Banking Law 1 Case Digests IDBenitez

Far Eastern University-Institute of Law
GENERAL BANKING LAWS

Atty. Dino Robert L. de Leon
I. THE GENERAL BANKING LAW OF 2000 (Republic Act No. 8791)
A. Coverage
B. State Policy
C. Definition and classification of banks
D. Distinction of banks from quasi-banks and trust entities
E. Bank Powers and liabilities
Cases:
CA Agro-Industrial Development Corp v. Court of Appeals and Security Bank and Trust
Company, G.R. No. 90027, March 3, 1993;
- In 1979, petitioner, through its President Sergio Aguirre, entered an agreement with
Spouses Pugao whereby the former will purchase from the latter 2 parcels of land.
Through a Memorandum of True and Actual Agreement of Sale, it was agreed upon that
titles shall be transferred to the petitioner upon full payment and that certificates shall
be deposited in a safety deposit box of any bank. The same could be withdrawn only upon
the joint signatures of a representative of the petitioner and the Pugaos upon full
payment of the purchase price. They rented Safety Deposit box No. 1448 of the
respondent bank whereby they signed a contract of lease and stipulated provisions
therein were:
o 8. The Bank shall use due diligence that no unauthorized person shall be admitted
to any rented safe and beyond this, the Bank will not be responsible for the
contents of any safe rented from it.
o 13. The bank is not a depositary of the contents of the safe and it has neither the
possession nor control of the same.
o 14. The bank has no interest whatsoever in said contents, except herein expressly
provided, and it assumes absolutely no liability in connection therewith.
- 2 renter’s key were given - one for petitioner and for the spouses and 1 guard key
remained with the respondent bank. Later on, a certain Mrs. Margarita Ramos offered to
buy from the petitioner the two (2) lots whereby the buyer demanded the execution of a
deed of sale which entails necessarily the production of the certificates. In view thereof,
spouses Pugaos accompanied the petitioner to the bank and found out however that the
box yielded no certificates. Thus, when Mrs. Ramos withdrew her offer, the petitioner
filed a complaint for damages against respondent bank where the latter alleged that the
former has no cause of action based on pars 13 and 14 of the contract of lease. While the
petitioner claims that pars. 13 and 14 were null and void for being contrary to law, public
order or public policy and the contract being on of deposit.
ISSUE
- Whether paragraphs 13 and 14 are void
- Whether the relationship is one of lessor-lessee or depositor-depositary
HELD
- Yes, said provisions are inconsistent with the respondent Bank's responsibility as a
depositary under Section 72(a) of the General Banking Act. Section 72 of the General
Banking Act pertinently provides:
o Sec. 72. In addition to the operations specifically authorized elsewhere in this Act,
banking institutions other than building and loan associations may perform the
following services:
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General Banking Laws Syllabus, AY 2020-2021
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§ (a) Receive in custody funds, documents, and valuable objects, and rent
safety deposit boxes for the safeguarding of such effects.
- It is not correct to assert that the Bank has neither the possession nor control of the
contents of the box since in fact, the safety deposit box itself is located in its premises and
is under its absolute control; moreover, the respondent Bank keeps the guard key to the
said box. The company, in renting safe-deposit boxes, cannot exempt itself from liability
for loss of the contents by its own fraud or negligence or that of its agents or servants,
and if a provision of the contract may be construed as an attempt to do so, it will be held
ineffective for the purpose.
- Neither. The contract is a special kind of deposit and the relationship is one of bailor-
bailee. In a contract of lease, the lessor gives the full enjoyment of the thing to the lessee.
In a contract of deposit, the depositary is duty-bound to keep and return the exact thing
deposited by the depositary. In this case, the petitioner did not give the full possession of
the thing deposited to the bank because the renter’s key remained with them thus
preventing the bank from opening the safety deposit box without it. The prevailing rule
in American jurisprudence — that the relation between a bank renting out safe deposit
boxes and its customer with respect to the contents of the box is that of a bailor and
bailee, the bailment for hire and mutual benefit.
- However, the petition should be dismissed on the fact that no competent proof was
presented to show that respondent Bank was aware of the agreement between the
petitioner and the Pugaos to the effect that the certificates of title were withdrawable
from the safety deposit box only upon both parties' joint signatures, and that no evidence
was submitted to reveal that the loss of the certificates of title was due to the fraud or
negligence of the respondent Bank. This in turn flows from this Court's determination that
the contract involved was one of special kind of deposit.
Luzan Sia v. Court of Appeals and Security Bank and Trust Company, G.R. No. 10297, May 13,
1993
- The plaintiff rented on March 22, 1985 the Safety Deposit Box No. 54 of the defendant
bank at its Binondo Branch located at the Fookien Times Building, Soler St., Binondo,
Manila wherein he placed his collection of stamps. The said safety deposit box leased by
the plaintiff was at the bottom or at the lowest level of the safety deposit boxes. During
the floods that took place in 1985 and 1986, floodwater entered into the defendant
bank's premises, seeped into the safety deposit box leased by the plaintiff and caused,
according to the plaintiff, damage to his stamps collection. The defendant bank rejected
the plaintiff's claim for compensation for his damaged stamps collection, so, the plaintiff
instituted an action for damages. Defendant bank invoked pars 9 and 13 of "Rules and
Regulations Governing the Lease of Safe Deposit Boxes", to wit:
o "9. The liability of the Bank by reason of the lease, is limited to the exercise of the
diligence to prevent the opening of the safe by any person other than the Renter,
his authorized agent or legal representative; xxx xxx xxx
o "13. The Bank is not a depository of the contents of the safe and it has neither the
possession nor the control of the same. The Bank has no interest whatsoever in
said contents, except as herein provided, and it assumes absolutely no liability in
connection therewith."
- That the destruction of the plaintiff's stamps collection was due to a calamity beyond
obligation on its part to notify the plaintiff about the flood waters that inundated its
premises. On the other hand, petitioner claims that despite such knowledge, however, it
never bothered to inform the petitioner of the flooding or take any appropriate measures
to insure the safety and good maintenance of the safety deposit box in question.
ISSUES
- Whether or not pars 9 and 13 are null and void
- Whether or not the relationship is lessor-lessee or deposit-depositary
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HELD
- Yes, both conditions No. 9 and No. 13 of the "Lease Agreement" covering the safety
deposit box in question (Exhibits "A" and "1") must be stricken down for being contrary
to law and public policy as they are meant to exempt SBTC from any liability for damage,
loss or destruction of the contents of the safety deposit box which may arise from its own
or its agents' fraud, negligence or delay. SBTC's negligence aggravated the injury or
damage to the stamp collection. SBTC was aware of the floods of 1985 and 1986; it also
knew that the floodwaters inundated the room where Safe Deposit Box No. 54 was
located In this respect, it failed to exercise the reasonable care and prudence expected of
a good father of a family, thereby becoming a party to the aggravation of the injury or
loss. Accordingly, the aforementioned fourth characteristic of a fortuitous event is absent
Article 1170 of the Civil Code, which reads:
o Those who in the performance of their obligation are guilty of fraud, negligence,
or delay, and those who in any manner contravene the tenor thereof, are liable
for damages.
- Neither. The contract is a special kind of deposit. The relationship is one of bailor-bailee.
The prevailing rule in American jurisprudence — that the relation between a bank renting
out safe deposit boxes and its customer with respect to the contents of the box is that of
a bailor and bailee, the bailment for hire and mutual benefit. Note that the primary
function is still found within the parameters of a contract of deposit, i.e., the receiving in
custody of funds, documents and other valuable objects for safekeeping. The renting out
of the safety deposit boxes is not independent from, but related to or in conjunction with,
this principal function.
F. Diligence required of banks
Cases:
Simex International v. Court of Appeals, G.R. No. 88013, March 19, 1990;
- The petitioner is a private corporation engaged in the exportation of food products. It
buys these products from various local suppliers and then sells them abroad, particularly
in the United States, Canada and the Middle East.
- The petitioner was a depositor of the respondent bank and maintained a checking
account in its branch at Romulo Avenue, Cubao, Quezon City. On May 25, 1981, the
petitioner deposited to its account in the said bank the amount of P100,000.00, thus
increasing its balance as of that date to P190,380.74. Subsequently, the petitioner issued
several checks against its deposit but was suprised to learn later that they had been
dishonored for insufficient funds thereby causing the California Manufacturing
Corporation, Malabon Long Life Trading and the G and U Enterprises to send demand
letters and caused the witholding of the petitioner’s order and in the case of Malabon, it
cancelled the petitioner’s credit line.
- Upon complaint to the respondent bank, investigation disclosed that the amount
deposited by petitioner had not beed credited to its account. The petitioner demanded
reparation from the respondent bank for its "gross and wanton negligence." This demand
was not met. The petitioner then filed a complaint in the then Court of First Instance of
Rizal claiming from the private respondent moral damages in the sum of P1,000,000.00
and exemplary damages in the sum of P500,000.00, plus 25% attorney's fees, and costs.
- The respondent court found with the trial court that the private respondent was guilty of
negligence but agreed that the petitioner was nevertheless not entitled to moral damages
because of the absence of bad faith since the private respondent rectified its records.
ISSUES
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- Whether or not private respondent is guilty of negligence thus awarding petitioner of
moral and exemplary damages and whether or not the private respondent violated its
fiduciary relationship with the petitioner.
HELD
- Yes, guilty of negligence and violated fiduciary relationship.
- Article 2205 of the Civil Code provides that actual or compensatory damages may be
received "(2) for injury to the plaintiff s business standing or commercial credit." There is
no question that the petitioner did sustain actual injury as a result of the dishonored
checks and that the existence of the loss having been established "absolute certainty as
to its amount is not required.
- We agree that moral damages are not awarded to penalize the defendant but to
compensate the plaintiff for the injuries he may have suffered.
o Art. 2229. Exemplary or corrective damages are imposed, by way of example or
correction for the public good, in addition to the moral, temperate, liquidated or
compensatory damages.
o Art. 2232. In contracts and quasi-contracts, the court may award exemplary
damages if the defendant acted in a wanton, fraudulent, reckless, oppressive, or
malevolent manner.
- The banking system is an indispensable institution in the modern world and plays a vital
role in the economic life of every civilized nation. As for business entities like the
petitioner, the bank is a trusted and active associate that can help in the running of their
affairs, not only in the form of loans when needed but more often in the conduct of their
day-to-day transactions like the issuance or encashment of checks.
- In every case, the depositor expects the bank to treat his account with the utmost fidelity,
whether such account consists only of a few hundred pesos or of millions.
Consolidated Bank and Trust Corporation v. Court of Appeals, G.R. No. 138569, September 11,
2003;
- Solidbank is a domestic banking corporation organized and existing under Philippine laws.
Private respondent L.C. Diaz and Company, CPAs (L.C. Diaz), is a professional partnership
engaged in the practice of accounting. On 14 August 1991, L.C. Diaz through its cashier,
Mercedes Macaraya (Macaraya), filled up a savings (cash) deposit slip for P990 and a
savings (checks) deposit slip for P50. Macaraya instructed the messenger of L.C. Diaz,
Ismael Calapre (Calapre), to deposit the money with Solidbank. Macaraya also gave
Calapre the Solidbank passbook. Since the transaction took time and Calapre had to make
another deposit for L.C. Diaz with Allied Bank, he left the passbook with Solidbank.
Calapre then went to Allied Bank. When Calapre returned to Solidbank to retrieve the
passbook, Teller No. 6 informed him that somebody got the passbook. When Macaraya
asked Teller No. 6 if Calapre got the passbook, Teller No. 6 answered that someone
shorter than Calapre got the passbook. Failing to get back the passbook, Macaraya went
back to her office and reported the matter to the Personnel Manager of L.C. Diaz,
Emmanuel Alvarez.. L.C. Diaz through its Chief Executive Officer, Luis C. Diaz (Diaz), called
up Solidbank to stop any transaction using the same passbook until L.C. Diaz could open
a new account. On the same day, Diaz formally wrote Solidbank to make the same
request. It was also on the same day that L.C. Diaz learned of the unauthorized withdrawal
the day before, 14 August 1991, of P300,000 from its savings account. A certain Noel
Tamayo received the P300,000. LC. Diaz through its counsel demanded from Solidbank
the return of its money. Solidbank refused. Thus, the filing of the Recovery for the Sum
on Money.
- RTC absolved the Solidbank - it applied the rules on savings account written on the
passbook. The rules state that possession of this book shall raise the presumption of
ownership and any payment or payments made by the bank upon the production of the
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said book and entry therein of the withdrawal shall have the same effect as if made to the
depositor personally. Further, that the Solidbanks act of allowing the withdrawal of
P300,000 was not the direct and proximate cause of the loss. The CA reversed the decision
of the RTC applying the rules on quasi-delict.
ISSUE
- Whether or not the contract involved is cupla contractual or culpa acquillana
HELD
- SC- We hold that Solidbank is liable for breach of contract due to negligence, or culpa
contractual.
- For breach of the savings deposit agreement due to negligence, or culpa contractual, the
bank is liable to its depositor. The passbook was still in the hands of the employees of
Solidbank for the processing of the deposit when Calapre left Solidbank. When the
passbook is in the possession of Solidbanks tellers during withdrawals, the law imposes
on Solidbank and its tellers an even higher degree of diligence in safeguarding the
passbook.
- The law imposes on banks high standards in view of the fiduciary nature of banking.
Section 2 of Republic Act No. 8791 (RA 8791),[18] which took effect on 13 June 2000,
declares that the State recognizes the fiduciary nature of banking that requires high
standards of integrity and performance. This fiduciary relationship means that the banks
obligation to observe high standards of integrity and performance is deemed written into
every deposit agreement between a bank and its depositor. The fiduciary nature of
banking requires banks to assume a degree of diligence higher than that of a good father
of a family.
- The bank must not only exercise high standards of integrity and performance, it must also
insure that its employees do likewise because this is the only way to insure that the bank
will comply with its fiduciary duty.
- However, the liability of Consolidated was mitigated due to the contributory negligence
of LC Diaz in allowing a withdrawal slip signed by its authorized signatories to fall into the
hands of an impostor. Thus, 60-40 liability.
Metropolitan Bank and Trust Company v. Cabilzo, G.R. No 154469, December 6, 2006;
- Respondent Renato D. Cabilzo (Cabilzo) was one of Metrobank’s clients who maintained
a current account with Metrobank Pasong Tamo Branch. On 12 November 1994, Cabilzo
issued a Metrobank Check No. 985988, payable to "CASH" and postdated on 24
November 1994 in the amount of One Thousand Pesos (P1,000.00) which was paid by
Cabilzo to a certain Mr. Marquez, as his sales commission.
- Subsequently, the check was presented to Westmont Bank for payment. Westmont Bank,
in turn, indorsed the check to Metrobank for appropriate clearing. Metrobank cleared the
check for encashment in accordance with the Philippine Clearing House Corporation
(PCHC) Rules.
- On 16 November 1994, Cabilzo’s representative was at Metrobank Pasong Tamo Branch
to make some transaction when he was asked by a bank personnel if Cabilzo had issued
a check in the amount of P91,000.00 to which the former replied in the negative. On the
afternoon of the same date, Cabilzo himself called Metrobank to reiterate that he did not
issue a check in the amount of P91,000.00. Cabilzo discovered that Metrobank Check No.
985988 which he issued on 12 November 1994 in the amount of P1,000.00 was altered to
P91,000.00 and the date 24 November 1994 was changed to 14 November 1994. Cabilzo
demanded that Metrobank re-credit the amount of P91,000.00 to his account.
- Repeated verbal demands followed but Metrobank still failed to re-credit the amount of
P91,000.00 to Cabilzo’s account.
- RTC rendered a decision in favor of Cabilzo, stressing the fiduciary nature of the
relationship between the bank and its clients and the negligence of the drawee bank in
failing to detect an apparent alteration on the check. Metrobank appealed to CA arguing
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that in clearing the check, it was not remiss in the performance of its duty as the drawee
bank, but rather, it exercised the highest degree of diligence in accordance with the
generally accepted banking practice.
ISSUE
- Whether Metrobank shall be liable
HELD
- YES. We never fail to stress the remarkable significance of a banking institution to
commercial transactions, in particular, and to the country’s economy in general. The
banking system is an indispensable institution in the modern world and plays a vital role
in the economic life of every civilized nation.
- In the present case, it is obvious that Metrobank was remiss in that duty and violated that
relationship. As observed by the Court of Appeals, there are material alterations on the
check that are visible to the naked eye. Thus:
- x x x The number "1" in the date is clearly imposed on a white figure in the shape of the
number "2". The appellant’s employees who examined the said check should have
likewise been put on guard as to why at the end of the amount in words, i.e., after the
word "ONLY", there are 4 asterisks, while at the beginning of the line or before said
phrase, there is none, even as 4 asterisks have been placed before and after the word
"CASH" in the space for payee. In addition, the 4 asterisks before the words "ONE
THOUSAND PESOS ONLY" have noticeably been erased with typing correction paper,
leaving white marks, over which the word "NINETY" was superimposed. The same can be
said of the numeral "9" in the amount "91,000", which is superimposed over a whitish
mark, obviously an erasure, in lieu of the asterisk which was deleted to insert the said
figure. The appellant’s employees should have again noticed why only 2 asterisks were
placed before the amount in figures, while 3 asterisks were placed after such amount.
The word "NINETY" is also typed differently and with a lighter ink, when compared with
the words "ONE THOUSAND PESOS ONLY." The letters of the word "NINETY" are likewise
a little bigger when compared with the letters of the words "ONE THOUSAND PESOS
ONLY".
- Metrobank failed to detect the above alterations which could not escape the attention of
even an ordinary person. This negligence was exacerbated by the fact that, as found by
the trial court, the check in question was examined by the cash custodian whose functions
do not include the examinations of checks indorsed for payment against drawer’s
accounts. Obviously, the employee allowed by Metrobank to examine the check was not
verse and competent to handle such duty.
- Banks are expected to exercise the highest degree of diligence in the selection and
supervision of their employees.
- What is even more deplorable is that, having been informed of the alteration, Metrobank
did not immediately re-credit the amount that was erroneously debited from Cabilzo’s
account but permitted a full blown litigation to push through, to the prejudice of its client.
PNB v. Pike, G.R. No. 157845, September 20, 2005;

