Commercial Law Review

COMMERCIAL LAW REVIEW
BANKING AND OTHER ALLIED LAWS

(BASED ON E-IBL SYLLABUS SUMMER 2017)
General Banking Law
Definition of Banks (BAR)
SECTION 3. Definition and Classification of Banks.
3.1. "Banks" shall refer to entities engaged in the lending of funds obtained in the form
of deposits.
3.2. Banks shall be classified into:

(a) Universal banks;
(b) Commercial banks;
(c) Thrift banks, composed of:
(i) Savings and mortgage banks,
(ii) Stock savings and loan associations, and
(iii) Private development banks, as defined in Republic Act No. 7906
(hereafter the "Thrift Banks Act");
(d) Rural banks, as defined in Republic Act No. 7353 (hereafter the "Rural Banks
Act");
(e) Cooperative banks, as defined in Republic Act No. 6938 (hereafter the
"Cooperative Code");
(f) Islamic banks as defined in Republic Act No. 6848, otherwise known as the
"Charter of Al Amanah Islamic Investment Bank of the Philippines"; and
(g) Other classifications of banks as determined by the Monetary Board of the
Bangko Sentral ng Pilipinas.
Banking Services; Relationship with Depositor; Prohibited Services (BAR)
SECTION 53. Other Banking Services. In addition to the operations specifically authorized in
this Act, a bank may perform the following services:
53.1. Receive in custody funds, documents and valuable objects;
53.2. Act as financial agent and buy and sell, by order of and for the account of their
customers, shares, evidences of indebtedness and all types of securities;
53.3. Make collections and payments for the account of others and perform such other
services for their customers as are not incompatible with banking business;
53.4. Upon prior approval of the Monetary Board, act as managing agent, adviser,
consultant or administrator of investment management/advisory/consultancy
accounts; and
53.5. Rent out safety deposit boxes.
The bank shall perform the services permitted under Subsections 53.1, 53.2, 53.3 and
53.4 as depositary or as an agent. Accordingly, it shall keep the funds, securities and
other effects which it receives duly separate from the bank's own assets and liabilities.
The Monetary Board may regulate the operations authorized by this Section in order to
ensure that such operations do not endanger the interests of the depositors and other
creditors of the bank.
In case a bank or quasi-bank notifies the Bangko Sentral or publicly announces a bank
holiday, or in any manner suspends the payment of its deposit liabilities continuously
for more than thirty (30) days, the Monetary Board may summarily and without need
for prior hearing close such banking institution and place it under receivership of the
Philippine Deposit Insurance Corporation. (72a)
SECTION 54. Prohibition to Act as Insurer. A bank shall not directly engage in insurance
business as the insurer. (73)
SECTION 55. Prohibited Transactions.
55.1. No director, officer, employee, or agent of any bank shall

(a) Make false entries in any bank report or statement or participate in any
fraudulent transaction, thereby affecting the financial interest of, or causing
damage to, the bank or any person;
(b) Without order of a court of competent jurisdiction, disclose to any
unauthorized person any information relative to the funds or properties in the
custody of the bank belonging to private individuals, corporations, or any other
entity: Provided, That with respect to bank deposits, the provisions of existing
laws shall prevail;
(c) Accept gifts, fees or commissions or any other form of remuneration in
connection with the approval of a loan or other credit accommodation from said
bank;
(d) Overvalue or aid in overvaluing any security for the purpose of influencing in
any way the actions of the bank or any bank; or
(e) Outsource inherent banking functions.
55.2. No borrower of a bank shall

(a) Fraudulently overvalue property offered as security for a loan or other credit
accommodation from the bank;
(b) Furnish false or make misrepresentation or suppression of material facts for
the purpose of obtaining, renewing, or increasing a loan or other credit
accommodation or extending the period thereof;
(c) Attempt to defraud the said bank in the event of a court action to recover a
loan or other credit accommodation; or
(d) Offer any director, officer, employee or agent of a bank any gift, fee,
commission, or any other form of compensation in order to influence such
persons into approving a loan or other credit accommodation application.
55.3. No examiner, officer or employee of the Bangko Sentral or of any department,

bureau, office, branch or agency of the Government that is assigned to supervise,
examine, assist or render technical assistance to any bank shall commit any of the acts
enumerated in this Section or aid in the commission of the same. (87-Aa)
The making of false reports or misrepresentation or suppression of material facts by

personnel of the Bangko Sentral ng Pilipinas shall constitute fraud and shall be subject
to the administrative and criminal sanctions provided under the New Central Bank Act.
55.4. Consistent with the provisions of Republic Act No. 1405, otherwise known as the
Banks Secrecy Law, no bank shall employ casual or nonregular personnel or too
lengthy probationary personnel in the conduct of its business involving bank deposits.
NISCE v. EQUITABLE PCI

BPI EMPPLOYEES UNION v. BPI
Classes of Banks; Powers and Restrictions of Types of Banks (BAR)
SECTION 3. xxx Classification of Banks.
xxx
3.2. Banks shall be classified into:

(a) Universal banks;
(b) Commercial banks;
(c) Thrift banks, composed of:
(i) Savings and mortgage banks,
(ii) Stock savings and loan associations, and
(iii) Private development banks, as defined in Republic Act No. 7906
(hereafter the "Thrift Banks Act");
(d) Rural banks, as defined in Republic Act No. 7353 (hereafter the "Rural Banks
Act");
(e) Cooperative banks, as defined in Republic Act No. 6938 (hereafter the
"Cooperative Code");
(f) Islamic banks as defined in Republic Act No. 6848, otherwise known as the
"Charter of Al Amanah Islamic Investment Bank of the Philippines"; and
(g) Other classifications of banks as determined by the Monetary Board of the
Bangko Sentral ng Pilipinas.
SECTION 23. Powers of a Universal Bank. A universal bank shall have the authority to
exercise, in addition to the powers authorized for a commercial bank in Section 29, the powers
of an investment house as provided in existing laws and the power to invest in non-allied
enterprises as provided in this Act. (21-B)
SECTION 24. Equity Investments of a Universal Bank. A universal bank may, subject to the
conditions stated in the succeeding paragraph, invest in the equities of allied and non-allied
enterprises as may be determined by the Monetary Board. Allied enterprises may either be
financial or non-financial.
Except as the Monetary Board may otherwise prescribe:
24.1. The total investment in equities of allied and non-allied enterprises shall not
exceed fifty percent (50%) of the net worth of the bank; and
24.2. The equity investment in any one enterprise, whether allied or non-allied, shall
not exceed twenty-five percent (25%) of the net worth of the bank.
As used in this Act, "net worth" shall mean the total of the unimpaired paid-in capital
including paid-in surplus, retained earnings and undivided profit, net of valuation
reserves and other adjustments as may be required by the Bangko Sentral.
The acquisition of such equity or equities is subject to the prior approval of the
Monetary Board which shall promulgate appropriate guidelines to govern such
investments.
SECTION 29. Powers of a Commercial Bank. A commercial bank shall have, in addition to
the general powers incident to corporations, all such powers as may be necessary to carry on
the business of commercial banking, such as accepting drafts and issuing letters of credit;
discounting and negotiating promissory notes, drafts, bills of exchange, and other evidences of
debt; accepting or creating demand deposits; receiving other types of deposits and deposit
substitutes; buying and selling foreign exchange and gold or silver bullion; acquiring
marketable bonds and other debt securities; and extending credit, subject to such rules as the
Monetary Board may promulgate. These rules may include the determination of bonds and
other debt securities eligible for investment, the maturities and aggregate amount of such
investment. (21a).
SECTION 30. Equity Investments of a Commercial Bank. A commercial bank may, subject to
the conditions stated in the succeeding paragraphs, invest only in the equities of allied
enterprises as may be determined by the Monetary Board. Allied enterprises may either be
financial or non-financial.
Except as the Monetary Board may otherwise prescribe:
30.1. The total investment in equities of allied enterprises shall not exceed thirty-five
percent (35%) of the net worth of the bank; and
30.2. The equity investment in any one enterprise shall not exceed twenty-five percent
(25%) of the net worth of the bank.
The acquisition of such equity or equities is subject to the prior approval of the
Monetary Board which shall promulgate appropriate guidelines to govern such
investments. (21A-a; 21-Ca)
Acquisition of Realty; Rule and Exception (BAR)
SECTION 51. Ceiling on Investments in Certain Assets. Any bank may acquire real estate as
shall be necessary for its own use in the conduct of its business: Provided, however, That the
total investment in such real estate and improvements thereof, including bank equipment,
shall not exceed fifty percent (50%) of combined capital accounts: Provided, further, That the
equity investment of a bank in another corporation engaged primarily in real estate shall be
considered as part of the bank's total investment in real estate, unless otherwise provided by
the Monetary Board. (25a)
SECTION 52. Acquisition of Real Estate by Way of Satisfaction of Claims. Notwithstanding

