BOUNCING CHECKS LAW presentme nt period is presentme

a) Purpose of the law nt period not nt is an

To prevent proliferation/circulation of expressly express
worthless check provided element on
b) Nature of offense: the 2nd
Malum Prohibitum offense
"wrong due to being prohibited," which
refers to crimes made so by statute, In both instances, offense is
compared to crimes based on English consummated by the dishonor of the
Common Law and obvious violations of check for insufficiency of funds.
society's standards which are defined
as "malum in se." d) When endorsers liable under
BP 22
c) 2 types of offenses covered: An endorser who passes a bad
check is held liable, even though
(1) Making or drawing and issuing the presumption of knowledge does
any check to apply on account not apply to him, if there is
or for value, knowing at the evidence at the time of
time of issue that the drawer endorsement, he was aware of the
does not have sufficient funds knowledge of funds.
in or credit with the drawee
bank. e) When foreign checks covered
by law
(2) Having sufficient funds in or When it is drawn OR issued in the
credit with the drawee bank shall Phil. though payable outside
fail to keep sufficient funds or to
maintain a credit to cover the full f) Elements of offense under
amount of the check if presented Section 1 of B.P. Blg. 22 are:
within a period of 90 days from the Drawing and issuance of any
date appearing thereon, for which check to apply on account or for
reason it is dishonored by the value;
drawee bank. Knowledge by the maker,
drawer, or issuer that at the
Where the check is drawn by a time of issue he did not have
corporation, company or entity, the sufficient funds in or credit with
person or persons who actually signed the drawee bank for the
the check in behalf of such drawer payment of such check in full
shall be liable under this Act. upon presentment; and
Said check is subsequently
1st offense 2nd offense dishonored by the drawee bank
Knowledge w/ Has for insufficiency of funds or
of knowledge sufficient credit, or would have been
availability that he has funds but dishonored for the same reason
of funds no funds fails to had not the drawer, without any
maintain valid reason, ordered the bank
credit to stop payment.
within 90
days from
date on g) Knowledge of the accused
check about the insufficiency of funds
Check Worthless Good It must be shown beyond reasonable
involved check check doubt that the accused knew of the
when insufficiency of funds at the time the
issued check was issued.
90 day Presentme 90 say
h) Presumption of knowledge
Prima facie presumption of knowledge
of such insufficiency of funds arises
when a check is issued.
Presumption that issuer has knowledge
of insufficiency is brought by existence
only after it is proved that issuer had
received a notice of dishonor and that
within 5 days from receipt, he FAILS to
pay amount of check.
The law also provides that the
presumption does NOT arise when the
issuer pays the amount of the check
within five banking days after
receiving notice that such check has
not been paid by the drawee.
i) Necessity of Notice of dishonor
Must be written, printed, or stamped in
plain language thereon, or attached
thereto, the reason for drawee's
dishonor provided, that where there
are no sufficient funds with such
drawee bank, such fact shall always be
explicitly stated in the notice of
dishonor.
Section 2 provides that the accused
must be notified of the dishonor. The
notice of dishonor of a check to the
maker must be in writing. A mere oral
notice to the drawer or maker of the
dishonor of his check is not enough.
j) On post-dated checks
It must be shown beyond reasonable
doubt that the accused knew of the
insufficiency at the time of issuance.
Prima facie presumption arises when a
post-dated check is issued
k) Payment within 5 days
If FAILED to replace within 5 days after
notice, it give rise to presumption that
issuance was fraudulent.
l) Payment as valid defense
under BP 22
Payment within 5 days from notice is a
complete defense regardless of the
strength of evidence.
m) Conviction for issuance of
bouncing checks
Penalty may either be a criminal case
for violation of BP 22 or estafa
depending on the surrounding
circumstances.
Imprisonment of 30 days to
1 year or
A fine double the value of
the check or
Both at the discretion of the
court.
Cases where bank dishonors, and
maker becomes liable:
1. Check is drawn against
insufficient funds
2. Check is drawn against a closed
account
3. Issuer gives a stop payment
order (which would have been
dishonored by insufficient
funds)
Defenses that can be availed by issuer:
I. Payment of the value of the
dishonored check within 5
banking days from receipt of
the notice of dishonor;
II. Payment of the value of the
check before filing of the
criminal case in court;
III. Failure to serve a written notice
of dishonor of the check to the
issuer;
IV. Novation or change in the
underlying obligation of the
parties before the filing of the
criminal case in court;
V. A stop payment order pursuant
to a valid reason such as non-
delivery of goods or services;
and
VI. Knowledge by the payee that
the check was not supported by
sufficient funds when the issuer
issued the check.
Non-imprisonment for debt
What it punishes is the non-payment of b) Compulsory Insurance of
the check, not the act of issuing it. Deposits
Definition: Deposit
. The unpaid balance of MONEY or
its equivalent RECEIVED BY A
Violation of BP 22: BANK in the usual course of
malice and intent are immaterial business and for which it has
Ex: strength is on liability given or is obliged to give credit
Estafa through bouncing checks: to a commercial, checking,
w/ intent to defraud, malice must savings, time or thrift account for
be proven which is evidenced by
Ex: strength is on check a passbook, check and/or
certificate of deposit, printed or
Pwede simultaneous charge issued in accordance with Central
Bank rules and regulations.
Gen. Rule: any obligation of a bank
which is payable at the office of the
bank LOCATED OUTSIDE of the
Philippines shall NOT BE A DEPOSIT for
any purpose of this Act or included as
part of the total deposits or of insured
deposit
Exception: any insured bank
incorporated under Philippine law,
which maintains a branch outside the
Philippines if approved by the PDIC
PDIC LAW Board of Directors, may elect to
Philippine Deposit Insurance Corp. include for insurance its deposit
- Government-owned entity obligations payable only at such
mandated by law to insure the branch
depositors of all banks entitled o Trust funds and safety deposit
to the benefits of insurance boxes are not considered as
under this Act. insured deposits under PDIC
Functions:
I. Insurance of Banks PDIC will NOT pay deposit insurance
II. Co-regulator of BSP for the following accounts or
III. RECEIVER/LIQUIDATOR of transactions:
distressed banking corporation Investment products such as bonds,
securities and trust accounts;(money
The following deposits are required to market)
be insured with the PDIC: Deposit accounts which are unfunded,
deposit liabilities of ANY BANK fictitious or fraudulent;
engaged in the business of Deposit products constituting or
receiving deposits emanating from unsafe and unsound
deposit liabilities of ANY BANKING banking practices;
INSTITUTION engaged in the Deposits that are determined to be
business of receiving deposits proceeds of an unlawful activity as
defined under the Anti-Money
a) Purpose of the law Laundering Law.
To promote and safeguard the interests
of the depositing public by providing Insured deposit
insurance coverage on all insured The term insured deposit means the
deposits and helping maintain a sound amount due to any bona fide depositor
and stable banking system. for legitimate deposits in an insured
bank net of any obligation of the
depositor to the insured bank as of
date of closure, but not to exceed
P500,000.(per bank, not branch)
Rules in determining new
amount
In determining the amount due to any
depositor, all deposits in the bank
maintained in the same capacity and
the same right for his benefit either in
his own name or in the name of others
shall be added together

