Protection of Deposits
- To be covered by insurance of the PDIC and
The main basis in our discussion is the BANK
SECRECY LAW (RA 1405 amended by PD
1792).
What is the purpose of protecting secrecy
of deposits?
- Discourage private hoarding
Why is it that we are fearful from private
hoarding? If people will be fearful of banks,
our tendency is to keep the money close to us.
The economy will not move because there is
no money to be lent to other persons or no
cash to invest, or not going to be as robust.
The economy will be stalled.
- Encourage people to deposit their money in
banking institutions
- Protection from unwarranted inquiry or
investigation if the purpose of such inquiry is
merely to determine the existence and nature,
and the amount of deposit in any given bank
account.
Foreign Currency Deposits (RA 6426)
This law recognizes and validates the
acceptance of foreign currency acceptable in
international reserve.
It is not so much for the use of the citizens
but primarily for the foreign investors.
It entices and encourages foreigners to deposit
as well. It encourages deposit in a long term
investment which is more beneficial to the
country.
What are the rights of foreign currency
depositors?
- For foreign currency deposit to be accepted
- To be issued certifciates to evidence such
deposits
- To use deposits as collaterals
- To be paid interest in foreign currency on
such deposits
Note that the interest deposited in foreign
currency shall be in that foreign currency.
- Free to withdraw the deposit by the
depositor
- Free to transfer the same abroad except
those arising from the contract between the
depositor and the bank
paid out in the curency as the insured
deposits.
If the PH currency deposits are protected up
to P500,000, the equivalent of that will be
paid out in that foreign currency.
What are the incentives?
These will encourage the inflow of foreign
currency deposits in the country.
1. Tax exempt foreign currency deposits and
interest and other income or earnings of such
deposit.
The interest in the foreign currency deposits
shall be tax exempt - pertaining to all taxes
WON made by resident or non-resident or
engaged in business or not.
2. Exempt from attachment, garnishment, or
any other order or process of any court,
legislative body, government agency or
administrative body.
This cannot be garnished. You cannot forced
or this cannot be subject of a writ of execution
to get all the contents of the foreign currency
account and then give it to the judgment
creditor. That is not permissible. Why?
-Because the law expressly states that
it is exempt from attachment or garnishment.
 Absolutely confidential unless with
written permission of the depositor.
This is the only instance wherein there is
exemption to the secrecy of a foreign currency
deposit, if there is a written permission of
the depositor. This is the only exception with
respect to foreign currency.
This provision also apply to Offshore banking
Units. Offshore Banking Units are only
permitted to take in foreign currencies from
non-residents of the PH. They are also
afforded the same confidentiality. ABSOLUTE
CONFIDENTIALITY daw sabi ng law.
Those are the 3 incentives. Please remember
them and memorize them if you must.
Bank Secrecy
RA 1405 as amended by PD 1792
Let’s move on to RA 1405 or this pertains now
to those that are not covered by the Foreign
Currency Deposit Act.
Sec. 2
- All deposits of whatever nature with
banks or banking institutions in the
PH….are hereby considered as an absolutely
confidential nature.
Sec. 2 states that all deposits of whatever
nature with banks or banking institutions in
the are hereby considered as an absolutely
confidential nature.
This is the basis for all the banks secrecy laws
that we have. (ABSOLUTELY CONFIDENTIAL
NATURE)
What does it mean when there is a bank
secrecy? Who is expected to observe the
secrecy of the bank accounts?
-It is the bank employees and the bank.
Kunyare tayo learning about all the account of
a person that may come to ambit of Data
Privacy Act but it is not under the bank
secrecy under Act 1405 is the obligation of the
bank as well as the bank employees.
What does it involve?
-It involves all deposit of whatever
nature. And it is not only limited to you
having an account. How much is the content
of the bank account? Usually yun ang iniisip.
But it is more than that.
Banks are even prohibited from answering
discussion. Thus this person maintains a
bank account in your branch. A bank
employee is prohibited from affirming or even
confirming that there is a bank account
maintained by this individual. Everything
about it will be considered as Absolutely
Confidential.
Take note, it says there that all deposits of
whatever nature being it a time deposit or
current deposit. It is still afforded absolute
confidentiality.
They may not be
-examined, inquired or looked into by any
person, government official, bureau or office.
Because there is a bank secrecy or absolute
confidentiality, they cannot be examined
inquired or looked into by any person,
government official, bureau or office.
Coverage of absolute confidentiality
- Unlawful for any official or employee of a
banking institution to disclose to any person
other than those mentioned in Section two
hereof any information concerning said
deposits.
What is the coverage of absolute
confidentiality?
-It is unlawful for any official or
employee of a banking institution to disclose
to any person other than those mentioned in
Section two hereof any information concerning
said deposits.
Any information concerning said deposits.
does it exists, how much is deposited, how
much is withdrawn, who owns it, who co-
owns it, who has been accessing it? All of
these cannot and should not be disclosed by a
bank or its employees.
Sec. 2
- All deposits of whatever nature with banks
or banking institutions in the PH including
investments in bonds…are hereby
considered as an absolutely confidential
nature…..wherever deposited or invested.
If we are going to look at this closely actually
states that all deposits of whatever nature
with banks or banking institutions in the PH
including investments in bonds are hereby
considered as an absolutely confidential
nature wherever deposited or invested.
What does that mean?
-The use of the word deposit is Limited
only to accounts which give rise to a creditor-
debtor relationship between the depositor and
the bank.
Deposit
- Limited only to accounts which give rise
to a creditor-debtor relationship between the
depositor and the bank. (Ejercito v.
Sandiganbayan)
- Interpreted broadly
So, is a maintenance of safety deposit box
considered as having relationship by creditor-
debtor? No. It is not covered by bank secrecy.
It may be covered by obligation of banks
under GBL or the manual on regulations of
banks but it is not covered by bank secrecy.
Take note however that this should be
interpreted broadly to achieve the goals of the
law which is to avoid hoarding.
Is this covered by Absolute Confidentiality?
Investments made thru banks
Are investments made thru banks covered by
absolute confidentiality as in the case of
Ejercity where it stated that it is a trust
account and which is not an exemption or
covered by the bank secrecy?
In answering it, the SC considered Sec. 2 of
the Bank Secrecy Act.
Take note of those that I have highlighted in
yellow. You would see that the definition of
deposit is broad enough to include not only
those what we understood to be simple loans
but even those situations wherein where the
money deposited or invested is the subject
matter of litigation.
So, this does not apply only to money which is
deposited but also those which are to be
invested later on.
What happened in the case of Ejercito is that:
Is a trust account wherein a bank is investing
the money for and on behalf of the depositor
Ejercito. Is it considered as deposit which is
afforded bank secrecy?
-Yes. By taking a look at the definition
of deposits under Sec. 2 and even
pointing out that the deposited money
under the trust account was not merely
to remain with the bank but to be
invested elsewhere.
This again pertains to what we said
earlier that what we consider as deposit
would mean that there is not only a
creditor-debtor relationship but the
money would be transferred for the use
of another individual, the public in order
to make the economy grow.
Is this covered by Absolute Confidentiality?
Contents of safety deposit box
No. Because there is creation of creditor-
debtor relationship and contents of safety
deposit box cannot be lent to a 3 rd persons.
This is not subject or cannot be protected. Not
considered as deposit under Sec. 2 of the
Bank Secrecy Act.
For other accounts that may not be
considered under GBL, Sec. 55.1 of GBL will
apply. Take note, it is still duty of the bank
and its employees not to disclose to an
unauthorized person any info relative to the
funds of properties.
Is the bank secrecy, does it cover safety
deposit boxes?
-No. It does not because there is no
creation of creditor-debtor relationship by
virtue of depositing the contents in the safety
deposit box.
Second, does it mean that there is no
protection afforded to properties deposited in
the bank?
-No. It does not. Because what is
applicable now is the Sec. 55.1 of the GBL.
Penalty
 Imprisonment: not more than 5 years or
 Fine: not more than Php 20,000.00
 Or both.
Penalty
 Imprisonment: not more than five
years or
 Fine: not more than Php20,000
 Or both.
REMEMBER!
 General rule:
Bank deposits are afforded absolute
confidentiality.
 of public officers. Those impeachable officers does not
Question: Will this money or property be lent pertain to the provision in the Rules of Court under the
out to other person in order to make profit for Rules on Evidence that it should be for impeachment of
the bank? witness, hindi yun yun.

