Manila * Cavite * Laguna * Cebu * Cagayan De Oro * Davao

Since 1977

RFBT.3407 VILLEGAS/APRADO/MAGUMUN
Cooperative Law (RA 9520), PDIC (RA 3591), Bank Secrecy (RA 1405), UBL (Act 3936) MAY 2023

Other Coops as may be determined

Cooperative (RA 9520)
F. According to terms of membership, the following
The law which governs cooperatives, prior to the recent are the categories of cooperatives:
enactment of Republic Act No. 9520 (“Philippine
Cooperative Code of 2008”), is Republic Act No. 6938 Primary Cooperative – the members of which are
(“Cooperative Code of the Philippines of 1990”). natural person of legal age;
Secondary Cooperative – the members of which
A. Cooperative (defined) are primaries;
Tertiary Cooperative – the members of which are
A Cooperative is an autonomous and duly secondary cooperatives. Cooperatives whose
registered association of persons, with a common members are cooperatives are called as the
bond of interest, who have voluntarily joined federation and unions.
together to achieve their social, economic, and
cultural needs and aspirations by making equitable G. Basic in Cooperative
contributions to the capital required, patronizing
their products and services and accepting a fair The minimum paid-up share capital is PhP15,000.00
share of the risks and benefits of the undertaking in for primary cooperatives, except for multipurpose
accordance with universally accepted cooperative cooperative - P100,000.00 or as required by the
principles (Art. 3, RA 9520). feasibility study whichever is higher.

B. The Cooperative Development Authority (CDA), The par value of shares of a primary cooperative
under the Office of the President created under RA shall not exceed PhP1,000.
No. 6839, is the agency charged with the authority
and responsibility for implementing the program of No member of primary cooperative other than
cooperatives development. cooperative itself shall own or hold more than 10%
of the share capital of the cooperative.
C. Basic Purpose - The declared purpose of the law,
among others, is to foster the creation and growth Should preferred share capital be provided in the
of cooperatives as a practical vehicle for promoting their by-laws, it shall not exceed 25% of the total
self-reliance and harnessing people power towards authorized share capital of the cooperative.
the attainment of economic development and social
justice. Finally, for both common and preferred share
capital, no fractional shares shall be issued.
D. Cooperative Principles
H. Liability of Members
1. Open and voluntary membership
2. Democratic member control A member shall be liable for the debts of the
3. Member economic participation cooperative to the extent of his contribution to the
4. Autonomy and independence share capital of the cooperative. (Doctrine of
5. Cooperative education Limited Liability)
6. Cooperation among cooperatives
7. Concern for community I. Capital Subscription And Paid Up Capital
Requirement
E. Types of Cooperative
Credit Cooperative At least twenty-five per centum (25%) of the
Consumers Cooperative authorized share capital must be subscribed
Producers Cooperative
Marketing Cooperative At least twenty-five per centum (25%) of the total
Service Cooperative subscription has been paid.
Multipurpose Coop
Advocacy Cooperative In no case shall the paid-up share capital be less
Agrarian Reform Cooperative than Fifteen thousand pesos (P15,000.00).
Cooperative Bank
Dairy Cooperative J. Registration of Cooperative
Education Cooperative
Electric Cooperative A cooperative formed and organized under this
Financial Service Cooperative Code acquires juridical personality from the date the
Fishermen Cooperative Authority issues a certificate of registration under
Health Service Cooperative its official seal.
Housing Cooperative
Insurance Cooperative All applications for registration shall be finally
Transport Cooperative disposed of by the Authority within a period of sixty
Water Service Cooperative (60) days from the filing thereof, otherwise the
Workers Cooperative

Page 1 of 10 www.teamprtc.com.ph RFBT.3407

TEAM PRTC

application is deemed approved, unless the cause of 6. It combines two (2) or more of the business activities
the delay is attributable to the applicant. of these different types of cooperatives.
a. Service Cooperative
In case of a denial of the application for registration, b. Marketing Cooperative
an appeal shall lie with the Office of the President c. Multi-purpose Cooperative
within ninety (90) days from receipt of notice of d. Advocacy Cooperative
such denial. e. Consumers Cooperative

