NEW CENTRAL BANK ACT

- Republic Act 7653

● Bangko Sentral ng Pilipinas (BSP)

- The state’s central monetary authority; it is the government agency
charged with the responsibility of administering the monetary, banking
and credit system of the country and is granted the power of supervision
and examination over bank and non-bank financial institutions
performing quasi-banking functions, including savings and loan
associations.

● POLICIES OF THE STATE with respect to the creation of the BSP

1. The State shall maintain a central monetary authority that shall

function and operate as an independent and accountable body
corporate in the discharge of its responsibilities concerning
banking and credit.
2. In line with this policy, and considering its unique functions and
responsibilities, the central monetary authority established under
this Act, while being a government-owned corporation, shall enjoy
fiscal and administrative autonomy (Sec. 1.)

● SALIENT CONSIDERATIONS on the creation of the BSP

1. It is established as an independent central monetary authority.

2. Its capital shall be P50,000,000,000, to be fully subscribed by the
Philippine Government.
3. The P10,000,000,000 of the capital shall be fully paid for by the
Government upon the effectivity of this Act and the balance to be
paid for within a period of 2 years from the effectivity of this Act in
such manner and form as the Government, through the Secretary
of Finance and the Secretary of Budget and Management, may
thereafter determine. (Sec. 2)

● RESPONSIBILITIES of BSP

● To provide policy directions in the areas of money, banking, and

credit
● To supervise bank operations
● To regulate the operations of finance companies and non-bank
financial institutions performing quasi-banking functions, and
similar institutions. (Sec. 3)
 ● PRIMARY OBJECTIVES of BSP

1. To maintain price stability conducive to a balanced and sustainable

growth of the economy.
2. To promote and maintain monetary stability and the convertibility
of the peso. (Sec. 3)

● Functions of BSP

1. Issuer of currency. (Sec. 49-60)

2. Custodian of reserves. (Secs. 64-66, 94, 103)
3. Clearing channel or house; especially where the PCHC does not
operate .(Sec. 102)
4. Banker of the government – the BSP shall be the official depository
of the Government and shall represent it in all monetary fund
dealings (Secs. 110- 116)
5. Financial advisor of the government (Secs. 123-124) – Under Article
VII, Sec. 20 of the 1987 Constitution, the President may contract or
guarantee foreign loans but with the prior concurrence of the
Monetary Board.
6. Source of credit (Secs. 61-63, 81-89, 109)
7. Supervisor of the banking system (Sec. 25)

● Monetary Board
- The body through which the powers and functions of the Bangko Sentral
are exercised. (Sec 6)

● POWERS AND FUNCTIONS of the Monetary Board

1. Issue rules and regulations it considers necessary for the effective

discharge of the responsibilities and exercise of its powers
2. Direct the management, operations, and administration of the
Bangko Sentral, reorganize its personnel, and issue such rules and
regulations as it may deem necessary or convenient for this
purpose
3. Establish a human resource management system
4. Adopt an annual budget for and authorize such expenditures by
the Bangko Sentral as are in the interest of the effective
administration and operations of the Bangko Sentral in
accordance with applicable laws and regulations
5. Indemnify its members and other officials of the Bangko Sentral,
including personnel of the departments performing supervision
and examination functions against all costs and expenses
 reasonably incurred by such persons in connection with any civil
or criminal action. (Sec 15)

● Function of the BSP on a distressed bank

- Appointment of a conservator or receiver or closure of the bank.

● Conservator
- One appointed if the bank is in the state of illiquidity or the bank
fails or refuses to maintain a state of liquidity adequate to protect
its depositors and creditors. The bank still has more assets than its
liabilities but its assets are not liquid or not in cash thus it cannot
pay its obligation when it falls due. The bank, not the Central Bank,
pays for fees.

● When Monetary Board can close a bank or quasi-bank

● Cash Flow test - Inability to pay liabilities as they become due in

the ordinary course of business (Sec. 30 [a] NCBA).
● Balance sheet test – Insufficiency of realalizable assets to meet its
liabilities (Sec 30 [b] NCBA).
● Inability to continue business without involving probable losses to
its depositors and creditors (Sec 30 [c] NCBA).
● Willful violation of a cease and desist order under Section 37 that
has become final, involving acts or transactions which amount to
fraud or a dissipation of the assets (Sec 30 [d] NCBA).
● Notification to the BSP or public announcement of a bank holiday
(Sec 53, GBL).
● Suspension of payment of its deposit liabilities continuosly for
more than 30 days (Sec 53, GBL).
● Persisting in conducting its business in an unsafe or unsound
manner (Sec 56, GBL).

