RFBT 05 18 Banking Laws

No. 125 Brgy.
San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com
Banking Laws
Coverage
a. Bouncing Checks Law
b. PDIC Law
c. Bank Secrecy Laws
d. Anti-Money Laundering Law
e. Truth in Lending Act
Batas Pambansa Bilang 22 (Bouncing Checks Law)
A. Punishable Acts under BP 22

1. Any person who (a) makes or draws and issues any check to apply on account or for value, (b)
knowing at the time of issue that he does not have sufficient funds in or credit with the drawee
bank for the payment of such check in full upon its presentment, (c) which check is subsequently
dishonored by the drawee bank for insufficiency of funds or credit or would have been
dishonored for the same reason had not the drawer, without any valid reason, ordered the bank
to stop payment.
2. Any person who, having sufficient funds in or credit with the drawee bank when he makes or
draws and issues a check, shall fail to keep sufficient funds or to maintain a credit to cover the
full amount of the check if presented within a period of ninety (90) days from the date appearing
thereon, for which reason it is dishonored by the drawee bank.
B. Elements of Criminal Violation of BP 22 for issuance of worthless checks
1. There must be making, drawing, and issuance of any check to apply for account or for value.
2. There must be knowledge of the maker, drawer, or issuer that at the time of issue he does not
have sufficient funds in or credit with the drawee bank for the payment of the check in full upon
its presentment.
3. There must be subsequent dishonor of the check by the drawee bank for insufficiency of funds or
creditor dishonor for the same reason had not the drawer, without any valid cause, ordered the
bank to stop payment.
C. Penalty for violation of BP 22 at the discretion of the court
1. Imprisonment of not less than thirty days but not more than one (1) year; or
2. Fine of not less than but not more than double the amount of the check which fine shall in no
case exceed Two Hundred Thousand Pesos; or
3. Both imprisonment of not less than thirty days but not more than one (1) year and Fine of not
less than but not more than double the amount of the check which fine shall in no case exceed
Two Hundred Thousand Pesos.
D. Evidence of Knowledge of Insufficiency of Funds by the Issuer of Worthless Check
The making, drawing and issuance of a check payment of which is refused by the drawee because of
insufficient funds in or credit with such bank, when presented within ninety (90) days from the date of
the check, shall be prima facie evidence of knowledge of such insufficiency of funds or credit
E. Evidence or Defense to destroy prima facie evidence of knowledge of insufficiency of

funds by the Issuer of Worthless checks
The maker or drawer pays the holder thereof the amount due thereon, or makes arrangements for
payment in full by the drawee of such check within (5) banking days after receiving notice that such
check has not been paid by the drawee.
1|P a g e RLACO/DSALES/NVALDERRAMA
No. 125 Brgy. San Sebastian
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Telephone : (043) 723 8412
F. Duty of Drawee Bank
It shall be the duty of the drawee of any check, when refusing to pay the same to the holder thereof
upon presentment, to cause to be written, printed, or stamped in plain language thereon, or attached
thereto, the reason for drawee's dishonor or refusal to pay the same: Provided, That where there are no
sufficient funds in or credit with such drawee bank, such fact shall always be explicitly stated in the
notice of dishonor or refusal. In all prosecutions under this Act, the introduction in evidence of any
unpaid and dishonored check, having the drawee's refusal to pay stamped or written thereon or attached
thereto, with the reason therefor as aforesaid, shall be prima facie evidence of the making or issuance of
said check, and the due presentment to the drawee for payment and the dishonor thereof, and that the
same was properly dishonored for the reason written, stamped or attached by the drawee on such
dishonored check. Notwithstanding receipt of an order to stop payment, the drawee shall state in the
notice that there were no sufficient funds in or credit with such bank for the payment in full of such
check, if such be the fact.
G. Credit Construed
The word "credit" as used herein shall be construed to mean an arrangement or understanding with the
bank for the payment of such check.
H. Evidence Required for Violation of BP 22

1. To prove violation of BP 22 or for conviction of crime of BP 22 – Proof beyond reasonable doubt
2. To prove civil damages on civil action involving BP 22 – Preponderance of evidence
3. To sue or to file a case for violation of BP 22 – Probable cause or Prima Facie evidence
I. Scope of Criminal Prosecution for BP 22

1. Covered Checks
a. Corporate Check – Officer who signed the checks
b. Accommodation Check – Accommodating maker
c. Personal Check – Maker/Issuer of Check
2. Uncovered Checks
a. Manager’s check
b. Cashier’s check
J. Distinctions between Violation of BP 22 and Estafa

Criterion for Distinction Violation of BP 22 Estafa
Worthless Check Mandatory Not required
Presence of Deceit/Fraud Not required Required
Presence of Damage Not required Required
Good Faith as a defense Not applicable Applicable
Notice of Dishonor Required Not Required
Nature of Crime Mala Prohibita Mala In Se
Applicable Penal Law Special Penal Law Revised Penal Code
K. Prosecution for Violation of BP 22 (Requirement of Receipt of Notice of Dishonor by Maker

or Drawer)
Failure to establish that a written notice of dishonor was actually received by the maker or drawer of the
check is a ground for an acquittal. Numerous BP 22 cases have been dismissed and/ or have resulted in
the acquittal of the accused on the ground that the prosecution failed to establish that the accused had
actually received a notice of dishonor.
First, the prosecution in a BP 22 case must establish that (a) notice of dishonor was sent to the issuer of
the dishonored check and (b) that the same was actually received. A notice of dishonor may be sent to
the maker or drawer of the dishonored check by (1) by personal service upon the issuer or (2) by
registered mail. If the notice of dishonor is sent by registered mail, the fact of sending the notice of
dishonor is established by the registry receipt, the registry return card, and an affidavit executed by the
person who mailed the notice of dishonor detailing the circumstances of the mailing.
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As to establishing actual receipt, the prosecution must also prove that the signature appearing on the
registry return card or notice of dishonor, in case of personal service, belongs to that of the issuer of the
dishonored check or, at the very least, to his duly authorized agent. In the latter case, the prosecution
must establish the capacity and authority of such person as agent. An illegible signature, such as when a
recipient merely signs his/ her initials on the registry return card or notice of dishonor, as the case may
be, does not prove that the issuer actually received the notice of dishonor. It is also crucial that the
registry return card or the notice of dishonor indicate the date it was received in order to fix the start of
the five (5) day period within which the maker or drawer of the check must pay or make arrangements
for the payment of the amount of the check.
The notice of dishonor may be sent to the office of the maker or drawer of the dishonored check but he
must receive the notice personally or through his authorized agent. A corporation or an officer of a
corporation that receives a notice of dishonor addressed to one of its employees has no obligation to
forward the notice to the employee concerned. Thus, such receipt is not the receipt contemplated by BP
22. A notice of dishonor may also be sent to the residence of the maker or drawer of the dishonored
check and received by him/her, the housemaids or houseboys who are deemed to have a special power-
of-attorney to receive mail in behalf of the addressee, or any member of the family of sufficient age or
discretion). Notably, the notice of dishonor may be sent to, and received by, the maker or drawer of the
dishonored check wherever he may be found as long as the fact and date of receipt are established.
J. Differences between BP 22 and Estafa
Estafa and Violation of Bouncing Checks Law, how do they differ?
In the Philippines, B.P. 22, commonly referred to as the Bouncing Checks Law, and Article 315 of the
Revised Penal Code are the laws that penalize the issuance of bouncing checks and Estafa, respectively.
Cases that violate these laws may narrate the same facts, they differ, however, with the causes of action.
B.P. 22 or the Bouncing Checks Law is a special penal law that penalizes the act of making, drawing, and
issuance of a check without sufficient funds or credit. As discussed above, this law specifically punishes
acts, to wit: (1) the making or drawing and issuing a check knowing at the time of issuance that he does
not have sufficient funds; or (2) the failure to keep sufficient funds or to maintain credit to cover the full
amount of the check. The violation of this law is a crime mala prohibita as the acts stipulated are
prohibited by a special penal law.
Article 315 of the Revised Penal Code punishes the act of Estafa or swindling which is committed by any
person by means of the following: (1) with unfaithfulness or abuse of confidence; (2) by means of false
pretenses or fraudulent acts; or (3) through any fraudulent means. Example, committing Estafa by means
of false pretenses or fraudulent acts includes postdating or issuing a check without having funds or
having insufficient funds.
For many years, checks, or the issuance thereof, have become a vital instrument for individuals,
businesses, and other entities to facilitate a smoother flow of commercial transactions. This commercial
innovation has made it easier for some individuals to secure a loan. However, since it is not really difficult
to get hold of a check, it has also become susceptible to abuse. There are persons who knowingly issue
worthless checks to secure or pay an obligation or for some other purposes. Consequently, these checks
will bounce.
Currently, there are two laws that penalize the issuance of bouncing checks in the Philippines, to
wit: Estafa under Article 315 of the Revised Penal Code and B.P. 22.
Although Estafa and B.P. 22 or the Bouncing Checks Law cases may originate from a similar set of facts,
they, however, present different causes of action. Under the affected laws, these causes of action are
considered distinct and independent from each other; thus, filing both Estafa and B.P. 22 against a
person, arising from the same set of facts, does not necessarily violate the rule on double jeopardy.
Estafa is a crime against property while a violation of B.P. 22 constitutes a crime against public interest.
Thus, Estafa and B.P. 22 may coincide. The former is committed when a person, employing any of the
modes enumerated under Article 315 of the Revised Penal Code, defrauds another. One of the means of
committing Estafa under Article 315 of the RPC is by deceit through the issuance of bouncing checks.
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On the other hand, the violation of B.P. 22 is committed when the offender or the maker of the check
issues the same with knowledge that the fund in the account to which the check will be drawn against is
insufficient. Such knowledge of insufficiency of funds is presumed by the law.
A check, although technically not a legal tender, is nowadays used as a substitute for cash. The issuance
of checks makes business dealings faster and more convenient. It allows for transactions, especially
those involving large sums, to proceed without the need of physically giving money. However, this
commercial instrument has been and is still being abused by certain individuals. Such actions have a
negative impact on the integrity of banking and financial transactions in the country. This consequently
becomes inimical to public interest.
The enactment of B.P. 22 or the Bouncing Check Law was a means for the government to address said
issue and repress the practice of some people of issuing worthless checks or those that are dishonored
when presented to the drawee bank.
Definition Under the law

B.P. 22 is a special law that makes the mere act of issuing worthless or bum checks a crime, mala
prohibita, regardless if they were made as deposit, guarantee, or evidence of pre-existing debt. Thus, it
penalizes the making, drawing, and issuance of checks that are subsequently dishonored by the drawee
bank due to insufficiency of funds.
The law is broad enough to include, within its coverage, the making and issuing of a check by one who
has no account with a bank, or where such account was already closed when the check was presented
for payment. (Resterio v. People, G.R. No. 177438, [September 24, 2012], 695 PHIL 693-710)
Elements of the Offense

