I. SHORT TITLE: ALLIED BANK VS.

CA
II. FULL TITLE: ALLIED BANKING CORPORATION, petitioner, vs. COURT OF
APPEALS and BANK OF THE PHILIPPINE ISLANDS,
INC., respondents.; G.R. No. 123871; August 31, 1998;
III. PONENTE: PANGANIBAN, J.
IV. TOPIC: General Banking Laws

V. STATEMENT OF FACTS:
Hyatt Terraces Baguio issued two crossed checks drawn against Allied Banking Corp. in
favor of appellee Meszellen Commodities Services, Inc. Said checks were deposited with the now
defunct Commercial Bank and Trust Company. Upon receipt of the above checks, COMTRUST
stamped at the back thereof the warranty “All prior endorsements and/or lack of endorsements
Guaranteed” After the checks were cleared through the Philippine Clearing House Corporation
ALLIED BANK paid the proceeds of said checks to COMTRUST as the collecting bank.
The payee, MESZELLEN, sued the drawee, ALLIED BANK, for damages which it
allegedly suffered when the values of the checks were paid not to it but to some other person.
Almost ten years later, before defendant ALLIED BANK could finish presenting its
evidence, it filed a third party complaint against Bank of the Philippine Islands as successor-in-
interest of COMTRUST, for reimbursement in the event that it would be adjudged liable in the
main case to pay plaintiff, MESZELLEN. The third party complaint was admitted. BPI filed a
motion to dismiss said third party complaint grounded on the following: 1) that the court had no
jurisdiction over the nature of the action; and 2) that the cause of action of the third party plaintiff
had already prescribed.

VI. STATEMENT OF THE CASE

This is petition for review on certiorari under Rule 45, assailing the Decision promulgated by the
Court of Appeals in CA-GR CV No. 44804; which affirmed the trial court’s Order, dismissing
petitioner’s third-party complaint against private respondent.

VII. ISSUE/S:
1. Whether or not the cause of the third party complaint had already prescribed
2. Whether or not the filing of the third party complaint should be disallowed as it would only
delay the resolution of the case.
VIII. RULING:
The court is not unaware of the rule that a trial court, which has jurisdiction over the main
action, also has jurisdiction over the third-party complaint, even if the said court would have had
no jurisdiction over it had it been filed as an independent action. However, this doctrine does not
apply in the case of banks, which have given written and subscribed consent to arbitration under
the auspices of the PCHC.
By participating in the clearing operations of the PCHC, petitioner agreed to submit
disputes of this nature to arbitration. Accordingly, it cannot invoke the jurisdiction of the trial
courts without a prior recourse to the PCHC Arbitration Committee. Having given its free and
voluntary consent to the arbitration clause, petitioner cannot unilaterally take it back according to
its whim. In the world of commerce, especially in the field of banking, the promised word is
crucial. Once given, it may no longer be broken

IX. DISPOSITIVE PORTION:

WHEREFORE, the petition is DENIED for lack of merit. Costs against petitioner

X. PREPARED BY:
Imson, Kamille V.
I. SHORT TITLE: METROPOLITAN BANK & TRUST CO. VS. CA
II. FULL TITLE: METROPOLITAN BANK & TRUST COMPANY, Petitioner,
vs.THE HONORABLE COURT OF APPEALS and UNITED OVERSEAS
BANK (UOB) (formerly known as WESTMONT BANK), Respondents.
GR 166260; FEBRUARY 18, 2009;
III. PONENTE: J. NACHURA
IV. TOPIC: General Banking Laws

V. STATEMENT OF FACTS:
A check, payable to cash, and drawn against the account of Bienvenido C. Tan with
petitioner Metropolitan Bank & Trust Company (Metrobank) was deposited with respondent
United Overseas Bank (UOB). The check was then forwarded for clearing through the Philippine
Clearing House Corporation, and, on the same date, Metrobank cleared the check. However,
Metrobank informed UOB that it was returning the check on account of material alteration—the
date was changed from "January 23, 1997" to "January 13, 1997," and the amount was altered from
"₱1,000.00" to "₱91,000.00."

