REPUBLIC ACT NO.1405 SECRECY OF BANK DEPOSITS AN ACT PROHIBITING DISCLOSURE OF OR INQUIRY INTO, INTO, DEPOSITS WITH ANY BANKING INSTITUTION I NSTITUTION AND PROVIDING PENALTY PENALTY THEREFOR Sec!"# 1. It is hereby declared to be the policy of the Government to give encouragement to the people to deposit their money in banking institutions and to discourage private hoarding so that the same may be properly utilized by banks in authorized loans to assist in the economic development of the country.
Sec!"# $. All 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 con fidential nature and may not be examined, inuired or looked into by any person, government official, bureau or office, except when the examination is made in the course of a special or general examination of a bank and an d is specifically authorized by the !onetary "oard 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 fraud or irregularity, or when the examination is 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, or upon written permission of the depositor, or in cases of impeachment, or upon order of a competent court in cases of bribery or or dereliction of duty of public officials, or in cases where the money deposited or invested is the sub#ect matter of the litigation. $As amended by P% &o.'()*, +anuary ', ')-'
Sec!"# %. It shall be unlawful for any official or employee of a banking institution to disclose to any person other than those mentioned in /ection two hereof any an y information concerning said deposits.
Sec!"# 4. All Acts or parts of Acts, /pecial 0harters, 1xecutive 2rders, 3ules and 3egulations which are inconsistent with the provisions of this Act are hereby repealed.
Sec!"# 5. Any violation of this law will sub#ect offender upon con viction, to an imprisonment of not more than five years or a fine of not more than twenty thousand pesos or both, in the discretion of the court.
Sec!"# &. 4his Act shall take effect upon its approval. Approved5 /eptember ), ')66
4he purpose of this law is to encourage deposit in banking institutions7 and discourage private hoarding so that banks may lend such funds and assist in the economic development of the country. $/ec. ' 3ep. Act &o. '896
PROHIBITED ACTS' '.1xamination:inuiry:looking into all deposits of whatever nature with banks or ba nking institutions in the Philippines $including investment in bonds issued by the gov ernment by any person, government official or office $/ec. * $i %eposits refer to money or funds placed with a bank that can be withdrawn on the depositor;s order or demand, such as deposit accounts in the form of savings, current an d time deposits. %eposits are characterized as being in the nature of a simple loan. 4he placing of deposits in a bank creates a creditor
THE FOLLOWING ARE LIABLE UNDER THIS LAW' $i Any person or government official who, or any government bureau or office that, examines, inuires or looks into a bank deposit or government bond investment in any of the instances not allowed in /ection *7 $ii Any official or employee of a banking institution who makes a disclosure concerning bank deposits to another in any instance not allowed by law $Sec. 3, Rep. Act No. 14057 and $iii Any person who commits a violation of any of the provisions of the law $Sec. 5, Rep. Act No. 1405. Any bank official, director, employee or agent who discloses information relative to funds or properties in the custody of the bank may also be held liable under the applicable provisions of the General "anking >aw, 4hrift "anks Act and 3ural "anks Act.
E(CEPTIONS UNDER THE LAW ON SECRECY OF BANK DEPOSITS /ection * of 3epublic Act &o. '896 provides that bank deposits and government bond investments may be examined, inuired and looked into in the following instances5 $a ?pon written permission or consent in writing by the depositor. @or consent to be valid, it should be made knowingly, voluntarily and with sufficient awareness of the relevant circumstances and likely conseuences. $b In cases of impeachment of the President, ice President, members of the /upreme 0ourt, members of the 0onstitutional 0ommission $0ommission on 1lections, 0ivil /ervice 0ommission and 0ommission on Audit and the 2mbudsman for culpable violation of the 0onstitution, treason, bribery, graft and corruption, other high crimes or betrayal of public trust. $ Art. XI, Sec. 2, 1987 Philippine Constittion $c ?pon order of a competent court in cases of bribery or dereliction of duty of public officials. $d In cases where the money deposited or invested is the sub#ect matter of the litigation. 4he money deposited should be the very thing in dispute. $!ellon "#n$, N.A.%. !#&sino, 190 S.C.R.A. '33 (1990)
PENALTIES FOR VIOLATION 4he penalty of imprisonment of not more than 6 years or a fine of not more than *9,999 pesos or both, in the discretion of the court shall be imposed upon any official or employee of a banking institution who, upon conviction, was found to have violated 3.A. '896.
