BANKING LAWS (a) Is unable to pay its liabilities as they

become due in the ordinary course of

NEW CENTRAL BANK ACT business: Provided, That this shall not
(R.A. No. 7653, as amended by R.A. No. include inability to pay caused by
11211) extraordinary demands induced by
financial panic in the banking community;
SEC. 29. Appointment of Conservator. – (b) Has insufficient realizable assets, as
Whenever, on the basis of a report submitted by determined by the Bangko Sentral, to
the appropriate supervising or examining meet its liabilities; or
department, the Monetary Board finds that a (c) cannot continue in business without
bank or a quasi-bank is in a state of continuing involving probable losses to its depositors
inability or unwillingness to maintain a condition or creditors; or
of liquidity deemed adequate to protect the (d) has willfully violated a cease and desist
interest of depositors and creditors, the Monetary order under Section 37 that has become
Board may appoint a conservator with such final, involving acts or transactions which
powers as the Monetary Board shall deem amount to fraud or a dissipation of the
necessary to take charge of the assets, liabilities, assets of the institution; in which cases,
and the management thereof, reorganize the the Monetary Board may summarily and
management, collect all monies and debts due without need for prior hearing forbid the
said institution, and exercise all powers necessary institution from doing business in the
to restore its viability. The conservator shall Philippines and designate the Philippine
report and be responsible to the Monetary Board Deposit Insurance Corporation as receiver
and shall have the power to overrule or revoke of the banking institution.
the actions of the previous management and
board of directors of the bank or quasi-bank. For a quasi-bank, any person of recognized
competence in banking or finance may be
The conservator should be competent and designated as receiver.
knowledgeable in bank operations and
management. The conservatorship shall not The receiver shall immediately gather and take
exceed one (1) year. charge of all the assets and liabilities of the
institution, administer the same for the benefit of
The conservator shall receive remuneration to be its creditors, and exercise the general powers of a
fixed by the Monetary Board in an amount not to receiver under the Revised Rules of Court but
exceed two-thirds (2/3) of the salary of the shall not, with the exception of administrative
president of the institution in one (1) year, expenditures, pay or commit any act that will
payable in twelve (12) equal monthly payments: involve the transfer or disposition of any asset of
Provided, That, if at any time within the one-year the institution: Provided, That the receiver may
period, the conservatorship is terminated on the deposit or place the funds of the institution in
ground that the institution can operate on its nonspeculative investments. The receiver shall
own, the conservator shall receive the balance of determine as soon as possible, but not later than
the remuneration which he would have received ninety (90) days from take-over, whether the
up to the end of the year; but if the institution may be rehabilitated or otherwise
conservatorship is terminated on other grounds, placed in such a condition so that it may be
the conservator shall not be entitled to such permitted to resume business with safety to its
remaining balance. The Monetary Board may depositors and creditors and the general public:
appoint a conservator connected with the Bangko Provided, That any determination for the
Sentral, in which case he shall not be entitled to resumption of business of the institution shall be
receive any remuneration or emolument from the subject to prior approval of the Monetary Board.
Bangko Sentral during the conservatorship. The
expenses attendant to the conservatorship shall If the receiver determines that the institution
be borne by the bank or quasi-bank concerned. cannot be rehabilitated or permitted to resume
business in accordance with the next preceding
The Monetary Board shall terminate the paragraph, the Monetary Board shall notify in
conservatorship when it is satisfied that the writing the board of directors of its findings and
institution can continue to operate on its own and direct the receiver to proceed with the liquidation
the conservatorship is no longer necessary. The of the institution. The receiver shall:
conservatorship shall likewise be terminated
should the Monetary Board, on the basis of the (1) file ex parte with the proper regional trial
report of the conservator or of its own findings, court, and without requirement of prior
determine that the continuance in business of the notice or any other action, a petition for
institution would involve probable loss to its assistance in the liquidation of the
depositors or creditors, in which case the institution pursuant to a liquidation plan
provisions of Section 30 shall apply. adopted by the Philippine Deposit
Insurance Corporation for general
application to all closed banks. In case of
SEC. 30. Proceedings in Receivership and quasi-banks, the liquidation plan shall be
Liquidation. – Whenever, upon report of the adopted by the Monetary Board. Upon
head of the supervising or examining acquiring jurisdiction, the court shall, upon
department, the Monetary Board finds that a motion by the receiver after due notice,
bank or quasi-bank: adjudicate disputed claims against the
institution, assist the enforcement of

1
 individual liabilities of the stockholders,
directors and officers, and decide on other
issues as may be material to implement
the liquidation plan adopted. The receiver
shall pay the cost of the proceedings from
the assets of the institution.
(2) Convert the assets of the institution to
money, dispose of the same to creditors
and other parties, for the purpose of
paying the debts of such institution in
accordance with the rules on concurrence
and preference of credit under the Civil o The SC reiterated that the bank
Code of the Philippines and he may, in the placed under conservatorship does
name of the institution, and with the not mean that the bank will be
assistance of counsel as he may retain, already placed under receivership
institute such actions as may be necessary for eventual liquidation
to collect and recover accounts and assets o Sec. 29 deals only with
of, or defend any action against, the conservatorship. The placing of the
institution. The assets of an institution bank under receivership for
under receivership or liquidation shall be eventual liquidation will be covered
deemed in custodia legis in the hands of by Sec. 30.
the receiver and shall, from the moment
the institution was placed under such INSTANCE WHEN MB CAN PLACE A BANK /
receivership or liquidation, be exempt QUASI-BANK UNDER CONSERVATORSHIP
from any order of garnishment, levy,
attachment, or execution.

