R.A. No. 8791 (Allied Banking Corp. vs. Sps. Macam, G.R. No. 200635, Feb.

1, 2021)

General Banking Law of 2000 Stipulation on Interests

Classification of Banks • There are two types of interest:

o Monetary Interest; and
1. Universal Banks;
o Compensatory/Penalty Interest
2. Commercial Banks;
• Monetary Interest is the interest as compensation fixed by the parties
3. Thrift Banks, composed of:
for the use of forbearance of money.
a. Savings and Mortgage Banks;
• Compensatory/Penalty Interest is the interest that may be imposed
b. Stock Savings and Loan Associations; and
by law or by courts as a penalty for damages.
c. Private Development Banks
4. Rural Banks, as defined in R.A. 7353; The right to recover interest arises only either by virtue of a contract
5. Cooperative Banks, as defined in R.A. 6938; (monetary interest) or as damages for delay or failure to pay the principal
6. Islamic Banks, as defined in R.A. 6848; and loan on which the interest is demanded (compensatory interest).
7. Other Classifications of Banks as Determined by the Monetary Board
of the BSP Rule on Stipulation on Interests

Distinction of Banks from Quasi-Banks and Trust Entities • As regards monetary interest, although the parties are “free to
stipulate their preferred rate” the courts are “allowed to equitably
• “Banks” shall refer to entities engaged in lending funds obtained in temper interest rates that are found to be excessive, iniquitous,
the form of deposits. (Sec. 3.1, R.A. 8791) unconscionable, and/or exorbitant.” Thus, stipulated interest rates of
• Quasi-Banks refer to entities engaged in borrowing funds through the “3% per month or higher is considered as excessive or
issuance, endorsement, or assignment with recourse or acceptance unconscionable.” Alternatively, as per settled jurisprudence, as 24%
of deposit substitutes as defined in Sec. 95 of AR.A. 7653 (New per annum (or 2% per month) rate is not unconscionable.
Central Bank Act) for purposes of re-lending or purchasing of
receivables and other obligations. (Sec. 4, R.A. 8791) (Goldwell Properties Tagaytay, Inc. vs. Metropolitan Bank and Trust Co.)