Failure of the Office of the President to act on the 7. It is organized by marginal farmers of which are
appeal within ninety (90) days from the filing agrarian reform beneficiaries for the purpose of
thereof shall mean approval of said application. developing an appropriate system of land tenure, land
development, land consolidation of land management in
areas covered by agrarian reform.
COOPERATIVE MC QUESTIONS a. Cooperative Bank
b. Multi-purpose Cooperative
c. Financial Cooperative
1. The following are characteristics of a cooperative, d. Service Cooperative
except: e. Agrarian Reform Cooperative
a. An autonomous and duly registered association of
persons 8. S1 - Primary Cooperative has members are natural
b. With a common enjoyment of property persons.
c. Who have voluntarily joined together to achieve S2 - Secondary Cooperative has members of which are
their social, economic, and cultural needs and primaries.
aspirations S3- Tertiary Cooperative has members of which are
d. By making equitable contributions to the capital secondary cooperatives.
required a. All are correct
e. Patronizing their products and services b. All are incorrect
c. Only S1 and S2 are correct and S3 is incorrect
2. The following are universally accepted principles of d. Only S2 and S3 are correct and S1 is incorrect
cooperative, except: e. Correct answer not given
a. Voluntary and Open Membership
b. Democrative Member Control 9. The following are the qualifications of the persons who
c. Member Economic Participation will organize a cooperative, except:
d. Autonomy and Relativity a. Fifteen (15) or more natural persons
e. Concern for Community b. Majority of whom are Filipino citizens
c. of legal age
3. A cooperative may be organized and registered for any d. having a common bond of interest
or all of the following purposes, except: e. actually residing or working in the intended area of
a. To divide the profits and losses among themselves operation
b. To encourage thrift and savings mobilization
among the members 10. S1 - At least twenty-five per centum (25%) of the
c. To generate funds and extend credit to the authorized share capital must be subscribed.
members for productive and provident purposes S2 - At least twenty-five per centum (25%) of the total
d. To encourage among members systematic subscription has been paid.
production and marketing S3 - In no case shall the paid-up share capital be less
e. To provide goods and services and other than Five thousand pesos. (P5,000.00).
requirements to the members a. All are correct
b. All are incorrect
4. A cooperative may be organized and registered for any c. Only S1 and S2 are correct and S3 is incorrect
or all of the following purposes, except: d. Only S2 and S3 are correct and S1 is incorrect
a. To promote and advance the economic, social and e. Correct answer not given
educational status of the members
b. To establish, own, sell, appropriate, lease, 11. S1 - All applications for registration shall be finally
mortgage or operate private markets disposed of by the Authority within a period of ninety
c. To coordinate and facilitate the activities of the (90) days from the filing thereof, otherwise the
cooperatives application is deemed approved, unless the cause of the
d. To advocate for the cause of the cooperative delay is attributable to the applicant.
movement S2 - No extension of a Cooperative can be made earlier
e. To ensure the viability of cooperatives through the than five (5) years prior to the original or subsequent
utilization of new technologies expiry date/dates unless there are justifiable reasons
for an earlier extension as may be determined by the
5. It promotes and undertakes savings and lending Authority.
services among its members. It generates a common a. Both are correct
pool of funds in order to provide financial assistance to b. Both are incorrect
its members for productive and provident purposes. c. S1 is correct, S2 is incorrect
a. Credit Cooperative d. S1 is incorrect, S1 is correct
b. Consumers Cooperative
c. Producers Cooperative 12. An Associate member in Cooperative is:
d. Marketing Cooperative S1 – One who has no right to vote nor be voted upon
e. Service Cooperative and shall be entitled only to such rights and privileges
as the bylaws may provide.

Page 2 of 10 www.teamprtc.com.ph RFBT.3407

TEAM PRTC

S2 - One who meets the minimum requirements of 18. S1 – The BOD of a Cooperative shall hold office for Three
regular membership, continues to patronize the (3) years and shall hold office until their successors are
cooperative for three (3) years, and signifies his/her duly elected an qualified, or until duly removed for
intention to remain a member shall be considered a caused.
regular member S2 – The members of the board of directors shall hold
a. Both are correct any other position directly involved in the day to day
b. Both are incorrect operation and management of the cooperative.
c. S1 is correct, S2 is incorrect a. Both are correct
d. S1 is incorrect, S1 is correct b. Both are incorrect
c. S1 is correct, S2 is incorrect
13. S1 - A member shall be liable for the debts of the d. S1 is incorrect, S1 is correct
cooperative to the extent of his contribution to the share
capital of the cooperative. 19. S1 - Loss of confidence shall not be a valid ground for
S2 – The disqualification for elective officials of the removal unless evidenced by acts or omission causing
government does not extend to a party list loss of confidence in the honesty and integrity of such
representative being an officer of a cooperative he or BOD in a Cooperative.
she represents. S2 – When a director, officer or committee member
a. Both are correct attempts to acquire or acquires, in violation of his duty,
b. Both are incorrect any interest or equity adverse to the cooperative in
c. S1 is correct, S2 is incorrect respect to any matter which has been reposed in him in
d. S1 is incorrect, S1 is correct confidence, he shall, as a trustee for the cooperative,
be liable for damages and shall be accountable for the
14. S1 – A sixty (60) day notice to the board of directors is profits which otherwise would have accrued to the
required in case of withdrawal of membership cooperative.
S2 - The insolvency or dissolution of a member in a a. Both are correct
secondary or tertiary cooperative may be considered b. Both are incorrect
valid grounds for termination of membership. c. S1 is correct, S2 is incorrect
a. Both are correct d. S1 is incorrect, S1 is correct
b. Both are incorrect
c. S1 is correct, S2 is incorrect 20. S1 - The directors and officers of a cooperative shall not
d. S1 is incorrect, S1 is correct be entitled to any per diem when, in the preceding
calendar year, the cooperative reported a net loss or
15. The following are causes for termination of the had a dividend rate less than the official inflation rate
membership of the Board of Directors, except: for the same year.
a. When a member has not patronized any of the S2 - Any compensation other than per diems may be
services of the cooperative for an unreasonable granted to directors by a 2/3 vote of the members with
period of time as may be previously determined by voting rights at a regular or special general assembly
the board of directors meeting specifically called for the purpose.
b. When a member has continuously failed to comply a. Both are correct
with his obligations b. Both are incorrect
c. When a member has acted in violation of the c. S1 is correct, S2 is incorrect
bylaws and the rules of the cooperative d. S1 is incorrect, S1 is correct
d. In case of death or insanity of a member in a
primary cooperative 21. S1 - In case of self-dealing directors in a cooperative,
e. For any act or omission injurious or prejudicial to where any of the two conditions set forth in the law is
the interest or the welfare of the cooperative absent, in the case of a contract with a director, such
contract may be ratified by a three-fourths (3/4) vote
16. In a Cooperative, the quorum requirement for a of all the members with voting rights, present and
meeting are as follows: constituting a quorum in a meeting called for the
S1 - Electric Cooperatives, the quorum requirement purpose.
shall be one-half plus one of the number of voting S2 - A director who, by virtue of his office, acquires for
shares of all the members in good standing. himself an opportunity which should belong to the
S2 - Cooperative Banks, a quorum, unless otherwise cooperative shall be liable for damages and must
provided in the bylaws, shall consist of five per centum account for the profits that otherwise would have
(5%) of all the members entitled to vote. accrued to the cooperative by refunding the same,
a. Both are correct unless his act has been ratified by a three-fourths (3/4)
b. Both are incorrect vote of all the members with voting rights, present and
c. S1 is correct, S2 is incorrect constituting a quorum.
d. S1 is incorrect, S1 is correct a. Both are correct
b. Both are incorrect
17. Voting System in a Cooperative c. S1 is correct, S2 is incorrect
S1 - In the case of members of secondary or tertiary d. S1 is incorrect, S1 is correct
cooperatives, they shall have one (1) basic vote and as
many incentive votes as provided for in the bylaws but 22. The Authority may suspend or revoke, after due notice
not exceed five (5) votes. and hearing, the certificate of registration of a
S2 - The bylaws of a cooperative other than a primary cooperative on any of the following grounds:
may provide for voting by proxy. a. Having obtained its registration by fault
a. Both are correct b. Existing for an illegal purpose
b. Both are incorrect c. Willful violation, despite notice by the Authority, of
c. S1 is correct, S2 is incorrect the provisions of this Code or its bylaws
d. S1 is incorrect, S1 is correct d. Willful failure to operate on a cooperative basis

