Law o n Secr ecy

o f Ban k Dep o sit s

(R.A. No . 1405, as am en d ed )

PURPOSE

(1) To g ive en co u r ag em en t t o t h e p eo p le t o d ep o sit t h eir m o n ey in

b an kin g in st it u t io n s an d t o d isco u r ag e p r ivat e h o ar d in g ; an d
(2) So t h at t h e p eo p le‟s m o n ey m ay b e p r o p er ly u t ilized b y b an ks in
au t h o r ized lo an s t o assist in t h e eco n o m ic d evelo p m en t o f t h e co u n t r y.
(Sec. 1)
Th e ab so lu t e co n f id en t ialit y r u le in R.A. No . 1405 act u ally aim s at
p r o t ect io n f r o m u n w ar r an t ed in q u ir y o r in vest ig at io n if t h e p u r p o se o f
su ch in q u ir y o r in vest ig at io n is m er ely t o d et er m in e t h e exist en ce an d
n at u r e, as w ell as t h e am o u n t o f t h e d ep o sit in an y g iven b an k acco u n t .
(China Banking Corp. v. Ortega, 1973)

PROHIBITED ACTS

(1) No p er so n , g o ver n m en t o f f icial, b u r eau o r o f f ice m ay exam in e,

in q u ir e in t o o r lo o k in t o su ch d ep o sit s; an d (2) No o f f icial o r em p lo yee
o f an y b an kin g in st it u t io n m ay d isclo se t o an y u n au t h o r ized p er so n an y
in f o r m at io n co n cer n in g said d ep o sit s. (Sec. 3)

DEPOSITS COVERED

All peso-denominated deposits of whatever nature w it h b an ks o r b an kin g

in st it u t io n s in t h e Ph ilip p in es ar e h er eb y co n sid er ed as o f an ab so lu t ely
co n f id en t ial n at u r e an d may not be examined. [N.B. Th e co n f id en t ialit y o f
f o r eig n cu r r en cy d ep o sit s is g o ver n ed b y t h e Fo r eig n Cu r r en cy Dep o sit
Act .]

In clu d es in vest m en t s in b o n d s issu ed b y t h e Ph ilip p in e Go ver n m en t , it s

p o lit ical su b d ivisio n s an d it s in st r u m en t alit ies, r eg ar d less o f t h e
cu r r en cy o f d en o m in at io n . (Sec. 2)

Un d er t h e RA 1405, b an k d ep o sit s ar e st at u t o r ily p r o t ect ed o r

r eco g n ized zo n es o f p r ivacy. (People v. Estrada, G.R. No. 164368, April 2,
2009; Marquez v. Desierto, G.R. No. 135882, June 27, 2001, 359 SCRA 772; Ople
v. Torres, G.R. No. 107737. October 1, 1999, 316 SCRA 43)

Th e t er m d ep o sit s as u sed in RA 1405 is t o b e u n d er st o o d b r o ad ly an d

n o t lim it ed o n ly t o acco u n t s w h ich g ive r ise t o a cr ed it o r -d eb t o r
r elat io n sh ip b et w een t h e d ep o sit o r an d t h e b an k. If t h e m o n ey
d ep o sit ed u n d er an acco u n t m ay b e u sed b y b an ks f o r au t h o r ized lo an s
t o t h ir d p er so n s, t h en su ch acco u n t , r eg ar d less o f w h et h er it cr eat es a
cr ed it o r -d eb t o r r elat io n sh ip b et w een t h e d ep o sit o r an d t h e b an k, f alls
u n d er t h e cat eg o r y o f acco u n t s w h ich t h e law p r ecisely seeks t o p r o t ect
f o r t h e p u r p o se o f b o o st in g t h e eco n o m ic d evelo p m en t o f t h e co u n t r y.

