BANKING LAWS  Bank deposits can be examined by law enforcement with a Court of

Appeals order if related to terrorism investigations.

Bank Secrecy Law (RA 1405, as amended)

E – Examination by Authorities
Purpose:

 Bank accounts may be checked by:

 To encourage people to deposit money in banks, and discourage o BSP (Bangko Sentral ng Pilipinas) — for suspected fraud or
hoarding it privately, so banks can use the funds for loans that support serious irregularities.
national development. o PDIC (Philippine Deposit Insurance Corporation) — for
unsafe or unsound banking practices.
Prohibited Acts: o COA (Commission on Audit) — for auditing government funds.
o PCGG (Presidential Commission on Good Government) —
for recovering ill-gotten wealth, especially from the Marcos regime.
 Bank officials or auditors cannot reveal any information about
deposits to anyone except authorized bank personnel.
A – Independent Auditor
 Any person, including government officials, is not allowed to
examine or inquire into bank deposits or government-issued bonds.
 A bank's own independent auditor may examine accounts, but only for
DEPOSITS COVERED (BANK SECRECY LAW) the bank's internal auditing — not for public disclosure or sharing
with others.

 Peso Deposits:
FOREIGN CURRENCY DEPOSITS (RA 6426)
o All bank deposits in the Philippines, including trust accounts.
o Treated as simple loans: depositor = creditor, bank = debtor.
 Government Bonds:  General Rule:
o Investments in bonds issued by the Philippine government and its Foreign currency deposits are absolutely confidential and cannot
agencies. be disclosed.
o Fully backed by the government's taxing power.
Exceptions (When disclosure is allowed):
EXCEPTIONS TO BANK SECRECY LAW
1. Written consent of the depositor (Section 8, RA 6426).
W – Written Permission 2. Anti-Money Laundering Act (Section 11):
o If there’s probable cause linking the deposit to unlawful
activities or money laundering.
 The depositor or investor signs a written consent allowing their bank 3. Human Security Act (Sections 27 and 28):
account to be examined. o If related to terrorism cases and probable cause is
established.
I – Impeachment Cases 4. Examination by government bodies:
o BSP (Bangko Sentral ng Pilipinas)
o PDIC (Philippine Deposit Insurance Corporation)
 Bank accounts can be opened if officials like the President, VP, Supreme o PCGG (Presidential Commission on Good Government)
Court justices, or Constitutional Commission members are being o COA (Commission on Audit)
impeached for crimes like corruption, treason, bribery, betrayal of public
trust, etc.
GARNISHMENT

O – Order of Competent Court

 Definition:
Garnishment is a legal process where a creditor seizes money from a
 A court can order the examination of deposits in cases involving: debtor’s bank account to pay off a debt.
o Bribery or failure of public officials to do their duties.  General Rule:
o Money that is the subject of a court case (example: wrongful Bank accounts may be garnished without violating bank secrecy
deposit).
because the amount is not disclosed to the public.
o Unexplained wealth (Anti-Graft and Corrupt Practices Act).
 Exception (Foreign Currency Deposits):
o Generally, foreign currency deposits cannot be garnished.
C – Commissioner of BIR o Exception to the exception:
In Salvacion v. Central Bank (GR 94723, Aug. 21, 1997), dollar
deposits by a transient or tourist are not protected and
 The Bureau of Internal Revenue (BIR) can check deposits:
may be garnished.
o To compute estate taxes for someone who died.
o When responding to international tax agreements.  Also Exempt:
Some garnishments are allowed under the Rules of Court.

