On 09 September 1955, Republic Act No.

1405, otherwise known as An Act Prohibiting Disclosure of

or Inquiry into, Deposits with any Banking Institution (“Bank Secrecy Law”), was approved. This law
was enacted to encourage individuals to deposit their money in banks instead of hoarding them.

You may ask, why is there a need to protect the secrecy of bank deposits? Technically speaking, the
law prefers that money be deposited in banks so they may be properly utilized to assist in the
economic development of the country. However, it is more relevant on a practical matter. Let’s use
you dear reader as an example. Suppose that you only have P1,000 in your bank account. Surely, you
do not want any person (such as your friend, employer or any stranger) to find that out. Either you do
not want others to know that you do not have sufficient money or you simply do not feel comfortable
in people prying in your financial affairs. On the other hand, if you have P100,000,000.00 in your bank
account, you also do not want others to find that out for fear that you might be kidnapped, or
relatives might borrow from you, or simply, it’s your personal affair. In all these cases, one’s financial
status is a private matter. Transactions happening in your bank account are not just empty figures.
There are stories affixed to such transactions. Thus, these financial transactions are akin to your
personal activities which should not be easily accessible to anyone.

The Bank Secrecy Law protects all deposits of whatever nature in banks or banking institutions in the
Philippines as well as investments in government bond. This law prohibits any person, subject to the
exceptions below, from disclosing to any person any information, relative to the funds or properties
belonging to the depositors in the custody of the bank. Simply put, no one can just go to your bank
and ask for your bank balance.

As you can see, although there are many exceptions, securing such exceptions is not an easy task.
The easiest way to waive the secrecy of bank deposits is through a written waiver. Although there is
no prescribed form for a waiver, it is necessary that the waiver be made voluntarily, knowingly and
with sufficient awareness of relevant circumstances and consequences. Thus, as a matter of practice,
banks will require the depositor to state in his waiver the specific bank account, bank branch, name of
depositor, period covered by the transactions and the name of the person authorized to access the
bank account.

Republic Act No. 1405, also known as the Law on Secrecy of Bank Deposits, was enacted in
September 1955, primarily to encourage the public to invest their money in government securities
and deposit them in banking institutions, discourage private hoarding,4 and enhance protection of
privacy rights. During those times, the country needed enough capital and credit facilities to boost the
economy after the ravage of World War II.

through this law, maeencourage na ang mga tao na magdeposit since safe naman na ang account nila
kasi hindi magkakaroon ng access oir kahit silip lang ang ibang tao

yung mga naideposit gagamitin sya for authorized loans which is considered as commercial
transactions ng bank in which would help to boost the economy

the objectives of the law to deter private hoarding and to boost the economy are deemed achieved.

Deposits refers 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, time deposits

Deposit is characterized as being in the nature of a simple loan. The placing of a deposit in a bank
creates a creditor-debtor relationship between the depositor and the bank. The bank, as debtor, has
the obligation to pay a certain sum of money to the depositor, as creditor. The term “deposit of
whatever nature” is construed broadly to include accounts that may be used by banks for authorized
loans to third persons, although there is no creditor-debtor relationship arising from the account,
such as money placed under trust account

Ang mga deposits ng mga depositors sa bangko ay may malaking papel sa pagpapatakbo ng
ekonomiya ng isang bansa. Narito ang ilan sa mga paraan kung paano ito nakakatulong:

1. Pagpapautang:

 Pagpapautang sa mga negosyo: Ang mga bangko ay gumagamit ng bahagi ng mga deposito
upang ipautang sa mga negosyo. Ang perang ito ay ginagamit ng mga negosyo upang
mapalawak ang kanilang operasyon, bumili ng mga bagong kagamitan, o mag-hire ng mga
bagong empleyado. Ang mga aktibidad na ito ay nakakatulong sa paglikha ng mga trabaho at
pagpapalakas ng ekonomiya.
 Pagpapautang sa mga indibidwal: Ang mga tao ay umaabot sa mga bangko upang mag-loan
para sa iba't ibang layunin tulad ng pagbili ng bahay, kotse, o pag-aaral. Ang mga pautang na
ito ay nagbibigay-daan sa mga tao na madagdagan ang kanilang mga pag-aari at mapabuti
ang kanilang pamumuhay, na nagtutulak din sa paglago ng ekonomiya.

2. Paglikha ng Salapi:

 Fractional Reserve Banking: Ang mga bangko ay hindi kailangang i-keep ang lahat ng mga
deposito sa kanilang vault. Sa halip, sila ay nag-iingat lamang ng isang bahagi nito bilang
reserba at pinapautang ang natitira. Ang prosesong ito ay kilala bilang fractional reserve
banking. Kapag ang isang bangko ay nagpapautang, ang perang ito ay muling idineposito sa
ibang bangko, na nagreresulta sa paglikha ng mas maraming pera sa ekonomiya.

Exceptions to Absolutely Confidentiality - nagkakaroon the exceptions kasi for example yung mga
government agencies how can we make sure the walang corruption na nangyayari if di titingnan yung
deposits nila

1. Examination of the MB of the BSP

If the MB thinks after its investigation na may reasonable ground to believe that there is bank
fraud, and in order to exercise the power of MB, it is necessary for them to deposits specially those
deposits na ginagamit to perpetrate bank fraud.
The MB of the BSP may order the examination of bank accounts if it determines that bank
fraud or serious irregularity is being committed by banks.

