Banking Laws, particular topics for study

Banking Laws, Vol. II, by T. Aquino, 2010 3 rd Edition

Page
703

Topic
Use of a credit card by a bank officer which is
issued by the bank where he is an officer;
would the DOSRI rule apply;

705

In case of DOSRI transactions, what are the

procedural requirements; arms length rule;
reportorial requirements;

705

Individual and aggregate ceiling in DOSRI

loans;

707

Waiver of rights to secrecy of bank deposits in

case of DOSRI transactions;

Comment/Remark
Yes, privilege of becomin
credit card holder is open
to allqualified persons and
dorsi pays/eimbursed for
the illed amount in full
Dosri acount if failureto
payfull amount or if aailed
a deffered payment
scheme
Written consent of all
directors
Account is upon terms not
less favorable to the bank
Resolution approving the
loan shall be entered into
therecord of the bank and
transmitted to BSP
1. EQUIVALENTTO TE
UNEncumbered deposit
and book value of their
paid in capital. Unsecured
loans shall no exceed 30%
of ther total loan.
2. Shall not exceed 15% of
the banks total loan
portfolio or 100% of the
banks ntworth whichever
is lower.
However in no case shall
the total unsecured loan
exceed 30% of the
aggregate ceiling or
outstanding loan

The DOS is req'd to waive

the secrecy of his deposits
of whatever nature in all
banks in the phil.not req'd
if related intrest. It

708

May unsecured loans be granted by bank;

708

May banks grant loans in amounts equivalent

to 100% of the appraised value of the
securities;
In case of foreclosure of mortgages executed
in favor of a bank, what is the period of
redemption granted to the mortgagor;
May a bank extend the redemption period
for foreclosed mortgages;
Will the issuance of a restraining order or a
writ of preliminary injunction toll the running of
the redemption period;
Will the filing of an action to annul the
foreclosure sale suspend the running of
the redemption period;
In case of mortgages foreclosed by banks,
what is the redemption price;
May a bank obtain possession of the
foreclosed property during the
redemption period;
What is the extent or nature of the
authority of the judge before whom an
application for the issuance of a writ of
possession is made;
May a bank be deemed to be a mortgagee in
good faith based on a claim that a mortgagee
of land is not required to look further than
what appears on the face of the title;
In case of a loan granted to a borrower
corporation, may a bank validly cause the
execution of the personal properties of an
officer of the borrowing corporation who has
signed as surety or a joint and solidary
undertaking with the borrowing corporation
(JSS);
In case a loan is secured by an assignment of
deposit by the borrower, in case of default,
what is the procedure to be undertaken by the

711

197
711

198

712
202

204

713

713

714

remains confi, used only in

connection to the
supervision aand
examination of BSP in
legal action.
Yes, but not the gen norm.
Norm is require cllateral to
secure loan.
No, 75% of appraised
value of reaal or personal
property.

718

722
723
724

724

246
256
760
763

778
783
786
786
788
789
794
797
807
807
338

lender to get the value of the security;

Where the borrower executed an assignment
of rights or properties in favor of the lender, is
the ownership over the rights or the properties
transferred to the assignee;
What is the so-called single borrower limit in
case of loans granted by banking institutions;
What is loan participation; syndicated
loan;
Gateway Electronics Corporation v. Land
Bank of the Philippines, GR Nos. 155217
and 156393, July 30, 2003;
Truth in Lending Act; will the act of furnishing
the borrower a copy of the promissory note
which stipulates the interest rate and other
charges be deemed compliance with the
requirement for a disclosure statement;
Sia v. CA et al., GR No. 102970, May 13,
1993;
Independence principle in Letters of
Credits transctions;
Fit and Proper Rule;
Doctrine of apparent authority; First Philippine
International Bank v. CA, GR No. 115849,
January 24, 1996;
Unsound banking practices;
Conservatorship; powers of conservator;
Receivership; grounds for the appointment of
a receiver;
Who has the jurisdiction to hear and decide
cases to place a bank under receivership;
Duties of a receiver;
Powers of PDIC;
Close Now, Hear Later Scheme;
Liquidation of banks;
Judicial review of orders placing banks under
conservatorship or receivership;
Banco Filipino Savings and Mortgage Bank v.
Monetary Board, 204 SCRA 767 (1991);
Ong v. CA, GR No. No. 112830, Feb. 1,
1996);

Ong vs. Court of Appeals G.R. No. 112830, February 1, 1996

MARCH 16, 2014LEAVE A COMMENT

All claims against the insolvent bank should be filed in the liquidation
proceeding. The judicial liquidation is intended to prevent multiplicity of
actions against the insolvent bank. It is a pragmatic arrangement
designed to establish due process and orderliness in the liquidation of the
bank, to obviate the proliferation of litigations and to avoid injustice and
arbitrariness.
Facts: Jerry Ong filed with the Regional Trial Court of Quezon City a petition for the
surrender of 2 TCTs against Rural Bank of Olongapo, Inc. (RBO), represented by its
liquidator Guillermo G. Reyes, Jr. and deputy liquidator Abel Allanigue. The
complaint stemed from 2 parcels of land which was duly mortgaged by RBO in favor
of petitioner to guarantee the payment of Omnibus Finance, Inc., which is likewise
now undergoing liquidation proceedings of its money market obligations to
petitioner. Omnibus Finance, Inc., not having seasonably settled its obligations to
petitioner, the latter proceeded to effect the extrajudicial foreclosure of said
mortgages and the city sheriff of TagaytayCity issued a certificate of sale in favor of
petitioner which were duly registered.

