LECTURE IN BANKING

DEfinition of banking institution (sec 3.1) entity engaged in lending of funds, retained in deposit.
Banks are entities that are engaged in the lending of funds and it’s funds are mantained by the public.

Quasi banks, borrwing of funds. Through the issuance of deposit substitutes as efined in sec 95 and
used for the relending and purchasing of receivable.

NATURE OF THE BUSINESS (sec 8 of general banking law)

=> must be registered with the SEC for purposes. Dispensed with the requirement of minimum
capitalization of the SEC. Subject to provisions of SEC. One such company is banking institution.
Similar to that of a common carrier. The court has articulated this position. Degree of care that banks
are expected to observe. Lending as well as deposit is extraordinary care.

CASES: PnB: The spouses obtained a loan from TRB. Used as collateral a piece of land they useed to
own. The peoprety was foreclosed. When you are awarded a property because you participated in
foreclosure, acquire title. But acquistion subject to redemption period. Appeared to have lapesed.
When Avila learned of this anomoly, sought nullification of redemption. Villa won, but when he tried
to execute the decision of the court he could not do so. He used collateral the property this time ffor
another loan obtained by pnb. WHo are chasing the property: Villa and PnB. In the ensuing ruling of
the Supreme Court, the court sustained the ruling of the villa. Ruled PnB failed to properly ascertain
the property because it just relied on the TcT. The court reiterated the rule that as a banking
corporation, it should o some sort of validation, PNB SHOULD HAVE DONE OCULAR INSPECTION AND
CHECJ WITH OFFICES. Foreclosure of the property. In the material that Union bank used, the unit had
an area of 95 square meters. Unionbank shoul have done it’s part. The measurement of the condo
unit should have been done in connection with act. Should not have incliuded certain areas. Is applied
more strictly. The failure to check the unit and it’s area, lack of indication of extraordinary care

Sipriana and husband sold lot in Cebu. The buyer is Ms Cecila who made partial payments. PRoperty
intended to be used by Cecilia. Cipriana refused the sale because she had offered the same proeprty
to the lease, and fascilate the loan that they will get from. Who has a better title over property?
Specificaly the court is taked to resolve this issue whether or notPhilank is mortgagee in good faith.
Facts here are different from PnB, as the defect here is due to the alleged simulation. The fact that
Cipriana was a party to the simulated sale, is something that cannot be inspected by mere ocular
inspection. So no amount of diligene of ocular inspection will help in this circumstnace.

*Chea Chi Cong

Case of Kababayan: the spouses often gave foreign depsotu to sons. This is a joint account unless you
preterminate the account. But before the maturily of the account, a person whol alleged that she is
Carmelita alleged to the City Ban branch where the deposit was being maintained and requested
thatshe be allowed to prederminate the account deposit.
All the papers were accepted, when the pasbook was looked for, what was provided is a zerox copied
redeay acceoted.She was madeto certain froms including quit claim to proetect bank to possible
issues regarding te property. Against the person appearing before them, The transaction was finished
less than 30 mins. But apparently that was an impositor. The court ruled that bank failed to dishcarge
what was expected of them. They failed to do extraordinary care. The cert of time deposit, it was not
presented the original copy of time deposit. Just a zerox copy was accepted and yet the termination
was allowed. Also ID, should have cross checked. Waiver was not even notrized So no presumption of
genuiness.

*CArbonel case

PRODUCTS OF BANKING INSTITUTION

*not depostor and depository relationship. Tit;le or ownership is transfered to the bank, but not the
xexact money. Title to the money deposited is tranffered to the bank. Bank cannot file an estafa
against bank officers and employeesNO MISSAPORPROIATION because it was transfered to bank (ask
what the proper remedy is)

RA 1405 (secrecy of bank deposits) Deposits in banking institutions are to be treated by banking
institutions, no sharing of information. Inquiry or sharing of date in connection with impeachment
proceeding, or whenever the case deals with bribery or dereliction of duty, and when deposit is
subject matter of litigation. The SC initiated the rule that the term deposit should not be executed
broadly. Even trust accounts within the coverage of secrecy rule. If the money deposited can be used
by bank, such account shall fall within the category of accounts which the law seeks to protect. The
court mentioned that while trust accounts which are not in the nature of deposit, whil covered by rule
on secrecy, they can also be examined under the allowed exceptions because
Bank was sought to be examined. The camp of former president ERap, settled. While it may be true
that what was mentioned in exceptions is only birbery, plunder should be considered included
because if we were to check the elments of brbery and plundder, the same. ELEMENTS ARE
ANALAGOUS. If we allow examination of bank accounts, the same should include examination.
Plunder is even more serious.
Other exception of bank secrecy law: when there is aneed of authorities to check on the wealth.
Violation of bank law can be impuded. For purposes of letting, the BIR asses the taxable estate, the
BIR has the authority to check on the assets, including the deposits of the diseased individual. PDIC
and or BSP has also this auhtority to check on deposits, but this is reglatory in nature. Always have
access to the records of banks. Dormant accounts, accounts inactive for
These accounts must be referred by the general. Escheat is that proceeding initiated by the state, and
if properties ound to be dormant, goes to state. There is a process. The basis of bank security law,
which will also serve as an exception to bank secrecy law. It shall be unlawful for any person to
disclose without property authorty any information regarding any deposit. Penalty is five years. Fine is
not more than 20,000 pesos. Robbery or theft, make appear from legitimate sources. DEpriving the
state th opportunity to trace the culprit and to retrieve whatever is recovered. In the special law, anti-
money londering act, there was a council or office created to ensure that AMLA provisions are
properly enforced and implemented. Has authority to inquire into deposits. AMLAC, anti-money
laundering council, power to look into details to look into a particular bank account.