- Complainant Pike often traveled to and from Japan as a gay entertainer in said country.
Sometime in 1991, he opened U.S. Dollar Savings Account with herein petitioner PNB
Buendia branch for which he was issued a corresponding passbook. He alleged that before
he left for Japan, he kept the aforementioned passbook inside a cabinet under lock and
key, in his home; that on 19 April 1993, a few hours after he arrived from Japan, he
discovered that some of his valuables were missing including the passbook; that he
immediately reported the incident to the police which led to the arrest and prosecution
of a certain Mr. Joy Manuel Davasol; that the latter made two (2) unauthorized
withdrawals from his U.S. Dollar Savings Account. Complainant Pike went to defendant
PNB’s Buendia branch and verbally protested the unauthorized withdrawals and likewise
demanded the return of the total withdrawn amount of U.S. $7,500.00, on the ground
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that he never authorized anybody to withdraw; that defendant PNB refused to credit said
amount back without justifiable reason, and instead, defendant bank wrote him that it
exercised due diligence in the handling of said account; and that on 06 May 1993,
complainant Pike wrote defendant PNB simply to request that the hold-account be lifted
so that he may withdraw the remaining balance left in his U.S.$ Savings Account and
nothing else.
- On the other hand, PNB alleged that, On March 15, 1993 at PNB Buendia Branch, Mr.
Norman Y. Pike, together with a certain Joy Davasol went to see PNB AVP Mr. Lorenzo T.
Val (sic), Jr. purposely to withdraw the amount of $2,000.00. Mr. Pike also informed AVP
Val that he is leaving for abroad (Japan) and made verbal instruction to honor all
withdrawals to be transmitted by his Talent Manager and Choreographer, Joy Davasol
who shall present pre-signed withdrawal slips bearing his (Pike’s) signature
- On April 19, 1993, a certain Josephine Balmaceda, who claimed to be plaintiff’s sister
executed an affidavit stating therein that they discovered today (April 19, 1993) the lost
(sic) of her brother’s passbook; that her brother cannot report the matter to the Bank
because he was currently in Japan and therefore requesting the Bank to issue a hold-order
on her brother’s passbook.
- On April 26, 1993, Atty. Nathaniel Ifurung who claims to be plaintiff’s counsel sent a
demand letter to VP Violeta T. Suquila demanding the bank to credit back the amount of
US$7,500.00 which were withdrawn on March 31, 1993 and April 5, 1993, because his
client’s signatures were forged and the withdrawal made thereon were unauthorized.
- On May 5, 1993, Mr. Norman Y. Pike executed an affidavit of loss (sic) Dollar Account
Passbook … and requested the PNB to replace the same and allow him to make
withdrawals thereon. On the same day May 6, 1993 Plaintiff Norman Y. Pike was allowed
by defendant bank to withdraw the remaining balance from his passbook … .
- A letter dated May 18, 1993 was sent to Plaintiff’s counsel, by PNB, stating that the Bank
regrets that it cannot accede to such request inasmuch as the Bank exercised due
diligence of a good father to his family in the handling of transactions covering the deposit
account of Mr. Pike. On July 2, 1993, Plaintiff’s counsel sent a letter to PNB Vice Pres.
Suquila denying that his client made any such promise not to hold responsible the bank
and its officers for the withdrawal made.
- A letter dated July 29, 1993 was sent to Plaintiff’s counsel by VP Suquila stating that
plaintiff’s withdrawal of the remaining balance of his account with the Bank effectively
estops him from claiming on the alleged unauthorized withdrawals.
- RTC and CA ruled in favor of Pike; that PNB bank was negligent and failed to exercise the
diligence required for banking industries.
ISSUE:
- Whether PNB was negligent
HELD
- Yes. Petitioner PNB does not deny that the withdrawal slips used were in breach of
standard operating procedures of banks in the ordinary and usual course of banking
operations as testified to by one of its witnesses, Mr. Lorenzo T. Bal, Assistant Vice
President of Petitioner PNB’s Buendia branch, on cross-examination. Having admitted
that pre-signed withdrawal slips do not constitute the normal procedure with respect to
withdrawals by representatives should have already put petitioner PNB’s employees on
guard. Rather than readily validating and permitting said withdrawals, they should have
proceeded more cautiously. Clearly, petitioner bank’s employee, Lorenzo T. Bal, an
Assistant Vice President at that, was exceedingly careless in his treatment of respondent
Pike’s savings account.
BPI v. Lifetime Marketing, G.R. No. 176434, June 25, 2008;

- Sometime in 1986, LMC availed of the BPI's inter-branch banking network services in
Metro Manila, whereby the former's agents could make [a] deposit to any BPI branch in
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Metro Manila under the same account. Under this system, BPI's bank tellers were no
longer obliged to retain the extra copy of the deposit slips instead, they will rely on the
machine-validated deposit slip, to be submitted by LMC's agents. For its part, BPI would
send to LMC a monthly bank statement relating to the subject account. This practice was
observed and complied with by the parties. As a business practice, the registered sales
agents or the Lifetime Educational Consultants of LMC, can get the books from the latter
on consignment basis, then they would go directly to their clients to sell. These agents or
Lifetime Educational Consultants would then pay to LMC, seven (7) days after they pick
up all the books to be sold. Since LMC have several agents around the Philippines, it
required to remit their payments through BPI, where LMC maintained its current account.
It has been LMC's practice to require its agents to present a validated deposit slip and, on
that basis, LMC would issue to the latter an acknowledgement receipt.
- Alice Laurel, is one of LMC's "Educational Consultants" or agents. On various dates
covering the period from May, [sic] 1991 up to August, 1992, Alice Laurel deposited
checks to LMC's subject account at different branches of BPI
- A verification with BPI by LMC showed that Alice Laurel made check deposits with the
named BPI branches and, after the check deposit slips were machine-validated, requested
the teller to reverse the transactions. Alice Laurel presented the machine-validated
deposit slips to LMC which, on the strength thereof, considered her account paid. LMC
even granted her certain privileges or prizes based on the deposits she made.
- The above fraudulent transactions of Alice Laurel and her husband was made possible
through BPI teller's failure to retrieve the duplicate original copies of the deposit slips
from the former, every time they ask for cancellation or reversal of the deposit or
payment transaction.
- Upon discovery of this fraud in early August 1992, LMC made queries from the BPI
branches involved. In reply to said queries, BPI branch managers formally admitted that
they cancelled, without the permission of or due notice to LMC, the deposit transactions
made by Alice and her husband, and based only upon the latter's verbal request or
representation.
ISSUE
- Whether BPI observed the highest degree of care in handling LMC's account
HELD
- No. The fiduciary nature of banking, previously imposed by case law, is now enshrined in
Republic Act No. 8791 or the General Banking Law of 2000. Section 2 thereof specifically
says that the state recognizes the fiduciary nature of banking that requires high standards
of integrity and performance.
- In this case, both the trial court and the Court of Appeals found that the reversal of the
transactions in question was unilaterally undertaken by BPI's tellers without following
normal banking procedure which requires them to ensure that all copies of the deposit
slips are surrendered by the depositor. The machine-validated deposit slips do not show
that the transactions have been cancelled, leading LMC to rely on these slips and to
consider Alice Laurel's account as already paid.
BPI v. Casa Montessori, G.R. No. 149454, May 28, 2004;

- On November 8, 1982, plaintiff CASA Montessori International opened Current Account
No. 0291-0081-01 with defendant BPI[,] with CASAs President Ms. Ma. Carina C. Lebron
as one of its authorized signatories. In 1991, after conducting an investigation, plaintiff
discovered that nine (9) of its checks had been encashed by a certain Sonny D. Santos
since 1990 in the total amount of P782,000.00. It turned out that Sonny D. Santos with
account at BPIs Greenbelt Branch [was] a fictitious name used by third party defendant
Leonardo T. Yabut who worked as external auditor of CASA. Third party defendant
voluntarily admitted that he forged the signature of Ms. Lebron and encashed the checks.
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ISSUE
- Whether BPI is negligent
HELD
- Yes. Clear Negligence in allowing payment under a Forged Signature
- We have repeatedly emphasized that, since the banking business is impressed with public
interest, of paramount importance thereto is the trust and confidence of the public in
general. Consequently, the highest degree of diligence is expected, and high standards of
integrity and performance are even required, of it. By the nature of its functions, a bank
is under obligation to treat the accounts of its depositors with meticulous care, always
having in mind the fiduciary nature of their relationship.
- BPI contends that it has a signature verification procedure, in which checks are honored
only when the signatures therein are verified to be the same with or similar to the
specimen signatures on the signature cards. Nonetheless, it still failed to detect the eight
instances of forgery. Its negligence consisted in the omission of that degree of diligence
required of a bank. It cannot now feign ignorance, for very early on we have already ruled
that a bank is bound to know the signatures of its customers; and if it pays a forged check,
it must be considered as making the payment out of its own funds, and cannot ordinarily
charge the amount so paid to the account of the depositor whose name was forged. In
fact, BPI was the same bank involved when we issued this ruling seventy years ago.
Philippine Bank of Commerce, et al. v. Court of Appeals, et al., G.R. No. 97626 March 14, 1997
- RMC maintained two (2) separate current accounts, Current Account Nos. 53-01980-3
and 53-01748-7, with the Pasig Branch of PBC in connection with its business of selling
appliances.From May 5, 1975 to July 16, 1976, petitioner Romeo Lipana claims to have
entrusted RMC funds in the form of cash totalling P304,979.74 to his secretary, Irene
Yabut, for the purpose of depositing said funds in the current accounts of RMC with PBC.
It turned out, however, that these deposits, on all occasions, were not credited to RMC's
account but were instead deposited to Account No. 53-01734-7 of Yabut's husband,
Bienvenido Cotas who likewise maintains an account with the same bank. During this
period, petitioner bank had, however, been regularly furnishing private respondent with
monthly statements showing its current accounts balances. Unfortunately, it had never
been the practice of Romeo Lipana to check these monthly statements of account
reposing complete trust and confidence on petitioner bank.
- Irene Yabut's modus operandi is far from complicated. She would accomplish two (2)
copies of the deposit slip, an original and a duplicate. The original showed the name of
her husband as depositor and his current account number. On the duplicate copy was
written the account number of her husband but the name of the account holder was left
blank. PBC's teller, Azucena Mabayad, would, however, validate and stamp both the
original and the duplicate of these deposit slips retaining only the original copy despite
the lack of information on the duplicate slip. The second copy was kept by Irene Yabut
allegedly for record purposes. After validation, Yabut would then fill up the name of RMC
in the space left blank in the duplicate copy and change the account number written
thereon, which is that of her husband's, and make it appear to be RMC's account number.
With the daily remittance records also prepared by Ms. Yabut and submitted to private
respondent RMC together with the validated duplicate slips with the latter's name and
account number, she made her company believe that all the while the amounts she
deposited were being credited to its account when, in truth and in fact, they were being
deposited by her and credited by the petitioner bank in the account of Cotas. This went
on in a span of more than one (1) year without private respondent's knowledge.
- Upon discovery of the loss of its funds, RMC demanded from petitioner bank the return
of its money
ISSUES
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- What is the proximate cause of the loss, to the tune of P304,979.74, suffered by the
private respondent RMC -- petitioner bank's negligence or that of private respondent's?
- Whether or not culpa contractual or culpa acquillana?
HELD
- Petitioner’s bank. Ms. Azucena Mabayad, was negligent in validating, officially stamping
and signing all the deposit slips prepared and presented by Ms. Yabut, despite the glaring
fact that the duplicate copy was not completely accomplished contrary to the self-
imposed procedure of the bank with respect to the proper validation of deposit slips,
original or duplicate. Ms. Mabayad failed to observe this very important procedure. The
fact that the duplicate slip was not compulsorily required by the bank in accepting
deposits should not relieve the petitioner bank of responsibility.
- Here, assuming that private respondent RMC was negligent in entrusting cash to a
dishonest employee, thus providing the latter with the opportunity to defraud the
company, as advanced by the petitioner, yet it cannot be denied that the petitioner bank,
thru its teller, had the last clear opportunity to avert the injury incurred by its client,
simply by faithfully observing their self-imposed validation procedure.
- Culpa acquillana. 60-40 liability
Reyes, et al. v. Court of Appeals, et al., G.R. No. 118492, August 15, 2001
- Gregorio H. Reyes, as vice-president for finance, racing manager, treasurer, and director
of PRCI, sent Godofredo Reyes, the clubs chief cashier, to the respondent bank to apply
for a foreign exchange demand draft in Australian dollars. Godofredo went to respondent
banks Buendia Branch in Makati City to apply for a demand draft in the amount One
Thousand Six Hundred Ten Australian Dollars (AU$1,610.00) payable to the order of the
20th Asian Racing Conference Secretariat of Sydney, Australia. Godofredo asked if there
could be a way for respondent bank to accommodate PRCIs urgent need to remit
Australian dollars to Sydney. The respondent bank would draw a demand draft against
Westpac Bank in Sydney, Australia (Westpac-Sydney for brevity) and have the latter
reimburse itself from the U.S. dollar account of the respondent in Westpac Bank in New
York, U.S.A (Westpac-New York for brevity). Respondent bank approved the said
application of PRCI and issued Foreign Exchange Demand Draft
- Upon due presentment of the foreign exchange demand draft, denominated as FXDD No.
209968, the same was dishonored, with the notice of dishonor stating the following: xxx
No account held with Westpac. Meanwhile, on August 16, 1988, Westpac-New York sent
a cable to respondent bank informing the latter that its dollar account in the sum of One
Thousand Six Hundred Ten Australian Dollars (AU$1,610.00) was debited.On August 19,
1988, in response to PRCIs complaint about the dishonor of the said foreign exchange
demand draft, respondent bank informed Westpac-Sydney of the issuance of the said
demand draft FXDD No. 209968, drawn against the Westpac-Sydney and informing the
latter to be reimbursed from the respondent banks dollar account in Westpac-New York.
The respondent bank on the same day likewise informed Westpac-New York requesting
the latter to honor the reimbursement claim of Westpac-Sydney. On September 14, 1988,
upon its second presentment for payment, FXDD No. 209968 was again dishonored by
Westpac-Sydney for the same reason, that is, that the respondent bank has no deposit
dollar account with the drawee Westpac-Sydney.
- On September 17, 1988 and September 18, 1988, respectively, petitioners spouses
Gregorio H. Reyes and Consuelo Puyat-Reyes left for Australia to attend the said racing
conference. However, the were informed that they could not register because the foreign
exchange demand draft for his registration fee had been dishonored for the second time.
ISSUE
- Whether respondent bank failed to exercise that degree of diligence required of banks
HELD
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- No. The evidence also shows that the respondent bank exercised that degree of diligence
expected of an ordinary prudent person under the circumstances obtaining. Prior to the
first dishonor of the subject foreign exchange demand draft, the respondent bank advised
Westpac-New York to honor the reimbursement claim of Westpac-Sydney and to debit
the dollar account of respondent bank with the former. As soon as the demand draft was
dishonored, the respondent bank, thinking that the problem was with the reimbursement
and without any idea that it was due to miscommunication, re-confirmed the authority
of Westpac-New York to debit its dollar account for the purpose of reimbursing Westpac-
Sydney. Respondent bank also sent two (2) more cable messages to Westpac-New York
inquiring why the demand draft was not honored. The evidence shows that the
respondent bank did everything within its power to prevent the dishonor of the subject
foreign exchange demand draft. The erroneous reading of its cable message to Westpac-
Sydney by an employee of the latter could not have been foreseen by the respondent
bank.
- As a general rule, banks are expected to exercise the highest degree of negligence. But
the same higher degree of diligence is not expected to be exerted by banks in commercial
transactions that do not involve their fiduciary relationship with their depositors.
- Considering the foregoing, the respondent bank was not required to exert more than the
diligence of a good father of a family in regard to the sale and issuance of the subject
foreign exchange demand draft. The case at bar does not involve the handling of
petitioners deposit, if any, with the respondent bank. Instead, the relationship involved
was that of a buyer and seller, that is, between the respondent bank as the seller of the
subject foreign exchange demand draft, and PRCI as the buyer of the same, with the 20th
Asian Racing Conference Secretariat in Sydney, Australia as the payee thereof.
G. Authority of the Bangko Sentral ng Pilipinas
Case:
Central Bank v. Citytrust Bank, G.R. No. 141835, February 4, 2009