● Receiver
- One appointed if bank is already insolvent which means that its
liabilities are greater than its assets.

● Duties of Receiver

1. The receiver shall immediately gather and take charge of all

the assets and liabilities of the institution.
2. Administer the same for the benefit of the creditors, and
exercise the general powers of a receiver under the Revised
Rules of Court
 3. Shall not, with the exception of administrative
expenditures, pay or commit any act that will involve the
transfer or disposition of any asset of the institution:
Provided that the receiver may deposit or place the funds of
the institution in non-speculative investments (Sec 30,
NCBA).

● Liquidation
- It is an act of settling a debt by payment or other satisfaction. It is
also the act or process of converting assets into cash especially to
settle debts (Black’s Law Dictionary).

● Legal Tender
- All notes and coins issued by the Bangko Sentral are fully
guaranteed by the Republic and shall be legal tender in the
Philippines for all debts, both public and private (Sec. 52)

● Legal tender power of coins

- 1-Peso, 5-Peso and 10-Peso coins: In amounts not exceeding

P1,000.00
- 25 centavo coin or less: In amounts not exceeding P100.00
(Circular No. 537, 2006)

● Rules on BSP’s Authority to replace legal tender

● Notes and coins called in for replacement shall remain legal tender
for a period of one year from the date of call.
● After that period, they shall cease to be legal tender during the
following year or for such longer period as MB may determine.
● After the expiration of this latter period, the notes and coins which
have not been exchanged shall cease to be a liability of BSP and
shall be demonetized. (Sec. 57)

SECRECY IN BANK DEPOSIT

- Republic Act 1405

● PURPOSE
- To encourage deposit in banking institutions; and
- To discourage private hoarding so that banks may lend such funds
and assist in the economic development of the country.
● PROHIBITED ACTS

1. Examination/inquiry/looking into all deposits of whatever nature

with banks or banking institutions in the Philippines (including
investment in bonds issued by the government) by any person,
government official or office (Sec. 2)
2. Disclosure by any official or employee of any banking institution to
any authorized person of any information concerning said deposit
(Sec. 3)

● 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)

● 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, G.R. No.
157294-95, Nov. 30, 2006)

Note: Despite such pronouncement that trust funds are

considered deposits, trust funds remain not covered by PDIC.

● Are FOREIGN CURRENCY DEPOSITS covered by the Secrecy in bank

Deposits (R.A. 1405) ?

- No. Foreign currency deposits are covered by R.A. 6426 otherwise

known as the Foreign Currency Act. Under the same law, all
authorized foreign currency deposits are considered of an
absolutely confidential nature and,except upon the written
permission of the depositors, in no instance shall be examined,
inquired or looked into by any person, government official,bureau
or office whether judicial or administrative private.
● Instances where EXAMINATION or DISCLOSURE OF INFORMATION
CAN BE ALLOWED

1. Upon written consent of the depositor. (Sec. 2)

2. In cases of impeachment. (Sec. 2)
3. Upon order of competent court in cases of bribery or dereliction
of duty of public officials. (Sec. 2)
4. In cases where the money deposited or invested is the subject
matter of the litigation. (Sec. 2)
5. Upon order of the Commissioner of Internal Revenue in respect of
the bank deposits of a decedent for the purpose of determining
such decedent’s gross estate. (Sec. 6[F][1], NIRC)
6. Upon the order of the Commissioner of Internal Revenue in
respect of bank deposits of a taxpayer who has filed an application
for compromise of his tax liability by reason of financial incapacity
to pay his tax liability. (Sec. 6[f][1],NIRC)
7. In case of dormant accounts/deposits for at least 10 years under
the Unclaimed Balances Act. (Sec. 2, Act No. 3936).
8. When the examination is made by the BSP to insure compliance
with the AML Law in the course of a periodic or special
examination

● WITH COURT ORDER:

1. In cases of unexplained wealth under Sec. 8 of the

Anti-Graft and Corrupt Practices Act (PNB v. Gancayco,
L-18343, Sept. 30, 1965)
2. 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)

● WITHOUT COURT ORDER:

- If the AMLC determines that a particular deposit or

investment with any banking institution is related to the
following: HK-MAD

a. Hijacking,
b. Kidnapping,
c. Murder,
d. Destructive Arson, and
e. Violation of the Dangerous Drugs Act. (2004, 2006
Bar Question)
● REQUISITES for OMBUDSMAN EXAMINATION of Deposits

1. There is a pending case before court of competent jurisdiction

2. The account must be clearly identified
3. There is notice upon the account holder and bank personnel of
their presence during inspection.