Page 3 of 10 www.teamprtc.com.ph RFBT.3407

TEAM PRTC

e. Failure to meet the required minimum number of The PDIC shall not pay deposit insurance for the following
members in the cooperative accounts or transactions, whether denominated,
documented, recorded or booked as deposit by the bank:
23. S1 - If a cooperative has not commenced business and
its operation within two (2) years after the issuance of (1) Investment products such as bonds and securities,
its certificate of registration or has not carried on its trust accounts, and other similar instruments;
business for two (2) consecutive years, the Authority (2) Deposit accounts or transactions which are
shall send a formal notice to the said cooperative to unfunded, or that are fictitious or fraudulent;
show cause as to its failure to operate. (3) Deposits accounts or transactions constituting,
S2 – In case of voluntary dissolution where no creditors and/or emanating from, unsafe and unsound
are affected in a cooperative, Resolution by the banking practice/s, as determined by the
affirmative vote of at least 2/3 of all the members with Corporation, in consultation with the BSP, after due
voting rights, present and constituting a quorum at a notice and hearing, and publication of a cease and
meeting called for the purpose. desist order issued by the Corporation against such
a. Both are correct deposit accounts or transactions; and
b. Both are incorrect (4) Deposits that are determined to be the proceeds of
c. S1 is correct, S2 is incorrect an unlawful activity as defined under republic act
d. S1 is incorrect, S1 is correct 9160, as amended. (Sec. 4f, Republic Act (RA) No.
3591, as amended by RA 9576)
24. A cooperative may be dissolved by order of a competent
court after due hearing on the grounds of:
2. Maximum Liability
a. Violation of any law or regulation
b. Violation of the provisions of its bylaws
c. Insolvency PDIC covers only the risk of a bank closure ordered by the
d. In case of death or insanity of a member in a Monetary Board. Thus, bank losses due to theft, fire, closure
primary cooperative by reason of strike or existence of public disorder, revolution
or civil war, are not covered by PDIC.
25. S1 - No merger or consolidation shall be valid unless The maximum insurance liability is P500,000.00.
approved by a three-fourths (3/4) vote of all the
members with voting rights, present and constituting a
quorum of each of the constituent cooperatives at How is the Liability Determined?
separate general assembly meetings.
S2 - An elective officer may be removed by three In determining such amount due to any depositor, there
fourths (3/4) votes of the regular members present and shall be added together all deposits in the bank maintained
constituting a quorum, in a regular or special general in the same right and capacity for his or her benefit either
assembly meeting called for the purpose. in his or her own name or in the name of others.
a. Both are correct
b. Both are incorrect i. Per depositor, per capacity rule
c. S1 is correct, S2 is incorrect
d. S1 is incorrect, S1 is correct In determining such amount due to any depositor, there
shall be added together all deposits in the bank maintained
PDIC Law in the same right and capacity for his or her benefit either
in his or her own name or in the name of others.
(RA 3591, as amended)
ii. Joint accounts
1. Insurable Deposits
A joint account regardless of whether the conjunction ‘and’,
The term "deposit" means the unpaid balance of money or
‘or’, ‘and/or’ is used, shall be insured separately from any
its equivalent received by a bank in the usual course of
individually- owned deposit account: Provided, That –
business and for which it has given or is obliged to give
a. If the account is held jointly by two or more natural
credit to a commercial, checking, savings, time or thrift
persons, or by two or more juridical persons or
account or which is evidenced by its certificate of deposit,
entities; The maximum insured deposit shall be
and trust funds held by such bank whether retained or
divided into as many equal shares as there are
deposited in any department of such bank or deposited in
individuals, juridical persons or entities, Unless a
another bank, together with such other obligations of a bank
different sharing is stipulated in the document of
as the Board of Directors shall find and shall prescribe by
deposit.
regulations to be deposit liabilities of the Bank.
b. If the account is held by a juridical person or entity
jointly with one or more natural persons, the
Note that the term “deposit” shall not include any obligation
maximum insured deposit shall be presumed to
of a bank which is payable at the office of the bank located
belong entirely to such juridical person or entity.
outside of the Philippines, but any insured bank which is
incorporated under the laws of the Philippines which The aggregate of the interest of each co-owner over several
maintains a branch outside the Philippines may elect to joint accounts, whether owned by the same or different
include for insurance its deposit obligation payable only at combinations of individuals, juridical persons or entities,
such branch. shall likewise be subject to the maximum insured deposit of
P500,000.00.
The term "insured deposit" means the amount due to any
bona fide depositor for legitimate deposits in an insured
bank net of any obligation of the depositor to the insured
bank as of date of closure, but not to exceed Five hundred
thousand pesos (P500,000.00). (Sec. 4f, Republic Act (RA) 3. REQUIREMENTS FOR CLAIMS
No. 3591, as amended by RA 9576)
Deposits not Covered by Insurance