A joint accounts (AND/OR) shall be

insured separately from any
individually-owned deposit account
PROVIDED:
If held jointly by 2/more natural
persons or 2/more juridical
entities: max insured deposit is
divided into as many equal
shares as individuals
If held by juridical person jointly
with 1/more natural person: max
insured deposit is presumed to
belong entirely to juridical
person.

Mode of Payment: Cash/ transferred

deposit

immediate/early payment of deposit

insurance claim as part of PDICs
initiative to provide convenience to
small depositors. Payments to these
depositors are sent as postal money
orders to the depositors mailing
addresses.

c) Requirements for claim

Depositors with valid deposit accounts
with balances of Php100,000 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.
These depositors are entitled to
When are claims filed?
Claims are filed during the claims
settlement operations period (2 years),
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
PDICs takeover of the closed bank to
file their deposit insurance claims.
Who are required to file deposit
insurance claims?
Depositors with valid deposit
accounts with balances of more
than Php100,000.
Depositors who have outstanding
obligations with the closed bank
regardless of amount of deposits.
Depositors with account balances
of less than Php100,000 who have
not updated addresses in the bank
records or who have not updated
their addresses through the Mailing
Address Update Form (MAUF)
issued by the PDIC.
Depositors who maintain their
accounts under the name of
business entities, regardless of
type of account and account
balance.
Depositors with accounts not
eligible for early payment,
regardless of type of account and
account balance per advice of
PDIC.
SECRECY OF BANK
DEPOSITS
AN ACT PROHIBITING DISCLOSURE OF
OR INQUIRY INTO, DEPOSITS WITH ANY
BANKING INSTITUTION AND PROVIDING
PENALTY THEREOF
a) Policy under RA 1405
It is 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.
b) Operative Provisions
All deposits of whatever nature in
banks or banking institutions in the
Philippines and investments in
government bonds are absolutely
confidential in nature and may not be
examined, inquired or looked into by
any person, government official,
bureau or office,
c) Exceptions under sec 2
when the examination is made
in the course of a
special/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
committed
when the examination is made
by an independent auditor hired
by the bank to conduct its
regular audit, results thereof
shall be for the exclusive use of
the bank,
upon WRITTEN PERMISSION of
the depositor,
or in cases of Impeachment
upon order of a competent court
in cases of:
i. BRIBERY of public officials or
Plunder is analogous to bribery. The exception
in the law that is applicable in bribery also
applies to plunder.
ii. DERELICTION of duty of public
officials
or in cases where the money
deposited or invested is the
subject matter of the litigation
d) Other exceptions
1) The Ombudsman has the power
to issue subpoena and
 subpoena duces tecum, take o Without need of court
testimony in any investigation order, when probable
or inquiry, as well as examine cause exists that a
and access bank accounts and particular deposit or
records. investment with any
banking institution is
2) Bank deposits of a public related to certain predicate
official, his spouse and crimes: kidnapping for
unmarried children may be ransom, violation of the
taken into consideration in the Comprehensive Dangerous
enforcement of Section 8 of The Drugs Act, hijacking and
Anti-Graft and Corrupt Practices other violations under
Act . Upon order of the court in Republic Act No. 6235
cases of unexplained wealth.
6) The Bangko Sentral is
3) Directors, officers, stockholders authorized to:
and related interests who o inquire into bank deposits
contract a loan or any form of or investments in the
financial accommodation with course of a periodic or
their are required to execute a special examination to
written waiver of secrecy of ensure compliance with
deposits pursuant to The New The Anti- Money
Central Bank Act. Laundering Law, in
accordance with the rule of
4) The Commissioner of Internal examination of the Bangko
Revenue is authorized to Sentral; and
inquire into bank deposit o conduct annual testing
accounts in relation to: which is limited to the
o an application for determination of the
compromise of tax liability existence and true identity
of the NIRC by reason of of the owners of numbered
financial incapacity to pay accounts.
his tax liability
o or a determination of a 7) The Philippine Deposit
decedents gross estate Insurance Commission (PDIC)
o a request for tax and the Bangko Sentral may
information of specific inquire into bank deposits when
taxpayers made by a there is a finding of unsafe or
foreign tax authority unsound banking practices.
pursuant to a tax treaty
under The Exchange of 8) The Court of Appeals,
Information on Tax Matters designated as a special court,
Act of 2009 may issue an order authorizing
law enforcement officers to
5) The Anti-Money Laundering examine information on the
Council may be authorized to deposits, placements, trust
examine and inquire into bank accounts, assets and records in
deposits: a bank or financial institution in
o With court order, when connection with anti-terrorism
there is probable cause case.
that the deposits or
investments are related to 9) The Commission on Audit is
an unlawful activity or a authorized to audit government
money laundering offense deposits pertaining to the
and; 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.
10) The Presidential Commission on
Good Government (PCGG), 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.
UNCLAIMED BALANCES
LAW
AN ACT REQUIRING BANK, TRUST
CORP., AND BUILDING AND LOAN
ASSOCIATIONS, TO TRANSFER
UNCLAIMED BALANCES HELD BY THEM
TO THE TRASURER OF THE PHIL. (Once
presumed abandoned)
This Treasury Circular prescribes the
Uniform Rules and Procedure for
Reactivation of Unclaimed Balances
reported to the Treasurer of the
Philippines.
e) Definition:
Shall include credits or deposits of
money,
bullion,
security
other evidence of indebtedness
and interest thereon with banks,
buildings and loan associations,
and trust corporations,
In favor of any person known to be:
dead
or who has not made further
deposits /withdrawals during
the preceding ten years or
more.
Such unclaimed balances, together
with the increase and proceeds
thereof, shall be deposited with the
Treasurer of the Philippines to the
credit of the Government.
f) Procedure: ESCHEAT
PROCEEDINGS
Sec 2. Ayon sa nasabing batas,
kailangan na ipaalam sa depositor ang
gagawin na pagrereport sa Treasurer of
the Philippines:
Within the month of January of every
odd year(every 3 years), all banks,
building and loan associations, and
trust corporations shall forward to
the Treasurer of the Philippines a
statement, under oath, of their
respective managing officers, of all
credits and deposits held by them
in favor of persons known to be
dead, or who have not made
further deposits or withdrawals
during the preceding ten years or
more, arranged in alphabetical order
according to the names of creditors
and depositors, and showing:
Names and last known place of
residence or post office
addresses of the persons in
whose favor such unclaimed
balances stand;
Amount and the date of the
outstanding unclaimed balance
Date of depositors death, if
known, or the date when he
made his last deposit or
withdrawal; and
interest due on such unclaimed
balance, if any, and the amount
thereof.
A copy of the above sworn
statement shall be posted in a
conspicuous place in the premises
of the bank, building and loan
association, or trust corporation
concerned for at least 60 days from
the date of filing thereof: Provided,
That immediately before filing the
above sworn statement
(statement to treasurer), the bank,
building and loan association, and trust
corporation shall communicate with
the person in whose favor the
unclaimed balance stands at his
last known place of residence or
post office address.
It shall be the duty of the Treasurer of
the Philippines to inform the Solicitor
General from time to time the
existence of unclaimed balances held
by banks, building and loan
associations, and trust corporations.
Kung hindi sinunod ng banko ang
procedure ng pagbibigay ng notice sa
depositor, ang pagrereport at
pagforfeit ng deposit ng gobyerno ay
illegal at pwedeng singilin sa korte.
and loan association, or trust
corporation neglects or refuses to
make and file the sworn statement
required by this action, such bank,
building and loan association, or trust
corporation shall pay to the
Government the sum of 500 pesos
a month for each month or
fraction thereof during which such
default shall continue.
Sec 5. Any bank, building and loan
association or trust corporation which
shall make deposit with the Treasurer
of the Philippines in conformity with
the provisions of this Act shall not
thereafter be liable to any person for
the same.

