MONDAY

2016-2020

CASE DOCTRI NE S I N
BANKI NG L AWS
BANKING 2E-1
ATTY. EFREN VINCENT M. DIZON
SAN BEDA COLLEGE ALABANG
SCHOOL OF LAW

THURSDAY NOTES
TABLE OF CONTENTS

Nature of Banking Business

Diligence Required of Banks
Impressed with Public Interest
Fiduciary Duty
Indispensable Institution
Dealing with Registered Lands
Powers and Liabilities of Banks
Loan Functions of Banks
Other Functions of Banks
Secrecy of Bank Transactions
Nature of Funds or Deposits
Philippine Deposit Insurance Corporation
Anti-Money Laundering Act
Jurisdiction and Prosecution
Authority to Inquire Into Bank Deposits
Anti-Money Laundering Council
 Nature of Banking Business
D I L I G E N C E R E Q U I R E D O F B A N K S

UNIVERSITY OF MINDANAO, INC. VS. BANGKO SENTRAL NG PILIPINAS

G.R. NOS. 194964-65 | JANUARY 11, 2016

LEONEN, J.
Banks are required to exercise the highest degree of diligence in their transactions.—The banking

institution is “impressed with public interest” such that the public’s faith is “of paramount importance.”

Thus, banks are required to exercise the highest degree of diligence in their transactions. In China

Banking Corporation v. Lagon, 494 SCRA 560 (2006), this court found that the bank was not a

mortgagee in good faith for its failure to question the due execution of a Special Power of Attorney that

was presented to it in relation to a mortgage contract. This court said: Though petitioner is not expected

to conduct an exhaustive investigation on the history of the mortgagor’s title, it cannot be excused from

the duty of exercising the due diligence required of a banking institution. Banks are expected to exercise

more care and prudence than private individuals in their dealings, even those that involve registered

lands, for their business is affected with public interest.

PHILIPPINE SAVINGS BANK VS. BARRERA

G.R. NO. 197393 | JUNE 15, 2016

SERENO, C.J.

The degree of responsibility, care and trustworthiness expected of bank officials and employees is, by

the very nature of their work, far greater than that of ordinary officers and employees in other business

firms. Hence, no effort must be spared by banks and their officers and employees to ensure and preserve

the trust and confidence of their clients and the general public, as well as the integrity of bank records.

GUMABON VS. PHILIPPINE NATIONAL BANK

G.R. NO. 202514 | JULY 25, 2016
BRION, J.
To discharge a debt, the bank must pay to someone authorized to receive the payment. A bank acts at

its peril when it pays deposits evidenced by a certificate of deposit, without its production and surrender

after proper indorsement.

PHILIPPINE NATIONAL BANK VS. RAYMUNDO

G.R. NO. 208672 | DECEMBER 7, 2016

PERALTA, J.

Gross Negligence; A bank’s disregard of its own banking policy amounts to gross negligence, which is

described as “negligence characterized by the want of even slight care, acting or omitting to act in a

situation where there is duty to act, not inadvertently but willfully and unintentionally with a conscious

indifference to consequences insofar as other persons may be affected.

 Nature of Banking Business
D I L I G E N C E R E Q U I R E D O F B A N K S

DRA. MERCEDES OLIVER VS. PHILIPPINE SAVINGS BANK

G.R. NO. 214567 | APRIL 4, 2016

MENDOZA, J.

In the case of banks, the degree of diligence required is more than that of a good father of a family.—In

the case of banks, the degree of diligence required is more than that of a good father of a family.

Considering the fiduciary nature of their relationship with their depositors, banks are duty-bound to

treat the accounts of their clients with the highest degree of care. The point is that as a business

affected with public interest and because of the nature of its functions, the bank is under obligation to

treat the accounts of its depositors with meticulous care, always having in mind the fiduciary nature of

their relationship.

LAND BANK OF THE PHILIPPINES VS. LORENZO MUSNI

G.R. NO. 206343 | FEBRUARY 22, 2017

LEONEN, J.

Banks must show that they exercised the required due diligence before claiming to be mortgagees in

good faith or innocent purchasers for value. Primarily, it bears noting that the doctrine of "mortgagee in

good faith" is based on the rule that all persons dealing with property covered by a Torrens Certificate

of Title are not required to go beyond what appears on the face of the title. This is in deference to the

public interest in upholding the indefeasibility of a certificate of title as evidence of lawful ownership of

the land or of any encumbrance thereon. In the case of banks and other financial institutions, however,

greater care and due diligence are required since they are imbued with public interest, failing which

renders the mortgagees in bad faith. Thus, before approving a loan application, it is a standard

operating practice for these institutions to conduct an ocular inspection of the property offered for

mortgage and to verify the genuineness of the title to determine the real owner(s) thereof. The

apparent purpose of an ocular inspection is to protect the "true owner" of the property as well as

innocent third parties with a right, interest or claim thereon from a usurper who may have acquired a

fraudulent certificate of title thereto.

BDO UNIBANK VS. CONCEPCION CRUZ

G.R. NO. 229465 | MARCH 22, 2017

NOTICE

This Court has, time and again, emphasized that since their business and industry are imbued with

public interest, banks are required to exercise extraordinary diligence, which is more than that of a

Roman paterfamilias or a good father of a family, in handling their transactions. Accordingly, banks are

expected to ensure that the depositor's funds shall only be given to him or his authorized representative.

Thus, as standard banking practice intended precisely to prevent unauthorized and fraudulent

withdrawals, banks should verify with the client-depositor to authenticate and confirm that he or she

has validly authorized such withdrawal.

 Nature of Banking Business
D I L I G E N C E R E Q U I R E D O F B A N K S

AMANDO TETANGCO JR. VS. COMMISSION ON AUDIT

G.R. NO. 215061 | JUNE 6, 2017

TIJAM, J.

It must be emphasized that the degree of diligence required from bank employees and officials is not

ordinary but requires the highest standards of integrity and performance. Banks handle daily

transactions involving millions of pesos. By the very nature of their work the degree of responsibility, care

and trustworthiness expected of their employees and officials is far greater than those of ordinary clerks

and employees. For obvious reasons, the banks are expected to exercise the highest degree of

diligence in the selection and supervision of their employees integrity and performance.

SANTAMARIA VS. EQUITABLE PCI-BANK

G.R. NO. 229540 | SEPTEMBER 6, 2017

NOTICE

Article 1173 of the Civil Code defines negligence as the "omission of that diligence which is required by

the nature of the obligation and corresponds with the circumstances of the persons, of the time and of

the place." This definition is reflected in jurisprudence where negligence is described as the failure to

observe, for the protection of the interest of another person, that degree of care, precaution and

vigilance which the circumstances reasonably impose. In the case of banking institutions, the diligence

required is more than that of the Roman bonos pater familias or a good father of a family. The

observance of the highest degree of diligence is expected of banks under Sec. 2 of Republic Act No.