Diligence Required of Banks Stipulation on Interests

The Monetary Board shall regulate the interest imposed on microfinance

• R.A. 8791 enshrines the fiduciary nature of banking that requires high
borrowers by lending investors and similar lenders, such as, but not limited
standards of integrity and performance. The statute now reflects
to, the unconscionable rates of interest collected on salary loans and similar
jurisprudential holdings that the banking industry is impressed with
credit accommodations. (Sec. 43, R.A. 8791)
public interest requiring banks to assume a degree of diligence higher
than that of a good father of a family. Thus, all banks are charged with
extraordinary diligence in the handling and care of its deposits as well
as the highest degree of diligence in the selection and supervision of
its employees.
Grants of Loans and Security Requirements 3. Restrictions of Bank Exposure to DOSRI
a. No Director or Officer of any bank, shall directly or indirectly
1. Ratio of Net Worth of Total Risk Assets
for himself or as the representative or agent of others,
a. The Monetary Board shall prescribe the minimum ration
borrow from such bank nor shall he become a guarantor,
which the net worth of a bank must bear to its total risk
indorses, or surety for loans from such bank to others, or in
assets which may include contingent accounts.
any manner be an obligor or incur any contractual liability to
b. The Monetary Board may require that such ratio be
the bank.
determined on the basis of the net worth and risk assets of a
i. Exception: With the Written Approval of the Majority
bank and its subsidiaries, financial, or otherwise, as well as
of all the directors of the bank, excluding the director
prescribe the composition and the manner of determining
concerned.
the net worth and total risk assets of banks and their
1. Approval and Recording;
subsidiaries. (Sec. 34, R.A. 8791)
2. Borrower/Loans should be reported to the
c. BSP sets the required minimum ratio at 10% maintaining the
Monetary Board;
minimum capital ratio under the current system. The
3. Ceiling Requirement: Cannot borrow beyond
internationally recommended minimum ratio is 8% (Sec. 116,
what the law authorizes;
BSP Circ. No. 280, Series of 2001)
4. Use some form of Security.
2. Single Borrower’s Limit
ii. Note (Exception to the Exception): That such written
a. Except as the Monetary Board may otherwise prescribe for
approval shall not be required for loans, other credit
reasons of national interest, the total amount of loans, credit
accommodations and advances granted to officers
accommodations and guarantees as may be defined by the
under a fringe benefit plan approved by BSP.
Monetary Board that may be extended by a bank to any
person, partnership, association, corporation or other
entitle, shall at no time exceed 20% of the net worth of such
bank. The basis for determining compliance with single-
borrower limit is the total credit commitment of the bank to
the borrower. (Sec. 35.1, R.A. 8791)
b. Consistent with national interest, the total amount of loans,
credit accommodations, and guarantees that a bank may
extend to any person, partnership, association, corporation,
or other entity shall at no time exceed 25% of the net worth
of such bank. The basis for determining compliance with the
single borrower’s limit (SBL) is the total credit commitment
of the bank to or on behalf of the borrower.
c. (Circ. No. 4255, Series of 2004, amending Sec. 303 of the
Manual of Regulation for Banks)
General Banking Law Cases produces injury and without which the result would not have
occurred.
1. Bank of the Philippine Islands vs. Sps. Quiaoit, G.R. No. 199562, 3. The action of BPI was deemed the proximate cause of the loss
January 16, 2019 suffered by the spouses Quiaoit. Even though the spouses did not
check or count the dollar bills themselves, BPI could have listed down
Facts:
the serial numbers of the bills to verify their authenticity, but it failed
• Fernando V. Quiaoit (Fernando) had peso and dollar accounts with
to do so.
the Bank of the Philippine Islands (BPI) Greenhills-Crossroads Branch
4. The "Doctrine of last clear chance" was applied in this case. BPI had
(BPI Greenhills).
the last clear chance to prove that all the dollar bills it issued were
• Fernando, through Merlyn Lambayong, encashed a BPI Greenhills
genuine, and it could have done so by listing down the serial
check for US$20,000, and the dollar bills were handed to Lambayong
numbers. BPI's lapses in processing the transaction fell below the
inside an envelope without being checked.
extraordinary diligence required of a banking institution, making it
• The spouses Quiaoit traveled abroad and used some of the
responsible for the consequences of its actions.
US$20,000 bills withdrawn from BPI. While abroad, they encountered
5. The spouses Quiaoit were awarded moral damages and attorney's
issues with several banks in Madrid, Spain, who refused to accept
fees because they suffered serious anxiety, embarrassment,
some of the US$100 bills as they were counterfeit.
humiliation, and threats while abroad due to the counterfeit bills.
• The spouses Quiaoit alleged that BPI's negligence and bad faith led to However, the award of exemplary damages was deleted because