VI. STATEMENT OF THE CASE

Since UOB refused to accept the return and to reimburse Metrobank the amount it paid on
the check, Metrobank filed a Complaint before the PCHC Arbitration Committee, contending that
UOB had the duty to examine the deposited check for any material alteration; but since UOB failed
to exercise due diligence in determining that the check had been altered, UOB should bear the loss.
On the other hand, UOB interposed that it exercised due diligence, and that Metrobank failed to
comply with the 24-hour clearing house rule, and, with gross negligence, cleared the check.
Metrobank was then asked to submit the check to the Philippine National Police (PNP)
Crime Laboratory for examination. Metrobank asked for many postponements, on the ground that
examination results were not yet available; but on the date of the scheduled hearing, its counsel
failed to appear, thus UOB moved for the dismissal of the case, which the Arbitration Committee
granted.
Metrobank filed a Motion for Reconsideration of the dismissal order, attaching thereto a
copy of the Medical Certificate declaring that its counsel had been afflicted with influenza during
the hearing, and a copy of PNP Crime Laboratory Document Examination Report stating that the
subject check had been altered.
UOB opposed the motion and argued that Metrobank was not serious in prosecuting the
case considering the numerous postponements of hearings made by its counsel. The Committee
denied Metrobank’s motion. Metrobank filed a Second Motion for Reconsideration, but was
denied by the PCHC Board of Directors; it subsequently received communication from the PCHC
Executive Secretary informing it that the proper remedy following Section 13 of the PCHC Rules
of Procedure for Arbitration (PCHC Rules) was for it to file a notice of appeal with the PCHC and
a petition for review with the Regional Trial Court (RTC) within a non-extendible period of fifteen
(15) days counted from the receipt of the PCHC board resolution. Hence, Metrobank filed its
Petition for Review with the RTC of Makati City, but the same was dismissed due to lack of
jurisdiction, it being being filed out of time.
The Court of Appeals affirmed the ruling of the trial court, but said that the petition for
review before the trial court was filed on time—its filing was in accordance with the PCHC Rules.
Based on the communication received from the PCHC Executive Secretary, Metrobank
filed a petition for Review before the RTC. The petition was denied for lack of jurisdiction.

VII. ISSUE/S:
Whether or not the dismissal of the trial court of Metrobank’s petition for the review the arbitral
award was proper.

VIII. RULING:
Yes.
Metrobank was incorrect when it followed the advice of the PCHC Executive Secretary
when it filed a petition for Review before the RTC. The Supreme Court said that the PCHC Rules
cannot confer jurisdiction on the RTC to review arbitral awards. Petitioner, however, has several
judicial remedies available at its disposal after the Arbitration Committee denied its Motion for
Reconsideration. First, it may petition the proper RTC to issue an order vacating the award on the
grounds provided for under Section 24 of the Arbitration Law. Second, petitioner has the option
to file a petition for review under Rule 43 of the Rules of Court with the Court of Appeals on
questions of fact, of law, or mixed questions of fact and law. Lastly, petitioner may file a petition
for certiorari under Rule 65 of the Rules of Court on the ground that the Arbitrator Committee
acted without or in excess of its jurisdiction or with grave abuse of discretion amounting to lack
or excess of jurisdiction.
In this instance, petitioner did not avail of any of the abovementioned remedies available
to it. Instead it filed a petition for review with the RTC pursuant to Section 13 of the PCHC Rules
to sustain its action. Clearly, it erred in the procedure it chose for judicial review of the arbitral
award.
Jurisdiction is the authority to hear and determine a cause - the right to act in a case.
Jurisdiction over the subject matter is the power to hear and determine the general class to which
the proceedings in question belong. It is conferred by law and not by the consent or acquiescence
of any or all of the parties or by erroneous belief of the court that it exists.
 In this case, even if petitioner and respondent have agreed that the PCHC Rules would
govern in case of controversy, the same could not be applied since the PCHC Rules came about
only as a result of an agreement between and among member banks of PCHC and not by law and
hence, it cannot confer jurisdiction to the RTC. Thus, the portion of the PCHC Rules granting
jurisdiction to the RTC to review arbitral awards, only on questions of law, cannot be given effect.
Consequently, the proper recourse of petitioner from the denial of its motion for
reconsideration by the Arbitration Committee is to file either a motion to vacate the arbitral award
with the RTC, a petition for review with the Court of Appeals under Rule 43 of the Rules of Court,
or a petition for certiorari under Rule 65 of the Rules of Court. In the case at bar, petitioner filed a
petition for review with the RTC when the same should have been filed with the Court of Appeals
under Rule 43 of the Rules of Court. Thus, the RTC of Makati did not err in dismissing the petition
for review for lack of jurisdiction but not on the ground that petitioner should have filed a separate
case from Civil Case No. 92-145 but on the necessity of filing the correct petition in the proper
court.
The trial court, in this case, properly dismissed Civil Case for lack of jurisdiction, not
because the petition had been filed out of time, but because the court had no jurisdiction over the
subject matter of the petition.

