Banking Class CaseDigest IncompleteVersion

REPUBLIC VS SECURITY CREDIT AND ACCEPTANCE CORP
ABELLANA
HONGKONG BANK INDEPENDENT LABOR UNION (HBILU) V. HSBC

G.R. NO. 218390, FEBRUARY 28, 2018
FACTS: In 2001, BSP issued the Manual of Regulations For Banks (MoRB).
Section X338 which states: Banks may provide financial assistance to their officers and employees,
as part of their fringe benefits program, to meet housing, transportation, household and personal
needs of their officers and employees. Financing plans and amendments thereto shall be with prior
approval of the BSP.
HSBC submitted their Financial Assistance Plan to BSP for approval and it was later on approved.
HBILU, the bargaining agent of HSBC’s rank-and-file employees entered into CBA with HSBC.
Article 11 of the CBA provides for the SALARY LOANS of employees for housing, personal and
car. Section 4 thereof provides: Credit Ratio. The availment of any of the foregoing loans shall be
subject to the BANK's credit ratio policy.
When the CBA was about to expire, HSBC and HBILU started negotiations. HSBC proposed
amendments to Article 11 to align the CBA with the BSP approved financial plan. Particularly,
the deletion of Section 4 and proposed that the availment of loans shall be subject to
EMPLOYEE’S credit ratio. HBILU objected the amendments as they insisted that this would
curtail its member’s availment of salary loans. Subsequently, HSBC withdrew their amendments
and Article 11 remain unchanged.
Despite this, HSBC sent an email to all its employees on April 20,2012 concerning the enforcement
of financial plan, including the CREDIT CHECKING provisions which states that: Repayment
defaults on existing loans and adverse information considered in the evaluation of loan
applications. With the strict implementation of these provisions, adverse credit findings may result
to disapproval of loan or credit card applications.”
HBILU member Vince Mananghaya applied for a loan in March and it was approved.
Subsequently on September it was denied due to adverse findings on his credit background. This
denial was raised by HBILU to NCMB as a grievance issue. It argued that the imposition of
additional requirement (credit checking prior to approval) of any loan is not sanctioned in the CBA,
thus, the implementation of HSBC was a unilateral act with violations to the existing CBA.
HBILU claims that it is not privy to the Plan and has not been consulted. Much less informed, of
the impositions therein prior to its implementation. No proof was offered that the plan had been
disseminated to the employees prior to the April 20, 2012 e-mail blast.
1 BANKING LAW CASE DIGEST. Atty. Fontanilla- Wednesday 7:30-9:30. 3rd yr 4yr program
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HSBC contended that such implementation was only in connection to the BSP approved Plan. As
such, it is a condition sine qua non for any loan grant under Section 338 of MoRB. Moreover, the
Credit Checking was being practiced since 2003 in banking industry to protect the interests of
public and preserve confidence in banks.
NCMB ruled in favor of HSBC. The CA affirmed in toto.
ISSUE: Could HSBC validly enforce the credit-checking requirement under BSP-approved Plan
in processing salary loan applications of its employees even the said requirement is not recognized
under the CBA?
HELD: NO. The CBA is the law between the parties and they are obliged to comply with its
provisions. Also, the salary loans subject of this case is not covered by the credit-checking
requirement under the MoRB.
In the present controversy, it is clear from the arguments and evidence submitted that the Plan was
never made part of the CBA. As a matter of fact, HBILU vehemently rejected the Plan's
incorporation into the agreement. Due to this lack of consensus, the bank withdrew its proposal
and agreed to the retention of the original provisions of the CBA. The subsequent implementation
of the Plan's external credit check provisions in relation to employee loan applications under
Article XI of the CBA was then an imposition solely by HSBC.
In this respect, this Court is of the view that tolerating HSBC's conduct would be tantamount to
allowing a blatant circumvention of Article 253 of the Labor Code. It would contravene the express
prohibition against the unilateral modification of a CBA during its subsistence and even thereafter
until a new agreement is reached. It would unduly license HSBC to add, modify, and ultimately
further restrict the grant of Salary Loans beyond the terms of the CBA by simply adding stringent
requirements in its Plan, and having the said Plan approved by BSP in the guise of compliance
with the MoRB.
HSBC' s defense, that there was no modification of the CBA since the external credit check has
been a long-standing policy of the Bank applied to all of its employees, is unconvincing.
Noteworthy is that the bank failed to submit in evidence the very Plan that was supposedly
approved by the BSP in 2003. Nevertheless, even if We were to rely on the later versions of the
Plan approved by the BSP, our ruling will not change.
Thus, no other conclusion can be had in this factual milieu other than the fact that HSBC's
enforcement of credit checking on salary loans under the CBA invalidly modified the latter's
provisions thereon through the imposition of additional requirements which cannot be found
anywhere in the CBA.
We are convinced that the credit checking provision of the Plan was never intended to cover salary
loans under the CBA. Otherwise, HSBC would have implemented such the moment said salary
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loans under the previous CBA were made available to its covered employees. Thus, HSBC cannot
now insist on its imposition on loan applications under the disputed CBA provision without
violating its duty to bargain collectively.
Sec.304.1. General Guidelines. Consistent with safe and sound banking practices, a bank shall
grant loans or other credit accommodations only in amounts and for the periods of time essential
for the effective completion of the operation to be financed. Before granting loans or other credit
accommodations, a bank must ascertain that the borrower, comaker, endorser, surety, and/or
guarantor, if applicable, is/are financially capable of fulfilling his/their commitments to the bank.
For this purpose, a bank shall obtain adequate information on his/their credit standing and financial
capacities x x x.
This provision should be read together with Sec. 338.3, the provision that specifically applies to
salary loans under fringe benefit program. Thus: The investment by a bank in equipment and other
chattels under its fringe benefits program for officers and employees shall be included in
determining the extent of the investment of the bank in real estate and equipment for purposes of
Section 51 of R.A. No. 8791.
The investment by a bank in equipment and other chattels contemplated under these guidelines
shall not be for the purpose of profits in the course of business for the bank.
All loans or other credit accommodations to bank officers and employees, EXCEPT those granted
under the fringe benefit program of the bank, shall be subject to the same terms and conditions
imposed on the regular lending operations of the bank. Loans or other credit accommodations
granted to officers shall, in addition, be subject to the provisions of Section 36 of R.A. No. 8791
and Sections X326 to X336 but not to the individual ceilings where such loans or other credit
accommodations are obtained under the bank's fringe benefits program.
Sec. 338.3 clearly excluded loans and credit accommodations under the bank's fringe benefits
program from the operation of Sec. X304.1. HSBC, being a bank, is statutorily required to conduct
a credit check on all of its borrowers, even though it be made under a loan accommodation scheme,
applying Section 40 of RA 8791 (General Banking Law of 2000). A reading of RA 8791, however,
reveals that loan accommodations to employees are not covered by said statute. Nowhere in the
law does it state that its provisions shall apply to loans extended to bank employees which are
granted under the latter's fringe benefits program. Had the law intended otherwise, it could have
easily specified such, similar to what was done for directors, officers, stockholders and their related
interests under Section 36 thereof.
These convince us to conclude that RA 8791 only intended to cover loans by third persons and
those extended to directors, officers, stockholders and their related interests. Consequently, Section
40 thereof, which requires a bank to ascertain that the debtor is capable of fulfilling his
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commitments to it before granting a loan or other credit accommodation, does not automatically
apply to the type of loan subject of the instant case.
Furthermore, it is inaccurate to state that credit checking is necessary, or even indispensable, in

the grant of salary loans to the bank's employees, since the business of banking is imbued with
public interest and there is a fiduciary relationship between the depositor and the bank. It is also
incorrect to state that allowing bank employees to borrow funds from their employer via salary
loans without the prior conduct of a credit check is inconsistent with this fiduciary obligation. This
is so because there are other ways of securing payment of said salary loans other than ascertaining
whether the borrowing employee has the capacity to pay the loan.
Withal, we cannot subscribe to HSBC's position that its imposition of the credit checking
requirement on salary loans granted under the CBA is valid. The evidence presented convinces Us
to hold that the credit checking requirement imposed by HSBC under the questioned Plan which
effectively and undoubtedly modified the CBA provisions on salary loans was a unilateral
imposition violative of HSBC's duty to bargain collectively and, therefore, invalid. HSBC
miserably failed to present even an iota of concrete documentary evidence that the credit checking
requirement has been imposed on salary loans even before the signing of the CBA subject of the
instant dispute and that the Plan was sufficiently disseminated to all concerned. In contrast, HBILU
sufficiently proved that HSBC violated its duty to bargain collectively under Article 253 of the
Labor Code when it unilaterally restricted the availment of salary loans under Article XI of the
CBA on the excuse of enforcing the Plan approved by the BSP.
Respondent HSBC's Financial Assistance Plan, insofar as it unilaterally imposed a credit

checking proviso on the availment of Salary Loans by its employees under Article XI of the 2010-
2012 CBA, is hereby declared legally ineffective and invalid for being in contravention of Article
253 of the Labor Code.
BANK OF THE PHILIPPINE ISLANDS and ANA C. GONZALES vs. SPOUSES

FERNANDO V. QUIAOIT and NORA L. QUIAOIT January 16, 2019 G.R. No. 199562
FACTS:
Fernando V. Quiaoit maintains peso and dollar accounts with the Bank of the Philippine Islands
(BPI) Greenhills-Crossroads Branch. Fernando, through Merlyn Lambayong, encashed BPI
Greenhills Check for US$20,000. Lambayong delivered the dollar bills to the spouses Quiaoit in
US$100 denomination in US$10,000 per bundle. Nora then purchased plane tickets worth
US$13,100 for their travel abroad, using part of the US$20,000 bills withdrawn from BPI.
On 22 April 1999, the spouses Quiaoit left the Philippines for Jerusalem and Europe. Nora was
placed in a shameful and embarrassing situation when several banks in Madrid, Spain refused to
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exchange some of the US$100 bills because they were counterfeit. Nora was also threatened that
she would be taken to the police station when she tried to purchase an item in a shop with the dollar
bills.
The spouses Quiaoit filed a complaint against BPI. They alleged that BPI failed in its duty to ensure
that the foreign currency bills it furnishes its clients are genuine. According to them, they suffered
public embarrassment, humiliation, and possible imprisonment in a foreign country due to BPI's
negligence and bad faith.
BPI countered that it is the bank's standing policy and part of its internal control to mark all dollar
bills with "chapa" bearing the code of the branch when a foreign currency bill is exchanged or
withdrawn. BPI alleged that any local or foreign currency bill deposited or withdrawn from the
bank undergoes careful and meticulous scrutiny by highly-trained and experienced personnel for
genuineness and authenticity. BPI alleged that the US$20,000 in US$100 bills encashed by
Fernando through Lambayong were inspected, counted, personally examined, and subjected to a
counterfeit detector machine by the bank teller under Gonzales' direct supervision. Gonzales also
personally inspected and "piece-counted" the dollar bills which bore the identifying "chapa" and
examined their genuineness and authenticity. BPI alleged that after its investigation, it was
established that the 44 US$100 bills surrendered by the spouses Quiaoit were not the same as the
dollar bills disbursed to Lambayong. The dollar bills did not bear the identiying "chapa" from BPI
Greenhills and as such, they came from another source.
ISSUE:
Whether or not BPI liable for the gross negligence amounting to bad faith in handling dollar
withdrawals?
RULING:
YES, . BPI is liable.
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.
In this case, BPI failed to exercise the highest degree of diligence that is not only expected but
required of a banking institution.
It was established that on 15 April 1999, Fernando informed BPI to prepare US$20,000 that he
would withdraw from his account. The withdrawal, through encashment of BPI Greenhills Check
No. 003434, was done five days later, or on 20 April 1999. BPI had ample opportunity to prepare
the dollar bills. Since the dollar bills were handed to Lambayong inside an envelope and in bundles,
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Lambayong did not check them. However, as pointed out by the Court of Appeals, BPI could have
listed down the serial numbers of the dollar bills and erased any doubt as to whether the counterfeit
bills came from it. While BPI Greenhills marked the dollar bills with "chapa" to identify that they
came from that branch, Lambayong was not informed of the markings and hence, she could not
have checked if all the bills were marked.
BPI insists that there is no law requiring it to list down the serial numbers of the dollar bills.
However, it is well-settled that the diligence required of banks is more than that of a good father
of a family.12 Banks are required to exercise the highest degree of diligence in its banking
transactions. In releasing the dollar bills without listing down their serial numbers, BPI failed to
exercise the highest degree of care and diligence required of it. BPI exposed not only its client but
also itself to the situation that led to this case. Had BPI listed down the serial numbers, BPI's
presentation of a copy of such listed serial numbers would establish whether the returned 44 dollar
bills came from BPI or not.
The Court has also applied the doctrine of last clear chance in banking transactions.
The doctrine of last clear chance, stated broadly, is that the negligence of the plaintiff does not
preclude a recovery for the negligence of the defendant where it appears that the defendant, by
exercising reasonable care and prudence, might have avoided injurious consequences to the
plaintiff notwithstanding the plaintiff's negligence. The doctrine necessarily assumes negligence
on the part of the defendant and contributory negligence on the part of the plaintiff, and does not
apply except upon that assumption. Stated differently, the antecedent negligence of the plaintiff
does not preclude him from recovering damages caused by the supervening negligence of the
defendant, who had the last fair chance to prevent the impending harm by the exercise of due
diligence. Moreover, in situations where the doctrine has been applied, it was defendant's failure
to exercise such ordinary care, having the last clear chance to avoid loss or injury, which was the
proximate cause of the occurrence of such loss or injury.
As pointed out by the Court of Appeals, BPI had the last clear chance to prove that all the dollar
bills it issued to the spouses Quiaoit were genuine and that the counterfeit bills did not come from
it if only it listed down the serial numbers of the bills. BPI's lapses in processing the transaction
fall below the extraordinary diligence required of it as a banking institution. Hence, it must bear
the consequences of its action.
PHILIPPINE BANKING CORPORATION vs. COURT OF APPEALS and LEONILO