Note: The inspection must cover only the account identified in the
pending case. (Marquez v. Desierto, G.R. No. 138569, Sept. 11, 2003)

● Can a bank be COMPELLED to DISCLOSE the records of the

ACCOUNTS of a depositor under the investigation FOR UNEXPLAINED
WEALTH?

- Since cases of unexplained wealth are similar to cases of

bribery,dereliction of duty, no reason is seen why it cannot be
excepted from the rule making bank deposits confidential. In this
connection, inquiry into illegally acquired property in anti-graft
cases extends to cases where such property is concealed by being
held or recorded in the name of other persons. This is also because
the Anti-Graft and Corrupt Practices Act, bank deposits shall be
taken into consideration in determining whether or not a public
officer has acquired property manifestly out of proportion with his
lawful income. (PNB v. Gancayco, G.R. No. L-18343, Sept. 30, 1965)

● In an action FILED by the BANK to RECOVER the money TRANSMITTED

BY MISTAKE, can the bank be ALLOWED to present the accounts which
it believed were responsible for the acquisition of the money?

- Yes, R.A. 1405 allows the disclosure of bank deposits in cases where
the money deposited is the subject matter of litigation.

● Does GARNISHMENT of a bank deposit VIOLATE the law?

- No, the prohibition against examination does not preclude its

being garnished for satisfaction of judgement. The disclosure is
purely incidental to the execution process and it was not the
intention of the legislature to place bank deposits beyond the
reach of judgment creditor. (PCIB v. CA, G.R. No. 84526, Jan.
28,1991)
 ● PENALTIES for the VIOLATION of R.A. 1405

- The penalty of imprisonment of not more than 5 years or a fine of

not more than 20,000pesos or both, in the discretion of the court
shall be imposed upon any official or employee of a banking
institution who, upon conviction, was found to have violated R.A.
1405.

GENERAL BANKING ACT

- Republic Act 8791

● BANKS
- Entities engaged in the lending of funds obtained through deposits
from public.

● ELEMENTS determinative of a Bank

1. Must be authorized by law;

2. Accepts fund, in the form of a deposit,
3. from the public; and
4. Lends money to the public.

● CLASSIFICATIONS OF BANKS

1. Universal banks - Primarily governed by the General

Banking Law (GBL), can exercise the powers of an
investment house and invest in non-allied enterprises and
have the highest capitalization requirement.
2. Commercial banks - Ordinary banks governed by the GBL
which have a lower capitalization requirement than
universal banks and can neither exercise the powers of an
investment house nor invest in non-allied enterprises.
3. Thrift banks – These are a) Savings and mortgage banks; b)
Stock savings and loan associations; c) Private development
banks, which are primarily governed by the Thrift Banks Act
(R.A. 7906).
4. Rural banks – Mandated to make needed credit available
and readily accessible in the rural areas on reasonable
terms and which are primarily governed by the Rural Banks
Act of 1992 (RA 7353).
5. Cooperative banks – Those banks organized whose
majority shares are owned and controlled by cooperatives
 primarily to provide financial and credit services to
cooperatives. It shall include cooperative rural banks. They
are governed primarily by the Cooperative Code (RA 6938).
6. Islamic banks – Banks whose business dealings and
activities are subject to the basic principles and rulings of
Islamic Shari’ a, such as the Al Amanah Islamic Investment
Bank of the Philippineswhich was created by RA 6848.
7. Other classification of banks as determined by the
Monetary Board Of the Bangko Sentral ng Pilipinas.

● QUASI-BANK

- These are entities engaged in the borrowing of funds

through the issuance,endorsement or assignment with
recourse or acceptance of deposit substitutes for purposes
of re-lending or purchasing of receivables and other
obligations (Sec 4).Unlike banks, quasi-banks do not accept
deposits.

● TRUST ENTITIES

- These are entities engaged in trust business that act as a

trustee or administer any trust or hold property in trust or
on deposit for the use, benefit, or behoof of others (Sec. 79).
A bank does not act as a trustee.

● FINANCIAL INTERMEDIARIES

- Persons or entities whose principal functions include the lending,

investing, or placement of funds on pieces of evidence of
indebtedness or equity deposited with them, acquired by them or
otherwise coursed through them, either for their own account or
for the account of others.