IX. DISPOSITIVE PORTION:

WHEREFORE, premises considered, the petition for review on certiorari is DENIED.

X. PREPARED BY:
Imson, Kamille V.
I. SHORT TITLE: PEREZ VS. CA
II. FULL TITLE: CORAZON PEREZ, Petitioner, v. HON. COURT OF APPEALS and
MEVER FILMS, INCORPORATED, Respondents.; G.R. No. L-56101;
February 20, 1984;
III. PONENTE: MELENCIO-HERRERA, J.
IV. TOPIC: General Banking Laws

V. STATEMENT OF FACTS:
Congeneric Development & Finance Corporation (Congeneric) is a company engaged in
money market operations. Congeneric issued what was in effect a promissory note in the amount
of Php 11,973.58 in favor of Ramon C. Mojica (Mojica). The promissory note was to mature on
August 6, 1974. On May 15,1974, Congeneric issued another bearer promissory note for the sum
of P208.666.67, also in favor of Mojica. The note was to mature on August 13, 1974. On June 5,
1974, Mever Films, Inc. (Mever) the private respondent, borrowed Php 500.000.00 from
Congeneric, the former issuing in favor of the latter a negotiable promissory note to mature on
August 5, 1974. What may be stated in connection with the note is that it had no provision for
interest, except that, if not paid on due date, it would be subject to interest at 14% per annum.
Congeneric received Php 200.000.00 from Corazon Perez (Perez) and issued to her, as
“Bearer 209”, a confirmation of sale (CS). Under the terms of CS-0366, Perez was to be paid Php
203.483.33 on August 5, 1974 and that Congeneric would make collection on behalf of her;
and that all of congeneric’s interest in NCI-0352 was being transferred to her. Under this last
provision, Perez, subject to defenses, could have sued Mever for payment of the full amount of
Php 500.000.00, especially if Congeneric should not object. It may also be noted that while NCI-
0352 was not subject to interest prior to August 5, 1974, congeneric obligated itself to pay Perez
interest on August 5, 1974 in the amount of Php 3.483.33, or roughly an estimated interest rate of
19% per annum.
On August 5, 1974, Mever paid P100,000.00 to Congeneric on account of NCI-0352. On the same
date Congeneric paid Perez the sum of P103.483.33, the Php 3.483.33 coming from its own
funds. On August 6, 1974, Congeneric paid Mojica the interest due on Bill 1298, the principal
being rolled-over to mature on October 4, 1974. The roll-over was annotated on the original of Bill
1298. On August 13, 1974, Congeneric paid Mojica the interest due on Bill 1419, the principal
being rolled-over to mature on October 11, 1974. The roll-over was annotated on Bill 1419. On
September 9, 1974, Mojica assigned Bill 1298 and Bili 1419 to Mever through a notarized
deed. On October 3, 1974, Mever surrendered the originals of Bill 1298 and Bill 1419 to
Congeneric, and asked the latter to compute the balance of the account of Mever with Congeneric,
taking account of the amounts of the two Bills, which balance Meyer would then pay.
VI. STATEMENT OF THE CASE
On October 7,1974, Mever was served with garnishment by the Provincial Sheriff of Rizal
in two collection cases filed against Congeneric by two of its creditors whose credits totaled
PI85,693.78. On the same date, Congeneric advised Mever by telephone that of the original
amount of P500,000.00 of NCI-0352, the sum of P200.000.00 was sold on July 3, 1974 to a third
party, but not naming CORAZON as the third party. On October 8, 1974, Congeneric confirmed
in writing to Mever the previous "sale" of P200,000.00 out of the P500,000.00 amount of NCI-
0352; and advised that it could not take account of the assignment to Mever of Bill 1298 and Bill
1419. On November 15, 1974, Mever turned over to the Provincial Sheriff of Rizal, the sum of
