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G.R. No.


July 4, 2012

FAR EAST BANK AND TRUST COMPANY (now Bank of the Philippine Islands), Petitioner,
The signatures of respondents, Gregoria Pilares Santos (President) and Rhoel P.
Santos(Treasurer) of Tentmakers Group Inc. (TGI) appeared on 3 promissory notes for loans
contractedwith the petitioner.
Petitioner, after a futile demand, filed a complaint before the RTC for the payment of
theprincipal of the promissory notes which amounted to a total of Php 887,613.37 inclusive of interest,
penalty charges and attorneys fees.
The RTC rendered a decision in favour of the petitioner. However, this was reversed by theCA
on the ground, among others, that there were no collaterals to ensure the payment of the loansand, in
the conferment of such unsecured loans, the bank manager also failed to comply with theguidelines set
forth under the Manual fo Regulation for Banks when it approved and released thesubject loans to
Gregoria and Rhoel.
Petitioner contends that the evidence on record showed its compliance with the bankingrules
and regulations through board resolutions issued by TGI fully authorizing Gregoria and Rhoelto
transact business with it.
Whether or not petitioner did not comply with the guidelines under the Manual of Regulation
for Banks.
Decision:Far East Bank and Trust Company failed to show a document evidencing that
Gregoria andRhoel or TGI received the proceeds of the 3 promissory notes. Moreover, petitioner
violated therules and regulations of the BSP by its failure to strictly follow the guidelines in the
conferment of unsecured loans set forth under the Manual or Regulations for Banks.
Section X319.1 of the Manual of Regulation for Banks states that before granting credit
accommodations against personal security, banks must exercise proper caution by ascertaining thatthe
borrowers, co-makers, endorsers, sureties and/or guarantors possess good credit standing and are
financially capable of fulfilling their commitments to the bank. To show proof of financial capacity of
borrower, Section X319.2 provides that oth er than the personal information sheet about the borrower,
banks shall require that an application for a credit accommodation againstpersonal security be
accompanied by a copy of the latest income tax returns of the borrower and hisco-maker duly stamped

as received by the BIR and if the credit accommodation exceeds Php 500,000.00, a copy of the
borrowers balance sheet duly certified by an Independent Certified Public Accountant and in case he is
engaged in business, also a copy of the profit and loss statement duly certified by a CPA.