Why is there a need to

protect the secrecy of

bank deposits?
 R.A. 1405
“Law on Secrecy of Bank
Deposits”
Amended by: PD 1792 – January 26, 1981

Further amended by: RA 7653 – June 14, 1943

 R.A 1405
Section 1. 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 the economic development of
the country.

Section 2. 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, except upon written permission of the
depositor, or in cases of impeachment, or upon order of a competent court
in cases of bribery or dereliction of duty of public officials, or in cases
where the money deposited or invested is the subject matter of the
litigation.
 R.A 1405
Section 3. It shall be unlawful for any official or employee of a banking
institution to disclose to any person other than those mentioned in Section
two hereof any information concerning said deposits.

Section 4. All Acts or parts of Acts, Special Charters, Executive Orders,

Rules and Regulations which are inconsistent with the provisions of this
Act are hereby repealed.

Section 5. Any violation of this law will subject offender upon conviction,
to an imprisonment of not more than five years or a fine of not more than
twenty thousand pesos or both, in the discretion of the court

Section 6. This Act shall take effect upon its approval.

Approved, September 9, 1955

 Table of contents
What is bank secrecy
01 law?

02 Governing laws

03 Purpose of the law

04 Rationale of the law

 Table of contents
Coverage of bank
05 secrecy law

06 Confidential nature
Construction of
07 confidentialty

08 Zone of privacy
 Table of contents
09 Prohibited acts
Bank secrecy on foreign
10 deposits
Exceptions for the
11 coverage

12 Authorized disclosures
 Table of contents
13 Garnishment
 0 What is bank
secrecy law?
1
A law that protects the confidentiality of
bank deposits and prohibits the government from
accessing them. In the Philippines, the Bank
Secrecy Law is Republic Act No. 1405, which was
enacted in 1955. The law states that all bank
deposits are confidential and cannot be examined
without the depositor’s permission, or in other
certain cases.
 Governing
0
laws
2
1. Republic Act 1405, as amended “An Act
Prohibiting Disclosure of or Inquiry into Deposits
with any Banking Institution and Providing Penalty
Therefor”

2. Republic Act 6426, as amended “An Act

Instituting a Foreign Currency Deposit System in
the Philippines, and for Other Purposes”
 0 Purpose of the
law
3
The law's purpose was to encourage people
to deposit their money in banks so that it could be
used for loans to help the country develop.
However, some say that the law's strict provisions
have been used to hinder investigations into
government officials and employees. Others have
raised concerns that the law could be used for
political harassment or to cause investors to divest
their funds.
 0 Purpose of the
law
3
Two Allied Purposes:
1. Encourage the people to deposit their money in
banking institutions, so that it may be utilized by
way of authorized loans and thereby assist in
economic development.

2. Discourage private hoarding.

 Rationale of the
0
law
4
The law was passed to encourage the
infusion of adequate capital to propel more
speedily the country's economic development. The
author of the law believed that the approval of the
law "will inject into the bloodstream of our anemic
economy the capital which we need for greater
agricultural and industrial production.
 Coverage of bank
0
secrecy law
5 Act 1405 in the Philippines, is that it
The coverage of bank secrecy law, also know
as Republic
makes all deposits of whatever nature with banks
or banking institutions in the country confidential
in nature and not readily available to anyone. This
means that the law prohibits the disclosure of bank
deposits to any person, government officials,
bureau, or office, treating them as a private matter.
The law covers all deposits in banks or
banking institutions in the Philippines, including
savings accounts, current accounts, time deposits,
 Confidential nature of bank
0
secrecy law

6
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.
This law aims to encourage the public to
deposit Their money in banking institutions by
ensuring the privacy and security of their deposit.
 Construction of
0 confidentiality
7 secrecy laws are designed to protect
Bank
the privacy of individuals’ financial information.
The concept of confidentiality in this context is
crucial for maintaining trust between banks and
their clients. It ensures that sensitive financial data
remains private, encouraging individuals to deposit
their money in banks and participate in the formal
financial system The Philippines has several laws
and regulations that protect the confidentiality of
bank deposits, including:
 Construction of
0 confidentiality
anyone7
Republic Act No. 1405.This law makes it illegal for
to examine, inquire into, or look into bank
deposits without the depositor’s written
permission. The law also prohibits bank employees
from disclosing deposit information to anyone
other than those authorized.

