BANKING LAWS

Course Outline
Atty. Maria Zarah R. Villanueva-Castro
Zarah banking lecture transcribed by beet faller :>
I.

GENERAL CONCEPTS

A. Definition of Banks
- Banks shall refer to entities engaged in the lending of funds obtained in
the form of deposits.
- Quasi-Banks
- entities engaged in the borrowing of funds through the issuance,
endorsement or assignment with recourse or acceptance of deposit substitutes for
purposes of relending or purchasing receivables and other obligations.
Deposit substitute is an alternative form of borrowing funds from the public, other
than deposits, through the issuance, endorsement, or acceptance of debt instruments
for the borrower's own account, for the purpose of relending or purchasing receivables
or other obligations.
B. Nature of the Business
1. Utmost Diligence
- Like common carriers the degree of diligence required of banking institutions are
expected to exercise the highest degree of diligence in the conduct of its business
- Banks are entities for safekeeping
- Active instruments of business and commerce
- Significant role in providing an atmosphere that is conducive to the sustained
national economy
- It is for the foregoing reasons that the degree of diligence required of banking
institutions is likewise utmost or extraordinary diligence
- Their business is greatly impressed and imbued with public interest
2. Strikes and Lockouts
- The banking industry is hereby declared as indispensable to the national interest
and, notwithstanding the provisions of any law to the contrary, any strike or lockout
involving banks, if unsettled after seven (7) calendar days shall be reported by the
Bangko Sentral to the Secretary of Labor who may assume jurisdiction over the
dispute or decide it or certify the same to the National Labor Relations Commission
for compulsory arbitration. However, the President of the Philippines may at any
time intervene and assume jurisdiction over such labor dispute in order to settle or
terminate the same.
C. Requirements to Operate
1. Incorporation
- Basic requirement for incorporation purposes that the bank should have secured
favorable recommendation from the BSP with regard to its proposed articles of
incorporation for the SEC's imprimatur.
- You do not go straight to the SEC
- Entities and holders of secondary franchise

- For the BSP to see to it that the proposed provisions in the AI are consistent with law
as well as bank regulations, without which the SEC would not take action on the
proposed incorporation
- Same holds true when for amending by-laws
- Banks cannot be organized or registered as a closed corporation
- Banks must be openly held or publicly held, it could not be a closed corporation
- Because we do not want vital enterprises like banking institutions to be concentrated in
the hands of a few people or family
- Limitations with regard to the use of corporate name, if the use of a particular word
under existing law or regulation
- The use of the word bank as part of the corporate name is forbidden unless the bank is
allowed to engage in a banking business
Monetary Board may authorize the organization of a bank or quasi-bank subject to the
following conditions:
1. That the entity is a stock corporation;
- Authority in its charter to distribute its dividends and earnings to its shareholders.
Must be registered with the SEC.
2. That its funds are obtained from the public, which shall mean twenty (20) or more
persons; and
3. That the minimum capital requirements prescribed by the Monetary Board for each
category of banks are satisfied.
2. Business Operation
No person or entity shall engage in banking operations or quasi-banking functions
without authority from the Bangko Sentral: Provided, however, That an entity authorized
by the Bangko Sentral to perform universal or commercial banking functions shall
likewise have the authority to engage in quasi-banking functions.
Upon issuance of this authority, such person or entity may commence to engage in
banking operations or quasi-banking functions and shall continue to do so unless such
authority is sooner surrendered, revoked, suspended or annulled by the Bangko Sentral
in accordance with this Act or other special laws.
D. Applicable Laws see page 329, commercial law memaid 2016
II.

CLASSIFICATION OF BANKS
A. Universal Banks
B. Commercial Banks
1. Rural Banks
2. Other Banks (cooperative, thrift, Islamic, foreign, etc.)
3. Areas of Distinctions
(a) capitalization
- they have different minimum capitalization requirements
(b) purpose
- rural banks are created to be able to extend loans and credit facilities
to meet the normal credit needs of fishermen and farmers

