Secrecy of Bank Deposits and
was a mere street vendor yet has been making
Unclaimed Balances Law
Purpose
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.
(Section 1, Republic Act No. 1405)
Prohibited Acts
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, Republic Act No. 1405)
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. (Section 3, Republic Act No. 1405)
Accordingly, following acts are prohibited
under the bank secrecy law:
1. Examination, inquiry or looking into the
bank deposits by any person,
government official, bureau or office; or
2. Disclosure to any person of any
information concerning bank deposits
committed by any official or employee
of a banking institution.
EXAMPLE NO. 1
Dissa is a bank teller in Unionbank of the
Philippines. One day her neighbor Marites
asked her if she can provide her with the bank
balance of one of their depositors Gerald.
What prompted Marites to this inquiry was the
sudden increase in prosperity of Gerald who
purchases in the Apple Store. To satisfy
Marites’s curiosity, Dissa told her that Gerald
has a current balance of P1,500,000 in his bank
account. Thrilled by what she learned, Marites
then shared this information to her other
“chismosa” friends.
A. Is Dissa liable under the bank secrecy
law?
B. Is Marites liable under the bank secrecy
law for her unauthorized disclosure of
Gerald’s bank balance?
EXAMPLE NO. 2
While making a deposit in a bank, Tine a writer
of Gossip Magazine PH overheard a pretty
bank teller informing her co-employee that
Kevin, a well-known businessman, has just a
few thousands in his bank account such that his
next check will in all probability bounce. Tine
wrote about this information in her column.
When Kevin learned about this, he
immediately filed a complaint against the bank
for violation of bank secrecy law for the
unauthorized disclosure of his bank
information. Will the suit prosper?
Deposits Covered
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.
EXAMPLE
Mr. T is a corrupt public official. He has used
his office to corrupt public funds which he then
puts in his BPI Trust Account. When he was
criminally charged for violation of the Anti-
Graft and Corrupt Practices Act, the
prosecution sought to examine both his BPI
Deposit Account and his BPI Trust Account. Mr.
T argued that while his case falls under the
exception to the law on secrecy of bank
deposits, the law merely mentioned “deposits”
which he posited excludes his Trust Account.
May the BPI Trust Account be examined?

EXCEPTIONS
As a general rule, all deposits of whatever
nature are absolutely confidential and may not
be disclosed to any person or be examined,
inquired or look into by anybody. The
following are the recognized exceptions to
such rule:
1. Upon written permission of the
depositor, or
2. In 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 inquiry by the Commissioner of
Internal Revenue for the purpose of
determining the net estate of a
deceased depositor for tax purposes
6. Reports of banks to Anti-Money
Laundering Council of covered and/or
suspicious transactions
7. Upon order of competent court or
tribunal in cases involving unexplained
wealth under the Anti-Graft and Corrupt
Practices Act (RA No. 3019); and
8. AMLC inquiry in relation to financing of
terrorism as provided by the Anti-
Terrorism Act of 2020.
EXAMPLE
BDO erroneously credited a P10 Million
collection to Kevin’s account instead of
properly crediting it to Kevon. BDO now files a
suit for the recovery of the erroneously
credited amount. To prove its claim, BDO
wants to examine the bank account of Kevin to
prove the P10 Million erroneous deposit.
Kevon objected raising the defense that his
bank account under the Law on Secrecy of
Bank Deposits. Is Kevon’s defense tenable?
Garnishment of deposits including foreign
deposits
Peso bank deposits may be subject to
garnishment to insure satisfaction of a
judgment creditor. This can be gleaned from
the fact that RA 1405 or the bank secrecy law
does not contain such prohibition.
On the other hand, Section 8 of RA 6426 or
The Foreign Currency Deposit Act of the
Philippines provides that 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.
EXAMPLE
Abet lost in a P1,000,000 collection case filed
by his judgment creditor, Marilou. Abet has a
P250,000 balance in his BPI Account and a $
100,000 balance in his foreign currency
deposit in the same bank. Can Marilou go after
both the peso and dollar accounts of Abet?
What are UNCLAIMED BALANCES?
"Unclaimed balances" shall include credits or
deposits of money, bullion security or other
evidence of indebtedness of any kind and
interest thereon with banks, as hereinafter
defined, in favor of any person unheard from
for a period of ten years or more. (Section 1,
Act No. 3936)
What will happen to unclaimed balances?
Such unclaimed balances, together with the
increase and proceeds thereof, shall be
deposited with the Insular Treasurer to the
credit of the Government of the Philippine
Islands to be used as the Philippine Legislature
may direct.
What is the duty of the bank?
All banks shall forward to the insular Treasurer
a statement, under oath of their respective
managing officers, of all credits and deposits
held by them in favor of persons known to be
dead, or who have not made further deposits
or withdrawals during the preceding ten years
or more, arranged in alphabetical order
according to the names of depositors, and
showing:
a. The names and last known place of
residence or post-office addresses of
the persons in whose favor such
credit or deposits stand;
b. The amount and date of the
outstanding credit or deposit and
whether the same is in money or in
 security, and if the latter, the nature
of the same;

c. The date when the person in whose

favor the credit or deposit stands
died, if known, or the date when he
made his last deposit or withdrawal;
and

d. The interest due on such credit or

deposit, if any, and the amount
thereof.

CHECK YOUR MASTERY

Answer the following questions without

looking at your notes:

1. What are the two prohibited under the

bank secrecy law?

2. Distinguish the persons liable in the two

respective prohibited acts.

3. What are the deposits covered under

the bank secrecy law?

4. What are the exception to the secrecy of

bank deposits?

5. Compare the applicability of

garnishment of peso deposit and
foreign currency deposit.