MARCOS G.R. No. 127469; January 15, 2004
Facts:
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Leonilo Marcos was persuaded by his friend Florencio Pasaliga, an official of PBC, to deposit
money with PBC. Marcos yielded to the persuasion and made time deposits on two occasions
(P664,897.67 and P764,897.67). PBC only issued a receipt for the first time deposit. The second
time deposit was acknowledged only through a letter-certification that Pagsaligan issued. The time
deposits earned interest at 17% per annum and had a maturity period of 90 days. Marcos alleged
that Pagsaligan kept the various time deposit certificates on the assurance that the BANK would
take care of the certificates, interests and renewals. Marcos claimed that from the time of the
deposit, he had not received the principal amount or its interest.
In March 1983, Marcos wanted to withdraw his time deposits and its accumulated interests to buy
materials for his construction business. However, PBC through Pagsaligan convinced Marcos to
keep his time deposits intact and instead to open several domestic letters of credit. PBC required
Marcos to give a marginal deposit of 30% of the total amount of the letters of credit. The time
deposits of Marcos would secure 70% of the letters of credit. Since Marcos trusted PBC and
Pagsaligan, he signed blank printed forms of the application for the domestic letters of credit, trust
receipt agreements and promissory notes. Marcos believed that he and the PBC became creditors
and debtors of each other and expected the PBC to offset automatically a portion of his time
deposits and the accumulated interest with the amount covered by the three trust receipts totalling
P851,250 less the 30% marginal deposit that he had paid. Marcos argued that if only PBC applied
his time deposits and the accumulated interest to his remaining obligation, which is 70% of the
total amount of the letters of credit, he would have paid completely his debt.
Marcos further pointed out that since he did not apply for a renewal of the trust receipt agreements,
the PBC had no right to renew the same. Marcos further accused PBC of unjustly demanding
payment for the total amount of the trust receipt agreements without deducting the 30% marginal
deposit that he had already made. He decried PBC’s unlawful charging of accumulated interest
because he claimed there was no agreement as to the payment of interest. The interest arose from
numerous alleged extensions and penalties. Marcos reiterated that there was no agreement to this
effect because his time deposits served as the collateral for his remaining obligation. Marcos also
denied that he obtained another loan from the BANK for P500,000 with interest at 25% per annum
supposedly covered by Promissory Note No. 20-979-83 dated 24 October 1983. Marcos bewailed
the PBC’s belated claim that his time deposits were applied to this void promissory note on 12
March 1985.
On its defense, PBC alleged that Marcos’ time deposit was only P764,897.67 which included the
P664,897.67. It pointed out that it delivered the time deposit certificates to Marcos by virtue of a
Deed of Assignment to secure his various loan obligations. PBC claimed that these loans are
covered by Promissory Note No. 20-756-82 dated 2 June 1982 for P420,000 and Promissory Note
No. 20-979-83 dated 24 October 1983 for P500,000. PBC stressed that these obligations are
separate and distinct from the trust receipt agreements. Further, when Marcos defaulted on his
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payment for Promissory Note No. 20-979-83, PBC debited the his deposits and applied it to the
obligation. PBC insisted that the Deed of Assignment authorized it to apply the time deposits.
The trial court ruled that the total amount of time deposits of Marcos was P1,429,795.34 and not
only P764,897.67 as claimed by the BANK and that Marcos did not execute the questionable
documents for the loan. On appeal, the CA ruled that the total amount of the time deposits of
Marcos is only P764,897.67 and not P1,429,795.34 as found by the trial court. The certification
letter issued by Pagsaligan showed that Marcos made a time deposit on 12 March 1982 for
P764,897.67. The certification letter shows that the amount mentioned in the letter was the
aggregate or total amount of the time deposits of Marcos as of that date. Therefore, the P764,897.67
already included the P664,897.67 time deposit made by Marcos on 11 March 1982. As to
Promissory Note 20-979-83, it agreed with the trial court that is is void. The bank was ordered to
return to Marcos the amount of P764,897.67 with 17% interest within 90 days from March 11,
1982 in accordance with the letter-certification and with legal interest thereafter until fully paid.
Issue:
WON the bank was liable to Marcos for offsetting his time deposit with a fictitious promissory
note.
Ruling:
YES. The BANK is liable to Marcos for offsetting his time deposits with a fictitious promissory
note. Section 2 of Republic Act No. 8791 (General Banking Law of 2000) expressly imposes this
fiduciary duty on banks when it declares that the State recognizes the “fiduciary nature of banking
that requires high standards of integrity and performance.” This statutory declaration merely
echoes the earlier pronouncement of the Supreme Court in Simex International (Manila) Inc. v.
Court of Appeals requiring banks to “treat the accounts of its depositors with meticulous care,
always having in mind the fiduciary nature of their relationship.” The Court reiterated this
fiduciary duty of banks in subsequent cases. Although RA No. 8791 took effect only in the year
2000, at the time that the BANK transacted with Marcos, jurisprudence had already imposed on
banks the same high standard of diligence required under RA No. 8791. This fiduciary relationship
means that the bank’s obligation to observe “high standards of integrity and performance” is
deemed written into every deposit agreement between a bank and its depositor. Assuming
Pagsaligan was behind the spurious promissory note, the BANK would still be accountable to
Marcos. We have held that a bank is liable for the wrongful acts of its officers done in the interest
of the bank or in their dealings as bank representatives but not for acts outside the scope of their
authority. As PBC’s depositor, Marcos had the right to expect that PBC was accurately recording
his transactions with it. Upon the maturity of his time deposits, Marcos also had the right to
withdraw the amount due him after the BANK had correctly debited his outstanding obligations
from his time deposits. By the very nature of its business, PBC should have had in its possession
the original copies of the disputed promissory note and the records and ledgers evidencing the
offsetting of the loan with the time deposits of Marcos. The BANK inexplicably failed to produce
the original copies of these documents. Clearly, PBC failed to treat the account of Marcos with
meticulous care
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PNB VS PIKE
BANUELOS
BPI VS LIFETIME MARKETING

GR No. 176434 June 25, 2008
FACTS:
Lifetime Marketing Corporation (LMC), opened a current account with BPI.
On various dates, Alice Laurel, one of LMC’s agents, deposited checks to LMC's subject account
at different branches of BPI.
Each check thus deposited were retrieved by Alice Laurel after the deposit slips were machine-
validated, except for thirteen (13) checks, which bore no machine validations. verification with
BPI by LMC showed that Alice Laurel made check deposits with the named BPI branches and,
after the check deposit slips were machine-validated, requested the teller to reverse the
transactions. Based on general banking practices, however, the cancellation of deposit or payment
transactions upon request by any depositor or payor, requires that all copies of the deposit slips
must be retrieved or surrendered to the bank. This practice, in effect, cancels the deposit or
payment transaction, thus, it leaves no evidence for any subsequent claim or misrepresentation
made by any innocent third person. Notwithstanding this, the verbal requests of Alice Laurel and
her husband to reverse the deposits even after the deposit slips were already received and
consummated were accommodated by BPI tellers.
Alice Laurel presented the machine-validated deposit slips to LMC which, on the strength thereof,
considered her account paid. LMC even granted her certain privileges or prizes based on the
deposits she made.
The above fraudulent transactions of Alice Laurel and her husband was made possible through
BPI teller's failure to retrieve the duplicate original copies of the deposit slips from the former,
every time they ask for cancellation or reversal of the deposit or payment transaction.
Upon discovery of this fraud, LMC made queries from the BPI branches involved. In reply to said
queries, BPI branch managers formally admitted that they cancelled, without the permission of or
due notice to LMC, the deposit transactions made by Alice and her husband, and based only upon
the latter's verbal request or representation.
Thereafter, LMC immediately instituted a criminal action for Estafa against Alice Laurel and her
husband Thomas Limoanco.This case for estafa, however, was archived because summons could
not be served upon the spouses as they have absconded; With this situation and BPI's apparent
reluctance to admit liability has been left with no option but to recover damages from BPI.RTC
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ruled in favor of LMC. BPI filed an appeal. The Court of Appeals affirmed the decision of the trial
court.
IBPI insists that LMC should have presented evidence to prove not only the amount of the checks
that were deposited and subsequently reversed, but also the actual delivery of the books and the
payment of "sales and promo prizes" to Alice Laurel. Failing this, there was allegedly no basis for
the award of actual damages.
BPI further avers that LMC's negligence in considering the machine-validated check deposit slips
as evidence of Alice Laurel's payment was the proximate cause of its own loss.
ISSUE: Whether or not BPI is liable for damages
HELD: YES.
By the nature of its functions, a bank is under obligation to treat the accounts of its depositors with
meticulous care, always having in mind the fiduciary nature of its relationship with them. The
fiduciary nature of banking, previously imposed by case law, is now enshrined in Republic Act
No. 8791 or the General Banking Law of 2000. Section 2 thereof specifically says that the state
recognizes the fiduciary nature of banking that requires high standards of integrity and
performance.9
Whether BPI observed the highest degree of care in handling LMC's account is the subject of the
inquiry in this case.
In this case, both the trial court and the Court of Appeals found that the reversal of the transactions
in question was unilaterally undertaken by BPI's tellers without following normal banking
procedure which requires them to ensure that all copies of the deposit slips are surrendered by the
depositor. The machine-validated deposit slips do not show that the transactions have been
cancelled, leading LMC to rely on these slips and to consider Alice Laurel's account as already
paid.
Negligence in this case lies in the tellers' disregard of the validation procedures in place and BPI's
utter failure to supervise its employees. Notably, BPI's managers admitted in several
correspondences with LMC that the deposit transactions were cancelled without LMC's knowledge
and consent and based only upon the request of Alice Laurel and her husband.
BPI cannot escape liability because of LMC's failure to scrutinize the monthly statements sent to
it by the bank. This omission does not change the fact that were it not for the wanton and reckless
negligence of BPI's tellers in failing to require the surrender of the machine-validated deposit slips
before reversing the deposit transactions, the loss would not have occurred. BPI's negligence is
undoubtedly the proximate cause of the loss.
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Parenthetically, we find no merit in BPI's allegation that LMC should have presented evidence of
delivery of the books and payment of sales and promo prizes to Alice Laurel. The evidence
presented by LMC in the form of BPI's own admission that the deposit transactions were
reversed at the instance of Alice Laurel and her husband, coupled with the machine-validated
deposit slips16 which were supposed to have been deposited to LMC's account but were cancelled
without its knowledge and consent, sufficiently form the bases for the actual damages claimed
because they are the very same documents relied upon by LMC in considering Alice Laurel's
account paid and in granting her monetary privileges and prizes.
BPI vs. CASA MONTESSORI

G.R. No. 149454 May 28, 2004
FACTS:
On November 8, 1982, plaintiff CASA Montessori Internationalopened Current Account No.

