Special Commercial Laws on Banking and Finance

SPECIAL BANKING LAWS

1. SPECIAL BANKING LAWS S

2. BANKS- Refers to entities engaged in the lending of funds obtained in the form of deposits from public. QUASI-BANKS- - Entities engaged in the borrowing of funds thru issuance, endorsement or assignment with recourse or acceptance of deposit substitutes for purposes of relending or purchasing of receivables and other obligations.

3. DILIGENCE REQUIRED BY BANKS A banking institution is obliged to exercise the highest degree of diligence as well as high standards of integrity and performance in all its transactions because its business is imbued with public interest. The stability of banks largely depends on the confidence of the people in the honesty and efficiency of banks.

4. NATURE OF BANK FUNDS AND BANK DEPOSITS Bank deposits are in the nature of IRREGULAR DEPOSITS. They are not true deposits but are simple loans.

5. CLASSIFICATION OF BANKS 1. Universal banks 2. Commercial banks 3. Thrift banks 4. Rural banks 5. Cooperative banks 6. Islamic bank 7. Government banks

6. LAW ON SECRECY OF BANK DEPOSITS (RA 1405) ATTY. VAN JOHN C. MAGALLANES, CPA

7. Purposes of the Law on Secrecy of Bank Deposits 1.) to discourage private hoarding; and at the same time, 2.) to encourage the people to deposit their money in banking institutions, so that it may be utilized by way of authorized loans and thereby assist in economic development.

8. PROHIBITED ACTS: 1. All bank deposits of whatever nature with banks or banking institutions in the Philippines, including investments in bonds issued by the Government of the Philippines, its political subdivisions and instrumentalities, are hereby considered as of an absolutely confidential nature and may not be examined, inquired or looked into by any person, government official, bureau or office, EXCEPT:

9. EXCEPTIONS: 1. Upon written permission of the depositor; 2. In cases of impeachment; 3. Upon order of the Court in cases of bribery or dereliction of duty of public officials; 4. In cases where the money deposited or invested is the subject matter of the litigation; 5. In cases of unexplained wealth under the AGCPA (Anti-Graft and Corrupt Practices Act) 6. Special or general bank examination specifically authorized by the Monetary Board 7. Examination made by the independent auditor hired by the bank for the exclusive use of the bank, and others.

10. QUESTION: What are the rules on Secrecy of Bank Deposits under the existing law?

11. QUESTION: X, a public official, is charged with violation of the Anti-Graft and Corrupt Practices Act for unexplained wealth. The prosecuting official learned that X maintains a safety box at Union Bank. May the officials of the bank be subpoenaed and examined about the safety deposit box?

12. ANTI-MONEY LAUNDERING ACT It is the policy of the State to protect and preserve the integrity and confidentiality of bank accounts and to ensure that the Philippines shall not be used as a money laundering site for the proceeds of any unlawful activity.

13. MONEY LAUNDERING - - A crime whereby the proceeds of an unlawful activity is transacted, thereby making them appear to have originated from legitimate sources.

14. COVERED TRANSACTIONS vs. SUSPICIOUS TRANSACTIONS: 1.) Covered Transactions- - transaction in cash or other equivalent monetary instrument involving a total in excess of P500,000 within 1 banking day. 2.) Suspicious Transactions- - transactions with covered institutions regardless of the amounts involved, where any of the suspicious circumstances exist.

15. COVERED INSTITUTIONS: 1. Banks, non-banks, quasi-banks and other institutions supervised or regulated by the Bangko Sentral ng Pilipinas . 2. Insurance companies and all other institutions supervised or regulated by the Insurance Commission; 3. Entities dealing in currency, commodities, cash substitutes and other monetary instruments or property supervised or regulated by the Securities and Exchange Commission.

16. PDIC Act (RA 3591) -PDIC is a government instrumentality created by law to insure the deposits of all banks which are entitled to the benefits of insurance. PDIC’s Primary Functions are as follows: 1. Deposit insurer; 2. Co-regulator of banks; and 3. Receiver and liquidator of closed banks.

17. 1.) Insurer of Deposits - The PDIC shall, as a basic policy, promote and safeguard the interest of the depositing public by way of providing permanent and continuing insurance coverage on all insured. INSURED DEPOSITS – Amount due to any bona fide depositor for legitimate deposits in an insured bank net of any obligation of the depositor to the insured bank as of the date of closure, but not to exceed P500,000.

18. 2.) Regulator: Examination and Investigation of Banks 1. Examination – Requires prior consent of the Monetary Board. 2. Investigation – Prior consent from the Monetary Board is not necessary.

19. 3.) Rehabilitation Receiver of Banks - The PDIC as receiver shall control, manage and administer the affairs of the closed bank. - Banks closed by the Monetary Board shall no longer be rehabilitated. - The powers of PDIC as receiver includes the power to collect loans, and other claims of the closed bank, and for the purpose, modify, compromise, or restructure the terms and conditions of such loans or claims as may be deemed advantageous to the interest of the creditors and claimants of the closed bank.

20. INTELLECTUAL PROPERTY LAW - Patent Trademark Copyright

21. DATA PRIVACY ACT It is the policy of the State to protect the fundamental human right of privacy, of communication while ensuring free flow of information to promote innovation and growth. The state recognizes the vital role of information and communications technology in nation-building and its inherent obligation to ensure that personal information in information and communications systems in the government and in the private sector are secured and protected.

22. SCOPE OF DATA PRIVACY ACT (DPA) The DPA applies to all types of: Personal Information; and Personal data

23. WHO ARE COVERED: - Those who process personal data or are involved in personal information processing, whether natural or juridical persons in both the government and private sectors, are covered by the DPA. - The DPA covers personal information controllers or processors.

24. PERSONAL INFORMATION vs. SENSITIVE PERSONAL INFORMATION and PRIVILEGED INFORMATION As a rule, the processing of personal information is permitted, if not otherwise prohibited by law and subject to compliance with specific conditions. On the other hand, the processing of sensitive personal information and privileged information is prohibited, except in cases specified by the DPA.

25. EASE OF DOING BUSINESS ACT (ARTA OF 2007)