BANKING NOTES (FINALS) A. DEPOSIT FUNCTION NATURE OF DEPOSIT SERRANO v.

CENTRAL BANK, 96 SCRA 96 (1980) DOCTRINE: Bank deposits are in the nature of irregular deposits. They are really loans because they earn interest. All kinds of bank deposits, whether fixed, savings, or current are to be treated as loans and are to be covered by the law on loans. Current and savings deposits are loans to a bank because it can use the same. GUINGONA, JR. v. CITY FISCAL OF MANILA, 128 SCRA 577 (1984) DOCTRINE: The relationship between the depositor and the bank is that of creditor and debtor. Consequently, the ownership of the amount deposited was transmitted to the Bank upon the perfection of the contract and it can make use of the amount deposited for its banking operations, such as to pay interests on deposits and to pay withdrawals.
BPI FAMILY BANK v. FRANCO, 538 SCRA 184 (2007)

DOCTRINE: Money bears no earmarks of peculiar ownership. Its primary function is to pass from hand to hand as a medium of exchange, without other evidence of its title. Money, which passed through various transactions in the general course of banking business, even if of traceable origin, bears no earmarks of peculiar ownership. FULTON IRON WORKS CO. v. CHINA BANKING CORP., 55 PHIL. 208 (1930) DOCTRINE: A depositor is presumed to be the owner of funds standing in his name in a bank deposit, and where a bank is not chargeable with notice that the money deposited therein is the property of another person, it is justified in paying out the money to the depositor, or upon his order, and in so doing cannot be held liable to any other person as the true owner.
BPI v. CA, 232 SCRA 302 (1994)

DOCTRINE: A bank is under no duty or obligation to make the application. To apply the deposit to the payment of the loan is a privilege, a right to set-

off which the bank has the option to exercise. The relationship then between a depositor and a bank is one of creditor and debtor. The deposit under the questioned account was an ordinary bank deposit; hence, it was payable on demand of the depositor. BPI cannot be relieved of its duty to pay Eastern simply because it already allowed the heirs of Velasco to withdraw the whole balance of the account. The petitioner should not have allowed such withdrawal because it had admitted in the Holdout Agreement the unceertain ownership of the money deposited in the account. Moreover, the order of the court in the intestate case merely authorized the heirs of Velasco to withdraw the account. BPI was not specifically ordered to release the account to the said heirs; hence, it was under no judicial compulsion to do so. The authorization given to the heirs of Velasco cannot be construed as a final determination or adjudication that the account belonged to Velasco. We have ruled that when the ownership of a particular property is disputed, the determination by a probate court of whether that property is included in the estate of a deceased is merely provisional in character and cannot be the subject of execution. Because the ownership of the deposit remained undetermined, BPI, as the debtor with respect thereto, had no right to pay to persons other than those in whose favor the obligation was constituted or whose right or authority to receive payment is indisputable. The payment of the money deposited with BPI that will extinguish its obligation to the creditor-depositor is payment to the person of the creditor or to one authorized by him or by the law to receive it. Payment made by the debtor to the wrong party does not extinguish the obligation as to the creditor who is without fault or negligence, even if the debtor acted in utmost good faith and by mistake as to the person of the creditor, or through error induced by fraud of a third person. The payment then by BPI to the heirs of Velasco, even if done in good faith, did not extinguish its obligation to the true depositor, Eastern. CENTRAL BANK v. MORFE, 63 SCRA 114 (1975) Fixed, savings, and current deposits of money in banks and similar institutions are not true deposits. They are considered simple loans and, as such, are not preferred credits. Evidently, one purpose in prohibiting the insolvent bank from doing

business is to prevent some depositors from having an undue or fraudulent preference over other creditors and depositors. That purpose would be nullified if, as in this case, after the bank is declared insolvent, suits by some depositors could be maintained and judgments would be rendered for the payment of their deposits and then such judgments would be considered preferred credits under article 2244 (14) (b) of the Civil Code.
The general principle of equity that the assets of an insolvent are to be distributed ratably among general creditors applies with full force to the distribution of the assets of a bank. A general depositor of a bank is merely a general creditor, and, as such, is not entitled to any preference or priority over other general creditors.

GULLAS v. PNB, 62 PHIL. 519 (1935) DOCTRINE: A bank has the right of set off of the deposit in its hands for the payment of any indebtedness to it on the part of the depositor.
REPUBLIC v. CA, 65 SCRA 186 (1975)

DOCTRINE: Since the relation between a depositor and a bank is that of a creditor and debtor, the depositor has the right to apply his deposits/credit with the bank against the loans he had obtained from his deposits.
BPI v. CA, 512 SCRA 620 (2007)

DOCTRINE: A bank generally has the right of set-off over the deposits therein for the payment of any withdrawals on the part of a depositorthe right of a collecting bank to debit a clients account for the value of a dishonored check that has previously been credited has fairly been established by jurisprudence. CONSOLIDATED BANK AND TRUST COMPANY v. CA, 410 SCRA 562 (2003) DOCTRINE: The fiduciary relationship means that the banks obligation to observe high standards of integrity and performance is deemed written into every deposit agreement between a bank and its depositors. It requires banks to assume a degree of diligence higher than that of a good

father of a family.

B. KINDS OF DEPOSIT (1) DEMAND DEPOSITS All those liabilities of the Bangko Sentral and of other banks, which are denominated in Philippine currency and are subject to payment in legal tender upon demand by the presentation of checks. BPI FAMILY SAVINGS BANK v. FIRST METRO INVESTMENT CORP, 429 SCRA 30 (2004) DOCTRINE: Demand Deposits are all those liabilities of the Bangko Sentral and of other banks which are denominated in the Philippine currecncy and are subject to payment in legal tender upon demand by the presentation of depositors checks. Under CB Circular No. 22 (Series of 1994), demand deposits shall not be subject to any interest rate ceiling. This, in effect, is an open authority to pay interest on demand deposits, such interest not being subject to any rate ceiling.

(2) SAVINGS DEPOSITS INTERNATIONAL EXCHANGE BANK v. CIR, 520 SCRA 688 (2007) DOCTRINE: A Fixed Savings Deposit (FSD), like a time deposit, provides for a higher interest rate when the deposit is not withdrawn within the required fixed period, otherwise, it earns interest pertaining to a regular savings deposit.
A depositor of a savings deposit-FSD is required to keep the money with the bank for at least thirty (30) days in order to yield a higher interest rate. Otherwise, the deposit earns interest pertaining only to a regular savings deposit. The same feature is present in a time deposit. A depositor is allowed to withdraw his time deposit even before its maturity subject to bank charges on its pre-termination and the depositor loses his entitlement to earn the interest rate corresponding to the time deposit. Instead, he earns interest pertaining only to a

regular savings deposit.

In both cases, the deposit may be withdrawn anytime but the depositor gets to earn a lower rate of interest. The only difference lies on the evidence of deposit, a savings deposit-FSD is evidenced by a passbook, while a time deposit is evidenced by a certificate of time deposit." In order for a depositor to earn the agreed higher interest rate in a SA-FSD, the amount of deposit must be maintained for a fixed period. Thus, SA-FSD is a deposit account with a fixed term. Withdrawal before the expiration of said fixed term results in the reduction of the interest rate. Having a fixed term and reduction of interest rate in case of pre-termination are essentially the features of a time deposit. Ultimately, the Banks SA-FSD and time deposit are substantially the same.
To claim that time deposits evidenced by passbooks should not be subject to DST is a clear evasion of the rule on equality and uniformity in taxation that requires the imposition of DST on documents evidencing transactions of the same kind, in this particular case, on all certificates of deposits drawing interest.

CHINA BANKING CORP. v. CIR, 602 SCRA 316 (2009) A certificate of deposit is a written acknowledgment by a bank or banker of the receipt of a sum of money on deposit which the bank or banker promises to pay to the depositor, to the order of the depositor, or to some other person or his order, whereby the relation of debtor and creditor between the bank and the depositor is created.

