RA: 3591 PHILIPPINE DEPOSIT Purpose of PDIC
INSURANCE CORPORATION
THE CREATION OF THE PHILIPPINE
DEPOSIT INSURANCE CORPORATION
(R.A. No. 3591, as amended)
Basic Policy
1. To promote and safeguard the interests
of the depositing public by providing
insurance coverage on all insured
deposits and helping maintain a sound
and stable banking system.
2.  To strengthen the mandatory deposit
insurance coverage system to generate,
preserve, maintain faith and confidence
in the country's banking system; and
protect it from illegal schemes and
machinations.
Philippine Deposit Insurance Corporation
or PDIC
 Philippine Deposit Insurance
Corporation or also known as PDIC was
created by R. A. No. 3591 on June 22,
1963 as an insurer of deposits in all
banks entitled to the benefits of
insurance under the PDIC Charter to
promote and safeguard the interests of
the depositing public by way of providing
permanent and continuing insurance
coverage of all insured deposits.  4. Four members from the private sector
 Government must extend all means and
mechanisms necessary for the
Philippine Deposit Insurance
Corporation (PDIC/Corporation) to
effectively fulfill its vital task of
promoting and safeguarding the
interests of the depositing public by way
of providing insurance coverage on
bank deposits and in helping develop a
sound and stable banking system.
 to act as deposit insurer, as a co-
regulator of banks, and as receiver and
liquidator of closed banks.
 PDIC exists to protect depositors by
providing deposit insurance coverage
for the depositing public and help
promote financial stability.
Composition of the Corporation
 Board of Directors
 powers and functions of the Corporation
should be vested in and exercised by
the Board of Directors which shall be
composed of seven (7) members 
1. Secretary of Finance
2. Governor of the BSP
3. President of the Corporation
Note: The president of the corporation shall
serve on the term of 
            six years on full-time basis.
         The president of the corporation shall
also serve as the Vice 
          Chairman of the Board 
Note: These four appointive directors shall
serve for a term of six     
           years unless sooner removed for cause
and shall be subject to 
           only one
1. Reappointment
2. Appointees shall serve for  a period of
three (3) years
 The appointive director shall continue to
hold the position or office until the
successor is appointed.

Qualifications of the members of the board
o No person shall be appointed as
member of the board unless he/she be:
 Of good moral character
 Of unquestionable integrity and
responsibility
 Of known prohibit and patriotism
 Is recognized of competence
 At least thirty-five (35) years old
Powers of Board of Directors
o The Board of Directors shall the
authority:
1. Approve and issue rules and regulations
for banks and the depositing as it
considers necessary for the effective
discharge of its responsibilities
2. Act as the policy - making body and
constitute Board Committees of the
corporation to oversee the
managements, operations and
administration of the corporation
3.  Establish a human resource
management system which shall govern
the selection, hiring, appointment
transfer, promotion or dismissal of the
personnel
Note: such system shall aim to establish
professionalism and excellence at all levels of
the Corporation
4. Approve a compensation structure as an
integral component of the corporation’s
human resource and development
program
5. Appoint, establish the rank, fix the
remuneration, benefits including health
care services and medical benefits
through Health Maintenance
Organization (HMO)
6. Approve policy on local and foreign
travel and the corresponding expenses,
allowances of the Corporation
7. Adopt an annual budget and authorize
such expenditures 
8. Approve the target level of the Deposit
Insurance Fund (DIF) for determining
reserves for insurance and financial
assistance losses
9. Review the organizational set-up of the
corporation and adopt a new revised
organizational structure as it necessary
for the Corporation
10. Design, adopt and revise of the
corporation and adopt a new revised
organizational structure as it necessary
for the Corporation 
11. Promote and sponsor the local or
foreign training or study personnel in the
fields of banking, finance, management,
information technology and law
 President of the Corporation
 The president of the corporation should
be the Chief Executive Officer and the
Vice Chairman of the Board of Directors
Powers and Duties of the President of the
Corporation
1. Prepare the agenda for the meeting 
2. Submit for the consideration of the
Board, the policies and measures which
he believes to be necessary to carry out
the purposes and provisions of this Act
3. Execute and administer the policies and
measure which are approved by the
Board
4. Direct and supervise the operations and
internal consideration of the Corporation
in accordance with the policies
established by the Board
Note: The President may delegate certain of
his administrative responsibilities to other
officers of the Corporation, subject to the rules 11. Serve notice of closure Others
and regulations of the Board
12. Dividend declaration 
5. Represent the Corporation in all
13. Payment of insured deposits on closed
dealings
banks
6. To authorize contracts with his/her
14. Financial assistance
signature upon prior authority the board
Represent the Corporation 15. Authority to borrow
7. Represent the Corporation 16. Issuance of bonds, debentures, and
other obligations 
8. Delegate his power to represent 
The functions of PDIC can be summarized as
Note: There must be a prior approval of the
follows:
Directors
 Deposit Insurer 
9. Exercise such other powers as may be
vested in him by the Board  Co-regulator of Banks
Powers and Functions of the PDIC   Receiver and Liquidator of Closed
Banks
1. Insurer of deposit liabilities of banks
Note: The PDIC’s power as a Corporate body
2. Conduct insurance risk evaluation 
is almost the same with corporations discussed
3. Assessment of members banks  during the BSA 1203: Business Laws and
Regulations - Partnership and Corporations. 