their public embarrassment, humiliation, and potential BPI's negligence was not accompanied by malice or bad faith.
imprisonment in a foreign country due to the counterfeit bills.
Issues: KEY DECISIONS:
1. Whether BPI exercised due diligence in handling the withdrawal of
• Banks must exercise the highest degree of diligence in their banking
the US dollar bills.
transactions.
2. What is the "Proximate cause"?
• Proximate cause is the cause that produces injury without which the
3. Whether the action of BPI is the proximate cause of the loss suffered
result would not have occurred.
by the spouses Quiaoit.
• The Doctrine of last clear chance applies when the defendant, in this
4. What is the "Doctrine of last clear chance"?
case, BPI, had the last opportunity to prevent harm through due
5. Whether the spouses Quiaoit are entitled to moral and exemplary
diligence.
damages and attorney's fees.
• The spouses Quiaoit were entitled to moral damages and attorney's
fees, but exemplary damages were not awarded as there was no
Ruling:
malice or bad faith on the part of BPI.
1. The Supreme Court ruled that BPI failed to exercise due diligence,
emphasizing that the General Banking Act of 2000 demands the
highest standards of integrity and performance from banks. BPI did
not meet these standards by releasing the dollar bills without listing
down their serial numbers, exposing its client and itself to the
situation that led to the case.
2. "Proximate cause" was defined as the cause which, in a natural and
continuous sequence, unbroken by any efficient intervening cause,
 2. Citystate Savings Bank v. Tobias, G.R. No. 227990, March 7, 2018 believing that a particular agent has the authority to act on the
principal's behalf, even if the agent's authority may not be actual.
FACTS:
• Citystate Savings Bank, as the principal, may be adjudged liable under
• Rolando Robles, an employee of Citystate Savings Bank, convinced the doctrine of apparent authority. While the bank's liability as a
respondent Teresita Tobias to open an account with the bank and debtor is limited to breaches of its contractual relationship with
invest her money in a high-interest scheme. depositors, it may also be held liable for the consequences of acts
• Robles later persuaded Tobias to participate in a back-to-back that were done within the apparent scope of authority vested in its
scheme offered exclusively to valued clients of the bank. agents.
• Under this scheme, depositors authorized the bank to use their • Citystate Savings Bank's evidence supported the finding that Robles,
deposits for high-yield investments. as branch manager, had apparent authority to conduct banking
• Tobias invested Php 1,800,000 through Robles without fully transactions on behalf of the bank. Therefore, the respondents were
understanding the terms. justified in believing that Robles had the authority to act for and on
• When Robles failed to remit the promised interest, it was revealed behalf of the bank and relied on his representations.
that he had withdrawn and misappropriated the money for personal • The bank's apparent or implied authority is determined by previous
use. ratified acts, accepted benefits, course of business, usages, and
• The respondents filed a complaint for sum of money and damages practices. Since the bank's stability relies on public trust and
against Robles and Citystate Savings Bank. confidence, it must exercise strict care in selecting and supervising its
• The trial court ruled in favor of the respondents. employees to prevent prejudice to depositors.
• The Court of Appeals (CA) modified the decision, holding Citystate • Citystate Savings Bank, despite not breaching its contractual
Savings Bank jointly and solidarily liable with Robles. relationship with the respondents, was held jointly and solidarily
liable with Robles due to its apparent authority and the bank's
ISSUE: fiduciary relationship with the public.
• Whether the CA erred in holding Citystate Savings Bank jointly and KEY POINTS:
solidarily liable with Robles.
• The business of banking is subject to the highest standards of diligence,
RULING: integrity, and performance.
• Banks have a fiduciary duty towards their clients and must treat client
• No, the CA did not err. The business of banking is imbued with public accounts with meticulous care.
interest, obligating banks to exercise the highest degree of diligence, • Banks may be held liable for the consequences of acts done by their agents
integrity, and performance in all transactions. Banks have a fiduciary within the apparent scope of their authority, even if the agent's authority is
duty towards their clients, requiring meticulous care of client not actual.
accounts. • Apparent authority arises when a principal's actions mislead the public into
• In this case, Citystate Savings Bank could be held liable for its primary believing an agent has the authority to act on the principal's behalf.
and sole liability under the doctrine of apparent authority. Apparent • Citystate Savings Bank was held jointly and solidarily liable with Robles due
authority arises when a principal's actions mislead the public into to apparent authority and the bank's fiduciary relationship with the public.
 3. East West Banking Corp. v. Cruz, G.R. No. 221641, July 12, 2021 Ruling:

Facts: • The central issue in this case is the correct mode of appeal for
judgments rendered by a lower court and whether the bank's
• In 2012, East West Banking Corporation filed a lawsuit against Ian
complaint stated a valid cause of action.
Cruz and Paul Chua Hua to recover P16,054,541.66.
• The Supreme Court (SC) evaluates whether the bank's complaint
• The bank claimed that Paul transferred funds from Francisco and
states a valid cause of action, emphasizing that the failure to state a
Alvin's accounts to Ian's with the promise of regularizing the
cause of action is a ground for dismissing a case.
transactions.
• The SC clarifies that the bank must have a legally recognized right that
• Ian used this money to secure a loan, which he allegedly paid back.
has been violated by the defendants.
However, Francisco and Alvin demanded payment, backed by Foreign
• The court finds that the bank is not the real party in interest since the
Exchange Forward Contracts (FEFCs), which the bank rejected,
individuals affected by the transactions are the ones who should
asserting they were fake.
initiate the action.
• The bank believed Ian and Paul were attempting fraud and obtained
• The SC also highlights that the bank's claim is based on preliminary
a preliminary attachment against them.
findings related to a writ of preliminary attachment and should not
• Ian filed a motion to dismiss, arguing that the bank lacked a cause of
automatically determine the outcome of the main case.
action, had no right over the funds, and no obligation was violated.
• The Court of Appeals (CA) correctly dismissed the bank's appeal, as
• The Regional Trial Court (RTC) dismissed the bank's complaint in
the issues raised are purely questions of law and cannot be addressed
November 2013, finding that Francisco and Alvin were the actual
through the mode of appeal chosen by the bank.
parties concerned, not the bank.
• The correct mode of appeal in such cases is a petition for review on
• The bank appealed to the Court of Appeals (CA), which granted a
certiorari.
motion to dismiss filed by Ian, Francisco, and Alvin.
• Since the bank pursued the wrong mode of appeal, the trial court's
• The CA argued that the bank should have filed a petition for review
dismissal order became final and executory.
on certiorari under Rule 45 instead of an appeal under Rule 41.
• The court emphasizes that compliance with procedural rules is
• The bank persisted and filed a Petition for Review on Certiorari.
crucial, especially in the banking sector, which is held to high
Issue: standards of diligence and integrity.
• In conclusion, the case revolves around the mode of appeal for
• The main issue is whether the bank availed of the correct remedy in judgments and whether the bank's complaint stated a valid cause of
assailing the RTC's Order of Dismissal of its Complaint and whether it action. The court determines that the bank's appeal was incorrect,
incurred damage in any way to file a claim against Ian and Paul. and the bank failed to establish a valid cause of action in its
complaint. The court also emphasizes the importance of adherence
to procedural rules and the high standards expected of banking
institutions.
 4. Allied Banking Corp. v. Spouses Macam, G.R. No. 200635, February RULING:
1, 2021
• Yes, Allied Bank is liable.
FACTS: • RA 8791 establishes the fiduciary nature of banking, requiring high
standards of integrity and performance.
• Mario Macam invested P1.572M in respondent Helen Garcia's
• The banking industry is of public interest, imposing a higher standard
cellular card business.
of diligence than a good father of a family.
• The investment was deposited in the savings account of Elena Valerio
• Sec. 20 of the GBL treats a bank and its branches as one unit,
with petitioner Allied Bank's Pasay Branch.
responsible for all business conducted.
• Valerio issued a BPI check to Mario covering the principal investment.
• Allied Bank cannot deny the banking relationship with the Spouses
• Respondent Caña informed the bank to prepare armored vans to pick
Macam after accepting their initial deposit.
up a P46M deposit from Helen.
• Money has no peculiar ownership; its primary purpose is to pass from
• Caña provided five fund transfer receipts, but Helen had not made a
hand to hand as a medium of exchange.
deposit to cover the amount.
• Allied Bank's unilateral closure of the Spouses Macam's deposit
• Berras, the bank teller, refused to credit the amounts but Caña
account violated their savings deposit agreement.
approved the fund transfer, crediting the accounts.
• Valerio withdrew P1.722M and deposited P1.590M into Mario's Doctrine:
brother's account.
• The Spouses Macam opened an account with Allied Bank and
RA 8791 enshrines the fiduciary nature of banking that requires high
withdrew P490,000.
standards of integrity and performance. The statute now reflects
• Caña instructed to reverse the P10M fund transfer and debit specific
jurisprudential holdings that the banking industry is impressed with public
accounts. The bank's operating officer learned of this.
interest requiring banks to assume a degree of diligence higher than that of a
• Allied Bank investigated and recovered part of the amount but
good father of a family. Thus, all banks are charged with extraordinary
ordered the debit of the remaining P1.1M from the Spouses Macam's
diligence in the handling and care of its deposits as well as the highest degree
account.
of diligence in the selection and supervision of its employees.
• Spouses Macam filed a complaint against the Bank and its branch
head, Dimog.
• RTC ordered Allied Bank and Dimog to pay Spouses Macam P1.1M
with interest.
• CA affirmed RTC's decision.
• Allied Bank appealed.

