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Morales: The Philippine General Banking Law (Annotated)

(Article published in the March 4, 2002 issue of TODAY, Business Section)

This was a book I had wanted to write, if only I had the ever-elusive time. But since I was beaten to it, I gladly stand by the wayside and cheer as the winner passes by. The book is a slender tome entitled The Philippine General Banking Law (Annotated) and the author is Atty. Rafael Morales, senior partner and head of the banking, finance and securities department of SyCip Salazar Hernandez & Gatmaitan law office.

Launched last Friday at the Manila Shangri-la Hotel in Makati City, the work, as observed by Atty. Juan De Zuniga, Jr., in his foreword, is the first ever annotation of the general banking law in the Philippines. In the book’s compact 200 or so page format, Atty. Morales dissects the statute section by section in mini-essays, unwraps the meaning of its provisions with a generous dose of history and policy, and provides the reader with what the author himself describes as "a footing in walking through the intricacies of the General Banking Law of 2002," officially, Republic Act 8791.

Like most law books written by law professors (Atty. Morales is a professiorial lecturer in Banking and Financial Law at the College of Law of the University of the Philippines where he, the class valedictorian, was graduated Bachelor of Law cum laude in 1978), it was primarily meant for law students, the usual captive audience of their writing teachers. Nonetheless, the book contains helpful material for the out-of-school, i.e. the young lawyers starting specialization in banking, junior bank officers, and ready-reference for a new breed of bank executives called "compliance officers." Trying to be relevant to a diverse readership, it ipso facto, like the others, exhibits the internal contradiction of an opus that blends the basic with the advanced.

For instance, in his annotation of the first section of the statute, which is traditionally simply the statement of the law’s title, the author points out, for law students undoubtedly, that R.A. No. 8791 I called a "law" rather and an "act" (purpose: to differentiate the current law from its predecessor). He then makes a list, clearly for the benefit of the young lawyer doing his research, of the laws that amended the prior general banking act, and concludes with quotes from the legislative journals on the purpose of the law, for the guidance, I am sure, of the regulatory authorities implementing its mandates.

The book, however, is not just an articulation of the current state of the law. True, the author’s comments make a constant appeal to authority, - thus the continuous procession of relevant excerpts from cases decided by the Supreme Court and extracts from the regulations of the Bangko Sentral ng Pilipinas (BSP) constituting the official interpretation at the administrative level of what the law means, - still, when the occasion demands, the author does not hesitate to criticize an unhappy use of a term or a more serious inadequacy in the system established by the law.

Atty. Morales, for example, takes exception to a legal drafting lapse which found its way in the old General Banking Act in the early days of martial law, I guess because that was when the crafting of a statute, with the abolition of a separate legislative body, passed from the expert hands of the technical commitments in Congress, to the well intentioned though less adept pens of Marcos’ technocrafts. He maintains that it is inappropriate to apply the term "quasi-banking" to the alternative borrowing operations (i.e. borrowing from the public through means other than deposits) of banks themselves. He suggests that such activity be simply termed "deposit-substitute operation" since, to quote him, "there is nothing ‘quasi’ about it, when it is performed by banks themselves."

Going beyond criticizing semantics, the author decries the inability of the law to provide legal protection for bank regulators against criminal suits which under our system ordinarily costs no one to institute. Witness, for instance, the barrage of complains filed with the Ombudsman whenever the BSP, in the exercise of its mandate to protect the banking system, closes to a bank.

Atty. Morales points out that neither the Administrative Code of 1987 (which shields p7ublic servants from civil liability "unless there is a clear showing of bad faith, malice, or gross negligence") nor the New Central Bank Act (which indemnifies a BSP official for legal costs in defending himself "unless he is finally adjudged in such action or proceeding to be liable for negligence or misconduct") offers any protection against criminal complaints filed against their acts done in the performance of their functions.

He proposes for the BSP personnel a protective provision of import similar to the more comprehensive shield given by Section 9-A of the Philippine Deposit Insurance Corp. (PDIC) Charter (RA 3591, as amended) to its directors, officers and employees against "any action, claim, or demand for or in connection with any act done or omitted to be done by them in good faith in the exercise of their functions."

Conspicuously absent, despite the author’s more than twenty five years of law practice since placing fourth in the 1974 Bar Examinations, are the irritating staples of lawyer-speech, such as "this humble representation submits;" instead, one finds the authoritative disquisition (a term in vogue because of recent Supreme Court decisions often using it) of a law teacher, confident of his accomplishments (the inside jacket lists the author’s internationally published articles), but not resting on his laurels.

For those who would want to pursue a career in banking, or begin specialization in banking law, or whose present livelihood requires current knowledge of the law affecting banks (e.g. the book has references to the Anti-Money Launder Law of 2002), The Philippine General Banking Law (Annotated) is a recommended buy. I would have bought one myself, had not Raffy Morales provided me with one, with his compliments and autograph.