(3) NEGOTIABLE ORDER OF WITHDRAWAL (NOW) ACCOUNTS Section X223 of the Manual of Regulations for Banks defines
Negotiable Order of Withdrawal (NOW) Accounts as "interestbearing deposit accounts that combine the payable on demand feature of checks and the investment feature of savings accounts."

PEOPLE v. REYES, 454 SCRA 635 (2005)

DOCTRINE: NOW Accounts are defined as interest-bearing deposit accounts that combine the payable on demand feature of checks and the investment feature of savings accounts. There is no estafa through bouncing checks when it is shown that
private complainant knew that the drawer did not have sufficient funds in the bank at the time the check was issued to him. Such knowledge negates the element of deceit and constitutes a defense in estafa through bouncing checks.

(4) TIME DEPOSITS

SEC. X231, MRB: Time deposits shall be issued for a specific period of term.
BPI FAMILY SAVINGS BANK v. FIRST METRO INVESTMENT CORP., 429 SCRA 30 (2004)

DOCTRINE: A Time Deposit is defined as one the payment of which cannot legally be required within such a specified number of days. INTERNATIONAL EXCHANGE BANK v. CIR, 520 SCRA 688 (2007) DOCTRINE: Having a fixed term and the reduction of interest rate in case of pre-termination are essential features of a time deposit.

(5) FOREIGN CURRENCY DEPOSITS

(6) MONEY MARKET PLACEMENTS

ALLIED BANKING CORP. v. LIM SIO WAN, 549 SCRA 504 (2008) DOCTRINE: A Money Market is a market dealing in standardized shortterm credit instruments (involving large amounts) where lenders and borrowers do not deal directly with each other by through a middle man or dealer in open marketin a money market transaction, the investor is a

lender who loans his money to a borrower through a middleman or dealer. a money market placement is a simple loan or mutuum. In a money market transaction, the investor is a lender who loans his money to a borrower through a middleman or dealer. C. CAPACITY OF DEPOSITORS D. OPENING OF DEPOSIT ACCOUNTS

KYCS: Know Your Customer Standards - Specimen signatures, ID

photos.

Joint Accounts: ART. 485, NCC: The share of the co-owners, in the benefits as well as in the charges, shall be proportional to their respective interests. Any stipulation in a contract to the contrary shall be void. The portions belonging to the co-owners in the co-ownership shall be presumed equal, unless the contrary is proved. ART. 1207, NCC: The concurrence of two or more creditors or of two or more debtors in one and the same obligation does not imply that each one of the former has a right to demand, or that each one of the latter is bound to render, entire compliance with the prestation. There is a solidary liability only when the obligation expressly so states, or when the law or the nature of the obligation requires solidarity. ART. 1208, NCC: If from the law, or the nature or the wording of the obligations to which the preceding article refers the contrary does not appear, the credit or debt shall be presumed to be divided into as many shares as there are creditors or debtors, the credits or debts being considered distinct from one another, subject to the Rules of Court governing the multiplicity of suits.

E. ADMINISTRATION OF DEPOSIT ACCOUNTS

 DEPOSIT OF FUNDS - Delivery is required. Acceptability of Withdrawal Slips as Deposits Firestone Tire & Rubber Co. of the Phil. v CA DOCTRINE: A bank is under the obligation to treat the accounts of its depositors with meticulous care, whether such account consists only of a few hundred pesos or millions of pesos. The fact that the other withdrawal slips were honored and paid by the other bank was no license for the bank to presume that subsequent slips would be honored and paid immediately. By doing so, it failed in its fiduciary duty to treat the accounts of its clients with the highest degree of care. In the ordinary and usual course of banking operations, current account deposits are accepted by the bank on the basis of deposit slips prepared and signed by the depositor, or the latter's agent or representative, who indicates therein the current account number to which the deposit is to be credited, the name of the depositor or current account holder, the date of the deposit, and the amount of the deposit either in cash or in check. The withdrawal slips deposited with petitioner's current account with Citibank were not checks, as petitioner admits. Citibank was not bound to accept the withdrawal slips as a valid mode of deposit. But having erroneously accepted them as such, Citibank and petitioner as account- holder must bear the risks attendant to the acceptance of these instruments. Petitioner and Citibank could not now shift the risk and hold private respondent liable for their admitted mistake.

Acceptability of Checks Without Indorsement of Payee PNB v Rodriguez DOCTRINE: A bank that regularly processes checks that are neither payable to the customer nor duly indorsed by the payee is apparently grossly negligent in its operations. In a checking transaction, the drawee bank has the duty to verify the genuineness of the signature of the drawer and to pay the check

strictly in accordance with the drawers instructions, i.e., to the named payee in the check.

As a rule, when the payee is fictitious or not intended to be the true

recipient of the proceeds, the check is considered as a bearer instrument based on Sections 8 and 9 of the NIL. The drawee bank is then absolved from liability and the drawer bears the loss. However, there is a commercial bad faith exception to the fictitious-payee rule. A showing of commercial bad faith on the part of the drawee bank, or any transferee of the check for that matter, will work to strip it of this defense. For the fictitious-payee rule to be available as a defense, PNB must show that the makers did not intend for the named payees to be part of the transaction involving the checks. At most, the banks thesis shows that the payees did not have knowledge of the existence of the checks. This lack of knowledge on the part of the payees, however, was not tantamount to a lack of intention on the part of respondents-spouses that the payees would not receive the checks proceeds. Considering that the respondents were transacting with PEMSLA and not the individual payees, it is understandable that they relied on the information given by the officers of PEMSLA that the payees would be receiving the checks.

WITHDRAWAL OF FUNDS
1 FROM CURRENT ACCOUNTS When Funds Insufficient Moran v CA

DOCTRINE: A bank is under no obligation to make part payment on a check, up to only the amount of the drawer's funds, where the check is drawn for an amount larger than what the drawer has on deposit. Such a practice of paying checks in part has never existed. Upon partial payment, the check holder could not be called upon to surrender the check, and the bank would be without a voucher affording a certain means of showing the payment. The rule is based on commercial convenience, and any rule that would work such manifest inconvenience should not be recognized. A check is intended not only to transfer a right to the amount named in it, but to serve the further purpose of affording evidence for the bank of the

payment of such amount when the check is taken up.

Villanueva v Nite

DOCTRINE: If a bank refuses to pay a check (notwithstanding the sufficiency of funds), the payee-holder cannot sue the bankthe payee should instead sue the drawer who might in turn sue the bank. Sec. 189 is sound law based on logic and established legal principlesno privity of contract exists between the drawee-bank and the payee.

Prior to Clearing
Associated Bank v Tan

DOCTRINE: Although a collecting bank has the right to debit a clients account for the value of a dishonored check that has previously been credited, it should nevertheless exercise such right with the highest degree of diligence, as it is a business impressed with public interest. A bank generally has the right to setoff over the deposits therein for the payment of any withdrawals on the part of the depositor. The right of a collecting bank to debit a clients account for the value of a dishonored check that has previously been credited has fairly been established by jurisprudence. The degree of diligence required of banks is more than that of a good
father of a family where the fiduciary nature of their relationship with their depositors is concerned. By the nature of its functions, a bank is under obligation to treat the accounts of its depositors with meticulous care. It is undisputed that purportedly as an act of accommodation to a valued client, the bank allowed the withdrawal of the face value of the deposited check prior to its clearing. That act certainly disregarded the clearance requirement of the banking system. Such a practice is unusual, because a check is not legal tender or money, and its value can properly be transferred to a depositors

account only after the check has been cleared by the drawee bank. When the bank came to know of the checks dishonour, it should have immediately and duly informed Tan of the debiting of his account. Notice was proper and ought to be expected. As a valued client, Tan deserved nothing less than an official notice of the precarious condition of his account.

When Check Crossed

Traders Royal Bank v Radio Philippine Network Inc.

DOCTRINE: The crossing of a check should put a bank on guard. It was duty bound to ascertain the indorsers title to the check or the nature of his possession. Its effects are that (a) the check may not be encashed but only deposited in the bank; (b) the check may be negotiated only once to one who has an account with a bank; and (c) the act of crossing the check serves as a warning to the holder that the check has been issued for a definite purpose so that he must inquire if he has received the check pursuant to that purpose, otherwise, he is not a holder in due course. By encashing in favor of unknown persons checks which were on
their face payable to the BIR. A government agency which can only act through its agents, TRB did so in at its peril and must suffer the consequences of the unauthorized endorsement. TRB cannot exculpate itself from liability by claiming that RPN was itself negligent.

