COVERAGE: Banking Laws
Direction: Read and study the following concepts
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 th at 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-dav 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 01 liabilities as a mode liquidation, and express prohibition
on reopening banks ordered closed bp 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.
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 Anti-Money 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 Phpl,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 Fe Santos
100,000
100,000
Charlie Santos In Trust For Fe Santos
100,000
100,000
Fe Santos' Store (Sole Proprietorship)
700,000
200,000
Total
1,000,000
500,000
2. How much is Fe Santos's insured
ACCOUNT NAME
Fe Santos or Ben Santos
Fe Santos and Charlie Santos
Deposit in PHP
500,000
1,000,000
Insured Deposit of Fe Santos
250,000
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?
ACCOUNT NAME
Deposit (in PHP)
Insured Deposit of Fe Santos
All single accounts of Fe Santos in BDO Branch 1 1,000,000
500,000
All joint accounts of Fe Santos in BDO Branch 2 2,500,000
500,000
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
PDC.
3. Who are depositors not required to file deposit insurance claims?
Depositors with valid deposit accounts with balances of Phpl00,000 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 Phpl00,000 and below may
update their addresses using the MAUF and submit to PDC representatives stationed at the closed bank premises before the start
of the onsite claims settlement operations
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:
a. If filing personally:
i.
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.
b.
If filing through Mail
i.
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
ii
By Cash
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.
ii.
PDIC may require proof of claims before paying the insured deposit
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.
II.
PDIC shall be legally subrogated to all rights of depositor against the closed bank to the extent of such payment.
Bank Secrecy Laws
A. AN ACT PROHIBITING DISCLOSURE OF OR INOUIRY 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. 551b], 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. 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.
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 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).
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 Anti-Money
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)
f.
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 [19731).
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
2.
3.
4.
5.
6.
7.
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)
The Commissioner of Internal Revenue is authorized to inquire into bank deposit accounts in relation to:
(l) 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).
The Anti-Money Laundering Council may be authorized to examine and inquire into bank deposits or
investments with banking or non-bank financial institutions — (l) 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 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).
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 Anti-Money 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).
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)
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)
The Presidential Commission on Good Government, in the conduct of its investigations to recover illgotten 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. [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.
III.
Unclaimed Balances Law
A. Definition of Terms
a. "Unclaimed _Balances" shall include (l) credits. (2) deposits of money. (3) bullion. (4) security or (5) other evidence
b.
c.
d.
e.
of indebtedness of any kind, and (6) interest thereon with banks in favor of any person known to be dead or who has
not made further deposits or withdrawal during the preceding ten (10) years or more.
"Applicant" pertains to the depositor or his successor-in-interest who requests for the reactivation of the account which
was reported by his depository bank to the Treasurer of the Philippines pursuant to the Unclaimed Balances Law.
"Procedure" refers to the course of action to be complied with by the applicant in order that his request be given due
course.
"Covered Institution" refers to all (l) banks. (2) trust companies. (3) savings and mortgage banks. (4) mutual building
and loan associations. (5) all banking institutions of every kind, covered under Act No. 3936, as amended by P.D. 679,
which reported to the Treasurer of the Philippines as unclaimed the account being applied for reactivation.
"Affidavit of Undertaking" is a sworn statement executed by the responsible authorized officer of the bank absolving
the Bureau of the Treasury from any liability that may arise due to the granting of the Applicant's request for
reactivation.
B. Procedure for Reactivation of Unclaimed Balances Reported to the Treasurer of the Philippines
i
ii
iii
iv
v
vi
vii
Letter Request of Depositor/Creditor. The depositor/creditor shall write his depository bank requesting for the
reactivation of his account which was included in the report of unclaimed balances to the Bureau of the Treasury.
Authentication. The covered institution shall authenticate and verify the request for reactivation and the signature of the
depositor/creditor.
Letter Request of the Covered Institution. The depository bank shall write the Bureau of the Treasury through the
authorized approving official, requesting authority to reactivate the deposit account concerned attaching to its letter the
stamped verified letter of the depositor/creditor.
