Banking Law Notes Part 1-Atty. Heffron (Santos, Weng).pdf - BANKING LAW DLSU \u2013 Law Definition of Banks GENERAL BANKING LAW Section 3 Definition and

Banking Law Notes Part 1-Atty. Heffron (Santos, Weng).pdf -...

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BANKING LAW Atty. James Heffron DLSU Law WS, 3 rd year 1 “If you want to build a ship, don't drum up people together to collect wood and don't assign them tasks and work, but rather teach them to long for the endless immensity of the sea” Definition of Banks GENERAL BANKING LAW Section 3. Definition and Classification of Banks. - 3.1. "Banks" shall refer to entities engaged in the lending of funds obtained in the form of deposits. Case 1 Republic of the Philippines vs. Security Credit and Acceptance Corporation G.R. No. L-20583, January 23, 1967 Facts: Articles of Incorporation of defendant corporation were registered with the Securities and Exchange Commission. When they applied with SEC for the registration and licensing of their securities under the Securities Act, the latter referred it to the Central Bank which in turn rendered an opinion classifying defendant corporation as engaged in banking. SEC then advised the corporation to comply with the requirements under the General Banking Act. Pursuant to a search warrant issued by MTC Manila, members of Central Bank intelligence division and Manila police seized documents and records relative to the business operations of the corporation. After examination of the same, the intelligence division of the Central Bank submitted a memorandum to the then Acting Deputy Governor of Central Bank finding that the corporation is engaged in banking operations. In lieu of the memorandum, the Monetary Board issued a resolution declaring that the corporation is performing banking operations without first complying with the provisions of Republic Act No. 337.Notwithstanding such resolution, the corporation, have been and still are performing the functions and activities which had been declared to constitute illegal banking operations; the corporation had established 74 branches in principal cities and towns throughout the Philippines; that through a systematic and vigorous campaign undertaken by the corporation, the same had managed to induce the public to open 59,463 savings deposit accounts with an aggregate deposit of P1,689,136.74; Accordingly, the Solicitor General commenced this quo warranto proceedings for the dissolution of the corporation, with a prayer that, meanwhile, a writ of preliminary injunction be issued ex parte, enjoining the corporation and its branches, as well as its officers and agents, from performing the banking operations complained of, and that a receiver be appointed pendente lite. Superintendent of Banks of the Central Bank was then appointed by the Supreme Court as receiverpendente lite of defendant corporation. Issue: Whether or not defendant corporation was engaged in banking operations. Held: Yes. An investment company which loans out the money of its customers, collects the interest and charges a commission to both lender and borrower, is a bank. It is conceded that a total of 59,463 savings account deposits have been made by the public with the corporation and its 74 branches, with an aggregate deposit of P1,689,136.74, which has been lent out to such persons as the corporation deemed suitable therefore.
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  • Summer '17
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