Bouncing Check & Bank Secrecy Law

8/11/2019 Bouncing Check & Bank Secrecy Law

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BANK SECRECY LAW &BOUNCING CHECK


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Bank Secrecy Law (RA 1405)

This is an act prohibiting disclosure of or

inquiry into all types of deposits in any banking

institution including investments in bonds

issued by the Philippine government and itspolitical subdivisions and instrumentalities.

It is also unlawful for any official or employeeof a bank to disclose to any person any

information concerning deposits


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Purpose

Encourage enough people to deposit in banks

Discourage private hoardings so that banks

may lend such funds


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Coverage

All deposits of whatever nature with banks or

banking institution in the Philippines, including

investments in bond issued by the

Government of the Philippines , its political

subdivision and its instruments.


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Prohibited Acts

Examination and inquiry and looking all deposits

a.any person

b. any government official or

c. any bureau or d. any office

Disclosure by any

official

Employee

ANY UNAUTHORIZED PERSON of any information

concerning the said deposit.


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General Rule

The deposits covered by law are considered

absolutely confidential nature and may not

be examined, inquired or looked into by anyperson, government bureau or office.


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Grounds to Allow Examination Of A

Bank Account:

Depositor consents in writing

Impeachment cases

By court order in bribery or dereliction of duty

cases against public officials

Deposit is subject of litigation


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AN IN- CAMERA INSPECTION

Pending case before a court of competentjurisdiction

Account must be clearly identified

The inspection is limited to the subject matter of

the pending case The bank personnel and the account holder must

be notified to be present during the inspection,and such inspection may cover only the account

identified in the pending case.An investigation by the Office of the Ombudsman isnot

a pending litigation to allow examination of a bank

account.


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Other Exemptions

NIRCInquiry by the Commissioner of InternalRevenue

Cases of Unclaimed Balances

Anti-Graft and Corrupt Practices Act (unexplained

wealth). Inquiry or examination by the Anti-Money

Laundering Council

By order of the court in cases filed by the

ombudsman and upon the latters authority toexamine and obtain access to bank accounts andbank records

Audit purposes, made by an independent auditorhired by the bank, the results of which usedexclusively for the latter


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Foreign Currency

These deposits :absolutely confidential nature and

cannot be

examined inquired or looked into

by any person, government official,bureau or office

whether judicial or administrative orlegislative

any other entity whether public orprivate.


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Exemption for Foreign Currency

written permission of thedepositor

that provided for by AMLA


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Liability of Banks and Officers

Under RA 1405 - the offender is subject to

imprisonment of not more than 5 years or a

fine of not more than P20,000, or both, in the

discretion of the court. Under RA 6426 - the penalty is imprisonment

of not less than 1year not more than 5 years or

a fine of not less than P5,000 nor more than

P25,000, or both, in the discretion of the court.


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Application:

Hi Yielding Corporation filed a complaintagainst five of its officers for violation ofSection 31 of the Corporation Code. Thecorporation claimed that the said officers wereguilty of advancing their personal interests tothe prejudice of the corporation, and that theywere grossly negligent in handling its affairs.Aside from documents and contracts, thecorporation also submitted in evidence recordsof the officers U.S. Dollar deposits in severalbanks overseas - Boston Bank, Bank ofSwitzerland, and Bank of New York.


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For their part, the officers filed a criminal

complaint against the directors of Hi Yielding

Corporation for violation of Republic Act No.

6426, otherwise known as the ForeignCurrency Deposit Act of the Philippines. The

officers alleged that their bank deposits were

illegally disclosed for want of a court order,

and that such deposits were not even thesubject of the case against them.


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a) Will the complaint filed

against the directors of Hi

Yielding Corporation

prosper?


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Ans.

No, because the Foreign Currency Deposit Act

(R.A. No. 6426), including its punitive

provisions, refers to foreign currency deposits

accounts constituted within the Philippines. Ithas no application at all to accounts, even

though they are banks, opened and

constituted abroad.


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b) Was there a violation of

the Secrecy of Bank

Deposits Law (Republic Act

No. 1405)?


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Ans.

No, because the punitive provisions of the

Secrecy of Bank Deposits Law (R.A. No.

1405), including the statutory exemptions

provided therein, are not applicable to FCDUaccounts, even when constituted locally.

(Intengan v. Court of Appeals, G.R. No.

128996, February 15, 2002)


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Cases

PNB v. Gancayco 15 SCRA 91 (1965)

Mellon Bank v. Magsino 190 SCRA (1990)

PCIB v CA 193 SCRA 452 (1991)

Onate v. Abrogar 241 SCRA 659 (1995)

Bouncing Check & Bank Secrecy Law

Documents

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