BANKING LAW – DEAN ABELLA LECTURE NOTES 2019

BANK SECRECY LAW Exceptions (4) in the law itself: There could be disclosure of information:
1. Where there be a written authority from the depositor himself;
Purpose: To encourage people with money to deposit their money in a. Authority be in writing,
banks to promote national economy. b. Specify the account for which information is desired
2. In case of impeachment;
Notes: o Jose Velarde case
Ø Money kept in your own homes will earn no interest. 3. When there be order of court in case of bribery, dereliction of
Ø After a year, you decided to deposit your money, so you go to duty, graft and corruption practices;
a thrift bank (3% per annum). o In case of violation of the Anti-Graft Law, inquiry is not
Ø Deposit 1M, bank pays you 5% per annum. So, Php50,000 in one limited to the account but inquiry could extend to the
year. So, you contributed to the economy. There is 20% account of the spouse, relatives, close friends and
withholding tax. You will not get the whole amount of associates
Php50,000. Php10,000 is withheld by the BIR. 4. Where the deposit is the subject matter of litigation.
Ø Deposit Php1M with a bank. What will bank do? Cannot lend o Read it literally.
the whole amount. Why? Remember: reserve requirement. The o The deposit is the subject of the litigation.
200,000PHP (20% of 1M) will be deposited with the BSP which
will NOT earn interest. Secrecy of Bank Deposits Law
Ø Gross receipts tax: whatever interest earning which banks may - First law
hold, will be subject to tax. - There was a time the Philippines had difficulty sourcing foreign
Ø Long before, people are afraid to deposit their money in the currency.
banks. Anyone can inquire regarding your bank deposit - We had a Uniform Currency Act. It is illegal for parties to agree
details. That’s why there existed the Bank Secrecy Law. on payment of obligations contracted in the Philippines that
payment could be foreign currency or in relation to foreign
General Rule: It is illegal for any bank officer or employee to disclose currency.
ANY information relating to any deposit in a savings, bank or checking
account, including any investments in government securities. Foreign Currency Deposits Act
- You can open a US Dollar account with any bank
If you invest in government securities, you deal with bank, usually - Your withdrawal will also be paid in US Dollars
commercial bank because it is deemed inherent therein. Treasury bills - There is a provision of ABSOLUTE CONFIDENTIALITY.
– go to commercial bank, you can buy it there. - By express provision of the law, deposits in foreign currencies
are NOT subject to garnishment.
2015 BAR Q. Investment in government securities. - But the Supreme Court violates the law! In one case, it allowed
the garnishment of deposit of foreigner in foreign currency in a
Any violation of the law is a crime. Imprisonment of not more than 5 Rape Case.
years, or fine, or both at the discretion of the court. - Deposits in Peso, while supposed to be kept in secrecy, are NOT
free from garnishment.
- Peso Deposits: When garnished, there is NO disclosure.

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 BANKING LAW – DEAN ABELLA LECTURE NOTES 2019

Bailees, it’s possible, that when they cause the printing of their
To strengthen the Secrecy Law, in the General Banking Act of 2000 – instruments, they make it NON-NEGOTIABLE. Which one should be
banks should hire/have employees on a permanent basis. followed? NCC: The holder may treat it as negotiable.

DOCUMENTS OF TITLE How may a document of title be negotiated? As to order instrument,

indorse and deliver. If bearer instrument, deliver.
What is a document of title?
Ø It is a document or an instrument where a bailee
acknowledges goods and which contains his undertaking to MODES OF INDORSING:
deliver those goods. 1. Implied
2. Special
BAILEES (in possession of goods and has committed to deliver those
goods later on): If the instrument is originally bearer, and at one point it was specially
Ø Common Carrier indorsed and delivered say to you, and you want to further negotiate
1. Issues a bill of lading it? NIL Says: Once a bearer instrument, always a bearer instrument! But
Ø Warehousemen in Documents of Title, Civil Code: further negotiation is by indorsement
1. “Bodegero” followed by delivery.
2. Issues a warehouse receipt
Code of Commerce which deals on BILLS OF LADING.
QUEDAN (Check Civil Code)
Ø A type of warehouse receipt BILLS OF LADING
Ø Goods covered: rice, sugar or tobacco. Generic term. Before, transportation by water, bill of lading. Over the
time, transportation by land (way bills). Over the time, transportation by
How to recognize a negotiable document of title? air (air way bills).
Ø Section 1, NIL: Negotiable Instrument
Ø Simply look for the words of negotiability Ø Governed by the Code of Commerce.
Ø “to order, or to bearer, or equivalent words or phrases” like “to
possessor” Ø In the Code of Commerce, it is especially provided that bills of
lading should be printed.
“TO ORDER”
- i.e. “deliver to the order of Jose”, “deliver to bearer or Jose Ø Common Carrier should cause to be printed: complete name
Cruz” of a common carrier and complete address. Over the time,
many changes were added. Telephone number, facsimile
PURPOSE OF NEGOTIABLE DOCUMENT OF TITLE: To facilitate commercial number, email address, TIN.
transactions. For a speedy commercial transaction.