Sanctions Against Unsafe and Unsound
Banking Practices Prohibition’s
4. Examine any insured bank and submit Personnel of the Corporation are hereby
the report of examination to the prohibited from:
Monetary Board and to secure
1. Being an officer directly or indirectly of
corrective action. 
any bank except otherwise provided in
5. Institute corrective action in case no this Act.
corrective action.
2. Receiving any gift from any employees
6. Terminate the insured status of any of banks. 
bank that fails to comply with the
3. Revealing any information without any
corrective action. 
authorization. 
Bank Resolution
Note: The examiners are also prohibited to
7. Commence bank resolution  borrow from their assigned bank to be
examined. 
8. Be provided by the BSP with information
Deposit 
9. To examine, inquire, or look into the
deposit records of a bank incase of o unpaid balance of money or its
failure of prompt corrective action. equivalent received by a bank in usual
course of business and for which it has
Liquidation of a Closed Bank; Notice of
given or obliged to give credit to an
Closure and Takeover Activities
evidence of deposit issued in
10. Act as receiver
 accordance with BSP rules and
regulations. 
o Deposits that are insured by PDIC:
 Deposits of all commercial banks,
savings and mortgage banks, rural
banks, private development banks,
cooperative banks, savings and loan
associations, as well branches and
agencies in the PH of foreign banks and
all other corporations authorized to
perform banking functions in the
country. 
Notes:
o BoD will determine and prescribe by
regulations to be deposited liabilities of
the bank.  (savings banks, mortgage banks, stock savings
 Provided: Obligation outside of
the Philippines shall not be a
deposit for any purposes of this
act. And in case of banks
incorporated in the Philippines
and it has branch outside the
country, it will be subject to
Approval from the BoD.
o Foreign Currency Deposits are also
insured by PDIC pursuant to RA 6426
and Central Bank Circular No. 1389.
The Corporation shall not pay deposit
insurance for the following: 
 Investment products such as bonds and
securities
 Deposit accounts/transactions which are
fictitious or fraudulent 
 Deposit accounts/transactions
constituting unsafe and unsound
banking practices 
 Deposits that are determined to be the
proceeds of an unlawful activity
Membership
Membership with PDIC is mandatory for all
banks licensed by the BSP to operate in the
Philippines:
 Banks incorporated under Philippine
laws, such as commercial banks,
savings banks, mortgage banks, stock
savings and loan associations,
development banks, cooperative banks,
and rural banks
 Domestic branches of foreign banks
As of 31 December 2020, there are 535 banks
in the Philippine banking system. These
consist of 46 commercial banks (including
branches of foreign banks), 48 thrift banks
and loan associations, and development
banks), and 441 rural banks (including
cooperative banks).
Insured Deposit and the Extent of Liability
 Insured Deposit - The amount due to
any bonafide depositor for legitimate
deposits in an insured bank as of the
date of closure not to exceed 500,000
php. 
 RA 9576
o April 29, 2009 - The PDIC propose to
adjust the Maximum Deposit
Insurance Coverage  
o June 01, 2009 - The start of the
effectivity of the proposal.
o When the maximum deposit
insurance cover may be adjusted.
 In case of a condition that
threatens the monetary and
financial stability of the banking
system, the MDIC may be
adjusted in such amount for
such period, for such deposit
products. 