SA)PLE CASES '. !, a newspaper columnist, while making a deposit in a bank, overheard a bank teller informing a co
aw on /ecrecy of "ank %eposits does not penalize the mere receipt of information about a bank account. !, having merely overheard the information on G;s account and not having examined, inuired or looked into the said account cannot be penalized under /ec. *
of the "ank /ecrecy >aw. &either could he be penalized under /ec. = of the "ank /ecrecy >aw since /ec. = refers to disclosures made by officials or employees of banking institutions.
*. A has P'9,999 in his savings account, P*9,999 in his checking account, P=9,999 in his money market placement and P89,999 in a trust fund. Bhich of the accounts are covered by the /ecrecy of "ank %eposits >awC 2nly the savings and checking account are covered. 4he money market placement and the trust fund is not covered. A bought some goods from a department store and paid with h is personal check. 4he check was dishonored. 2n the assumption that the department store did not know who A was, the store manager inuired from the check;s drawee bank the name of the dishonored check. 4he drawee bank refused to disclose the name of the drawer invoking the /ecrecy of "ank %eposits >aw. In this case, the bank is not #ustified in not divulging the name of the drawer to the store manager. 4he store manager is merely inuiring as to the name of the drawer of the check. 4o divulge the same would not in any way amount to disclosure of any information concerning his deposits. Also, the inuiry is not an investigation of any balance in favor of the drawer. 4o include such disclosure within the ambit of the prohibition would be unduly straining and stretching the meaning of the /ecrecy of "ank.
RA %*%& UNCLAI)ED BALANCES LAW
1>1!1&4/ 2@ ?&0>AI!1% "A>A&01/ 5
1. I#c+-e ce-!/ " -e"/!/ "' a. b. c. d.
!oney "ullion /ecurity 2ther evidence of indebtedness
$. T2e ce-! " -e"/! 3/ e !2 2e 6#7, !+-!#8 6#- +"6# 6//"c!6!"#, " / c""6!"#, 6#%. T2e ce-! " -e"/! !/ !# 69" " 6 e/"#' a. Dnown to be dead, or b. Bho has not made further deposits or withdrawals during the preceding '9 years or more
•
/uch unclaimed balances, together with the increase and proceeds thereof, shall be deposited with the 4reasurer of the Philippines to the credit of the Government of the 3epublic of the Philippines, and to be used as the &ational Assembly may direct after following the reclassification and procedures provided by law.
&2415 %emand drafts cannot be escheated, but 41>1G3APEI0 &241/ can be escheated. >1GA> 02&/1F?1&015 the unclaimed balances may be sub#ect of escheat proceedings, after proper publication and the depositors still do not lay claim to them.
+?3I/P3?%1&015 RP %s CA @A04/5 4he 3epublic of the Philippines filed a complaint for escheat against several banks. 4he respective managers of the banks submitted to the 4reasurer of the 3P separate statements prepared under oath which listed all deposits and credits held by them in favor of depositors and creditors either known to be dead, have not been heard from, of have not made deposits or withdrawals for ten years or more. 3P prayed that the publication of the list of unclaimed balances be dispensed with. It asserted that the only reuirement under the ?"> is the publication of summons and notice to all persons and that to publish the names and list of unclaimed balances would only result in additional and unnecessary expenses to the government. I//?15 Bhether or not the publication of the names and list of unclaimed balances ius necessary. E1>%5 1/. 4he publication of the list of unclaimed balances is intended to safeguard the right of the depositor, their heirs and successors to due process. Eow would other persons who may have interest in any of the unclaimed balances know what this case is all about and whether they have an interest in this case if the amended complaint and the said list are not publishedC /uch other persons may be heirs of the bank depositors named in the list. 4he fact that the government is in a tight financial situation is not a #ustification for the 0ourt to dispense with the elementary rule of due process.
