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CHAPTER 1 I. DECLARED Policy of the State (Sec. 2, GBL) - The State recognizes the vital role of banks providing an environment conducive to the sustained development of the national economy and the fiduciary nature of banking that requires high standards of integrity and performance. In furtherance thereof, the State shall promote and maintain a stable and efficient banking and financial system that is globally competitive, dynamic and responsive to the demands of a developing economy. II. Definition of Banks (Sec. 3.1, GBL) - "Banks" shall refer to entities engaged in the lending of funds obtained in the form of deposits. Note: Banks may engage in other activities allowed by law. III. Nature of Banking Business H.
Art. 1172 of NCC states that the degree of diligence required of an obligor is that prescribed by law or contract, and in the absence of such, that of a good father to a family NOTE: Due diligence is required of banks extend even to persons or institutions, regularly engaged in the business of lending money secured by real estate mortgage. Treatment of Accounts with Meticulous Care – There is NO LAW mandating banks to call up their clients whenever their representatives withdraw significant amounts from their accounts. Duty to Keep Records 1. Banks shall have a true and accurate account, record, statement of their daily transactions especially those of deposit liabilities. 2. The making of a false entry or willful omission of entries is a ground for the imposition of administrative sanctions and disqualification from office. Banks are NOT Gratuitous Bailees – Banks solicit deposits in order that they can use the money to gain. Banks are NOT Expected to be Infallible, but must bear the blame for NOT discovering mistakes despite established procedures.
Debtor-Creditor Relationship – The relationship existing between a depositor and bank is that of a creditor and debtor. Fiduciary Duty 1. Simex Intl., Inc. vs. CA: The State recognizes the “fiduciary nature of banking that requires high standards of integrity and performance.” Banks are required to treat the accounts of its depositors with meticulous care, always having in mind the fiduciary nature of their relationship. 2. This bank’s obligation is deemed written into every deposit agreement between a bank and its depositor. Not A Trust Agreement 1. The fiduciary nature of bank-depositor relationship does NOT convert the contract between the bank and its depositors FROM a SIMPLE LOAN TO a TRUST AGREEMENT. This is because Banks do not accept deposits to enrich depositors but to earn money for themselves. 2. Failure by the bank to pay to pay the depositor is failure to pay a simple loan, and NOT a breach of trust. Indispensable Institution 1. Banks is an indispensable institution in the modern world and plays vital role in the economic life of every citizen. People have come to regard them with respect, gratitude, and confidence.
Q: Sps. A and V opened a joint current account in C Bank with an initial deposit of P2,250. Prior thereto, A had a personal account with the same bank. When the spouse opened their joint current account, the “New Accounts” teller pulled out the old signature card of A and placed the old personal account number of A in the deposit slip. V issued two checks and one of these was dishonored for IF. They were deducted P20 from their account. The bank tried to call the spouses, but they were in Pampanga. Is the bank liable for damages? A: Yes. a depositor expects a bank to treat his account with utmost fidelity, whether such account consists only of a few hundred pesos or millions. Bank must record every transaction accurately A blunder on the part of the bank such as dishonor of check without good reason can cause the depositor embarrassment, financial loss, and perhaps civil and criminal litigation Note: Exemplary damages are awarded if there is malice and bad faith. K. Dealing with Registered Lands – The rule that persons dealing with registered lands can rely solely on the certificate of title does NOT APPLY to banks. Banks should exercise more care and prudence in dealing with registered lands that private individuals, for their business is one affected by public interest. Q: A sold is unregistered parcel of land to B. Subsequently, an Orig. Cert.Title (OCT) was issued. A surrendered it to X bank as a consequence of a mortgage. B died w/o knowing that an OCT has been issued. Upon learning of his right, C (B’s heir) confronted A and went to X bank. C asked to photocopy the owner’s duplicate certificate outside the bank’s premises. C then brought it to the Register of Deeds with the Deed of Sale and he was issued a Transfer Cert of Title. Is the bank liable for damages to A? A: Yes. Bank failed to foresee the risk of its act of entrusting C with the OCT without notifying A and verifying the veracity of C’s claim and character. This acts runs afoul of the bank’s mandate to observe the highest diligence A has also the right to due process. Notice and hearing are indispensable elements of this right which the bank ignored Q: A bank accepted a property as mortgage despite existence of structures and occupants other than the mortgagor. Is the bank negligent? A: Yes. Banks, being in the business of extending loans, are familiar with the rules on land registration. They are expected to exercise more care and prudence in dealing with registered lands that private individuals, for their business is one affected by public interest.
2. 3. 4.
Even a humble wage-earner does not hesitate to entrust his life savings An ordinary person usually maintains an account for security and convenience in settling his bills
As for business entities, the bank is trusted to help them in running their affairs, not only in the form of loans, but in their day-to-day transactions like encashing a check. Impressed with Public Interest (Simex vs. CA) – a depositor expects a bank to treat his account with utmost fidelity, whether such account consists only of a few hundred pesos or millions. Degree of Diligence (Simex vs. CA)
The bank should have conducted investigation since there occupants other than the owner of the land mortgaged. This constitutes gross negligence amounting to bad faith. L. Banks may Exclude Persons in their Premises – No employees must be spared by banks and their officers and employees to ensure and preserve the trust and confidence of the general public.
Thrift Banks: allowed to use and adopt any name, provide the ff words are affixed: A thrift bank, Saving bank, A Private Development Bank, or A stick Savings and Loan Association Rural or Commercial Banks: allowed to use and adopt any name, provide the ff words are affixed: Rural or Coop, A Cooperative Bank, or A Rural Bank. o The size of the letters of such phrase shall be at least ½ of the size of the business name when shown on letterheads, billboards, and other advertising materials. Universal Banks powers authorized for a commercial bank powers of an investment house power to invest in non-allied enterprises Commercial Banks general powers incident to corporations powers of commercial banks: (A BREAD)
IV. Liability For Acts and Employees – Bank is LIABLE for the wrongful acts of its officers done WITHIN the scope of their authority. A. Negligence of Manager Bank is liable for the negligence or misdeed of the branch manager since confidence in the banking system necessarily includes reliance on bank managers. (BPI vs. First Metro Investment Corp.) B. Negligence of Officers – if within the scope of authority, bank is liable C. Negligence of Tellers – returning the passbook ONLY to the depositor or his authorized representative. If given to the wrong person, bank is liable since they would be clothing that person presumptive ownership of the passbook. Note: Appropriation of money by a bank teller is NOT ESTAFA. Such is only MATERIAL POSSESSION. The bank still has JURIDICAL POSSESSION. If for personal gain, THEFT. If the teller has possession of the money since he occupies a position of confidence, QUALIFIED THEFT. D. Right to Recover from Employees – Banks may recover from their employees. (Art. 2181 of NCC) E. Liabilities other than Actual 1. Exemplary – by way of example. Malice and bad faith must be attendant 2. Moral – when the good reputation of the client was besmirched or his financial credit Note: Banks are NOT responsible for such damages in the ABSENCE of fraud, bad faith, malice, or wanton attitude. F. Respondeat superior, Diligence in the Selection, and Supervision of Employees - A bank is bound by negligence of its employees under the principle of Respondeat superior or command responsibility. V. Classification of Banks (CUT RICO) Sec. 3.2. Banks shall be classified into: (a) Universal banks; (b) Commercial banks; (c) Thrift banks, composed of: (i) Savings and mortgage banks; (ii) Stock savings and loan associations; and (iii) Private development banks, as defined in the Republic Act No. 7906 (hereafter the “Thrift Banks Act”); (d) Rural banks, as defined in Republic Act No. 73S3 (hereafter the "Rural Banks Act"); (e) Cooperative banks, as defined in Republic Act No 6938 (hereafter the "Cooperative Code"); (f) Islamic banks as defined in Republic Act No. 6848, otherwise known as the “Charter of Al Amanah Islamic Investment Bank of the Philippines”; and (g) Other classifications of banks as determined by the Monetary Board of the Bangko Sentral ng Pilipinas. A. Business Name Only a bank that is granted universal/ commercial banking authority may represent itself to the public as such in connection with its business name
B. 1. 2. 3. C. 1.
D. E. -
Rural Banks designed to make needed credit available and readily accessible in the rural areas on reasonable terms primary purpose is to meet the normal credit needs of farmers, fishermen, or farm families Thrift Banks include savings and mortgage banks, private devt. banks, and stock savings and loans associations. Providing short-term working capital, medium and long term financing to business engaged in agriculture, services, industry, and housing Powers of a Thrift Bank: Cooperative Banks one organized by, the majority shares of which is owned and controlled by, cooperatives primarily to provide financial and credit services to cooperatives “cooperative bank” shall include cooperative rural banks Membership shall include ONLY cooperatives and federations of cooperatives Functions of a Cooperative Bank
Islamic Banks (Al-Amanh Islamic Investment Bank of the Philippines) in Zamboanga City primary purpose shall be to promote and accelerate the socio-economic devt of the Autonomous Region by performing banking and financing operations and to establish and participate in the agricultural, commercial, and industrial ventures based on the Islamic concept of banking.
Other Banks Philippine Veterans Bank – private commercial bank owned by veterans Land Bank of the Philippines – finance the acquisition and distribution of agricultural estates fro division and resale to small landholders as well as the purchase of the landholding by the agricultural lessee Development Bank of the Philippines – was created as Rehabilitation Finance Corp. (RFC); took over the functions of Agricultural Industrial Bank Non-Stock Saving And Loan Associations – mean a non-stock, non-profit corp engaged in the business of accumulating the savings of its members and using such accumulations for loans to members for home building or personal finance Quasi-banks – refer to entities engaged in the borrowing of funds through the issuance, endorsement or assignment with recourse or acceptance of deposit substitutes for purposes of relending or purchasing of receivables and other obligations "deposit substitutes" is defined as an alternative form of obtaining funds from the public, other than deposits, through the issuance, endorsement, or acceptance of debt instruments for the borrower's own account, for the purpose of relending or purchasing of receivables and other obligations. VI. Authority to Engage in Banking and Quasi-Banking (QB) Functions A. Authority from Bangko Sentral
The SEC shall not register the articles of corp or any amendment unless accompanied by a certificate of authority issued by the MB, under its seal. The MB shall be satisfied from the evidence submitted to it: (RPC) o All requirements of law have been complied with o Public interest and economic conditions justify the authorization o The amount of capital as well as the integrity of the organizers reasonable assure the safety of deposits and the public interest The SEC shall not register the by-laws of any bank or any amendment unless accompanied by a certificate of authority issued by the MB, under its seal.
CHAPTER 2: ORGANIZATION, MANAGEMENT & ADMINISTRATION OF BANKS, QUASIBANKS AND TRUST ENTITIES I. A. Organization of Banks Conditions The MB may authorize the organization of a bank and quasi-bank: 1. Entity is a stock corporation 2. Funds are obtained from the public, 20 o more persons 3. Minimum capital requirements by MB are satisfied Capabilities The MB shall take into consideration their apability in terms of their financial resources and technical expertise and integrity. 1. Bank’s ownership structure 2. Director’s and senior management 3. Its operating plan 4. Internal control 5. Its projected financial condition and capital base Capital Requirements 1. Banks shall comply with the required minimum capital by MB: Universal Bank4,950M Commercial Bank2,400M Thrift Banks w/n MM325.0M Outside MM52.0M Rural Banks w/n MM26.0M Cities of Cebu and Davao13.0M In 1st, 2nd & 3rd class cities and 1st class minicipalities6.5M In 4th, 5th & 6th classcities and in the 2nd, 3rd & 4th class municipalities3.9M In 5th & 6th class municipalities- 2.6M 2. At least 25% of the total authorized capital stock shall be subscribed by the subscribers of the propsed bank, and at least 25% of such subscription shall be paid-up that it must not be less than the minimum required capital.
No person shall engage in banking operations or QB functions WITHOUT authority from the Bangko Sentral No articles of incorporation or amendment to articles of incorporation of banks, banking and quasi-banking institutions, building and loan associations, trust companies and other financial intermediaries, insurance companies, public utilities, educational institutions, and other corporations governed by special laws shall be accepted or approved by the Commission unless accompanied by a favorable recommendation of the appropriate government agency to the effect that such articles or amendment is in accordance with law. (Sec. 17 of BP 68) The Securities and Exchange Commission shall not accept for filing the by-laws or any amendment thereto of any bank, banking institution, building and loan association, trust company, insurance company, public utility, educational institution or other special corporations governed by special laws, unless accompanied by a certificate of the appropriate government agency to the effect that such by-laws or amendments are in accordance with law. (Sec. 46 of BP 68) Whether a person or entity is performing banking or quasi-banking functions W/O the BS authority shall be decided by the Monetary Board by examining and investigating the books and records of such person or entity. Upon issuance of authority, may commence to engage in functions until authority is suspended, revoked or annulled by BS. The dept head and the examiners of the supervising and examining dept shall: administer oath to any such person or entity compel presentation of books, records, and documents a. failure to do so would subject such to appropriate sanctions BS shall, when examining a bank, have the authority to examine an enterprise which is wholly or majority-owned by the bank. Certificate of Authority to Register
C. • • • •
C. 1. 2.
Incorporators/ Subscribers 1. Must be persons of integrity and of good credit standing in the business community. Subscribers must have adequate fonancial strength to pay for their propsed subscriptions in the bank. 2. Must not have been convicted of any crime involving moral turpitude unless otherwise allowed. 3. A bank may be organized with not less than 5 or more than 15 persons in organizing or investing in the proposed bank. *if there is excess, may be listed among the original subscribers in the Articles of Corp.
exceed 40% of the outstanding voting stock of the bank. The percentage of foreign-owned voting stock shall be determined by the citizenship of the individual stockholders in the bank. -Filipino individual and domestic non-bank corporation may each own up to 40% o the voting stock of a domestic bank. There shall be no aggregate ceiling on the ownership by such individuals and corporations in a domestic bank. 2. The percentage of foreign-owned voting stock shall be determined by the citizenship of the individual stockholders in the bank – shall follow the citizenship of the controlling stockholders of the corporation, irrespective of the place of incorporation. *CONTROLLING STOCKHOLDER- refer to individuals holding more than 50% of the voting stock of the corporate stockholders of the bank.
