COURSE SYLLABUS

FOR
BANKS and FINANCIAL INTERMEDIARIES

Dela Salle University College of Law

2nd Sem, AY 2019-2020

Atty. Monica Jimenez-Bigbig

jimenez.mariamonica@gmail.com

Credits: 2 units
Schedule: Tuesdays, 6:00 to 8:00 PM

Basic References: General Banking Law (R.A. No. 8791)

The New Central Bank Act (RA7653, as amended by RA 11211)
Manual of Regulations for Banks (available via BSP website)
Manual of Reguations for Non-Bank Financial Intermediaries (available on BSP website)
Other special laws

A. Anti-Money Laundering Act

R.A. No. 9160, as amended by R.A. No. 9194, RA 10167, RA 10365, RA 10927

1. Definition of money laundering

2. Policy of the Law
3. Covered Institutions
- Obligations of Covered Institutions
4. Covered Transactions
5. Suspicious Transactions
6. When Is Money Laundering Committed
7. Unlawful Activities or Predicate Crimes
8. Anti-Money Laundering Council
9. Freezing of Accounts
10. Authority to Inquire Into Bank Deposits
a. Ligot vs. Republic, 692 SCRA 509 (2013)
b. Republic vs Hon Eugenio, GR No. 174629, Feb 14, 2008
11. Distinction from money-laundering
Ra 10168; The Anti-Terrorism Financing Act

b. Banks and the Business of Banking

1. What are banks and what do they do
a. Definition of banks and banking under Sec 3.1, GBL
b. Other activities of banks under Section 53, GBL

2. What are the types of banks

Section 3.2 of the GBL
Manual of Regulations for Banks (MORB), Sec X101
a. Commercial Bank
b. Universal Bank
c. Thrift Bank (RA7906)
d. Rural Bank (RA7353)
e. Specialized government banks; DBP and Landbank
f. Islamic banks (RA 6848)
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3. What are non-bank financial institutions (NBFIs)

a. NBFI with QB Functions - refers to Investment Houses (IH) and Financing Companies
(FC) with QB functions
b. NBFI without QB Functions - refers to Credit Card Companies (CCC), IH without QB
functions, FC without QB functions, Securities Dealers Brokers (SDB), Pawnshops, Non-
stock Savings and Loans Associations (NSSLA), Investment Companies (IC), Lending
Investors (LI), Venture Capital Corporations (VCC), and Government NBFI (GNBFI),
Money Service Businesses (MSBs) [i.e. Remittance and Transfer Companies (RTCs), Money
Changers (MCs)/Foreign Exchange Dealers (FXDs)]

4. Degree of diligence required from banks

a. PNB vs Pike, GR No. 157845, Sept 20, 2005
b. BPI vs Lifetime Marketing, GR No. 176434, June 25, 2008
c. BPI vs Casa Montessori, G.R. No. 149454, May 28, 2004
d. Central Bank vs. Citytrust Bank, GR No. 141835, Feb 4, 2009

B. Bank Deposits
1. Deposit-taking function
MORB Section X213-214

2. Legal nature of bank deposits

Art. 1980, Civil Code
Art 1933, Civil Code
Consolidated Bank vs CA & Diaz, GR No, 138569, Sept 111, 2003
People vs. Ong, 204 SCRA 942 (1991)

3. Certain types of bank accounts

Joint Accounts (Art 484, 405, Civil Code)
Numbered Accounts (BSP Circular No. 302, Sec. 9, AMLA)
Basic deposit (BSP Circular 992 Series of 2018)

3. Secrecy of Bank Deposits

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

Purpose
Prohibited Acts
Deposits Covered
Exceptions under RA 1405 and under special laws

Sec. 6 (f), NIRC

Act No. 3696, Unclaimed Balances Law
Anti-Money Laundering Act
Section 10, Rule 57, Rules of Court
Sec 27, RA 9372, Human Security Act
Sec 8, RA 3591, PDIC Law

a. People vs Joseph Ejercito Estrada, GR No. 164368—69, April 2, 2009

b. PSBank vs. Senate, GR No. 200238, Feb 9, 2012 (include Brion concurring and Sereno dissenting)
c. BSB Group vs. Sally Go GR No. 168644, Feb 16, 2010
d. GSIS vs. Industrial Bank of Korea, GR No. 189206, June 8, 2011
e. JV Ejercito vs. Sandiganbayan, GR No. 157294-95, November 30, 2006
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4. Deposit Insurance
(R.A. 3591, RA 9576)
Purpose
Deposits covered
Liability of Philippine Deposit Insurance Corporation

a. PDIC vs Citibank GR No. 170290, April 11, 2012

b. PDIC vs Aquero GR No. 118917, Dec 22, 1997
c. PDIC vs Philippine Countryside Rural Bank GR No. 176348, Jan 24, 2011

5. Unclaimed Balances (Act 3936, as amended)

6. Garnishment of Bank Deposits

a. Chinabank vs. Ortega 49 SCRA 355 (1973)

b. RCBC vs. de Castro, 168 SCRA 49
c. Fernandez vs. Aniñon, GR No. 138967, 24 April 2007
d. Salvacion vs. CB, 278 SCRA 27

7. Foreign Currency Deposits (R.A. No. 6426)

C. Bank Loans

1. Truth in Lending Act (RA 3765)

2. Loans to Related Parties/ DOSRI

Sec. 36, GBL

Sec. X237, MORB
Sec. X328.1, MORB
Sec. 26, New Central Bank Act

a. Go vs. BSP, 604 SCRA 322 (2009)

b. Jose C. Go vs. BSP, GR No. 178429, 23 October 2009
c. Soriano vs. People, GR No. 162336, 1 February 2010

3. Single Borrower’s Limit

Sec. 35, GBL

D. Organization of Banks

1. Stockholders of Banks
a. Foreign Stockholdings (Sec.11, GBL)
b. Stockholdings of Family Groups or Related Interests (Sec. 12-13, GBL)

2. Directors and Officers of Banks

Sec. 15-19, GBL
a. Fit and Proper Rule
b. Foreign directors
c. Public Officials

3. Foreign Banks
RA 10641, Allowing Full Entry of Foreign Banks, amending RA7721, The Foreign Banks Liberalization
Act
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E. Regulation of Banks
RA 11211 The New Central Bank Act, as amended

1. Mandate of the BSP (Sec 4, GBL)

2. Responsibility and Primary Objectives of the BSP
3. Monetary Board—Powers, Functions, Scope
4. How the BSP Handles Banks in Distress
Conservatorship
Closure
- “Close now, hear later rule”
Receivership
Liquidation
Remedies of the Bank

a. Banco Filipino vs. Central Bank, 204 SCRA 767

b. BSP-MB vs. Antonio-Valenzuela 602 SCRA 698 (2009)
c. Rural Bank of San Miguel vs. Monetary Board, GR No. 150866, Feb 16, 2007
d. Central Bank Employees Association vs. BSP, GR No. 148208, Dec 15, 2004

5. How the BSP Handles Exchange Crisis

a. Legal Tender Power
b. Rate of Exchange