2017 PRE-WEEK BAR LECTURE IN BANKING AND SPECIAL COMMERCIAL LAWS Documentary Credit, a codification of customs and usages

tion of customs and usages governing letter of credit prepared

by the International Chamber of Commerce. The Supreme Court has recognized the validity
Dean Nilo T. Divina and applicability of UCP in resolving issues and disputes relating to letter of credit.

Banking and Special Commercial Laws UCP binds the parties to an LC even though not it is not so stipulated in the LC

What is a letter of credit? Correspondent Bank of the Issuing bank in letter of credit

A letter of credit is any arrangement, however named or described, whereby a bank, acting The Advising/Notifying Bank
a.
upon the request of its client or on its own behalf, agrees to pay another against stipulated i. The advising bank determines the apparent authenticity of the letter of credit and
documents, provided that the terms of the credit are complied with. notifies the beneficiary of the l/c issuance.
ii. It does not guarantee the genuineness or due execution of the l/c. It is not liable for
Kinds of letter of credit damages even if the l/c turns out to be spurious provided the spurious character is
not apparent on the face of the instrument.
a. Confirmed -When the Letter of credit is guaranteed by adding payment confirmation by i. It has no obligation to pay the beneficiary unless it is also the paying or confirming
the advising bank or any third bank (Confirming Bank) on behalf of the opening bank, it is bank.
termed as a confirmed LC
b. Unconfirmed- when the letter of credit is not guaranteed by a confirming bank. b. The Confirming Bank
Confirmation can be added only to irrevocable and not to the revocable credits. i. The confirming bank lends credence to the lc issued by a lesser known bank as if it
were the one that issued the letter of credit.
The presence of a correspondent bank does not make the LC confirmed unless the bank ii. Its obligation is similar to the issuing bank. Thus, beneficiary may tender documents
expressly assumes the obligation of a confirming bank to the confirming bank and collect payment.
iii. The confirming bank collects fees for such engagement and obtains reimbursement
Under FRIA, issuers of letter of credit are not covered by commencement order issued by a from the issuing bank.
competent court
c. The Negotiating Bank
What laws govern letter of credit? i. The negotiating bank becomes a party to the l/c transaction after it buys the draft
drawn by the beneficiary and becomes the holder thereof.
A letter of credit is a commercial transaction. As such, it is governed by the Code of
Commerce. The Code of Commerce, nevertheless, provides that in the absence of applicable An advising bank may act as a negotiating bank independently of the LC arrangement.
laws governing commercial transactions, customs and usages shall be made to apply. Letter
of credit is thus now primarily governed by the Uniform Customs and Practices (UCP) for What do you understand by the Doctrine of Independence?

