Commercial Law Review
Banking Laws Maria Zarah – Villanueva - Castro BANKING LAW (R.A. 8791) General Banking Law: Sec. 3 of the General Banking Law provides that: "Banks" shall refer to entities engaged in the lending of funds obtained in the form of deposits.” Sec. 8 of the General Banking Law provides that: “The Monetary Board may authorize the organization of a bank or quasi-bank subject to the following conditions: 8.1 That the entity is a stock corporation; 8.2 That its funds are obtained from the public, which shall mean twenty (20) or more persons; and 8.3 That the minimum capital requirements prescribed by the Monetary Board for each category of banks are satisfied. No new commercial bank shall be established within three (3) years from the effectivity of this Act. In the exercise of the authority granted herein, the Monetary Board shall take into consideration their capability in terms of their financial resources and technical expertise and integrity. The bank licensing process shall incorporate an assessment of the bank’s ownership structure, directors and senior management, its operating plan and internal controls as well as its projected financial condition and capital base.” *To be registered as bank, it must be a stock corporation. *Banks must obtain funds from the public. Minimum number of depositor is 20 persons. Nature of Business: Sec. 2 of the General Banking Law states that: “The State recognizes the vital role of banks 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.” Consequences: 1. Sec. 9 of the General Banking Law provides that: “The Monetary Board may prescribe rules and regulations on the types of stock a bank may issue, including the terms thereof and rights appurtenant thereto to determine compliance with laws and regulations governing capital and equity structure of banks; Provided, That banks shall issue par value stocks only.” Bank must be an open corporation Reason: Vital to industry The word “bank” cannot be used if such person or entity is not engaged in banking business. It is subject to heavy and close supervision and/or regulation by the Bangko Sentral ng Pilipinas. Banks must observe highest degree of diligence. Sec. 22 of the General Banking Law states that: “The banking industry is hereby declared as indispensable to the national interest and, notwithstanding the provisions of any law to the contrary, any strike or lockout involving banks, if unsettled after seven (7) calendar days shall be reported by the Bangko Sentral to the Secretary of Labor who may assume jurisdiction over the dispute or decide it or certify the same to the National Labor Relations Commission for compulsory arbitration. However, the President of the Philippines may at any time intervene and assume jurisdiction over such labor dispute in order to settle or terminate the same.”
2. 3. 4. 5. 6.
*In DBP v CA, the SC held that while an innocent mortgagee is not expected to conduct an exhaustive investigation on the history of the mortgagor’s title, in case of a banking institution, it must exercise due diligence before entering into said contract, and cannot rely upon on what is or is not annotated on the title. Cases: China Banking v Lagon; Citibank v Cabangongan Authority to incorporate and operate: Sec. 14 of the General Banking Law states that: “The Securities and Exchange Commission shall not register the articles of incorporation of any bank, or any amendment thereto, unless accompanied by a certificate of authority issued by the Monetary Board, under its seal. Such 1
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Banking Laws Maria Zarah – Villanueva - Castro certificate shall not be issued unless the Monetary Board is satisfied from the evidence submitted to it: 14.1. That all requirements of existing laws and regulations to engage in the business for which the applicant is proposed to be incorporated have been complied with; 14.2. That the public interest and economic conditions, both general and local, justify the authorization; and 14.3. That the amount of capital, the financing, organization, direction and administration, as well as the integrity and responsibility of the organizers and administrators reasonably assure the safety of deposits and the public interest. The Securities and Exchange Commission shall not register the by-laws of any bank, or any amendment thereto, unless accompanied by a certificate of authority from the Bangko Sentral.” *The articles of incorporation must be accompanied by the favorable recommendation of the BSP. Sec. 6 of the General Banking Law provides that: “No person or entity shall engage in banking operations or quasibanking 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 quasibanking 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 function 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.” Classification of banks: Sec. 3.2 of the General Banking Law provides that: “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 the Republic Act No. 7906 (hereafter the “Thrift Banks Act”); (d) Rural banks, as defined in Republic Act No. 73S3 (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.” Distinctions between different kinds of banks: a. As to Capitalization: They have different minimum capitalization requirements. 2
the same may be an “and/or account” or an “and account”. c. it can be organized or established by cooperatives and corporations primarily organized to hold equities in rural banks. Reason: equality in capacity *Bank account may be opened by one individual or two or more persons. Some banks may exercise certain powers only upon prior approval of the Monetary Board. *There is passing of ownership to the bank. Whenever two or more persons open an account. Basis: Trust and Confidence *What is prohibited under the Family Code is donation inter vivos and not donation mortis causa. majority of the shares must be owned by cooperatives. they are able to read and write and have sufficient discretion. Functions of the bank: 1. its political subdivisions and its instrumentalities.Commercial Law Review
Banking Laws Maria Zarah – Villanueva . *The bank can appropriate the deposits without the consent of the depositor. are 3 -
. Deposit Functions 2. *In RA 6938. *Legal compensation can take place because they are mutually creditor-debtor of each other. e.Castro b. and it should only be savings or time deposits. *Universal banks can engage into nonallied enterprises. As to Powers or Functions: There are functions and powers that are not exercised by one that are exercised by others.They can open bank accounts in their own right provided that they are at least 7 years of age. As to who can be directors: Public officers can be directors of Rural Banks while such officers are prohibited from being directors or officers of other types of banks. As to Foreign Equity: A rural bank must be wholly owned by Filipinos while other banks require only 40% Filipino ownership of their voting stocks. Depositors: 1. *The law requires that necessary measures are undertaken by the bank to record and establish the true identity of the depositor. the deposits can be named to corporate treasurer. As to Purpose: Some of the banks have specific purposes and social functions. they are not otherwise disqualified by any other incapacity. As to necessity of public offering: Public offering of shares is necessary for domestic banks seeking authority to act as universal bank while there is no such requirement for other banks. As to Incorporators: General Rule: Incorporators must be natural persons. 2 of Republic Act No. 1405 provides that: “All deposits of whatever nature with banks or banking institutions in the Philippines including investments in bonds issued by the Government of the Philippines. it can enter into underwriting commitments and do underwriting securities. f. Exception: Foreign currency deposits which may be a numbered account. Loan Functions Deposit Function: *The relationship created is one of creditordebtor relation. thus. *Prior to incorporation. g. 2. d. General Rule: Fictitious accounts or anonymous accounts are prohibited. * They cannot open checking account nor demand deposits. It can also act as an investment house. *Joint accounts may be the subject of survivorship agreement whereby the codepositors agree to permit either of them to withdraw the whole deposit during their lifetime and transferring the balance to the survivor upon the death of one of them. Secrecy of Bank Deposits: Peso deposits: General Rule: Sec. Married Women: They are allowed to open bank accounts without the assistance of their husbands. He will held it in trust for the corporation. Exception: In rural banks. Minors: .