- cooperative banks to extend credit facilities to cooperatives as well

as federations of cooperatives
(c) powers/ activities and businesses that they are allowed to indulge or
engage in
- universal banks has the more comprehensive authority in terms of
investment because unlike other banks they have the authority to
engage in non-allied enterprises or those which are completely alien to
banking (agriculture, mining, quarrying, manufacturing, public utilities,
construction, industrial park project, real estate development, financial
and commercial complex, and others as may be authorized by the
monetary board.
(d) equity
- foreign equity is generally allowed up to 40% with the exception of
rural banks which requires complete ownership by filipino citizens
(100%)
(e) board composition
- Public officers can be directors of Rural Banks while such officers are
prohibited from being directors or officers of other types of banks.
(f) public offering
- a mandatory requirement for those domestic banks seeking authority
to act or operate as a universal banks but such requirement does not
apply to other banks
III.

DEPOSIT FUNCTION

A. Contractual relationship between the bank and the depositor

- When money is deposited in a bank a relationship is inevitably created, it is neither
bailor-bailee relationship nor is it trustor-trustee relationship, it's one of creditordebtor relationship. The one depositing his money being the creditor and the bank
being the debtor.
- The deposit function in effect allows the bank to borrow from the public
- Regardless of the type of deposit the relationship is the same
B. Legal consequences of contractual relationship
- While it is said that the bank is fiduciary and it is deemed a trustee of the funds of
its depositors/creditors in a fiduciary relationship, the relationship the is thereby
created cannot be labeled as a trustor-trustee relationship
- The amount is delivered by the depositor not a trustor but as creditor, and the
relationship created is governed by the provisions of the civil code on simple loan
- Unlike in an ordinary trust agreement, where the trustee does not become the owner
of the money deposited, in deposits, when money is deposited in a bank the bank
effectively becomes the owner thereof. In other words, there is passing of ownership
to the bank.
- Accordingly, if the bank were to appropriate the money deposited to whatever use
that it has in mind, there can be no liability for estafa because title has passed to
the bank already.
- Even if the bank should fail to return the money deposited, there is no criminal
liability, at best there would only be civil liability. The bank is not expected to return
exactly the same bill, note or coin.
- Another consequence is that compensation is legally possible. As was said, the bank
also has a loan function so the depositor could likewise be a debtor of the bank if it

obtains a loan. Legal compensation is possible as the parties are mutual creditor and
debtor of each other.
- Phil. Banking Corporation v. CA (2004), where the bank was seeking compensation
but was not allowed because the bank was not able to show to the satisfaction of the
court that indeed it had a loan agreement with the depositor such as a promissory
note and other supporting papers. By the nature of its business, banks should have
had in its possession or records, an original copy of the disputed promissory note.

C. Capacity of Depositor
1. minors/incompetents
The validity of the contract will be impaired, at the very least the contract will be
voidable
However, PD 734, Sec. 1, gives special capacity to minors to maintain or open savings
and time deposits but subject to the following requirements:
They have reached the age of at least 7 years
Able to read and write and has sufficient discretion
Not otherwise disqualified by any other incapacity
The kind of deposit that they are allowed to maintain are only savings and time
deposit accounts (expressio unios est exclusio alterius); consequently, they could not
maintain demand or checking accounts.
There is an evil that is avoided by limiting the kind of deposits that a minor may
open.

2. married Woman
- RA 7192 allows married women to open bank accounts even without the assistance/
consent of the husband
3. corporations
- juridical persons are capacitated to open bank accounts. With respect to
corporations, the opening of an account on its behalf is in fact a requirement even
before its life commences.
Requirements:
A. Incorporation stage - the SEC requires a bank certificate of deposit of paid-up
capital notarized in the place where signed
B. Post-incorporation - resolution of the board of directors authorizing the signatories
and specifying the depositary bank.
D. Kinds of Deposits (Savings, Time, Demand, others)
Deposits are money or funds placed with a bank that can be withdrawn on the
depositor's order and demand.
Savings deposits are the most common type of deposits and is usually evidenced by a
passbook.
Time deposit is an account with a fixed term; payment of which cannot be legally
required within a specified number of days.
Demand deposits are liabilities of the BSP and of other banks which are denominated
in Philippine currency and are subject to payment of legal tender upon demand by the
presentation of checks.