B.P. 22 punishes two acts, to wit: (1) the making or drawing and issuing a check knowing at the time of
issuance that he does not have sufficient funds; or (2) the failure to keep sufficient funds or to maintain
credit to cover the full amount of the check.
The elements that constitute the first punishable act under this law are the following:
1. That a person makes or draws and issues any check to apply on account or for value;
2. That the person knows that at the time of issue, he does not have sufficient funds in or credit
with the drawee bank for the payment of such check upon its presentment; and
3. That the check is subsequently dishonored by the drawee bank for insufficiency of funds or
creditor or would have been dishonored for the same reason had not the drawer, without any
valid reason, ordered the bank to stop payment.
The elements that constitute the second punishable act under this law are the following:
1. That a person has sufficient funds with the drawee bank when he makes or draws and issues
a check;
2. That he fails to keep sufficient funds to maintain a credit to cover the full amount if
presented within a period of 90 days from the date appearing on the face of the check;
3. That the check is dishonored by the drawee bank; and
4. After receiving such written notice and demand refuses or fails to pay the value of the check
within five (5) banking days.
It is to be noted that in the second punishable act under B.P. 22, the ninety (90) days provided therein is
not one of the elements that constitutes the crime penalized thereunder. Pursuant to current banking
practices, the reasonable time within which the maker, drawer, or issuer of the check has the duty to
maintain a sufficient fund balance is 180 days or 6 months. However, the maintenance of sufficient funds
for a period of 90 days under the law is essential in order to rebut the law’s presumption of knowledge of
such insufficiency of funds to cover the check.
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Thus, if a check was presented after 90 days but before 180 days from the date written on its face, and
was dishonored on the ground that the maker, drawer, or issuer’s failure to maintain a sufficient balance,
such maker, drawer, or issuer would still be liable for violation of B.P. 22.
Practical Example
X wanted to buy a car for a really long time. Since he could not afford to buy a brand-new car, he offered
to buy one of Y’s car for P200,000.00. Y agreed to sell X his oldest car. Trusting his friend X, Y already
delivered the car to the former in exchange for a dated check with the amount of P200,000.00. Since it is
already 7 o’clock in the evening, Y was only able to encash said check on the following day after delivery
of the car. However, upon presentment of the check to the drawee bank, the same was dishonored by
reason of insufficiency of funds.
In this example, X committed a violation of B.P. 22 particularly the first mode of commission thereunder:
that is the making or drawing and issuing of a check knowing at the time of issuance that he does not
have sufficient funds. In this particular example, X may also be held liable for the crime of Estafa by
means of deceit.
C is in the business of buying and selling palay. In order to avoid handling large sums of money and to
reduce the probability of getting robbed, C never pays in cash. He only issues checks as payment for the
palay he buys. F came to C’s palay buying station asking how much the latter would buy F’s palay. Seeing
that the quality of said palay is good, C offered to pay F P18 per kilo. Not satisfied, F negotiated for a
better price of P21 per kilo. C agreed to buy said palay for P3 above the current market price on the
condition that the check he would issue F as payment would be dated three months after delivery of
palay. Amenable to C’s proposal, F delivered his palay to C’s warehouse on April 1, 2021. In return, C
issued to F a check post-dated on July 1, 2021. Although C’s account had sufficient funds when he issued
F the said check, due to the poor management of his warehouse, a bulk of the palay he stored therein
subsequently changed color and obtained a bad smell. Since C wanted to cut his loss, he sold the said
palay for a price lower than the price for which he bought them. C even agreed to a later payment in
exchange for the palay. Because of such loss, C’s account subsequently became insufficiently funded.
Come July 1, 2021, F went to the bank for the encashment of the check issued by C. However, this was
dishonored by the drawee bank because of insufficiency of funds. Furious of what just happened, F sent
to C a demand letter for the payment of the value of the check that was dishonored. C promised to pay F
the said amount; however, more than 5 banking days after receipt of the demand letter, C still failed to
pay his obligation to F. In this example, C committed a violation of B.P. 22 particularly the second mode
of commission thereunder; that is the failure to keep sufficient funds or to maintain credit to cover the
full amount of the check.
Related Jurisprudence
In the case of People vs Chua, the Court held that NATY is liable under Batas Pambansa Blg. 22 for
issuing four replacement checks. The law makes the mere act of issuing a worthless check punishable as
a special offense. The gravamen of the offense under this law is the act of issuing a worthless check or a
check that is dishonored upon its presentment for payment. The law has made the mere act of issuing a
bum check a malum prohibitum, an act proscribed by legislature for being deemed pernicious and
inimical to public welfare. It is undisputed that the four replacement checks in question were issued by
NATY and that these were all dishonored due to insufficiency of funds. (People v. Chua, G.R. No. 130632,
[September 28, 1999], 373 PHIL 962-976)
In the case of Tan vs Mendez, Jr., Petitioners were convicted for violation of BP Blg. 22. The present case
is an appeal whereby petitioners alleged payment through compensation or offset to preclude
their prosecution. The Court held in this case that Petitioner Marciano admitted that he drew the subject
check as payment for the fuel and oil products of respondents. He knew at that time that there were no
sufficient funds to cover the check because he had uncollected receivables. The check was thus
dishonored upon presentment to the bank for payment. The law has made the mere act of issuing a bum
check a malum prohibitum, an act proscribed by legislature for being deemed pernicious and inimical to
public welfare. The gravamen of the offense under this law is the act of issuing a worthless check or a
check that is dishonored upon its presentment for payment. Thus, even if there had been payment,
through compensation or some other means, there could still be prosecution for violation of B.P. 22. We
find that no reversible error was committed by the courts a quo in finding petitioners guilty of violation of
B.P. 22. (Tan v. Mendez, Jr., G.R. No. 138669, [June 6, 2002], 432 PHIL 760-774)
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In the more recent case of San Mateo vs People, the Court granted San Mateo’s petition for certiorari and
acquitted her in this wise: Since there is insufficient proof that San Mateo actually received the notice of
dishonor, the presumption that she knew of the insufficiency of her funds cannot arise. For this reason,
the Court cannot convict her with moral certainty of violation of B.P. 22. Nevertheless, San Mateo’s
acquittal does not entail the extinguishment of her civil liability for the dishonored checks. An acquittal
based on lack of proof beyond reasonable doubt does not preclude the award of civil damages. For this
reason, the trial court’s directive for San Mateo to pay the civil liability in the amount of P134,275.00
representing the total value of the 11 checks plus 12% interest per annum from the time the said sum
became due and demandable until fully paid, stands. (San Mateo v. People, G.R. No. 200090, [March 6,
2013], 705 PHIL 630-640)
What is the felony of Estafa under the Revised Penal Code?

Estafa is also known as Swindling and is punishable in the Philippines as stated in the Revised Penal
Code. Estafa can be committed by different forms, to wit: (1) Estafa with unfaithfulness or abuse of
confidence; (2) Estafa by means of deceit; and (3) Estafa through fraudulent means. The penalty for
Estafa was amended by RA 10951 wherein the basis for fines is the increased amount of fraud.
Practical Example
X borrowed Y’s white car for the former’s wedding this coming weekend. When the date passed and
came Monday, Y asked X for the return of his car. X does not return the white car and sells it to another
person to add his pocket money for his honeymoon. A committed the crime of Estafa, specifically the first
form which is Estafa with unfaithfulness or abuse of confidence (Article 315 No. 1, RPC).
C purchases iPhone 12 Pro Max worth P70,000 from D. C issues a check in payment of the item he
bought. D agrees and allows C to take the phone home. If the check bounces, C may be liable for Estafa,
particularly the Estafa by means of deceit (Article 315 No. 2, RPC). Suppose that before the check was
encashed, C takes it back and issues a different check and when the later check was encashed, the
account did not have sufficient funds. The crime now will fall under BP 22 because the later check was
issued for payment of a pre-existing debt.
Related Jurisprudence
The crime of Estafa or Swindling was mentioned in strings of jurisprudence under the Philippines. Some
of which are as follows.
In People v. Reyes, the Court ruled that for Estafa under the above provision to prosper, the issuance of
the check must have been the inducement for the other party to part with his money or property, viz:
“To constitute estafa under this provision, the act of postdating or issuing a check in payment of an
obligation must be the efficient cause of the defraudation; as such, it should be either prior to or
simultaneous with the act of fraud. The offender must be able to obtain money or property from the
offended party because of the issuance of the check, whether postdated or not. It must be shown that
the person to whom the check was delivered would not have parted with his money or property were it
not for the issuance of the check by the other party. Stated otherwise, the check should have been
issued as an inducement for the surrender by the party deceived of his money or property and not in
payment of a pre-existing obligation.”
More recently, in People v. Tibayan, it has been held by the Supreme Court that the two incorporators of
the Tibayan Group Investment Company, Inc. (TGICI) be convicted of multiple counts of Syndicated
Estafa and sentencing them to life imprisonment for each count. “As in the other fraudulent investment
schemes, the private complainants, in that case, were enticed to invest in TGICI due to the offer of high-
interest rates, as well as the assurance that they will recover their investments. After parting with their
monies, the private complainants received a Certificate of Share and post-dated checks, representing the
amount of the principal investment and the corresponding monthly interest earnings. The checks,
however, were dishonored upon encashment, and the TGICI office closed down without private
complainants having been paid. The investors were then constrained to file criminal complaints against
the incorporators and directors of TGICI.”
To differentiate the crime of Estafa from Theft, the Supreme Court made a discussion in the case
of Ricafort v. Fernan: “In general, the crime of estafa is distinguished from that of theft by the manner in
which the offender in each case acquires possession of the property. The estafador receives the
possession of the property, while the thief takes, without the owner’s consent, the possession of the
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latter’s property. There are, however, instances where even if the property misappropriated was received
by the offender, the misappropriation will constitute theft, and not estafa. In such cases, distinction
should be made whether the offender, on receiving the property, acquired: (1) the material possession
alone or (2) the material and juridical possession, or (3) the material and juridical possession plus the
ownership of the property. Where only the material possession is transferred, conversion of the property
gives rise to the crime of theft; where both material and juridical possessions are transferred,
misappropriation of the property would constitute estafa; and where in addition to the material
possession, the ownership of the property is transferred, misappropriation would only give rise to a civil
obligation (People vs. Aquino, 36 Off. Gaz., 1886). For example, an agent of the public authorities who,
in the performance of his duties, and because of the lack of registration papers, takes possession of
cattle in the presence of the cattleman charged with the care thereof, without any opposition or protest
on the part of said cattleman or on the part of the possessor or owner of the cattle seized and
appropriating the value thereof to his own use, without reporting the case to his superior officers or to
the competent authorities, constitute the crime of estafa (U. S. vs. Dacanay, Phil. 617).”
Is bouncing check a criminal case in the Philippines?