P79.359.75, which Mever had computed as the amount it was still owing Congeneric and which
was subject to garnishment. On October 23, 1974, Congeneric filed a Petition for Suspension of
Payments in Civil Case No. 20212 of the Court of First Instance of Rizal. In that petition, Mever
was listed as a debtor. On November 11, 1974, the Court issued an order enjoining Congeneric
from making any payment to creditors.
In subsequent proceedings in Civil Case No. 20212, the Court promulgated an Order, dated
January 24, 1975, to the effect that Mever was not a debtor of Congeneric, and said Order has
become final. On July 14, 1975, Perez filed suit before the Court of First Instance of Rizal against
MEVERever for the recovery of P100.000.00, plus interest, damages, and attorney's fees. She
admits that CS-0366 issued to her by Congeneric was a "without recourse" instrument. The Trial
Court rendered judgment in favor of Perez and, upon her filing a bond, she was able to have
execution pending appeal. Mever had to pay her P131,166.00 under the Trial Court's judgment.
On Mever's appeal, the Court of Appeals reversed the judgment of the Trial Court.

VII. ISSUE/S:
Whether or not notice is required to be given to a borrower or issuer of commercial paper of its
sale to the investor.

VIII. RULING:
YES, no notice is required to be given to a borrower or issuer of commercial paper of its
sale to the investor. In addition to the civil aspect, what is involved here is a money market
transaction. As defined by Lawrence Smith "the money market is a market dealing in standardized
short-term credit instruments (involving large amounts) where lenders and borrowers do not deal
directly with each other but through a middle man or dealer in the open market." It involves
"commercial papers" which are instruments "evidencing indebtedness of any person or entity ...,
which are issued, endorsed, sold or transferred or in any manner conveyed to another person or
entity, with or without recourse". The fundamental function of the money market device in its
operation is to match and bring together in a most impersonal manner both the "fund users" and
the "fund suppliers." The money market is an "impersonal market", free from personal
considerations. "The market mechanism is intended to provide quick mobility of money and
securities."
The impersonal character of the money market device overlooks the individuals or entities
concerned. The issuer of a commercial paper in the money market necessarily knows in advance
that it would be expeditiously transacted and transferred to any investor/ lender without need of
notice to said issuer. In practice, no notification is given to the borrower or issuer of commercial
paper of the sale or transfer to the investor.
Accordingly, we find no applicability herein of Article 1285, 3rd paragraph of the Civil
Code. Rather, it is the first paragraph of the same legal provision that is applicable:
"ART. 1285. The debtor who has consented to the assignment of rights made by a creditor
in favor of a third person, cannot set up against the assignee the compensation which would
pertain to him against the assignor, unless the assignor was notified by the debtor at Dela
Conception, et al. vs. Mindanao Portland Cement Corp., et al. the time he gave his consent,
that he reserved his right to the compensation."
There a is need to individuate a money market transaction, a relatively novel institution in
the Philippine commercial scene. It has been intended to facilitate the flow and acquisition of
capital on an impersonal basis. And as specifically required by Presidential Decree No. 678, the
investing public must be given adequate and effective protection in availing of the credit of a
borrower in the commercial paper market.