the limitations of the preceding Section, a bank may acquire, hold or convey real property
under the following circumstances:
52.1. Such as shall be mortgaged to it in good faith by way of security for debts; 52.2.
Such as shall be conveyed to it in satisfaction of debts previously contracted in the
course of its dealings; or
52.3. Such as it shall purchase at sales under judgments, decrees, mortgages, or trust
deeds held by it and such as it shall purchase to secure debts due it.
Any real property acquired or held under the circumstances enumerated in the above
paragraph shall be disposed of by the bank within a period of five (5) years or as may be
prescribed by the Monetary Board: Provided, however, That the bank may, after said
period, continue to hold the property for its own use, subject to the limitations of the
preceding Section. (25a)
UNIONBANK v. TIU
SEPTEMBER 7, 2011
BSP Functions (BAR)
SECTION 4. Supervisory Powers. The operations and activities of banks shall be subject to
supervision of the Bangko Sentral. "Supervision" shall include the following:
4.1. The issuance of rules of conduct or the establishment of standards of operation for
uniform application to all institutions or functions covered, taking into consideration
the distinctive character of the operations of institutions and the substantive
similarities of specific functions to which such rules, modes or standards are to be
applied;
4.2. The conduct of examination to determine compliance with laws and regulations if
the circumstances so warrant as determined by the Monetary Board;
4.3. Overseeing to ascertain that laws and regulations are complied with;
4.4. Regular investigation which shall not be oftener than once a year from the last date
of examination to determine whether an institution is conducting its business on a safe
or sound basis: Provided, That the deficiencies/irregularities found by or discovered by
an audit shall be immediately addressed;
4.5. Inquiring into the solvency and liquidity of the institution (2-D); or
4.6. Enforcing prompt corrective action. (n)
The Bangko Sentral shall also have supervision over the operations of and exercise
regulatory powers over quasi-banks, trust entities and other financial institutions
which under special laws are subject to Bangko Sentral supervision. (2-Ca)
For the purposes of this Act, "quasi-banks" shall refer to entities engaged in the
borrowing of funds through the issuance, endorsement or assignment with recourse or
acceptance of deposit substitutes as defined in Section 95 of Republic Act No. 7653
(hereafter the "New Central Bank Act") for purposes of relending or purchasing of
receivables and other obligations. (2-Da)
SECTION 5. Policy Direction; Ratios, Ceilings and Limitations. The Bangko Sentral shall
provide policy direction in the areas of money, banking and credit. (n)
For this purpose, the Monetary Board may prescribe ratios, ceilings, limitations, or other forms
of regulation on the different types of accounts and practices of banks and quasi-banks which
shall, to the extent feasible, conform to internationally accepted standards, including those of
the Bank for International Settlements (BIS). The Monetary Board may exempt particular
categories of transactions from such ratios, ceilings and limitations, but not limited to
exceptional cases or to enable a bank or quasi-bank under rehabilitation or during a merger or
consolidation to continue in business with safety to its creditors, depositors and the general
public. (2-Ca)
Organization of Banks
SECTION 8. Organization. The Monetary Board may authorize the organization of a bank or
quasi-bank subject to the following conditions:
8.1. That the entity is a stock corporation (7);

8.2. That its funds are obtained from the public, which shall mean twenty (20) or more
persons (2-Da); and
8.3. That the minimum capital requirements prescribed by the Monetary Board for each
category of banks are satisfied. (n)
No new commercial bank shall be established within three (3) years from the effectivity
of this Act. In the exercise of the authority granted herein, the Monetary Board shall
take into consideration their capability in terms of their financial resources and
technical expertise and integrity. The bank licensing process shall incorporate an
assessment of the bank's ownership structure, directors and senior management, its
operating plan and internal controls as well as its projected financial condition and
capital base.
SECTION 9. Issuance of Stocks. The Monetary Board may prescribe rules and regulations on
the types of stock a bank may issue, including the terms thereof and rights appurtenant
thereto to determine compliance with laws and regulations governing capital and equity
structure of banks: Provided, That banks shall issue par value stocks only.
SECTION 10. Treasury Stocks. No bank shall purchase or acquire shares of its own capital
stock or accept its own shares as a security for a loan, except when authorized by the Monetary
Board: Provided, That in every case the stock so purchased or acquired shall, within six (6)
months from the time of its purchase or acquisition, be sold or disposed of at a public or
private sale. (24a)
SECTION 11. Foreign Stockholdings. Foreign individuals and non-bank corporations may
own or control up to forty percent (40%) of the voting stock of a domestic bank. This rule shall
apply to Filipinos and domestic non-bank corporations. (12a; 12-Aa)
The percentage of foreign-owned voting stocks in a bank shall be determined by the citizenship
of the individual stockholders in that bank. The citizenship of the corporation which is a
stockholder in a bank shall follow the citizenship of the controlling stockholders of the
corporation, irrespective of the place of incorporation. (n)
SECTION 12. Stockholdings of Family Groups or Related Interests. Stockholdings of

individuals related to each other within the fourth degree of consanguinity or affinity, legitimate
or common-law, shall be considered family groups or related interests and must be fully
disclosed in all transactions by such an individual with the bank. (12-Da)
SECTION 13. Corporate Stockholdings. Two or more corporations owned or controlled by the
same family group or same group of persons shall be considered related interests and must be
fully disclosed in all transactions by such corporations or related groups of persons with the
bank. (12-Ba)
SECTION 14. Certificate of Authority to Register. The Securities and Exchange Commission
shall not register the articles of incorporation of any bank, or any amendment thereto, unless
accompanied by a certificate of authority issued by the Monetary Board, under its seal. Such
certificate shall not be issued unless the Monetary Board is satisfied from the evidence
submitted to it:
14.1 That all requirements of existing laws and regulations to engage in the business
for which the applicant is proposed to be incorporated have been complied with;
14.2. That the public interest and economic conditions, both general and local, justify
the authorization; and
14.3. That the amount of capital, the financing, organization, direction and
administration, as well as the integrity and responsibility of the organizers and
administrators reasonably assure the safety of deposits and the public interest. (9)
The Securities and Exchange Commission shall not register the by-laws of any bank, or
any amendment thereto, unless accompanied by a certificate of authority from the
Bangko Sentral. (10)
SECTION 15. Board of Directors. The provisions of the Corporation Code to the contrary
notwithstanding, there shall be at least five (5), and a maximum of fifteen (15) members of the
board of directors of bank, two (2) of whom shall be independent directors. An "independent
director" shall mean a person other than an officer or employee of the bank, its subsidiaries or
affiliates or related interests. (n)
Non-Filipino citizens may become members of the board of directors of a bank to the extent of
the foreign participation in the equity of said bank. (Sec. 7, RA 7721)
The meetings of the board of directors may be conducted through modern technologies such
as, but not limited to, teleconferencing and video-conferencing. (n)
SECTION 16. Fit and Proper Rule. To maintain the quality of bank management and afford
better protection to depositors and the public in general, the Monetary Board shall prescribe,
pass upon and review the qualifications and disqualifications of individuals elected or
appointed bank directors or officers and disqualify those found unfit.
After due notice to the board of directors of the bank, the Monetary Board may disqualify,
suspend or remove any bank director or officer who commits or omits an act which render him
unfit for the position.
In determining whether an individual is fit and proper to hold the position of a director or
officer of a bank, regard shall be given to his integrity, experience, education, training, and
competence. (9-Aa)
SECTION 17. Directors of Merged or Consolidated Banks. In the case of a bank merger or
consolidation, the number of directors shall not exceed twenty-one (21). (13a)
SECTION 18. Compensation and Other Benefits of Directors and Officers. To protect the
funds of depositors and creditors, the Monetary Board may regulate the payment by the bank
to its directors and officers of compensation, allowance, fees, bonuses, stock options, profit
sharing and fringe benefits only in exceptional cases and when the circumstances warrant,
such as but not limited to the following:
18.1. When a bank is under comptrollership or conservatorship; or
18.2. When a bank is found by the Monetary Board to be conducting business in an

unsafe or unsound manner; or
18.3. When a bank is found by the Monetary Board to be in an unsatisfactory financial

condition. (n)
SECTION 19. Prohibition on Public Officials. Except as otherwise provided in the Rural
Banks Act, no appointive or elective public official, whether full-time or part-time shall at the
same time serve as officer of any private bank, save in cases where such service is incident to
financial assistance provided by the government or a government-owned or controlled