Kung ang deposito naman ay nasa

pangalan ng namatay, ang
tagapagmana ay pwede lamang ito
mawithdraw sa pamamagitan ng pag-
execute ng extrajudicial settlement of
estate at pagbabayad ng estate tax.
Kung wala ito, ang anumang deposito
ng isang namatay na tao ay hindi
pwedeng kunin at ibigay ng banko.

Sec 3.
Whenever the Solicitor General shall
be informed of such unclaimed
balances, he shall commence an action
or actions in the name of the People of
the Republic of the Philippines in the
Court of First Instance of the province
or city where the bank, building and
loan association or trust corporation is
located.

Upon the trial, the court must hear all

parties who have appeared therein,
and if it be determined that such
unclaimed balances are truly GENERAL BANKING LAW
unclaimed as hereinbefore stated, then AN ACT PROVIDING FOR THE
the court shall render judgment in REGULATION OF THE ORGANIZATION
favor of the Government of the AND OPERATIONS OF BANKS, QUASI-
Republic of the Philippines. BANKS, TRUST ENTITIES AND FOR
OTHER PURPOSES
Sec 4. If the president, cashier or
managing officer of the bank, building a) Declaration of Policy
The State recognizes the vital role of
banks in providing an environment
conducive to the sustained
development of the national economy
and the fiduciary nature of banking
that requires high standards of
integrity and performance. In
furtherance thereof, the State shall
promote and maintain a stable and
efficient banking and financial system
that is globally competitive, dynamic
and responsive to the demands of a
developing economy.
b) Banks covered, definition and
classification
Universal Banks (UB) banks
that have the authority to
exercise, in addition to the
powers authorized for a operation
commercial bank, the powers of
an investment house and the
power to invest in non-allied
enterprises.
Commercial Banks (CB) banks
that have, in addition to the
general powers incident to
corporations, all such powers as
may be necessary to carry on
the business of commercial
banking, such as accepting
drafts and issuing letters of
credit; discounting and
negotiating promissory notes,
drafts, bills of exchange, and
other evidences of debt;
accepting or creating demand
deposits; receiving other types
of deposits and deposit
substitutes; buying and selling
foreign exchange and gold or
silver bullion; acquiring
marketable bonds and other
debt securities; and extending
credit, subject to such rules as
the Monetary Board may
promulgate.
Rural Banks banks that are
created to make needed credit
available and readily accessible
in the rural areas for purposes
of promoting comprehensive
rural development.
Thrift Banks banks that
include savings and mortgage
banks, private development
banks, and stock savings and
loan associations.
Cooperative Banks banks that
primarily provide financial,
banking and credit services to
cooperative organizations and
their members.
Islamic Banks Charter of Al
Amanah Islamic Investment
Bank of the Philippines.
c) Rule on bank operations
The operations and activities of banks
shall be subject to supervision of the
Bangko Sentral.
"Supervision" shall include the
following:
Establishment of standards of
for uniform
application to all institutions
covered, taking into
consideration the distinctive
character of the operations of
specific institutions to which
such rules, modes or standards
are to be applied;
The conduct of examination to
determine compliance with laws
and regulations if the
circumstances so warrant as
determined by the Monetary
Board;
Overseeing to ascertain that
laws and regulations are
complied with;
Regular investigation which
shall not be often more than
once a year from the last date
of examination to determine
whether an institution is
conducting its business on a
safe or sound basis
Inquiring into the solvency and
liquidity of the institution or
Enforcing prompt corrective
action.
d) Board of directors
There shall be at least 5-15 members
of the board of directors of bank, two
(2) of whom shall be independent
directors. An independent director
shall mean a person other than an
officer or employee of the bank, its
subsidiaries or affiliates or related
interests.
Non-Filipino citizens may become
members of the board of directors of a
bank to the extent of the foreign
participation in the equity of said bank.
SEC 19. Prohibition on Public Officials.
Except as otherwise provided in the
Rural Banks Act, no appointive or
elective public official, shall at the
same time serve as officer of any
private bank, save in cases where such
service is incident to financial
assistance provided by the
government or a government-owned or
controlled corporation to the bank or
unless otherwise provided under
existing laws.
SEC 54. Prohibition to Act as Insurer.
A bank shall not directly engage in
insurance business as the insurer.
SEC 55. Prohibited Transactions.
No director, officer, employee, or agent
of any bank shall
Make false entries in any bank
report or participate in any
fraudulent transaction, thereby
affecting the financial interest
of, or causing damage to, the
bank or any person;
Without order of a court of
competent jurisdiction, disclose
to any unauthorized person any
information relative to the
funds or properties in the
custody of the bank belonging
to private individuals,
corporations, or any other
entity: Provided, That with
respect to bank deposits, the
provisions of existing laws shall
prevail;
Accept gifts, fees or
commissions or any other form
of remuneration in connection
with the approval of a loan or
other credit accommodation
from said bank;
Overvalue or aid in overvaluing
any security for the purpose of
influencing in any way the
actions of the bank or any bank;
or
Outsource inherent banking
functions.
No borrower of a bank shall
Fraudulently overvalue property
offered as security for a loan or
other credit accommodation
from the bank;
Furnish false or make
misrepresentation or
suppression of material facts for
the purpose of obtaining,
renewing, or increasing a loan
or other credit accommodation
or extending the period thereof;
Attempt to defraud the said
bank in the event of a court
action to recover a loan or other
credit accommodation; or
Offer any director, officer,
employee or agent of a bank
any gift, fee, commission, or
any other form of compensation
in order to influence such
persons into approving a loan
or other credit accommodation
application.
The making of false reports or
misrepresentation or suppression of
material facts by personnel of the
Bangko Sentral ng Pilipinas shall
constitute fraud and shall be subject to
the administrative and criminal
sanctions provided under the New
Central Bank Act.
Consistent with the provisions of Banks
Secrecy Law, no bank shall employ
casual or non-regular personnel or too
lengthy probationary personnel in the
conduct of its business involving bank
deposits.
e) Liability of banks for tort/
fraudulent scheme of its
officers
Yes, bank is liable for wrongful act. An
example is, negligent encashment of a
forged check.
f) Liability of banks for acts
contracts of their branch
manager and other officers
Yes, bank is liable for contract
obligations of bank employees. Direct
obligation of supervisors should require
high standard degree of responsibility
due to fiduciary nature of relationship.
g) Relationship between bank and
depositor
a) Creditor (bank) and debtor
(depositor): Contract of loan
b) Principal and agent: where checks
are received by bank merely for
collection and deposit. Agency
h) Standard of diligence required
of banks for deposits
The fiduciary relationship means that
the banks obligation to observe high
standards of integrity and
performance is deemed written into
every deposit agreement between a
bank and its depositor. The fiduciary
nature of banking requires banks to
assume a degree of diligence higher
than that of a good father of a family.
i) Obligation of banks on
signature of clients and
forgeries
Bank warrants existence of drawer, the
genuineness of his signature, and his
capacity and authority to draw the
instrument. Bank is liable if it pays a
forged check.
j) Various dealings with deposits
Deposit Function:
Deposit is one of the core banking
functions. While the function is
referred to as deposit, it is strictly
simple loan where the bank is the
debtor and the depositor is the
creditor. Fixed, savings and current
deposits of money in banks and similar
institutions shall be governed by the
provisions concerning simple loan
(Article 1980, Civil Code of the
Philippines).
Since the bank is the borrower, it can
make use as its own the money