Revised Implementing Rules and Regulations. This

law states that the Philippines’ policy is to protect
the confidentiality of bank accounts and to prevent
the country from being used as a money laundering
 Construction of
0 confidentiality
7
Data Privacy Act of 2012 (Republic Act 10173). This
law protects the privacy of individuals and
communication while ensuring that information can
flow freely.
 0
Zone of privacy
8 "zone of privacy" in the context of bank
The
secrecy law refers to the legal principle that a
customer's financial information is protected from
unauthorized disclosure. This concept is rooted in
the idea that individuals have a right to privacy
regarding their financial dealings and transactions
with banks, and as such, banks are required to
maintain confidentiality about their customers'
accounts, unless compelled by law to reveal
information.
 Prohibited
0
acts
Prohibited acts
9
Persons liable
Examine, inquiry or looking a. Any person
into: b. Any government official
a. Bank deposit.

b. Government bond c. Any government, bureau

investment or office

Disclosure concerning bank a. Any official or

deposits b. Any employee of
banking institution
 1 Bank secrecy on foreign
deposits
0
Prohibited acts Persons liable

Examine, inquiry or a. Any person

looking into foreign b. Any government official
currency deposit without C Any government bureau
written permission of the or office
depositor. d. Any other private or
public entity.

Attach, garnish or subject c. Anyone

the FCD to any other order
or process of any court,
legislative or
 1 Bank secrecy on foreign
deposits
0
Disclosure concerning bank a. Any official
deposits b. Any employee of the banking
institution.
 Exceptions for the 1
coverage
1
A. Exceptions under RA 1405
1. Written permission of the depositor.
2. Impeachment of the president, vice president,
members of the Supreme Court, members of the
Constitutional Commission.
3. Upon order of a competent court in cases of
bribery or dereliction of duty of public officials.
4. Where the money deposited is the subject of the
litigation.
 Exceptions for the 1
coverage
B. Exceptions under other laws
1 Prosecution
5. Anti-graft and Corrupt Practices Act.
for violation of anti-graft and corrupt practices.
6. Unclaimed Balance Law. Disclosure by the bank to
the National Treasurer of information concerning
dormant deposits.
7. Philippine Deposit Insurance Commission.
Examination by PDIC when there is failure of prompt
corrective action as declared by the Monetary Board.
8. Bangko Sentral ng Pilipinas is authorized to
conduct annual testing which is limited to the
determination of the existence and true identity of
the owners of numbered accounts.
 Exceptions for the 1
coverage
B. Exceptions under other laws
9. New Central Bank Act. Directors, 1
officers,
stockholders and related interests who contract a
loan or any financial accommodation with their bank
are required to execute a written waiver of secrecy
of deposits.
10. Human Security Act. After determining existence
of probable cause, the CA may authorize
examination of and gathering of information on
deposits, placements, trust accounts, assets, and
records in a bank of the following:
a. Person charged with or suspected of the crime of
terrorism
 Exceptions for the 1
coverage
B. Exceptions under other laws
1
10. Human Security Act. After determining existence
of probable cause, the CA may authorize
examination of and gathering of information on
deposits, placements, trust accounts, assets, and
records in a bank of the following:
b. Any judicially declared and outlawed terrorist
organizations, associations, or group of persons
c. Any member of such organization, association or
group of persons in a bank and the gathering of any
relevant information about the same from the said
bank.
 Exceptions for the 1
coverage
11. The Anti-Money Laundering Act may be
1 bank
authorized to examine and inquire into
deposits or investment with banks or non-bank
financial institutions:
a. With court order, when there is a probable cause
that the deposits or investments are related to an
unlawful activity or money laundering offense.
b. Without court order in the following cases:
i. Kidnapping for ransom
ii. Violation of Comprehensive Dangerous Drugs
Act of 2002
iii. Hijacking and other violations under R.A. 6235
 Exceptions for the 1
coverageCommission on Good Government in
12. Presidential
1 the ill-
the conduct of its investigation to recover
gotten wealth accumulated by former President
Ferdinand E. Marcos, his immediate family, relatives,
subordinates and close associates, may issue
subpoenas.
13. Commission of Internal Revenue is authorized to
inquire into bank deposit accounts in relation to:
a. An application for compromise of tax liability.
b. A request for tax information of specific taxpayers
made by a foreign tax authority pursuant to a tax
treaty under The Exchange of Information on Tax
Matters Act of 2009.
 Exceptions for the 1
coverage
1
14. Commission on Audit is authorized to examine
and audit government deposits.
15. Ombudsman has the power to issue subpoena.
The power of the ombudsman may be exercised
when the following conditions concur:
a. There must be a pending case before a court of
competent jurisdiction.
b. The account must be clearly identified.
c. The inspection must be limited to the subject
matter of the pending case.
 Exceptions for the 1
coverage
1
16. Ombudsman has the power to issue subpoena.
The power of the ombudsman may be exercised
when the following conditions concur:
d. The bank personnel and the account holder must
be notified to be present during the inspection.
17. 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 connection with anti-terrorism case.
18. Coup D’ Etat Law (RA 6968)
19. Police Power. When the state exercises its police.
 Exceptions for the 1
coverage
1
C. Jurisprudence interpreting exceptions