Answer: Yes, if lent out to other person and that
it will different money that will be returned, that
it is considered fungible, then it is considered as
deposit. That’s the reason why investments are
considered as deposit even though it is not
borrowed from the public because it is going to
lent out to the public.
3. Upon order of a competent court in cases of bribery
or dereliction of duty of public officials.
It cannot be the just because that public official
has committed bribery or dereliction of duty that it
becomes already as a matter of right that there is no
secrecy of the bank deposits, it should always be by
virtue of a competent court.

Why safety deposit box is not considered as 4. In cases where the money deposited or invested is
deposit under the Bank Secrecy Law? the subject matter of litigation.

Answer: Because the content of the deposit in
the safety box is not going to be lent out to the
public.
 Exceptions:
So it must be the subject matter of litigation.
Most of the cases that have been assigned to you or is
existing in this world pertains to subject matter of
litigation.

Exceptions that are found under the Bank Secrecy

Act

What are the exceptions of bank secrecy under the Bank

Secrecy Act?

Answer:

1. Upon written permission of the depositor.

It's not enough that there is consent, it's not
enough that there is implied consent, it's not enough that
it is just a verbal or oral consent, there should be a
Subject of the action
written permission. And if this written permission of the
depositor is for the advantage of your client, it is best
 This is not the cause of action which is the
that it is in a public instrument, either to subscribe to in
injury the subject matter of the action.
jurat or acknowledged before a notary public. so that
 It is the matter or thing with respect to which the
there is an added level of acceptance and regularity
controversy has arisen, concerning which the
attached to the written permission.
wrong has been done, and this ordinarily is a
property, or the contract and its subject matter or
2. For cases of impeachment
the thing in dispute.
Under Article 11 Section 2 of the 1987
Constitution, the impeachable officers are only limited
to the President, the Vice president, the members of
the Supreme Court, the members of Constitutional
Commissions and the Ombudsman.

It's only them that there is no bank secrecy

afforded to this impeachable officers. The
impeachment that is used here is only for impeachment