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 BANKING LAW – DEAN ABELLA LECTURE NOTES 2019

Ø Common Carriers when they cause the printing, also cause Anybody who wants to be engaged in the business of warehousing, he
printing provisions limiting their liabilities to damages to goods must first be licensed by the Director of the Bureau of Domestic Trade
transported. TERMS AND CONDITIONS. (DTI). Applicant must first post bond. Purpose: to answer for any
damage/s goods may suffer while in storage.
Ø SC: Yes. Contracts are perfected by mere consent and
consent could be implied. Business of warehousing is governed by the GBWA. Warehouse receipts
are governed by the Warehouse Receipts Act.
Ø There is no prohibition against Contracts of Adhesion.
RULES:
Ø In one case, the ponente made a statement about the Two-
Under the WRA if a warehouseman would issue more than one (1) copy
Fold Purposes of Bills of Lading:
of a negotiable warehouse receipt, in ALL the copy or copies, he
should indicate that they are MERELY copies or are not the original. If he
1. It serves as a receipt; and
fails to do, he shall be liable to the holder of such copies who acquired
2. It serves as the dated contract between the parties.
them in good faith and for value.

NO. When a common carrier issues a bill of lading, it gives only

Example:
a DISPUTABLE PRESUMPTION that it received the goods. Take
I am the warehouseman, and you want to deposit your goods
note, not conclusive presumption.
with me. You are an importer of fresh apples, selling the latter
to supermarkets. When your importation arrived, you went to
Ø Two-Fold purposes gave birth! It has now become Three-Fold
me. You said you want to deposit. I said “Kayang-kaya!” Sayo
Purpose: 3. It stands for the goods mentioned therein.
ko na itatago, kaya lang, yung mga ipapasok ko ditto,
ibebenta ko lahat ng yan. Ang usapan naming ng customers
Topics Next Meeting:
ko, sila na ang kukuha. Instructions: 20,000 crates deposit for
1. WAREHOUSE RECEIPTS ACT
storage. Lahat ng yan, ilagay mo “deliver to bearer” –
2. ELECTRONIC COMMERCE ACT
negotiable.
3. LETTERS OF CREDIT
4. TRUST RECEIPTS
How to do the numerous copies?
In between the sheets, may carbon sheets.
WAREHOUSE RECEIPTS ACT
What is called by the original?
Who issues warehouse receipts? Duplicate Original.
Warehouseman
Second copy which are signed individually is called?
What law governs the business of warehousing? Carbon- Original. All signed, are good as the very first copy. “Anak
The General Bonded Warehouse Act (not included in the Bar Exams) ng original”

Duplicate of the duplicate cannot be regarded as the original.

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 BANKING LAW – DEAN ABELLA LECTURE NOTES 2019

Second, third, fourth copies printed. “COPY” – that is just a copy. 3. Claimant must express willingness to sign a receipt upon
delivery of the goods to him.
If warehouseman fails to indicate on the copy of a negotiable a. “Received the above goods in good order and
warehouse receipt that it is just a copy, then he shall be liable to any condition”
person who may have acquired that copy in good faith and for b. Warehouseman, after parting with the goods and
value. getting back the original receipt, SHOULD
CANCEL THAT RECEIPT. Otherwise, the
What is the consequence of negotiation of a warehouse receipt? warehouseman should be liable to person
Through negotiation, the transferee acquires the direct obligation acquiring the same in good faith and for value.
of the warehouseman to deliver the goods to him.
Bonded Warehouse is different from Customs Bonded
Example: Warehouse.
Depositor is Pedro. I am the warehouseman. I issued Ø Customs Bonded Warehouse: where imported goods are
warehouse receipt. Pedro negotiated one to Maria. Later, stored before they are converted into finished products by
Maria came to claim the goods. Since I am seeing Maria for their importers
the first time in my life, can I ask “Ma’am sabi ng Nanay ko, Ø Drawback: claim cost of receipts (right of those who export)
don’t talk to strangers”. Can he do this? NO. Transferee
acquires the direct obligation of the warehouseman to deliver
ELECTRONIC COMMERCE ACT
the goods to him.