Respondents failed to seasonably redeem said parcels of land, for which reason,
petitioner has executed an affidavit of consolidation of ownership which has not
been submitted to the Registry of Deeds of Tagaytay City, in view of the fact that
possession of the aforesaid titles or owners duplicate certificates of title remains
with the RBO. To date, petitioner has not been able to effect the registration of said
parcels of land in his name in view of the persistent refusal of respondentsto
surrender RBOs copies of its owners certificates of title for the parcels of land
covered by the two TCTs.
Respondent RBO filed a motion to dismiss on the ground of res judicata and that it
was undergoing liquidation and it is the liquidation court which has exclusive
jurisdiction to take cognizance of petitioners claim. Trial court denied the motion to
dismiss because it found that the causes of action in the previous and present cases
were different although it was silent on the jurisdictional issue. RBO filed a motion
for reconsideration but was similarly rejected. The Court of Appeals, through a
certiorari filed by RBO, annulled the challenged orders of the trial court which
sustained the jurisdiction of the trial court and denied reconsideration thereof.
Moreover, the trial judge was ordered to dismiss the civil case without prejudice to
the right of petitioner to file his claim in the liquidation proceedings pending before
the RegionalTrialCourtofOlongapoCity.
Issue: Whether or not the civil case against RBO may proceed independently from
the liquidation proceedings.
Held: Section 29, par. 3, of R.A. 265 as amended by P. D. 1827 provides If the
Monetary Board shall determine and confirm within (sixty days) that the bank x x x

is insolvent or cannot resume business with safety to its depositors, creditors and
the general public, it shall, if the public interest requires, order its liquidation,
indicate the manner of its liquidation and approve a liquidation plan. The Central
Bank shall, by the Solicitor General, file a petition in the Court of First Instance[7]
reciting the proceedings which have been taken and praying the assistance of the
court in the liquidation of such institution. The court shall have jurisdiction in the
same proceedings to adjudicate disputed claims against the bank x x x and enforce
individual liabilities of the stockholders and do all that is necessary to preserve the
assets of such institution and to implement the liquidation plan approved by the
Monetary Board
All claims against the insolvent bank should be filed in the liquidation proceeding.
The judicial liquidation is intended to prevent multiplicity of actions against the
insolvent bank. It is a pragmatic arrangement designed to establish due process
and orderliness in the liquidation of the bank, to obviate the proliferation of
litigations and to avoid injustice and arbitrariness. It is not necessary that a claim be
initially disputed in a court or agency before it is filed with the liquidation court.
Sia vs. Court of Appeals G.R. No. 102970, May 13, 1990
MARCH 16, 2014LEAVE A COMMENT
Contract of the use of a safety deposit box of a bank is not a deposit but a
lease under Sec 72, A of General Banking Act. Accordingly, it should have
lost no time in notifying the petitioner in order that the box could have
been opened to retrieve the stamps, thus saving the same from further
deterioration and loss. The banks negligence aggravated the injury or
damage to the stamp collection..
Facts: Plaintiff Luzon Sia rented a safety deposit box of Security Bank and Trust
Co. (Security Bank) at its Binondo Branch wherein he placed his collection of
stamps. The said safety deposit box leased by the plaintiff was at the bottom or at
the lowest level of the safety deposit boxes of the defendant bank. During the floods
that took place in 1985 and 1986, floodwater entered into the defendant banks
premises, seeped into the safety deposit box leased by the plaintiff and caused,
according damage to his stamps collection. Security Bank rejected the plaintiffs
claim for compensation for his damaged stamps collection.

Sia, thereafter, instituted an action for damages against the defendant bank.
Security Bank contended that its contract with the Sia over safety deposit box was
one of lease and not of deposit and, therefore, governed by the lease agreement
which should be the applicable law; the destruction of the plaintiffs stamps
collection was due to a calamity beyond obligation on its part to notify the plaintiff
about the floodwaters that inundated its premises at Binondo branch which

allegedly seeped into the safety deposit box leased to the plaintiff. The trial court
rendered in favor of plaintiff Sia and ordered Sia to pay damages.
Issue:

Whether or not the Bank is liable for negligence.

Held: Contract of the use of a safety deposit box of a bank is not a deposit but a
lease. Section 72 of the General Banking Act [R.A. 337, as amended] pertinently
provides: In addition to the operations specifically authorized elsewhere in this Act,
banking institutions other than building and loan associations may perform the
following services (a) Receive in custody funds, documents, and valuable objects,
and rent safety deposit boxes for the safequarding of such effects.
As correctly held by the trial court, Security Bank was guilty of negligence. The
banks negligenceaggravated the injury or damage to the stamp collection. SBTC
was aware of the floods of 1985 and 1986; it also knew that the floodwaters
inundated the room where the safe deposit box was located. In view thereof, it
should have lost no time in notifying the petitioner in order that the box could have
been opened to retrieve the stamps, thus saving the same from further
deterioration and loss. In this respect, it failed to exercise the reasonable care and
prudence expected of a good father of a family, thereby becoming a party to the
aggravation of the injury or loss. Accordingly, the aforementioned fourth
characteristic of a fortuitous event is absent. Article 1170 of the Civil Code, which
reads Those who in the performance of their obligation are guilty of fraud,
negligence, or delay, and those who in any manner contravene the tenor thereof,
are liable for damages is applicable. Hence, the petition was granted.
The provisions contended by Security Bank in the lease agreement which are meant
to exempt SBTC from any liability for damage, loss or destruction of the contents of
the safety deposit box which may arise from its own agents fraud, negligence or
delay must be stricken down for being contrary to law and public policy.