 Requisites:  
 Meeting called for the purpose and
chaired by the Secretary of the
Finance 
 Unanimous vote of the Board of the
Directors
 Approval of the President of the
Philippines  or juridical person into is broken down and
Calculation of Liability
 Per depositor, per capacity rule -  in
determining the amount due to any
depositor, added together all deposits in
the bank.
 Joint Accounts - regardless of whether the
conjunction “and”, “or”, “and/or” is used,
shall be insured separately from any
individually-owned deposit account:
o If the account is held jointly by 2 or more
natural persons, or by two or more
juridical entities = maximum insured
deposit shall be divided into as many
equal shares as there are individuals
and juridical persons, unless stipulated
otherwise.  loans or deposit accounts.
Risk Classification of a bank 
 Possible resolution modes
Prohibition Against Splitting of Deposits
Splitting of deposits occurs whenever a deposit
account with outstanding balance of more than
the statutory maximum amount of insured
deposit maintained under the name of natural
transferred into two or more accounts in the
names of the natural or juridical persons or
entities who have no beneficial ownership on
transferred deposits in their names within 120
days immediately preceding or during a bank
declared bank holiday or immediately
preceding a closure order issued by the
monetary board of the bsp for the purpose of
availing of the maximum deposit insurance
coverage.
Penalty for Splitting of Deposits -
imprisonment not less than 6 years but not
more than 12 years or a fine of not less than
50,000 pesos but not more than 10 million
pesos or both at the discretion of the court
shall be imposed upon the any director, officer,
employee or agent of the bank for spitting of
deposits or creation of fictitious or fraudulent

o If the account is held by a juridical Prohibition against issuances of Temporary

person or entity jointly with one or more Restraining Orders
natural persons = maximum insured  Temporary restraining orders (TRO) are
deposit shall be presumed to belong short-term pre-trial temporary
entirely to such juridical person. injunctions.
o Note: The aggregate of the interest of General Rule: No court, except Court of
each co-owner over several joint Appeals, shall issue TRO, preliminary
accounts, shall likewise be subject to injunction or Preliminary Mandatory Injunction
MIDC of 500,000 php.  against the Corporation for any action under
Insurance Risk Evaluation this act. 

Bank is determined by BSP to the capital Exemption: when the supreme court may issue
deficient, the Corporation may conduct an a restraining order or injunction
insurance risk evaluation on the bank. The  extreme urgency involving a
evaluation may include the determination of:  constitutional issues such that 
 FMV of the assets and liabilities of the  unless a temporary restraining order is
bank issued
  grave injustice  the affirmative vote of at least five members of
the pdic board shall determine whether the
 irreparable injury will arise
bank may be resolved
Bond
1. Through the purchase of all its asset
 Shall file a Bond in amount to be Fixed and assumption of all its liabilities
by the Supreme Court 
2. Merger or consolidation with a qualified
 Shall accrue in favor of the corporation if investor or
the court should finally decide that the
3. Acquisition by qualified investor
applicants was not entitled to the relief
sought.  Factors to consider in determining the
appropriate method of resolution
Violation:
In determining the appropriate resolution
any restraining order or injunction issued in
method for a bank corporation shall consider
violation of this section is  void and if no force
the; 
and effect and any judge who has each with
the same shall suffer the penalty of suspension 1. fair market value of the asset of the
of at least 60 days without pay bank its franchise as well as the amount
of its liabilities
Bank Resolution
2. availability of a qualified investors 
 the term resolution refers to the action
undertaken by the corporation under 3. least cost of the DIF
section 11 of RA 2591 amended to
4. interest of the depositing public
1. protect depositors’ creditors and the
Role of PDIC in Relation to Banks in
DIF 
Distress
2. safeguard the continuity of essential
CLOSURE AND TAKEOVER 
banking services or maintain financial
stability The term takeover refers to the act of
physically taking possession and control of the
3. prevent deterioration or dissipation of
promise’s assets and affairs of a closed bank
bank.
for the purpose of liquidating the bank 
Commencement of the resolution of a bank
Notice of Closure upon the designation of the
the corporation in a coordination with the bsp corporation as receiver of the closed bank, it
may comments that a solution of the bank shall serve a notice of closure to the highest
under the section upon: rank officer of the bank present in the bank
premises are in the absence of the such
1. failure a prompt corrective action as
officer, post the notice of closure in the bank
declared by the monetary board
premises or on its main entrance.
 due to capital deficiency
2. request by a bank to be placed under 
Receivership
resolution
Proceeding in Receiving and Liquidation under
Modes of resolution
the NCBA
Within the period of 180 days from a bank and
whenever upon report of the head of the
three into the solution the corporation through
supervising or examining department, the
monetary board finds that the a bank or quasi-
bank:  standard process of liquidation
1. Unilateral Closure or has been dormant
for at least 60 days  of liabilities - refers to a transaction
or in any manner has suspended the payment
of its deposit / deposit substitute liabilities, or is
unable to pay its liabilities as they become due
in the ordinary course of business 
Note:  this shall not include in ability to pay
caused by extraordinary demands induced by
the financial panic in the banking community. 
