HANDOUT 9: SECRECY OF BANK DEPOSITS
J-Culajara
ATENEO DE ZAMBOANGA UNIVERSITY
School of Management and Accountancy
Accountancy Department
STATE POLICY
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.
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 –
• When the examination is made in the course
of a special or general examination of a bank
and is specifically authorized by the Monetary
Board after being satisfied that –
• There is reasonable ground to
believe that a bank fraud or
serious irregularity has been or is
being committed and that it is
necessary to look into the
deposit to establish such fraud or
irregularity; or
• When the examination is made
by an independent auditor hired
by the bank to conduct its
regular audit provided that the
examination is for audit purposes
Integrative Course for Regulatory Framework for Business Transactions (RFBT)
only and the results thereof shall
be for the exclusive use of the
bank; or
• 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
• Upon order of a competent
court in cases where the money
deposited or invested is the
subject matter of the litigation;
• Upon order of the competent
court or tribunal in cases
involving unexplained wealth
under the Anti-Graft and
Corrupt Practices Act (R.A. No.
3019);
• Upon inquiry by the
Commissioner of Internal
Revenue for the purpose of
determining the net estate of a
deceased depositor;
• Upon the order of a competent
court or in proper cases by the
Anti-Money Laundering Council
where there is probable cause of
money laundering and in some
instances even without court
order;
• Disclosure to the Treasurer of
the Philippines for dormant
deposits for at least ten (10)
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Instructor: K.
years under the Unclaimed
Balances Act;
• Report of banks to Anti-Money
Laundering Council of covered
and/or suspicious transactions;
• Upon order of the Court of
Appeals, examination by law
enforcement officers in
terrorism cases under the
Human Security Act of 2007.
OTHER MATTERS
• The inquiry into bank deposits allowable under
R.A. No. 1405 must be premised on the fact that
the money deposited in the account is itself the
subject of the action.
• It shall be unlawful for any official or employee of a
bank to disclose to any person other than those
mentioned in the preceding item, or for an
independent auditor hired by a bank to conduct its
regular audit to disclose to any person other than a
bank director, official or employee authorized by
the bank, any information concerning said deposits.
FOREIGN CURRENCY DEPOSITS
The above-enumerated exceptions do not apply to
foreign currency deposits. There is only one exception
under the Foreign Currency Deposits Act although another
is provided for under the Anti-Money Laundering Law.
Therefore, the exceptions are:
• When there is written consent of
depositor under Section 8 of the Foreign
Currency Deposits Act;
• Under Section 11 of the Anti-Money
Laundering Act; and
HANDOUT 9: SECRECY OF BANK DEPOSITS
SECRECY OF DEPOSITS UNDER AMLA (ANTI-
MONEY LAUNDERING ACT)
• The Anti-Money Laundering Council (AMLC) may
inquire into deposits upon order of the court when
there is probable cause that the deposits are related
to the crime of unlawful activities defined in
Section 3(1) and Section 4 of R.A. 9160 as
amended by R.A. 9194.
• However, a court order is not even necessary
when the offense or unlawful activity involved is
any of the following:
• Kidnapping for ransom;
• Sections 4, 5, 7, 8, 9, 10, 12, 13, 14, 15,
and 16 of R.A. No. 9165 otherwise
known as the Comprehensive Dangerous
Drugs Act of 2002; and
• Hijacking and other violations under R.A.
No. 6235; destructive arson and murder,
as defined under the Revised Penal Code,
as amended, including those perpetrated
by terrorists against non-combatant
persons and similar targets.
GARNISHMENT
• Bank accounts may be garnished by the creditors of
the depositor. There is no violation of the Law on
Secrecy of Bank Deposits of the accounts are
garnished. The amount of deposit is actually not
disclosed and the intent of the legislature does not
cover garnishment.
• Deposits that are exempt from garnishment:
• Foreign currency deposits
• Note: The Supreme Court ruled
in Salvacion, et. al. v. Central
Bank of the Philippines, et. al. by
Integrative Course for Regulatory Framework for Business Transactions (RFBT)
way of exception that foreign
currency deposits of an
American tourist who was found
guilty of repeatedly raping a
twelve (12)-year old child is
subject to garnishment.
• Those exempt under the Rules of
Civil Procedure like provision
for the family for four (4)
months.
JURISPRUDENCE
The applicable law for U.S. dollar deposits (or
foreign deposits) is not Republic Act No. 1405, but
Republic Act No. 6426 otherwise known as the “Foreign
Currency Deposit Act of the Philippines”. Carmen Ll.
Intengan, et al. v. Court of Appeals.
The term “deposits” is to be understood broadly
and not limited only to accounts which give rise to a
creditor-debtor relationship between the depositor and the
bank. Trust Accounts or Trust Agreements, if the money
deposited under an account may be used by banks for
authorized loans to third persons, qualify as “deposits” and
are within the purview of the law. Joseph Ejercito v.
Sandiganbayan
However, the foreign currency deposit made by a
transient or a tourist is not the kind of deposit encouraged
by PD Nos. 1034 and 1035 and given incentives and
protection by said laws because such depositor stays only for
a few days in the country and, therefore, will maintain his
deposit in the bank only for a short time. Considering that
Bartelli is just a tourist or a transient, he is not entitled to
the protection of Section 113 of Central Bank Circular No.
960 and PD No. 1246 against attachment, garnishment or
other court processes. Karen E. Salvacion v. Central
Bank of the Philippines
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Instructor: K. J-Culajara
SAMPLE CASES
Raymond invested his money in securities issued by
the Philippine government, through his bank. Subsequently,
the Bureau of Internal Revenue asked his bank to disclose his
investments. His bank refused the request for disclosure on
the ground that the investments are confidential under the
Secrecy of Bank Deposits Law (Republic Act No. 1405, as
amended).
Suggested answer: The refusal is justified. Under
R.A. 1405, investment in bonds issued by the Philippine
government are also absolutely confidential and may not be
examined, inquired or looked into by any person,
government official, bureau or office save for the exceptions
provided by law. None of the exceptions apply in the
present case.
A bought some goods from a Department Store
and paid with his personal check. When the Department
Store deposited the check of A, the bank dishonored it. On
the assumption that the Department Store did not know
who A was, the store manager inquired from the check’s
drawee bank the name of the dishonored check. The drawee
bank refused to disclose the name of such drawer in view of
Secrecy of Bank Deposits Law.
Suggested answer: The bank is not justified in not
divulging the name of the drawer to the store manager. The
store manager is merely inquiring as to the name of the
drawer of the dishonored check. To divulge the same would
not in any way amount to disclosure of any information
concerning his deposits, if any, in said bank. Moreover, the
inquiry is not an investigation of any balance in favor of the
depositor.
HANDOUT 9: SECRECY OF BANK DEPOSITS Integrative Course for Regulatory Framework for Business Transactions (RFBT) Instructor: K. J-Culajara