2. During examination made by independent auditor hired by banks

The IA needs to look into the bank deposits para makapag audit
Banks are allowed to engage the services of an independent auditors to conduct regular audit.
These auditors are authorized to examine bank accounts but only for the purpose of the audit. The
results may not also be used in other legal proceedings as the same is confidential in nature. Hindi
pwedeng gamitin sa ibang purposed yung results from the audit.

3. Upon permission of the depositor

A depositor may expressly waive the confidentiality of his bank deposit. The waiver must be
in writing and freely given.

4. In cases of impeachment
In impeachment cases of government officials, the examination or looking into of deposits of the
officials concerned is allowed since it is imbued with public interest. Ex ERAP case

5. Upon order of a competent court in cases of bribery or dereliction of duty of public officials
6. In cases where the money deposited or invested is the subject matter of the litigation
If the key subject of a case in court pertains to the very bank deposit or investment, the the court
may order that such bank deposit or investment be examined

OTHER EXCEPTIONS

1. Anti graft and Corrupt Practices Act

Cases of unexplained wealth are similar to the cases of bribery or dereliction of duty.

2. Order of the Ombudsman (nagddiscipline sa mga public officials) to have an In Camera Inspection,
the bank account is inspected visully only and must comply with the following:
- there must be a pending case before the court
- the inspection must be limited to the subject matter of the pending case before the court
- the bank personnel and the account holder must be notified to be present during the
inspection
- the inspection may only cover the account identified in the pending case

3. Anti Money Laundering Act

One way para matrace if may money laundering is through the bank deposits

4. Authority of the BIR commissioner to inquired into bank deposit accounts and other related
information held by the Financial Institution.
The BIR commissioner is authorized to inquire into the bank deposits of the following:
A. A decedent to determine his gross estate
B. Any taxpayer who has filed for a comrpomise (tingnan anf BD if wala ka ba talagang pambayad)
C. A taxpayer subject of a request for the supply of tax information from a foreign tax authority
pursuant to an international convention or agreement on tax matters which the Philippines is a
signatory thereof.

5. Unclaimed Balances Act

The unclaimed balances act permits the examination of the deposits of a person who is know to
have already died. Before such examination may be allowed, the person/bank making such
examination must strictly follow the guidelines set forth by the treasurer of the Philippines.

6. PDIC
Under RA 10846, the PDIC may allow the examination, inquire into, bank deposits when the
Monetary Board of the PDIC of the Philippines determines that a bank has failed to take corrective
actions due to capital deficiency. This authority may not be exercised if the failure to take
promt/corrective action if the reason was not due to capital deficiency (pagkalugi)

7. Human Security Act of 2007 (anti terrorism)

The court of appeals may authorized in writing any police or law enforcement officer and the
members of his/her team duly authorized by the anti-terrorism council to:
a. Examine the deposits, placements, trust accounts, assets, records in a bank financial institution
b. Gather any relevant information about such deposits, placements, trust accounts, assets, and
records from a bank or financial institution
The bank concerned shall not refuses to allow such examination when so ordered by and served
with the written order of the COA
As an exception to the Bank Secrecy Law, the Human Security Act authorizes the COA to issue
orders for the examination of the bank deposits of know terrorist individuals, or terrorist groups. This
ensures that those suspected of terrorism will not be able to utilize funds for their illegal activities and
purposes.

8. New Central Bank Act

 Pag may isang director ng isang bangko tapos umutang sya sa sarili nyang bank den malaki yung
inutang nya (an amount in excess of the 5% of the capital and surplus of the bank) or maximum
amount permitted by law, he shall be required to waive the secrecy of his bank deposits

9. Examination by the Commission on Audit who is authorized to examine and audit government
deposits pertaining to the revenue and receipts of the expenditures of the Government, or any of its
subdivisions, agencies or instrumentalities, including GOCCs with original charters

10. Examintation by the PCGG who in the conduct of its investigations to recover ill gotten wealth
accumulated by former President FEM, his immediate family, relatives, subordinated,a nd close
associates.

FOREIGN CURRENCY DEPOSITS (RA 6426)

General Rule: Absolutely confidential and cannot be disclose, except for the following:
1. Written consent of the depositor
2. AMLA
3. Human Security Act
4. Examination by the BSP, PDIC, PCGG, COA
EXEMPTION FROM PROCESS OF FOREIGN CURRENCY DEPOSITS

FCD shall be exempt from attachment, garnishment, or any other order or process of any court,
legislative body, government agency or any administrative body. The process-exemption should be
distinguied from the confidentiality clause. Exemption from confidentiality clause does not necessarily
translate to exemption for process.

Garnishment is a legal process where a creditor obtains a court order to collect a debt by seizing a
portion of the debtor's wages, bank accounts, or assets. It allows creditors to recover owed funds
directly from the debtor's income or assets to satisfy outstanding debts

In other words, FCD are exempt from court order or administrative process.

So kung may kaso ka pwede mo itranslate into foreign currency deposits.

EXCEPTIONS TO THE EXEMPTION

CASE: THE SUPREME COURT ALLOWS THE GARNISHMENT OF FCD OF A FOREIGH NATIONAL WHO
RAPED A MINOR AND ESCAPED

CIVIL FORFEITURE SUIT

FREEZE ORDER
TRUTH LENDING ACT

Kung magpapautang ka dapat idisclose mo lahat ng dapat bayaran ni debtor

Who are the lenders required to disclose?

A: Banks and other financial institutions
Any person in the business of extending loans, or selling or renting property or services on a time,
credit, or installment basis, either as principal or agent