In contrast with managers check

Equitable PCI Bank v Ong DOCTRINE: A managers check upon itself, committing in effect behind its issuance, and by its commerce, a managers check is the money it represents. is an order of the bank to pay, drawn its total resources, integrity and honor peculiar character and general use in regarded substantially to be as good as

Said check stands on the same footing as a certified check. As stated

in Sec 187 of the NIL, when the managers check is certified by the bank on which it was drawn, the certification is equivalent to an acceptance. Jurisprudence adds that a manager's check is one drawn by the bank's manager upon the bank itself. It is similar to a cashier's check both as to effect and use. A cashier's check is a check of the bank's cashier on his own or another check. In effect, it is a bill of exchange drawn by the cashier of a bank upon the bank

itself, and accepted in advance by the act of its issuance. It is really the bank's own check and may be treated as a promissory note with the bank as a maker. The check becomes the primary obligation of the bank which issues it and constitutes its written promise to pay upon demand. The mere issuance of it is considered an acceptance thereof.

2 FROM SAVINGS ACCOUNT

BPI v CA (2000) DOCTRINE: The requirement of presentation of the passbook when withdrawing an amount cannot be given mere lip service even though the person making the withdrawal is authorized by the depositor to do so.

A bank is under obligation to treat the accounts of its depositors "with meticulous care, always having in mind the fiduciary nature of their relationship."27As such, in dealing with its depositors, a bank should exercise its functions not only with the diligence of a good father of a family but it should do so with the highest degree of care.

From Time Deposits Far East Bank and Trust Company v Querimit

DOCTRINE: A bank acts at its peril when it pays deposits evidenced by a certificate of deposit, without its production and surrender after proper endorsement. A certificate of deposit is defined as a written acknowledgment by a bank or banker of the receipt of a sum of money on deposit which the bank or banker promises to pay to the depositor, to the order of the depositor, or to some other person or his order, whereby the relation of debtor and creditor between the bank and the depositor is

created. The principles governing other types of bank deposits are applicable
to certificates of deposit, as are the rules governing promissory notes when they contain an unconditional promise to pay a sum certain of money absolutely. The principle that payment, in order to discharge a debt, must be made to someone authorized to receive it is applicable to the payment of certificates of deposit. Thus, a bank will be protected in making payment to the holder of a certificate indorsed by the payee, unless it has notice of the invalidity of the indorsement or the holder's want of title. A bank acts at its peril when it pays deposits evidenced by a certificate of deposit, without its production and surrender after proper indorsement. As a rule, one who pleads payment has the burden of proving it. Even where the plaintiff must allege nonpayment, the general rule is that the burden rests on the defendant to prove payment, rather than on the plaintiff to prove payment. The debtor has the burden of showing with legal certainty that the obligation has been discharged by payment. From Foreign Currency Deposits SEC. 5, FCDA: Withdrawability and transferability of deposits. There

shall be no restriction on the withdrawal by the depositor of his deposit or on the transferability of the same abroad except those arising from the contract between the depositor and the bank.

If Deceased Depositor: Tax Clearance Required

If a bank has knowledge of the death of a person, who maintained a

bank deposit account alone, or jointly with another, it shall not allow any withdrawal from the said deposit account, unless the Commissioner has certified that the taxes imposed thereon by this Title have been paid. Provided, however, That the administrator of the estate or any one (1) of the heirs of the decedent may, upon authorization by the Commissioner, withdraw an amount not exceeding Twenty thousand pesos (P20,000) without the said certification. For this purpose, all withdrawal slips shall contain a statement to the effect that all of the joint depositors are still living at the time of withdrawal by any one of the joint depositors and such

statement shall be under oath by the said depositors.

Survivorship Agreements Vitug v CA

DOCTRINE: Survivorship agreements are permitted by the Civil Code. The validity of the contract seems debatable by reason of its survivor-take-all feature. But in reality, the contract imposed a mere obligation with a term being death. However, if it be shown that such an agreement is a mere cloak to hide an inofficious donation, it may be assailed and annulled on such ground. The agreement didnt modify the conjugal funds of the spouse. Spouses are not prohibited by law to invest conjugal property, say by way of a joint and several bank account, or an and/or account. When the spouses Vitug opened the savings account, they merely put what rightfully belonged to them in a money-making venture. They did not dispose of it in favor of the other, which would have arguably been sanctionable as a prohibited donation. And since the funds were conjugal, it cannot be said that one spouse could have pressured the other in placing his or her deposits in the money pool. The agreement was in the nature of an aleatory contract. In reality what is involved here is a contract with a term the fulfillment of which depends on either the happening of an event which is (1) uncertain, (2) which is to occur at an indeterminate time.

BOOKING OF DEPOSITS

INTEREST ON DEPOSITSSEC. X242, MRB: Interest on Deposits/Deposit Substitutes. Demand, savings, NOW accounts, time deposits and deposit substitutes shall not be subject to interest ceilings. X242.1 Time of payment of interest on time deposits/deposit substitutes. Interest or yield on time deposit/deposit substitute may be paid at maturity or upon withdrawal or in advance: Provided, however, That interest or yield

paid in advance shall not exceed the interest for one (1) year. X242.2 Treatment of matured time deposits/deposit substitutes!a. A time deposit not withdrawn or renewed on its due date shall be treated as a savings deposit and shall earn interest from maturity to the date of actual withdrawal or renewal at a rate applicable to savings deposits. b. A deposit substitute instrument not withdrawn or renewed on its maturity date shall from said date become payable on demand and shall earn an interest or yield from maturity to actual withdrawal or renewal at a rate applicable to a deposit substitute with a maturity of fifteen (15) days. Banks performing quasi-banking functions shall continue to consider matured and unwithdrawn deposit substitutes as such and subject to reserves.

Citibank, NA v Cabamongan

DOCTRINE: In a loan or forbearance of money, the interest due should be that stipulated in writing and in the absence thereof, the rate shall be 12% per annum counted from the time of demand.

CLOSING OF ACCOUNTS
Far East Bank and Trust Company v Pacilan, Jr.

DOCTRINE: No malice or bad faith could be imputed on a bank for closing the account of a depositor for frequently drawing checks against insufficient funds. Neither is there malice or bad faith, but only negligence, when the bank accepted a deposit made by the depositor the day following the closure of his account. Petitioner bank has the right to close the account. The Bank Rules also state that: "...the depositor is NOT ENTITLED, AS A MATTER OF RIGHT, TO OVERDRAW on this deposit and the bank reserves the right at any time to return checks of the depositor which are drawn against insufficient funds or for any other reason." There was no right of the petitioner that was violated. The fact that petitioner constantly overdrew his account and used signatures not on file was sufficient ground to close the account; therefore, there

was no bad faith. He had improperly handled his account hundreds of time. The depositor is bound by the terms and conditions of the agreement with the bank. Neither the fact that petitioner bank accepted the deposit made by the respondent the day following the closure of his account constitutes bad faith or malice on the part of petitioner bank. The same could be characterized as simple negligence by its personnel. Said act, by itself, is not constitutive of bad faith. No legal right was established nor bad faith proved by Pacilan. Damnum Absque Injuria.

F. SECRECY OF BANK DEPOSITS REPUBLIC v. EUGENIO, 545 SCRA 384 (2008) DOCTRINE: There is a right to privacy governing bank accounts in the Philippines, as expressed in Sec. 2, RA 1405 (Bank Secrecy Act of 1995). Exceptions provided for in Sec. 2 (may be examined by any person, government official, bureau or office), are as follows:

Upon written permission of the depositor; In cases of impeachment; Examination of bank accounts is upon order of a competent court in cases of bribery or dereliction of duty of public officials; Money deposited or invested is the subject matter of litigation.

