By: Atty. Lew Earvin Manarin on March 3,2025

The Secrecy of Bank Deposits Act (Republic Act No. 1405), often referred to as the Bank Secrecy Act, protects the confidentiality of bank deposit information, ensuring individuals and businesses can conduct transactions without fear of unauthorized disclosure. The law prohibits the release of deposit details without the depositor’s consent, safeguarding both personal and corporate financial privacy.

A key feature of the Bank Secrecy Act is privacy protection. It prevents unauthorized access to bank records, ensuring individuals and businesses are not subjected to unwarranted scrutiny. In tax matters, the Bureau of Internal Revenue (BIR) cannot access taxpayer records without clear legal grounds. Access is only permitted through a court order, ensuring that any breach of financial privacy is legally justified. This balance protects both financial transparency and the taxpayer’s right to privacy.

Although the Secrecy of Bank Deposits Act protects financial privacy, it recognizes certain exceptions where disclosure of bank deposit information is permissible. These exceptions are narrowly defined to balance privacy with the need for financial transparency in specific circumstances.

Under the Bank Secrecy Act, there are only four instances where bank deposits or investments in government bonds may be disclosed or investigated: (1) upon written permission of the depositor; (2) in cases of impeachment; (3) upon order of a competent court in cases of bribery or dereliction of duty; or (4) in cases where the money deposited or invested is the subject of litigation.

In addition, the Commissioner of Internal Revenue (CIR) is authorized to inquire into bank deposit accounts and other related information held by financial institutions under the Tax Code only in the following circumstances:

1. Determining the gross estate of a decedent and the computation of estate tax liability;
2. Applications for tax compromise on the grounds of financial incapacity; and

Requests for tax information of specific taxpayers made by a foreign tax authority pursuant to a tax treaty.

Notably, other laws also provide instances where bank deposits or investments in government bonds may be disclosed or examined, including the following:

1. The Ombudsman may subpoena bank deposit information in cases involving public officials.
2. Disclosure may occur in cases of violation of the Anti-Money Laundering Act (AMLA).
3. Bank deposit information may be disclosed in cases involving unexplained wealth, including plunder.
4. Disclosure may occur in prosecutions under the Anti-Graft and Corrupt Practices Act.
5. Bank deposits may be examined in anti-terrorism investigations under the Human Security Act.
6. Bangko Sentral ng Pilipinas (BSP) may issue orders:
   1. Requiring individuals or entities seeking loans from banks to provide bank deposit information, particularly in relation to financial accommodations.
   1. To monitor compliance with Anti-Money Laundering regulations and investigate unsafe banking practices.
7. The Commission on Audit (COA) may examine bank deposits in the course of government audits related to public funds.
8. Disclosure of dormant accounts under the Unclaimed Balances Law.

In Republic v. Eugenio, Jr. (G.R. No. 174629, February 14, 2008), the Supreme Court emphasized that while exceptions to the Bank Secrecy Act exist, there is a clear disfavor toward interpreting these exceptions in a way that would grant unlimited discretion to the government or any party seeking to enforce those exceptions and inquire into bank deposits. In cases where there are doubts about whether the government has the authority to inquire into such accounts, the doubts must be resolved in favor of preserving the confidentiality of bank deposits.

It thus clear that bank deposit information may only be inquired upon under the specific circumstances provided by law. Consequently, the BIR does not have the authority to access the contents of a taxpayer’s bank account except in the specific instances outlined in the Tax Code and other relevant laws, not even in the course of conducting a tax audit investigation in relation to CIR’s power to make assessments.

In fact, in People v. Ligot (C.T.A. Crim. Case Nos. O-241, O-242, O-243 & O-244), the Court of Tax Appeals (CTA) explained that the exceptions to the bank secrecy laws cannot be extended to tax evasion cases involving violations of Sec. 254 of the Tax Code, which concerns the attempt to evade or defeat tax, and Sec. 255 of the Tax Code, which covers failure to file returns, provide accurate information, pay taxes, withhold and remit tax, and refund excess taxes withheld on compensation. The CTA clarified that the subject matter of the litigation is not the money deposited or invested but the accused’s failure to fulfill the legal obligation to pay taxes and related reportorial requirements. Hence, the absolute confidentiality of the accused’s bank accounts must be respected under the Bank Secrecy Act.

Taxpayers must remain vigilant and aware of their rights under the Bank Secrecy Act.  It is essential that they know the specific circumstances under which disclosure is permitted and they should be cautious when asked to provide sensitive information. Any disclosure outside the legally defined exceptions may infringe upon their rights. Therefore, taxpayers should ensure that any release of their bank details is fully authorized by law and seek legal advice if uncertain, in order to safeguard their financial privacy.

Lew Earvin H. Manarin is a CPA-Lawyer and an associate of Mata-Perez, Tamayo & Francisco (MTF Counsel). This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. If you have any questions or comments regarding this article, you may email the author at info@mtfcounsel.com or visit MTF website at www.mtfcounsel.com