20. Garnishment of bank deposits.

21. In cases of amendment or repeal of the law.
22. Plunder and Unexplained Wealth.
23. Court ordered examination of deposits in the
grounds of equity (Salvacion Case)
24. Examination of Foreign Currency Deposit upon
written permission of the depositor himself.
 Authorized
1
disclosures
2
Disclosures by authorized and responsible bank officials
are allowed in the following instances:
1. Reporting of unclaimed balances to the treasurer of the
Philippines.
2. Turn-over to the Commissioner of Internal Revenue of
the amount as may be sufficient to satisfy the writ of
garnishment issued to collect delinquent taxes.
3. Submission of report or turn-over to the court officer of
garnished amounts pursuant to a writ of garnishment in
satisfaction of judgment.
4. Disclosure by a bank officer or employee upon order of
the court in connection with a deposit that was used in the
perpetration of anomalies.
 1
Garnishment
3
Bank accounts may be garnished by the
General creditor of the depositor. There is no violation
Rule of the Law on Secrecy of Bank Deposits.

1. Foreign currency deposits shall be exempt

Exception from attachment, garnishment, or any other
order or process of any court, legislative
body, government agency or any other
administrative body whatsoever.
2. Those exempt under the rules of Civil
Procedure like provision for the family for four
months.

Exception to 1. Salvacion Case Equity – exceptional case;

the garnishment of foreign currency.
Exception 2. Gotianuy Case Co-payee – consent of co-
 1
Garnishment
Salvacion Case Equity
Here is a child, a 12-year old girl, who in her belief that all
3
Americans are good and in her gesture of kindness by teaching his
alleged niece the Filipino language as requested by the American,
trustingly went with said stranger to his apartment, and there she
was raped by said American tourist Greg Bartelli. Not once, but
ten times. She was detained therein for four (4) days. This
American tourist was able to escape from the jail and avoid
punishment. On the other hand, the child, having received a
favorable judgment in the Civil Case for damages in the amount of
more than P1,000,000.00, which amount could alleviate the
humiliation, anxiety, and besmirched reputation she had suffered
and may continue to suffer for a long, long time; and knowing that
this person who had wronged her has the money, could not,
however get the award of damages because of this unreasonable
law. This questioned law, therefore makes futile the favorable
judgment and award of damages that she and her parents fully
 1
Garnishment
3
IN VIEW WHEREOF, the provisions of Section 113 of CB Circular No.
960 and PD No. 1246, insofar as it amends Section 8 of R.A. 6426
are hereby held to be INAPPLICABLE to this case because of its
peculiar circumstances. Respondents are hereby REQUIRED to
COMPLY with the writ of execution issued in Civil Case No. 89-
3214, aKaren Salvacion, et al. vs. Greg Bartelli y Northcott, by
Branch CXLIV, RTC Makati and to RELEASE to petitioners the dollar
deposit of respondent Greg Bartelli y Northcott in such amount as
would satisfy the judgment.
SO ORDERED.

https://jur.ph/jurisprudence/salvacion-v-central-bank-of-the-
philippines#_
 1
Garnishment
3
Gotianuy Case Co-payee
It must be remembered that in the complaint of Jose Gotianuy
, he alleged that his US dollar deposits with Citibank were illegally
taken from him. On the other hand, China Bank employee
Cristuta Labios
testified that Mary Margaret Dee came to China Bank and deposit
ed the money of Jose
Gotianuy
in Citibank US dollar checks to the dollar account of her sister Adr
ienne Chu.[20] This fortifies our conclusion that an inquiry into the
said deposit at China Bank is justified. At the very least, Jose
Gotianuy
as the owner of these funds is entitled to a hearing on the wherea
bouts of these funds.
Thanks!
And good luck

Dana Jezryll P. Tumpang

Jorge August R. Tarnate
Andre Martin G. Molet

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