The actions of the Monetary Board taken

under this section or under Section 29 of this
Act shall be final and executory, and may not
be restrained or set aside by the court except
on petition for certiorari on the ground that
the action taken was in excess of jurisdiction
or with such grave abuse of discretion as to
amount to lack or excess of jurisdiction. The
petition for certiorari may only be filed by the
stockholders of record representing the  When the bank / quasi-bank is suffering
majority of the capital stock within ten (10) from liquidity issues that would be either
days from receipt by the board of directors of the decision of the bank not to comply
the institution of the order directing with the minimum liquidity requirement or
receivership, liquidation or conservatorship. because of its failure to maintain the level
of liquidity
The designation of a conservator under  In short, the bank may not be bankrupt
Section 29 of this Act or the appointment of a but is not liquid, meaning, it doesn’t have
receiver under this section shall be vested the minimum cash available at any given
exclusively with the Monetary Board. time
Furthermore, the designation of a conservator o This is because, banks need
is not a precondition to the designation of a
sufficient cash in order to meet the
receiver.
minimum requirement of their
customers
CONSERVATORSHIP
o It is very important that the bank
must have enough liquidity to pay
the withdrawal of depositors
whenever they will borrow money.
If there is no enough money, then
MB can place the bank under
conservatorship
 When a bank is suffering from liquidity
 Not synonymous with CLOSURE of the issues, the MB can place that bank under
bank but just placing the bank under conservatorship
direct SUPERVISION of BSP during the
conservatorship period RATIONALE FOR CONSERVATORSHIP

 Effect if bank is placed under

conservatorship

2
 o He may change the senior officers
or place them in areas where they
can be more useful
 Under section 29, always envision a bank
having LIQUIDITY PROBLEMS. So it is not
yet right for receivership / closure because
the bank can still continue to operate. It
was just merely suffering from liquidity
issues and is NOT BANKRUPT. It can still
continue to operate given the proper
management.
 Placing the bank under conservatorship
pursuant to the provision of Sec 29, NCBA
is not equivalent to placing the bank under o All actions of the appointed
receivership and eventual liquidation conservator are being cleared with
o Sec 29 – the bank is merely having the MB
liquidity problems (either voluntary
or involuntary) brought about by RULES ON THE APPOINTMENT OF
whatever circumstances. And for as A CONSERVATOR OR RECEIVER
long as the bank is having liquidity
problems, BSP/MB can order the  Do not think that since section 29 comes
bank to be placed under first then it is necessary to first place the
conservatorship pursuant to Sec bank under cship pursuant to section 29,
29, NCBA before going to section 30 for receivership
 When bank is placed under
conservatorship, the
ownership of the bank
remains with owners and
stockholders of the bank.
 It will not be subjected to
receivership proceedings
because the intention is
merely for reorganizing the
management, collection of
moneys due to the bank and
revitalizing the bank. Hence,
putting it in a state of o If given a problem whereby the
viability in order to continue conservator was appointed by the
operating as a vibrant bank MB and the BOD of the bank are
or as a bank that is capable claiming that the MB cannot
of meeting its obligations appoint a conservator without the
concurrence of the BOD of the
bank, the argument is wrong
POWERS CONFERRED TO A CONSERVATOR because the matter of appointing a
conservator is purely a prerogative
CONSERVATOR of the MB and the BOD cannot
 Representative of MB to conserve the challenge the authority of the MB
assets, properties, and to ensure payment to appoint the conservator that he
liabilities of the bank wishes to act as such in that bank
 It only places the entire operation of the under cship
bank under the watchful eyes of the MB o No other government agency can
 When the MB places the bank under cship, interfere in the decision to place a
the MB will appoint a CONSERVATOR. The bank under conservatorship,
Conservator will be the one to be receivership or eventual
managing the bank. In effect, he will be liquidation. It is only the MB who
replacing the management of the bank has the power.
and he will be reporting not the BOD but o The court cannot set aside the
to the MB of the BSP. decision of designating a
conservator because it is a right
exclusively vested to the MB

3
 bank and bring it back to the BOD
of the bank
o Conservatorship is only for 1 year.
o Cship is not necessary before a
Assuming that after 7 months, the
bank can be placed under rship. It
bank is already operating properly
does not follow that since section
and there are already no liquidity
29 comes ahead of section 30 then
issues, the conservatorship can be
sec 29 should be the frist remedy
terminated at this point. There is
before the bank can be placed
no rule that the MB should exhaust
under rship.
the 1-year period.
o Since the MB has the discretion to
decide whether to place the bank
under rship or to first place the
bank under cship, the BOD cannot
question the discretion of the MB in
acting pursuant to the best interest
of the bank and the public in
general
o Note that the MB can disregard
o Here, there is a situation where
section 29 and immediately
what is initially deficient liquidity
proceed to section 30 by way of
position of the bank become a
appointment of receiver and not a
more problematic status, whereby
conservator
it is no longer a mere liquidity issue
o Section 29 pertains to LIQUIDITY
but the bank is already facing so
whereas section 30 pertains to many financial problem whereby it
CLOSURE of the bank can no longer continue operating
o The closure may be availed of the without probable loss to the
by the MB without need of depositors or creditors
requiring cship o Even if the 1-year period has not
o e.g. Suppose the bank was yet been completed and the MB is
discovered to be operating already convinced that the bank can no
in a situation where it can no longer recover, the bank can be
longer pay off its maturing placed under receivership and
obligation (bank is operating in a eventually, liquidation
manner that prejudices the rights  Hence, there is no need to
of the depositors, creditors, and the continue the 1-year period
public in general) or there is
already a situation compelling the BSP’S ACTION IN CASE A BSFI CAN NO
closure of the bank as far as BSP is LONGER CONTINUE IN BUSINESS WITHOUT
concerned PROBABLE LOSSES TO ITS STAKEHOLDERS
 In this situation, the bank
cannot be placed first under
conservatorship (sec 29)
then receivership (sec 30).
BSP can directly and
immediately place the bank
under receivership without
going through
conservatorship.

