Republic Act No.

1405

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

Section 1. Purpose of the Law

 To encourage people to deposit their money in banking institutions;

 To discourage private hoarding

Money may be properly utilized by banks in authorized loans to assist in the economic development
of the country.

Additional information:

o Banking Institution – an institution (public or private) that collects funds (from the public or
other institutions) and invests them in financial assets
o Private Hoarding – a practice of holding or piling up of assets, namely money, goods, or
securities

GENERAL RULE

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 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.

Section 2. Deposits Covered

All deposits, including investment bonds issued by the Philippine Government, its political subdivisions
and its instrumentalities are considered:

 Absolutely confidential in nature and;

 May not be examined, inquired, or looked into by any person, government official, bureau or
office

EXCEPTIONS:

1. Upon written permission of the depositor

Additional: 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. In cases of impeachment of the:

 President
 Vice President
 Members of the Constitutional Commission (Commission on Elections, Civil Service Commission
and Commission on Audit)
 Ombudsman for culpable violation of the Constitution, treason, bribery, graft and corruption,
and other high crimes or betrayal of public trust

3. Upon order of a competent court in cases of:

 Bribery or
 Dereliction of duty of public officials

 Additional: involving unexplained wealth under RA 3019 (Anti-Graft and Corrupt Practices Act)
 By the AMLC where there is probable cause of money laundering and in some instances even
without court order

4. In cases where the money deposited or invested is the subject matter of the litigation

5. Upon order of the competent court or tribunal in cases involving unexplained wealth under RA
3019, or the Anti-Graft and Corrupt Practices Act

6. Upon inquiry by the Commissioner of BIR:

 The purpose of determining the gross estate of a deceased depositor

 Pursuant to a request for tax information of specific taxpayers made by a foreign tax authority
pursuant to a tax treaty under RA 8424, as amended by RA 10021 (Tax Matters Act of 2009)

7. 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

8. Disclosure to the Treasurer of the Philippines for dormant deposits for at least 10 years under the
Unclaimed Balances Act (RA 3936)

9. Report of banks to AMLC of covered and/or suspicious transactions

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

11. Examination is made:

 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.
 By the PDIC who may inquire into bank deposits when there is a finding of unsafe or unsound
banking practices
 By the 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
 By the 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

12. Examination is made by an independent auditor hired by the bank to conduct its regular audit
provided that the examination is for audit.

ADDITIONAL INFORMATION:

1. Investment Bonds – a debt security, similar to an IOU to raise money from investors willing to lend
them money for a certain amount of time

2. Impeachment – process by which a legislative body or other legally constituted tribunal initiates
charges against a public official for misconduct

3. Competent Court – a court (place where cases are heard) that has the authority to do a certain act or
hear a certain dispute

4. Bribery – an act or practice of giving money or favor given or promised in order to influence the
judgment or conduct of a person in a position of trust

5. Dereliction of Duty – deliberate or accidental failure to do what you should do as part of your job

6. Civil Aviation - one of two major categories of flying, representing all nonmilitary aviation, both
private and commercial.

Section 3. Unlawful Acts

 Any official or employee of a banking institution: to disclose to any person other than those
mentioned in Section two any information concerning deposits
 Additional: Any person, including the government: to inquire, examine or look into bank
deposits or bonds issued by the government

Section 4. Repealing Clause

  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.

Section 5. Penalties for Violation

 Any violation of this law will subject offender upon conviction, to an imprisonment of not more
than five (5) years or a fine of not more than twenty thousand pesos (P20,000) or both, in the
discretion of the court.

Section 6. Approval

 This Act shall take effect upon its approval. It was acclaimed on September 9, 1955.