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By this doctrine, the relationships among: a) the issuing bank and the beneficiary; b ) the
issuing bank and the applicant; and, c ) the beneficiary and the applicant while interrelated
are separate, distinct and independent of one another.
Thus, in determining the obligation of the issuing bank to pay the beneficiary, the issuing bank
has no obligation to verify whether or not the main contract has been fulfilled or not. The
issuing bank is liable to pay the beneficiary upon the latter’s submission of the stipulated
documents and compliance with the terms of the credit regardless of any breach of contract
by the beneficiary to the applicant of the l/c. Conversely, the right of the issuing bank to
obtain reimbursement from the applicant of the l/c is not adversely affected by the non-
fulfillment by the beneficiary of its obligation to the applicant.
The doctrine is likewise applicable to standby letter of credit. In one case, the Supreme Court
ruled that in standby letter of credit issued to secure a loan obligation, any payment of the
debtor to the creditor should not be deducted from the total obligation of the issuing bank to
the beneficiary. The issuing bank, after payment of the full amount, is entitled to full
reimbursement from the debtor. But the debtor may recover excess payment from the
creditor to prevent unjust enrichment
The issuing bank should pay the beneficiary as long as it submits the stipulated documents
even though the applicant of the lc has already indicated that it will not reimburse the issuing
bank.
SMC accredited B as one its dealers authorized to sell SMC beer products. As required by
the terms of the dealership, B obtained a credit line from ABC Bank and that in case of
purchase by B from SMC, the latter may draw on the credit line and such drawdown shall
be considered loan availments on the part of B. The obligation of B under the dealership
agreement secured by a letter of credit issued by ABC Bank. B failed to pay certain purchase
orders. SMC filed an action for collection against B and ABC Bank. The Court rendered
judgment finding B solely liable to pay SMC and omitted by inadvertence to insert in its
decision the phrase “without prejudice to the decision that will be made against ABC, may
the Bank avoid responsibility on this ground?
No. The obligation of B to pay under its agreement with SMC is distinct and independent from
the right of SMC to draw on the letter of credit. Under the independence principle, the seller
or beneficiary is assured of prompt payment independent of any breach of the main contract
and precludes the issuing bank from determining whether the main contract is actually
fulfilled or not.
What is the Fraud Exception Principle?
The fraud exception principle is an exception to the doctrine of independence. Under the
fraud exception principle, the beneficiary may be enjoined from collecting on the letter of
credit if the following elements are present: a) there is fraud on the part of the beneficiary, b
) fraud must be in relation to the independent purpose or character of the credit, c ) unless
the beneficiary is restrained, the applicant shall suffer grave and irreparable injury. For the
fraud exception principle to serve as an exception to the doctrine of independence, the fraud
must not be in relation to the performance of the main contract but in relation to the
independent purpose or character of the credit.
What is the Doctrine of Strict Compliance?
Under this doctrine, the documents that the beneficiary should submit to the issuing bank or
confirming bank must strictly conform to the documents stipulated. If there is discrepancy,
the issuing bank is not liable to pay. If it pays despite discrepant documents, it pays at its own
risk and cannot obtain reimbursement from the applicant.
WAREHOUSE RECEIPTS LAW
What are the remedies available to the warehouseman to enforce his lien?
The remedies available to the warehouseman to enforce the lien are:
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 1. refuse to deliver the goods until his lien is satisfied;
2. to sell the goods and apply the proceeds to the value of the lien;
3. by other means allowed by law to a creditor against his debtor for the collection from
the depositor of all charges and advances which the debtor contracted with the
warehouseman; or such remedies allowed by law for the enforcement of a lien
against personal property.
TRUST RECEIPTS LAW
What is a Trust Receipt?
Trust receipt is a transaction between the entruster and the entrustee whereby the entruster
who owns or holds absolute title or security interest over certain goods, documents and
instruments, releases the same to the possession of the entrustee upon the latter’s execution
and delivery of a trust receipt wherein the entrustee binds himself to hold the designated
goods, documents and instruments in trust for the entruster and to sell or otherwise dispose
of the goods or instruments with the obligation to turn over to the entruster the proceeds
thereof to the extent of the amount owing to the entruster or to return them to the entruster
in case of non- sale.
Are all obligations of the entrustee criminal in nature?
No. only the failure of the entrustee to deliver the proceeds of the sale of the goods or
instruments subject of the trust receipt up to the extent of the amount owing to the entruster
or to return the goods. Such violation constitutes estafa. Under recent jurisprudence,
however, the penal sanction under the trust receipts law does not apply in case the goods are
not intended for sale or resale or to manufacture items intended for sale such as when they
are for actual use.
What is the effect of the loss or surrender by the entrustee or repossession by the entruster
of the goods under trust receipt?
The loss of the goods subject of the trust receipt regardless of the cause does not extinguish
the civil liability of the entrustee up the extent of the amount owing to the entruster.
When is a transaction considered a loan even though denominated as a trust receipt?
1. If the entrustee is already the owner or in possession of the goods before delivery of the
loan and execution of the trust receipt agreement, the transaction shall be considered a
simple loan even though the parties may have denominated the agreement as one of
trust receipt. To be in the nature of the trust receipt, the entruster should have financed
the acquisition or importation of the goods. The funds should have been delivered before
or simultaneously with delivery of the goods.
2. If the goods subject of the trust receipt are not intended for sale or resale
3. Sale of goods by a person in the business of selling goods, for profit, who at the outset of
the transaction has as against the buyer general property rights in such goods and the
seller agrees to hold the proceeds of the sale of such goods to his creditor under a
supposed trust receipt transaction.
D owns 100 sacks of rice which he sold to B. D obtained a loan from C secured by the