INTENGAN v. CA, 377 SCRA 63 (2002) DOCTRINE: Where the accounts in question are US dollar deposits, the applicable law is RA 6426 (FCDA), not RA 1405 (Bank Secrecy Law). Under the applicable law, the only exception to the secrecy of foreign currency deposits is upon the written permission of the depositor.

Applicability of Exclusionary Rule

EJERCITO v. SANDIGANBAYAN, 509 SCRA 190 (2006) DOCTRINE: RA 1405 nowhere provides that an unlawful examination of bank accounts shall render the evidence obtained therefrom inadmissible in evidence. Sec. 5 only states that any violation of this law will subject the offender upon conviction, to an imprisonment of not more than 5 years or fine of not more than P20,000 or both, in the discretion of the court. Section 5 of R.A. 1405 only states that [a]ny violation of this law
will subject the offender upon conviction, to an imprisonment of not more than five years or a fine of not more than twenty thousand pesos or both, in the discretion of the court. Even assuming arguendo, however, that the exclusionary rule applies in principle to cases involving R.A. 1405, the Court finds no reason to apply the same in this particular case.

Clearly, the fruit of the poisonous tree doctrine1[13] presupposes a violation of law. If there was no violation of R.A. 1405 in the instant case, then there would be no poisonous tree to begin with, and, thus, no reason to apply the doctrine.

Rules for Peso Deposits

SEC. 2, LAW ON SECRECY OF BANK DEPOSITS: All deposits of whatever nature with banks or banking institutions in the Philippines including investments in bonds issued by the Government of the Philippines, its political subdivisions and its instrumentalities, are hereby considered as of an absolutely confidential nature and may not be examined, inquired or looked into by any person, government official, bureau or office, except upon written permission of the depositor, or in cases of impeachment, or upon order of a competent court in cases of bribery or dereliction of duty of public officials, or in cases where the money deposited or invested is the subject matter of the litigation.

EJERCITO v. SANDIGANBAYAN, 509 SCRA 190 (2006) DOCTRINE: The term deposits used therein is to be understood broadly and not limited only to accounts, which give rise to a creditor-debtor relationship between the depositor and the bank. If the money deposited

under an account may be used by banks for authorized loans to third persons, then such accounts, regardless of whether it creates a creditordebtor relationship between the depositor and the bank, falls under the category of accounts which the law precisely seeks to protect for the purpose of boosting the economic development of the country.

Under the Anti-Graft and Corrupt Practices Act

SEC. 8, RA 3019: Dismissal due to unexplained wealth. If in accordance with the provisions of Republic Act Numbered One thousand three hundred seventy-nine, a public official has been found to have acquired during his incumbency, whether in his name or in the name of other persons, an amount of property and/or money manifestly out of proportion to his salary and to his other lawful income, that fact shall be a ground for dismissal or removal. Properties in the name of the spouse and unmarried children of such public official may be taken into consideration, when their acquisition through legitimate means cannot be satisfactorily shown. Bank deposits shall be taken into consideration in the enforcement of this section, notwithstanding any provision of law to the contrary. Cases PNB v. GANCAYAO, 15 SCRA 91 (1965) DOCTRINE: Sec. 8 of RA 3019 directs in mandatory terms that bank deposits shall be taken into consideration in the enforcement of this section, notwithstanding any provision of law to the contrary. Anti Graft and Corrupt Practices Act prevails over the Bank Secrecy
Law. The anti graft law directs in mandatory terms that bank deposits shall be taken into consideration in the enforcement of this section, notwithstanding any provision of law to the contrary. The only conclusion possible is that Section 8 of the Anti Graft Law is intended to amend Section 2 of the Bank

Secrecy Law by providing an additional exception to the rule against the disclosure of bank deposits. BANCO FILIPINO SAVINGS AND MORTGAGE BANK v. PURISIMA, 161 SCRA 576 (1988)

DOCTRINE: By enacting Sec. 8 of RA 3019, Congress intended to provide an additional ground for the examination of bank deposits for without such provision, the prosecutors would be hampered if not altogether frustrated in the prosecution of those charged with having acquired unexplained wealth while in public office. The inquiry into illegally acquired property or property NOT "legitimately acquired" extends to cases where such property is concealed by being held by or recorded in the name of other persons. This proposition is made clear by R.A. No. 3019 which quite categorically states that the term, "legitimately acquired property of a public officer or employee shall not include .. property unlawfully acquired by the respondent, but its ownership is concealed by its being recorded in the name of, or held by, respondent's spouse, ascendants, descendants, relatives or any other persons. To sustain the petitioner's theory, and restrict the inquiry only to
property held by or in the name of the government official or employee, or his spouse and unmarried children is unwarranted in the light of the provisions of the statutes in question, and would make available to persons in government who illegally acquire property an easy and fool-proof means of evading investigation and prosecution; all they would have to do would be to simply place the property in the possession or name of persons other than their spouse and unmarried children. This is an absurdity that we will not ascribe to the lawmakers.

Under the Ombudsman Act

SEC. 15 (8), RA 6770: Powers, Functions and Duties. The Office of the Ombudsman shall have the following powers, functions and duties: Administer oaths, issue subpoena and subpoena duces tecum, and take testimony in any investigation or inquiry, including the power to examine and have access to bank accounts and records. MARQUEZ v. DESIERTO, 359 SCRA 772 (1991) DOCTRINE: Before an in camera inspection by the Ombudsman may be allowed, there must be a pending case before a court of competent jurisdiction. Further, the account must be clearly identified, the inspection

limited to the subject matter of the pending case before the court of competent jurisdiction. The bank personnel and the account holder must be notified to be present during the inspection, and such inspection may cover only the account identified in the pending case. ISSUE (Ombudsman act) whether petitioner may be cited for indirect contempt for her failure to produce the documents requested by the Ombudsman. And whether the order of the Ombudsman to have an in camera inspection of the questioned account is allowed as an exception to the law on secrecy of bank deposits (R. A. No. 1405). RULING! NO, she may not be held in contempt or may the Ombudsman have an in camera inspection. Examination of the secrecy of bank deposits law (R. A. No. 1405) would reveal the following exceptions: 1.Where the depositor consents in writing; 2.Impeachment case; 3.By court order in bribery or dereliction of duty cases against public officials; 4.Deposit is subject of litigation; 5.Sec. 8, R. A. No. 3019, n cases of unexplained wealth as held in the case of PNB vs. Gancayco. - The order of the Ombudsman to produce for in camera inspection the subject accounts with the Union Bank of the Philippines, Julia Vargas Branch, is based on a pending investigation at the Office of the Ombudsman against Amado Lagdameo, et. al. for violation of R. A. No. 3019, Sec. 3 (e) and (g) relative to the Joint Venture Agreement between the Public Estates Authority and AMARI. We rule that before an in camera inspection may be allowed, there must be a pending case before a court of competent jurisdiction. Further, the account must be clearly identified, the inspection limited to the subject matter of the pending case before the court of competent jurisdiction. In Union Bank of the Philippines v. Court of Appeals, we held that

Section 2 of the Law on Secrecy of Bank Deposits, as amended, declares bank deposits to be absolutely confidential except: (1) In an examination made in the course of a special or general examination of a bank that is specifically authorized by the Monetary Board after being satisfied that there is reasonable ground to believe that a bank fraud or serious irregularity has been or is being committed and that it is necessary to look into the deposit to establish such fraud or irregularity, (2) In an examination made by an independent auditor hired by the bank to conduct its regular audit provided that the examination is for audit purposes only and the results thereof shall be for the exclusive use of the bank, (3) Upon written permission of the depositor, (4) In cases of impeachment, (5) Upon order of a competent court in cases of bribery or dereliction of duty of public officials, or (6) In cases where the money deposited or invested is the subject matter of the litigation In the case at bar, there is yet no pending litigation before any court of competent authority. What is existing is an investigation by the office of the Ombudsman. In short, what the Office of the Ombudsman would wish to do is to fish for additional evidence to formally charge Amado Lagdameo, et. al., with the Sandiganbayan. Clearly, there was no pending case in court, which would warrant the opening of the bank account for inspection.