Co n sid er in g t h e u se o f t h e p h r ase “o f w h at ever n at u r e ” RA 1405 ap p lies

n o t o n ly t o m o n ey w h ich is d ep o sit ed b u t also t o t h o se w h ich ar e
in vest ed . Th u s, t h e p r o t ect io n af f o r d ed b y RA 1405 ext en d s t o t r u st
acco u n t s. (Ejercito v. Sandiganbayan (Special Division), 2006)

EXCEPTIONS

(1) Up o n w r it t en p er m issio n o f t h e d ep o sit o r ;

(2) In cases o f im p each m en t ;
(3) Up o n o r d er o f a co m p et en t co u r t in cases o f :
(a) Br ib er y;
(b ) Der elict io n o f d u t y o f p u b lic o f f icials; o r
(4) Wh er e t h e m o n ey d ep o sit ed o r in vest ed is t h e su b ject m at t er o f t h e
lit ig at io n . (Sec. 2)

By t h e p h r ase "su b ject m at t er o f t h e act io n " is m ean t "t h e p h ysical

f act s, t h e t h in g s r eal o r p er so n al, t h e m o n ey, lan d s, ch at t els, an d t h e
like, in r elat io n t o w h ich t h e su it is p r o secu t ed , an d n o t t h e d elict o r
w r o n g co m m it t ed b y t h e d ef en d an t . (Mathay v. Consolidated Bank and Trust
Company, 1974).

We n o t e w it h ap p r o val t h e d if f er en ce b et w een t h e "su b ject o f t h e

act io n " f r o m t h e "cau se o f act io n ." We also f in d p et it io n er 's d ef in it io n
o f t h e p h r ase "su b ject m at t er o f t h e act io n " is co n sist en t w it h t h e t er m
"su b ject m at t er o f t h e lit ig at io n ," as t h e lat t er is u sed in t h e Bank
Deposits Secrecy Act.

Wh er e t h e p lain t if f is f ish in g f o r in f o r m at io n so it can d et er m in e t h e

cu lp ab ilit y o f p r ivat e r esp o n d en t an d t h e am o u n t o f d am ag es it can
r eco ver f r o m t h e lat t er . It d o es n o t seek r eco ver y o f t h e ver y m o n ey
co n t ain ed in t h e d ep o sit . Th e su b ject m at t er o f t h e d isp u t e m ay b e t h e
am o u n t o f P999,000.00 t h at p et it io n er seeks f r o m p r ivat e r esp o n d en t as
a r esu lt o f t h e lat t er 's alleg ed f ailu r e t o in f o r m t h e f o r m er o f t h e
d iscr ep an cy; b u t it is n o t t h e P999,000.00 d ep o sit ed in t h e d r aw er 's
acco u n t . By t h e t er m s o f R.A. No . 1405, t h e "m o n ey d ep o sit ed " it self
sh o u ld b e t h e su b ject m at t er o f t h e lit ig at io n . (Union Bank v. Court of
Appeals, 1999)
Th e excep t io n ap p lies t o cases o f co n cealm en t o f illeg ally acq u ir ed
p r o p er t y in an t i-g r af t cases. Th e in q u ir y in t o illeg ally acq u ir ed p r o p er t y
– o r p r o p er t y NOT "leg it im at ely acq u ir ed " – ext en d s t o cases w h er e
su ch p r o p er t y is co n cealed b y b ein g h eld b y o r r eco r d ed in t h e n am e o f
o t h er p er so n s. (Banco Filipino v. Purisima, 1988)

Th e excep t io n even ext en d s t o cases o f co n cealm en t o f illeg ally

acq u ir ed p r o p er t y n o t in vo lvin g an t i -g r af t cases as lo n g as m o n ey
d ep o sit ed w as t h e su b ject m at t er o f lit ig at io n . (Mellon Bank, N.A. v.
Magsino, 1990)