8791, also known as the General Banking Law of 2000.

DE PERALTA VS. PCIB

G.R. NO. 184440 | JULY 3, 2017

NOTICE

These were negligent acts which were, however, not enough to hold petitioners liable. The petitioners

nevertheless contributed to Philippine Commercial International Bank's loss. "Banks are expected to

exercise the highest degree of diligence in the selection and supervision of their employees." Hence,

Philippine Commercial International Bank could not be faulted for dismissing its negligent employees.
 Nature of Banking Business
I M P R E S S E D W I T H P U B L I C

I N T E R E S T

GUMABON VS. PHILIPPINE NATIONAL BANK

G.R. NO. 202514 | JULY 25, 2016

BRION, J.

Section 2 of Republic Act No. 8791, declares the State’s recognition of the “fiduciary nature of banking

that requires high standards of integrity and performance.” It cannot be overemphasized that the

banking business is impressed with public interest. The trust and confidence of the public to the industry

is given utmost importance. Thus, the bank is under obligation to treat its depositor’s accounts with

meticulous care, having in mind the nature of their relationship. The bank is required to assume a degree

of diligence higher than that of a good father of a family.

PHILIPPINE NATIONAL BANK VS. RAYMUNDO

G.R. NO. 208672 | DECEMBER 7, 2016

PERALTA, J.

Since their business and industry are imbued with public interest, banks are required to exercise

extraordinary diligence, which is more than that of a Roman paterfamilias or a good father of a family, in

handling their transactions. Banks are also expected to exercise the highest degree of diligence in the

selection and supervision of their employees. By the very nature of their work in handling millions of pesos

in daily transactions, the degree of responsibility, care and trustworthiness expected of bank employees

and officials is far greater than those of ordinary clerks and employees.

UNIVERSITY OF MINDANAO INC. VS. BANGKO SENTRAL NG

PILIPINAS, ET AL.,
G.R. NOS. 194964-65 | JANUARY 11, 2016
LEONEN, J.

Though petitioner is not expected to conduct an exhaustive investigation on the history of the

mortgagor’s title, it cannot be excused from the duty of exercising the due diligence required of a

banking institution. Banks are expected to exercise more care and prudence than private individuals in

their dealings, even those that involve registered lands, for their business is affected with public interest.

SPOUSES CHUA V. UCPB

G.R. NO. 215999 | AUGUST 16, 2017

BERSAMIN, J.
As such, UCPB's actual knowledge of the deeds of trust became undeniable. In addition, UCPB, being a banking

institution whose business was imbued with public interest, was expected to exercise much greater care and due

diligence in its dealings with the public. Any failure on its part to exercise such degree of caution and diligence

would invariably stigmatize its dealings with bad faith. It should be customary and prudent for UCPB, therefore, to

adopt certain standard operating procedures to ascertain and verify the genuineness of the titles to determine

the real ownership of real properties involved in its dealings, particularly in scrutinizing and approving loan

applications. By approving the loan application of Revere obviously without making prior verification of the

mortgaged properties' real owners, UCPB became a mortgagee in bad faith.

 Nature of Banking Business
F I D U C I A R Y D U T Y

DRA. MERCEDES OLIVER VS. PHILIPPINE SAVINGS BANK

G.R. NO. 214567 | APRIL 4, 2016

MENDOZA, J.

That “[o]rdinarily, banks allow withdrawal by someone who is not the account holder so long as the

account holder authorizes his representative to withdraw and receive from his account by signing on the

space provided particularly for such transactions, usually found at the back of withdrawal slips.” There,

the bank violated its fiduciary duty because it allowed a withdrawal by a representative even though the

authorization portion of the withdrawal slip was not signed by the depositor.

REDENTOR CATAPANG AND CASIANA CATAPANG

GARBIN, PETITIONERS, VS. LIPA BANK, RESPONDENT
GR NO. 240645 | JANUARY 27, 2020
CAGUIOA, J.

The banking industry is one impressed with great public interest as it affects economies and plays a

significant role in businesses and commerce. Hence, [t]he public reposes its faith and confidence upon

banks, such that 'even the humble wage-earner has not hesitated to entrust his life's savings to the bank

of his choice, knowing that they will be safe in its custody and will even earn some interest for him. This is

the reason why the fiduciary nature of the banks' functions is well-entrenched in jurisprudence. The

law allows the grant of exemplary damages by way of example for the public good. The public relies on

the banks' sworn profession of diligence and meticulousness in giving irreproachable service. The level of

meticulousness must be maintained at all times by the banking sector.

 Nature of Banking Business
I N D I S P E N S A B L E I N S T I T U T I O N

MUNICIPAL RURAL BANK OF LIBMANAN VS. ORDOÑEZ

G.R. NO. 204663 | SEPTEMBER 27, 2017

PERALTA, J.

This Court has never failed to stress the remarkable significance of a banking institution to commercial

transactions, in particular, and to the country's economy in general. The banking system is an

indispensable institution in the modern world and plays a vital role in the economic life of every civilized

nation. Whether as mere passive entities for the safekeeping and saving of money or as active

instruments of business and commerce, banks have become an ubiquitous presence among the people,

who have come to regard them with respect and even gratitude and, most of all, confidence.

Consequently, the highest degree of diligence is expected, and high standards of integrity and

performance are even required of it.

 Nature of Banking Business
D E A L I N G W I T H R E G I S T E R E D

L A N D S

JOSEPH HARRY WALTER POOLE-BLUNDEN VS. UNION BANK OF

THE PHILIPPINES
G.R. NO. 205838 | NOVEMBER 29, 2017
LEONEN, J.

Banks are required to observe a high degree of diligence in their affairs. This encompasses their

dealings concerning properties offered as security for loans. A bank that wrongly advertises the area

of a property acquired through foreclosure because it failed to dutifully ascertain the property's

specifications is grossly negligent as to practically be in bad faith in offering that property to

prospective buyers. Any sale made on this account is voidable for causal fraud. In actions to void such

sales, banks cannot hide under the defense that a sale was made on an as-is-where-is basis. As-is-

where-is stipulations can only encompass physical features that are readily perceptible by an ordinary

person possessing no specialized skills. Credit investigations are standard practice for banks before

approving loans and admitting properties offered as security. It entails the assessment of such

properties: an appraisal of their value, an examination of their condition, a verification of the

authenticity of their title, and an investigation into their real owners and actual possessors. Whether it

was unaware of the unit's actual interior area; or, knew of it, but wrongly thought that its area should

include common spaces, respondent's predicament demonstrates how it failed to exercise utmost

diligence in investigating the Unit offered as security before accepting it. This negligence is so

inexcusable; it is tantamount to bad faith.