INSTANCES WHEN CONSERVATORSHIP MAY

BE TERMINATED
 If the bank can no longer be revived
despite the fact that it has underwent
cship, then that period remaining of the
cship will now be converted into rship for
eventual liquidation
 When the bank is placed under rship, it
will now be turned over to PDIC as the
receiver
 This is a major amendment introduced
under RA 11211
o Before, when a bank is not doing
well in its operations, there were
o Within the period of cship, if upon instances where courts were
the report of the conservator, the allowed to question the decisions of
MB is already convinced that the the MB insofar as closure of banks
issues by which the cship was are involved
anchored on is no longer present,  BSP v Banco Filipino:
therefore, the MB can already where the court has
dissolve the cship status of the questioned the act of BSP in
4
 summarily closing Banco news wherein nag-circulate sa text
Filipino messages na magsasara na sila so
o Before, BSP was allowed to close a might as well mag withdraw na sila
bank without prior hearing (CLOSE ng pera nila. In this case, the BSP,
NOW, HEAR LATER DOCTRINE) instead of placing them under
 BSP v Fonacier: SC upheld receivership/liquidation, helped the
the principle of close now, bank)
hear late doctrine
 The CLOSE NOW, HEAR LATER DOCTRINE
is only laid down under jurisprudence. BUT
TODAY, under RA 11211, it is stated that
BSP, thru MB, can summarily and without
need for prior notice from the bank
o When bank no longer has enough
realizable assets to pay for its
RECEIVERSHIP AND LIQUIDATION maturing obligations

GROUNDS FOR PLACING BSFI UNDER

RECEIVERSHIP AND LIQUIDATION o E.g. the bank is already having
difficulties servicing and meeting
its maturing obligations, and
continuing with the business will
just result to losses on the part of
the depositors and creditors of the
bank. Therefore, the MB can
already move in and close the bank
 GENERAL RULE

o The bank is already ignoring the

 In local terms, it is called BANK HOLIDAY – authority of the MB or BSP. And
o when a bank notifies BSP that it will because of refusal to follow a cease
close because it does not have and desist order, then the MB can
money to pay withdrawing place the bank under closure
depositors, so mag close na lang,
then BSP can place bank under AUTHORITY OF MB TO CLOSE
receivership or liquidation because SAVINGS AND LOAN ASSOCIATIONS
there is already categorical
admission from the bank that it can
no longer pay and service the
withdrawals of the customers
o They will no longer allow
withdrawal during this period
o If this situation will happen, this is
unilateral on the part of the bank,
for a period of 60 DAYS, then the
MB can now come in and place the  The law states that the power of the MB to
bank under rship place a bank under rship for eventual
o When a bank declared a holiday, it liquidation is not merely directed to banks
doesn’t mean that the bank will be and quasi-banks.
immediately placed under rship for  Even other entities under BSP supervision
eventual liquidation can also be placed under rship by the MB
o EXCEPTION  And one of them is the SAVINGS AND
LOAN ASSOCIATIONS

POWER OF MB TO ORDER CLOSURE OF BSFI

o This presupposes a situation where
the inability to service the
withdrawal of the customers was
not because of its lack of available
resources, or lack of liquidity, but
because of extraordinary demand
for withdrawal caused by
FINANCIAL PANIC in the banking
community
o (may case na nainvolve yung isang
universal bank sa malicious fake
5
 filed beyond the 10-day period
(from the time the BOD received
the notice of closure from MB).
Should the court allow the filing of
petition for issuance of TRO?
 NO, because the 2
requirements must be
satisfied before a petition
for issuance of TRO against
action of MB may prosper.
Absent any of the 2
requirements, the petition
 When the MB decides to close a bank, the will not prosper
decision becomes final and cannot be
restrained as a GENERAL RULE, just like
the order of MB in conducting examination
of a bank
 XPN: unless via a petition via certiorari on
the ground that the action taken was in
excess of jurisdiction or with grave abuse
of discretion amounting to lack or excess
of jurisdiction.

REQUIREMENTS IN FILING A PETITION FOR

CERTIORARI

o If the bank will file a petition for the

issuance of TRO against the order
of the MB placing the bank under
rship or under cship, that filing of
petition should contain the
approval of the stockholders of
record at least representing a
majority of the outstanding capital
stock of the bank
o If given a bar question: that the
bank filed a petition upon
instruction of the BOD, will the
petition progress?
 NO, it will not prosper
because there was no
mention of approval by the
stockholders of record
representing a majority of
the capital stock of the bank
/ quasi-bank

o Supposed there was a SH’s

approval and the SH duly approved
the filing of the petition, but it was

6
 SECRECY OF BANK DEPOSITS o There must be an order ISSUED by
(R.A. No. 1405 and R.A. No. 6426, as COMPETENT COURT
amended)

GENERAL RULE:

 In a civil case or claim for civil

indemnity arising from estafa, where
the subject matter is the money obtained
by the criminal was deposited into his
account or account of other person, then it
is a valid inquiry under the 4th exception.
o Even if the crime is not related to
 Confidentiality is the rule insofar as bank bribery of dereliction of duty, it is
deposits are concerned allowable because the money that
is the subject matter of the
EXCEPTIONS: litigation is the one that is being
inquired to, and not the crime itself.
 In the Ejercito case, the court said that
trust accts are included in the protective
mantle of the law, because whether the
trust account is treated as a deposit or
investment, the law proscribed any
restrictive interpretation of the term
deposit or investment, so RA 1405 was
 There must be: applied.
o PERMISSION o HOWEVER, the exception still
o in WRITING applied because plunder is a specie
o by the DEPOSITOR of bribery, and has the same
 if any of the 3 is absent, then there can be category, hence the exception is
no valid permission applicable to a trust account where
 e.g. suppose the depositor called the bank the money was supposedly
manager and said that he is allowing his obtained in violation of the law,
wife to inquire the balance of his account, particularly on plunder.
and the bank manager followed the  Where the information pertains to a bank
instruction. Later on, there was a quarrel account but that bank account is not the
between the depositor and the wife, so the principal subject of the case, then the
depositor sued the bank including the secrecy of bank deposit shall apply as a
bank manager, then the bank manager rule.
will be liable because even though there o The exception shall not apply
was permission ang was given by the because the information pertaining
depositor, it was not in writing. to the account should be kept
o HENCE, the 3 requirements must confidential if the account is not
always be present. the subject matter of the litigation
 Real Bank v Maningas: In this case, the
complainant would like the bank to
disclose the identity of the impostor who
was able to encash the check. The SC held
 Good example is the case of former CJ
that disclosing the account number of the
Corona where he was subjected to
impostor is not allowed because the case
impeachment proceedings. In this case,
was a matter for damages filed by the
the court can issue a subpoena duces
complainant against the bank and not for
tecum ad testificandum against the bank
the purpose of identifying who the
for an inquiry.
impostor was. Therefore, the opening of
the bank account has nothing to do with
the claim for damages against the bank

 The law limits the kinds of criminal cases

where inquiry on the bank account is
allowed
 In a criminal case for estafa,
examination/inquiry of bank account is not
allowed because it is not related to
bribery/dereliction of data
 Real Bank v Maningas: SC interpreted
the context of an order of competent court
in connection with filing of bribery or
dereliction of duty of public officials.

