LAW ON SECRECY OF BANK DEPOSITS

Question 1

Prohibited Acts

Answer 1

• Examination, inquiry, or looking into deposits and investments in Philippine government bonds by persons, government officials, bureaus, or offices; [Sec. 2]
• Disclosure by banking institutions’ officials or employees to unauthorized persons regarding information about covered deposits and investments. [Sec. 3]

Question 2

Deposits and Covered

Answer 2

• General Rule - All peso deposits of whatever nature with banks or banking institutions in the Philippines are considered as of an absolutely confidential nature. [Sec. 2]
• Also covered are investments in bonds issued by the Government of the Philippines, its political subdivisions and its instrumentalities, whether denominated in pesos or foreign currency. Note that investments in bonds in foreign currency are still covered by RA 1405. The Foreign Currency Deposit Act does not cover those investments.

Question 3

Deposits and Funds Covered by Other Laws on Confidentiality

Answer 3

• Foreign currency deposits, which are governed by the Foreign Currency Deposit Act
• Funds placed in a bank not in the nature of a deposit by private individuals or entities. These may also not be disclosed, under Subsec. 55.1 of the General Banking Law of 2000.

Question 4

Trust Accounts

Answer 4

The term “deposits” is to be understood broadly and not limited to accounts giving rise to creditor-debtor relations between the bank and depositor. The deposit of money which maybe used by banks for authorized loans to 3rd persons also falls under RA 1405. Therefore, trust accounts are also covered. [Ejercito v. SB Special Division, G.R. Nos. 157294-95 (2006)]

Question 5

Exceptions

Answer 5

• Deposits:
• Upon written permission of the depositor; b. In cases of impeachment;
• Upon order of competent court in cases of bribery and dereliction of duty;
• In cases where the money deposited or invested is the subject matter of
  litigation.
• The Commissioner of Internal Revenue can inquire into the bank accounts of the following taxpayers:
• i. A decedent in order to determine his gross estate; or
• ii. A taxpayer who has filed an application to compromise his tax liability on the ground
  of financial incapacity; [NIRC, Sec. 6(f)]
• iii. A taxpayer, information on whose account is requested by a foreign tax authority.
• Unexplained wealth under Sec. 8 of the Anti-Graft and Corrupt Practices Act (RA 3019).
• Inquiry by the Anti-Money Laundering Council under the AMLA, after obtaining a court order, when there is probable cause that the deposits or investments involved are in any way related to an unlawful activity or a money laundering offense except that no court order is required if the covered investments are related to:
• Kidnapping for Ransom [RPC];
• Dangerous Drugs [2002 Comprehensive Dangerous Drugs Act];
• Hijacking and other violations of RA 6235;
• Destructive arson and murder;
• Felonies similar to (i) to (iv) above which are punishable under the penal laws of other countries; and
• Terrorism and conspiracy to commit terrorism under the Human Security Act of 2007.
• BSP inquiry or examination in the course of its periodic or special examination of the bank.
• Disclosure of certain information about bank deposits which have been dormant for at least 10 years, to the Treasurer of the Philippine in a sworn statement, a copy of which is posted in he bank premises. [Sec. 2, Unclaimed Balances Law, Act No. 3926, as amended by PD 679]
• The PDIC and/or the BSP can inquire into or examine deposit accounts and all information related thereto in case there is a finding of unsafe and unsound banking practice.

Question 6

Garnishment of Deposits, Including Foreign Deposits

Answer 6

• General rule: The prohibition against examination of or inquiry into a bank deposit under Republic Act 1405 does not preclude its being garnished to insure satisfaction of a judgment.
• Exception: The 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. [Sec. 8, FCDA – Foreign Currency Deposit Act]

Question 7

Penalties for Violation

Answer 7

• 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. [Sec.5]