corporation to the bank or unless otherwise provided under existing laws. (13)
SECTION 20. Bank Branches. Universal or commercial banks may open branches or other
offices within or outside the Philippines upon prior approval of the Bangko Sentral.
Branching by all other banks shall be governed by pertinent laws.
A bank may, subject to prior approval of the Monetary Board, use any or all of its branches as
outlets for the presentation and/or sale of the financial products of its allied undertaking or of
its investment house units.
A bank authorized to establish branches or other offices shall be responsible for all business
conducted in such branches and offices to the same extent and in the same manner as though
such business had all been conducted in the head office. A bank and its branches and offices
shall be treated as one unit. (6-B; 27)
SECTION 21. Banking Days and Hours. Unless otherwise authorized by the Bangko Sentral
in the interest of the banking public, all banks including their branches and offices shall
transact business on all working days for at least six (6) hours a day. In addition, banks or any
of their branches or offices may open for business on Saturdays, Sundays or holidays for at
least three (3) hours a day: Provided, That banks which opt to open on days other than working
days shall report to the Bangko Sentral the additional days during which they or their
branches or offices shall transact business.
For purposes of this Section, working days shall mean Mondays to Fridays, except if such days
are holidays
PDIC v. CITIBANK
APRIL 11, 2012
Loan Limitation; SBL; DOSRI; Security Foreclosure (BAR)
SECTION 35. Limit on Loans, Credit Accommodations and Guarantees.
35.1. Except as the Monetary Board may otherwise prescribe for reasons of national
interest, the total amount of loans, credit accommodations and guarantees as may be defined
by the Monetary Board that may be extended by a bank to any person, partnership,
association, corporation or other entity shall at no time exceed twenty percent (20%) of the net
worth of such bank. The basis for determining compliance with single-borrower limit is the
total credit commitment of the bank to the borrower.
35.2. Unless the Monetary Board prescribes otherwise, the total amount of loans, credit
accommodations and guarantees prescribed in the preceding paragraph may be increased by
an additional ten percent (10%) of the net worth of such bank provided the additional liabilities
of any borrower are adequately secured by trust receipts, shipping documents, warehouse
receipts or other similar documents transferring or securing title covering readily marketable,
non-perishable goods which must be fully covered by insurance.
35.3. The above prescribed ceilings shall include:
(a) the direct liability of the maker or acceptor of paper discounted with or sold
to such bank and the liability of a general indorser, drawer or guarantor who
obtains a loan or other credit accommodation from or discounts paper with or

sells papers to such bank;
(b) in the case of an individual who owns or controls a majority interest in a

corporation, partnership, association or any other entity, the liabilities of said
entities to such bank;
(c) in the case of a corporation, all liabilities to such bank of all subsidiaries in
which such corporation owns or controls a majority interest; and
(d) in the case of a partnership, association or other entity, the liabilities of the
members thereof to such bank.
35.4. Even if a parent corporation, partnership, association, entity or an individual who

owns or controls a majority interest in such entities has no liability to the bank, the
Monetary Board may prescribe the combination of the liabilities of subsidiary
corporations or members of the partnership, association, entity or such individual
under certain circumstances, including but not limited to any of the following
situations:
(a) the parent corporation, partnership, association, entity or individual

guarantees the repayment of the liabilities;
(b) the liabilities were incurred for the accommodation of the parent corporation
or another subsidiary or of the partnership or association or entity or such
individual; or
(c) the subsidiaries though separate entities operate merely as departments or

divisions of a single entity.
35.5. For purposes of this Section, loans, other credit accommodations and guarantees
shall exclude:
(a) loans and other credit accommodations secured by obligations of the Bangko
Sentral or of the Philippine Government;
(b) loans and other credit accommodations fully guaranteed by the government
as to the payment of principal and interest;
(c) loans and other credit accommodations covered by assignment of deposits

maintained in the lending bank and held in the Philippines;
(d) loans, credit accommodations and acceptances under letters of credit to the
extent covered by margin deposits; and
(e) other loans or credit accommodations which the Monetary Board may from
time to time, specify as non-risk items.
35.6. Loans and other credit accommodations, deposits maintained with, and usual
guarantees by a bank to any other bank or non-bank entity, whether locally or abroad,
shall be subject to the limits as herein prescribed.
35.7. Certain types of contingent accounts of borrowers may be included among those
subject to these prescribed limits as may be determined by the Monetary Board. (23a)
SECTION 36. Restriction on Bank Exposure to Directors, Officers, Stockholders and Their
Related Interests. No director or officer of any bank shall, directly or indirectly, for himself or
as the representative or agent of others, borrow from such bank nor shall he become a
guarantor, indorser or surety for loans from such bank to others, or in any manner be an
obligor or incur any contractual liability to the bank except with the written approval of the
majority of all the directors of the bank, excluding the director concerned: Provided, That such
written approval shall not be required for loans, other credit accommodations and advances
granted to officers under a fringe benefit plan approved by the Bangko Sentral. The required
approval shall be entered upon the records of the bank and a copy of such entry shall be
transmitted forthwith to the appropriate supervising and examining department of the Bangko
Sentral.
Dealings of a bank with any of its directors, officers or stockholders and their related interests
shall be upon terms not less favorable to the bank than those offered to others.
After due notice to the board of directors of the bank, the office of any bank director or officer
who violates the provisions of this Section may be declared vacant and the director or officer
shall be subject to the penal provisions of the New Central Bank Act.
The Monetary Board may regulate the amount of loans, credit accommodations and guarantees
that may be extended, directly or indirectly, by a bank to its directors, officers, stockholders
and their related interests, as well as investments of such bank in enterprises owned or
controlled by said directors, officers, stockholders and their related interests. However, the
outstanding loans, credit accommodations and guarantees which a bank may extend to each of
its stockholders, directors, or officers and their related interests, shall be limited to an amount
equivalent to their respective unencumbered deposits and book value of their paid-in capital
contribution in the bank: Provided, however, That loans, credit accommodations and
guarantees secured by assets considered as non-risk by the Monetary Board shall be excluded
from such limit: Provided, further, That loans, credit accommodations and advances to officers
in the form of fringe benefits granted in accordance with rules as may be prescribed by the
Monetary Board shall not be subject to the individual limit.
The Monetary Board shall define the term "related interests."
The limit on loans, credit accommodations and guarantees prescribed herein shall not apply to
loans, credit accommodations and guarantees extended by a cooperative bank to its
cooperative shareholders. (83a)
SECTION 37. Loans and Other Credit Accommodations Against Real Estate. Except as the
Monetary Board may otherwise prescribe, loans and other credit accommodations against real
estate shall not exceed seventy-five percent (75%) of the appraised value of the respective real
estate security, plus sixty percent (60%) of the appraised value of the insured improvements,
and such loans may be made to the owner of the real estate or to his assignees. (78a)
SECTION 47. Foreclosure of Real Estate Mortgage. In the event of foreclosure, whether
judicially or extrajudicially, of any mortgage on real estate which is security for any loan or
other credit accommodation granted, the mortgagor or debtor whose real property has been
sold for the full or partial payment of his obligation shall have the right within one year after
the sale of the real estate, to redeem the property by paying the amount due under the
mortgage deed, with interest thereon at the rate specified in the mortgage, and all the costs and
expenses incurred by the bank or institution from the sale and custody of said property less
the income derived therefrom. However, the purchaser at the auction sale concerned whether
in a judicial or extrajudicial foreclosure shall have the right to enter upon and take possession
of such property immediately after the date of the confirmation of the auction sale and
administer the same in accordance with law. Any petition in court to enjoin or restrain the
conduct of foreclosure proceedings instituted pursuant to this provision shall be given due
course only upon the filing by the petitioner of a bond in an amount fixed by the court
conditioned that he will pay all the damages which the bank may suffer by the enjoining or the
restraint of the foreclosure proceeding.
Notwithstanding Act 3135, juridical persons whose property is being sold pursuant to an
extrajudicial foreclosure, shall have the right to redeem the property in accordance with this
provision until, but not after, the registration of the certificate of foreclosure sale with the
applicable Register of Deeds which in no case shall be more than three (3) months after
foreclosure, whichever is earlier. Owners of property that has been sold in a foreclosure sale
prior to the effectivity of this Act shall retain their redemption rights until their expiration.
(78a)
Conservatorship v. Receivership (BAR)
Vivas v. Monetary Board

August 7, 2013
New Central Bank Law
BSP Function (BAR)
SECTION 3. Responsibility and Primary Objective. The Bangko Sentral shall provide policy
directions in the areas of money, banking, and credit. It shall have supervision over the
operations of banks and exercise such regulatory powers as provided in this Act and other
pertinent laws over the operations of finance companies and non-bank financial institutions
performing quasi-banking functions, hereafter referred to as quasi-banks, and institutions
performing similar functions.
The primary objective of the Bangko Sentral is to maintain price stability conducive to a
balanced and sustainable growth of the economy. It shall also promote and maintain monetary
stability and the convertibility of the peso.
SECTION 4. Place of Business. The Bangko Sentral shall have its principal place of business
in Metro Manila, but may maintain branches, agencies and correspondents in such other
places as the proper conduct of its business may require.
SECTION 5. Corporate Powers. The Bangko Sentral is hereby authorized to adopt, alter, and
use a corporate seal which shall be judicially noticed; to enter into contracts; to lease or own
real and personal property, and to sell or otherwise dispose of the same; to sue and be sued;
and otherwise to do and perform any and all things that may be necessary or proper to carry
out the purposes of this Act.
The Bangko Sentral may acquire and hold such assets and incur such liabilities in connection
with its operations authorized by the provisions of this Act, or as are essential to the proper
conduct of such operations.
The Bangko Sentral may compromise, condone or release, in whole or in part, any claim of or
settled liability to the Bangko Sentral, regardless of the amount involved, under such terms
and conditions as may be prescribed by the Monetary Board to protect the interests of the
Bangko Sentral.
BANK OF COMMERCE v. PLANTERS DEVELOPMENT BANK