QUERY: MAY COOPERATIVES ORGANIZE A BANK? Yes, established cooperatives and corporations may organize a bank and/or subscribe to the shares of stock oa any rural bank. Provided, that it shall be subject to special examination and to such rules and regulations prescribed by the MB. E. Bank Branches 1. UB & CB may open branches or other offices within or outside the Philppines upon prior approval of the BS. 2. A bank authorized to branch out shall be responsible for all business conducted in such branches because a bank and its offices shall be treated as one unit. Stockholdings Treasury Stocks 1. No bank shall Purchase/ acquire shares of its own capital stock or Accept its own shares as a security for a loan EXCEPT: when authorized by the MB. -stocks purchased shall be sold or disposed of at a public or private sale. 2. 3. At common law, a coprpration has no lien upon the shares of stockholders for any indebtedness of the corporation. Sec.35 of the US National Banking At of 1864, if banking corporations were given a lien on their own stock for the indebtedness of the stockholders, the prohibition against granting loans or discounts upon the security of the stock would become laregly ineffective. D.
At least 60% of voting stock of any commercial bank shall be owned by Filipino citizens. For thrift banks, at least 40% of its voting stock shall be owned by Filipinos. In rural banks,all of the capital stock.
NOTE: In determining the nationality of banks, the CONTROL TEST is applied. The following tests do not: 1. War-time test 2. Investment test 3. Place of incorporation test 4. Grandfather rule 5. Principal place of usiness test C. Acquisition of Voting Stock in a Domestic Bank 1. Within 7years from the effectivity of the GBL and subject to guidelines issued pursuant to the Foreign Banks Libearlization Act, the MB may authorize a foreign bank to acquire up to 100% of the voting stock of only one bank organized under the laws of the Republic of the Philippines. 2. Within the same period, MB may authorize any foreign bank, which prior to the effectivity of the GBL availed itself of the privilege to acquire upto 60% of the voting stock of a bank under the Foreign Banks Libearlization Act and the Thrift Banks Act, to further acquire voting shares of such bank to the extent necessary for it to own 100% of the voting stock thereof. 3. MB shall adopt measures necessary to ensure that at all times the control of 70% of the resources or assets of teh entire banking system is held by banks which are at keast majority-owned by Filipinos. Family Grous or Related Interests 1. Stockholdingsn of individuals related to each other within the fourth degree of consanguinity or affinity, legitimater or common-law shall be considered family groups or related interests and must be fullt disclosed in all transactions by such an individual with the bank. 2. Two or more corporations owned or controlled by the same family group or same group of persons shall be considered related interests and must be fullly disclosed in all transactions by such corporations or related groups of persons with the bank. Board of Directors
Foreign Stockholdings 1. Foreign inividuals an non-bank corporations may own or control up to 40% of the voting stock of a domestic bank. It shall apply t Filipinos and domestic non-bank cprporations.
QUERY: PROVISION IS AMBIGUOUS. IF IT APPEARS THAT FPREIGN INDIVIDUALS AND NON-BANK COPORATINS MAY ONLY CONTROL UP TO 40% OF THE VOTING STOCK. ON THE OTHER HAND, FILIPINOS AND DOMESTIC NON-BANK CORPORATIONS MAY ALSO CONTROL ONLY UP TO 40% OF THE VOTING STOCK. WHAT HAPPENS THEN TO THE 20%? - Foreign inividuals an non-bank corporations may own or control up to 40% of the voting stock of a domestic bank – Provided, that the aggregate foreign-voting stoks owned by them shall not III.
Number of Directors 1. Shall be at least 5, an a maximum of 15 members of the board of directors of bank, 2 shall be independent directors. (except) -all be of legal age -majority are residents of the Phil. -form a private corporation for any lawful purpose 2. INDEPENDENT DIRECTOR- mean a person other tha an officer or employee of the bank, its subsidiaries or ffiliates or related interests. *Non-Filipino citizens may become members of the bord of directors of a bank to the extent of the foreign participation in the equity of said bank. IV. A.
b. c. 2.
When found by the MB to be conucting business in an unsafe or unsound manner When found to be an unsatisfactory financial condition.
REMEDY: Sec.30 of the Corporation Code Directors shall not receive any compensation except for reasonable per diems. Provided, taht any such compensation other than per diems maybe granted to directors by the vote of the stockholers representing at least a majority of the outstanding capitl stock at a regular or special stockholder’s meeting. It shall not exceed 10& of the net income before income tax of the corporation durng the preceeding year.
a. not or has not been an officer or employee of the bank/quasibank/trust entity, its subsidiaries and affiliates or related interests during the past 3 years conted from the date of his election b. not a director of officer of related companies of the institution’s majority stokholder c. not a majority shareholder of the institutions, any of its related ompanies or of its majority shareholder d. not a relative w/n 4th degree of consanguinity or affinity, legitimate or common law of any director,oficer or majority shareholder of the bank/quasibank/trust entity, its subsidiaries and affiliates or related companies e. not acting as a nominee or representatve of any director or substantial holder f. free from any business or other relationship which could materially interfere with the exerise of his judgment B. C. Directors of Merged or Consolidated Banks The number of directors shall not excedd 21. Meetings 1. May be conducted throuh modern technologies such as teleconferencing and video-conferencing *Banks shall include in theor bylaws a provision taht meetings of their board of directors shall be held only within the Philippines. 2. Corporate officers, quorum: Immediately after election, directors must formally organize the election of the a. president who shall be thedirector b. treasurer, who may or may not be a director c. secretary who shall be a resident nd citizen of the Philippines d. other officers provided for in the by-laws
Fit and Proper Rule Powers of the MB 1. To maintain the quality of bank management and afford better protection to depositors and the public in general. -MB shall prescribe,pass upon and review the qualifications and disqualifications of individuals elected or appointed bank directors or officers and disqualify those found unfit. 2. After due notice to the board of directors of the bank, the MB may disqualify, suspend or remove any bank director or officer who commits or omits an act which render himunfit for the position. If found fit and proper, shall be given to his integrity, experience, education, training and competence.
Disqualification a. Permanently Disqualified Directors 1. Have been convicted by final judgment of a court for offenses involving dishonesty or breach of trust (ex. Estafa, extortion, forgery, malversation, swindling, BP22) 2. Have been convicted by final judgment of a court sentecing them to serve a maximum term of imprisonment of more than 6 years. 3. Have been convicted by final judgment of a court for violation of banking laws, rules and regulations 4. Those who have been judicially declared insolvent, spendthrit or incapacitated to contract 5. Those directors, officers or emplyees of banks, quasi anks or trust entities who were found to be culpable for such institution’s closure 6. Those directors, officers or emplyees of banks, quasi anks or trust entities who were found by the MB as administratively liable for violation of banking law, rules an regulaitons 7. Those directors, officers or emplyees of banks, quasi anks or trust entities who were found to be unfit for the position of directors nad officers Temporarily Disqualified Directors: 1. Person who refuses to fully disclose the extent of their business interests to the appropriate suoervising and examining department. 2. Directors who have been absent or who have not participated in more than 50% of all meetings, both regular and special, and those who failed to
*Any 2 or more positions may be held concurrently by the same person EXCEPT that no one shall act as a president and secretary or as president and treasurer at the same time. *Directors or trustees cannot attend ot vote by proy at board meetings. D. Compensation and other Benefits of Directors and Officers 1. MB may regulate the payment by the bank to its deirectors and officers of compensation, allowance, fees, bonuses, stock options, proit sharing and fringe benefits only in the exceptional cases and when the circumstances warrant, such as but not limited to the following: a. When a bank is under comptrollership or conservatorship
BP22) Directors of officers of closed banks/quasibanks/trust entities pending their clearance by the MB Directors disqualified for failure to observe/discharge their duties & responsibilities Directors who failed to attend the special seminar for board of directors Persons dismissed/terminated from employment for cause. No person convited by fianl judgment of an offense puishable by imprionment for a perios exceeding 6years or a violation of this Code within 5years prior to date of is electiom or appointment shall qualify as a director. If so. extortion. 4. MB shall require a bank etc. Disqualification? Prohibitions under NCBA D. 5. Those are administratively liable for violation of banking laws. such is found to be administratively liable. Obligations shall include all borrowings from a bank/quasibank obtained by: 1. to all to open off site ATMS. underdifferent credit lines or loan contracts. Automated Teller Machines A. Estafa. His spouse is the managing partner or a general partner owning a controlling interest in the partnership 5. indorser or surety of loans 2. Must comply with these. Of the BSP fianncial statements. and shall contain such informations as required in the BSP regualtions. 2. forgery. or on the official files of. 3. hospitals. 3. supermarkets. whenther as continuing basis or special engagements. National Bureau of Investigation. Those under preventive suspension Persons with derogatory records as certified by. subsidiaries and affiliates. Any person whose loan proceeds were credited to an acount for the benefit of a director or officer. Independent Auditor 1. Shall transact business on all working days for at least 6 hours a day. To review the internal audit and control system of teh bank etc. quasi judicial bodies. Term of engagement hall be prescribed by MB. Board of Directors shall also conduct an annual balance sheet audit of the bank etc.27.3. Number of Days and Hour 1. The spouse or child under the parental authority of the director or officer 3. even before 8am or after 8pm. 2. offices. V. 11. 7. VIII. Shall submit to the appropriate supervising and examining dept. Financial Statements Every bank etc. Must submit a report to the appropriate department of the BSP on ATMs which they establish 2. B.an obligation of a person with a bank/quasibank/trust entity where he is a director or officer. ar past due. Director or officer for his own account or acts as guarantor. trustee or officer of any corporation. 4. malversation. Should allowed to visit only centers of activity and should confine their itinerary to Metro Manila until futher notice. Persons who are deinquent in the payment of their obligations: a. rules and regulations. To engage the services of an independent auditor to be chosen by a bank etc. When penalty is suspension from office or fine is imposed. Off-ite Automated Teller Machines (ATMs) 1. 10. May open for business on Sat. 8. association or firm whollyowned by any group of persons Have been convicted by final judgment of a court for offenses involving dishonesty or breach of trust (ex. 6. or at least 2 obligations with other banks/financial institutions. Mobile ATMs 1. Sun or holidays for at least 3 hours a day. 13. the judiciary. 4. swindling. and to submit a report of such audit. VII. Branches at international airport or major fish port are allowed to operate on flexible banking hours provided hat wil inform BSP of the schedule of the banking hours that is not less than 6 hrs a day. Working days mean Mon-Fri excpet holidays. A corporation. From a list of certified public accountants acceptable to the MB 2. Banking Days and Hours A. Shall be installed only in the centers of activity like shopping. Banks hall notify the supervising and examining department of the BSP of the tual date a mobile ATM become oprational and when terminated. It shall be of a specific date designated by BSP and shall show actual financial conditions of the institution submitting the statements. university campuses. PUBLICATION: In English or Filipino At least once every quarter in a newspaper of general circulation in the city or province BSP msy prescibe where it shall be published Shall make available to the public an shall prescribe the complete set of its audited financial statements Disqualification/ Prohibitions under the Corporation Code Sec. physically attend at east 25% of all meetings in an year except those with notarized certification executed by the corporate secretary. that adequate internal control and security measures shall be adopted nd submitted to BSP. 3. DELINQUENT IN THE PAYMENT OF OBLIGATIONS. and of its branhes. b. Shall secure insurance coverage or adopt a self-insurance scheme to protect itself against losses of whatever nature in ita mobile ATM oprations 3. C. 9. Philippine National Police. 12. Provided. must repot to the Bangko Sentrl the additional days 6|Page . VI. Any person found by MB to be unfit for th position of directors or officers.
All officers. or acceptance of debt instruments of any kind. QUASI – BANKING FUNCTIONS: Essential elements of quasi-banking are: A. The President. Reports of Strikes and lockouts The bank shal disclose pertinent info: 1. DEPOSIT FUNCTIONS OF BANKS Demand deposits – are all those liabilities of the BSP and other banks which are denominated in Phil. b. NEGOTIABLE CERTIFICATES OF TIME DEPOSITS (NCTD’s) a. officers or stockholders. Agencies in actions and proceedings brought before them involving controversies in banks etc. Employees of the bank’s cash department/cash units Others employees who have direct and immediate responsibility in the handling of transactions/records pertaining to demand deposits or current accounts. endorsement. or (2) purchasing receivables or other obligations Any person. Of Labor who may assume jurisdiction over the dispute and decide it or certify the same. a. the provisions of the Gbl shall govern. RESPONSIBILITY OF THE DRAWER He must personally keep track of his available balance in the bank and not rely on the bank to notify him of the necessity to fund certain checks he previously issued. Unsettles Labor Disputes The banking industry is indispensable to the national interest. Cooperative Code For Islamic banks. borrowing of funds for the borrower’s own account. TO PAY PARTIAL PAYMENT A bank is under no obligation to make part payment on the check up to only the amount of the drawer’s fund where the check is drawn for an amount larger than what the drawer has on deposit. The spouse. natural or juridical may deposit with such Phil. Cause of the strike/lockout and bank management’s position on its legality 2. 20 or more lenders at any one time. NO OBLI. Bank in good standing foreign currencies which are acceptable as part of the international reserve except those which are required by the central bank to be surrendered. C. DUTY OF BANKS TO KNOW SIGNATURES A bank is bound to know the signatures of its customers. XI. If unsettled afer 7 days shall be reported by the BSP to the Sec. No branch of any foreign bank doing business in the Phil shall in any way announce the amount of the capital and surplus of its had office. Universal banks / commercial banks may issue NCTDs without approval of BSP b. Laws Governing other Types of Banks Thrift Banks Act. DUTY OF BANK TO HONOR CHECKS Where the bank possesses funds of a depositor it is bound to honor his checks to the extent of the amount of his deposits. c. Publication of Capital Stock X. . Methods of borrowing are issuance. CHAPTER 3. Bank oprations affected XII. NOTES: page 54-55 (IMPORTANT) IX.special laws For purposes of prescribing the minimum ration which the net worth of a thrift bank must bear to its total risk assets. the amount o its capital actually paid-up.- If there is local emergency or imminent panic. Thrift banks/Rural banks/Cooperative banks need approval of BSP NON – NEGOTIABLE CTD . It shll not publish the amount of its authorized or subscribed capital stock without indicating at the same tme and with equal prominence. WITHDRAWALS BAKS ARE PROHIBITED FROM ISSUING/ACCEPTING Withdrawals slips without requiring the depositors to present their passbooks and accomplishing necessary withdrawal slips except for banks authorized by BSP to adopt the no passbook withdrawal system. B.Banks may issue long-term negotiable tax exempt certificates of time deposit without approval of the BSP. Time deposits – one the payment of which cannot legally be required within such a specified number of days. Strikes and Lockouts A. may intervene and assume juridiction over suh labor dispute in order to settle and terminate the same. B. as well as disputes between any all or all of them which theya re the directors. other than deposits D. 7|Page . Currency and are subject to payment in legal tender upon demand by presentation of checks. Failure of the bank to pay the check. the MB by vote of at least 5 of its members may allow to defer for a stated period of time the publication of the statement of financial condition. Negotiable order of withdrawal (NOW) – are interest – bearing deposits of accounts that combine the payable on demand feature of the checks and investment feature of a savings acct. Includes also. The followings are prohibited from maintaining demand deposits or current accounts with the bank office in which they are assigned. relatives within 2nd degree of consanguinity and affinity of the officers and employee covered by the prohibition. Rural Banks Act. The purpose of which is (1) relending. Settlement of Disputes BSP shall be consulted by other gov. entitles the drawer to substantial damage without any proof of actual damages.