Page 4 of 10 www.teamprtc.com.ph RFBT.3407

TEAM PRTC

PDIC shall commence the determination of insured deposits 1. Proceeds of the assets of such closed bank; and
due the depositors of a closed bank upon its actual takeover 2. Recoveries on account of stockholders’ liability, as
of the closed bank. would have been payable to the depositor on a claim
for the insured deposits.
PDIC shall give notice to the depositors of the closed bank
However, such depositor shall retain his claim for any
of the insured deposits due them by whatever means
uninsured portion of his deposit.
deemed appropriate by the Board of Directors: Provided,
That – a. PDIC shall publish the notice once a week for at
Failure of depositor to claim insured deposits
least three (3) consecutive weeks in a newspaper of general
If the depositor in the closed bank shall fail to claim his
circulation; or b. When appropriate, it shall be published in
insured deposits with PDIC within two (2) years from actual
a newspaper circulated in the community or communities
takeover of the closed bank by the receiver, or does not
where the closed bank or its branches are located. [Sec. 18,
enforce his claim filed with the corporation within two (2)
R.A. 9302]
years after the two-year period to file a claim:
Period to file claim: Depositors have two (2) years from
a. All rights of the depositor against PDIC with
PDIC's takeover of the closed bank to file their deposit
respect to the insured deposit shall be barred
insurance claims. After the two-year period, the depositor's
b. However, all rights of the depositor against the
right to claim for deposit insurance is barred. (Section 21(e)
closed bank and its shareholders or the receivership
of R.A. 3591, as amended.)
estate to which PDIC may have become subrogated,
shall thereupon revert to the depositor.
Who are required to file claim?
c. Thereafter, PDIC shall be discharged from any
liability on the insured deposit. [Sec. 18, R.A. 9302]
Depositors:

2.1.With valid deposit accounts with balances of more PDIC Law MC QUESTIONS
than P100,000.00;
1. The PDIC is also authorized to conduct independent
2.2.With outstanding obligations with the closed bank special examination of banks and may inquire into or
either as borrower, co-maker, or as spouse of examine deposit accounts of ailing banks in the event
borrower; a. there is a finding of unsafe and unsound banking
practices
2.3.With incomplete mailing address found in the bank b. The bank is in the verge of insolvency
records, or failed to update them through the MAUF c. The bank is in the liquidation proceeding
issued by the PDIC; d. The bank is under receivership
e. The bank is under conservatorship
2.4.With accounts maintained under the name of
business entities; 2. S1 – The Bangko Sentral ng Pilipinas is composed of 7
members in the board.
2.5.With accounts not eligible for early payment, S2 – The PDIC is composed of 5 members of the board.
regardless of type of account and account balance a. All are correct
per advice of PDIC; and b. All are wrong
c. Only S1 is incorrect
2.6.Who are deceased whose filing of claim is thru the d. Only S2 is incorrect
legal heirs
3. The following are functions of PDIC, except:
Requirements in Filing Claims a. Deposit Insurer
b. Co-regulator of Banks
1. ORIGINAL EVIDENCE OF DEPOSITS such as savings c. Receiver and Liquidator of Closed Banks
passbook, certificate of time deposit, bank d. Administrator of Banks
statement, used or unused checks, or ATM card.
4. S1 - Examination involves an evaluation of the current
2. ONE (1) VALID ORIGINAL PHOTO-BEARING
status of a bank and determines its compliance with the
IDENTIFICATION DOCUMENT (ID) with clear set standards regarding solvency, liquidity, asset
signature of depositor/claimant. valuation, operations, systems, management, and
3. For depositors below eighteen (18) years old, compliance with banking laws, rules and regulations.
photocopy of birth certificate from the Philippine Such a process then involves an intrusion into a bank’s
Statistics Authority (PSA) or a duly certified copy records.
issued by the local civil registrar, and valid ID of the S2 - Investigation is conducted based on specific
parent. findings of certain acts or omissions which are subject
4. Original copy of a notarized Special Power of of a complaint or a Final Report of Examination made
Attorney (SPA) for claimants who are not the by PDIC
signatories in the bank records. In the case of minor a. All are correct
b. All are wrong
depositor, the SPA must be executed by the parent.
c. Only S1 is incorrect
5. Duly accomplished claim form. (PDIC Website)
d. Only S2 is incorrect
Effects of Payment by the PDIC
5. The maximum deposit insurance coverage under the
PDIC, upon payment of any depositor, shall be subrogated PDIC Law is ________________. All deposit accounts
to all rights of the depositor against the closed bank to the by a depositor in a closed bank maintained in the same
extent of such payment. right and capacity shall be added together.
Such subrogation shall include the right on the part of PDIC a. P100,000 per depositor
to receive the same dividends and payments from the – b. P500,000 per depositor

