General Banking Law of 2000 (GBL) – Republic Act No.

8791)

I. Banks and Nature of Banking Business –

i. Chapter 1, Sections 1-3, GBL
AN ACT PROVIDING FOR THE REGULATION OF THE
ORGANIZATION AND OPERATIONS OF BANKS, QUASI-BANKS,
TRUST ENTITIES AND FOR OTHER PURPOSES
SECTION 1. Title. — The short title of this Act shall be "The General
Banking Law of 2000." (1a)

SECTION 2. Declaration of Policy. — The State recognizes the vital role of

banks in providing an environment conducive to the sustained development of
the national economy and the fiduciary nature of banking that requires high
standards of integrity and performance. In furtherance thereof, the State shall
promote and maintain a stable and efficient banking and financial system that
is globally competitive, dynamic and responsive to the demands of a
developing economy. (n)

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. (2a) 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. (6-Aa)

ii. RA No. 7906 (Thrift Banks Act, Section 2);

Sec. 2. Declaration of Policy. — It is hereby declared the policy of the State
to: (a) Recognize the indispensable role of the private sector, to encourage
private enterprise, and to provide incentives to needed investments; (b)
Promote economic development pursuant to the socioeconomic program of the
government, to expand industrial and agricultural growth, to encourage the
establishment of more private thrift banks in order to meet the needs for
capital, personal and investment credit or medium- and long-term loans for
Filipino entrepreneurs; (c) Encourage and assist the establishment of thrift
bank system which will promote agriculture and industry and at the same time
place within easy reach of the people the medium-and long-term credit
facilities at reasonable cost; (d) Encourage industry, frugality and the
accumulation of savings among the public, and the members and stockholders
of thrift banks; and (e) Regulate and supervise the activities of thrift banks in
order to place their operations on a sound, stable and efficient basis and to
 curtail or prevent acts or practices which are prejudicial to the public interest.

iii. RA No. 7353 (Rural Banks Act, Section 2); REPUBLIC ACT NO. 7353
AN ACT PROVIDING FOR THE CREATION, ORGANIZATION AND
OPERATION OF RURAL BANKS, AND FOR OTHER PURPOSES
Sec. 2. The State hereby recognizes the need to promote comprehensive rural
development with the end in view of attaining acquitable distribution of
opportunities, income and wealth; a sustained increase in the amount of goods
and services produced by the nation of the benefit of the people; and in
expanding productivity as a key raising the quality of life for all, especially the
underprivileged.
Towards these ends, the State hereby encourages and assists in the
establishment of rural banking system designed to make needed credit
available and readily accessible in the rural areas on reasonable terms.

1. Simex International v. CA, GR No. DOCTRINE:

88013, 89 SCRA 360 As a business affected with public interest and
because of the nature of its functions, the bank is
under obligation to treat the accounts of its
depositors with meticulous care, always having in
mind the fiduciary nature of their relationship.

FACTS:
The petitioner is a private corporation engaged in
the exportation of food products. It buys these
products from various local suppliers and then
sells them abroad, particularly in the United
States, Canada and the Middle East. Most of its
exports are purchased by the petitioner on credit.
The petitioner was a depositor of the respondent
bank and maintained a checking account in its
branch at Romulo Avenue, Cubao, Quezon City.
On May 25, 1981, the petitioner deposited to its
account in the said bank the amount of
P100,000.00, thus increasing its balance as of that
date to P190,380.74. 1 Subsequently, the petitioner
issued several checks against its deposit but was
suprised to learn later that they had been
dishonored for insufficient funds.
Investigation disclosed that the sum of
P100,000.00 deposited by the petitioner on May
25, 1981, had not been credited to it. 

ISSUE:
W/N the claim of damages should be granted

HELD:
The initial carelessness of the respondent bank,
aggravated by the lack of promptitude in repairing
its error, justifies the grant of moral damages. The
fact is that the petitioner's credit line was canceled
and its orders were not acted upon pending receipt
of actual payment by the suppliers. Its business
declined. Its reputation was tarnished. Its standing
was reduced in the business community. All this
was due to the fault of the respondent bank which
was undeniably remiss in its duty to the petitioner.
A corporation is not as a rule entitled to moral
damages because, not being a natural person, it
cannot experience physical suffering or such
sentiments as wounded feelings, serious anxiety,
mental anguish and moral shock. The only
exception to this rule is where the corporation has
a good reputation that is debased, resulting in its
social humiliation. 
The banking system is an indispensable institution
in the modern world and plays a vital role in the
economic life of every civilized nation. Whether
as mere passive entities for the safekeeping and
saving of money or as active instruments of
business and commerce, banks have become an
ubiquitous presence among the people, who have
come to regard them with respect and even
gratitude and, most of all, confidence. Thus, even
the humble wage-earner has not hesitated to
entrust his life's savings to the bank of his choice,
knowing that they will be safe in its custody and
will even earn some interest for him. The ordinary
person, with equal faith, usually maintains a
modest checking account for security and
convenience in the settling of his monthly bills
and the payment of ordinary expenses. As for
business entities like the petitioner, the bank is a
trusted and active associate that can help in the
running of their affairs, not only in the form of
loans when needed but more often in the conduct
of their day-to-day transactions like the issuance
or encashment of checks.
In every case, the depositor expects the bank to
 treat his account with the utmost fidelity, whether
such account consists only of a few hundred pesos
or of millions. The bank must record every single
transaction accurately, down to the last centavo,
and as promptly as possible. This has to be done if
the account is to reflect at any given time the
amount of money the depositor can dispose of as
he sees fit, confident that the bank will deliver it
as and to whomever he directs. A blunder on the
part of the bank, such as the dishonor of a check
without good reason, can cause the depositor not a
little embarrassment if not also financial loss and
perhaps even civil and criminal litigation.

2. Philippine Banking Corporation v. CA, DOCTRINE:

GR No. 127469, 419 SCRA 487 The fiduciary nature of banking requires banks to
assume a degree of diligence higher than that of a
good father of a family. Thus, the BANK’s
fiduciary duty imposes upon it a higher level of
accountability than that expected of Marcos, a
businessman, who negligently signed blank forms
and entrusted his certificates of time deposits to
Pagsaligan without retaining copies of the
certificates.
The business of banking is imbued with public
interest. The stability of banks largely depends on
the confidence of the people in the honesty and
efficiency of banks.