Deed of Undertaking. The covered institution, through its responsible authorized officer, shall execute a Deed of
Undertaking ensuring that the Bureau of the Treasury and its officials and employees shall be free and harmless from
any liability once the account is reactivated.
Letter of Authority to Reactivate. Finding complete documentation supporting the request, the Bureau of the Treasury,
through the authorized officer shall issue the authority to the covered institution to reactivate the account.
Entity Requirements. In case the requesting party/deposit/creditor is a juridical entity/person, the request must be
accompanied with corresponding board resolutions and lor Secretary's Certificate showing that the signatory to the
request for reactivation is fully authorized to transact with the Bureau of the Treasury relative to the reactivation of its
account.
APPROVING AUTHORITY, the authority to reactivate on unclaimed balance account/s shall be issued by the
following officers:
i.
Division Chief/Head Law & Litigation Division Legal Service - aggregate amount of unclaimed balance not
exceeding P 100,000.00
ii. Director, Legal Service - aggregate amount of unclaimed balance exceeding P 100,000.00 but not exceeding
P500,000.00
iii. Deputy Treasurer of the Philippines - aggregate amount exceeding P500,000.00 but not exceeding
P1,000,000.00
iv. Treasurer of the Philippines - aggregate amount of unclaimed balances exceeding P 1,000,000.00
C. Escheat Proceedings for Unclaimed Balances
a. Section 1. Of Rule 91 When an by whom petition filed. — When a person dies intestate, seized of real property in the
Philippines, leaving no heir or person by law entitled to the same, the Solicitor General or his representative in behalf of
the Republic of the Philippines, may file a petition in the Court of First Instance of the province where the deceased last
resided or in which he had estate, if he resided out of the Philippines, setting forth the facts, and praying that the estate
of the deceased be declared escheated in favor of the state or Republic of the Philippines.
b. Note: Demand drafts cannot be escheated, but telegraphic notes can be escheated in favor of the state.
IV.
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. I), 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.
l), 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 (34 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 Person' (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;
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); and
34. 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."
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)
i
AFP or PNP Officials such as Colonel or General
ii
Senators or Congressmen or Mayor or Governor
iii
Chairman or Commissioners of COMELEC or COA or CSC
iv
President or Vice-President or Department Secretary and Undersecretary
v
Justices of Court of Appeals, Court of Tax Appeals. Sandiganbayan or Supreme Court
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)
i
Insurance companies
ii
Pre-need companies
iii
Insurance agents
iv
Insurance brokers
v
Professional reinsurers
vi
Holding companies
vii Holding company system
viii Mutual benefit associations
ix
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 P1,000,000
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. 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.
e. 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.
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 title?" (15) working days, from the occurrence
thereof.
6. For Suspicious transactions, "occurrence" refers to the date of determination of the suspicious nature ot- 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.
8. Freeze Order Freeze Order. - Upon verified ex parte petition by the AMLC and under 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 life 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 hours (24) from
filing thereof.
c. Effectivity of Freeze Order. — The total period of the freeze order issued by the Court of Appeals under this provision
shall not exceed six months. This is without prejudice to an asset preservation order that the Regional Trial Court having
jurisdiction over the appropriate money-laundering case or civil forfeiture case may issue on the same accounting
depending upon 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, no exceeding six months. the freeze order shall be deemed ipso 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 24 hours
from filing of the petition. If the application is filed a day before a nonworking day, the computation of the 24-hour
period shall exclude the nonworking days. The freeze order or asset preservation order issued under this Act shall be
limited only 10 the amount of cash or monetary instrument or value of property that the court finds there is probable
cause to be considered as proceeds of a predicate offense, and the freeze order or asset preservation order Shull not apply
to amounts in the same account in excess of the amount or value of the proceeds of the predicate offense.
9. Bank Inquiry with Court Order. - Notwithstanding the provisions of Republic Act No. 140S, 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, l1, 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
a. 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.
b. 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.
c. 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.
V.
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 (I) 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.
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. 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 (l) 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.
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.