B.P. 22 is a Special Penal Law. Thus, violation of which is essentially a crime against public interest
because it degrades the integrity of the country’s banking and financial system. However, like other
crimes, there also exists a civil aspect to it. Although violation of this law constitutes a crime, acquittal of
the accused based on reasonable doubt does not necessarily extinguish his civil liability to the other
party. Bouncing check, as a general rule, constitutes a crime that is punished either by estafa under
Article. 315 of the RPC or by B.P. 22 or by both. However, under B.P. 22, once a check bounces and the
drawer or maker was informed of such dishonor of the check through a written notice and there is proof
that he received said notice, he is given the chance to pay the value of the check within 5 banking days
from his receipt of the notice. In such a case, the payment of the value of the said check before the filing
of the criminal charge is valid defense on the part of the drawer or maker.
What will happen to bounced checks?

Bounced checks are stamped by the bank indicating such insufficiency of funds against which the checks
were drawn. These checks can be presented for encashment again to the drawee bank or redeposited to
any bank for up to three times. However, upon the check’s dishonor for the third time due to insufficiency
of funds, it cannot be redeposited anymore and becomes totally worthless.
The bounced checks serve as pieces of evidence material to the filing of a criminal case against the
maker, drawer, or issuer of such checks as the case may be. They also serve as basis for the penalty to
be imposed upon the accused if he is found guilty beyond reasonable doubt by the court, as well as to
determine the amount of the accused’s civil liability. As previously mentioned, however, even if the
accused is acquitted based on reasonable doubt, he may still be held civilly liable.
How do you prove Estafa?

Any person may be liable for committing the crime of Estafa if he defrauds another by any means
provided under Article 315 of the Revised Penal Code. In the case of People vs. Juego (298 SCRA 22, 33
(1998)), the elements of the crime of Estafa are: 1) there must be a false pretense, fraudulent act or
fraudulent means; 2) such false pretense, fraudulent act or fraudulent means must be made or executed
prior to or simultaneously with the commission of the fraud; 3) the offended party must have relied on
the false pretense, fraudulent act, or fraudulent means, that is, he was induced to part with his money or
property because of the false pretense, fraudulent act, or fraudulent means; and 4) as a result thereof,
the offended party suffered damage.
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Bank Secrecy Laws
A. AN ACT PROHIBITING DISCLOSURE OF OR INQUIRY INTO DEPOSITS WITH ANY

BANKING INSTITUTION (REPUBLIC ACT NO. 1405) a.k.a. Bank Secrecy Law on
Philippine Peso Bank Deposit
a. Absolute Confidentiality of Domestic Bank Deposits and Investments in

Government Bonds
i. All deposits of whatever nature in banks or banking institutions in the Philippines

and investments in government bonds are absolutely confidential in nature. (Sec.
2, Rep. Act No. 1405)
1. Deposits refer to money or funds placed with a bank that can be
withdrawn on the depositor’s order or demand, such as deposit accounts
in the form of savings, current and time deposits. Deposits are
characterized as being in the nature of a simple loan. The placing of
deposits in a bank creates a creditor-debtor relationship between the
depositor and the bank. As such, the bank, being the debtor, has the
obligation to pay a certain sum of money to the depositor, being the
creditor.
2. Investments in Government Bonds refer to investments in bonds issued

by the Government of the Philippines, its political subdivisions and its
instrumentalities. Government bonds are debt securities which are
unconditional obligations of the State, and backed by its full taxing
power. Government bonds include treasury bills, treasury notes, retail
treasury bonds, dollar linked peso notes, and other risk-free bonds.
3. The General Banking Law prohibits bank directors, officers, employees or

agents from disclosing to any unauthorized person, without order of a
competent court, any information relative to funds or properties
belonging to private individuals, corporations, or any other entity in the
custody of the bank. (Sec. 55[b], Rep. Act No. 8791) The Thrift Banks
Act and the Rural Banks Act likewise prohibit any bank officer, employee
or agent from disclosing any information on such funds or properties.
(Sec. 21[a][2], Rep. Act No. 7906 & Sec. 26[a][2], Rep. Act No. 7353)
Prohibited Acts and Persons Liable
b. The following are criminally liable under this law:

i. Any person or government official who, or any government bureau or office that,
examines, inquires or looks into a bank deposit or government bond investment
in any of the instances not allowed in Section 2;
ii. Any official or employee of a banking institution who makes a disclosure
concerning bank deposits to another in any instance not allowed by law (Sec. 3,
Rep. Act No. 1405); and
iii. Any person who commits a violation of any of the provisions of the law (Sec. 5,
Rep. Act No. 1405).
iv. Any bank official, director, employee or agent who discloses information relative
to funds or properties in the custody of the bank may also be held liable under
the applicable provisions of the General Banking Law, Thrift Banks Act and Rural
Banks Act.
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c. Instances when Confidentiality of Domestic Bank Deposits is Not Absolute.

Bank deposits and investments in government bonds may be examined, inquired or
looked into under limited exceptions in Republic Act No. 1405 and in other laws as
enumerated below:
1. Exceptions under the Law on Secrecy of Bank Deposits. Section 2
of Republic Act No. 1405 provides that bank deposits and government
bond investments may be examined, inquired and looked into in the
following instances:
a. Upon written permission or consent in writing by the depositor.
For consent to be valid, it should be made knowingly, voluntarily
and with sufficient awareness of the relevant circumstances and
likely consequences.
b. In cases of impeachment of the President, Vice President,
members of the Supreme Court, members of the Constitutional
Commission (Commission on Elections, Civil Service Commission
and Commission on Audit) and the Ombudsman for culpable
violation of the Constitution, treason, bribery, graft and
corruption, other high crimes or betrayal of public trust. (Art. XI,
Sec. 2, 1987 Philippine Constitution)
c. Upon order of a competent court in cases of bribery or
dereliction of duty of public officials.
d. In cases where the money deposited or invested is the subject
matter of the litigation. The money deposited should be the very
thing in dispute. (Mellon Bank, N.A. v. Magsino, 190 S.C.R.A.
633 [1990])
2. Exceptions under Other Laws. Bank deposits and investments
may be examined, inquired or looked into as provided for under
other laws in the following instances:
a. The Ombudsman has the power to issue subpoena and
subpoena duces tecum, take testimony in any investigation or
inquiry, as well as examine and access bank accounts and
records. The power of the Ombudsman to subpoena deposit
information of a government official may be exercised when the
following conditions concur: (1) there must be a case pending
before a court of competent jurisdiction; (2) the account must
be clearly identified; (3) the inspection must be limited to the
subject matter of the pending case; and (4) the bank personnel
and the account holder must be notified to be present during the
inspection. (Marquez v. Desierto, 359 S.C.R.A. 772 [2001])
b. Bank deposits of a public official, his spouse and unmarried
children may be taken into consideration in the enforcement of
Section 8 of The Anti-Graft and Corrupt Practices Act (Rep. Act
No. 3019)
c. Directors, officers, stockholders and related interests who
contract a loan or any form of financial accommodation with
their bank or related bank are required to execute a written
waiver of secrecy of deposits pursuant to The New Central Bank
Act. (Sec. 26, Rep. Act No. 7653)
d. The Commissioner of Internal Revenue is authorized to inquire
into bank deposit accounts in relation to: (1) an application for
compromise of tax liability or a determination of a decedent’s
gross estate under The National Internal Revenue Code (Rep.
Act No. 8424, as amended by Rep. Act No. 10021); and (2) a
request for tax information of specific taxpayers made by a
foreign tax authority pursuant to a tax treaty under The
Exchange of Information on Tax Matters Act of 2009 (Rep. Act
No. 8424, as amended by Rep. Act No. 10021).
e. The Anti-Money Laundering Council may be authorized to
examine and inquire into bank deposits or investments with
banks or nonbank financial institutions – (1) with court order,
when there is probable cause that the deposits or investments
are related to an unlawful activity or a money laundering offense
(Secs. 3[i] and 4 of Rep. Act No. 9160); and (2) without need of
court order, when probable cause exists that a particular deposit
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or investment with any banking institution is related to certain

predicate crimes, such as kidnapping for ransom, violation of the
Comprehensive Dangerous Drugs Act, hijacking and other
violations under Republic Act No. 6235, destructive arson and
murder (Sec. 11 of Republic Act No. 9160).
f. The Bangko Sentral is authorized to – (1) inquire into or examine
bank deposits or investments in the course of a periodic or
special examination to ensure compliance with The AntiMoney
Laundering Law, in accordance with the rule of examination of
the Bangko Sentral (Sec. 11, Rep. Act No. 9160, as amended);
and (2) conduct annual testing which is limited to the
determination of the existence and true identity of the owners of
numbered accounts (Sec. 9, Rep. Act No. 9160, as amended).
g. The Philippine Deposit Insurance Commission and the Bangko
Sentral may inquire into bank deposits when there is a finding of
unsafe or unsound banking practices. (Sec. 8, Rep. Act No.
3591, as amended)
h. The Court of Appeals, designated as a special court, may issue
an order authorizing law enforcement officers to examine and
gather information on the deposits, placements, trust accounts,
assets and records in a bank or financial institution in connection
with anti-terrorism case. (Rep. Act No. 9372)
i. The Commission on Audit is authorized to examine and audit
government deposits pertaining to the revenue and receipts of,
and expenditures or uses of funds and properties, owned or held
in trust by, or pertaining to, the Government or any of its
subdivisions, agencies or instrumentalities, including
government-owned and controlled corporations with original
charters. (See Art. IX-D, 1987 Constitution and Pres. Dec. No.
1445)
j. The Presidential Commission on Good Government, in the
conduct of its investigations to recover ill-gotten wealth
accumulated by former President Ferdinand E. Marcos, his
immediate family, relatives, subordinates and close associates,
may issue subpoenas requiring the attendance and testimony of
witnesses and/or the production of books, papers, contracts,
records, statement of accounts and other documents. (Sec. 3
[e], Exec. Order No. 1 [1986])
3. Exceptions under Jurisprudence or Decision by Supreme Court
a. Plunder is analogous to bribery. The exception in the law that is
applicable in bribery also applies to plunder. The overt or
criminal acts as described in Section 1(d) of Republic Act No.
7080 would make the similarity between plunder and bribery
even more pronounced since bribery is essentially included
among these criminal acts. (Ejercito v. Sandiganbayan, 509
S.C.R.A. 190 [2006])
b. Cases of unexplained wealth are similar to cases of bribery or
dereliction of duty and no reason is seen why these two classes
of cases cannot be excepted from the rule making bank deposits
confidential. (Phil. National Bank v. Gancayco, 122 Phil. 503
[1965])
4. Authorized Disclosures by authorized and responsible bank
officials are allowed in the following instances:
a. reporting of unclaimed balances to the Treasurer of the
Philippines (Secs. 1 & 2, Act No. 3936);
b. turn-over to the Commissioner of Internal Revenue of the
amount in bank accounts as may be sufficient to satisfy the writ
of garnishment issued to collect delinquent taxes (Secs. 205 &
208, Rep. Act No. 8424); and
c. (submission of report, and turn-over to, the court officer or
executing sheriff of garnished amounts pursuant to a writ of
garnishment in satisfaction of a judgment (Sec. 9[c], Rule 39,
Rules of Court; See China Banking Corporation v. Ortega, 49
SCRA 355 [1973]).
10 | P a g e RLACO/DSALES/NVALDERRAMA
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d. disclosure by a bank officer or employee upon order of the court