OTHER EXCEPTIONS

(1) Up o n o r d er o f a co m p et en t co u r t in cases o f u n exp lain ed w ealt h

u n d er Sec. 8 o f RA 3019 o r t h e An t i -Gr af t an d Co r r u p t Pr act ices Act (PNB
v. Gancayco, 1965;Banco Filipino v. Purisima, 1988; Marquez v. Desierto, 2001)
(2) Wh en in q u ir y is co n d u ct ed u n d er t h e au t h o r it y o f t h e Co m m issio n er
o f In t er n al Reven u e in t o t h e b an k acco u n t s o f t h e f o llo w in g :
(a) A d eced en t in o r d er t o d et er m in e h is g r o ss est at e
(b ) An y t axp ayer w h o h as f iled an ap p licat io n f o r co m p r o m ise o f h is
t ax liab ilit y, w h ich ap p licat io n sh all in clu d e a w r it t en w aiver o f h is
p r ivileg e u n d er RA 1405 o r u n d er o t h er g en er al o r sp ecial law s
Note: In f o r m at io n o b t ain ed f r o m b an ks an d f in an cial in st it u t io n s
m ay b e f u r n ish ed t o a f o r eig n t ax au t h o r it y p u r su an t t o an
exist in g co n ven t io n o r ag r eem en t . (Sec. 6(F), NIRC, as amended by
RA 10021)
(3) Up o n o r d er o f a co m p et en t co u r t in cases u n d er t h e An t i-Mo n ey
Lau n d er in g Act o f 2001 (RA 9160, h er ein af t er “AMLA”), w h en t h er e is
p r o b ab le cau se t h at t h e d ep o sit s o r in vest m en t s in vo lved ar e in an y
w ay r elat ed t o an u n law f u l act ivit y o r a m o n ey lau n d er in g o f f en se,
excep t t h at n o co u r t o r d er r eq u ir ed if :
(a) Fu n d s o r p r o p er t y in vo lved co n sist s o f in vest m en t s; o r
(b ) Said in vest m en t s ar e r elat ed t o :
(i) Kid n ap p in g f o r r an so m
(ii) Un law f u l act ivit ies u n d er Co m p r eh en sive Dr u g s Act o f 2002
(RA 9165);
(iii) Hijackin g an d o t h er vio lat io n s u n d er RA 6235; an d
(iv) Dest r u ct ive ar so n an d m u r d er , in clu d in g t h o se p er p et r at ed
b y t er r o r ist s ag ain st n o n -co m b at an t s an d sim ilar t ar g et s.
(4) BSP in q u ir y o r exam in at io n in t h e co u r se o f it s p er io d ic o r sp ecial
exam in at io n o f t h e b an k (Sec. 11, AMLA).
(5) Disclo su r e o f cer t ain in f o r m at io n ab o u t b an k d ep o sit s w h ich h ave
b een d o r m an t f o r at least 10 year s, t o t h e Tr easu r er o f t h e Ph ilip p in e in
a sw o r n st at em en t , a co p y o f w h ich is p o st ed in t h e b an k p r em ises. (Sec.
2, Unclaimed Balances Law [Act No. 3926, as amended])
(6) Th e PDIC an d /o r t h e BSP can in q u ir e in t o o r exam in e d ep o sit acco u n t s
an d all in f o r m at io n r elat ed t h er et o in case t h er e is a f in d in g o f u n saf e
an d u n so u n d b an kin g p r act ice (Sec. 8, paragraph 8, R.A. 3591, as amended by
R.A. 9576).

NOT CONSIDERED AS EXCEPTIONS

(1) In 1981, PD 1792 ad d ed t h e f o llo w in g g r o u n d s w h en t h e b an k can b e