)ALACA:ANG !anila
PRESIDENTIAL DECREE N". &;* A!+ $, 1*;5 A)ENDING ACT NU)BERED THIRTY NINE HUNDRED AND THIRTY SI(, AN ACT REQUIRING BANKS, TRUST CORPORATIONS, AND BUILDING AND LOAN ASSOCIATIONS, TO TRANSFER UNCLAI)ED BALANCES HELD BY THE) TO THE TREASURER OF THE PHILIPPINES AND FOR OTHER PURPOSES. BE131A/, Act &o. =)= reuires the publication of a sworn statement of unclaimed balances in banks once a week of three consecutive weeks in at least two newspapers of general circulation in the locality where the banks are situated, if there be any, and if there is none, in the 0ity of !anila, one in 1nglish and one in /panish, the cost of which shall be paid by the "ureau of 4reasury, which shall be reimbursed out of the escheated funds7 BE131A/, the law also provides for the publication of summons and a notice upon the commencement of the prescribed #udicial proceedings for the escheat of unclaimed balances7
BE131A/, past experience has shown that the cost of publication reuired by law, the increase of which has been substantial the past few years, is more than the aggregate amount of the unclaimed balances to be escheated, the average amount of which is small7 BE131A/, there is a felt need to simplify the procedure for the escheat of unclaimed balances for the purpose of reducing the expenses therefore7 &2B, 4E131@231, I, @13%I&A&% 1. !A302/, President of the Philippines, by virtue of the powers in me vested by the 0onstitution, do hereby decree and order5
Sec!"# 1. /ections ', *, =, 8, and 6 of Act &o. =)= are hereby amended to read as follows5 H/ec. '. H?nclaimed balancesH, within the meaning of this Act, shall include credits or deposits of money, bullion, security or other evidence of indebtedness of any kind, and interest thereon with banks, buildings and loan associations, and trust corporations, as hereinafter defined, in favor of any person known to be dead or who has not made further deposits or withdrawals during the preceding ten years or more. /uch unclaimed balances, together with the increase and proceeds thereof, shall be deposited with the 4reasurer of the Philippines to the credit of the Government of the 3epublic of the Philippines to be used as the &ational Assembly may direct. H"anksH, Hbuilding and loan associationsH and Htrust corporationsH, within the meaning of this Act, shall refer to institutions defined under /ection two, thirty
from the date of filing thereof5 Provided, 4hat immediately before filing the above sworn statement, the bank, building and loan association, and trust corporation shall communicate with the person in whose favor the unclaimed balance stands at his last known place of residence or post office address. HIt shall be the duty of the 4reasurer of the Philippines to inform the /olicitor General from time to time the existence of unclaimed balances held by banks, building and loan associations, and trust corporations. H/ec. =. Bhenever the /olicitor General shall be informed of such unclaimed balances, he shall commence an action or actions in the name of the People of the 3epublic of the Philippines in the 0ourt of @irst Instance of the province or city where the bank, building and loan association or trust corporation is located, in which shall be #oined as parties the bank, building and loan association or trust corporation and all such creditors or depositors. All or any of such creditors or depositors or banks, building and loan association or trust corporations may be included in o ne action. /ervice of process in such action or actions shall be made by delivery of a copy of the complaint and summons to the president, cashier, or managing officer of each defendant bank, building and loan association or trust corporation and by publication of a copy of such summons in a newspaper of general circulation, either in 1nglish, in @ilipino, or in a local dialect, published in the locality where the bank, building and loan association or trust corporation is situated, if there be any, and in case there is none, in the 0ity of !anila, at such time as the court may order. ?pon the trial, the court must hear all parties who have appeared therein, and if it be determined that such unclaimed balances in any defendant bank, building and loan association or trust corporation are unclaimed as hereinbefore stated, then the court shall render #udgment in favor of the Government of the 3epublic of the Philippines, declaring that said unclaimed balances have escheated to the Government of the 3epublic of the Philippines and commanding said bank, building and loan association or trust corporation to forthwith deposit the same with the 4reasurer of the Philippines to credit of the Government of the 3epublic of the Philippines to be used as the &ational Assembly may direct. HAt the time of issuing summons in the action above provided for, the clerk of court shall also issue a notice signed by him, giving the title and number of said action, and referring to the complaint therein, and directed to all persons, other than those named as defendants therein, claiming any interest in any unclaimed balance mentioned in said complaint, and reuiring them to appear within sixty days after the publication or first publication, if there are several, of such summons, and show cause, if they have any, why the unclaimed balances involved in said action should not be deposited with the 4reasurer of the Philippines as in this Act provided and notifying them that if they do not appear and show cause, the Government of the 3epublic of the Philippines will apply to the court for the relief demanded in the complaint. A copy of said notice shall be attached to, and published with the copy of, said summons reuired to be published as above, and at the end of the copy of such notice so published, there shall be a statement of the date of publication, or first publication, if there