- Respondent Citytrust Banking Corporation (Citytrust) maintained a demand deposit
account with petitioner Central Bank. Citytrust furnished petitioner with the names and
corresponding signatures of five of its officers authorized to sign checks and serve as
drawers and indorsers for its account. And it provided petitioner with the list and
corresponding signatures of its roving tellers authorized to withdraw, sign receipts and
perform other transactions on its behalf. Petitioner later issued security identification
cards to the roving tellers one of whom was Rounceval Flores (Flores).
- On July 15, 1977, Flores presented for payment to petitioners Senior Teller Iluminada dela
Cruz (Iluminada) two Citytrust checks. Iluminada verified them, prepared the cash
transfer slip on which she affixed her signature, stamped the checks with the notation
Received Payment and asked Flores to, as he did, sign on the space above such notation.
Instead of signing his name, however, Flores signed as Rosauro C. Cayabyab a fact
Iluminada failed to notice. Petitioner then debited the amount of the checks totaling
P1,750,000 from Citytrusts demand deposit account. More than a year and nine months
later, Citytrust, demanded petitioner to restore the amounts covered thereby to its
demand deposit account. Petitioner did not heed the demand.
- RTC and CA ruled that both parties were negligent.
ISSUE
- What is should be the Citytrust’s liability
HELD
- Petitioners teller Iluminada did not verify Flores signature on the flimsy excuse that Flores
had had previous transactions with it for a number of years. That circumstance did not
excuse the teller from focusing attention to or at least glancing at Flores as he was signing,
and to satisfy herself that the signature he had just affixed matched that of his specimen
11
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signature. Had she done that, she would have readily been put on notice that Flores was
affixing, not his but a fictitious signature.
- This fiduciary relationship means that the banks obligation to observe high standards of
integrity and performance is deemed written into every deposit agreement between a
bank and its depositor. The fiduciary nature of banking requires banks to assume a degree
of diligence higher than that of a good father of a family. Citytrusts failure to timely
examine its account, cancel the checks and notify petitioner of their alleged loss/theft
should mitigate petitioners liability
- Petitioner and Citytrust should bear the loss on a 60-40 ratio.
H. Organization, Management and Administration of Banks, Quasi-

Banks and Trust Entities
1) Organization
a. BSP Circular No. 854, Series of 2014

b. BSP Circular No. 902, Series of 2016
c. BSP Circular No. 296, Series of 2001
2) Stockholdings
a. Domestic v. Foreign; Individuals v. Corporations
i. R.A. No. 10641, amending R.A. No. 7721

ii. R.A. No. 10574
iii. BSP Circular No. 256, August 15, 2010
3) Fit and proper rule

4) Limitation on compensation and benefits of directors and officers
5) Prohibition on public officials
6) Branches
7) Banking days
8) Rule on Strikes and Lockouts
I. Nature of bank funds and bank deposits
1) Kinds of Deposits
a. Demand Deposits
i.) Drawing against uncollected deposits (DAUD) v. Drawing
against insufficient funds (DAIF)
ii.) Current deposit of bank officers
iii.) Philippine Clearing House Corporation Policy
CHOM No. 15-460, as amended)
b. Savings Accounts
c. Negotiable Order of Withdrawal (NOW) Account
d. Time Deposits
e. Deposit Substitute Operations
f. Foreign Currency Deposits (see R.A. No. 6426)
g. Anonymous and Numbered Accounts (see CA No. 142, as
amended by R.A. No. 6085)
h. Dormant Deposits (See PD No. 679; Rule 91 of the
Rules of Court)
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Cases:
BPI v. Suarez, G.R. No. 167750, March 5, 2010;
- Suarez is a lawyer who had a client who wanted to buy several parcels of land but
preferred not to directly deal with the land owner
- Suarez made it appear to the land owners that he is the buyer
- His client deposited an RCBC check in his account with BPI n June 16, 1997
- However, despite being aware of the 3-day clearing, he instructed his secretary Garaygay
to confirm with the bank whether the check has been cleared on the same day it was
deposited
- Allegedly, according to Garaygay, BPI personnel confirmed and relying on this, Suarez
issued checks to land owners but was dishonored due to insufficiency of funds
- Suarez claimed that the checks were tampered with to make it appear it that BPI marked
the checks DAUD instead of DAIF
- BPI, in its letter, asserts that it does not see any damages incurred by Suarez on the ground
that it was dishonored due to DAIF instead of DAUD because still, the checks were
dishonored anyway.
ISSUE
- Whether BPI mistakenly marked the checks DAIF instead of DAUD
HELD
- Yes. In the case of DAUD, the depositor has, on its face, sufficient funds in his account,
although it is not available yet at the time the check was drawn, whereas in DAIF, the
depositor lacks sufficient funds in his account to pay the check. Moreover, DAUD does not
expose the drawer to possible prosecution for estafa and violation of BP 22, while DAIF
subjects the depositor to liability for such offenses. It is clear therefore that, contrary to
BPIs contention, DAIF differs from DAUD.
Allied Bank v. Lim Sio Wan, G.R. No. 133179, March 27, 2008;
- On September 21, 1983, Angie Lazo of FCC deposited with Producer’s bank a Money
market Placement which was rolled-over to mature on December 5.
- On November 14, 1983, Lim Sio Wan deposited with Allied a money market placement to
mature after 31 days.
- On December 5, 1983, an impostor of Lim Sio Wan called Cristina So of allied to pre-
terminate his MMP and issue a manager’s check containing the proceeds thereof and give
such MC to one Deborah Santos - On this same day, FCC demanded its MMP.
- Santos is the person handling the MMP of FCC in Producers Bank and upon receipt of the
MC, she deposited such in Metrobank account of FCC purportedly representing its
matured MMP with Producer
- In other words, the Allied check was deposited with Metrobank in the account of FCC as
Producers Banks payment of its obligation to FCC.
- Lim Sio Wan demaned his matured MMP but Allied refused claiming that Wan authorized
the pre-termination
ISSUE
- Is Allied liable?
HELD
- Yes. A money market placement is in a nature of loan hence the creditor-debtor
relationship. Lim Sio Wan, as creditor of the bank for her money market placement, is
entitled to payment upon her request, or upon maturity of the placement, or until the
bank is released from its obligation as debtor. Until any such event, the obligation of Allied
to Lim Sio Wan remains unextinguished.
Associated Bank v. Tan, G.R. No. 156940, December 14, 2004;
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- Sometime in September 1990, Tan deposited a postdated UCPB check with the said BANK
in the amount of P101,000.00 issued to him by a certain Willy Cheng from Tarlac.
- The check was duly entered in his bank record thereby making his balance in the amount
of P297,000.00, as of October 1, 1990, from his original deposit of P196,000.00.
- Allegedly, upon advice and instruction of the BANK that the P101,000.00 check was
already cleared and backed up by sufficient funds, TAN, on the same date, withdrew the
sum of P240,000.00, leaving a balance of P57,793.45.
- A day after, TAN deposited the amount of P50,000.00 making his existing balance in the
amount of P107,793.45, because he has issued several checks to his business partners
- However, these checks bounced due to insufficiency of funds
- Petitioner Bank alleged that it gave notice to Tan as to the return of the UCPB check and
that it has the right to debit his account by reason of the dishonor of the check deposited
by Tan prior to its clearing
ISSUE
- Whether or not the petitioner, which is acting as a collecting bank, has the right to debit
the account of its client for a check deposit which was dishonored by the drawee bank
HELD
- Yes but this right must be exercised properly. The manager of the banks Cabanatuan
branch, Consorcia Santiago, categorically admitted that she and the employees under her
control had breached bank policies. They admittedly breached those policies when,
without clearance from the drawee bank in Baguio, they allowed respondent to withdraw
on October 1, 1990, the amount of the check deposited. Santiago testified that
respondent was not officially informed about the debiting of the P101,000 from his
existing balance of P170,000 on October 2, 1990. Tan was not given notice prior to
debiting hence the dishonor of the checks.
Bank of the Philippine Islands v. Court of Appeals, G.R. No.136202, January 25, 2007;
- Private respondent Salazar prayed for the recovery of the amount of Two Hundred Sixty-
Seven Thousand, Seven Hundred Seven Pesos and Seventy Centavos (P267,707.70)
debited by petitioner BPI from her account.
- Petitioner BPI, in its answer, alleged that on August 31, 1991, Julio R. Templonuevo, third-
party defendant and herein also a private respondent, demanded from the former
payment of the amount of Two Hundred Sixty-Seven Thousand, Six Hundred Ninety-Two
Pesos and Fifty Centavos (P267,692.50) representing the aggregate value of three (3)
checks, which were allegedly payable to him, but which were deposited with the
petitioner bank to private respondent Salazars account (Account No. 0203-1187-67)
without his knowledge and corresponding endorsement.
- Accepting that Templonuevos claim was a valid one, petitioner BPI froze Account No.
0201-0588-48 of A.A. Salazar and Construction and Engineering Services, instead of
Account No. 0203-1187-67 where the checks were deposited, since this account was
already closed by private respondent Salazar or had an insufficient balance.
ISSUE
- Does a collecting bank, over the objections of its depositor, have the authority to
withdraw unilaterally from such depositors account the amount it had previously paid
upon certain unendorsed order instruments deposited by the depositor to another
account that she later closed?
HELD
- Yes however, solely upon the prompting of Templonuevo, and with full knowledge of the
brewing dispute between Salazar and Templonuevo, petitioner debited the account held
in the name of the sole proprietorship of Salazar without even serving due notice upon
her.
BPI Family Bank v. Franco, G.R. No. 123498, November 23, 2007;
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- On August 15, Tevetesco opened current and savings account with BPI-FB and 10 days
later FMIC opened a time deposit with an amount of 100 Billion to mature 1 year
- On August 31, Franco opened current and savings account with 500k each and a time
deposit with 1M.
- The total amount of 2M used by Franco is traceable to a check issued by Tevesteco
allegedly in consideration of Francos introduction of Eladio Teves, who was looking for a
conduit bank to facilitate Tevestecos business transactions, to Jaime Sebastian, who was
then BPI-FB SFDMs Branch Manager.
- In turn, the funding for the 2M check was part of the 80M debited by BPI-FB from FMICs
time deposit account and credited to Tevestecos current account pursuant to an
Authority to Debit purportedly signed by FMICs officers which turned out to be forgery
- BPI-FB debited the current and savings account of Franco thus the checks under issued by
the latter under his current account were dishonored stamped with account under
garnishment
- Despite demands, BPI-FB refused to unfreeze Franco’s accounts claiming that it has a
better right to the amounts deposited therein.
ISSUE
- Who has a better right to the amount
HELD
- There is no doubt that BPI-FB owns the deposited monies in the accounts of Franco, but
not as a legal consequence of its unauthorized transfer of FMICs deposits to Tevestecos
account. BPI-FB conveniently forgets that the deposit of money in banks is governed by
the Civil Code provisions on simple loan or mutuum. As there is a debtor-creditor
relationship between a bank and its depositor, BPI-FB ultimately acquired ownership of
Francos deposits, but such ownership is coupled with a corresponding obligation to pay
him an equal amount on demand. Although BPI-FB owns the deposits in Francos accounts,
it cannot prevent him from demanding payment of BPI-FBs obligation by drawing checks
against his current account, or asking for the release of the funds in his savings account.
Thus, when Franco issued checks drawn against his current account, he had every right as
creditor to expect that those checks would be honored by BPI-FB as debtor.
- More importantly, BPI-FB does not have a unilateral right to freeze the accounts of Franco
based on its mere suspicion that the funds therein were proceeds of the multi-million
peso scam Franco was allegedly involved in. To grant BPI-FB, or any bank for that matter,
the right to take whatever action it pleases on deposits which it supposes are derived
from shady transactions, would open the floodgates of public distrust in the banking
industry.
Consolidated Bank and Trust Corporation v. Court of Appeals, G. R. No. 138569, September 11,
2003, supra
Ursua v. Court of Appeals, et al. G.R. No. 112170, April 10, 1996
- On 9 May 1989 the Provincial Governor of Cotabato requested the Office of the
Ombudsman in Manila to conduct an investigation on a complaint for bribery, dishonesty,
abuse of authority and giving of unwarranted benefits by petitioner and other officials of
the Department of Environment and Natural Resources.
- Atty. Palmones then asked his client Ursua to take his letter-request to the Office of the
Ombudsman because his law firms messenger, Oscar Perez, had to attend to some
personal matters
- When petitioner arrived at the Office of the Ombudsman in Davao City he was instructed
by the security officer to register in the visitors logbook. Instead of writing down his name
petitioner wrote the name Oscar Perez
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- He handed the letter of Atty. Palmones to the Chief of the Administrative Division, Ms.
Loida Kahulugan, who then gave him a copy of the complaint, receipt of which he
acknowledged by writing the name Oscar Perez
- Before petitioner could leave the premises he was greeted by an acquaintance, Josefa
Amparo, who also worked in the same office.
- Loida reported the matter to the Deputy Ombudsman who recommended that petitioner
be accordingly charged.
ISSUE
- Whether Ursua is liable for the violation of CA 142
HELD
- No. The use of a fictitious name or a different name belonging to another person in a
single instance without any sign or indication that the user intends to be known by this
name in addition to his real name from that day forth does not fall within the prohibition
contained in C.A. No. 142 as amended. The use of the name Oscar Perez was made by
petitioner in an isolated transaction where he was not even legally required to expose his
real identity. For, even if he had identified himself properly at the Office of the
Ombudsman, petitioner would still be able to get a copy of the complaint as a matter of
right.
People v. Estrada, et al., G.R. No. 164368-69, April 2, 2009
2) Minors and Corporations as Depositors