0291-0081- 01 with defendant Bank of the Philippine Islands(BPI) with CASA’s President Ms.
Ma. Carina C. Lebron as one of its authorized signatories.
In 1991, after conducting an investigation, plaintiff discovered that nine (9) of its checks had been
encashed by a certain Sonny D. Santos since 1990 in the total amount of P782,000.00. It turned
out that ‘Sonny D. Santos’ with account at BPI’s Greenbelt Branch *was+ a fictitious name used
by third party defendant Leonardo T. Yabut who worked as external auditor of CASA. Third party
defendant voluntarily admitted that he forged the signature of Ms. Lebron and encashed the checks.
The PNP Crime Laboratory conducted an examination of the nine (9) checks and concluded that
the handwritings thereon compared to the standard signature of Ms. Lebron were not written by
the latter.
On March 4, 1991, plaintiff filed the herein Complaint for Collection with Damages against
defendant bank praying that the latter be ordered to reinstate the amount of P782,500.00 in the
current and savings accounts of the plaintiff with interest at 6% per annum.
Regional Trial Court (RTC) granted the Complaint for Collection with Damages against BPI
ordering to reinstate the amount in account, with interest. CA took account of CASA’s contributory
negligence and apportioned the loss between the CASA and BPI, ordered Yabut to reimburse both.
However, BPI contends that the monthly statements it issues to its clients contain a notice worded
as follows: “if no error is reported in 10 days, account will be correct” and as such, it should be
considered a waiver.
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Modifying the Decision of the RTC, the CA apportioned the loss between BPI and CASA. The
appellate court took into account CASA’s contributory negligence that resulted in the undetected
forgery.
ISSUES/ RULING:
1. Was BPI negligent and therefore liable?
Yes. Clear Negligence in Allowing Payment Under a Forged Signature
We have repeatedly emphasized that, since the banking business is impressed with public interest,
of paramount importance thereto is the trust and confidence of the public in general. Consequently,
the highest degree of diligence is expected, and high standards of integrity and performance are
even required, of it. By the nature of its functions, a bank is “under obligation to treat the accounts
of its depositors with meticulous care, always having in mind the fiduciary nature of their
relationship.”
BPI’s negligence consisted in the omission of that degree of diligence required of a bank. It cannot
now feign ignorance, for very early on we have already ruled that a bank is “bound to know the
signatures of its customers; and if it pays a forged check, it must be considered as making the
payment out of its own funds, and cannot ordinarily charge the amount so paid to the account of
the depositor whose name was forged.”
Loss Borne by Proximate Source of Negligence
For allowing payment on the checks to a wrongful and fictitious payee, BPI — the drawee bank
— becomes liable to its depositor-drawer. It “may not debit the drawer’s account and is not entitled
to indemnification from the drawer.” In both law and equity, when one of two innocent persons
“must suffer by the wrongful act of a third person, the loss must be borne by the one whose
negligence was the proximate cause of the loss or who put it into the power of the third person to
perpetrate the wrong.”
Pursuant to its prime duty to ascertain well the genuineness of the signatures of its client-depositors
on checks being encashed, BPI is “expected to use reasonable business prudence.” Unfortunately,
it failed in that regard.
2. Is CASA is precluded from setting up forgery as a defense?
YES. Forged Signature Wholly Inoperative
Section 23 of the NIL provides:
“Section 23. Forged signature; effect of. — When a signature is forged or made without the
authority of the person whose signature it purports to be, it is wholly inoperative, and no right x x
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x to enforce payment thereof against any party thereto, can be acquired through or under such
signature, unless the party against whom it is sought to enforce such right is precluded from setting
up the forgery or want of authority.”
Under this provision, a forged signature is a real or absolute defense, and a person whose signature
on a negotiable instrument is forged is deemed to have never become a party thereto and to have
never consented to the contract that allegedly gave rise to it.
The counterfeiting of any writing, consisting in the signing of another’s name with intent to
defraud, is forgery.
In the present case, we hold that there was forgery of the drawer’s signature on the check.
Forgery “cannot be presumed.” It must be established by clear, positive and convincing evidence.
Having established the forgery of the drawer’s signature, BPI — the drawee — erred in making
payments by virtue thereof. The forged signatures are wholly inoperative, and CASA — the drawer
whose authorized signatures do not appear on the negotiable instruments — cannot be held liable
thereon.
In this jurisdiction, the negligence of the party invoking forgery is recognized as an exception to
the general rule that a forged signature is wholly inoperative. Contrary to BPI’s claim, however,
we do not find CASA negligent in handling its financial affairs. CASA, we stress, is not precluded
from setting up forgery as a real defense.
CENTRAL BANK VS CITYTRUST BANK
CENTRAL BANK OF THE PHILIPPINES, Petitioner, vs. CITYTRUST BANKING

CORPORATION, Respondent.
G.R. No. 141835 February 4, 2009
Facts:
Citytrust Banking Corporation (Citytrust) maintained a demand deposit account with Central Bank of the
Philippines. Citytrust provided Central Bank with the list and corresponding signatures of its roving tellers
authorized to withdraw, sign receipts and perform other transactions on its behalf. Central Bank later issued
security identification cards to the roving tellers one of whom was "Rounceval Flores" (Flores).
Flores presented for payment to Central Bank Senior Teller Iluminada dela Cruz (Iluminada) two Citytrust
checks of even date, payable to Citytrust, both of which were signed and indorsed by Citytrust’s authorized
signatory-drawers. After the checks were certified by Central Bank’s Accounting Department, Iluminada
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verified them, prepared the cash transfer slip on which she affixed her signature, stamped the checks with
the notation "Received Payment" and asked Flores to, as he did, sign on the space above such notation.
Instead of signing his name, however, Flores signed as "Rosauro C. Cayabyab" – a fact
Iluminada failed to notice. Central then debited the amount of the checks totaling ₱1,750,000 from
Citytrust’s demand deposit account.
More than a year and nine months later, Citytrust, alleging that the checks were already cancelled because
they were stolen, demanded Central Bank to restore the amounts covered thereby to its demand deposit
account. Central Bank did not heed the demand. Citytrust later filed a complaint for estafa, with reservation
on the filing of a separate civil action, against Flores. Flores was convicted. Citytrust thereafter filed before
the RTC of Manila a complaint for recovery of sum of money with damages against Central Bank.
RTC found both Citytrust and Central Bank negligent and accordingly held them equally liable for the loss.
CA affirmed RTC and held that both parties contributed equally to the fraudulent encashment of the checks,
hence, they should equally share the loss in consonance with Article 21793 vis a vis Article 11724 of the
Civil Code.
Issue:
WON Central Bank was negligent.
Ruling:
Yes. Central Bank’s teller Iluminada did not verify Flores’ signature on the flimsy excuse that Flores had
had previous transactions with it for a number of years. That circumstance did not excuse the teller from
focusing attention to or at least glancing at Flores as he was signing, and to satisfy herself that the signature
he had just affixed matched that of his specimen signature. Had she done that, she would have readily
been put on notice that Flores was affixing, not his but a fictitious signature.
The contract between the bank and its depositor is governed by the provisions of the Civil Code on simple
loan. Article 1980 of the Civil Code expressly provides that "x x x savings x x x deposits of money in banks
and similar institutions shall be governed by the provisions concerning simple loan." There is a debtor-
creditor relationship between the bank and its depositor. The bank is the debtor and the depositor is the
creditor. The depositor lends the bank money and the bank agrees to pay the depositor on demand. The
savings deposit agreement between the bank and the depositor is the contract that determines the rights
and obligations of the parties.
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The law imposes on banks high standards in view of the fiduciary nature of banking. Section 2 of Republic
Act No. 8791 ("RA 8791"), which took effect on 13 June 2000, declares that the State recognizes the
"fiduciary nature of banking that requires high standards of integrity and performance." This new provision
in the general banking law, introduced in 2000, is a statutory affirmation of Supreme Court decisions,
starting with the 1990 case of Simex International v. Court of Appeals, holding that "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."
This fiduciary relationship means that the bank’s obligation to observe "high standards of integrity and
performance" is deemed written into every deposit agreement between a bank and its depositor. The
fiduciary nature of banking requires banks to assume a degree of diligence higher than that of a good
father of a family. Article 1172 of the Civil Code states that the degree of diligence required of an obligor
is that prescribed by law or contract, and absent such stipulation then the diligence of a good father of a
family. Section 2 of RA 8791 prescribes the statutory diligence required from banks – that banks must
observe "high standards of integrity and performance" in servicing their depositors.
Citytrust’s failure to timely examine its account, cancel the checks and notify petitioner of their alleged
loss/theft should mitigate petitioner’s liability, in accordance with Article 2179 of the Civil Code which
provides that if the plaintiff’s negligence was only contributory, the immediate and proximate cause of the
injury being the defendant’s lack of due care, the plaintiff may recover damages, but the courts shall
mitigate the damages to be awarded. For had Citytrust timely discovered the loss/theft and/or subsequent
encashment, their proceeds or part thereof could have been recovered. In line with the ruling in
Consolidated Bank, the Court deems it proper to allocate the loss between petitioner and Citytrust
on a 60-40 ratio.
ALLIED BANKING VS LIM SIO WAN

GR No. 133179 | March 27, 2008
Facts:
On November 14, 1983, respondent Lim Sio Wan deposited with petitioner Allied Banking
Corporation (Allied) a money market placement for a term of 31 days to mature on December 15,
1983, evidenced by Provisional Receipt No. 1356. On December 5, 1983, a person claiming to be
Lim Sio Wan called up Cristina So, an officer of Allied, and instructed to pre-terminate Lim Sio
Wan’s money market placement, to issue a manager’s check representing the proceeds of the
placement, and to give the check to one Santos who would pick up the check. Santos arrived at the
bank and signed the application form for a manager’s check to be issued. The bank issued
Manager’s Check No. 035669 representing the proceeds of Lim Sio Wan’s money market
placement in the name of Lim Sio Wan, as payee. The check was cross-checked "For Payee’s
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Account Only" and given to Santos. The manager’s check was deposited in the account of Filipinas
Cement Corporation (FCC) at respondent Metropolitan Bank and Trust Co. (Metrobank), with the
forged signature of Lim Sio Wan as indorser. The Allied check was deposited with Metrobank in
the account of FCC as Producers Bank’s payment of its obligation to FCC.
To clear the check and in compliance with the requirements of the Philippine Clearing House
Corporation (PCHC) Rules and Regulations, Metrobank stamped a guaranty on the check, which
reads: "All prior endorsements and/or lack of endorsement guaranteed." The check was sent to
Allied through the PCHC. Upon the presentment of the check, Allied funded the check even
without checking the authenticity of Lim Sio Wan’s purported indorsement. Thus, the amount on
the face of the check was credited to the account of FCC.
Upon the maturity date of the first money market placement, Lim Sio Wan went to Allied to
withdraw it.21 She was then informed that the placement had been pre-terminated upon her
instructions. She denied giving any instructions and receiving the proceeds thereof. She desisted
from further complaints when she was assured by the bank’s manager that her money would be
recovered. However, Lim Sio Wan, realizing that the promise that her money would be recovered
would not materialize, sent a demand letter to Allied asking for the payment of the first placement.
Allied refused to pay Lim Sio Wan, claiming that the latter had authorized the pre-termination of
the placement and its subsequent release to Santos. Lim Sio Wan filed with the RTC a Complaint
to recover the proceeds of her first money market placement. Sometime in February 1984, she
withdrew her second placement from Allied.
More than six (6) months after funding the check, Allied informed Metrobank that the signature
on the check was forged. Thus, Metrobank withheld the amount represented by the check from
FCC. Metrobank agreed to release the amount to FCC after the latter executed an Undertaking,
promising to indemnify Metrobank in case it was made to reimburse the amount.
Issues
1. whether Producers Bank is absolved of any liability for the reimbursement of amount adjudged
demandable. YES.
2. whether [Allied] liable to the extent of 60% of amount adjudged demandable in clear disregard
to the ultimate liability of Metrobank as guarantor of all endorsement on the check, it being the
collecting bank. YES.
Ruling:
The relationship between a bank and a client is one of debtor-creditor.
Articles 1953 and 1980 of the Civil Code provide:
Art. 1953. A person who receives a loan of money or any other fungible thing acquires the
ownership thereof, and is bound to pay to the creditor an equal amount of the same kind and
quality.
Art. 1980. Fixed, savings, and current deposits of money in banks and similar institutions shall be
governed by the provisions concerning simple loan.
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A bank deposit is in the nature of a simple loan or mutuum. In Citibank, N.A. (Formerly First
National City Bank) v. Sabeniano, this Court ruled that a money market placement is a simple loan
or mutuum. In Cebu International Finance Corporation v. Court of Appeals, a money market is
defined as follows:
[A] 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 open market. In a money market transaction, the investor is a lender who
loans his money to a borrower through a middleman or dealer.
In the case at bar, the money market transaction between the petitioner and the private respondent
is in the nature of a loan.44
Lim Sio Wan, as creditor of the bank for her money market placement, is entitled to payment upon
her request, or upon maturity of the placement, or until the bank is released from its obligation as
debtor. Until any such event, the obligation of Allied to Lim Sio Wan remains unextinguished.
Art. 1231 of the Civil Code enumerates the instances when obligations are considered
extinguished, thus:
Art. 1231. Obligations are extinguished:

(1) By payment or performance;
(2) By the loss of the thing due;
(3) By the condonation or remission of the debt;
(4) By the confusion or merger of the rights of creditor and debtor;
(5) By compensation;
(6) By novation.
Other causes of extinguishment of obligations, such as annulment, rescission, fulfillment of a
resolutory condition, and prescription, are governed elsewhere in this Code.
Lim Sio Wan did not authorize the release of her money market placement to Santos and the bank
had been negligent in so doing, there is no question that the obligation of Allied to pay Lim Sio
Wan had not been extinguished. Art. 1240 of the Code states that "payment shall be made to the
person in whose favor the obligation has been constituted, or his successor in interest, or any person
authorized to receive it."
Payment made by the debtor to a wrong party does not extinguish the obligation as to the creditor,
if there is no fault or negligence which can be imputed to the latter. Even when the debtor acted in
utmost good faith and by mistake as to the person of his creditor, or through error induced by the
fraud of a third person, the payment to one who is not in fact his creditor, or authorized to receive
such payment, is void, except as provided in Article 1241. Such payment does not prejudice the
creditor, and accrual of interest is not suspended by it.
Since there was no effective payment of Lim Sio Wan’s money market placement, the bank still
has an obligation to pay her at six percent (6%) interest from March 16, 1984 until the payment
thereof.
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We cannot, however, say outright that Allied is solely liable to Lim Sio Wan.
Allied claims that Metrobank is the proximate cause of the loss of Lim Sio Wan’s money. It points
out that Metrobank guaranteed all prior indorsements inscribed on the manager’s check, and
without Metrobank’s guarantee, the present controversy would never have occurred. We are not
persuaded.
In Bank of the Philippine Islands v. Court of Appeals, we said that the drawee bank is liable for
60% of the amount on the face of the negotiable instrument and the collecting bank is liable for
40%.
Similarly, we ruled in Associated Bank v. Court of Appeals that the issuing institution and the
collecting bank should equally share the liability for the loss of amount represented by the checks
concerned due to the negligence of both parties:
The Court finds as reasonable, the proportionate sharing of fifty percent-fifty percent (50%-50%).
Due to the negligence of the Province of Tarlac in releasing the checks to an unauthorized person
A reading of the facts of the two immediately preceding cases would reveal that the reason why
the bank or institution which issued the check was held partially liable for the amount of the check
was because of the negligence of these parties which resulted in the issuance of the checks.
In the instant case, the trial court correctly found Allied negligent in issuing the manager’s check
and in transmitting it to Santos without even a written authorization. Allied’s negligence must be
considered as the proximate cause of the resulting loss. Had Allied exercised the diligence due
from a financial institution, the check would not have been issued and no loss of funds would have
resulted.
The liability of Allied, however, is concurrent with that of Metrobank as the last indorser of the
check. When Metrobank indorsed the check in compliance with the PCHC Rules and
Regulations55 without verifying the authenticity of Lim Sio Wan’s indorsement and when it
accepted the check despite the fact that it was cross-checked payable to payee’s account only,56
its negligent and cavalier indorsement contributed to the easier release of Lim Sio Wan’s money
and perpetuation of the fraud. Given the relative participation of Allied and Metrobank to the
instant case, both banks cannot be adjudged as equally liable. Hence, the 60:40 ratio of the
liabilities of Allied and Metrobank, as ruled by the CA, must be upheld.
As to the claim that there was unjust enrichment on the part of Producers Bank, the same is correct.
Allied correctly claims in its petition that Producers Bank should reimburse Allied for whatever
judgment that may be rendered against it pursuant to Art. 22 of the Civil Code, which provides:
"Every person who through an act of performance by another, or any other means, acquires or
comes into possession of something at the expense of the latter without just cause or legal ground,
shall return the same to him."
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In the instant case, Lim Sio Wan’s money market placement in Allied Bank was pre-terminated
and withdrawn without her consent. Moreover, the proceeds of the placement were deposited in
Producers Bank’s account in Metrobank without any justification. With such payment, Producers
Bank’s indebtedness to FCC was extinguished, thereby benefitting the former. Clearly, Producers
Bank was unjustly enriched at the expense of Lim Sio Wan. Based on the facts and circumstances
of the case, Producers Bank should reimburse Allied and Metrobank for the amounts the two latter
banks are ordered to pay Lim Sio Wan.
Producers Bank must be held liable to Allied and Metrobank for the amount of the check plus 12%
interest per annum, moral damages, attorney’s fees, and costs of suit which Allied and Metrobank
are adjudged to pay Lim Sio Wan based on a proportion of 60:40.
ASSOCIATED BANK VS TAN

