LAW ON SECRECY OF BANK DEPOSITS RA 1405

I.

POLICY OF THE LAW

Not covered:

It is hereby declared to be the policy of the Government to give

encouragement to the people to deposit their money in banking
institutions and 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. [Section 1, RA 1405]

a.

Money market placement

Not covered as they are intended to be utilized for trades in
short-term negotiable instruments (Sir Rondezs)

b.
II.

SpecCom

Safety deposit box

GENERAL RULE
Not the deposits contemplated by the law as the bank is never in
possession or control of the contents of the safety deposit box,
the depositor is merely leasing the deposit box from the bank.

All deposits of whatever nature with banks or banking institutions in

the Philippines including investments in bonds issued by the Government
of the Philippines, its political subdivisions and its instrumentalities, are
hereby considered as of an ABSOLUTELY CONFIDENTIAL NATURE and
may not be examined, inquired or looked into by any person, government
official, bureau or office. [Section 2, RA 1405]

c.

***FCDA
the Foreign Currency Deposit Act (RA 6426) allows any person
to deposit, and banks to accept for deposit ANY foreign currency
ACCEPTABLE AS PART OF OUR INTERNATIONAL RESERVE

It shall be unlawful for any official or employee of a bank to disclose to

any person, other than those mentioned in Section 2 hereof, any
information concerning said deposits. [Section 3, RA 1405]

(ii) INVESTMENTS IN GOVERNMENT BONDS refer to investments in

bonds issued by the Government of the Philippines, its political subdivisions
and its instrumentalities. Government bonds are debt securities which are
unconditional obligations of the State, and backed by its full taxing power.
Government bonds include treasury bills, treasury notes, retail treasury
bonds, dollar linked peso notes, and other risk-free bonds.

III. PROHIBITED ACTS

1.

the EXAMINATION AND INQUIRY OR LOOKING into all

deposits of whatever nature with banks or banking institutions
in the Philippines (including investments in bonds issued by the
Governments or its political subdivisions and instrumentalities)
i.
ii.
iii.
iv.

2.

by any person or
any government official
or any bureau
or any office

the DISCLOSURE by
i.
ii.

any OFFICIAL of any banking institution or

any EMPLOYEE of any banking institution

to ANY UNAUTHORIZED PERSON of any information

concerning the said deposit.

V.

EXCEPTIONS
A.
1.

(i) DEPOSITS refer to money or funds placed with a bank that can be
withdrawn on the depositors order or demand, such as deposit accounts in
the form of savings, current and time deposits.
a.

Savings and current accounts are privileged documents which

fall within the protection of Republic Act No. 1405, and their
disclosure can only be justified under any of the cases
enumerated in Section 2 of the Act. (Tatalon Barrio Council v.
Chief Accountant, 1963)

b.

The term deposits includes placements in trust departments of

banks. To hold that this type of account is not protected by the
law would encourage private hoarding of funds that could
otherwise be invested by banks in other ventures. ( Ejercito v.
SB, 2006)

Under RA 1405

upon WRITTEN PERMISSION OF THE DEPOSITOR

An oral or implied authorization does not suffice. For consent to be

valid, it should be made knowingly, voluntarily and with sufficient awareness
of the relevant circumstances and likely consequences.

2.

in cases of IMPEACHMENT of the President, Vice-President, members

of the Supreme Court, members of the Constitutional Commission
(Commission of Elections, Civil Service Commission and Commission on
Audit) and the Ombudsman for culpable violation of the Constitution,
treason, bribery, graft and corruption, other high crimes or betrayal of
public trust

IV. COVERAGE
All deposits of whatever nature in banks or banking institutions in the
Philippines and investments in government bonds are absolutely
confidential in nature. (Sec. 2, Rep. Act No. 1405)

Foreign currency covered by a separate law

3.

upon order of a competent court in cases of

I.
BRIBERY of public officials or
ii.
DERELICTION of duty of public officials

Plunder is analogous to bribery. (Ejercito v. Sandiganbayan, 509

S.C.R.A. 190[2006])

Cases of unexplained wealth are similar to cases of bribery or

dereliction of duty. (Phil. National Bank v. Gancayco, 122 Phil.
503 [1965])

The Ombudsman has the power to issue subpoena and subpoena

duces tecum, take testimony in any investigation or inquiry, as well as
examine and access bank accounts and records. The power of the
Ombudsman to subpoena deposit information of a government official may
be exercised when the following conditions concur:

LAW ON SECRECY OF BANK DEPOSITS RA 1405

(1) there must be a case pending before a court of competent
jurisdiction;
(2) the account must be clearly identified;
(3) the inspection must be limited to the subject matter of the
pending case; and
(4) the bank personnel and the account holder must be notified
to be present during the inspection. (Marquez v. Desierto,
359 S.C.R.A. 772 [2001])
4.

in cases where the money deposited or invested is the subject

matter of the litigation
The money deposited should be the very thing in
dispute. (Mellon Bank, N.A.v. Magsino, 190 S.C.R.A. 633 [1990])

B. From other laws

1.