Electronic Documents
REQUIREMENTS for delivery of goods to claimant:
Facsimile Machine (Fax Machine).
1. Person taking the goods must satisfy first ALL the liens of the
Nowadays: email, scanner.
warehouseman;
- Are they acceptable or admissible evidence? YES. E-
a. What comprise the liens of warehouseman?
Commerce Act. Follow SC Circular.
i. Storage fees,
o Nature of liens:
If you make withdrawal thru an ATM, the transaction considered
Possessory. While nasa kanya, wag niya bibitawan. Pag
consummated the moment the machine dispenses the amount
binitawan niya, wala na ang liens niya.
withdrawn.

2. Claimant must surrender the original warehouse receipt;

Debit Card. When consummated? The moment the account of the
a. What if the original got lost? Claimant will have a
cardholder is debited and the amount debited is credited to the
very big problem. Claimant will have to go to
account of the merchant.
court. Court to order the warehouseman to deliver
the goods without the receipt. Court require
claimant to post bond equivalent to the value of
the goods.

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 BANKING LAW – DEAN ABELLA LECTURE NOTES 2019

LETTERS OF CREDIT - A letter that does not meet the 2 requirements mentioned
above.
Ø Definition:
A letter of credit is a letter addressed by a merchant to another - Walang pananagutan si Maker. Nag recommend lang siya.
merchant to enable the person named in the letter to attend to a
commercial transaction. Maker becomes obliged to the Addressee
Beneficiary becomes obliged to the Maker
- Cannot be in negotiable in form.
DOMESTIC v. FOREIGN LETTERS OF CREDIT
Ø How many persons are involved? (MAB) I. DOMESTIC LETTERS OF CREDIT
3 persons: Maker, Addressee, Beneficiary • All parties in one country
• Transacted within 180 days
Ø How many merchants?
At least 2 persons. Maker and the Addressee to whom the letter is II. FOREIGN LETTERS OF CREDIT
addressed. • Parties are in different countries
• Transacted within 360 days
Ø Who is considered a merchant?
It could be a natural person or juridical person. Allowed? Yes. But nowadays, letters of credit are a bank facility, bank
service or accommodation.
I. Natural Person; Qualifications:
1. He must be at least 18 years old; Bank Letter of Credit:
2. Must have a capacity to give consent to a contract; and A facility, service or accommodation of banks to enable persons
3. Must be regularly engaged in commerce (buying and to have a commercial transaction where the seller is assured of
selling). payment, and buyer is assured of delivery.

II. Juridical Persons; Qualifications: Marginal Deposit:

1. Must have been organized according to law; and Amount required by a bank to be deposited with it for the
2. Regularly engaged in commerce. purpose of letter of credit.

REQUIREMENTS: Domestic Letters of Credit:

1. The person to whom credit extended should be named, and There are 3 independent contracts
2. The amount or maximum amount of credit to be extended 1. Contract bet. buyer and seller
should be stated. 2. Contract bet. buyer and bank
3. Contract bet. seller and bank
Letter of Recommendation:
Foreign Letters of Credit:
There are 4 independent contracts

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 BANKING LAW – DEAN ABELLA LECTURE NOTES 2019

1. Contract bet. buyer and seller

2. Contract bet. buyer and bank
3. Contract bet. seller and bank
4. Contract bet. the correspondent bank

How did the SC bank letter of credit?

It’s a financial device to reconcile the seeming differences between
buyer and seller. Where the seller would be assured of payment and
the buyer assured of delivery.

In practice, if you are to avail of the letter of credit thru a banking

system, L/C – Tr.

After a number of transactions, bank may say they will not require
payment of 100% payment of marginal deposit.

TRUST RECEIPTS LAW

Trust Receipt Transaction

Is one where the entruster who has security interest over goods,
documents or instruments entrust those goods, documents, or
instruments to the entrustee so that the entrustee can sell those goods
etc. and entrustee agrees to remit the proceeds of the sale to the
extent of the amount owing to the entruster within an agreed period.
And if that amount cannot be remitted within that period, entrustee
agrees to return all goods, etc. which has not been sold.

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