CAUBANG
BENGUET MANAGEMENT VS MONETARY BOARD

CRIADOR
SAN FERNANDO RURAL BANK VS PAMPANGA

DALIAN
FACTS:
Pampanga Omnibus Development Corporation (PODC) was the registered owner of a parcel of land in
San Fernando, Pampanga. PODC secured two loans from San Fernando Rural Bank, Inc. (SAFER Bank) and
Masantol Rural Bank, Inc. To secure payment of the loans, PODC executed a real estate mortgage over
the subject lot in favor of the creditor banks. The contract provided that in case of failure or refusal of the
mortgagor to pay the obligation secured thereby, the real estate mortgage may be extrajudicially
foreclosed in accordance with Act No. 3135, as amended. Eliza M. Garbes (PODC President), together with
her husband Aristedes Garbes, secured a P950,000.00 loan from SAFER Bank. Upon PODC's failure to pay
its loan to SAFER Bank, the latter filed a petition for extrajudicial foreclosure of real estate mortgage and
at the auction, SAFER Bank emerged as the winning bidder for P1,245,982.05. The Ex-Officio Sheriff
executed a Certificate of Sale which stated that "the period of redemption of the property shall expire
one (1) year after registration in the Register of Deeds." The certificate was annotated on June 7, 2001.
On May 11, 2002, PODC executed a notarized deed of assignment in favor of Dominic G. Aquino over its
right to redeem the property. Aquino offered to redeem the property for P1,588,094.28, but SAFER Bank
rejected the offer and demanded the payment of P16,805,414.71 (including the loan of the spouses
Garbes) as redemption money. Aquino rejected the demand of SAFER Bank. Aquino remitted
P1,588,094.28 to the Ex-Officio Sheriff as redemption money for the property. The Ex-Officio Sheriff
computed the redemption price (based on the General Banking Act [R.A. No. 8791], and The Rural Bank
Act of 1992 R.A. No. 7353) to be P5,194,742.50. When Aquino was apprised of this, he remitted on June
7, 2002 the remaining balance. The Ex-Officio Sheriff issued on June 7, 2002 a Certificate of Redemption.
On June 10, 2002, SAFER Bank executed an Affidavit of Consolidation over the property. It was alleged
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therein that PODC or any other person/entity with the right of redemption did not exercise their right to
repurchase within one year from June 7, 2001. The Ex-Officio Sheriff then informed SAFER Bank that
Aquino had redeemed the property and requested SAFER Bank, to turn over the owner's duplicate before
the redemption price of P5,194,742.50 would be remitted. However, SAFER Bank refused to do so.
Meanwhile, the Ex-Officio Sheriff fell ill and failed to file the Certificate of Redemption with the Register
of Deeds. Hence, the Annotation of the Redemption was made only on June 17, 2002. The application of
SAFER Bank for a writ of possession was then granted by the RTC considering the fact that the registry of
the Certificate of Redemption and other related documents was annotated only on June 17, 2002. Hence,
the same was not registered within the aforesaid one (1) year redemption period. The CA reversed the
ruling of the RTC, stating that Aquino, as successor-in-interest of PODC, had redeemed the property on
June 7, 2002 in accordance with Section 6 of Act No. 3135, as amended, and in relation to Section 27(a),
Rule 39 of the Rules of Court. Thus, although the Certificate of Redemption was not registered before the
Register of Deeds, he was entitled to the possession thereof; the registration of the Certificate of
Redemption in the Office of the Register of Deeds is merely required to bind third persons. SAFER Bank
moved for the reconsideration of its decision on the ground that, under Section 47 of R.A. No. 8791, PODC
had only up to the registration of the Certificate of Foreclosure Sale (June 7, 2001) but not more than
three (3) months from the public auction, whichever is earlier, within which to redeem the property;
PODC, on the other hand, assigned its right to redeem the property on May 11, 2002, long after the
redemption period had expired; hence, PODC had no more right to assign it to Aquino. Consequently, the
latter had no right to redeem the property, and the Certificate of Redemption executed by the Ex-Officio
Sheriff was null and void. Moreover, Aquino failed to pay the correct amount of the redemption price.
SAFER Bank claimed that it acted in good faith when it had its Affidavit of Consolidation registered in the
Register of Deeds. In sum, it ascribes error on the part of the CA in nullifying the order of the RTC.
ISSUE: Whether Aquino had lawfully redeemed the property as provided in Section 47 of R.A. No. 8791.
HELD: The Court did not resolve the issue. The threshold issue between SAFER Bank and Aquino in the
RTC was the correct amount of redemption money under Section 47 of R.A. No. 8791. Aquino had the
right to file an action against SAFER Bank in the RTC in the exercise of its general jurisdiction to enforce
redemption within the redemption period to preserve its right to redeem the foreclosed property. It bears
stressing that the controversy between the parties relates to the precise amount of redemption: SAFER
Bank contended that, under the real estate mortgage executed by PODC in its favor, the loan account of
the spouses Garbes was secured by the property covered by said deed; on the other hand, PODC and
Aquino averred that only the loan account of PODC was secured by the mortgage of its property. Indeed,
the parties could have raised the issue of the redemption period under the second paragraph of Section
47 of R.A. No. 8791. The provision reads: Notwithstanding Act 3135, juridical persons whose property is
being sold pursuant to an extrajudicial foreclosure, shall have the right to redeem the property in
accordance with this provision until, but not after, the registration of the certificate of foreclosure sale
with the applicable Register of Deeds which in no case shall be more than three (3) months after
foreclosure, whichever is earlier. Owners of property that has been sold in a foreclosure sale prior to the
effectivity of this Act shall retain their redemption rights until their expiration. The ministerial duty of the
RTC to issue a writ of possession does not become discretionary simply because the Register of Deeds had
elevated in consulta to the LRA the question of whether the Torrens title should be issued in favor of
SAFER Bank whose Affidavit of Consolidation was registered in the Office of the Register of Deeds, or in
favor of Aquino who claimed to have redeemed the property on June 7, 2002 as gleaned from the
Certificate of Redemption of the Ex-Officio Sheriff but registered only on June 17, 2002. Aquino claimed
to have redeemed the property with the correct redemption price and within the one year period of
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redemption. The LRA himself admitted that the issue of whether Aquino had remitted the correct
redemption price is a matter that should be resolved by the regular courts. The LRA was vested with
jurisdiction to resolve only the registrability of the Affidavit of Consolidation executed by SAFER Bank and
the Certificate of Redemption executed by the Ex-Officio Sheriff. We need not rule on the issue of whether
Aquino had lawfully redeemed the property as provided in Section 47 of R.A. No. 8791. This issue shall be
passed upon by the RTC in Civil Case No. 12785 after the parties present their testimonial and
documentary evidence.
RURAL BANK OF SAN MIGUEL, INC. and HILARIO P. SORIANO vs. MONETARY
BOARD, BANGKO SENTRAL NG PILIPINAS and PHILIPPINE DEPOSIT
INSURANCE CORPORATION
G.R. No. 150886 February 16, 2007
FACTS
Petitioner Rural Bank of San Miguel, Inc. (RBSM) was a domestic corporation engaged in
banking. It started operations in 1962 and by year 2000 had 15 branches in Bulacan.
The comptrollership/monitoring report as of October 31, 1999 by Mr. Wilfredo B. Domo-ong,

Director, Department of Rural Banks, showed that [RBSM]:
(a) is unable to pay its liabilities as they become due in the ordinary course of
business;
(b) cannot continue in business without involving probable losses to its depositors
and creditors; that the management of the bank had been accordingly informed of
the need to infuse additional capital to place the bank in a solvent financial
condition and was given adequate time within which to make the required infusion
and that no infusion of adequate fresh capital was made;
On the basis of such report, the Monetary Board (MB), the governing board of respondent Bangko
Sentral ng Pilipinas (BSP), issued Resolution No. 105 prohibiting RBSM from doing business in
the Philippines, placing it under receivership and designating respondent Philippine Deposit
Insurance Corporation (PDIC) as receiver.
Petitioners argue that Resolution No. 105 was bereft of any basis considering that no complete
examination had been conducted before it was issued. Petitioners contend that there must be a
current, thorough and complete examination before a bank can be closed under Section 30 of RA
7653.
Section 30 of RA 7653 provides:
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SECTION 30. Proceedings in Receivership and Liquidation. — Whenever, upon
report of the head of the supervising or examining department, the Monetary
Board finds that a bank or quasi-bank:
(a) is unable to pay its liabilities as they become due in the ordinary course of
business: Provided, That this shall not include inability to pay caused by
extraordinary demands induced by financial panic in the banking community;
(b) has insufficient realizable assets, as determined by the [BSP] to meet its
liabilities; or
(c) cannot continue in business without involving probable losses to its depositors
or creditors; or
(d) has willfully violated a cease and desist order under Section 37 that has become
final, involving acts or transactions which amount to fraud or a dissipation of the
assets of the institution; in which cases, the Monetary Board 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.
Petitioners also cite Banco Filipino Savings & Mortgage Bank v. Monetary Board, Central Bank
of the Philippines wherein the Court ruled:
There is no question that under Section 29 of the Central Bank Act, the following
are the mandatory requirements to be complied with before a bank found to be
insolvent is ordered closed and forbidden to do business in the Philippines: Firstly,
an examination shall be conducted by the head of the appropriate supervising
or examining department or his examiners or agents into the condition of the
bank; secondly, it shall be disclosed in the examination that the condition of the
bank is one of insolvency, or that its continuance in business would involve
probable loss to its depositors or creditors; thirdly, the department head concerned
shall inform the Monetary Board in writing, of the facts; and lastly, the Monetary
Board shall find the statements of the department head to be true.
Petitioners assert that an examination is necessary and not a mere report before the MB can order
its closure. Otherwise the decision to close a bank would be arbitrary.
ISSUE
Whether or not Section 30 of RA 7653 (also known as the New Central Bank Act) and applicable
jurisprudence require a current and complete examination of the bank before it can be closed and
placed under receivership.
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RULING
NO. Section 30 of RA 7653 does not require a current and complete examination of the bank
before it can be closed and placed under receivership.
RA 265, including Section 29 thereof, was expressly repealed by RA 7653 which took effect in
1993. Resolution No. 105 was issued on January 21, 2000. Hence, petitioners’ reliance on Banco
Filipino which was decided under RA 265 was misplaced.
The court ruled that MB and BSP complied with all the requirements of RA 7653. By relying on
a report before placing a bank under receivership, the MB and BSP did not only follow the letter
of the law, they were also faithful to its spirit, which was to act expeditiously.
Accordingly, the issuance of Resolution No. 105 was untainted with arbitrariness.
CENTRAL BANK EMPLOYEES ASS. VS BSP

