LAW Assignment 5.1

Insurable Deposits, Maximum Liability, and Secrecy of Bank Deposit
I. Define the following:

a. deposits;
Deposit is the unpaid money balance or its equivalent that is received by the
bank in the usual course of business for which it is obliged to give credit to a
commercial, checking, savings, time or thrift account or which is evidenced by a
passbook, certificate of deposit, or other deposit evidence issued accordingly with the
Bangko Sentral ng Pilipinas rules and regulations and other applicable laws, together
with other bank obligations.
b. types of deposit,
 Savings
 Special Savings
 Demand/Checking
 Negotiable Order of Withdrawal (NOW)
 Time Deposits
c. insurable deposits;
Insurable deposit is the amount due to any bona fide depositor for legitimate
deposits in an insured bank as of the closure date but not to exceed five hundred
thousand pesos. Such net amount shall be determined according to regulations
prescribed by the Board of Directors. 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 or in the name of others.
d. maximum insurance coverage;
The maximum insurance coverage per depositor is of a closed bank is five
hundred thousand pesos (P500,000). The amount includes the accounts maintained in
the same right and capacity for a depositor’s benefit whether under his own name or the
name of others.
e. unlawful/unsound banking practice and functions of the PDIC under Republic
Act No. 3591, as amended.
 Deposit-related transactions without the approval or adequate controls required
under existing laws, rules and regulations;
 Failure to keep bank records within bank premise;
 Granting high interest rate when the bank has negative unimpaired capital or
liquid assets to deposit ratio is less than 10%; and
 Non-compliance with PDIC regulations.
II. What is secrecy of bank deposit under RA 1405
RA 1405 or the Law on Secrecy of Bank Deposits was passed to encourage
people to deposit their money in banking institutions and to discourage private
hoardings so that the money may be utilized properly by banks in authorized loans to
assist the country’s economic development. This also prohibits any person from
disclosing to any person any information relative to the funds or properties of the
depositors in the bank custody.
III. What are the exceptions to the secrecy of bank deposit law?
1. Written permission or consent in writing by the depositor;
2. In cases of impeachment;
3. Upon order of the court in cases of bribery or dereliction of duty of public officials;
4. Upon order of the court in cases where the money deposited or invested is the
subject matter of the litigation;
5. Upon a subpoena issued by the Ombudsman concerning an investigation it is
conducting, provided that there must already be a case pending in court, the account be
clearly identified, the inspection be limited to the subject matter of the pending case;
and the bank personnel and the depositor must be notified to be present during the
inspection;
6. The BIR can inquire into bank deposits in an application for compromise of tax liability
or determination of a decedent’s gross estate;
7. The Anti-Money Laundering Council can examine bank accounts pursuant to a court
order, where there is probable cause that the deposits are related to an unlawful activity
or money laundering offense;
8. The AMLC can examine bank accounts, without a court order, where there is
probable cause that the deposits are related to certain crimes such as kidnapping for
ransom, violation of the Dangerous Drugs Act, hijacking, destructive arson, murder and
violations of RA 6235 (acts inimical to civil aviation);
9. The Bangko Sentral can examine bank accounts in the course of its periodic or
special examination regarding compliance with Anti-Money Laundering Law.
“I affirm that I have not given or received any unauthorized help on this assignment, and
that this work shall be my own.”

LAW Assignment 5.1

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Insurable Deposits, Maximum Liability, and Secrecy of Bank Deposit

I. Define the following:

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