REG 3: SPECIAL COMMERCIAL LAW

The Law on Secrecy of Bank Deposits

Deposits on bank are considered as confidential and may not be
examined, inquired, or investigated by any person, other than the
depositor itself
Diligence required to the bank: Extra-ordinary diligence

Purposes
1. To encourage the people to deposit their money in banking
institutions
2. To discourage private hoarding
3. To encourage the people to deposit their money in banks
4. To discourage private hoarding so that the funds can be
used by the bank to grant loans to assist in economic
development
- for the circulation of money
- the government benefits from it
Prohibited Acts
1. Examination, inquiry, or looking into deposits and
investments in Philippine government bonds by person,
government officials, bureaus, or offices
2. Disclosure by banking institutions’ officials or employees
to unauthorized persons regarding information about
covered deposits and investments
TRANSACTIONS COVERED UNDER SECRECY OF
BANK DEPOSITS
General Rule (not absolute)

 All peso deposits of whatever nature with banks or banking

institutions in the Philippines.
 Investments in bonds issued by the government of the
Philippines, its political subdivisions, and its
instrumentalities, whether denominated in pesos or foreign
currency
 Investments in bonds in foreign currency
 Foreign currency deposits
 Funds placed in bank not in the nature of a deposit by
private individuals or entities
 Trust accounts
– debtor-creditor relationship
– the deposit of money which may be used by banks for
authorized loans to third persons
 Exemptions

 Upon written permission of the depositor

 In cases of impeachment (government officials)
 Upon order of competent court in cases of bribery and
dereliction of duty (public officials)
 In cases where the money deposited or invested is the
subject matter of litigation
o Subject matter: money in bank

Additional Exemptions:
A) In estate settlement cases, upon inquiry by the commissioner of
the BIR in the determination of the net estate of a deceased
depositor
– kelangan ireview ang bank account to compute the estate
B) In cases of offer for abatement (reduction of taxes) or
compromise settlement of a taxpayer’s tax liabilities on the
ground of financial incapacity
– para malaman ng BIR kung talagang may financial incapacity
yung taxpayer, baka may tinatago sa bank account
C) To enforce domestic laws enacted by pursuant to the country’s
bilateral and multilateral agreements for exchange of
information
– for example, sa mga VISA, kailangan magpakita ng laman ng
bank account bago maapprove
D) In cases of congressional inquiries in aid of legislation
– The Senate or any of its Committees may conduct formal
inquiries or investigations in aid of legislation

* bouncing checks
* philippine competition act
* government procurement law
*law on other business transactions
* pdic law
*secrecy of bank deposits
* angla law
* intellectual property law
* data privacy act
* e-commerce act
* di ko naintindihan hayop
* labor law
* social security law
*
GARNISHMENT
General rule:
Exemptions:
Foreign Currency Deposits shall be exempt from

 Attachment
 Garnishment – no real inquiry, just purely incidental
 Or any other order or process of any court
Truth in Lending Act
Purpose: To protect its citizens from a lack of awareness of the true
cost of credit to the user by assuring a full disclosure of such cost
with a view of preventing the ununiformed use of credit to the
detriment of the national economy

 Principal amount
 Interest
 Fees
 Service charges
 Discounts
 Other charges
 To ensure understanding before the credit is legally bound
 Mutual understanding of the stipulations upon agreement
 To give full consent as to the contract
 Otherwise, the creditor would be sanctioned
Creditor – any person engaged in the business of extending credit
who requires as an incident to the extension of credit, the payment
of a finance charge
- Regular business practice,
o Makes loans
o Sells or rents property or services
o On a time, credit, or installment basis
- either as principal or as agent
Obligation of creditors to person whom credit is extended
- Prior to the consummation: A clear statement in writing
setting forth, to the extent applicable and in accordance with
rules and regulations prescribed by the Board
Disclosures:
[1] The cash price or delivered price of the property or service
to be acquired
[2] The amounts, if any, to be credited as down payment and/or
trade-in
[3] The difference between the amounts set forth under clauses
(1) and (2)
[4] The charges, individually itemized, which are paid or to be
paid by such persons in connection with the transaction, but
which are not incident to the extension of the credit
[5] The total amount to be financed
[6] The finance charge expressed in terms of pesos and centavos,
and
[7] The percentage that the finance bears to the total amount to
be financed expressed as a simple annual rate on the
outstanding unpaid balance of the obligation

COVERED TRANSACTIONS
 Any loan, mortgage, deed of trust, advance, or discount
 Any conditional sales contract
 Any contract to sell, or sale or contract of sale of property
or services, either for present or future delivery, under
which part or all of the price is payable subsequent to the
making of such sale or contract
 Any rental-purchase contract
 Any contract or arrangement for the hire, bailment, or
leasing of property
 Any option, demand, lien, pledge, or other claim against, or
for the delivery of, property or money; any purchase, or
other acquisition of, or any credit upon the security of, any
obligation of claim arising out of any of the foregoing
 And any transaction or series of transactions having a
similar purpose or effect

CONSEQUENCES OF NON-COMPLIANCE WITH THE

OBLIGATION
 P100 or in an amount equal to twice the finance