SEPTEMBER 24, 2012
Monetary Board; Qualifications and Disqualifications (BAR)
SECTION 6. Composition of the Monetary Board. The powers and functions of the Bangko
Sentral shall be exercised by the Bangko Sentral Monetary Board, hereafter referred to as the
Monetary Board, composed of seven (7) members appointed by the President of the Philippines
for a term of six (6) years.
The seven (7) members are:
(a) the Governor of the Bangko Sentral, who shall be the Chairman of the Monetary Board. The
Governor of the Bangko Sentral shall be head of a department and his appointment shall be
subject to confirmation by the Commission on Appointments. Whenever the Governor is unable
to attend a meeting of the Board, he shall designate a Deputy Governor to act as his alternate:
Provided, That in such event, the Monetary Board shall designate one of its members as acting
Chairman;
(b) a member of the Cabinet to be designated by the President of the Philippines. Whenever the
designated Cabinet Member is unable to attend a meeting of the Board, he shall designate an
Undersecretary in his Department to attend as his alternate; and
(c) five (5) members who shall come from the private sector, all of whom shall serve full-time:
Provided, however, That of the members first appointed under the provisions of this
subsection, three (3) shall have a term of six (6) years, and the other two (2), three (3) years.
No member of the Monetary Board may be reappointed more than once.
SECTION 7. Vacancies. Any vacancy in the Monetary Board created by the death,
resignation, or removal of any member shall be filled by the appointment of a new member to
complete the unexpired period of the term of the member concerned.
SECTION 8. Qualifications. The members of the Monetary Board must be natural-born

citizens of the Philippines, at least thirty-five (35) years of age, with the exception of the
Governor who should at least be forty (40) years of age, of good moral character, of
unquestionable integrity, of known probity and patriotism, and with recognized competence in
social and economic disciplines.
SECTION 9. Disqualifications. In addition to the disqualifications imposed by Republic Act

No. 6713, a member of the Monetary Board is disqualified from being a director, officer,
employee, consultant, lawyer, agent or stockholder of any bank, quasi-bank or any other
institution which is subject to supervision or examination by the Bangko Sentral, in which case
such member shall resign from, and divest himself of any and all interests in such institution
before assumption of office as member of the Monetary Board.
The members of the Monetary Board coming from the private sector shall not hold any other
public office or public employment during their tenure.
No person shall be a member of the Monetary Board if he has been connected directly with any
multilateral banking or financial institution or has a substantial interest in any private bank in
the Philippines, within one (1) year prior to his appointment; likewise, no member of the
Monetary Board shall be employed in any such institution within two (2) years after the
expiration of his term except when he serves as an official representative of the Philippine
Government to such institution.
SECTION 10. Removal. The President may remove any member of the Monetary Board for
any of the following reasons:
(a) If the member is subsequently disqualified under the provisions of Section 8 of this Act; or
(b) If he is physically or mentally incapacitated that he cannot properly discharge his duties
and responsibilities and such incapacity has lasted for more than six (6) months; or
(c) If the member is guilty of acts or operations which are of fraudulent or illegal character or
which are manifestly opposed to the aims and interests of the Bangko Sentral; or
(d) If the member no longer possesses the qualifications specified in Section 8 of this Act.
Conservatorship and Receivership (BAR)
SECTION 29. Appointment of Conservator. Whenever, on the basis of a report submitted by

the appropriate supervising or examining department, the Monetary Board finds that a bank or
a quasi-bank is in a state of continuing inability or unwillingness to maintain a condition of
liquidity deemed adequate to protect the interest of depositors and creditors, the Monetary
Board may appoint a conservator with such powers as the Monetary Board shall deem
necessary to take charge of the assets, liabilities, and the management thereof, reorganize the
management, collect all monies and debts due said institution, and exercise all powers
necessary to restore its viability. The conservator shall report and be responsible to the
Monetary Board and shall have the power to overrule or revoke the actions of the previous
management and board of directors of the bank or quasi-bank.
The conservator should be competent and knowledgeable in bank operations and management.
The conservatorship shall not exceed one (1) year.
The conservator shall receive remuneration to be fixed by the Monetary Board in an amount
not to exceed two-thirds (2/3) of the salary of the president of the institution in one (1) year,
payable in twelve (12) equal monthly payments: Provided, That, if at any time within one-year
period, the conservatorship is terminated on the ground that the institution can operate on its
own, the conservator shall receive the balance of the remuneration which he would have
received up to the end of the year; but if the conservatorship is terminated on other grounds,
the conservator shall not be entitled to such remaining balance. The Monetary Board may
appoint a conservator connected with the Bangko Sentral, in which case he shall not be
entitled to receive any remuneration or emolument from the Bangko Sentral during the
conservatorship. The expenses attendant to the conservatorship shall be borne by the bank or
quasi-bank concerned.
The Monetary Board shall terminate the conservatorship when it is satisfied that the institution
can continue to operate on its own and the conservatorship is no longer necessary. The
conservatorship shall likewise be terminated should the Monetary Board, on the basis of the
report of the conservator or of its own findings, determine that the continuance in business of
the institution would involve probable loss to its depositors or creditors, in which case the
provisions of Section 30 shall apply.
SECTION 30. Proceedings in Receivership and Liquidation. Whenever, upon report of the
head of the supervising or examining department, the Monetary Board finds that a bank or
quasi-bank:
(a) is unable to pay its liabilities as they become due in the ordinary course of business:
Provided, That this shall not include inability to pay caused by extraordinary demands induced
by financial panic in the banking community;
(b) has insufficient realizable assets, as determined by the Bangko Sentral, to meet its
liabilities; or
(c) cannot continue in business without involving probable losses to its depositors or creditors;
or
(d) has willfully violated a cease and desist order under Section 37 that has become final,
involving acts or transactions which amount to fraud or a dissipation of the assets of the
institution; in which cases, the Monetary Board may summarily and without need for prior
hearing forbid the institution from doing business in the Philippines and designate the
Philippine Deposit Insurance Corporation as receiver of the banking institution.
For a quasi-bank, any person of recognized competence in banking or finance may be designed
as receiver.
The receiver shall immediately gather and take charge of all the assets and liabilities of the
institution, administer the same for the benefit of its creditors, and exercise the general powers
of a receiver under the Revised Rules of Court but shall not, with the exception of
administrative expenditures, pay or commit any act that will involve the transfer or disposition
of any asset of the institution: Provided, That the receiver may deposit or place the funds of the
institution in non-speculative investments. The receiver shall determine as soon as possible,
but not later than ninety (90) days from take over, whether the institution may be rehabilitated
or otherwise placed in such a condition so that it may be permitted to resume business with
safety to its depositors and creditors and the general public: Provided, That any determination
for the resumption of business of the institution shall be subject to prior approval of the
Monetary Board.
If the receiver determines that the institution cannot be rehabilitated or permitted to resume
business in accordance with the next preceding paragraph, the Monetary Board shall notify in
writing the board of directors of its findings and direct the receiver to proceed with the
liquidation of the institution. The receiver shall:
(1) file ex parte with the proper regional trial court, and without requirement of prior notice or
any other action, a petition for assistance in the liquidation of the institution pursuant to a
liquidation plan adopted by the Philippine Deposit Insurance Corporation for general
application to all closed banks. In case of quasi-banks, the liquidation plan shall be adopted by
the Monetary Board. Upon acquiring jurisdiction, the court shall, upon motion by the receiver
after due notice, adjudicate disputed claims against the institution, assist the enforcement of
individual liabilities of the stockholders, directors and officers, and decide on other issues as
may be material to implement the liquidation plan adopted. The receiver shall pay the cost of
the proceedings from the assets of the institution.
(2) convert the assets of the institutions to money, dispose of the same to creditors and other
parties, for the purpose of paying the debts of such institution in accordance with the rules on
concurrence and preference of credit under the Civil Code of the Philippines and he may, in the
name of the institution, and with the assistance of counsel as he may retain, institute such
actions as may be necessary to collect and recover accounts and assets of, or defend any action
against, the institution. The assets of an institution under receivership or liquidation shall be
deemed in custodia legis in the hands of the receiver and shall, from the moment the
institution was placed under such receivership or liquidation, be exempt from any order of
garnishment, levy, attachment, or execution.
The actions of the Monetary Board taken under this section or under Section 29 of this Act
shall be final and executory, and may not be restrained or set aside by the court except on
petition for certiorari on the ground that the action taken was in excess of jurisdiction or with
such grave abuse of discretion as to amount to lack or excess of jurisdiction. The petition for
certiorari may only be filed by the stockholders of record representing the majority of the
capital stock within ten (10) days from receipt by the board of directors of the institution of the
order directing receivership, liquidation or conservatorship.
The designation of a conservator under Section 29 of this Act or the appointment of a receiver
under this section shall be vested exclusively with the Monetary Board. Furthermore, the
designation of a conservator is not a precondition to the designation of a receiver.
Currency; Legal Tender; Replacement and Retirement of Currencies (BAR)
SECTION 49. Definition of Currency. The word "currency" is hereby defined, for purposes of
this Act, as meaning all Philippine notes and coins issued or circulating in accordance with the
provisions of this Act.
SECTION 52. Legal Tender Power. All notes and coins issued by the Bangko Sentral shall be
fully guaranteed by the Government of the Republic of the Philippines and shall be legal tender
in the Philippines for all debts, both public and private: Provided, however, That, unless
otherwise fixed by the Monetary Board, coins shall be legal tender in amounts not exceeding
Fifty pesos (P50.00) for denominations of Twenty-five centavos and above, and in amounts not
exceeding Twenty pesos (P20.00) for denominations of Ten centavos or less.
SECTION 55 Interconvertibility of Currency. The Bangko Sentral shall exchange, on demand