proceeds of sale of the rice from B which D agrees to hold in trust for C. D and C
denominated their transaction as one of trust receipt. Is such transaction a trust receipt
within the ambit of the trust receipt law?
No. There is no trust receipt, notwithstanding the label, if goods offered as security for loan
accommodation are goods owned and sold by the seller who, at the outset of the transaction,
has against the buyer general property rights over such goods.
Limitation the right of the entrustee as owner of the goods
The entrustee cannot mortgage the goods because one of the requisites of a valid mortgage
is that the mortgagor must be the absolute owner of the property mortgaged or must have
free disposal thereof. Entrustee is not the absolute owner of the goods under trust receipt
nor has free disposal thereof.
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The entruster likewise is not responsible as principal or vendor under any sale or contract to
sell made by the entrustee
Who has a better right over the goods subject of the trust receipt, the creditors of the
entrustee or the entruster?
What about between the entruster and the innocent purchaser for value?
The entruster’s security interest in the goods under trust receipt shall be valid as against all
creditors of the entrustee for the duration of the trust receipt agreement. Thus, the security
interest of the entruster over the goods under trust receipt is superior than the monetary
claims of the laborers of the entrustee.
The innocent purchaser for value of the goods sold by the entrustee has a better right than
the entruster. He acquires title to the goods free from the security interest of the entruster.
There is no criminal liability despite execution of a trust receipt agreement if the transaction
is not a trust receipt within the contemplation of the trust receipts law
Upon whom the does the law impose liability if the offender is a corporation?
If the violation or offense is committed by a corporation, the criminal liability shall be imposed
upon the directors, officers, employees or other officials or persons therein responsible for
the offense without prejudice to civil liabilities arising from the criminal offense.
The officer of the corporation who signed a trust receipt can not hide behind the cloak of the
separate legal personality of the corporation and can not avoid criminal prosecution even
though he had no physical possession of the goods nor benefitted from the trust receipt
transaction. The law makes him liable for such corporate act without prejudice to the civil
liability of the corporation and/or directors/officers responsible for the violation.
The director or officer of the corporation or an agent who signed the trust receipt in behalf of
the corporation shall be criminally liable but not civilly liable unless he assumes personal
liability.
What are the remedies available to the entruster in case of violation of the trust receipt
agreement ?
The remedies available to the entruster are:
1. File a criminal action for estafa in case of failure of the entrustee to deliver the
proceeds of the sale of the goods under trust receipt up to the extent of his obligation
to the entruster. The civil action may be instituted in the criminal action or separately
filed independently of the criminal action. The criminal action is based on ex-delictu
for violation of the law while the civil action is based on ex-contractu for violation of
the trust receipt agreement.
2. Cancel the trust and take possession of the goods at any time upon default of the
entrustee. After repossession, the entruster may sell the goods upon at least five day
notice to the entrustee and apply the proceeds in payment of the obligation. The
entrustee is liable for deficiency or entitled to excess, if any.
3. If a surety secures the obligation of the entrustee in addition to the trust receipt, the
law does not obligate the entruster to cancel the trust or take possession of the
goods. He can proceed against the surety. The options belong to the entruster
The New Central Bank Act
Bsp can buy and sell foreign currency as part of its mandate to promote and maintain
monetary stability
BSP may grant ordinary loans to banks by way of rediscounting facility and in case of
emergency as when a bank needs liquidity
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Does the court have the authority to appoint a receiver for a bank in financial distress?
The court has no authority to appoint a receiver for a bank if the latter will function as such
under the BSP law. The power to appoint belongs to BSP.
RTC has no power to place a bank under management committee even if the bank is in
imminent danger of dissipation of assets and serious paralyzation of business
Is the resolution of the BSP imposing sanctions against a bank for engaging in insurance
activities subject to declaratory relief?
No. It is not. Resolutions of the BSP in the exercise of its quasi-judicial function are not subject
to petition for declaratory relief.
What do you mean by the “Close now hear later“ doctrine ?
It is the rule that allows BSP to order the closure of the bank even without prior hearing. BSP
may rely on the report of either the conservator, receiver or the head of the supervising and
examining department. It is not required to conduct a thorough audit of the bank before
ordering its closure.
Does injunction lie against the authority of BSP to appoint a conservator/receiver or order
the closure of a bank?
No. The authority of BSP to place a bank under conservatorship, receivership or order its
closure is a valid exercise of police power. It is final and executory and not subject to
injunction. However, such orders are subject to judicial scrutiny. They may be set aside if they
were arbitrary and appear to have been issued with grave abuse of discretion
What are the requisites to assail the order of BSP appointing a receiver/conservator or
closing a bank?
The order of conservatorship (receivership or closure) may be assailed : a ) by the stockholders
representing at least majority of the outstanding capital stock; b ) within ten days from receipt
by the board of directors of the order; c ) thru a petition for certiorari with the Court of
Appeals on the ground that the action taken by BSP was in excess of jurisdiction or with grave
abuse of discretion as to amount to lack of jurisdiction
What is the legal tender power of notes and coins?
All notes and coins issued by BSP shall be fully guaranteed by the government and shall be
legal tender for all debts, both public and private. However, with respect to coins, they have
legal tender power only for the following amounts:
a. one peso coins and coins of higher peso value are legal tender for obligations not
exceeding P 1,000.
b. Twenty five cents and coins of lower value are legal tender for obligations not
exceeding P 100
Notes, regardless of denomination, are legal tender for any amount.
Coins which show signs of filing, clipping or perforation and notes which have lost more than