ISSUE:

• Whether Allied Bank is liable for unilaterally debiting and closing the
deposit account of the Spouses Macam.
 5. Land Bank of the Philippines vs. Catadman, G.R. No. 200407, June RULING:
17, 2020
• No, Land Bank should not bear the loss.
FACTS: • The CA erroneously applied the BPI Family Bank and Simex doctrine,
as Catadman did not suffer financial loss when his account was
• Land Bank received 3 DBP checks from Catadman: (1) P8,500 payable
credited; he was unjustly enriched.
to GCNK Merchandising (owned by Catadman); (2) P100,000 payable
• Unlike the cases cited, Catadman did not directly suffer financial loss
to NEDA; and (3) P6,502 payable to Benjamin Reyno.
or damage.
• Checks were cleared, but later, NEDA and Reyno's checks were
• Catadman cannot hide behind Land Bank's negligence to evade his
erroneously credited to Catadman's account, and Catadman's check
obligation to return the money. Allowing this would be unjust
was inadvertently credited twice, resulting in P115,062.68 in his
enrichment.
account.
• The fiduciary nature of banking does not preclude Land Bank from
• Land Bank demanded Catadman to return the amount (excluding
recovering the money from Catadman.
P8,500), but Catadman refused.
• Land Bank is reprimanded for its negligence, as banks are obliged to
• Catadman initially promised to repay P2,000 monthly but stopped
treat depositors' accounts with meticulous care due to the fiduciary
after paying P15,000.
nature of their relationship.
• Land Bank filed a case for collection of a sum of money against
• The fiduciary nature of banking requires banks to uphold high
Catadman.
standards of integrity and performance, as prescribed by Section 2 of
• MTCC ruled in favor of Catadman, holding Land Bank responsible for
RA 8791.
its employee's negligence.
• RTC reversed MTCC's decision, applying Civil Code provisions (Arts. Doctrine:
19, 22, and 1456) and held Catadman should have returned the
money when he knew it wasn't his. The bank is under obligation to treat the accounts of all its depositors with
• CA ruled in favor of Land Bank, citing negligence of the bank's meticulous care, always having in mind the fiduciary nature of their
employee, the fiduciary nature of banking, and Catadman's bad faith. relationship. This fiduciary relationship means that the bank's obligation to
CA applied a 60-40 ratio. observe "high standards of integrity and performance" is deemed written into
every deposit agreement between a bank and its depositor. The fiduciary
ISSUE:
nature of banking requires banks to assume a degree of diligence higher than
• Whether Land Bank should bear the loss due to its employee's that of a good father of a family. Likewise, Section 2 of RA 8791 prescribes
negligence and the fiduciary nature of banking. the statutory diligence required from banks - those banks must observe "high
standards of integrity and performance" in servicing their depositors.
 6. Soriano v. People, G.R. No. 240458, January 8, 2020 Doctrine:

FACTS:
The prohibition in Sec. 83 is broad enough to cover various modes of
• Hilario Soriano, President of Rural Bank of San Miguel, faced two borrowing. It covers loans by a bank director or officer which are made either:
criminal charges. (1) directly, (2) indirectly, (3) for himself, (4) or as the representative or agent
• The first charge was estafa through falsification of commercial of others. It applies even if the director or officer is a mere guarantor, indorser
documents, alleging that Soriano falsified loan documents to secure or surety for someone else's loan or is in any manner an obligor for money
an unauthorized loan. borrowed from the bank or loaned by it. The covered transactions are
• The second charge was for violation of Sec. 83 of RA 337 (DOSRI law), prohibited unless the approval, reportorial and ceiling requirements under
accusing Soriano of indirectly securing an P8M loan for his personal Sec. 83 are complied with.
use without complying with required procedures.
• Soriano moved to quash the charges, arguing that the court lacked
jurisdiction and that the offenses were incompatible.
• The trial court and CA denied the motion to quash.