Covered transaction. The bank and other institutions, report to AMLAC to transactions they encounter
(big accounts). The threshold; if withdrawal or deposit. Letting monitor. Reported also to AMLAC.
More than 500k, record. Suspicion trasnsaction report, warn the bank regarding irregularity. Or
amount not commensurate, the transaction is structured in such a way as to avoid being the subkect
of reporting requirements.

Covert or suspicious transaction report have protection against possible liability. Court of appeals can
make any memeber of team to examine the DEPOSIT PLACEMENTS in order to allow CA to ascertain
laws. Confidentiality is mandated. If and when there is a written permission which came from the
depositor. REad the case of Salvacion v Central Bank. If strict secrey rule will cost great and
irreparable injury to the proponent, then relax the foreign currency deposit act to enable them to
obtain justice. PDIC law, all banking institutionsa re covered. The coverage is not full, but this gives
depositors some kind. The depositor, or purposed of calculating insurance coverage, deduct loan he
has with bank.KEYNOTES in PDIC. Housing loan of 200,000 sale bank.

Scenario: He gets only 500o

PER BANK NOT PER ACCOUNT INSURANCE COVERAGE. While he cannot recover the 1m pesos from
the PDIC, this does not mean he cannot recover the same anymore. He has to file the claim with the
receiver which is alos th PDIC but as capacity as receiver. Guy has different joint accounts with the
same bank,

Rule for joint: joint accounts are separately covered, depending on interest they own. Joint account is
separately insured as per PDIC law. What if mantians several joint accounts: so five different joint
accounts. If you have several joint accounts, it will be subject to a ceiling of 500,000. For all the joint
accounts, the most you can get is 500,000.
Is broken down and is transfered to other people’s accounts. Declared bank holiday.

Splitting of deposits, you would have to face the liquidator

*Petersaw case

One important product is the loan or credit accomodation product. The amount to be loaned should
be comensurate. Real property, house and lot. For financing of product. The amount should be
comensurate of the thing to be financed.

Loans that have maturities of more than five years, annualy, borrower pays. Does not initialy produce
revenue necessary for amortization payments. Borrower pays amortization. The most extention you
can give is five years from when the loan was granted. Those procured from financing of products. X
entered the bank, and this was used to produce electricty, as well as cooperatives. This will be
distrivuted. Where will you get what you paid? Where you earned from the person you talked to.

Answer is if. The bank is not happy if you pre pay your debt. There is penalty for pretermination of
loan. Penalty an fee should be reasonable. The bank cannot prohibit the pre-payment. The bank
cannot reject the request to pre pay.

DOSRI: recitation
The law says that when what is ased of the bank is DOSRI, there are requirements to be enforced that
normaly do not apply if the borrower is nonDORSI. We want to avoid that impression. We want to
avoid this DOSRI taking advantage of the bank. That is why if the subject matter of procurement of
law, a lot of things to do to avoid irrecularities that may attend their attention. Kindly take note of
requirements. This needs to be reported to BSP. Not take avantage of connection with bank. Cannot
exceed the value of the incumbered deposit. The message of DOSRI the bank should be extra careful
in extending loans in such a way that the DOSRI does not unduly take advantage of connection. .
Mantian the trust of public in banking system. Direction, president stock.
Indirectly connected with lending bank: wife of DOS, relatives etc. First degree relative. Arms lenght
requirement, as well as ceiling requirement that was just shared.
What he offered is
NAme of Mr X and Mr Y. Property which is named as collateral. One of the lenders of lending bank.
The borrowers of x and lending bank. Do not include the entire property in itself, if it is sufficent to
cover the debt that you are procuring, then that should suffice
When it comes to corporations,

READ CASE OF SORIANO for next meeting.