*The aggregate share in all joint accounts is subject to P250. 2. *A joint account held by a juridical person or entity jointly with natural person/s shall be presumed to belong to the juridical person. 14. Garnishment: General Rule: Bank accounts may be garnished by the creditors of the depositor. 3019). *Insured deposit under the law means the net amount due to any depositor for deposits in an insured bank but should not exceed P250.A. Exception: In some instances even without court order. 12. 13. 2. Upon inquiry by the Commissioner of Internal Revenue for the purpose of determining the net estate of a deceased depositor. the maximum coverage of P250. 10. 9. Impeachment cases. *A joint account shall be insured separately from any individual-owned account. Exceptions: 1. Loan Function of the Banks: *A bank shall grant loans and other credit accommodations only in amounts and for the 4
. *Obligation to pay the premium lies on the bank. and Hi-jacking and other violations under R.Commercial Law Review
Banking Laws Maria Zarah – Villanueva . as amended. bureau or office. and 16 of the Comprehensive Dangerous Drugs Act of 2002.000. Secrecy of Deposits under the AntiMoney Laundering Law: General Rule: The Anti-Money Laundering Council may inquire into deposits upon order of the court when there is probable cause that the deposits are related to the crime of unlawful activities defined in Sec. there is only one exception and that is: When there is a written consent of depositor.A. 4 of R. 8 of the Anti-Graft and Corrupt Practices Act (R. Upon order of the competent court or tribunal in cases involving unexplained wealth under Sec. governmental official. inquired or looked into by any person.Castro hereby considered as of an absolutely confidential nature and may not be examined. Under the Foreign Currency Deposit Act. destructive arson and murder. 7.A. 6235. 3. 4. Upon the order of a competent court in cases where the money deposited or invested is the subject of litigation. 9160 as amended by R. *In case the taxpayer compromised his tax liability by reason of financial incapacity. Sections 4. Those exempt under the Rules of Civil Procedure like provision for the family for four months Deposit Insurance: *All deposits of any bank are insured with the PDIC. 8. Upon the order of a competent court in cases of bribery or dereliction of duty of public officials. 7. 8.A.000 pertains to the sum of all such accounts maintained in the same right and capacity. including those perpetrated by terrorists against noncombatant persons and similar targets. 3(1) and Sec. 5. 2. 6. thus. Foreign Currency Deposits *In Salvacion v Central Bank of the Philippines. 5. If the depositor has two or more accounts with the same bank. Disclosure of the Treasurer of the Philippines for dormant deposits for at least 10 years under the Unclaimed Balances Act (R. the SC held that foreign currency deposits of an American tourist who was found guilty of repeatedly raping a twelve years old child is subject to garnishment. Exception: A court order is not even necessary when the offense or unlawful activity involved is any of the following: 1. 9194.A. Reason: Not deposits for investment. Kidnapping for ransom under Article 267 of the Revised Penal Code. 15. as defined under the Revised Penal Code.000 threshold. law on secrecy is not applicable. When there is written permission of the depositor or investor. General Rule: Upon the order of a competent court or in proper cases by the Anti-Money Laundering Council where there is probable cause of money laundering. 3936) *Escheat proceedings Foreign Currency deposits: *Subsequent to secrecy law.” Exceptions: 1. Risk insured against: closure of banks due to liquidity problems.
nonperishable goods which must be fully covered by insurance. That loans.” Purpose: To protect the general public from the abuse of the directors. warehouse receipts or other similar documents transferring or securing title covering readily marketable. credit accommodations and advances to officers in the form of fringe benefits granted in accordance with rules as may be prescribed by the Monetary Board shall not be subject to the individual limit. borrow from such bank nor shall he become a guarantor. officers or stockholders and their related interests shall be upon terms not less favorable to the bank than those offered to others. stockholders and their related interests. directors. stockholders and related interests of the bank. credit accommodations and guarantees prescribed herein shall not apply to loans. however. excluding the director concerned: Provided. the office of any bank director or officer who violates the provisions of this Section may be declared vacant and the director or officer shall be subject to the penal provisions of the New Central Bank Act. the total amount of loans. Single Borrower’s Limit: Sec. The basis for determining compliance with single borrower limit is the total credit commitment of the bank to the borrower. or b. credit accommodations and guarantees secured by assets considered as non-risk by the Monetary Board shall be excluded from such limit: Provided. 35. 2. He contract a loan or any form of financial accommodation. or in any manner be an obligor or incur any contractual liability to the bank except with the written approval of the majority of all the directors of the bank. The Monetary Board shall define the term “related interests. The Monetary Board may regulate the amount of loans. officer or any stockholder of a bank. credit accommodations and guarantees which a bank may extend to each of its stockholders.” DOSRI ACCOUNTS: Sec. the total amount of loans. for himself or as the representative or agent of others. 36 of the General Banking Law states that: “No director or officer of any bank shall. Dealings of a bank with any of its directors. That loans. shipping documents. corporation or other entity shall at no time exceed twenty-five percent (25%) of the net worth of such bank.1 of the General Banking Law provides that: “Except as the Monetary Board may otherwise prescribe for reasons of national interest. endorser or surety for loans from such bank to others. a bank that is a subsidiary of a bank holding 5
. association. The required approval shall be entered upon the records of the bank and a copy of such entry shall be transmitted forthwith to the appropriate supervising and examining department of the Bangko Sentral. by a bank to its directors. credit accommodations and guarantees prescribed in the preceding paragraph may be increased by an additional ten percent (10%) of the net worth of such bank provided the additional liabilities of any borrower are adequately secured by trust receipts. Sec. as well as investments of such bank in enterprises owned or controlled by said directors. or officers and their related interests.Castro periods of time essential for the effective completion of the operations to be financed. The loan or financial accommodation is from: a. credit accommodations and guarantees extended by a cooperative bank to its cooperative shareholders. stockholders and their related interests.2 of the General Banking Law states that: “Unless the Monetary Board prescribes otherwise. officers. the outstanding loans. officers. shall be limited to an amount equivalent to their respective unencumbered deposits and book value of their paid-in capital contribution in the bank: Provided. 3. his bank. credit accommodations and guarantees that may be extended. directly or indirectly. credit accommodations and guarantees as may be defined by the Monetary Board that may be extended by a bank to any person. The borrower is a director. After due notice to the board of directors of the bank. other credit accommodations and advances granted to officers under a fringe benefit plan approved by the Bangko Sentral. partnership. further. That such written approval shall not be required for loans. officers. directly or indirectly.” The limit on loans. Requisites: 1. 35.Commercial Law Review
Banking Laws Maria Zarah – Villanueva . However.