in connection with a deposit in a closed bank that was used in
the perpetration of anomalies. (Soriano v. Manuzon, C.A. G.R.-
S.P No. 87634)
d. Penalties for Violation of Republic Act No. 1405 will subject the offender, upon
conviction, to the following penalties:
i. imprisonment of not more than five years;
ii. fine of not more than P20,000.00; or
iii. both imprisonment and fine.
B. FOREIGN CURRENCY DEPOSIT ACT OF THE PHILIPPINES (REPUBLIC ACT NO. 6426)
a.k.a Foreign Currency Deposit Secrecy Law
Absolute Confidentiality of Foreign Currency Deposits

a. All foreign currency deposits are absolutely confidential and cannot be examined,
inquired, or looked into by any person, government official, bureau or office, whether
judicial or administrative or legislative, or any other private or public entity.
b. Foreign currency deposits are also exempt from attachment, garnishment, or any other
order or process of any court, legislative body, government agency or any administrative
body whatsoever. (Sec. 8, Rep. Act No. 6426) Foreign currency deposits refer to funds in
foreign currencies which are accepted and held by authorized banks in the regular course
of business with the obligation to return an equivalent amount to the owner thereof, with
or without interest.
c. Prohibited Acts and Persons Liable. The following are liable under this law:
i. Any person or government official who, or any government bureau or office that,
examines, inquires or looks into a foreign currency deposit without the written
permission of the depositor (Sec. 8, Rep. Act No. 6426);
ii. (Any official or employee of a banking institution who makes a disclosure
concerning foreign currency deposits to another, in any instance not allowed by
law (See Sec. 10, Rep. Act No. 6426);
iii. Anyone who shall attach, garnish, or subject the foreign currency deposit to any
other order or process of any court, legislative body, government agency or any
other administrative body (Sec. 8, Rep. Act No. 6426); and
iv. Any person who commits a willful violation of any of the provisions of Republic
Act No. 6426 or regulation issued by the Monetary Board pursuant to the said
law (Sec. 10, Rep. Act No. 6426).
d. Instances when Confidentiality of Foreign Currency Deposits is Not Absolute.

Foreign currency deposits may be examined, inquired or looked into under the limited
exceptions in Republic Act No. 6426 and in other laws.
i. Exception under The Foreign Currency Deposit Act. Foreign currency
deposits may be examined, inquired or looked into when there is written
permission of the depositor. (Only one exception under R,A, 6426)
ii. Exceptions under Other Laws
1. Directors, officers, stockholders and related interests who contract a loan
or any form of financial accommodation with their bank or related bank
are required to execute a written waiver of secrecy of deposits pursuant
to The New Central Bank Act. (Sec. 26, Rep. Act No. 7653)
2. The Commissioner of Internal Revenue is authorized to inquire into bank
deposit accounts in relation to: (1) an application for compromise of tax
liability or a determination of a decedent’s gross estate under The
National Internal Revenue Code (Rep. Act No. 8424, as amended by
Rep. Act No. 10021); and (2) a request for tax information of specific18
taxpayers made by a foreign tax authority pursuant to a tax treaty under
The Exchange of Information on Tax Matters Act of 2009 (Rep. Act No.
8424, as amended by Rep. Act No. 10021).
3. The Anti-Money Laundering Council may be authorized to examine and
inquire into bank deposits or investments with banking or non-bank
financial institutions – (1) with court order, when there is probable cause
that the deposits or investments are related to an unlawful activity or a
Mobile : 0927 283 8234
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money laundering offense (Secs. 3(i) and 4 of Rep. Act No. 9160); and
(2) without need of court order, when probable cause exists that a
particular deposit or investment with any banking institution is related to
certain predicate crimes, such as kidnapping for ransom, violation of the
Comprehensive Dangerous Drugs Act, hijacking and other violations
under Republic Act No. 6235, destructive arson and murder (Sec. 11 of
Republic Act No. 9160).
4. The Bangko Sentral is authorized to – (1) inquire into or examine bank
deposits and investments in the course of a periodic or special
examination to ensure compliance with The AntiMoney Laundering Act,
in accordance with the rules of examination of the Bangko Sentral (Sec.
11, Rep. Act No. 9160, as amended); and (2) conduct annual testing
which is limited to the determination of the existence and true identity of
the owners of numbered accounts (Sec. 9, Rep. Act No. 9160, as
amended).
5. The Philippine Deposit Insurance Commission and the Bangko Sentral
may inquire into bank deposits when there is a finding of unsafe or
unsound banking practices. (Sec. 8, Rep. Act No. 3591, as amended)
6. The Commission on Audit is authorized to examine and audit
government deposits pertaining to the revenue and receipts of, and
expenditures or uses of funds and properties, owned or held in trust by,
or pertaining to, the Government or any of its subdivisions, agencies or
instrumentalities, including government-owned and controlled
corporations with original charters. (See Art. IX-D, 1987 Constitution and
Pres. Dec. No. 1445)
7. The Presidential Commission on Good Government, in the conduct of its
investigations to recover ill-gotten wealth accumulated by former
President Ferdinand E. Marcos, his immediate family, relatives,
subordinates and close associates, may issue subpoenas requiring the
attendance and testimony of witnesses and/or the production of books,
papers, contracts, records, statement of accounts and other documents.
(Sec. 3 [e], Exec. Order No. 1 [1986])
iii. Exceptions under Jurisprudence on Grounds of Equity
1. Account of a Non-resident Alien The garnishment of a foreign currency

deposit account of a non-resident alien found guilty of raping a minor
was allowed on the basis of equity. ( [1997])
2. Account of a Co-payee of a Check A co-payee of a check who filed a suit
for recovery of sum of money was considered, in a pro hac vice ruling by
the Supreme Court, as a depositor in view of the distinctive
circumstances of the case. (China Banking Corporation v. Court of
Appeals, 511 S.C.R.A. 110 [2006])
e. Penalties of Violation of Republic Act No. 6426:

i. imprisonment of not less than one (1) year but not more than five (5) years; or
ii. fine of not less than Five Thousand Pesos (P5,000.00) but not more than Twenty
Five Thousand Pesos (P25,000.00); or
iii. both imprisonment and fine.
f. The following sanctions may also be imposed against a bank or any bank
director and officer for violation of the provisions of Republic Act No. 6426 and
Bangko Sentral regulation issued pursuant to said law:
i. revocation of the authority of the bank to accept new foreign currency deposits;
and
ii. administrative sanctions provided under Section 37 of the New Central Bank Act
(Rep. Act No. 7653), as may be applicable.
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PDIC Law
I. Philippine Deposit Insurance Corporation Law (RA 3591 as amended by RA 10846)

A. Description of Philippine Deposit Insurance Corporation
PDIC is a government instrumentality created in 1963 by virtue of Republic Act 3591 to insure the
deposits of all banks which are entitled to the benefits of insurance. The PDIC is an attached agency of
the Department of Finance.
The latest amendments to RA 3591 are contained in RA 10846 signed into law on May 23, 2016. RA
10846 empowered PDIC with stronger authorities to protect the depositing public and promote financial
stability. The new law also includes important provisions to ensure that the PDIC remains financially and
institutionally strong to fulfill its mandate under its Charter.
The PDIC now has the authority to help depositors have quicker access to their insured deposits should
their bank close; resolve problem banks while still open; hasten the liquidation process for closed banks;
and mete out stiffer sanctions and penalties against those who engage in unsafe and unsound banking
practices.
Under amendment, depositors would have quicker access to their insured deposits in the event of bank
closure since PDIC now has the authority to pay insured deposits without netting out depositors’ loan
obligations with the closed bank, and based on evidence of deposits and not on the closed bank’s records
alone.
With its enhanced resolution authorities, PDIC would also be able to more effectively promote financial
inclusion through early intervention in problem banks or open bank resolution. In cases where bank
closure becomes inevitable, the new law enhanced the chances of recovery by creditors of their claims
against the assets of the closed bank by preventing the further dissipation of these assets through
seamless transition from bank closure to liquidation. The new law does away with the 90-day
receivership period and allows PDIC to proceed directly to liquidation. The immediate assignment of
encumbered assets to closed bank creditors, adoption of purchase of assets and assumption of liabilities
as a mode of liquidation, and express prohibition on reopening of banks ordered closed by the Monetary
Board of the Bangko Sentral ng Pilipinas would help enhance recovery rate for creditors of closed banks.
B. Insurable Deposits under PDIC Law (Covered by PDIC Insurance)