deposited, and the amount is not
held in trust for the depositor nor is
it kept for safekeeping. Bank
officers cannot also be held liable for
estafa if they authorized the use of the
money deposited by the depositor.
Third persons who may have the right
to the money deposited cannot hold
the bank responsible unless there is a
court order or garnishment, since the
duty of the bank is to the creditor-
depositor and not to third persons.
Kinds of deposits:
Demand deposits are those
liabilities of banks which are
denominated in Philippine currency
and are subject to payment in legal
tender upon demand by
presentation of checks. In here, no
interest is paid by the bank
because the depositor can take out
his funds any time. It is called
demand deposit because the
depositor can withdraw the money
he deposited on the very same day.
Savings Account, which is the most
common type of deposit, is usually
evidenced by a passbook. Under
the fine print, if you deposit today,
you cannot withdraw the amount
until 60 days later. Bank pays an
interest rate, but not as high as
time deposits.
Time Deposit is an account with
fixed term. The interest rate is
stipulated depending on the
number of days. During this period,
the money deposited cannot be
withdrawn. It has a higher rate of
interest than saving account.
Negotiable Order of Withdrawal
(NOW) Account is an interest-
bearing deposit account that
combines the payable on demand
feature of checks and investment
feature of savings accounts.
Other Account is one that may be
opened by one individual or by two
or more persons. Whenever two or
more persons open an account, the
same may be an and/or account
or an and account.
SEC 33. Acceptance of Demand
Deposits. A bank other than a
universal or commercial bank cannot
accept or create demand deposits
except upon prior approval of, and
subject to such conditions and rules as
may be prescribed by the Monetary
Board.
Moreover, the bank is under the
obligation to treat deposit accounts of
it depositors with meticulous care. It
must bear the blame for failing to
discover the mistake of its employees
despite the established procedure
requiring bank papers to pass through
bank personnel whose duty it is to
check and countercheck them for
possible errors.
As a business affected with public
interest and because of the nature of
its functions, a bank is under obligation
to treat the accounts of its depositors
with meticulous case, always having in
mind the fiduciary nature of their
relationship.
Safety Deposit Boxes: In the case of
rent of safety deposit box, the contract
is a special kind of deposit and cannot
be characterized as an ordinary
contract of lease because the full and
absolute possession and control of the
deposit box is not given to the renters.
The prevailing rule is that the relation
between the bank renting out and the
renter is that of bailer and bailee, the
bailment being for hire and mutual
benefit.
k) Restrictions on Bank Exposure
to Directors, Officers,
Stockholders, and Related
interests (DOSRI)
GBL imposes restrictions (not total
prohibition) on borrowings and security
arrangement by directors, officers, and
stockholders of the bank. These
restrictions apply when the loan or
financial accommodation of DORSI is in
excess of 5% of the capital and surplus
of the lending bank or in the maximum
amount permitted by law, whichever is
lower. This is done in order to prevent
the insiders from making the bank as
their captive source of finance
SEC 36. Restriction on Bank Exposure
to Directors, Officers, Stockholders and
Their Related Interests. No director
or officer of any bank shall, directly or
indirectly, for himself or as the
representative or agent of others,
borrow from such bank nor shall he
become a guarantor, indorser or surety
for loans from such bank to others, or
in any manner be an obligor or incur
any contractual liability to the bank
except with the written approval
of the majority of all the directors
of the bank, excluding the director
concerned:
Dealings of a bank with any of its
directors, officers or stockholders and
their related interests shall be upon
terms not less favorable to the bank
than those offered to others.
The Monetary Board may regulate the
amount of loans, credit
accommodations and guarantees that
may be extended, directly or indirectly.
However, credit accommodations
which a bank may extend to each of its
stockholders, directors, or officers and
their related interests, shall be limited
to an amount equivalent to their
respective unencumbered deposits and
book value of their paid-in capital
contribution in the bank:
Provided, however, That loans,
credit accommodations and
guarantees secured by assets
considered as non-risk by the
Monetary Board shall be
excluded from such limit:
Provided, further, That loans,
credit accommodations and
advances to officers in the form
of fringe benefits granted in
accordance with rules as may
be prescribed by the Monetary
Board shall not be subject to
the individual limit.
The limit on loans, credit
accommodations and guarantees
prescribed herein shall not apply to
loans, credit accommodations and
guarantees extended by a
cooperative bank to its
cooperative shareholders.
 title to goods and the goods covered
l) Limit on loans, credit are readily marketable, non-perishable
accommodations and and fully insured
guarantees (single borrowers
limit) The SBL limits lending of a bank to a
single client to only 25 percent of their
Loan Function: capital. As a general rule, banks should
1. A bank shall grant loans and spread their risks. By capping lending
other credit accommodations only to a single client, the potential loss of a
in amounts and for the periods of bank from that particular's client
time essential for the effective failure will be limited.
completion of the operations to be
financed, consistent with safe and Inclusion of parent
sound banking practices. corporation
2. The Monetary Board shall Even if a parent corporation,
prescribe the minimum ratio which partnership, association, entity or an
the net worth of a bank must bear individual who owns or controls a
to its total risk assets which may majority interest in such entities has
include contingent accounts. The no liability to the bank, the Monetary
risk-based capital ratio of a bank, Board may prescribe the combination
expressed, as a percentage of of the liabilities of subsidiary
qualifying capital to risk-weighted corporations or members of the
assets, shall not be less than 10% partnership, association, entity or such
for both solo basis (head office plus individual under certain circumstances,
branches) and consolidated basis including but not limited to any of the
(parent bank plus subsidiary following situations:
financial allied undertakings, but (a) The parent corporation,
excluding insurance companies). partnership, association, entity or
individual guarantees the repayment
Purpose of SBL: To prevent banks from of the liabilities;
making excessive loans and other (b) The liabilities were incurred for
credit accommodations to a single the accommodation of the parent
borrower, to safeguard the banks from corporation or another subsidiary or
putting too large a risk exposure to a of the partnership or association or
single client. entity or such individual; or
(c) The subsidiaries though separate
Coverage (25%) entities operate merely as
Except as the MB may otherwise departments or divisions of a single
prescribe for reasons of national entity.
interest, the total amount of loans,
credit accommodations and Limits on loans and other
guarantees that may be extended by a credit accommodations
bank to any person, partnership, (collaterals):
association, corporation or other entity
shall at no time exceed 25% of the Loans and other credit
net worth of such bank. accommodations against Real
Basis: for determining Estate shall not exceed 75% of the
compliance with SBL is the appraised value of the respective real
total credit commitment of estate security, plus 60% of the
the bank to the borrower. appraised value of the insured
20% of the net worth of the bank; can improvements, and such loans may be
be increased by an additional 10% made to the owner of the real estate or
of such net worth, PROVIDED to his assignees. Those against
additional liabilities of the borrower are security of chattels and
adequately secured by documents of intangible properties shall not
exceed 75% of the appraised value of
the security, and such loans and other
credit accommodations may be made
to the title-holder of the chattels and
intangible properties or his assignees.