Examples: 1. Restrictions: 1. of any mortgage on real estate which is security for any loan or other credit accommodation granted. singly or with that of his related interest. Any petition in court to enjoin or restrain the conduct of foreclosure proceedings instituted pursuant to this provision shall be given due course only upon the filing by the petitioner of a bond in an amount fixed by the court conditioned that he will pay all the damages which the bank may suffer by the enjoining or the restraint of the foreclosure proceeding. A director. is in excess of 5% of the capital and surplus of the lending bank or in the maximum amount permitted by law. The loan or financial accommodation of the director. 3. Foreclosure of Mortgage Sec. 55. whichever is earlier.Castro company of which both his bank and lending bank are subsidiaries. and 4. officer. or related interests owned more than 20% share in a corporation (borrower) – subject to DOSRI restriction. the registration of the certificate of foreclosure sale with the applicable Register of Deeds which in no case shall be more than three (3) months after foreclosure. shall have the right to redeem the property in accordance with this provision until. If there is interlocking directors – subject to DOSRI restrictions 2. stockholder or related interest of the bank – subject to DOSRI restrictions 4. officer. Procedural requirement: The account should be upon written approval of all the director of the lending bank excluding the director concerned. the purchaser at the auction sale concerned whether in a judicial or extrajudicial foreclosure shall have the right to enter upon and take possession of such property immediately after the date of the confirmation of the auction sale and administer the same in accordance with law. 2. the mortgagor or debtor whose real property has been sold for the full or partial payment of his obligation shall have the right within one year after the sale of the real estate. Owners of property that has been sold in a foreclosure sale prior to the effectivity of this Act shall retain their redemption rights until their expiration. General partner is either a director. Reportorial requirement: The resolution approving the loan shall be entered in the records of the bank and a copy of the entry shall be transmitted forthwith to the Supervising and Examination Sector of the BSP. stockholder. if the property is owned by stranger alone – not subject to DOSRI restrictions. 6
.juridical persons whose property is being sold pursuant to an extra judicial foreclosure. However.Commercial Law Review
Banking Laws Maria Zarah – Villanueva . to redeem the property by paying the amount due under the mortgage deed. renewing. (b) Furnish false or make misrepresentation or suppression of material facts for the purpose of obtaining. whichever is lower. with interest thereon at rate specified in the mortgage. but not after. Arms Length Rule: The account should be upon terms not less favorable to the bank than those offered to others. whether judicially or extra-judicially.2 of the General Banking Law states that: “No borrower of a bank shall (a) Fraudulently overvalue property offered as security for a loan or other credit accommodation from the bank. Stranger applied for a loan and a property was collateral: a. or increasing a loan or other credit accommodation or extending the period thereof. a bank in which a controlling proportion of the shares is owned by the same interest that owns a controlling proportion of the shares of his bank. Notwithstanding Act 3135. 47 of the General Banking Law provides that: “In the event of foreclosure. b.” Prohibited acts of Borrowers: Sec. and all the costs and expenses incurred by the bank or institution from the sale and custody of said property less the income derived there from. stockholder or related interest of a lending bank – subject to DOSRI restrictions 3. officer. officer or stockholder. c. if the property is co-owned by a director.
purchasing or owning up to sixty percent (60%) of the voting stock of an existing bank. 7721 states that: “In approving entry applications of foreign banks.” General Rule: Banks are partly nationalized *The 60% minimum threshold must be satisfied by the bank. Q: Is this allowed? A: NO. or (iii) by establishing branches with full banking authority: Provided. That a foreign bank may avail itself of only one (1) mode of entry: Provided. Act Liberalizing Entry of Foreign Banks: Sec. *Filipino ownership – voting stocks owned by Filipinos Examples: X bank has 1M voting stocks: 600.Castro (c) Attempt to defraud the said bank in the event of a court action to recover a loan or other credit accommodation. *The 40% threshold includes both direct and indirect ownership of shares of the bank. 11 of the General Banking Law provides that: “Foreign individuals and nonbank corporations may own or control up to forty percent (40%) of the voting stock of a domestic bank. employee or agent of a bank any gift. This rule shall apply to Filipinos and domestic non-bank corporations.000 shares *A single Filipino stockholders can only own upto 40% of the voting stock of the bank. X bank has 1M voting shares: 400. or any other form of compensation in order to influence such persons into approving a loan or other credit accommodation application. 400. 200. If the majority controlling stockholders are Filipino thus Y Corporation is a Filipino citizen hence the 60% is complied with.Commercial Law Review
Banking Laws Maria Zarah – Villanueva . *If the corporation acquiring is a bank the 40% threshold is not applicable. A Corporation which is not a banking institution – 500. If Y corporation is controlled by a foreigners there is noncompliance of the 60% requirement. 2 of Republic Act No. Depending on the citizenship of Y Corporation. irrespective of the place of incorporation.000 owned by Filipinos. Examples: 600. global reputation for financial innovations and stability in a competitive environment of the applicant.000 owned by Filipinos.000 is owned by A Corporation In A Corporation. The bank complied with the 60% requirement.000 is indirectly owned by a Filipino individual. 50% of 200. commission. 400. (ii) by investing in up to sixty percent (60%) of the voting stock of a new banking subsidiary incorporated under the laws of the Philippines.000 owned by Filipinos. (ii) consider strategic trade and investment relationships between the Philippines and the country of incorporation of the foreign bank.000 owned by foreigners In the 800. *The 40% requirement is applicable not only to foreigners but also to individual Filipino shareholders and domestic non-bank corporation.000 of which is owned by A and the 200. further. officer. the Monetary Board shall: (i) ensure geographic representation and complementation.000 owned by Filipinos. 800. or (d) Offer any director.000 shares *A domestic non-bank corporation can only own upto 40% of the voting stock of the bank. The percentage of foreign-owned voting stocks in a bank shall be determined by the citizenship of the individual stockholders in that bank. Q: Does the 60% requirement satisfied? A: IT DEPENDS. That a foreign bank or a Philippine corporation may own up to a sixty percent (60%) of the voting stock of only one (1) domestic bank or new banking subsidiary.000 owned by Y Corporation. The citizenship of the corporation which is a stockholder in a bank shall follow the citizenship of the controlling stockholders of the corporation. 400.” Ownership of Banks: Sec. (iii) study the demonstrated capacity. 3 of Republic Act No. the 40% threshold is violated. fee.000 owned by foreigners A – owned 500. (iv) see to it that reciprocity rights are enjoyed by Philippine banks in the 7
. A is a stockholder owning 50% of the controlling stock of A Corporation.” Sec.000 owned by foreigners and 200. 7721 provides that: “The Monetary Board may authorize foreign banks to operate in the Philippine banking system through any of the following modes of entry: (i) by acquiring.000 owned by Filipinos and 400.000 owned by foreigners.
and (v) consider willingness to fully share their technology. Non-Filipino citizens may become members of the board of directors of a bank to the extent of the foreign participation in the equity of said bank. Exception: Foreign bank can own upto 60% of the voting shares of a bank. the Monetary Board may disqualify. 16 of the General Banking Law provides that: “To maintain the quality of bank management and afford better protection to depositors and the public in general the Monetary Board shall prescribe. 34 of the General Banking Law provides that: “The Monetary Board shall prescribe the minimum ratio which the net worth of a bank must bear to its total risk assets which may include contingent accounts. pursuant to the Corporation Code of the Philippines. 15 of the General Banking Law states that: “The provisions of the Corporation Code to the contrary notwithstanding. participations. but not limited to. (ii) prevent a dominant market position by one bank or the concentration of economic power in one or more financial institutions. its subsidiaries or affiliates or related interests. Regulations to maintain liquidity and security: 1.Commercial Law Review
Banking Laws Maria Zarah – Villanueva . teleconferencing and video-conferencing. For purposes of this Section. In determining whether an individual is fit and proper to hold the position of a director or officer of a bank. Only those among the top one hundred fifty (150) foreign banks in the world or the top five (5) banks in their country of origin as of the date of application shall be allowed entry in accordance with Section 2 (ii) and (iii) hereof. the Monetary Board shall adopt such measures as may be necessary to: (i) ensure that at all times the control of seventy percent (70%) of the resources or assets of the entire banking system is held by domestic banks which are at least majority-owned by Filipinos. Exception: In case of merger Sec. experience. training.Castro applicant's country. save in cases where such service is incident to financial assistance provided by the government or a government owned or controlled corporation to the bank or unless otherwise provided under existing laws. there shall be at least five (5).” Justification: Police power Reason: Banking institution is imbued with public interest. two (2) of whom shall be independent directors. groups or individuals with related interests. pass upon and review the qualifications and disqualifications of individuals elected or appointed bank directors or officers and disqualify those found unfit.” General Rule: Foreigners must own only upto 40% of the voting shares of a bank. To qualify to establish a branch or a subsidiary. and a maximum of fifteen (15) members of the board or directors of a bank. education. After due notice to the board of directors of the bank. partnerships.” General Rule: The Board of Directors is composed of 5 to 15 members only. The meetings of the board of directors may be conducted through modern technologies such as. 19 of the General Banking Law states that: “Except as otherwise provided in the Rural Banks Act. An "independent director" shall mean a person other than an officer or employee of the bank. Sec. the foreign bank applicant must be widely-owned and publicly-listed in its country of origin. suspend or remove any bank director or officer who commits or omits an act which render him unfit for the position. regard shall be given to his integrity. and (iii) secure the listing in the Philippine Stock Exchange of the shares of stocks of banking corporations established under Section 2(i) and (ii) of this Act: Provided. the Monetary Board may require such 8
. In the exercise of this authority. unless the foreign bank applicant is owned by the government of its country of origin.” Sec. no appointive or elective public official whether full-time or part-time shall at the same time serve as officer of any private bank. Directors and Officers: Composition: Sec. and competence. or in corporations. That said banking corporations shall establish stock option plans for their officers and employees as the resources or assets of these corporations may allow in the best business judgment of their respective boards of directors.