BPI VS. BENTLEY HOUSE FURNITURE

G.R. NO. 194509 | AUGUST 23, 2017

NOTICE

The concept of mortgagee in good faith is derived from the rule that whoever deals with property

covered by a Torrens certificate of title need not go beyond what appears on the face of the title.

This in effect gives meaning to the indefeasibility of the Torrens certificate of title as evidence of

lawful ownership of the land or of any encumbrance thereon. Nonetheless, the rule admits of

exceptions such as in the case of banks and other financial institutions because much greater care

and due diligence are required of them because their business has been imbued with public interest.

Any failure on their part to exercise caution and due diligence turns them into mortgagees in bad

faith. It is customary as well as prudent for them to exercise due diligence and caution as well as to

adopt certain standard operating procedures like conducting ocular inspections of the properties

offered for mortgage and verifying the genuineness of the certificates of title to determine the real

owners thereof before approving loan applications.

 Powers and Liabilities of Banks

INTERNATIONAL EXCHANGE BANK, NOW, UNION BANK

OF THE PHILIPPINES VS. SPOUSES BRIONES
G.R. NO. 205657 | MARCH 29, 2017
LEONEN, J.

In a contract of agency, "a person binds himself to render some service or to do something in

representation or on behalf of another, with the consent or authority of the latter." Furthermore,

Article 1884 of the Civil Code provides that "the agent is bound by his acceptance to carry out the

agency, and is liable for the damages which, through his non-performance, the principal may

suffer." All the elements of agency exist in this case. Under the promissory note with chattel

mortgage, Spouses Briones appointed iBank as their attorney-in-fact, authorizing it to file a claim

with the insurance company if the mortgaged vehicle was lost or damaged. Petitioner was also

authorized to collect the insurance proceeds as the beneficiary of the insurance policy. Having been

negligent in its duties as the duly constituted agent, petitioner must be held liable for the damages

suffered by the Spouses Briones because of non- performance of its obligation as the agent, and

because it prioritized its interests over that of its principal.

PARADIGM DEVELOPMENT CORPORATION OF

THE PHILIPPINES VS. BPI
G.R. NO. 191174 | JUNE 7, 2017
REYES, J.

Indeed, FEBTC's failure to comply with its contractual obligation to send notice to PDCP of the

foreclosure sale is fatal to the validity of the foreclosure proceedings. While personal notice to the

mortgagor in extrajudicial foreclosure proceedings is not necessary, this holds true only if the parties

did not stipulate therefor. Stated differently, personal notice is necessary if the parties so agreed in

their mortgage contract. This provision clearly establishes the agreement between the parties that

personal notice is required before FEBTC may proceed with the foreclosure of the property and

thus, FEBTC's act of proceeding with the foreclosure despite the absence of personal notice to the

mortgagor was its own lookout. That the portion on the mortgagor's address was left in blank cannot

be simply swept under the rug as "an expression of general intent" that cannot prevail of the parties'

specific intent not to require personal notice. Apart from the fact that this reasoning is based on a

questionable doctrine, the CA's ruling completely ignored the fact that the mortgage contract

containing said stipulation was a standard contract prepared by FEBTC itself. If the latter did not

intend to require personal notice, on top of the statutory requirements of posting and publication,

then said provision should not have at all been included in the mortgage contract. In other words,

the REMs in this case are contracts of adhesion, and in case of doubt, the doubt should be resolved

against the party who prepared it.

 Powers and Liabilities of Banks

BORLONGAN VS. BANCO DE ORO

G.R. NO. 21761 | APRIL 5, 2017

VELASCO, JR., J.

At the outset, it must be pointed out that the subject property was never mortgaged to, much less

foreclosed by, the respondent bank. Thus, it was error for the CA to refer to the subject property as

"foreclosed property." Rather, as disclosed by the records, the possession of the subject property was

acquired by BDO through attachment and later by execution sale. However, it is presumptive to state

that the right of BDO over the possession of the subject property is now absolute considering that

there is an action that questions the validity of the bank's acquisition over the same property. The

respondent appellate court's emphasis on the failure of the petitioner to redeem the properties within

the period required by law is misplaced because redemption, in this case, is inconsistent with the

petitioner's claim of invalidity of levy and sale. Redemption is an implied admission of the regularity of

the sale and would estop the petitioner from later impugning its validity on that ground. Thus, even

given the expiration of the redemption period, a TRO and/or WPI is still obtainable and warranted

where the validity of the acquisition of the possession is afflicted by Constitutional and procedural

infirmities.

BDO UNIBANK, INC. V. LAO

G.R. NO. 227005 | JUNE 19, 2017

MENDOZA, J.

The Court agrees with the appellate court that in cases of unauthorized payment of checks to a

person other than the payee named therein, the drawee bank may be held liable to the drawer. The

drawee bank, in turn, may seek reimbursement from the collecting bank for the amount of the check.

This rule on the sequence of recovery in case of unauthorized check transactions had already been

deeply embedded in jurisprudence.The liability of the drawee bank is based on its contract with the

drawer and its duty to charge to the latter's accounts only those payables authorized by him. A

drawee bank is under strict liability to pay the check only to the payee or to the payee's order. When

the drawee bank pays a person other than the payee named in the check, it does not comply with the

terms of the check and violates its duty to charge the drawer's account only for properly payable

items.
 Powers and Liabilities of Banks

VIRATA V. WEE

G.R. NO. 220926 | JULY 5, 2017

VELASCO, JR., J.

The Omnibus Rules and Regulations for Investment Houses and Universal Banks Registered as

Underwriters defines "quasi-banking function" as the function of "borrowing funds for the borrower's

own account from 20 or more persons or corporate lenders at any one time, through the issuance,

endorsement or acceptance of debt instruments of any kind other than deposits which may include

but need not be limited to acceptances, promissory notes, participations, certificates of assignment

or similar instruments with recourse, trust certificates or of repurchase agreements for purposes of

relending or purchasing of receivables and other obligations." Given the definition, it would appear

on paper that offering the "sans recourse" transactions does not qualify as the performance of a

quasi-banking function specifically because it is "sans recourse" against Wincorp.

GUMABON VS. PHILIPPINE NATIONAL BANK

G.R. NO. 202514 | JULY 25, 2016

BRION,J.