3) Matured Time Deposits
J. Stipulations on Interest
Cases:
Floirendo v. Metropolitan Bank and Trust Co., G.R. No. 148325, September 3, 2007;
- Petitioner obtained a loan of 1M from Metrobank to infuse additional working capital for
his company Reymill Realty Corporation. As security, petitioner executed a REM in favor
of the respondent bank over his 4 parcels of land. The loan was renew for another year
secured by the same REM. Petitioner signed a promissory note, “fixing the rate of interest
at 15.446% per annum for the first 30 days, subject to upward/downward adjustment
every 30 days thereafter and it also provides that therate of interest and/or bank charges
herein stipulated, during the term of the Promissory Note, may be increased/decreased
or otherwise changed from time to time by the bank without advance notice.” Metrobank
started to impose higher interest rates on petitioners loan until the time came that
petitioner could no longer pay the high interest rates charged to him. Petitioner prayed
for reformation.
ISSUE
- Whether the mortgage contract and the promissory note express the true agreement
between the parties
HELD
- No. We hold that the increases of interest rate unilaterally imposed by respondent bank
without petitioners assent are violative of the principle of mutuality of contracts ordained
in Article 1308 of the Civil Code[3] which provides:
o Article 1308. The contract must bind both contracting parties; its validity or
compliance cannot be left to the will of one of them.
- The binding effect of any agreement between the parties to a contract is premised on two
settled principles: (1) that obligations arising from contracts have the force of law
between the contracting parties; and (2) that there must be mutuality between the
parties based on their essential equality to which is repugnant to have one party bound
by the contract leaving the other free therefrom. Any contract which appears to be
16
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heavily weighed in favor of one of the parties so as to lead to an unconscionable result is
void. Any stipulation regarding the validity or compliance of the contract which is left
solely to the will of one of the parties is likewise invalid.
Equitable PCI Bank v. Ng Sheung Ngor, G.R. No. 171545, December 19, 2007
- Respondents filed an action for annulment and/or reformation of documents and
contracts against petitioner claiming that the latter induced them to avail of its peso and
dollar credit facilities by offering low interest rates so they accepted the proposal and
signed the bank’s pre-printed promissory notes but was unaware that the documents
contained identical escalation clause granting equitably authority to increase interest
rates without their consent
- Petitioner asserted that respondents knowingly accepted all the terms and even availed
of and benefited from its credit facilities for five years.
ISSUE
- Whether the promissory notes and the escalation clause contained therein were valid
HELD
- Promissory notes valid. It is erroneous, however, to conclude that contracts of adhesion
are invalid per se. They are, on the contrary, as binding as ordinary contracts. A party is in
reality free to accept or reject it. A contract of adhesion becomes void only when the
dominant party takes advantage of the weakness of the other party, completely depriving
the latter of the opportunity to bargain on equal footing. That was not the case here. As
the trial court noted, if the terms and conditions offered by Equitable had been truly
prejudicial to respondents, they would have walked out and negotiated with another
bank at the first available instance. But they did not. Instead, they continuously availed of
Equitable's credit facilities for five long years. However, the escalation clause was violative
of the principle of mutuality of contracts. Equitable dictated the interest rates if the term
(or period for repayment) of the loan was extended. Respondents had no choice but to
accept them. This was a violation of Article 1308 of the Civil Code. Furthermore, the
assailed escalation clause did not contain the necessary provisions for validity, that is, it
neither provided that the rate of interest would be increased only if allowed by law or the
Monetary Board, nor allowed de-escalation. For these reasons, the escalation clause was
void.
Villa Crista Monte Realty & Development Corp. v. Equitable PCI Bank, et al., G.R. No. 208336,
November 21, 2018
- Villa Crista Monte Realty Corporation, engaged in the business of real estate
development, acquired from Alfonso Lim a parcel of land located at Old Balara, Quezon
City with a land area of 80,000 square meters (8 hectares) and intended to develop in into
a residential subdivision. After putting up a clubhouse, appellant Corporation eventually
purchased the adjoining 13.5-hectare land, consolidating its ownership over the 21.5
hectares of land. Appellant then executed a Real Estate Mortgage over the 80 hectares of
land as security for the credit line of P 80 Million applied and granted by Equitable PCI
Bank.
- In 1995, appellant subdivided the mortgaged parcel of land into 174 lots, each covered by
a separate certificate of title. Appellant applied for an additional P50 Million credit line
from the E-PCIB, mortgaged 41 lots as securities for the credit accommodation and asked
for the release of the remaining 133 titles from the earlier mortgage. E-PCIB granted the
request provided that the mortgage contract would be amended to conform to the
changes in the amount of credit line and mortgaged properties, appellant agreed. The
latter obtained the amount of credit line on various occasions from March 20, 1987 to
August 15, 1997, each amount was covered by a promissory note. E-PCIB wrote to
appellant informing it of the increased interest rates ranging from 21% to 36% anchored
on the uniform provision in the promissory notes.
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- Appellant defaulted on its obligations amounting to P129,700,000.00 prompting E-PCIB
to initiate foreclosure proceedings. Respondent Sheriff scheduled auction of the lots
which led to the filing for the nullification of the promissory notes and the mortgage
agreements with prayer for injunctive relief. The auction sale still proceeded where E-
PCIB emerged as the highest bidder. Appellant then filed a supplemental complaint with
the RTC of Quezon City assailing the said auction sale and the amount claimed therein as
well as praying for the nullification of the titles under the name of E-PCIB.
- Appellant contended that the increases in the interest rates were not discussed by both
parties; that the mortgage and its amendment were contrary to law and public policy;
that E-PCIB prematurely initiated the foreclosure proceedings; and a claim for reparation
of damages and attorney’s fees. E-PCIB countered that appellant has no cause of action
and appellant likewise voluntarily agreed to the monthly re-pricing interest. E-PCIB
maintained that it merely complied with the provisions of the Promissory Notes. On 2009,
RTC rendered judgment in favour of E-PCIB. Petitioner, appellant herein, appealed to the
CA. However, CA affirmed the judgment of the RTC.
ISSUES
- Whether or not the bank’s repricing of the interest rates was valid;
- Whether or not the promissory notes bound appellant; and
- Whether or not the payments made by appellant in excess of the original rate of interest
should be credited to the principal.
HELD
- The SC ruled that the real estate mortgage and promissory notes were valid, as well as
the foreclosure proceedings. The provision found in the promissory notes is commonly
known as the escalation clause, which refers to the stipulation allowing increases in the
interest rates agreed upon by the contracting parties. It is validly stipulated in commercial
contracts. The escalation clause is not void per se, the clause would only be void if it
violates the principle of mutuality of contracts wherein it grants the creditor an unbridled
right to adjust the interest independently and deprive the debtor of the right to assent to
an important modification in the agreement. A de-escalation clause is an indispensable
requisite to the validity of the escalation clause in the contract. No express de-escalation
clause was stipulated in the promissory notes, yet its absence did not invalidate the
repricing of the interest rates. The repricing notices indicated that on some occasions, the
bank had reduced or adjusted the interest rates downward. Despite the absence of the
corresponding de-escalation clause, the actual grant by the respondent of the decreases
in the interest rates rendered inexistent the evil of inequality sought to be thwarted.
- There was mutuality of contracts between petitioner and respondent, the former’s
president signed the promissory notes and was aware of the certain provision on the
interest rates. The respondent nonetheless accorded the petitioner the notice of any
repricing of the interest rates despite being not obliged, this is in order to give the
petitioner the option to reject the repricing or has implemented the downward repricing.
- The contract of adhesion is not invalid per se but is as binding as any contract. The
petitioner drew the amount of credit line on various occasions and thus was afforded the
opportunity to discuss or negotiate the interest rates.
- There was no showing by the petitioner that it had been placed at any disadvantage.
Respondent bank readily acceded to the request of the petitioner for the release of some
lots. Also, the petitioner’s President, trained and experienced in the field of business,
functioned without duress or force in signing the various promissory notes and allied
agreement on petitioner’s behalf.
- Hence, the petitioner for review on certiorari was denied.
K. Grant of Loans and Security Requirements
1) Risk-based Capital
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2) Ratio of Net Worth to Total Risk Assets
3) Single Borrower’s Limit (SBL) (BSP Circular No. 425, March 25, 2004)
4) Restriction on bank exposure to DOSRI (Directors, Officers,
Stockholders and their Related Interests)
5) Foreclosure of Real Estate Mortgage
Case:
GC Dalton Industries, Inc., v. Equitable PCI Bank, G.R. No. 171169, August 24, 2009
- PCI Equitable Bank – creditor granted credit line to Candem Industries, Inc. P30M
o With holdout agreement – PCI may deduct form Candem’s account
o Secured by GC Dalton’s properties in Quezon City and Malolos, Bulacan
- Candem defaulted
- Extrajudicial foreclosuse – PCI Equitable is the highest bidder
o Was then issued a Certificate of Sale
o Consolidation of ownership was then filed to the RD Bulacan pursuant to Sec. 47 of the
GBL
o Writ of possession
- GC Dalton: they were not informed of the extrajudicial foreclosure
ISSUE
- Is the writ of possession proper?
HELD
- Yes, the issuance of the writ of possession in an extrajudicial foreclosure is summary and
ministerial in nature
- Under Sec. 47 of the GBL, if the mortgagor is a juridical person, it can exercise the right to redeem
the foreclosed property until, but not after, the registration of the certificate of foreclosure within
3 months after the foreclosure
- Therefore, in this case, PCI timely filed the consolidation with the RD, thereby terminating the
period of redemption by the petitioner.
680 Home Appliances v. CA, G.R. No. 206599, September 29, 2014
- Creditor – First Sovereign Asset Management, Inc.
- Debtor – 680 Home Appliances
- Secured by REM over its commercial lot and building
- 680 Home Appliances defaulted, so a foreclosure sale was done. FSAMI emerged as the highest
bidder of 680 Home’s mortgaged properties
- 13 Mar 2009 - Certificate of Sale was issued – registered to RD Makati – annotated the title
- Three months after or in June 2009 – they FSAMI consolidated its ownership over the subject
property
- 680 Home commenced an action to annul the mortgage and foreclosure with the RTC Makati
- Ex parte issuance of a writ of possession – RTC Makati
o Home is claiming that this should be cancelled, for Aldanco is currently possessing the
said property
- RTC – ruled in favor of FSAMI
- CA – affirmed the RTC
o The CA ruled that under Section 8 of Act No. 3135, a judgment debtor may file a petition
for cancellation of the writ of possession within 30 days only after the purchaser has
obtained possession of the property.
HELD
- Annulment of sale – another remedy
o Within 30 days after possession
- As the CA correctly pointed out, a debtor may avail of the remedy under Section 8 of Act No. 3135
only after the purchaser has obtained possession of the property. What it missed, however, is
that this rule is applicable only to a unique factual situation — when the writ of possession sought
to be cancelled was issued during the redemption period. In Ong v. Court of Appeals, 333 SCRA
189 (2000), where this rule was laid down, the mortgagors sought the recall of the writ of
possession that was issued during the one-year redemption period. Section 8 of Act No. 3135
finds no application when the redemption period has expired without the debtor exercising his
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right, and the purchaser in the foreclosure sale has already consolidated his ownership over the
property and moved for the issuance of the writ of possession.
- In extrajudicial foreclosures, a writ of possession may be issued either (1) within the redemption
period or (2) after the lapse of the redemption period. The first instance is based on a privilege
provided under Section 7 of Act No. 3135; the second is based on the purchaser’s right of
ownership. The basis of the purchaser’s right to possess the property affects the nature of the
right.
- Act No. 3135 governs only the manner of the sale and redemption of the mortgaged real property
in an extrajudicial foreclosure; proceedings beyond these, i.e., upon the lapse of the redemption
period and the consolidation of the purchaser’s title, are no longer within its scope. This is
apparent from Section 1 of Act No. 3135, which states: Section 1. When a sale is made under a
special power inserted in or attached to any real estate mortgage hereafter made as security for
the payment of money or the fulfillment of any other obligation, the provisions of the following
[sections] shall govern as to the manner in which the sale and redemption shall be effected,
whether or not provision for the same is made in the power. In fact, the nine (9) sections of Act
No. 3135 pertain to proceedings governing extrajudicial foreclosures, from the conduct of the
foreclosure sale up to the exercise of the right of redemption. Our reading of Act No. 3135,
therefore, should be consistent with the law’s limited coverage.
- During the redemption period, the purchaser’s title is merely inchoate or budding.
- The debtor is provided opportunity to contest the transfer of possession during the redemption
period under Section 8 of Act No. 3135, as he remains to be the owner of the foreclosed property.
- A bond is no longer required to be filed in support of a petition for writ of possession filed after
the redemption period has expired without the mortgagor exercising his right of redemption
- Upon the lapse of the redemption period without the debtor exercising his right of redemption
and the purchaser consolidates his title, it becomes unnecessary to require the purchaser to
assume actual possession thereof before the debtor may contest it
6) Truth in Lending Act (Republic Act No. 3765)

a) Purpose
b) Obligation of creditors to person to whom credit is extended
c) Covered and excluded transactions
d) Consequences of non-compliance with obligation
Cases:
Development Bank of the Philippines v. Felipe Arcilla, G.R. No. 161397, 161436, June 30, 2005
- Debtor – Arcilla – employee of DBP
- Individual Housing Project of DBP
- 1k per month for 25 years
- Arcilla left DBP so the loan was converted into a normal housing loan
- Arcilla defaulted in his payments
- DBP advertised the property for bidding
- Complaint was filed by Arcilla to the RTC Antipolo claiming that he wasn’t fully informed as a
debtor based on Truth in Lending Act
HELD
- It is true that the without the required information furnished to the borrower, the creditor cannot
demand payment
- However, in this case, it is a mere afterthought
- He’s a lawyer, he should have known the legal implications
- He was informed of the terms and requisite changes for the loan
United Coconut Planters Bank v. Sps. Beluso, G.R. No. 159912, August 17, 2007
- Loan granted by UCPB to Sps. Beluso around P2.35M
HELD
- Principle of mutuality – obligations arisings from contracts may have the force of law between the
parties – there must be mutuality between the parties based on their essential equality
o In this case, the contract is a veritable trap for the weaker party, Sps. Beluso, whom the
court must protect against abuse and imposition
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- The provision stating that the interest shall be at the rate indicative of DBD retail rate or as
determined by the Branch Head is solely on the will of the lender.
o It gives the lender an unfettered discretion on what the rate may be the branch head may
choose any rate he or she desires
o Under these provisions, UCPB has two choices
§ DBD retail rate
§ Rate determined by the branch head
- Estoppel cannot be applied on an illegal act
- The interest rate provisions in this case was not disclosed in connection with the true finance
charges which is not only against the Civil Code provisions, but also to Truth in Lending Act
L. Other Banking Services, Prohibited Acts and Transactions, Conducting Business in an

