RFBL Reviewer
RFBL Reviewer
Garnishment: Bank accounts may be garnished by the creditors of the depositor. In garnishment, there is no
violation of the bank secrecy law since the amount of the deposit is not actually disclosed. Deposits exempt
from garnishment:
1. Foreign currency deposits, Section 8 of RA 6426
2. Those exempt under Rules of Court
- Penalties for violation: imprisonment of not more than 5 years or a fine not more than
P20,000.00 or both
- Trust Accounts: are likewise covered by the bank secrecy law. (Ejercito vs. Sandiganbayan)
Under Section 22 of the PDIC Charter, a systemic risk refers to the possibility of failure of one bank to
settle net transactions with other banks will trigger a chain reaction, depriving other banks of funds leading
to a general shutdown of normal clearing and settlement activity. It also means the likelihood of a sudden,
unexpected collapse of confidence in a significant portion of the banking or financial system with potentially
large real economic effects.
Coverage: The deposit liabilities of any bank or banking institution, which is engaged in the business of
receiving deposits as herein defined on the effective date of the PDIC Act, or which thereafter may engage in
the business of receiving deposits, shall be insured with the PDIC.
Splitting of Deposit – occurs whenever a deposit account with an outstanding balance more than P500,000
under the name of persons is broken down and transferred to two or more accounts in the name of persons or
entities who have no beneficial ownership in the transferred deposits in their names within 120 days
immediately preceding or during a bank-declared bank holiday.
Or immediately preceding a closure order issued by the Monetary Board for the purpose of availing the
maximum deposit insurance coverage.
This is considered a criminal act punishable by imprisonment of not less than 6 years but not more than 12
years or a fine not less than P50,000 but not more than P10,000,000, or both, at the discretion of the court.
Determination of the amount due Per Depositor, Per Capacity Rule:
Per Bank: the entitlement to deposit insurance is on a per bank basis. Such that if X has a deposit with A
Bank and B Bank and both banks closed, X is entitled to P500,000 insurance coverage for each bank.
Per Depositor, Per Capacity Rule: 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 shall be added together in determining the insured
amount, and regardless of the type of account.
Accounts “By”, “In Trust For (ITF)” or “For the Account of (FAO)” another person:
1. In a “By” account (Juan by Pedro) – Juan is the depositor.
2. In an “ITF” account (Juan ITF Pedro)- Pedro is the depositor.
3. In a “FAO” account (Juan FAO Pedro) – Pedro is the depositor
Joint accounts: A joint account regardless of whether the conjunction “and”, “or”, “and/or” is used shall be
insured separately from any individually-owned deposit account, provided that:
1. If the account is held jointly by two or more natural persons, or by two or more juridical persons or
entities, the maximum insured deposit shall be divided into as many equal shares as there are individuals,
juridical persons O entities, unless a different sharing is stipulated in the document of deposit, and
2. If the account s held by a juridical person or entity jointly with one or more natural persons the
maximum insured deposit shall be presumed to belong entirely to such juridical person or entity;
Provided, further, hat the aggregate of the interest of each co-owner over several joint accounts, whether
owned by the same or different combinations of individuals, juridical persons or entities, shall likewise be
subject to the maximum insured deposit of P500,000.00
Effect of payment: PDIC shall be subrogated to all rights of the depositor against the closed bank to
the extent of such payment. Such subrogation shall include the right on the part of PDIC to receive the same
dividends and payments from the proceeds of the assets of such closed bank and recoveries on account of
stockholders liability as would have been payable to the depositor on a claim for the insured deposits, but
such depositor shall retain his claim for any uninsured portion of his deposit.
Period for the PDIC to settle claim: 6 months from the date of filing of the claim.
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.
Except: that 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