Banking Law

CMTFALCON NOTES
NEW CENTRAL BANK ACT c. Good moral character;
d. Unquestionable Integrity;
1. STATE POLICY e. Of known probity and patriotism; and
The state shall maintain a central monetary authority that shall function and f. With recognized competence in social economic disciplines.
operate as an independent and accountable body corporate in the discharge of its  DISQUALIFICATION OF MONETARY BOARD MEMBERS
mandated responsibilities concerning money, banking and credit. In line with this a. Disqualification imposed by RA 6713;
policy, and considering its functions and responsibility, the central monetary authority b. Disqualified from being a director which is subject to the supervision
established under NCBA, while being government owned corporation, shall enjoy fiscal and examination of BSP;
and administrative autonomy. c. No member of the MB must be connected to multilateral banking or
financial institution or has substantial interest in a private bank; and
2. CREATION OF THE BSP d. No member of MB shall be employed in any institution within 2 years
 SECTION 2 OF NCBA after expiration of term.
BSP’s capital is 50 B  GROUNDS FOR REMOVAL IF MB MEMBER
 SECTION 4 OF NCBA The PRES has the power to remove.
BSP’s Principal location is at Metro Manila
 SECTION 20, ARTICLE 12 of 1987 Constitution a. If the member is subsequently disqualified under NCBA
“Congress shall establish an independent central authority.” b. Physically and mentally incapacitated and cannot perform his duties for more
than 6 months
3. RESPONSIBILITY AND PRIPARY OBJECTIVE OF BSP c. Guilty of acts that are fraudulent and illegal
a. Provide policy directions in areas on money, banking and credit d. The member no longer possess the qualification
b. Supervision over the operation of bank
c. Exercise regulatory powers over the operation of finance companies and non-  SCOPE AND AUTHORITY OF MB
bank financial institutions performing quasi-banking functions a. Issue rules and regulations relating to BSP
d. Maintain price stability conducive to a balanced and sustainable growth of b. Direct the management, operations and administration of BSP
economy c. Establish a human resource management system and shall govern the hiring,
e. Promote and maintain financial stability and convertibility of peso appointment, transfer, promotion or dismissal of personnel in BSP
f. The responsibility to administer the monetary, banking and credit system of the d. Adopt annual budget for BSP
country e. Indemnify its members and other officials of BSP

4. MONETARY BOARD POWERS AND FUNTIONS 5. HOW BSP HANDLES BANK DISTRESS
The powers and functions of the BSP shall be exercised by the BSP-MB. a. CONSERVATORSHIP
 COMPOSITION First Phil International Bank v CA
The MB is composed of 7 members appointed by the PRES for a term of 6 “The conservator’s power is not unilateral and he cannot simply repudiate
years valid obligations of the bank. His authority would be only to bring court actions to
 VACANCIES assail contracts.”
Any vacancy of the MB by death, resignation or removal of any member to NOTES:
complete the unexpired term of the member concerned. a. GOVERNING LAW
 QUALIFICATION OF MEMBERS OF MB SECTION 29 of NCBA
a. Natural born citizen of the Philippines; b. GROUNDS FOR APPOINTMENT OF CONSERVATOR
b. At least 35, exc: governor at least 40; When the MB finds the bank in a state of:
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1. Continuing liability; pr “The bank is allowed to collect interest on its loans while under liquidation,
2. Unwillingness to maintain a condition of liquidity provided that the interests were legal.”
deemed adequate to protect the interest of its Rural bank of San Miguel vs MB
depositors. “The absence of an examination before the closure of a bank did not mean
that there was no basis of closure order. Needless to say, the decision of the MB
The MB may appoint a conservator with the power of:
and BSP, like any other administrative body, must have something to support
1. Take charge of the assets, liabilities, and the itself and its findings of fact must be supported by substantial evidence. The basis
management need not arise from an examination as required by the old law before the MB can
2. Reorganize the management order its closure.”
3. Collect all monies and debts due said institution “Closure of bank may be considered exercise of police power. The actions of
4. Exercise powers necessary to restore it viability the MB are final and executor. Such exercise may be subjected to judicial inquiry
c.DEFINITION and be set aside if found to be excess of jurisdiction or with such grave abuse of
a. LIQUIDITY- the ability of an asset to be converted into cash quickly discretion as amount to lack or excess of jurisdiction.”