Unsafe or Unsound Manner, Penalties for Violations
II. THE NEW CENTRAL BANK ACT (Republic Act No. 7653, as amended by RA 11211)
A. State policies
B. Creation of the Bangko Sentral ng Pilipinas
C. Responsibility and primary objective
D. Monetary board - powers and functions
E. How the BSP handles banks in distress
1) Conservatorship
2) Closure
a. “Close Now, Hear Later”
3) Receivership
4) Liquidation
Cases:
Rural Bank of San Miguel v. Monetary Board, G.R. No. 150886, February 16, 2007
- Petitioner bank was a domestic corporation engaged in banking. Respondent Monetary Board
issued a resolution prohibiting petitioner from doing business in the Philippines and placed it
under receivership with PDIC as its receiver. On the basis of reports prepared by the PDIC stating
that petitioner bank could not resume business, the Monetary Board directed PDIC to proceed
with the liquidation. Petitioner filed a special civil action for certiorari and prohibition with the
CA, contending that there was no complete examination conducted before the bank was closed.
ISSUE
- Whether Section 30 of RA 7653 require a current and complete examination of the bank before
it can be closed and placed under receivership.
HELD
- NO. Banco Filipino and other cases petitioners cite were decided using Section 29 of the old law.
Thus in Banco Filipino, we ruled that an “examination [conducted] by the head of the appropriate
supervising or examining department or his examiners or agents into the condition of the bank”
is necessary before the MB can order its closure. However, RA 265, including Section 29 thereof,
was expressly repealed by RA 7653 which took effect in 1993. Resolution No. 105 was issued on
January 21, 2000. Hence, petitioners’ reliance on Banco Filipino which was decided under RA 265
was misplaced.
- In RA 7653, only a “report of the head of the supervising or examining department” is necessary.
This Court cannot look for or impose another meaning on the term “report” or to construe it as
synonymous with “examination.” From the words used in Section 30, it is clear that RA 7653 no
longer requires that an examination be made before the MB can issue a closure order. We cannot
make it a requirement in the absence of legal basis.
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Banco Filipino Savings and Mortgage Bank v. Ybanez, G.R. No. 148163, December 6, 2004
- Respondents obtained a loan secured by a REM from petitioner bank. However, respondents were
unable to pay claiming that Banco Filipino had ceased operations and/or was not allowed to
continue business, having been placed under liquidation by the Central Bank.
ISSUE
- What is the effect of the temporary closure of the Banco Filipino on the loan?
HELD
- Such does not diminish the authority of the designated liquidator to administer and continue the
bank transactions. The Court allow the banks liquidator to continue receiving collectibles and
receivables or paying off creditors claims and other transactions pertaining to normal operations
of a bank. Among these are suits against debtors and even the collection of interests on loans
while under liquidation.
BSP-MB v. Antonio-Valenzuela, G.R. No. 184778, October 2, 2009

- Supervision and Examination Department of the BSP examined the books of the respondent
banks. Thereafter, SED provided them with the copies of Lists of Findings/Exceptions containing
the deficiencies discovered during the examinations. These banks were required to undertake
remedial measures which included the infusion of additional capital but still they were found to
have failed to carry out the required remedial measure. They requested that the basis of the
capital infusion figures be disclosed and noted that they have not received the ROE which finalizes
the audit findings. Hence the banks were prohibited from transacting business and placed under
receivership of the PDIC. Later on, respondents filed a TRO and writ of preliminary injunction
before the RTC which was granted.
ISSUE
- Whether the writ of injunction was proper
HELD
- No. The issuance of the writs of preliminary injunction is an unwarranted interference with the
powers of the MB. It hinders the MB from fulfilling its function under the law. The writ of
preliminary injunction cannot prevent the MB from taking action, by preventing the submission
of the ROE. (Apply close now-hear later scheme)
F. Legal Tender
1) Legal Tender Power
a. BSP Circular No. 537, Series of 2006
2) Rate of Exchange
G. How the BSP handles exchange crisis
1) Domestic monetary instability

2) Abnormal movements in the monetary aggregates, credit or price level
3) Foreign Exchange
4) Liquidity problems of banks
I. Bank Reserves
III. SECRECY OF BANK DEPOSITS
A. R.A. No. 1405, as amended (The Law on Secrecy of Bank Deposits)
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1. Purpose
2. Prohibited Acts
3. Deposits Covered
4. Exceptions
5. Garnishment of deposits, including foreign deposits
6. Penalties for violation
Cases:
China Banking Corporation v. Ortega, G.R. No. L-34964, January 31, 1973
- Acaban filed a complaint against Bautista Logging Co., Inc., B&B Forest Development Corp. and
Bautista for collection of sum of money
- The court ruled in favor of Acaban, and to satisfy judgment, the plaintiff, Acaban sought the
garnishment of the bank deposit of the defendant B&B Forest Development Corp. with the China
Banking Corp.
- A notice of garnishment was issued by the sheriff to the bank’s cashier – Tan Kim Liong – who
refused due to bank secrecy law
- The plaintiff filed a motion to cite Liong for contempt of court
ISSUE
- Whether a bank may validly refuse to comply with a court process garnishing the bank deposit of
a judgment debtor by invoking the provisions of bank secrecy laws?
HELD
- No. The lower court did not order an examination of or inquiry into the deposit of B&B Forest
Development Corporation, as contemplated in the law. It merely required Tan Kim Liong to inform
the court whether or not the defendant B&B Forest Development Corporation had a deposit in
the China Banking Corporation only for purposes of the garnishment issued by it, so that the bank
would hold the same intact and not allow any withdrawal until further order
- The discussion of the conference committee report of the two houses of Congress that the
prohibition against examination of or inquiry into a bank deposit under Republic Act 1405 does
not preclude its being garnished to insure satisfaction of a judgment. Indeed there is no real
inquiry in such a case, and if the existence of the deposit is disclosed the disclosure is purely
incidental to the execution process. It is hard to conceive that it was ever within the intention of
Congress to enable debtors to evade payment of their just debts, even if ordered by the Court,
through the expedient of converting their assets into cash and depositing the same in a bank.
PNB v. Gancayco, G.R. No. L-18343, September 30, 1965

- Emilio A. Gancayco and Florentino Flor, as special prosecutors of the Department of Justice,
required the plaintiff Philippine National Bank to produce at a hearing to be held at 10 am. on
February 20, 1961 the records of the bank deposits of Ernesto T. Jimenez, former administrator
of the Agricultural Credit and Cooperative Administration, who was then under investigation for
unexplained wealth.
- PNB declined; hence this petition.
ISSUE
- Whether a bank can be compelled to disclose the records of accounts of a depositor who is under
investigation for unexplained wealth
HELD
- The Anti-Graft Law is not repugnant to Bank Secrecy Law.
- The Anti-Graft Law directs in mandatory terms that bank deposits "shall be taken into
consideration in the enforcement of this section, notwithstanding any provision of law to the
contrary."
- Congress clearly intended to provide an additional ground for the examination of bank deposits.
- Cases of unexplained wealth are similar to cases of bribery or dereliction of duty and no reason is
seen why these two classes of cases cannot be excepted from the rule making bank deposits
confidential. The policy as to one cannot be different from the policy as to the other. This policy
expresses the notion that a public office is a public trust and any person who enters upon its
discharge does so with the full knowledge that his life, so far as relevant to his duty, is open to
public scrutiny.
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JV Ejercito v. Sandiganbayan, G.R. Nos. 157294-95, November 30, 2006

- In lieu of the Criminal Case “People v. Estrada” for plunder, the Special Prosecution Panel filed
before the Sandiganbayan a request for issuance of Subpoena Duces Tecum directing the
President of Export and Industry Bank or his/her authorized representative to produce documents
namely, Trust Account and Savings Account belonging to petitioner and statement of accounts of
one named “Jose Velarde” and to testify thereon during the hearings. Sandiganbayan granted
both requests and subpoenas were accordingly issued. Sandiganbayan also granted and issued
subpoenas prayed for by the Prosecution Panel in another later date. Petitioner now assisted by
his counsel filed two separate motions to quash the two subpoenas issued. Sandiganbayan denied
both motions and the consequent motions for reconsideration of petitioner.
ISSUES
- Whether or not the trust accounts of petitioner are covered by the term “deposits” as used in R.A.
No. 1405
- Whether or not plunder is neither bribery nor dereliction of duty not exempted from protection
of R.A. No. 1405
- Whether or not the unlawful examination of bank accounts shall render the evidence obtained
therefrom inadmissible in evidence.
HELD
- YES. An examination of the law shows that the term “deposits” used therein is to be understood
broadly and not limited only to accounts which give rise to a creditor-debtor relationship between
the depositor and the bank.
o The policy behind the law is laid down in Section 1. If the money deposited under an
account may be used by banks for authorized loans to third persons, then such account,
regardless of whether it creates a creditor-debtor relationship between the depositor and
the bank, falls under the category of accounts which the law precisely seeks to protect for
the purpose of boosting the economic development of the country.
o Trust Account No. 858 is, without doubt, one such account. The Trust Agreement between
petitioner and Urban Bank provides that the trust account covers “deposit, placement or
investment of funds” by Urban Bank for and in behalf of petitioner. The money deposited
under Trust Account No. 858, was, therefore, intended not merely to remain with the
bank but to be invested by it elsewhere. To hold that this type of account is not protected
by R.A. 1405 would encourage private hoarding of funds that could otherwise be invested
by banks in other ventures, contrary to the policy behind the law.
o Section 2 of the same law in fact even more clearly shows that the term “deposits” was
intended to be understood broadly. The phrase “of whatever nature” proscribes any
restrictive interpretation of “deposits.” Moreover, it is clear from the immediately quoted
provision that, generally, the law applies not only to money which is deposited but also
to those which are invested. This further shows that the law was not intended to apply
only to “deposits” in the strict sense of the word. Otherwise, there would have been no
need to add the phrase “or invested.”
o Clearly, therefore, R.A. 1405 is broad enough to cover Trust Account No. 858.
- NO. Cases of unexplained wealth are similar to cases of bribery or dereliction of duty and no
reason is seen why these two classes of cases cannot be excepted from the rule making bank
deposits confidential. The policy as to one cannot be different from the policy as to the other. This
policy expresses the notion that a public office is a public trust and any person who enters upon
its discharge does so with the full knowledge that his life, so far as relevant to his duty, is open to
public scrutiny.
o The crime of bribery and the overt acts constitutive of plunder are crimes committed by
public officers, and in either case the noble idea that “a public office is a public trust and
any person who enters upon its discharge does so with the full knowledge that his life, so
far as relevant to his duty, is open to public scrutiny” applies with equal force.
o Plunder being thus analogous to bribery, the exception to R.A. 1405 applicable in cases of
bribery must also apply to cases of plunder.
- NO. Petitioner’s attempt to make the exclusionary rule applicable to the instant case fails. R.A.
1405, it bears noting, nowhere provides that an unlawful examination of bank accounts shall
render the evidence obtained therefrom inadmissible in evidence. Section 5 of R.A. 1405 only
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states that “[a]ny violation of this law will subject the offender upon conviction, to an
imprisonment of not more than five years or a fine of not more than twenty thousand pesos or
both, in the discretion of the court.”
o Even assuming arguendo, however, that the exclusionary rule applies in principle to cases
involving R.A. 1405, the Court finds no reason to apply the same in this particular case.
Clearly, the “fruit of the poisonous tree” doctrine presupposes a violation of law. If there
was no violation of R.A. 1405 in the instant case, then there would be no “poisonous tree”
to begin with, and, thus, no reason to apply the doctrine.
Marquez v. Desierto, G.R. No. 135882, June 27, 2001

- Sometime in May, 1998, petitione Lourdes T. Marquez as Branch Manager of Union Bank of the
Philippines, Julia Vargas Branch, received an Order from Ombudsman Aniano A. Desierto dated
April 29, 1998, to produce several bank documents for purposes of inspection in camera.
- The accounts to be inspected are involved in a case pending with the Ombudsman entitled, "Fact-
Finding and Intelligence Bureau (FFIB) vs. Amado Lagdameo, et al." for violation of R.A. No. 3019,
Sec. 3 (e) and (g).
- In relation thereto, petitioner, together with Union Bank of the Philippines, filed a petition for
declaratory relief, prohibition and injunction with the Regional Trial Court, Makati City, against
the Ombudsman wherein petitioner sought a declaration of her rights from the court due to the
clear conflict between R.A. No. 6770 (The Ombudsman Act of 1989), Section 15 and R.A. No. 1405
(Secrecy of Bank Deposits Law), Sections 2 and 3.
- On August 21, 1998, petitioner received a copy of the motion to cite her for contempt. Petitioner
then filed with the Ombudsman an opposition, on the ground that the filing thereof was
premature due to the petition pending in the lower court. But then, the Ombudsman panel
ordered her and her counsel to appear for a continuation of the hearing of the contempt charges
against her. Her motion for reconsideration was likewise denied by the Ombudsman in the order
dated October 14, 1998. Hence, this petition.
HELD
- The Court ruled that before an in camera inspection may be allowed, there must be a pending
case before a court of competent jurisdiction.
- Further, the account must be clearly identified, the inspection limited to the subject matter of the
pending case before the court of competent jurisdiction.
- The bank personnel and the account holder must be notified to be present during the inspection,
and such inspection may cover only the account identified in the pending case.
- In the case at bar, there is yet no pending litigation before any court of competent authority. What
is existing is an investigation by the Office of the Ombudsman.
- In short, what the Office of the Ombudsman would wish to do is to fish for additional evidence to
formally charge Amado Lagdameo, et. al., with the Sandiganbayan.
- Clearly, there was no pending case in court which would warrant the opening of the bank account
for inspection.
BSB Group v. Sally Go, G.R. No. 168644, February 16, 2010
- BSB Group, Inc. – presided by Ricardo Bangayan – employed as cashier, Sally Go-Bangayan – the
wife of Ricardo
- Allegedly, Sally deposited in her personal account in Security Bank the checks paid by the
company’s customers, which is worth around P1.5M
- However, in the complaint affidavit filed to the prosecutor as well as in the information, it merely
mentioned that the cashier took away money from the company with intent to gain
o It did not mention about the two checks allegedly deposited and cashed to the bank
- In convicting her for qualified theft, the RTC considered as admissible the testimony of the bank
officer who testified that during those period, there were two checks cashed and deposited to the
personal account of Sally.
- Sally raised the defense of non-admissibility of the testimony of the bank since it’s violative of the
Bank Secrecy Law, which prohibits the inquiry of bank deposits being highly confidential
- CA reversed and ruled that these are inadmissible
- Petitioner argued that the cash involved is the subject matter of litigation hence inquiry and
testimony of the bank are admissible.
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ISSUE
- Whether the bank deposits in the record of the bank as well as the testimony are admissible
HELD
- No. What constitutes the subject matter in litigation in relation to Bank Secrecy Laws, as
previously held in the case of Union Bank v. CA, must premised on the fact that the money
deposited in the account is itself the subject of the action
- Given this, the court deduce that the subject matter of the action in the case is to be determined
from the indictment that charges the respondent with the offense, and not from the evidence
sought by the prosecution to be admitted into the records
- In the criminal information filed with trial court, respondent, unqualifiedly and in plain language,
is charged with qualified theft by abusing petitioners trust and confidence and stealing cash in the
amount of P1.5M.
- The said information makes no factual allegation that in some material way involves the checks
subject of the testimonial and documentary evidence sought to be suppressed
- Neither do the allegations in said information mention of the supposed bank account in which the
funds represented by the checks have allegedly been kept
B. R.A. No. 6426 (The Foreign Currency Deposit Act)
Cases:
GSIS v. Industrial Bank of Korea, G.R. No. 189206, June 8, 2011