upon order of a competent court in cases of bribery or dereliction of duty of public officials. however. b.Anonymous accounts or accounts under fictitious name should not be kept allowed. 2. inquired or looked into by any person. belonged to the survivor. CHAPTER 4 IV. Secrecy of bank Deposits Purposes a. II. the SEC requires a bank certificate of deposit of paid-up capital notarized in place where signed. a decedent to determine his gross estate. 8367 Absolute Confidentiality All deposits of whatever nature with an Association in the Philippines are herby considered as of an absolutely confidential nature and may not be examined. Total investment shall not exceed 50% of the net worth of the bank 8|Page . to discourage private hoarding so that the same may be properly utilized by banks in authorized loans to assist in the economic development of the country. 4. to give encouragement to the people to deposit their money in banking institutions. a. that the administrator of the estate or any 1 of the heirs of the decent may upon authorization of the commissioner withdraw an amount not exceeding 20. have sufficient discretion. there is probable cause that the deposits or investments are related to an unlawful activity. a money laundering offense. b. at least 7 years of age. provided. however. V. and withdraw the same without the assistance of their parents or guardians. deposits received shall be booked likewise. and extension office doing business in the Philippines. METICULOUS CARE A bank is required to take meticulous care of the deposits of its clients. written permission of the depositor. whether such account consists only of a few hundred pesos or of millions. Administration of deposits All banking institutions are required to set a minimum of 3 specimens of their depositors and to update the specimen of signatures every 5 years or sooner. and the balance. Survivorship Agreement Definition: Joint owners of a deposit agree that either of them could withdraw any part or the whole of said account during the lifetime of both. 4.000 without the said certification. 3. Duties of Banks A. that a bank may set a clearing cut –off time for its head office not earlier than 2 hours before the start of clearing at the BSP and not earlier than 3-1/2 hours before the start of clearing for all its branches.bank financial institution upon order of any competent court in cases of violation. b. IN CASE OF DEATH OF DEPOSITOR National revenue code provides: If a bank has knowledge of the death of the depositor. Allied enterprises: financial or non-financial ii. Provided. 3. government official. III. Authority to inquire into bank deposits under the ANTI MONEY LAUNDERING ACT The AMLC may inquire into or examine any particular deposit or investment with any banking institution or non. who have the right to expect high standards of integrity and performance from it.A. provided the f requirements are met. 2. further that banks are located in areas where there are no BSP regional/clearing arrangement may set a clearing cut-off time not earlier than 2 hours before the start of their local clearing after which time. Powers of an inverstment house c. Equity Investments of a Universal Bank a. in case of impeachment. at the discretion of the bank. Powers of a commercial bank b. if any. Corporations a. b. Provided. when it has been established that. Power to invest in non-allied enterprises II. Incorporation Stage – payment of subscription is in cash. in cases. Although survivorship agreement is per se not contrary to law. B. R. not otherwise disqualified by any other incapacity. upon the death of either. Authority of the Commissioner of Internal Revenue to inquire into deposits In cases. 1. any taxpayer who has filed an application for compromise of his tax liability by reason of financial incapacity to pay his tax liability. Parents may nevertheless deposit for their minor children and guardians for their wards. it shall not allow any withdrawal from said deposit account unless the commissioner has certified that the taxes imposed thereon by this title have been paid. Allied or non-allied i. able to read and write. Clearing cut –off time General rule: all deposits and withdrawals during regular banking hours shall be credited or debited to deposit liability accounts on the date of receipt or payment thereof. PAYMENT TO PROPER PARTY Operations of a Universal Bank a. 1. its operation or effect may be violative of the law. agencies. bureau or office except upon. the board of directors issues a resolution authorizing the signatories and specifying the depository bank. In every case the depositor expects the bank to treat his account with the utmost fidelity. Post Incorporation – in opening a bank account. C. where the money deposited or invested is the subject matter of the litigation. a. Minors are vested with special capacity and power to make savings.
activities in agri. Powers a. Such powers necessary to carry on the business of commercial banking: i. DOSRI I. In other financial allied enterprises. Effect of Non. Assignment of Credit. Prohibits the ff: a. V. mining. Direct liability of the maker of paper sold or discounted with the bank b. Rural/Cooperative Banks may invest. Loans covered by assignment of deposits maintained in the bank c. Industrial park projects. Accepting drafts and issuance of letters of credit ii. In case of partnership or association. etc. Minimum Ratio. and without the need of the consent of the debtor. Independence Principle. retained earnings and undivided profit. Bank Guarantee. Except: i.assures the seller of prompt payment even if buyer has not yet reimbursed as long as the seller presents the necessary documents III. Marketing of agri products v. Investments in Non-Allied Enterprises a. the liabilities of said corporation is included c. A publicly-listed universal or commercial bank can own only one other universal or commercial bank c. Acquisition is subject to prior approval of the Monetary Board III. 100% of the equity of a thrift bank or a rural bank b. reserves and other adjustments b. VI. Warehousing. Extending credit v. credit card companies. Contingent Accounts of borrowers may be included among those subject to the limits VI. Financial Allied: leasing companies. Letters of Credit a. iv. investment houses. If the borrower owns ac majority interest in a corporation. investment shall only be a minority holding Investments in non-financial allied a. Equity Investments of a Universal Bank in Non-financial allied enterprises a.shall not exceed 20% of the net worth of the bank a. Total investment in one enterprise shall not exceed 25% of the net worth of the bank IV. Limit or prohibit the distribution of net profits b. Only universal banks can investment in non-allied enterprises: i. It is not allowed in assignment of deposits. Become a guarantor or indorses or surety for loans from such bank to others c. As provided by the monetary board for reasons of national interest ii. Total investment in any one enterprise shall not exceed 25% of the net worth of the bank.automatic appropriation of the pledged or mortgaged property by the creditor in payment of the loan upon its maturity. II. Credit Accommodations and Guarantees I.Compliance a. safe deposit box.monetary board shall prescribe. transfers his credit to another who acquires the power to enforce it to the same extent as the creditor could have. the liabilities of the members thereof III. May be altered or suspended for a maximum of one year when necessary b. Single Borrower’s Limit. The approval shall entered on the records of the bank 9|Page . financial and commercial complex projects. Accepting or creating demand deposits iii. it shall also be subject to the limits herein prescribed V. banks. Shall not exceed 40% equity Operations of Commercial Banks I.total of the unimpaired paid-in capital including paid-in surplus. home building and home development c. Can own up to 100% of the equity in a thrift bank. Loans specified as non-risk items IV. insurance companies. Investments in Financial Allied a. Equity investments of a Universal Bank in Financial Allied Enterprises a. ration of the net worth of the bank to its total risk assets which may include contingent accounts a. donation. IV. VII. financing companies. Transportation of agricultural products iv. etc.iii. Receiving deposit substitutes iv. 3 relationships created: bank and buyer. dation in payment. Farm equipment distribution iii. Uniformly applied for banks in the same category II. Total investments in allied enterprises shall not exceed 35% of the net worth of the bank c. providing computer services. May own up to 100% b. May own up to 100% Risk-Based Capital I. Shall not exceed 35% of the total equity in that enterprise nor shall it exceed 35% of the voting stock b. by a legal cause. storage. holding company. Be an obligor to the bank except with the written approval of the majority of all the directors of the bank II. net of valuation. Direct or indirectly borrow from the bank b. Restrict or prohibit acquisition of major assets Limits on Loans. Discounting negotiating promissory notes. buyer and seller b. Investments in Quasi-Banks a. such as sales. Leasing V. Investments of a Commercial Bank a. Pacto Commissorio. The limit maybe increased by 10% provided the additional loans are secured II.irrevocable commitment of bank binding itself to pay in the vent of non-performance by a third party. Warehousing and postharvest facilities ii. manufacturing. Powers incident to corporations b.etc.agreement by virtue of which the owner of a credit. Liabilities of subsidiaries of a corporation who is borrowing from the bank d. Deposits of rural banks with GOC financial institutions b. Loans under letters of credit covered by margin deposits d. Net worth. SBL should exclude: a. a rural bank or others within this category b. SBL should include: a. Buying and selling foreign exchange and gold or silver vi. bank and seller. as a non-financial allied undertaking in the ff: i. Loans secured by the BSP or government b. Only equities in allied enterprises: either financial or non-financial b. insurance agencies. management of mutual funds.
stockholder or record in the books of the bank a. the bank may still demand immediate repayment because the borrower has lost the benefit of the period under Art. Disclosure shall include: a.after due notice. Creditor: any person engaged in the business of extending credit who requires as an incident to the extension of credit. i. mortgage.The bank invests the money it holds in trust for the depositors. VP. Elected to fill vacancies Officers: a.maybe regulated by the MB and prescribe conditions and limitations Banks cannot extend peso loans to non-residents Provisions for losses and write-off a. Arms Length Rule-Dealings with DOSRI shall be upon terms not less favorable to the bank Directors: a. vice-chairman or any other position who performs functions of management Stockholder. Trust Officer b. VP.periodic amortization but must be made annually c. The purpose shall be stated in the application c. b. Both instances should be present before escalation clause is allowed iii. any loan.debts due to on which interest is past due and unpaid b. advance or discount ii. Statement of their income and expenditure c. Escalation clause. Only allowed when the monetary board has increased the rate of interest provided that there is also a stipulation that interest will be lowered if MB has lowered the rate of interest ii.III. Sr. The cash price of the property or service to be acquired b.Disclosure of Finance Charges) I. Requirements: a. Unsecured Loans or Other Credit Accommodations. the payment of a finance charge IV. Treasurer. the court may reduce the interest rate Prepayment of Loans. Amount to be financed e. Secured by Chattels and Intangible Properties a. borrower may pay subject to such reasonable terms agreed upon with the bank Development Assistance Incentive.The MB is authorized to issue regulations with respect to unsecured loans V. Hence. Only in the amount and for the period of time essential for the completion of the operations to be financed. c. Spouse and/or relative within the 1st degree or consanguinity or affinity partnership where DOSRI of those in a) above are general partners co-owner with a DOSRI or those in a) of a property used as a security Corporation or association where the DOSRI or those in a) are is also a director e. hospitals.protect the citizens from a lack of awareness of the true cost of credit by assuring a full disclosure of such cost II.amortization may be deferred until such time as said revenues are sufficient but in no case shall it be later than 5 years d. V. EVP. Any conditional sales contract iii.The MB may prescribe further security requirements shall be subject to. Rental-purchase contract b. Other Security Requirements. Corporation owned by the stockholder or his wife Related Interests VI. Effect of Violation. Unconscionable and exorbitant interests. Includes: Spouse and/or relative within the 1st degree or consanguinity or affinity ii. VII. d. Chairman. or both) V. Corporation wholly or majority owned or owned by at least 20% by the DOSRI or those in a) VIII. VII. esacalation will be allowed f. Bad debts. Loans are used for purposes not initially producing revenue. X. a. Crediti. Names in the articles of incorporation b. Penalty. MB shall fix the amount of reserves for bad debts Truth In Lending (RA 3765. the bank may terminate the loan and demand immediate repayment II. IX.either civil or criminal (1k-5k fine or imprisonment for 6-12 months. Even in the absence of this provision. Shall be adapted to the nature o the operations to be financed b. Elected in meetings of the stockholders c. Secretary. Secured by Real Estate a. cooperatives. Will be considered as void. GM. Authority to Prescribe Terms and Conditions of Loans Amortization on Loans a. Finance charge III. a bank is expected to ascertain the identities of the persons transacting with them to protect both the interest of the bank and the depositors. This shall be done consistent with safe and sound banking practice b. Exception: if the creditor unilaterally decreased the interest even if it was not stipulated. VIII. Government is exempted from the punishment or penalty Foreclosure of Real Estate 10 | P a g e .SC: 5. the office of the person violating shall be declared vacant and shal be subject to the penal provisions of NCBA Securities on Loans I. Microfinance.prior to the maturity date. Statement of assets and liabilities b. Amounts for downpayment c. Charges which are paid in connection with the transaction d. 1198 of the Civil Code III. deed of trust. and LGUs Renewal of Exntension of Loans.take into consideration the projected cash flow of the borrower e. Policy. IV.5% per month or 66% per annum. IV. low-cost housing. XII. Reason for Stringent Rules in Granting Loans.interest and fees incident to the extension of credit c. Finance Charge.raising of interest i. Pres. Shall not exceed to 75% Grant and Purpose of Loans I. XI. With those whose maturities are more than 5 years.BSP shall give incentives to banks who extend loans to education. For this reason. Other information prescribed by law or by the Monetary Board d. Amount and Purpose a. If the purpose stated was not followed. Shall not exceed 75% of the appraised value plus 60% of the insured improvements II. Definitions: a. VI.
