Liability under the Deposit Secrecy Law

Current controversies involving unexplained wealth, claims against conjugal assets, smuggling, bribery, fraud and money laundering most likely involve funds placed in bank deposits. An inquiry on these funds would most likely also get the response that the disclosure would violate the law.

That law should be carefully looked at for guidance on specific questions such as what cannot be disclosed, what are the prohibited acts, who can be held liable, and what is the penalty for violations. Another issue is whether information obtained in violation of law is admissible in court.

In so far as peso deposits are concerned, that law is Republic Act No. 1405, as amended. It is a penal law because it subjects the offender to imprisonment or fine. Being a penal law, it is strictly construed against the State and liberally in favor of the accused (US vs. Abad Santos, 36 Phil. 243).

The accounts that cannot be looked into or disclosed are deposits and investments in government bonds. The Supreme Court added a third item, namely, trust accounts (Ejercito vs. Sandiganbayan, 509 SCRA 190). The law will not however apply to bank accounts in a closed bank, inasmuch as said entity is no longer a “banking institution” within the spirit and letter of the law (Soriano vs. Gutierrez and Manuzon, G.R. No. 174944, Jan. 24, 2007).

There are two (2) prohibited acts under R. A. No. 1405. The first is the examination, inquiry or looking into deposits and investments in government bonds “by any person, government official, bureau or office” without lawful authority to do so. The second prohibited act is the disclosure of such information by “any official or employee of a banking institution” to a person who is not authorized to receive the information. The overt acts which are punishable therefore involve either the examination, inquiry or looking into or the disclosure of deposits and investments in government bonds.

For the first prohibited act, the persons who can be held liable are any person, whether he is a public officer or not, and a “government official, bureau or office”. The words “bureau or office “would obviously refer to the officers of the bureau or office concerned since penal laws can only be enforced against natural persons. For the second prohibited act, the same can be committed only by officials and employees of banks. A hypothetical question is whether an official of a bank who has already retired or resigned at the time of disclosure can be held liable. Technically, he is no longer an official of the bank and as mentioned above a penal law like R. A. No. 1405 is strictly construed against the State and liberally in favor of the accused. The penalties for violations would be imprisonment of not more than five (5) years, or a fine of not more than R20,000, or both such imprisonment and fine, in the discretion of the court.

On whether information unlawfully obtained may be submitted in evidence, R.A. No. 1405 is silent on the admissibility of records obtained in violation of law. In the case of Ejercito vs. Sandiganbayan, above cited, the Supreme Court ruled that it is not inclined to apply the exclusionary rule, citing the case of US vs. Frazin. .

***** The above comments are the personal views of the writer. His email address is jzuniga@bsp.gov.ph