Under the Plunder Law

SEC. 1 (D), RA 7080: Ill-gotten wealth means any asset, property, business enterprise or material possession of any person within the purview of Section Two (2) hereof, acquired by him directly or indirectly through dummies, nominees, agents, subordinates and/or business associates by any combination or series of the following means or similar schemes: 1) Through misappropriation, conversion, misuse, or malversation of public funds or raids on the public treasury;

2) By receiving, directly or indirectly, any commission, gift, share, percentage, 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; 3) By the illegal or fraudulent conveyance or disposition of assets belonging to the National Government or any of its subdivisions, agencies or instrumentalities or government-owned or -controlled corporations and their subsidiaries; 4) By obtaining, receiving or accepting directly or indirectly any shares of stock, equity or any other form of interest or participation including promise of future employment in any business enterprise or undertaking; 5) 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; or 6) By taking undue advantage of official position, authority, relationship, 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.

EJERCITO v SANDIGANBAYAN, 509 SCRA 190 (2006)

DOCTRINE: The plunder case under the Sandiganbayan necessarily involves an inquiry into the whereabouts of the amount purportedly acquired illegally by Erap, and the subject matter of the litigation cannot be limited to bank accounts under his name alone, but must include those accounts to which the money purportedly acquired illegally or a portion thereof was alleged to have been transferred. A public office is a public trust.

Under the AMLA

REPUBLIC v. EUGENIO, 545 SCRA 384 (2008) DOCTRINE: Even if bank inquiry order may be availed of without need of a pre-exisitng case under the AMLA, it does not follow that such order may

be availed of ex parte.

Under section 10, the AMLC is authorized to inquire into a bank account upon establishing probable cause where the deposits are related to kidnapping for ransom, violation of the Dangerous Drugs Act, hijacking, destructive arson and murder. The exception does not dispense the Bank Secrecy Act to all deposits, except for cases related to the enumerations above. Section 10 contains the application for ex parte, but it is connected to freezing of accounts. This must be done ex parte, since notifying the accused my cause him to disburse the account before the order freezing the account is issued. Section 11 does not contain the application for ex parte, for the fact that there is nothing wrong with the accused knowing that his accounts are being checked. It is immaterial for the accused to know that his accounts are being checked, since he cannot hide the bank records to prove that the accounts are linked to the crime imputed against him. Hence, using the ex parte application found in section 10 in inquiring into bank accounts (section 11) may be stayed with injunction.

Independent Auditor

MARQUEZ v. DESIERTO, 359 SCRA 772 (2001) DOCTRINE: Sec. 2 of Bank Secrecy Law provides for exceptions to the confidentiality rule of bank deposits, one of which is in an examination made by an independent auditor hired by the bank to conduct its regular audit provided that the examination is for audit purposes only and the results thereof shall be for the exclusive use of the bank.
RATIO We rule that before an in camera inspection may be allowed, there must be a pending case before a court of competent jurisdiction. Further, the account must be clearly identified, the

inspection limited to the subject matter of the pending case before the court of competent jurisdiction. The bank personnel and the account holder must be notified to be present during the inspection, and such inspection

may cover only the account identified in the pending case.

In Union Bank of the Philippines v. Court of Appeals, we held that Section 2 of the Law on Secrecy of Bank Deposits, as amended, declares bank deposits to be absolutely confidential except: (2) In an examination made by an independent auditor hired by the bank to conduct its regular audit provided that the examination is for audit purposes only and the results thereof shall be for the exclusive use of the bank In the case at bar, there is yet no pending litigation before any court of competent authority. What exists is an investigation by the office of the Ombudsman. In short, what the Office of the Ombudsman would wish to do is to fish for additional evidence to formally charge Amado Lagdameo, et. al., with the Sandiganbayan. Clearly, there was no pending case in court, which would warrant the opening of the bank account for inspection.

Under the Rules of Court 1 Garnishment

SEC. 9 (C), RULE 39: Garnishment of debts and credits. - The officer may levy on debts due the judgment obligor and other credits, including bank deposits, financial interests, royalties, commissions and other personal property not capable of manual delivery in the posssession or control of third parties. Levy shall be made by serving notice upon the person owing such debts or having in his possession or control such credits to which the judgment obligor is entitled. The garnishment shall cover only such amount as will satisfy the judgment and all lawful fees. The garnishee shall make a written report to the court within five (5) days from service of the notice of garnishment stating whether or not the judgment obligor has sufficient funds or credits to satisfy the amount of the judgment. If not, the report shall state how much funds or credits the garnishee holds for the judgment obligor. The garnished amount in cash, or certified bank check issued in the name of the judgment obligee, shall be delivered directly to the judgment obligee within ten (10) working days from service of notice on

said garnishing requiring such delivery, except the lawful fees which shall be paid directly to the court. In the event there are two or more garnishees holding deposits or credits sufficient to satisfy the judgment, the judgment obligor, if available, shall have the right to indicate the garnishee or garnishees who shall be required to deliver the amount due; otherwise, the choice shall be made by the judgment obligee. The executing sheriff shall observe the same procedure under paragraph (a) with respect to delivery of payment to the judgment obligee.

CHINA BANKING CORPORATION v. ORTEGA, 49 SCRA 356 (1973) DOCTRINE: Garnishment of bank deposit judgment debtor is not violative of RA 1405. The Court merely required the cashier of the bank to inform the court whether or not the defendant had a deposit in said bank only for purposes of the garnishment issued by it, so that the bank would hold the same intact and not allow any withdrawal until further order.

2 Preliminary Attachment Examination of party whose property is attached and persons indebted to him or controlling his property; delivery of property to sheriff.

3 Rules for Foreign Currency Deposits SEC. 8, FCDA: Secrecy of foreign currency deposits. All foreign currency deposits authorized under this Act, as amended by PD No. 1035, as well as foreign currency deposits authorized under PD No. 1034, are hereby declared as and considered of an absolutely confidential nature and, except upon the written permission of the depositor, in no instance shall foreign currency deposits be examined, inquired or looked into by any person, government official, bureau or office whether judicial or administrative or legislative, or any other entity whether public or private; Provided, however, That said foreign currency deposits shall be exempt from attachment, garnishment, or any other order or process of any court, legislative body, government agency or any administrative body whatsoever. (As amended by PD No. 1035, and further amended by PD No. 1246, prom. Nov. 21, 1977.)

Cases SALVACION v. CENTRAL BANK, 278 SCRA 27 (1997) DOCTRINE: Sec. 113 of CB Circular No. 960, which exempts from garnishment, attachment or any other order or process of any court, legislative body, government agency or any administrative body whatsoever foreign currency deposits, is NOT applicable to a foreign transient, but only to foreign lenders and investors to the development of the Foreign Currency Deposit System and Offshore Banking System in the Philippines. CHINA BANKING CORP. v. CA, 511 SCRA 110 (2006) DOCTRINE: The only exception to the secrecy of foreign currency deposits is in the case of a written permission of the depositor.

Rules for Deposits in Specific Banks and Financial Institutions Under the GBL SEC. 55.1 (B), GBL: No director, officer, employee, or agent of any bank shall, without order of a court of competent jurisdiction, disclose to any unauthorized person any information relative to the funds or properties in the custody of the bank belonging to private individuals, corporations, or any other entity: Provided, That with respect to bank deposits, the provisions of existing laws shall prevail;

G. GARNISHMENT

SEC. 13, RULE 39 OF RULES OF COURT: Property exempt from execution. Except as otherwise expressly provided by law, the following property, and no other, shall be exempt from execution: (a) The judgment obligor's family home as provided by law, or the homestead in which he resides, and land necessarily used in connection therewith;

(b) Ordinary tools and implements personally used by him in hs trade, employment, or livelihood; (c) Three horses, or three cows, or three carabaos, or other beasts of burden such as the judgment obligor may select necessarily used by him in his ordinary occupation; (d) His necessary clothing and articles for ordinary personal use, excluding jewelry; (e) Household furniture and utensils necessary for housekeeping, and used for that purpose by the judgment obligor and his family, such as the judgment obligor may select, of a value not exceeding one hundred thousand pesos; (f) Provisions for individual or family use sufficient for four months; (g) The professional libraries and equipment of judges, lawyers, physicians, pharmacists, dentists, engineers, surveyors, clergymen, teachers, and other professionals, not exceeding three hundred thousand pesos in value; (h) One fishing boat and accessories not exceeding the total value of one hundred thousand pesos owned by a fisherman and by the lawful use of which he earns his livelihood;

(i) So much of the salaries, wages, or earnings of the judgment obligor of his personal services within the four months preceding the levy as are necessary for the support of his family; (j) Lettered gravestones; (k) Monies benefits, privileges, or annuities accruing or in any manner growing out of any life insurance; (l) The right to receive legal support, or money or property obtained as such support, or any pension or gratuity from the Government; (m) Properties specially exempt by law. But no article or species of property mentioned in his section shall be

exempt from executio issued upon a judgment recovered for its price or upon a judgment of foreclosure of a mortgage thereon.