2. Has insufficient realizable assets , as
determined by the bangko sentral to
meet its liabilities  under existing laws. the Corporation, as
3. Cannot continue in business without
involving probable losses to its
depositors or creditors.  closed bank
4. has willfully violated a cease and desist
order under section 37 of ncba that has
become final, involving acts or
transactions which amount to fraud or
dissipation of the assets of the
institution 
Designation of PDIC as Receiver
Correlate this provision with section 12 of RA
3591 as amended which provides that
whenever a bank is ordered close by the
monetary board the corporation shall be
designated as receiver and it shall proceed
with the takeover and liquidation of the closed
bank in accordance with this act for this
purpose of banks closed by the monetary
board shall no longer be rehabilitated 
Liquidation
The term "liquidation" refers to the process of
winding up business affairs by settling
corporate obligations or debts and distributing
remaining corporate assets through liquidating
dividends. 
The receiver is authorized to adopt and
implement any or a combination of the
following modes of liquidation:
1. Conventional liquidation - the
  
2. Purchase of assets and assumption
where an insured bank purchases any
or all assets and assumes any or all
liabilities for another bank under
liquidation. 
Note: The consent of the stockholders, board
of directors, creditors, or depositors of the
closed banks is not needed.
Powers of the Corporation as receiver
In addition to the powers of a receiver provided
receiver of a closed bank, is empowered to: 
1. Represent and act for and on behalf of the
2. Gather and take charge of all the assets,
records, and affairs of the closed bank and
administer the same for the benefit of Its
creditor
3. Convert the assets to the closed bank to
cash or other forms of liquid assets, as far
as practicable
4. Bring suits to enforce liabilities of the
directors, officers, employees, agents of the
closed bank, and other entities related or
connected to the closed bank or to collect.
recover, and preserve all assets, including
assets over which the bank has equitable
interest 
5. Appoint or hire persons or entities of
recognized competence in banking
finance, asset management, or remedial
management as it deputies. assistants or
agents, to perform such powers and
functions of the Corporation as receiver of
the closed hank, or assist in the
performance thereof 
6. Appoint or hire persons or entities of
recognized competence in forensic and
fraud investigations
7. Pay accrued utilities, rentals, and
salaries of personnel of the closed bank for
a period not exceeding three (3) months,
from available hinds of the closed bank
8. Collect loans and other claims of the
closed bank and for this purpose, modify,
compromise or restructure the terms and
conditions of such loans or claims as may
be deemed advantageous to the Interests
of the creditors of the closed hank
9. Hire or retain private counsel as may be
necessary
10. Borrow or obtain a loan, mortgage,
pledge or encumber any asset and of the
closed bank, when necessary to preserve
or prevent dissipation of the assets. or to
redeem foreclosed assets of the dosed
bank, or to minimize losses to its depositors
and creditors
11. If the stipulated interest rate on deposits
is unusually high compared with
prevailing applicable interest rate, the
Corporation as receiver may exercise such
powers which may include a reduction of
the interest rate to a reasonable rate 
NOTE: Any modifications or reductions
shall apply only to earned and unpaid
interest  Note: In no case shall the bank be reopened
12. Utilize available funds of the bank
including funds generated by the
receiver from the conversion of assets
to pay for reasonable costs and
expenses incurred for the preservation
of the assets, and liquidation of the
closed bank, without need for approval
of the liquidation court;  legis (in the custody of the law)
NOTE. Fn. banks with insufficient funds, the
Corporation is authorized to advance the
foregoing costs and expenses, and collect
payment. as and when funds become
available 
13. Charge reasonable fees for the
liquidation of the bank from the assets of
the bank provided, That payment of
these fees including any unpaid
advances under the immediately
preceding paragraph, shall be subject to
approval by the liquidation court.