The bank is not absolved from liability by the fact that it was the bank’s employee who committed the

wrong and caused damage to the depositor. Article 2180 of the New Civil Code provides that the

owners and managers of an establishment are responsible for damages caused by their employees

while performing their functions

DRA. MERCEDES OLIVER VS. PHILIPPINE SAVINGS BANK

G.R. NO. 214657 | APRIL 04, 2016

MENDOZA, J.

The bank is expected to ensure that the depositor’s funds shall only be given to him or his authorized

representative.— the usual banking procedure was that withdrawals of savings deposits could only be

made by persons whose authorized signatures were in the signature cards on file with the bank. In

the said case, the bank therein allowed an unauthorized person to withdraw from its depositor’s

savings account, thus, it failed to exercise the required diligence of banks and must be held liable.
 Powers and Liabilities of Banks
BANK OF THE PHILIPPINE ISLANDS VS. LAND INVESTORS AND
DEVELOPERS CORPORATION
G.R. NO. 198237 | OCTOBER 08, 2018
TIJAM, J.

A bank that fails to comply with its obligation to secure accounts by allowing only those withdrawals

authorized by its depositor is guilty of negligence It is basic that those who, in the performance of

their obligations, are guilty of negligence, and those who in any manner contravene the tenor thereof,

are liable for damages. When BPI allowed Dela Peña to make unauthorized withdrawals, it failed to

comply with its obligation to secure said accounts by allowing only those withdrawals authorized by

respondent. In so doing, BPI violated the terms of its contract of loan with respondent and should be

held liable in this regard.

BANGKO SENTRAL NG PILIPINAS AND ITS MONETARY BOARD V. BANCO

FILIPINO SAVINGS AND MORTGAGE BANK
G.R. NO. 178696 | JULY 30, 2018
LEONARDO-DE CASTRO, J.

The passage of RA 7653, the New Central Bank Act, does not toll the prescription for actions. There

was no vacuum created with the passage of R.A. 7653 that would render Banco Filipino uncertain as

against whom it can enforce its rights. All powers, duties and functions vested by law in the Central

Bank of the Philippines were deemed transferred to the BSP. The law provides that all references to

the Central Bank of the Philippines in any law or special charters shall be deemed to refer to the BSP.

Further, R.A. 7653 states that any asset or liability of the Central Bank not transferred to the Bangko

Sentral shall be retained and administered, disposed of and liquidated by the Central Bank itself

which shall continue to exist as the CB Board of Liquidators or CB-BOL. In other words, the entities

where the assets and liabilities of the Central Bank have been transferred are readily identifiable.

BANK OF THE PHILIPPINE ISLANDS VS. SPS. QUIAOIT

G.R. NO. 199562 | JANUARY 16, 2019

CARPIO, J.

Under the General Banking Act of 2000 demands of banks the highest standards of integrity and

performance. The Court ruled that banks are under obligation to treat the accounts of their

depositors with meticulous care. The Court ruled that the bank’s compliance with this degree of

diligence has to be determined in accordance with the particular circumstances of each case.
 Powers and Liabilities of Banks

BANGKO SENTRAL NG PILIPNAS V. SPOUSES LEDESMA

G.R. NOS. 211176 & 211583 | FEBRUARY 6, 2019

LEONEN, J.

In a case involving the restitution for losses suffered in sugar farming operations due to the actions of

government-owned and controlled agencies, lending banks, such as the PNB, are not obligated to

compensate sugar producers for their losses. Restitution falls under the BSP, upon the establishment

of a sugar restitution fund. The BSP cannot effect the restitution since neither the PCGG nor other

government agencies have turned over funds to it for the sugar producer’s compensation.

PHILIPPINE BANK OF COMMUNICATIONS, PETITIONER, V. THE

REGISTER OF DEEDS FOR THE PROVINCE OF BENGUET, RESPONDENT
GR. NO. 22295 | MARCH 11, 2020
CAGUIOA, J.

PBCOM is a bank and is thus bound to comply with Section 51 of Republic Act No. (R.A.) 8791 or the

"General Banking Law." Any real property acquired or held under the circumstances enumerated in

the cited provision shall be disposed of by the bank within a period of five (5) years or as may be

prescribed by the Monetary Board: Provided, however, That the bank may, after said period, continue

to hold the property for its own use, subject to the limitations of the preceding Section. PBCOM

would be left with no other remedy under the law to exercise full ownership rights over its own

property if res judicata was applied. PBCOM, as the undisputed registered owner of the land

covered by TCT No. 21320 on file with the Register of Deeds, cannot be barred by res judicata from

filing a second petition to replace its owner's duplicate certificate of title in case of loss or

destruction of the original duplicate. Upholding the applicability of res judicata in the instant case

would not only perpetually prevent PBCOM from registering any voluntary transaction over the parcel

of land, but also perpetually prevent it from complying with its obligations under the General Banking

Law. This interpretation is absurd.

 Powers and Liabilities of Banks

STAR CITY PTY LIMITED, REPRESENTED BY THE JIMENO COPE & DAVID
LAW OFFICES AS ITS ATTORNEY-IN-FACT, PETITIONER, V. QUINTIN
ARTACHO LLORENTE AND EQUITABLE PCI BANK (NOW BDO UNIBANK, INC.)
GR. 212216 | JANUARY 15, 2020
CAGUIOA, J.

A draft in the law of bills and notes is a "drawing" and has been defined as an open letter of request

from, and an order by, one person on another to pay a sum of money therein mentioned to a third

person on demand or at a future time specified therein. A draft is a bill of exchange, and the term

"draft" is commonly employed as a synonym for the words "bill of exchange" or "check," although it

cannot be the latter if it lacks the requirements of a check as distinguished from other bills of

exchange. Banks are perhaps the greatest users of drafts, and they sell them to persons who desire to

transmit funds. Thus a draft has been defined as a check drawn by a bank, the only distinguishing

feature between a draft and an ordinary check being the character of the drawer.

The instrument which is usually denominated a "bank draft" is in the customary form of a check and is

generally drawn by one bank upon another bank in which it has deposits much the same as the

ordinary depositor draws his check upon his bank. The general rule is that such instrument is a check

and subject to the rules applicable to checks. Since the term check is limited to a demand instrument

and "draft" is not [as it may be payable on demand or at a fixed or determinable future time, there is

a distinction between the two in this respect. In its usual form a draft is a negotiable instrument.

