BANKING & FINANCIAL LAWS

COURSE OUTLINE
PROF. ARLENE G. LAPUZ-URETA
1ST SEMESTER, 2018-2019

I. HISTORY OF BANKING

Introduction, The General Banking Law Annotated, Banking Laws of the Philippines, Book II
("GBLA, BLP-Bk. II"), pp. 1-9.

II. THE GENERAL BANKING LAW OF 2000

Republic Act No. 8791, Chapter I

GBLA, BLP-Book II, pp. 10-33

A. History of RA 8791

Republic Act No. 337

B. Role of Banks

Simex International (Manila), Inc. v. Court of Appeals, 183 SCRA 360

Phil. Banking Corp. v. CA, G.R. No. 127469, January 15, 2004

C. Nature of Business

1. Fiduciary in nature and Impressed with public interest

Citibank v. Dinopol, G.R. No. 188412, November 22, 2010

Far East Bank v. Tentmakers, G.R. No. 171050, July 4, 2012
BPI v. IAC, 206 SCRA 408

2. Highest degree of Diligence

Comsavings Bank v. Capistrano, G.R. No. 170942, August 28, 2013

Cagungun v. Planters Development Bank, G.R. No. 158674 October 17, 2005

D. What constitutes Banking

Republic v. Security Credit and Acceptance Corp., et al., 19 SCRA 58 (1967)

E. Classification of Banks

Rafael A. Morales, The Philippine General Banking Law (Annotated), pp. 1-15

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III. Basic Functions of Banks

A. Deposit Function

GBLA, BLP Book II, pp. 34-47

Timoteo Aquino, Notes and Cases on Banking Law and Negotiable Instruments Law, Volume II,
Third Ed (2010), pp. 37-162

1. Nature of Deposits
Article 1980, Civil Code
China Banking Corp. v. CA, G.R. No. 140687, December 18, 2006, 511 SCRA 110
Central Bank v. Citytrust Banking Corp., G.R. No. 141835, February 4, 2009
Tan Tiong Tick v. American Apothecaries, 65 Phil. 414 (1938)
Associated Bank v. Tan, G.R. No. 156940, Dec. 14, 2004
Serrano v. Central Bank, G.R. 30511, February 14, 1980
Guingona v. City Fiscal of Manila, G.R. No. L-60033, April 4, 1984

2. Kinds of Deposits and Types of Accounts

Manual of Regulations for Banks ("MORB"), Sec. X 201-233

Philippine Bank of Commerce v. Court of Appeals, G.R. No. 97626, March 14, 1997

3. Who are qualified to be Depositors

Articles 234 and 236, Civil Code

Art. 234. When there is danger that a person obliged to give support may lose his or her fortune because
of grave mismanagement or on account of riotous living, his or her spouse, if any, and a majority of
those entitled to be supported by him or by her may petition the Court of First Instance for the creation
of the family home.

Art. 235. The family home may be sold, alienated or encumbered by the person who has constituted
the same, with the consent of his or her spouse, and with the approval of the court. However, the family
home shall under no circumstances be donated as long as there are beneficiaries. In case of sale, the
price or such portion thereof as may be determined by the court shall be used in acquiring property
which shall be formed into a new family home. Any sum of money obtained through an encumbrance
on the family home shall be used in the interest of the beneficiaries. The court shall take measures to
implement the last two provisions.

Art. 236. The family home may be dissolved upon the petition of the person who has constituted the
same, with the written consent of his or her spouse and of at least one half of all the other beneficiaries
who are eighteen years of age or over. The court may grant the petition if it is satisfactorily shown that
the best interest of the family requires the dissolution of the family home.

Sec. 1, Presidential Decree No. 734

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Section 1. Minors who are at least seven years of age, are able to read and write, have sufficient
discretion, and are not otherwise disqualified by any other incapacity, are hereby vested with special
capacity and power, in their own right and in their own names, to make savings or time deposits with
and withdraw the same as well as receive interests thereon from banking institutions, without the
assistance of their parents or guardians, the provisions of existing laws and regulations to the contrary
notwithstanding. Parents may nevertheless deposit for their minor children and guardians for their
wards.

Sec. 22, Thrift Banks Act

Sec. 22. Minors as Depositors. — Minors in their own rights and in their own names may make deposits
and withdraw the same, and may receive dividends and interest: Provided, however, That, if any
guardian shall give notice in writing to any thrift bank not to make payments of deposits, dividends, or
interest to the minor of whom he is the guardian, then such payment shall be made only to the
guardian.

4. Withdrawals of Deposits and Statements of Account

Firestone Tire & Rubber Co. v. CA, 353 SCRA 600

BPI v. CA, G.R. No. 112392, Feb. 29, 2000
PNB v. Pike, 470 SCRA 328
BPI v. CA and Napiza, 326 SCRA 641
Citibank v. Sps. Cabamongan, et al, G.R. No. 146918, May 2, 2006
Dra. Oliver v. Phil. Savings Bank and Castro, G.R. No. 214567, April 04, 2016
BPI v. Casa Montessori, G.R. No. 149454. May 28, 2004

5. Deceased Depositor

Section 97, National Internal Revenue Code, as amended by TRAIN Law or RA 10963

Sec. 97 Payment of Tax Antecedent to the Transfer of Shares, Bonds or Rights. – If a bank has knowledge
of the death of a person, who maintained a bank deposit account alone, or jointly with another, it shall
allow any withdrawal from the said deposit account, subject to a final withholding tax of six percent
(6%). For this purpose, all withdrawal slips shall contain a statement to the effect that all of the joint
depositors are still living at the time of withdrawal by any one of the joint depositors and such
statement shall be under oath by the said depositors.

Vitug v. Court of Appeals, 183 SCRA 755

6. Interest on Deposits
Republic of the Phil. v. Holy Trinity Realty Development Corp., G.R. No. 172410, April 14, 2008

7. Closure of Accounts

Far East Bank v. Pacilan, Jr. G.R. No. 157314, July 29, 2005

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 8. Protection for Depositors

RA 3591 - deposit insurance coverage and exemptions

Sec. 3 (f) The term “deposit” means the unpaid balance of money or its equivalent received by a bank
in the usual course of business and for which it has given or is obliged to give credit to a commercial,
checking, savings, time or thrift account or which is evidenced by its certificate of deposit, and trust
funds held by such bank whether retained or deposited in any department of such bank or deposited
in another bank, together with such other obligations of a bank as the Board of Directors shall find and
shall prescribe by regulations to be deposit liabilities of the Bank: Provided, That any obligation of a
bank which is payable at the office of the bank located outside of the Philippines shall not be a deposit
for any of the purposes of this Act or included as part of the total deposits or of the insured deposit:
Provided, further, That any insured bank which is incorporated under the laws of the Philippines which
maintains a branch outside the Philippines may elect to include for insurance its deposit obligation
payable only at such branch.

Risk insured against

Aquino, Notes and Cases on Baking Law, Chapter 3
Section 94, RA 7653 -New Central Bank Act -reserve requirements

SEC. 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.