BOUNCING CHECKS LAW OR BATAS PAMBANSA BLG.

22 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
AN ACT PENALIZING THE MAKING OR DRAWING AND ISSUANCE
facie evidence of knowledge of such insufficiency of funds or credit unless
OF A CHECK WITHOUT SUFFICIENT FUNDS OR CREDIT AND FOR
such maker or drawer pays the holder thereof the amount due thereon, or
OTHER PURPOSES.
makes arrangements for payment in full by the drawee of such check within
Section 1.Checks without sufficient funds. - Any person who (5) banking days after receiving notice that such check has not been paid
makes or draws and issues any check to apply on account or for value, by the drawee.
knowing at the time of issue that he does not have sufficient funds in or
Section 3.Duty of drawee; rules of evidence.- It shall be the duty
credit with the drawee bank for the payment of such check in full upon its
of the drawee of any check, when refusing to pay the same to the holder
presentment, which check is subsequently dishonored by the drawee bank
thereof upon presentment, to cause to be written, printed, or stamped in
for insufficiency of funds or credit or would have been dishonored for the
plain language thereon, or attached thereto, the reason for drawee's
same reason had not the drawer, without any valid reason, ordered the
dishonor or refusal to pay the same: Provided, That where there are no
bank to stop payment, shall be punished by imprisonment of not less than
sufficient funds in or credit with such drawee bank, such fact shall always
thirty days but not more than one (1) year or by a fine of not less than but
be explicitly stated in the notice of dishonor or refusal. In all prosecutions
not more than double the amount of the check which fine shall in no case
under this Act, the introduction in evidence of any unpaid and dishonored
exceed Two Hundred Thousand Pesos, or both such fine and
check, having the drawee's refusal to pay stamped or written thereon or
imprisonment at the discretion of the court.
attached thereto, with the reason therefor as aforesaid, shall be prima facie
The same penalty shall be imposed upon any person who, having evidence of the making or issuance of said check, and the due
sufficient funds in or credit with the drawee bank when he makes or draws presentment to the drawee for payment and the dishonor thereof, and that
and issues a check, shall fail to keep sufficient funds or to maintain a credit the same was properly dishonored for the reason written, stamped or
to cover the full amount of the check if presented within a period of ninety attached by the drawee on such dishonored check.
(90) days from the date appearing thereon, for which reason it is
Not with standing receipt of an order to stop payment, the drawee
dishonored by the drawee bank.
shall state in the notice that there were no sufficient funds in or credit with
Where the check is drawn by a corporation, company or entity, the such bank for the payment in full of such check, if such be the fact.
person or persons who actually signed the check in behalf of such drawer
Section 4.Credit construed. - The word "credit" as used herein
shall be liable under this Act.
shall be construed to mean an arrangement or understanding with the bank
Section 2.Evidence of knowledge of insufficient funds. - The for the payment of such check.
making, drawing and issuance of a check payment of which is refused by
 Section 5.Liability under the Revised Penal Code. - Prosecution
under this Act shall be without prejudice to any liability for violation of any
provision of the Revised Penal Code.
Section 6.Separability clause. - If any separable provision of this
Act be declared unconstitutional, the remaining provisions shall continue
to be in force.
Section 7.Effectivity. - This Act shall take effect fifteen days after
publication in the Official Gazette.
Approved: April 3, 1979.
Republic Act No. 3591, as amended
AN ACT ESTABLISHING THE PHILIPPINE DEPOSIT
INSURANCE CORPORATION, DEFINING ITS POWERS AND
DUTIES AND FOR OTHER PURPOSES
THE CREATION OF THE PHILIPPINE DEPOSIT INSURANCE
CORPORATION
SECTION 1. There is hereby created a Philippine Deposit Insurance
Corporation hereinafter referred to as the “Corporation” which shall insure,
as herein provided, the deposits of all banks which are entitled to the
benefits of insurance under this Act, and which shall have the powers
hereinafter granted.
The Corporation shall, as a basic policy, promote and safeguard the
interests of the depositing public by way of providing permanent and
continuing insurance coverage on all insured deposits.
BOARD OF DIRECTORS: COMPOSITION AND AUTHORITY
SECTION 2. The powers and functions of the Corporation shall be
vested in and exercised by a Board of Directors which shall be composed
of five (5) members as follows:
(a) The Secretary of Finance who shall be the ex-officio Chairman
of the Board without compensation.