Negotiable order of withdrawal accounts (NOW) are interest bearing deposit accounts
that combine the payable on demand feature of checks and the investment feature of
savings accounts.
Trust account is a savings account established under a trust agreement, containing
funds administered by the bank for the benefit of the trustor or another person or
persons.
Foreign currency deposits - any person, natural or juridical, may deposit with such
Philippine banks in good standing as designated by the bsp, foreign currencies which
are acceptable as part of the international reserve, except those as are required by
the bsp to be surrendered under RA 7635.
E. Ownership of Deposit and Authority to Withdraw
1. Individual
- a deposit maintained by a single individual or entity. It is a personal account.
2. Joint
- a deposit maintained by two or more individual and/or juridicial entities.
Whether held in as an "and" or "and/or" capacity the general rule is that it is deemed
to be for the benefit of both; so they hold the deposits share and share alike/ equal
shares in the deposit absent any evidence to the contrary.
Art. 484, NCC portions belonging to the coowners in the coownership shall be
presumed equal unless the contrary is proved.
'And' accounts require the permission of both depositors for withdrawal purposes.
'And/or' the rule is that anyone of the depositors could effect a withdrawal at anytime
without the consent of the other; for it is deemed that they have given the advanced
consent to the other to effect withdrawal.
Thus such terms only govern or affect the authority to withdraw as reflected by their
agreement. Ownership of the funds is a different/ another matter.
When the depositor dies, the rules is that until the appropriate provisions of the civil
code regarding the distribution of the estate has been complied with and the
appropriate taxes have been satisfied by the heirs, the bank should not allow the
deposit. Until such time that the person who will be entitled to the deposit has been
identified by the heirs, the rules is that the provisions of will should be respected or
the heirs must either execute an extrajudicial settlement of the estate if the agree, if
they don't, then judicial settlement.
For banks are instrumentalities of the government in the collection of taxes. Thus, the
heirs must be able to present clearance from the BIR showing that the required taxes
has already been settled by the estate. For estates have personality for tax purposes.
Until such time that the person who will be entitled to the deposit has been identified
by the heirs, the rules is that the provisions of will should be respected or the heirs
must either execute an extrajudicial settlement of the estate if the agree, if they
don't, then judicial settlement.
Allowable deductions from the estate tax of the deceased are:
- expenses incurred in the funeral or the wake of the deceased but only up to the
amount of 200k
- Hospitalization expenses of the decedent 500k

- By implication, to the extent of the amounts mentioned, withdrawals may be

allowed provided that the bank has taken precautionary measures in ensuring that
the payee is actually the person who is entitled thereto (hospital/funeral parlor as
the case may be).
F. Rule on Anonymous Accounts
- Anonymous accounts or those under fictitious names are prohibited
- Exception: Foreign currency deposits; however, the banks or non-bank financial
institutions should ensure that the client is identified in an official or other
identifying document.
G. Disposition of Deposit of a Deceased Depositor (Survivorship Agreements)
- Since it is presumed that the depositors hold the deposit in equal shares, only 50%
would go to the estate of the deceased depositor.
- Survivorship agreement is an agreement by virtue of which the depositors permit
each other to withdraw the whole amount during their life, with the caveat that
upon the demise of anyone, the remaining balance goes to the survivor. Normally,
those who trust and are confident with each other are the ones who enter into such
agreement.
- Vitug v. CA, respondents were questioning the validity of the survivorship agreement
on account of the civil code provision which is now incorporated in the family code,
which forbids the spouses from giving donations to each other in consideration of
marriage. The SC sustained the SA, explaining that the donation contemplated in the
civil code is a donation which will take effect during the lifetime or during the
marriage, but in the SA the donation only takes effect after the dissolution of the
marriage for it takes effect after the demise of the donor. So it's a donation mortis
cause, and therefore strictly speaking, it is not the donation contemplated under the
CC/FC.
- Futhermore, there is doubt if could really be considered as a donation because to
become a donor, you must have a definite interest or that you must have definite
ownership of the thing to be donated. In this case, the subject matter is conjugal
and thus, you cannot claim any definite interest in the properties held by the
conjugal partnership.