FACTS:
The BANK did not issue an official receipt for the
petitioner’s time deposit but it acknowledged a
deposit of this amount through a letter-
certification Pagsaligan issued. The time deposits
earned interest at 17% per annum and had a
maturity period of 90 days.
Sometime in March 1983, Marcos wanted to
withdraw from the BANK his time deposits and
the accumulated interests to buy materials for his
construction business. However, the BANK
through Pagsaligan convinced Marcos to keep his
time deposits intact and instead to open several
domestic letters of credit. The BANK required
Marcos to give a marginal deposit of 30% of the
total amount of the letters of credit. The time
deposits of Marcos would secure 70% of the
letters of credit. Since Marcos trusted the BANK
and Pagsaligan, he signed blank printed forms of
the application for the domestic letters of credit,
trust receipt agreements and promissory notes.
Marcos accused the BANK of unjustly demanding
payment for the total amount of the trust receipt
agreements without deducting the 30% marginal
deposit that he had already made. He decried the
BANK’s unlawful charging of accumulated
interest because he claimed there was no
agreement as to the payment of interest. The
interest arose from numerous alleged extensions
and penalties. Marcos reiterated that there was no
agreement to this effect because his time deposits
served as the collateral for his remaining
obligation.

ISSUE:

HELD:
The BANK is liable to Marcos for offsetting his
time deposits with a fictitious promissory note.
The existence of Promissory Note No. 20-979-83
could have been easily proven had the BANK
presented the original copies of the promissory
note and its supporting evidence. In lieu of the
original copies, the BANK presented the
"machine copies of the duplicate" of the
documents. These substitute documents have no
evidentiary value. The BANK’s failure to explain
the absence of the original documents and to
maintain a record of the offsetting of this loan
with the time deposits bring to fore the BANK’s
dismal failure to fulfill its fiduciary duty to
Marcos.
Section 2 of Republic Act No. 8791 (General
Banking Law of 2000) expressly imposes this
fiduciary duty on banks when it declares that the
State recognizes the "fiduciary nature of banking
that requires high standards of integrity and
performance."
 This fiduciary relationship means that the bank’s
obligation to observe "high standards of integrity
and performance" is deemed written into every
deposit agreement between a bank and its
depositor.
Assuming Pagsaligan was behind the spurious
promissory note, the BANK would still be
accountable to Marcos. We have held that a bank
is liable for the wrongful acts of its officers done
in the interest of the bank or in their dealings as
bank representatives but not for acts outside the
scope of their authority.37 Thus, we held:
A bank holding out its officers and agents as
worthy of confidence will not be permitted to
profit by the frauds they may thus be enabled to
perpetrate in the apparent scope of their
employment; nor will it be permitted to shirk its
responsibility for such frauds, even though no
benefit may accrue to the bank therefrom (10 Am
Jur 2d, p. 114). Accordingly, a banking
corporation is liable to innocent third persons
where the representation is made in the course of
its business by an agent acting within the general
scope of his authority even though, in the
particular case, the agent is secretly abusing his
authority and attempting to perpetrate a fraud
upon his principal or some other person, for his
own ultimate benefit. (Prudential Bank v CA,
June 14, 1993)
3. Consolidated Bank and Trust Corporation DOCTRINE:
v. Court of Appeals, G.R. No. 138569, 410 SCRA This fiduciary relationship means that the bank’s
562 obligation to observe "high standards of integrity
and performance" is deemed written into every
deposit agreement between a bank and its
depositor. The fiduciary nature of banking
requires banks to assume a degree of diligence
higher than that of a good father of a family. 

FACTS:
When Calapre returned to Solidbank to retrieve
the passbook, Teller No. 6 informed him that
"somebody got the passbook. 3 Calapre went back
to L.C. Diaz and reported the incident to
Macaraya.

Macaraya immediately prepared a deposit slip in

duplicate copies with a check of P200,000.
Macaraya, together with Calapre, went to
Solidbank and presented to Teller No. 6 the
deposit slip and check. The teller stamped the
words "DUPLICATE" and "SAVING TELLER 6
SOLIDBANK HEAD OFFICE" on the duplicate
copy of the deposit slip. When Macaraya asked
for the passbook, Teller No. 6 told Macaraya that
someone got the passbook but she could not
remember to whom she gave the passbook. When
Macaraya asked Teller No. 6 if Calapre got the
passbook, Teller No. 6 answered that someone
shorter than Calapre got the passbook. Calapre
was then standing beside Macaraya.
It was also on the same day that L.C. Diaz learned
of the unauthorized withdrawal the day before, 14
August 1991, of P300,000 from its savings
account. The withdrawal slip for the P300,000
bore the signatures of the authorized signatories of
L.C. Diaz, namely Diaz and Rustico L. Murillo.
The signatories, however, denied signing the
withdrawal slip. A certain Noel Tamayo received
the P300,000.cralaw : red
The trial court believed that Solidbank’s act of
allowing the withdrawal of P300,000 was not the
direct and proximate cause of the loss. The trial
court held that L.C. Diaz’s negligence caused the
unauthorized withdrawal. Three facts establish
L.C. Diaz’s negligence: (1) the possession of the
passbook by a person other than the depositor
L.C. Diaz; (2) the presentation of a signed
withdrawal receipt by an unauthorized person;
and (3) the possession by an unauthorized person
of a PBC check "long closed" by L.C. Diaz, which
check was deposited on the day of the fraudulent
withdrawal.

The appellate court ruled that while L.C. Diaz was

also negligent in entrusting its deposits to its
messenger and its messenger in leaving the
passbook with the teller, Solidbank could not
escape liability because of the doctrine of "last
clear chance." Solidbank could have averted the
 injury suffered by L.C. Diaz had it called up L.C.
Diaz to verify the withdrawal.

ISSUE:
W/N Petitioner Bank should suffer the loss

HELD:
We hold that Solidbank is liable for breach of
contract due to negligence, or culpa contractual.

The contract between the bank and its depositor is

governed by the provisions of the Civil Code on
simple loan. 17 Article 1980 of the Civil Code
expressly provides that." . . savings . . . deposits of
money in banks and similar institutions shall be
governed by the provisions concerning simple
loan." There is a debtor-creditor relationship
between the bank and its depositor. The bank is
the debtor and the depositor is the creditor. The
depositor lends the bank money and the bank
agrees to pay the depositor on demand. The
savings deposit agreement between the bank and
the depositor is the contract that determines the
rights and obligations of the parties.
The law imposes on banks high standards in view
of the fiduciary nature of banking. Section 2 of
Republic Act No. 8791 ("RA 8791"), 18 which
took effect on 13 June 2000, declares that the
State recognizes the "fiduciary nature of banking
that requires high standards of integrity and
performance."

