Secrecy of Bank Deposits

o Purpose is to (1) give encouragement to the people to deposit their money in

banking institution and (2) discourage private hoarding of depositors so that
could be used in economic development.
o All deposits of whatever nature including investment bonds are considered
absolutely confidential and may not be examined or looked into, even by
government officials.
o RA 1405 (Bank Secrecy Law) prohibits the inquire or disclosure of deposits
o Exceptions:
 Written permission of depositor
 Impeachment
 Order of court in case of bribery or dereliction
 Subject matter of litigation
o Also applies to foreign currency deposits with the only exception of written
permission
o In Islamic banks, the exceptions are: 1. Inspection of bank auditor; 2. Written
permission by depositor; and 3. Subject matter of litigation

Additional matters:

o Accounts can be garnished to ensure satisfaction of judgment as there is no

real inquiry and some disclosures are merely incidental.
o General exemption against garnishment shall not apply to foreign transients
o Foreign currency deposits of a foreigner who was convicted of the crime of rape
may be garnished to satisfy judgment
o Under RA 1405 and Anti-Money Laundering Act, the secrecy of deposits do not
apply
o The BSP can also inquire in deposits for periodic and special examinations
o The Ombudsman has the In-Camera Inspection power to look into deposits
provided that there is a pending case in court and: 1) the account must be
properly identified; and 2) inspection is limited to the subject matter
o CIR can also look into deposits to determine gross estate of a decedent or he
has applied for compromise tax liability.
 SECRECY OF BANK DEPOSITS LAW (local currency)
R.A. No. 1405

Purpose:
1. To encourage people to deposit in banking institutions.
2. To discourage private hoarding so that banks may lend such funds and assist in the
economic development of the country.

Coverage:
All deposits of whatever nature with banks or banking institutions in the
Philippines, including investments in BONDS issued by the Government of the
Philippines, it’s political subdivisions and its instrumentalities.
It covers all bank deposits in the Philippines and no distinction was made
between domestic and foreign deposits.

Prohibited Acts:
1. Examination and inquiry or looking into all deposits, of whatever nature, with the
banks in the Philippines including investments in bonds issued by the Government.
2. Any disclosure by any official or employee of any banking institution to any
unauthorized person or any information concerning the said deposits.

General Rule:
The deposits covered by law are considered as of an absolutely confidential
nature and may not be examined, inquired or looked into by any person,
governmental bureau, or office.

Exceptions:
A. From RA 1405 (BIDS)
1. Upon written permission of the depositor;
2. In cases of impeachment;
3. Upon order of a competent court in cases of bribery or dereliction of duty of
public officials;
4. Upon the order of a competent court in cases where the money deposited or
invested is the subject matter of the litigation;

For purposes of RA 1405, the subject matter of the litigation cannot be limited
to bank accounts under the name of defendant alone, but must include those
accounts to which the money purportedly acquired illegally or a portion thereof was
alleged to have been transferred. Plunder being thus analogous to bribery must also
be applied as an exception.
B. From other Laws
1. Anti-Graft and Corrupt Pactices Act
Upon order of a competent court or tribunal in cases involving unexplained
wealth under the Anti-Graft and Corrupt Practices Act (RA 3019).
Cases of unexplained wealth are similar to cases of bribery and dereliction of
duty and there is no reason why these two classes of cases cannot be an exception
from the rule making bank deposits confidential. Inquiry into illegally acquired
property extends to cases where such property is concealed by being held by or
recorded in the name of other persons.

2. NIRC – The Commissioner of Internal Revenue may inquire into the bank deposits
of:
a. A decedent to determine his gross estate;
b. Any taxpayer who has filed an application for compromise of his tax liability
under Sec. 204 (A) by reason of financial incapacity to pay his tax liability. He must
file a written waiver of his privilege under RA 1405 or other general or special laws and
such waiver shall constitute the authority of the Commissioner to inquire into the
bank deposits of the taxpayer.

3. AMLA- Inquiry or examination by the Anti-Money Laundering Council (AMLC) upon

order of any competent court in cases of violation of the Anti-Money Laundering Law,
if there is probable cause that the deposits or investments are related to an unlawful
activity or a money laundering offense.

4. Unclaimed Balances Act- Disclosure to the Treasurer of the Philippines of dormant

deposits for at least 10 years.

Other Laws Relating to Secrecy of Bank Deposits

A. Foreign Currency Deposit Act (RA 6426)

B. General Banking Law of 2000 (RA 8791)

1. No bank employee on casual or non-regular status of employment or lengthy
probationary status must be employed by the bank in the conduct of business
involving bank deposits.
2. No director, officer, employee , or agent of any bank shall disclose, without
any court order, to any unauthorized person any information relative to the funds or
properties in the custody of the bank belonging to private individuals, corporations, or
any other entity.

C. New Central Bank Act (RA 7653)

1. DOSRI loans
 2. Periodic and special examinations by the BSP - provided that the
examination is for audit purposes only and results shall be for the exclusive use of the
bank.

Garnishment
Bank accounts may be garnished by the creditors of the depositor. There is no
violation of the Law on Secrecy of Bank Deposits if the accounts are garnished. It was
not the intention of the legislature to place bank deposits beyond the reach of
execution to satisfy final judgement. Its purpose is merely to secure information as to
the name of the depositor and whether or not the defendant had a deposit in said
bank, only for purposes of garnishment. Any disclosure is purely incidental to the
execution process.

Exception: Foreign deposits cannot be garnished (Sec.8, Foreign Currency Deposits

Act).

Penalties for Violation of RA 1045:

Imprisonment of not more than 5 years or a fine not more than Php 20,000.00
or both, upon the discretion of the court.

Foreign Currency Deposits (R.A. 6426)

Section 8. Secrecy of foreign currency deposits. – All foreign currency deposits

authorized under this Act, as amended by PD No. 1035, as well as foreign currency
deposits authorized under PD No. 1034, are hereby declared as and considered of an
absolutely confidential nature and, except upon the written permission of the
depositor, in no instance shall foreign currency deposits be examined, inquired or
looked into by any person, government official, bureau or office whether judicial or
administrative or legislative, or any other entity whether public or private; Provided,
however, That said foreign currency deposits shall be exempt from attachment,
garnishment, or any other order or process of any court, legislative body, government
agency or any administrative body whatsoever. (As amended by PD No. 1035, and
further amended by PD No. 1246, prom. Nov. 21, 1977.)

Note:
There is only one exception to the rule on confidentiality under the Foreign Currency
Act – when the depositor consents

The exceptions under the Law of Secrecy of Bank Deposits (R.A. No. 1405) do not
apply foreign currency deposits.
Nevertheless an additional exception is provided for in Anti-Money Laundering Law
(Section 11, R.A. 9194) and Human Security Act (Section 28, R.A. 9372)
Three exceptions on the secrecy of foreign deposits:
1. When there is written consent of depositor under Sec 8 of the Foreign Currency
Deposits Act;
2. when there is probable cause of money laundering as provided for under Sec 11
of the Ant-Money Laundering Act;
3. When there is probable cause of terrorism under the Human Security Act.

Applicable to Foreign Currency Deposit of Any Person

Section 8 of the Law does not distinguish if the depositor is an alien or a Filipino
citizen. It does not provide that the absolutely confidential nature of foreign currency
deposits applies only to deposits of non-resident aliens. Consequently, the
confidentiality rule applies to all foreign currency deposits whether owned by Filipinos
or aliens (resident or non-residents).