2/5s of their surface or all of the signatures inscribed therein shall be withdrawn from
circulation and demonetized without compensation to the bearer.
Are notes and coins withdrawn from circulation still legal tender?
Notes and coins called in for replacement shall remain legal tender for a period of one year
from date of call. After this period, they shall cease to be legal tender but during the following
year or such longer period as the MB may determine, they may be exchanged at par. After
expiration of this latter period, the notes and coins which have not been exchanged shall
cease to be the liability of the BSP
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LAW ON SECRECY OF PHILIPPINE CURRENCY BANK DEPOSITS (RA 1405)
What are the prohibited acts under RA 1405?
It shall be unlawful for any official or employee of a bank to disclose or allow the examination
or inquiry by any person other than those excepted by law any information concerning
Philippine currency bank deposits of whatever nature and kind, as well as investment in
government securities
Bank depositor can invoke the right to privacy of bank deposits in congressional and senate
hearings because one’s bank account is included in the zone of right to privacy
Who are covered by the prohibition?
If a legislator outside the halls of congress discloses information about bank deposit he
obtained from a bank teller, the former is not liable under RA 1405 but violates the right to
privacy of the depositor. During senate and congressional hearings, rights under RA 1405 are
available if invoked.
Ombudsman cannot examine bank accounts
AMLA cannot inquire into bank deposits unless there is bank inquiry order unless there is a
probable cause that the bank account relates to unlawful activity and the predicate crime is
HKTMAD
What are the items covered by the prohibition against unauthorized disclosure under RA
1405?
1. All Philippine currency bank deposits of whatever nature with banks, including investment
in bonds issued by the government of the Philippines, its political subdivisions and
instrumentalities.
Funds for safekeeping are not covered by RA 1405 but by the GBL.
Information relating to the Purchase by the bank client of a commercial bond coursed through
the bank is not covered by RA 1405 but by the Data privacy act
In what cases may information on Philippine currency bank deposits, as well as investment
in government securities, be disclosed, examined or looked into without violating the law?
1. in case of impeachment
The house committee on justice has no power to look into deposits of the public official
facing impeachment but only the senate once constituted into an impeachment court
2. in case of order of a competent court in any of the following cases :
i. where the subject matter of litigation is the money deposited
- BSBA vs Ong
ii. prosecution for unexplained wealth ( plunder is akin to unexplained wealth )
3. In case the law is repealed, superseded or modified by any law to the contrary.
May the bank disclose information about Philippine currency bank deposits pursuant to a
writ of garnishment?
The Bank may disclose information about Philippine currency bank deposits pursuant to a writ
of garnishment. The disclosure in this case is only incidental to the execution process. There
is nothing in the records of Congress that would show the intention of legislature to place
Philippine currency bank deposits beyond the reach of judgment creditor.
Foreign currency deposits, however, are exempt from garnishment or any court or
administrative process. However, the exemption of foreign currency deposits from court
order and administrative processes cannot be invoked in case of violation of the anti-money
laundering law, or if property or funds are related to financing of terrorism or acts of terrorism
or by a person who is not the owner of the FCDU account or against a co-owner of the account
or by a transient for any purpose contrary to that intended by law, which is to encourage
foreign currency deposits to beef up our international reserves.
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BSP can not look into deposits unless the purpose is to ensure compliance with the anti-
money laundering law
GENERAL BANKING ACT
What is a BANK?
A bank is an entity engaged in the lending of funds obtained from the public in the form of
deposits.
A transaction involving not a loan but purchase of receivables at a discount within the purview
of investing, reinvesting, or trading in securities which an investment company may perform
is not banking. What is prohibited is for investment company to lend funds obtained from the
public through receipts of deposit which is a banking function.
How are Banks classified?
1. universal bank or expanded commercial bank
2. commercial bank
3. thrift banks which is composed of savings and mortgage bank, stock savings and loan
association and private development bank
4. rural bank
5. cooperative bank
6. Islamic bank
7. Other banks as may be classified by the BSP
How do you distinguish banks from quasi-banks and trust entities?
A bank obtains funds from the public in the form of deposit while quasi-banks refer to entities
engaged in the borrowing of funds through the issuance, endorsement or assignment with
recourse or acceptance of deposit substitutes for purposes of relending or purchasing of
receivables. Only deposits are insured with PDIC. Funds obtained by quasi-bank and trust
entities are not insured with PDIC. Unlike deposits or funds obtained thru quasi-banking,
there is no creditor and debtor relationship in trust.
Distinguish universal bank from commercial bank.
Minimum capital for UB is 10b. Commercial bank 5b thrift bank 1b
UB may invest in the equity of allied and non allied undertaking a commercial bank can only
invest in the equity of allied undertaking.
What is the kind of diligence required of banks?
The 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. The highest degree
of diligence is based on the General Banking Law which requires of banks the highest
standards of integrity and performance.
Is stipulation on interest valid?
CB Circular 905 (1982) lifted the ceiling on interest rate. The Bank and its depositors are
therefore free to stipulate on the rate of interest for loans. Nevertheless, if the interest rate
is unconscionable, it may be nullified on grounds of equity.
If the parties agreed on the payment of interest but silent as to rate, the legal rate is 6%
regardless of the nature or kind of obligation breached.
BSP cannot be compelled by mandamus to restore ceiling on interest rate
What do you mean by risk based capital?
It means that the capital of the bank must be sufficient to withstand risks arising from bank
operations like granting of loans and investment in equity. The risk assets of a commercial
bank should not exceed 10% its capital.
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What do you mean by the single borrower’s limit?