4. Manlapat v. CA, GR 125585, GR No. Bank Liable for Nominal Damages

125585, 459 SCRA 412
Of deep concern to this Court, however, is the fact
that the bank lent the owner’s duplicate of the
OCT to the Cruzes when the latter presented the
instruments of conveyance as basis of their claim
of ownership over a portion of land covered by
the title. Simple rationalization would dictate that
a mortgagee-bank has no right to deliver to any
stranger any property entrusted to it other than to
those contractually and legally entitled to its
possession. Although we cannot dismiss the
bank’s acknowledgment of the Cruzes’ claim as
 legitimized by instruments of conveyance in their
possession, we nonetheless cannot sanction how
the bank was inveigled to do the bidding of virtual
strangers. Undoubtedly, the bank’s cooperative
stance facilitated the issuance of the TCTs. To
make matters worse, the bank did not even notify
the heirs of Eduardo. The conduct of the bank is
as dangerous as it is unthinkably negligent.
However, the aspect does not impair the right of
the Cruzes to be recognized as legitimate owners
of their portion of the property.
The bank should not have allowed complete
strangers to take possession of the owner’s
duplicate certificate even if the purpose is merely
for photocopying for a danger of losing the same
is more than imminent. They should be aware of
the conclusive presumption in
Section 53. Such act constitutes manifest
negligence on the part of the bank which would
necessarily hold it liable for damages under
Article 1170 and other relevant provisions of the
Civil Code.5
The act of RBSP of entrusting to respondents the
owner’s duplicate certificate entrusted to it by the
mortgagor without even notifying the mortgagor
and absent any prior investigation on the veracity
of respondents’ claim and
character is a patent failure to foresee the risk
created by the act in view of the provisions of
Section 53 of P.D. No. 1529 (Property
Registration Decree). This act runs afoul of every
bank’s mandate to observe the highest degree of
diligence in dealing with its clients. Moreover, a
mortgagor has also the right to be afforded due
process before deprivation or diminution of his
property is effected as the OCT was still in the
name of Eduardo. Notice and hearing are
indispensable elements of this right which the
bank miserably ignored.

5. BPI v. Court of Appeals, 326 SCRA 641 From these facts on record, it is at once apparent
that petitioner's personnel allowed the withdrawal
of an amount bigger than the original deposit of
 $750.00 and the value of the check deposited in
the amount of $2,500.00 although they had not yet
received notice from the clearing bank in the
United States on whether or not the check was
funded. Reyes' contention that after the lapse of
the 35-day period the amount of a deposited check
could be withdrawn even in the absence of a
clearance thereon, otherwise it could take a long
time before a depositor could make a
withdrawal,36 is untenable. Said practice amounts
to a disregard of the clearance requirement of the
banking system.
While it is true that private respondent's having
signed a blank withdrawal slip set in motion the
events that resulted in the withdrawal and
encashment of the counterfeit check, the
negligence of petitioner's personnel was the
proximate cause of the loss that petitioner
sustained. Proximate cause, which is determined
by a mixed consideration of logic, common sense,
policy and precedent, is "that cause, which, in
natural and continuous sequence, unbroken by any
efficient intervening cause, produces the injury,
and without which the result would not have
occurred."37 The proximate cause of the
withdrawal and eventual loss of the amount of
$2,500.00 on petitioner's part was its personnel's
negligence in allowing such withdrawal in
disregard of its own rules and the clearing
requirement in the banking system. In so doing,
petitioner assumed the risk of incurring a loss on
account of a forged or counterfeit foreign check
and hence, it should suffer the resulting
damage.1âwphi1.nêt

6. Tan v. Court of Appeals, G.R. No. FACTS:

108555, 239 SCRA 310
ISSUE:

HELD:
7. Spouses Omengan v. PNB, GR No. FACTS:
161319, January 23, 2007
ISSUE:
 HELD:
8. Serrano v. Central bank, GR No. L- FACTS:
30511, 96 SCRA 96
ISSUE:

HELD:
9. Central Bank v. Citytrust Banking FACTS:
Corporation, GR No. 141835, 578 SCRA 27
ISSUE:

HELD:
10. PNB v. Raymundo, GR 208672, FACTS:
December 7, 2016
ISSUE:

HELD:
11. PNB v. Vila. GR No. 213241, August 1, FACTS:
2016
ISSUE:

HELD:
12. Gumabon v. PNB, GR 202514, July 25, FACTS:
2016
ISSUE:

HELD:
13. Landbank v. Kho, GR 205839 & 205840, FACTS:
July 7, 2016
ISSUE:

HELD:
14. Oliver v. PSBank, GR 214567, April 4, FACTS:
2016
ISSUE:

HELD:
15. Carbonell v. Metrobank, GR No. 178467, FACTS:
April 26, 2017
ISSUE:

HELD:
1. Authority of BSP
i. Chapter II, Sections 4-7, GBL
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)

SECTION 6. Authority to Engage in Banking and Quasi-Banking Functions.

— No person or entity shall engage in banking operations or quasi-banking
functions without authority from the Bangko Sentral: Provided, however, That
an entity authorized by the Bangko Sentral to perform universal or commercial
banking functions shall likewise have the authority to engage in quasi-banking
functions. The determination of whether a person or entity is performing
banking or quasi-banking functions without Bangko Sentral authority shall be
 decided by the Monetary Board. To resolve such issue, the Monetary Board
may, through the appropriate supervising and examining department of the
Bangko Sentral, examine, inspect or investigate the books and records of such
person or entity. Upon issuance of this authority, such person or entity may
commence to engage in banking operations or quasi-banking functions and
shall continue to do so unless such authority is sooner surrendered, revoked,
suspended or annulled by the Bangko Sentral in accordance with this Act or
other special laws. The department head and the examiners of the appropriate
supervising and examining department are hereby authorized to administer
oaths to any such person, employee, officer, or director of any such entity and
to compel the presentation or production of such books, documents, papers or
records that are reasonably necessary to ascertain the facts relative to the true
functions and operations of such person or entity. Failure or refusal to comply
with the required presentation or production of such books, documents, papers
or records within a reasonable time shall subject the persons responsible
therefore to the penal sanctions provided under the New Central Bank Act.
Persons or entities found to be performing banking or quasi-banking functions
without authority from the Bangko Sentral shall be subject to appropriate
sanctions under the New Central Bank Act and other applicable laws. (4a)

SECTION 7. Examination by the Bangko Sentral. — The Bangko Sentral

shall, when examining a bank, have the authority to examine an enterprise
which is wholly or majority-owned or controlled by the bank. (21-Ba)
CHAPTER III ORGANIZATION, MANAG

Manual of Regulations for Banks (MORB), Sections 001-003

Section X001 Examination by the Bangko Sentral. The term “examination” shall refer to an
investigation of an institution under the supervisory authority of the Bangko Sentral to determine
whether the institution is operating on a safe and sound basis, inquire into its solvency and liquidity,
and assess the effectiveness of its compliance function to ascertain that it is conducting business in
accordance with laws and regulations.