IX. DISPOSITIVE PORTION:

WHEREFORE, the judgment of respondent Appellate Court, dated September 3, 1979 as well as
its Resolution dated January 16, 1981 is hereby reversed, and that of the then Court of First
Instance of Manila, Branch XXXI, dated December 27, 1976, hereby reinstated. SO ORDERED.

X. PREPARED BY:
Imson, Kamille V.
I. SHORT TITLE: SESBRENO VS. CA
II. FULL TITLE: RAUL H. SESBRENO, Petitioner, v. HONORABLE COURT OF
APPEALS and HERMILO RODIS, SR., Respondents.; G.R. No. 84096;
III. PONENTE: QUIASON, J.
IV. TOPIC: General Banking Laws

V. STATEMENT OF FACTS:
Raul Sesbreno made a money market placement in the amount of P300,000 with
PhilFinance, with a term of 32 days. PhilFinance issued to Sesbreno the Certificate of
Confirmation of Sale of a Delta Motor Corporation Promissory Note (DMC PN No. 2731), the
Certificate of Securities Delivery Receipt indicating the sale of the Note with notation that said
security was in the custody of Pilipinas Bank, and postdated checks drawn against the Insular Bank
of Asia and America for P304,533.33 payable on 13 March 1981. The checks were dishonored for
having been drawn against insufficient funds. Philfinance delivered to petitioner Denominated
Custodian Receipt (DCR).
Petitioner approached Ms. Elizabeth de Villa of private respondent Pilipinas, and handed
her a demand letter informing the bank that his placement with Philfinance in the amount reflected
in the DCR had remained unpaid and outstanding, and that he in effect was asking for the physical
delivery of the underlying promissory note. Petitioner then examined the original of the DMC PN
No. 2731 and found: that the security had been issued on 10 April 1980; that it would mature on 6
April 1981; that it had a face value of P2,300,833.33, with the Philfinance as “payee” and private
respondent Delta Motors Corporation (“Delta”) as “maker;” and that on face of the promissory
note was stamped “non negotiable.” Pilipinas did not deliver the Note, nor any certificate of
participation in respect thereof, to petitioner.
Petitioner later made similar demand letters again asking private respondent Pilipinas for physical
delivery of the original of DMC PN No. 2731.
Petitioner also made a written demand upon private respondent Delta for the partial satisfaction of
DMC PN No. 2731, explaining that Philfinance, as payee thereof, had assigned to him said Note
to the extent of P307,933.33. Delta, however, denied any liability to petitioner on the promissory
note.
As petitioner had failed to collect his investment and interest thereon, he filed an action for
damages against private respondents Delta and Pilipinas.
VI. STATEMENT OF THE CASE
The appellate court rendered a decision upholding private respondent’s contention that a money
market placement is in the nature of a loan which entails the transfer of ownership of the money
so invested and therefore the liability for its return is civil in nature.
VII. ISSUE/S:
Whether or not private respondent may be held liable for estafa

VIII. RULING:
No. What is involved here is a money market transaction. The money market is a market dealing
in standardized short-term credit instruments where lenders and borrowers do not deal directly
with each other but through a middle man or dealer in the open market. The CA correctly ruled
that a money market transaction partakes the nature of a loan and therefore nonpayment thereof
would not give rise to criminal liability for estafa through misappropriation or conversion.

IX. DISPOSITIVE PORTION:

WHEREFORE, the petition is DENIED and the Decision of the Court of Appeals, as modified by
its Resolution of May 27, 1988, is AFFIRMED in toto.