ANTI-MONEY LAUNDERING
ACT
a) Salient features of AMLA
o Criminalizes money laundering
o Creates a Financial Intelligence
Unit (FIU)
o Imposes requirements on
customer identification, record-
keeping and reporting of
covered and suspicious
transactions.
o Relaxes strict bank deposit
secrecy laws
o Provides for freezing/ seizure/
forfeiture recovery of dirty
money/ property
o Provides for international
cooperation

b) Declared policies
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 State shall extend
cooperation in transnational
investigations and prosecutions of
persons involved in money laundering
activities wherever committed.

c) Covered Transactions
Covered transaction (or threshold
transaction) is a transaction in
cash or other equivalent
monetary instrument involving a
total amount in excess of five
hundred thousand pesos (P500,
 000) within one banking/business rendering services as
day. investment agent, advisor, or
Suspicious transactions are consultant,
mutual funds, close-end
transactions with covered
investment companies,
institutions, regardless of the common trust funds, pre-need
amount involved, where any of companies and other similar
the following circumstances exist: persons,
a. There is no underlying legal or other entities administering or
trade obligation, purpose or otherwise dealing in currency,
economic justification; commodities or financial
b. The client is not properly derivatives based thereon,
identified; valuable objects, cash
c. The amount involved is not substitutes and other similar
commensurate with the business monetary instruments or
or financial capacity of the client; property supervised or
d. Taking into account all known regulated by Securities and
circumstances, it may be Exchange Commission.
perceived that the clients d. Jewelry dealers in precious
transaction is structured in order
metals, who trades in precious
to avoid being the subject of
reporting requirements under the metals/stones, for transactions
AMLA in excess of P1,000,000
e. Any circumstance relating to the e. Company service providers
transaction which is observed to which, as a business, provide
deviate from the profile of the any of the following services to
client and/or clients past third parties:
transactions with the covered Acting as a formation agent
institution; of juridical persons
f. The transaction is in any way Acting as a director or
related to an unlawful activity or corporate secretary of a
offense under AMLA, as company, a partner of a
amended, that is about to be, is partnership, or a similar
being or has been committed; or position in relation to other
g. Any transaction that is similar or juridical persons
analogous to any of the Providing a registered office,
foregoing. business address or
accommodation,
d) Covered institutions correspondence or
Covered persons, natural or juridical, administrative address for a
refer to: company, a partnership or
a. Banks, quasi-banks, trust any other legal person or
entities, foreign exchange arrangement; and
dealers, pawnshops, money Acting as a nominee
changers, remittance and other shareholder for another
similar entities and all other person; and
persons and their subsidiaries f. Persons who provide any of the
and affiliates supervised or following services:
Managing of client money,
regulated by the BSP;
securities or other assets
b. Insurance companies, pre-need Management of bank,
companies and all other savings or securities accounts
persons supervised or regulated
by the Insurance Commission; Organization of contributions
and for the creation, operation or
c. the following: management of companies
securities dealers, brokers, Creation, operation or
salesmen, investment houses management of juridical
and other similar entities persons or arrangements, and
managing securities or buying and selling business
 entities. names, and all other similar
accounts shall be absolutely
Notwithstanding the foregoing, the prohibited. The BSP may
term covered persons shall conduct annual testing for the
exclude lawyers and accountants purpose of determining the
acting as independent legal existence and true identity of the
professionals in relation to owners of such accounts.
information concerning their clients or
where disclosure of information would Prohibition against opening of
compromise client confidences or the Accounts without Face-to- face
attorney-client relationship. Contact: No new accounts shall
be opened and created without
e) Obligations of covered face-to-face contact and full
institutions compliance with the
Prevention of Money Laundering: requirements.
CUSTOMER IDENTIFICATION:
Covered institutions shall establish and
RECORD KEEPING: All records of all
record the true identity of its clients
transactions of covered institutions
based on official documents. They shall
shall be maintained and safely stored
maintain a system of verifying the true
for (5) years from the date of
identity of their clients and, in case of
transactions. Covered institutions shall
corporate clients, require a system of
prepare and maintain documentation,
verifying their legal existence and
as to enable the AMLC, and/or the
organizational structure, as well as the
courts to establish an audit trail for
authority and identification of all
money laundering.
persons purporting to act on their
behalf.
Trustee, Nominee and Agent Existing and New Accounts - All
Accounts: When dealing with records of existing and new
customers who are acting as accounts and of new
trustee, nominee, agent or in any transactions shall be
capacity for and on behalf of maintained and safely stored
another, covered institutions shall for five (5) years from October
verify and record the true and full 17,2001 or from the dates of
identity of the person(s) on whose the accounts or transactions,
behalf a transaction is being whichever is later.
conducted. In case a covered
institution has doubts as to Closed Accounts - With respect
whether such persons are being to closed accounts, the records
used as dummies in circumvention on customer identification,
of existing laws, it shall account files and business
immediately make the necessary correspondence shall be
inquiries to verify the status of the preserved and safely stored for
business relationship between the at least five (5) years from the
parties. dates when they were closed.