If you still have not been convince what is a subject
matter of litigation. It is the money deposited in account
is itself the subject of the action.
How about in the case of estafa if the millions of
pesos was swindled by the accused, is this a subject
matter of litigation?
When it pertains only to the money that was
swindled and it should be recovered by the parties, then
it becomes a subject matter of the litigation.
Example: There was a deposited amount of 1M US
dollars in the bank account, but this should have only
been one 1,000 US dollars. Here the intention to recover
the difference between 1 million from 1,000 is warrant
to take a look at the bank account, and it is a subject
matter of the litigation. Why? Because this case is for
the recovery of the difference between a million and
1,000 US dollars.
The Supreme Court in this case ruled that this falls
under the exception. It means that there is no bank
secrecy afforded to this because the goal here is to
recover the amount converted to by the Javier's for
their own benefit. It must be with an inquiry into the
whereabouts of the illegally acquired amount. Trying to
determine if this amount is still in the bank account of
the Javiers or if it's already been converted into
properties, then it becomes a subject matter of litigation.
It can be by court order that there is no absolute
confidentiality afforded to this bank account.
Is the money subject matter of litigation?
Accused committed estafa. The money obtained from
the crime was deposited in the bank. Is the money that
is deposited in the bank afforded still secrecy or is it
is subject matter of litigation which is exempt from
the bank secrecy?
Answer: This is not a subject matter of litigation
because even without this money deposited in the bank,
the crime of estafa could still be proven. The money that
is deposited in the bank account is irrelevant in trying to
establish the crime of estafa. Why? Because whether or
not the money can be shown, the estafa could still be
proven.
To determine if this is a subject matter of litigation is:
Can the case of estafa be proven without knowledge
of the money? Or it adds nothing of value to the
prosecution of a crime or a prosecution of a cause of
action in a civil case?
If it is irrelevent or it does not matter how
much money or you know about the contents
where it is located, if that doesn't matter, then
it is not a subject matter of litigation which
can be subject of a court order as an
exempting circumstance under the bank
secrecy act.
NOT FALLING UNDER EXCEPTION (of
subject matter under Litigation)
-if it falls in any of these, it is still afforded
absolute confidentiality.
*The true purpose for the examination is to
aid petitioner in proving the extent of Allied
Bank's liability (to aid in criminal liability)
-Why is this not necessary? Because this is
a phishing expedition. Its purpose is to aid
another person. It’s not really the subject
matter of litigation. It’s not the property that
is involve in a civil suit or a criminal suit.
o Information for Qualified Theft
-No factual allegation that in
some material way involves the
checks subject of the testimonial
and documentary evidence sought
to be suppressed.
-If there is an attempt to take a
look at the bank deposit, they
should already been included in
 the information which is being
charged as against the accused.
-No allegation in said Information
mentioning the supposed bank
account in which the funds
represented by the checks have
allegedly been kept.
-These, again, are not a basis for it to be
covered as an exempting circumstance for the
absolute confidentiality afforded to its
deposits.
(As decided under BSP Group Inc., v Go, Feb
16, 2010)
That is my rule. That's how I assess or filter
out whether its subject matter of litigation.
Can the case be proven even if there is no
knowledge or information about the bank
account that is being sought to be used or
subpoenaed? If there is none, then it cannot
be a subject matter of litigation.
5. In an examination made in the course of
a special or general examination of a bank
that is specifically authorized by the MB
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 is necessary to
look into the deposit to establish such
fraud or irregularity.
-these are the other two instances provided for
under the Bank Secrecy Act other than the
four which we already discussed. If it is in a
conduct of a special or general examination of
a bank for the purpose of determining bank
fraud or serious irregularity, then it is an
exception. Which means that the MB could
examine and take a look at deposits of any
one inorder to determine if there is fraud or
irregularity.
6. 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.
7.
- if it’s one of this, then it is an exception of
the bank secrecy act.
OTHER EXCEPTIONS
7. Written permission of foreign currency
depositor account owner.
-This is the only permission under the Foreign
Currency Deposit Act.
-those discussed earlier (from GBL or Bank
Secrecy) does not apply to foreign bank
currency deposit
8. Cases of unexplained wealth (Sec 8, RA