are several, of said summons and notice. Any person interested may appear in said action and become a party thereto. ?pon the publication or the completion of the publication, if there are several, of the summons and notice, and the service of the summons on the defendant banks, building and loan associations or trust corporations, the court shall have full and complete #urisdiction in the 3epublic of the Philippines over the said unclaimed balances and over the persons having or claiming any interest in the said unclaimed balances, or any of them, and shall have full and complete #urisdiction to hear and determine the issues herein, and render the appropriate #udgment thereon. H/ec. 8. If the president, cashier or managing officer of the bank, building and loan association, or trust corporation neglects or refuses to make and file the sworn statement reuired by this action, such bank, building and loan association, or trust corporation shall pay to the Government the sum of five hundred pesos a month for each month or fraction thereof during which such default shall continue. H/ec. 6. Any bank, building and loan association or trust corporation which shall make any deposit with the 4reasurer of the Philippines in conformity with the provisions of this Act shall not thereafter be liable to any person for the same and any action which may be brought by any person against in any bank, building and loan association, or trust corporation for unclaimed balances so deposited with the 4reasurer of the Philippines shall be defended by the /olicitor General without cost to such bank, building and loan association or trust corporation.H
Sec!"# $. 4his %ecree shall take effect immediately. %2&1 in the 0ity of !anila, this *nd day of April, in the year of 2ur >ord, nineteen hundred and seventy
SA)PLE CASE
1& "A&0
G.R. N". L<1&10&
Dece3e %0, 1*&1
REPUBLIC OF THE PHILIPPINES, plaintiff
PHILIPPINE NATIONAL BANK, ET AL., defendants, THE FIRST NATIONAL CITY BANK OF NEW YORK, defendant
BAUTISTA ANGELO, J.: 4he 3epublic of the Philippines filed on /eptember *6, ')6( before the 0ourt of @irst Instance of !anila a complaint for escheat of certain unclaimed bank deposits balances under the provisions of Act &o. =)= against several banks, among them the @irst &ational 0ity "ank of &ew ork. It is alleged that pursuant to /ection * of said Act defendant banks forwarded to the 4reasurer of the Philippines a statement under oath of their respective managing officials of all the credits and deposits held by them in favor of persons known to be dead or who have not made further deposits or withdrawals during the period of '9 years or more. Bherefore, it is prayed that said credits and deposits be escheated to the 3epublic of the Philippines by ordering defendant banks to deposit them to its credit with the 4reasurer of the Philippines. In its answer the @irst &ational 0ity "ank of &ew ork claims that, while it admits that various savings deposits, preegislature may direct. It would appear that the term Hunclaimed balancesH that are sub#ect to escheat include credits or deposits money, or other evidence of indebtedness of any kind with banks, in favor of any person unheard from for a period of '9 years or more. And as correctly stated by the trial court, the term
HcreditH in its usual meaning is a sum credited on the books of a company to a person who appears to be entitled to it. It presupposes a creditoribby vs. Eopkins, '98 ?./. =9=, =9)7 Prudential Insurance 0o. of America vs. &elson, '9' @. *d, 88', 88=7 "arnes vs. 4reat, ( !ass. *(', *(8. 4he same is true with the term HdepositsH in banks where the relationship created between the depositor and the bank is that of creditor and debtor $Article ')-9, 0ivil 0ode7 Gullas vs. &ational "ank, * Phil. )'67 Gopoco Grocery, et al. vs. Pacific 0oast "iscuit 0o., et al., 6 Phil. 88=. 