Prohibition against Certain

Accounts: Covered institutions
shall maintain accounts only in REPORTING OF COVERED AND
the true and full name of the SUSPICIOUS TRANSACTIONS:
account owner or holder. The
provisions of existing laws to the Covered institutions shall report to the
contrary notwithstanding, AMLC all covered transactions within
anonymous accounts, (5) working days from occurrence
accounts under fictitious thereof, unless the Supervising
Authority concerned prescribes a
longer period not exceeding (10)
working days.
Exemption from Bank Secrecy
Laws. - When reporting covered
OR SUSPICIOUS transactions to
the AMLC, covered institutions
and their officers and
employees, shall not be
deemed to have violated R.A.
No. 1405, and other similar
laws, but are prohibited from
communicating, directly or
indirectly, in any manner or
by any means, to any
person, entity, the media,
the fact that a covered or
suspicious transaction
report was made, the
contents thereof, or any other
information in relation thereto.
In case of violation thereof, the
concerned officer and employee
of the covered institution, shall
be criminally liable.
Confidentiality Provisions. -
When reporting covered
transactions or suspicious
transactions to the AMLC,
covered institutions and their
officers and employees, are
prohibited from communicating,
directly or indirectly the fact
that a covered or suspicious
transaction report was made.
Neither may such reporting
be published or aired in any
manner or form by the mass
media, electronic mail, or
other similar devices. In case
of violation thereof, the
concerned officer, and
employee, of the covered
institution, or media shall be
held criminally liable.
f) Money laundering crime
Money laundering is a crime whereby
the proceeds of an unlawful activity
are transacted; thereby making them
appear to have originated from
legitimate sources. It is committed by
the following:
a. Any person knowing that any
monetary instrument or property
represents involves, or relates to
the proceeds of any unlawful
activity, transacts or attempts
to transact said monetary
instrument or property.
b. Any person knowing that any
monetary instrument or property
involves the proceeds of any
unlawful activity performs or fails
to perform any act as a result of
which he facilitates the offense
of money laundering referred
to in paragraph (a) above.
c. Any person knowing that any
monetary instrument or property is
required under this Act to be
disclosed and filed with the Anti-
Money Laundering Council (AMLC),
fails to do so.
g) Unlawful activities
Kidnapping for ransom
Drug Offenses
Graft and corrupt practices
Plunder
Robbery and extortion
Jueteng and masiao
Piracy on the high seas
Qualified theft
Swindling
Smuggling
Electronic consumer
crimes
Terrorist acts: hijacking,
destructive arson and
murder
Securities fraud
Felonies and other similar
offenses punishable under
penal laws of other
countries
h) Jurisdiction
The regional trial courts shall have
jurisdiction to try all cases on money
laundering. Those committed by public
officers and private persons who are in
conspiracy with such public officers
shall be under the jurisdiction of the
Sandiganbayan.
i) Penalties and other
consequences
Penalties for the Crime of Money
Laundering.
a. imprisonment from 7-14 years
and a fine of not less than
P3,000,000 but not more than
twice the value of the monetary
instrument or property involved
in the offense, shall be imposed
upon a person convicted under
Section 4(a) of this Act.
b. imprisonment from 4-7 years
and a fine of P1,500,000-
P3,000,000, shall be imposed
upon a person convicted under
Section 4(b) of this Act.
c. imprisonment from 6 months- 4
years or a fine of P100,000-
P500,000, or both, shall be
imposed on a person convicted
under Section 4(c) of this
Act.
Others:
Penalties for Failure to Keep
Records.
The penalty of imprisonment from six
(6) months to one (1) year or a fine of
not less than P100,000- P 500,000, or
both, shall be imposed on a person
convicted under Section 9(b).
Malicious Reporting.
The penalty of imprisonment from six
(6) months to (4) year or a fine of not
less than P100,000- P 500,000, or
both,at the discretion of the court:
Provided, that the offender is not
entitled to the benefits of the Probation
Law.
Breach of Confidentiality.
The punishment of imprisonment
ranging from (3) to (8) years and a fine
of not less than P 500,000-P 1,000,000
shall be imposed on a person
convicted for a violation under Section
9 (c).
j) Freezing of accounts
Upon determination that probable
cause exists that any deposit or similar
account is in any way related to an
unlawful activity, the AMLC may issue
a freeze order, which shall be effective
immediately, on the account for a
period not exceeding 20 days.
o Notice to the depositor that his
account has been frozen shall
be issued simultaneously with
the issuance of the freeze order.
The depositor shall have (72)
hours upon receipt of the notice
to explain why the freeze order
should be lifted.
o The AMLC has (72) hours to
dispose of the depositor's
explanation. If it fails to act
within (72) hours from receipt
of the depositors explanation,
the freeze order shall
automatically be dissolved.
The 20 day freeze order of the AMLC
may be extended upon order of the
court. No court shall issue a temporary
restraining order or writ of injunction
against any freeze order issued by the
AMLC except the Court of Appeals or
the Supreme Court.
k) Examination of accounts
AMLC may inquire into or examine any
particular deposit or investment with
any banking institution or non- bank
financial institution upon order of any
competent court in cases of violation
of this Act when it has been
established that there is probable
cause that the deposits or investments
involved are in any way
 o enjoy FISCAL AND
ADMINISTRATIVE AUTONOMY,
while being govt owned
b) BSPs primary objective and
roles