14. Distribute the available assets of the
closed hank, in cash or in kind, to us
creditors in accordance with the Rules
on Concurrence and Preference of
Credits under the Civil Code or other
laws,
15. Dispose records of the closed bank
that are no longer needed in the
liquidation in accordance with guidelines
set by the PDIC, Board of Directors,
notwithstanding the Laws on archival
period and disposal of records.
16. Exercise such other powers as are
inherent and necessary for the effective
discharge of the duties of the
Corporation as receiver. (Sec.13(b). RA
3591. as amended)
Effects of liquidation
The placement of a bank shall have the
following effects:
1. On the corporate franchise or existence - to
continue
and permitted to resume banking business
after being placed under liquidation.
2. On the powers and functions of its
directors, officers, and stockholders -
terminated
3. On the assets - deemed in custodia
4. On the labor relations - deemed
terminated
5. Contractual obligation - may be
terminated by the receiver
6. On the interest payments - to cease
upon closure
 7. Liability for penalties and surcharges for
late payment and nonpayment of taxes -
no liability
8. Bank charges on services - may be
imposed by the receiver
9. Actions pending for or against the
closed bank - suspended, subject to
exception
10. Final decisions against the closed bank
- stayed
11. Docket and other court fees - deferred
12. Assets, records, and documents in
the possession of the closed bank at
the time of its closure - presumed held
by the bank in the concept of an owner.
13. The exercise of authority, functions,
and duties by the receiver under this
Act is presumed to have occurred in the
regular course of business.
14. Even if administered by the receiver,
the closed bank's assets and
documents must remain private.
Matters relating to the exercise by the
receiver of the functions under this Act
shall be subject to visitorial audit only by
the Commission on Audit.
Claims - practicing your right to avail the
insurance, it is a formal declaration on your
part as a creditor to exercise your right to
accept the insurance
 claims must be filed during the claims
settlement period, as announced - upon
the PDIC's announcement the claims
settlement period will already
commence.
Who should claim:
1. depositors of valid accounts of more than
100,00
2. depositors with outstanding bank
obligations.
3. depositors who failed to update address via
MAUF (Mailing Address Update Form)
4. depositors who maintain accounts under the
name of business entity
5. deposits not eligible for early payment, as
determined by PDIC 
Not required to claim:
1. depositors of valid account that has below
100,000
2. depositors without outstanding bank
obligations
3. has updated personal information via MAUF
Who should sign the claim:
General rule: should be signed by the
depositor
exceptions:
- minor - parents & guardian can sign the claim
- “by accounts” - agent can sign the claim
- "in trust for" or ITF, the one who will sign the
account is trustee
- Joint accounts - all of the joint depositors
should sign the claim
Period of filing the claim: 2 years from actual
takeover of the bank
Period of enforcing claim: 2 years after filing
claim
PDIC may require a proof of claim. PDIC can
also require court determination.
Effects of failure to file and/or enforce
claim.
1. barred from rights against PDIC
2. Revocation of depositor rights against the
closed bank
3. PDIC is discharged from liability
Mode of payment - cash, or via direct deposit
in a new bank, under the depositor's name
—————————————————————
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BANK SECRECY LAW
R.A. 1405 & R.A 6426
Purpose
It is hereby declared to be the policy of the
Government to give encouragement to the
people to deposit their money in banking
institutions and to discourage private hoarding
so that the same may be properly utilized by
banks in authorized loans to assist in the
economic development of the country.
Coverage
All deposits of whatever nature with banks
or banking institutions in the Philippines
including investments in bonds issued by the
Government of the Philippines, its political
subdivisions and its instrumentalities, are
hereby considered as of an absolutely
confidential nature and may not be
examined, inquired or looked into by any
person, government official, bureau or
office, except upon written permission of the
depositor, or in cases of impeachment, or upon
order of a competent court in cases of bribery
or dereliction of duty of public officials, or in
cases where the money deposited or invested
is the subject matter of the litigation.
Prohibited Acts
1. Bank deposits may not be
examined/inquired/investigated by any person,
government official, bureau, or office.
2. Any official or employee of a banking
institution may not disclose to any person of
any information concerning said deposits
Acts not covered by the Prohibition:
Non-bank official or employee is not covered
by the prohibition. Neither is disclosure by any
bank official or employee of information about
bank deposit in favor of a co- employee in the
course of the performance of his duties
covered by the prohibition.
