BANKING LAWS

Course Outline
Atty. Maria Zarah R. Villanueva-Castro
I.

GENERAL CONCEPTS
A. Definition of Banks
Quasi-Banks
B. Nature of the Business
1. Utmost Diligence
2. Strikes and Lockouts
C. Requirements to Operate
1.
Incorporation
2. Business Operation
D. Applicable Laws

II.

CLASSIFICATION OF BANKS
A.

B.

III.

Universal Banks
Commercial Banks
1. Rural Banks
2.
Other Banks (cooperative, thrift, Islamic, foreign, etc.)
3.
Areas of Distinctions
(a) capitalization
(b)
purpose
(c)
powers
(d)
equity
(e)
board composition
(f)
public offering

DEPOSIT FUNCTION
A. Contractual relationship between the bank and the depositor
B. Legal consequences of contractual relationship
C. Capacity of Depositor
1.
minors
2.
married Woman
3.
corporations
D. Kinds of Deposits (Savings, Time, Demand, others)
E. Ownership of Deposit and Authority to Withdraw
1. Individual
2. Joint
F. Rule on Anonymous Accounts
G. Disposition of Deposit of a Deceased Depositor (Survivorship
Agreements)
H. Secrecy of Bank Deposits

1. Confidentiality of Deposits (Rationale)

2. Exceptions to the Secrecy Rule
(a)
Exceptions under RA 1405
(b)
Anti-Graft and Corrupt Practices Act
(c)
Unclaimed Balances Act
(d)
Tax law
(e)
Anti-Money Laundering Act
(f)
Human Security Act
(g)
Rule under Foreign Currency Deposit Act
I.

PDIC Insurance
1. Amount of coverage
2. Rules on payment

CASES: BPI v. First Metro, G.R. No. 132390, December 8, 2004, 429 SCRA 30;
Vitug vs. Court of Appeals, 29 March 1990; Intengan vs. Court of Appeals, 15
February 2002; China Bank vs. Ortega, 49 SCRA 356; Salvacion vs. Central
Bank, 21 August 1997; Ejercito vs. Sandiganbayan, 30 November 2006;
People vs. Ejercito Estrada, 2 April 2009; Marquez v. Desierto, G.R. No.
135882, June 27, 2001)
IV.

LOAN FUNCTION OF BANKS

A. Legal basis
B. Terms and Conditions
1. Amortization
2. Rules on Pre-Payment and Renewal
3. Interest
C. DOSRI Accounts
1. Requisites
2. Persons Covered (See BSP Circular No.
3. Transactions Covered
4. Restrictions under the GBL
5. Restrictions under Sec. 26, NCBA
D. Collaterals
1. Value of Collaterals
2. Foreclosure of Mortgage
3. Redemption Period
4. Effect of Estoppel and/or Agreement
5. Effect of Restraining Order
E. Single Borrower Limit
1. Rationale
2. Ceiling
3. Inclusions/Exclusions from SBL
F.

Limit on Loans Against Real or Personal Property

G. Truth in Lending
1. Matters required to be disclosed
2. Penalties
CASES: Soriano vs. People of the Phils., 30 June 2009; BPI vs. Sps. Yu, 20
January 2010; DBP vs. Arcilla, G.R. No. 161397, 30 June 2005
V.

BANK REGULATIONS
A.

Ownership of Banks
1. Guidelines for Establishment
2.
Foreign Stockholdings
(a) Individual and non-banks
(b) Foreign Banks
3.
Filipino Stockholdings
4. Stockholdings of family Groups or Related Interests
5.
BSP Circulars on Ownership (Circular No. 332, Series of
2002; Circular No. 256, Series of 2000)

B.

Directors and Officers

1.
Composition of Board
2. Public Officials
3. Meetings
4. Qualifications
(a) Fit and Proper Rule
(b) Minimum Qualifications
5.
Prohibited Acts and Disqualifications

C. Ownership of Real Property

CASE: Tala Realty Corp. vs. Banco Filipino, 7 April 2009

VI.

BANKS IN DISTRESS
A. Loans to Banks
1. Loans without Collateral
2. Emergency Loans
B. Conservatorship
1. Powers of Conservator
2. Report of the Conservator
3. Qualifications and Remunerations
4. Termination of Conservatorship

C. Receivership
1. Grounds
2. Duties of Receiver
3. Close Now-Hear Later Scheme
4. Other Legal Effects
D. Liquidation
CASES: Central Bank vs. Court of Appeals, 30 March 1993; Cudiamat vs.
Batangas Savings, 9 March 2010; Lipana vs. Development Bank of Rizal, 24
September 1987; Sps. Larrobis, Jr. vs. Philippine Veterans Bank, 1 October
2004; Fidelity Savings Bank vs. Cenzon, 5 April 1990; In Re: Petition for
Assistance in the Liquidation of Rural Bank of Bokod, 18 December 2006;
Philippine International Bank v. CA, G.R. No. 115849, January 24, 1996; Vivas
v. Monetary Board, G.R. No. 191424, August 7, 2013
VII.

THE BANGKO SENTRAL NG PILIPINAS

A. Responsibilities and Objectives
1. Supervision of Banks (Effect on SEC Jurisdiction)
2. Issuance of Regulations
3. Bank Examination
4. Overseeing Compliance
5. Money Function
6. Monetary Policy
7. International Monetary Stabilization
B. Organization of the BSP (The Monetary Board)
1. Composition
2. Qualifications and Disqualifications