Regular or periodic examination shall be done once a year, with an interval of twelve (12) months
from the last date thereof. Special examination may be conducted earlier, or at a shorter interval,
when authorized by the Monetary Board (MB) by an affirmative vote of five (5) members. In the full
exercise of the supervisory powers of the Bangko Sentral, examination by the Bangko Sentral of
institutions shall be complemented by overseeing thereof. In this regard, the term “overseeing” shall
refer to a limited investigation of an institution, or any investigation that is limited in scope,
conducted to inquire into a particular area/aspect of an institution’s operations, for the purpose of
overseeing that laws and regulations are complied with, inquiring into the solvency and liquidity of
the institution, enforcing prompt corrective action, or such other matters requiring immediate
investigation: Provided, That
(i) specific authorizations be issued by the Deputy Governor, Supervision and Examination Sector
(SES), and
(ii) periodic summary reports on overseeings conducted be submitted to the Monetary Board.
a. Scope of examination. Consistent with a risk-based approach to supervision, the scope of
examination may include, but need not be limited to, the following:

(1) Appraisal of the overall quality of corporate governance;

(2) Assessment of the risk management system, which shall include the evaluation of the
effectiveness of management oversight and self-assessment functions (e.g., internal audit, risk
management and compliance); adequacy of policies, procedures, and limits; effectiveness of risk
measurement, monitoring and management information system; and robustness of internal controls;

(3) Review of the institution’s operations and overall risk profile;

(4) Evaluation of financial performance, capital adequacy, asset quality, and liquidity; and

(5) Any other activity relevant to the above. b. Conduct of examination. The conduct of examination
shall include, but need not be limited to, the interview of any bank’s directors, officers and personnel;
and the verification, review and evaluation of documents and records, including making copies of the
records, taking possession thereof and keeping them under the custody of the Bangko Sentral after
giving proper receipts thereof. For this purpose, “records” shall refer to information, whether in its
original form or otherwise, including documents, signatures, seals, texts, images, sounds, speeches, or
data compiled, recorded or stored, as the case may be:

(1) in written form on any material; (2) on film, negative, tape or other medium so as to be capable of
being reproduced; or (3) by means of any recording device or process, computer or other electronic
device or process; and
regardless of whether these information are stored and kept by the BSFI or another entity duly
authorized by the BSFI (e.g., technology service provider). Records shall also include audio,
photographic, and video evidence of events, acts, or transactions of the BSFI, including all records of
communication, oral (e.g., voice recordings) or written (e.g., letters) of officers and employees of the
BSFI: Provided, That the recording was made in connection with the performance of the official
functions of the concerned officers or employees and coursed through BSFI-issued computers,
telephones, mobile phones, and similar devices.

X001.1 Refusal to permit examination. Any act or omission that impedes, delays or obstructs the duly
authorized Bangko Sentral examiner from conducting an examination of a BSFI, including the act of
refusing to accept or honor the letter of authority to examine presented by the examiner of the
Bangko Sentral, shall be considered as a refusal to permit examination. The refusal of the BSFI to
permit examination shall be reported by the Bangko Sentral examiner to the Head of the appropriate
department of the SES, who shall forthwith make a written demand upon the BSFI concerned for such
examination. If the BSFI continues to refuse the said examination without any satisfactory explanation
thereof, a report on such refusal shall be submitted by the Bangko Sentral examiner concerned to the
said Department Head. Sanctions. A bank that wilfully refuses to permit examination shall pay a fine
of P30,000 per day from the day of the refusal and for as long as such refusal lasts, without
prejudice to the sanctions under Section 34 of R.A. No. 7653.

The fine shall be imposed starting on the day following the receipt by the concerned Head of
Department in the SES of the report from the Bangko Sentral examiner that the bank continues to
refuse to permit examination notwithstanding the written demand made by the Department Head.
Aside from the fine mentioned above, the bank and/or its concerned directors and/ or officers may be
subject to non-monetary sanctions provided under Section 37 of R. A. No. 7653 (The New Central
Bank Act) and Sec. X009

Subsidiaries and affiliates of banks (See Section 25, R.A. No. 7653 as amended by RA No. 11211);
Section 25. Section 45 of the same Act is hereby amended to read as follows:

"Sec. 45. Revaluation Profits and Losses. - Unrealized profits or losses arising from any
revaluation of the Bangko Sentral’s assets, liabilities or derivative instruments denominated in
foreign currencies with respect to the movements of prices and exchange rates from third
currencies to Philippine peso shall not be included in the computation of the annual profits and
losses of the Bangko Sentral. Any profits or losses arising in this manner shall be offset by any
amounts which, as a consequence of such revaluations, are owed by the Philippines to any
international or regional intergovernmental financial institution of which the Philippines is a
member or are owed by these institutions to the Philippines. Any remaining unrealized profit or
loss shall be carried in an account which shall be named ‘Revaluation of International Reserve
(RIRY, and the net balance of which shall appear either among the liabilities or among the assets
of the Bangko Sentral, depending on whether the revaluations have produced net profits or net
losses.

"The RIR account shall be credited or debited for the periodic revaluation as authorized in this
section and to reflect the corresponding adjustment resulting to reduction in the Bangko Sentral’s
net foreign assets, liabilities and foreign currency-denominated derivative instruments. The RIR
shall be adjusted and recognized in the income statement upon sale of gold and foreign securities,
or when the foreign currency is repatriated to local currency or is used to pay foreign obligations,
or upon maturity of a foreign currency-denominated forward or option contract involving the
Philippine peso."