and without charge, Philippine currency of any denomination for Philippine notes and coins of
any other denomination requested. If for any reason the Bangko Sentral is temporarily unable
to provide notes or coins of the denominations requested, it shall meet its obligations by
delivering notes and coins of the denominations which most nearly approximate those
requested.
SECTION 56. Replacement of Currency Unfit for Circulation. The Bangko Sentral shall
withdraw from circulation and shall demonetize all notes and coins which for any reason
whatsoever are unfit for circulation and shall replace them by adequate notes and coins:
Provided, however, That the Bangko Sentral shall not replace notes and coins the identification
of which is impossible, coins which show signs of filing, clipping or perforation, and notes
which have lost more than two-fifths (2/5) of their surface or all of the signatures inscribed
thereon. Notes and coins in such mutilated conditions shall be withdrawn from circulation and
demonetized without compensation to the bearer.
SECTION 57. Retirement of Old Notes and Coins. The Bangko Sentral may call in for
replacement notes of any series or denomination which are more than five (5) years old and
coins which are more than (10) years old.
Notes and coins called in for replacement in accordance with this provision shall remain legal
tender for a period of one (1) year from the date of call. After this period, they shall cease to be
legal tender but during the following year, or for such longer period as the Monetary Board may
determine, they may be exchanged at par and without charge in the Bangko Sentral and by
agents duly authorized by the Bangko Sentral for this purpose. After the expiration of this
latter period, the notes and coins which have not been exchanged shall cease to be a liability of
the Bangko Sentral and shall be demonetized. The Bangko Sentral shall also demonetize all
notes and coins which have been called in and replaced.
SECTION 60. Legal Character. Checks representing demand deposits do not have legal
tender power and their acceptance in the payment of debts, both public and private, is at the
option of the creditor: Provided, however, That a check which has been cleared and credited to
the account of the creditor shall be equivalent to a delivery to the creditor of cash in an amount
equal to the amount credited to his account.
Reserves (BAR)
SECTION 65. International Reserves. In order to maintain the international stability and
convertibility of the Philippine peso, the Bangko Sentral shall maintain international reserves
adequate to meet any foreseeable net demands on the Bangko Sentral for foreign currencies.
In judging the adequacy of the international reserves, the Monetary Board shall be guided by
the prospective receipts and payments of foreign exchange by the Philippines. The Board shall
give special attention to the volume and maturity of the Bangko Sentral's own liabilities in
foreign currencies, to the volume and maturity of the foreign exchange assets and liabilities of
other banks operating in the Philippines and, insofar as they are known or can be estimated,
the volume and maturity of the foreign exchange assets and liabilities of all other persons and
entities in the Philippines.
SECTION 66. Composition of the International Reserves. The international reserves of the
Bangko Sentral may include but shall not be limited to the following assets:
(a) gold; and
(b) assets in foreign currencies in the form of: documents and instruments customarily
employed for the international transfer of funds; demand and time deposits in central banks,
treasuries and commercial banks abroad; foreign government securities; and foreign notes and
coins.
The Monetary Board shall endeavor to hold the foreign exchange resources of the Bangko
Sentral in freely convertible currencies; moreover, the Board shall give particular consideration
to the prospects of continued strength and convertibility of the currencies in which the reserve
is maintained, as well as to the anticipated demands for such currencies. The Monetary Board
shall issue regulations determining the other qualifications which foreign exchange assets
must meet in order to be included in the international reserves of the Bangko Sentral.
The Bangko Sentral shall be free to convert any of the assets in its international reserves into
other assets as described in subsections (a) and (b) of this section.
Bank Deposits and Deposits Substitutes (BAR)
SECTION 94. Reserve Requirements. In order to control the volume of money created by the
credit operations of the banking system, all banks operating in the Philippines shall be
required to maintain reserves against their deposit liabilities: Provided, That the Monetary
Board may, at its discretion, also require all banks and/or quasi-banks to maintain reserves
against funds held in trust and liabilities for deposit substitutes as defined in this Act. The
required reserves of each bank shall be proportional to the volume of its deposit liabilities and
shall ordinarily take the form of a deposit in the Bangko Sentral. Reserve requirements shall be
applied to all banks of the same category uniformly and without discrimination.
Reserves against deposit substitutes, if imposed, shall be determined in the same manner as
provided for reserve requirements against regular bank deposits, with respect to the
imposition, increase, and computation of reserves.
The Monetary Board may exempt from reserve requirements deposits and deposit substitutes
with remaining maturities of two (2) years or more, as well as interbank borrowings.
Since the requirement to maintain bank reserves is imposed primarily to control the volume of
money, the Bangko Sentral shall not pay interest on the reserves maintained with it unless the
Monetary Board decides otherwise as warranted by circumstances.
SECTION 95. Definition of Deposit Substitutes. The term "deposit substitutes" is defined as
an alternative form of obtaining funds from the public, other than deposits, through the
issuance, endorsement, or acceptance of debt instruments for the borrower's own account, for
the purpose of relending or purchasing of receivables and other obligations. These instruments
may include, but need not be limited to, bankers acceptances, promissory notes,
participations, certificates of assignment and similar instruments with recourse, and
repurchase agreements. The Monetary Board shall determine what specific instruments shall
be considered as deposit substitutes for the purposes of Section 94 of this Act: Provided,
however, That deposit substitutes of commercial, industrial and other non-financial companies
for the limited purpose of financing their own needs or the needs of their agents or dealers
shall not be covered by the provisions of Section 94 of this Act.
Bank Secrecy Law
Rule and Exceptions (BAR)
Section I. It is hereby declared to be the policy of the Government to give encouragement to the
people to deposit their money in banking institutions and to discourage private hoarding so
that the same may be properly utilized by banks in authorized loans to assist in the economic
development of the country.
*Sec. 2. 1 All deposits of whatever nature with banks or banking institutions in the Philippines
including investments in bonds issued by the Government of the Philippines, its political
subdivisions and its instrumentalities, are hereby considered as of an absolutely confidential
nature and may not be examined, inquired or looked into by any person, government official,
bureau or office, except when the examination is made in the course of a special or general
examination of a bank and is specifically authorized by the Monetary Board after being
satisfied that there is reasonable ground to believe that a bank fraud or serious irregularity has
been or is being committed and that it is necessary to look into the deposit to establish such
fraud or irregularity, or when the examination is made by an independent auditor hired by the
bank to conduct its regular audit provided that the examination is for audit purposes only and
the results thereof shall be for the exclusive use of the bank, or upon written permission of the
depositor, or in cases of impeachment, or upon order of a competent court in cases of bribery
or dereliction of duty of public officials, or in cases where the money deposited or invested is
the subject matter of the litigation. (As amended by PD No.1792, January 16, 1981)
*Sec. 3. It shall be unlawful for any official or employee of a bank to disclose to any person
other than those mentioned in Section Two hereof, or for an independent auditor hired by a
bank to conduct its regular audit to disclose to any person other than a bank director, official
or employee authorized by the bank, any information concerning said deposits. (As amended by
PD No.1792)
*This Section and Section 3 were both amended by Pres. Decree No.1792, issued January 16,
1981, PD 1792 was expressly repealed by Sec. 135 of Rep. Act No.7653, approved June 14,
1993. The original Sections 2 and 3 of Rep. Act No.1405 are hereby reproduced for reference, as
follows:
"Sec. 2 All deposits of whatever nature with banks or banking institutions in the Philippines
including investments in bonds issued by the Government of the Philippines, its political
subdivisions and its instrumentalities, are hereby considered as of an absolutely confidential
nature and may not be examined, inquired or looked into by any person, government official,
bureau or office, except upon written permission of the depositor, or in cases of impeachment, or
upon order of a competent court in cases of bribery or dereliction of duty of public officials. or in
cases where the money deposited or invested is the subject matter of the litigation,"
"Sec. 3. It shall be unlawful for any official or employee of a banking institution to disclose to any
person other than those mentioned in Section two hereof any information concerning said
deposits."
Foreign Currency Deposit Act