ISSUES:

• Whether a loan transaction under the DOSRI law can also be the
subject of estafa under the Revised Penal Code.

RULING:

• Yes, a loan transaction within the ambit of the DOSRI law can also be
the subject of estafa.
• Sec. 83 of RA 337 broadly covers various modes of borrowing by bank
directors or officers, directly or indirectly, for themselves or others.
• The prohibition aims to protect the public, especially depositors,
from overborrowing by bank officers, which may lead to bank
failures.
• The law does not exclude cases where DOSRIs act for their own
benefit, even if they use unsuspecting individuals.
• The charges filed against Soriano do not negate each other.
• This decision allows for the simultaneous prosecution of violations of
the DOSRI law and estafa in cases where bank officers abuse their
positions for personal gain.
 7. Apolinario, Jr. y Llauder vs. People, G.R. No. 242977, October 13, Doctrine:
2021
Banking institutions are corporations imbued with public interest. They are
FACTS: required to exercise the highest degree of diligence. By their nature, banks
operate within certain restrictions and limitations, one of which is the
• Directors and officers of Unitrust Development Bank, including
issuance of loans to its directors, officers, stockholders, and related interests
Apolinario, were charged with violating DOSRI laws.
(DOSRI). The requirements under the General Banking Law are
• Loans were allegedly approved without proper documentation and straightforward. If all the elements provided by the law are present, erring
board approval. directors and officers can be held criminally liable for violating the DOSRI law.
• Apolinario argued that he was not a shareholder and that board
meetings were simulated.
• RTC and CA convicted Apolinario, finding that he acted in conspiracy
with others to approve the loans without proper authorization.

ISSUE:

• Whether the elements of the offense have been sufficiently

established and proven by the prosecution.

RULING:

• Yes, the elements of the offense have been sufficiently established.

