B. Secrecy of Bank Deposits (RA 1405; RA 6426, as amended by PD 1035, 1246, and 1453)

Secrecy of Bank Deposits (RA 1405 and RA 6426, as Amended)

Under Republic Act No. 1405, the declared policy of the Government is to encourage the depositing of money in banking institutions and to discourage private hoarding, thereby allowing funds to be utilized by banks in authorized loans to support national economic development¹. In pursuit of this policy, all deposits of whatever nature with banks or banking institutions in the Philippines, including investments in bonds issued by the Government, its political subdivisions, and its instrumentalities, are treated as of an absolutely confidential nature². Consequently, bank officials and employees are prohibited from disclosing any information concerning such deposits to unauthorized persons³.

Deposits protected under Republic Act No. 1405 may not be examined, inquired, or looked into by any person, government official, bureau, or office, except in the following specific instances:

• Upon the written permission of the depositor²;
• In cases of impeachment²;
• Upon order of a competent court in cases of bribery or dereliction of duty of public officials²; or
• In cases where the money deposited or invested is the subject matter of the litigation².

Under Presidential Decree No. 1035, the secrecy of deposits under that decree is governed in accordance with the provisions of Republic Act No. 1405⁴. Depository banks designated by the Central Bank are authorized to accept foreign currency deposits and trusts—allowing numbered accounts for recording and servicing—and to issue certificates, accept such deposits as collateral, and pay interest in foreign currency⁵. Furthermore, Section 6 of Republic Act No. 6426, as amended by Presidential Decree No. 1246, states a tax exemption for eligible foreign currency deposits, including interest and other income or earnings, whether maintained by residents or nonresidents⁶. The taxation of that interest and other income must, however, be determined under the later applicable provisions of the National Internal Revenue Code; it is not categorically exempt for both residents and nonresidents.