1. By Deposit Type:
a. Savings Deposit
b. Special Savings
c. Demand/Checking Account
d. Negotiable Order of Withdrawal (NOW)
e. Certificate of Time Deposits
f. Foreign currency Deposit
2. By Deposit Account:
a. Single Accounts - are individually-owned accounts or accounts held under one name,
either as natural person (single proprietorship or individual) or juridical entity
(corporation, partnership or cooperative).
b. Joint Accounts - are accounts held under more than one name.
i. A joint account regardless of whether the conjunction “and”, “or” or “and/or” is
used shall be insured separately from single accounts.
ii. Unless a different sharing is stipulated in the deposit documents, the insured
amount up to the Maximum Deposit Insurance Coverage of Php500,000 shall be
divided equally between or among co-owners of a joint account.
iii. The total shares of a co-owner in several joint accounts may exceed Php500,000
but will only be insured up to the Maximum Deposit Insurance Coverage of
Php500,000.
iv. Joint accounts held in the names of a juridical entity and a natural person shall
be presumed to belong solely to the juridical entity.
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c. Account “By”, “In Trust For” (ITF) or “For the Account of” (FAO) another person
i. In a “By” account, Ana by Ben, Ana is the depositor.
ii. In an “In Trust For” (ITF) account, Ana In Trust For Ben, Ben is the depositor.
iii. In a “For the Account of” (FAO) account, Ana For the Account of Ben, Ben is the
depositor.
d. Explanatory Notes
i. To simplify: In the case where a depositor is the sole beneficial owner of a
single, “For the Account of”, “By”, and “In Trust For” accounts, the consolidated
balances of these accounts shall be insured up to Php500,000.
ii. The depositor’s total shares in his/her joint accounts shall be separately insured
up to Php500,000.
iii. A depositor with single accounts and joint accounts may have insured deposits of
up to Php1,000,000.
C. Items that are not covered by PDIC Deposit Insurance
The following, whether denominated, documented, recorded or booked as deposit by the bank, are
excluded from PDIC deposit insurance (Section 4 (f) of the PDIC Charter):
a. Investment products such as bonds and securities, trust accounts and other similar instruments
b. Telegraphic note
c. Deposit accounts or transactions that:
i. Are unfunded, fictitious or fraudulent
ii. Constitute and/or emanate from unsafe and unsound banking practices as determined by
the PDIC, in consultation with the BSP, after due notice and hearing and publication of
PDIC’s cease & desist order against such deposit accounts/transactions
iii. Are determined to be proceeds of an unlawful activity as defined in the AntiMoney
Laundering Act (Republic Act 9160, as amended)
d. Bank Deposits in Foreign Banks operating outside the Philippine territory or Bank Deposits in
Foreign branch of domestic bank operating outside the Philippine territory
Note: Unsafe and unsound deposit-related activities include, among others: (PDIC Regulatory Issuance
No. 2011-01)
➢ Deposit-related practice/activity/transaction without the approval or adequate controls required
under existing laws, rules and regulations
➢ Failure to keep bank records within bank premises
➢ Granting high interest rates, when bank has: (i) negative unimpaired capital, or (ii) liquid assets
to deposit ratio less than 10%
➢ Non-compliance with PDIC regulations
D. Maximum Liability (Maximum Deposit Insurance Coverage)
PDIC shall pay deposit insurance on all valid deposits up to the Maximum Deposit Insurance Coverage of
Php500,000, per depositor, of a closed bank. Accounts maintained in the same right and capacity for a
depositor’s benefit, whether in his own name or in the name of others, are covered by deposit insurance.
However, A depositor with single accounts and joint accounts may have insured deposits of up to
Php1,000,000.
Illustrative examples:
1. How much is Fe Santos’s insured deposit if she has the following four deposit accounts in the same
bank?
ACCOUNT NAME Deposit (in PHP) Insured Deposit of Fe Santos
Fe Santos 100,000 100,000
Ben Santos For the Account of 100,000 100,000
Fe Santos
Charlie Santos In Trust For Fe 100,000 100,000
Santos
Fe Santos’ Store (Sole 700,000 200,000
Proprietorship)
Total 1,000,000 500,000
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2. How much is Fe Santos’s insured deposit if she has the following three joint accounts in the same
bank?
Fe Santos or Ben Santos 500,000 250,000
Fe Santos and Charlie Santos 1,000,000 250,000
Fe Santos and/or Divina Santos 1,000,000 0*
Total 2,500,000 500,000
*Note: Mrs. Fe Santos does not have any insured deposit share since she already has P500,000 in total
shares in the two joint accounts she has with Ben and Charlie Santos.
3. How much is Fe Santos’s insured deposit for all her single and joint accounts in the same bank?
All single accounts of Fe Santos 1,000,000 500,000
in BDO Branch 1
All joint accounts of Fe Santos in 2,500,000 500,000
BDO Branch 2
Total 3,500,000 1,000,000
Note: For purposes of computing the insured deposits, all obligations or loans of the depositor with the
closed bank, as of bank closure, shall be deducted from the depositor’s total deposits with the said bank.
(PDIC Regulatory Issuance No. 2011-04).
Note: In case of joint account involving a juridical/artificial person and a natural person, the maximum
insured deposit of P500,000 to such joint account shall be given to juridical/artificial person only.
E. Requirements for Claims of Insured Deposits
1. When are claims filed?
Claims are filed during the claims settlement operations period, as announced in the Notice to
Depositors published in national or local newspapers, or posted in the bank premises and
conspicuous places within the locality, and in the PDIC website
Depositors have two (2) years from PDIC’s takeover of the closed bank to file their deposit insurance
claims.
2. Who are required to file deposit insurance claims?
a. Depositors with valid deposit accounts with balances of more than Php100,000.
b. Depositors who have outstanding obligations with the closed bank regardless of amount
of deposits.
c. Depositors with account balances of less than Php100,000 who have no updated
addresses in the bank records or who have not updated their addresses through the
Mailing Address Update Form (MAUF) issued by the PDIC.
d. Depositors who maintain their accounts under the name of business entities, regardless
of type of account and account balance.
e. Depositors with accounts not eligible for early payment, regardless of type of account
and account balance per advice of PDIC.
3. Who are depositors not required to file deposit insurance claims?
Depositors with valid deposit accounts with balances of Php100,000 and below are not required
to file claims provided they have no obligations with the closed bank and have complete and
updated addresses in the bank records or have updated these through the Mailing Address
Update Form (MAUF) issued by the PDIC. Depositors with deposit balances of Php100,000 and
below may update their addresses using the MAUF and submit to PDIC representatives stationed
at the closed bank premises before the start of the onsite claims settlement operations
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These depositors are entitled to immediate/early payment of deposit insurance claim as part of
PDIC’s initiative to provide convenience to small depositors. Payments to these depositors are
sent as postal money orders to the depositors’ mailing addresses.
4. Steps in filing deposit insurance claims

a. Prepare the following documents:
i. Original evidence of deposits such as savings passbook, certificate of time
deposit, bank statement, unused checks, and ATM card.
ii. Original copy of ONE (1) VALID PHOTO-BEARING IDENTIFICATION
DOCUMENTS (ID) with clear signature of depositor/claimant such as Driver’s
License, SSS/ GSIS ID, Senior Citizen’s ID, Passport, PRC ID, OWWA/ OFW ID,
Seaman’s ID, Alien Certification of Registration ID, Voter’s ID, IBP. Please ensure
that the ID number is clear and legible.
iii. If the depositor is below 18 years old, a photocopy of his/her birth certificate
from the Philippine Statistics Authority (PSA) or duly certified copy from the local
civil registrar and valid IDs of the parent.
iv. Original copy of a notarized Special Power of Attorney (SPA) for claimants who
are not the signatories in the bank records. In the case of minor depositor, the
SPA must be executed by the parent.
b. Submit to:
i. If filing personally:
1. The PDIC representatives at the premises of the closed bank during
Claims Settlement Operations (CSO) or to the PDIC Public Assistance
Center at the 3rd Floor, SSS Bldg., 6782 Ayala Avenue corner V.A. Rufino
Street, Makati City after the onsite CSO.
ii. If filing through Mail
1. Send the accomplished and notarized Claim Form and requirements to
The Claims Processing Department of PDIC 4/F SSS Building, 6782 Ayala
Avenue corner V.A. Rufino St. 1226 Makati City
5. Who should sign the deposit insurance claim form?

a. Depositor of the account – for depositors 18 years old and above
b. Parent – if the depositor is below 18 years old
c. Agent – in the case of “By” accounts
d. Trustee – in the case of “In Trust for (ITF” accounts
e. Each Depositor – in the case of joint accounts such as “Or”, “And/Or” or “And”
accounts
6. Procedures for Claiming Insurance Proceeds

a. Mode of payment
i. By Cash
ii. By making available to each depositor a transferred deposit in another insured
bank in an amount equal to insured deposit of such depositor
b. Requirement before payment

i. PDIC may require proof of claims before paying the insured deposit
ii. If PDIC is not satisfied as to the validity of a claim for an insured deposit, it may
require final determination of a court of competent jurisdiction before paying
such claim
c. Period for payment

i. It must be made within 6 months from the date of filing otherwise the officers of
PDIC will be liable for failure to pay if due to grave abuse of discretion, gross
negligence, bad faith or malice. The six-month period shall not apply if the
documents of the claimant are incomplete or if the validity of the claim requires
the resolution of issues of facts and law by another office, body or agency,
independently or in coordination with PDIC.
d. Rights of PDIC upon payment of insured deposits

i. PDIC shall be legally subrogated to all rights of depositor against the closed bank
to the extent of such payment.
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Anti-Money Laundering Law
Anti-Money Laundering Law (AMLA) (R.A. 9160 a.k.a. Anti Money Laundering Act of 2001 as
amended by R.A. 9194 and R.A. 10168 a.k.a. Terrorism Financing Prevention and
Suppression Act of 2012) and RA 10365 a.k.a AN ACT FURTHER STRENGTHENING THE ANTI-
MONEY LAUNDERING LAW)
A. Declaration of Policy: It is hereby declared the policy of the State to protect and preserve the
integrity and confidentiality of bank accounts and to ensure that the Philippines shall not be used as a
money laundering site for the proceeds of any unlawful activity.
Consistent with its foreign policy, the Philippines shall extend cooperation in transnational investigations
and prosecutions of persons involved in money laundering activities wherever committed.
B. Definition of Money Laundering - Money laundering is committed by any person who, knowing
that any monetary instrument or property represents, involves, or relates to the proceeds of any unlawful
activity: (Acts punishable as Money Laundering)
1. Transacts said monetary instrument or property;
2. Converts, transfers, disposes of, moves, acquires, possesses or uses said monetary instruments
or property or proceeds of any unlawful activity;
3. Conceals or disguises the true nature, source, location, disposition, movement or ownership of or
rights with respect to said monetary instruments or property or proceeds of unlawful activity;
4. Attempts or conspires to commit Money Laundering referred to in par. 1), 2) & 3);
5. Aids, abets, assists in or counsels the commission of the Money Laundering offenses referred to
in par. 1), 2) & 3) above;
6. Performs or fails to perform any act as a result of which he facilitates the offense of Money
Laundering referred to in par. 1), 2) & 3) above; or
7. Any covered person who, knowing that a covered or suspicious transaction is required under the
AMLA to be reported to the AMLC, fails to do so.
C. Predicate Crimes of Money Laundering (36 Crimes)