(b) The Governor of the Bangko Sentral ng Pilipinas, who shall be
ex-officio member of the Board without compensation. (As amended by
R.A. 9302, 12 August 2004)
Section 1 of R.A. 9576 (1 June 2009) also provides: “SECTION 1.
Statement of State Policy and Objectives. – It is hereby declared to be the
policy of the State to strengthen the mandatory deposit insurance coverage
system to generate, preserve, maintain faith and confidence in the
country’s banking system, and protect it from illegal schemes and
machinations. Towards this end, the government must extend all means
and mechanisms necessary for the Philippine Deposit Insurance
Corporation to effectively fulfill its vital task of promoting and safeguarding
the interests of the depositing public by way of providing permanent and
continuing insurance coverage on all insured deposits, and in helping
develop a sound and stable banking system at all times.”
(c) The President of the Corporation, who shall be appointed by
the President of the Philippines from either the Government or private
sector to serve on a full-time basis for a term of six (6) years. The President
of the Corporation shall also serve as Vice Chairman of the Board. (As
amended by R.A. 9302, 12 August 2004)
(d) Two (2) members from the private sector, to be appointed for a
term of six (6) years without reappointment by the President of the
Philippines: Provided, That of those first appointed, the first appointee shall
serve for a period of two (2) years.
No person shall be appointed as member of the Board unless he
be of good moral character and of unquestionable integrity and
responsibility, and who is of recognized competence in economics,
banking and finance, law, management administration or insurance, and
shall be at least thirty-five (35) years of age. For the duration of their tenure
or term in office and for a period of one year thereafter, the appointive
members of the Board shall be disqualified from holding any office, position
or employment in any insured bank.
The Secretary of Finance and the Governor of the Bangko Sentral
may each designate a representative, whose position shall not be lower
than an undersecretary or deputy governor respectively, to attend such
meetings and to vote on behalf of their respective principals. Whenever the
Chairman of the Board is unable to attend a meeting of the Board, or in the
event of a vacancy in the office of the Secretary of Finance, the President
of the Corporation shall act as Chairman. (As amended by R.A. 9302, 12
August 2004)
The presence of three (3) members shall constitute a quorum. All
decisions of the Board of Directors shall require the concurrence of at least
three (3) members. (As amended by R.A. 9302, 12 August 2004)
The Secretary of Finance shall fix the rate of per diem for every
Board meeting attended by the members of the Board of Directors from
the private sector. The President of the Philippines may fix such
emoluments that may be received by the Board of Directors comparable to
the emoluments of members of the Board of Directors of other government
financial institutions. (As amended by R.A. 9302, 12 August 2004)
The Board of Directors shall have the authority:
1. To prepare and issue rules and regulations as it considers
necessary for the effective discharge of its responsibilities;
2. To direct the management, operations and administration of the
Corporation;
3. To establish a human resource management system which shall
govern the selection, hiring, appointment, transfer, promotion, or dismissal
of all personnel. Such system shall aim to establish professionalism and
excellence at all levels of the Corporation in accordance with sound
principles of management. (As added by R.A. 9302, 12 August 2004)
A compensation structure, based on job evaluation studies and wage
surveys and subject to the Board’s approval, shall be instituted as an
integral component of the Corporation’s human resource development
program: Provided, That all positions in the Corporation shall be governed
by a compensation, position classification system and qualification
standards approved by the Board based on a comprehensive job analysis
and audit of actual duties and responsibilities. The compensation plan shall
be comparable with the prevailing compensation plans of other
government financial institutions and shall be subject to review by the
Board no more than once every two (2) years without prejudice to yearly
merit reviews or increases based on productivity and profitability. The
Corporation shall therefore be exempt from existing laws, rules and
regulations on compensation, position classification and qualification
standards. It shall however endeavor to make its system conform as
closely as possible with the principles under Republic Act No. 6758, as
amended. (As added by R.A. 9302, 12 August 2004)
4. To appoint, establish the rank, fix the remuneration, approve
local and foreign training of, and remove any officer or employee of the