3019) [PNB v Gancayo]
9.
-By analogy, plunder will also be a ground of
exemption under the Bank Security Act.
-Why? Because these positions are positions
of public trust. Its perceived that the money
that is being stored in this account belongs to
the public, belongs to the tax payer. That's
why it cannot be afforded bank secrecy
because they are using the law to violate the
rights of the people that the government
shoule be protecting.
9. Written permission of borrower in DOSRI
borrowing.
- In case a DOSRI is borrowing from a bank,
one of the requirement's in an arm's length
principle or prudence principle is that there
should be a written permission.
10. PDIC and BSP if there is unsafe and
unsound banking practices (PDIC Law)
-the purpose is to protect everyone, not just
the bank or depositor, but every member of
the 'valued chain' that it is transacting with.
RA 10021 BIR
 The determination of BIR in case of any
compromise pertaining to:The gross
estate of a decedent;
-they will be waiving the Bank Secrecy
because they will be entering into a
compromise agreement with the BIR on behalf
of the government.
 In acceding to compromise of a tax
payer's liabilities due to financial
inability to pay the tax assessed;
 When information is requested by a
foreign tax authority pursuant to an
international agreement entered into by
the Philippines.
-these are the instances whereby transacting
with the BIR might cause the waiver of the
absolute confidentiality of bank deposit.
UNDER THE ANTI MONEY LAUNDERING
ACT
*Money Laundering: A crime whereby the
proceeds of an unlawful activity are
transacted, thereby making them appear to
have originated from legitimate sources.
-When you watch a movie and there is a
money laundering, when they will be getting
money from drug deals. Then, they will be
using that money and they will be putting up
laundry mart (talagang nilalabhan). They will
be putting up a laundry mart or dry-cleaning
shop, any small business like a barbershop
and the purpose of that is to make it appear
that the money being earned from these shops
are coming from legitimate busines. That is
coming from laundry of clothes, or dry
cleaning of clothes. But actually, the reason
why they put up there is to turn it into a
legitimate money.
-For casinos which are added as lately for the
Anti Money Laundering Act- the inclusion of
casinos as an avenue for money laundering
has been added in the Anti Money Laundering
Act and its recent amendments. Again, more
of that in the finals.
12. Order of competent court upon ex
parte application if there is probable cause
that the deposits or investments, including
related accounts involved, are related to an
unlawful activity or a money laundering
offense.
13. AMLC (Anti Money Laundering Council)
inquiry because of kidnapping for ransom,
hijacking and violation of RA 6235 (Civil
Aviation Law), destructive arson and
murder, terrorism and conspiracy to
commit terrorism, importation, sale,
administration, delivery, distribution and
transportation of prohibited drugs,
maintaining during drug den, manufacture
of drugs, possession of drugs and
cultivation of plants which are sources of
prohibited drugs.
-AMLC could inquire into the bank deposit if
there is a commission of any of the crimes
listed here without the need of order of
competent court.
14. Garnishment
-after there has been an issuance of Writ of
Execution in any case and it pertains to bank
accounts (not garnishment over personal
property or real property)
-This has been determined by the SC in the
case of PCIB v CA.
The prohibition against examination does not
carry with it prohibition of it being garnished
to insure satisfaction of judgment.
Where it said that the prohibition against
examination does not carry with it prohibition
of it being garnished to insure satisfaction of
judgment.
The ends of justice will be frustrated if the
banks secrecy will be violated or if would
amount to violation of bank secrecy in order
to execute or enforce any decision which is
based on law.
WHY?
- No real injury
- Existence of deposit is purely incidental
This is according to the SC, well because it is
not really inquiring whether there is an
account of depositor in a bank and the
determination of the existence of deposits is
purely incidental in the enforcement of a writ
of execution.
15.
- Incidental information made to OSG as to
existence of dormant accounts to initiate
escheat proceedings
In case of Escheat proceedings of bank
deposits which have not been attached or
when there is no activity for at least 1 year or
2 years that any infos that may have been
obtained by the OSG is not subject or not a
violation of bank secrecy act.
16. ANTI-TERRORISM COUNCIL
Problematic one. Those that are made by the
Anti-Terrorism Council
This is an old provision under RA 9372, Sec.
27. That this is the new Human Security Act.
Upon Court of Appeals Division Authority
after determination of probable cause against
a person charged with terrorism, judicially
declared and outlawed terrorist organization
or member of such declared and outlawed
organization.