Clearing and processing of checks not in the Philippine Clearing House system c. construction. Notwithstanding the limitations given above. any insurance contract making or proposing to make.The mortgagor or debtor has the right within one year after the sale of the real estate. banks may outsource the ff: a. Acquire real estate necessary for its own use in the conduct of its business i. Purchased at sales under judgments. the agreement between them shall govern VIII. Procurement services h. fixtures. Change management inclusive of quality assurance and testing d. Right of Redemption may be extended Major Investments I. Security policy and administration Outsourcing of other functions I.Special Kind of Deposit because it cannot be characterized as a contract of lease since the guard key of the box remains with the bank.right of the mortgagor to extinguish the mortgage and retain ownership by paying the secured debt within a period not less than 90 days nor more than 120 days after the judgment becomes final. However. bank forms and promotional materials d. 55. Service level and contract management e. 54. Right of Redemption a. Equity of Redemption v. Bank premises. Real property. In a judicial foreclosure sale where the mortgagee is the PNB or a banking institution. bank loan statements. 55. chattel purchased by the bank in its name b. any contract of suretyship as a vocation and not as merely incidental to any other legitimate business or activity of the surety doing any kind of business. Act as financial agent and buy and sell for their customers III. (Rule 68. Juridical Persons shall have the right to redeem the property until. If a box is rented by two persons. Ceiling on Investments a. Shall be mortgaged to it in good faith by way of security of debts ii. buildings. but not after. mortgages. the purchaser at the auction shall have the right to take possession immediately after the date of the confirmation of the auction sale III. officer. or agent of any bank shall – 11 | P a g e .1. Printing of bank deposit statement. consultant or administrator of an investment management with the approval of the MB V. Rules of Court) iii. . Prohibition to Act as Insurer. Safety Deposit Box. Outsourcing of IT systems. Credit card services e. The SC said that the rent of a safety deposit box is that of a bailor an bailee Electronic Transactions I. Any petition in court to restrain the auction shall only be given due course upon the filing of a bond in an amount fixed by the court IV.A bank shall not directly engage in insurance business as the insurer. Real Property acquired under this provision shall be disposed by the bank within a period of 5 years c. Equity of Redemption. Make collection and payments for the account of others IV. or trust deeds held by it b. Determination of system functionalities c. right of redemption exits ii. Right of Redemption exists only in extrajudicial foreclosure sale i. BSP shall have full authority to regulate the use of electronic devices used in connection with the operations of a bank including the delivery of services and products to customers II. Data imaging b. Conveyed to it in satisfaction of debts previously contracted iii. Other Banking Services I. documents and other objects II. Rent out safety deposit boxes VI. However.land. decrees. leasehold rights. quipmet. adviser. Act as managing agent. With approval of the MB. employee. Credit investigation f. VII. Strategic planning for the use of IT b. No director. as insurer. *Includes: a) b) c) d) making or proposing to make. Legal services Questions: Whether or not an alien-owned bank can acquire ownership of a residential lot by virtue of a deed of transfer as settlement of a debt • No. Prohibited Transactions. Acquisition of Real Estate by way of satisfaction of claims a. Investments by a bank in a real estate corporation shall be considered as part of the total investment in real estate by the bank III. The MB shall establish a criteria for reviewing major acquisitions by a bank II. for the purpose of the constitution is to place and keep in the hands of the people the ownership of private lands in order not to endanger the integrity of the nation I. it may continue to hold such property beyond the period given if the limitations given in the previous provision are not yet reached. including a reinsurance business. Janitorial services g. specifically recognized as constituting the doing of an insurance business within the meaning of the Insurance Code doing or proposing to do any business in substance equivalent to any of the foregoing in a manner designed to evade the provisions of the Insurance Code Sec. improvement. Total investment in real estate including improvements shall not exceed 50% of combined capital accounts c. Chapter 5 Sec. to redeem the property by paying the amount due in the mortgage w/ interest and all the cost and expenses II. the registration of the certificate of foreclosure with the Register of Deeds within 3 months V. furniture ii. Receive in custody funds. a bank may acquire real estate under the ff circumstances: i.can be done with prior approval of the MB except: a. as surety.
or abnormal risk or danger to the safety. no bank shall employ casual or non regular personnel or too lengthy probationary personnel in the conduct of its business involving bank deposits.” “quasi-banker. trust entity. branch or agency of the Government that is assigned to supervise. Conservatorship. officer or employee of the Bangko Sentral or of any department. – The grounds and procedures for placing a bank under conservatorship. Unauthorized Advertisement or Business Representation. It does not comply with the liquidity standards/ratios prescribed by the Bangko Sentral for purposes of determining funds available for dividend declaration. assist or render technical assistance to any bank shall commit any of the acts enumerated in this Section or aid in the commission of the same. which is not otherwise prohibited by any law.” “banker. The act or omission has resulted or may result in material loss or damage or abnormal risk to the institution's depositors. *Grounds for appointment of conservator Whenever. or has given any unwarranted benefits. Consistent with the provisions of Republic Act No. or any act whereby the latter supplies. or any other form of compensation in order to influence such persons into approving a loan or other credit accommodation application. corporations. Prohibition on Dividend Declaration. examine. . fees. It has committed a major violation as may be determined by the Bangko Sentral. thereby affecting the financial interest of. officer. (b) Without order of a court of competent jurisdiction. office. (d) Overvalue or aid in overvaluing any security for the purpose of influencing in any way the actions of the bank or any bank.” “quasi-banking.In determining whether a particular act or omission. the provisions of existing laws shall prevail. quasi-bank or trust entity persists in conducting its business in an unsafe or unsound manner.2. may be deemed as conducting business in an unsafe or unsound manner for purposes of this Section.2. employee or agent of a bank any gift. The act or omission has resulted or may result in material loss or damage.” “trust corporation. corporation or association. or any other entity: Provided. 67.3. That this Section shall also apply to conservatorship proceedings of quasi-banks. Sec. renewing. advantage or preference to the bank or any party in the discharge by the director or officer of his duties and responsibilities through manifest partiality. 56. Conducting Business in an Unsafe or Unsound Manner . association. It is deficient in the required liquidity floor for government deposits for five (5) or more consecutive days.” “trust company” or words of similar import or transact in any manner the business of any such bank. commission. 64. the powers and duties of the conservator appointed for the bank shall be governed by the provisions of Section 29 and the last two paragraphs of Section 30 of the New Central Bank Act: Provided. That with respect to bank deposits. creditors. otherwise known as the Banks Secrecy Law. quasi-bank. or savings and loan association as defined in this Act. shall advertise or hold itself out as being engaged in the business of such bank. or commissions or any other form of remuneration in connection with the approval of a loan or other credit accommodation from said bank. stockholders or to the Bangko Sentral or to the public in general. whether or not the director or officer profited or will profit thereby.The act or omission involves entering into any contract or transaction manifestly and grossly disadvantageous to the bank. 55. or use in connection with its business title.1. stability. – No bank or quasi-bank shall declare dividends. (b) Furnish false or make misrepresentation or suppression of material facts for the purpose of obtaining. Whenever a bank.” “quasi-bank. 56.3. the Monetary Board may. The act or omission has caused any undue injury. without prejudice to the administrative sanctions provided in Section 37 of the New Central Bank Act. or . the word or words “bank. 56. or 57. take action under Section 30 of the same Act and/or immediately exclude the erring bank from clearing. or other banking laws. Sec. or corporation unless duly authorized to engage in the business of a bank. the manpower to service the deposit transactions of the former intended to ensure secrecy of bank deposits 55. Sec. – No person.4. (c) Attempt to defraud the said bank in the event of a court action to recover a loan or other credit accommodation. quasi-bank or trust entity. investors. (c) Accept gifts. the Monetary Board finds that a bank or quasi-bank is in a state of: 12 | P a g e .1. or 56. trust entity.(a) Make false entries in any bank report or statement or participate in any fraudulent transaction. or (e) Outsource inherent banking functions. No examiner.” “banking.4.2. fee. refers to any contract between the bank and a service provider for the latter to supply. or causing damage to. evident bad faith or gross inexcusable negligence. if at the time of declaration: 57. on the basis of a report submitted by the appropriate supervising or examining department. the provisions of law to the contrary notwithstanding. 57. disclose to any unauthorized person any information relative to the funds or properties in the custody of the bank belonging to private individuals. rule or regulation affecting banks. The making of false reports or misrepresentation or suppression of material facts by personnel of the Bangko Sental ng Pilipinas shall be subject to the administrative and criminal sanctions provided under the New Central Bank Act.3. quasi-banks or trust entities. 55. as well as.4. bureau. 1405.” “savings and loan association. liquidity or solvency of the institution. the bank or any person. quasi-bank. Sec. or association. or (d) Offer any director. or increasing a loan or other credit accommodation or extending the period thereof. Its clearing account with the Bangko Sentral is overdrawn. 57. the Monetary Board shall consider any of the following circumstances: 56. or 57. No borrower of a bank shall (a) Fraudulently overvalue property offered as security for a loan or other credit accommodation from the bank.
by a trustee appointed by the bank. 68. and the general public. c. competent 2. or of any branch or office in the Philippines of a foreign bank. and exercise all powers necessary to restore its viability. collection of loans. retention of juridical personality not liable to pay interest assets are deemed under custodia legis stay of execution of judgment restriction of bank’s capacity to act exclusive jurisdiction of liquidation court 13 | P a g e . and the management thereof. 2. The conservator shall report and be responsible to the Monetary Board and shall have the power to overrule or revoke the actions of the previous management and board of directors of the bank or quasi-bank. i. or unwillingness to maintain a condition of liquidity deemed adequate to protect the interests of depositors and creditors. A hearing may be subsequent to the closure. actions in his own name to take and keep possession of the property in controversy to receive rents to collect debts due to himself as receiver or to the fund. The Monetary Board shall terminate the conservatorship when it is satisfied that the institution can continue to operate on its own and the conservatorship is no longer necessary. cannot continue in business without involving probable losses to its depositors or creditors 4. h. that it shall be accompanied by a liquidation plan and written notice *”Close now hear later” scheme – the law does not contemplate prior notice and hearing before a bank may be directed to stop operations and placed under receivership. *Grounds for receivership and liquidation: The bank or quasi-bank: 1. knowledgeable in bank operations and management *Period of conservatorship – shall not exceed 1 year *Termination of conservatorship: 1. on the basis of the report of the conservator or of its own findings. b. determine that the continuance in business of the institution would involve probable loss to its depositors or creditors. f. to bring and defend. involving acts or transactions which amount to fraud or a dissipation of the assets of the institution *Powers of a receiver: the Monetary Board may appoint a conservator with such powers as the Monetary Board shall deem necessary to: 1. d. has willfully violated a cease-and-desist order that has become final. – In case of voluntary liquidation of any bank organized under the laws of the Philippines. It should likewise be terminated should the Monetary Board. This is to prevent unwarranted dissipation of the bank’s assets and is a valid exercise of police power to protect the creditors. or by a receiver appointed by the bank no voluntary dissolution shall be undertaken by a bank without prior approval of the Monetary Board. Sec. 2. property. written notice of such liquidation shall be sent to the Monetary Board before such liquidation shall be sent to the Monetary Board before such liquidation is undertaken. to meet its liabilities 3. in which case the provisions on receivership and liquidation shall apply. *Liquidity – the ability of an asset to be converted into cash quickly and without any price discount *Solvency – the condition that exists when liabilities amount to less than total assets. person. e. or corporation of which he is the receiver to compound for and compromise the same to make transfers to pay outstanding debts to divide the money and other property that shall remain among the persons legally entitled to receive the same generally to do such acts respecting the property as the court may authorize *Prohibited acts: Any director or officer of a bank declared insolvent or placed under receivership by the Monetary Board shall not commit any of the ff: a. provided further.1. take charge of the assets. d. 5. or destroying or causing misappropriation and destruction of the bank’s assets receiving or permitting or causing to be received in said bank any deposit. *Powers of conservator cannot impair the obligations of contracts – the law merely gives him the power to revoke contracts that are. depositors. 6. f. in such capacity. 3. 3. e. is unable to pay its liabilities as they become due in the ordinary course of business 2. *Effects of receivership and liquidation: 1. deemed to be defective. and/or receivables paying out or permitting or causing to be paid out any funds of said bank transferring or permitting or causing to be transferred any securities or property of said bank 2. stockholders. a. thus providing the ability to pay debts *Qualifications of conservator: 1. has insufficient realizable assets. under existing law. reorganize the management. liabilities. 4. Voluntary Liquidation. and the Monetary Board shall have the right to intervene and take such steps as may be necessary to protect the interests of creditors. collect all monies and debts due said institutions. 2. refusing to turn over the bank’s records and assets to the designated receiver tampering with bank records appropriating for himself or another party. continuing inability. as determined by the Bangko Sentral. g. 4. b. estate. c. may be undertaken by the bank itself through its board of directors.
The SC.. Notes: Corporation Code Summons and Legal Process: If served on agent or head of foreign bank. What enables a bank to pay stipulated interest on money deposited with it is that thru the other aspects of its operation.our courts acquires jurisdiction over such bank. branches of foreign banks shall be held to refer to such unit.no access to our courts and cannot transact business in Phil. Within same period. or who receives or permits or causes to be received in said bank any deposit. to submit itself to the jurisdiction of courts of the Phils. Offshore banking unit – branch. may maintain or intervene in any action. Was there a perfected contract? None. within 10 days. it is able to generate funds to cover the payment of such interest. MB may authorize those foreign bank which prior to effectivity of GBL availed itself of 60% of voting stock of a bank under FBLA and Thrift Banks Act. collection of loans and/or receivables. The accepted offer became ineffective when the bank became insolvent before the bank’s acceptance of said offer came to the offeror’s knowledge. their head office shall fully guarantee prompt payment of all liabilities of its Phil. 133. branches of FB. or who pays out or permits or causes to be transferred any securities or property of said bank shall be subject to the penal provisions of the New Central Bank Act. before it issues a license for it to transact business in Phil. If authority of agent or head revoked. shall transmit by mail to president or secretary of bank at its head or principal office a duly certified copy. If “without license”. Any right or incentive granted to foreign bank shall be equally enjoyed by banks organized under laws of RP. Registry receipt is prima facie evidence of transmission. summons and legal process and notices be made upon Bangko Sentral Deputy Governor In-Charge of the supervising and examining departments. for which reason O bank is ready to accept its liability for the payment to C of the balance of the principal amount deposited with it. Doing business without a license – foreign corporation transacting business in Phil. whom summons must be served. branch. MB shall adopt measures to the control of 70% of resources and assets of entire banking system is held by banks which are majority owned by Filipinos. In absence of agent or head. Resident agent. **Problems** The conservator of B bank revoked a contract previously entered into by the bank on the ground that the lands subject of said contract presently commanded a much higher price than when it was sold. C deposited money with O bank. Chapter 6: Foreign Banks and Trust Operations I. Foreign bank shall execute and file with SEC an agreement. if it desires to do business here. . – Any director or officer of any bank declared insolvent or placed under receivership by the Monetary Board who refuses to turn over the bank’s records and assets to the designated receivers. Penalty for Transactions After a Bank Becomes Insolvent. it cannot generate such funds. 2. However. bank shall designate a new one. Before said deposits could be withdrawn. File with SEC a duly authenticated nomination of such agent. service of process: SEC shall require foreign bank to file with SEC a written power of atty. or he became mentally incompetent. Power of conservator cannot impair the obligations of contracts. hence it cannot pay the interest. affiliate of a foreign banking corporation authorized to transact offshore banking business in Phil. latter shall transmit it by mail to the head office of such bank. Consistent with Corporation Code…. MB may authorize foreign bank to acquire up to 100% of voting stock of ONLY one bank organized under laws of RP. annulled said resolution. the BSP passed a resolution suspending the bank’s operations. Residents and citizens of the Phil. Primary purpose of Statute: to compel foreign corp. The latter upon receipt. who are creditors shall have preferential rights to assets of such branch. 70. Foreign Banks – entry to Phils.binds the bank which it represents. courts though on any valid cause. To protect interests of depositors and creditors of Phil. Offshore Banking – governed by Offshore Banking System Decree conduct of banking transactions in foreign currency involving receipt of funds from external sources and its utilization. Is O bank liable for interest thereon during the period it was closed? No. subsidiary. or who appropriates for himself for another party or destroys or causes the misappropriation and destruction of the bank’s assets. designating a resident of the Phil. thru establishments of branches governed by Foreign Bank Liberazation Act.Sec. shall notify SEC in writing. 3. and all reference to Phil. . Sec. Agency n Phil but cannot sue before Phil. If summons be made with SEC. 14 | P a g e . By securing a license. or no person authorized . Is the revocation valid? No. Wthin 7 yrs from effectivitiy of GBL. If it is closed. howver. A contract of sale entered into by a bank cannot be revoked if at the time of the transaction. the price agreed upon was reasonable. Sending of copy is necessary part of services and shall complete service. suit or proceeding in any court or adm. even if adverse to it. A buyer offered to buy the property of a bank which the latter accepted. or who tampers with banks records. Sec. In case of change of address of resident agent. a foreign entity would be giving assurance that it wll abide by the decisions of our courts. NOTES: all branches of foreign bank shall be treated as one unit for purpose of GBL. Acquisition of Voting Stock in a Domestic Bank: 1. to further acquire voting shares to extent necessary for it to own up to 100%. 4. the bank became insolvent before the buyer learned of the acceptance. 128.