Kinds of Deposits Covered
1. All deposits of whatever nature with banks
or banking institutions found in the Philippines;
or
2. Investments in bonds issued by the
Philippine government, its branches, and
institutions. (Sec. 2, R.A. 1405).
3. Trust Account
NOTE: Despite such pronouncement that trust
funds are considered deposits, trust funds
remain not covered by PDIC.
Confidentiality granted by RA 1405 does NOT
extend to Letters of Credit and Trust Receipts
(Opinion of the Secretary of Justice No. 5,
Series of 1982; Opinion of the Secretary of
Justice No. 126, Series of 1989)
May a deposit in a safety deposit box be
also considered a bank deposit?
YES. The non-disclosure of deposits law (RA
1405) includes all deposits of whatever nature
with banks and banking institutions.
Exceptions to the Rule on Secrecy of Bank
Deposits
1. Upon written consent of the depositor or
investor;
2. Impeachment cases;
3. Upon order of competent court in cases of
bribery or dereliction of duty of public officials
or where the money deposited or invested is
the subject of litigation;
4. Upon order of competent court in cases
involving unexplained wealth under the Anti‐
Graft and Corrupt Practices Act, RA 3019
(Bangko Filipino vs. Purisima)
5. Upon inquiry by the CIR into the bank
accounts of the following:
a) deceased depositor determines his net
estate;
b) any taxpayer who has filed an application for
compromise of his tax liability by reason of
financial incapacity plus waiver of his privilege
(Sec. 6[f][1], NIRC);
6. Upon court order when there is probable
cause that the deposits or investments
involved are in any way related to any unlawful
activities or a money laundering offense under
the AMLA;
7. Without need for AMLC to secure court
order: If there is probable cause that the
deposit or investment are related to the
following: (HK‐MADS)
a) Hijacking;
b) Kidnapping for ransom;
c) Murder;
d) Destructive Arson; and
e) Violation of the Dangerous Drugs Act.
8. Upon a general or special examination of a
bank authorized by the Monetary Board after
being satisfied that a bank fraud or serious
irregularity has been committed;
9. When an examination is made by an
independent auditor hired by the bank to
conduct its regular audit.
10. Disclosure to the Treasurer of the
Philippines for dormant deposits for at least 10
years under the Unclaimed Balances Act. (Sec.
2, Act No. 3936);
11. Upon order of the Court of Appeals,
examination by law enforcement officers in
terrorism cases under the Human Security Act
(Secs. 27 and 28, RA 8372);
12. Inquiry into illegally acquired amounts
under the Pl under Law (RA 7080);
13. In camera inspection by the Ombudsman
under the Ombudsman Act (Sec. [15][8], RA
6770);
14. Report of banks to AMLC of covered and
suspicious transactions;
15. Without court order: In cases filed by the
Ombudsman and upon the latter's authority to
examine and have access to bank accounts
and records (Marquez v. Desierto, GR 138569,
Sept. 11, 2003);
16. Where there is a waiver in case of DOSRI
loans.
Are Trust Funds Covered by the Term
"Deposit?"
YES. The money deposited under the trust
agreement is intended not merely to remain
with the bank but to be invested by it
elsewhere. To hold that this type of account is
not protected by R.A. 1405 would encourage
private hoarding of funds that could otherwise
be invested by banks in other ventures,
contrary to the policy behind the law. (Ejercito
v. Sandiganbayan)
Note: Despite such pronouncement that trust
funds are considered deposits, trust funds
remain not covered by PDIC.
Are Foreign Currency Deposits Governed
by the Secrecy in Bank Deposits (R.A.
1405)?
No. Foreign currency deposits are governed by
the Foreign Currency Deposits Act (RA 6426).
Does Garnishment of a Bank Deposit
Violate the Law on Secrecy of Bank
Deposits?
No. Bank accounts may be garnished by the
creditors of the depositor. There is no violation
of the Law on Secrecy of Bank Deposits if the
accounts are garnished. The amount of deposit
is actually not disclosed and the intent of the
legislature does not cover garnishment (PCIB
v. CA, G.R. No. 84526, Jan. 28, 1991).
Are Foreign Currency Deposits Subject to
Garnishment?
GR: NO. Foreign currency deposits shall be
exempt from attachment, garnishment, or any
other order or process of any court, legislative
body, government agency or any
administrative body whatsoever (Sec 8. R.A.
6426). XPN: Subject to garnishment to prevent
injustice and for equitable grounds, i.e.