• To sustain a conviction for violating DOSRI restrictions, the
prosecution must prove that the offender is a director or officer of a
banking institution, that the offender performed acts covered by
DOSRI laws without written approval, and that the offender acted
directly or indirectly for personal gain.
• Apolinario's status as a director was proven.
• The loans were approved without proper documentation and board
approval.
• Apolinario's role in signing board meeting minutes was significant in
approving the loans.
• Apolinario acted in conspiracy with others to approve the loans.
• His argument that board meetings were simulated was not
persuasive, and the evidence supported his conviction.
• This decision upholds the conviction of Apolinario for violating DOSRI
laws related to the approval of loans without proper authorization.
 8. Go vs. BSP G.R. No. 178429, Oct. 23, 2009 (604 SCRA 322) FACTS:
• Jose Go, the Director, President, and CEO of the Orient Commercial
Doctrine: Banking Corporation, was charged with violating Section 83 of RA 337
Under Sec. 83 of RA 337, the following elements must be present to (General Banking Act).
constitute a violation of its 1st paragraph: • Go was accused of borrowing deposits/funds from the Orient Bank
and facilitating/granting credit lines/loans to New Zealand Accounts
1. the offender is a director or officer of any banking institution;
without written board approval.
2. the offender, either directly or indirectly, for himself or as
• He argued that the charge was invalid because the law penalizes only
representative or agent of another, performs any of the following
directors or officers who are either borrowers or guarantors, but not
acts: both.
a. he borrows any of the deposits or funds of such bank; or • Go also claimed that the second paragraph of Section 83 serves as an
b. he becomes a guarantor, indorser, or surety for loans from exception and limits the amount of credit accommodations.
such bank to others, or ISSUE:
c. he becomes in any manner an obligor for money borrowed • Whether Go is liable for violating Section 83 of RA 337.
from bank or loaned by it; RULING:
3. the offender has performed any of such acts without the written • Yes, Go is liable for violating Section 83 of RA 337.
approval of the majority of the directors of the bank, excluding the • Section 83 of RA 337 penalizes a bank director or officer for becoming
offender, as the director concerned. an obligor of the bank without written board approval.
• The second element in the law lists various modes of committing the
The essence of the crime in Sec. 83 is becoming an obligor of the bank without offense but does not create a distinction between borrowing and
securing the necessary written approval of the majority of the bank’s guaranteeing.
directors. The second element merely lists down the various modes of • The law aims to prevent bank directors or officers from becoming
committing the offense. The third mode serves as a catch-all phrase that obligors without proper approval, regardless of the mode of their
covers any situation when a director or officer of the bank becomes its involvement.
obligor. The prohibition is directed against a bank director or officer who • The credit accommodation limit in the second paragraph is not an
becomes in any manner an obligor for money borrowed from or loaned by exception or an element of the offense but a separate regulatory
the bank without the written approval of the majority of the bank’s board of requirement.
directors. To make a distinction between the act of borrowing and • Compliance with the ceiling requirement does not dispense with the
guarantying is therefore unnecessary because in either situation, the director approval requirement.
or officer concerned becomes an obligor of the bank against whom the • Failure to observe any of the three requirements (Approval,
obligation is juridically demandable. Reportorial, Ceiling) can lead to prosecution for different offenses.
• This decision affirms that the law penalizes bank directors or officers
The credit accommodation limit under the 2nd paragraph of Sec. 83 is not an who become obligors of the bank without written board approval,
exception nor is it an element of the offense. Sec. 83 imposes three regardless of whether they are borrowers or guarantors. Compliance
restrictions: Approval, Reportorial, and Ceiling requirements. with the ceiling requirement is separate from the approval
requirement.
 9. Banco Filipino Savings and Mortgage Bank vs. BSP, G.R. No. 200642, • In 2011, the Monetary Board issued a resolution prohibiting Banco
April 26, 2021 Filipino from doing business and placing it under receivership.
• The CA reversed the grant of TRO and WPI, stating it lacked
Doctrine:
jurisdiction over the matter.

ISSUE:
A bank under receivership can only sue or be sued through its receiver, the
PDIC. Thus, a petition filed on behalf of a bank under receivership that is • Whether the non-inclusion of the receiver, PDIC, warrants the
neither filed through nor authorized by the PDIC must be dismissed for want dismissal of the case.
of jurisdiction.
RULING:
The mandatory inclusion of the PDIC as a representative party is grounded on
its statutory role as the fiduciary of the closed bank which, under the New • Yes, the case should be dismissed due to the non-inclusion of the
Central Bank Act, is authorized to conserve the latter's property for the receiver, PDIC.
benefit of its creditors. • When a bank is under receivership, it can only sue or be sued through
its receiver, PDIC.
FACTS: • The powers and functions of the bank's directors, officers, and
• Banco Filipino was ordered closed in 1985 but later declared that the stockholders are suspended upon takeover by PDIC.
closure was tainted with grave abuse of discretion by the Supreme • PDIC, as the receiver, is authorized to bring suits and defend the
Court. closed bank in legal actions.
• After the passage of RA 7653, Banco Filipino sought financial • Banco Filipino should have sought PDIC's authorization to file the suit
assistance from Bangko Sentral, which imposed certain conditions. or joined PDIC as a co-petitioner.
• A disagreement arose regarding the conditions, specifically the • Participation of PDIC in such cases is necessary and in the public
withdrawal of cases against Bangko Sentral and its officials. interest.
• Banco Filipino filed a petition to compel Bangko Sentral to approve • The case was speculative in presuming that PDIC might not allow the
its business plan. suit without seeking authorization or joining PDIC as an unwilling co-
• During the case, an Ad Hoc Committee provided an alternative petitioner.
business plan accepted by Banco Filipino but subject to Monetary • This decision highlights the requirement to include the receiver, PDIC,
Board approval. in cases involving banks under receivership. Such cases must be
• Bangko Sentral approved financial assistance but required the brought for or against the closed bank through the statutory receiver,
withdrawal of cases as a condition. and PDIC's participation is crucial for the protection of creditors and
the public interest.
• Banco Filipino hesitated to accept this condition, leading to a failed
settlement.
• A petition for certiorari and mandamus was filed against Bangko
Sentral, leading to a TRO and WPI.
 10. BPI vs. Central Bank of the Philippines, G.R. No. 197593, October 12, FACTS:
2020
1. BPI and Citibank are both members of the Clearing House established
DOCTRINE: and supervised by CBP.
2. Both banks maintained demand deposit balances with CBP for their
CBP is not liable for the acts of its employees because Valentino and Estacio
clearing transactions.
were not "special agents".
3. BPI discovered discrepancies in its inter-bank reconciliation
the test of liability statements with CBP, amounting to P9 million.
4. BPI filed a complaint with CBP and requested an investigation.
depends on whether or not the employees, acting in behalf of CBP, were 5. An organized criminal syndicate committed bank fraud by infiltrating
performing governmental or proprietary functions. CBP, pilfering checks, tampering with documents, and making
The State in the performance of its governmental functions is liable only for withdrawals through Citibank and BPI accounts.
the tortuous acts of its special agents. 6. BPI requested CBP to credit back the P9 million with interest, but CBP
credited only P4.5 million.
On the other hand, the State becomes liable as an ordinary employer when 7. BPI filed a complaint for the remaining P4.5 million plus interest
performing its proprietary functions. against CBP.
To reiterate, CBP's establishment of clearing house facilities for its member 8. The RTC held CBP liable due to its employees' criminal acts.
banks to which Valentino and Estacio were assigned as Bookkeeper and 9. The CA dismissed the complaint, arguing that CBP was not liable for
Janitor-Messenger, respectively, is a governmental function. its employees' actions as they were not special agents.