X. PREPARED BY:
Imson, Kamille V.
I. SHORT TITLE: PANLILIO VS. CITIBANK
II. FULL TITLE: SPOUSES RAUL and AMALIA PANLILIO, Petitioners, v. CITIBANK,
N.A.,Respondent.; G.R. NO. 156335; November 28, 2007; AUSTRIA-
III. PONENTE: MARTINEZ, J.
IV. TOPIC: General Banking Laws

V. STATEMENT OF FACTS:
Petitioner Amalia Panlilio (Amalia) visited Citibank’s (respondent) Makati City office and
deposited one million pesos in the bank's "Citihi" account, a fixed-term savings account with a
higher-than-average interest. On the same day, Amalia also opened a current or checking account
with Citibank, to which interest earnings of the Citihi account were to be credited. Citibank
assigned one of its employees, Jinky Suzara Lee (Lee), to personally transact with Amalia and to
handle the accounts.
Amalia opened the accounts as ITF or "in trust for" accounts, as they were intended to
benefit her minor children, in case she would meet an untimely death. To open these accounts,
Amalia signed two documents namely a Relationship Opening Form (ROF) and an Investor
Profiling and Suitability Questionnaire.
Amalia phoned Citibank saying she wanted to place an investment, this time in the amount
of three million pesos (PhP3 million). Again, she spoke with Lee. After the phone conversation,
Amalia went to Citibank bringing a PCIBank check in the amount of three million pesos (PhP3
million). During the visit, Amalia instructed Lee on what to do with the PhP3 million. Later, she
learned that out of the said amount, PhP2,134,635.87 was placed by Citibank in a Long-Term
Commercial Paper (LTCP), a debt instrument that paid a high interest, issued by the corporation
Camella and Palmera Homes (C&P Homes). The rest of the money was placed in two PRPN
accounts, in trust for each of Amalia's two children.
LTCPs' attraction is that they usually have higher yields than most investment instruments.
In the case of the LTCP issued by C&P Homes, the gross interest rate was 16.25% per annum at
the time Amalia made her investment.

The day she made the PhP3million investment, Amalia signed a Directional Investment
Management Agreement (DIMA), Term Investment Application (TIA), and Directional
Letter/Specific Instructions. Key features of the DIMA and the Directional Letter are provisions
that essentially clear Citibank of any obligation to guarantee the principal and interest of the
investment, absent fraud or negligence on the latter's part. The provisions likewise state that all
risks are to be assumed by the investor (petitioner).
 Following this investment, respondent claims to have regularly sent confirmations of
investment (COIs) to petitioners. A COI is a one-page, computer generated document informing
the customer of the investment earlier made with the bank. The first of these COIs was received
by petitioners on or about December 9, 1997, as admitted by Amalia. Respondent claims that other
succeeding COIs were sent to and received by petitioners.
Amalia claims to have called Lee as soon as she received the first COI and demanded that
the investment in LTCP be withdrawn and placed in a PRPN. Respondent, however, denies this,
claiming that Amalia merely called to clarify provisions in the COI and did not demand a
withdrawal.
Petitioners met with respondent's other employee, Lizza Colet, to preterminate the LTCP
and their other investments. Petitioners were told that as to the LTCP, liquidation could be made
only if there is a willing buyer, a prospect which could be difficult at that time because of the
economic crisis. Still, petitioners signed three sets of Sales Order Slip to sell the LTCP and left
these with Colet.
Amalia, through counsel, sent her first formal, written demand to respondent "for a
withdrawal of her investment as soon as possible." The same was followed by another letter, which
reiterated the same demands. In answer to the letters, respondent noted that the investment had a
2003 maturity, was not a deposit, and thus, its return to the investor was not guaranteed by
respondent; however, it added that the LTCP may be sold prior to maturity and had in fact been
put up for sale, but such sale was "subject to the availability of buyers in the secondary market."
At that time, respondent was not able to find a buyer for the LTCP.