Quasi-banks (See also Section 95, R.A. No 7653 as amended by RA No 11211;

Section 38. Section 95 of the same Act is hereby amended to read as follows:

"Sec. 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 phrase
obtaining funds from the public’ shall mean borrowing from twenty (20) or more lenders at any one
time, and, for this purpose, Tenders’ shall refer to individuals and corporate entities that are not
acting as financial intermediaries, subject to the safeguards and regulations issued by the
Monetary Board. 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 nonfinancial 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."
 Elements of Quasi Banking; MORB Sections 241-243,

241     SCOPE OF QUASI-BANKING FUNCTIONS

The following rules and regulations shall govern the quasi-banking operations of banks.

Elements of quasi-banking. The essential elements of quasi-banking are:

a. Borrowing funds for the borrower’s own account;

b. Twenty (20) or more lenders at any one (1) time;

c. Methods of borrowing are issuance, endorsement, or acceptance of debt instruments of any kind,
other than deposits, such as acceptances, promissory notes, participations, certificates of
assignments or similar instruments with recourse, trust certificates, repurchase agreements, and
such other instruments as the Monetary Board may determine; and

d. The purpose of which is (1) relending, or (2) purchasing receivables or other obligations.

Bañas v. Asia Pacific Corporation, GR 128703, FACTS:

October 18, 2000 Defendants claimed that since ASIA PACIFIC
could not directly engage in banking business, it
proposed to them a scheme wherein plaintiff
ASIA PACIFIC could extend a loan to them
without violating banking laws: first, Cenen
Dizon would secure a promissory note from
Teodoro Bañas with a face value of P390,000.00
payable in installments; second, ASIA PACIFIC
would then make it appear that the promissory
note was sold to it by Cenen Dizon with the 14%
usurious interest on the loan or P54,000.00
discounted and collected in advance by ASIA
PACIFIC; and, lastly, Cenen Dizon would
provide sufficient collateral to answer for the loan
in case of default in payment and execute a
continuing guaranty to assure continuous and
prompt payment of the loan.
Petitioners insist that ASIA PACIFIC was
organized as an investment house which could not
engage in the lending of funds obtained from the
public through receipt of deposits.

ISSUE:
 Whether the disputed transaction between
petitioners and ASIA PACIFIC violated banking
laws, hence, null and void;

HELD:
Clearly, the transaction between petitioners and
respondent was one involving not a loan but
purchase of receivables at a discount, well
within the purview of "investing, reinvesting or
trading in securities" which an investment
company, like ASIA PACIFIC, is authorized to
perform and does not constitute a violation of the
General Banking Act.
Moreover, Sec. 2 of the General Banking
Act provides in part -
Sec. 2. Only entities duly authorized by the
Monetary Board of the Central Bank may engage
in the lending of funds obtained from the public
through the receipt of deposits of any kind, and all
entities regularly conducting such operations shall
be considered as banking institutions and shall be
subject to the provisions of this Act, of the Central
Bank Act, and of other pertinent laws
(underscoring supplied).
Indubitably, what is prohibited by law is for
investment companies to lend funds obtained
from the public through receipts of deposit, which
is a function of banking institutions. But here, the
funds supposedly "lent" to petitioners have not
been shown to have been obtained from the public
by way of deposits, hence, the inapplicability of
banking laws.

1. Organization, Management and Administration of Banks, QB and Trust Entities

i. Chapter III, Sections 8-13, GBL

1. Organization, Issuance of Stocks; Treasury Shares (Sections 8-10,

GBL)
2. MORB, Section X122
3. Foreign Stockholdings (Sections 11-13, GBL)
4. Foreign Banks (Section 73, GBL)
Foreign Bank Liberalization Act (RA 7721, as amended by RA No. 10641)
REPUBLIC ACT NO. 10641

AN ACT ALLOWING THE FULL ENTRY OF FOREIGN BANKS IN THE PHILIPPINES,

AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 7721

Be it enacted by the Senate and House of Representatives of the Philippines in Congress

assembled:

Section 1. Section 2 of Republic Act No. 7721 is hereby amended to read as follows:

"SEC. 2. Modes of Entry. – The Monetary Board may authorize foreign banks to operate in the
Philippine banking system through any one of the following" modes of entry: (i) by acquiring,
purchasing or owning up to one hundred percent (100%) of the voting stock of an existing bank;
(ii) by investing in up to one hundred percent (100%) of the voting stockof a new banking
subsidiary incorporated under the laws of the Philippines; or (iii) by establishing branches with full
banking authority."

Section 2. Section 3 of Republic Act No. 7721 is hereby amended to read as follows:

"SEC. 3. Guidelines for Approval. – In approving entry applications of foreign banks, the Monetary
Board shall: (i) ensure geographic representation and complementation; (ii) consider strategic
trade and investment relationships between the Philippines and the country of incorporation of the
foreign bank; (iii) study the demonstrated capacity, global reputation for financial innovations and
stability in a competitive environment of the applicant; (iv) see to it that reciprocity rights are
enjoyed by Philippine banks in the applicant’s country; and (v) consider willingness to fully share
their technology.

"Only established, reputable and financially sound foreign banks shall be allowed entry in
accordance with Section 2 of this Act. The foreign bank applicant must be widely-owned and
publicly-listed in its country of origin, unless the foreign bank applicant is owned and controlled by
the government of its country of origin.

"In the exercise of this authority, the Monetary Board shall adopt such measures as may be
necessary to ensure that the control of at least sixty percent(60%) of the resources or assets of
the entire banking system is held by domestic banks which are majority-owned by Filipinos."

Section 3. Section 4 of Republic Act No. 7721 is hereby amended to read as follows:

"SEC. 4. Capital Requirements. – (i) For Locally Incorporated Subsidiaries – The minimum capital
required for locally incorporated subsidiaries of foreign banks shall be equal to that prescribed by
the Monetary Board for domestic banks of the same category.

"(ii) For Foreign Bank Branches – Foreign banks that shall be authorized to establish branches
pursuant to Section 2(hi) of this Act shah permanently assign capital of an amount not less than
the minimum capital required for domestic banks of the same category. The permanently assigned
capital shall be inwardly remitted and converted into Philippine currency.

"The foreign bank branch may open up to five (5) sub-branches as may be approved by the
Monetary Board. Locally incorporated subsidiaries of foreign banks pursuant to Section 2(h) of this
Act shall have the same branching privileges as domestic banks of the same category."

Section 4. Section 6 of Republic Act No. 7721 is hereby repealed.