1. Kidnapping for ransom under the Revised Penal Code (RPC)
2. Drug Trafficking and other violations of the Comprehensive Dangerous Drugs Act of 2002
3. Graft and Corruption (R.A. No. 3019, as amended)
4. Plunder (R.A. No. 7080, as amended)
5. Robbery and extortion (RPC)
6. Jueteng and Masiao (PD 1602)
7. Piracy (RPC & PD 532)
8. Qualified Theft (RPC)
9. Swindling/Estafa (RPC)
10. Smuggling (R.A. Nos. 455 & 1937)
11. Violations of Electronic Commerce Act of 2000 (R.A. No. 8792)
12. Hijacking (R.A. No. 6235), Destructive Arson and Murder (RPC)
13. Terrorism and Conspiracy to Commit Terrorism (R.A. No. 9372);
14. Financing of Terrorism (R.A. No. 10168)
15. Bribery and Corruption of Public Officers (RPC);
16. Frauds and Illegal Exactions and Transactions (RPC);
17. Malversation of Public Funds (RPC);
18. Forgeries and Counterfeiting (RPC);
19. Trafficking in Persons (R.A. No. 9208
20. Violations of the Revised Forestry Code (PD 705);
21. Violations of the Philippine Fisheries Code of 1998 (R.A. No. 8550);
22. Violations of the Philippine Mining Act of 1995 (R.A. No. 7942);
23. Violations of the Wildlife Resources Conservation and Protection Act (R.A. No. 9147);
24. Violations of the National Caves and Cave Resources Management Protection Act (R.A. No.
9072);
25. Carnapping (R.A. No. 6539);
26. Illegal/Unlawful Possession, Manufacture, Dealing In, Acquisition or Disposition of Firearms,
Ammunitions and Explosives (PD 1866);
27. Fencing (PD 1612);
28. Illegal Recruitment (R.A. No. 8042);
29. Violations of the Intellectual Property Code;
Mobile : 0927 283 8234
Telephone : (043) 723 8412
30. Voyeurism (R.A. No. 9995);

31. Child Pornography (R.A. No. 9775);
32. Child Prostitution, Trafficking, and other forms of Abuse (R.A. No. 7610);
33. Fraudulent practices and other violations of the Securities Regulation Code (R.A. No. 8799);
34. Violation of Section 9 (a)(3) of Republic Act No. 10697, otherwise known as the "Strategic Trade
Management Act", in relation to the proliferation of weapons of mass destruction and its
financing pursuant to United Nations Security Council Resolution Numbers 1718 of 2006 and
2231 of 2015";
35. Violation of Section 254 of Chapter II, Title X of the National Internal Revenue Code of 1997, as
amended, where the deficiency basic tax due in the final assessment is in excess of Twenty-five
million pesos (P25,000,000.00) per taxable year, for each tax type covered and there has been a
finding of probable cause by the competent authority: Provided,further, That there must be a
finding of fraud, willful misrepresenting or malicious intent on the part of the
taxpayer: Provided, finally, That in no case shall the AMLC institute forfeiture proceedings to
recover monetary instruments, property or proceeds representing, involving, or relating to a tax
crime, if the same has already been recovered or collected by the Bureau of Internal Revenue
(BIR) in a separate proceeding; and
36. Felonies or offenses of a similar nature that are punishable under the penal laws of other
countries.
D. Types of Reportable Transactions to AMLC

• Covered Transactions are those transactions involving covered persons that breached the
quantitative threshold provided by AMLA for reporting purposes to AMLC and therefore must be
reported by covered persons to AMLC.
• Suspicious Transactions are those transactions that do not breach the quantitative threshold
provided by AMLA for reporting purposes to AMLC but must still be reported to AMLC by covered
persons because of the suspicious nature of the transactions.
E. Amount of Covered Transaction for Reporting to AMLC
• A transaction in cash or other equivalent monetary instrument exceeding Five Hundred Thousand
pesos (P500,000)
• A transaction exceeding One Million pesos (P1,000,000) in cases of jewelry dealers, dealers in
precious metals and dealers in precious stones.
• Covered transaction now includes a Single Casino Cash Transaction involving an amount in
excess of Five Million Pesos (P5,000,000.00) or its equivalent in any other currency.”
• Real Estate Developers for a single transaction in excess of P7,500,000
F. Suspicious Transactions that shall also be reported to AMLC

1. there is no underlying legal or trade obligation, purpose or economic justification;
2. the client is not properly identified;
3. the amount involved is not commensurate with the business or financial capacity of the client;
4. taking into account all known circumstances, it may be perceived that the client's transaction is
structured in order to avoid being the subject of reporting requirements under the AMLA;
5. any circumstance relating to the transaction which is observed to deviate from the profile of the
client and/or the client's past transactions with the covered person;
6. the transaction is in any way related to an unlawful activity or any money laundering activity or
offense that is about to be committed, is being or has been committed; or
7. any transaction that is similar, analogous or identical to any of the foregoing.
G. Politically Exposed Person (PEP) – refers to an individual who is or has been entrusted with
prominent public position in (a) the Philippines with substantial authority over policy, operations or the
use or allocation of government-owned resources; (b) a foreign State; or (c) an international
organization. The term PEP shall include immediate family members, and close relationships and
associates that are reputedly known to have:1)Joint beneficial ownership of a legal entity or legal
arrangement with the main/principal PEP; or Sole beneficial ownership of a legal entity or legal
arrangement that is known to exist for the benefit of the main/principal PEP
1. Under Implementing Rules and Regulations of AMLA issued by AMLC, the following
are the politically exposed persons (High Risk Government Personnel)
a. AFP or PNP Officials such as Colonel or General
b. Senators or Congressmen or Mayor or Governor
c. Chairman or Commissioners of COMELEC or CoA or CSC
d. President or Vice-President or Department Secretary and Undersecretary
e. Justices of Court of Appeals, Court of Tax Appeals, Sandiganbayan or Supreme Court
Mobile : 0927 283 8234
Telephone : (043) 723 8412
H. Covered persons, natural or juridical, required to report to AMLC covered transactions and
suspicious transactions
1. Under Bangko Sentral ng Pilipinas (BSP)
a. Banks
b. Non-banks
c. Quasi-banks
d. Trust entities
e. Nonstock savings and loan associations
f. Foreign exchange dealers,
g. Electronic money issuers
h. Pawnshops,
i. Money changers,
j. Remittance and transfer companies
k. All other persons and their subsidiaries and affiliated supervised or regulated by the BSP.
2. Under Insurance Commission (IC)
a. Insurance companies
b. Pre-need companies
c. Insurance agents
d. Insurance brokers
e. Professional reinsurers
f. Holding companies
g. Holding company system
h. Mutual benefit associations
i. All other persons and their subsidiaries and affiliated supervised or regulated by the
Insurance Commission
3. Under Securities and Exchange Commission (SEC)
a. Securities dealers, brokers, salesmen, investment houses, and other similar persons
managing securities or rendering services such as investment agents.
b. mutual funds or open-end companies, close-end investment, investment companies or
issuers and other similar
c. other entities administering or otherwise dealing in commodities, or financial derivatives
based thereon, valuable objects, cash substitutes and other similar monetary instruments
or properties supervised and regulated by the SEC.
4. Other Designated Non-Financial Business and Professionals

a. Jewelry dealers, dealers in precious metals, and dealers in precious stones for
transactions in excess of 1,000,000.
b. Land Registration Authority and all of its Register of Deeds on all real estate
transaction with price exceeding P500,000.
c. Casino refers to a business authorized by the appropriate government agency to engage
in gaming operations for single casino transaction in excess of P5,000,000.
i. Internet-based casino shall refer to casinos in which persons participate by
the use of remote communication facilities such as, but not limited to, internet,
telephone, television, radio or any other kind of electronic or other technology
for facilitating communication.
ii. Ship-based casino shall refer to casinos, the operation of which is undertaken
on board at vessel, ship, boat or any other water-based craft wholly or partly
intended for gambling.
d. Real Estate Developers for a single transaction in excess of P7,500,000
e. Offshore gaming operation, as well as their service providers, supervised,
accredited or regulated by the Philippine Amusement and Gaming Corporation (PAGCOR)
or any government agency for a single transaction in excess of P500,000
f. Company service providers to 3rd parties including CPAs and Lawyers
1. acting as a formation agent of juridical persons;
2. acting as (or arranging for another person to act as) a director or corporate secretary
of a company, a partner of a partnership, or a similar position in relation to other
juridical persons;
3. providing a registered office; business address or accommodation, correspondence or
administrative address for a company, a partnership or any other legal person or
arrangement; and
4. acting as (or arranging for another person to act as) a nominee shareholder for
another person.
Mobile : 0927 283 8234
Telephone : (043) 723 8412
g. Person providing the following services including CPAs and lawyers

1. managing of client money, securities or other assets;
2. management of bank, savings or securities accounts;
3. organization of contributions for the creation, operation or management of
companies; and
4. creation, operation or management of juridical persons or arrangements, and buying
and selling business entities.
Note: A shell company is an incorporated company that possesses no significant assets and
does not perform any significant operations. To launder money, the shell company purports to
perform some service that would reasonably require its customers to often pay with cash. Cash
transactions increase the anonymity of customers and therefore decrease the government’s
ability to trace the initial recipient of the dirty money. Money launderers commonly select beauty
salons and plumbing services as shell companies. The launderer then deposits the money with
the shell company, which deposits it into its accounts. The shell company then creates fake
invoices and receipts to account for the cash. Such transactions create the appearance of
propriety and clean money. The shell company can then make withdrawals and either return the
money to the initial criminal or pass the money on to further shell companies before returning it
to further cloud who first deposited the money.
5. Persons excluded to report covered transactions or suspicious transactions to AMLC

1. Lawyers if acting as independent legal professionals in relation to information concerning their
clients or where disclosure of information would compromise client confidences or the attorney-
client relationship
2. Certified public accountants if acting as independent legal professionals in relation to information
concerning their clients or where disclosure of information would compromise client confidences
or the CPA-client relationship.
I. Jurisdiction over Money Laundering Cases

a. Regional Trial Court. - The regional trial courts shall have the jurisdiction to try money
laundering cases committed by private individuals, and public officers not covered by the
jurisdiction of the Sandiganbayan.
b. Sandiganbayan. - The Sandiganbayan shall have jurisdiction to try money laundering cases
committed by public officers under its jurisdiction (salary grade of 27 or higher), and private
persons who are in conspiracy with such public officers.
J. Prosecution of Money Laundering Cases