shall continue to be in force. The law imposes limits on loans. 3. restrict or prohibit the acquisition of major assets and the making of new investments by the bank. endorser or surety for loans from such bank to others. as well as investments of such bank in enterprises owned or controlled by said directors. stockholders and their related interests. as amended. the Monetary Board may limit or prohibit the distribution of net profits by such bank and may require that part or all of the net profits be used to increase the capital accounts of the bank until the minimum requirement has been met The Monetary Board may. the Monetary Board shall. including those of the Bank for International Settlements (BIS). Section 22 of the General Banking Act. Sec. Before the effectivity of rules which the Monetary Board is authorized to prescribe under this provision. other credit accommodations and advances granted to officers under a fringe benefit plan approved by the Bangko Sentral. officers. or in any manner be an obligor or incur any contractual liability to the bank except with the written approval of the majority of all the directors of the bank. The Monetary Board may regulate the amount of loans. borrow from such bank nor shall he become a guarantor. financial or otherwise.Castro ratio be determined on the basis of the net worth and risk assets of a bank and its subsidiaries. That it may alter or suspend compliance with such ratio whenever necessary for a maximum period of one (1) year: Provided. 36 of the General Banking Law states that: “No director or officer of any bank shall. as well as prescribe the composition and the manner of determining the net worth and total risk assets of banks and their subsidiaries: Provided. relating to riskbased capital requirements: Provided further. or when a bank is under rehabilitation under a program approved by the Bangko Sentral. However. That in the exercise of this authority.Commercial Law Review
Banking Laws Maria Zarah – Villanueva . credit 9
. credit accommodations and guarantees that may be extended. directly or indirectly. officers. After due notice to the board of directors of the bank. the office of any bank director or officer who violates the provisions of this Section may be declared vacant and the director or officer shall be subject to the penal provisions of the New Central Bank Act. In case of a bank merger or consolidation. the outstanding loans. That such written approval shall not be required for loans. and all pertinent rules issued pursuant thereto. or constituent bank or corporations under rehabilitation from full compliance with the required capital ratio under such conditions as it may prescribe. to the extent feasible conform to internationally accepted standards. consolidated bank. directly or indirectly. until the minimum required capital ratio has been restored. excluding the director concerned: Provided. by a bank to its directors. officers or stockholders and their related interests shall be upon terms not less favorable to the bank than those offered to others. Section 9 of the Thrift Banks Act. with the exception of purchases of readily marketable evidences of indebtedness of the Republic of the Philippines and of the Bangko Sentral and any other evidences of indebtedness or obligations the servicing and repayment of which are fully guaranteed by the Republic of the Philippines. The required approval shall be entered upon the records of the bank and a copy of such entry shall be transmitted forthwith to the appropriate supervising and examining department of the Bangko Sentral. finally. furthermore. for himself or as the representative or agent of others. credit accommodations and guarantees that may be extended by banks.” 2. stockholders and their related interests. That such ratio shall be applied uniformly to banks of the same category. Monetary Board may temporarily relieve the surviving bank. In case a bank does not comply with the prescribed minimum ratio. Dealings of a bank with any of its directors.
The Monetary Board shall define the term “related interests.2 It is deficient in the required liquidity floor for government deposits for five (5) or more consecutive days.” 4.” The limit on loans. similarly in accordance with the authority granted to it in Section 106 of the New Central Bank Act. likewise authorize the Bangko Sentral to grant emergency loans or advances to banking institutions. for the purpose of 10
. That loans. and taking into account the requirements of the economy for the effective utilization of long-term funds. even during normal periods. Sec. That loans. 84 of the New Central Bank Act states that: “In periods of national and/or local emergency or of imminent financial panic which directly threaten monetary and banking stability.1 Its clearing account with the Bangko Sentral is overdrawn. credit accommodations and guarantees extended by a cooperative bank to its cooperative shareholders. by a vote of at least five (5) of its members. 5. directors. however. if at the time of declaration: 57. 43 of the General Banking Law provides that: “The Monetary Board. at its discretion. as well as related terms and conditions for various types of bank loans and other credit accommodations. further. Any change by the Board in the maximum maturities shall apply only to loans and other credit accommodations made after the date of such action. the debtor institution shall not.4 It has committed a major violation as may be determined by the Bangko Sentral. That while such loans or advances are outstanding. The Monetary Board shall regulate the interest imposed on micro finance borrowers by lending investors and similar lenders such as. Any change by the Board in the maximum maturities. the Monetary Board may. or officers and their related interests. Sec. except upon prior authorization by the Monetary Board. or 57. the unconscionable rates of interest collected on salary loans and similar credit accommodations.3 It does not comply with the liquidity standards/ratios prescribed by the Bangko Sentral for purposes of determining funds available for dividend declaration. 41 of the General Banking Law provides that: “The Monetary Board is hereby authorized to issue such regulations as it may deem necessary with respect to unsecured loans or other credit accommodations that may be granted by banks. Sec. prescribe the maturities.” 6. credit accommodations and guarantees prescribed herein shall not apply to loans.”
Other functions of the Bangko Sentral: A. or 57.” 7. expand the total volume of its loans or investments. credit accommodations and advances to officers in the form of fringe benefits granted in accordance with rules as may be prescribed by the Monetary Board shall not be subject to the individual limit. may. Emergency Loan Sec. The Monetary Board may. 57 of the General Banking Law states that: “No bank or quasibank shall declare dividends. but not limited to. authorize the Bangko Sentral to grant extraordinary loans or advances to banking institutions secured by assets as defined hereunder: Provided. credit accommodations and guarantees secured by assets considered as non-risk by the Monetary Board shall be excluded from such limit: Provided.Commercial Law Review
Banking Laws Maria Zarah – Villanueva . or 57. as well as related terms and conditions for various types of bank loans and other credit accommodations. shall be limited to an amount equivalent to their respective unencumbered deposits and book value of their paid-in capital contribution in the bank: Provided.Castro accommodations and guarantees which a bank may extend to each of its stockholders. The law imposes restrictions on the value of collaterals on loans.