The liability of EPCIB as the drawer cannot be abrogated by virtue of the Indemnity Agreement

because it arises from the subject demand/bank drafts, which are negotiable instruments that it

issued. Its secondary liability under Section 61 of the NIL became primary when the payment of the

subject demand/bank drafts had been stopped which had the same effect as if the instruments had

been dishonored and notice thereof was given to the drawer pursuant to Section 84 of the NIL. Given

the nature of the liability of the drawer of a negotiable instrument, EPCIB's argument that it is not

liable to SCPL because they have no private of contract is utterly without merit.
 Loan Functions of Banks
COMMISSIONER OF INTERNAL REVENUE vs. PHILIPPINE
NATIONAL BANK
G.R. NO. 212699 | MARCH 13, 2019
REYES, JR., J.

Interbank Call Loans; An interbank call loan refers to the cost of borrowings from other resident banks

and nonbank financial institutions with quasi-banking authority that is payable on call or demand.— an

interbank call loan is considered as a deposit substitute transaction by a bank performing quasi-banking

functions to cover reserve deficiencies. It does not fall under the definition of a loan agreement. Even if

it does, the DST liability under Section 180, supra, will only attach if the loan agreement was signed

abroad but the object of the contract is located or used in the Philippines, which was not the case in

regard to PNB’s interbank call loans.

PRUDENTIAL BANK (NOW BANK OF THE A ISLANDS) V. RONALD

RAP ANOT
G.R. NO. 191636 | JANUARY 16, 2017
CAGUI OA, J.

In loan transactions, banks have the particular obligation of ensuring that clients comply with all the

documentary requirements pertaining to the approval of their loan applications and the subsequent

release of their proceeds. In granting the loan, petitioner bank should not have been content merely with

a clean title, considering the presence of circumstances indicating the need for a thorough investigation

of the existence of buyers like respondent. Having been wanting in care and prudence, the latter cannot

be deemed to be an innocent mortgagee. Petitioner cannot claim to be a mortgagee in good faith.

Indeed it was negligent, as found by the Office of the President and by the CA. Petitioner should not

have relied only on the representation of the mortgagor that the latter had secured all requisite permits

and licenses from the government agencies concerned. The former should have required the submission

of certified true copies of those documents and verified their authenticity through its own independent

effort. Having been negligent in finding out what respondent's rights were over the lot, petitioner must be

deemed to possess constructive knowledge of those rights.

MANUEL UBAS V. WILSON CHAN

G.R. NO. 215910 | FEBRUARY 6, 2017

PERLAS-BERNABE, J.

Jurisprudence holds that "in a suit for a recovery of sum of money, as here, the plaintiff-creditor

[(petitioner in this case)] has the burden of proof to show that defendant [(respondent in this case)] had

not paid [him] the amount of the contracted loan. However, it has also been long established that where

the plaintiff-creditor possesses and submits in evidence an instrument showing the indebtedness, a

presumption that the credit has not been satis ed arises in [his] favor. Thus, the defendant is, in

appropriate instances, required to overcome the said presumption and present evidence to prove the

fact of payment so that no judgment will be entered against him."

 Loan Functions of Banks
REPUBLIC OF THE PHILIPPINES REPRESENTED BY THE NATIONAL
IRRIGATION ADMINISTRATION V. ROLANDO CEBUAN
G.R. NO. 206702 | JUNE 7, 2017
TIJAM, J.

By recent jurisprudence, it has been settled that the payment of just compensation for the

expropriated property amounts to an effective forbearance on the part of the State. In the instant

case, the interest is to be imposed only on the balance of the final just compensation ,i.e., just

compensation as computed by the RTC (sans the award for unrealized income) less the amount of the

provisional compensation. Since NIA's initial valuation had been contested, and it has been

subsequently determined that the expropriated properties had been undervalued, an interest on the

balance or the difference between the amount already paid and the just compensation as determined

by the RTC, is proper. While the debt incurred by the government on account of the taking of the

property subject of an expropriation constitutes a forbearance, nevertheless, in line with the recent

circular of the Monetary Board of the Bangko Sentral ng Pilipinas (BSP-MB) No. 799, Series of 2013,

effective July 1, 2013, the prevailing rate of interest for loans or forbearance of money is six percent

(6%) per annum (p.a.), in the absence of an express contract as to such rate of interest. Accordingly,

the interest rate of 12% p.a. should be imposed on the balance due from the date of the taking.

SPOUSES VILLALUZ V. LANDBANK OF THE PHILIPPINES

G.R. NO. 192602 | JANUARY 18, 2017

JARDELEZA, J.

Although the validity of the Real Estate Mortgage is dependent upon the validity of the loan,27 what is

essential is that the loan contract intended to be secured is actually perfected, 28 not at the time of

the execution of the mortgage contract vis-à-vis the loan contract. In loan transactions, it is customary

for the lender to require the borrower to execute the security contracts prior to initial drawdown. This

is understandable since a prudent lender would not want to release its funds without the security

agreements in place. On the other hand, the borrower would not be prejudiced by mere execution of

the security contract, because unless the loan proceeds are delivered, the obligations under the

security contract will not arise. 29 In other words, the security contract — in this case, the Real Estate

Mortgage — is conditioned upon the release of the loan amount. This suspensive condition was satis

ed when Land Bank released the first tranche of the P3,000,000 loan to Mil ores Cooperative on June

25, 1996, which consequently gave rise to the Spouses Villaluz's obligations under the Real Estate

Mortgage.
 Loan Functions of Banks
BPI FAMILY SAVINGS BANK V. DALES

G.R. NO. 231555 | AUGUST 23, 2017

PERLAS-BERNABE, J.

In the event of a judicial or extrajudicial foreclosure of any mortgage on real estate that issued as a

security for an obligation to any bank, banking institution or credit institution, the mortgagor can

redeem the property by paying the amount fixed by the court in the order of execution, with interest at

the rate specified in the mortgage. Thus, BPI's contention that the redemption price should be based

on the total amount of indebtedness, which includes other charges and interests, finds no support.
 Other Functions of Banks
F O R E C L O S U R E O F R E A L E S T A T E M O R T G A G E

PANACAN LUMBER CO., ET AL. VS. SOLIDBANK CORP.

G.R. NO. 226272 | SEPTEMBER 16, 2020

HERNANDO, J.

Well-settled is the rule that personal notice to the mortgagor in extrajudicial foreclosure proceedings is

not necessary. Section 3 of Act No. 3135, as amended by Act No. 4118, requires only the posting of the

notice of sale in the three public places and the publication of that notice in a newspaper of general

circulation. The provision clearly establishes that personal notice is required before Solidbank may

proceed with the foreclosure of the subject property. Thus, Solidbank’s act of proceeding with the

foreclosure despite the absence of personal notice to petitioners violated the said deed of REM which

accordingly renders the foreclosure null and void.