A – AMLC (Anti-Money Laundering Council)

PENALTIES FOR VIOLATION

 AMLC can investigate bank accounts if there’s probable cause of

money laundering or unlawful activities, sometimes even without a court Type of Deposit Imprisonment Fine
order.
Peso Deposits Up to 5 years Up to ₱20,000
R – Reports
Foreign Currency Deposits 1 to 5 years ₱5,000 to ₱25,000
 Banks are required to:
o Report dormant accounts (inactive for at least 10 years) to the
Treasurer under the Unclaimed Balances Act. UNCLAIMED BALANCES LAW (ACT 3936, AS AMENDED BY PD 679)
o Report covered and suspicious transactions to the AMLC.
Unclaimed Balances:
O – Ombudsman

 Definition:
 The Ombudsman can inspect bank accounts during investigations if all Includes money, securities, or any form of credit in banks, building
of these conditions are met: and loan associations, and trust corporations that:
1. There is a pending case in court. o Have not been touched (no deposits or withdrawals) for 10
2. The inspection must be limited to the issue in that case. years or more, or
3. Bank personnel and the account holder must be notified o Are in favor of someone known to be dead.
and allowed to be present.
4. Only the specific account involved can be examined.
Bank's Obligation:

T – Terrorism Cases (Human Security Act)

 Report: o The coverage limit for insured deposits was raised to
Every bank must report unclaimed balances to the Treasurer of the ₱1,000,000 (effective March 15, 2025).
Philippines through a sworn statement. The Treasurer will then inform 3. Basic Policy:
the Solicitor General. o The main goal is to safeguard depositors by providing insurance
 Deadline: coverage for all insured deposits.
Banks must submit this report every January of every odd year. 4. Insured Deposit:
o The PDIC insures deposits made by bona fide depositors in
insured banks.
PROCEDURE FOR ESCHEAT (HANDLING UNCLAIMED BALANCES) o Coverage limit: Up to ₱1,000,000 per depositor, per bank,
including deposits in checking, savings, and time accounts.
1. Notice to Depositor: o For joint accounts, each depositor’s share is insured up to
o A notice is sent to the depositor's last known address (either ₱1,000,000.
home or post office). 5. Coverage:
2. Report to the Treasurer: o All deposit liabilities of a bank, whether already operating or
o The bank submits a sworn statement to the Treasurer of the starting to accept deposits, are covered by PDIC insurance.
Philippines, detailing the unclaimed balance. 6. Commencement of Liability:
3. Information Required in the Sworn Statement: o The PDIC starts determining the insured deposits once it takes over
o Names and addresses of the person(s) in whose favor the a closed bank.
balance stands.
o Amount and nature of the balance (money or security). DEPOSIT ACCOUNTS NOT ENTITLED TO PAYMENT
o Date of the last deposit/withdrawal or the date of death, if known.
o Interest due on the balance, if any.
4. Posting Requirement: 1. Splitting of Deposit:
o The sworn statement must be posted in a conspicuous place o Occurs when a deposit over ₱1,000,000 is broken into smaller
at the bank for 60 days from the filing date. accounts to increase insurance coverage.
5. Escheat Proceedings: o Punishable by 6 to 12 years imprisonment or a fine of
o The Solicitor General starts the legal process in court to transfer ₱50,000 to ₱10,000,000.
unclaimed balances to the government. 2. Head Office of a Foreign Bank in its Branch:
o A copy of the complaint and summons is served to the bank’s o Deposits made by the head office of a foreign bank in its
president, cashier, or managing officer. Philippine branch are not covered.
3. Anti-Money Laundering Act (RA 9160):
o The summons is also published in a newspaper with wide
circulation. o Deposits linked to unlawful activities, as defined by the Anti-
6. Court Judgment: Money Laundering Act, are excluded.
4. Outside the Philippines:
o After trial, if the balances are confirmed as unclaimed, the court
will declare them escheated (transferred to the government). o Deposits payable outside the Philippines (like those in foreign
7. Deposit with the Treasurer: branches) are not entitled to payment.
5. Unfunded Deposits:
o The unclaimed balances (and any increase/proceeds) are
deposited with the Treasurer of the Philippines for the o Accounts or transactions that are unfunded, fictitious, or
Republic's use, as directed by Congress. fraudulent are not insured.
6. Unsafe and Unsound Banking Practices:
o Accounts linked to unsafe or unsound banking practices as
PROCEDURE FOR REACTIVATION OF UNCLAIMED BALANCES determined by PDIC and BSP.
7. Investment Products:
1. Letter Request from Depositor/Creditor: o Bonds, securities, trust accounts, and similar investment
o The depositor/creditor writes to the depository bank, asking products are not entitled to PDIC insurance.
to reactivate the account included in the unclaimed balances
report to the Bureau of the Treasury. DETERMINATION OF THE AMOUNT DUE (DEPOSIT INSURANCE
2. Authentication: COVERAGE)
o The bank verifies the request and the depositor/creditor's
signature for authenticity.
3. Letter Request from the Bank: 1. Per Bank:
o The bank sends a letter to the Bureau of the Treasury, asking
for permission to reactivate the account, attaching the verified  Insurance is provided per bank. If a depositor has accounts with
request letter from the depositor/creditor. multiple banks, each bank’s deposit will be insured up to ₱1,000,000.
4. Deed of Undertaking:
o The bank signs a Deed of Undertaking, ensuring that the
Bureau of the Treasury and its officials will not be held liable 2. Per Depositor, Per Capacity Rule:
once the account is reactivated.
5. Letter of Authority to Reactivate:
 All accounts held in the same name or capacity (e.g., individual,
o If the request is complete, the Bureau of the Treasury will issue joint) with the same bank will be added together to determine the
a Letter of Authority allowing the bank to reactivate the account.
total insured amount.
6. Entity Requirements:
o If the depositor/creditor is a company or organization, the  Example: If X has both a personal account and an account in trust for
request must include board resolutions or a Secretary's someone else in the same bank, those accounts will be added up to
Certificate showing the authorized signatory for the reactivation calculate the total insurance.
request.
3. Accounts "By", "In Trust For (ITF)" or "For the Account of (FAO)" another
7. Approving Authority: person:

 Division Chief/Head (Legal Service):  "By" Account (Juan by Pedro): Juan is the depositor.
For unclaimed balances up to ₱100,000.  "ITF" Account (Juan ITF Pedro): Pedro is the depositor.
 Director, Legal Service:  "FAO" Account (Juan FAO Pedro): Pedro is the depositor.
For balances over ₱100,000 but not exceeding ₱500,000.
 Deputy Treasurer of the Philippines: 4. Individual Accounts:
For balances over ₱500,000 but not exceeding ₱1,000,000.
 Treasurer of the Philippines:
For balances over ₱1,000,000.  All individual accounts of a depositor (including "by", "ITF", or "FAO"
accounts) are insured up to ₱1,000,000.

PHILIPPINE DEPOSIT INSURANCE CORPORATION (PDIC) ACT

OVERVIEW Illustration:
If Fe Santos has the following four accounts in the same bank:
1. Creation and Purpose:
o The PDIC was established in 1963 by Republic Act 3591 to  Fe Santos: ₱100,000 (insured for ₱100,000)
insure deposits in banks.  Ben Santos For the Account of Fe Santos: ₱100,000 (insured for
o It is an attached agency of the Department of Finance. ₱100,000)
2. Recent Amendments:
 Charlie Santos In Trust For Fe Santos: ₱100,000 (insured for
o The latest amendments, under RA 10846, strengthen the PDIC’s ₱100,000)
authority to protect depositors and promote financial stability.
 Fe Santos' Store (Sole Proprietorship): ₱1,000,000 (insured for o PDIC may withhold payments to a depositor if there are unresolved
₱700,000 due to limit) liabilities (e.g., the depositor is a stockholder of the closed bank).
11. Effect of Payment:
o Once payment is made, PDIC becomes subrogated to the
Total Insured Deposit: ₱1,000,000 (maximum coverage) depositor’s rights against the closed bank. This allows PDIC to claim
any recoveries, including stockholder liability.
5. Joint Accounts: 12. Discharge of Liability:
o PDIC is discharged from liability once the insured deposit is paid,
and if a transferred deposit is paid by another bank, the bank is
 Joint accounts are insured separately from individual accounts. also discharged from liability.
 The maximum insurance for joint accounts is divided equally among co- 13. Priority of Payments:
owners, but the total cannot exceed ₱1,000,000 per person. o Payments made by PDIC are considered public funds, similar to
tax payments, and have priority in liquidation proceedings.
14. Period for Settlement:
Example:
o PDIC must settle claims within 6 months from the date of filing.
o If PDIC delays due to gross negligence, bad faith, or malice,
 If a depositor has joint accounts with others and individual accounts, PDIC directors, officers, or employees could face imprisonment
the total insurance coverage can be up to ₱2,000,000: for 6 months to 1 year.
o ₱1,000,000 for individual accounts 15. Exceptions:
o ₱1,000,000 for joint accounts (split between the co- o The 6-month period may be extended if the validity of a claim
owners). requires resolution by another body or agency.

