SPECIAL BANKING LAWS j.
Report of banks to AMLC of covered and/or
SECRECY OF BANK DEPOSITS
R.A. No. 1405, as amended
I. Purposes
a. To encourage people to deposit in banking
institutions; and
b. To discourage private hoarding of money and other
financial instruments so that the same may be
properly utilized by banks in authorized loans to
assist in the economic development of the country.
II. 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.
III. Exceptions to Secrecy of Peso Deposits
a. When there is written permission of the depositor
or investor;
b. In cases of impeachment;
c. Upon order of a competent court in cases of bribery
or dereliction of duty of public officials;
d. Upon order of a competent court in cases where
the money deposited or invested is the subject
matter of the litigation;
e. Upon order of the competent court or tribunal in
cases involving unexplained wealth under Sec. 8 of
the Anti-Graft and Corrupt Practices Act (R.A. No.
3019);
f. Upon the order of a competent court, or in proper
cases by the Anti-Money Laundering Council
(AMLC), where there is probable cause of money
laundering (and in instances related to kidnapping,
violation of the Dangerous Drugs Act, hijacking,
destructive arson and murder, including those
perpetrated by terrorists, even without court
order);
g. Upon inquiry by the Commissioner of Internal
Revenue for the purpose of determining the net
estate of a deceased depositor;
h. Upon inquiry by the Commissioner of Internal
Revenue for the purpose of determining the
financial incapacity of a taxpayer who has filed an
application for compromise settlement of his tax
liability by reason of financial incapacity under Sec.
204 (A) (2) of the Tax Code;
i. Disclosure of the Treasurer of the Philippines for
dormant deposits for at least 10 years under the
Unclaimed Balances Act (R.A. No. 3936);
1 See Sec. 35 of R.A. No. 11479, otherwise known as The Anti-Terrorism
Act of 2020. R.A. No. 11479 was signed into law on 03 July 2020,
published on 06 July 2020, and took effect on 21 July 2020. However, as
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suspicious transactions under Sec. 9 of R.A. No.
9160; and
k. Upon the issuance by the court of a preliminary
order of proscription OR in case of designation of
terrorist individual, groups of persons,
organizations or associations, the AMLC may,
without a need of a court order, either on its own
or upon the request of the Anti-Terrorism Council,
inquire into the property or funds:
i. that are in any way related to financing of
terrorism as defined and penalized under R.A.
No. 10168 (The Terrorism Financing Prevention
and Suppression Act of 2012), and
ii. of any person or persons in relation to whom
there is probable cause to believe that such
person or persons are committing or attempting
or conspiring to commit, or participating in or
facilitating the financing of the acts punished
under R.A. No. 11479 (The Anti-Terrorism Act of
2020).1
IV. Exceptions to Secrecy of Foreign Currency Deposits
a. When there is written consent of depositor under
Section 8 of the Foreign Currency Deposits Act (R.A.
No. 6426);
b. Upon the order of a competent court, the AMLC
may inquire into or examine any particular deposit
or investment with any banking institution or non-
bank financial institution when it has been
established that there is probable cause that the
deposits or investments involved are in any way
related to a money laundering offense; and
c. Upon the issuance by the court of a preliminary
order of proscription OR in case of designation of
terrorist individual, groups of persons,
organizations or associations, the AMLC may,
without a need of a court order, either on its own
or upon the request of the Anti-Terrorism Council,
inquire into the property or funds:
i. that are in any way related to financing of
terrorism as defined and penalized under R.A.
No. 10168 (The Terrorism Financing Prevention