H. Secrecy of Bank Deposits

1. Confidentiality of Deposits (Rationale)
because of the importance of deposits, there are several pieces of legislation that
were enacted to protect them, one of which is the secrecy of bank deposits act/RA
1405
Under Sec 2 of RA 1405, all deposits of whatever nature with banks or banking
institutions in the Philippines; including investments in bonds issued by the
government of the Philippines, its political subdivisions and instrumentalities, are
considered absolutely confidential and therefore, they may not be inquired,
examined or looked into by any person(even as to private individuals), government
official, bureau or office.
therefore the rule is confidentiality.
the rule is in place to encourage investment by way of deposits

2. Exceptions to the Secrecy Rule

(a) Exceptions under RA 1405
1. Written permission emanating from the depositor/investor
2. Impeachment cases (ejercito case)
3. Upon the order of the competent court, but specifically in cases of bribery and
deriliction of public duty of public officials

4. Upon the order of the competent court, in cases where the money deposited is the
subject matter of litigation
Ejercito v. Sandiganbayan
- Plunder case
- The prosecutor requested for the production and examination of documents/records,
involving/relating to among other things, the savings account plus trust account of
Erap being maintained in EIB.
- Contention of prosecution:
- When you open a trust account, strictly speaking, the relationship is not one of
debtor-creditor like deposits, for you are entrusting your money to the bank and thus
you are allowing it to manage it for you. You are giving the bank a certain level of
authority. Thus it is not covered by RA 1405.
- Ruling:
- The term "investment" in Sec. 2 of RA 1405 is broad enough to cover trust accounts.
However, there are exemptions to bank secrecy which are:
Upon the order of the competent court, but specifically in cases of bribery and
deriliction of public duty of public officials
Upon the order of the competent court, in cases where the money deposited is the
subject matter of litigation
- Erap claims that plunder is different from bribery and dereliction; hence, the rule
should be sustained, that is secrecy.
- The SC ruled that erap's contention is untenable.
- Upon examination of the elements of plunder, it would appear basically that the
acts/omissions constituting/comprising the crime of plunder, are analogous to or
identical, if not the same as bribery. The only difference is that the law imposed a
higher penalty for plunder because of the amount involved.
(b) Anti-Graft and Corrupt Practices Act
- sec. 8, for purposes of determining violations of sec. 8 (unexplained wealth), which
is wealth that is manifestly out of proportion to the lawful source of income of the
public official concerned
- Upon order of the competent court or tribunal concerned in cases involving
unexplained wealth under this act
- Inquiry by the CIR for the purposes of determining the net estate of a deceased
depositor
(c) Unclaimed Balances Act
- involves the disclosure/ report/ referral by banks to the treasurer of the Philippines
(bureau of treasury) of the so-called dormant accounts. For the treasurer to refer
the matter to the office of the solicitor general for the filing/ initiation of an
escheat case
- The amount is not automatically forfeited in favor of the state because estate is a
proceeding, therefore it follows a process. One of the basic requirements for the
escheat proceedings to take place is publication. The publication is to put everyone
on notice that there is an account involving (person so and so), so that those who are
interested (such as heirs, creditors) in the account should make a proper
representation to the court so that their claims may be adjudicated properly.
- If no one files a claim to the account, the court may thus make a finding that the
account is in fact dormant and adjudicate the same in favor of the state.
- Dormant account is an account where the depositor is known to be dead or has not
made any transaction, meaning withdrawal for the past 10 years or more
- In the process of complying with the unclaimed balances act, it is unavoidable for
the bank to make a disclosure with regard to the deposit, subject matter of