4he uestions that now arise are5 %o demand draft and telegraphic orders come within the meaning of the term HcreditsH or HdepositsH employed in the lawC 0an their import be considered as a sum credited on the books of the bank to a person who appears to be entitled to itC %o they create a creditoraw $Act &o. *9=' does not operate as an assignment of funds in the hands of the drawee who is not liable on the instrument until he accepts it. 4his is the clear import of /ection '*(. It says5 HA bill of exchange of itself does not operate as an assignment of the funds in the hands of the drawee available for the payment thereon and the drawee is not liable on the bill unless and until he accepts the same.H In other words, in order that a drawee may be liable on the draft and then become obligated to the payee it is necessary that he first accepts the same. In fact, our law reuires that with regard to drafts or bills of exchange there is need that they be presented either for acceptance or for payment within a reasonable time after their issuance or after their last negotiation thereof as the case may be $/ection (', Act *9='. @ailure to make such presentment will discharge the drawer from liability or to the extent of the loss caused by the delay $/ection '-, Ii . /ince it is admitted that the demand drafts herein involved have not been presented either for acceptance or for payment, the inevitable conseuence is that the appellee bank never had any chance of accepting or re#ecting them. erily, appellee bank never became a debtor of the payee
concerned and as such the aforesaid drafts cannot be considered as credits sub#ect to escheat within the meaning of the law. "ut a demand draft is very different from a cashiers or managers cheek, contrary to appellants pretense, for it has been held that the latter is a primary obligation of the bank which issues it and constitutes its written promise to pay upon demand. 4hus, a cashiers che ck has been clearly characterized in In Re "ank of the ?nited /tates, *(( &../. ). '99, as follows5 A cashiers check issued by a bank, however, is not an ordinary draft. 4he latter is a bill of exchange payable demand. It is an order upon a third party purporting to drawn upon a deposit of funds. rin$#ll %. !o%ios St#te "#n$ , '' &.%. '9, -- &.B. (*8, 6( >.3.A. =8', )6 Am. /t. 3ep. )=7 /tate v. 4yler 0ounty /tate "ank $4ex. 0om. App. *(( /.B. *6, 8* A.>.3. '=8(. A cashiers check is of a very different character. It is the primary obligation of the bank which issues it $&issenbaum v. /tate, =- Ga. App. *6=, /.1. (( and constitutes its written promise to pay upon demand $/teinmetz v. /chultz, 6) /.%. 9=, *8' &.B. (=8.... 4he following definitions cited by appellant also confirm this view5 A cashiers check is a check of the banks cashier on his or another bank. It is in effect a bill of exchange drawn by a bank on itself and accepted in advance by the act of issuance $'9 0.+./. 89). A cashiers check issued on reuest of a depositor is the substantial euivalent of a certified check and the deposit represented by the check passes to the credit of the checkholder, who is thereafter a depositor to that amount $>ummus 0otton Gin 0o. v. Balker, (9 /o. (68, (6, ')6 Ala. 66*. A cashiers check, being merely a bill of exchange drawn by a bank on itself, and accepted in advance by the act of issuance, is not sub#ect to countermand by the payee after endorsement, and has the same legal effects as a certificate deposit or a certified check $Balker v. /ellers, (( /o. ('6, *9' Ala. '-). A demand draft is not therefore of the same category as a cashiers check which should come within the purview of the law. 4he case, however, is different with regard to telegraphic payment order. It is said that as the transaction is for the establishment of a telegraphic or cable transfer the agreement to remit creates a contractual obligation has been termed a purchase and sale transaction $) 0.+./. =-. 4he purchaser of a telegraphic transfer upon making payment completes the transaction insofar as he is concerned, though insofar as the remitting bank is concerned the contract is executory until the credit is established $ Ii . Be agree with the following comment the /olicitor General5 H4his is so because the drawer bank was already paid the value of the telegraphic transfer payment order. In the particular cases under consideration it appears in the books of the defendant bank that the amounts represented by the telegraphic payment orders appear in the names of the respective payees. If the latter ch oose to demand payment of their telegraphic
transfers at the time the same was $were received by the defendant bank, there could be no uestion that this bank would have to pay them. &ow, the uestion is, if the payees decide to have their money remain for sometime in the defendant bank, can the latter maintain that the ownership of said telegraphic payment orders is now w ith the drawer bankC 4he latter was already paid the value of the telegraphic payment orders otherwise it would not h ave transmitted the same to the defendant bank. Eence, it is absurd to say that the drawer banks are still the owners of said telegraphic payment orders.H BE131@231, the decision of the trial court is hereb y modified in the sense that the items specifically referred to and listed under paragraph = of appellee banks answer representing telegraphic transfer payment orders should be escheated in favor of the 3epublic of the Philippines. &o costs. Rees, ."./., "#rrer#, P#rees, ion #n e /eon, ++., concur. "en&on, C.., P#ill#, /#r#or #n Concepcion, ., took no part.