Page 5 of 10 www.teamprtc.com.ph RFBT.3407

TEAM PRTC

c. P1million per depositor

d. P2million per depositor 11. PDIC covers only the risk of a -
a. bank losses due to theft
6. The PDIC may propose to adjust the minimum deposit b. bank closure ordered by the Monetary Board
insurance coverage, subject to the approval of the c. bank losses due to fire, closure by reason of strike
President of the Philippines, in case of d. banks losses due to existence of public disorder,
_________________________ that may have revolution or civil war
systemic consequences. e. All of the above
a. exercise of the police power of the State
b. exercise of eminent domain 12. The insurance premium assessed against the bank
c. bankruptcy of the majority of banks in the under the PDICS is -
Philippines a. 1/5 of 1% per annum of the assessment base of the
d. a condition that threatens the monetary and bank
financial stability of the banking system b. 1/4 of 1% per annum of the assessment base of the
e. law passed by Congress bank
c. 1/5 of 2% per annum of the assessment base of the
7. It means a deposit in an insured bank made available bank
to a depositor by the Corporation as payment of insured d. 1/4 of 2% per annum of the assessment base of the
deposit of such depositor in a closed bank and assumed bank
by another insured bank.
a. Deposit substitutes 13. S1 – For purposes of the PDIC Law, deposits in different
b. Demand deposit banking institutions are insured separately.
c. Trust deposit S2 – For purposes of the PDIC Law, if a bank has one or
d. Trust substitutes more branches, the main office and all branch offices
e. Transfer deposit are considered as one bank
a. All are correct
8. S1 - A joint account regardless of whether the b. All are wrong
conjunction ‘and,’ ‘or,’ ‘and/or’ is used, shall be insured c. Only S1 is incorrect
separately from any individually-owned deposit d. Only S2 is incorrect
account.
S2 - If the account is held jointly by two or more natural 14. The depositor of the closed insured bank has
persons, or by two or more juridical persons or entities, ____________ to file his deposit insurance claim.
the maximum insured deposit shall be divided into as a. 3 months from date of bank takeover
many equal shares as there are individuals, juridical b. 6 months from date of bank takeover
persons or entities. c. 9 months from date of bank takeover
S3 - If the account is held by a juridical person or entity d. 12 months from date of bank takeover
jointly with one or more natural persons, the maximum e. 24 months from date of bank takeover
insured deposit shall be presumed to belong entirely to
such natural person. 15. Under the PDIC Law, the Corporation, its directors,
a. Only S1 is incorrect officers, employees and agents are held free and
b. Only S2 is incorrect harmless to the fullest extent permitted by law from any
c. Only S3 is incorrect liability, and they shall be indemnified for any and all
d. Both S1 and S2 are incorrect liabilities, losses, claims, demands, damages,
e. Both S2 and S3 are incorrect deficiencies, costs and expenses of whatsoever kind and
nature that may arise in connection with the
9. R.A. No. 9576 stipulates that PDIC will pay deposit performance of their functions, without prejudice to any
insurance for the following accounts or transactions, criminal liability under existing laws, except in the
except: following:
a. Investment products such as bonds, securities and a. willful violation of this PDIC Law
trust accounts; b. performed in bad faith
b. Deposit accounts which are unfunded, fictitious or c. with malice and/or gross negligence
fraudulent; d. All of the above
c. Deposit products constituting or emanating from
unsafe and unsound banking practices; 16. Deposits NOT covered by Insurance under the PDIC
d. Deposits that are determined to be proceeds of an Law, except:
unlawful activity as defined under the Anti-Money a. The amount in excess of insured deposit of
Laundering Law. P500,000
e. All of the above b. Deposit that is payable in foreign branches
c. Deposit accounts that resulted from splitting of
10. S1 - Membership of banks to PDIC is mandatory. deposit
S2 - As for Philippine banks with branches outside the d. Foreign currency deposits in the Philippines
country, RA 9576 stipulates that subject to the approval
of the Board of Directors, any insured bank with branch 17. It means funds held by an insured bank in a fiduciary
outside the Philippines may elect to include for capacity and includes without being limited to, funds
insurance its deposit obligations payable at such held as trustee, executor, administrator, guardian or
branch. agent.
S3 - Foreign currency deposits are also insured by PDIC. a. Trust Funds d. Trust substitutes
a. Only S1 is incorrect b. Demand deposit e. Transfer deposit
b. Only S2 is incorrect c. Trust deposit
c. Only S3 is incorrect
d. All are correct 18. Which of the following is not a function of PDIC?
e. All are incorrect a. Deposit insurer

Page 6 of 10 www.teamprtc.com.ph RFBT.3407

TEAM PRTC

b. Co-regulator of banks BANK SECRECY LAW

c. Receiver and liquidator of closed banks (RA 1405, as amended)
d. Engage in the lending of funds obtained from
the public Purpose

19. Deposits in which of the following banks are insured The purposes of RA 1405 are:
by the PDIC? 1. Encourage deposit in banking institutions; and
I. Commercial banks 2. Discourage private hoarding so that banks may lend
II. Mortgage banks such funds and assist in the economic development
III. Cooperative banks of the country. (Section 1, Republic Act (RA) No.
IV. Rural banks 1405)
a. All except II
4. Prohibited Acts
b. All except IV
c. All except III The following are the prohibited acts in RA 1405:
d. All banks enumerated are covered 1. Examination/inquiry/looking into all deposits of
whatever nature with banks or banking institutions
20. Mercy is a depositor of Redstone Bank. She has 3
in the Philippines (including investment in bonds
deposit accounts all under her name. One, in
issued by the government) by any person,
checking account, one in savings account and
government official or office (RA 1405, Sec. 2).
another one in time deposit account. Each account
has a balance of P250,000. Redstone Bank became 2. Disclosure by any official or employee of any
insolvent. PDIC closed the Bank. Mercy therefore is banking institution to any unauthorized person of
unable to withdraw from all of the accounts. She any information concerning said deposit (RA 1405,
then filed her claims with the PDIC. Which Sec. 3)
statement is most accurate?
a. X can claim a total of P500,000 for all 3 Note: Non-bank official or employee is not covered by the
accounts. prohibition. Neither is disclosure by a bank official or
b. X can only claim from 1 account of P250,000 employee of information about bank deposit in favor of a
c. X can claim a total of P750,000 from all 3 co-employee in the course of the performance of his duties
accounts. covered by the prohibition.
d. X cannot claim anything from any of the deposit
accounts. 3. Deposits Covered