- Loan agreement between the respondents banks to loan US $11M to Domsat for the purpose of
lease of Russian Intersputnik
- GSIS secured the payment of the banks for Domsat based on a surety bond
- The Domsat failed to pay, so the banks went to GSIS for payment.
- When Domsat failed to pay the loan, GSIS refused to comply with its obligation reasoning that
Domsat, with Westmont Bank as the conduit, transferred the U.S. $11 Million loan proceeds from
the Industrial Bank of Korea to Citibank New York account of Westmont Bank and from there to
the Binondo Branch of Westmont Bank.
- In the course of the hearing, GSIS requested for the issuance of a subpoena duces tecum to the
custodian of records of Westmont Bank. A motion to quash was filed by the said banks on the
ground that request for the documents will violate the Law on Secrecy of Bank Deposits. RTC
denied the motion to quash. However, Court of Appeals declared that Domsat’s deposit in
Westmont Bank is covered by Republic Act No. 6426 or the Bank Secrecy Law. GSIS insists that
Domsat’s deposit with Westmont Bank can be examined based on Republic Act No. 1405 or the
"Law on Secrecy of Bank Deposits," which allows the disclosure of bank deposits in cases where
the money deposited is the subject matter of the litigation.
ISSUE
- Whether the US$11,000,000.00 deposit in the account of respondent Domsat in Westmont Bank
is covered by the secrecy of bank deposit.
HELD
- Yes. Presidential Decree No. 1246, provides, Section 8. Secrecy of Foreign Currency Deposits.
States that All foreign currency deposits authorized under this Act, as amended by Presidential
Decree No. 1035, as well as foreign currency deposits authorized under Presidential Decree No.
1034, 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.
- Applying the said provision, absent the written permission from Domsat, Westmont Bank cannot
be legally compelled to disclose the bank deposits of Domsat, otherwise, it might expose itself to
criminal liability under the same act.
Salvacion v. Central Bank of the Phils, G.R. No. 94723, August 21, 1997
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- Greg Bartelli, an American tourist, was arrested for committing four counts of rape and serious
illegal detention against Karen Salvacion. Police recovered from him several dollar checks and a
dollar account in the China Banking Corp. Trial court awarded Salvacion moral, exemplary and
attorney’s fees amounting to almost P1,000,000.00. Salvacion tried to execute the judgment on
the dollar deposit of Bartelli with the China Banking Corp., but the latter refused arguing that
Section 11 of Central Bank Circular No. 960 exempts foreign currency deposits from attachment,
garnishment, or any other order or process of any court, legislative body, government agency or
any administrative body whatsoever.
ISSUE
- Whether Section 113 of Central Bank Circular No. 960 and Section 8 of Republic Act No. 6426, as
amended by PD 1246, otherwise known as the Foreign Currency Deposit Act be made applicable
to a foreign transient?
HELD
- NO. The SC adopted the comment of the Solicitor General who argued that the Offshore Banking
System and the Foreign Currency Deposit System were designed to draw deposits from foreign
lenders and investors and, subsequently, to give the latter protection.
- However, the foreign currency deposit made by a transient or a tourist is not the kind of deposit
encouraged by PD Nos. 1034 and 1035 and given incentives and protection by said laws because
such depositor stays only for a few days in the country and, therefore, will maintain his deposit in
the bank only for a short time. Considering that Bartelli is just a tourist or a transient, he is not
entitled to the protection of Section 113 of Central Bank Circular No. 960 and PD No. 1246 against
attachment, garnishment or other court processes.
PSBank v. Senate, G.R. No. 200238, February 9, 2012 (including the concurring opinion of Justice
Brion and the dissenting opinions of Justices Carpio and Sereno)
- Philippine Savings Bank (PS Bank) and its President, Pascual M. Garcia III, filed before the
Supreme Court an original civil action for certiorari and prohibition with application for
temporary restraining order and/or writ of preliminary injunction. The TRO was sought to
stop the Senate, sitting as impeachment court, from further implementing the Subpoena
Ad Testificandum et Duces Tecum, dated February 6, 2012, that it issued against the
Branch Manager of PS Bank, Katipunan Branch. The subpoena assailed by petitioners
covers the foreign currency denominated accounts allegedly owned by the impeached
Chief Justice Renato Corona of the Philippine Supreme Court.
ISSUE
- Should a TRO be issued against the impeachment court to enjoin it from further
implementing the subpoena with respect to the alleged foreign currency denominated
accounts of CJ Corona?
HELD
- Yes, a TRO should be issued against the impeachment court to enjoin it from further
implementing the subpoena with respect to the alleged foreign currency denominated
accounts of CJ Corona.
- There are two requisite conditions for the issuance of a preliminary injunction:
o the right to be protected exists prima facie, and
o the acts sought to be enjoined are violative of that right. It must be proven that
the violation sought to be prevented would cause an irreparable injustice.
- A clear right to maintain the confidentiality of the foreign currency deposits of the Chief
Justice is provided under Section 8 of Republic Act No. 6426, otherwise known as the
Foreign Currency Deposit Act of the Philippines (RA 6426). This law establishes the
absolute confidentiality of foreign currency deposits:
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- Under R.A. No. 6426 there is only a single exception to the secrecy of foreign currency
deposits, that is, disclosure is allowed only upon the written permission of the depositor.
In Intengan v. Court of Appeals, the Court ruled that where the accounts in question are
U.S. dollar deposits, the applicable law is not Republic Act No. 1405 but RA 6426.
Similarly, in the recent case of Government Service Insurance System v. 15th Division of
the Court of Appeals, the Court also held that RA 6426 is the applicable law for foreign
currency deposits and not Republic Act No. 1405.
- The written consent under RA 6426 constitutes a waiver of the depositor’s right to privacy
in relation to such deposit. In the present case, neither the prosecution nor the
Impeachment Court has presented any such written waiver by the alleged depositor,
Chief Justice Renato C. Corona. Also, while impeachment may be an exception to the
secrecy of bank deposits under RA 1405, it is not an exemption to the absolute
confidentiality of foreign currency deposits under RA 6426.
PSBank v. Senate, G.R. No. 200238, November 20, 2012
C. R.A. No. 9160 (The Anti-Money Laundering Act), as amended by R.A. Nos.
10167, 10365 and 10927
1. Basic Policy
2. Definitions
3. Offenses
4. Anti-Money Laundering Council
5. Prevention
6. Powers of the AMLC
7. Foreign State Assistance
8. Penal provisions
Cases:
People v. Estrada, G.R. No. 164368-69, April 2, 2009

- On April 4, 2001, an Information for plunder (docketed as Crim. Case No. 26558) was filed
with the Sandiganbayan against respondent Estrada, among other accused. A separate
Information for illegal use of alias, docketed as Crim. Case No. 26565, was likewise filed
against Estrada. The amended information alleged that on 4 Feb. 2000, President Joseph
Estrada represented himself as Jose Velarde in several transactions in order to conceal his
ill-gotten weath. Another case of perjury was Estrada was filed.
ISSUE
- Whether Estrada is guilty under RA 9160
HELD
- The enactment of R.A. No. 9160 clearly manifests that prior to its enactment, numbered
accounts or anonymous accounts were permitted banking transactions, whether they be
allowed by law or by a mere banking regulation. To be sure, an indictment against Estrada
using this relatively recent law cannot be maintained without violating the constitutional
prohibition on the enactment and use of ex post facto laws.
Subido Pagente Mendoza and Binay Law Offices v. Court of Appeals, et al., G.R. No. 216914,
December 6, 2016
- Challenged in this petition for certiorari and prohibition under Rule 65 of the Rules of
Court is the constitutionality of Section 11 of R.A No. 9160, the Anti-Money Laundering
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Act, as amended, specifically the Anti-Money Laundering Council's authority to file with
the Court of Appeals (CA) in this case, an ex-parte application for inquiry into certain bank
deposits and investments, including related accounts based on probable cause.
- In 2015, a year before the 2016 presidential elections, reports abounded on the supposed
disproportionate wealth of then Vice President Jejomar Binay and the rest of his family,
some of whom were likewise elected public officers. The Office of the Ombudsman and
the Senate conducted investigations and inquiries thereon.
- From various news reports announcing the inquiry into then Vice President Binay's bank
accounts, including accounts of members of his family, petitioner Subido Pagente Certeza
Mendoza & Binay Law Firm (SPCMB) was most concerned with the article published in
the Manila Times on 25 February 2015 entitled "Inspect Binay Bank Accounts" which read,
in pertinent part:
o The Anti-Money Laundering Council (AMLC) asked the Court of Appeals (CA) to
allow the Council to peek into the bank accounts of the Binays, their corporations,
and a law office where a family member was once a partner.
o Also the bank accounts of the law office linked to the family, the Subido Pagente
Certeza Mendoza & Binay Law Firm, where the Vice President's daughter Abigail
was a former partner.
- By 8 March 2015, the Manila Times published another article entitled, "CA orders probe
of Binay 's assets" reporting that the appellate court had issued a Resolution granting the
ex-parte application of the AMLC to examine the bank accounts of SPCMB. Forestalled in
the CA thus alleging that it had no ordinary, plain, speedy, and adequate remedy to
protect its rights and interests in the purported ongoing unconstitutional examination of
its bank accounts by public respondent Anti-Money Laundering Council (AMLC), SPCMB
undertook direct resort to this Court via this petition for certiorari and prohibition on the
following grounds that the he Anti-Money Laundering Act is unconstitutional insofar as it
allows the examination of a bank account without any notice to the affected party: (1) It
violates the person's right to due process; and (2) It violates the person's right to privacy.
ISSUES
- Whether Section 11 of R.A No. 9160 violates substantial due process.
- Whether Section 11 of R.A No. 9160 violates procedural due process.
- Whether Section 11 of R.A No. 9160 is violative of the constitutional right to privacy
enshrined in Section 2, Article III of the Constitution.
HELD
- No. We do not subscribe to SPCMB' s position. Succinctly, Section 11 of the AMLA
providing for ex-parte application and inquiry by the AMLC into certain bank deposits and
investments does not violate substantive due process, there being no physical seizure of
property involved at that stage.
o In fact, .Eugenio delineates a bank inquiry order under Section 11 from a freeze
order under Section 10 on both remedies' effect on the direct objects, i.e. the bank
deposits and investments:
o On the other hand, a bank inquiry order under Section 11 does not necessitate
any form of physical seizure of property of the account holder. What the bank
inquiry order authorizes is the examination of the particular deposits or
investments in banking institutions or non-bank financial institutions. The
monetary instruments or property deposited with such banks or financial
institutions are not seized in a physical sense, but are examined on particular
details such as the account holder's record of deposits and transactions. Unlike
the assets subject of the freeze order, the records to be inspected under a bank
inquiry order cannot be physically seized or hidden by the account holder. Said
records are in the possession of the bank and therefore cannot be destroyed at
the instance of the account holder alone as that would require the extraordinary
cooperation and devotion of the bank.At the stage in which the petition was filed
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before us, the inquiry into certain bank deposits and investments by the AMLC still
does not contemplate any form of physical seizure of the targeted corporeal
property.
- No. The AMLC functions solely as an investigative body in the instances mentioned in Rule
5.b.26 Thereafter, the next step is for the AMLC to file a Complaint with either the DOJ or
the Ombudsman pursuant to Rule 6b. Even in the case of Estrada v. Office of the
Ombudsman, where the conflict arose at the preliminary investigation stage by the
Ombudsman, we ruled that the Ombudsman's denial of Senator Estrada's Request to be
furnished copies of the counter-affidavits of his co-respondents did not violate Estrada's
constitutional right to due process where the sole issue is the existence of probable cause
for the purpose of determining whether an information should be filed and does not
prevent Estrada from requesting a copy of the counter-affidavits of his co-respondents
during the pre-trial or even during trial.
o Plainly, the AMLC's investigation of money laundering offenses and its
determination of possible money laundering offenses, specifically its inquiry into
certain bank accounts allowed by court order, does not transform it into an
investigative body exercising quasi-judicial powers. Hence, Section 11 of the
AMLA, authorizing a bank inquiry court order, cannot be said to violate SPCMB's
constitutional right to due process.
- No. We now come to a determination of whether Section 11 is violative of the
constitutional right to privacy enshrined in Section 2, Article III of the Constitution. SPCMB
is adamant that the CA's denial of its request to be furnished copies of AMLC's ex-parte
application for a bank inquiry order and all subsequent pleadings, documents and orders
filed and issued in relation thereto, constitutes grave abuse of discretion where the
purported blanket authority under Section 11: ( 1) partakes of a general warrant intended
to aid a mere fishing expedition; (2) violates the attorney-client privilege; (3) is not
preceded by predicate crime charging SPCMB of a money laundering offense; and ( 4) is
a form of political harassment [of SPCMB' s] clientele.
o We thus subjected Section 11 of the AMLA to heightened scrutiny and found
nothing arbitrary in the allowance and authorization to AMLC to undertake an
inquiry into certain bank accounts or deposits. Instead, we found that it provides
safeguards before a bank inquiry order is issued, ensuring adherence to the
general state policy of preserving the absolutely confidential nature of Philippine
bank accounts:
o The AMLC is required to establish probable cause as basis for its ex-parte
application for bank inquiry order;
o The CA, independent of the AMLC's demonstration of probable cause, itself makes
a finding of probable cause that the deposits or investments are related to an
unlawful activity under Section 3(i) or a money laundering offense under Section
4 of the AMLA;
o A bank inquiry court order ex-parte for related accounts is preceded by a bank
inquiry court order ex-parte for the principal account which court order ex-parte
for related accounts is separately based on probable cause that such related
account is materially linked to the principal account inquired into; and
o The authority to inquire into or examine the main or principal account and the
related accounts shall comply with the requirements of Article III, Sections 2 and
3 of the Constitution. The foregoing demonstrates that the inquiry and
examination into the bank account are not undertaken whimsically and solely
based on the investigative discretion of the AMLC. In particular, the requirement
of demonstration by the AMLC, and determination by the CA, of probable cause
emphasizes the limits of such governmental action. We will revert to these
safeguards under Section 11 as we specifically discuss the CA' s denial of SPCMB'
30
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s letter request for information concerning the purported issuance of a bank
inquiry order involving its accounts.
- All told, we affirm the constitutionality of Section 11 of the AMLA allowing the ex-parte
application by the AMLC for authority to inquire into, and examine, certain bank deposits
and investments. WHEREFORE, the petition is DENIED. Section 11 of Republic Act No.
9160, as amended, is declared VALID and CONSTITUTIONAL.
D. R.A. No. 3591 (Philippine Deposit Insurance Corporation Act), as amended by

R.A. Nos. 9576 and 10846
1. Basic Policy
2. Concept of insured deposits
3. Liability to depositors
a) Deposit liabilities required to be insured with PDIC

b) Commencement of liability
c) Deposit accounts not entitled to payment
d) Extent of liability
e) Determination of insured deposits
f) Calculation of liability
Cases:
PDIC v. Citibank, G.R. No. 170290, April 11, 2012

