Secrecy of Bank Deposits (RA 1405)

A. Two-fold Purpose (Section 1, RA 1405)

(a) To give encouragement to the people to deposit their money in banking institutions; and
(b) 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
B. Privacy

Zones of privacy are recognized and protected in our laws.

C. Absolute Confidentiality

all deposits of whatever nature including investment bonds issued by the government
unlawful for bank officials and employees to disclose any information concerning said deposits
1. Prohibition against inquiry into or disclosure of deposits under RA 8367 (An Act Providing for the
Regulation of the Organization and Operation of Non-stock Savings and Loan Associations)
(Section 6, RA 8367)

all deposits of whatever nature, absolutely confidential

except:
- written permission of depositor
- in cases of impeachment
- order of competent court in cases of bribery or dereliction of duty of public officials
- subject matter of litigation

2. Foreign Currency Deposits (Section 8, RA 6426)

absolutely confidential, except upon written permission of the depositor

exempt from attachment, garnishment, or any other order or process

3. Confidentiality of Deposits in Islamic Banks (Section 17, RA 6848)

all deposits of whatever nature

exceptions:
- inspection by the banks auditor
- written permission of depositor
- court order
unlawful for any official or employee of the Islamic Bank to disclose or reveal to any person any
confidential information
Exceptions to Secrecy of Deposits

A. Exceptions under the Bank Secrecy Law (Section 2, RA 1405)

written permission of the depositor

in cases of impeachment
order of competent court in cases of bribery or dereliction of duty of public officials
in cases where the money deposited or invested is the subject matter of litigation

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B. Garnishment (Rule 39, Section 9 (c), Rules of Court)

The officer may levy on debts due the judgment obligor and other credits, including bank deposits,
financial interests, royalties, commissions and other personal property not capable of manual delivery in the
possession or control of third parties.
The prohibition against examination of or inquiry into a bank deposit does not preclude its being garnished to
insure satisfaction of a judgment. (China Banking Corp v. Ortega, GR No. L- 34964, January 31, 1973)
Foreign currency deposits of Filipino depositors are not covered by the Foreign Currency Deposit Act, and are
thus not exempt from the processes duly-issued by the BIR. (Estrada v. Desierto, GR No. 156160, December
9, 2004 )

C. Secrecy and Exemption from Attachment and Garnishment of Foreign Currency Deposits Cannot be Used
as Device for Wrongdoing
Exemption from attachment, garnishment, or any other order of process of any court, legislative body,
government agency or any administrative body whatsoever, is not applicable to a foreign transient, otherwise,
injustice would result especially to a citizen aggrieved by a foreign guest. ( Salvacion v. Central Bank of the
Philippines, GR No. 94723, August 21, 1997)
D. Graft and Corruption
The Anti-Graft Law directs in mandatory terms that bank deposits shall be taken into consideration in its
enforcement, notwithstanding any provision of law to the contrary. It is intended to amend RA 1405 by providing an
additional exemption to the rule against the disclosure of bank deposits. It applies when there is a court order in
cases of unexplained wealth or inquiries into illegally acquired property or property not legitimately acquired.
(PNB v. Gancayco, 15 SCRA 91)
E. Authority to Inquire into Bank Deposits under AMLA (Section 11, RA 9160)
The AMLC may inquire into or examine any particular deposit or investment, including related
accounts, with any banking institution or non-bank financial institution upon order of competent court based on an
ex parte application in cases of violations of RA 9160, where it has been established that:

there is probable cause that the deposits or investments, including related accounts, are related to
an unlawful activity defined in Section 3(i); or
money laundering offense under Section 4

No court order in the following:

kidnapping for ransom under Article 267 of the RPC

violations of Sections 4, 5, 6, 8, 9, 10, 11, 12, 13, 14, 15, and 16 of RA 9165 (Comprehensive
Dangerous Drugs Act)
hijacking and other violations under RA 6235 (Anti-Hijacking Law); destructive arson and
murder under the RPC
terrorism and conspiracy to commit terrorism under RA 9372 (Human Security Act)

F. Periodic or Special Examinations

the BSP may inquire into or examine any deposit or investment in the course of periodic or special
examination (Section 11, RA 9160)
disclosure is also allowed when the Monetary Board has reasonable ground to believe that a bank fraud or
serious irregularity has been or is being committed, or during the conduct of a banks regular audit (Marquez
v. Desierto, GR No. 135882, June 27, 2001)

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G. In Camera Inspection by the Ombudsman (Section 15 (8), RA 6770)

the Ombudsman has the power to examine and have access to bank accounts and records, with the
following conditions:
- there is a pending case
- the account must be clearly identified
- the inspection must be limited to the subject matter of the pending case
- the bank personnel and the account holder must be notified to be present during the inspection
- the inspection should cover only the account identified
mere investigation would not warrant the opening of the bank account for inspection, since it is not considered
as pending litigation (Marquez v. Desierto, GR No. 135882, June 27, 2001)

H. Preliminary Attachment (Rule 57 of the Rules of Court)

Any person who has in his possession or or under his control debts and credits such as bank deposits
belonging to a party whose property has been attached may be ordered by the court to deliver such property to
the clerk of court or sheriff.
I. Disclosure of Dormant Accounts (Section 2, RA 3936, Unclaimed Balances Act)
All banks shall forward to the Insular Treasurer a statement, under oath of their respective managing
officers, of all 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 preceding 10 years or more.
J. Authority of the Commissioner of Internal Revenue to Inquire into Deposits (Section 6 (F), NIRC)
The Commissioner is authorized to inquire into the bank deposits of and other related information held
by financial institutions:

a decedent to determine his gross estate;

any taxpayer who has filed an application for compromise of his tax liability under Section
204 (A) (2) by reason of financial incapacity;
a specific taxpayer subject of a request for the supply of tax information from a foreign tax
authority pursuant to international convention or agreement

K. Waiver by DOSRI (Section 26, NCBA)

in case the DOSRI contracts a loan or any form or financial accommodation under Section 26 of the
NCBA, he shall be required by the lending bank to waive secrecy of his deposits of whatever nature in all
banks in the Philippines
information obtained shall be held strictly confidential, may be used by the examiner only in connection with
their supervisory and examination responsibility or by the BSP in case of legal action initiated involving the
deposited account

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