21. The portion of the deposit not insured shall: 1. All deposits of whatever nature with banks or
a. Be forfeited in favor of the bank. banking institutions found in the Philippines.
b. Be forfeited in favor of the Government. 2. Investments in bonds issued by the Philippine
c. Become a claim against the asset of the closed government, its branches, and institutions (R.A.
bank. 1405, Sec. 2).
d. Be written off immediately by the depositor. 3. Trust accounts.

22. The PDIC will not pay deposit insurance on the Deposits in the context of the Secrecy of Philippine currency
following accounts or transactions except deposits include deposits of whatever nature and kind. They
a. Investment products such as bonds include funds deposited in the bank giving rise to creditor-
b. Deposits that are determined to be the proceeds debtor relationship, as well as funds invested in the bank
of an unlawful activity like trust accounts. The money deposited under the trust
c. Deposit accounts or transactions which are agreement (“Trust account”) is intended not merely to
fictitious or fraudulent as determined by the remain with the bank but to be invested by it elsewhere. To
Corporation. hold that this type of account is not protected by R.A. 1405
d. Deposits in foreign currency. would encourage private hoarding of funds that could
otherwise be invested by banks in other ventures, contrary
23. Citation of the PDIC Law - to the policy behind the law (Ejercito v. Sandiganbayan,
a. RA 4951 G.R. No. 157294-95, November 30, 2006).
b. RA 3591
c. RA 1405 4. Exceptions
d. RA 3293
Instances where examination or disclosure of information
24. The year of the effectivity of the PDIC law. about deposits can be allowed:
a. 1962 1. Upon written consent of the depositor
b. 1974 2. In cases of impeachment
c. 1982 3. Upon order of competent court in cases of bribery
d. 1963 or dereliction of duty of public officials
4. In cases where the money deposited or invested is
the subject matter of the litigation (RA 1405, Sec.
2)

Other instances:
a. Upon order of the Commissioner of Internal
Revenue in respect of the bank deposits of a
decedent for the purpose of determining such
decedent’s gross estate (NIRC, Sec. 6[F][1])

Page 7 of 10 www.teamprtc.com.ph RFBT.3407

TEAM PRTC

b. In case of dormant accounts/deposits for at least 10 and it was not the intention of the legislature to place bank
years under the Unclaimed Balances Act (Act No. deposits beyond the reach of judgment creditor (PCIB v. CA,
3936, Sec. 2) G.R. No. 84526, January 28, 1991).
c. The Anti-Money Laundering Council (AMLC) may
inquire into any deposit with any bank in case of Garnishment of Foreign Currency Deposits
violation of the RA 9160 or the AMLA if there is General Rule: Foreign currency deposits shall be exempt
from attachment, garnishment, or any other order or
probable cause that it is related to an unlawful
process of any court, legislative body, government agency
activity (RA 9160, as amended, Sec. 11)
or any administrative body whatsoever (RA 6426, Sec 8).
d. The PDIC and the BSP may examine deposit Exception: The application of Sec. 8 of RA 6426 depends on
accounts and all information related to them in case the extent of its justice. The garnishment of a foreign
of a finding of unsafe or unsound banking practices currency deposit should be allowed to prevent injustice and
(RA 3591, as amended, Sec. 8) for equitable grounds, otherwise, it would negate Article 10
e. With court order: a. In cases of unexplained wealth of the New Civil Code which provides that “in case of doubt
under Sec. 8 of the Anti-Graft and Corrupt Practices in the interpretation or application of laws, it is presumed
Act (PNB v. Gancayco, L-18343, September 30, that the lawmaking body intended right and justice to
1965) b. In cases filed by the Ombudsman and upon prevail (Salvacion v. Central Bank of the Philippines, G.R.
the latter’s authority to examine and have access to 94723, August 21, 1997).
bank accounts and records (Marquez v. Desierto,
GR 138569, September 11, 2003
f. Without court order: If the AMLC determines that a
Bank Secrecy Law MC QUESTIONS
particular deposit or investment with any banking
institution is related to the following: a. Hijacking, 1. The Law on Secrecy of Bank Deposits is an act
b. Kidnapping, c. Murder, d. Destructive Arson, and prohibiting the disclosure of or inquiry into deposits with
e. Violation of the Dangerous Drugs Act, f. Acts of any banking institution and its purposes are, except:
Terrorism or in violation of Human Security Act. a. encourage people to deposit money in banks
b. strengthen the peso
5. Garnishment of Deposit including Foreign c. discourage private hoarding of money
Deposits d. protect the confidentiality of bank deposits