- Petitioner Philippine Deposit Insurance Corporation (PDIC) is a government
instrumentality created by virtue of Republic Act (R.A.) No. 3591, as amended by R.A. No.
9302.
- Respondent Citibank, N.A. (Citibank) is a banking corporation while respondent Bank of
America, S.T. & N.A. (BA) is a national banking association, both of which are duly
organized and existing under the laws of the United States of America and duly licensed
to do business in the Philippines, with offices in Makati City.
- In 1977, PDIC conducted an examination of the books of account of Citibank. It discovered
that Citibank, in the course of its banking business, from September 30, 1974 to June 30,
1977, received from its head office and other foreign branches a total of
P11,923,163,908.00 in dollars, covered by Certificates of Dollar Time Deposit that were
interest-bearing with corresponding maturity dates. These funds, which were lodged in
the books of Citibank under the account “Their Account-Head Office/Branches-Foreign
Currency,” were not reported to PDIC as deposit liabilities that were subject to
assessment for insurance. As such, in a letter dated March 16, 1978, PDIC assessed
Citibank for deficiency in the sum of P1,595,081.96.
- Similarly, sometime in 1979, PDIC examined the books of accounts of BA which revealed
that from September 30, 1976 to June 30, 1978, BA received from its head office and its
other foreign branches a total of P629,311,869.10 in dollars, covered by Certificates of
Dollar Time Deposit that were interest-bearing with corresponding maturity dates and
lodged in their books under the account “Due to Head Office/Branches.” Because BA also
excluded these from its deposit liabilities, PDIC wrote to BA on October 9, 1979, seeking
the remittance of P109,264.83 representing deficiency premium assessments for dollar
deposits.
- Believing that litigation would inevitably arise from this dispute, Citibank and BA each
filed a petition for declaratory relief before the Court of First Instance (now the Regional
Trial Court) of Rizal on July 19, 1979 and December 11, 1979, respectively. In their
petitions, Citibank and BA sought a declaratory judgment stating that the money
placements they received from their head office and other foreign branches were not
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deposits and did not give rise to insurable deposit liabilities under Sections 3 and 4 of R.A.
No. 3591 (the PDIC Charter) and, as a consequence, the deficiency assessments made by
PDIC were improper and erroneous. The cases were then consolidated.
- On June 29, 1998, the Regional Trial Court, Branch 163, Pasig City (RTC) promulgated its
Decision in favor of Citibank and BA. Aggrieved, PDIC appealed to the CA which affirmed
the ruling of the RTC in its October 27, 2005 Decision. Hence, this petition.
ISSUE
- Whether or not a branch of a bank has a separate legal Personality.
HELD
- No. A branch has no separate legal personality. This Court is of the opinion that the key
to the resolution of this controversy is the relationship of the Philippine branches of
Citibank and BA to their respective head offices and their other foreign branches.
- The Court begins by examining the manner by which a foreign corporation can
establish its presence in the Philippines. It may choose to incorporate its own
subsidiary as a domestic corporation, in which case such subsidiary would have its
own separate and independent legal personality to conduct business in the
country. In the alternative, it may create a branch in the Philippines, which would
not be a legally independent unit, and simply obtain a license to do business in the
Philippines.
- In the case of Citibank and BA, it is apparent that they both did not incorporate a separate
domestic corporation to represent its business interests in the Philippines. Their
Philippine branches are, as the name implies, merely branches, without a separate legal
personality from their parent company, Citibank and BA. Thus, being one and the same
entity, the funds placed by the respondents in their respective branches in the Philippines
should not be treated as deposits made by third parties subject to deposit insurance
under the PDIC Charter. The purpose of the PDIC is to protect the depositing public in the
event of a bank closure. It has already been sufficiently established by US jurisprudence
and Philippine statutes that the head office shall answer for the liabilities of its branch.
Now, suppose the Philippine branch of Citibank suddenly closes for some reason. Citibank
N.A. would then be required to answer for the deposit liabilities of Citibank Philippines.
If the Court were to adopt the posture of PDIC that the head office and the branch are
two separate entities and that the funds placed by the head office and its foreign branches
with the Philippine branch are considered deposits within the meaning of the PDIC
Charter, it would result to the incongruous situation where Citibank, as the head office,
would be placed in the ridiculous position of having to reimburse itself, as depositor, for
the losses it may incur occasioned by the closure of Citibank Philippines. Surely our law
makers could not have envisioned such a preposterous circumstance when they created
PDIC.
- Finally, the Court agrees with the CA ruling that there is nothing in the definition of a
“bank” and a “banking institution” in Section 3(b) of the PDIC Charter[27] which explicitly
states that the head office of a foreign bank and its other branches are separate and
distinct from their Philippine branches.
- There is no need to complicate the matter when it can be solved by simple logic bolstered
by law and jurisprudence. Based on the foregoing, it is clear that the head office of a bank
and its branches are considered as one under the eyes of the law. While branches are
treated as separate business units for commercial and financial reporting purposes, in the
end, the head office remains responsible and answerable for the liabilities of its branches
which are under its supervision and control. As such, it is unreasonable for PDIC to require
the respondents, Citibank and BA, to insure the money placements made by their home
office and other branches. Deposit insurance is superfluous and entirely unnecessary
when, as in this case, the institution holding the funds and the one which made the
placements are one and the same legal entity.
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PDIC v. Abad, G.R. No. 126911, April 30, 2003

- Prior to May 22, 1997, respondents had 71 certificates of time deposits denominated as
"Golden Time Deposits" (GTD) with an aggregate face value of P1,115,889.96. May 22,
1987, a Friday, the Monetary Board (MB) of the Central Bank of the Philippines, now
Bangko Sentral ng Pilipinas, issued Resolution 5052 prohibiting Manila Banking
Corporation to do business in the Philippines, and placing its assets and affairs under
receivership. The Resolution, however, was not served on MBC until Tuesday the
following week, or on May 26, 1987, when the designated Receiver took over. On May
25, 1987 - the next banking day following the issuance of the MB Resolution, respondent
Jose Abad was at the MBC at 9:00 a.m. for the purpose of pre-terminating the71
aforementioned GTDs and re-depositing the fund represented thereby into 28 new GTDs
in denominations of P40,000.00 or less under the names of herein respondents
individually or jointly with each others Of the 28 new GTDs, Jose Abad pre-terminated 8
and withdrew the value thereof in the total amount of P320,000.00. Respondents
thereafter filed their claims with the PDIC for the payment of the remaining 20 insured
GTDs. February 11, 1988, PDIC paid respondents the value of 3 claims in the total amount
of P120,000.00. PDIC, however, withheld payment of the 17 remaining claims after
Washington Solidum, Deputy Receiver of MBC-Iloilo, submitted a report to the PDIC that
there was massive conversion and substitution of trust and deposit accounts on May 25,
1987 at MBC-Iloilo. Because of the report, PDIC entertained serious reservation in
recognizing respondents' GTDs as deposit liabilities of MBC-Iloilo. Thus, PDIC filed a
petition for declaratory relief against respondents with the RTC of Iloilo City, for a judicial
declaration determination of the insurability of respondents' GTD sat MBC-Iloilo. In their
Answer respondents set up a counterclaim against PDIC whereby they asked for payment
of their insured deposits. The Trial Court ordered petitioners to pay the balance of the
deposit insurance to respondents. The Court of Appeals affirmed the decision of the lower
court. Petitioner posits that the trial court erred in ordering it to pay the balance of the
deposit insurance to respondents, maintaining that the instant petition stemmed from a
petition for declaratory relief which does not essentially entail an executory process, and
the only relief that should have been granted by the trial court is a declaration of the
parties' rights and duties. As such, petitioner continues, no order of payment may arise
from the case as this is beyond the office of declaratory relief proceedings.
ISSUE
- Whether or not the trial court order the payment of the balance even if the petition
stemmed from a petition for declaratory relief which does not essentially entail an
executor process.
HELD
- Yes. Without doubt, a petition for declaratory relief does not essentially entail an
executory process. There is nothing in its nature, however, that prohibits a counter claim
from being set-up in the same action. There is nothing in the nature of a special civil action
for declaratory relief that prescribes the filing of a counterclaim based on the same
transaction, deed or contract subject of the complaint. A special civil action is after all not
essentially different from an ordinary civil action, which is generally governed by Rules 1
to 56 of the Rules of Court, except that the former deals with a special subject matter
which makes necessary some special regulation. But the identity between their
fundamental nature is such that the same rules governing ordinary civil suits may and do
apply to special civil actions if not inconsistent with or if they may serve to supplement
the provisions of the peculiar rules governing special laws.
PDIC v. Aquero, G.R. No, 118917, December 22, 1997

- On September 22, 1983, plaintiffs-appellees invested in money market placements with
the Premiere Financing Corporation (PFC) in the sum of P10,000.00 each for which they
33
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were issued by the PFC corresponding promissory notes and checks. On the same date
(September 22, 1983), John Francis Cotaoco, for and in behalf of plaintiffs-appellees, went
to the PFC to encash the promissory notes and checks, but the PFC referred him to the
Regent Saving Bank (RSB). Instead of paying the promissory notes and checks, the RSB,
upon agreement of Cotaoco, issued the subject 13 certificates of time deposit with Nos.
09648 to 09660, inclusive, each stating, among others, that the same certifies that the
bearer thereof has deposited with the RSB the sum of P10,000.00; that the certificate
shall bear 14% interest per annum; that the certificate is insured up toP15,000.00 with
the PDIC; and that the maturity date thereof is on November 3, 1983 (Exhs. “B”, “B-1” to
“B-12”).
- On the aforesaid maturity dated (November 3, 1983), Cotaoco went to the RSB to encash
the said certificates. Thereat, RSB Executive Vice President Jose M. Damian requested
Cotaoco for a deferment or an extension of a few days to enable the RSB to raise the
amount to pay for the same (Exh. “D”). Cotaoco agreed. Despite said extension, the RSB
still failed to pay the value of the certificates. Instead, RSB advised Cotaoco to file a claim
with the PDIC.
- Meanwhile, on June 15, 1984, the Monetary Board of the Central Bank issued Resolution
No. 788 (Exh. ‘2’, Records, p. 159) suspending the operations of the RSB. Eventually, the
records of RSB were secured and its deposit liabilities were eventually determined. On
December 7, 1984, the Monetary Board issued Resolution No. 1496 (Exh. ‘1’) liquidating
the RSB. Subsequently, a masterlist or inventory of the RSB assets and liabilities was
prepared. However, the certificates of time deposit of plaintiffs-appellees were not
included in the list on the ground that the certificates were not funded by the PFC or duly
recorded as liabilities of RSB.
- On September 4, 1984, plaintiffs-appellees filed with the PDIC their respective claims for
the amount of the certificates (Exhs. “C”, “C-1”, to “C-12”). Sabina Yu, James Ngkaion,
Elaine Ngkaion and Jeffrey Ngkaion, who have similar claims on their certificates of time
deposit with the RSB, likewise filed their claims with the PDIC. To their dismay, PDIC
refused the aforesaid claims on the ground that the Traders Royal Bank Check No. 299255
dated September 22, 1983 for the amount of P125,846.07 (Exh. “B”) issued by PFC for the
aforementioned certificates was returned by the drawee bank for having been drawn
against insufficient funds; and said check was not replaced by the PFC, resulting in the
cancellation of the certificates as indebtedness or liabilities of RSB.
- Consequently, on March 31, 1987, private respondents filed an action for collection
against PDIC, RSB and the Central Bank.
- On September 14, 1987, the trial court, declared the Central Bank in default for failing to
file an answer.
- On May 29, 1989, the trial court rendered its decision ordering the defendants therein to
pay plaintiffs, jointly and severally, the amount corresponding to the latter’s certificates
of time deposit.
- Both PDIC and RSB appealed.
ISSUE
- Whether or not PDIC can be held liable for value of the certificates of time deposit held
by the petitioners.
HELD
- No. Whenever an insured bank shall have been closed on account of insolvency, payment
of the insured deposits in such bank shall be made by the Corporation as soon as possible.
The term “deposit” means the unpaid balance of money or its equivalent received by a
bank in the usual course of business and for which it has given or is obliged to give credit
to a commercial, checking, savings, time or thrift account or which is evidence by
passbook, check and/or certificate of deposit printed or issued in accordance with Central
Bank rules and regulations and other applicable laws, together with such other obligations
of a bank which, consistent with banking usage and practices, the Board of Directors shall
34
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determine and prescribe by regulations to be deposit liabilities of the Bank. These pieces
of evidence convincingly show that the subject CTDs were indeed issued without RSB
receiving any money therefor. No deposit, as defined in Section 3 (f) of R.A. No. 3591,
therefore came into existence. Accordingly, petitioner PDIC cannot be held liable for
value of the certificates of time deposit held by private respondents.
PDIC v. Philippines Countryside Rural Bank, G.R. No. 176438, January 24, 2011
- On May 25, 2005, the PDIC Board adopted another resolution, Resolution No. 2005-05-
056, approving the conduct of an investigation on PCRBI based on a Complaint-Affidavit
filed by a corporate depositor, the Philippine School of Entrepreneurship and
Management.
- On June 3, 2005, in accordance with the two PDIC Board resolutions, then PDIC President
and Chief Executive Officer Ricardo M. Tan issued the Notice of Investigation to the
President or The Highest Ranking Officer of PCRBI.
- In the course of its investigation, PCRBI was found to have granted loans to certain
individuals, which were settled by way of dacion of properties. These properties,
however, had already been previously foreclosed and consolidated under the names of
PRBI, BEAI and RBCI.
- On June 15, 2005, PDIC issued similar notices of investigation to PRBI and BEAI. The
notices stated that the investigation was to be conducted pursuant to Section 9 (b-1) of
the PDIC Charter and upon authority of PDIC Board Resolution No. 2005-03-032
authorizing the twelve (12) named representatives of PDIC to conduct the
investigation.The notice of investigation was served on PRBI the next day, June 16, 2005.
- PRBI and BEAI refused entry to their bank premises and access to their records and
documents by the PDIC Investigation Team, upon advice of their respective counsels. On
June 16 and 17, 2005, Atty. Victoria G. Noel sent letters to the PDIC informing it of her
legal advice to PCRBI and BEAI not to submit to PDIC investigation on the ground that its
investigatory power pursuant to Section 9(b-1) of R.A. No. 3591, as amended, cannot be
differentiated from the examination powers accorded to PDIC under Section 8, paragraph
8 of the same law, under which, prior approval from the Monetary Board is required.
- On June 17, 2005, PDIC General Counsel Romeo M. Mendoza sent a reply to Atty. Noel
stating that "PDIC’s investigation power, as distinguished from the examination power of
the PDIC under Section 8 of the same law, does not need prior approval of the Monetary
Board." PDIC then urged PRBI and BEAI "not to impede the conduct of PDIC’s
investigation" as the same "constitutes a violation of the PDIC Charter for which PRBI and
BEAI may be held criminally and/or administratively liable.
- The Banks, through counsel, sought further clarification from PDIC on its source of
authority to conduct the impending investigations and requested that PDIC refrain from
proceeding with the investigations. The Banks wrote to the Monetary Board requesting a
clarification on the parameters of PDIC’s power of investigation/examination over the
Banks and for an issuance of a directive to PDIC not to pursue the investigations pending
the requested clarification.
- On June 28, 2005, PRBI and BEAI again received letters from PDIC, which appeared to be
final demands on them to allow its investigation. The PDIC General Counsel reiterates its
position that prior Monetary Board approval was not a pre-requisite to PDIC’s exercise of
its investigative power.
- The Banks then filed a Petition for Declaratory Relief with a Prayer for the Issuance of a
TRO and/or Writ of Preliminary Injunction (RTC Petition) before the Regional Trial Court
of Makati. In the RTC Petition, the Banks prayed for a judgment interpreting Section 9(b-
1) of the PDIC Charter, as amended, to require prior Monetary Board approval before
PDIC could exercise its investigation/examination power over the Banks.
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- The Banks withdrew their application for a temporary restraining order (TRO). Thus, the
Banks instituted a petition for injunction with application for TRO and/or Preliminary
Injunction (CA-Manila petition) before the Court of Appeals-Manila.
- RTC Makati and CA-Manila both dismissed the petitions filed by the Banks. On March 14,
2006, the Banks filed their Petition for Injunction with Prayer for Preliminary Injunction
(CA-Cebu Petition) with the Court of Appeals-Cebu (CA-Cebu). On March 15, 2006, the
CA-Cebu issued a resolution granting the Bank’s application for a TRO. This enjoined the
PDIC, its representatives or agents or any other persons or agency assisting them or acting
for and in their behalf from conducting examinations/investigations on the Banks’ head
and branch offices without securing the requisite approval from the Monetary Board of
BSP.
- On September 18, 2006, after both parties had submitted their respective memoranda,
the CA-Cebu rendered a decision granting the writ of preliminary injunction.
- PDIC moved for reconsideration but it was denied in a resolution dated January 25, 2007.
Hence, this petition.
ISSUES
- Whether prior approval of the Monetary Board of the Bangko Sentral ng Pilipinas is
necessary before the PDIC may conduct an investigation of respondent banks.
- Whether the power of the PDIC to conduct investigation the same as its power of
examination.
HELD
- The Court is of the view that the Monetary Board approval is not required for PDIC to
conduct an investigation on the Banks.
o Section 9(b-1) of the PDIC Charter provides that the PDIC Board shall have the
power to:
§ (b-1) The investigators appointed by the Board of Directors shall have the
power on behalf of the Corporation to conduct investigations on frauds,
irregularities and anomalies committed in banks, based on reports of
examination conducted by the Corporation and Bangko Sentral ng Pilipinas
or complaints from depositors or from other government agency. Each
such investigator shall have the power to administer oaths, and to examine
and take and preserve the testimony of any person relating to the subject
of investigation. (As added by R.A. 9302, 12 August 2004)
o As stated above, the charter empowers the PDIC to conduct an investigation of a
bank and to appoint examiners who shall have the power to examine any insured
bank. Such investigators are authorized to conduct investigations on frauds,
irregularities and anomalies committed in banks, based on an examination
conducted by the PDIC and the BSP or on complaints from depositors or from
other government agencies.
- The distinction between the power to investigate and the power to examine is
emphasized by the existence of two separate sets of rules governing the procedure in the
conduct of investigation and examination. Regulatory Issuance (RI) No. 2005-02 or the
PDIC Rules on Fact-Finding Investigation of Fraud, Irregularities and Anomalies
Committed in Banks covers the procedural requirements of the exercise of the PDIC’s
power of investigation. On the other hand, RI No. 2009-05 sets forth the guidelines for
the conduct of the power of examination.
- The definitions provided under the two aforementioned regulatory issuances elucidate
on the distinction between the power of examination and the power of investigation.
Section 2 of RI No. 2005-02 states that its coverage shall be applicable to "all fact-finding
investigations on fraud, irregularities and/or anomalies committed in banks that are
conducted by PDIC based on: [a] complaints from depositors or other government
agencies; and/or [b] final reports of examinations of banks conducted by the Bangko
Sentral ng Pilipinas and/or PDIC."
36
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- The same issuance states that the Final Report of Examination is one of the three pre-
requisites to the conduct of an investigation, in addition to the authorization of the PDIC
Board and a complaint. Juxtaposing this provision with Section 9(b-1) of the PDIC Charter,
since an examination is explicitly made the basis of a fact-finding examination, then
clearly examination and investigation are two different proceedings. It would obviously
defy logic to make the result of an "investigation" the basis of the same proceeding. Thus,
RI No. 2005-02 defines an "investigation" as a "fact-finding examination, study or inquiry
for determining whether the allegations in a complaint or findings in a final report of
examination may properly be the subject of an administrative, criminal or civil action."
- Examination involves an evaluation of the current status of a bank and determines its
compliance with the set standards regarding solvency, liquidity, asset valuation,
operations, systems, management, and compliance with banking laws, rules and
regulations. Investigation, on the other hand, is conducted based on specific findings of
certain acts or omissions which are subject of a complaint or a Final Report of
Examination.
- Clearly, investigation does not involve a general evaluation of the status of a bank. An
investigation zeroes in on specific acts and omissions uncovered via an examination, or
which are cited in a complaint. An examination entails a review of essentially all the
functions and facets of a bank and its operation. It necessitates poring through
voluminous documents, and requires a detailed evaluation thereof. Such a process then
involves an intrusion into a bank’s records.
- In contrast, although it also involves a detailed evaluation, an investigation centers on
specific acts of omissions and, thus, requires a less invasive assessment.
- The practical justification for not requiring the Monetary Board approval to conduct an
investigation of banks is the administrative hurdles and paperwork it entails, and the
correspondent time to complete those additional steps or requirements. As in other types
of investigation, time is always of essence, and it is prudent to expedite the proceedings
if an accurate conclusion is to be arrived at, as an investigation is only as precise as the
evidence on which it is based. The promptness with which such evidence is gathered is
always of utmost importance because evidence, documentary evidence in particular, is
remarkably fungible. A PDIC investigation is conducted to "determine[e] whether the
allegations in a complaint or findings in a final report of examination may properly be the
subject of an administrative, criminal or civil action." In other words, an investigation is
based on reports of examination and an examination is conducted with prior Monetary
Board approval. Therefore, it would be unnecessary to secure a separate approval for the
conduct of an investigation. Such would merely prolong the process and provide
unscrupulous individuals the opportunity to cover their tracks.
- Indeed, while in a literary sense, the two terms may be used interchangeably, under the
PDIC Charter, examination and investigation refer to two different processes. To reiterate,
an examination of banks requires the prior consent of the Monetary Board, whereas an
investigation based on an examination report, does not.
E. Other related laws