7
 FOREIGN CURRENCY DEPOSIT ACT
REPUBLIC ACT No. 6426

GARNISHMENT ON FCD

RULE WITH RESPECT TO FOREIGN DEPOSITS

 if the deposit is in local currency, the same

can be subject of garnishment
 if deposit is in foreign currency, it cannot
be covered by garnishment and the rule
on attachment

 Confidentiality rule insofar as foreign

currency deposits
 No difference whether foreign or local
currency – the account must be treated
with utmost confidentiality

EXCEPTION TO THE RULE

 Same with first exception under RA 1405

 There must be:
o PERMISSION
o in WRITING
o by the DEPOSITOR

8
 GENERAL BANKING LAW OF 2000 Remember that a bank can be the DRAWEE – the
(R.A. No. 8791) one who will be instructed to pay the check
issued by one of its depositors that has a
NATURE OF BANK FUNDS AND BANK checking account with the bank
DEPOSITS
 What would be the liability of the drawee
bank in case the check of the depositor
was presented to the bank and the bank
would now need to look into whether to
pay the check or not? Can the bank be
made liable in paying a person who may
have presented himself to be the payee of
the check? But in truth and in fact, he is
not the payee identified in the check?

 This is the reason why the bank is paying

you interest on your bank deposits
 Because when you deposit your money
into the bank, the bank servers as the
debtor and you are the creditor
 Which is why at the agreed period, there
will be interest payments

REQUIRED DILIGENCE OF BANKS

o In this case, the court is instructing
the banks to make sure that they
will only pay the person who is the
payee of the check
o And if the bank would pay other
person other than the one whose
name appears on the check, then
the bank is liable
o The bank will be liable for paying
the wrong payee

 When the law prescribed compliance with

the DOSRI (directors, officers,
stockholders, and related interests)
requirements, this requirement of the law
is merely strengthening the view that the
banks are supposed to be acting for the
benefit of their customers because of the
fiduciary nature of banking, the need to
exercise the highest level of diligence for
 If given a problem, whereby an impostor
their customers
sends the check supposedly issued to him
 If given a question: pertaining to liability of
by the depositor but in truth and in fact, it
banks, particular to the action of their
was a stolen check and the payee is not
employee – the banks cannot interpose
the impostor, nonetheless when the
the defense that the employee has acted
impostor got all the stolen checks, he
beyond the scope of authority vested into
went to the bank and the bank is not the
him by the bank
drawee bank but the collecting bank. He
o Because these employees of the
was presented with the check and the
bank are considered by law to be
collecting bank has a stamp on this check
required to exercise the diligence
“all prior endorsement guaranteed”. And it
necessary in order to maintain the
was passed on to the drawee bank. Since
trust of the public as banks are
there was a stamp at the back of the
imbued with public interests
check stating that “all prior endorsement
o If these employees would commit
guaranteed”, then the drawee bank now
acts even if these actions are
paid the collecting bank. The impostor was
without authority from the
able to get the money already and
bank/management/BOD, and these
disappeared. The owner of the check
acts had prejudiced the interest of
discovered that the collecting bank, as
the depositors – since banks are
well as the drawee bank has erroneously
imbued with public interest, then
paid a person who represented to be the
the bank is liable to their
payee. Who will have the ultimate liability?
customers
o The liability will be imposed upon
the DRAWEE BANK because it is the
LIABILITY AS DRAWEE BANK
entity that is dealing with the
Negotiable instrument

9
 owner of the check / issuer of the this loan is part of the program which was
check. approved by the MB of BSP.
o However, since there was a stamp
at the back of the check saying “all ELEMENTS TO CONSTITUTE A VIOLATION OF
prior endorsement guaranteed”, THE DOSRI RULE
the collecting bank must reimburse
the drawee bank.
o But first, the drawee bank must
restore whatever amount was
deducted from the account of the  Offender must be a DOSRI in a banking
check holder, in case of wrong institution
payment to the payee.

RESTRICTIONS ON BANK EXPOSURE TO  The offender, when he is a DOSRI, will

DOSRI already satisfy the second requirement
DOSRI – directors, officers, stockholders, and
related interests

GENERAL RULE: a DOSRI cannot borrow from

the bank where they are a DOSRI

 Soriano v People: the bank owner

borrowed directly from the bank. This is
violative of the DOSRI rule

PROHIBITED TRANSACTIONS

 This is a simple principle which applies

that banks are imbued with public interest
 Since banks are imbued with public
interest, the DOSRI, they cannot borrow
from the bank where they are a DOSRI
o Reason: to ensure that all
transactions with the bank are
done at arm’s length, meaning,
there will be no special treatment
or terms

EXCEPTION:

o Violation of RA 1405, as amended

o If will be given a problem: the

president of the bank received a
grandiose gift from a borrower and
 E.g. A is the president of a bank. Aside it was seen that the president was
from his car provided by the bank, he the one who finally approved the
would like to apply for a loan so that he loan – then this is violative of this
can buy another car. A applied for loan prohibition
with the bank but the bank has already a o But suppose there was a mere
pre-approved fringe benefit program for all
token given to the employees of
the employees including A, which was
the bank for helping the borrower
already approved by the MB. This benefit
provide all the documents for his
is what A is availing of. In this case,
loan application – this is not a
approval of BOD is not needed because
violation because that employee is
not authorize to approve the loan
10
  Entities being supervised by Insurance
Commission – Insurance companies, etc.
o Suppose the borrower tendered a
are considered as covered persons
property but the property has a
because they are used by money
very insignificant value compared
launderers in transacting their monies
to the loan being availed of. If the
 Insurance Commissioner is included in the
officer would overvalue the value of
AMLC because of this number
the security/collateral, then the
officer is committing and offense
under GBA 2000.