ZOMER DEVELOPMENT COMPANY, INC., PETITIONER, VS. SPECIAL

TWENTIETH DIVISION OF THE COURT OF APPEALS, CEBU CITY AND
UNION BANK OF THE PHILIPPINES
G.R. NO. 194461 | JANUARY 7, 2020
LEONEN, J.

The difference in the treatment of juridical persons and natural persons was based on the nature of

the properties foreclosed — whether these are used as residence, for which the more liberal one-year

redemption period is retained, or used for industrial or commercial purposes, in which case a shorter

term is deemed necessary to reduce the period of uncertainty in the ownership of property and enable

mortgagee banks to dispose sooner of these acquired assets. It must be underscored that the General

Banking Law of 2000, crafted in the aftermath of the 1997 Southeast Asian financial crisis, sought to

reform the General Banking Act of 1949 by fashioning a legal framework for maintaining a safe and

sound banking system. In this context, the amendment introduced by Section 47 embodied one of such

safe and sound practices aimed at ensuring the solvency and liquidity of our banks. It cannot therefore

be disputed that the said provision amending the redemption period in Act 3135 was based on a

reasonable classification and germane to the purpose of the law.

The shorter redemption period is an incentive which mortgagee-banks may use to encourage

prospective assignees to accept the assignment of credit for a consideration. If the redemption period

under R.A. No. 8791 would be extended upon the assignment by the bank of its rights under a mortgage

contract, then it would be tedious for banks to find willing parties to be subrogated in its place. Thus, it

would adversely limit the bank's opportunities to quickly dispose of its hard assets, and maintain its

solvency and liquidity.

 Secrecy of Bank Transactions
SERENO VS. COMMITTEE ON TRADE AND RELATED MATTERS
(CTRM) OF THE NATIONAL ECONOMIC AND DEVELOPMENT
AUTHORITY (NEDA),
GR NO. 175210 | FEBRUARY 1, 2016
BERSAMIN, J.

The Supreme Court (SC) has already declared that the constitutional guarantee of the people’s right

to information does not cover national security matters and intelligence information, trade secrets and

banking transactions and criminal matters.—The second requisite is that the information requested must

not be excluded by law from the constitutional guarantee. In that regard, the Court has already

declared that the constitutional guarantee of the people’s right to information does not cover national

security matters and intelligence information, trade secrets and banking transactions and criminal

matters. Equally excluded from coverage of the constitutional guarantee are diplomatic

correspondence, closed-door Cabinet meeting and executive sessions of either house of Congress, as

well as the internal deliberations of the Supreme Court. In Chavez v. Public Estates Authority, 384

SCRA 152 (2002), the Court has ruled that the right to information does not extend to matters

acknowledged as “privileged information under the separation of powers,” which include “Presidential

conversations, correspondences, or discussions during closed-door Cabinet meetings.” Likewise

exempted from the right to information are “information on military and diplomatic secrets, information

affecting national security, and information on investigations of crimes by law enforcement agencies

before the prosecution of the accused.”

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE ANTI-

MONEY LAUNDERING COUNCIL V. JOCELYN I. BOLANTE
G.R. NO. 186717 | APRIL 17, 2017
SERENO, C.J.

As regards the purported violation of the right to privacy, the Court recalled the pronouncement

inEugenio that the source of the right to privacy governing bank deposits is statutory, not

constitutional. The legislature may validly carve out exceptions to the rule on the secrecy of bank

deposits, and one such legislation is Section 11 of R.A. 9160. The Court in Subido emphasized that the

holder of a bank account that is the subject of a bank inquiry order issued ex parte has the opportunity

to question the issuance of such an order after a freeze order has been issued against the account. 94

The account holder can then question not only the nding of probable cause for the issuance of the

freeze order, but also the nding of probable cause for the issuance of the bank inquiry order.
 Nature of Funds and Deposits
PRUDENTIAL BANK (NOW BANK OF THE PHILIPPINE ISLANDS)
V. RONALD RAPANOT
G.R. NO. 191636 | JANUARY 16, 2017
CAGUIOA, J.

We never fail to stress the remarkable significance of a banking institution to commercial

transactions, in particular, and to the country's economy in general. The banking system is an

indispensable institution in the modern world and plays a vital role in the economic life of every

civilized nation. Whether as mere passive entities for the safekeeping and saving of money or as

active instruments of business and commerce, banks have become an ubiquitous presence among the

people, who have come to regard them with respect and even gratitude and, most of all, confidence.

Consequently, the highest degree of diligence is expected, and high standards of integrity and

performance are even required, of it.

SPOUSES CARBONELL V. METROPOLITAN BANK AND TRUST

COMPANY
G.R. NO. 178467 | APRIL 26, 2017
BERSAMIN, J.

The relationship existing between the petitioners and the respondent that resulted from a contract of

loan was that of a creditor-debtor. Even if the law imposed a high standard on the latter as a bank

by virtue of the fiduciary nature of its banking business, bad faith or gross negligence amounting to

bad faith was absent. The incident was but an isolated one. Under the law, moral damages for culpa

contractual or breach of contract are recoverable only if the defendant acted fraudulently or in bad

faith, or is found guilty of gross negligence amounting to bad faith, or in wanton disregard of his

contractual obligations. The breach must be wanton, reckless, malicious or in bad faith, oppressive or

abusive. In order to maintain their action for damages, the petitioners must establish that their injury

resulted from a breach of duty that the respondent had owed to them, that is, there must be the

concurrence of injury caused to them as the plaintiffs and legal responsibility on the part of the

respondent.

Underlying the award of damages is the premise that an individual was injured in contemplation of

law. In this regard, there must first be a breach of some duty and the imposition of liability for that

breach before damages may be awarded; and the breach of such duty should be the proximate

cause of the injury. Here, although the petitioners suffered humiliation resulting from their unwitting

use of the counterfeit US dollar bills, the respondent, by virtue of its having observed the proper

protocols and procedure in handling the US dollar bills involved, did not violate any legal duty

towards them. Being neither guilty of negligence nor remiss in its exercise of the degree of diligence

required by law or the nature of its obligation as a banking institution, the latter was not liable for

damages. Given the situation being one of damnum absque injuria, they could not be compensated

for the damage sustained.

 Nature of Funds and Deposits
CHINATRUST COMMERCIAL BANK V. PHILIP TURNER

G.R. NO. 191458 | JULY 3, 2017

LEONEN, J.

Petitioner was not remiss in the performance of its contractual obligation to remit the funds. It was

established that the funds were credited to the account of Min Travel on September 15, 2004, or two

(2) days from respondent's application. Petitioner cannot likewise be faulted for the discrepancy

notice sent by Citibank-Cairo, assuming there was a mistake in its sending. It merely relayed its

contents to respondent. Citibank-Cairo is not an agent of petitioner but a beneficiary bank

designated by respondent, upon the instruction of the beneficiary, Min Travel.