1. R.A. No. 3696, as amended (The Unclaimed Balances Act)
2. R.A. No. 9510 (The Credit Information System Act)
3. R.A. No. 9372 (The Human Security Act)
4. R.A. No. 10168 (The Terrorism Financing Prevention and
Suppression Act)
5. NCBA, on DOSRI Loans
6. Anti-Graft and Corrupt Practices Act (See PNB v. Gancayco, supra)
7. NIRC, as amended
8. R.A. No. 8367 (The Revised Non-Stock Saving and Loan Association Act
of 1997)
37
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IV. ACCESS DEVICES REGULATION ACT (R.A. No. 8484)
A. Definitions
B. Credit Card Application and Solicitation
C. Exceptions
D. Disclosures and Failure to Disclose
E. Prohibited Acts
F. Penalties
G. Conspiracy to commit access device fraud
H. Frustrated and Attempted to access device fraud
I. Presumption and prima facie evidence of intent to defraud
J. Reporting requirements
Cases:
Soledad v. People, G.R. No. 184274, February 23, 2011

- Henry Yu received a call from Rochelle Bagaporo offering a loan assistance at a low
interest rate. Private complainant then invited her to go to his office. Bagaporo then
indorsed private complainant to a certain Arthur, herein petitioner. In their telephone
conversation, petitioner told private complainant to submit documents. Private
complainant submitted various documents, such as his Globe handyphone original
platinum gold card, identification cards and statements of accounts. Subsequently,
private complainant followed up his loan status but failed to do so.
- Private complainant then received his Globe handyphone statement of account where he
was charged for two mobile phone numbers which were not his. Upon verification with
the phone company, private complainant learned that he had additional five mobile
numbers in his name, and the application for said cellular phone lines bore the picture of
petitioner and his forged signature. Private complainant also checked with credit card
companies and learned that his Citibank Credit Card database information was altered
and he had a credit card application with Metrobank. You then lodged a complaint with
NBI which conducted an entrapment operation.
- During the entrapment operation, NBIs Special Investigator posed as delivery boy of the
Metrobank credit card. The agent reached the address written on the delivery receipt and
asked for Henry Yu. Petitioner said he was Henry Yu and presented two identification
cards with the name and signature of Henry Yu, while the picture showed the face of
petitioner. Petitioner signed the delivery receipt. Thereupon, the investigator introduced
himself as an NBI agent and apprehended him. Petitioner was then charged with violation
of Section 9(e), R.A. No. 8484 for possessing a counterfeit access device or access device
fraudulently applied for.
- Petitioner avers that he was never in possession of the credit card because he was
arrested immediately after signing the acknowledgement receipt thus he did not yet
know the contents of the envelope delivered and had no control over the subject credit
card. In RTC, petitioner was found guilty. The conviction was affirmed in CA.
ISSUE
- Whether or not petitioner was legally in possession of the credit card subject of the case.
HELD
- Yes. The trial court convicted petitioner of possession of the credit card fraudulently
applied for. The law, however, does not define the word possession. Thus, the term was
used as defined in Article 523 of the Civil Code, that is, possession is the holding of a thing
or the enjoyment of a right. The acquisition of possession involves two elements: the
corpus or the material holding of the thing, and the animus possidendi or the intent to
38
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possess it. Animus possidendi is a state of mind, the presence or determination of which
is largely dependent on attendant events in each case. It may be inferred from the prior
or contemporaneous acts of the accused, as well as the surrounding circumstances.
- In this case, prior to the commission of the crime, petitioner fraudulently obtained from
private complainant various documents showing the latter’s identity. He, thereafter,
obtained cellular phones using private complainants identity. Undaunted, he fraudulently
applied for a credit card under the name and personal circumstances of private
complainant. Upon the delivery of the credit card applied for, the messenger (NBI agent)
required two valid identification cards. Petitioner thus showed two identification cards
with his picture on them, but bearing the name and forged signature of private
complainant. As evidence of the receipt of the envelope delivered, petitioner signed the
acknowledgment receipt shown by the messenger, indicating therein that the content of
the envelope was the Metrobank credit card.
- Petitioner materially held the envelope containing the credit card with the intent to
possess. Contrary to petitioners contention that the credit card never came into his
possession because it was only delivered to him, the above narration shows that he, in
fact, did an active part in acquiring possession by presenting the identification cards
purportedly showing his identity as Henry Yu. Certainly, he had the intention to possess
the same. Had he not actively participated, the envelope would not have been given to
him. Moreover, his signature on the acknowledgment receipt indicates that there was
delivery and that possession was transferred to him as the recipient. Undoubtedly,
petitioner knew that the envelope contained the Metrobank credit card, as clearly
indicated in the acknowledgment receipt, coupled with the fact that he applied for it using
the identity of private complainant.
Sps. Yulo v. BPI, G.R. No. 217044, January 16, 2019

- Petitioner spouses Rainer Yulo and Juliet Yulo are both credit card holders of the
respondent, Bank of the Philippine Islands (BPI). When the petitioners had been
delinquent with their payments, BPI started to send out demand letters and later on filed
a complaint for sum of money against the petitioners. Spouses admitted that they used
the credit cards issued by the Bank of the Philippine Islands but claimed that their total
liability was only P20,000.00. They also alleged that the Bank of the Philippine Islands did
not fully disclose to them the Terms and Conditions on their use of the issued credit cards
and also, BPI failed to prove their liability. The lower court ruled in favor of BPI and
ordered petitioners to pay the bank the sum of P229,378.68. Petitioners filed an appeal
with the Regional Trial Court and Court of Appeals but was both denied. The Court of
Appeals found that the Yulo Spouses' failure to contest the charges in the monthly
Statements of Account signified that they accepted the veracity of the charges. It further
noted that Rainier, an insurance underwriter, was familiar with contractual stipulations;
hence, he could not feign ignorance over his own contractual obligation to the Bank of
the Philippine Islands.
ISSUE
- Whether or not petitioners Rainier Jose M. Yulo and Juliet L. Yulo are bound by the Terms
and Conditions on their use of credit cards issued by respondent
HELD
- No. As the recipient of an unsolicited credit card, the pre-screened client can then choose
to either accept or reject it. When petitioners accepted respondent's credit card by using
it to purchase goods and services, a contractual relationship was created between them,
"governed by the Terms and Conditions found in the card membership agreement. Such
terms and conditions constitute the law between the parties.". However, when issuing a
pre-screened or pre-approved credit card, the credit card provider must prove that its
client read and consented to the terms and conditions governing the credit card's use.
Failure to prove consent means that the client cannot be bound by the provisions of the
39
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terms and conditions, despite admitted use of the credit card. With respondent's failure
to prove petitioner Rainier's conformity and acceptance of the Terms and Conditions,
petitioners cannot be bound by its provisions. The Metropolitan Trial Court ruling was
affirmed by both the Regional Trial Court and the Court of Appeals. Since petitioner did
not consent to the Terms and Conditions governing his credit card, there is a need to
modify the outstanding balance by removing the interests, penalties, and other charges
imposed before.
BPI v. Sps. Sarda, G.R. No. 239092, June 26, 2019

Gesmundo, J.
- Sps. Sarda incurred a debt of P1.2 million, which they are denying for having received and
and issued a card by BPI. They likewise denied having used or agreeing to the terms and
conditions
- BPI presented documentary evidence of Delivery Receipt, Terms and Conditions of BPI
Express credit card
- RTC – ruled in favor of BPI
- CA – reversed RTC
ISSUE
- Whether Sarda should be held liable
HELD
- No.
- Sarda did not actually receive the credit card issued to him by BPI
o Without his knowledge and consent as he did not apply for it – him being a pre-
qualified client
o BPI failed to prove that Ms. Tandogon was authorized by Sarda
- BPI clearly failed to present adequate proof that it was respondents who made purchases
and cash advances using the cards
- Duty imposed on banks to exercise a high degree of diligence in their business
transactions banks and credit card companies are now prohibited from issuing pre-
approved credit cards. Before issuing credit cards, these entities "must exercise proper
diligence by ascertaining that applicants possess good credit standing and are financially
capable of fulfilling their credit commitments
- RA 10870 – Philippine Credit Card Industry Regulation Law
o Before issuing credit cards, issuers are now mandated to conduct "know-your-
client" procedures and to exercise proper diligence in ascertaining that applicants
possess good credit standing and are financially capable of fulfilling their credit
commitments
- BPI failed to exercise proper diligence in the issuance of the primary and supplementary
cards and should thus bear the resulting loss or damage caused by its own acts and
policies
VI. DATA PRIVACY ACT (R.A. No. 10173)
A. Personal v. Sensitive Information

B. Scope
C. Processing of personal information
D. Rights of date subject
COURSE GOALS AND OBJECTIVES:
At the end of the course, students would:
40
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1) Explain the state policy on banking;

2) Understand the obligations and liabilities of banks, its officers and employees;
3) Identify the rights of a depositor and discuss specific instances when they may be
invoked; and
4) Recognize the role of banks in nation-building vis-à-vis the government’s efforts
to attain economic viability and progress.
REFERENCES:
Timoteo B. Aquino, Notes and Cases on Banking Law and Negotiable Instrument Law, Rex Book
Store
Efren L. Dizon and Efren Vincent M. Dizon, Banking Laws and Jurisprudence, Rex Book Store
Rafael A. Morales, The Philippine Banking Law (Annotated), First Lexiana Enterprises
Larry P. Ignacio, Banking and Allied Laws, Central Books
SUGGESTED ELECTRONIC SOURCES:
1) http://bsp.gov.ph/
2) http://sc.judiciary.gov.ph/
3) http://amlc/gov.ph/
MIDTERM EXAMINATIONS:
September 14-23, 2020
FINAL EXAMINATIONS:
November 23-December 5, 2020
Be brave.
We are FEU LAW.
41

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Far Eastern University-Institute of Law

GENERAL BANKING LAWS

I. THE GENERAL BANKING LAW OF 2000 (Republic Act No. 8791)

F. Diligence required of banks

PNB v. Pike, G.R. No. 157845, September 20, 2005;

BPI v. Lifetime Marketing, G.R. No. 176434, June 25, 2008;

BPI v. Casa Montessori, G.R. No. 149454, May 28, 2004;

Central Bank v. Citytrust Bank, G.R. No. 141835, February 4, 2009

H. Organization, Management and Administration of Banks, Quasi-

a. BSP Circular No. 854, Series of 2014

a. Domestic v. Foreign; Individuals v. Corporations

i. R.A. No. 10641, amending R.A. No. 7721

3) Fit and proper rule

I. Nature of bank funds and bank deposits

Associated Bank v. Tan, G.R. No. 156940, December 14, 2004;

People v. Estrada, et al., G.R. No. 164368-69, April 2, 2009

2) Minors and Corporations as Depositors

K. Grant of Loans and Security Requirements

6) Truth in Lending Act (Republic Act No. 3765)

L. Other Banking Services, Prohibited Acts and Transactions, Conducting Business in an

BSP-MB v. Antonio-Valenzuela, G.R. No. 184778, October 2, 2009

1) Legal Tender Power

a. BSP Circular No. 537, Series of 2006

G. How the BSP handles exchange crisis

1) Domestic monetary instability

III. SECRECY OF BANK DEPOSITS

A. R.A. No. 1405, as amended (The Law on Secrecy of Bank Deposits)

PNB v. Gancayco, G.R. No. L-18343, September 30, 1965

JV Ejercito v. Sandiganbayan, G.R. Nos. 157294-95, November 30, 2006

Marquez v. Desierto, G.R. No. 135882, June 27, 2001

B. R.A. No. 6426 (The Foreign Currency Deposit Act)

GSIS v. Industrial Bank of Korea, G.R. No. 189206, June 8, 2011

PSBank v. Senate, G.R. No. 200238, November 20, 2012

People v. Estrada, G.R. No. 164368-69, April 2, 2009

D. R.A. No. 3591 (Philippine Deposit Insurance Corporation Act), as amended by

a) Deposit liabilities required to be insured with PDIC

PDIC v. Citibank, G.R. No. 170290, April 11, 2012

PDIC v. Abad, G.R. No. 126911, April 30, 2003

PDIC v. Aquero, G.R. No, 118917, December 22, 1997

E. Other related laws

IV. ACCESS DEVICES REGULATION ACT (R.A. No. 8484)

Soledad v. People, G.R. No. 184274, February 23, 2011

Sps. Yulo v. BPI, G.R. No. 217044, January 16, 2019

BPI v. Sps. Sarda, G.R. No. 239092, June 26, 2019

VI. DATA PRIVACY ACT (R.A. No. 10173)

A. Personal v. Sensitive Information

COURSE GOALS AND OBJECTIVES:

At the end of the course, students would:

1) Explain the state policy on banking;

Larry P. Ignacio, Banking and Allied Laws, Central Books

SUGGESTED ELECTRONIC SOURCES:

September 14-23, 2020

November 23-December 5, 2020

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