Rule and Exception (BAR)
Section 2. Authority to deposit foreign currencies. Any person, natural or juridical, may, in
accordance with the provisions of this Act, deposit with such Philippine banks in good
standing, as may, upon application, be designated by the Central Bank for the purpose, foreign
currencies which are acceptable as part of the international reserve, except those which are
required by the Central Bank to be surrendered in accordance with the provisions of Republic
Act Numbered two hundred sixty-five (Now Rep. Act No. 7653).
Section 3. Authority of banks to accept foreign currency deposits. The banks designated by
the Central Bank under Section two hereof shall have the authority:
(1) To accept deposits and to accept foreign currencies in trust Provided, That numbered
accounts for recording and servicing of said deposits shall be allowed;
(2) To issue certificates to evidence such deposits;
(3) To discount said certificates;
(4) To accept said deposits as collateral for loans subject to such rules and regulations as
may be promulgated by the Central Bank from time to time; and
(5) To pay interest in foreign currency on such deposits.
Section 4. Foreign currency cover requirements. Except as the Monetary Board may
otherwise prescribe or allow, the depository banks shall maintain at all times a one hundred
percent foreign currency cover for their liabilities, of which cover at least fifteen percent shall
be in the form of foreign currency deposit with the Central Bank, and the balance in the form
of foreign currency loans or securities, which loans or securities shall be of short term
maturities and readily marketable. Such foreign currency loans may include loans to domestic
enterprises which are export-oriented or registered with the Board of Investments, subject to
the limitations to be prescribed by the Monetary Board on such loans. Except as the Monetary
Board may otherwise prescribe or allow, the foreign currency cover shall be in the same
currency as that of the corresponding foreign currency deposit liability. The Central Bank may
pay interest on the foreign currency deposit, and if requested shall exchange the foreign
currency notes and coins into foreign currency instruments drawn on its depository banks. (As
amended by PD No. 1453, June 11, 1978.)
Depository banks which, on account of networth, resources, past performance, or other

pertinent criteria, have been qualified by the Monetary Board to function under an expanded
foreign currency deposit system, shall be exempt from the requirements in the preceding
paragraph of maintaining fifteen percent (15%) of the cover in the form of foreign currency
deposit with the Central Bank. Subject to prior Central Bank approval when required by
Central Bank regulations, said depository banks may extend foreign currency loans to any
domestic enterprise, without the limitations prescribed in the preceding paragraph regarding
maturity and marketability, and such loans shall be eligible for purposes of the 100% foreign
currency cover prescribed in the preceding paragraph. (As added by PD No. 1035.)
Section 5. Withdrawability and transferability of deposits. There shall be no restriction on the

withdrawal by the depositor of his deposit or on the transferability of the same abroad except
those arising from the contract between the depositor and the bank.
Section 6. Tax exemption. All foreign currency deposits made under this Act, as amended by
PD No. 1035, as well as foreign currency deposits authorized under PD No. 1034, including
interest and all other income or earnings of such deposits, are hereby exempted from any and
all taxes whatsoever irrespective of whether or not these deposits are made by residents or
nonresidents so long as the deposits are eligible or allowed under aforementioned laws and, in
the case of nonresidents, irrespective of whether or not they are engaged in trade or business
in the Philippines. (As amended by PD No. 1246, prom. Nov. 21, 1977.)
Section 7. Rules and regulations. The Monetary Board of the Central Bank shall promulgate
such rules and regulations as may be necessary to carry out the provisions of this Act which
shall take effect after the publications in the Official Gazette and in a newspaper of national
circulation for at least once a week for three consecutive weeks. In case the Central Bank
promulgates new rules and regulations decreasing the rights of depositors, rules and
regulations at the time the deposit was made shall govern.
Section 8. Secrecy of foreign currency deposits. All foreign currency deposits authorized
under this Act, as amended by PD No. 1035, as well as foreign currency deposits authorized
under PD 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; Provided, however, That said foreign currency deposits shall be exempt from
attachment, garnishment, or any other order or process of any court, legislative body,
government agency or any administrative body whatsoever. (As amended by PD No. 1035, and
further amended by PD No. 1246, prom. Nov. 21, 1977.)
Section 12-A. Amendatory enactments and regulations. In the event a new enactment or
regulation is issued decreasing the rights hereunder granted, such new enactment or
regulation shall not apply to foreign currency deposits already made or existing at the time of
issuance of such new enactment or regulation, but such new enactment or regulation shall
apply only to foreign currency deposits made after its issuance. (As added by PD No. 1246,
prom. Nov. 21, 1977.)
CHINA BANKING CORP v. CA

511 SCRA 110
GSIS v. CA
G.R. NO. 189206
Truth in Lending Act
Coverage (BAR)
Section 4. Any creditor shall furnish to each person to whom credit is extended, prior to the
consummation of the transaction, a clear statement in writing setting forth, to the extent
applicable and in accordance with rules and regulations prescribed by the Board, the following
information:
(1) the cash price or delivered price of the property or service to be acquired;
(2) the amounts, if any, to be credited as down payment and/or trade-in;
(3) the difference between the amounts set forth under clauses (1) and (2);
(4) the charges, individually itemized, which are paid or to be paid by such person in
connection with the transaction but which are not incident to the extension of credit;
(5) the total amount to be financed;
(6) the finance charge expressed in terms of pesos and centavos; and
(7) the percentage that the finance bears to the total amount to be financed expressed
as a simple annual rate on the outstanding unpaid balance of the obligation.
Section 6. (a) Any creditor who in connection with any credit transaction fails to disclose to any
person any information in violation of this Act or any regulation issued thereunder shall be
liable to such person in the amount of P100 or in an amount equal to twice the finance charged
required by such creditor in connection with such transaction, whichever is the greater, except
that such liability shall not exceed P2,000 on any credit transaction. Action to recover such
penalty may be brought by such person within one year from the date of the occurrence of the
violation, in any court of competent jurisdiction. In any action under this subsection in which
any person is entitled to a recovery, the creditor shall be liable for reasonable attorney's fees
and court costs as determined by the court.
(b) Except as specified in subsection (a) of this section, nothing contained in this Act or
any regulation contained in this Act or any regulation thereunder shall affect the validity or
enforceability of any contract or transactions.
(c) Any person who willfully violates any provision of this Act or any regulation issued
thereunder shall be fined by not less than P1,00 or more than P5,000 or imprisonment for not
less than 6 months, nor more than one year or both.
(d) No punishment or penalty provided by this Act shall apply to the Philippine
Government or any agency or any political subdivision thereof.
(e) A final judgment hereafter rendered in any criminal proceeding under this Act to the
effect that a defendant has willfully violated this Act shall be prima facie evidence against such
defendant in an action or proceeding brought by any other party against such defendant under
this Act as to all matters respecting which said judgment would be an estoppel as between the
parties thereto.
UCPB v. BELUSO
530 SCRA 567
DBP v. ARCILLA
462 SCRA 599
SPS SILOS v. PNB

JULY 2, 2014
Unclaimed Balances Act
Coverage (BAR)
Sec. 1. Unclaimed balances", within the meaning of this Act, shall include credits or deposits of
money, bullion, security or other evidence of indebtedness of any kind, and interest thereon
with banks, buildings and loan associations, and trust corporations, as hereinafter defined, in
favor of any person known to be dead or who has not made further deposits or withdrawals
during the preceding ten years or more. Such unclaimed balances, together with the increase
and proceeds thereof, shall be deposited with the Treasurer of the Philippines to the credit of
the Government of the Republic of the Philippines to be used as the National Assembly may
direct.
RP v. CA
345 SCRA 63
RCBC v. HI-TRI DEVELOPMENT CORP.