co m p elled t o r eveal t h e am o u n t o f a d ep o sit o r :
(a) “m ad e in t h e co u r se o f a sp ecial o r g en er al exam in at io n o f a b an k
an d is sp ecif ically au t h o r ized b y t h e Mo n et ar y Bo ar d af t er b ein g
sat isf ied t h at t h er e is r easo n ab le g r o u n d t o b elieve t h at a b an k f r au d o r
ser io u s ir r eg u lar it y h as b een o r is b ein g co m m it t ed an d t h at it is
n ecessar y t o lo o k in t o t h e d ep o sit t o est ab lish su ch f r au d o r
ir r eg u lar it y,” o r
(b ) “m ad e b y an in d ep en d en t au d it o r h ir ed b y t h e b an k t o co n d u ct it s
r eg u lar au d it p r o vid ed t h at t h e exam in at io n is f o r au d it p u r p o ses o n ly
an d t h e r esu lt s t h er eo f sh all b e f o r t h e exclu sive u se o f t h e b an k. ”
Ho w ever , Sec. 135 o f RA 7653 o r t h e New Cen t r al Ban k Act exp r essly
r ep ealed PD 1792 t h er eb y r ever t in g RA 1405 t o it s ver sio n p r io r t o t h e
p r o m u lg at io n o f t h e Decr ee.
(i) Th u s, Villan u eva says t h at t h ese t w o in st an ces ar e exclu d ed f r o m t h e
en u m er at io n o f excep t io n s t o t h e secr ecy o f b an k d ep o sit s
(VILLANUEVA, Commercial Law Review, opinion).
(ii) Mo r ales, h o w ever , n o t es t h at w it h t h e en act m en t o f t h e AMLA,
excep t io n (i) h as b een su b st an t ially r esu r r ect ed (see it em s 4 an d 6 o f
“Ot h er excep t io n s” ab o ve). Wh ile t h er e is n o sim ilar d evelo p m en t o f
excep t io n (ii), t h e exclu sio n o f in d ep en d en t au d it o r s f r o m t h e co ver ag e
o f t h e Secr ecy o f Ban k Dep o sit s Law f in d s b asis in Op in io n No . 243 (s.
1975) o f t h en Secr et ar y o f Ju st ice Ped r o Tu aso n . (MORALES, The Philippine
General Banking Law, opinion)
(2) It u sed t o b e b elieved t h at t h e RA 1405 d id n o t ap p ly t o t h e
Om b u d sm an , o n acco u n t o f h is au t h o r it y u n d er Sec. 15(8) o f RA 6770 o r
t h e Om b u d sm an Act o f 1989 t o “exam in e an d h ave access t o b an k
acco u n t s an d r eco r d s.” Ho w ever , t h e SC in Mar q u ez v. Desier t o (G.R.
No.135882, June 27, 2001) and Ombudsman v. Ibay (G.R. No. 137538, September
3, 2001) r est r ict ed t h e Om b u d sm an ‟s p o w er as f o llo w s:

“[B]efore an in camera inspection may be allowed, there must be a

pending case before a court of competent jurisdiction. Fu r t h er , t h e
acco u n t m u st b e clear ly id en t if ied , t h e in sp ect io n lim it ed t o
t h e su b ject m at t er o f t h e p en d in g case b ef o r e t h e co u r t o f
co m p et en t ju r isd ict io n . Th e b an k p er so n n el an d t h e acco u n t
h o ld er m u st b e n o t if ied t o b e p r esen t d u r in g t h e
in sp ect io n ,
 an d su ch in sp ect io n m ay co ver o n ly t h e acco u n t id en t if ied
in t h e p en d in g case.” (Morales, The Philippine General Banking
Law)

“Fu r t h er , it is in t er est in g t o n o t e t h at t h e Secr et ar y o f

Ju st ice in h is Op in io n No . 13 (s. 1987) co n clu d ed t h at t h e
Pr esid en t ial Co m m issio n o n Go o d Go ver n m en t can co m p el
b an ks t o d isclo se o r p r o d u ce b an k r eco r d s
w it h o u t vio lat in g t h e b an k secr ecy law s.” (Morales, The
Philippine General Banking Law)

“Mo r eo ver , u n d er Sec. 1(d ) o f RA 6382 (1990), w h ich cr eat ed

t h e David e Co m m issio n t h at co n d u ct ed a f act f in d in g
in vest ig at io n o f t h e f ailed co u p d ‟ et at o f Decem b er 1989,
t h e co m m issio n h ad t h e p o w er t o „ask t h e Mo n et ar y b o ar d
t o d isclo se in f o r m at io n o n an d /o r g r an t au t h o r it y t o
exam in e b an k d ep o sit s, t r u st f in d s, o r b an kin g t r an sact io n s
in t h e n am e o f an d /o r u t ilized b y a p er so n , n at u r al o r
ju r id ical, u n d er in vest ig at io n b y t h e Co m m issio n , in an y b an k
o r b an kin g in st it u t io n in t h e Ph ilip p in es, w h en t h e
Co m m issio n h as r easo n ab le g r o u n d t o b elieve t h at said
d ep o sit s, t r u st o r in vest m en t f u n d s, o r b an kin g t r an sact io n s
h ave b een u sed in su p p o r t o f f u r t h er an ce o f t h e o b ject ives
o f t h e co u p d ‟ et at .‟” (Morales, The Philippine General Banking
Law)