Foreign currency deposits are covered by R.A. 6426 2. The following are exceptions under the Bank Secrecy
otherwise known as the “Foreign Currency Deposits Act” Law, which exception is found under other laws:
General Rule: Foreign currency deposits cannot be inquired a. Upon written permission or consent in writing by the
or looked into. All foreign currency deposits are absolutely depositor
confidential (RA 6426, Sec. 8). b. In cases of impeachment of the President, Vice
Exceptions: President, members of the Supreme Court,
1. The depositor has given his written permission; members of the Constitutional Commission and the
2. The Commissioner of Internal Revenue is Ombudsman
authorized to inquire into bank deposits of the c. Upon order of a competent court in cases of bribery
following: or dereliction of duty of public officials.
a. A decedent to determine his estate; and d. In cases where the money deposited or invested is
b. Any taxpayer who has filed for an application for the subject matter of the litigation
compromise of his tax liability e. The Presidential Commission on Good Government
in the conduct of its investigations to recover ill-
c. A specific taxpayer upon request for tax
gotten wealth
information from a foreign tax authority
pursuant to an international convention or
3. The CIR is authorized to inquire into bank deposits in
agreement on tax matters to which the the following instances, except:
Philippines is a party (NIRC, Sec. 6 [f]). a. an application for compromise of tax liability
3. AMLC may inquire into any deposit with a bank or b. determination of a decedent’s gross estate under
financial institution in case of violation of RA 9160 if NIRC
there is probable cause that it is related to an c. determination of the gross income of a corrupt
unlawful activity (RA 9160, Sec. 11). public official
4. PDIC and BSP may examine deposit accounts and d. request for tax information of specific taxpayers
all information related to them in case of a finding made by a foreign tax authority pursuant to a tax
of unsafe or unsound banking practices (RA 3591, treaty under The Exchange of Information on Tax
as amended, Sec. 8). Matters Act of 2009
5. AMLC can investigate (a) any property of funds
4. The Anti-Money Laundering Council without need of
related to financing terrorism; (b) property or funds
court order, when probable cause exists that a
of any person if there is probable cause to believe particular deposit or investment with any banking
he is committing or attempting or conspiring to institution is related to certain predicate crimes, except:
commit terrorism or financing terrorism (RA 10168, a. espionage
Sec. 10). b. kidnapping for ransom
c. violation of the Comprehensive Dangerous Drugs
Note: Garnishment of a bank deposit does not violate Act
RA 1405. d. hijacking and other violations under Republic Act
No. 623510
The prohibition against examination or inquiry does not e. destructive arson and murder
preclude its being garnished for satisfaction of judgment.
The disclosure is purely incidental to the execution process

Page 8 of 10 www.teamprtc.com.ph RFBT.3407

TEAM PRTC

5. The Philippine Deposit Insurance Commission and the 10. The following persons are not liable under Bank Secrecy
Bangko Sentral may inquire into bank deposits when: Law, except:
a. there is a request for tax information of specific a. Any person or government official who, or any
taxpayers made by a foreign tax authority pursuant government bureau or office that, examines,
to a tax treaty inquires or looks into a bank deposit or government
b. there is a finding of unsafe or unsound banking bond investment in any of the instances not allowed
practices in Sec. 2;
c. when there is probable cause that the deposits or b. Any official or employee of a banking institution who
investments are related to an unlawful activity or a makes a disclosure concerning bank deposits to
money laundering offense another in any instance not allowed
d. there is a conduct annual testing which is limited to c. Any person who commits a violation of any of the
the determination of the existence and true identity provisions of the law
of the owners of numbered accounts d. All of the above
e. necessary to examine and gather information on the e. None of the above
deposits, placements, trust accounts, assets and
records in a bank or financial institution in 11. The Bank Secrecy Law prohibits disclosing any
connection with anti-terrorism case information about deposit records of an individual without
court order, except:
6. The following are Authorized Disclosures in the Bank a. In an examination to determine gross estate of
Secrecy Law, except: a decedent.
a. when there is probable cause that the deposits or b. In an investigation for violation of Anti-Graft
investments are related to an unlawful activity or a and Corrupt Practices.
money laundering offense c. In an investigation by the Ombudsman.
b. reporting of unclaimed balances to the Treasurer d. None of the above.
of the Philippines
c. turn-over to the CIR of the amount in bank accounts 12. The Anti-Money Laundering Council may, without court
as may be sufficient to satisfy the writ of order, examine a particular deposit or investment if this is
garnishment issued to collect delinquent taxes related to the following predicate crimes except:
d. submission of report, and turn-over to, the court a. Kidnapping c. Homicide
officer or executing sheriff of garnished amounts b. Destructive Arson d. Hijacking
pursuant to a writ of garnishment in satisfaction of
a judgment 13. I. Foreign currency deposits are exempt from
e. disclosure by a bank officer or employee upon attachment, garnishment, or any other order or process of
order of the court in connection with a deposit in a any court, legislative body, government agency or any
closed bank that was used in the perpetration of administrative body whatsoever.
anomalies
II. Peso currency deposits are not exempt from
7. The Anti-Money Laundering Council, either upon its own attachment, garnishment, or any other order or process of
initiative or at request of the Anti-Terrorism Council, any court, legislative body, government agency or any
further authorize to issue an ex parte order to freeze administrative body whatsoever.
accounts without delay. Freeze order shall be for a a. Both statements are correct.
period of ___ days, unless extended by the CA up to a b. Both statements are incorrect.
period not exceeding six (6) months upon petition by c. Statement I is correct while statement II is
the AMLC. incorrect.
a. 10 days d. 40 days d. Statement I is incorrect while statement II
b. 20 days e. 50 days is correct.
c. 30 days
14. Deposits covered under the Law on Secrecy of Bank
8. S1 - The Secrecy of Bank Deposit Law does not apply to Deposits are the following except:
foreign currency deposits. a. All deposits of whatever nature.
S2 – The AMLC, without a court order, is authorized to b. Investments in bonds issued by the
investigate property or funds that are in any way related Government of the Philippines, its political
to financing of terrorism or acts of terrorism OR the subdivisions and its instrumentalities.
property or funds of any person or persons in relation c. Trust accounts.
to whom there is probable cause that such person is d. None of the above.
involved in the acts of terrorism.
a. Both Statements are correct 15. The declared policy of the Government in making the
b. Both Statements are incorrect Law on Secrecy of Bank Deposits is to give encouragement
c. Only Statement 1 is incorrect to the people to deposit their money in:
d. Only Statement 2 is incorrect a. Government institution
b. Banking institution
9. S1 - Bank accounts may not be garnished by the c. Economic institution
creditors of the depositor as this constitutes a violation d. Educational institution
of the bank Secrecy Law.
S2 - AMLC may inquire into deposits upon order of the 16. The period to file the claim in PDIC.
court when there is probable cause that the deposits are a. 6 months
related to the crime of unlawful activities. b. 12 months
a. Both Statements are correct c. 24 months
b. Both Statements are incorrect d. 5 years
c. Only Statement 1 is incorrect
d. Only Statement 2 is incorrect
Unclaimed Balances Law

