REPUBLIC ACT NO.1405
AN ACT PROHIBITING DISCLOSURE OF OR INQUIRY INTO, DEPOSITS WITH ANY BANKING
INSTITUTION
AND PROVIDING PENALTY THEREFOR
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 in 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.
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are inconsistent with the provisions of this Act are hereby repealed.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
REPUBLIC ACT No. 6426
AN ACT INSTITUTING A FOREIGN CURRENCY DEPOSIT SYSTEM IN THE PHILIPPINES, AND FOR
OTHER PURPOSES.
Section 1. Title.– This act shall be known as the "Foreign Currency Deposit Act of the Philippines."
Section 2. Authority to deposit foreign currencies. – Any person, natural or juridical, may, in accordance
with the provisions of this Act, deposit with such Philippine banks in good standing, as may, upon
application, be designated by the Central Bank for the purpose, foreign currencies which are acceptable
as part of the international reserve, except those which are required by the Central Bank to be
surrendered in accordance with the provisions of Republic Act Numbered two hundred sixty-five
(Now Rep. Act No. 7653).
Section 3. Authority of banks to accept foreign currency deposits. – The banks designated by the Central
Bank under Section two hereof shall have the authority:
(1) To accept deposits and to accept foreign currencies in trust Provided, That numbered
accounts for recording and servicing of said deposits shall be allowed;
(2) To issue certificates to evidence such deposits;
(3) To discount said certificates;
(4) To accept said deposits as collateral for loans subject to such rules and regulations as may be
promulgated by the Central Bank from time to time; and
(5) To pay interest in foreign currency on such deposits.
Section 4. Foreign currency cover requirements. – Except as the Monetary Board may otherwise
prescribe or allow, the depository banks shall maintain at all times a one hundred percent foreign
currency cover for their liabilities, of which cover at least fifteen percent shall be in the form of foreign
currency deposit with the Central Bank, and the balance in the form of foreign currency loans or
securities, which loans or securities shall be of short term maturities and readily marketable. Such foreign
currency loans may include loans to domestic enterprises which are export-oriented or registered with the
Board of Investments, subject to the limitations to be prescribed by the Monetary Board on such loans.
Except as the Monetary Board may otherwise prescribe or allow, the foreign currency cover shall be in
the same currency as that of the corresponding foreign currency deposit liability. The Central Bank may
pay interest on the foreign currency deposit, and if requested shall exchange the foreign currency notes
and coins into foreign currency instruments drawn on its depository banks. (As amended by PD No.
1453, June 11, 1978.)
Depository banks which, on account of networth, resources, past performance, or other pertinent criteria,
have been qualified by the Monetary Board to function under an expanded foreign currency deposit
system, shall be exempt from the requirements in the preceding paragraph of maintaining fifteen percent
(15%) of the cover in the form of foreign currency deposit with the Central Bank. Subject to prior Central
Bank approval when required by Central Bank regulations, said depository banks may extend foreign
currency loans to any domestic enterprise, without the limitations prescribed in the preceding paragraph
regarding maturity and marketability, and such loans shall be eligible for purposes of the 100% foreign
currency cover prescribed in the preceding paragraph. (As added by PD No. 1035.)
Section 5. Withdrawability and transferability of deposits. – There shall be no restriction on the withdrawal
by the depositor of his deposit or on the transferability of the same abroad except those arising from the
contract between the depositor and the bank.
Section 6. Tax exemption. – All foreign currency deposits made under this Act, as amended by PD No.
1035, as well as foreign currency deposits authorized under PD No. 1034, including interest and all other
income or earnings of such deposits, are hereby exempted from any and all taxes whatsoever
irrespective of whether or not these deposits are made by residents or nonresidents so long as the
deposits are eligible or allowed under aforementioned laws and, in the case of nonresidents, irrespective
of whether or not they are engaged in trade or business in the Philippines. (As amended by PD No.
1246, prom. Nov. 21, 1977.)
Section 7. Rules and regulations. – The Monetary Board of the Central Bank shall promulgate such rules
and regulations as may be necessary to carry out the provisions of this Act which shall take effect after
the publications in the Official Gazette and in a newspaper of national circulation for at least once a week
for three consecutive weeks. In case the Central Bank promulgates new rules and regulations decreasing
the rights of depositors, rules and regulations at the time the deposit was made shall govern.
Section 8. Secrecy of foreign currency deposits. – All foreign currency deposits authorized under
this Act, as amended by PD No. 1035, as well as foreign currency deposits authorized under PD
No. 1034, are hereby declared as and considered of an absolutely confidential nature and, except
upon the written permission of the depositor, in no instance shall foreign currency deposits be
examined, inquired or looked into by any person, government official, bureau or office whether
judicial or administrative or legislative, or any other entity whether public or private; Provided,
however, That said foreign currency deposits shall be exempt from attachment, garnishment, or
any other order or process of any court, legislative body, government agency or any
administrative body whatsoever. (As amended by PD No. 1035, and further amended by PD No.