Don Mariano was able to secure a favorable confidential” in nature. Manosa, who merely overheard
judgment against Nestor Pe for recovery of sum of money what appeared to be vague remark of a bank employee to a
and the said judgment had become final and executor. Don co-employee and writing the same in his newspaper column
Mariano was informed by someone that Nestor Pe might is neither the inquiry nor disclosure contemplated by the
have a sizeable savings deposit with Xena Commercial Bank, law.
of which Don Mariano was a stockholder, with 1 share
registered in his name. Immediately, he rushed to the Bank
and demanded from the Bank Manager that he be shown the
bank records to see if Nestor Pe really had such savings
deposit. When the Bank Manager refused and invoked the
Secrecy of Bank Deposits Law, Don Mariano cited his right
as a stockholder to inspect corporate records.
Suggested answer: The stand of the bank manager
of Xena Commercial Bank, of which Don Mariano is a
stockholder, with 1 share, is legally tenable. Although as a
general rule in the Corporation Code, a stockholder may
inspect the books of a corporation, yet it is subject to a
special law like the Secrecy of Bank Deposits Law, which
operates as exception to the general rule, and shall be
strictly construed. The case of Don Mariano does not fall
under any of the exceptions.

Manosa, a newspaper columnist, while making a

deposit in a bank, overheard a pretty bank teller informing a
co-employee that Gigi, a well-known public official, has just
a few hundred pesos in her bank account and that her next
check will in all probability bounce. Manosa wrote this
information in his newspaper column. Thus, Gigi filed a
complaint for unlawfully disclosing information about her
bank account.
Suggested answer: The Secrecy of Bank Deposits
Act prohibits, subject to its exclusionary clauses, any person
from examining, inquiring or looking into all deposits of
whatever nature with banks or banking institutions in the
Philippines which by law are declared “absolutely
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