a. Independent Proceedings. - The prosecution of money laundering and the unlawful activity
shall proceed independently. Any person may be charged with and convicted of both money
laundering and the unlawful activity.
b. Separate and Distinct Elements. - The elements of money laundering are separate and
distinct from the elements of the unlawful activity. The elements of the unlawful activity,
including the identity of the perpetrators and the details of the commission of the unlawful
activity, need not be established by proof beyond reasonable doubt in the case for money
laundering.
c. Knowledge. - The element of knowledge may be established by direct or circumstantial
evidence.
K. Anti-Money Laundering Council - refers to the financial intelligence unit of the Republic of the
Philippines which is the government agency tasked to implement the AMLA.
a. Composition of Anti-Money Laundering Council
i. Chairperson – BSP Governor
ii. Member – Insurance Commissioner
iii. Member – SEC Chairperson
b. Unanimous Decision. - The AMLC shall act unanimously in discharging its functions. In case of
incapacity, absence, or disability of any member, the officer duly designated or authorized to
discharge the functions of the Governor of the BSP, the Commissioner of the IC, and the
Chairperson of the SEC, as the case may be, shall act in his stead in the AMLC.
c. Information Security and Confidentiality. - The AMLC and its Secretariat shall securely
protect information received or processed and shall not reveal, in any manner, any information
known to them by reason of their office. This prohibition shall apply even after their separation
from the AMLC. The AMLC shall formulate rules governing information exchange and
Mobile : 0927 283 8234
Telephone : (043) 723 8412
dissemination, the security and confidentiality of such information, including procedures for
handling, storage, and protection of, as well as access to such information."
L. Preventive Measures
1. Customer Due Diligence. - Covered persons shall establish and record the true identity of their
clients based on official documents, as defined under Rule 3 of RIRR of AMLA.
2. Customer Identification
a. Face-to-Face Contact. - Covered persons shall conduct face-to-face contact at the
commencement of the relationship, or as reasonably practicable so as not to interrupt
the normal conduct of business
b. Minimum Customer Information and Identification Documents
i. Name of customer;
ii. Date and place of birth;
iii. Name of beneficial owner, if applicable;
iv. Name of beneficiary (in case of insurance contracts or remittance transactions);
v. Present address;
vi. Permanent addresses;
vii. Contact number or information;
viii. Nationality;
ix. Specimen signatures or biometrics of the customer;
x. Nature of work and name of employer or nature of self-employment! business, if
applicable;
xi. Sources of funds or property; and
xii. Tax Identification Number (TIN), Social Security System . (SSS) number or
Government Service Insurance System (GSIS) number, if applicable.
3. Prohibited Accounts
a. Anonymous Accounts and Accounts under Fictitious Names. - Covered persons
shall maintain customers' account only in the true and full name of the account owner or
holder. Anonymous accounts, accounts under fictitious names, and all other accounts
shall be absolutely prohibited.
b. Numbered Accounts. Numbered accounts, except non-checking numbered accounts,
shall not be allowed. Covered and suspicious transaction reports involving non-checking
numbered accounts shall contain the true name of the account holder.
4. Record Keeping. - Covered persons shall maintain and safely store for five (5) years from the
dates of transactions all records of customer identification and transaction documents of their
customers or five (5) years from the date the account is closed.
5. Transaction Reporting. - Covered persons shall report to the AMLC all covered transactions
and suspicious transactions within five (5) working days, unless the AMLC prescribes a different
period not exceeding fifteen (15) working days, from the occurrence thereof.
6. For Suspicious transactions, "occurrence" refers to the date of determination of the

suspicious nature of the transaction, which determination should be made not exceeding ten (10)
calendar days from the date of transaction. However, if the transaction is in any way related to,
or the person transacting is involved in or connected to, an unlawful activity or money laundering
offense, the 10-day period for determination shall be reckoned from the date the covered person
knew or should have known the suspicious transaction indicator.
7. Safe Harbor Provision of AMLA. No administrative, criminal or civil proceedings shall lie
against any person for having made a covered transaction report in the regular performance of
his duties and in good faith, whether or not such reporting results in any criminal prosecution
under the AMLA or any other Philippine law.
Mobile : 0927 283 8234
Telephone : (043) 723 8412
8. Freeze Order - Upon verified ex parte petition by the AMLC and after determination that
probable cause exists that any monetary instrument or property is in any way related to an
unlawful activity, the Court of Appeals may issue a freeze order, which shall be effective
immediately for a period of 20 days. Within 20-day period, the Court of Appeals shall conduct a
summary hearing, with notice to the parties, to determine whether or not to modify or lift the
freeze order or to extend its effectivity
a. Freezing of Related Accounts and Materially-Linked Accounts. - Considering the intricate
and diverse web of interlocking accounts that a person may create in different covered
persons, and the high probability that these accounts are utilized to divert, move,
conceal, and disguise the monetary instrument or property subject of the freeze order,
the AMLC may include in its petition the freezing of related and materially-linked
accounts.
b. Period to Resolve Petition. - The Court of Appeals shall resolve the petition to freeze
within twenty-four (24) hours from filing thereof.
c. Effectivity Period of Freeze Order" (a) Upon a verified ex parte petition by the
AMLC and after determination that probable cause exists that any monetary
instrument or property is in any way related to an unlawful activity as defined in
Section 3(i) hereof, the Court of Appeals may issue a freeze order which shall be
effective immediately, for a period of twenty (20) days. Within the twenty (20)
day period, the Court of Appeals shall conduct a summary hearing, with notice to
the parties, to determine whether or not to modify or lift the freeze order, or
extend its effectivity. The total period of the freeze order issued by the Court of
Appeals under this provision shall not exceed six (6) months. This is without
prejudice to an asset preservation order that the Regional Trial Court having
jurisdiction over the appropriate anti-money laundering case or civil forfeiture
case may issue on the same account depending on the circumstances of the
case, where the Court of Appeals will remand the case and its
records: Provided, That if there is no case filed against a person whose account
has been frozen within the period determined by the Court of Appeals, not
exceeding six (6) months, the freeze order shall be deemed ipso
facto lifted: Provided,further, That this new rule shall not apply to pending cases
in the courts. In any case, the court should act on the petition to freeze within
twenty-four (24) hours from filing of the petition. If the application is filed a day
before a nonworking day, the computation of the twenty-four (24) hour period
shall exclude the nonworking days.
d. Extent of Freeze Order or Asset Preservation Order. The freeze order or asset
preservation order issued under this Act shall be limited only to the amount of
cash or monetary instrument or value of property that court finds there is
probable cause to be considered as proceeds of a predicate offense, and the
freeze order or asset preservation order shall not apply to amounts in the same
account in excess of the amount or value of the proceeds of the predicate
offense.
e. Remedy on Freeze Order. A person whose account has been frozen may file a
motion to lift the freeze order and the court must resolve this motion before the
expiration of the freeze order.
f. Non-issuance of TRO against any asset preservation order. No court shall issue a
temporary restraining order or a writ of injunction against any freeze order,
except the Supreme Court.
g. Targeted Financial Sanctions in relation to weapons of mass destruction For
purposes of implementing targeted financial sanctions in relation to proliferation
of weapons of mass destruction and its financing, as provided under Section
3(15), the AMLC shall have the power to issue, ex parte, an order to freeze
without delay. The freeze order shall be effective until the basis for its issuance
shall have been lifted. During the effectivity of the freeze order, the aggrieved
party may, within twenty (20) days from issuance, file with the Court of Appeals
a petition to determine the basis of the freeze order according to the principle of
effective judicial protection: Provided, That the person whose property or funds
have been frozen may withdraw such sums as the AMLC determines to be
reasonably needed for monthly family needs and sustenance including the
services of counsel and the family medical needs of such person. The AMLC, if
circumstance warrant, may initiate civil forfeiture proceedings to preserve the
assets and to protect it from dissipation. No court shall issue a temporary
restraining order or a writ of injunction against the freeze order, except the Court
of Appeals or the Supreme Court."
Mobile : 0927 283 8234
Telephone : (043) 723 8412
9. Bank Inquiry with Court Order. - Notwithstanding the provisions of Republic Act No. 1405, as
amended; Republic Act No. 6426, as amended; Republic Act No. 8791, and other laws, the AMLC
may inquire into or examine any particular deposit or investment account, including related
accounts, with any banking institution or non-bank financial institution, upon order by the Court
of Appeals based on an ex parte application in cases of violation of the AMLA when it has been
established that probable cause exists that the deposits or investments involved, including related
accounts, are in any way related to an unlawful activity or a money laundering offense.
a. Period to Resolve Application. - The Court of Appeals shall resolve the application within
twenty-four (24) hours from filing thereof.
b. Inquiry Into or Examination of Related Accounts. - A court order ex parte must be
obtained before the AMLC can inquire into the related accounts. The procedure for the ex
parte application for an order of inquiry into the principal account shall be the same for
that of the related accounts.
c. Compliance with Article III, Sections 2 and 3 of the Constitution. - The authority to
inquire into or examine the main account and the related accounts shall comply with the
requirements of Article III, Sections 2 and 3 of the 1987 Constitution.
10. Bank Inquiry without Court Order. - The AMLC shall issue a resolution authorizing the AMLC
Secretariat to inquire into or examine any particular deposit or investment account, including
related accounts, with any banking institution or non-bank financial institution and their
subsidiaries and affiliates when it has been established that probable cause exists that the
deposits or investments involved, including related accounts, are in any way related to any of the
following unlawful activities: (Predicate crimes that may authorize AMLC to inquire bank
accounts even without Court Order from Court of Appeals)
a. Kidnapping for ransom under Article 267 of Act No. 3815,otherwise known as the Revised
Penal Code, as amended;
b. Sections 4, 5, 6, 8, 9, 10, 11, 12, 13, 14, 15 and 16 of Republic Act No. 9165, otherwise
known as the Comprehensive Dangerous Drugs Act of 2002;
c. Hijacking and other violations under Republic Act No. 6235;
d. Destructive arson and murder, as defined under the Revised Penal Code, as amended;
e. Felonies or offenses of a nature similar to those mentioned in Section 3(i) (1), (2) and
(12) of the AMLA which are punishable under the penal laws of other countries;
f. Terrorism and conspiracy to commit terrorism as defined and penalized under Republic
Act No. 9372; and
g. Financing of terrorism under Section 4 and offenses punishable under Sections 5, 6, 7
and 8 of Republic Act No. 10168, otherwise known as the Terrorism Financing Prevention
and Suppression Act of 2012.
11. Asset Forfeiture

h. Civil Forfeiture. - Upon determination that probable cause exists that any monetary
instrument or property is in any way related to an unlawful activity or a money
laundering offense, the AMLC shall file with the regional trial court, through the Office of
the Solicitor General, a verified petition for civil forfeiture.
i. No Prior Criminal Charge, Pendency of or Conviction Necessary. - No prior
criminal charge, pendency of or conviction for an unlawful activity or money laundering
offense is necessary for the commencement or the resolution of a petition for civil
forfeiture.
j. Asset Forfeiture in Money Laundering Cases. - Where there is conviction for money
laundering, the court shall issue a judgment of forfeiture in favor of the Government of
the Philippines with respect to the monetary instrument or property found to be proceeds
of an unlawful activity.
12. Non-issuance of TRO against any asset preservation order. No court shall issue a
temporary restraining order (TRO) or a writ of injunction against any provisional asset
preservation order or asset preservation, except the Court of Appeals or the Supreme Court.
13. Non-Intervention in the Bureau of Internal Revenue (BIR) Operations. - Nothing