o Particularly those functions that are

very critical to the bank itself
o Might not be ask in the bar

ANTI-MONEY LAUNDERING ACT

(R.A. No. 9160, as amended by R.A. Nos.
9194, 10167, 10365, 10927, and 11521)

 Those who are buying jewelries where the

metal composition is very expensive and
the amount would exceed 1M, then they
will be considered as covered persons
under the law

 There was a prior crime committed and

the prior crime committed yielded money
in favor of the criminal

COVERED INSTITUTIONS  Stones used in jewelries

 The term COVERED INSTITUTIONS has
been replaced by the term COVERED
PERSONS
 The first three are those originally stated
under RA 9160, known as COVERED
INSTITUTIONS
 Under RA 10365 where a major
amendment was introduced, numbers 4 to
10 was included in the enumeration of
COVERED PERSONS

 If your law firm will act as a corporate

secretary for a client then your law firm
can be considered as covered persons

 In AMLC, as already discussed, the

chairman is the Governor of the BSP. The
reason why the Governor of BSP is chosen
as one of the members of the AMLC is  Entities that would act as a representative
because he is the one who monitors and of someone else in a corporate set-up
regulates the covered persons as
mentioned in this number.
 This first category are those being
supervised and regulated by BSP
11
  Most important obligation

 e.g. (iv) those law firms that act as

counsel of entities engaged in the mergers
and acquisitions (MAA) initiative, in which
case, the law firm becomes a covered
person

 with the introduction of casino law  MALICIOUS REPORTING

o “Malicious reporting” is committed
by any person who, with malice, or
in bad faith, reports or files a
 If you are a lawyer of these developers,
completely unwarranted or false
then considered as covered person
information relative to money
laundering transaction against any
person.
 Other crime considered under AMLA
 Offshore gaming operation, aka POGO  Must be equated with spiderman – “with
great power comes great responsibility”
OBLIGATIONS OF COVERED INSTITUTIONS o Covered persons are authorized to
submit reports to the AMLC. It is a
power and authority granted to
them. While they have this power,
they should not use it to commit
malicious reporting

REPORTABLE TRANSACTIONS
*** Most asked topic in AMLA
 The law requires covered persons to make
sure that they can identify their customers
 e.g. when you go to a bank and open a
bank account, the bank will require you to
present at least 1 government-issued ID;
purpose is to establish your identity as a
customer of the said bank

 reportable to the AMLC

COVERED TRANSACTION
 In PDIC there is a threshold amount or the
 Banks are mandated to keep record of maximum insurance coverage which
their transaction for at least 5 years before amount should not be confused in a
they can dispose the documents because covered transaction under AMLA
the law mandates all covered persons to
keep a record of their customer and  The report on covered transaction WILL
transactions NOT CAUSE IMMEDIATE INVESTIGATION OF
THE ONE TRANSACTION. It is just intended
to give the data to the AMLC so that they
can later look into the said data in case
they will uncover a money laundering
activity.

12
Any transaction with a covered person is
considered as a covered transaction when:

 When the one transacting with a covered

person would transact without any
justifiable reason for the kind of
 P500,000 explained – when you transact transaction
with any of the covered persons  e.g. when a bank customer carries with
enumerated; you went to the bank and him a check issued by the government
deposited/withdrawn P500,001 (basta and when asked if he is an employee of
above 500k), then already considered as the government, or if in any way
covered transaction connected with the government, and the
o Any transaction amounting in customer said no, then it would warrant a
excess of 500k made within 1 suspicious transaction and such
banking day is reportable to the transaction shall be reported to the AMLC
AMLC  hence, one who would transact using a
o BUT you will only be reported if check must be able to establish that he
there is a sufficient data to see the has legal rights over the check
flow of money of the customer

 When transacting with a covered person,

the latter is mandated by law to establish
the identity of the customer, therefore if
the covered person could not properly
identify the customer or connect the
customer to the document he is
submitting, then the transaction is
deemed suspicious, and a report must be
submitted
 When client cannot be identified or the
client does not want to provide documents
to establish his identity
 e.g. when a person transacts with the
bank and the bank manager asked certain
details from the customer, like where he
lives but the address was not given, the
transaction is suspicious then must be
reported; or when the customer refuses to
be identified

 e.g. when you purchase a condominium

unit in excess of 7.5M then reportable to
the AMLC
 e.g. the recent case of Pharmally where
There are 3 important values that needs to be their services was engaged by the DOH,
remembered for covered transactions: for the purchase of face masks and face
1) for regular bank transaction – IN EXCESS shields. Pharmally only has a very small
OF 500,000 pesos amount of capital (P600,000) but they
2) for casino transaction – in excess of 5 were able to transact with huge amount of
million pesos money (billions of pesos)
3) for real estate transaction – in excess of
7.5 million pesos