 Nature of Funds and Deposits
BANCO FILIPINO SAVINGS & MORTG AGE BANK V. BANGKO SENTRAL
NG PILIPINAS & MO NETARY BOARD
G.R. NO. 200678 | JUNE 4, 2018
LEONEN , J.

The subject BPI account is in the nature of a joint account. “[It] is one that is held jointly by two or

more natural persons, or by two or more juridical persons or entities. Under such setup, the depositors

are joint owners or co-owners of the said account, and their share in the deposits shall be presumed

equal, unless the contrary is proved.” In an “and” joint account, as in this case, the depositors are

joint creditors of the bank and the signatures of all depositors are necessary to allow withdrawal.

Thus, it is indispensable that all the persons named as account holders give their consent before any

withdrawal could be made.

IN THE MATTER OF THE INTESTATE ESTATE OF MIGUELITA

PACIOLES AND EMMANUEL C. CHING VS. PACIOLES, JR.
G.R. NO. 214415 | OCTOBER 15, 2018
TIJAM, J.

All foreign currency deposits as defined by applicable laws are not subject to any form of

attachment, garnishment, or any other order or process of any court, legislative body, government

agency or any administrative body.The rule on foreign currency deposits is embodied in Section 8 of

Republic Act No. 6426, also known as the Foreign Currency Deposit Act of the Philippines, which

provides that: Sec. 8. 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)

This provision was reproduced in Section 87 of the Central Bank of the Philippines Circular No. 1318,

Series of 1992.

It is apparent that in ordering the branch manager or any representative of BPI to release the money

contained in a foreign currency deposit account, the intestate court committed a violation of the

law.This provision was reproduced in Section 87 of the Central Bank of the Philippines Circular No.

1318, Series of 1992. It is apparent that in ordering the branch manager or any representative of BPI

to release the money contained in a foreign currency deposit account, the intestate court committed

a violation of the law.

 Philippine Deposit Insurance
Commission
CU V. SMALL BUSINESS GUARANTEE AND FINANCE CORP.

G.R. NO. 211222 | AUGUST 7, 2017

CAGUIOA, J.

To digress, when a bank is ordered closed by the Monetary Board, PDIC is designated as the receiver

which shall then proceed with the takeover and liquidation of the closed bank.

APEX BANCRIGHTS HOLDINGS INC. V. BANGKO SENTRAL NG

PILIPINAS & PDIC
G.R. NO. 214866 | OCTOBER 2, 2017
PERLAS-BERNABE, J.

Suffice it to say that if the law had indeed intended that the Monetary Board make a separate and

distinct factual determination before it can order the liquidation of a bank or quasi-bank, then there

should have been a provision to that effect. There being none, it can safely be concluded that the

Monetary Board is not so required when the PDIC has already made such determination. It must be

stressed that the BSP (the umbrella agency of the Monetary Board), in its capacity as government

regulator of banks, and the PDIC, as statutory receiver of banks under RA 7653, are the principal

agencies mandated by law to determine the financial viability of banks and quasi-banks, and facilitate

the receivership and liquidation of closed financial institutions, upon a factual determination of the

latter's insolvency

IN THE MATTER OF THE INT ESTATE ESTATE OF MIGUELITA

PACIOLES AND EMMANUEL C. CHING VS. PACIOLES, JR.
G.R. NO. 214415 | OCTOBER 15, 2018
TIJ AM, J.

A closed bank under receivership can only sue or be sued through its receiver, the Philippine Deposit

Insurance Corporation. Under Republic Act No. 7653, when the Monetary Board finds a bank insolvent,

it may "summarily and without need for prior hearing forbid the institution from doing business in the

Philippines and designate the Philippine Deposit Insurance Corporation as receiver of the banking

institution.
 Philippine Deposit Insurance
Commission
BANCO FILIPINO SAVINGS AND MORTGAGE BANK VS. BANGKO
SENTRAL NG PILIPINAS AND THE MONETARY BOARD
G.R. NO. 200678 | JUNE 04, 2018
LEONEN, J.

The relationship between the Philippine Deposit Insurance Corporation and a closed bank is

fiduciary in nature. Section 30 of Republic Act No. 7653 directs the receiver of a closed bank to

"immediately gather and take charge of all the assets and liabilities of the institution" and

"administer the same for the benefit of its creditors." The law likewise grants the receiver "the

general powers of a receiver under the Revised Rules of Court." Under Rule 59, Section 6 of the

Rules of Court, "a receiver shall have the power to bring and defend, in such capacity, actions in

his [or her] own name." Thus, Republic Act No. 7653 provides that the receiver shall also "in the

name of the institution, and with the assistance of counsel as [it] may retain, institute such actions

as may be necessary to collect and recover accounts and assets of, or defend any action against,

the institution." Considering that the receiver has the power to take charge of all the assets of the

closed bank and to institute for or defend any action against it, only the receiver, in its fiduciary

capacity, may sue and be sued on behalf of the closed bank.

PETER L. SO VS. PHILIPPINE DEPOSIT INSURANCE COMMISSION

G.R. NO. 230030 | MARCH19, 2018

PERLAS-BERNABE, J.

The PDIC is deemed a quasi-judicial agency for purposes of filing a petition for certiorari

assailing its denial to pay a claim for deposit insurance such that the petition should be filed

with the court of appeals It bears stressing that as stated in Section 4(f) of its Charter, as

amended, PDIC's action, such as denying a deposit insurance claim, is considered as final and

executory and may be reviewed by the court only through a petition for certiorari on the ground

of grave abuse of discretion. Thus, the legislative intent in creating PDIC as a quasi-judicial

agency is clearly manifest. Indeed, PDIC exercises judicial discretion and judgment in

determining whether a claimant is entitled to a deposit insurance claim, which determination

results from its investigation of facts and weighing of evidence presented before it. Noteworthy

also is the fact that the law considers PDIC's action as final and executory and may be reviewed

only on the ground of grave abuse of discretion.

 Philippine Deposit Insurance
Commission
SPOUSES KISHORE LADHO CHUGANI AND PRISHA KISHORE CHUGANI, ET
AL. VS. PHILIPPINE DEPOSIT INSURANCE CORPORATION
G.R. NO. 230037 | MARCH 19, 2018
TIJAM, J.