Unless otherwise prescribed by the MB, the total amount of loans, credit accommodations
and guarantees that may be extended by a bank to a single borrower shall not exceed 25% of
the net worth of such bank. The amount may be increased by an additional 10% of the bank’s
net worth provided that the additional liabilities are adequately secured by documents of title
covering readily marketable and non-perishable goods.
What are the rules on loan values of properties offered to the bank as collateral or security
for loan accommodations?
Except as the Monetary Board may otherwise prescribe, loans and credit accommodations
against real estate shall not exceed 75% of the appraised value of the respective real estate
security plus 60% of the appraised value of the insured improvements while loans on the
security of chattels and intangible properties shall not exceed 75% of the appraised value of
the security.
The redemption period after extra-judicial foreclosure of REM is one year from registration of
the sale. However, the redemption period is reduced to three months from date of the sale
or registration of the sale, whichever comes earlier if the following elements are present:
1. Mortgagee is a bank, quasi bank or trust entity
2. Mortgagor is a juridical person
3. Mode of foreclosure is extra-judicial
The reduced redemption period does not violate the equal protection of the laws because the
classification is based on substantial distinction. Natural persons enjoy a longer redemption
period because what they mortgage are usually their family home.
The assignee of the mortgage is entitled to the reduced redemption period even though it is
not a bank because the former steps into the shoes of the bank and acquires similar rights
and privileges
There is no redemption after foreclosure of CHM
What are the rules governing transactions where DOSRI may incur contractual obligation
with their banks?
No director or officer of any bank shall, directly or indirectly, for himself or as the
representative or agent of others, borrow from such bank nor shall become a guarantor,
indorser or surety for loans from such bank to others, or in any be an obligor or incur any
contractual liability to the bank except with the written approval of at least majority of all the
directors of the bank excluding the director concerned. The required approval shall be
entered upon the records of the bank and a copy of such entry shall be transmitted forthwith
to the appropriate supervising and examining department of BSP.
The outstanding loans, credit accommodations and guarantees which a bank may extend to
the DOSRI shall be limited to an amount equivalent to their respective unencumbered
deposits and book value of their paid-in capital contribution to the Bank.
What is the nature of the loan that does not comply with the rules on DOSRI and/or Single
Borrower’s limit?
The loan transaction is valid but without prejudice to criminal prosecution against the erring
DOSRI.
ANTI-MONEY LAUNDERING LAW
(RA 9160, as amended by RA 10365)
What is the rationale of the law?
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.
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Who are the covered institutions/persons under the Anti-Money Laundering law? subject to the provisions of their respective codes of conduct and/or professional
responsibility or any of its amendments.”
1. Institutions supervised or regulated by BSP;
2. Institutions supervised and regulated by the Insurance Commission; and, What are the obligations of covered institutions/persons?
3. Entities dealing in currency, commodities or financial derivatives based thereon valuable
objects, cash substitutes and other similar monetary instruments or property supervised 1. Customer identification
and regulated by the Securities and Exchange Commission 2. Record keeping (records should be kept and safely stored for five years from date of
4. “(4) jewelry dealers in precious metals, who, as a business, trade in precious metals, for the transaction)
transactions in excess of One million pesos (P1,000,000.00); 3. Reporting of covered and suspicious transactions
5. “(5) jewelry dealers in precious stones, who, as a business, trade in precious stones, for
When is Money Laundering committed?
transactions in excess of One million pesos (P1,000,000.00);
6. “(6) company service providers which, as a business, provide any of the following services
Money laundering is a crime whereby the proceeds of an unlawful activity are transacted
to third parties: (i) acting as a formation agent of juridical persons; (ii) acting as (or
thereby making them appear to have originated from legitimate sources. It is committed by
arranging for another person to act as) a director or corporate secretary of a company, a
the following:
partner of a partnership, or a similar position in relation to other juridical persons; (iii)
providing a registered office, business address or accommodation, correspondence or
Money laundering is committed by any person who, knowing that any monetary instrument
administrative address for a company, a partnership or any other legal person or
or property represents, involves, or relates to the proceeds of any unlawful activity:
arrangement; and (iv) acting as (or arranging for another person to act as) a nominee
shareholder for another person; and “(a) transacts said monetary instrument or property;
7. “(7) persons who provide any of the following services:
(i) managing of client money, securities or other assets; “(b) converts, transfers, disposes of, moves, acquires, possesses or uses said monetary
(ii) management of bank, savings or securities accounts; instrument or property;
(iii) organization of contributions for the creation, operation or management of
companies; and “(c) conceals or disguises the true nature, source, location, disposition, movement or
(iv) creation, operation or management of juridical persons or arrangements, and ownership of or rights with respect to said monetary instrument or property;
buying and selling business entities.
“(d) attempts or conspires to commit money laundering offenses referred to in
“Notwithstanding the foregoing, the term ‘covered persons’ shall exclude lawyers and paragraphs (a), (b) or (c);
accountants acting as independent legal professionals in relation to information
concerning their clients or where disclosure of information would compromise client “(e) aids, abets, assists in or counsels the commission of the money laundering offenses
confidences or the attorney-client relationship: Provided, That these lawyers and referred to in paragraphs (a), (b) or (c) above; and
accountants are authorized to practice in the Philippines and shall continue to be
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 “(f) performs or fails to perform any act as a result of which he facilitates the offense of Probable cause must be SEPARATELY established to justify inquiry into accounts materially
money laundering referred to in paragraphs (a), (b) or (c) above. linked to the primary account,