Primary Objectives:
o To maintain price stability
conducive to a balanced and
sustainable growth of the
economy;
o To promote and maintain the
monetary stability and
convertibility of the peso;
o To provide policy directions in
areas of money, banking and
credit, with supervision over
operations of banks and with
regulatory powers over
operations of finance
companies, and non-bank
financial institutions performing
quasi-banking functions.

Role of BSP (chapter 5)

Acts as banker of the

government

Representation with
international monetary fund

Representation with other

financial institutions

Fiscal operations: maintains

NEW CENTRAL BANK ACT
(BSP)
a) State declared policy
to maintain a central monetary
authority that shall:
o function and operate as an in
INDEPENDENT AND
ACCOUNTABLE BODY in the
discharge of its
responsibilities concerning
money, banking and credit;
and
general cash account in which
liquid funds of the govt are
deposited.
c) Supervision and examination of
banks
Sec 25:
The Bangko Sentral shall have
supervision over, and conduct periodic
or special examinations of, banking
institutions and quasi-banks, including
their subsidiaries and affiliates
engaged in allied activities.
o Subsidiary- corporation of which more
than 50% of the voting stock is owned
by a bank or quasi-bank.
o Affiliate- corporation of which the voting
stock to the extent of 50% or less, is
owned by a bank or quasi-bank or
which is related to such institution or
through common stockholders.
The department heads and the
examiners of the supervising
and/or examining departments are
hereby authorized to administer
oaths to any director, officer, or
employee of any institution under
their respective supervision or subject
to their examination and to compel the
presentation of all books, documents,
papers or records necessary in their
judgment to ascertain facts relative to
the true condition of any institution,
subject to the provision of existing
laws protecting the secrecy or
confidentiality of bank deposits as
well as investments of private
persons, natural or juridical, in
debt instruments issued by the
Government.
Effect on DORSI:
Sec 26:
Any director, officer or stockholder
who, together with his related interest,
contracts a loan or any form of
financial accommodation from:
his bank; or
from a bank
which is a subsidiary of a
bank holding company of
which both his bank and the
lending bank are subsidiaries;
or
in which a controlling
proportion of the shares is
owned by the same interest
that owns a controlling
proportion of the shares of his
bank, in excess of five
percent (5%) of the capital
and surplus of the bank, or in
the maximum amount
permitted by law, whichever
is lower,
20% Shall be required by the
lending bank to waive the secrecy
of his deposits of whatever nature in
all banks in the Philippines. Any
information obtained from an
examination of his deposits shall be
held strictly confidential and may be
used by the examiners only in
connection with their supervisory and
examination responsibility or by the
Bangko Sentral in an appropriate legal
action it has initiated involving the
deposit account.
Sec 27:
Prohibitions. - In addition, personnel of
the Bangko Sentral are hereby
prohibited from:
a. being an officer, director,
lawyer or agent, employee,
consultant or stockholder,
directly or indirectly, of any
institution subject to
supervision or examination
by the Bangko Sentral,
except non-stock savings and
loan associations and provident
funds organized exclusively for
employees of the Bangko
Sentral, and except as
otherwise provided in this Act;
b. directly or indirectly requesting
or receiving any gift, present or
pecuniary or material benefit
for himself or another, from
any institution subject to
supervision or examination
by the Bangko Sentral;
c. revealing in any manner,
except under orders of the
court, the Congress or any
government office or agency
authorized by law, or under
such conditions as may be
prescribed by the Monetary
Board, information relating
 to the condition or business
of any institution.
d. borrowing from any
institution subject to
supervision or examination
by the Bangko Sentral shall
be prohibited unless said
borrowings are adequately
secured, fully disclosed to the
Monetary Board, provided, that
personnel of the supervising
and examining departments are
prohibited from borrowing from
a bank under their supervision
or examination
d) Conservator, receiverhship and
liquidation
Sec 29:
Appointment of conservator
Whenever the Monetary Board finds
that a bank or a quasi-bank is in a
state of continuing inability or
unwillingness to maintain a condition
of liquidity adequate to protect the
interest of depositors and creditors,
the Monetary Board may appoint a
conservator to take charge of the
assets, liabilities, reorganize the
management, and exercise all powers
necessary to restore its viability.
The conservator shall report and be
responsible to the Monetary Board and
shall have the power to overrule or
revoke the actions of the previous
management and board of directors of
the bank or quasi-bank.
The Monetary Board may appoint a
conservator connected with the
Bangko Sentral, in which case he shall
not be entitled to receive any
remuneration from Bangko Sentral
during the conservatorship. The
expenses attendant to the
conservatorship shall be borne by the
bank or quasi-bank concerned.
When conservatorship terminated
The Monetary Board shall terminate
the conservatorship when it is satisfied
that the institution can continue to
operate on its own. The
conservatorship shall likewise be
terminated should the Monetary Board
or conservator determines that the
continuance in business of the
institution would involve probable
loss to its depositors or creditors, in
which case the provisions of Section
30 shall apply.
The conservatorship shall not exceed
one (1) year.
Sec 30:
Proceedings in Receivership and
Liquidation
Whenever, upon report of the head of
the supervising or examining
department, the Monetary Board finds
that a bank or quasi-bank:
is unable to pay its liabilities as
they become due in the ordinary
course of business: Provided, That
this shall not include inability to
pay caused by extraordinary
demands induced by financial
panic in the banking community;
has insufficient realizable assets, as
determined by the Bangko Sentral,
to meet its liabilities; or
cannot continue in business
without involving probable losses
to its depositors or creditors; or
has willfully violated a cease and
desist order under Section 37 that
has become final, involving
transactions which amount to fraud
or a dissipation of the assets of the
institution; in which cases, the
Monetary Board may without need
for prior hearing forbid the
institution from doing business in
the Philippines and designate the
Philippine Deposit Insurance
Corporation as receiver of the
banking institution.
For a quasi-bank, any person of
recognized competence in banking or
finance may be designed as receiver.
1) The receiver shall immediately
gather and take charge of all
the assets and liabilities of the
