Secrecy of Bank Deposits Act (RA No. 1405)
The Bank Secrecy Act, or Republic Act No. 1405, was enacted to protect the confidentiality of bank
deposits in the Philippines. This law was approved on September 9, 1955.
The Declaration of Policy of Republic Act No. 1405, also known as the Bank Secrecy Law of the
Philippines, states:
"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."
PURPOSES
1. To encourage people to deposit in banking institutions; and
2. To discourage private hoarding so that banks may lend such funds and assist in the economic
development of the country.
COVERAGE
All types of deposits with banks or banking institutions in the Philippines, including investments
in bonds issued by the Philippine Government, its political subdivisions, and instrumentalities.
PROHIBITED ACTS
1. Inspecting, inquiring, or investigating all types of deposits in banks across the Philippines,
including investments in government-issued bonds.
2. The unauthorized disclosure by any bank official or employee of any information regarding these
deposits to an unauthorized individual.
GENERAL RULE: The deposits covered by law are considered as absolutely confidential in nature and may
not be examined, inquired, or looked into by any person, government official, bureau, or office.
EXCEPTIONS:
(a) From RA 1405 (DIBS)
i. Upon written permission of the Depositor;
ii. In cases of Impeachment;
iii. Upon order of a competent court in cases of Bribery or dereliction of duty of public officials; and
iv. Upon the order of a competent court in cases where the money deposited or invested is the Subject
matter of litigation.
(b) From Other Laws
1. Anti-Graft and Corrupt Practices Act (Republic Act No. 3019) – Upon the order of a competent
court or tribunal in cases involving unexplained wealth under the Anti-Graft and Corrupt
Practices Act.
ADDITION:
The Anti-Graft and Corrupt Practices Act, officially known as Republic Act No. 3019, is a Philippine
law enacted in 1960 to combat corruption and promote integrity in public service. It establishes
prohibited acts, penalties, and legal procedures to prevent government officials and employees
from engaging in corrupt activities that harm public trust and economic development.
Key Provisions of R.A. 3019
1. Prohibited Acts – The law defines corrupt practices, including:
o
Giving or accepting bribes
o
Influencing government contracts for personal gain
o
Misuse of public funds
o
Unexplained wealth acquisition
o
Favoring or discriminating in government transactions
o
Negligence that results in undue advantage or loss to the government
2. Penalties – Public officials found guilty of corruption may face:
o
Imprisonment
o
Fines
o
Permanent disqualification from holding public office
o
Confiscation of unexplained wealth
3. Investigation and Prosecution – The law allows the Ombudsman, Sandiganbayan (anti-graft
court), and other government agencies to investigate and prosecute corrupt officials.
4. Exceptions to the Bank Secrecy Law – Under R.A. 3019, bank deposits of public officials can be
examined by court order in cases involving unexplained wealth.
2. National Internal Revenue Code – The Commissioner of Internal Revenue may inquire into the
bank deposits of:
i. A decedent to determine his gross estate.
ii. Any taxpayer who has filed an application for compromise of his tax liability by reason of
financial incapacity to pay his tax.
For tax liability, the taxpayer must submit a written waiver of their privilege under R.A. 1405 or any other
relevant laws. This waiver serves as authorization for the Commissioner to examine the taxpayer's bank
deposits.
3. Anti-Money Laundering Act
The Anti-Money Laundering Council has the authority to investigate any deposit or investment, including
related accounts, if a competent court issues an order based on probable cause indicating that these
deposits or investments, along with related accounts, are linked to or associated with an unlawful
activity.
Exceptions:
A court order shall not be necessary in the following instances:
Kidnapping for ransom under Art. 267 RPC
Violations of the Comprehensive Dangerous Drugs Act
Hijacking and under violations under RA 6235
Destructive arson and murder, including those perpetrated by terrorists against non-combatant
persons and similar targets
Felonies or offenses of a nature similar to those mentioned above, which are punishable under
the penal laws of other countries
Terrorism and conspiracy to commit terrorism
4. Unclaimed Balances Act (Act No. 3936)
Disclosure to the Treasurer of the Philippines of dormant deposits for at least 10 years.
5. Foreign Currency Deposits Act (RA 6426)
Upon written consent of the depositor.
6. New Central Bank Act
Directors, officers, stockholders & related interests
DOSRI loans; and
Periodic and special examination by the BSP
7. In-Camera Inspection by the Ombudsman
Requisites:
i. Pending case before a court of competent jurisdiction
ii. Account must be clearly identified
iii. The inspection is limited to the subject of the pending litigation
iv. The bank personnel and account holder must be notified to be present during the inspection
v. The inspection must cover only the account identified in the pending case.
8. Other Exceptions Established by Jurisprudence
i. Examination of deposits of persons charged with the crime of plunder (Ejercito v. Sandiganbayan)
ii. Examination of deposits in compliance with orders of garnishment (China Banking Corporation v.
Ortega, G.R. No. L-34964, 31 January 1973)
iii. Court-ordered examination of deposits on grounds of equity.
IV. PENALTIES
Imprisonment of not more than five (5) years or a fine not more than PhP 20,000 or both in the
discretion of the court.
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