American tourist found guilty of repeatedly
raping a 12 year old child (Salvation vs. Central
Bank of the Philippines)
Rule in Foreign Currency Deposits
Foreign currency deposits cannot be inquired
or looked as they are absolutely confidential
(Sec. 8, RA 6426)
Note: Protection under this law is intended only
for depositors who are non-residents and are
not engaged in trade and business in the
Philippines (Estrada vs. Desierto)
AUTHORITY TO DEPOSIT FOREIGN
CURRENCIES
Any person, natural or juridical, may deposit
with such Philippine banks in good standing
designated by the Central Bank for the purpose
of:
foreign currencies which are acceptable as part
of the international reserves.
AUTHORITY OF BANKS TO ACCEPT
FOREIGN CURRENCIES
(1) To accept deposits and to accept foreign
currencies in trust Provided, That numbered
accounts for recording and servicing of said
deposits shall be allowed;
(2) To issue certificates to evidence such
deposits;
(3) To discount said certificates;
(4) To accept said deposits as collateral for
loans subject to such rules and regulations as
may be promulgated by the Central Bank from
time to time; and
(5) To pay interest in foreign currency on such
deposits.
CONFIDENTIALITY OF FOREIGN
CURRENCY DEPOSITS
All foreign currency deposits as amended by
PD No. 1035, as well as foreign currency
deposits authorized under PD No. 1034, are
declared as and considered of an absolutely
confidential nature and no instance shall
foreign currency deposits be examined,
inquired or looked into by any person,
government official, bureau or office whether
judicial or administrative or legislative, or any
other entity whether public or private.
EXCEPTION: upon the written permission of
the depositor.
FOREIGN CURRENCY DEPOSITS
COVERED BY RA 6426
PD No. 1034 (September 30, 1976)
 Transactions of offshore banking units with
residents of the Philippines including those
with local commercial banks and local
branches of foreign banks authorized to
receive foreign deposits.
PD No. 1035 (September 30, 1976)
 foreign currency loan from and transactions
with non-residents Offshore banking units in
the Philippines (Offshore banking system)
EXCEPTIONS TO THE CONFIDENTIALITY
OF R.A 6426
1. When there is written consent of depositor
(Sec. 8);
2. AMLC may inquire into any deposit with a 2.) Civil Forfeiture Suit brought by AMLC
bank or financial institution in case of violation through the OSG pursuant to Sec. 7(4) & 12 of
of RA 9160 if there is probable cause that it is AMLA and Sec. 18 of TFPSA.
related to an unlawful activity (S11, AMLA);
3.) The Freeze order pursuant to AMLA and
3. Upon ex parted application by a law enforcer Anti-Terror Law.
authorized by the Anti-Terrorism Council, the
PENAL PROVISIONS (Section 10)
justices of the CA designated as special court
to handle anti-terrorism cases may authorize Any willful violation of this Act or any regulation
the examination of deposits in a financial duly promulgated by the Monetary Board
institution upon finding probable cause of the pursuant hereto shall subject the offender upon
commission of terrorism or conspiracy to conviction to an imprisonment
commit terrorism (S27-28, Human Security Act,
RA 9372) not less than one year nor more than five
years or a fine of not less than five
4. Under Sec. 10 of RA 10168 where AMLC is thousand pesos nor more than twenty-five
authorized to inquire into or examine deposits thousand pesos, or both such fine and
and investments with any bank or non-bank imprisonment at the discretion of the court.
institution without a court order;
5. CIR is authorized to inquire into bank
deposits of the following:
a) Decedent to determine his estate;
b) Any taxpayer who has filed for an
application for compromise of his tax liability;
c) Specific taxpayer upon request for tax
information from a foreign tax authority
pursuant to an international convention or
agreement on tax matters to which the
Philippines is a party (S6[f], NIRC);
6. Disclosure to the BSP in the course of
examination to ensure compliance with the
Anti-Money Laundering Act; and
7. PDIC's inquiry into and examination of
deposit accounts and all information related
thereto in case there is a finding of unsafe of
unsound banking practice under (S8, pr. 8, RA
3591, as amended by RA 9576)
EXEMPTIONS TO THE EXCEPTIONS
1.) Pro Hac Vice (For that instance only) case
The Supreme Court allowed the garnishment
of FCD of a Foreign transient who molested a
minor, and escaped. The garnishment of his
foreign currency was allowed to prevent an
injustice and for equitable grounds.