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BANK SECRECY LAW (RA 1405, AS AMENDED)

Purpose of the law: It hopes to discourage private hoarding and at the same time encourage the people to deposit their money in banking institutions, so that it may be utilized by way of authorized loans and thereby assist in economic development.

PROHIBITED ACTS
It shall be unlawful:
1. Bank (any official or employee or independent auditor of a bank) - to disclose to any person other than a bank director, official or employee authorized by the bank, any information concerning deposits.
2. Any person, including the government - to inquire, examine or look into bank deposits or bonds issued by the government.

DEPOSITS COVERED
1. All deposits of whatever nature with banks or banking institutions in the Philippines, including Trust Accounts.

Deposits refer to money or funds placed with a bank that can be withdrawn on the depositor's order or demand, such as deposit accounts in the form of savings, current and time deposits. Deposits are characterized as being in the
nature of a simple loan. The placing of deposits in a bank creates a creditor-debtor relationship between the depositor and the bank. As such, the bank, being the debtor, has the obligation to pay a certain sum of money to the depositor, being the creditor.

2. Investments in bonds issued by the Government of the Philippines, its political subdivisions and its instrumentalities.

Investments in Government Bonds are debt securities which are unconditional obligations of the State and backed by its full taxing power. Government bonds include treasury bills, treasury notes, retail treasury bonds, dollar linked peso notes, and other risk-free bonds.

EXCEPTIONS
Peso Deposits: (WIOɓmù CARO TEA)
1. When there is a written permission of the depositor or investor.

DOSRI accounts: 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 pursuant to The New Central Bank Act. (Sec. 26, Rep. Act No.7653)

Taxpayer's application for compromise: a taxpayer who is applying for a compromise on the ground of clear inability to pay or financial incapacity, is likewise required to execute a waiver prior to the processing of his request.

2. Impeachment cases of the President, Vice President, members of the Supreme Court, members of the Constitutional Commission(Commission on Elections, Civil Service Commission and Commission on Audit) and the Ombudsman for culpable violation of the Constitution,
treason, bribery, graft and corruption, other high crimes or betrayal of public trust. (Art. XI, Sec. 2, 1987 Philippine Constitution)
3. Upon the order of a competent court in cases:
a. of bribery or dereliction of duty of public officials (including
plunder)
b. Where the money deposited or invested is the subject of litigation
c. Involving unexplained wealth under RA 3019, or the Anti-Graft and Corrupt Practices Act.
ILLUSTRATION: Mr. X, located in the USA, asked First National Bank to facilitate the transfer of an amount equivalent to $1,000 to Ms. A located in the Philippines. First National Bank instructed Mellon Bank to facilitate such transfer. Mellon Bank, however, inadvertently transferred $1,000,000 to the peso account of Ms. A in Prudential Bank Peso deposit account Mellon Bank sought the return of the excess $999,000 through a case they filed in the Philippines. Ms. A objected to the inquiry into her bank deposits
Invoking the confidentiality thereof. Is Ms. A correct?

ANSWER: No. Since the very subject of the case is the money deposited in her account by virtue of the case for recovery filed by Mellon Bank.Therefore, it constitutes an exception to the Secrecy of Bank Deposits. Mellon Bank, N.A. v. Magsino, 190 S.C.R.A. 633 [1990])

Upon inquiry by the Commissioner of BIR:
a. The purpose of determining the gross estate of a deceased depositor
b. Pursuant to 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).
5. Upon the order of a competent court or in proper cases by the AMLC where there is probable cause of money laundering and in some instances even without court order
6. Reports:
a.Disclosure to the Treasurer of the Philippines for unclaimed
balances under the Unclaimed Balances Act (RA 3936)
b. Report of banks to AMLC of covered and/or suspicious transactions.
7. 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. (Marquez v. Desierto, 359 S.C.R.A. 772 [2001])

8. Upon order of the CA, examination by law enforcement officers in terrorism cases under the Human Security Act of 2007 (RA 9372)

9. Examination is made:
a. In the course of a special or general examination of bank and is specifically authorized by the Monetary Board (BSP) 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 is necessary to look into the deposit to establish such fraud or irregularity.
b. By the Philippine Deposit Insurance Commission (PDIC) who may inquire into bank deposits when there is a
finding of unsafe or unsound banking practices. (Sec. 8, Rep. Act No. 3591, as amended)
c. By the Commission on Audit (COA) who 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)
d. By the Presidential Commission on Good Government (PCGG) who, 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])
10. Examination is made by an independent auditor hired by the bank to conduct its regular audit provided that the examination is for audit bank purposes only and the results thereof shall be for the exclusive use of the bank

Foreign currency deposits (FOREIGN CURRENCY DEPOSIT ACT):
foreign currency deposits in banks are likewise absolutely confidential and cannot be disclosed, except:
1. When there is written consent of depositor under Section 8 of the Foreign Currency Deposits Act (RA 6426)
2. Under Section 11 of the Anti-Money Laundering Act (probable cause established that it is related to an unlawful activity as defined or money Laundering)
3. Under Section 27 and 28 of the Human Security Act (existence of probable cause in anti-terrorism cases and those involving persons charged with or suspected of the crime of terrorism or conspiracy to commit terrorism, judicially declared and outlawed terrorist organization, association, or group of persons, or member of such organization, association, or group of persons)
4. Examinations by the BSP, PDIC, PCGG and COA.

Garnishment: Bank accounts may be garnished by the creditors of the depositor. In garnishment, there is no violation of the bank secrecy law since the amount of the deposit is not actually disclosed.

Deposits exempt from garnishment:
1. Foreign currency deposits, Section 8 of RA 6426 (except for transient foreigners)
2. Those exempt under Rules of Court

As such, the following do not violate the secrecy of bank deposits:
1. Turn-over to the Commissioner of Internal Revenue of the amount in bank accounts as may be sufficient to satisfy the writ of garnishment issued to collect delinquent taxes (Secs. 205 & 208, Rep. Act No. 8424); and
2. Submission of report, and turn-over to, the court officer or executing sheriff of garnished amounts pursuant to a writ of garnishment in satisfaction of a judgment (Sec. 9[c], Rule 39, Rules of Court; See China Banking Corporation v. Ortega, 49 SCRA 355 [1973]).

Penalties for violation
Peso Deposits;