JUNE 13, 2012
PDIC
Coverage (BAR)
SEC. 5. As used in this Act
xxx
The term insured deposit means the amount due to any bonafide depositor for legitimate
deposits in an insured bank as of the date of closure but not to exceed Five hundred thousand
pesos (P500,000.00). Such amount shall be determined according to such regulations as the
Board of Directors may prescribe. In determining such amount due to any depositor, there
shall be added together all deposits in the bank maintained in the same right and capacity for
his or her benefit either in his or her own name or in the name of others. A joint account
regardless of whether the conjunction and, or, and/or is used, shall be insured separately
from any individually-owned deposit account: Provided, That (1) if the account is held jointly by
two or more natural persons, or by two or more juridical persons or entities, the maximum
insured deposit shall be divided into as many equal shares as there are individuals, juridical
persons or entities, unless a different sharing is stipulated in the document of deposit, and (2)
if the account is held by a juridical person or entity jointly with one or more natural persons,
the maximum insured deposit shall be presumed to belong entirely to such juridical person or
entity: Provided, further, That the aggregate of the interest of each co-owner over several joint
accounts, whether owned by the same or different combinations of individuals, juridical
persons or entities, shall likewise be subject to the maximum insured deposit of Five hundred
thousand pesos (P500,000.00): Provided, furthermore, That the provisions of any law to the
contrary notwithstanding, no owner/holder of any passbook, certificate of deposit, or other
evidence of deposit shall be recognized as a depositor entitled to the rights provided in this Act
unless the passbook, certificate of deposit, or other evidence of deposit is determined by the
Corporation to be an authentic document or record of the issuing bank: Provided, finally, That
in case of a condition that threatens the monetary and financial stability of the banking system
that may have systemic consequences, as defined in Section 22 hereof, as determined by the
Monetary Board, the maximum deposit insurance cover may be adjusted in such amount, for
such a period, and/or for such deposit products, as may be determined by a unanimous vote of
the Board of Directors in a meeting called for the purpose and chaired by the Secretary of
Finance, subject to the approval of the President of the Philippines.
PDIC v. CA
402 SCRA 194
PDIC v. CITIBANK
APRIL 11, 2012
Anti-Money Laundering Act
Covered Institution (BAR)
Section 3(a) Definitions. For purposes of this Act, the following terms are hereby defined as
follows:
(a) Covered persons, natural or juridical, refer to:
(1) banks, non-banks, quasi-banks, trust entities, foreign exchange dealers, pawnshops, money
changers, remittance and transfer companies and other similar entities and all other persons
and their subsidiaries and affiliates supervised or regulated by the Bangko Sentral ng Pilipinas
(BSP);
(2) insurance companies, pre-need companies and all other persons supervised or regulated by
the Insurance Commission (IC);
(3) (i) securities dealers, brokers, salesmen, investment houses and other similar persons
managing securities or rendering services as investment agent, advisor, or consultant, (ii)
mutual funds, close-end investment companies, common trust funds, and other similar
persons, and (iii) other entities administering or otherwise dealing in currency, commodities or
financial derivatives based thereon, valuable objects, cash substitutes and other similar
monetary instruments or property supervised or regulated by the Securities and Exchange
Commission (SEC);
(4) jewelry dealers in precious metals, who, as a business, trade in precious metals, for
transactions in excess of One million pesos (P1,000,000.00);
(5) jewelry dealers in precious stones, who, as a business, trade in precious stones, for
transactions in excess of One million pesos (P1,000,000.00);
(6) company service providers which, as a business, provide any of the following services to
third parties: (i) acting as a formation agent of juridical persons; (ii) acting as (or arranging for
another person to act as) a director or corporate secretary of a company, a partner of a
partnership, or a similar position in relation to other juridical persons; (iii) providing a
registered office, business address or accommodation, correspondence or administrative
address for a company, a partnership or any other legal person or arrangement; and (iv) acting
as (or arranging for another person to act as) a nominee shareholder for another person; and
(7) persons who provide any of the following services:
(i) managing of client money, securities or other assets;
(ii) management of bank, savings or securities accounts;
(iii) organization of contributions for the creation, operation or management of companies; and
(iv) creation, operation or management of juridical persons or arrangements, and buying and
selling business entities.
Notwithstanding the foregoing, the term covered persons shall exclude lawyers and
accountants acting as independent legal professionals in relation to information concerning
their clients or where disclosure of information would compromise client confidences or the
attorney-client relationship: Provided, That these lawyers and accountants are authorized to
practice in the Philippines and shall continue to be subject to the provisions of their respective
codes of conduct and/or professional responsibility or any of its amendments.
Covered Transaction (BAR)
'Covered transaction' is a transaction in cash or other equivalent monetary instrument

involving a total amount in excess of Five hundred thousand pesos (PhP 500,000.00) within
one (1) banking day.
Suspicious Transaction (BAR)
'Suspicious transaction'are transactions with covered institutions, regardless of the amounts

involved, where any of the following circumstances exist:
1. there is no underlying legal or trade obligation, purpose or economic justification;
2. the client is not properly identified;
3. the amount involved is not commensurate with the business or financial capacity of the
client;
4. taking into account all known circumstances, it may be perceived that the client's
transaction is structured in order to avoid being the subject of reporting requirements under
the Act;
5. any circumstances relating to the transaction which is observed to deviate from the profile of
the client and/or the client's past transactions with the covered institution;
6. the transactions is in a way related to an unlawful activity or offense under this Act that is
about to be, is being or has been committed; or
7. any transactions that is similar or analogous to any of the foregoing."
Predicate Crimes to Money Laundering (BAR)
Unlawful activity refers to any act or omission or series or combination thereof involving or
having direct relation to the following:
(1) Kidnapping for ransom under Article 267 of Act No. 3815, otherwise known as the
Revised Penal Code, as amended;
(2) Sections 4, 5, 6, 8, 9, 10, 11, 12, 13, 14, 15 and 16 of Republic Act No. 9165, otherwise
known as the Comprehensive Dangerous Drugs Act of 2002;
(3) Section 3 paragraphs B, C, E, G, H and I of Republic Act No. 3019, as amended,

otherwise known as the Anti-Graft and Corrupt Practices Act;
(4) Plunder under Republic Act No. 7080, as amended;
(5) Robbery and extortion under Articles 294, 295, 296, 299, 300, 301 and 302 of the
(6) Jueteng and Masiao punished as illegal gambling under Presidential Decree No. 1602;
(7) Piracy on the high seas under the Revised Penal Code, as amended and Presidential
Decree No. 532;
(8) Qualified theft under Article 310 of the Revised Penal Code, as amended;
(9) Swindling under Article 315 and Other Forms of Swindling under Article 316 of the
(10) Smuggling under Republic Act Nos. 455 and 1937;
(11) Violations of Republic Act No. 8792, otherwise known as the Electronic Commerce Act
of 2000;
(12) Hijacking and other violations under Republic Act No. 6235; destructive arson and
murder, as defined under the Revised Penal Code, as amended;
(13) Terrorism and conspiracy to commit terrorism as defined and penalized under Sections
3 and 4 of Republic Act No. 9372;
(14) Financing of terrorism under Section 4 and offenses punishable under Sections 5, 6, 7
and 8 of Republic Act No. 10168, otherwise known as the Terrorism Financing
Prevention and Suppression Act of 2012:
(15) Bribery under Articles 210, 211 and 211-A of the Revised Penal Code, as amended,
and Corruption of Public Officers under Article 212 of the Revised Penal Code, as
amended;
(16) Frauds and Illegal Exactions and Transactions under Articles 213, 214, 215 and 216
of the Revised Penal Code, as amended;
(17) Malversation of Public Funds and Property under Articles 217 and 222 of the Revised
Penal Code, as amended;
(18) Forgeries and Counterfeiting under Articles 163, 166, 167, 168, 169 and 176 of the
(19) Violations of Sections 4 to 6 of Republic Act No. 9208, otherwise known as the Anti-
Trafficking in Persons Act of 2003;
(20) Violations of Sections 78 to 79 of Chapter IV, of Presidential Decree No. 705, otherwise
known as the Revised Forestry Code of the Philippines, as amended;
(21) Violations of Sections 86 to 106 of Chapter VI, of Republic Act No. 8550, otherwise
known as the Philippine Fisheries Code of 1998;
(22) Violations of Sections 101 to 107, and 110 of Republic Act No. 7942, otherwise known
as the Philippine Mining Act of 1995;
(23) Violations of Section 27(c), (e), (f), (g) and (i), of Republic Act No. 9147, otherwise
known as the Wildlife Resources Conservation and Protection Act;
(24) Violation of Section 7(b) of Republic Act No. 9072, otherwise known as the National
Caves and Cave Resources Management Protection Act;
(25) Violation of Republic Act No. 6539, otherwise known as the Anti-Carnapping Act of
2002, as amended;
(26) Violations of Sections 1, 3 and 5 of Presidential Decree No. 1866, as amended,

