SECRECY OF BANK DEPOSITS UNDER PHILIPPINE LAW AND ITS EXCEPTIONS

In the Philippines, the Secrecy of Bank Deposits is governed primarily by two major statutes: Republic Act No. 1405 (RA 1405), or the "Law on the Secrecy of Bank Deposits," and Republic Act No. 6426 (RA 6426), or the "Foreign Currency Deposit Act of the Philippines." These laws protect the confidentiality of bank deposits, with RA 1405 covering peso deposits and RA 6426 covering foreign currency deposits. However, these statutes also provide specific exceptions to their coverage, under which disclosure of bank deposit information may be legally permitted.

1. Republic Act No. 1405 (Law on the Secrecy of Bank Deposits)

RA 1405 declares that all deposits of whatever nature with banks or banking institutions in the Philippines, including investments in government bonds, are considered absolutely confidential and may not be examined, inquired, or looked into by any person, government official, bureau, or office, except as provided by law. The purpose is to encourage individuals to deposit their money in banks by ensuring that such deposits are protected from inquiry, inspection, or exposure.

Exceptions under RA 1405

RA 1405 provides for specific instances where disclosure of bank deposits is permitted, despite the law's confidentiality provisions. These exceptions are:

Written Consent of the Depositor:
- Disclosure of bank deposit information is permitted when there is explicit written permission from the depositor, authorizing such disclosure. The consent must be clear, voluntary, and specific to be valid.
In Cases of Impeachment:
- Disclosure is allowed if required in an impeachment proceeding. This was notably invoked during the impeachment trials of government officials, where bank records were relevant to proving allegations of corruption or undeclared wealth.
Upon Order of a Competent Court in Cases of Bribery or Dereliction of Duty of Public Officials:
- Disclosure of bank deposits can be ordered by a competent court in cases involving bribery or dereliction of duty by public officials. This is relevant in criminal cases where a public official is suspected of corruption or abuse of public office, and bank records are critical in investigating the crime.
In Cases Where the Money Deposited is the Subject of Litigation:
- Bank secrecy does not apply when the deposited funds themselves are directly involved in litigation. For example, in civil cases where ownership of a specific bank deposit is disputed, the court may order the examination of the deposit to resolve the case.
Compliance with Anti-Money Laundering Laws (Indirect Exception):
- RA 1405 does not explicitly include the Anti-Money Laundering Act (AMLA) as an exception; however, later jurisprudence and amendments to AMLA have expanded reporting requirements for suspicious transactions, including freezing accounts suspected to be linked to money laundering or terrorism financing, with prior approval from the court. Compliance with AMLA is now recognized as an implicit exception to RA 1405's secrecy provisions.

2. Republic Act No. 6426 (Foreign Currency Deposit Act of the Philippines)

RA 6426 provides for absolute confidentiality of foreign currency deposits in Philippine banks. The law is designed to encourage foreign currency deposits by offering strict confidentiality to depositors, especially foreigners who might otherwise refrain from bringing currency into the country. The law initially aimed to increase foreign exchange reserves by incentivizing foreign investments in the local banking system.

Exceptions under RA 6426

RA 6426’s confidentiality provisions differ from RA 1405’s in that they are considered stricter. However, there are still recognized exceptions under this law, primarily:

Written Consent of the Depositor:
- Like in RA 1405, RA 6426 allows disclosure if the depositor provides express written consent.
Examination in Cases of Anti-Money Laundering (Indirect Exception):
- Although not explicitly stated in RA 6426, the Anti-Money Laundering Act (AMLA) and related laws indirectly affect foreign currency deposits by requiring banks to report suspicious activities that could indicate money laundering. Under AMLA, the Anti-Money Laundering Council (AMLC) may inquire into and examine deposits if there is probable cause related to offenses specified in the AMLA. However, the examination requires prior court approval to be valid under RA 6426.

3. Anti-Money Laundering Act (AMLA) as an Overarching Statute Affecting Both RA 1405 and RA 6426

The Anti-Money Laundering Act of 2001 (RA 9160), as amended, introduced additional grounds for the disclosure of bank deposits to combat money laundering and terrorism financing. AMLA applies to both peso and foreign currency deposits.

Exceptions under AMLA Affecting Bank Secrecy

Under AMLA, bank deposit confidentiality is lifted in certain situations:

Suspicious Transaction Reports (STRs):
- Banks are required to report suspicious transactions to the AMLC without notifying the depositor, even if this might disclose details of bank deposits that would otherwise be confidential.
Examination of Bank Deposits upon Court Order:
- If the AMLC establishes probable cause that deposits are related to money laundering or other predicate crimes, it can petition the Court of Appeals for authorization to examine specific accounts. The Court of Appeals’ approval effectively lifts the bank secrecy protection for the targeted account(s).
Freezing of Accounts Related to Terrorism Financing or Money Laundering:
- The AMLC may issue a freeze order on accounts that it reasonably believes are related to money laundering or terrorism financing, even before securing a court order. The initial freeze is effective for 20 days, and the AMLC must obtain a court order to extend this period.

Other Statutes with Implications on Bank Secrecy

Certain other laws interact with bank secrecy laws, adding further exceptions under particular circumstances:

The Tax Code (National Internal Revenue Code of the Philippines):
- The Tax Reform for Acceleration and Inclusion Act (TRAIN) amended the Tax Code, giving the Bureau of Internal Revenue (BIR) the authority to access bank deposits in cases involving tax fraud. Under the Tax Code, the BIR Commissioner may inquire into bank accounts if it is in connection with tax fraud cases, but only upon issuance of a court order.
The Sandiganbayan Act (RA 8249):
- In cases before the Sandiganbayan (the special court for cases involving graft and corruption), access to bank records may be granted if relevant to cases under its jurisdiction, especially when prosecuting public officials for offenses under anti-corruption laws.
The Perjury Law:
- Deposits may be examined in cases of perjury, particularly when a public official is being investigated for submitting a false Statement of Assets, Liabilities, and Net Worth (SALN) under oath. This can result in a waiver of bank secrecy protections.

Summary of Exceptions to Bank Secrecy Laws in the Philippines

RA 1405 (Law on the Secrecy of Bank Deposits): Written consent, impeachment proceedings, court order in bribery cases or dereliction of duty, litigation involving the deposit.
RA 6426 (Foreign Currency Deposit Act): Written consent, AMLA cases with probable cause and court order.
AMLA (Anti-Money Laundering Act): STRs, court-approved examination for money laundering, freeze orders.
Tax Code: Court-authorized access in tax fraud cases.
Other Relevant Laws: Exceptions in Sandiganbayan proceedings, SALN-related perjury cases, and related court orders.

In conclusion, while RA 1405 and RA 6426 establish a high standard of confidentiality, the increasing emphasis on anti-corruption, anti-fraud, and anti-money laundering initiatives in the Philippines has led to a progressive expansion of these exceptions. This ensures a balance between protecting individual depositors' rights and upholding public interest in combating financial crimes.