SUSPICIOUS TRANSACTIONS
difference of covered and suspicious transactions
 COVERED – always anchored to the  e.g. A money launderer has a knowledge
amount of the threshold that in an ordinary transaction, the
 SUSPICIOUS – no amount but we are threshold amount is 500k. He has 30
looking at the circumstances pertaining to million in cash and in order not to be
the transaction; amount is irrelevant reported, he planned to deposit below
300k a day, until he will be able to deposit
the full amount of 30 million.
o While he will not be reported for a
covered transaction, he will be
13
 reported for a suspicious which turns out to be inaccurate, the
transaction person cannot be subjected to an
administrative, criminal or civil
proceedings because of the Safe Harbor
Provision.
 Bar question: A bank customer was
reported by the bank because he was
 E.g. Client A has been depositing the engaged in jueteng operations. The
amount of 500 pesos to his account jueteng operator was reported for a
monthly, which account has a balance of suspicious transaction. The operator
30k. all of a sudden, there was a learned that he was reported by the bank.
transaction of 1 million pesos to his bank Meanwhile, the charge of money
account. laundering to the operator was dismissed
o This will be reportable as on the ground of insufficiency of evidence.
suspicious transaction because Can the bank personnel/officers be a
there is a deviation from the subject of an administrative, criminal or
client’s past transactions civil proceeding for their submission of
suspicious transaction report?
o NO, the bank officials cannot be
made liable even if the person
reported is later on not convicted of
 E.g. client is known to the covered person the crime of money laundering
as one involved in jueteng operation, then provided that the report was done
the bank is supposed to submit a in good faith and in the regular
suspicious transaction report because the performance of their duties or
amount being transacted with the bank official function.
came from an unlawful activity
 e.g. kidnapper for ransom who is duguan MONEY LAUNDERING – HOW COMMITTED
would enter the bank and deposit the
money and was asked by the bank
manager why is he duguan, and the
kidnapper says that nakipaghabulan sa
mga pulis and say that the money is a
proceed from a kidnapping from ransom,
then suspicious transaction and must be 1) Transacts said monetary instrument
reported or property
 Actual act of transacting: when money is
deposited to the bank directly by the
criminal, then he is transacting by using
that money

2) Converts, transfers, disposes of,

moves, acquires, possesses, or uses
 catch all provision
said monetary instrument or property
 POSSESSION: mere possession will lead
to money laundering
o e.g. A rich woman was charged
with plunder with many politicians.
The money she got was not
deposited to the bank but was
placed on a bathtub. In this case,
there was a crime of money
laundering because MERE
POSSESSION of the money is
punishable even though there was
SAFE HARBOR CLAUSE no actual transaction with the bank
 CONVERTING: if you have peso as a
proceed from an unlawful activity and you
convert it to other foreign currency
 TRANSFERRING: transferred using
remittance centers
o Basta in this mode, there is no
need for actual transaction with
the bank. It can be done with
different ways such as sending to
family, relatives, or other persons.

*** asked last bar 3) Conceals or disguises the true nature,

source, location, disposition,
 When a covered person submits a movement or ownership of or rights
suspicious or covered transaction report
14
 with respect to send monetary
instrument or property
 Although concealed, it can still be
established UNLAWFUL ACTIVITIES OR PREDICATE
 e.g. When criminal goes to bank and said CRIMES
that the money came from a legitimate When you talk about money laundering, THERE
business, it is still considered as money MUST BE A PRIOR CRIME COMMITTED (called as
laundering the PREDICATE CRIME or UNLAWFUL ACTIVITY).
There must be an UNLAWFUL ACTIVITY
4) Attempts or conspires to commit committed, and from that activity, the criminal
money laundering offenses was able to obtain proceeds, such as monetary
 Conspiracy as basis for the charge of instruments, assets, properties, where it was
money laundering being transacted.
 e.g. conspiring with bank personnel to be
able to deposit the money to the bank

5) Aids, abets, assists in or counsels the

commission of the money laundering
offenses
 e.g. when branch manager gives his
unqualified support to the money
launderer so the latter could bring the  UNLAWFUL ACTIVITY – must be one which
money into the bank without suspicion is mentioned under the law, if not
and was able to successfully jide the mentioned under the law, then it will not
transaction without the knowledge of the be a basis and money laundering cannot
top management. In this case, the branch be established.
manager will be held liable together with
the money launderer.  Dean said not to memorize because
masyadong marami. But remember the
6) Performs or fails to perform any act following:
as a result of which he facilitates the o If the crime would lead to the
offense of money laundering creation of monetary instrument or
 Nos. 1 to 5 are the PRINCIPAL ACT OF will give monetary instrument,
MONEY LAUNDERING assets, or property in favor of a
 No 6 – the act of FACILITATING the offense criminal, then it is likely an
of money laundering unlawful activity under AMLA
o One merely facilitates the o But if the crime will not give
commission of money laundering monetary benefit to the criminal,
 e.g. when branch manager assisted the then it is likely that it is not an
money launderer in encashing a unlawful activity under AMLA
government check even if the latter does
not have a transaction with the The following are unlawful activities referred to
government. In this case, the transaction under AML Law:
pushed through because of the facilitation
of the branch manager. Hence, branch 1) Kidnapping for ransom
manager is equally liable.  Take note of this
7) FAILURE TO MAKE A REPORT – “Money 2) Violation of the Comprehensive
laundering is also committed by any Dangerous Drugs Act of 2002
person who, knowing that a covered  Take note of this too
or suspicious transaction is required  e.g. peddlers, sellers, operators of shabu
under this Act to be reported to the den/laboratory
Anti Money Laundering Council
(AMLC), fails to do so.” (SEC 4, RA 3) Violation of the Anti-Graft and
10365) Corrupt Practices Act
 Related with the obligation of a covered
person to submit covered and suspicious 4) Plunder
transaction reports  Difference to Anti-Graft and Corrupt
 The law mandates covered persons to Practices Act is the AMOUNT
make covered/suspicious transactions o If reaches 50M, then plunder
report when necessary and this report
shall be submitted to the AMLC. Failure to 5) Robbery and extortion
do so, the bank official can be made liable.  To consider: act of violence or intimidation
o e.g. bank officials refused to make  The unlawful taking of a personal property
a covered/suspicious transaction, should be accompanied by force, threat,
they can be charged also for their intimidation or violence. Therefore, if
refusal to make a report taking of personal property was not
accompanied by FTIV, then what was
committed was merely theft.
 Theft is not a predicate crime to ML