Whenever a financial institution incurs an overdraft in its account with the Bangko Sentral. the banking institution shall submit to the Bangko Sentral a resolution of its board of directors authorizing the Bangko Sentral to evaluate other assets of the banking institution certified by its external auditor to be good and available for collateral purposes should the release of the subsequent tranche be thereafter applied for. though foreseeable. could not be prevented by the bank concerned: Provided. The amount of the first tranche shall be limited to twentyfive percent (25%) of the total deposit and deposit substitutes of the institution and shall be secured by government securities to the extent of their applicable loan values and other unencumbered first class collaterals which the Monetary Board may approve: Provided.Commercial Law Review
Banking Laws Maria Zarah – Villanueva . would be adequate to supplement. The Monetary Board may.Castro assisting a bank in a precarious financial condition or under serious financial pressures brought by unforeseen events. in the judgment of the Monetary Board. The amount of any emergency loan or advance shall not exceed the sum of fifty percent (50%) of total deposits and deposit substitutes of the banking institution and shall be disbursed in two (2) or more tranches. the Monetary Board finds that a bank or a quasi-bank is in a state of continuing inability or unwillingness to maintain a condition of liquidity 11
. the assets tendered by the banking institution to collateralize the subsequent tranche. That if as determined by the Monetary Board. In connection with the exercise of these powers. and the principal stockholders of the institution furnish an acceptable undertaking to indemnify and hold harmless from suit a conservator whose appointment the Monetary Board may find necessary at any time. or events which. and (b) provide acceptable security which. authorize the release of a subsequent tranche on condition that the principal stockholders of the institution: (a) furnish an acceptable undertaking to indemnify and hold harmless from suit a conservator whose appointment the Monetary Board may find necessary at any time. by a vote of at least five (5) of its members. the prohibitions in Section 128 of this Act shall not apply insofar as it refers to acceptance as collateral of shares and their acquisition as a result of foreclosure proceedings. Appointment of Conservator Sec. That a concurrent vote of at least five (5) members of the Monetary Board is obtained. where necessary. 29 of the New Central Bank Act states that: “Whenever. however. however. Prior to the release of the first tranche.” B. including the exercise of voting rights pertaining to said shares: Provided. further. the amount of the first tranche may exceed twenty-five percent (25%) of the bank's total deposit and deposit substitutes if the same is adequately secured by applicable loan values of government securities and unencumbered first class collaterals approved by the Monetary Board. That the Monetary Board has ascertained that the bank is not insolvent and has the assets defined hereunder to secure the advances: Provided. the same shall be eliminated within the period prescribed in Section 102 of this Act. That should the Bangko Sentral acquire any of the shares it has accepted as collateral as a result of foreclosure proceedings. the Bangko Sentral shall dispose of said shares by public bidding within one (1) year from the date of consolidation of title by the Bangko Sentral. on the basis of a report submitted by the appropriate supervising or examining department. the circumstances surrounding the emergency warrant a loan or advance greater than the amount provided hereinabove.
The conservatorship shall not exceed one (1) year. reorganize the management. To collect all monies and debts due said institutions. The conservator should be competent and knowledgeable in bank operations and management. the conservator shall not be entitled to such remaining balance. That this shall not include inability to pay caused by extraordinary demands induced by financial panic in the banking community. in which case the provisions of Section 30 shall apply. in which case he shall not be entitled to receive any remuneration or emolument from the Bangko Sentral during the conservatorship. The Monetary Board shall terminate the conservatorship when it is satisfied that the institution can continue to operate on its own and the conservatorship is no longer necessary. 3.Commercial Law Review
Banking Laws Maria Zarah – Villanueva . payable in twelve (12) equal monthly payments: Provided. involving acts or transactions which amount to fraud or a dissipation of the assets of the institution.Castro deemed adequate to protect the interest of depositors and creditors. The Monetary Board may appoint a conservator connected with the Bangko Sentral. in which cases. liabilities. the conservatorship is terminated on the ground that the institution can operate on its own. Powers of Conservator: 1. 2. and exercise all powers necessary to restore its viability. and the management thereof. or (c) cannot continue in business without involving probable losses to its depositors or creditors. That. and 4. the Monetary Board finds that a bank or quasi-bank: (a) is unable to pay its liabilities as they become due in the ordinary course of business: Provided. as determined by the Bangko Sentral. upon report of the head of the supervising or examining department. the Monetary Board may appoint a conservator with such powers as the Monetary Board shall deem necessary to take charge of the assets. 30 of the New Central Bank Act provides that: “Whenever. Appointment of Receiver Sec. or (d) has willfully violated a cease and desist order under Section 37 that has become final. on the basis of the report of the conservator or of its own findings. if at any time within one-year period. The conservator shall receive remuneration to be fixed by the Monetary Board in an amount not to exceed two-thirds (2/3) of the salary of the president of the institution in one (1) year. The expenses attendant to the conservatorship shall be borne by the bank or quasi-bank concerned. determine that the continuance in business of the institution would involve probable loss to its depositors or creditors. The conservatorship shall likewise be terminated should the Monetary Board. the conservator shall receive the balance of the remuneration which he would have received up to the end of the year. (b) has insufficient realizable assets. collect all monies and debts due said institution. To reorganize the management of the subject bank. to meet its liabilities. To take charge of the assets. To exercise all powers necessary to restore its viability Except: Those already perfected C. liabilities. The conservator shall report and be responsible to the Monetary Board and shall have the power to overrule or revoke the actions of the previous management and board of directors of the bank or quasi-bank.” *Experiencing liquidity problems only. and the management thereof. but if the conservatorship is terminated on other grounds. the Monetary Board may summarily and without need for prior hearing forbid the institution from doing business in the Philippines and designate the Philippine Deposit Insurance 12
institute such actions as may be necessary to collect and recover accounts and assets of. The receiver shall pay the cost of the proceedings from the assets of the institution. levy. The petition for certiorari may only be filed by the stockholders of record representing the majority of the capital stock within ten (10) days from receipt by the board of directors of the institution of the order directing receivership. and decide on other issues as may be material to implement the liquidation plan adopted.Castro Corporation as receiver of the banking institution. directors and officers. with the exception of administrative expenditures. If the receiver determines that the institution cannot be rehabilitated or permitted to resume business in accordance with the next preceding paragraph. The designation of a conservator under Section 29 of this Act or the appointment of a receiver under this section shall be 13
. The receiver shall determine as soon as possible. any person of recognized competence in banking or finance may be designed as receiver. attachment. but not later than ninety (90) days from takeover. a petition for assistance in the liquidation of the institution pursuant to a liquidation plan adopted by the Philippine Deposit Insurance Corporation for general application to all closed banks. The receiver shall immediately gather and take charge of all the assets and liabilities of the institution. The actions of the Monetary Board taken under this section or under Section 29 of this Act shall be final and executory. or defend any action against. upon motion by the receiver after due notice. Upon acquiring jurisdiction. adjudicate disputed claims against the institution. whether the institution may be rehabilitated or otherwise placed in such a condition so that it may be permitted to resume business with safety to its depositors and creditors and the general public: Provided. That the receiver may deposit or place the funds of the institution in nonspeculative investments. be exempt from any order of garnishment. and without requirement of prior notice or any other action. In case of quasi-banks. pay or commit any act that will involve the transfer or disposition of any asset of the institution: Provided. (2) convert the assets of the institutions to money. the Monetary Board shall notify in writing the board of directors of its findings and direct the receiver to proceed with the liquidation of the institution. or execution. The receiver shall: (1) file ex parte with the proper regional trial court. the institution. and with the assistance of counsel as he may retain. for the purpose of paying the debts of such institution in accordance with the rules on concurrence and preference of credit under the Civil Code of the Philippines and he may. the court shall. administer the same for the benefit of its creditors. dispose of the same to creditors and other parties. and exercise the general powers of a receiver under the Revised Rules of Court but shall not.Commercial Law Review
Banking Laws Maria Zarah – Villanueva . That any determination for the resumption of business of the institution shall be subject to prior approval of the Monetary Board. and may not be restrained or set aside by the court except on petition for certiorari on the ground that the action taken was in excess of jurisdiction or with such grave abuse of discretion as to amount to lack or excess of jurisdiction. from the moment the institution was placed under such receivership or liquidation. For a quasi-bank. the liquidation plan shall be adopted by the Monetary Board. liquidation or conservatorship. The assets of an institution under receivership or liquidation shall be deemed in custodia legis in the hands of the receiver and shall. in the name of the institution. assist the enforcement of individual liabilities of the stockholders.