Section 5. Section 8 of Republic Act No. 7721 is hereby amended to read as follows:
"SEC. 8. Equal Treatment. – Foreign banks authorized to operate under Section 2 of this Act,
shall perform the same functions, enjoy the same privileges, and be subject to the same
limitations imposed upon a Philippine bank of the same category. The single borrower’s limit of a
foreign bank branch shall be aligned with that of a domestic bank.

"The foreign banks shall guarantee the observance of the rights of their employees under the
Constitution.

"Any right, privilege or incentive granted to foreign banks or their subsidiaries or affiliates under
this Act, shall be equally enjoyed by and extended under the same conditions to Philippine
banks."

Section 6. A new provision in Section 9 is hereby inserted in the same Act, in lieu of the original
provisions of Section 9 repealed by Section 11 of Republic Act No. 10000. Section 9 shall now
read as follows:

"SEC. 9. Participation in Foreclosure Proceedings.—Foreign banks which are authorized to do

banking business in the Philippines through any of the modes of entry under Section 2 hereof
shall be allowed to bid and take part in foreclosure sales of real property mortgaged to them, as
well as to avail of enforcement and other proceedings, and accordingly take possession of the
mortgaged property, for a period not exceeding five (5) years from actual
possession: Provided, That in no event shall title to the property be transferred to such foreign
bank. In case said bank is the winning bidder, it shall, during the said five (5)-year period, transfer
its rights to a qualified Philippine national, without prejudice to a borrower’s rights under applicable
laws. Should the bank fail to transfer such property within the five (5)-year period, it shall be
penalized one half (1/2) of one percent (1%) per annum of the price at which the property was
foreclosed until it is able to transfer the property to a qualified Philippine national."

Section 7. Transitory Provisions. –Foreign banks which are already authorized to do banking
business in the Philippines through any of the modes of entry under Section 2 hereof may apply to
change their original mode of entry.

Foreign banks operating through branches in the Philippines upon the effectivity of this Act shall
retain their original privilege upon entry to establish a limited number of sub-branches. However,
the previous restriction on the locations of such additional branches is hereby lifted.
The existing Philippine branches of foreign banks shall comply within one (1) year from the
effectivity of this Act with the minimum capital requirements as prescribed under Section 4(ii) of
this Act, unless otherwise extended by the Monetary Board.

Section 8. Section 12 of Republic Act No. 7721 is hereby amended to read as follows:

"SEC. 12. Applicability of Other Banking Laws. – The provisions of Republic Act No. 7653,
otherwise known as the New Central Bank Act and the provisions of Republic Act No. 8791,
otherwise known as The General Banking Law of 2000′, insofar as they are applicable and not in
conflict with any provision of this Act, shall apply to banks authorized pursuant to this Act."

Section 9. Section 13 of Republic Act No. 7721 is hereby amended to read as follows:

"SEC. 13. Rule-Making Powers of the Monetary Board of the Bangko Sentral ng Pilipinas and
Compliance Reports. – The Monetary Board is hereby authorized to issue such rules and
regulations as may be needed to implement "the provisions of this Act. On or before May 30 of
each year, the Monetary Board shall file a written report to Congress and its respective Banks
Committees, on the developments in the implementation of this Act. The implementing rules and
regulations of this Act shall be published in at least two (2) newspapers of general circulation."
1âwphi1

Section 10. Repealing Clause. – All laws, decrees, executive orders, proclamations, rules and
regulations and other issuances or parts thereof insofar as they are inconsistent with the
provisions of this Act are hereby repealed or modified accordingly.

Section 11. Effectivity. – This Act shall take effect fifteen (15) days after its publication in
the Official Gazette or in at least two (2) national newspapers of general circulation.

Approved,

5.

GSIS Family Bank v. BPI Family Bank, G.R. No. FACTS:

175278, September 23, 2015.
ISSUE:
Whether the use by GSIS Family Bank of the
words "Family Bank" is deceptively and
confusingly similar to the name BPI Family Bank

HELD:
Section 18 of the Corporation Code provides,

Section 18. Corporate name. - No corporate name

may be allowed by the Securities and Exchange
Commission if the proposed name is identical or
deceptively or confusingly similar to that of any
existing corporation or to any other name already
protected by law or is patently deceptive,
confusing or contrary to existing laws. When a
change in the corporate name is approved, the
Commission shall issue an amended certificate of
incorporation under the amended

In Philips Export B.V. v. Court of Appeals,34 this

Court ruled that to fall within the prohibition of
the law on the right to the exclusive use of a
corporate name, two requisites must be proven,
namely:chanRoblesvirtualLawlibrary

(1) that the complainant corporation acquired a

prior right over the use of such corporate
name; and

(2) the proposed name is either

 (a) identical or

(b deceptive or confusingly similar to that of

) any existing corporation or to any other
name already protected by law; or

(c) patently deceptive, confusing or contrary

to existing law.

1. Chapter III, Sections 8-13, GBL

 Organization, Issuance of Stocks; Treasury Shares (Sections 8-10, GBL)
 Individual/aggregate Limits Stockholding (Sections 11-13, GBL)
 Manual of Regulations for Banks (MORB) Section 122, as attached.

2. Chapter III, Sections 15-17, GBL -Board of Directors

 Section 132 of MORB, as attached

3. Bank branches -Section 20

 Section 105 of MORB, as attached
4. Banking Hours –Section 21
 Section 108 MORB, as attached

1. Section 16 Fit and Proper

i. MORB Section 132
ii. MORB Section 134
iii. MORB Section 137

2. Equity Investments of UB/KB - Sections 24-28 and Sections 30-32

i. MORB Section 371

ii. MORB Section 372
iii. MORB Section 373
iv. MORB Section 375
v. MORB Section 376-A
vi. MORB Section 378