Summary: ANTI-BOUNCING CHECKS LAW (BATAS PAMBANSA 22)

B.P. 22 is a law that penalizes people who issue checks without enough funds
 Per bank insurance: ₱1,000,000 per bank.
in their bank accounts to cover the check.
 Individual accounts: Up to ₱1,000,000 total.
 Joint accounts: Additional coverage up to ₱1,000,000 for joint
What is a Bouncing Check?
accounts (separate from individual coverage).

A "bouncing check" refers to a check that is rejected by the bank because

PROCEDURE FOR PDIC
there are insufficient funds in the issuer's account to cover the amount written
on the check.
1. Commencement of Claims Process:
o PDIC starts the process of determining insured deposits after
Purpose of the Law
taking over the closed bank.
o Notice to Depositors: PDIC will notify depositors about their
insured deposits by methods approved by the Board of Directors, The goal of this law is to ensure the integrity of checks and maintain trust
such as publishing the notice in newspapers for at least 3 in their use as a form of payment.
consecutive weeks.
2. Certificate of Deposit: KEY POINTS:
o The owner/holder of a negotiable certificate of deposit is not
recognized as a depositor unless their name is registered in the
bank's books. 1. Definition of a Check:
3. Filing Claims: o A check is a written, negotiable instrument (like a bill of
o Claims Filing Period: Depositors file claims during the claims exchange) that orders a bank to pay a specific amount of money
settlement period announced by PDIC. Claims are announced in to a designated person (the payee).
the Notice to Depositors or posted in the bank's premises and 2. Parties Involved:
on PDIC’s website. o The Issuer/Drawer/Maker: The person who writes the check
o Depositors Required to File Claims: and whose account will cover the payment.
 Those with deposit balances over ₱100,000. o The Payee: The person who receives the check and will cash or
 Depositors with outstanding obligations with the closed bank. deposit it.
 Depositors with balances under ₱100,000 who have not o The Drawee Bank: The bank that the check is drawn on and from
which the funds will be withdrawn.
updated their addresses in the bank records.
3. Elements of a Violation:
 Depositors maintaining accounts in the name of business o The making, drawing, and issuance of a check.
entities.
4. Depositors Not Required to File Claims:
o The knowledge of the person issuing the check that they don't
have enough funds or credit in the bank to cover the amount of
o Depositors with accounts below ₱100,000 do not need to file the check at the time it was written.
claims if:
o The check is dishonored by the bank due to insufficient funds or
 They have no outstanding obligations. because the issuer has stopped payment.
 Their address is up-to-date in the bank records. 4. Knowledge of Insufficient Funds:
o If a check is dishonored due to insufficient funds and the issuer
These depositors can receive immediate payment through does not pay the amount due or make arrangements for payment
postal money orders sent to their mailing addresses. within 5 banking days after being notified, it is prima facie
evidence (presumed proof) that they knew their account did not
have enough funds to cover the check.
5. Who Signs the Insurance Claim?
o Depositor (18+ years): Signs for themselves.
o Parent: If the depositor is under 18. Penalties:
o Agent: For "By" accounts.
o Trustee: For "In Trust For" accounts.  The law penalizes the act of issuing a worthless check, not just the
o Each Depositor: For joint accounts. nonpayment of a debt.
6. Claim Filing and Enforcement Period:
o File Claims: Within 2 years from the bank’s closure.  If someone issues a check without sufficient funds, they can face
criminal charges.
o Enforce Claims: Within 2 years after the filing period.
7. Proof of Claim:
o PDIC may require proof before paying out the insured deposit. EFFECT OF ACQUITTAL ON CIVIL LIABILITY
o If PDIC is unsure about the validity, it can request a court decision
before paying the claim. An acquittal in a criminal case involving a dishonored check does not
8. Non-Compliance (Non-filing or Non-enforcement): automatically cancel the civil liability of the person who issued the check.
o Depositor’s rights against PDIC are barred after the filing period.
o Rights against the closed bank or its shareholders revert to the
depositor.  Acquittal (being found not guilty) based on lack of proof beyond a
o PDIC is discharged from liability once the period expires. reasonable doubt does not mean the person is free from paying
9. Modes of Payment: damages related to the dishonored check.
o Payment Methods:  The civil liability (e.g., for the amount of the check) can still be
 Cash. pursued even after an acquittal.
 Transferred deposits to another insured bank equal to the
insured amount. PENALTY FOR VIOLATING THE ANTI-BOUNCING CHECKS LAW
10. Withholding of Payment: (B.P. 22)
If found guilty of issuing a bouncing check, the penalties include: Result:

1. Imprisonment:  A is not liable for Estafa because the check was for a pre-existing
o Minimum: 30 days obligation, and there was no deceit.
o Maximum: 1 year  However, A is liable for violating B.P. 22 because they issued a
2. Fine: worthless check.
o Minimum: Equal to the value of the bounced check
o Maximum: Double the amount of the check, but the fine cannot
exceed P200,000. If C tries to present the check after 90 days, A will not be liable for the
3. Both Imprisonment and Fine: offense anymore.
o The court has the discretion to impose both penalties
(imprisonment and a fine).

STOP PAYMENT ORDER:

General Rule:

If the issuer (drawer) issues a stop payment order to the bank before
the payee can encash the check, the issuer can still be liable under B.P. 22.

 Stop payment is seen as a way for the issuer to avoid responsibility,

but it does not protect them from criminal liability.

Exception:
If the issuer has a valid reason for issuing the stop payment order, such as:

 A mistake in the payee's name, or

 Goods or services were not delivered,

then the issuer may not be held liable for criminal charges, provided the stop
payment order is justified.

ESTAFA BY ISSUING OR POSTDATING A WORTHLESS CHECK

Issuing or postdating a check with insufficient funds to cover it can result in

the crime of Estafa (fraud). The failure to deposit enough money to cover
the check within three days of being notified that the check was dishonored
(due to insufficient funds) can be treated as prima facie evidence of
deceit, meaning it's automatically assumed to be a fraudulent act.

Elements of Estafa by Issuing a Worthless Check:

1. Issuing or Postdating a Check: The check is issued to pay for a debt

or obligation when the issuer knows there are not enough funds in the
account to cover the amount.
2. Insufficient Funds: The issuer’s bank account doesn’t have enough
money to cover the check amount.
3. Damage to the Payee: The person or business receiving the check is
harmed because the check cannot be cashed due to insufficient funds.

Good Faith Defense:

 Good faith can serve as a defense if the issuer genuinely believed

they would be able to deposit enough funds to cover the check, but
failed to do so.
 If the issuer informed the payee (the person receiving the check)
before the check was presented for payment, asking them not to
present it due to financial difficulties, this may prevent liability for Estafa.
o Example: In People vs. Villapando, the accused was not liable
because they informed the complainant not to present the check
when they realized they couldn't make the deposit.

Pre-existing Obligation:

 If the check was issued to pay for an existing debt or obligation (a

pre-existing obligation), and the issuer didn’t have sufficient funds,
there is no deceit. In such cases, the crime of Estafa does not
apply.

Liability for Both Estafa and Bouncing Checks (B.P. 22):

 A person may be liable for both Estafa and violating B.P. 22 (the
Anti-Bouncing Check Law). This is because Estafa involves deceit, while
B.P. 22 punishes the act of issuing a worthless check.

Example:

 A issues a check for P10,000 to B as payment for a pre-existing

obligation.
 B then gives the check to C and represents it as a valid check.
 The check is dishonored for insufficient funds when C tries to cash it.