No violation of Law on Secrecy of Bank Deposits! Cases! CHINA BANKING v. ORTEGA, 49 SCRA 356 (1973)! The prohibition against examination of or inquiry into a bank deposit under Republic Act 1405 does not preclude its being garnished to insure satisfaction of a judgment. Indeed there is no real inquiry in such a case, and if the existence of the deposit is disclosed the disclosure is purely incidental to the execution process. It is hard to conceive that it was ever within the intention of Congress to enable debtors to evade payment of their just debts, even if ordered by the Court, through the expedient of converting their assets into cash and depositing the same in a bank. PCI BANK v. CA, 193 SCRA 452 (1991) It is clear from the discussion of the conference committee report on Senate Bill No. 351 and House Bill No. 3977, which later became Republic Act 1405, that the prohibition against examination of or inquiry into a bank deposit under Republic Act 1405 does not preclude its being garnished to insure satisfaction of a judgment. Indeed there is no real inquiry in such a case, and if existence of the deposit is disclosed the disclosure is purely incidental to the execution process. It is hard to conceive that it was ever within the intention of Congress to enable debtors to evade payment of their just debts, even if ordered by the Court, through the expedient of converting their assets into cash and depositing the same in a bank.

Liability for Release Cases RCBC v. DE CASTRO. 168 SCRA 49 (1988)

Moreover, by virtue of the order of garnishment, the same was placed in custodia legis and therefore, from that time on, RCBC was holding the funds subject to the orders of the court a quo. That the sheriff, upon delivery of the check to him by RCBC encashed it and turned over the

proceeds thereof to the plaintiff was no longer the concern of RCBC as the responsibility over the garnished funds passed to the court. Thus, no breach of trust or dereliction of duty can be attributed to RCBC in delivering its depositor's funds pursuant to a court order, which was merely in the exercise of its power of control over such funds. The bank had no choice but to comply with the order demanding delivery of the garnished amount in check. The very tenor of the order called for immediate compliance therewith. On the other hand, the bank cannot be held liable for the subsequent encashment of the check as this was upon order of the court in the exercise of its power of control over the funds placed in custodia legis by virtue of the garnishment.

H. DEPOSIT INSURANCE SEC. 5, PDIC CHARTER: The deposit liabilities of any bank or banking institution, which is engaged in the business of receiving deposits as herein defined on the effective date of this Act, or which thereafter may engage in the business of receiving deposits, shall be insured with the Corporation. (As amended by R.A. 6037, 04 August 1969; renumbered from Sec. 4 by R.A. 9302, 12 August 2004) SEC. 9, FCDA: Deposit insurance coverage. The deposits under this Act shall be insured under the provisions of Republic Act No. 3591, as amended (Philippine Deposit Insurance Corporation), as well as its implementing rules and regulations: Provided, That insurance payment shall be in the same currency in which the insured deposits are denominated.

Amount Insured! SEC. 4 (G), PDIC CHARTER: The term insured deposit means the amount due to any bona fide depositor for legitimate deposits in an insured bank net of any obligation of the depositor to the insured bank as of the date of closure, but not to exceed Five Hundred Thousand Pesos (P500,000.00).2 Such net amount shall be determined according to such regulations as the Board of Directors may prescribe. In determining such

amount due to any depositor, there shall be added together all deposits in the bank maintained in the same right and capacity for his benefit either in his own name or in the name of others. A joint account regardless of whether the conjunction "and," "or," "and/or" is used, shall be insured separately from any individually- owned deposit account: Provided, That (1) If the account is held jointly by two or more natural persons, or by two or more juridical persons or entities, the maximum insured deposit shall be divided into as many equal shares as there are individuals, juridical persons or entities, unless a different sharing is stipulated in the document of deposit, and (2) if the account is held by a juridical person or entity jointly with one or more natural persons, the maximum insured deposit shall be presumed to belong entirely to such juridical person or entity: Provided, further, That the aggregate of the interest of each co-owner over several joint accounts, whether owned by the same or different combinations of individuals, juridical persons or entities, shall likewise be subject to the maximum insured deposit of Five Hundred Thousand Pesos (P500,000.00): Provided, furthermore, That the provisions of any law to the contrary notwithstanding, no owner/holder of any negotiable certificate of deposit shall be recognized as a depositor entitled to the rights provided in this Act unless his name is registered as owner/holder thereof in the books of the issuing bank: Provided, finally, That, in case of a condition that threatens the monetary and financial stability of the banking system that may have systemic consequences, as defined in section 17 hereof, as determined by the Monetary Board, the maximum deposit insurance cover may be adjusted in such amount, for such a period, and/or for such deposit products, as may be determined by a unanimous vote of the Board of Directors in a meeting called for the purpose and chaired by the Secretary of Finance, subject to the approval of the President of the Philippines. (As amended by R.A. 9302, 12 August 2004; R.A. 9576, 2009)

Rules on Payment !SEC. 10 (B), PDIC CHARTER: REPEALED ALREADY. For purposes of this Act an insured bank shall be deemed to have been closed on account of insolvency when ordered closed by the Monetary Board of the Central Bank of the Philippines pursuant to Section 29 of R.A. 265, as amended.

Liability of PDIC Cases PDIC v. CA

It doesn't matter. Whether the CTDs in question are negotiable or

not is immaterial in the present case. The Philippine Deposit Insurance Corporation was created by law and, as such, is governed primarily by the provisions of the special law creating it. The liability of the PDIC for insured deposits therefore is statutory and such liability rests upon the existence of deposits with the insured bank, not on the negotiability or nonnegotiability of the certificates evidencing these deposits. the deposit liability of PDIC is determined by the provisions of the law that created it, RA 3519, and statements in the certificates that the same are insured by PDIC are not binding upon the latter. PDIC not liable. In order that a claim for deposit insurance with the PDIC may prosper, the law requires that a corresponding deposit be placed in the insured bank. The problem is that Regent did not receive anything in consideration for the CTDs it issued, since the check representing the vale of the CTDs (issued by Premiere) bounced; therefore no deposit ever came into existence. Accordingly, there is nothing here for PDIC to insure.

I. UNCLAIMED BALANCES

SEC. 1, UNCLAIMED BALANCES LAW: "Unclaimed balances", within the meaning of this Act, shall include credits or deposits of money, bullion, security or other evidence of indebtedness of any kind, and interest thereon with banks, buildings and loan associations, and trust corporations, as hereinafter defined, in favor of any person known to be dead or who has not made further deposits or withdrawals during the preceding ten years or more. Such unclaimed balances, together with the increase and proceeds thereof, shall be deposited with the Treasurer of the Philippines to the credit of the Government of the Republic of the Philippines to be used as the National Assembly may direct. "Banks", "building and loan associations" and "trust corporations", within the meaning of this Act, shall refer to institutions defined under Section

two, thirty-nine and fifty-six, respectively, of Republic Act Numbered Three Hundred Thirty Seven, otherwise known as the General Banking Act, as amended, whether organized under special charters or not.
Cases Republic v. CA, 345 SCRA 63 (2000)

The publication of the list of unclaimed balances is intended to safeguard the right of the depositors, their heirs and successors to due process. This was made clear by the lower court in its assailed Order, to wit: Moreover, how would other persons who may have an interest in any of the unclaimed balances know what this case is all about and whether they have an interest in this case if the amended complaint and list of unclaimed balances are not published? Such other persons may be heirs of the bank depositors named in the list of unclaimed balances. xxx The fact that the government is in a tight financial situation is not a justification for this Court to dispense with the elementary rule of due process. As declared by the trial court in its Order dated August 1, 1989, the dismissal of the petition for escheat is without prejudice. In other words, the State can refile the said petition, notwithstanding the lapse of time. Prescription of action does not run against the government.