DELFIN
LETICIA G. MIRANDA vs. PHILIPPINE DEPOSIT INSURANCE CORPORATION,

BANGKO SENTRAL NG PILIPINAS and PRIME SAVINGS BANK
G.R. No. 169334 September 8, 2006
FACTS: Miranda was a depositor of Prime Savings Bank, Santiago City Branch. On June 3,
1999, she withdrew substantial amounts from her account, but instead of cash she opted to be
issued a crossed cashier's check. She was thus issued cashier's check no. 0000000518 in the sum
of P2.5M and cashier's check no. 0000000514 in the amount of P3M.
Petitioner deposited the two checks into her account in another bank on the same day,
however, BSP suspended the clearing privileges of Prime Savings Bank effective 2:00 p.m. of
June 3, 1999. The two checks of petitioner were returned to her unpaid.
On June 4, 1999, Prime Savings Bank declared a bank holiday. On January 7, 2000, the BSP
placed Prime Savings Bank under the receivership of the Philippine Deposit Insurance
Corporation (PDIC).6
MIRANDA filed a civil action for sum of money in the to recover the funds from her unpaid
checks against Prime Savings Bank, PDIC and the BSP.
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RTC: Judgment on the pleadings was rendered against PDIC, BSP and Prime Bank, to pay jointly
and solidarily the amount of P5,502,000.00 to the plaintiff.
CA: reversed the trial court and ruled in favor of the PDIC and BSP, dismissing the case against
them, without prejudice to the right of petitioner to file her claim before the court designated to
adjudicate on claims against Prime Savings Bank.
CONTENTIONS:
Petitioner contends that:
1. she ceased to be a depositor upon withdrawal of her deposit and the issuance of the two cashier's
checks to her. As a holder in due course of the cashier's checks as defined under Sections 52 and
191 of the Negotiable Instruments Law, she is an assignee of the funds of Prime Savings Bank as
drawer thereof and entitled to its immediate payment.10
2. the present claim is not a disputed claim in contemplation of Section 30 of the New Central
Bank Act. Since disputed claims refer to all claims, whether they be against the assets of the
insolvent bank, for specific performance, breach of contract, or damages, it is manifest that
petitioner's claim cannot fall within the purview of a disputed claim because she is recovering
assigned funds which are segregated monies of Prime Savings Bank.11
3. by the mere issuance of the cashier's check, the funds represented by the check are transferred
from the credit of the maker to that of the payee or holder. Hence, petitioner alleges that she cannot
be placed on the same footing with the ordinary creditors of the bank because Section 30 of R.A.
No. 7653 is for equality among creditors. She avers that she is not a creditor thus is entitled to the
immediate payment of her claim, pursuant to Section 189 of the Negotiable Instruments Law and
existing jurisprudence. She argues that putting her on equal footing with ordinary creditors, would
contravene the provisions of the Negotiable Instruments Law and would greatly diminish her rights
as a holder in due course of said two cashier's checks.12
4. PDIC and BSP contrary to Sections 185 and 189 of the Negotiable Instruments Law have caused
damage to the petitioner and should be held solidarily liable by indemnifying the petitioner for the
value of the two cashier's checks.13
Respondents, argues that:
1. the mere issuance of the cashier's checks did not operate as assignment of funds in favor of the
petitioner. They argue that even prior to the issuance of the cashier's checks, the bank was already
cash-strapped, which negates petitioner's claim that there was an assignment of funds in her
favor.14 There can be no assignment of funds when there is no funds to speak of in the first place.
2. the cashier's checks issued to petitioner were not certified but crossed, hence, there was no
assignment of funds made by the cashier or manager of respondent Prime Savings Bank-Santiago
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City Branch as it had insufficient funds to meet the said checks either in its cash vault or with
respondent BSP to clear the said checks.15
3. the instant case involves a disputed claim of sum of money against a closed financial institution.
Sections 30 and 31 of R.A. No. 7653, exclusively vests the authority to assess, evaluate and
determine the condition of any bank with the BSP, while the PDIC has the primary responsibility
of acting as receiver or liquidator of the closed financial institution.16 Since the relationship
between petitioner and Prime Savings Bank is one of creditor and debtor, petitioner should file her
claim with the liquidation court constituted precisely for purposes of adjudicating claims against
the bank in accordance with the rules on concurrence and preference of credits.17
4. PDIC alleges that it was impleaded in its representative capacity as the receiver/liquidator of the
closed institution, therefore, it has no direct, personal and solidary liability for the payment of the
two cashier's checks. Its involvement came about only because a bank under receivership or
liquidation cannot sue or be sued except through its receiver or liquidator.18
5. BSP also insists that not being a party to the said checks nor for imposing sanctions on co-
respondent Prime Savings Bank, is not liable on the said crossed cashier's checks.19
ISSUE:
1. WON the two cashier's checks operate as an assignment of funds in the hands of the petitioner;
(NO.)
2. WON the claim lodged by the petitioner is a disputed claim under Section 30 of R.A. No.
7653, otherwise known as the New Central Bank Act, and therefore, under the jurisdiction
of the liquidation court (YES)
3. WON the respondents are solidarily liable to the petitioner. (NO)
HELD:
1. NO, the two cashier's checks issued by Prime Savings Bank do not constitute an assignment of
funds in the hands of the petitioner as there were no funds to speak of in the first place. The bank
was financially insolvent for sometime, even before the issuance of the checks on June 3, 1999.
As the Court of Appeals correctly ruled, the issuance of the cashier's checks to petitioner did not
constitute an assignment of funds, of which there was practically none at the time these were
issued, as the bank was in dire financial straits for some time.20
2. YES, the claim lodged by the petitioner qualifies as a disputed claim subject to the
jurisdiction of the liquidation court. Regular courts do not have jurisdiction over actions filed
by claimants against an insolvent bank, unless there is a clear showing that the action taken by the
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BSP, through the Monetary Board in the closure of financial institutions was in excess of
jurisdiction, or with grave abuse of discretion.
The power and authority of the Monetary Board to close banks and liquidate them thereafter when
public interest so requires is an exercise of the police power of the State. Police power, however,
is subject to judicial inquiry. It may not be exercised arbitrarily or unreasonably and could be set
aside if it is either capricious, discriminatory, whimsical, arbitrary, unjust, or is tantamount to a
denial of due process and equal protection clauses of the Constitution.21
"Disputed claims" refer to all claims, whether they be against the assets of the insolvent bank, for
specific performance, breach of contract, damages, or whatever.22 Petitioner's claim which
involved the payment of the two cashier's checks that were not honored by Prime Savings
Bank due to its closure falls within the ambit of a claim against the assets of the insolvent
bank. The issuance of the cashier's checks by Prime Savings Bank to the petitioner created a
debtor/creditor relationship between them. This disputed claim should therefore be lodged in
the liquidation proceedings by the petitioner as creditor, since the closure of Prime Savings
Bank has rendered all claims subsisting at that time moot which can best be threshed out by
the liquidation court and not the regular courts.
It is well-settled in both law and jurisprudence that the Central Monetary Authority, through the
Monetary Board, is vested with exclusive authority to assess, evaluate and determine the condition
of any bank, and finding such condition to be one of insolvency, or that its continuance in business
would involve a probable loss to its depositors or creditors, forbid bank or non-bank financial
institution to do business in the Philippines; and shall designate an official of the BSP or other
competent person as receiver to immediately take charge of its assets and liabilities.23
In Central Bank of the Philippines v. De la Cruz,24 we held that the actions of the Monetary Board
in proceedings on insolvency are explicitly declared by law to be "final and executory." They may
not be set aside, or restrained, or enjoined by the courts, except upon "convincing proof that the
action is plainly arbitrary and made in bad faith.
Hence, as clearly laid down in Ong v. Court of Appeals,25 the rationale behind judicial liquidation
is intended to prevent multiplicity of actions against the insolvent bank. It is a pragmatic
arrangement designed to establish due process and orderliness in the liquidation of the bank, to
obviate the proliferation of litigations and to avoid injustice and arbitrariness. The lawmaking body
contemplated that for convenience, only one court, if possible, should pass upon the claims against
the insolvent bank and that the liquidation court should assist the Superintendent of Banks and
regulate his operations.
3. No, it is only Prime Savings Bank that is liable to pay for the amount of the two cashier's
checks. Solidary liability cannot attach to the BSP, in its capacity as government regulator
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of banks, and the PDIC as statutory receiver under R.A. No. 7653, because they are the
principal government agencies mandated by law to determine the financial viability of banks
and quasi-banks, and facilitate receivership and liquidation of closed financial institutions,
upon a factual determination of the latter's insolvency.
As correctly pointed out by the Court of Appeals, the BSP should not be held liable on the crossed
cashier's checks for it was not a party to the issuance of the same; nor can it be held liable for
imposing the sanctions on Prime Savings Bank which indirectly affected Miranda, since it is
mandated under Sec. 37 of R.A. No. 7653 to act accordingly.26 The BSP, through the Monetary
Board was well within its discretion to exercise this power granted by law to issue a resolution
suspending the interbank clearing privileges of Prime Savings Bank, having made a factual
determination that the bank had deficient cash reserves deposited before the BSP. There is no
showing that the BSP abused this discretionary power conferred upon it by law.
In addition, co-respondent PDIC was impleaded as a party-litigant only in its representative

capacity as the receiver/liquidator of Prime Savings Bank. Both BSP and PDIC cannot therefore
be held directly and solidarily liable for the payment of the two cashier's checks. Sole liability rests
with Prime Savings Bank.
In the absence of fraud, the purchase of a cashier's check, like the purchase of a draft on a
correspondent bank, creates the relation of creditor and debtor, not that of principal and agent, with
the result that the purchaser or holder thereof is not entitled to a preference over general creditors
in the assets of the bank issuing the check, when it fails before payment of the check. However, in
a situation involving the element of fraud, where a cashier's check is purchased from a bank at
a time when it is insolvent, as its officers know or are bound to know by the exercise of
reasonable diligence, it has been held that the purchase is entitled to a preference in the assets
of the bank on its liquidation before the check is paid.27
As correctly found by the Court of Appeals:
Prime Savings as a bank did not collapse overnight but was hemorrhaging and in financial extremis
for some time, a fact which could not have gone unnoticed by the bank officers. They could not
have issued in good faith checks for the total sum of P5,502,000.00 knowing that the bank's coffers
could not meet this.28
Clearly, there was fraud or the intent to deceive when the two cashier's checks dated June 3, 1999
were issued by Prime Savings Bank to the petitioner.
In the distribution of assets of Prime Savings Bank, Section 31 of the New Central Bank Act which
provides that "[i]n case of liquidation of a bank or quasi-bank, after payment of the cost of
proceedings, including reasonable expenses and fees of the receiver to be allowed by the court, the
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receiver shall pay the debts of such institution, under order of the court, in accordance with the
rules on concurrence and preference of credit as provided in the Civil Code," should apply.
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated February
23, 2005 and the Resolution dated July 7, 2005, in CA-G.R. CV No. 77556, are AFFIRMED with
the MODIFICATION that petitioner Leticia G. Miranda is entitled to a preference in the assets
of Prime Savings Bank in its liquidation for the amounts of P3,002,000.00 and P2,500,000.00,
respectively stated in Cashier's Check No. 0000000514 and 0000000518 dated June 3, 1999 in the
proceedings before the liquidation court designated to adjudicate on all claims against Prime
Savings Bank, in accordance with the rules on concurrence and preference of credits as provided
in the Civil Code. SO ORDERED.
SORIANO vs. PEOPLE AND BSP