of its country.- All costs incurred in transmission shall be paid in advance by the party whose instance the service is made. and country of FB. 4. 2. FB may open 3 branches in location of their choice. study capacity. unless accompanied by a certificate of authority issued by the BSP IV. FB shall be allowed entry under 3rd mode within 5 yrs. After revocation. ensure geographic representation. Authority to engage only a stock corporation or a person duly authorized by the MB shall act as a trustee the cardinal principle is fidelity Trust business. FB may avail only 1 mode Only those included in top 150 FB in the world or top 5 banks in their country of origin allowed to mode (b) and (c). global reputation and stability in competitive environment of applicant. 2. Capital Requirements: 1. Head Office Guarantee. 4.shall guarantee prompt payment of all liabilities of its Philippine branches Board of Directors. ensure reciprocity rights are enjoyed by Phil banks in applicant’s country. development loans incentives etc. Foreign Bank Branches (entry under the 3rd mode) not less than US dollar equal to P210. prevents dominant market position by one bank 3. FB can open three additional branches by inwardly remitting and converting into Philippine currency as permanently assigned capital. 5. or its continuance will involve probable loss to those it transacts business with. capital to risk asset ratio.trust entity shall comply with the minimum paid-in capital requirements which will be determined by the MB. investing up to 60% of voting stocks of new banking subsidiary incorporated under Phil. To establish a branch or subsidiary. BSP shall take action to protect creditors and public. Guidance for Approval: MB shall 1. Liberalized Entry of Foreign Banks: Purpose: 1. P35 Million per additional branch.000. Conduct of Trust business Administer with diligence that a prudent man would exercise in the conduct of an enterprise No transaction within the same trust entity will be allowed except when the transaction is authorized by the trustor and the relationship of the trustee and the other party involved is fully disclosed III. From effectivity of RA 7721. consider willingness to fully share their technology. ensures that 70% of resources and assets is held by domestic bank majority owned by Filipinos 2. laws. Equal treatment. it cannot transact business unless license is renewed or reissued. 15% of which shall be inwardly remitted and converted into Philippine currency. it must be widely-owned and publicly listed in its country of origin. Locally Incorporated Subsidiaries . 6 FB may be allowed by MB. c. 3 branches in locations designated by MB to insure balanced economic development in all regions. Establishment of Additional Branches 1.000 and shall be entitled to 3 branches o capital shall include those permanently assigned plus net due to head office outside the Philippines. V. consider strategic trade and investment relationship between Phil. Additional 4 may be allowed on recommendation by MB and approval of President. 3. to create more competitive environment. After revocation. Revocation of license of Foreign Bank: By Monetay Board. 3. promote a competitive and stable banking system provide a wider variety of financial services enhance competitiveness in international market to promote industrialization. acquiring up to 60% of voting stocks of an existing bank b. Trust Operations I. unless owned by govt. II. in imminent danger. Powers of a trust entity: Powers incident to a corporation Act as trustee on any mortgage or bond issued by any body politic and to accept and execute ant trust consistent with law Act as an administrator of a minor or incompetent upon the order of a court Act as the executor of any will if named as the executor Act as the administrator of any deceased person Accept and execute and trust for the holding and administration of any estate including the rents and profits thereof Establish and manage common trust funds Modes of Entry: a. New Central Bank Act provides the sanction and penalties. Establishing branches with full banking authority. to encourage greater foreign participation Policies: 1.minimum capital equal to that prescribed by MB for domestic banks of same category. If insolvent. 2.foreign banks shall also be subject to limitations imposed upon a Philippine bank such as the SBL.aliens may become members of the Board of a bank to the extent of the foreign participation in the equity of said bank. develop self-reliant economy controlled by Filipinos. Adoption of measures: MB adopt those which 1.refers to any activity resulting from a trustor-trustee relationship involving the appointment of a trustee for the administration of funds and/or properties of the trustor for the benefit of the latter. Minimum Capital. 2. Registration of Articles of incorporation and by-laws The SEC shall not register the same or any amendment thereto. secures the listing in SEC of shares of stocks 15 | P a g e . II. provided that amounts invested in productive or export activities shall not be subject to conversion.
Responsibilities and corporate Powers of the Banko Sentral A. which shall be a body corporate known as the Bangko SEntral ng Pilipinas.000 This deposit can be increased by the MB whenever it is necessary The paid-in capital and surplus of the entity should be at least equal to the amount required to be deposited A trust entity has the right to collect the interest earned on such deposit All claims arising out of the trust business shall have priority over all other claims as regards the deposits. Upon presentation of a proof that the subject matter has been deposited with a trust entity. mortgages. Those appointed by the court shall file a bond in such sum as the court may require b. Transactions requiring prior authority Lend. Deposit for faithful performance of trust duties Before transacting any business. real estate acquired by the trust entity shall be acquired. or trust deeds These properties shall be conveyed within 5 years However. Real Estate acquired by a trust entity Unless otherwise directed by the trustor or the nature of the trust. unless directed by the instrument creating the trust III. Investment in non-trust funds b. The reduced bond shall be adequate to secure the proper administration of the property Exemption from Bond Requirement a. Bond of certain person required for the faithful performance of duties I. banking and credit. or conveyed under the ff circumstances: o Mortgaged to it in good faith by way of security for debts o Conveyed to it in satisfaction of debts previously contracted o Purchased at sales under judgments. Declared Policy of the state • The State shall maintain a central monetary authority that shall function and operate as an independent and accountable body corporate in the discharge of its mandated responsibilities concerning money. NCBA) Operations of Trust Entity I. hold. Shall be governed by the GBL an other applicable laws B. the court may order reduction in the amount of the bond given d. decrees. Chapter 7 The Bangko Sentral ng Pilipinas I. transfer or assign money or property to those related to the trustee Purchase or acquire property or debt instruments to those related to the trustee Invest in equities I which the trustee owns 50% of the capital Sell transfer assign or lend from one trust account to another VII. – There is hereby established an independent central monetary authority. sell. Separation of Trust Business from General Business Shall be kept physically separated and distinct from the accounts of the general business of the trust entity II. 16 | P a g e . Establishment of Branches • Shall be in the place of business stated in the articles of incorporation • Additional branches can be established with the approval of the MB • The trust entity and its branches should be considered as one unit VII. Upon application in the court. Creation of the bangko Sentral ng Pilipinas • Section 2 & 4 of NCBA: SECTION 2 Creation of the Bangko Sentral. the subject matter of the trust or any part thereof be deposited with a trust entity c. In line with this policy. and considering its unique functions and responsibilities.VI. while being a government owned corporation. there shall be a deposit made with the BSP cash or securities approved by the MB an amount not less that P500. it may continue to hold it beyond the period when: o It shall not exceed 50% of the combined capital accounts of the entity o The investment of a bank in another corporation engaged in real estate shall be considered as part of the total investment IV. Requirements a. Trust entities required by the court to be an administrator. etc are not required to give a bond V. the central monetary authority established under the NCBA. Creation. Funds of the government which are authorized by special laws to be placed in trust II. Advertisement of Services • In a dignified manner • Ready and willing to give full disclosure of services being offered • Conduct its dealings with transparency VIII. Money of Government • Banks may not receive or hold as trustee any money from the government o Except: government-owned banks with respect to the ff: Funds of LGUs for long term investments in securities and other evidences guaranteed by the national government. shall enjoy fiscal and administrative autonomy. (Section 1. MB or any court of competent jurisdiction. Investment limitations of a trust entity Limited to those loans or investments prescribed by law. Exemption of Trust Assets from claims • Those assets held by a trust entity shall not be subject to any claims other those of the parties interested in the trusts VI. Sanctions and Penalties.those who violate the pertinent provisions of the GBL shall be subject to sanctions and penalties VI.
banking. Power to Prosecute • BSP has no power to prosecute. Until the congress otherwise provides. – The Bangko SEntral shall have its principal place of business in Metro Manila. through the Secretary of Finance and the Secretary of Budget and Management. and to dispose of the same Sue and be sued Perform all things necessary to carry out the purposes of the NCBA Acquire and hold assets and incur liabilities in connection with its operation as authorized by the NCBA. may thereafter determine. of known probity. F. integrity. the Central bank of the Philippines operating under existing laws. But BSP and its officials have the duty to cause the prosecution of those who violate the banking laws. and institutions performing similar functions. shall function as the central monetary authority. Adopt. Corporate Powers of the Bngko Sentral 1. 7. D. SECTION 4 Place of Business. It shall have supervision over the operations of banks and exercise such regulatory powers as may be provided by law over the operations of finance companies and other institutions performing similar functions. or release any claim of or settled liability to the Bangko Sentral .provide policy directions in the areas of money. Responsibility and Primary Objectives of the bangko Sentral 1. It shall have supervision over operations of banks. Responsibility of BSP . banking.The capital of the Bangko Sentral shall be Fifty Billion Pesos. agencies and correspondents in such other places as the proper conduct of its business may require. or a s essential to the proper conduct of such operations Compromise. anyone can denounce this to any prosecuting authority because said violations constitute a public offense and is a matter of public interest. the majority of whom shall come from the private sector. 6. to be fully subscribed by the Government of the Republic. 3. regardless of the amount involved. The authority shall provide policy direction in the areas of money. Ten Billion of which shall be fully paid for by the government upon effectivity of this act In such manner and form as the Government. Prosecution of violation of banking laws is not exclusive to BSP. It shall also promote and maintain monetary stability and the convertibility of the peso. It shall also exercise regulatory powers over the operations of finance companies and non-bank financial institutions performing quasi-banking functions. 3. and patriotism. 5. the members of whose governing board must be natural-born Filipino citizens. condone. and credit. They shall also be subject to such other qualifications and disabilities as may be prescribed by law. 4. Primary objective of BSP – maintain price stability conducive to a balanced and sustainable growth in the economy. Estoppel 17 | P a g e . • Mandate by the Constitution: The Congress shall establish an independent central monetary authority. and credit. BSP is an artificial person limited to its statutory powers. • 2. 2. under such terms and conditions as maybe prescribed by the monetary board. • C. E. 4. it is a government corporation created principally to administer the monetary and banking System of the Philippines and not a prosecution authority like the fiscal’s office. alter and use a corporate seal Enter into contracts Lease or own real and personal property. but may maintain branches. The closest it can get to prosecuting is its power to sue and be sued (civil cases only). 5.