Escheat Proceedings

SEC. 3, UNCLAIMED BALANCES LAW: Whenever the Solicitor General shall be informed of such unclaimed balances, he shall commence an action or actions in the name of the People of the Republic of the Philippines in the Court of First Instance of the province or city where the bank, building and loan association or trust corporation is located, in which shall be joined as parties the bank, building and loan association or trust corporation and all such creditors or depositors. All or any of such creditors or depositors or banks, building and loan association or trust corporations may be included in one action.

Effects of Compliance/Non-Compliance! SEC. 4, UNCLAIMED BALANCES LAW: If the president, cashier or managing officer of the bank, building and loan association, or trust corporation neglects or refuses to make and file the sworn statement required by this action, such bank, building and loan association, or trust corporation shall pay to the Government the sum of five hundred pesos a month for each month or fraction thereof during which such default shall continue.

J. ANTI-MONEY LAUNDERING ACT

Declared Policy!SEC. 2, AMLA: Declaration of Policy. - It is hereby declared the policy of the State to protect and preserve the integrity and confidentiality of bank accounts and to ensure that the Philippines shall not be used as a money laundering site for the proceeds of any unlawful activity. Consistent with its foreign policy, the State shall extend cooperation in transnational investigations and prosecutions of persons involved in money laundering activities wherever committed.

Covered Transactions! SEC. 3 (B), AMLA: "Covered transaction" is a single, series, or combination of transactions involving a total amount in excess of Four million Philippine pesos (Php4,000,000.00) or an equivalent amount in foreign currency based on the prevailing exchange rate within five (5) consecutive banking days except those between a covered institution and a person who, at the time of the transaction was a properly identified client and the amount is commensurate with the business or financial capacity of the client; or those with an underlying legal or trade obligation, purpose, origin or economic justification.
It likewise refers to a single, series or combination or pattern of

unusually large and complex transactions in excess of Four million Philippine pesos (Php4,000,000.00) especially cash deposits and investments having no credible purpose or origin, underlying trade obligation or contract.

Suspicious Transactions SEC. 3 (B-1), AMLA: SEC. 3 (B), AMLA: "Covered transaction" is a single, series, or combination of transactions involving a total amount in excess of Four million Philippine pesos (Php4,000,000.00) or an equivalent amount in foreign currency based on the prevailing exchange rate within five (5) consecutive banking days except those between a covered institution and a person who, at the time of the transaction was a properly identified client and the amount is commensurate with the business or financial capacity of the client; or those with an underlying legal or trade obligation, purpose, origin or economic justification.

Covered Institutions SEC. 3 (A), AMLA: "Covered Institution" refers to: 1. banks, non-banks, quasi-banks, trust entities, and all other institutions and their subsidiaries and affiliates supervised or regulated by the Bangko Sentral ng Pilipinas (BSP); insurance companies and all other institutions supervised or regulated by the Insurance Commission; and securities dealers, brokers, salesmen, investment houses and other similar entities managing securities or rendering services as investment agent, advisor, or consultant, (ii) mutual funds, close and investment companies, common trust funds, pre-need companies and other similar entities, (iii) foreign exchange corporations, money changers, money payment, remittance, and transfer companies and other similar entities, and (iv) other entities administering or otherwise dealing in currency, commodities or financial derivatives based thereon, valuable objects, cash substitutes and other similar monetary instruments or property supervised or

2. 3.

regulated by Commission.

Securities

and

Exchange

Obligations of Covered Institutions SEC. 9, AMLA: Prevention of Money Laundering; Customer Identification Requirements and Record Keeping.

Money-Laundering Crime SEC. 4, AMLA: Money Laundering Offense. - Money laundering is a crime whereby the proceeds of an unlawful activity are transacted, thereby making them appear to have originated from legitimate sources. It is committed by the following:

1.Any person knowing that any monetary instrument or property represents. involves, or relates to the proceeds of any unlawful activity, transacts or attempts to transact said monetary instrument or property. 2.Any person-knowing that any monetary instrument or property involves the proceeds of any unlawful activity, 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. 3.Any person knowing that any monetary instrument or property is required under this Act to be disclosed and filed with the Anti-Money Laundering Council (AMLC), fails to do so. (a) Transacting or attempting to transact, with monetary instrument or property, knowing it represents, involves, or related to proceeds of any Unlawful Activity! (b) Facilitating money-laundering referred to in Item (a) above, by failing to perform an act (c) Failing to disclose and file report with AMLC of any monetary instrument or property as required under AMLA

Unlawful Activities SEC. 3 (i), AMLA: "Unlawful activity" refers to any act or omission or series or combination thereof involving or having relation to the following: 1.Kidnapping for ransom under Article 267 of Act No.3815, otherwise known as the Revised Penal Code, as amended; 2.Sections 3,4,5,7,8 and 9 of Article Two of Republic Act No.6425, as amended, otherwise known as the Dangerous Drugs Act of 1972; 3.Section 3 paragraphs B,C,E,G,H and I of Republic Act No.3019, as amended; otherwise known as the Anti-Graft and Corrupt Practices Act; 4.Plunder under Republic Act No.7080, as amended; 5.Robbery and extortion under Articles 294,295,296,299,300,301 and 302 of the Revised Penal Code, as amended; f. Jueteng and Masiao punished as illegal gambling under Presidential Decree No.1602; g. Piracy on the high seas under the Revised Renal Code, as amended and Presidential Decree No.532; h. Qualified theft under Article 310 of the Revised Penal Code, as amended; (9) Swindling under Article 315 of the Revised Penal Code, as amended; i. Smuggling under Republic Act Nos. 455 and 1937;!j. Violations under Republic Act No.8792, otherwise known as the Electronic Commerce Act of 2000;!k. Hijacking and other violations under Republic Act No.6235; destructive arson and murder, as defined under the Revised Penal Code, as amended, including those perpetrated by terrorists against non- combatant persons and similar targets; l. Fraudulent practices and other violations under Republic Act No.8799. otherwise known as the Securities Regulation Code of 2000;

m. Felonies or offenses of a similar nature that are punishable under the penal laws of other countries.

Prohibition against Political Harassment! SEC. 16, AMLA: Prohibitions Against Political Harassment. - This Act shall not be used for political prosecution or harassment or as an instrument to hamper competition in trade and commerce. No case for money laundering may be filed against and no assets shall be frozen, attached or forfeited to the prejudice of a candidate for an electoral office during an election period.