1246, prom. Nov. 21, 1977.)
Section 9. Deposit insurance coverage. – The deposits under this Act shall be insured under the
provisions of Republic Act No. 3591, as amended (Philippine Deposit Insurance Corporation), as well as
its implementing rules and regulations: Provided, That insurance payment shall be in the same currency
in which the insured deposits are denominated.
Section 10. Penal provisions. – Any willful violation of this Act or any regulation duly promulgated by the
Monetary Board pursuant hereto shall subject the offender upon conviction to an imprisonment of not less
than one year nor more than five years or a fine of not less than five thousand pesos nor more than
twenty-five thousand pesos, or both such fine and imprisonment at the discretion of the court.
Section 11. Separability clause. – The provisions of this Act are hereby declared to be separable and in
the event one or more of such provisions are held unconstitutional, the validity of other provisions shall
not be affected thereby.
Section 12. Repealing clause. – All acts, executive orders, rules and regulations, or parts thereof, which
are inconsistent with any provisions of this Act are hereby repealed, amended or modified accordingly,
without prejudice, however, to deposits made thereunder.
Section 12-A. Amendatory enactments and regulations. – In the event a new enactment or regulation is
issued decreasing the rights hereunder granted, such new enactment or regulation shall not apply to
foreign currency deposits already made or existing at the time of issuance of such new enactment or
regulation, but such new enactment or regulation shall apply only to foreign currency deposits made after
its issuance. (As added by PD No. 1246, prom. Nov. 21, 1977.)
Section 13. Effectivity. – This Act shall take effect upon its approval.
Approved, April 4, 1974
NOTES ON BANK SECRECY LAW (RA 1405)
What is the purpose of the law?
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 in the economic development of the country. (RA 1405)
-
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.
I. RULES AS TO PESO DEPOSITS:
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. (SECTION 2, RA 1405)
However, this rule is not absolute.
The following are the exceptions to the bank secrecy law:
1. Written permission or consent in writing by the depositor;
2. In cases of impeachment;
3. Upon order of the court in cases of bribery or dereliction of duty of public officials;
4. Upon order of the court in cases where the money deposited or invested is the
subject matter of the litigation;
5. Upon order of the competent court or tribunal in cases involving unexplained wealth
under the Anti – Graft and Corrupt Practices Act, RA No. 3019. (BANGKO Filipino v.
Purisima, 161 SCRa 576)
6. Under 1997 NIRC – Section 6(f) of the National Internal Revenue Code (ra8424)
authorizes the BIB Commissioner to inquire into bank deposits of:
a. A decedent to determine his gross estate.
b. Any taxpayer who has filed an application for compromise of his tax liability by
reason of financial incapacity to pay his tax liability
7. Under the AMLA - The Anti-Money Laundering Council (AMLC) may inquire into any
deposit or investment, including, related accounts pursuant to a court order, where
there is probable cause that the deposits are related to an unlawful activity or money
laundering offense;
8. Under the AMLA - The AMLC can examine bank accounts, without a court order,
where there is probable cause that the deposits are related to certain crimes such as:
a. Kidnapping for ransom under Article 267 of the Revised Penal Code
b. Violation of the Dangerous Drugs Act of 2002
c. Hijacking and other violations under RA 6235
d. Destructive arson and murder under the Revised Penal Code, including those
perpetrated by terrorists against non-combatant persons and similar targets
e. Felonies or offenses of a nature similar to those mentioned above which are
punishable under the penal laws of other countries
f. Terrorism and conspiracy to commit terrorism as defined and penalized under RA
9372. (Sec. 2, RA 10617)
9. Under the New Central Bank Act - The Bangko Sentral can examine bank accounts
a. In DOSRI loans
b. Periodic or special examinations by the Bangko Sentral ng Pilipinas (Sec. 25, RA
7653)
10. Under the Unclaimed Balances Act – Disclosure to the Treasurer of the Philippines
of dormant deposits for at least 10 years. (Sec. 2, Act 3936)
11. Under the Human Security Act – The justices of the Court of Appeals designated as
a special court to handle anti-terrorism cases may authorize the examination of bank
deposits of:
a. A person charged with or suspected of the crime of terrorism or conspiracy to
commit terrorism,
b. A judicially declared and outlawed terrorist organization, association or group of
persons, and
c. A member of such judicially declared and outlawed organization, association or
group of persons. (Sec. 27, RA 9372).
12. Under Sec. 17, RA 6848, Charter of the Al Amanah Islamic Investment Bank,upon
compliance with the ff. requisites:
a. Inspection by the bank auditor
b. Upon written permission by the depositor
c. In cases where the money deposited or the transaction concerned is the subject
of a court order.