GR NO. 162336, FEB. 1, 2010
FACTS:
Soriano was charged for estafa through falsification of commercial documents for allegedly
securing a loan of Php8 million in the name of two (2) persons when in fact these individuals did
not make any loan in the bank, nor did the bank's officers approved or had any information about
the said loan. The state prosecutor conducted a Preliminary Investigation on the basis of letters
sent by the officers of Special Investigation of BSP together with 5 affidavits and filed two (2)
separate information against Soriano for estafa through falsification of commercial documents and
violation of DOSRI loans under Section of RA337, as amended by PD 1795
Soriano moved for the quashal of the two (2) informations based on the ground:
1. that the court has no jurisdiction over the offense charged, for the letter transmitted by the
BSP to the DOJ constituted the complaint and was defective for failure to comply with the
mandatory requirements of Sec. 3(a), Rule 112 of the Rules of Court, such as statment of
address of the petitioner and oath of subscription and the signatories were not authorized
persons to file the complaint; and
2. that the facts charged do not constitute an offense, for the commission of estafa uner par.
1(b) of Art. 315 of the RPC is inherently incompatible with the violation of DORSI law
(Sec. 83 or RA 337 as amended by PD 1795), and therefore a person cannot be charged of
both offenses.
ISSUE:
Whether a loan transaction within the ambit of the DOSRI law (violation of Section 83 of RA 337,
as amended) could be the subject of Estafa under Article 315
HELD:
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We have examined the two informations against petitioner and we find that they contain
allegations which, if hypothetically admitted, would establish the essential elements of the crime
of DOSRI violation and estafa thru falsification of commercial documents.
Petitioner raises the theory that he could not possibly be held liable for estafa in concurrence with
the charge for DOSRI violation. According to him, the DOSRI charge presupposes that he acquired
a loan, which would make the loan proceeds his own money and which he could neither possibly
misappropriate nor convert to the prejudice of another, as required by the statutory definition of
estafa. On the other hand, if petitioner did not acquire any loan, there can be no DOSRI violation
to speak of. Thus, petitioner posits that the two offenses cannot co-exist. This theory does not
persuade us.
Petitioner’s theory is based on the false premises that the loan was extended to him by the bank in
his own name, and that he became the owner of the loan proceeds. Both premises are wrong.
The bank money (amounting to ₱8 million) which came to the possession of petitioner was money
held in trust or administration by him for the bank, in his fiduciary capacity as the President of said
bank. It is not accurate to say that petitioner became the owner of the ₱8 million because it was
the proceeds of a loan. That would have been correct if the bank knowingly extended the loan to
petitioner himself. But that is not the case here. According to the information for estafa, the loan
was supposed to be for another person, a certain "Enrico Carlos"; petitioner, through falsification,
made it appear that said "Enrico Carlos" applied for the loan when in fact he ("Enrico Carlos") did
not. Through such fraudulent device, petitioner obtained the loan proceeds and converted the same.
Under these circumstances, it cannot be said that petitioner became the legal owner of the ₱8
million. Thus, petitioner remained the bank’s fiduciary with respect to that money, which makes
it capable of misappropriation or conversion in his hands.
Section 83 of RA 337 reads:
Section 83. No director or officer of any banking institution shall, either directly or indirectly, for
himself or as the representative or agent of others, borrow any of the deposits of funds of such
bank, nor shall he become a guarantor, indorser, or surety for loans from such bank to others, or
in any manner be an obligor for moneys borrowed from the bank or loaned by it, except with the
written approval of the majority of the directors of the bank, excluding the director concerned. Any
such approval shall be entered upon the records of the corporation and a copy of such entry shall
be transmitted forthwith to the Superintendent of Banks. The office of any director or officer of a
bank who violates the provisions of this section shall immediately become vacant and the director
or officer shall be punished by imprisonment of not less than one year nor more than ten years and
by a fine of not less than one thousand nor more than ten thousand pesos. x x x
The prohibition in Section 83 is broad enough to cover various modes of borrowing. It covers loans
by a bank director or officer (like herein petitioner) which are made either: (1) directly,
(2) indirectly, (3) for himself, (4) or as the representative or agent of others. It applies even if the
director or officer is a mere guarantor, indorser or surety for someone else's loan or is in any
manner an obligor for money borrowed from the bank or loaned by it. The covered transactions
are prohibited unless the approval, reportorial and ceiling requirements under Section 83 are
complied with.
The prohibition is intended to protect the public, especially the depositors, from the overborrowing
of bank funds by bank officers, directors, stockholders and related interests, as such overborrowing
may lead to bank failures. It has been said that "banking institutions are not created for the benefit
of the directors [or officers]. While directors have great powers as directors, they have no special
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privileges as individuals. They cannot use the assets of the bank for their own benefit except as
permitted by law. Stringent restrictions are placed about them so that when acting both for the
bank and for one of themselves at the same time, they must keep within certain prescribed lines
regarded by the legislature as essential to safety in the banking business".
A direct borrowing is obviously one that is made in the name of the DOSRI himself or where the
DOSRI is a named party, while an indirect borrowing includes one that is made by a third party,
but the DOSRI has a stake in the transaction. The latter type – indirect borrowing – applies here.
The information in Criminal Case 238-M-2001 alleges that petitioner "in his capacity as President
of Rural Bank of San Miguel – San Ildefonso branch x x x indirectly borrow[ed] or secure[d] a loan
with [RBSM] x x x knowing fully well that the same has been done by him without the written
consent and approval of the majority of the board of directors x x x, and which consent and
approval the said accused deliberately failed to obtain and enter the same upon the records of said
banking institution and to transmit a copy thereof to the supervising department of the said bank x
x x by using the name of one depositor Enrico Carlos x x x, the latter having no knowledge of the
said loan, and once in possession of the said amount of eight million pesos (₱8 million),
[petitioner] converted the same to his own personal use and benefit".
The foregoing information describes the manner of securing the loan as indirect; names petitioner
as the benefactor of the indirect loan; and states that the requirements of the law were not complied
with. It contains all the required elements for a violation of Section 83, even if petitioner did not
secure the loan in his own name.
The broad interpretation of the prohibition in Section 83 is justified by the fact that it even
expressly covers loans to third parties where the third parties are aware of the transaction (such as
principals represented by the DOSRI), and where the DOSRI’s interest does not appear to be
beneficial but even burdensome (such as in cases when the DOSRI acts as a mere guarantor or
surety). If the law finds it necessary to protect the bank and the banking system in such situations,
it will surely be illogical for it to exclude a case like this where the DOSRI acted for his own
benefit, using the name of an unsuspecting person. A contrary interpretation will effectively allow
a DOSRI to use dummies to circumvent the requirements of the law.
In sum, the informations filed against petitioner do not negate each other.
PSBANK VS SENATE
ESCALANTE
BSB GROUP, INC., represented by its President, Mr. RICARDO BANGAYAN, Petitioner,
vs. SALLY GO a.k.a. SALLY GO-BANGAYAN, Respondent.
G.R. No. 168644 February 16, 2010
FACTS:
Petitioner, the BSB Group, Inc., is a duly organized domestic corporation presided by its
representative, Ricardo Bangayan, husband of herein respondent Sally Go. Respondent was
employed as a cashier, and was engaged, among others, to receive and account for the payments
made by the various customers of the company.
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In 2002, Bangayan filed with the Manila Prosecutor’s Office a complaint for estafa and/or qualified
theft against respondent, alleging that several checks representing the aggregate amount of
₱1,534,135.50 issued by the company’s customers in payment of their obligation were, instead of
being turned over to the company’s coffers, indorsed by respondent who deposited the same to her
personal banking account maintained at Security Bank and Trust Company (Security Bank) in
Divisoria, Manila Branch. Upon a finding that the evidence adduced was uncontroverted, the
assistant city prosecutor recommended the filing of the Information for qualified theft against
respondent.
Respondent entered a negative plea when arraigned. The trial ensued. On the premise that
respondent had allegedly encashed the subject checks and deposited the corresponding amounts
thereof to her personal banking account, the prosecution moved for the issuance of subpoena duces
tecum /ad testificandum against the respective managers or records custodians of Security Bank’s
Divisoria Branch, as well as of the Asian Savings Bank (now Metropolitan Bank & Trust Co.
[Metrobank]), in Jose Abad Santos, Tondo, Manila Branch. The trial court granted the motion and
issued the corresponding subpoena.
Meanwhile, the prosecution was able to present in court the testimony of Elenita Marasigan
(Marasigan), the representative of Security Bank. In a nutshell, Marasigan’s testimony sought to
prove that between 1988 and 1989, respondent, while engaged as cashier at the BSB Group, Inc.,
was able to run away with the checks issued to the company by its customers, endorse the same,
and credit the corresponding amounts to her personal deposit account with Security Bank. In the
course of the testimony, the subject checks were presented to Marasigan for identification and
marking as the same checks received by respondent, endorsed, and then deposited in her personal
account with Security Bank. But before the testimony could be completed, respondent filed a
Motion to Suppress, seeking the exclusion of Marasigan’s testimony and accompanying
documents thus far received, bearing on the subject Security Bank account. This time respondent
invokes, in addition to irrelevancy, the privilege of confidentiality under R.A. No. 1405.
Aggrieved, and believing that the trial court gravely abused its discretion in acting the way it did,
respondent elevated the matter to the Court of Appeals via a petition for certiorari under Rule 65.
Finding merit in the petition, the Court of Appeals reversed and set aside the assailed orders of the
trial court in its April 20, 2005 Decision.
ISSUE:
Whether or not the testimony on the particulars of respondent’s account with Security Bank, as
well as of the corresponding evidence of the checks allegedly deposited in said account, constitutes
an unallowable inquiry under R.A. 1405.
HELD:
YES. The Court found guidance in the relevant portions of the legislative deliberations on Senate
Bill No. 351 and House Bill No. 3977, which later became the Bank Secrecy Act, and it held that
the absolute confidentiality rule in R.A. No. 1405 actually aims at protection from unwarranted
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inquiry or investigation if the purpose of such inquiry or investigation is merely to determine the
existence and nature, as well as the amount of the deposit in any given bank account.
What indeed constitutes the subject matter in litigation in relation to Section 2 of R.A. No. 1405
has been pointedly and amply addressed in Union Bank of the Philippines v. Court of Appeals, in
which the Court noted that the inquiry into bank deposits allowable under R.A. No. 1405 must be
premised on the fact that the money deposited in the account is itself the subject of the action.
Given this perspective, we deduce that the subject matter of the action in the case at bar is to be
determined from the indictment that charges respondent with the offense, and not from the
evidence sought by the prosecution to be admitted into the records. In the criminal Information
filed with the trial court, respondent, unqualifiedly and in plain language, is charged with qualified
theft by abusing petitioner’s trust and confidence and stealing cash. The said Information makes
no factual allegation that in some material way involves the checks subject of the testimonial and
documentary evidence sought to be suppressed. Neither do the allegations in said Information
make mention of the supposed bank account in which the funds represented by the checks have
allegedly been kept.
In other words, it can hardly be inferred from the indictment itself that the Security Bank account
is the ostensible subject of the prosecution’s inquiry. Without needlessly expanding the scope of
what is plainly alleged in the Information, the subject matter of the action in this case is the money
alleged to have been stolen by respondent, and not the money equivalent of the checks which are
sought to be admitted in evidence. Thus, it is that, which the prosecution is bound to prove with
its evidence, and no other.
It comes clear that the admission of testimonial and documentary evidence relative to respondent’s
Security Bank account serves no other purpose than to establish the existence of such account, its
nature and the amount kept in it. It constitutes an attempt by the prosecution at an impermissible
inquiry into a bank deposit account the privacy and confidentiality of which is protected by law.
On this score alone, the objection posed by respondent in her motion to suppress should have
indeed put an end to the controversy at the very first instance it was raised before the trial court.
GSIS VS INDUSTRIAL BANK OF KOREA

FLORENTINO
JV EJERCITO VS SANDIGANBAYAN
FUENTES
PDIC VS CITIBANK
GR No. 170290 April 11, 2012
FACTS: Respondents Citibank and Bank of America are banks existing under the laws of the
United States of America and duly licensed to do business in the Philippines, with offices in Makati
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City. In 1977, Petitioner Philippine Deposit Insurance Corporation (PDIC), a government
instrumentality, discovered that Citibank and Bank of America received from their head office and
other foreign branches funds in dollars, covered by Certificate of Dollar Time Deposit. These funds
were not reported by the Citibank and Bank of America to PDIC as deposit liabilities that were
subject to assessment for insurance. As such, in a letter, PDIC assessed Citibank and Bank of
America for deficiency for dollar deposits.
Citibank and BA each filed a petition for declaratory relief before the Court of First instance of
Rizal. The respondents sought a declaratory judgment that the money placements they received
from their head office and other foreign branches were not deposits and did not give rise to
insurable deposit liabilities under section 3 and 4 of R.A No. 3591. The cases were then
consolidated.
RTC rendered its decision in favour of the respondents. RTC reasoned out that the money
placements were made outside the Philippines and under Section 3.05 (b) of the PDIC Rules and
Regulations, such deposits are excluded from the computation of deposit liabilities. Section 3(f)
of the PDIC Charter likewise excludes from the definition of the term "deposit" any obligation of
a bank payable at the office of the bank located outside the Philippines. The RTC further stated
that there was no depositor-depository relationship between the respondents and their head office
or other branches.
CA affirmed the decision of RTC. The CA found that the money placements were received as part
of the bank’s internal dealings by Citibank and BA as agents of their respective head offices. This
showed that the head office and the Philippine branch were considered as the same entity. Thus,
no bank deposit could have arisen from the transactions between the Philippine branch and the
head office because there did not exist two separate contracting parties to act as depositor and
depositary. Secondly, the CA called attention to the purpose for the creation of PDIC which was
to protect the deposits of depositors in the Philippines and not the deposits of the same bank
through its head office or foreign branches. Thirdly, because there was no law or jurisprudence
on the treatment of inter-branch deposits between the Philippine branch of a foreign bank and its
head office and other branches for purposes of insurance, the CA was guided by the procedure
observed by the FDIC which considered inter-branch deposits as non-assessable. Finally, the CA
cited Section 3(f) of R.A. No. 3591, which specifically excludes obligations payable at the office
of the bank located outside the Philippines from the definition of a deposit or an insured deposit.
Since the subject money placements were made in the respective head offices of Citibank and BA
located outside the Philippines, then such placements could not be subject to assessment under the
PDIC Charter. Hence, this petition.
ISSUE: Whether the funds placed in the Philippine branch by the head office and foreign branches
of Citibank and BA are insurable deposits under the PDIC Charter and, as such, are subject to
assessment for insurance premiums.
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HELD: NO.
CITIBANK and BA are merely branches with no separate and distinct legal personality from
their parent company.
The Court begins by examining the manner by which a foreign corporation can establish its
presence in the Philippines. It may choose to incorporate its own subsidiary as a domestic
corporation, in which case such subsidiary would have its own separate and independent legal
personality to conduct business in the country. In the alternative, it may create a branch in the
Philippines, which would not be a legally independent unit, and simply obtain a license to do
business in the Philippines.
In the case of Citibank and BA, it is apparent that they both did not incorporate a separate domestic
corporation to represent its business interests in the Philippines. Their Philippine branches are, as
the name implies, merely branches, without a separate legal personality from their parent company,
Citibank and BA. Thus, being one and the same entity, the funds placed by the respondents in their
respective branches in the Philippines should not be treated as deposits made by third parties
subject to deposit insurance under the PDIC Charter.
Finally, the Court agrees with the CA ruling that there is nothing in the definition of a "bank" and
a "banking institution" in Section 3(b) of the PDIC Charter which explicitly states that the head
office of a foreign bank and its other branches are separate and distinct from their Philippine
branches.
FUNDS NOT A DEPOSIT UNDER THE DEFINITION
PDIC avers that the funds are dollar deposits and not money placements. Citing R.A. No. 6848, it
defines money placement as a deposit which is received with authority to invest. Because there is
no evidence to indicate that the respondents were authorized to invest the subject dollar deposits,
it argues that the same cannot be considered money placements. PDIC then goes on to assert that
the funds received by Citibank and BA are deposits, as contemplated by Section 3(f) of R.A. No.
3591, for the following reasons: (1) the dollar deposits were received by Citibank and BA in the
course of their banking operations from their respective head office and foreign branches and were
recorded in their books as "Account-Head Office/Branches-Time Deposits" pursuant to Central
Bank Circular No. 343 which implements R.A. No. 6426; (2) the dollar deposits were credited as
dollar time accounts and were covered by Certificates of Dollar Time Deposit which were interest-
bearing and payable upon maturity, and (3) the respondents maintain 100% foreign currency cover
for their deposit liability arising from the dollar time deposits as required by Section 4 of R.A. No.
6426.
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PDIC desperately cites R.A. No. 6848, The Charter of the Al-Amanah Islamic Investment Bank
of the Philippines. Reliance on the said law is unfounded because nowhere in the law is the term
"money placement" defined. Additionally, R.A. No. 6848 refers to the establishment of an Islamic
bank subject to the rulings of Islamic Shari’a to assist in the development of the Autonomous
Region of Muslim Mindanao (ARMM), making it utterly irrelevant to the case at bench. Since
Citibank and BA are neither Islamic banks nor are they located anywhere near the ARMM,
then it should be painfully obvious that R.A. No. 6848 cannot aid us in deciding this case.
Philippine Deposit Insurance Corporation(PDIC) , v. The Honorable Court of Appeals

