Banks: Applicability: Foreign Currency Deposit Act & Secrecy of Bank Deposits (2005)

Hi Yielding Corporation filed a complaint against five of its officers for violation of Section 31 of the Corporation Code. The corporation claimed that the said officers were guilty of advancing their personal interests to the prejudice of the corporation, and that they were grossly negligent in handling its affairs. Aside from documents and contracts, the corporation also submitted in evidence records of the officers‘ U.S. Dollar deposits in several banks overseas BostonBank, Bank of Switzerland, and Bank of New York. 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 Foreign Currency Deposit Act of the P hilippines. The officers alleged that their bank deposits were illegally disclosed for want of a court order, and that such deposits were not even the subject of the case against them.

A.) Will the complaint filed against the directors of Hi Yielding Corporation prosper? Explain.

SUGGESTED ANSWER: 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. It has no application at all to accounts, even though they are banks, opened and constituted abroad.

B.) Was there a violation of the Secrecy of Bank Deposits Law (Republic Act No. 1405)? Explain. (5%)

SUGGESTED ANSWER: No, because the punitive provisions of the Secrecy of Bank Deposits Law (R.A. No. 1405), including the statuto ry exemptions provided therein, are not applicable to FCDU accounts, even when constituted locally. ( Appeals, G.R. No. 128996, February 15, 2002 Banks: Collateral Security (2002)