and the management thereof. determine that the continuance in business of the institution would involve probable loss to its depositors or creditors. the conservator shall receive the balance of the remuneration which he would have received up to the end of the year. in which case the provisions of Section 30 shall apply. It is enough that subsequent judicial review is provided for. the Monetary Board finds that a bank or a quasibank is in a state of continuing inability or unwillingness to maintain a condition of liquidity deemed adequate to protect the interest of depositors and creditors. and exercise all powers necessary to restore its viability. the conservatorship is terminated on the ground that the institution can operate on its own. liabilities. levy. Supervision of Banks: Sec. 5. reorganize the management. the designation of a conservator is not a precondition to the designation of a receiver. Effects of receivership and liquidation: 1. on the basis of the report of the conservator or of its own findings. There will be no preference even if the claimant-depositor obtained a writ of preliminary attachment. The assets under receivership or liquidation shall be deemed in custodia legis in the hands of the receiver and shall be exempt from garnishment. the Monetary Board may appoint a conservator with such powers as the Monetary Board shall deem necessary to take charge of the assets. The conservator shall receive remuneration to be fixed by the Monetary Board in an amount not to exceed two-thirds (2/3) of the salary of the president of the institution in one (1) year. “Close Now. The conservatorship shall not exceed one (1) year. The conservator should be competent and knowledgeable in bank operations and management. Reason: The government has responsibility to see to it that the person dealing with the bank is protected. taking into consideration the distinctive character of the operations of institutions and the substantive similarities of specific functions to which 14
. Furthermore. if at any time within one-year period. in which case he shall not be entitled to receive any remuneration or emolument from the Bangko Sentral during the conservatorship. Suspension of operation 2.Castro vested exclusively with the Monetary Board.” *No prior hearing is necessary in appointing a receiver and in closing the bank. Banks under liquidation retain their legal personality *The bank can sue and be sued but any case should be initiated and prosecuted through the liquidator. The Monetary Board may appoint a conservator connected with the Bangko Sentral. Bank is not liable to pay interest on deposits during the period of suspension of operation Reason: There is no source of income 4. That. Indeed. collect all monies and debts due said institution. on the basis of a report submitted by the appropriate supervising or examining department. The conservatorship shall likewise be terminated should the Monetary Board. “ Supervision” shall include the following: 4. The conservator shall report and be responsible to the Monetary Board and shall have the power to overrule or revoke the actions of the previous management and board of directors of the bank or quasi-bank. 4 of the General Banking Law states that: “The operations and activities of banks shall be subject to supervision of the Bangko Sentral. but if the conservatorship is terminated on other grounds.” *There is a bank closure.1. to require such previous hearing would not only be impractical but would tend to defeat the very purpose of the law when it invested the Monetary Board with such authority. attachment or execution 3. conduct or the establishment standards of operation for uniform application to all institutions or functions covered. The issuance of rules of. payable in twelve (12) equal monthly payments: Provided. The Monetary Board shall terminate the conservatorship when it is satisfied that the institution can continue to operate on its own and the conservatorship is no longer necessary. Hear Later” Scheme: Sec. the conservator shall not be entitled to such remaining balance. 29 of the New Central Bank Act states that: “Whenever. The expenses attendant to the conservatorship shall be borne by the bank or quasi-bank concerned. Purpose: To avoid creation of panic from the depositors or public.Commercial Law Review
Banking Laws Maria Zarah – Villanueva .
the proceeds of any unlawful activity. b) Any person knowing that any monetary instrument or property involves the proceeds of any unlawful activity. That the deficiencies/irregularities found by or discovered by an audit shall be immediately addressed. 4. 4. conduct searches and seizures in accordance with law. In case the Revised Penal Code provides for a greater penalty. The Bangko Sentral shall have the authority to investigate. “ quasibanks” shall refer to entities engaged in the borrowing of funds through the issuance. transacts or attempts to transact said monetary instrument or property. c) Any person knowing that any monetary instrument or property is required under this Act to be disclosed and filed with the AntiMoney Laundering Council (AMLC). performs or fails to perform any act as a result of which he facilitates the offense of money laundering referred to in paragraph (a) above.1 of Republic Act 9160 states that: “Money laundering is a crime whereby the proceeds of an unlawful activity AS HEREIN DEFINED are transacted. fails to do so. trust entities and other financial institutions which under special laws are subject to Bangko Sentral supervision. modes or standards are to be applied.6 Enforcing prompt corrective action. make arrests. For the purposes of this Act. thereby making them appear to have originated from legitimate sources. It is committed by the following: a) Any person knowing that any monetary instrument or property represents. The client is not properly identified. within the territory of the Philippines. nor reproduce or imitate the facsimiles of Bangko Sentral notes without prior authority from the Bangko Sentral. regardless of amount.000 within one banking day. where any of the following circumstances exists: 1.5 Inquiring into the solvency and liquidity of the institution.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. 2. 50 of the New Central Bank Act states that: “The Bangko Sentral shall have the sole power and authority to issue currency. may put into circulation notes. Violation of this provision or any regulation issued by the Bangko Sentral pursuant thereto shall constitute an offense punishable by imprisonment of not less than five (5) years but not more than ten (10) years. The Bangko Sentral shall also have supervision over the operations of and exercise regulatory powers over quasi-banks.3 Overseeing to ascertain that laws and regulations are complied with. in the opinion of the Monetary Board.” Money Function: Sec. or 4. involves. *P500.Castro such rules. Taking into account all known circumstances. 3. The amount involved is not commensurate with the business or financial capacity of the client. for the purpose of maintaining the integrity of the currency. No other person or entity. purpose or economic justification. 7653 (hereafter the “New Central Bank Act”) for purposes of re-lending or purchasing of receivables and other obligations. 4. 4. or relates to.000 is the threshold/controlling Suspicious Transaction are transactions. then that penalty shall be imposed.” Anti-Money Laundering Act: Sec. it may be perceived 15
. public or private. coins or any other object or document which. There is no underlying legal or trade obligation. The Monetary Board may issue such regulations as it may deem advisable in order to prevent the circulation of foreign currency or of currency substitutes as well as to prevent the reproduction of facsimiles of Bangko Sentral notes. might circulate as currency. 4. endorsement or assignment with recourse or acceptance of deposit substitutes as defined in Section 95 of Republic Act No.2 The conduct of examination to determine compliance with laws and regulations if the circumstances so warrant as determined by the Monetary Board.” Definitions: Covered Transaction is a transaction in cash or other equivalent monetary instrument involving total amount in excess of P500.Commercial Law Review
Banking Laws Maria Zarah – Villanueva . 4.