and Jose Abad, Leonor Abad, Sabina Abad, Josephine Josie Beata Abad-Orlina, Cecilia
Abad, Pio Abad, Dominic Abad, Teodora Abad, respondents.
FACTS:
Prior to May 22, 1987, respondents had, individually or jointly with each other, 71 certificates of
time deposits denominated as Golden Time Deposits (GTD) with an aggregate face value of
P1,115,889.96
On May 22, 1987, a Friday, the Monetary Board (MB) of the Central Bank of the Philippines,
issued Resolution 5052 prohibiting Manila Banking Corp (MBC) to do business in the
Philippines, and placing its assets and affairs under receivership. The Resolution, however, was
not served on MBC until Tuesday the following week, or on May 26, 1987, when the designated
Receiver took over.
On May 25, 1987(Monday), the next banking day following the issuance of the MB Resolution,
respondent Jose Abad was at the MBC at 9:00 a.m. for the purpose of pre-terminating the 71
aforementioned GTDs and re-depositing the fund represented thereby into 28 new GTDs in
denominations of P40,000.00 or less under the names of herein respondents individually or jointly
with each other. 4 Of the 28 new GTDs, Jose Abad pre-terminated 8 and withdrew the value thereof
in the total amount of P320,000.00.
Respondents thereafter filed their claims with the PDIC for the payment of the remaining 20
insured GTDs.
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On February 11, 1988, PDIC paid respondents the value of 3 claims in the total amount of
P120,000.00. PDIC, however, withheld payment of the 17 remaining claims after Washington
Solidum, Deputy Receiver of MBC-Iloilo, submitted a report to the PDIC7 that there was massive
conversion and substitution of trust and deposit accounts on May 25, 1987 at MBC-Iloilo.
RTC:
In its Decision of February 22, 1994,13 Branch 30 of the Iloilo RTC declared the 20 GTDs of
respondents to be deposit liabilities of MBC, hence, are liabilities of PDIC as statutory insurer. It
accordingly disposed as follows:
CA:
On appeal, the Court of Appeals, by the assailed Decision of October 21, 1996,14 affirmed the
trial courts decision except as to the award of legal interest which it deleted.
1st ISSUE: WON The honorable court of appeals erred in affirming the holding of the trial court
that the amount represented in the faces of the so called golden time deposits were insured deposits
even as they were mere derivatives of respondents previous account balances which were pre-
terminated/terminated at the time the Manila Banking Corporation was already in serious financial
distress.
HELD :
While the MB issued Resolution 505 on May 22, 1987, a copy thereof was served on MBC only
on May 26, 1987. MBC and its clients could be given the benefit of the doubt that they were not
aware that the MB resolution had been passed, given the necessity of confidentiality of placing a
banking institution under receivership.
The evident implication of the law, therefore, is that the appointment of a receiver may be made
by the Monetary Board without notice and hearing but its action is subject to judicial inquiry to
insure the protection of the banking institution. Stated otherwise, due process does not necessarily
require a prior hearing; a hearing or an opportunity to be heard may be subsequent to the closure.
One can just imagine the dire consequences of a prior hearing: bank runs would be the order of the
day, resulting in panic and hysteria. In the process, fortunes may be wiped out, and disillusionment
will run the gamut of the entire banking community. (Underlining supplied).
Mere conjectures that MBC had actual knowledge of its impending closure do not suffice. The
MB resolution could not thus have nullified respondents transactions which occurred prior to May
26, 1987.
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That no actual money in bills and/or coins was handed by respondents to MBC does not mean that
the transactions on the new GTDs did not involve money and that there was no consideration
therefor. For the outstanding balance of respondents 71 GTDs in MBC prior to May 26, 198722
in the amount of P1,115,889.15 as earlier mentioned was re-deposited by respondents under 28
new GTDs. Admittedly, MBC had P2,841,711.90 cash on hand more than double the outstanding
balance of respondents 71 GTDs at the start of the banking day on May 25, 1987. Since respondent
Jose Abad was at MBC soon after it opened at 9:00 a.m. of that day, petitioner should not presume
that MBC had no cash to cover the new GTDs of respondents and conclude that there was no
consideration for said GTDs.
Petitioner having failed to overcome the presumption that the ordinary course of business
was followed,this Court finds that the 28 new GTDs were deposited in the usual course of
business of MBC.
2nd ISSUE: WON The honorable court of appeals erred in affirming the holding of the trial court
ordering petitioner to pay respondents claims for payment of insured deposits for the reason that
an action for declaratory relief does not essentially entail an executory process as the only relief
that should have been granted by the trial court is a declaration of the rights and duties of Petitioner
under R.A. 3591, as amended, particularly section 3(f) thereof as considered against the
surrounding circumstances of the matter in issue sought to be construed without prejudice to other
matters that need to be considered by petitioner in the processing of respondents claims.
HELD:
In its second assignment of error, petitioner posits that the trial court erred in ordering it to pay the
balance of the deposit insurance to respondents, maintaining that the instant petition stemmed from
a petition for declaratory relief which does not essentially entail an executory process, and the only
relief that should have been granted by the trial court is a declaration of the parties rights and
duties. As such, petitioner continues, no order of payment may arise from the case as this is beyond
the office of declaratory relief proceedings.
Without doubt, a petition for declaratory relief does not essentially entail an executory process.
There is nothing in its nature, however, that prohibits a counterclaim from being set-up in the same
action.
Now, there is nothing in thee nature of a special civil action for declaratory relief that proscribes
the filing of a counterclaim based on the same transaction, deed or contract subject of the
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complaint. A special civil action is after all not essentially different from an ordinary civil action,
which is generally governed by Rules 1 to 56 of the Rules of Court, except that the former deals
with a special subject matter which makes necessary some special regulation. But the identity
between their fundamental nature is such that the same rules governing ordinary civil suits may
and do apply to special civil actions if not inconsistent with or if they may serve to supplement the
provisions of the peculiar rules governing special civil actions.
Petitioner additionally submits that the issue of determining the amount of deposit insurance due
respondents was never tried on the merits since the trial dwelt only on the determination of the
viability or validity of the deposits and no evidence on record sustains the holding that the amount
of deposit due respondents had been finally determined.27 This issue was not raised in the court a
quo, however, hence, it cannot be raised for the first time in the petition at
bar.28cräläwvirtualibräry
Finally, petitioner faults respondents for availing of the statutory limits of the PDIC law,
presupposing that, based on the conduct of respondent Jose Abad on March 25, 1987, he and his
co-respondents somehow knew of the impending closure of MBC. Petitioner ascribes bad faith to
respondent Jose Abad in transacting the questioned deposits, and seeks to disqualify him from
availing the benefits under the law.2
Good faith is presumed. This, petitioner failed to overcome since it offered mere presumptions as
evidence of bad faith.
PDIC VS AQUERO, Yu, Cuescano, Tan, Rumbana, Acub

GR No. 118917 December 22, 1997
FACTS: - PDIC seeks the reversal of CA’s decision affirming the RTC’s decision that PDIC is
liable for the value of 13certificate of time deposit (CTD) in the possession of Aquero et al. - Sept
22, 1983, Aquero et al invested in money marker placements with Premier Financing Corp (PFC)
the sum of P10k each with an issued by PFC a promissory notes and checks. Same day, Cataoco,
for and behalf of Aquero et al, went to PFC to encash the promissory notes and checks, but PFC
referred him to Regent Savings Bank (RSB). - RSB, instead of paying the promissory notes and
checks, upon agreement with Cataoco, issued 13 CTDs inclusive, each stating, among others that,
the same certifies that 1) the bearer thereof has deposited with RSB the sum of P10k; 2) the
certificate shall bear 14% interest per annum; 3) the certificate is insured upto P15k with PDIC;
and 4) the maturity date thereof is on Nov 3, 1983. - On Nov 3, 1983, Cotaoco went to RSB to
encash the CTDs. But the RSB’s Vice Pres Damian requested Cotaoco for a deferment or an
extension. Despite of the extension which Cotaoco agreed, RSB, still failed to pay the value of
CTDs. - June 15, 1984, the Monetary Board of Central Bank suspends the RSB’s operation.
Eventually, the records of RSB were secured and its deposit liabilities were eventually determined.
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- Dec. 7, 1984, the Monetary Board liquidated the RSB, a masterlist or inventory of assets and
liabilities were prepared. But the CTDs of Aquero et al were not included because the CTDs are
not funded by the PFC or duly recorded as liabilities of RSB.
ISSUE: WON PDIC can be held liable for the value of the CTDs.
HELD: NO. The liability of PDIC for insured deposit is statutory under RA 3591 where such
liability rests upon the existence of deposits with the insured bank. In order that the claim for
deposit insurance with PDIC may prosper, the law requires that the corresponding deposit be
placed in the insured bank. RA 3591, Sec 10(a), emphasized that whenever an insured bank shall
have been closed on account of insolvency, payment of the insured deposit in such bank shall be
made by the corp. as soon as possible. Likewise, RA 3591, Sec. 3(f) defined “deposit” as the
unpaid balance of money or its equivalent received by a bank in the usual course of business and
for which it has given or is obliged to give credit to a commercial, checking, savings, time or thrift
account which is evidenced by passbook, check, and/or CTDs, printed or issued.... Moreover, the
evidences presented that RSB received no money for the CTDs. These are 1) RSB did not received
money or its equivalent when it issued CTDs because the check issued by PFC bounced for
insufficiency of funds, 2) on the records, TRBs check dated Sept 22, 1983 covering the amount of
P125, 846. 07 were issued by PFC, at the back of the check, it wrote, “refer ti drawer”, indicating
that the drawer bank (TRB) referred to pay the value presented by the said bank. Thus, by reason
of the check’s dishonor, RSB cancelled the corresponding as an evidence by RSB’s ticket dated
Nov 4, 1983. Therefore, RSB received no money for the CTDs. Accordingly, PDIC cannot be held
liable for the value if the CTDs held by RSB.
REPUBLIC V. GLASGOW CREDIT AND COLLECTION SERVICES, INC. and