Authority of the Bangko Sentral A. Monetary Board may exempt particular categories of transactions from such ratios. o Of the members first appointed. • B. the BSP shall phase out and transfer its supervising and regulatory powers over building and loan associations to the Home Insurance and Guarantee Corporation. Overseeing to ascertain that laws are complied with. The members are: Governor o o Chairman of the monetary board Appointment subject to confirmation of the Commission on Appointments If governor cannot attend a meeting of the board. IV. III. Underlying this commitment however is the government’s strict and faithful adherence to basic principles of fairness and decency under the Bill of Rights. II. ceilings and limitations. • • The Monetary Board II. Regular investigation which shall not be oftener than once a year Inquiry into the solvency and liquidity of the institution Enforcing prompt corrective action.• BSP is committed to maintain the stability of the country’s foreign exchange reserve position. ceilings. C. o Whenever such cabinet cannot attend a meeting of the board. • 5 members shall come from the private sector. including those of the Bank of International Settlements. Hence BSP circulars/ memoranda must be implemented in a manner that would not only safeguard or harmonize them with government programs designed to uplift or promote the country’s level of production and employment. but not limited to exceptional cases or to enable a bank or quasi-bank under rehabilitation or during a merger or consolidation to continue business with safety to its creditors. 3 shall have a term of 6 years and the other 2. Banking and Credit Monetary Board may prescribe ratios. In such event. Ceilings and Limitations 18 | P a g e . and limitations or other forms of regulation on the different types of accounts and practices of banks and quasi-banks which shall conform to internationally accepted standards. Issuance of rules of conduct or the establishment of standards of operation for uniform application to all institutions and functions covered. 3 years. the Monetary Board shall designate one of its members as acting chairman. depositors and the general public. Thus in case banks or banking institutions already faithfully complied with BASP’s directives. Supervisory Powers of the bangko Sentral • Supervisory powers include the following: A. A member of the cabinet to be designated by the President. o Composition • Composed of 7 members appointed by the president of the Philippines for a term of 6 years. Policy Direction. I. Phase out of Bangko Sentral Powers Over Building Loan and Association • Within 3 years form effectivity of GBl. but at the same time avoid irreparable or grave prejudice to participants of said program. • • BSP shall provide policy direction in the areas of Money. BSP is stopped from enforcing circulars that would deny banks or banking institutions of their rights. he shall designate a Deputy Governor to act as his alternate. • III. V. Conduct of examination to determine compliance with the laws and regulations if the circumstances so warrant and determined by the monetary board. he shall designate a Undersecretary in his department to attend as his alternate. VI. all of whom shall serve fulltime. Ratios. • The powers and functions of the bangko Sentral may be exercised by the BAngko SEntral Monetary Board.
agent. removal E. Member is subsequently disqualified under section 9 of NCBA D. iii. Disqualifications of Monetary board Members i. consultant. Guilty of fraudulent or illegal acts or which are manifestly opposed to the aims and interests of the bangko sentral. upon application of a bank. A new member shall be appointed who shall serve the unexpired term of the member concerned. iv. (section 9 NCBA) B. Quorum. vi. Person connected directly with any multilateral banking or financial institution. Physically or mentally incapacitatedtaht he cannot properly discharge his duties and responsibilities as such incapacity a\has lasted for more than 6 months. iv. i. Decisions and Proceedings of the Monetary board i. resignation.In allowing banks to delay publication of its statements of financial condition in periods of national or local emergency. The board may be called to a meeting by the governor of the bangko sentral or by 2 other members of the board Presence of 4 members constitutes a quorum. Meetings. within 0ne year prior to his appointment No member of the monetary board shall be employed in any such institution within two years after expiration of his term except when he iii. Known probity and patriotism Unquestionable integrity Recognized competence in social and economic disciplines. Sec 61 GBL .. Vacancies • • Cause of vacancy: death. Grounds for removal of Monetary Board members • The president may remove any member of the monetary board for these reasons : i. vi. ii. i. lawyer. o v. employee. Having a substantial interest in any private bank in the Philippines. Being a director. iii. 19 | P a g e . or imminent panic which directly monetary and banking stability. stockholder of any bank or any other institution under the supervision of the bangko Sentral. The Monetary Bard shall meet at least once a week. ii. Member no longer possesses the qualifications.serves as an official representative of the Government to such Institution. Provided that the governor is always among those 4 Decisions of MB shall require concurrence of 4 members. Disqualifications imposed by RA 6713 (An act establishing a code of conduct and ethical standards for public officials and employees) F. Qualifications of the Members of the monetary Board ii. iv. he must resign first to assume office as member of the monetary board Holding public office or public employment during their tenure. officer. chairman 40yrs old Good moral character iii. C. v. Exceptions ( 5 votes are needed in these cases): ii. Natural born citizen 35 yrs old.
o Section 28 NCBA. and may subject all transactions in gold and foreign exchange to license by the Bangko Sentral. however. by a vote of at least five (5) of its members. . That while such loans or advances are outstanding. (a) furnish an acceptable undertaking to indemnify and hold harmless from suit a conservator whose appointment the Monetary Board may find necessary at any time. That there shall be an interval of at least twelve (12) months between annual examinations. the amount of the first tranche may exceed twenty-five percent (25%) of the bank's total deposit and deposit substitutes if the same is adequately secured by applicable loan values of government securities and unencumbered first class collaterals approved by the Monetary Board. the debtor institution shall not. at the effective exchange rate or rates. where necessary. the circumstances surrounding the emergency warrant a loan or advance greater than the amount provided hereinabove. That a concurrent vote of at least five (5) members of the Monetary Board is obtained. The Monetary Board may. likewise authorize the Bangko Sentral to grant emergency loans or advances to banking institutions. Prior to the release of the first tranche. The amount of any emergency loan or advance shall not exceed the sum of fifty percent (50%) of total deposits and deposit substitutes of the banking institution and shall be disbursed in two (2) or more tranches. including the exercise of voting rights pertaining to said shares: Provided. or events which. and may require that any foreign exchange thereafter obtained by any person residing or entity operating in the Philippines be delivered to the Bangko Sentral or to any bank or agent designated by the Bangko Sentral for the purpose. authorize the release of a subsequent tranche on condition that the principal stockholders of the institution: o Section 72 NCBA. The amount of the first tranche shall be limited to twenty-five percent (25%) of the total deposit and deposit substitutes of the institution and shall be secured by government securities to the extent of their applicable loan values and other unencumbered first class collaterals which the Monetary Board may approve: Provided. Emergency Loans and Advances.in the imminence of. expand the total volume of its loans or investments. — The supervising and examining department head. Examination and Fees. however. or overcome such a crisis or emergency. the assets tendered by the banking institution to collateralize the subsequent tranche. authorize the Bangko Sentral to grant extraordinary loans or advances to banking institutions secured by assets as defined hereunder: Provided. though foreseeable. the prohibitions in Section 128 of this Act shall not apply insofar as it refers to acceptance as collateral of shares and their acquisition as a result of foreclosure proceedings. personally or by deputy. by a vote of at least five (5) of its members. may deem expedient and to make a report on the same to the Monetary Board: Provided. except upon prior authorization by the Monetary Board. further. even during normal periods. the Monetary Board may. at its discretion. for the purpose of assisting a bank in a precarious financial condition or under serious financial pressures brought by unforeseen events. In connection with the exercise of these powers. could not be prevented by the bank concerned: Provided. may temporarily suspend or restrict sales of exchange by the Bangko Sentral. That should the Bangko Sentral acquire any of the shares it has accepted as 20 | P a g e . in the judgment of the Monetary Board. shall examine the books of every banking institution once in every twelve (12) months. and at such other times as the Monetary Board by an affirmative vote of five (5) members. or in time of national emergency to give the Monetary Board and the Government time in which to take constructive measures to forestall. That the Monetary Board has ascertained that the bank is not insolvent and has the assets defined hereunder to secure the advances: Provided. combat. with the concurrence of at least five (5) of its members and with the approval of the President of the Philippines. or during an exchange crisis. the Monetary Board. o Section 84. That if as determined by the Monetary Board. — In periods of national and/or local emergency or of imminent financial panic which directly threaten monetary and banking stability. the banking institution shall submit to the Bangko Sentral a resolution of its board of directors authorizing the Bangko Sentral to evaluate other assets of the banking institution certified by its external auditor to be good and available for collateral purposes should the release of the subsequent tranche be thereafter applied for. and the principal stockholders of the institution furnish an acceptable undertaking to indemnify and hold harmless from suit a conservator whose appointment the Monetary Board may find necessary at any time. and (b) provide acceptable security which. would be adequate to supplement. The Monetary Board may.
6758. assign. further. shall be instituted as an integral component of the Bangko Sentral's human resource development program: Provided. fix the remunerations and other emoluments. That the Monetary Board shall make its own system conform as closely as possible with the principles provided for under Republic Act No. transfer. i. Deputy Governors may Attend Meetings of the Monetary Board • He may attend with the right to be heard A compensation structure. or is. based on job evaluation studies and wage surveys and subject to the Board's approval. adopt an annual budget for and authorize such expenditures by the Bangko Sentral as are in the interest of the effective administration and operations of the Bangko Sentral in accordance with applicable laws and regulations. c.collateral as a result of foreclosure proceedings. and J. i. appoint. G. d. That compensation and wage structure of employees whose positions fall under salary grade 19 and below shall be in accordance with the rates prescribed under Republic Act No. That the Monetary Board may delegate such authority to the Governor under such guidelines as it may determine. Issue rules and regulations it considers necessary for the effective discharge of the responsibilities and exercise of the powers vested upon the Monetary Board and the Bangko Sentral. operations. and remove personnel of the Bangko Sentral. and administration of the Bangko Sentral. On the recommendation of the Governor. or reassign personnel of the Bangko Sentral and these personnel actions are deemed made in the interest of the service and not disciplinary: Provided. That the Monetary Board shall have exclusive and final authority to promote. subject to pertinent civil service laws: Provided. indemnification shall be provided only in connection with such matters covered by the settlement as to which the Bangko Sentral is advised by external 21 | P a g e . or dismissal of all personnel. The decision taken on the matter shall be made public. however. suit or proceedings to which he may be. hiring. Salaries of the Governor and Members of the Monetary Board • Salaries shall be fixed by the president at an amount commensurate to the importance and responsibility attached to the position. indemnify its members and other officials of the Bangko Sentral. Scope of the Authority of the Monetary Board a. unless he is finally adjudged in such action or proceeding to be liable for negligence or misconduct. Establish a Human Resource management system which shall govern the selection. the Bangko Sentral shall dispose of said shares by public bidding within one (1) year from the date of consolidation of title by the Bangko Sentral establish professionalism and excellence in all levels of BSP in accordance with the sound principles of management. Personal or Pecuniary Interest • Any member of the MB with personal or pecuniary interest in any matter in the agenda of the monetary board shall disclose his interest to the board and shall retire from the meeting when the matter is taken up. H. including personnel of the departments performing supervision and examination functions against all costs and expenses reasonably incurred by such persons in connection with any civil or criminal action. I. ii. Direct the management. The minutes shall reflect the disclosure made and the retirement of the member concerned from the meeting. Such system shall aim to In the event of a settlement or compromise. b. made a party by reason of the performance of his functions or duties. e. reorganize its personnel and issue such rules and regulations as it may deem necessary or convenient for this purpose. 6758: Provided.
decisions. examiners. e. or rulings. i. however. and Employees of the Bangko Sentral c. Responsibilities of the Members of the Monetary Board. abuses or acts of malfeasance or misfeasance or fail to exercise extraordinary diligence in the performance of his duties shall be held liable for any loss or injury suffered by the Bangko Sentral or other banking institutions as a result of such violation. suit or proceeding upon receipt of an undertaking by or on behalf of the member. the Bangko Sentral or third parties: Provided. render opinions. That removal of personnel shall be with the approval of the Monetary Board.counsel that the person to be indemnified did not commit any negligence or misconduct. and employees of the Bangko Sentral who willfully violate this Act or who are guilty of negligence. Similar responsibility shall apply to members. Members of the Monetary Board. or is with prior authorization of the Monetary Board or the Governor. as well as to impose disciplinary measures upon personnel of the Bangko Sentral. and IV. and employees of the Bangko Sentral for: d. malfeasance. Examiners. ii. or to be published under the provisions of this Act shall not be considered confidential. the disclosure of any information of a confidential nature. a. direct and supervise the operations and internal administration of the Bangko Sentral. which shall be final and executory until reversed or modified by the Monetary Board. A. officials. The costs and expenses incurred in defending the aforementioned action. misfeasance or failure to exercise extraordinary diligence. Powers and Duties of the Governor a. That any data or information required to be submitted to the President and/or the Congress. 22 | P a g e . b. officer. negligence. abuse. unless the disclosure is in connection with the performance of official functions with the Bangko Sentral. on matters regarding application or enforcement of laws pertaining to institutions supervised by the Bangko Sentral and laws pertaining to quasi-banks. officers. or any information on the discussions or resolutions of the Monetary Board. suit or proceeding may be paid by the Bangko Sentral in advance of the final disposition of such action. or employee to repay the amount advanced should it ultimately be determined by the Monetary Board that he is not entitled to be indemnified as provided in this subsection. appoint and fix the remunerations and other emoluments of personnel below the rank of a department head in accordance with the position and compensation plans approved by the Monetary Board. or the use of such information for personal gain or to the detriment of the Government. or about the confidential operations of the Bangko Sentral. prepare the agenda for the meetings of the monetary board and to submit for the consideration of the monetary board the policies and measures which he believes to be necessary to carry out the purposes and provisions of this act ii. The Governor may delegate certain of his administrative responsibilities to other officers or may assign specific tasks or responsibilities to any full-time member of the Monetary Board without additional remuneration or allowance whenever he may deem fit or subject to such rules and regulations as the Monetary Board may prescribe. execute and administer the policies and measures approved by the Monetary Board. and the implementation thereof. as well as regulations. G. policies or instructions issued by the Monetary Board. subject to the provisions of Section 15(c) of this Act: Provided. The Governor and Deputy Governors of the Bangko Sentral • Governor shall be chief executive officer of the Bangko Sentral ng Pilipinas. Officials. b.
f. shall appoint not more than three (3) Deputy Governors who shall perform duties as may be assigned to them by the Governor and the Board. That in order to preserve the integrity and the prestige of his office. with the concurrence of two (2) other members of the Monetary Board. as provided in subsections (a). sign contracts entered into by the Bangko Sentral. however. in any legal proceedings. 23 | P a g e . not accept any other employment. delegate his power to represent the Bangko Sentral. D. the Governor or the full-time member is tasked to represent the interest of the Government or other government agencies in matters connected with or affecting the economy or the financial system of the country. in such capacity and in accordance with the instructions of the Monetary Board. by designation of the President. a. exercise such other powers as may be vested in him by the Monetary Board. all reports. may decide any matter or take any action within the authority of the Board. During the negotiations. profit and loss statements. C. In case of emergencies where time is sufficient to call a meeting of the Monetary Board. Powers of the Governor as Representative of the Monetary Board and the Bangko Sentral • The Governor of the Bangko Sentral shall be the principal representative of the Monetary Board and of the Bangko Sentral and.a. whether domestic. Number and Functions of Deputy Governors a. to other officers upon his own responsibility: Provided. including private counsel. public or private. correspondence and other documents of the Bangko Sentral. with the following powers: c. as may be authorized by the Monetary Board. he may instead be represented by a permanent negotiator. limit their professional activities to those pertaining directly to their positions with the Bangko Sentral. the Governor shall call a meeting of the Monetary Board to submit his action for ratification. either personally or through counsel. The signature of the Governor may be in facsimile whenever appropriate Limitations on outside interests of the governor and the Full-time Members of the Board • The governor of the Bangko Sentral and the full-time members of the Board shall: a. The Governor shall submit a report to the President and Congress within seventy-two (72) hours after the action has been taken. the Governor of the Bangko Sentral. E. d. with the approval of the Monetary Board. c. the Governor of the Bangko Sentral may choose not to participate in preliminary discussions with any multilateral banking or financial institution on any negotiations for the Government within or outside the Philippines. action or specialized legal studies b. represent the Bangko Sentral. B. foreign or international b. remunerated or ad honorem. balance sheets. Emergencies The Governor of the Bangko Sentral. civic. whether public or private. represent the Monetary Board and the Bangko Sentral in all dealings with other offices. with the exception of positions in eleemosynary. b. agencies and instrumentalities of the Government and all other persons or entities. (b) and (c) of this section. notes and securities issued by the Bangko Sentral. cultural or religious organizations or whenever. At the soonest possible time.