contained in this Act nor in related antecedent laws or existing agreements shall be construed to
allow the AMLC to participate in any manner in the operation of the BIR. The AMLC, may,
however, coordinate with the BIR On investigations in relating to violations of Section 254 of
NIRC, as amended, as a predicate offense to money laundering."
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Truth in Lending Act (R.A. No. 3765: An Act To Require The Disclosure Of Finance Charges In
Connection With Extensions Of Credit)
I. State Policy
a. It is hereby declared to be the policy of the State to protect its citizens from a lack of
awareness of the true cost of credit to the user by assuring a full disclosure of such cost
with a view of preventing the uninformed use of credit to the detriment of the national
economy.
II. Purposes of Truth in Lending Act

a. To protect a debtor from the effects of misrepresentation and concealment;
b. To allow a debtor to fully appreciate and evaluate the real cost of his borrowing;
c. To avoid circumvention of prohibition against contra bonus mores interest rates.
III. Rationale of Disclosure Requirement in Truth in Lending Act

a. To protect users of credit from a lack of awareness of the true cost thereof, proceeding
from the experience that banks are able to conceal such true cost by hidden charges,
uncertainty of interest rates, deduction of interests from the loaned amount, and the like.
b. The law thereby seeks to protect debtors by permitting them to fully appreciate the true
cost of their loan, to enable them to give full consent to the contract, and to properly
evaluate their options in arriving at business decisions.
IV. Applicability of Truth in Lending Act

a. It applies to creditors who extend loans, sales in installments, and other credit
transactions.
b. It applies only in cases involving an extension of credit, and not to those on a cash basis.
V. Definition of Terms
a. Board means the Monetary Board of the Central Bank of the Philippines.
b. Credit means any loan, mortgage, deed of trust, advance, or discount; any conditional
sales contract; any contract to sell, or sale or contract of sale of property or services,
either for present or future delivery, under which part or all of the price is payable
subsequent to the making of such sale or contract; any rental-purchase contract; any
contract or arrangement for the hire, bailment, or leasing of property; any option,
demand, lien, pledge, or other claim against, or for the delivery of, property or money;
any purchase, or other acquisition of, or any credit upon the security of, any obligation of
claim arising out of any of the foregoing; and any transaction or series of transactions
having a similar purpose or effect.
i. Differentiating hire, bailment, and leasing:

1. Hire-purchase agreements – Arrangements wherein the party paying
periodic installments for a good will acquire the right to it after the final
installment has been paid.
2. Bailment – Form of agreement wherein the bailor transfers the
possession of a property to the bailee, but retains legal ownership. The
bailee, in possession, is also not allowed to use the property. In a way, it
is a form of a safekeeping arrangement like holding a collateral to secure
a loan or by simply doing warehousing (wherein the goods are stored in
the warehouse, but are not being used).
3. Leasing – Lessor transfers the possession of property to the lessee,
retaining legal ownership, but allowing the lessee to use the property.
c. Finance charge includes interest, fees, service charges, discounts, and such other
charges incident to the extension of credit as the Board may be regulation prescribe.
Mobile : 0927 283 8234
Telephone : (043) 723 8412
d. Creditor means any person engaged in the business of extending credit (including any
person who as a regular business practice make loans or sells or rents property or
services on a time, credit, or installment basis, either as principal or as agent) who
requires as an incident to the extension of credit, the payment of a finance charge.
e. Person means any individual, corporation, partnership, association, or other organized

group of persons, or the legal successor or representative of the foregoing, and includes
the Philippine Government or any agency thereof, or any other government, or of any of
its political subdivisions, or any agency of the foregoing.
VI. Implementing Agency of Truth in Lending Act

a. The Monetary Board of Bangko Sentral ng Pilipinas shall prescribe such rules and
regulations as may be necessary or proper in carrying out the provisions of this Act. Any
rule or regulation prescribed hereunder may contain such classifications and
differentiations as in the judgment of the Board are necessary or proper to effectuate the
purposes of this Act or to prevent circumvention or evasion, or to facilitate the
enforcement of this Act, or any rule or regulation issued thereunder.
VII. Obligation of Creditors to Persons to whom credit is extended

a. Any creditor shall furnish to each person to whom credit is extended, prior to the
consummation of the transaction, a clear statement in writing setting forth, to the extent
applicable and in accordance with rules and regulations prescribed by the Board, the
following information:
i. the cash price or delivered price of the property or service to be acquired;
ii. the amounts, if any, to be credited as down payment and/or trade-in;
iii. the difference between the amounts set forth under clauses (1) and (2);
iv. the charges, individually itemized, which are paid or to be paid by such person in
connection with the transaction but which are not incident to the extension of
credit;
v. the total amount to be financed;
vi. the finance charge expressed in terms of pesos and centavos; and
vii. the percentage that the finance bears to the total amount to be financed
expressed as a simple annual rate on the outstanding unpaid balance of the
obligation.
VIII. Covered Transactions of Truth in Lending Act

a. Any loan, mortgage, deed of trust, advance and discount;
b. Any conditional sales contract, any contract to sell, or sale or contract of sale of property
or services, either for present or future delivery, under which part or all of the price is
payable subsequent to the making of such sale or contract;
c. Any rental-purchase contract;
d. Any contract or arrangement for the hire, bailment, or leasing of property;
e. Any option, demand, lien, pledge, or other claim against, or for delivery of, property or
money;
f. Any purchase, or other acquisition of, or any credit upon security of any obligation or
claim arising out of any of the foregoing; and
g. Any transaction or series of transactions having a similar purpose or effect.
IX. Excluded Transactions from Truth in Lending Act

a. Credit transactions which do not involve the payment of any finance charge by the
debtor, and
b. Credit transactions which the debtor is the one specifying a definite and fixed set of
credit terms such as bank deposits, insurance contracts, safe of bonds, etc.
Mobile : 0927 283 8234
Telephone : (043) 723 8412
X. Consequences of Non-Compliance by Lender of its Obligations under Truth in Lending

Act
a. Civil Liability of Creditor to Debtor
i. Any creditor who in connection with any credit transaction fails to disclose to any
person any information in violation of this Act or any regulation issued
thereunder shall be liable to such person in the amount of P100 or in an amount
equal to twice the finance charged required by such creditor in connection with
such transaction, whichever is the greater, except that such liability shall not
exceed P2,000 on any credit transaction. Action to recover such penalty may be
brought by such person within one year from the date of the occurrence of the
violation, in any court of competent jurisdiction. In any action under this
subsection in which any person is entitled to a recovery, the creditor shall be
liable for reasonable attorney's fees and court costs as determined by the court.
b. Validity or Enforceability of Contract or Transactions

i. Except as specified in subsection (a) of this section, nothing contained in this Act
or any regulation contained in this Act or any regulation thereunder shall affect
the validity or enforceability of any contract or transactions.
c. Criminal liability for criminal violation

i. Any person who willfully violates any provision of this Act or any regulation
issued thereunder shall be fined by not less than P1,00 or more than P5,000 or
imprisonment for not less than 6 months, nor more than one year or both.
d. State Immunity from Penalty

i. No punishment or penalty provided by this Act shall apply to the Philippine
Government or any agency or any political subdivision thereof.
e. Prima Facie Evidence and Estoppel

i. A final judgment hereafter rendered in any criminal proceeding under this Act to
the effect that a defendant has willfully violated this Act shall be prima facie
evidence against such defendant in an action or proceeding brought by any other
party against such defendant under this Act as to all matters respecting which
said judgment would be an estoppel as between the parties thereto.

RFBT 05 18 Banking Laws

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RFBT 05 18 Banking Laws

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No. 125 Brgy.

Batas Pambansa Bilang 22 (Bouncing Checks Law)

A. Punishable Acts under BP 22

B. Elements of Criminal Violation of BP 22 for issuance of worthless checks

C. Penalty for violation of BP 22 at the discretion of the court

D. Evidence of Knowledge of Insufficiency of Funds by the Issuer of Worthless Check

E. Evidence or Defense to destroy prima facie evidence of knowledge of insufficiency of

F. Duty of Drawee Bank

H. Evidence Required for Violation of BP 22

I. Scope of Criminal Prosecution for BP 22

J. Distinctions between Violation of BP 22 and Estafa

K. Prosecution for Violation of BP 22 (Requirement of Receipt of Notice of Dishonor by Maker

J. Differences between BP 22 and Estafa

Estafa and Violation of Bouncing Checks Law, how do they differ?

Definition Under the law

Elements of the Offense

What is the felony of Estafa under the Revised Penal Code?

Is bouncing check a criminal case in the Philippines?

What will happen to bounced checks?

How do you prove Estafa?

Bank Secrecy Laws

A. AN ACT PROHIBITING DISCLOSURE OF OR INQUIRY INTO DEPOSITS WITH ANY

a. Absolute Confidentiality of Domestic Bank Deposits and Investments in

i. All deposits of whatever nature in banks or banking institutions in the Philippines

2. Investments in Government Bonds refer to investments in bonds issued

3. The General Banking Law prohibits bank directors, officers, employees or

b. The following are criminally liable under this law:

c. Instances when Confidentiality of Domestic Bank Deposits is Not Absolute.

or investment with any banking institution is related to certain

d. disclosure by a bank officer or employee upon order of the court

Absolute Confidentiality of Foreign Currency Deposits

d. Instances when Confidentiality of Foreign Currency Deposits is Not Absolute.

iii. Exceptions under Jurisprudence on Grounds of Equity

1. Account of a Non-resident Alien The garnishment of a foreign currency

e. Penalties of Violation of Republic Act No. 6426:

I. Philippine Deposit Insurance Corporation Law (RA 3591 as amended by RA 10846)

B. Insurable Deposits under PDIC Law (Covered by PDIC Insurance)

C. Items that are not covered by PDIC Deposit Insurance

D. Maximum Liability (Maximum Deposit Insurance Coverage)

E. Requirements for Claims of Insured Deposits

1. When are claims filed?

2. Who are required to file deposit insurance claims?

3. Who are depositors not required to file deposit insurance claims?

4. Steps in filing deposit insurance claims

5. Who should sign the deposit insurance claim form?

6. Procedures for Claiming Insurance Proceeds

b. Requirement before payment

c. Period for payment

d. Rights of PDIC upon payment of insured deposits

Anti-Money Laundering Law

C. Predicate Crimes of Money Laundering (36 Crimes)

30. Voyeurism (R.A. No. 9995);

D. Types of Reportable Transactions to AMLC

F. Suspicious Transactions that shall also be reported to AMLC

4. Other Designated Non-Financial Business and Professionals

g. Person providing the following services including CPAs and lawyers

5. Persons excluded to report covered transactions or suspicious transactions to AMLC

I. Jurisdiction over Money Laundering Cases

J. Prosecution of Money Laundering Cases

6. For Suspicious transactions, "occurrence" refers to the date of determination of the

11. Asset Forfeiture

13. Non-Intervention in the Bureau of Internal Revenue (BIR) Operations. - Nothing