and without any price discount
c. RECIEVERSHIP
b. SOLVENCY- the condition that exists when liabilities amount to less
than the total assets, thus providing the ability to pay debts. Abacus Real Estate v Manila Banking Corp
d. QUALIFICATION OF CONSERVATOR
The conservator should be competent and knowledgeable in bank NOTES:
operations a. RECIEVERSHIP AND INVOLUNTARY LIQUIDATION
e. PERIOD OF CONSERVATORSHIP Governed by SECTION 30,31,32 and 33 of NCBA
Not exceed 1 year
f. THE POWERS OF CONSERVATOR CANNOT IMPAIR OBLIGATIONS AND 1. GROUNDS FOR RECIEVERSHIP AND LIQUIDATION
CONTRACT The MB may w/o prior hearing forbid the institution from doing business in the
b. CLOSURE Philippines and designate the PDIC as receiver of the banking institution, upon report
“CLOSE NOW HEAR LATER RULE” of the head of the supervising department, it finds that the bank:
Central Bank v CA a. Is unable to pay its liabilities
“The law does not contemplate prior notice and hearing before a bank may b. Insufficient realizable assets
be directed to stop operations and placed under receivership. When the law c. Cannot continue business without involving losses to its creditors
provides for the filing of a case within 10 days after the receiver takes charge of d. Has violated a cease and desist order that has become final, involving transactions
the assets of the bank, it is unmistakable that the assailed actions should precede which amount to fraud.
the filing of the case. Plainly, the legislature could not have intended to authorize
“NO PRIOR NOTICE AND HEARING” in the closure of the bank and at the same 2. CURRENT AND COMPLETE EXAMINATION NOT NECESSARY (Rural bank of San
time allow a suit to annul it on the absence there of.” Miguel v MB, RE: SECTION 30)

b. PROCEDURE
Banco Filipino Savings and Mortgage Bank
a. The receiver shall immediately:
v Ybanez a. Gather and take charge of all the assets and liabilities of the institution,
“An examination by the head of the appropriate supervising or examining b. Administer the same for the benefit of its creditors
department or his examiners or agents into the condition of the bank is c. Exercise general powers of a receiver under the ROC
necessary”
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CMTFALCON NOTES
d. Shall not with the exception of administrative expenditures, pay or commit
any act that will involve the transfer, or disposition of any asset of the NOTE: Under Circular No. 547 Series of 2006 the maximum amount of coins
institution. considered as legal tender is adjusted to as follows:
b. The receiver may deposit or place the funds of the institution in non-speculative 1. 1K for denominations of 1P, 5P and 10P
investment 2. 100P for denominations of 1C,5C and 25C
c. The receiver shall determine as soon as possible, but not later than 90 days w-o-n
the institution is rehabilitated or not RE: NCC
d. Any determination for the resumption of business shall be subject to the approval
Art. 1249. The payment of debts in money shall be made in the currency
of the monetary board.
stipulated, and if it is not possible to deliver such currency, then in the
c. PROHIBITED ACTS
currency which is legal tender in the Philippines.
Any director of a bank declared insolvent or placed under receivership shall no commit
any of the following:
The delivery of promissory notes payable to order, or bills of exchange or
a. Refusing to turn over bank records’ and assets to designated receiver
other mercantile documents shall produce the effect of payment only when
b. Tampering with bank records
they have been cashed, or when through the fault of the creditor they have
c. Appropriating for himself or another party, or destroying or causing
been impaired.
misappropriation and destruction of banks assets
d. Receive bank deposits In the meantime, the action derived from the original obligation shall be held
e. Paying out or causing to be paid out of any funds of the said bank in the abeyance. (1170)
f. Transferring any securities or properties of said bank
d. LIQUIDATION Art. 1250. In case an extraordinary inflation or deflation of the currency
Pacific Banking vs CA stipulated should supervene, the value of the currency at the time of the
establishment of the obligation shall be the basis of payment, unless there is
an agreement to the contrary.
