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PURPOSES: 1. to encourage people to deposit their money in banking institutions to discourage private hoarding so that banks may lend such funds and assist in the economic development of the country.
NOTE: the subject matter of the litigation cannot be limited to bank accounts under the name of defendant alone, but must include those accounts to which the money purportedly acquired illegally to have been transferred. PLUNDER being thus analogous to bribery; the exception to RA 1405 applicable in cases of bribery must also apply to cases of plunder. (EJERCITO v SANDIGANBAYAN) B. OTHER LAWS, RULES, JURISPRUDENCE 1. ANTI-GRAFT AND CORRUPT PRACTICES ACT Upon the order of a competent court/tribunal in cases involving unexplained wealth under this law. NOTE: this law is intended to amend RA 1405 by providing an additional exception to the rule against disclosure of bank deposits. - Cases of unexplained wealth are similar to cases of bribery and dereliction of duty and there is no reason why these 2 classes of cases cannot be excepted from the rule making bank deposits confidential. The policy as to one cannot be different from the policy as to the other. Inquiry into illegally acquired property extends to cases where such property is concealed by being held by or recorded in the name of other persons. 2. NIRC The Commissioner of Internal Revenue may inquire into the bank deposits of: a. A decedent to determine his gross estate, and b. Any taxpayer who has filled an application for compromise of his tax liability under NIRC by reason of financial incapacity to pay his tax liability. He must file a written waiver of his privilege under RA 1405 or other general or special laws and such waiver shall constitute the authority of the commissioner to inquire into the bank deposits of the taxpayer. 3. ANTI-MONEY LAUNDERING ACT GR: Inquiry or examination by the AMLC upon order of any competent court in cases of violation of AMLA, if there is probable cause that the deposits or investments are related to an unlawful activity or a money laundering offense. EXCEPTIONS: No court order shall be required in the following unlawful activities— a. Kidnapping for ransom (RPC)
COVERAGE: ALL DEPOSITS of whatever nature w banks or banking institutions in the Philippines Investment in bonds issued by government of Philippines & its political subdivisions/instrumentalities included Money-market placement not covered (because not deposited in bank) PROHIBITED ACTS: 1. Examination and inquiry or looking into all deposits, of whatever nature, w the banks in the Philippines (including bonds issued by government) Any disclosure by any official or employee of any banking institution to any unauthorized person of any information concerning said deposits.
GENERAL RULE: the deposits covered by law are considered as of an ABSOLUTELY CONFIDENTIAL NATURE and may not be examined, inquired or looked into by any person, governmental bureau, or office. EXCEPTIONS: A. RA 1405 1. Upon written permission of the depositor 2. In cases of impeachment 3. Upon order of a competent court in cases of bribery or dereliction of duty of public officials 4. Upon the order of a competent court in cases where the money deposited or invested is the subject matter of the litigation.
b. Violations of the Comprehensive Drugs Act c. Hijacking and other violations under RA 6235 d. Destructive arson and murder under RPC (including those perpetrated by terrorists against non-combatant persons and similar targets. 4. UNCLAIMED BALANCES ACT Disclosure to the Treasurer of the Philippines of dormant deposits for at least 10 years. 5. MARQUEZ v DESIERTO Upon order of the court in cases filed by the Ombudsman and upon the latter’s authority to examined and have access to bank accounts and records 6. RULES OF EXAMINATION OF BSP Inquiry into or examination of any deposit or investment with any banking institution when the examination is made by the BSP in the course of a periodic or special examination OTHER RELATED LAWS: A. FOREIGN CURRENCY DEPOSIT ACT GR: Absolute confidentiality to foreign currency deposits. EXCEPTION: 1. Written consent of the depositor (FCDA) 2. A co-payee in a check deposited in a bank is likewise a co-depositor thereof; no written consent of the other co-payee is necessitated in an inquiry of the deposits by said co-depositor (CHINA BANKING v CA) 2. Upon order of court, or even without court order, in proper cases when there is probable cause of money laundering (AMLA) NOTE: as things now stand, it appears that there are 2 exceptions on foreign currency deposits. The co-payee rule is pro hac vice. B. GENERAL BANKING LAW OF 2000 1. No bank shall employ casual or nonregular personnel or too lengthy probationary personnel in the conduct of its business involving bank deposits.