Anti-Graft and Corrupt Practices Act cases (R.A. No. 3019)

An examination not only of the accuseds deposits, but also those of

his spouse, ascendant, descendants and relatives, and other persons as
well. (Banco Filipino v. Hon. Fidel Purisima, 161 SCRA 576 (1988).
Here, the Court declared as proper the production by subpoena duces
tecum of bank records of transactions by or in the names of the wife,
children and friends of a special agent of the BOC accused of having
allegedly acquired property manifestly out of proportion to his salary and
lawful income. The Court explained:
To sustain the petitioners theory, and restrict the inquiry only to
property held by or in the name of the government official or employee, or
his spouse and unmarried children, is unwarranted in the light of the
provisions of the statutes in question, and would make available to persons
in government who illegally acquire property an easy and fool-proof means
of evading investigation and prosecution; all they would have to do would
be to simply place the property in the possession or name of persons other
than their spouse and unmarried children.
2.

NIRC - Inquiry by the Commissioner of Internal Revenue into bank

deposits of:
a. A decedent to determine his gross estate;
b. A taxpayer who has filed an application for compromise of his tax
liability 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 (Sec. 6[f], NIRC).

3.

Disclosure to the Treasurer of the Philippines of dormant deposits for

at least 10 years under the Unclaimed Balances Act (Act No. 3936).

4.

Anti-Money Laundering Law

(a.) with court order, when there is probable cause that the
deposits or investments are related to an unlawful activity or a money
laundering offense
(Secs. 3[i] and 4 of Rep. Act No. 9160); and

SpecCom

Republic Act No. 623510, destructive arson and murder (Sec. 11 of

Republic Act No. 916011).
5. Anti-terrorism case
The Court of Appeals, designated as a special court, may issue
an order authorizing law enforcement officers to examine and gather
information on the deposits, placements, trust accounts, assets and records
in a bank or financial institution in connection with anti-terrorism case.
(Rep. Act No. 9372)
6. Unsafe/Unsound Banking Practice
The PDIC and the BSP may inquire into bank deposits when
there is a finding of unsafe or unsound banking practices. (Sec. 8, Rep. Act
No. 3591, as amended)
7. DOSRI accounts
Directors, officers, stockholders and related interests who
contract a loan or any form of financial accommodation with their bank or
related bank are required to execute a written waiver of secrecy of deposits
pursuant to The New Central Bank Act. (Sec. 26, Rep. Act No. 7653)
8. PD 1792 (Repealed by NCBA*)
a. In case of an examination, general or special, of the Monetary
Board after being satisfied that there is reasonable ground to believe that a
bank fraud or a serious irregularity has been or is being committed and that
it is necessary to look into the deposit to establish such fraud or irregularity
b. In case of an examination by an independent auditor hired by
a bank for audit purposes only and the results thereof shall be for the
exclusive use of the bank.
VI. GARNISHMENT OF BANK DEPOSITS
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 (China Banking Corporation vs. Ortega, 49 SCRA 355).
What is to be disclosed only is the existence of the deposit,
particularly whether or not it is sufficient to satisfy the garnishment. Hence,
a disclosure of the balance may constitute a violation of the law.
FCDA: FCD ARE EXEMPT from attachment, garnishment or any
other order or process of any court, legislative or administrative body, or
government agency whatsoever
The garnishment of a foreign currency deposit account of a nonresident alien found guilty of raping a minor was allowed on the basis of
equity. (Salvacion v. Central Bank of the Philippines, 278 S.C.R.A. 27
[1997])

(b.) without need of court order, when probable cause exists

that a particular deposit or investment with any banking institution is related
to certain predicate crimes, such as kidnapping for ransom, violation of the VII. PENALTY FOR VIOLATION
Comprehensive Dangerous Drugs Act, hijacking and other violations under

LAW ON SECRECY OF BANK DEPOSITS RA 1405

Any violation of this law will subject offender upon conviction to an
imprisonment of not more than five (5) years or a fine of not more than
twenty thousand pesos (P20,000) or both, in the discretion of the court.
[Section 5, RA 1405]
Any bank official, director, employee or agent who discloses
information relative to funds or properties in the custody of the bank may

SpecCom

also be held liable under the applicable provisions of the GBL, Thrift Banks
Act and Rural Banks Act. (BSP Legal Primer on Bank Secrecy Law)