Manalo vs CA
“The exclusive jurisdiction of the liquidation pertains only to the adjudication 7. HOW BSP HANDLES EXCHANGE CRISIS
of claims against the bank. It does not cover the reverse situation where it is the bank a. DOMESTIC MONETARY STABILITY 331
which files a claim against another person or legal entity” b. ABNORMAL MIVEMENT IN THE MONETARY AGGREGATES, CREDIT OR PRICE LEVEL
331
6. LEGAL TENDER c. FOREIGN EXCHANGE 336
a. LEGAL TENDER POWER d. LIQUIDITY PROBLEMS OF BANK
All notes and coins issued by the BSP shall be fully guaranteed by the 1. Receivership
Government of the RP and shall be legal tender in the Philippines for all debts, 2. Closure
both public and private: Provided however, that, unless otherwise fixed by the MB
coins shall be legal tender in amount not exceeding 50P for denominations of 25C LAW ON SECRECY OF BANK DEPOSITS (106-119)
and above, and in amounts not exceeding 20P for denominations of 10C.
1. PURPOSE
Checks representing demand deposits do not have legal tender power and a. It is to encourage people to deposit their money in the bank in order to make the
their acceptance in the payment of debts is at the option of the creditor: Provided same available for business or industry.
the check has been cleared and accredited to the account to the creditor shall be b. To discourage private hoarding
equivalent to delivery to the creditor of cash in an amount equal to the amount
credited to his account. 2. PROHIBITED ACTS
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It shall be unlawful for any official or employee of a banking institution to disclose to
any person other than those mentioned in Section two hereof any information
concerning said deposits.
3. DEPOSITS COVERED
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 Sandingang Bayan
4. EXCEPTIONS
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,"
5. GARNISHMENT OF DEPOSITS, INCLUDING FOREIGN DEPOSITS
GR: All deposits protected by bank secrecy law.
EXC: When it is for execution of valid judgement
6. PENALTIES FOR VIOLATION
Any violation will subject the offended upon conviction, to an imprisonment of not
more than five (5) years, or a fine of not more than P20,000.00, or both in the
discretion of the court.
PHILIPPINE DEPOSIT INSURANCE CORPORATION
1. BASIC POLICY
SECTION 1. There is hereby created a Philippine Deposit Insurance Corporation
hereinafter referred to as the "Corporation" which shall insure, as herein provided, the
deposits of all banks which are entitled to the benefits of insurance under this Act, and
which shall have the powers hereinafter granted.
The Corporation shall, as a basic policy, promote and safeguard the interests of the
depositing public by way of providing permanent and continuing insurance coverage
on all insured deposits.
2. CONCEPT OF INSURED DEPOSITS
The term "insured deposit" means the amount due to any depositor for 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 Two hundred fifty thousand pesos (P250,000.00). 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 interests 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 Two hundred fifty thousand pesos (P250,000.00): 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.
SECTION 5. 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
3. LIABILITY OF DEPOSITORS
a. DEPOSIT LIABILITIES REQUIRED TO BE INSURED WITH PDIC
500k
b. COMMENCEMENT OF LIABILITY
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c. DEPOSIT ACCOUNTS NOT ENTITLED TO PAYMENT
d. EXTENT OF LIABILITY
Not exceed 500k
e. DETERMINATION OF INSURED DEPOSITS
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.
f. CALCULATION OF LIABILITY
i. PER DEPOSITOR, PER CAPACITY RULE
PDIC provides the maximum capacity of 500k per depositor per bank
ii. JOINT ACCOUNTS
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 interests 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 Two hundred fifty thousand pesos
(P250,000.00): 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.
iii. MODE OF PAYMENT
When an insured bank has been closed by the monetary board,
payment of the insured deposits on such close bank shall be made by
the PDIC as soon as possible either by:
a. Cash
b. Making available to each depositor a transferred deposit in another
insured bank in an amount equal to insured deposit of such
depositor.