No t w it h st an d in g t h e excep t io n s en u m er at ed b y law , t h e p r evailin g

p o licy o n t h e m at t er is t o p r eser ve t h e ab so lu t e co n f id en t ialit y en jo yed
b y b an k d ep o sit s.

In d eed , b y f o r ce o f st at u t e, all b an k d ep o sit s ar e ab so lu t ely

co n f id en t ial, an d t h at n at u r e is u n alt er ed even b y t h e leg islat ed
excep t io n s r ef er r ed t o ab o ve. Th er e is d isf avo r t o w ar d s co n st r u in g
t h ese excep t io n s in su ch a m an n er t h at w o u ld au t h o r ize u n lim it ed
d iscr et io n o n t h e p ar t o f t h e g o ver n m en t o r o f an y p ar t y seekin g t o
en f o r ce t h o se excep t io n s an d in q u ir e in t o b an k d ep o sit s. If t h er e ar e
d o u b t s in u p h o ld in g t h e ab so lu t ely co n f id en t ial n at u r e o f b an k d ep o sit s
ag ain st af f ir m in g t h e au t h o r it y t o in q u ir e in t o su ch acco u n t s, t h en su ch
d o u b t s m u st b e r eso lved in f avo r o f t h e f o r m er . Su ch a st an ce w o u ld
p er sist u n less Co n g r ess p asses a law r ever sin g t h e g en er al st at e p o licy o f
p r eser vin g t h e ab so lu t ely co n f id en t ial n at u r e o f Ph ilip p in e b an k
acco u n t s. (Republic v. Eugenio, 2008)

It is co n ced ed t h at w h ile t h e f u n d am en t al law h as n o t b o t h er ed w it h

t h e t r ivialit y o f sp ecif ically ad d r essin g p r ivacy r ig h t s r elat ive t o b an kin g
acco u n t s, t h er e, n ever t h eless, exist s in o u r ju r isd ict io n a leg it im at e
exp ect at io n o f p r ivacy g o ver n in g su ch acco u n t s. Th e so u r ce o f t h is r ig h t
o f exp ect at io n is st at u t o r y, an d it is f o u n d in R.A. No . 1405, o t h er w ise
kn o w n as t h e Ban k Secr ecy Act o f 1955. (BSB Group, Inc., v. Go, 2010)

Su b seq u en t st at u t o r y en act m en t s h ave exp an d ed t h e list o f excep t io n s

t o t h is p o licy yet t h e secr ecy o f b an k d ep o sit s st ill lies as t h e g en er al
r u le, f allin g as it d o es w it h in t h e legally r eco g n ized zo n es o f p r ivacy.
Th er e is, in f act , m u ch d isf avo r t o co n st r u in g t h ese p r im ar y an d
su p p lem en t al excep t io n s in a m an n er t h at w o u ld au t h o r ize u n b r id led
d iscr et io n , w h et h er g o ver n m en t al o r o t h er w ise, in u t ilizin g t h ese
excep t io n s as au t h o r it y f o r u n w ar r an t ed in q u ir y in t o b an k acco u n t s. It
is t h en p er ceivab le t h at t h e p r esen t leg al o r d er is o b lig ed t o co n ser ve
t h e ab so lu t ely co n f id en t ial n at u r e o f b an k d ep o sit s.