officer. The Bangko Sentral shall have the authority to request from government offices and instrumentalities. of qualified employees of the Bangko Sentral. B. The Bangko Sentral through the Governor or in his absence. including their subsidiaries and affiliates. documents. Whenever the Government is unable to attend meetings of government boards or councils in which he is an ex officio member pursuant to provisions of special laws. is owned by a bank or which is related or linked to such institution or intermediary through common stockholders or such other factors as may be determined by the MB. a Deputy Governor as may be designated by the Governor shall be vested with authority to participate and exercise the right to vote in such meetings. Subsidiary – more than 50% of the voting stock is owned by a bank Affiliate – 50% or less. a Deputy Governor designated by the Governor shall act as chief executive of the Bangko Sentral and shall exercise the powers and perform the duties of the Governor. credit and exchange policies. shall be subject to punishment for contempt in accordance with the provisions of the Rules of Court. In the absence of the Governor. The department heads and the examiners of the supervising and/or examining departments are hereby authorized to i. or employee of any institution under their respective supervision or subject to their examination and to c. or government-owned or controlled corporations. ii. Operations of the Bangko Sentral A. forecasts of the balance of payments of the Philippines. and conduct periodic or special examination of. the provisions of section 27 shall apply. Those supply the bank with data requested or required. Research and statistics of the bangko Sentral • The Bangko Sentral shall prepare data and conduct economic research for the guidance of the Monetary Board in the formulation and implementation of its policies. administer oaths to any director. The Monetary Board shall prescribe rules and regulations to govern the training program of the Bangko Sentral.V. gathered by the Department of Economic Research and other departments or units of the Bangko Sentral shall not be made available to any person or entity outside of the Bangko Sentral whether public or private escept under order of the court or under such conditions as may be prescribed by the monetary board: Provided however. at home or abroad. of promising university graduates or of any other qualified persons who shall be determined by proper competitive examinations. compel the presentation of all books. theth the case of data on banks. statistics on the monthly movement of the monetary aggregates and of prices and other statistical series and economic studies useful for the formulation and analysis of monetary. b. b. C. activities or transactions of the institution under examination. b. that the collected data on firms may be ii. any data which it may require for the proper discharge of its functions and responsibilities. i. among others. The BSP shall have supervision over. Scope of the Supervision and Examination by the bangko Sentral a. banking institutions and quasi-banks. subject to the provision of existing laws protecting or safeguarding the secrecy or 24 | P a g e . the Bangko Sentral is hereby authorized to defray the costs of study. Such data shall include. D. Scope of authority of bangko Sentral to Obtain data and Information a. a duly authorized representative shall have the power to issue a subpoena for the production of the books and records for the aforesaid purpose. Toward this end. other htan banks. Training of technical Personnel • The Bangko Sentral shall promote and sponsor the training of technical personnel in the field of money and banking. banking. released to interested persons or entities: provided finally. Data on individual firms. papers or records necessary in their judgment to ascertain the facts relative to the true condition of any institution as well as the books and records of persons and entities relative to or in connection with the operations.
in debt instruments issued by the Government. officer or stockholder who. together with his related interest. may deem expedient and to make a report on the same to the Monetary Board: Provided. shall examine the books of every banking institution once in every twelve (12) months. E. in excess of five percent (5%) of the capital and surplus of the bank. which is a subsidiary of a bank holding company of which both his bank and the lending bank are subsidiaries or in which a controlling proportion of the shares is owned by the same interest that owns a controlling proportion of the shares of his bank. in so far as they are applicable. Frequency of Examination • b. Service Fees 25 | P a g e . contracts a loan or any form of financial accommodation from: i. C. Officer or Stockholder and Related Interests A. or in the maximum amount permitted by law. his bank. Exception: there is convincing proof that the action of the BSP is plainly arbitrary and made in bad faith and the petitioner or plaintiff files with the clerk or judge of the court in which the action is pending a bond is executed infavor of the BSP in the amount fixed by court. Affording Opportunity to Examine • Bank concerned shall afford the head of the appropriate supervising and examining departments full opportunity to examine • • • Books Cash and available assets General condition • 2. natural or juridical. Provisions of the Rules of court regarding Preliminary injunction. Any director. shall be required by the lending bank to waive the secrecy of his deposits of whatever nature in all banks in the Philippines. i. Contracting Loans a. B. b. personally or by deputy. and at such other times as the Monetary Board by an affirmative vote of five (5) members. or from a bank 1. Examination of Banking Institutions A. Any information obtained from an examination of his deposits shall be held strictly confidential and may be used by the examiners only in connection with their supervisory and examination responsibility or by the Bangko Sentral in an appropriate legal action it has initiated involving the deposit account. B. and not inconsistent shall govern the issuance and dissolution of the restraining order or injunction. ii. Court cannot order restraining order prohibiting the BSP from examining any institution subject to the supervision and examination of the BSP. Anytime during the banking hours when requested by BSP The reports on the examinations will not be open to the public unless incidental to any proceedings authorized or is necessary for the prosecution of violations in connection with the business of such institutions. Director.confidentiality of bank deposits as well as investments of private persons. Prohibitions Against Personnel of the Bangko Sentral (same as disqualifications of MB Member) VII. VI. The supervising and examining department head. whichever is lower. That there shall be an interval of at least twelve (12) months between annual examinations. Restraining Order or Injunction a.
iii. and remedial measures in response to such abnormal movements (not later than 27 hours) C. of exports and imports. iv. The functions and duties of such operating departments and other offices shall be determined by the Monetary Board. by volume and value. the principal data on government receipts and expenditures and on the status of the public debt. Required Reports and Publications of the Bangko Sentral a. an annual fee. determine and provide for such operating departments and other offices. i. Failure to comply with the reportorial requirements pursuant to this article without justifiable reason as may be determined by the Monetary Board shall cause the withholding of the salary of the personnel concerned until the requirements are complied with. both domestic and foreign. including the condition of net international reserves and monetary aggregate. the Bangko Sentral shall publish and submit to the President and the Congress an annual report on the condition of the Bangko Sentral including a review of the policies and measures adopted by the Monetary Board during the past year and an analysis of the economic and financial circumstances which gave rise to said policies and measures. v. the monthly movement. the monthly movement of monetary aggregates and their components. and viii. the monthly movement of purchases and sales of foreign exchange and of the international reserves of the Bangko Sentral. ii. B. including a public information office. Amount of fee is prescribed by the MB. The BSP shall publish a general balance sheet within 60 days after the end of each month except December. Analysis of economic and financial developments. the balance of payments of the Philippines. 26 | P a g e . the texts of the major legal and administrative measures adopted by the Government and the Monetary Board during the year which relate to the functions or operations of the Bangko Sentral or of the financial system. The Bangko Sentral shall publish another version of the annual report in terms understandable to the layman. the following data: i. Operating Departments of the Bangko Sentral • The Monetary Board shall. in summary form. after deducting cash on hand and the amount due from banks. iii. It would be a percentage of its average total assets during the preceding year as shown by its end of month balance sheets. It shall contain the volume and compositions of its assets and liabilities as of the last working day of the month. Before the end of March of each year. vii. b. vi. of the Bangko Sentral as it deems convenient for the proper and efficient conduct of the operations and the accomplishment of the objectives of the Bangko Sentral. as a minimum.• Banks and quasi-banks subject to examination of the BSP shall pay the BSP within 30 days of each year. d. the monthly movement of the accounts of the Bangko Sentral and of other banks. b. Administration A. a. (90 days after end of each quarter) Preceeding year’s budget and profit and loss statement of the bankgo sentral showing in reasonable detail the result of its operations. iv. The annual report shall also include a statement of the financial condition of the Bangko Sentral and a statistical appendix which shall present. • Abnormal movements in monetary aggregates and the general price level. Annual Report of the Bangko Sentral VIII. (within 90 days after end of year) Review of the state of the financial system ( 120 days after end of semester) c. which shall be submitted 90 days after end of month. (as soon as practicable). MB shall publish the ff reports and submit them to the President and to congress. in accordance with its authority under this Act. ii. including the bangko sentral and the banks abroad. monthly indices of consumer prices and of import and export prices.
Distribution of Net Profits F. IX. in accordance with law. b. Any profits or losses arising in this manner shall be offset by any amounts which. Profits. The Revaluation of International Reserve account shall be neither credited nor debited for any purposes other than those specifically authorized in this section. Any remaining profit or loss shall be carried in a special frozen account which shall be named "Revaluation of International Reserve" and the net balance of which shall appear either among the liabilities or among the assets of the Bangko Sentral. E. The salaries and other emoluments shall be paid by the Commission. depending on whether the revaluations have produced net profits or net losses. except as otherwise provided in the transitory provisions of this Act. he is empowered and authorized to appoint a representative who shall be the auditor of the Bangko Sentral and. The Revaluation of International Reserve (RIR) account as of the effective date of this Act of the Central Bank shall continue to be for the account of the same entity and shall be governed by the provisions of Section 44 of Republic Act No. until otherwise provided for in accordance with the transitory provisions of this Act. D. the Bangko Sentral shall determine its net profits or losses. the Bangko Sentral shall make adequate allowance or establish adequate reserves for bad and doubtful accounts. Fiscal Year a. The representative of the Chairman of the Commission must be a certified public accountant with at least ten (10) years experience as such. are owed by the Philippines to any international or regional intergovernmental financial institution of which the Philippines is a member or are owed by these institutions to the Philippines. in accordance with the following rule: a. Signatures on Statements Balance sheets and statements shall be signed by the officers responsible for their preparation. 265. the Monetary Board shall determine and carry out the distribution of the net profits. c. Profits or losses arising from any revaluation of the Bangko Sentral's net assets or liabilities in gold or foreign currencies with respect to the Philippine peso shall not be included in the computation of the annual profits and losses of the Bangko Sentral. Any profits or losses arising in this manner shall be offset by any amounts which. as a consequence of such revaluations. In the calculation of net profits. 27 | P a g e . Suspense Accounts Amounts outstanding as of the effective date of this Act based on these accounts shall continue to be for the account of the Central Bank and shall be governed by the transitory provisions of this Act. B. b. as a consequence of such revaluations. depending on whether the revaluations have produced net profits or net losses. Computation of Profits and Losses Within the first thirty (30) days following the end of each year. The auditor of the Bangko Sentral and personnel under him may be removed only by the Chairman of the Commission. Profits or losses arising from any revaluation of the Bangko Sentral's net assets or liabilities in gold or foreign currencies with respect to the Philippine peso shall not be included in the computation of the annual profits and losses of the Bangko Sentral. and to appoint and fix salaries and number of personnel to assist said representative in his work. fix his salary. Losses. C. are owed by the Philippines to any international or regional intergovernmental financial institution of which the Philippines is a member or are owed by these institutions to the Philippines. as amended. Any remaining profit or loss shall be carried in a special frozen account which shall be named "Revaluation of International Reserve" and the net balance of which shall appear either among the liabilities or among the assets of the Bangko Sentral.D. as such. Fifty percent (50%) of the net profits shall be carried to surplus the remaining fifty percent (50%) shall revert back to the National Treasury. The Revaluation of International Reserve account shall be neither credited nor debited for any purposes other than those specifically authorized in this section. No relative of any • Within the first sixty (60) days following the end of each fiscal year. b. c. The Auditor The Chairman of the Commission on Audit shall act as the ex officio auditor of the Bangko Sentral and. and Special accounts A. Revaluation of Profits and Losses a.
or both. but not more than 10 years. iii. Penalty for Refusal to make Reports i.000) nor more than Two hundred thousand pesos (P200. vi. ii. implemented by the Bangko Sentral or any order. the Monetary Board may also suspend or remove such director or officer. at the discretion of the court. 000 and not more than 200. rule or regulation issued by the monetary board. 35. Suspension of rediscounting privileges or access to BSP credit facilities suspension of lending or foreign exchange operations or authority to accept new deposits or make new investments. instruction or regualtin issued by the Monetary Board. quasi-bank or trust entity.000) or by imprisonment of not less than two (2) years nor more than ten (10) years. If the offender is a director or officer of a bank. If the violation is committed by a corporation. Penalty for Willful Making of a False or Misleading Statement on a Material Fact • punished by a fine of not less than One hundred thousand pesos (P100. X. the violation of any of the provisions of this Act shall be subject to Sections 34. person. manager. 28 | P a g e . Proceedings Upon and Penalty for Violation of NCBA and Other banking laws. quasi-bank. C. in the discretion of the court. Fines not exceeding 30. agent. Any willful failure or refusal to comply with. Rules Regulations.000 for each day of violation. instruction. Administrative Sanctions on Banks and Quasi Banks a. such as the nature and gravity of the violation or irregularity and the size of the bank. Penalty for Violation Unless otherwise herein provided. 36 and 37 of the New Central Bank Act. Any willful violation of its charter or by-laws Willful delay in the submission of required reports and publications Refusal to permit examination into the affairs of the institution Willful making of false or misleading statement to the board or the appropriate supervising and examining department examiners. A bank. or violation of any banking law or any rder. Any officer. ii. or whenever any person or entity willfully violates this Act or other pertinent banking laws being enforced or Imposable sanctions: i. or both. being required in writing by the Monetary Board or by the head of the supervising and examining department willfully refuses to file the required report or permit any lawful examination into the affairs of such institution shall be punished by a fine of not less than Fifty thousand pesos (P50. and/or revocation of quasi-banking license. Mb would take into consideration the attendant circumstances. Orders or Instructions a. or any entity who willfully the NCBA or other banking laws implemented by BSP. director or officer-in-charge of any institution subject to the supervision or examination by the Bangko Sentral within the purview of this Act who. or by imprisonment of not more than (5) years.000) nor more than Two hundred thousand pesos (P200.000). instruction or ruling by the governor Conducting business in an unsafe or unsound manner as may be determined by the MB. the person or persons responsible for such violation shall unless otherwise provided in this Act be punished by a fine of not less than Fifty thousand pesos (P50. or both. Administrative violation and penalties: Grounds for administrative sanctions imposable by the MB to any bank or quasi-bank: A. B. D. v. iii. such corporation may be dissolved by quo warranto proceedings instituted by the Solicitor General. iv. or any order. shall be punished by a fine not less than 50. b. or any order.member of the Monetary Board or the Chairman of the Commission within the sixth degree of consanguinity or affinity shall be appointed such representative.000 or imprisonment of not less than 2 years. iv. Whenever a bank or quasi-bank. rule or regulation issued by the Monetary Board. at the discretion of the court. v.000) nor more than One hundred thousand pesos (P100. instruction.000) or by imprisonment of not less than one (1) year nor more than five (5) years. owner. suspension of interbank clearing privileges.