iv. EFFECT OF PAYMENT OF INSURED DEPOSIT
v. PAYMENT OF INSURED DEPOSIT AS PREFERED IMDER 2244 OF THE NCC
Art. 2244. With reference to other property, real and personal, of the
debtor, the following claims or credits shall be preferred in the order
named:
(1) Proper funeral expenses for the debtor, or children under his or her
parental authority who have no property of their own, when approved
by the court;
(2) Credits for services rendered the insolvent by employees, laborers,
or household helpers for one year preceding the commencement of the
proceedings in insolvency;
(3) Expenses during the last illness of the debtor or of his or her spouse
and children under his or her parental authority, if they have no
property of their own;
(4) Compensation due the laborers or their dependents under laws
providing for indemnity for damages in cases of labor accident, or illness
resulting from the nature of the employment;
(5) Credits and advancements made to the debtor for support of himself
or herself, and family, during the last year preceding the insolvency;
(6) Support during the insolvency proceedings, and for three months
thereafter;
(7) Fines and civil indemnification arising from a criminal offense;
(8) Legal expenses, and expenses incurred in the administration of the
insolvent's estate for the common interest of the creditors, when
properly authorized and approved by the court;
(9) Taxes and assessments due the national government, other than
those mentioned in Articles 2241, No. 1, and 2242, No. 1;
(10) Taxes and assessments due any province, other than those referred
to in Articles 2241, No. 1, and 2242, No. 1;
(11) Taxes and assessments due any city or municipality, other than
those indicated in Articles 2241, No. 1, and 2242, No. 1;
(12) Damages for death or personal injuries caused by a quasi-delict;
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(13) Gifts due to public and private institutions of charity or 5) The total amount to be financed;
beneficence;
(14) Credits which, without special privilege, appear in (a) a public 6) The finance charge expressed in terms of pesos and centavos; and
instrument; or (b) in a final judgment, if they have been the subject of
litigation. These credits shall have preference among themselves in the 7) The percentage that the finance charge bears to the total amount to be
order of priority of the dates of the instruments and of the judgments, financed expressed as a simple annual rate on the outstanding unpaid balance of the
respectively. obligation.

vi. FAILURE TO SETTLE CLAIM OF INSURED DEPOSITOR C. COVERED AND EXCLUDED TRANSACTIONS

vii. FAILURE OF DEPOSITOR TO CLAIM INSURED DEPOSITS D. CONSEQUENCES OF NON COMPLIANCE WITH OBLIGATIONS
a. EXAMINATION OF BANKS AND DEPOSITS ACCOUNTS The violation of the Truth in Lending Act would allow debtor to refuse payment of
b. PROHIBITION AGANINST SPLITING OF DEPOSITS financial charges or, if already paid, to recover the same. Debtor may also initiate
c. PROHIBITIONS AGAINST ISSUANCE OF TRO’s, ETC. criminal charges against the violator.

TRUTH IN LENDING ACT DBP v Felipe Arcilla

A. PURPOSE
The purpose it to protect the borrower from lack of awareness of the true cost of
credit to the user by assuring a full disclosure of such cost with a view of preventing
the uninformed use of credit to the detriment of the national economy.
The law intended to compliment the Anti-usury Law. The practice of lenders is to
make charges, in addition to the interest rates, as a veiled intention to circumvent the
Anti-usury Law.
B. OBLIGATIONS OF CREDITORS TO WHOM IT WAS EXTENDED
The law makes it an obligation on the part of the creditor, before the consummation of
the loan transaction, to give an itemized written statement of the following:
1) The cash price or delivered price of the property or service to be acquired;
2) The amounts, if any, to be credited as downpayment and/or trade-in;
3) The difference between the amounts set forth under nos. 1 and 2;
4) The charges, individually itemized, which are paid or to be paid by such
person in connection with the transaction but which are not incident to the extension
of credit;
United Coconut Planters Bank v Sps. Beluso
ANTI MONEY LAUDERING ACT (RA 9160)
1. BASIC POLICY
SEC. 2. 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.
2. DEFINITIONS
SEC. 3. Definitions. – For purposes of this Act, the following terms are hereby defined
as follows:
(a) "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);
(2) insurance companies and all other institutions supervised or regulated by the
Insurance Commission; and
(3) (i) 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-end investment companies, common trust funds,
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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 regulated by
Securities and Exchange Commission and Exchange Commission
(c) "Monetary instrument" refers to:
(1) coins or currency of legal tender of the Philippines, or of any other country;
(2) drafts, checks and notes;
(3) securities or negotiable instruments, bonds, commercial papers, deposit
certificates, trust certificates, custodial receipts or deposit substitute instruments,
trading orders, transaction tickets and confirmations of sale or investments and money
market instruments; and
(4) other similar instruments where title thereto passes to another by endorsement,
assignment or delivery.