Corporation, for cause, subject to pertinent civil service laws: Provided,
That the Board of Directors may delegate this authority to the President
subject to specific guidelines; (As amended by R.A. 9302, 12 August 2004)
5. To adopt an annual budget for, and authorize such expenditures
by the Corporation as are in the interest of the effective administration and
operation of the Corporation; (As amended by R.A. 9302, 12 August 2004)
and
6. To approve the methodology for determining the level and
amount of provisioning for insurance and financial assistance losses,
which shall establish reasonable levels of deposit insurance reserves. (As
added by R.A. 9302, 12 August 2004)
7. To review the organizational set-up of the Corporation and adopt
a new or revised organizational structure as it may deem necessary for the
Corporation to undertake its mandate and functions. (As added by R.A.
9576, 2009)
LAW ON SECRECY OF BANK DEPOSITS
 Republic Act No.1405, as amended
AN ACT PROHIBITING DISCLOSURE OF OR INQUIRY INTO,
DEPOSITS WITH ANY BANKING INSTITUTION AND PROVIDING
PENALTY THEREFOR
Section I. It is hereby declared to be the policy of the Government to give
encouragement to the people to deposit their money in banking institutions
and to discourage private hoarding so that the same may be properly
utilized by banks in authorized loans to assist in the economic development
of the country.
Sec. 2. 1 All deposits of whatever nature with banks or banking institutions
in the Philippines including investments in bonds issued by the
Government of the Philippines, its political subdivisions and its
instrumentalities, are hereby considered as of an absolutely confidential
nature and may not be examined, inquired or looked into by any person,
government official, bureau or office, except when the examination is made
in the course of a special or general examination of a bank and is
specifically authorized by the Monetary Board after being satisfied that
there is reasonable ground to believe that a bank fraud or serious
irregularity has been or is being committed and that it is necessary to look
into the deposit to establish such fraud or irregularity, or when the
examination is made by an independent auditor hired by the bank to
conduct its regular audit provided that the examination is for audit purposes
only and the results thereof shall be for the exclusive use of the bank, or
upon written permission of the depositor, or in cases of impeachment, or
upon order of a competent court in cases of bribery or dereliction of duty
of public officials, or in cases where the money deposited or invested is the
subject matter of the litigation. (As amended by PD No.1792, January 16,
1981)
Sec. 3. It shall be unlawful for any official or employee of a bank to disclose
to any person other than those mentioned in Section Two hereof, or for an
independent auditor hired by a bank to conduct its regular audit to disclose
to any person other than a bank director, official or employee authorized
by the bank, any information concerning said deposits. (As amended by
PD No.1792)
Sec. 4. All acts or parts of Acts, Special Charters, Executive Orders, Rules
and Regulations which are inconsistent with the provisions of this Act are
hereby repealed.
Sec. 5. Any violation of this law will subject the offender upon conviction,
to an imprisonment of not more than five years or a fine of not more than
twenty thousand pesos or both, in the discretion of the court.
Sec. 6. This Act shall take effect upon its approval.
APPROVED, September 9, 1955.
1 This Section and Section 3 were both amended by Pres. Decree
No.1792, issued January 16, 1981, PD 1792 was expressly repealed by
Sec. 135 of Rep. Act No.7653, approved June 14, 1993. The original
Sections 2 and 3 of Rep. Act No.1405 are hereby reproduced for reference,
as follows: "Sec. 2 All deposits of whatever nature with banks or banking
institutions in the Philippines including investments in bonds issued by the
Government of the Philippines, its political subdivisions and its
instrumentalities, are hereby considered as of an absolutely confidential
nature and may not be examined, inquired or looked into by any person,
government official, bureau or office, except upon written per- mission of
the depositor, or in cases of impeachment, or upon order of a competent
court in cases of bribery or dereliction of duty of public officials. or in cases
where the money deposited or invested is the subject matter of the
litigation," "Sec. 3. It shall be unlawful for any official or employee of a
banking institution to disclose to any person other than those mentioned in
Section two hereof any information concerning said deposits.
A. PURPOSE
1. To encourage deposit in banking institutions; and
2. 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 Are foreign currency deposits covered by the Secrecy in Bank
office (Sec. 2) Deposits (R.A. 1405)?