dormancy. But in so doing, since it is by virtue of the express mandate of the law,
the bank officer or employee concerned will not be held liable for violating RA 1405.
(d) Tax law
- when a taxpayer offers to compromise his tax liability, one of the requirements for
the BIR to consider the offer is for the taxpayer to waive in writing the protective
provisions of the bank secrecy law
(e) Anti-Money Laundering Act
The AMLC may inquire into any deposit or investment, including related accounts,
upon order of any competent court where there is probable cause that the deposits or
investments, including related accounts involved, are related to an unlawful activity.
Related accounts are funds or the sources of which originated from and/or are
materially liked to the monetary instruments or properties subject of the freeze order.
(f) Human Security Act
- the justices of the CA designated as a special court to handle anti-terrorism cases
may authorize the examination of bank deposits of:
1. A person charged with or suspected of the crime of terrorism or conspiracy to
commit terrorism;
2. A judicially declared and outlawed terrorist organization, association, or group of
persons; and
3. A member of such judicially declared and outlawed terrorist organization,
association, or group of persons.
(g) Rule under Foreign Currency Deposit Act
- a statute subsequent to the bank secrecy law
- When there is a written permission from the depositor concerned
- Sec. 8, all foreign currency deposits authorized under this act are hereby declared as
and considered of an absolutely confidential nature, and except upon the written
permission of the depositor, in no instance shall foreign currency deposits be
examined, inquired or looked into by any person, government official, bureau or
office, whether judicial or administrative or legislative, or any other entity whether
public or private.
- So the policy is confidentiality, absolutely confidential. It is even stronger than the
one contained under Sec. 2 of RA 1405 because of the succeeding clause stating that
foreign currency deposits shall be exempt from attachment, garnishment or any
other order or process of any court, legislative body or agency or any administrative
body whatsoever.
- So the only exception that we could derive from sec. 8 is the written permission
from the depositor himself.
Other exceptions:
Ejercito v sandiganbayan - plunder
China bank corporation v ortega - garnishment
Salvacion v. CA/Central Bank (landmark case) - equity
I. PDIC Insurance
1. Amount of coverage
- Up to 500k net of the liabilities of the depositor concerned to the bank
- If the depositor has different accounts (savings, time, demand deposits..etc) with
the same bank, the aggregate value/ amount of all the deposits being maintained in
the same capacity (in his name and personal capacity as distinguished from an

instance when it is just in his name but in the capacity of a trustee for a third party,
in which case it is not to be included in the computation of the aggregate) shall be
the basis of the maximum insurable amount
- The amount over the maximum insured amount may be recovered from the receiver
or liquidator, as the case may be, but the disadvantage is that he will have no
preference. The claim of preferred creditors, secured creditors, government for
taxes, would have to take precedence. If there is no asset left, then he could no
longer recover.
- If the accounts are being maintained in different branches of the same bank by the
same person in his personal capacity, it would not matter, the rule in the
computation of the aggregate amount would be the same.'
- Note that under the law, it is the responsibility of the bank and not the depositor
who is obligated under the pdic law to take insurance upon the deposit. The failure
of the bank to pay the required premium does not deprive the depositor of his claim
against the PDIC. The PDIC cannot revoke insurance coverage despite non-payment
of premium on the part of the bank, but this is without prejudice to the PDIC going
after the bank in default for the recovery of the supposed premium.
Cash and carry rule (sec. 77, insurance code)
- you pay me the required consideration, and then i will carry out my responsibility or
my obligation to you.
- the insurance does not bind the insurer until and unless the required premium
therefor has been paid; exceptions:
- Cases when the required premium has not yet been paid at the time of loss the
insurer would still be liable.
- despite failure to pay premium, payment to the depositor beneficiary shall not be
declined without prejudice to the pdic running after the party in default
Under the PDIC law, joint accounts have different coverage
- RA9576, a joint account regardless of the conjunction and, or or and/or is used, shall
be insured separately from the any individually owned deposit account.
- The joint depositors would not get 500k each, the coverage is for the whole joint
account; if they hold the account share and share alike, then they could get 250k
each.
- The aggregate of the interest of each co-owner(co-depositors) over several joint
accounts whether owned by the same or different combination of individuals,
juridical persons or entities, shall likewise be subject to the maximum insured
deposit of 500k.
- In other words, if a person has 4 joint accounts and his interest therein is 2million,
the total insurance proceeds to which he will be entitled to would only be 500k,
whatever amount they would not be able to recover they should get from the
liquidator and receiver, as the case may be.
Under the law, when an account is held by a juridical person or entity jointly, with
one or more natural persons, the presumption is that the deposit pertains to the
juridical person concerned (disputable, evidence to the contrary may be received).
The following are expressly excluded from the mandatory insurance coverage of
the PDIC:
1. anything in excess of 500k would no longer be within the ambit of the PDIC
2. Those under sec. 2 RA 9576, to wit:
any obligation of the insured bank which is payable outside the Philippines/ payable
at the office of the bank but located outside the Philippines, i.e. Branch of a local