Page 9 of 10 www.teamprtc.com.ph RFBT.3407

TEAM PRTC

(Act No. 3936) d. not made withdrawals during the preceding ten
years or more
a. Unclaimed Balances – within the meaning of this Act,
shall include credits or deposits of money, bullion, security 2. Deposits that have become dormant for a period of ten
or other evidence of indebtedness of any kind, and interest (10) years may be __________ in favor the
thereon with banks, buildings and loan associations, and Government.
trust corporations, as hereinafter defined, in favor of any a. subject to attachment b. executed
person (1) known to be dead or who has (2) not made b. garnished c. escheated
further deposits or withdrawals during the preceding ten
years or more. Such unclaimed balances, together with the 3. Every month of January of every odd year, all banks,
increase and proceeds thereof, shall be deposited with the building and loan associations, and trust corporations
Treasurer of the Philippines to the credit of the Government shall forward to the Treasurer of the Philippines a
of the Republic of the Philippines to be used as the National statement, under oath, of their respective managing
Assembly may direct (Sec. 1, PD 679). officers, of all credits and deposits held by them in favor
of persons (1) known to be dead, or (2) who have not
b. Deposits that have become dormant for a period of ten made further deposits or withdrawals during the
(10) years may be ESCHEATED in favor of the preceding ten years or more, arranged in alphabetical
Government. order according to the names of creditors and
depositors, and showing, except;
c. Solicitor General shall commence the action in the RTC a. The names and first known place of residence or
of the province or city where the bank, xxx xxx is located, post office addresses of the persons in whose favor such
in which shall be joined as parties the bank, building and unclaimed balances stand
loan association or trust corporation and all such creditors b. The amount and the date of the outstanding
or depositors. unclaimed balance and whether the same is in money
or in security, and if the latter, the nature of the same
d. Every month of January of every odd year, all banks, c. The date when the person in whose favor the
building and loan associations, and trust corporations shall unclaimed balance stands died, if known, or the date
FORWARD to the Treasurer of the Philippines a when he made his last deposit or withdrawal
statement, under oath, of their respective managing d. The interest due on such unclaimed balance, if
officers, of all credits and deposits held by them in favor of any, and the amount thereof
persons (1) known to be dead, or (2) who have not made
further deposits or withdrawals during the preceding ten 4. Under the Unclaimed Balances Law, the Solicitor
years or more, arranged in alphabetical order according to General shall commence the action in the RTC of the
the names of creditors and depositors, and showing: province or city _______________________________
in which shall be joined as parties the bank, building
i. The NAMES and last known place of residence or post and loan association or trust corporation and all such
office addresses of the persons in whose favor such creditors or depositors.
unclaimed balances stand; a. where the depositor first resided
b. where the depositor last resided
ii The AMOUNT and the date of the outstanding unclaimed c. where the last deposit was made
balance and whether the same is in money or in security, d. where the first deposit was made
and if the latter, the nature of the same; e. where the bank is located

iii. The DATE when the person in whose favor the unclaimed 5. Under the Unclaimed Balances Law, if the president,
balance stands died, if known, or the date when he made cashier or managing officer of the bank, building and
his last deposit or withdrawal; and loan association, or trust corporation neglects or refuses
to make and file the sworn statement required by this
iv. The INTEREST due on such unclaimed balance, if any, action, such bank, building and loan association, or trust
and the amount thereof (Sec. 2) corporation shall pay to the Government the sum of
________________________ thereof during which
e. The Regional Trial Court (RTC) shall declare the such default shall continue
unclaimed balances as ESCHEATED to the Government of a. five hundred pesos a month for each month or
the Republic of the Philippines and to be deposited to the fraction
Treasurer of the Republic of the Philippines. b. one thousand pesos a month for each month or
fraction
f. Make the statement under oath, report it to the Treasurer c. two thousand pesos a month for each month or
of the Philippines, and comply with the law. fraction
d. five thousand pesos a month for each month or
fraction
e. ten thousand pesos a month for each month or
UNCLAIMED BALANCES LAW fraction
MC QUESTIONS

1. Unclaimed Balances shall include credits or deposits of “The more you sweat in peace, the less you bleed in war”
money, bullion, security or other evidence of
indebtedness of any kind, and interest thereon with End of RFBT.3407
banks, buildings and loan associations, and trust
corporations, in favor of any person, except:
a. known to be dead
b. known to be insane
c. not made further deposits during the preceding
ten years or more

Page 10 of 10 www.teamprtc.com.ph RFBT.3407