SBD ACA Palma, JDA

James Daniel A.
Palma ACA-4
AEC 101
1. What is the bank secrecy law in the Philippines?

The Law on Secrecy of Bank Deposits, protects all deposits in the banks or banking institutions in
the Philippines. It treats all deposits in the country as confidential and may not be examined or looked
into by any person, government official, bureau or office.
2. What is the policy of the government under RA 1405?

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.
3. What is the basic state policy regarding bank 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. 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
4. Coverage of secrecy of bank deposits (What are covered in the secrecy law?)
All deposits of whatever nature with banks or banking institutions in the Philippines including
investments in bonds issued by the Government of the Philippines.
5. What are the exceptions?
From Section 2: “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.”
6. What are the new exceptions under Rep. Act 1405?

From the Banko Sentral Legal Primer of RA 1405, additional exemptions from the general rule
regarding confidential deposits were added:
(a) The Ombudsman has the power to issue subpoena and subpoena duces tecum, take testimony in any
investigation or inquiry, as well as examine and access bank accounts and records. The power of the
Ombudsman to subpoena deposit information of a government official may be exercised when the
following conditions concur:
(1) there must be a case pending before a court of competent jurisdiction;
(2) the account must be clearly identified;
(3) the inspection must be limited to the subject matter of the pending case; and
(4) the bank personnel and the account holder must be notified to be present during the
inspection.
(b) Bank deposits of a public official, his spouse and unmarried children may be taken into consideration
in the enforcement of Section 8 of The Anti-Graft and Corrupt Practices Act (Rep. Act No. 3019).
(c) Directors, officers, stockholders and related interests who contract a loan or any form of financial
accommodation with their bank or related bank are required to execute a written waiver of secrecy of
deposits.
(d) The Commissioner of Internal Revenue is authorized to inquire into bank deposit accounts in relation
to:
(1) an application for compromise of tax liability or a determination of a decedent’s
gross estate under The National Internal Revenue Code (Rep. Act No. 8424, as amended by
Rep. Act No. 10021); and (2) 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 (Rep. Act No. 8424, as amended by Rep. Act No. 10021).
(e) The Anti-Money Laundering Council may be authorized to examine and inquire into bank deposits or
investments with banks or nonbank financial institutions –
(1) with court order, when there is probable cause that the deposits or investments are
related to an unlawful activity or a money laundering offense (Secs. 3[i] and 4 of Rep. Act
No. 9160); and
(2) without need of court order, when probable cause exists that a particular deposit or
investment with any banking institution is related to certain predicate crimes, such as
kidnapping for ransom, violation of the Comprehensive Dangerous Drugs Act, hijacking
and other violations under Republic Act No. 6235, destructive arson and murder (Sec. 11
of Republic Act No. 9160).
(f) The Bangko Sentral is authorized to –

(1) inquire into or examine bank deposits or investments in the course of a periodic or
special examination to ensure compliance with The Anti- Money Laundering Law, in
accordance with the rule of examination of the Bangko Sentral (Sec. 11, Rep. Act No.
9160, as amended); and
(2) conduct annual testing which is limited to the determination of the existence and true
identity of the owners of numbered accounts (Sec. 9, Rep. Act No. 9160, as amended12).
(g) The Philippine Deposit Insurance Commission and the Bangko Sentral may inquire into bank deposits
when there is a finding of unsafe or unsound banking practices. (Sec. 8, Rep. Act No. 3591, as amended)
(h) The 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 a bank or financial institution in connection with anti-terrorism case. (Rep. Act No. 9372)
(i) The Commission on Audit is authorized to examine and audit government deposits pertaining to the
revenue and receipts of, and expenditures or uses of funds and properties, owned or held in trust by, or
pertaining to, the Government or any of its subdivisions, agencies or instrumentalities, including
government-owned and controlled corporations with original charters. (See Art. IX-D, 1987 Constitution
and Pres. Dec. No. 1445)
(j) The Presidential Commission on Good Government, in the conduct of its investigations to recover ill-
gotten wealth accumulated by former President Ferdinand E. Marcos, his immediate family, relatives,
subordinates and close associates, may issue subpoenas requiring the attendance and testimony of
witnesses and/or the production of books, papers, contracts, records, statement of accounts and other
documents. (Sec. 3 [e], Exec. Order No. 1 [1986])
Jurisprudence Interpreting Exceptions

(a) Plunder is analogous to bribery. The exception in the law that is applicable in bribery
also applies to plunder. The overt or criminal acts as described in Section 1(d) of Republic
Act No. 7080 would make the similarity between plunder and bribery even more
pronounced since bribery is essentially included among these criminal acts. (Ejercito v.
Sandiganbayan, 509 S.C.R.A. 190 [2006])
(b) Cases of unexplained wealth are similar to cases of bribery or dereliction of duty and
no reason is seen why these two classes of cases cannot be excepted from the rule making
bank deposits confidential. (Phil. National Bank v. Gancayco, 122 Phil. 503 [1965])
7. Define bank account garnishment.
● Bank account garnishment occurs when a creditor takes a portion of your paycheck or money
from your bank account to collect a debt
● Bank deposits may be garnished by creditors of the depositor
● In such a case, the same will not be deemed as a violation of the Bank Secrecy Law
8. Can foreign currency deposits be subject to garnishment?

● Foreign currency deposits are not subject to garnishment
● Foreign currency deposits shall be exempt from attachment, garnishment, or any other order or
process of any court
○ As well as those exempt under Rules of Court

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James Daniel A.

1. What is the bank secrecy law in the Philippines?

2. What is the policy of the government under RA 1405?

3. What is the basic state policy regarding bank deposits?

5. What are the exceptions?

6. What are the new exceptions under Rep. Act 1405?

(f) The Bangko Sentral is authorized to –

Jurisprudence Interpreting Exceptions

8. Can foreign currency deposits be subject to garnishment?

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