bank outside the Philippines shall not be a deposit for any of the purposes of this act
or included as part of the total deposits or of the insured deposits/ the same shall
not be covered by the PDIC
Investment products such as, bonds, securities, trust accounts and other similar
instruments
Accounts constituting and/or emanating from unsafe and unsound banking practice
upon consultation with the BSP, the deposit account or transaction shall not likewise
be covered by the PDIC
Deposit accounts or transactions which are unfounded or those that are fictitious or
fraudulent
Those deposits determined to be the proceeds of an unlawful activity as defined
under the AMLA
2. Rules on payment
- payment can be made:
1. By giving the cash equivalent of the insurance proceeds
2. For security reasons and to facilitate payment, by making available to each
depositor a transferred deposit in another insured bank, in which you could
withdraw the proceeds (so that the other bank would likewise be a bank
insured by the PDIC)
- In cases of doubtful claims/ PDIC is in doubt as to the veracity/viability of the
claim of a particular depositor
- The PDIC may, in the exercise of its sound discretion, require that the claim be
proved/ be properly substantiated.
- And if the PDIC is not satisfied with the evidence/proof proffered, the PDIC could
require final determination of the claim by a court of competent jurisdiction
before actual payment of insurance proceeds.
Payment of the claim should have been effected within 6 months from the date of
the filing of the claim for the insured deposit
- If failure of the PDIC to attend to such claim is attributable to gross negligence,
grave abuse of discretion, bad faith or malice, the directors, officers or employees
of the PDIC involved/responsible for the delay may be penalized with imprisonment
for a period of 6 months to 1 year
- However, if there is a justifiable reason for refusing payment, i.e. Where there is
doubt as to the veracity of the claim, the period (6 months from filing of claim) will
no longer hold/apply. In other words, the period would no longer apply if the claim
would require resolution of factual issues or issues of law before payment may be
made by the PDIC.
The rule on subrogation equally applies to the PDIC.
- Subrogation takes place upon payment of the insurance by the insurance company, in
this case is the PDIC. PDIC should be considered to be stepping into the shoes of the
depositor.
- Upon payment of the insurance proceeds to the depositor, insofar as the PDIC is
concerned, whatever rights that the depositor has against the bank, are by operation
of law transferred to the PDIC.
- So the PDIC could still file a claim against the bank for the amount paid as insurance
proceeds, subject still to the outcome of receivership or liquidation.
- Such subrogation shall also include the right on the part of the PDIC to receive
dividends and payments from the proceeds of the assets of the banks and recoveries
on account of stockholder's liability as would have been payable to the depositor on
a claim for the insured deposit.

- The depositor may still be allowed to proceed against the bank as regards any
amount not covered by the insurance.
All payments made by the PDIC of the insured deposit partake of the nature of
public funds because the PDIC is a GOCC, it's a public corporation. As such, it must
be considered as a preferred credit, similar to taxes due to the national
government.
- The preference shall be effective only upon liquidation proceedings subject to the
approval of the Monetary Board.

The filing of claim with the PDIC is within 2 years

- the counting of the 2 year period shall begin from the actual takeover of the bank
pursuant to sec. 30 of the NCBA
- Notice shall be published in a newspaper of general circulation that the depositor is
already required to file a claim
- Failure to file a claim within the prescribed period shall bar recovery from the PDIC;
the only recourse left to the depositor is to file a claim during the liquidation
proceedings.
Denial of insurance claim by the PDIC is final and executory.
- the only remedy left is a special civil action for certiorari
- Nonetheless, ra 9576 prescribes the period of only 30 days (compared to 60 days
under the rules of court) to file a petition for certiorari from the notice of the denial
of the insurance claim
Sec. 11 of RA 9576, Splitting of deposits
- the pdic is not likewise obliged to pay insurance on deposit accounts that result from
splitting of account/deposit
- Splitting of deposit occurs whenever a deposit account with an outstanding balance
of more than the maximum insurance coverage is broken into two or more accounts
in the names of natural or juridical persons who has no beneficial interest
whatsoever on the transferred deposit
- The splitting occurred within 120 days immediately preceding a closure issued by the
monetary board, in an obvious attempt to avail himself of the maximum deposit
insurance coverage
- It is one way of circumventing the maximum deposit insurance amount covered by
the pdic
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