and Suppression Act of 2012), and
ii. of any person or persons in relation to whom
there is probable cause to believe that such
person or persons are committing or attempting
or conspiring to commit, or participating in or
facilitating the financing of the acts punished
under R.A. No. 11479 (The Anti-Terrorism Act of
2020).2
V. Penalties for Violation
Imprisonment of not more than five (5) years or a fine
of not more than twenty thousand pesos (P20,000.00)
or both, in the discretion of the court.
of 24 August 2020, there are at least 29 Petitions filed before the
Supreme Court challenging its constitutionality.
2
Ibid.
 UNCLAIMED BALANCES III. Escheat under the Rules of Court
Act No. 3936, as amended The rules on Escheat, as a special proceeding, are laid
down in Rule 91 of the Rules of Court.
I. Coverage a. Petition for Escheat must be filed by the Solicitor
Unclaimed balances include credits or deposits of General in the Regional Trial Court (RTC) of the
money, bullion, security or other evidence of province where the deceased last resided or where
indebtedness of any kind, and interest thereon with he had estate (Sec. 1).
banks, loan associations, and trust corporations, in favor b. The court shall release an order of hearing that shall
of any person: fix the date and place of hearing, which date shall
a. known to be dead; or not be more than 6 months after the entry of order,
b. who has not made further deposits or withdrawals and shall direct publication of the order once a
during the preceding ten (10) years or more. week for 6 consecutive weeks in a newspaper of
general circulation published in the province (Sec.
Such unclaimed balances, together with the increase 2).
and proceeds thereof, shall be deposited with the c. Upon arrival of the date fixed and no sufficient
Treasurer of the Philippines to the credit of the cause shown to the contrary, the court shall
Government of the Republic of the Philippines to be adjudge that the estate of the deceased in the
used as the National Assembly (now Congress) may Philippines, after the payment of just debts and
direct. charges, escheat (Sec. 3).
d. If a devisee, legatee, heir, widow, widower, or other
II. Procedure person entitled to such estate appears and files a
a. Within the month of January of every odd year, all claim thereto with the court within 5 years from the
banks, loan associations, and trust corporations date of such judgment, such person shall have
shall forward to the Treasurer of the Philippines a possession of and title to the same, but a claim not
statement, under oath, of all credits and deposits made within the said time shall be forever barred
held by them in favor of persons known to be dead, (Sec. 4).
or who have not made further deposits or
withdrawals during the preceding 10 years or more,
arranged in alphabetical order according to the
names of creditors and depositors, and showing:
(1) The names and last known place of residence;
(2) The amount and the date of the outstanding
unclaimed balance;
(3) The date when the person in whose favor the
unclaimed balance stands died, if known, or
the date when he made his last deposit or
withdrawal; and
(4) The interest due on such unclaimed balance.
b. A copy of the sworn statement shall be posted in a
conspicuous place in the premises of the bank, loan
association, or trust corporation concerned for at
least sixty (60) days from the date of filing thereof.
c. Immediately before filing the sworn statement, the
bank, loan association, and trust corporation shall
communicate with the person in whose favor the
unclaimed balance stands at his last known place of
residence or post office address.
d. The Treasurer of the Philippines shall inform the
Solicitor General of the existence of unclaimed
balances held by banks, building and loan
associations, and trust corporations.
e. The Solicitor General will then initiate the proper
escheat proceedings in court.