● DEPOSIT SUBSTITUTES

- It is an alternative form of obtaining funds from the public, other

than deposits, through the issuance, endorsement, or acceptance
of debt instruments, for the borrower's own account, for the
purpose of relending or purchasing of receivables and other
obligations.
- These instruments may include, but need not be limited to,
banker’s acceptances, promissory notes,participations, certificates
 of assignment and similar instruments with recourse, and
repurchase agreements.

● CORPORATE POWERS OF A BANK

- All powers provided by the corporation code like issuance of

stocks and entering into merger or consolidation with other
corporation or banks.

● DEGREE OF DILIGENCE REQUIRED OF BANKS IN HANDLING

DEPOSITS

- Extraordinary diligence. The appropriate standard of diligence

must be very high, if not the highest, degree of diligence; highest
degree of care (PCI Bank vs. CA, 350 SCRA 446, PBCom vs. CA, G.R.
No. 121413, 29 Jan. 2001)
- This applies only to cases where banks are acting in their fiduciary
capacity, that is, as depository of the deposits of their depositors.
(Reyes v. CA, G.R. No. 118492, Aug. 15, 2001)

● Does the bank need to exercise extraordinary diligence in all

commercial transactions?

- No, the degree of diligence required of banks, is more than

that of a good father of the family where the fiduciary
nature of their relationship with their depositors is
concerned, that is, depositary of deposits.

Example:

Q 1: What is the effect when the teller gave the passbook to

person?

A: If the teller gives the passbook to the wrong person, they would
be clothing that person presumptive ownership of the passbook,
facilitating unauthorized withdrawals by that person. For failing to
return the passbook to authorized representative of the depositor,
the bank presumptively failed to observe such high degree of
diligence in safeguarding the passbook and insuring its return to
the party authorized to receive the same.
 Q 2: Is the bank liable when an employee encashed a check
without the requisite of endorsement?

A: Yes. The fiduciary nature of the relationship between the bank

and the depositors must always be of paramount concern.
(Philippine Savings Bank vs. Chowking, G.R. No. 177526,July 04,
2008).

● DEPOSIT FUNCTION OF BANKS

- The function of the bank to receive a thing,primarily money,from

depositors with the obligation of safely keeping it and returning
the same.

● KINDS OF DEPOSITS BETWEEN A BANK AND ITS DEPOSITORS

● As Debtor - Creditor:

1. Demand deposits – all those liabilities of banks which are

denominated in the Philippine currency and are subject to
payment in legal tender upon demand by representation of
checks.
2. Savings deposits – the most common type of deposit and is
usually evidenced by a passbook.

● Negotiable order of withdrawal account (NOWA)

- Interest-bearing deposit accounts that combine the payable

on demand feature of checks and investment feature of
saving accounts.

● Time Deposit

- an account with fixed term; payment of which cannot be

legally required within such a specified number of days.
● As Trustee-Trustor:

- Trust account
- a savings account, established under a trust
agreement containing funds administered by the
bank for the benefit of the trustor or another person
or persons.
 ● As agent-principal:

● Deposit of checks for collection

● Deposit for specific purpose
● Deposit for safekeeping

● TYPES OF DEPOSIT ACCOUNTS

● Individual; or
● Joint
○ “ And” account - the signature of both co-depositors are
required for withdrawals
○ “ And/or” account - either one of the co-depositors may
deposit and withdraw from the account without the
knowledge consent and signature of the other.

● IS AN ANONYMOUS ACCOUNT PROHIBITED?

- General Rule: Anonymous accounts or those under fictitious

names are prohibited. (R.A. 9160 as amended by by R.A. 9194; BSP
Circular No.251, July 21, 2000)
- Exception: In case where numbered accounts is allowed such as in
foreign currency deposits. However, banks/non-bank financial
institutions should ensure that the client is identified in an official
or other identifying documents. (Sec. 8, R.A. 6426 as
amended,FCDA)

● NATURE OF A BANK DEPOSIT

- All kinds of bank deposits are loan.

- The bank can make use as its own the money deposited. Said
amount is not being held in trust for the depositor nor is it being
kept for safekeeping. (Tang Tiong Tick v. American Apothecaries,
G.R. No. 43682, Mar. 31, 1938)

● Is a SAFETY DEPOSIT BOX a form of deposit or lease?