(17) Delivery of prohibited drugs (18) Distribution of prohibited drugs (19) Transportation of prohibited drugs (20) Maintenance of a Den. percentage. or giving any private party any unwarranted benefits. e. 15 and 16 of Republic Act No. misuse or malversation of public funds or raids upon the public treasury.i. otherwise known as the Anti-Graft and Corrupt Practices Act. (21) Plunder by receiving. committee. present. directly or indirectly. instrumentalities or government-owned or controlled corporations or their subsidiaries. Any circumstance relating to the transaction which is observed to deviate from the profile of the client and/or the client’s past transactions with the covered institution. has secured or obtained. as amended. Any transaction that is similar. 10. conversion. otherwise known as the Revised Penal Code. on behalf of the government. 9. or will secure or obtain. (22) Plunder by the illegal or fraudulent conveyance or disposition of assets belonging to the National Government or any of its subdivisions. (17) Entering. wherein the public officer in his official capacity has to intervene under the law. is being or has been committed. 5. to the following: (A) Kidnapping for ransom under Article 267 of Act No. (14) Directly or indirectly requesting or receiving any gift. from any person for whom the public officer. or 7. in consideration for the help given or to be given. 3. gift. and which exercise of discretion in such approval. g. including the government. (14) Kidnapping for ransom (B) Sections 4. any commission. (16) Administration of prohibited drugs. 3815. of Republic Act 9160 states that: “Unlawful activity" refers to any act or omission or series or combination thereof involving or having relation. as amended. Sec.9165. c. (16) Causing any undue injury to any party. into any contract or transaction manifestly and grossly disadvantageous to the same. directly or indirectly. percentage or benefit for himself or for any other person in connection with any contract or transaction between the Government and any party. or having material interest in any transaction or act requiring the approval of a board. panel or group of which he is a member. (14) Importation of prohibited drugs. advantage or preference in the discharge of his official. (15) Sale of prohibited drugs. kickbacks or any other form of pecuniary benefit from any person and/or entity in connection with any government contract or project or by reason of the office or position of the public officer concerned. (18) Directly or indirectly having financial or pecuniary interest in any business contract or transaction in connection with which he intervenes or takes part in his official capacity. otherwise known as the COMPREHENSIVE Dangerous Drugs Act of 2002. or in which he is prohibited by the Constitution or by any law from having any interest.13. for himself or for another. any shares of stock. even if he votes against the same or he does not participate in the action of the board. without prejudice to Section 13 of R.A. share. any government permit or license. panel or group. 6. 7080. agencies. 3019. for personal gain.Commercial Law Review
Banking Laws Maria Zarah – Villanueva . as amended. The transaction is in any way related to an unlawful activity or any money laundering activity or offense under this ACT that is about to be. 12. equity or any other form of interest or participation including the promise of 16
. present or other pecuniary or material benefit. share. in any manner or capacity. evident bad faith or gross inexcusable negligence. whether or not the public officer profited or will profit thereby. 8. 5. (15) Directly or indirectly requesting or receiving any gift. h and i of Republic Act No. administrative or judicial functions through manifest partiality. analogous or identical to any of the foregoing. 14.Castro that the client’s transaction is structured in order to avoid being the subject of reporting requirements under the ACT. (D) Plunder under Republic Act No. 3019. receiving or accepting. (23) Plunder by obtaining. 6. (19) Directly or indirectly becoming interested. (20) Plunder through misappropriation. Dive or Resort for prohibited users (21) Manufacture of prohibited drugs (22) Possession of prohibited drugs (23) Use of prohibited drugs (24) Cultivation of plants which are sources of prohibited drugs (25) Culture of plants which are sources of prohibited drugs (C) Section 3 paragraphs b.
to the prejudice of the offended party or any third person. (36) Estafa with unfaithfulness or abuse of confidence by misappropriating or converting. (F) Jueteng and Masiao punished as illegal gambling under Presidential Decree No. (29) Jueteng. even though such obligation be based on an immoral or illegal consideration. (28) Robbery in an uninhabited house or public building or edifice devoted to worship. money. as amended. (47) Assisting in any fraudulent importation. goods. (43) Estafa by resorting to some fraudulent practice to ensure success in a gambling game. or falsely pretending to possess power. in whole or in part. (44) Estafa by removing. (39) Estafa by altering the quality. 8792. (50) Concealing smuggled article after fraudulent importation. or by denying having received such money.Commercial Law Review
Banking Laws Maria Zarah – Villanueva . authority. 296. (48) Assisting in any fraudulent exportation. (32) Piracy in inland Philippine waters. (I) Swindling 'under Article 315 of the Revised Penal Code. as amended. (52) Selling smuggled article after fraudulent importation. which refers to: (55) unauthorized access into or interference in a computer system/server or information and communication system. and by writing any document above such signature in blank. office files. or for administration. as amended. credit. by means of deceit. 295. or his funds deposited therein were not sufficient to cover the amount of the check. or under any other obligation involving the duty to make delivery or to return the same.1. (53) Transportation of smuggled article after fraudulent importation. (34) Qualified theft.Castro future employment in any business enterprise or undertaking. (G) Piracy on the high seas under the Revised Penal Code. document or any other papers. (35) Estafa with unfaithfulness or abuse of confidence by altering the substance. otherwise known as the Electronic Commerce Act of 2000. (51) Buying smuggled article after fraudulent importation. 300. relationship. or issuing a check in payment of an obligation when the offender has no funds in the bank. Hacking or cracking. agency. steal. road or alley. connection or influence to unjustly enrich himself or themselves at the expense and to the damage and prejudice of the Filipino people and the Republic of the Philippines (E) Robbery and extortion under Articles 294. committed in an uninhabited place and by a band. (H) Qualified theft under Article 310 of the Revised Penal Code. (54) Fraudulent practices against customs revenue. to sign any document. (24) Plunder by establishing agricultural. industrial or commercial monopolies or other combinations and/or implementation of decrees and orders intended to benefit particular persons or special interests. (30) Masiao. K. (41) Estafa by postdating a check. or with use of firearms on a street. property. quality or quantity of anything of value which the offender shall deliver by virtue of an obligation to do so. concealing or destroying. even though such obligation be totally or partially guaranteed by a bond. or destroy using a computer or other 17
. qualifications. (26) Robbery with violence or intimidation of persons. or by means of other similar deceits. to the prejudice of another. (42) Estafa by inducing another. or other property. any court record. 455 and 1937. 532. goods or any other personal property received by the offender in trust or on commission. (40) Estafa by pretending to have bribed any government employee. (K) Violations under Republic Act No. (46) Fraudulent exportation of any vehicle. (49) Receiving smuggled article after fraudulent importation. influence. alter. 299. (45) Fraudulent importation of any vehicle. 301 and 302 of the Revised Penal Code. (37) Estafa with unfaithfulness or abuse of confidence by taking undue advantage of the signature of the offended party in blank. (J) Smuggling under Republic Act Nos. (33) Aiding and abetting pirates and brigands. 1602. (27) Robbery with physical injuries. business or imaginary transactions. (31) Piracy on the high seas. (25) Plunder by taking undue advantage of official position. or (56) any access in order to corrupt. fineness or weight of anything pertaining to his art or business. (38) Estafa by using a fictitious name. as amended and Presidential Decree No.