15
 6) Jueteng and Masiao (punished as a) Offender entered an
illegal gambling under PD 1602) Enclosed estate or a
 Not all forms of gambling is prohibited, field without the consent
ONLY JUETENG AND MASIAO of its owner;
o Jueteng: illegal numbers game b) Trespass is Forbidden or
when played in Metro Manila and the enclosed estate or
Luzon field belongs to Another;
o Masiao: illegal numbers game and
when played in Visayas c) Hunt or fish upon the
same or gather fruits,
7) Piracy on the high seas cereals or other forest or
farm products.
8) Qualified theft o e.g. While waiting in the airport, a
 Differences of robbery, theft and qualified person saw a ring, took it and
theft subsequently sold it. There is no
o ROBBERY AND EXTORTION: money laundering because the
predicate crime crime committed is only THEFT
o Elements of Robbery in general
(Article 293, RPC) o QUALIFIED THEFT: predicate
1. There is a personal property crime
belonging to another; o Theft is qualified if:
2. There is unlawful Taking of that a) Committed by a Domestic
property; servant; or
3. The taking must be with Intent b) Committed with Grave abuse of
to gain; and confidence; or
4. There is: c) If the property stolen consists
a. Violence against or of:
intimidation of any person; 1. Motor vehicle
or 2. Mail matter
b. Force used upon things 3. Large Cattle
o e.g. When someone forcefully or 4. Coconuts taken from the
with use of violence would take a premises of a plantation; or
cellphone of victim and would 5. Fish taken from a fishpond
thereafter sell and obtain its or fishery; or
proceeds 6. Property is taken on the
occasion of fire, earthquake,
o THEFT: NOT a predicate crime typhoon, volcanic eruption,
o Modes of Commission of Theft or any other Calamity,
(Article 308, RPC) vehicular accident or civil
 Mode 1: Taking of Personal disturbance.
Property of Another Without o e.g. A housemaid stole a ring from
Violence or Intimidation of his master, subsequently sold it.
Persons or Force upon Money laundering is committed
Things because the maid committed
a) Offender takes the take QUALIFIED THEFT.
Personal property of
another without the 9) Swindling
latter’s consent;  General Elements of Estafa (Article 315,
b) Taking was with Intent to RPC)
gain; and 1) Accused Defrauded another:
c) Taking was Without a. by abuse of Confidence, or
violence against or b. by means of Deceit; and
intimidation of persons 2) Damage or prejudice capable of
nor force upon things. pecuniary estimation is caused to the
 Mode 2: Failure to Return offended party or third person.
Lost Property  Modes of Committing Estafa
a) Offender found Lost o Mode 1: With unfaithfulness of
property; and abuse of confidence
b) Fails to deliver the same a) With Unfaithfulness [Art. 315
to the local authorities (1)(a)]
or to its owner. b) With Abuse of Confidence [Art.
 Mode 3: 315(1)(b)]
a) Offender maliciously c) By taking undue advantage of
Damaged the property the Signature in blank [Art.
of another; and 315(1)(c)]
b) Removes or makes use o Mode 2: By Means of False
of the fruits or object of Pretense or Fraudulent Acts
the damage caused by a) Using fictitious Name or false
them. pretenses and other similar
 Mode 4: deceits [Art. 315(2)(a)];

16
 b) By Altering the quality, fineness such as donating for the purpose of
or weight of anything pertaining committing terrorism.
to his art or business [Art.
315(2)(b)] 15) Bribery and Corruption of
c) By pretending to have Bribed Public Officers
any government employee [Art.
315(2)(c)] 16) Frauds and Illegal Exactions
d) By post-dating a Check with no and Transactions
funds or is not sufficient to  Those that would not amount to estafa but
cover the amount of the check. would still be considered as fraudulent
[Art. 315(2)(d)] activities
e) By obtaining Food, refreshment
or accommodation with intent 17) Malversation of public funds
to defraud [Art. 315(2)(e)] and property
o Mode 3: By Fraudulent Means  Similar to bribery, corrupt and practices
a) By inducing another to Sign any act
document [Art. 315 (3)(a)];  When government official uses the money
b) By resorting to some fraudulent outside its purpose
practice to insure success in o e.g. When money is allotted for
Gambling [Art. 315(3)(b)] purchase of face masks but
c) By Removing, concealing or government official used the
destroying Documents [Art. money to buy for other things
315(3)(c)]
18) Forgeries and Counterfeiting
10) Smuggling under RA 455 and  In relation to General Banking Act and
RA 1937 New Central Bank Act
 The only gov entity who can issue
currency of notes is the BSP; if there are
11) Violations of the Electronic individuals/entities who would come up
Commerce Act of 2000 with forged notes or currencies, then
 e.g. when you would like to buy apple considered as Foregery and Counterfeiting
computer and when you pay through
internet and what was delivered to you 19) Violations of the Anti-
was a fuji apple…. Hahaha Trafficking in persons act of 2003
 selling fake products through the internet  a.k.a. white slavery
o e.g. Where girls who are brought to
12) Hijacking and other violations Manila and promised a decent job
under RA 6235 (Human Security Act); and ended up in sex trade
destructive arson and murder o Whatever amount the criminal will
obtain arising from the activity will
13) Terrorism and conspiracy to be considered as unlawful activity
commit terrorism as defined and
penalized under Sections 3 and 4 of 20) Violations of the Revised
RA 9372 Forestry Code of the Philippines, as
 This is an expanded concept of money amended
laundering because in money  Illegal logging
laundering, there is usually a crime
committed where a money is obtained 21) Violations of the Philippine
through an unlawful act. In terrorism and fisheries code
terrorist financing, normally, the money  Illegal fishing
is being donated and given freely by those
who support the activities of terrorists, 22) Violations of the Philippine
nonetheless, the commission of terrorism Mining Act
and money obtained in violation of this  Illegal mining
law can be considered as predicate crime
to money laundering. 23) Violations of the Wildlife
o e.g. Marawi Siege Resources Conservation and
Protection Act
14) Financing of Terrorism under  Situation where criminal try to catch
RA 10168 endangered species and sells in the black
 When one donates to a terrorist because market
they share the same political or religious o e.g. Chinese poachers operating in
ideologies. Once the money is transferred, Palawan who looks for an
Financing of Terrorism is already present endangered species of “ant” and
and is a predicate crime to money cooks in an exotic way
laundering
o Sharing the same political or 24) Violation of the National Caves
religious ideologies is not and Cave Resources Management
punishable or prohibited per se. It Protection Act
only becomes punishable when one  Those who destroys caves to be able to
commits an act in furtherance of it, get minerals and stones inside it