VI. STATEMENT OF THE CASE

This is Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to reverse
the Decision of the Court of Appeals (CA) which reversed and set aside the Decision of the
Regional Trial Court (RTC) of Makati City.
The case originated as a Complaint for a sum of money and damages, filed with the RTC, by the
spouses Raul and Amalia Panlilio (petitioners) against Citibank N.A. (respondent).

VII. ISSUE/S:
Whether or not petitioners are bound by the terms and conditions of the Directional Investment
Management Agreement (DIMA), Term Investment Application (TIA), Directional
Letter/Specific Instructions, and Confirmations of Investment (COIs).
VIII. RULING:
The DIMA, Directional Letter, TIA and COIs, read together, establish the agreement between the
parties as an investment management agreement, which created a principal-agent relationship
between petitioners as principals and respondent as agent for investment purposes. The agreement
is not a trust or an ordinary bank deposit; hence, no trustor-trustee-beneficiary or even borrower-
lender relationship existed between petitioners and respondent with respect to the DIMA account.
Respondent purchased the LTCPs only as agent of petitioners; thus, the latter assumed all
obligations or inherent risks entailed by the transaction under Article 1910 of the Civil Code, which
provides:
Article 1910. The principal must comply with all the obligations which the agent may have
contracted within the scope of his authority.
As for any obligation wherein the agent has exceeded his power, the principal is not bound
except when he ratifies it expressly or tacitly.
The transaction is perfectly legal, as investment management activities may be exercised by a
banking institution, pursuant to Republic Act No. 337 or the General Banking Act of 1948, as
amended, which was the law then in effect. Section 72 of said Act provides:
Sec. 72. In addition to the operations specifically authorized elsewhere in this Act, banking
institutions other than building and loan associations may perform the following services:
(a) Receive in custody funds, documents, and valuable objects, and rent safety deposit
boxes for the safeguarding of such effects;
(b) Act as financial agent and buy and sell, by order of and for the account of their
customers, shares, evidences of indebtedness and all types of securities;

(c) Make collections and payments for the account of others and perform such other
services for their customers as are not incompatible with banking business.

(d) Upon prior approval of the Monetary Board, act as managing agent, adviser, consultant
or administrator of investment management/ advisory/consultancy accounts.
The banks shall perform the services permitted under subsections (a), (b) and (c) of this section as
depositories or as agents. Accordingly, they shall keep the funds, securities and other effects which
they thus receive duly separated and apart from the bank's own assets and liabilities.
The Monetary Board may regulate the operations authorized by this section in order to insure that
said operations do not endanger the interests of the depositors and other creditors of the banks
while Section 74 prohibits banks from guaranteeing obligations of any person, thus:

Sec. 74. No bank or banking institution shall enter, directly, or indirectly into any contract
of guaranty or suretyship, or shall guarantee the interest or principal of any obligation of
 any person, co-partnership, association, corporation or other entity. The provisions of this
section shall, however, not apply to the following: (a) borrowing of money by banking
institution through the rediscounting of receivables; (b) acceptance of drafts or bills of
exchange (c) certification of checks; (d) transactions involving the release of documents
attached to items received for collection; (e) letters of credit transaction, including stand-
by arrangements; (f) repurchase agreements; (g) shipside bonds; (h) ordinary guarantees or
indorsements in favor of foreign creditors where the principal obligation involves loans
and credits extended directly by foreign investment purposes; and (i) other transactions
which the Monetary Board may, by regulation, define or specify as not covered by the
prohibition.

IX. DISPOSITIVE PORTION:

WHEREFORE, the Petition is DENIED. For lack of evidence, the Decision of the Court of
Appeals dated May 28, 2002 and its Resolution of December 11, 2002, are AFFIRMED.
Costs against the petitioners.

X. PREPARED BY:
Imson, Kamille V.