otherwise known as the Securities Regulation Code of 2000. communication. reproduction. (74) Introduction into commerce of any mislabeled or banned hazardous substance. destruction.3. modification. (75) Alteration or removal of the labeling of a hazardous substance. a series of transactions in securities that raises their prices to induce the purchase of a security. in a manner that infringes intellectual property rights. electronic signature or copyrighted works including legally protected sound recordings or phonograms or information material on protected works. (87) Murder. uploading. (84) Other violations of the provisions of the E-Commerce Act. offer or distribution of securities within the Philippines without a registration statement duly filed with and approved by the SEC. the internet. (62) the unauthorized storage. (66) Sale of any adulterated or mislabeled product using electronic documents. alone or with others. alone or with others. (79) False representations in advertisements as the existence of a warranty or guarantee. (86) Destructive arson. Piracy. (80) Violation of price tag requirements. 7394 and other relevant or pertinent laws through transactions covered by or using electronic data messages or electronic documents: (64) Sale of any consumer product that is not in conformity with standards under the Consumer Act. (65) Sale of any product that has been banned by a rule under the Consumer Act. label or other identification device. (60) the unauthorized importation. without the knowledge and consent of the owner of the computer or information and communications system.Castro similar information and communication devices. through the use of telecommunication networks. as defined under the Revised Penal Code. such but not limited to. 8799. resulting in the corruption. K. (78) Fraudulent practices relative to weights and measures. (72) Sale of any drug or device by any person not licensed in accordance with the provisions of the E-Commerce Act. theft or loss of electronic data messages or electronic document. alteration. including (57) the introduction of computer viruses and the like. (59) the unauthorized dissemination. (88) Hijacking. (85) Hijacking. (81) Mislabeling consumer products. as amended. whether of the same or different class. deceptive or misleading advertisements. (76) Deceptive sales acts and practices. substitution. series of transactions in securities that depresses their price to induce the sale of a security. downloading. (89) Sale. destructive arson and murder. (91) Violation of reportorial requirements imposed upon issuers of securities. removal. (93) Manipulation of security prices by effecting. controlled or commonly controlled company by others. or (63) the unauthorized broadcasting. alteration. (61) the unauthorized use. (67) Adulteration or misbranding of any consumer product.Commercial Law Review
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. . whether of the same or different class. 6235. destructive arson or murder perpetrated by terrorists against noncombatant persons and similar targets.2. including those perpetrated by terrorists against noncombatant persons and similar targets. (70) Alteration or removal of the labeling of any drug or device held for sale. (69) Revealing trade secrets. (73) Sale of any drug or device beyond its expiration date. making available to the public. tag. (77) Unfair or unconscionable sales acts and practices. (L) Hijacking and other violations under Republic Act No. Violations of the Consumer Act or Republic Act No. (71) Sale of any drug or device not registered in accordance with the provisions of the E-Commerce Act. (92) Manipulation of security prices by creating a false or misleading appearance of active trading in any listed security traded in an Exchange or any other trading market. (68) Forging. (94) Manipulation of security prices by effecting. (90) Sale or offer to the public of any preneed plan not in accordance with the rules and regulations which the SEC shall prescribe. which refers to: (58) the unauthorized copying. stamp. (M) Fraudulent practices and other violations under Republic Act No. (83) Violation of required disclosures on consumer loans. of protected material. (82) False. K. distribution. of the same issuer or of a controlling. counterfeiting or simulating any mark.
(97) Manipulation of security prices by making false or misleading statements with respect to any material fact. or an associated person of any broker or dealer without any registration from the Commission. whether or not such reporting results in any criminal prosecution under this Act or any other Philippine law. which he knew or had reasonable ground to believe was so false and misleading. (99) Sale or purchase of any security using any manipulative deceptive device or contrivance.” Safe Harbor Provisions: Sec. alone or with others. is "of a similar nature". (103) Engaging in any act. any series of transactions for the purchase and/or sale of any security traded in an Exchange for the purpose of pegging. fixing or stabilizing the price of such security. scheme or artifice to defraud in connection with the purchase and sale of any securities. in the light of the circumstances under which they were made. (114) Any other violations of any of the provisions of the Securities Regulation Code. a series of transactions in securities that creates active trading to induce such a purchase or sale though manipulative devices such as marking the close. hype and dump. (113) Violations of any of the provisions of the implementing rules and regulations of the SEC. or acting as a salesman.i.3. not registered with the SEC. (96) Manipulation of security prices by circulating or disseminating' information that the price of any security listed in an Exchange will or is likely to rise or fall because of manipulative market operations of anyone or more persons conducted for the purpose of raising or depressing the price of the security for the purpose of inducing the purchase or sale of such security. . (111) Aiding and Abetting in any violations of the Securities Regulation Code. transaction. criminal or civil proceedings. controlled or commonly controlled company by others. for the purpose of inducing the purchase or sale of any security listed or traded in an Exchange. (98) Manipulation of security prices by effecting. or reporting such transaction. (106) Employment by a broker or dealer of any salesman or associated person or by an issuer of any salesman. painting the tape. (112) Hindering. the nomenclature of said felony or offense need not be identical to any of the predicate crimes listed under Rule 3.e of Republic Act 9160 states that: “No administrative. alone or with others. as to constitute the same as an unlawful activity under the AMLA. 9. in an Exchange or using the facility of an Exchange which is not registered with the SEC. obstructing or delaying the filing of any document required under the Securities Regulation Code or the rules and regulations of the SEC. (100) Execution of short sales or stop-loss order in connection with the purchase or sale of any security not in accordance with such rules and regulations as the SEC may prescribe as necessary and appropriate in the public interest or the protection of the investors. (95) Manipulation of security prices by effecting. unless otherwise allowed by the Securities Regulation Code or by the rules of the SEC. (102) Obtaining money or property in connection with the purchase and sale of any security by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made.Commercial Law Review
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. squeezing the float. not misleading. (109) Violations of margin requirements.Castro same issuer or of a controlling. (N) Felonies or offenses of a similar nature to the afore-mentioned unlawful activities that are punishable under the penal laws of other countries. (110) Violations on the restrictions on borrowings by members. (108) Making use of the facility of a clearing agency which is not registered with the SEC. (104) Insider trading. (107) Effecting any transaction in any security. practice or course of action in the sale and purchase of any security which operates or would operate as a fraud or deceit upon any person. (101) Employment of any device. brokers and dealers. In determining whether or not a felony or offense punishable under the penal laws of other countries. (105) Engaging in the business of buying and selling securities in the Philippines as a broker or dealer. shall lie against any person for having made a covered transaction report or a suspicious transaction report in the regular performance of his duties and in good faith. boiler room operations and such other similar devices.
to the extent applicable and in accordance with rules and regulations prescribed by the Board. (4) the charges. individually itemized. to be credited as down payment and/or trade-in.
. if any.Commercial Law Review
Banking Laws Maria Zarah – Villanueva . 4 of Republic Act No. which are paid or to be paid by such person in connection with the transaction but which are not incident to the extension of credit. 3765 states that: “Any creditor shall furnish to each person to whom credit is extended. Purpose: To avoid hidden charges. (6) the finance charge expressed in terms of pesos and centavos.Castro Truth in Lending Act: Sec. a clear statement in writing setting forth. to know the actual amount borrowed. the contract of loan is still valid however. the following information: (1) the cash price or delivered price of the property or service to be acquired. and (7) the percentage that the finance bears to the total amount to be financed expressed as a simple annual rate on the outstanding unpaid balance of the obligation. (5) the total amount to be financed.” *Failure to comply with the Truth in Lending Act. prior to the consummation of the transaction. (3) the difference between the amounts set forth under clauses (1) and (2). the bank cannot recover finance charges. (2) the amounts.