Civil Forfeiture SEC. 12, AMLA: Forfeiture Provisions. 1.Civil Forfeiture. - When there is a covered transaction report made, and the court has, in a petition filed for the purpose ordered seizure of any monetary instrument or property, in whole or in part, directly or indirectly, related to said report, the Revised Rules of Court on civil forfeiture shall apply. 2.Claim on Forfeited Assets. - Where the court has issued an order of forfeiture of the monetary instrument or property in a criminal prosecution for any money laundering offense defined under Section 4 of this Act, the offender or any other person claiming an interest therein may apply, by verified petition, for a declaration that the same legitimately belongs to him and for segregation or exclusion of the monetary instrument or property corresponding thereto. The verified petition shall be filed with the court which rendered the judgement of conviction and order of forfeiture, within fifteen (15) days from the date of the order or forfeiture, in default of which the said order shall become final and executory. This provision shall apply in both civil and criminal forfeiture. Payment in Lieu of Forfeiture. - Where the court has issued an order of forfeiture of the monetary instrument or property subject of a money laundering offense defined under Section 4, and said order cannot be

enforced because any particular monetary instrument or property cannot, with due diligence, be located, or it has been substantially altered, destroyed, diminished in value or otherwise rendered worthless by any act or omission, directly or indirectly, attributable to the offender, or it has been concealed, removed, converted or otherwise transferred to prevent the same from being found or to avoid forfeiture thereof, or it is located outside the Philippines or has been placed or brought outside the jurisdiction of the court, or it has been commingled with other monetary instruments or property belonging to either the offender himself or a third person or entity, thereby rendering the same difficult to identify or be segregated for purposes of forfeiture, the court may, instead of enforcing the order of forfeiture of the monetary instrument or property or part thereof or interest therein, accordingly order the convicted offender to pay an amount equal to the value of said monetary instrument or property. This provision shall apply in both civil and criminal forfeiture.! Cases !Republic v. Glasgow Credit and Collection Services, 542 SCRA 384 (2008)! RULE 12 Forfeiture Provisions xxx xxx xxx! Rule 12.2. When Civil Forfeiture May be Applied. When there is a SUSPICIOUS TRANSACTION REPORT OR A COVERED TRANSACTION REPORT DEEMED SUSPICIOUS AFTER INVESTIGATION BY THE AMLC, and the court has, in a petition filed for the purpose, ordered the seizure of any monetary instrument or property, in whole or in part, directly or indirectly, related to said report, the Revised Rules of Court on civil forfeiture shall apply. !RA 9160, as amended, and its implementing rules and regulations lay down two conditions when applying for civil forfeiture:! (1) when there is a suspicious transaction report or a covered transaction report deemed suspicious after investigation by the AMLC (Anti-Money Laundering Council)!(2) the court has, in a petition filed for the purpose, ordered the seizure of any monetary instrument or property, in whole or in part, directly or indirectly, related to said report.! Since account of Glasgow in CSB was (1) covered by several suspicious transaction reports and (2) placed under the control of the trial court upon the issuance of the writ of preliminary injunction, the conditions provided in RA 9160 were satisfied. Hence, the Republic, represented by the AMCL, properly instituted the complaint for civil forfeiture.!Whether or not there is

truth in the allegation that account of Glasgow contains the proceeds of unlawful activities is an evidentiary matter that may be proven during trial. The complaint, however, did not even have to show or allege that Glasgow had been implicated in a conviction for, or the commission of, the unlawful activities of estafa and violation of the Securities Regulation Code.!A criminal conviction for an unlawful activity is not a prerequisite for the institution of a civil forfeiture proceeding. Stated otherwise, a finding of guilt for an unlawful activity is not an essential element of civil forfeiture.!Thus, regardless of the absence, pendency or outcome of a criminal prosecution for the unlawful activity or for money laundering, an action for civil forfeiture may be separately and independently prosecuted and resolved.! - There was no failure to prosecute on the part of the Republic. Immediately after the complaint was filed, the trial court ordered the process server to serve summons to Glasgow. The subpoena to Glasgow was, however, returned unserved as Glasgow "could no longer be found at its given address" and had moved out of the building. Republic then filed a motion for issuance of alias summons and leave of court to serve summons by publication. The court archived the case for failure to cause service of alias summons, still, the Republic motioned the case to be reinstated. Meanwhile, the Republic continued to exert efforts to obtain information from other government agencies on the whereabouts or current status of respondent Glasgow. Its efforts, however, proved futile. The alias summons was again unserved. It was then that Glasgow filed the motion to dismiss.!Given these circumstances, how could the Republic be faulted for failure to prosecute the complaint for civil forfeiture? While there was admittedly a delay in the proceeding, it could not be entirely or primarily ascribed to the Republic. That Glasgows whereabouts could not be ascertained was not only beyond the Republics control, it was also attributable to Glasgow which left its principal office address without informing the Securities and Exchange Commission or any official regulatory body of its new address. Moreover, as early as October 8, 2003, the Republic was already seeking leave of court to serve summons by publication.! ADDINTIONAL RULING: the service of summons may be made by publication in cases of civil forfeiture as they are proceedings in rem. The Rules of Procedure in Cases of Civil Forfeiture also allows summons by publication in cases where the whereabouts of the owner are unknown and cannot be ascertained by diligent inquiry.! !

Freezing of Accounts!

SEC. 10, AMLA: Authority to Freeze. - Upon determination that probable cause .exists that any deposit or similar account is in any way related to an unlawful activity, the AMLC may issue a freeze order, which shall be effective immediately, on the account for a period not exceeding fifteen (15) days. Notice to the depositor that his account has been frozen shall be issued simultaneously with the issuance of the freeze order. The depositor shall have seventy-two (72) hours upon receipt of the notice to explain why the freeze order should be lifted. The AMLC has seventy-two (72) hours to dispose of the depositor's explanation. If it fails to act within seventy-two (72) hours from receipt of the depositors explanation, the freeze order shall automatically be dissolved. The fifteen (15)-day freeze order of the AMLC may be extended upon order of the court, provided that the fifteen (15)-day period shall be tolled pending the court's decision to extend the period.!
No court shall issue a temporary restraining order or writ of injunction against any freeze order issued by the AMLC except the Court of Appeals or the Supreme Court.! !

Cases!Republic v. Eugenio!

ISSUE !Whether a bank inquiry order issued in accordance with section 10 AMLA may be stayed with injunction!. RULING! YES . Under this section, the AMLC may file an application ex parte, with the CA, and upon determination of probable cause, they may issue a freeze order effective immediately. This is to prevent funds that is related to any money-laundering from being misused while the case is being tried. It is ex parte because the fact of freezing the account must be kept secret from the owner, else the funds may just be moved elsewhere before the freeze order may be issued.!Since the application of AMLC has nothing to do with any of the provided enumerations under Section 11, it must prove that there is probable cause with the case, in order to inquire into the bank

accounts. Probable cause may only be decided by the courts (Art III, Sec 2 of Constitution). Section 10 contains the application for ex parte, but it is connected to freezing of accounts. This must be done ex parte, since notifying the accused my cause him to disburse the account before the order freezing the account is issued. Section 11 does not contain the application for ex parte, for the fact that there is nothing wrong with the accused knowing that his accounts are being checked. It is immaterial for the accused to know that his accounts are being checked, since he cannot hide the bank records to prove that the accounts are linked to the crime imputed against him. Hence, using the ex parte application found in section 10 in inquiring into bank accounts (section 11) may be stayed with injunction.!

!Examination of Accounts
SEC. 11, AMLA: Authority to Inquire into Bank Deposits. - Notwithstanding the provisions of Republic Act No. 1405, as amended; Republic Act No. 6426, as amended; Republic Act No. 8791, and other laws, the AMLC may inquire into or examine any particular deposit or investment with any banking institution or non- bank financial institution upon order of any competent court in cases of violation of this Act when it has been established that there is probable cause that the deposits or investments involved are in any way related to a money laundering offense: Provided, That this provision shall not apply to deposits and investments made prior to the effectivity of this Act. AMLA: Mutual Assistance among States. 1. Request for assistance from a Foreign State. - Where a foreign State makes a request for assistance in the investigation or prosecution of a money laundering offense, the AMLC may execute the request or refuse to execute the same and inform the foreign State of any valid reason for not executing the request or for delaying the execution thereof. The principles of mutuality and reciprocity shall, for this purpose, be at all times recognized.

Requirements for Requests for Mutual Assistance from Foreign States.

- A request for mutual assistance from a foreign State must (1) confirm that an investigation or prosecution is being conducted in respect of a money launderer named therein or that he has been convicted of any money laundering offense; (2) state the grounds on which any person is being investigated or prosecuted for money laundering or the details of his conviction; (3) gives sufficient particulars as to the identity of said person; (4) give particulars sufficient to identify any covered institution believed to have any information, document, material or object which may be of assistance to the investigation or prosecution; (5) ask from the covered institution concerned any information, document, material or object which may be of assistance to the investigation or prosecution; (6) specify the manner in which and to whom said information, document, material or object detained pursuant to said request, is to be produced; (7) give all the particulars necessary for the issuance by the court in the requested State of the writs, orders or processes needed by the requesting State; and (8) contain such other information as may assist in the execution of the request.