(d) "Offender" refers to any person who commits a money laundering offense.
(e) "Person" refers to any natural or juridical person.
(f) "Proceeds" refers to an amount derived or realized from an unlawful activity.
(g) "Supervising Authority" refers to the appropriate supervisory or regulatory agency,
department or office supervising or regulating the covered institutions enumerated in
Section 3(a).
(h) "Transaction" refers to any act establishing any right or obligation or giving rise to
any contractual or legal relationship between the parties thereto. It also includes any
movement of funds by any means with a covered institution.
(i) "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;
(6) Jueteng and Masiao punished as illegal gambling under Presidential Decree No.
1602;
(7) Piracy on the high seas under the Revised Penal Code, as amended and Presidential
Decree No. 532;
(8) Qualified theft under Article 310 of the Revised Penal Code, as amended;
(9) Swindling under Article 315 of the Revised Penal Code, as amended;
(10) Smuggling under Republic Act Nos. 455 and 1937;
(11) Violations under Republic Act No. 8792, otherwise known as the Electronic
Commerce Act of 2000;
3. OFFENSES
SEC. 4. 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:
(a) 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.
(b) 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.
(c) 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.
4. ANTI-MONEY LAUDERING COUNCIL
SEC. 7. Creation of Anti-Money Laundering Council (AMLC). – The Anti-Money
Laundering Council is hereby created and shall be composed of the Governor of the
Bangko Sentral ng Pilipinas as chairman, the Commissioner of the Insurance
Commission and the Chairman of the Securities and Exchange Commission as
members. The AMLC shall act unanimously in the discharge of its functions as defined
hereunder:
(1) to require and receive covered transaction reports from covered institutions;
(2) to issue orders addressed to the appropriate Supervising Authority or the covered
institution to determine the true identity of the owner of any monetary instrument or
property subject of a covered transaction report or request for assistance from a
foreign State, or believed by the Council, on the basis of substantial evidence, to be, in
whole or in part, wherever located, representing, involving, or related to, directly or
indirectly, in any manner or by any means, the proceeds of an unlawful activity;
(3) to institute civil forfeiture proceedings and all other remedial proceedings through
the Office of the Solicitor General;
(4) to cause the filing of complaints with the Department of Justice or the Ombudsman
for the prosecution of money laundering offenses;
(5) to initiate investigations of covered transactions, money laundering activities and
other violations of this Act;
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(6) to freeze any monetary instrument or property alleged to be proceeds of any
unlawful activity;
(7) to implement such measures as may be necessary and justified under this Act to
counteract money laundering;
(8) to receive and take action in respect of, any request from foreign states for
assistance in their own anti-money laundering operations provided in this Act;
(9) to develop educational programs on the pernicious effects of money laundering,
the methods and techniques used in money laundering, the viable means of preventing
money laundering and the effective ways of prosecuting and punishing offenders; and
(10) to enlist the assistance of any branch, department, bureau, office, agency or
instrumentality of the government, including government-owned and -controlled
corporations, in undertaking any and all anti-money laundering operations, which may
include the use of its personnel, facilities and resources for the more resolute
prevention, detection and investigation of money laundering offenses and prosecution
of offenders.
5. PREVENTION
SEC. 9. Prevention of Money Laundering; Customer Identification Requirements and
Record Keeping.
(a) Customer Identification. - Covered institutions shall establish and record the true
identity of its clients based on official documents. They shall maintain a system of
verifying the true identity of their clients and, in case of corporate clients, require a
system of verifying their legal existence and organizational structure, as well as the
authority and identification of all persons purporting to act on their behalf.The
provisions of existing laws to the contrary notwithstanding, anonymous accounts,
accounts under fictitious names, and all other similar accounts shall be absolutely
prohibited. Peso and foreign currency non-checking numbered accounts shall be
allowed. The BSP may conduct annual testing solely limited to the determination of the
existence and true identity of the owners of such accounts.