Money laundering is also committed by any covered person who, knowing that a covered or The issuance of a bank inquiry order does not violate the constitutional right to privacy of the
suspicious transaction is required under this Act to be reported to the Anti-Money Laundering account holder because the right to secrecy of bank deposits is not constitutional but only
Council (AMLC), fails to do so.” statutory and statute may carve out the exceptions to the prohibition against unauthorized
disclosure of bank deposits.
What is the principal government agency tasked to implement the anti-money laundering
laws?
CONGRATULATIONS IN ADVANCE PANEROS AND PANERAS
The government body tasked to carry out the implementation of the Anti-Money Laundering
law is the Anti-Money Laundering Council. It is authorized to impose administrative sanctions
for the violation of the law, rules and regulations issued pursuant to the Anti-money
laundering law.

It may freeze monetary instrument or property alleged to be the proceeds of unlawful activity
upon approval of the court.

It is also authorized to inquire into bank funds, deposits or investments, regardless of currency
but it needs a bank inquiry order. The AMLC shall apply for a bank inquiry order with any
competent court. Such competent court is the RTC and the Court of Appeals

A bank inquiry and freeze order may be granted even without notice to the account holder.

The ex-parte application for the issuance of a bank inquiry order does not violate procedural
due process because the AMLC must establish the existence of probable cause that the
account relates to unlawful activity and the Court of Appeals must independently determine
the existence of probable cause that the account relates to unlawful activity before it issues
the bank inquiry order.

It does not violate substantive due process because the issuance of bank inquiry order does
not prevent the depositor from making withdrawals of his deposit.

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