3. Section 33 - Demand Deposits

i. MORB Section 201

4. Section 35 Single Borrower’s Limit

1. MORB, Sections 362 (a); (b); (g) and definition of terms
Rationale for SBL- The General Banking Law Annotated, Bangko Sentral ng Pilipinas
Section 36 DOSRI Regulations (Self-Dealing)
Revised Corporation Code on Self dealing Section 31
1. Go v. Bangko Sentral, GR FACTS:
178429, October 23, 2009 taking advantage of his position as such
officer/director of the said bank, did then and
there wilfully, unlawfully and knowingly borrow,
either directly or indirectly, for himself or as the
representative of his other related companies, the
deposits or funds of the said banking
institution and/or become a guarantor, indorser or
obligor for loans from the said bank to others, by
then and there using said borrowed deposits/funds
of the said bank in facilitating and granting and/or
caused the facilitating and granting of credit
lines/loans and, among others, to the New Zealand
Accounts loans in the total amount of TWO
BILLION AND SEVEN HUNDRED FIFTY-
FOUR MILLION NINE HUNDRED FIVE
THOUSAND AND EIGHT HUNDRED FIFTY-
SEVEN AND 0/100 PESOS, Philippine Currency,
said accused knowing fully well that the same has
been done by him without the written approval of
the majority of the Board of Directors of said
Orient Bank and which approval the said accused
deliberately failed to obtain and enter the same
upon the records of said banking institution and to
transmit a copy of which to the supervising
department of the said bank, as required by the
General Banking Act
Go claimed that the Information was defective, as
the facts charged therein do not constitute an
offense under Section 83 of RA 337 which states:
No director or officer of any banking institution
shall either directly or indirectly, for himself or as
the representative or agent of another, borrow any
of the deposits of funds of such banks, nor shall
he become a guarantor, indorser, or surety for
loans from such bank, to others, or in any
manner be an obligor for money borrowed from
the bank or loaned by it, except with the written
approval of the majority of the directors of the
bank, excluding the director concerned. Any such
approval shall be entered upon the records of the
corporation and a copy of such entry shall be
transmitted forthwith to the appropriate
supervising department. The office of any director
or officer of a bank who violates the provisions of
this section shall immediately become vacant and
the director or officer shall be punished by
imprisonment of not less than one year nor more
than ten years and by a fine of not less than one
thousand nor more than ten thousand pesos.
The Monetary Board may regulate the amount of
credit accommodations that may be extended,
directly or indirectly, by banking institutions to
their directors, officers, or stockholders. However,
the outstanding credit accommodations which a
bank may extend to each of its stockholders
owning two percent (2%) or more of the
subscribed capital stock, its directors, or its
officers, shall be limited to an amount equivalent
to the respective outstanding deposits and book
value of the paid-in capital contribution in the
bank. Provided, however, that loans and advances
to officers in the form of fringe benefits granted in
accordance with rules and regulations as may be
prescribed by Monetary Board shall not be subject
to the preceding limitation. (As amended by PD
1795)
In addition to the conditions established in the
preceding paragraph, no director or a building and
loan association shall engage in any of the
operations mentioned in said paragraphs, except
upon the pledge of shares of the association
having a total withdrawal value greater than the
amount borrowed. (As amended by PD 1795)
Go claimed that the charge was not only vague,
but also did not constitute an offense. He posited
that Section 83 of RA 337 penalized only
directors and officers of banking institutions who
acted either as borrower or as guarantor, but not
as both.
Additionally, Go reiterates his claim that credit
accommodations by banks to their directors and
officers are legal and valid, provided that these are
limited to their outstanding deposits and book
value of the paid-in capital contribution in the
bank. The failure to state that he borrowed
deposits and/or guaranteed loans beyond this limit
rendered the Information defective. He thus asks
the Court to reverse the CA decision to reinstate
the criminal charge.

ISSUE:

HELD:
Elements of Violation of
Section 83 of RA 337
Under Section 83, RA 337, the following
elements must be present to constitute a violation
of its first paragraph:
1. the offender is a director or officer of any
banking institution;
2. the offender, either directly or indirectly, for
himself or as representative or agent of another,
performs any of the following acts:
a. he borrows any of the deposits or funds of such
bank; or
b. he becomes a guarantor, indorser, or surety for
loans from such bank to others, or
c. he becomes in any manner an obligor for
money borrowed from bank or loaned by it;
3. the offender has performed any of such acts
without the written approval of the majority of the
directors of the bank, excluding the offender, as
the director concerned.
A simple reading of the above elements easily
rejects Go’s contention that the law penalizes a
bank director or officer only either for borrowing
the bank’s deposits or funds or for guarantying
loans by the bank, but not for acting in both
capacities. The essence of the crime is becoming
an obligor of the bank without securing the
necessary written approval of the majority of the
bank’s directors.
The prohibition is directed against a bank director
or officer who becomes in any manner an obligor
for money borrowed from or loaned by the bank
without the written approval of the majority of the
bank’s board of directors. To make a distinction
between the act of borrowing and guarantying is
therefore unnecessary because in either situation,
the director or officer concerned becomes an
obligor of the bank against whom the obligation is
juridically demandable.
Hence, when the law prohibits directors and
officers of banking institutions from becoming in
any manner an obligor of the bank (unless with
the approval of the board), the terms of the
prohibition shall be the standards to be applied to
directors’ transactions such as those involved in
the present case.
Credit accommodation limit is not an exception
nor is it an element of the offense
Contrary to Go’s claims, the second paragraph of
Section 83, RA 337 does not provide for an
exception to a violation of the first paragraph
thereof, nor does it constitute as an element of the
offense charged. Section 83 of RA 337 actually
imposes three restrictions: approval, reportorial,
and ceiling requirements.
The approval requirement (found in the first
sentence of the first paragraph of the law) refers to
the written approval of the majority of the bank’s
board of directors required before bank directors
and officers can in any manner be an obligor for
money borrowed from or loaned by the bank.
Failure to secure the approval renders the bank
director or officer concerned liable for
prosecution and, upon conviction, subjects him to
the penalty provided in the third sentence of first
paragraph of Section 83.
The reportorial requirement, on the other hand,
mandates that any such approval should be
entered upon the records of the corporation, and a
copy of the entry be transmitted to the appropriate
supervising department. The reportorial
requirement is addressed to the bank itself, which,
upon its failure to do so, subjects it to quo
warranto proceedings under Section 87 of RA
337.20
The ceiling requirement under the second
 paragraph of Section 83 regulates the amount of
credit accommodations that banks may extend to
their directors or officers by limiting these to an
amount equivalent to the respective outstanding
deposits and book value of the paid-in capital
contribution in the bank. Again, this is a
requirement directed at the bank. In this light, a
prosecution for violation of the first paragraph of
Section 83, such as the one involved here, does
not require an allegation that the loan exceeded
the legal limit. Even if the loan involved is below
the legal limit, a written approval by the majority
of the bank’s directors is still required; otherwise,
the bank director or officer who becomes an
obligor of the bank is liable. Compliance with the
ceiling requirement does not dispense with the
approval requirement.
Evidently, the failure to observe the three
requirements under Section 83 paves the way for
the prosecution of three different offenses, each
with its own set of elements. A successful
indictment for failing to comply with the approval
requirement will not necessitate proof that the
other two were likewise not observed.