2. No director, officer, employee, or agent of any bank shall, without court order, disclose to any unauthorized person any information relative to the funds or properties in the custody of the bank belonging to private individuals, corporations, or any other entity. (PROVIDED: that with respect to bank deposits, the provisions of existing laws shall prevail) 3. Outsourcing of inherent bank functions also prohibited. C. NEW CENTRAL BANK ACT 1. DOSRI loans 2. Periodic and special examinations by the BSP 3. The 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 (MARQUEZ case) NOTE: examination by an auditor as an exception to the rule can no longer be found in the statute books. Nevertheless, it can find basis in the opinions of authors, banking experts, and practitioners. Moreover, common sense would tell that the disclosure is a natural consequence of examination. GARNISHMENT CHINABANK CASE: Bank accounts may be garnished by the creditors of the depositor. There is NO VIOLATION of the Law on Secrecy of Bank Deposits if the accounts are garnished. It as not the intention of the legislature to place bank deposits beyond the reach of execution to satisfy a final judgment. Its purpose is merely to secure information as to the name of the depositor and whether or not the defendant had a deposit in the said bank, only for purposes of garnishment. Any disclosure is purely incidental to the execution process. PCIB CASE: the amount of deposit is actually not disclosed and the intent of the legislature does not cover garnishment. REQUISITES FOR IN-CAMERA INSPECTION OF BANK DEPOSITS: 1. 2. 3. Pending case before a court of competent jurisdiction Account must be clearly identified The inspection is limited to the subject of the pending litigation
The bank personnel and account holder must be notified to be present during the inspection The inspection must cover only the account identified in the pending case
column. Thus, Gigi filed a complaint against Manosa with the Office of the City Fiscal of Manila for unlawfully disclosing information about her bank account. Will the suit prosper? The suit will not prosper. The Law on Secrecy of Bank Deposits does not penalize the mere receipt of information about a bank account. Manosa, having merely overheard the information on the account and not having examined, inquired, or looked into the same, cannot be penalized under SEC 2 of RA 1405. Neither can he be penalized under SEC 3, as he is not an official or employee of the bank. 2) GP is a suspected jueteng lord who is rumored to be enjoying police and military protection. The envy of many drug lords who had not escaped the dragnet of the law, GP was summoned to a hearing of the Committee on Racketeering and Other Syndicated Crimes of the House of Representatives, which was conducting congressional investigation ―in aid of legislation‖ on the involvement of police and military personnel, and possibly even of local government officials, in the illegal activities of suspected gambling and drug lords. Subpoenaed to attend the investigation were officers of certain identified banks with a directive to them to bring the records and documents of bank deposits of individuals mentioned in the subpoenas, among them GP. GP and the banks opposed the production of the banks’ records of deposits on the ground that no such inquiry is allowed under RA 1405. Is the opposition of GP and the banks valid? YES. The opposition of GP and the banks is valid. The situation is not one of those where the examination of, or disclosure of information about, bank deposits is allowed whether under RA 1405 or other laws. GP is not a public official. In any case, there is no order of a court, the Committee mentioned not being one. There is also no litigation where the money which may be in the deposit accounts is the subject matter. (It may be necessary to enumerate all the situations where the examination of bank deposits or disclosure of information about them is allowed.) 3) Miguel, a special customs agent, s charged before the Ombudsman with having acquired property out of proportion to his salary, in violation of the AntiGraft law. The Ombudsman issued a subpoena duces tecum to the bank commanding its representative to furnish the Ombudsman records of transactions by or in the name of Miguel, his wife, and children. A second subpoena was issued expanding the first by including
Investigation by the Office of the Ombudsman is not considered a pending litigation before any court of competent authority. Such investigation would not warrant the opening of the Bank account for inspection. RA 1405 vs POWER OF BSP TO CONDUCT PERIODIC AND/OR SPECIAL EXAMINATIONS Prof. Aquino and Prof. Viray believe that the general rule still applies. Hence, the deposit remains confidential. PENALTIES: 1. 2. 3. Imprisonment – not more than 5 years, or Fine – not more than P20,000, or Both
QUESTIONS: Q: WOULD THE EXAMINATION OF THE BANK DEPOSITS OF ANOTHER PERSON, IN CONNECTION WITH AN INQUIRY INTO ILLEGALLY ACQUIRED PROPERTY OF THE DEFENDANT IN AN ANTIGRAFT CASE, VIOLATE THE LAW? A: NO. The permitted inquiry into illegally acquired property in anti-graft cases extends to instances where such property is concealed by being held by or recorded in the name of other persons. Q: IN A CASE WHERE THE MONEY DEPOSITED OR INVESTED IS THE SUBJECT MATTER OF LITIGATION, COULD AN INQUIRY INTO THE WHEREABOUTS OF THE AMOUNT EXTEND TO THE DEPOSITS HELD IN THE NAME OF PERSONS OTHER THAN THE ONE RESPONSIBLE FOR THE ILLEGAL ACQUISITION? A: YES. Even in cases involving prosecution under the Anti-Graft Act, an inquiry into the whereabouts of the amount converted necessarily extends to whatever is concealed (by being held or recorded in the name of persons other than the one responsible for the illegal acquisition) inasmuch as the case is aimed at recovering the amount covered. HYPOS AND BAR QUESTIONS 1) Manosa, a newspaper columnist, while making a deposit in a bank, overheard a pretty bank teller informing a coemployee that Gigi, a well-known public official, has just a few hundred pesos in her bank account, and that her next check will in all probability bounce. Manosa wrote this information in his newspaper
production of records of friends of Miguel in said bank and in all its branches and extension offices, specifically naming them. Miguel moved to quash the subpoenas arguing that they violate RA 1405. In addition, he contends that the subpoenas are in the nature of ―fishing expeditions‖ or ―general warrants‖ and are constitutionally impermissible with respect to private individuals who are not under investigation. Is Miguel’s contention tenable? NOT TENABLE. The inquiry into illegally acquired property extends to cases where such property is concealed by being held by or recorded in the name of other persons. To sustain Miguel’s theory and restrict the inquiry only to property held by or in the name of the government official would make available to persons in government who illegally acquired property an easy means of evading prosecution. All they have to do would be to place the property in the names of persons other than their spouses and children. 4) Shirlene bought P500,000 worth of Pabahay bonds issued by the Home Development Mutual Fund, a government agency, through ABC Bank. Afterwards, she placed the bonds in a safety deposit box she rented from ABC Bank. Ella, one of the bank’s safety deposit attendants, saw what Shirlene placed inside her box, noting that they were in her name. During lunch, she told her co-attendants what she saw and wondered aloud how a government employee like Shirlene could have money to buy the bonds. Could Shirlene file a complaint against Ella for violation RA 1405? YES. Shirlene could. The disclosure by Ella to her co-attendants of the existence, and the deposit in the safety deposit box, of the bonds is a prohibited act under RA 1405. A deposit in a safety deposit box in a bank is also protected by the said law.
AYN RUTH NOTES
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