(b) Record Keeping. - All records of all transactions of covered institutions shall be
maintained and safely stored for five (5) years from the dates of transactions. With
respect to closed accounts, the records on customer identification, account files and
business correspondence, shall be preserved and safely stored for at least five (5) years
from the dates when they were closed.
(c) Reporting of Covered Transactions. - Covered institutions shall report to the AMLC
all covered transactions within five (5) working days from occurrence thereof, unless
the Supervising Authority concerned prescribes a longer period not exceeding ten (10)
working days.
When reporting covered transactions to the AMLC, covered institutions and their
officers, employees, representatives, agents, advisors, consultants or associates shall
not be deemed to have violated Republic Act No. 1405, as amended; Republic Act No.
6426, as amended; Republic Act No. 8791 and other similar laws, but are prohibited
from communicating, directly or indirectly, in any manner or by any means, to any
person the fact that a covered transaction report was made, the contents thereof, or
any other information in relation thereto. In case of violation thereof, the concerned
officer, employee, representative, agent, advisor, consultant or associate of the
covered institution, shall be criminally liable. However, no administrative, criminal or
civil proceedings, shall lie against any person for having made a covered transaction
report in the regular performance of his duties and in good faith, whether or not such
reporting results in any criminal prosecution under this Act or any other Philippine law.
When reporting covered transactions to the AMLC, covered institutions and their
officers, employees, representatives, agents, advisors, consultants or associates are
prohibited from communicating, directly or indirectly, in any manner or by any means,
to any person, entity, the media, the fact that a covered transaction report was made,
the contents thereof, or any other information in relation thereto. Neither may such
reporting be published or aired in any manner or form by the mass media, electronic
mail, or other similar devices. In case of violation thereof, the concerned officer,
employee, representative, agent, advisor, consultant or associate of the covered
institution, or media shall be held criminally liable.
6. POWERS OF AMLC
SEC. 10. 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 depositor’s 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.
SEC. 11. 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
Banking Law
CMTFALCON NOTES
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.
7. FOREIGN STATE ASSISTANCE
SEC. 13. Mutual Assistance among States. –
(a) 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.
(b) Powers of the AMLC to Act on a Request for Assistance from a Foreign State. - The
AMLC may execute a request for assistance from a foreign State by: (1) tracking down,
freezing, restraining and seizing assets alleged to be proceeds of any unlawful activity
under the procedures laid down in this Act; (2) giving information needed by the
foreign State within the procedures laid down in this Act; and (3) applying for an order
of forfeiture of any monetary instrument or property in the court: Provided, That the
court shall not issue such an order unless the application is accompanied by an
authenticated copy of the order of a court in the requesting State ordering the
forfeiture of said monetary instrument or property of a person who has been
convicted of a money laundering offense in the requesting State, and a certification or
an affidavit of a competent officer of the requesting State stating that the conviction
and the order of forfeiture are final and that no further appeal lies in respect of either.
(c) Obtaining Assistance from Foreign States. - The AMLC may make a request to any
foreign State for assistance in (1) tracking down, freezing, restraining and seizing assets
alleged to be proceeds of any unlawful activity; (2) obtaining information that it needs
relating to any covered transaction, money laundering offense or any other matter
directly or indirectly related thereto; (3) to the extent allowed by the law of the foreign
State, applying with the proper court therein for an order to enter any premises
belonging to or in the possession or control of, any or all of the persons named in said
request, and/or search any or all such persons named therein and/or remove any
document, material or object named in said request: Provided, That the documents
accompanying the request in support of the application have been duly authenticated
in accordance with the applicable law or regulation of the foreign State; and (4)
applying for an order of forfeiture of any monetary instrument or property in the
proper court in the foreign State: Provided, That the request is accompanied by an
authenticated copy of the order of the regional trial court ordering the forfeiture of
said monetary instrument or property of a convicted offender and an affidavit of the
clerk of court stating that the conviction and the order of forfeiture are final and that
no further appeal lies in respect of either.
(d) Limitations on Requests for Mutual Assistance. - The AMLC may refuse to comply
with any request for assistance where the action sought by the request contravenes
any provision of the Constitution or the execution of a request is likely to prejudice the
national interest of the Philippines unless there is a treaty between the Philippines and
the requesting State relating to the provision of assistance in relation to money
laundering offenses.