The PDIC is exercising quasi-judicial functions when it denies deposit insurance claims. Based on its

charter, the PDIC has the duty to grant or deny claims for deposit insurance. The PDIC has the power

to prepare and issue rules and regulations to effectively discharge its responsibilities. The power of

the PDIC as to whether it will deny or grant the claim for deposit insurance based on its rules and

regulations partakes of a quasi-judicial function. Also, R.A. No. 3591, as amended, provides that

decisions of the PDIC with respect to deposit insurance shall be final and executory. Such decisions

therefore can only be set aside by a petition for certiorari.

PHILIPPINE DEPOSIT INSURANCE CORPORATION VS. GIDWANI

G.R. NO. 234616 | JUNE 20, 2018

VELASCO, JR., J.

The entitlement to a deposit insurance is based not on the number of bank accounts held, but on the

number of beneficial owners.To determine the insured deposit amount of a depositor, under Republic

Act No. 3591 (PDIC Charter), as amended, all deposits in a bank maintained in the same right and

capacity for a depositor's benefit, either in his name or in the name of others, shall be added

together for the purpose of determining the insured deposit amount due to a bona fide depositor,

which amount should not exceed the maximum deposit insurance coverage (MDIC) of P500,000.00.

LINSANGAN VS. PHILIPPINE DEPOSIT INSURANCE COMMISISON

G.R. NO. 228807 | FEBRUARY 11, 2019

REYES, J.

In deposit splitting, there is a presumption that the transferees have no beneficial ownership

considering that the source account, which exceeded the maximum deposit insurance coverage,

was split into two or more accounts within 120 days immediately preceding bank closure. On the

other hand, in cases wherein the transfer into two or more accounts occurred before the 120-day

period, the PDIC does not discount the possibility that there may have been a transfer for valid

consideration, but in the absence of transfer documents found in the records of the bank at the time

of closure, the presumption arises that the source account remained with the transferor. Stipulations

in the insurance contract, free from any ambiguity, should govern the relationship of the parties
 Anti-Money Laundering Act
J U R I S D I C T I O N A N D P R O S E C U T I O N

SUBIDO PAGENTE CERTEZA MENDOZA VS. CA

G.R. NO. 216914 | DECEMBER 6, 2016

PEREZ, J.

The right to due process has two aspects: (1) substantive which deals with the extrinsic and intrinsic

validity of the law; and (2) procedural which delves into the rules government must follow before it

deprives a person of its life, liberty or property. As presently worded, Section 11 of the AMLA has three

elements: (1) ex parte application by the AMLC; (2) determination of probable cause by the CA; and (3)

exception of court order in cases involving unlawful activities defined in Section 3(i)(1), (2), and (12).

A U T H O R I T Y T O I N Q U I R E I N T O B A N K

D E P O S I T S

SUBIDO PAGENTE CERTEZA MENDOZA VS. CA

G.R. NO. 216914 | DECEMBER 6, 2016

PEREZ, J.

Although the bank inquiry order ex-parte passes constitutional muster, there is nothing in Section 11 nor the

implementing rules and regulations of the AMLA which prohibits the owner of the bank account, as in his

instance SPCMB, to ascertain from the CA, post issuance of the bank inquiry order ex parte, if his account

is indeed the subject of an examination. Emphasized by our discussion of the safeguards under Section 11

preceding the issuance of such an order, we find that there is nothing therein which precludes the owner

of the account from challenging the basis for the issuance thereof.

That the bank inquiry order is a separate from the freeze order does not denote that it cannot be

questioned. The opportunity is still rife for the owner of a bank account to question the basis for its very

inclusion into the investigation and the corresponding freezing of its account in the process.

That there are no specific rules governing the bank inquiry order does not signify that the Court of

Appeals (CA) cannot confirm to the actual owner of the bank account reportedly being investigated

whether it had in fact issued a bank inquiry order for covering its accounts, of course after the issuance of

the Freeze Order.

 Anti-Money Laundering Act
A N T I - M O N E Y L A U N D E R I N G C O U N C I L

ESTRADA VS. SANDIGANBAYAN

G.R. NO. 21768 | JULY 17, 2018

REYES, J.

On AMLC’s basis for inquiry into bank deposits, inquiry and examination into bank accounts are not

undertaken whimsically based on its investigative discretion. The AMLC and the CA are respectively

required to ascertain the existence of probable cause before any bank inquiry order is issued.Section 11

of R.A.9160, even with the allowance of an ex parte application, therefore, cannot be categorized as

authorizing the issuance of a general warrant.This is because a search warrant or warrant of arrest

contemplates a direct object but the bank inquiry order does not involve the seizure of persons or

property.

REPRESENTATIVE LAGMAN VS. EXEC. SEC. MEDIALDEA

G.R. NO. 231658 | JULY 4, 2017

DEL CASTILLO, J.

The financing of terrorism was more specifically dealt with under R.A. 10168 (TerrorismFinancing

Prevention and Suppression Act). Under this law, the Anti-Money Laundering Council (AMLC), either upon

its own initiative or at the request of the Anti-Terrorism Council (ATC), is authorized to investigate (a) any

property or funds that are in any way related to financing of terrorism or acts of terrorism; (b) property or

funds of any person or persons in relation to whom there is probable cause to believe that such person

or persons are committing or attempting or conspiring to commit, or participating in or facilitating the

financing of terrorism or acts of terrorism as defined in the law. For purposes of the foregoing

investigation, the AMLC is authorized to inquire into or examine deposits and investments in any banking

institution or non-bank financial institution without a court order

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE ANTI-MONEY

LAUNDERING COUNCIL V. JOCELYN I. BOLANTE
G.R. NO. 186717 | APRIL 17, 2017
SERENO, C.J.

AMLC's ex parte application for a bank inquiry, which is allowed under Section 11 of R.A. 9160, does not

violate substantive due process. There is no such violation, because the physical seizure of the targeted

corporeal property is not contemplated in any form by the law. 89 The AMLC may indeed be authorized

to apply ex parte for an inquiry into bank accounts, but only in pursuance of its investigative functions

akin to those of the National Bureau of Investigation. 90 As the AMLC does not exercise quasi-judicial

functions, its inquiry by court order into bank deposits or investments cannot be said to violate any

person's constitutional right to procedural due process.

 Anti-Money Laundering Act
A N T I - M O N E Y L A U N D E R I N G C O U N C I L

SUBIDO PAGENTE CERTEZA MENDOZA VS. CA

G.R. NO. 216914 | DECEMBER 6, 2016

PEREZ, J.

Section 11 of the AMLA providing for ex parte application and inquiry by the AMLC into certain bank

deposits and investments does not violate substantive due process, there being no physical seizure of

property involved at that stage. It is the preliminary and actual seizure of the bank deposits or

investments in question which brings these within reach of the judicial process, specifically a

determination that the seizure violated due process.