Ateneo de Naga University

College of Business and Accountancy

Ateneo de Naga University
Naga City

REPUBLIC ACT NO. 1405

AN ACT PROHIBITING DISCLOSURE OF OR INQUIRY INTO, DEPOSITS WITH
ANY BANKING INSTITUTION AND PROVIDING PENALTY THEREFOR

In partial fulfilment of the requirements in Regulatory Framework and Legal Issues in

Business (ACCL103)

Submitted by:

ACCL103 AC22 Students

Submitted to:

Atty. Dominick Adan Botor, CPA

April 2020

REPUBLIC ACT NO. 1405

 AN ACT PROHIBITING DISCLOSURE OF OR INQUIRY INTO, DEPOSITS WITH ANY
BANKING INSTITUTION AND PROVIDING PENALTY THEREFOR.

Section 1. 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.

DEPOSIT – consist of money placed into banking institutions for safekeeping.

QUESTION:
1. What accounts are covered in the secrecy law?
Answer: Savings account, checking account, and other types of bank deposits are included in
the secrecy law. Money markets, trust funds, mutual funds, and the like are not covered.
2. Why is there a need to protect the secrecy of bank deposits?
Answer: Technically speaking, the law prefers that money be deposited in banks so they may be
properly utilized to assist in the economic development of the country.

However, it is more relevant on a practical matter. Suppose that you only have P1,000 in your
bank account. Surely, you do not want any person (such as your friend, employer or any
stranger) to find that out. Either you do not want others to know that you do not have
sufficient money or you simply do not feel comfortable in people prying in your financial
affairs. On the other hand, if you have P100,000,000.00 in your bank account, you also do not
want others to find that out for fear that you might be kidnapped, or relatives might borrow
from you, or simply, it’s your personal affair. In all these cases, one’s financial status is a private
matter. Transactions happening in your bank account are not just empty figures. There are
stories affixed to such transactions. Thus, these financial transactions are akin to your personal
activities which should not be easily accessible to anyone.

Section 2. 1All 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.

BANK SECRECY LAW protects all deposits whatever nature in banks or banking institutions
in the Philippines as well as investments in government bond. This law prohibits any person
subject to the exceptions below, from disclosing to any person any information, relative to the
funds or properties belonging to the depositors in the custody of the bank. Simply put, no one
can just go to your bank and ask for your bank balance.

However, the rule is not absolute. The following are the exceptions to the bank secrecy law:

1. Written permission or consent in writing by the depositor;

2. In cases of impeachment;

3. Upon order of the court in cases of bribery or dereliction of duty of public officials;

4. Upon order of the court in cases where the money deposited or invested is the subject matter
of the litigation;

5. Upon a subpoena issued by the Ombudsman concerning an investigation it is conducting,

provided that there must already be a case pending in court, the account be clearly identified,
the inspection be limited to the subject matter of the pending case; and the bank personnel and
the depositor must be notified to be present during the inspection;

6. The BIR can inquire into bank deposits in an application for compromise of tax liability or
determination of a decedent’s gross estate;

7. The Anti-Money Laundering Council (“AMLC”) can examine bank accounts pursuant to a
court order, where there is probable cause that the deposits are related to an unlawful activity
or money laundering offense;

8. The AMLC can examine bank accounts, WITHOUT a court order, where there is probable
cause that the deposits are related to certain crimes such as kidnapping for ransom, violation of
the Dangerous Drugs Act, hijacking, destructive arson, murder and violations of RA 6235 (acts
inimical to civil aviation);

9. The Bangko Sentral can examine bank accounts in the course of its periodic or special
examination regarding compliance with Anti-Money Laundering Law.

As you can see, although there are many exceptions, securing such exceptions is not an easy
task. The easiest way to waive the secrecy of bank deposits is through a written waiver.
Although there is no prescribed form for a waiver, it is necessary that the waiver be made
voluntarily, knowingly and with sufficient awareness of relevant circumstances and
consequences. Thus, as a matter of practice, banks will require the depositor to state in his
waiver the specific bank account, bank branch, name of depositor, period covered by the
transactions and the name of the person authorized to access the bank account.
QUESTION:
1. How about dollar deposits?
Answer: Foreign currency deposits are governed by a different law, namely Republic Act No.
6426 and has fewer exceptions. This will be discussed in a separate article.

Section 3. 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.

Bank official and employees are able to see some bank accounts in the system. What’s important
is that they don’t disclose the information they see to anyone .

Section 4. All acts or parts of acts, special charters, executive orders, rules and regulations
which are inconsistent with the provisions of this act are hereby repealed.

Those other Acts, Special Charters, Executive Orders, Rules and Regulations that are
inconsistent with the provisions of the Bank Secrecy Law are revoked.

Section 5. 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.

QUESTION:
1. Is there is any criminal liability for violating the bank secrecy law?
Answer: Yes, there is criminal liability. Any person violating this law may be imprisoned for
not more than five (5) years, or meted a fine not exceeding P20,000.00 or both. This is in
accordance to Section 5 of the RA which states that violators will be subject to “conviction, to an
imprisonment of not more than five years or a fine of not more than P20,000, or both, in the
discretion of the court.”

Section 6. This Act shall take effect upon its approval.

Approved: September 9, 1955

Footnote

1 
This Section and Section 3 were both amended by PD No. 1792 issued January 16, 1981,
PD 1792 was expressly repealed by Sec 135 of R.A. No. 7653, approved June 14, 1993.
The original sections 2 and 3 of R.A. No.1405 are hereby reproduced for reference, as
 follows; "Sec 2 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 per-mission 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," "Sec. 3. 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."

References
Nicolas and De Vega Law Offices. (2007-2020). Philippine Bank Secrecy Law Simplified. Retrieved
from https://ndvlaw.com/philippine-bank-secrecy-law-simplified/

Serran, K. (2016, April 29). Retrieved from https://www.ecomparemo.com/info/all-your-

questions-about-bank-secrecy-law-answered/

The Lawphil Project. (n.d.). Retrieved from

https://lawphil.net/statutes/repacts/ra1955/ra_1405_1955.html

CONTRIBUTORS:

Bonilla, Nina Koleen D.

Cortan, Frances Faye

BEADLE: Bonilla, Nina Koleen D.

SUBMITTED TO:

Atty. Dominick Adan Botor, CPA