(e) 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) give 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 obtained 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.
(f) Authentication of Documents. - For purposes of this Section, a document is
authenticated if the same is signed or certified by a judge, magistrate or equivalent
officer in or of, the requesting State, and authenticated by the oath or affirmation of a
witness or sealed with an official or public seal of a minister, secretary of State, or
officer in or of, the government of the requesting State, or of the person administering
the government or a department of the requesting territory, protectorate or colony.
The certificate of authentication may also be made by a secretary of the embassy or
legation, consul general, consul, vice consul, consular agent or any officer in the foreign
service of the Philippines stationed in the foreign State in which the record is kept, and
authenticated by the seal of his office.
(g) Extradition. - The Philippines shall negotiate for the inclusion of money laundering
offenses as herein defined among extraditable offenses in all future treaties.
8. PENAL PROVISIONS
SEC. 13. Mutual Assistance among States. –
(a) 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
Banking Law
CMTFALCON NOTES
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.
(b) Powers of the AMLC to Act on a Request for Assistance from a Foreign State. - The
AMLC may execute a request for assistance from a foreign State by: (1) tracking down,
freezing, restraining and seizing assets alleged to be proceeds of any unlawful activity
under the procedures laid down in this Act; (2) giving information needed by the
foreign State within the procedures laid down in this Act; and (3) applying for an order
of forfeiture of any monetary instrument or property in the court: Provided, That the
court shall not issue such an order unless the application is accompanied by an
authenticated copy of the order of a court in the requesting State ordering the
forfeiture of said monetary instrument or property of a person who has been
convicted of a money laundering offense in the requesting State, and a certification or
an affidavit of a competent officer of the requesting State stating that the conviction
and the order of forfeiture are final and that no further appeal lies in respect of either.
(c) Obtaining Assistance from Foreign States. - The AMLC may make a request to any
foreign State for assistance in (1) tracking down, freezing, restraining and seizing assets
alleged to be proceeds of any unlawful activity; (2) obtaining information that it needs
relating to any covered transaction, money laundering offense or any other matter
directly or indirectly related thereto; (3) to the extent allowed by the law of the foreign
State, applying with the proper court therein for an order to enter any premises
belonging to or in the possession or control of, any or all of the persons named in said
request, and/or search any or all such persons named therein and/or remove any
document, material or object named in said request: Provided, That the documents
accompanying the request in support of the application have been duly authenticated
in accordance with the applicable law or regulation of the foreign State; and (4)
applying for an order of forfeiture of any monetary instrument or property in the
proper court in the foreign State: Provided, That the request is accompanied by an
authenticated copy of the order of the regional trial court ordering the forfeiture of
said monetary instrument or property of a convicted offender and an affidavit of the
clerk of court stating that the conviction and the order of forfeiture are final and that
no further appeal lies in respect of either.
(d) Limitations on Requests for Mutual Assistance. - The AMLC may refuse to comply
with any request for assistance where the action sought by the request contravenes
any provision of the Constitution or the execution of a request is likely to prejudice the
national interest of the Philippines unless there is a treaty between the Philippines and
the requesting State relating to the provision of assistance in relation to money
laundering offenses.
(e) 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) give 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 obtained 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.
(f) Authentication of Documents. - For purposes of this Section, a document is
authenticated if the same is signed or certified by a judge, magistrate or equivalent
officer in or of, the requesting State, and authenticated by the oath or affirmation of a
witness or sealed with an official or public seal of a minister, secretary of State, or
officer in or of, the government of the requesting State, or of the person administering
the government or a department of the requesting territory, protectorate or colony.
The certificate of authentication may also be made by a secretary of the embassy or
legation, consul general, consul, vice consul, consular agent or any officer in the foreign
service of the Philippines stationed in the foreign State in which the record is kept, and
authenticated by the seal of his office.
(g) Extradition. - The Philippines shall negotiate for the inclusion of money laundering
offenses as herein defined among extraditable offenses in all future treaties.
Republic v Glasgow Credit
Republic v Honorable Eugenio
People v Estrada
FOREIGN CURRENCY DEPOSIT ACT