2. Disclosure by any official or employee of any banking institution to any NO.

authorized person of any information concerning said deposit (Sec. 3)
Foreign currency deposits are covered by R.A. 6426 otherwise known as
DEPOSITS COVERED the Foreign Currency Act. Under the same law, all authorized foreign
currency deposits are considered of an absolutely confidential nature and,
1. All deposits of whatever nature with banks or banking institutions found except upon the written permission of the depositors, in no instance shall
in the Philippines; or be examined, inquired or looked into by any person, government official,
bureau or office whether judicial or administrative private.
2. Investments in bonds issued by the Philippine government, its branches,
and institutions. (Sec. 2, R.A. 1405) EXCEPTIONS (Instances where examination or disclosure of information
about deposits can be allowed)
Definitions: DEPOSITS refer to money or funds placed with a bank that
can be withdrawn on the depositor’s order or demand, such as deposit EXCEPTIONS UNDER RA 1405
accounts in the form of savings, current and time deposits.
1. Upon written consent of the depositor. (Sec. 2)
Investments in Government Bonds
2. In cases of impeachment. (Sec. 2)
 refer to investments in bonds issued by the Government of the
Philippines, its political subdivisions and its instrumentalities. 3. Upon order of competent court in cases of bribery or dereliction of duty
 Government bonds are debt securities which are unconditional of public officials. (Sec. 2)
obligations of the State, and backed by its full taxing power.
4. In cases where the money deposited or invested is the subject matter of
 Government bonds include treasury bills, treasury notes, retail
the litigation. (Sec. 2)
treasury bonds, dollar linked peso notes, and other risk-free bonds.
EXCEPTIONS UNDER OTHER LAWS
Are trust funds covered by the term “deposit?”
5. Upon order of the Commissioner of Internal Revenue in respect of the
YES.
bank deposits of a decedent for the purpose of determining such
The money deposited under the trust agreement is intended not merely to decedent’s gross estate. (Sec. 6[F][1], NIRC)
remain with the bank but to be invested by it elsewhere. To hold that this
6. Upon the order of the Commissioner of Internal Revenue in respect of
type of account is not protected by R.A. 1405 would encourage private
bank deposits of a taxpayer who has filed an application for compromise
hoarding of funds that could otherwise be invested by banks in other
of his tax liability by reason of financial incapacity to pay his tax liability.
ventures, contrary to the policy behind the law. (Ejercito v. Sandiganbayan,
(Sec. 6[f][1],NIRC)
G.R. No. 157294‐95, Nov. 30, 2006)
7. In case of dormant accounts/deposits for at least 10 years under the
(Despite such pronouncement that trust funds are considered deposits,
Unclaimed Balances Act. (Sec. 2, Act No. 3936).
trust funds remains not covered by PDIC.)
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
9. with court order:
a) In cases of unexplained wealth under Sec. 8 of the Anti‐Graft and
Corrupt Practices Act (PNB v. Gancayco, L‐18343, Sept. 30, 1965)
b) 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)
10. without court order: If the AMLC determines that a particular deposit or
investment with any banking institution is related to the following:
a) Hijacking,
b) Kidnapping,
c) Murder,
d) Destructive Arson, and
e) Violation of the Dangerous Drugs Act.
What are the requisites before the Ombudsman may examine
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.
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?
YES.
The cases of unexplained wealth are similar to cases of bribery, dereliction
of duty. Thus, no reason is seen why it cannot be excepted from the rule
making bank deposits confidential. 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.
 In an action filed by the bank to recover the money transmitted by
mistake, necessarily, an inquiry into the whereabouts of the
amount extends to whatever is concealed by being held or
recorded in the name of the persons other than the one responsible
for the illegal acquisition. (Mellon Bank, N.A. v. Magsino, G.R. No.
71479, Oct. 18, 1990)
The Law on Secrecy of Bank Deposits provides that all deposits of
whatever nature with banks or banking institutions are absolutely
confidential in nature and may not be examined, inquired or looked into by
any person, governmental official, bureau or office. However, the law
provides exceptions in certain instances. Which of the following may NOT
be among the exceptions?
1. in cases of impeachment
2. in cases involving bribery
3. in cases involving BIR inquiry
4. in cases of anti‐graft and corrupt practices
5. in cases where the money involved is the subject of litigation
Under Section 6(F) of the National Internal Revenue Code, the
Commissioner of Internal Revenue can inquire into the deposits of a
decedent for the purpose of determining the gross estate of such decedent.
Apart from this case, a BIR inquiry into bank deposits cannot be made.
Thus, exception 3 may not always be applicable.
In exception 4, an inquiry into bank deposits is possible only in
prosecutions for unexplained wealth under the Anti‐graft and Corrupt
Practices Act. However, all other cases of anti‐graft and corrupt practices
will not warrant an inquiry into bank deposits. Thus, exception 4 may not
always be applicable. Like any other exception, it must be interpreted
strictly.
PENALTIES FOR VIOLATION
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.

Exceptions 1, 2, and 5 on the other hand, are provided expressly in the

Law on Secrecy of Bank Deposits. They are available to depositors at all
times.

Does garnishment of a bank deposit violate the law?

NO.

The prohibition against examination does not preclude its being garnished
for satisfaction of judgment. 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)

Can Foreign Currency Deposits be subjected to garnishment?

General Rule: Foreign currency deposits shall be exempt from attachment,

garnishment, or any other order or process of any court, legislative body,
government agency or any administrative body whatsoever. (Sec 8. R.A.
6426)

EXCEPTION: The application of Section 8 of R.A. 6426 depends on the

extent of its justice

The garnishment of a foreign currency deposit should be allowed to

prevent injustice and for equitable grounds, otherwise, it would negate
Article 10 of the New Civil Code which provides that “in case of doubt in
the interpretation or application of laws, it is presumed that the lawmaking
body intended right and justice to prevail. (Salvacion vs. Central Bank of
the Philippines, G.R. 94723, August 21, 1997)