CITYSTATE SAVINGS BANK, INC
G.R. NO. 170281 JANUARY 18, 2008
FACTS: On July 18, 2003, the Republic, as represented by the Anti-Money Laundering Council
(AMLC) filed a complaint in the Manila RTC for civil forfeiture of assets (with urgent plea for
issuance of a TRO and a writ of preliminary investigation) against the bank deposits in an account
maintained by Glasgow in Citystate Savings Bank, Inc (CSBI). While the trial court granted the
TRO and the writ of preliminary injunction, the summons to Glasgow was returned “unserved”
since it can no longer be found at its last known address.
October 8, 2003: omnibus motion for issuance of summons and leave of court to serve summons
by publication by the Republic
October 15: trial court directed issuance of summons but no mention re: leave of court
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January 30, 2004: trial court archived the case allegedly for failure of the Republic to serve the
alias summons but the Republic filed another motion to reinstate the case and resolve the motion
for leave of court
May 31: court reinstated case but still did not resolve the motion for leave of court to serve
summons by publication on the reason that “any action on such motion would be untenable if not
premature.” This motion remain unsolved.
August 11, 2005: Republic filed a manifestation and ex parte motion to resolve the above
motion.
August 12: the OSG received a copy of Glasgow’s Motion to Dismiss (By Way of Special
Appearance). The motion alleged that the trial court had no jurisdiction over its person as summons
had not yet been served on it; that the complaint was premature and stated no cause of action as
there was still no conviction for estafa or other criminal violations and there was failure to
prosecute on the part of the Republic.
The Republic opposed the Motion to Dismiss but on October 27, the trial court dismissed the
case.
ISSUE: Whether or not the complaint for civil forfeiture was correctly dismissed on grounds of
improper venue, insufficiency in form and substance, and failure to prosecute.
RULING: The complaint for civil forfeiture was not correctly dismissed. Petition by the
Republic was granted.
1. On issue of venue: the complaint was filed in the proper venue.
Under Section 3, Title II of the Rule of Procedure in Cases of Civil Forfeiture, “A petition for civil
forfeiture shall be filed in any regional trial court of the judicial region where the monetary
instrument, property or proceeds representing, involving or relating to an unlawful activity or to a
money laundering offense are located xxx”
In this case, RTC Manila, as one of the RTCs of the NCR Judicial Region was a proper venue of
the Republic’s complaint for civil forfeiture of Glasgow’s account since the account sought to be
forfeited was in Pasig City, which is likewise situated within the NCR Judicial Region.
2. On issue of sufficiency of complaint: the complaint was sufficient in form and in substance
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Under Section 4 of the aforementioned Rules, “the petition for civil forfeiture shall be verified and
shall contain the following allegations: (a) the name and address of the respondent; a description
with reasonable particularity of the monetary instrument, property xxx; and (c) the acts or
omissions prohibited by the specific provisions of the AMLA, which are alleged to be the grounds
relied upon for the forfeiture of the monetary instrument, property xxx.”
In this case, the verified complaint contained the name and address of Glasgow (principal office
at Unit 703, 7th floor, Citystate Center, No 709, Shaw Boulevard, Pasig City); a description of the
proceeds of Glasgow’s unlawful activities in
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the amount of P21,301,430.28 maintained with CSBI; and the acts prohibited by RA 9160
(AMLA), particularly suspicious transaction reports showed that Glasgow engaged in unlawful
activities of estafa and violation of the Securities Regulation Code, the proceeds were transacted
and deposited with CSBI, thereby making them appear to have originated from legit sources and
the AMLC subjected the account to a freeze order.
Pertinent provisions of RA 9160 also provide two conditions when applying for civil forfeiture:
a. When there is a suspicious transaction report or a covered transaction report deemed suspicious
after investigation by the AMLC and
b. The court has, in a petition filed for the purpose, ordered the seizure of any monetary instrument
or property, in whole or in part, directly or indirectly, related to said report.
The account of Glasgow in CSBI complies with the above conditions since it was covered by
several suspicious reports and it was placed under control of the trial court upon issuance of the
writ of preliminary injunctions.
Also, there need not be any prior charge, pendency or conviction necessary for the commencement
of a petition for civil forfeiture.
3. On issue of failure to prosecute: there was no failure to prosecute
The Republic continued to exert efforts to obtain information from government agencies on the
whereabouts of Glasgow (it must be recalled that Glasgow could not be found on its last known
office address during the course of the proceedings) despite its earlier motions for summons and
leave of court to serve summons by publication. There could not have been any failure on the part
of the Republic to prosecute and the delay could not be entirely ascribed to the Republic. It must
likewise be recalled that despite efforts of the Republic to prosecute such case, no prompt action
was taken by the trial court (i.e. re: motion for leave of court to serve summons by publication).
REPUBLIC VS HON. EUGENIO

LUCAS
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PEOPLE vs. ESTRADA
G.R. No. 164368-69
April 2, 2009
Facts: On April 4, 2001, an Information for plunder (docketed as Crim. Case No. 26558) was filed
with the Sandiganbayan against respondent Estrada, among other accused. A separate Information
for illegal use of alias, docketed as Crim. Case No. 26565, was likewise filed against Estrada. The
amended information alleged that on 4 Feb. 2000, President Joseph Estrada represented himself as
Jose Velarde in several transactions in order to conceal his ill-gotten weath. Another case of
perjury was Estrada was filed.
Evidence of Prosecution
 On 4 Feb. 2000, Estrada opened a numbered trust account with Philippine Commercial and
Industrial Bank (PCIB) and signed as Jose Velarde in the account opening documents as
witnessed by Clarissa Ocampo and Atty. Manuel Curato.
 PCIB-Greenhills Branch Manager Teresa Barcelan declared that a certain Baby [Lucena]
Ortaliza (employed in the Office of the Pres during said transactions were made) deposited
several checks under the account name Jose Velarde on the various dates;
Defense of Estrada:
 Only 2 out of the 35 witnesses presented evidence against Estrada;
 The use of numbered accounts and the like was legal and was prohibited only in late 2001
as can be gleaned from Bangko Sentral Circular No. 302, series of 2001, dated 11 October
2001;
 There is no proof of public and habitual use of alias as the documents offered by the
prosecution are banking documents which, by their nature, are confidential and cannot be
revealed without following proper procedures;
 The use of alias is absorbed in plunder.
Opposition of the Prosecution:
 Estrada is being prosecuted for violation of CA No. 142 and not BSP Circular No 302;
 Assuming arguendo that C.A. No. 142, as amended, requires publication of the alias and
the habitual use thereof, the prosecution has presented more than sufficient evidence in this
regard to convict Estrada for illegal use of alias;
 Illegal use of alias is not absorbed in plunder.
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Ruling of Sandiganbayan (12 July 2004):
 The only relevant evidence for the indictment are those relating to what is described in the
testimonies and documents on the opening of question Trust Account. The Sandiganbayan
reasoned that the use of disjunctive with regards to the date in the information proved that
time is not a material ingredient of the offense and used to prevent it from being interpreted
in any other way;
 Sandiganbayan, in citing Ursua v CA, ruled that there is an illegal use of alias within the
context of CA 142, as amended by RA 6085, only if use of the alias is public and habitual;
 The phrase “Estrada did represent himself as Jose Velarde in several transactions, standing
alone” violates Estradas right to be informed of the nature and the cause of the accusation,
because it is very general and vague. Thus, Estradas representations before persons other
than those mentioned in the Information are immaterial;
 The application of the libel law definition is onerous for CA 142, as a penal statute, should
be construed strictly against the State, and favorably for the accused. Estrada’s use of the
alias in front of Ocampo and Curato is one such privileged communication under R.A. No.
1405. On account of the absolute confidentiality of the transaction, it cannot be said that
movant intended to be known as Jose Velarde in addition to his real name;
 Reading CA No. 142, R.A. No. 1405 and R.A. No. 6713 together, Estrada had the absolute
obligation to disclose his assets including the amount of his bank deposits, but he was under
no obligation at all to disclose the other particulars of the bank account (such as the name
he used to open it);
 The Sandiganbayan ruled that the provisions of CA No. 142, as interpreted in Ursua, must
necessarily be harmonized with the provisions of R.A. No.1405 and R.A. No. 9160. The
use of an alias within the context of a bank transaction (specifically, the opening of a
numbered account made before bank officers) is protected by the secrecy provisions of
R.A. No. 1405, and is thus outside the coverage of CA No. 142 until the passage into law
of R.A. No. 9160.
 The Sandiganbayan dismissed the case. It held that the use by Estrada of his alias Jose
Velarde was not public, and that it was allowable under banking rules.
Issue: Whether or not Joseph Estrada’s use of his alias Jose Velarde was allowable under banking
rules, despite the clear prohibition under Commonwealth Act No. 142; (YES, allowable when the
act was committed)
Held: Yes.
The Law on Illegal Use of Alias and the Ursua Ruling
a.y.2019-2020
Ursua definition of an alias: a name or names used by a person or intended to be used by him
publicly and habitually usually in business transactions in addition to his real name by which he is
registered at birth or baptized the first time or substitute name authorized by a competent authority.
There must be a sign or indication that the user intends to be known by this name (the alias) in
addition to his real name, and there must be habituality. The repeated use of an alias within a single
day cannot be deemed habitual, as it does not amount to a customary practice or use.
Following the doctrine of stare decisis, we are guided by the Ursua ruling on how the crime
punished under CA No. 142 may be committed.
The court found no merit in the argument that the Sandiganbayan erred when it resurrected the
application of Ursua, resulting in the reversal of its earlier final ruling. First, the cited
Sandiganbayan resolution is a mere interlocutory order. Second, in the earlier motion to quash, the
Sandiganbayan solely looked at the allegations of the Information to determine the sufficiency of
these allegations and did not consider any evidence aliened.
What is the coverage of the indictment? (Regarding the limitative coverage)
The court found no merit on the argument of the People that the Sandiganbayan abused its
discretion in limiting the coverage of the amended Information to Estrada's use of the alias Jose
Velarde on February 4, 2000, considering that there were other transactions covered by the phrase
prior to or subsequent thereto.
The date of the commission of the offense need not be precisely stated in the complaint or
information except when the precise date is a material ingredient of the offense.
Under this analysis, the several transactions involving the signing of documents with Equitable
PCI Bank and/or other corporate entities all had their reference to February 4, 2000; they were all
made on or about or prior or subsequent to that date, thus plainly implying that all these
transactions took place only on February 4, 2000 or on another single date sometime before or
after February 4, 2000. To be sure, the Information could have simply said on or about February
4, 2000 to capture all the alternative approximate dates, so that the phrase sometime prior or
subsequent thereto would effectively be a surplusage that has no meaning separately from the on
or about already expressed. This consequent uselessness of the prior or subsequent thereto phrase
cannot be denied, but it is a direct and necessary consequence of the use of the OR between the
two phrases and the THERETO that referred back to February 4, 2000 in the second phrase. Of
course, the reading would have been very different (and would have been clearly in accord with
the Peoples present interpretation) had the Information simply used AND instead of OR to separate
the phrases; the intent to refer to various transactions occurring on various dates and occasions all
proximate to February 4, 2000 could not be disputed. Unfortunately for the People, the imprecision
in the use of OR is the reality the case has to live with. To act contrary to this reality would violate
Estradas right to be informed of the nature and cause of accusation against him; the multiple
transactions on several separate days that the People claims would result in surprise and denial of
an opportunity to prepare for Estrada, who has a right to rely on the single day mentioned in the
Information.
The issues of publicity, and the application of CA No. 142, R.A. No. 1405, and R.A. No. 9160
a.y.2019-2020
The rule in the law of libel that mere communication to a third person is publicity does not apply
to violations of CA No. 142. The use of the alias, to be considered public, must be made openly,
or in an open manner or place, or to cause it to become generally known, in other words, the intent
to publicly use the alias must be manifest.
The enactment of R.A. No. 9160 clearly manifests that prior to its enactment, numbered accounts
or anonymous accounts were permitted banking transactions, whether they be allowed by law or
by a mere banking regulation. To be sure, an indictment against Estrada using this relatively recent
law cannot be maintained without violating the constitutional prohibition on the enactment and
use of ex post facto laws.
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REPUBLIC VS SECURITY CREDIT AND ACCEPTANCE CORP

HONGKONG BANK INDEPENDENT LABOR UNION (HBILU) V. HSBC

NCMB ruled in favor of HSBC. The CA affirmed in toto.

Furthermore, it is inaccurate to state that credit checking is necessary, or even indispensable, in

Respondent HSBC's Financial Assistance Plan, insofar as it unilaterally imposed a credit

BANK OF THE PHILIPPINE ISLANDS and ANA C. GONZALES vs. SPOUSES

YES, . BPI is liable.

PHILIPPINE BANKING CORPORATION vs. COURT OF APPEALS and LEONILO

BPI VS LIFETIME MARKETING

ISSUE: Whether or not BPI is liable for damages

BPI vs. CASA MONTESSORI

On November 8, 1982, plaintiff CASA Montessori Internationalopened Current Account No.

1. Was BPI negligent and therefore liable?

Yes. Clear Negligence in Allowing Payment Under a Forged Signature

Loss Borne by Proximate Source of Negligence

2. Is CASA is precluded from setting up forgery as a defense?

YES. Forged Signature Wholly Inoperative

Section 23 of the NIL provides:

CENTRAL BANK VS CITYTRUST BANK

CENTRAL BANK OF THE PHILIPPINES, Petitioner, vs. CITYTRUST BANKING

G.R. No. 141835 February 4, 2009

WON Central Bank was negligent.

ALLIED BANKING VS LIM SIO WAN

Articles 1953 and 1980 of the Civil Code provide:

Art. 1231. Obligations are extinguished:

ASSOCIATED BANK VS TAN

BENGUET MANAGEMENT VS MONETARY BOARD

SAN FERNANDO RURAL BANK VS PAMPANGA

G.R. No. 150886 February 16, 2007

The comptrollership/monitoring report as of October 31, 1999 by Mr. Wilfredo B. Domo-ong,

Section 30 of RA 7653 provides:

CENTRAL BANK EMPLOYEES ASS. VS BSP

LETICIA G. MIRANDA vs. PHILIPPINE DEPOSIT INSURANCE CORPORATION,

G.R. No. 169334 September 8, 2006

Petitioner contends that:

Respondents, argues that:

In addition, co-respondent PDIC was impleaded as a party-litigant only in its representative

As correctly found by the Court of Appeals:

SORIANO vs. PEOPLE AND BSP

GSIS VS INDUSTRIAL BANK OF KOREA

FUNDS NOT A DEPOSIT UNDER THE DEFINITION

Philippine Deposit Insurance Corporation(PDIC) , v. The Honorable Court of Appeals

PDIC VS AQUERO, Yu, Cuescano, Tan, Rumbana, Acub

REPUBLIC V. GLASGOW CREDIT AND COLLECTION SERVICES, INC. and

G.R. NO. 170281 JANUARY 18, 2008

1. On issue of venue: the complaint was filed in the proper venue.

3. On issue of failure to prosecute: there was no failure to prosecute

REPUBLIC VS HON. EUGENIO

 Only 2 out of the 35 witnesses presented evidence against Estrada;

 The use of alias is absorbed in plunder.

Opposition of the Prosecution:

 Illegal use of alias is not absorbed in plunder.

The Law on Illegal Use of Alias and the Ursua Ruling

What is the coverage of the indictment? (Regarding the limitative coverage)

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