What is this saying is that if there has been a

determination of probable cause, that’s the
only time that a Bank Secrecy Act would be
inapplicable.
So, again, this is with court order involving
May be done upon ex parte application by a probable cause.
person authorized by the Anti-Terrorism
Council.

Why is there an existence of ex parte

application?
-Because if you are going to inform the
depositor then you would know that the latter
who is a terrorist would know that certain
individuals or enforcer of the law are on to
him and he might transfer the assets that are
deposited which could show a link to a
terrorists act.
Just try to remember that it is ex parte
application by the Anti-Terrorism Council.
Yes, it is okay. Because it is the court who will
determine if there is probable cause and it is a
3rd party who will determine whether there is
validity and legality of the actions that are to
be taken by the Anti-Terrorism Council.
16. ANTI-TERRORISM ACT OF 2020 (Sec. 35)
What this is saying is that even with the bank
secrecy afforded to this bank accounts
including RA 6426, the only exception
permitting for the foreign currency deposit
owner.
But this time, with this law, people from the
AMLC could take a look at our bank deposits
even without a court order. They can infringe
on this rights of privacy even without court
order. The problem, parang when the Human
Security Act was promulgated parang
owmaygaahd such a restriction.

Unfortunately, we have the Anti-Terrorism Act Now, because of this law, I suddenly prefer
of 2020 and under Sec. 35 it states that the the Human Security Act. Unfortunately, this
Anti-Money Laundering Council or theAnti- was repealed in its entirety by this Anti-
Terrorism Council has right to investigate, Terrorism Act of 2020.
inquire into and examine bank deposits. Upon
court order of the preliminary order of
proscription.
Answer: No, it does not. When comparing the
instances provided for under the bank secrecy
act, the only thing that it has in common with
the foreign currency deposit act was the first
one. The written permission. Therefore,, the
exempting circumstances that are found
under the bank secrecy act will not be
applicable to those that are considered foreign
currency.
The only things that cannot be done to foreign
currency deposits are those that are stated
under the bank secrecy act as well as
garnishment.
This was explained to the effect by the SC in
the case of GSIS v. CA.

What does that mean?

-If President again was impeached,
does it mean that the impeachment council or
the Senate could take a look at the contents of
foreign currency deposit? No, it does not.

Why?
Because that ground is only available
for peso deposit under the Bank Secrecy Act.
The exempting circumstance here are those
What about for plunder? Or dereliction of indicated under the bank secrecy act and not
duty? really the AMLA.
That is only for PH peso accounts.
But anything else other than the 4 grounds
For all others the DOSRI, AMLA, compliance stated under the banks secrecy act are
with BIR, everything else that are not found permissible. That is the exempting
under the bank secrecy act will be applicable circumstance in the absolute confidentiality of
to the foreign currency deposit except the foreign currency deposits.
garnishment. --------------------END--------------------
See you after Midterms. Goodluck!
Those that are found under the Bank Secrecy
Act as well as those expressly prohibited
under the law which is garnishment, those
cannot be done to foreign currency deposits.
Those are not exempting circumstance to the
prohibition into the inquiry of the foreign
currency deposits.

Bakit yung garnishment hindi pwede? Or

inquiry for purpose of garnishment or
execution of a decision with respect to foreign
currency deposit?

-Well, because one incentives accorded

to a foreign currency deposit is that it cannot
be subject of any garnishment if there is no
permission to that garnishment then an
inquiry to it, to a foreign currency deposit will
not even be permitted.

How about for Anti-Terrorism, does that mean

that foreign currency deposits cannot be
subject of inquiry by the ATC?
-No, it is not. With all more reasons
that this foreign currency deposit will be
subject of inquiry or even under the freeze
order for AMLA, they are still susceptible to all
of this.