As such, the State or CBP in this case, ISSUES:

is liable only for the torts committed by its employee when the latter acts as 1. Whether CBP may be sued for its governmental and/or proprietary
a special agent but not when the said employee or official performs his or her functions.
functions that naturally pertain to his or her office. 2. Whether CBP was performing a proprietary function when it entered
into clearing operations.
A special agent is defined as one who receives a definite and fixed order or 3. Whether CBP exercised diligence in supervising its employees
commission, foreign to the exercise of the duties of his office. involved in the bank fraud.
4. Whether Citibank, as the sending bank, should bear the damage as
Evidently, both Valentino and Estacio are not considered as special agents of
per Central Bank Circular No. 580.
CBP during their commission of the fraudulent acts against petitioner BPI as
they were regular employees performing tasks pertaining to their offices,
namely, bookkeeping and janitorial-messenger. Thus, CBP cannot be held
liable for any damage caused to petitioner BPI by reason of Valentino and
Estacio's unlawful acts.
HELD:

• CBP may be sued for both governmental and proprietary functions.

• CBP was performing a governmental function when it entered into
clearing operations.
• CBP was not liable for its employees' actions because they were not
special agents.
• Citibank is not liable as the sending bank; the responsibility lies with
those responsible for the tampering and pilfering of checks and
documents.

RULING SUMMARY:

• CBP can be sued for both governmental and proprietary functions.

CBP is a government corporation with a separate juridical
personality, and its charter explicitly waives its immunity from suit.
• The operation of a clearing house facility for regional checks was part
of CBP's governmental function, even if the Philippine Clearing House
Corporation (PCHC) later handled clearing services in Metro Manila.
• CBP is not liable for its employees' actions because they were not
special agents but regular employees performing tasks related to
their offices.
• Even if CBP were performing proprietary functions, it still would not
be liable because the employees acted beyond the scope of their
duties.
• Citibank is not liable as the sending bank because the subject checks
were not returned before the clearing period lapsed, and Citibank
allowed withdrawal without notice of dishonor from BPI. The
responsibility lies with those responsible for tampering and pilfering
checks and documents.

RESULT: The petition for review on certiorari was denied, and the CA decision
was affirmed.