Escheat - the reversion of property to a government

entity in the absence of legal claimants or heirs.

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 PHILIPPINE DEPOSIT INSURANCE CORPORATION
R.A. No. 3591, as amended
I. PDIC
a. PDIC is a government-owned corporation created
under R.A. No. 3591;
b. Powers and functions are exercised by a Board of
Directors composed of seven (7) members as
follows:
1. Secretary of Finance who shall be the ex officio
Chairman of the Board;
2. Governor of the BSP;
3. President of the PDIC, who shall be appointed
by the President of the Philippines to serve on
a full-time basis for a term of six (6) years. He
shall also serve as Vice-Chairman of the Board;
and
4. Four (4) members from the private sector to be
appointed by the President of the Philippines,
who shall serve for a term of six (6) years
subject to only one (1) reappointment.
c. No person shall be appointed as member of the
Board unless he/she is:
1. of good moral character;
2. of unquestionable integrity and responsibility;
3. of known probity and patriotism;
4. of recognized competence in economics,
banking and finance, law, management
administration or insurance; and
5. at least thirty-five (35) years of age.
II. Functions of the PDIC
a. Insure the deposit liability of banks in an account up
to P500,000.00 for every single depositor of each
bank irrespective of the number of accounts
therewith; and
b. As a basic policy, to promote and safeguard interest
of the depositing public by way of providing
permanent and continuing insurance coverage on
all insured deposits.
III. Deposit Insurance
All deposits in banks are insured with the PDIC. The term
deposit means the unpaid balance of money or its
equivalent received by a bank in the usual course of
business and for which it has given or is obligated to give
credit to a commercial, checking, savings, time or thrift
account, or issued in accordance with the rules and
regulations of the Bangko Sentral ng Pilipinas (BSP) and
other applicable laws.
Risk Insured: Bank closure only; losses due to bank
robberies are not covered.
IV. Coverage
The term insured deposit means the amount due to
any bona fide depositor for legitimate deposits in an
insured bank net of any obligation of the depositor to
the insured bank as of date of closure, but not to exceed
Five Hundred Thousand Pesos (P500,000.00).
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V. Exclusions
PDIC shall not pay deposit insurance for the following
accounts or transactions, whether denominated,
documented, recorded or booked as deposit by the
bank:
a. Investment products such as bonds and securities,
trust accounts, and other similar instruments;
b. Deposit accounts or transactions which are
unfunded, or that are fictitious or fraudulent;
c. Deposits accounts or transactions constituting,
and/or emanating from, unsafe and unsound
banking practice/s, as determined by the PDIC, in
consultation with the BSP, after due notice and
hearing, and publication of a cease and desist order
issued by the PDIC against such deposit accounts or
transactions; and
d. Deposits that are determined to be the proceeds of
an unlawful activity as defined under R.A. No. 9160,
as amended (Anti-Money Laundering Act of 2001).
VI. Rules in Determining Insured Deposit
a. PDIC liability is on a per bank basis. Accounts in a
bank, even though maintained in several branches,
are to be added together, provided that they are
maintained in the same right and capacity for his
benefit, either in his own name or in the name of
others.
b. A joint account, regardless of whether the
conjunction 'and,' 'or,' 'and/or' is used, shall be
insured separately from any individually-owned
deposit account.
c. If the account is held jointly by two or more natural
persons, or by two or more juridical persons or
entities, the maximum insured deposit shall be
divided into as many equal shares as there are
individuals, juridical persons or entities, unless a
different sharing is stipulated in the document of
deposit.
d. If the account is held by a juridical person or entity
jointly with one or more natural persons, the
maximum insured deposits shall be presumed to
belong entirely to such juridical person or entity.
e. The aggregate of the interest of each co-owner over
several joint accounts, whether owned by the same
or different combinations of individuals, juridical
persons or entities, shall likewise be subject to the
maximum insured deposit of P500,000.00.
f. No owner/holder of any passbook, certificate of
deposit, or other evidence of deposit shall be
recognized as a depositor unless the passbook,
certificate of deposit, or other evidence of deposit
is determined by the PDIC to be an authentic
document or record of the issuing bank.
VII. Prohibition on Splitting of Deposits
The penalty of imprisonment of 6 to 12 years and/or a
fine of P50,000 to P10,000,000 shall be imposed upon a
director, officer, employee or agent of a bank for
splitting of deposits or creation of fictitious or
fraudulent loan or deposit accounts.
 Splitting of Deposits – occurs whenever a deposit
account with an outstanding balance of more than
the statutory maximum amount of insured deposit
maintained under the name of natural or juridical
persons is broken down and transferred into two
(2) or more accounts in the name/s of natural or
juridical persons or entities who have no beneficial
ownership on transferred deposits in their names
within one hundred twenty (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.

VIII. Payment of Insured Deposits

a. When made: The proceeds of the insurance shall be
paid by the PDIC to the depositor whenever the
insured bank is closed on account of insolvency, or
upon expiration or revocation of a bank’s corporate
term.
b. Condition precedent to payment: Filing of claim
within two (2) years from actual takeover of the
closed bank by a receiver. An insured bank shall be
deemed to have been closed on account of
insolvency when ordered closed by the Monetary
Board of the BSP.
c. Manner of payment: Payment of insured deposits
shall be made in:
(1) Cash; or
(2) Transferred deposit - a deposit in an insured
bank made available to a depositor by the PDIC
as payment of insured deposit of such
depositor in a closed bank and assumed by
another insured bank.
d. Effect of payment: Payment by PDIC to the
depositor of his insured deposit shall gave the
following effects:
(1) Discharges the PDIC from further liability; and
(2) Subrogates the PDIC to all the rights of the
depositor against the closed bank to the extent
of such payment.

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