2. People v. Go, G.R. No. FACTS:

191015. August 6, 2014 Respondents argue that the cash deposit slip used
to deposit the alleged loan proceeds in Go’s
OCBC account is questionable, since under
banking procedure, a cash deposit slip may not be
used to deposit checks. Moreover, it has not been
shown who prepared the said cash deposit slip.
Respondents further question the validity and
authenticity of the other documentary evidence
presented, such as the Subsidiary Ledger, Cash
Proof,23 Schedule of Returned Checks and Other
Cash Items (RTCOCI), etc.
Finally, respondents claim that not all the
elementsof the crime of estafa under Article 315,
par. 1(b) of the Revised Penal Code have been
established; specifically, it has not been shown
that Goreceived the alleged loan proceeds, and
that a demand was made upon him for the return
thereof.

ISSUE:

HELD:
The elements of estafa through abuse of
confidence under Article 315, par. 1(b) of the
Revised Penal Code48 are: "(a) that money,goods
or other personal property is received by the
offender in trust or on commission, or for
administration, or under any other obligation
involving the duty to make delivery of or to return
the same; (b) that there be misappropriation
orconversion of such money or property by the
offender, or denial on his part of such receipt; (c)
that such misappropriation or conversion or denial
is to the prejudice of another; and (d) there is
demand by the offended party to the offender."49
Obviously, a bank takes its depositors’ money as a
loan, under an obligation to return the same; thus,
the term "demand deposit."
The contract between the bank and its depositor is
governed by the provisions of the Civil Code on
simpleloan. Article 1980 of the Civil Code
expressly provides that "x x x savingsx x x
deposits of money in banks and similar
institutions shall be governed by the provisions
concerning simple loan." There is a debtor-
creditor relationship between the bank and its
depositor. The bank is the debtor and the
depositor is the creditor. The depositor lends the
bank money and the bank agrees to pay the
depositor on demand. x x x50
Moreover, the banking laws impose high
standards on banks in view of the fiduciary nature
of banking."This fiduciary relationship means that
the bank’s obligation to observe ‘high standards
ofintegrity and performance’ is deemed written
into every deposit agreement between a bank and
its depositor. The fiduciary nature of banking
requires banks to assume a degree of diligence
higher than that of a good father of a family."51
 In Soriano v. People,52 it was held that the
President of a bank is a fiduciary with respect to
the bank’s funds, and he holds the same in trust or
for administration for the bank’s benefit. From
this, it may beinferred that when such bank
president makes it appear through falsification
that an individual or entity applied for a loan
when in fact such individual or entity did not, and
the bank president obtains the loan proceeds and
converts the same, estafa is committed.

3. Soriano v. People, GR No. DOCTRINE:

162336, Feb 1, 2010 A bank officer violates the DOSRI2 law when he
acquires bank funds for his personal benefit, even
if such acquisition was facilitated by a fraudulent
loan application. Directors, officers, stockholders,
and their related interests cannot be allowed to
interpose the fraudulent nature of the loan as a
defense to escape culpability for their
circumvention of Section 83 of Republic Act
(RA) No. 337

FACTS:

ISSUE:

HELD:
Sections 37- 45

1. Central Bank v. CA, GR L- FACTS:

45710, October 3, 1985
ISSUE:

HELD:
4. PNB v. Heirs of Benedicto, FACTS:
GR 171865, Oct 12, 2016.
ISSUE:

HELD:
5. Spouse Ginorella v PNB, GR FACTS:
194515, September 16, 2015
ISSUE:
 HELD:
6. Union Bank v CA GR FACTS:
164910, Sept 30, 2005
ISSUE:

HELD:
7. Floirendo cv Metrobank, GR FACTS:
148625, Sept 3, 2007
ISSUE:

HELD:
II. DEPOSITS – SEE ATTACHED MATERIALS ON DEPOSITS
III. Laws on Secrecy of Bank Deposits
i. R. A. No 1405
AN ACT PROHIBITING DISCLOSURE OF OR INQUIRY INTO,
DEPOSITS WITH ANY BANKING INSTITUTION AND PROVIDING
PENALTY THEREFOR.

1. Section 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.

2. Additional exemptions as provided in laws and jurisprudence

3. Section 3 Prohibition on Disclosure - t 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.

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

AN ACT INSTITUTING A FOREIGN CURRENCY DEPOSIT SYSTEM IN THE PHILIPPINES,
AND FOR OTHER PURPOSES.

Section 1. Title.– This act shall be known as the "Foreign Currency Deposit Act of the
Philippines."

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 9. Deposit insurance coverage. – The deposits under this Act shall be insured under the
provisions of Republic Act No. 3591, as amended (Philippine Deposit Insurance Corporation), as
well as its implementing rules and regulations: Provided, That insurance payment shall be in the
same currency in which the insured deposits are denominated.

Section 10. Penal provisions. – Any willful violation of this Act or any regulation duly promulgated
by the Monetary Board pursuant hereto shall subject the offender upon conviction to an
imprisonment of not less than one year nor more than five years or a fine of not less than five
thousand pesos nor more than twenty-five thousand pesos, or both such fine and imprisonment at
the discretion of the court.

Section 11. Separability clause. – The provisions of this Act are hereby declared to be separable
and in the event one or more of such provisions are held unconstitutional, the validity of other
provisions shall not be affected thereby.

Section 12. Repealing clause. – All acts, executive orders, rules and regulations, or parts thereof,
which are inconsistent with any provisions of this Act are hereby repealed, amended or modified
accordingly, without prejudice, however, to deposits made thereunder.

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.)

Section 13. Effectivity. – This Act shall take effect upon its approval.

Approved, April 4, 1974

1. Mellon Bank, NA v. Magsino, 190 SCRA
633 (1990)
2. Union Bank v. CA, GR 134699,
December 23, 1999
3. Marquez v. Desierto, 359 SCRA 772
(2001)
4. PNB v. Gancayco, 122 Phil 503 (1965)
5. Ejercito v. Sandiganbayan, 509 SCRA
190 (2006)
6. Salvacion v CBP, 278 SCRA 27 (1997)
7. China Banking Corporation v. CA, 511
SCRA 110 (2006)
Secrecy of Bank Deposits Primer