otherwise known as the decree Codifying the Laws on Illegal/Unlawful Possession,
Manufacture, Dealing In, Acquisition or Disposition of Firearms, Ammunition or
Explosives;
(27) Violation of Presidential Decree No. 1612, otherwise known as the Anti-Fencing Law;
(28) Violation of Section 6 of Republic Act No. 8042, otherwise known as the Migrant
Workers and Overseas Filipinos Act of 1995, as amended by Republic Act No. 10022;
(29) Violation of Republic Act No. 8293, otherwise known as the Intellectual Property Code
of the Philippines;
(30) Violation of Section 4 of Republic Act No. 9995, otherwise known as the Anti-Photo
and Video Voyeurism Act of 2009;
(31) Violation of Section 4 of Republic Act No. 9775, otherwise known as the Anti-Child
Pornography Act of 2009;
(32) Violations of Sections 5, 7, 8, 9, 10(c), (d) and (e), 11, 12 and 14 of Republic Act No.
7610, otherwise known as the Special Protection of Children Against Abuse,
Exploitation and Discrimination;
(33) Fraudulent practices and other violations under Republic Act No. 8799, otherwise
known as the Securities Regulation Code of 2000; and
(34) Felonies or offenses of a similar nature that are punishable under the penal laws of
other countries."
How Violation is Committed
Section 4. Money Laundering Offense. Money laundering is committed by any person who,
knowing that any monetary instrument or property represents, involves, or relates to the
proceeds of any unlawful activity:
(a) transacts said monetary instrument or property;
(b) converts, transfers, disposes of, moves, acquires, possesses or uses said monetary
instrument or property;
(c) conceals or disguises the true nature, source, location, disposition, movement or
ownership of or rights with respect to said monetary instrument or property;
(d) attempts or conspires to commit money laundering offenses referred to in paragraphs

(a), (b) or (c);
(e) aids, abets, assists in or counsels the commission of the money laundering offenses
referred to in paragraphs (a), (b) or (c) above; and
(f) performs or fails to perform any act as a result of which he facilitates the offense of
money laundering referred to in paragraphs (a), (b) or (c) above.
Money laundering is also committed by any covered person who, knowing that a covered or
suspicious transaction is required under this Act to be reported to the Anti-Money Laundering
Council (AMLC), fails to do so.
Safe Harbor Provision
Safe Harbor Provision. No administrative, criminal or civil proceedings shall lie against any
person for having made a covered transaction report in the regular performance of his duties
and in good faith, whether or not such reporting results in any criminal prosecution under the
AMLA or any other Philippine law.
Prohibition Against Political Persecution
Section 16. Prohibitions Against Political Harassment. This Act shall not be used for political
prosecution or harassment or as an instrument to hamper competition in trade and commerce.
No case for money laundering may be filed against and no assets shall be frozen, attached or
forfeited to the prejudice of a candidate for an electoral office during an election period.
Freeze Order and Inquiry Order (BAR)
Section 10. Freezing of Monetary Instrument or Property. Upon a verified ex parte petition by
the AMLC and after determination that probable cause exists that any monetary instrument or
property is in any way related to an unlawful activity as defined in Section 3(i) hereof, the
Court of Appeals may issue a freeze order which shall be effective immediately, and which shall
not exceed six (6) months depending upon the circumstances of the case: Provided, That if
there is no case filed against a person whose account has been frozen within the period
determined by the court, the freeze order shall be deemed ipso facto lifted:Provided, further,
That this new rule shall not apply to pending cases in the courts. In any case, the court should
act on the petition to freeze within twenty-four (24) hours from filing of the petition. If the
application is filed a day before a nonworking day, the computation of the twenty-four (24)-
hour period shall exclude the nonworking days.
A person whose account has been frozen may file a motion to lift the freeze order and the court
must resolve this motion before the expiration of the freeze order.
No court shall issue a temporary restraining order or a writ of injunction against any freeze
order, except the Supreme Court.
Section 11. Authority to Inquire into Bank Deposits. Notwithstanding the provisions of
Republic Act No. 1405, as amended; Republic Act No. 6426, as amended; Republic Act No.
8791; and other laws, the AMLC may inquire into or examine any particular deposit or
investment, including related accounts, with any banking institution or non-bank financial
institution upon order of any competent court based on an ex parte application in cases of
violations of this Act, when it has been established that there is probable cause that the
deposits or investments, including related accounts involved, are related to an unlawful activity
as defined in Section 3(i) hereof or a money laundering offense under Section 4 hereof; except
that no court order shall be required in cases involving activities defined in Section 3(i)(1), (2),
and (12) hereof, and felonies or offenses of a nature similar to those mentioned in Section 3(i)
(1), (2), and (12), which are Punishable under the penal laws of other countries, and terrorism
and conspiracy to commit terrorism as defined and penalized under Republic Act No. 9372.
The Court of Appeals shall act on the application to inquire into or examine any deposit or
investment with any banking institution or non-bank financial institution within twenty-four
(24) hours from filing of the application.
To ensure compliance with this Act, the Bangko Sentral ng Pilipinas may, in the course of a
periodic or special examination, check the compliance of a Covered institution with the
requirements of the AMLA and its implementing rules and regulations.
For purposes of this section, related accounts shall refer to accounts, the funds and sources of
which originated from and/or are materially linked to the monetary instrument(s) or
property(ies) subject of the freeze order(s).
A court order ex parte must first be obtained before the AMLC can inquire into these related
Accounts: Provided,That the procedure for the ex parte application of the ex parte court order
for the principal account shall be the same with that of the related accounts.
The authority to inquire into or examine the main account and the related accounts shall
comply with the requirements of Article III, Sections 2 and 3 of the 1987 Constitution, which
are hereby incorporated by reference.
RP v. EUGENIO (BAR)
545 SCRA 384
LIGOT v. REPUBLIC
MARCH 6, 2013

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COMMERCIAL LAW REVIEW

BANKING AND OTHER ALLIED LAWS

General Banking Law

Definition of Banks (BAR)

SECTION 3. Definition and Classification of Banks.

3.2. Banks shall be classified into:

Banking Services; Relationship with Depositor; Prohibited Services (BAR)

53.1. Receive in custody funds, documents and valuable objects;

53.5. Rent out safety deposit boxes.

SECTION 55. Prohibited Transactions.

55.1. No director, officer, employee, or agent of any bank shall

55.2. No borrower of a bank shall

55.3. No examiner, officer or employee of the Bangko Sentral or of any department,

The making of false reports or misrepresentation or suppression of material facts by

NISCE v. EQUITABLE PCI

Classes of Banks; Powers and Restrictions of Types of Banks (BAR)

SECTION 3. xxx Classification of Banks.

3.2. Banks shall be classified into:

Except as the Monetary Board may otherwise prescribe:

Except as the Monetary Board may otherwise prescribe:

Acquisition of Realty; Rule and Exception (BAR)

SECTION 52. Acquisition of Real Estate by Way of Satisfaction of Claims. Notwithstanding

BSP Functions (BAR)

4.6. Enforcing prompt corrective action. (n)

8.1. That the entity is a stock corporation (7);

SECTION 12. Stockholdings of Family Groups or Related Interests. Stockholdings of

18.1. When a bank is under comptrollership or conservatorship; or

18.2. When a bank is found by the Monetary Board to be conducting business in an

18.3. When a bank is found by the Monetary Board to be in an unsatisfactory financial

financial assistance provided by the government or a government-owned or controlled

Branching by all other banks shall be governed by pertinent laws.

Loan Limitation; SBL; DOSRI; Security Foreclosure (BAR)

SECTION 35. Limit on Loans, Credit Accommodations and Guarantees.

35.3. The above prescribed ceilings shall include:

obtains a loan or other credit accommodation from or discounts paper with or

(b) in the case of an individual who owns or controls a majority interest in a

35.4. Even if a parent corporation, partnership, association, entity or an individual who

(a) the parent corporation, partnership, association, entity or individual

(c) the subsidiaries though separate entities operate merely as departments or

(c) loans and other credit accommodations covered by assignment of deposits

The Monetary Board shall define the term "related interests."

Conservatorship v. Receivership (BAR)

Vivas v. Monetary Board

New Central Bank Law

BSP Function (BAR)

BANK OF COMMERCE v. PLANTERS DEVELOPMENT BANK

Monetary Board; Qualifications and Disqualifications (BAR)

The seven (7) members are:

No member of the Monetary Board may be reappointed more than once.

SECTION 8. Qualifications. The members of the Monetary Board must be natural-born

SECTION 9. Disqualifications. In addition to the disqualifications imposed by Republic Act

Conservatorship and Receivership (BAR)

SECTION 29. Appointment of Conservator. Whenever, on the basis of a report submitted by

Currency; Legal Tender; Replacement and Retirement of Currencies (BAR)

SECTION 55 Interconvertibility of Currency. The Bangko Sentral shall exchange, on demand

(a) gold; and

Bank Deposits and Deposits Substitutes (BAR)

Bank Secrecy Law

Rule and Exceptions (BAR)

Foreign Currency Deposit Act

(2) To issue certificates to evidence such deposits;

(3) To discount said certificates;

(5) To pay interest in foreign currency on such deposits.