institution, but 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 (principle of
liquidation na nah): Provided,
That the receiver may deposit
or place the funds of the
institution in non-speculative
investments.
2) The receiver shall determine as
soon as possible, but not later
than 90 days from take over,
whether the institution may be
rehabilitated or not. Any
determination for the
resumption of business shall be
subject to prior approval of the
Monetary Board.
If the receiver determines that the
institution cannot be
rehabilitated, the Monetary Board
shall notify in writing the board of
directors of its findings and direct the
receiver to proceed with the liquidation
of the institution. The receiver shall:
1) file ex parte with the proper
regional trial court a petition for
assistance in the liquidation of
the institution pursuant to a
liquidation plan adopted by the
PDIC for general application to
all closed banks. In case of
quasi-banks, the liquidation
plan shall be adopted by the
Monetary Board. Upon
acquiring jurisdiction, the court
shall, upon motion by the
receiver after due notice,
adjudicate disputed claims
against the institution, assist
the enforcement of individual
liabilities of the stockholders,
directors and officers, and
decide on other issues as may
be material to implement the
liquidation plan adopted. The
receiver shall pay the cost of
the proceedings from the assets
of the institution.
2) convert the assets of the
institutions to money, dispose
of the same to creditors and
other parties, for the purpose of
paying the debts. The assets of
an institution under
receivership or liquidation shall
be deemed in custodia legis
in the hands of the receiver and
shall, from the moment the
institution was placed under
such receivership or liquidation,
be exempt from any order of
garnishment, levy, attachment,
or execution.
The actions of the Monetary Board
taken under this section or under
Section 29 of this Act shall be final and
executory, and may not be restrained
or set aside by the court except on
petition for certiorari on the ground
that the action taken was in excess of
jurisdiction or with such grave abuse of
discretion as to amount to lack or
excess of jurisdiction.
The petition for certiorari may only be
filed by the stockholders of record
representing the majority of the capital
stock within 10 days from receipt by
the board of directors of the institution
of the order directing receivership,
liquidation or conservatorship.
The designation of a conservator under
Section 29 of this Act or the
appointment of a receiver under this
section shall be vested exclusively
with the Monetary Board.
Furthermore, the designation of a
conservator is not a precondition to the
designation of a receiver.
e) Peso, Currency, legal tender
and deposit accounts
The Peso. - The unit of monetary value
in the Philippines is the "peso," which
is represented by the sign "P."
Definition of Currency. - The word
"currency" is hereby defined, as
meaning all Philippine notes and coins
issued or circulating in accordance
with the provisions of this Act.
Exclusive Issue Power. - The Bangko
Sentral shall have the sole power and
authority to issue currency, within the
territory of the Philippines. No other
person or entity, public or private, may
put into circulation notes, coins or any
other object or document which, in the
opinion of the Monetary Board, might
circulate as currency, nor reproduce or
imitate the facsimiles of Bangko
Sentral notes without prior authority
from the Bangko Sentral.
This is done in order to prevent the
circulation of foreign currency or of
currency substitutes as well as to
prevent the reproduction of facsimiles
of Bangko Sentral notes.
Liability for Notes and Coins. - Notes
and coins issued by the Bangko Sentral
shall be liabilities of the Bangko Sentral
and may be issued only against, and in
amounts not exceeding, the assets of
the Bangko Sentral.
The Bangko Sentral's holdings of its
own notes and coins shall not be
considered as part of its currency issue
and, accordingly, shall not form part of
the assets or liabilities of the Bangko
Sentral.
Legal Tender Power. - All notes and
coins issued by the Bangko Sentral
shall be fully guaranteed by the
Government of the Republic of the
Philippines and shall be legal tender in
the Philippines for all debts, both
public and private: Provided, however,
That, unless otherwise fixed by the
Monetary Board, coins shall be legal
tender in amounts not exceeding Fifty
pesos (P50.00) for denominations of
Twenty-five centavos and above, and
in amounts not exceeding Twenty
pesos (P20.00) for denominations of
Ten centavos or less.
Amended: Philippine currency notes
have no limit to their legal tender
power. However, in the case of coins in
denomination of 1-, 5- and 10-piso
they shall be legal tender in amounts
not exceeding P1,000 while coins in
denomination of 1-, 5- and 10- and 25-
sentimo shall be legal tender in
amounts not exceeding P100, pursuant
to BSP Circular No. 537, Series of 2006.
Replacement of Currency Unfit for
Circulation. - The Bangko Sentral shall
withdraw from circulation and shall
demonetize all notes and coins which
for any reason whatsoever are unfit for
circulation and shall replace them by
adequate notes and coins:
Provided, however, That the
Bangko Sentral shall not replace
notes and coins the
identification of which is
impossible, coins which show
signs of filing, clipping or
perforation, and notes which
have lost more than 2/5 of their
surface or all of the signatures
inscribed thereon. Notes and
coins in such mutilated
conditions shall be withdrawn
from circulation and
demonetized without
compensation to the bearer.
Retirement of Old Notes and Coins. -
The Bangko Sentral may call in for
replacement notes of any series or
denominations which are more than
five (5) years old and coins which are
more than (10) years old.
Notes and coins called in for
replacement in accordance with this
provision shall remain legal tender for
a period of one (1) year from the date
of call. After the expiration of this
latter period, the notes and coins,
which have not been exchanged, shall
cease to be a liability of the Bangko
Sentral and shall be demonetized.

Demand Deposits- the term "demand
deposits" means all those liabilities of
the Bangko Sentral and of other banks
which are denominated in Philippine
currency and are subject to payment in
legal tender upon demand by the
presentation of checks.
Issue of Demand Deposits. - Only
banks duly authorized to do so may
accept funds or create liabilities
payable in pesos upon demand by the
presentation of checks, and such
operations shall be subject to the
control of the Monetary Board in
accordance with the powers granted it
with respect thereto under this Act.
Legal Character. - Checks representing
demand deposits do not have legal
tender power and their acceptance in
the payment of debts, both public and
private, is at the option of the creditor:
Provided, however, That a
check which has been cleared
and credited to the account of
the creditor shall be equivalent
to a delivery to the creditor of
cash in an amount equal to the
amount credited to his account.