17
 25) Violation of the Anti- 33) Fraudulent practices and
Carnapping Act of 2002, as amended violations of the SRC of 2000
 Carnapping is not a form or robbery  e.g. insider trading, pyramiding,
manipulation of security practices
26) Violations of the decree
Codifying the Laws on Illegal/Unlawful 34) Violations of section 9 (a)(3) of
Possession, Manufacture, Dealing In, RA 10697, otherwise known as the
Acquisition or Disposition of “Strategic Trade Management Act”,
Firearms, Ammunition or Explosives in relation to the proliferation of
 Illegal arms traders or those who sell weapons of mass destruction and its
firearms, ammunitions and explosives financing pursuant to United Nations
Security Council Resolution Numbers
27) Violation of the Anti-Fencing 1718 of 2006 and 2231 of 2015
Law  This unlawful activity was inserted
 Those who sells product of unlawful because of the insistence of the Financial
activity at a very low price Action Task Force that if “Weapons of Mass
o e.g. When a cellphone is taken Destruction” will not be included in our
without violence, then simple law, then we will be cited as violating the
theft is committed. But when it is international standard on money
sold at a very ridiculous price, then laundering, and we will be put in blacklist
a violation of the Anti-Fencing  But this is not prevalent in our case
Law, as well as money because we are a poor country 
laundering are committed.
35) Violation of Sec. 254 of the
28) Violation of the Migrant National Internal Revenue Code of
Workers and Overseas Filipinos Act of 1997, as amended, where the
1995, as amended by RA 10022 deficiency basic tax due in the final
 Illegal recruitment cases assessment is in excess of 25 million
pesos per taxable year, for each tax
29) Violation of RA 8293 or the type covered and there has been a
Intellectual Property Code of the finding of probable cause by the
Philippines competent authority
 Protection given to owners of patents,  a.k.a. TAX EVASION provided that the final
trademarks, and copyrights which when assessment is in excess of 25 million
violated, will lead to infringement. And pesos in one taxable year
infringement may give rise to a criminal o if hindi umabot ng 25 million yung
act which is a predicate crime to money evaded tax in a year, then not
laundering guilty of tax evasion and money
o e.g. Those selling fake Lacoste in laundering.
Greenhills, they can be charged for
money laundering because of their 36) Felonies and offenses of a
violation to the Trademark Law similar nature that are punishable
under the penal laws of other
30) Violation of the Anti-Photo and countries
Video Voyeurism Act of 2009  If a particular crime is not punishable in
 Careless Whisper Law (charot): this law the Philippines or among those
was enacted because of a sex scandal of a enumerated under AMLA, but is
known doctor and actress considered as a crime in other countries
o e.g. A man and a woman had a o e.g. During the Bangladesh Heist,
sexual intercourse which was the cybersecurity violations for this
recorded and one of them sold the hacking was not yet a criminal act
video and obtained money, then during that time, but it can be
guilty of violating this law and considered as an unlawful activity
money laundering or a predicate crime in the
Philippines for the purposes of
31) Violation of the Anti-Child AMLA because hacking is
Pornography Act of 2009 punishable in the U.S. and
 e.g. Minors/young children being asked to Bangladesh. Hence, the Philippine
dance naked and pedophiles pay to be Government can use that in order
able to watch, then the person who to prosecute criminals under the
obtainer money is guilty of this crime and AMLA.
money laundering
FREEZE ORDERS
32) Violation of the Special
Protection of Children Against Abuse,
Exploitation and Discrimination
 e.g. Businessmen who hire minors to work
in mine sites or forests, the former is
guilty of this offense and money
laundering

18
  only the COURT OF APPEALS can issue a
freeze order; no other court can issue a
freeze order
REQUISITES FOR ISSUANCE OF FREEZE
ORDER

EFFECTIVITY
 not a final disposition of the case; not a
final ruling that the money came from an
unlawful activity
 instead, it is a temporary order preventing
the owner from disbursing and
withdrawing the amount from the bank

PRIMARY OBJECTIVE OF A FREEZE ORDER

 No need for a 15-day period before the
freeze order shall take effective

VALIDITY PERIOD

AUTHORITY TO ISSUE FREEZE ORDER

AUTHORITY TO INQUIRE INTO BANK

DEPOSITS
1, 2, 12, 13, 15  unlawful activities

POWER OF THE AMLC TO INQUIRE INTO

BANK DEPOSITS

 This provision is VERY SIGNIFICANT

 Only the COURT OF APPEALS can issue
FREEZE ORDERS
 The freeze order can be issued ex parte –
even without the knowledge of the
respondent
o This is VALID and cannot be said
that it is in violation of the
respondent’s right to due process;  They can conduct inquiry but there should
can be issued even without a case be a COURT ORDER (any competent choir)
filed against the respondent  GR: AMLC can conduct inquiry PROVIDED
there is a court order

19
 AUTHORITY OF AMLC TO ISSUE BANK
INQUIRE ORDER

 The remedy given to the gov to forfeit

those proceeds obtained from unlawful
activity

 An excuse when the predicate crime are

the following: (no court order is necessary
if the unlawful activity are the following)
o 1) Kidnapping for ransom
o 2) Violation of the Comprehensive
Dangerous Drugs Act of 2002
o 12) Hijacking and other violations
under RA 6235 (Human Security
Act); destructive arson and murder
o 13) Terrorism and conspiracy to
commit terrorism as defined and
penalized under Sections 3 and 4 of
RA 9372
o 36) Felonies and offenses of a
similar nature that are punishable
under the penal laws of other
countries
 As a rule, the AMLC can conduct bank
inquiry into the accounts of persons
suspected of being a money launderer.
 The AML Law serves as an exception to
the provisions of RA 1405 and RA 6426 –
meaning, AMLA is an EXCEPTION to the
Bank Secrecy Law and Foreign Currency
Deposits Act
 Therefore, if the AMLC wishes to inquire
into bank deposits, it cannot be denied by
the banks PROVIDED that there is a court
order

5 INSTANCES WHERE COURT ORDER IS NOT

NECESSARY

PETITIONS FOR CIVIL FORFEITURE

20
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