GARNISHMENT OF DEPOSITS

General rule: Th e p r o h ib it io n ag ain st exam in at io n o f o r in q u ir y in t o a

b an k d ep o sit u n d er Rep u b lic Act 1405 does not preclude its being garnished
t o in su r e sat isf act io n o f a ju d g m en t (China Banking Corporation v. Ortega,
1973; Philippine Commercial and Industrial Bank v. Court of Appeals, 1991)

“…t h e p r o h ib it io n ag ain st exam in at io n o f o r in q u ir y in t o a

b an k d ep o sit u n d er Rep u b lic Act 1405 d o es n o t p r eclu d e it s
b ein g g ar n ish ed t o in su r e sat isf act io n o f a ju d g m en t . In d eed
t h er e is n o r eal in q u ir y in su ch a case, an d if t h e exist en ce o f
t h e d ep o sit is d isclo sed t h e d isclo su r e is p u r ely in cid en t al t o
t h e execu t io n p r o cess. It is h ar d t o co n ceive t h at it w as ever
w it h in t h e in t en t io n o f Co n g r ess t o e n ab le d eb t o r s t o evad e
p aym en t o f t h eir ju st d eb t s, even if o r d er ed b y t h e Co u r t ,
t h r o u g h t h e exp ed ien t o f co n ver t in g t h eir asset s in t o cash
an d d ep o sit in g t h e sam e in a b an k.” (China Banking Corporation
v. Ortega, 1973)

Exception: Foreign Currency Deposits – Th e f o r eig n cu r r en cy d ep o sit s sh all

b e exem p t f r o m at t ach m en t , g ar n ish m en t , o r an y o t h er o r d er o r
p r o cess o f an y co u r t , leg islat ive b o d y, g o ver n m en t ag en cy o r an y
ad m in ist r at ive b o d y w h at so ever . (Sec. 8, Foreign Currency Deposit Act)

CONFIDENTIALITY OF FOREIGN
CURRENCY DEPOSITS

General rule: Fo r eig n cu r r en cy d ep o sit s ar e co n f id en t ial.

Exceptions:
(1) Up o n w r it t en p er m issio n o f t h e d ep o sit o r (Sec. 8, Fo r eig n Cu r r en cy
Dep o sit Act ; In t en g an vs CA ; 2002)
(2) Up o n o r d er o f a co m p et en t co u r t in cases o f vio lat io n o f t h e An t i-
Mo n ey Lau n d er in g Act o f 2001 [as in t h e case o f p eso d ep o sit s, su p r a]
(3) Du r in g Ban g ko Sen t r al‟s p er io d ic o r sp ecial exam in at io n s [as in t h e
case o f p eso d ep o sit s, su p r a], an d
(4) Disclo su r e o f t h e Tr easu r er o f t h e Ph ilip p in es w h en t h e u n claim ed
b alan ces law ap p lies (Act 3936, as am en d ed b y PD 679)
(5) BSP/PDIC in q u ir y if t h er e is a f in d in g o f u n saf e an d u n so u n d b an kin g
p r act ice (as in t h e case o f p eso d ep o sit s, su p r a)
(6) In Salvacion vs. CB (1997), w h er e a Filip in o ch ild w as r ap ed b y a
f o r eig n er , t h e SC allo w ed , pro hac vice, g ar n ish m en t o f f o r eig n cu r r en cy
d ep o sit s st at in g : “If w e r u le t h at t h e q u est io n ed Sect io n 113 o f CB
Cir cu lar No . 960 w h ich exem p t s f r o m at t ach m en t , g ar n ish m en t , o r an y
o t h er o r d er o r p r o cess o f an y co u r t , leg islat ive b o d y, g o ver n m en t
ag en cy o r an y ad m in ist r at ive b o d y w h at so ever , is ap p licab le t o a
f o r eig n t r an sien t , in ju st ice w o u ld r esu lt esp ecially t o a cit izen ag g r ieved
b y a f o r eig n g u est .”

PENALTIES FOR VIOLATION OF R.A. No. 1405

Im p r iso n m en t o f n o t m o r e t h an 5 year s o r a f in e o f n o t m o r e
t h an P20,000 o r b o t h , in t h e d iscr et io n o f t h e co u r t . (Sec. 5)