- The contract for the use of a safe deposit box should be governed
by the law on lease.
- Under the old banking law, a safety deposit box is a special
deposit., now, such function has been deleted.
● RULES ON STIPULATION OF INTERESTS

● THEN Central Bank Circular 416 - 12% per annum in cases of:
1. Loans
2. Forbearance of money, goods and
3. credits
4. Judgement involving such loan or
5. Forbearance, in the absence of express agreement as to
such rate of interest

● Interest accruing from unpaid interest – interest due

shall earn interest from the time it is judicially
demanded although the obligation may be silent
upon this point.

● Interest rate, NOW reduced at 6%

● Our intervening Decision in Nacar v. Gallery Frames

recognized that the legal rate of interest has been reduced
to 6% per annum:
● Recently, however, the Bangko Sentral ng Pilipinas
Monetary Board (BSP-MB),in its Resolution No. 796 dated
May 16, 2013, approved the amendment ofSection 2 of
Circular No. 905, Series of 1982 and, accordingly, issued
CircularNo. 799, Series of 2013, effective July 1, 2013, the
pertinent portion of which reads:

○ The Monetary Board, in its Resolution No. 796 dated

16 May 2013, approved the following revisions
governing the rate of interest in the absence of
stipulation in loan contracts, thereby amending
Section 2 of Circular No. 905, Series of 1982:

■ Section 1. The rate of interest for the loan or

forbearance of any money,goods or credits
and the rate allowed in judgments, in the
absence of an express contract as to such rate
of interest, shall be six percent (6%) per
annum.
● LIMITATIONS imposed upon banks with respect to its LOAN FUNCTION

● General Rule: Single borrower’s limit - The Total

- amount of loans, credit accommodations and guarantees

that the bank could grant should at no time exceed 25% of
the bank’s net worth.(Sec 35.1, GBL)

● Exception:

a. As the Monetary Board may otherwise prescribe for reasons

of national interest
b. Deposits of rural banks with government-owned or
controlled financial institutions like LBP, DBP, and PNB.

● DOSRI

● Loans granted to DOSRI:

1. Director
2. Officer
3. Stockholder, which should at least own 1% (if below 1% -
not anymore covered)
4. Related Interests, such as DOS’s spouses, their relatives
within the ?

Procedural requirement
- Loan must be approved by the majority of all the directors
not including the director concerned.
- CB approval is not necessary;however, there is a need to
inform them prior to the transaction. Loan must be entered
in the books of the corporation. (Sec. 36)
Substantive requirement
- Loan must not exceed the paidin contribution and
unencumbered deposits. (Not to exceed 15% of the portfolio
or 100% of the net worth,whichever is lower.)

● ACTS PENALIZED OF FINE AND IMPRISONMENT IN THE NEW

CENTRAL BANK ACT (NCBA)

1. Refusal to Make Reports or Permit Examination (Sec. 34 NCBA)

2. False Statement (Sec. 35. NCBA)
3. Other acts that violates any banking laws (Sec. 36, NCBA)
 ● How could a bank be DISSOLVED?

1. Voluntary Liquidation (Sec. 68 GBL)

2. Receivership and Involuntary
3. Liquidation (Sec. 69 GBL)

PHILIPPINE DEPOSIT INSURANCE CORPORATION

- Republic Act 3591 as Amended by RA 9302

● BASIC POLICY for the creation of PDIC

- PDIC shall promote and safeguard the interests of the depositing public
by way of providing permanent and continuing insurance coverage in all
insured deposits. (AsAmended by Sec. 1, R.A. 9302)

● COVERAGE of the insurance

- The deposit liabilities of any bank or banking institution, which is engaged

in the business of receiving deposits, shall be insured with PDIC. The
coverage is compulsory.

● INSURED DEPOSIT

- 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 the date of closure, but not to exceed
P500,000.00. Such net amount shall be determined according to such
regulations as theBoard of Directors may prescribe. (As amended by Sec.
3, R.A. 9576)

● DEPOSITS COVERED BY INSURANCE

1. The unpaid balance of money or its equivalent received by a bank in the

usual course of business and for which it has given of is obliged to give
credit to a commercial, checking, savings, time or thrift account, or issued
inaccordance with Banko Sentral rules and regulations and other
applicable laws,together with such other obligations of a bank, which,
consistent with banking usage and practices, the Board of Directors shall
determine and prescribe by regulations to be deposit liabilities of the
bank; and
2. Subject to the approval of the Board of Directors, any insured bank which
is incorporated under the laws of the Philippines which maintains a
 branch outside the Philippines may elect to include for insurance its
deposit obligations payable only at such branch. (As Amended bySec. 2
R.A. 9576)

● Are deposits in Foreign Currency COVERED?