13. Under RA 6770, the Ombudsman Act of 1989 - In- Camera Inspection by the
Ombudsman
The Supreme Court ruled in the case of Marquez v. Desierto (G.R. No.135882, June
27, 2001) – “We rule that before an in camera inspection may be allowed, there must be
a pending case before a court of competent jurisdiction. Further, the account must
be clearly identified, the inspection limited to the subject matter of the pending case
before the court of competent jurisdiction. The bank personnel and the account holder
must be notified to be present during the inspection, and such inspection may cover
only the account identified in the pending case”.
14. In the examination of deposits of persons charged with the crime of plunder.
(Ejercito v. Sandiganbayan, G.R. Nos. 157294-95, Nov. 30,2006).
15. In the examination of deposits in compliance with orders of garnishment. (China
Banking Corporation v. Ortega, G.R. No.34964, Jan. 31, 1973).
NOTE: 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.
II. FOREIGN CURRENCY DEPOSITS ( RA 6426)
The above – enumerated exceptions do not apply to foreign currency deposits. There
is only one exception under the Foreign Currency Deposits Act. Although there are
additional exceptions under special laws.
The exceptions are the following:
a. When there is written consent of depositor under Section 8 of the Foreign
Currency Deposits Act.
Section 8. Secrecy of foreign currency deposits. – All foreign currency deposits
authorized under this Act, as amended by PD No. 1035, as well as foreign
currency deposits authorized under PD No. 1034, are hereby declared as and
considered of an absolutely confidential nature and, except upon the written
permission of the depositor, in no instance shall foreign currency deposits be
examined, inquired or looked into by any person, government official, bureau or
office whether judicial or administrative or legislative, or any other entity whether
public or private; Provided, however, That said foreign currency deposits shall
be exempt from attachment, garnishment, or any other order or process of
any court, legislative body, government agency or any administrative body
whatsoever. (As amended by PD No. 1035, and further amended by PD No.
1246, prom. Nov. 21, 1977.)
b. Under Sec.11 of the Anti – Money Laundering Act
SEC. 11. Authority to Inquire into Bank Deposits. — Notwithstanding the
provisions of Republic Act No. 1405, as amended; Republic Act No. 6426, as
amended; Republic Act No. 8791, and other laws, the AMLC may inquire into or
examine any particular deposit or investment with any banking institution
or non-bank financial institution upon order of any competent court in cases
of violation of this Act when it has been established that there is probable
cause that the deposits or investments involved are in any way related to a
money laundering offense: Provided, That this provision shall not apply to
deposits and investments made prior to the effectivity of this Act.
c. Under Section 27 and 28 of the Human Security Act.
Under the Human Security Act – The justices of the Court of Appeals designated
as a special court to handle anti-terrorism cases may authorize the examination
of bank deposits of:
a. A person charged with or suspected of the crime of terrorism or conspiracy to
commit terrorism,
b. A judicially declared and outlawed terrorist organization, association or group
of persons, and
c. A member of such judicially declared and outlawed organization, association
or group of persons. (Sec. 27, RA 9372).
GARNISHMENT OF BANK DEPOSITS
RULE: Bank accounts may be garnished by the creditors of the depositor. There is no
violation of the Bank Secrecy Law if the accounts are garnished. ( China Bank v.
Ortega, 49 SCRA 356).
As a rule, foreign currency deposits cannot be garnished.
Exception:
In the case of Salvacion vs. Central Bank of the Phils and China Bank which
allowed the attachment of the foreign currency deposit of an American tourist who raped
and kidnapped a 12 year old Filipino child. This was based on the grounds of equity.
What is the meaning of Garnishment?
In this case, the SC gave the definition of garnishment.
BANK OF THE PHILIPPINE ISLANDS, Petitioner,
vs.
CARLITO LEE, Respondent.
Garnishment has been defined as a specie of attachment for reaching credits belonging
to the judgment debtor and owing to him from a stranger to the litigation.A writ of
attachment is substantially a writ of execution except that it emanates at the beginning,
instead of at the termination, of a suit. It places the attached properties in custodia legis,
obtaining pendente lite a lien until the judgment of the proper tribunal on the plaintiff’s
claim is established, when the lien becomes effective as of the date of the levy.
By virtue of the writ of garnishment, the deposits of the defendants with Citytrust were
placed in custodia legis of the court. From that time onwards, their deposits were under
the sole control of the RTC and Citytrust holds them subject to its orders until such time
that the attachment or garnishment is discharged, or the judgment in favor of Lee is
satisfied or the credit or deposit is delivered to the proper officer of the court.Thus,
Citytrust, and thereafter BPI, which automatically assumed the former’s liabilities and
obligations upon the approval of their Articles of Merger, is obliged to keep the deposit
intact and to deliver the same to the proper officer upon order of the court.