BANKING LAWS

Course Outline
Atty. Maria Zarah R. Villanueva-Castro
I.

GENERAL CONCEPTS
A. Definition of Banks
Quasi-Banks
B. Nature of the Business
1. Utmost Diligence
2. Strikes and Lockouts
C. Requirements to Operate
1.
Incorporation
2. Business Operation
D. Applicable Laws

II.

CLASSIFICATION OF BANKS
A.
B.

III.

Universal Banks
Commercial Banks
1. Rural Banks
2.
Other Banks (cooperative, thrift, Islamic, foreign,
etc.)
3.
Areas of Distinctions
(a) capitalization
(b)
purpose
(c)
powers
(d)
equity
(e)
board composition
(f)
public offering

DEPOSIT FUNCTION
A. Contractual relationship between the bank and the depositor
B. Legal consequences of contractual relationship
C. Capacity of Depositor
1.
minors
2.
married Woman
3.
corporations
D. Kinds of Deposits (Savings, Time, Demand, others)
E. Ownership of Deposit and Authority to Withdraw
1. Individual
2. Joint
F. Rule on Anonymous Accounts

G. Disposition of Deposit of a Deceased Depositor (Survivorship

Agreements)
H. Secrecy of Bank Deposits
1. Confidentiality of Deposits (Rationale)
2. Exceptions to the Secrecy Rule
(a)
Exceptions under RA 1405
(b)
Anti-Graft and Corrupt Practices Act
(c)
Unclaimed Balances Act
(d)
Tax law
(e)
Anti-Money Laundering Act
(f)
Human Security Act
(g)
Rule under Foreign Currency Deposit Act
I. PDIC Insurance
1. Amount of coverage
2. Rules on payment
CASES: Vitug vs. Court of Appeals, 29 March 1990; Intengan vs. Court
of Appeals, 15 February 2002; China Bank vs. Ortega, 49 SCRA 356;
Salvacion vs. Central Bank, 21 August 1997; Ejecito vs.
Sandiganbayan, 30 November 2006; People vs. Ejercito Estrada, 2 April
2009
IV.

LOAN FUNCTION OF BANKS

A. Legal basis
B. Terms and Conditions
1. Amortization
2. Rules on Pre-Payment and Renewal
3. Interest
C. DOSRI Accounts
1. Requisites
2. Persons Covered (See BSP Circular No.
3. Transactions Covered
4. Restrictions under the GBL
5. Restrictions under Sec. 26, NCBA
D. Collaterals
1. Value of Collaterals
2. Foreclosure of Mortgage
3. Redemption Period
4. Effect of Estoppel and/or Agreement
5. Effect of Restraining Order

E. Single Borrower Limit

1. Rationale
2. Ceiling
3. Inclusions/Exclusions from SBL
F. Limit on Loans Against Real or Personal Property
G. Truth in Lending
1. Matters required to be disclosed
2. Penalties
V.

BANK REGULATIONS
A.

Ownership of Banks
1. Guidelines for Establishment
2.
Foreign Stockholdings
(a) Individual and non-banks
(b) Foreign Banks
3.
Filipino Stockholdings
4. Stockholdings of family Groups or Related Interests
5.
BSP Circulars on Ownership (Circular No. 332, Series
of 2002; Circular No. 256, Series of 2000)

B.

Directors and Officers

1.
Composition of Board
2. Public Officials
3. Meetings
4. Qualifications
(a) Fit and Proper Rule
(b) Minimum Qualifications
5.
Prohibited Acts and Disqualifications

C. Ownership of Real Property

VI.

BANKS IN DISTRESS
A. Loans to Banks
1. Loans without Collateral
2. Emergency Loans
B. Conservatorship
1. Powers of Conservator
2. Report of the Conservator
3. Qualifications and Remunerations
4. Termination of Conservatorship

C. Receivership
1. Grounds
2. Duties of Receiver
3. Close Now-Hear Later Scheme
4. Other Legal Effects
D. Liquidation
VII.

THE BSP
A. Responsibilities and Objectives
1. Supervision of Banks (Effect on SEC Jurisdiction)
2. Issuance of Regulations
3. Bank Examination
4. Overseeing Compliance
5. Money Function
6. Monetary Policy
7. International Monetary Stabilization
B. Organization of the BSP
1. The Monetary Board
(a) Composition
(b) Qualifications and Disqualifications