SECRECY OF BANK DEPOSITS

AND UNCLAIMED BALANCES

PURPOSE
• 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.
• 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 :
1. upon written permission of the depositor, or
2. n cases of impeachment, or
3. upon order of a competent court in cases of bribery or
dereliction of duty of public officials, or
4. In cases where the money deposited or invested is the
subject matter of the litigation.
5. Upon order of the Commissioner of Internal Revenue in respect of
the bank deposits of a decedent for the purpose of determining such
decedent’s gross estate. (Sec. 6[F][1], NIRC)

6. Upon the order of the Commissioner of Internal Revenue in respect

of bank deposits of a taxpayer who has filed an application for
compromise of his tax liability by reason of financial incapacity to pay
his tax liability. (Sec. 6[f][1],NIRC)
7. In case of dormant accounts/deposits for at least 10 years under the
Unclaimed Balances Act. (Sec. 2, Act No. 3936).

8. When the examination is made by the BSP to insure compliance

with the AML Law in the course of a periodic or special examination
• With court order:
• In cases of unexplained wealth
• under Sec. 8 of the Anti‐Graft and Corrupt Practices Act
• In cases filed by the Ombudsman and upon the latter’s
authority to examine and have access to bank accounts and
records

10.Without court order: If the AMLC determines that a

particular deposit or investment with any banking institution
is related to any of the predicate crimes under the AMLA
• 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.
What are the requisites before the Ombudsman
may examine deposits?
• 1. There is a pending case before court of competent
jurisdiction
• 2. The account must be clearly identified 3. There is notice
upon the account holder and bank personnel of their
presence during inspection.
• Note: The inspection must cover only the account identified
in the pending case.
Are foreign currency deposits covered by the
Secrecy in Bank Deposits (R.A. 1405)?
• No. Foreign currency deposits are covered by R.A. 6426
otherwise known as the Foreign Currency Act. Under the
same law, all authorized foreign currency deposits are
considered of an absolutely confidential nature and, except
upon the written permission of the depositors, in no instance
shall be examined, inquired or looked into by any person,
government official, bureau or office whether judicial or
administrative private.
Does garnishment of a bank deposit violate
the law?
• No, the prohibition against examination does not preclude
its being garnished for satisfaction of judgment. The
disclosure is purely incidental to the execution process and it
was not the intention of the legislature to place bank
deposits beyond the reach of judgment creditor.
How about foreign currency deposits, can they be
subject to garnishment?

• GR: 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.
• XPN: The application of Section 8 of R.A. 6426 depends on
the extent of its justice. The garnishment of a foreign
currency deposit should be allowed to prevent injustice and
for equitable grounds, otherwise, it would negate Article 10
of the New Civil Code which provides that “in case of doubt
in the interpretation or application of laws, it is presumed
that the lawmaking body intended right and justice to
prevail.
What are the penalties for violation of R.A.
1405?
• The penalty of imprisonment of not more than 5 years or a
fine of not more than 20,000pesos or both, in the discretion
of the court shall be imposed upon any official or employee
of a banking institution who, upon conviction, was found to
have violated R.A. 1405.
PD 679 ( UNCLAIMED DEPOSIT)
• Unclaimed balances shall include credits or deposits of money,
bullion, security or other evidence of indebtedness of any kind, and
interest thereon with banks, buildings and loan associations, and trust
corporations, as hereinafter defined, in favor of any person known to
be dead or who has not made further deposits or withdrawals during
the preceding ten years or more.

• Such unclaimed balances, together with the increase and proceeds

thereof, shall be deposited with the Treasurer of the Philippines to
the credit of the Government of the Republic of the Philippines to be
used as the National Assembly may direct.