- Deposit obligations in foreign currency of any insured bank are likewise

insured.

Note: Foreign currency deposits are covered under the provisions of

RA3591, as amended, and insurance payment shall be in the same
currency in which the insured deposits are denominated (Sec.9, RA 6426;
Circular No.1389, 1993).

● When will the liability by the Corporation to pay insured deposits commence?

- Whenever an insured bank shall have been closed by the Monetary Board
pursuant to Section 30 (Proceedings in Receivership and Liquidation) of
R.A. 7653, otherwise known as the New Central Bank Act, payment of the
insured deposits on such closed bank shall be made by the Corporation as
soon as possible. (Sec 14 R.A.3591, as amended)

● Extent of the PDIC’s liability to a bank depositor

- The amount due to any depositor for deposits in an insured bank net of
any obligation of the depositor to the insured bank as of the date of
closure,but not to exceed P500,00.00 per depositor.

● When and how shall PDIC commence the determination of insured deposits?

- PDIC shall commence the determination of insured deposits due the

depositor of a closed bank upon its actual takeover of the closed bank.
PDIC shall give notice to the depositors of the closed bank of the insured
deposits due them by whatever means deemed appropriated by the Board
of Directors. PDIC shall publish the notice once a week for at least 3
consecutive weeks in a newspaper of general circulation or, when
appropriate, in a newspaper circulated in the community or communities
where the closed bank or its branches are located. (Sec 16 R.A. 3591, as
amended)
● TYPES OF DEPOSITS COVERED

- Demand, savings and time deposits. If the depositor has all three types of
accounts with the same bank, he can only recover up to P500,000.00. He
is considered as one depositor.

● Is the liability of PDIC on a per bank or per branch basis?

- Per bank basis. (Catindig 2003, Verde Publications)

● How do you determine the amount due to a depositor?

- In determining such amount due to any depositor, there shall be added

together all deposits in the bank maintained in the same right and
capacity for his benefit either in his own name and the name of the
others.

● EFFECTS OF PAYMENT TO THE DEPOSITOR OF HIS INSURED DEPOSIT

1. PDIC is discharged from any further liability to the depositor; and

2. PDIC is subrogated to all the rights of the depositor against the closed
bank to the extent of such payment.

● PERIOD by which PDIC shall SETTLE A CLAIM of insured depositor

- PDIC has 6 months from the date of filing of claim for insured deposit.

● EFFECT OF FAILURE TO SETTLE CLAIM OF INSURED DEPOSITOR WITHIN

6-MONTH PERIOD

● General Rule:
- Failure to settle the claim. Within 6 months from the date of filing
of claim for insured deposit,where such failure was due to grave
abuse of discretion, gross negligence, bad faith, or malice,
shall,upon conviction, subject the directors, officers or employees
of PDIC responsible for the delay, to imprisonment from 6 months
to one year.
● Exception:
- The period shall not apply if the validity of the claim requires the
resolution of issues of facts and or law by another office, body or
agency. (Sec 14 R.A. 3591, as amended)

● PERIOD a depositor of insured deposits may FILE HIS CLAIM

- 2 years from the closure of the bank by the Central Bank.
● EFFECT OF THE FAILURE BY A DEPOSITOR TO CLAIM INSURED DEPOSIT/S
WITHIN THE PERIOD PRESCRIBED BY LAW

- It constitutes a waiver of his (depositor) right to claim if he fails to claim

hisinsured deposits with the PDIC within 2 years from actual takeover of
the closed bank by the receiver, unless otherwise waived by PDIC. (Sec.
16(e) R.A. 3591, as amended)

● WHEN PDIC MAY EXERCISE ITS POWER TO INQUIRE OR INQUIRE OR

EXAMINE DEPOSIT ACCOUNTS

- PDIC may inquired into or examine deposit accounts and all information
related thereto in case there is a finding of unsafe or unsound banking
practice.(Sec 8 R.A. 3591, as amended)

● UNSAFE OR UNSOUND BANKING PRACTICES

- They refer to actions or lack of actions which are contrary to generally

accepted standards of prudent operation.

● Does PDIC’s inquiry or examination of deposit accounts violate the laws

regarding secrecy of bank deposits?

- No. Notwithstanding the provisions of Secrecy of Bank Deposits,

ForeignCurrency Act, General Banking Law, and other laws, PDIC and/or
the BangkoSentral, may inquire into or examine deposit accounts in case
there is a finding of unsafe or unsound banking practice. (Section 8 R.A.
3591, as amended)

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