166. defined in Title One of Book Two of this Code.chan robles virtual law library 3. fines not in excess of Ten thousand pesos (P10. While being public officers or employees. Monetary Board regulations and policies.has authority to investigate. C. *Related Crimes under the RPC 1. to impose upon banking institutions. 168. payable to bearer or order mentioned therein. Should commit an offense while on a Philippine ship or airship 2. but also outside of its jurisdiction. — The forgery referred to in this section may be committed by any of the following means: 1. Counterfeiting. Making and Importing and Uttering False Coins 2. The Unit of Monetary Value A. 169. shall not form part of the assets or liabilities of the BSP. currency substitutes. How forgery is committed. Art. B. 10c or less denominations shall not exceed P20. C. Mutilation of Coins. Whether or not there is an administrative proceeding. Application of its provisions. substituting. the Monetary Board may issue an order requiring the institution and/or the directors and/or officers concerned to cease and desist from the indicated practice or violation. Value of Currency -has value because people are willing to accept it in exchange of goods. In case the RPC provides for a greater penalty.000) a day for each violation. d. Currency. Art. words or signs contained therein. Illegal Possession and Use of False Treasury or Bank Notes and Other Instruments of Credit 7. if the institution and/or the directors and/or officers concerned continue with or otherwise persist in the commission of the indicated practice or violation. or 5. Should commit any of the crimes against national security and the law of nations. 2. If a hearing is conducted. 4. — Except as provided in the treaties and laws of preferential application. 165. If no such hearing is requested within said period. Such may be issued only against. Importing. all issues shall be determined on the basis of records.SOLE power to issue currency (ii) Monetary Board.II. the latter shall prevail. and may further order that immediate action be taken to correct the conditions resulting from such practice or violation. and Uttering Such False or Forged Notes and Documents 5. Importation and Utterance of Mutilated Coins 3. the imposition of which shall be final and executory until reversed. 25c and above denominations shall not exceed P50. search and seize for the purpose of maintaining the integrity of the currency.00 29 | P a g e . B. letters. should commit an offense in the exercise of their functions. The cease and desist order shall be immediately effective upon service on the respondents. Legal Tender Power -all notes and coins issued by the BSP= Legal Tender for all debts *coins: a. *An Exception to Territoriality of Penal Laws (RPC) Art. against those who: 1. counterfeiting or altering by any means the figures. By giving to a treasury or bank note or any instrument. (ii) The Bangko Sentral’s holdings of its own notes and coins shall not be considered as part of its currency issue and. its interior waters and maritime zone. including its atmosphere. arrest. (iv) Violation: imprisonment of not less than five years but not more than ten years.00 b. services or payment of debts. b. modified or lifted by the Monetary Board on appeal. Liability for Notes and Coins (i) Notes and coins issued by the BSP shall be liabilities of the BSP. By erasing. Exclusive Issue Power (i) Bangko Sentral. Art. the provisions of this Code shall be enforced not only within the Philippine Archipelago. Art. the appearance of a true genuine document. 163. 164. for any failure to comply with the requirements of law. Should forge or counterfeit any coin or currency note of the Philippine Islands or obligations and securities issued by the Government of the Philippine Islands. The Governor is hereby authorized. upon request made by the respondents within five (5) days from their receipt of the order. Should be liable for acts connected with the introduction into these islands of the obligations and securities mentioned in the presiding number.may issue regulations to prevent circulation of foreign currency. and/or instructions issued by the Monetary Board or by the Governor. Without Connivance 4. Chapter 8: Currency. Selling of Flase or Mutilated Coin. Art. and in amounts not exceeding. Issue of Means of Payment A. Art. accordingly. or to prevent the reproduction of facsimiles of Bangko Sentral notes. Such shall be a first and paramount lien on all assets of the BSP. 2. Monetary Stabilization and Functions of the BSP I. c. Forging Treasury or Bank Notes on Other Documents Payable to Bearer. all monetary obligations shall be settled in Philippine currency parties may agree to settle such obligation in any other currency at the time of the payment. (iii) Bangko Sentral. at his discretion. defined -all Philippine notes and coins issued or circulating in accordance with the NCBA. 167. after which the Monetary Board may either reconsider or make final its order. The Peso (P) -unit of monetary value in the Philippines -divided into 100 equal parts: centavos (c) -legal tender. Art. The respondents shall be afforded an opportunity to defend their action in a hearing before the Monetary Board or any committee chaired by any Monetary Board member created for the purpose. the order shall be final. Importing and Uttering Instruments Not Payable to Bearer 6. the assets of the BSP.
wages and economic activity in general. (mutilated conditions) H. or when through the fault of the creditor they have been impaired. The delivery of promissory notes payable to order. notes which have lost 2/5 of their surface or all of the signatures therein.-checks representing demand deposits do not have legal tender power: one cannot be compelled to accept the same. B. 1249. with approval of the President. coins. (ii) Expenses incurred for the operations shall be for the account of the BSP. employment. Designs 4. shall prescribe: 1. Extent to which such changes have been reflected in the level of domestic output. The monetary aggregates. *a check cleared and credited to the account of the creditor = delivery of cash to such creditor. filed. Denominations 5. Guiding Principle on Monetary Stabilization -the MB shall endeavour to control any expansion or contraction in monetary aggregates which is prejudicial to the attainment or maintenance of price stability. b. 5 years old. in credit. shall not replace: notes and coins. Interconvertibility of Currency -BSP shall exchange. Measures taken and measures proposed to be adopted. Replacement of Currency Unfit for Circulation -shall be withdrawn and demonitized by the BSP from circulation and replace them with adequate ones. shall prescribe: 1. Lapse of such period. or bills of exchange or other mercantile documents shall produce the effect of payment only when they have been cashed. 2. *Related Civil Code Provisions Art. or the level of credit. Inscriptions 4. -MB shall pay special attention to the volume and maturity of: 1. also shall bear the signatures of the President of the Philippines and the Governor of the BSP. B. Other characteristics of the coins The MB shall consider the availability and cost of materials E. the identification of which is impossible. IV. The called in notes and coins shall likewise be demonitized.) -MB shall judge such adequacy based on: prospective receipts and payments of ForEx by the Philippines. 3. When in its judgment. a description and analysis: 1. It shall also have the authority to contract institutions. Printing of Notes and Minting of Coins (i) The MB shall prescribe the amount and conditions of notes and coins to be printed and minted. with approval of the President. International Monetary Stabilization -preserved by the BSP -maintain convertibility into other currencies primarily for foreign trade and invisibles. BSP’s own liabilities in foreign currencies 2. D. Art. the circumstances warrant. Action When Abnormal Movements Occur in the Monetary Aggregates. Denominations 2. Characteristics of the Currency (i) Monetary Board. 1250. credit and prices and shall make public such definitions and any changes thereof. C. Other characteristics of notes Provided that: the notes state that they are liabilities of the BSP and are guaranteed by the Government. 10 years old III. and if it is not possible to deliver such currency. the value of the currency at the time of the establishment of the obligation shall be the basis of payment. G. Retirement of Old Notes and Coins (i) The BSP may call in for replacement: notes. (iii) The MB shall continue to make periodic reports until the disturbances have disappeared or have been controlled. the action derived from the original obligation shall be held in the abeyance. Philippine currency of any denomination to any other denomination of such currency. shall deliver the notes and coins of the denominations which most nearly approximate those requested. The cost of living index increases by more than 10%. on demand and with no charge. or c. Causes of the rise or fall of such monetary aggregates. (ii) Whenever: a. F. perforated coins. the notes and coins shall cease to be a liability of the BSP and shall be demonitized. International Monetary Stabilization A. Weight 2. (ii) Monetary Board. (With respect to a-c) the MB shall submit reports and state whether such changes represent a threat to the stability of the economy or of its important sectors. Lapse of one year. clipped. mints or firms for such operations. Such notes called in for replacement shall remain legal tender for one year since the date of the call. Domestic Monetary Stabilization A. may be exchanged at par and without charge during the following year or for a period determined by the MB. then in the currency which is legal tender in the Philippines. International Reserves -Purpose: to maintain the international stability and convertibility of the Philippine Peso (adequate to meet foreseeable net demands on the BSP for foreign currencies. ForEx assets and liabilities of other banks operating in the Philippines (ii) 30 | P a g e . Designs 3. or Price Level (i) Whenever abnormal movements in the monetary aggregates. the MB shall: a) Take appropriate remedial measures b) Submit a report to the President and the Congress (also made public. In case an extraordinary inflation or deflation of the currency stipulated should supervene. and the nature and significance of any such changes. In the meantime. Fineness 3. Power to Define Terms -MB shall formulate definitions of monetary aggregates. If BSP is temporarily unable to do so. The payment of debts in money shall be made in the currency stipulated. Credit. unless there is an agreement to the contrary. increases or decreases by more than 15%. or in prices endanger the stability of the Philippine economy or important sectors.
ForEx assets and liabilities of all other persons and entities in the Philippines Composition of the International Reserves (of the BSP): (i) May include. Give particular consideration to the prospects of continued strength and convertibility of the currencies c. International Financial Institutions 5. Others authorized by the MB -the BSP may buy or sell any quantity of ForEx upon demand or request by any banking institution in the Philippines. Gold b. Provided. Temporarily suspend sales of exchange 2. BSP shall report to the Congress the origin of the liabilities and the manner it shall be paid. with notice to the Congress. Purchases and Sales of Gold -by the BSP subject to the regulations of MB -made in the national currency at the prevailing international market price as determined by the MB. treasuries and commercial banks abroad 3. Submit a report to the President and the Congress: 1. The MB shall: a. but not limited to: a. Require that any ForEx obtained by any person or entity in the Philippines be delivered to the BSP at the exchange rates. (Foreign currency deposits made under RA 6426. Operations in Gold and Foreign Exchange A. Foreign Asset Position of the Bangko Sentral -BSP shall maintain NET POSITIVE FOREIGN ASSET POSITION (Gross ForEx assets>Gross ForEx liabilities. additional action it deems necessary to restore international balance of payments in the Philippines (iii) The MB shall submit periodic reports until the threat to international monetary stability has disappeared. (not applicable to demands for foreign notes and coins) -exchange transactions shall be based on the NCBA. Demand and time deposits in central banks. -MB shall determine the procedure F. Foreign governments 4. D. D. and b. -If ForEx liabilities (in Pesos) > twice the ForEx assets (in Pesos). Action when the international stability of the peso is threatened: (i) Whenever: 1) The international reserve falls to a level the MB considers inadequate to meet prospective net demands. Government and its subdivisions and instrumentalities 3. Emergency Restrictions on Exchange Operations In order to: (i) Achieve the primary objective of the BSP (ii) Protect international reserves in the imminence or during and exchange crisis (iii) Give time to the MB and the Government to take measures to forestall or overcome such crisis 5 members of the MB and the President of the Philippines may: 1. Give particular consideration to the anticipated demands (iii) The MB shall issue regulations determining the other qualifications which the ForEx must meet in order to be included in the international reserves of the BSP. Documents and instruments customarily employed for the international transfer of funds 2. Nature and causes of the existing or imminent decline 2. But the margins between the effective exchange rates and the rates established may not exceed the margins for spot exchange by more than the additional costs involved in each type of transactions G. E. (iv) BSP is free to convert any asset in its international reserves into other assets as described in a. Banking institutions within the Philippines 2. Take appropriate remedial measures b. Endeavour to hold the ForEx resources of the BSP b. Measures proposed 4. Operations with Foreign Entities -MB may authorize the BSP to transact with foreign banks or entities. Foreign government securities 4. Cooperation required from other government agencies for the execution of policies of the MB (ii) If such actions fail. B. Exchange Rates -determined by the MB -MB shall determine the rates for buying and selling spot exchange and may establish deviation limits from the exchange rates -MB shall determine the rates for other types of ForEx transactions. exempt from this requirements) E. -with the following entities or persons only: 1.C. Regulation of Foreign Exchange Operations Of the Banks A. Purchases and Sales of ForEx -by the BSP VI. Assets in foreign currencies in the form of: 1. that such are freely convertible into gold or US dollars. Acquisition of Inconvertible Currencies -shall be avoided -may acquire more than the minimum balance necessary to cover current demands for such currencies only when considered by the MB to be in the national interest. (made within 60 days from the date of the occurrence. 3. Foreign notes and coins (ii) The MB shall: a. C. Means of Action -MB shall rely on its moral influence and the powers granted to it under the NCBA. Foreign Exchange Holdings of the Banks -MB may require the banks to sell to the BSP or to other banks all or part of their surplus holdings of ForEx to maintain international stability and 31 | P a g e . or 3) The international reserve is falling as a result of payments or remittances abroad which are contrary to the national welfare V. or 2) The international reserves appear to be imminent in falling to such level. -MB may authorize the BSP to pledge any gold or other assets as securities against loans which it receives from foreign entities. The BSP may also act as agent for such. Subject all gold and ForEx transactions to license 3. the MB shall propose to the President. Measures already taken or to be taken by the MB 3.
B. b. -MB must first ascertain that the bank is not insolvent and has assets to secure the advances. outstanding liabilities. Exchange risks not assumed by the BSP regarding non-spot exchange transaction E. Requirement of Balanced Currency Position -MB may require banks to maintain a balanced position between their assets and liabilities. Limited to 25% of the total deposits or deposit substitutes 32 | P a g e . the debtor cannot expand the total volume of its loan or investments without authorization from the MB b.convertibility of the Peso. Information on Exchange Operations: a.when necessary.*same* with maturities of not more than 360 days *same* and resulting from transactions related to the production or processing of agricultural. 70% of the appraised value of which equals or exceeds the amount of the loan granted. Such determination shall be applied in all banks uniformly. d. Whole banking community is threatened with the financial crisis -national/local emergency or imminent financial panic -directly threatening the monetary and banking stability The MB (vote of 5 members) authorize the BSP to grant the same. The BSP may inspect such declarations for verification. -discretion of MB -only a temporary remedial measure -must be on a fully secured basis B. Othe Exchange Profits and Losses -banks bear the risks of 1. cert of indebtedness. buy and sell bills. acceptances. duly insured and deposited. cannot be prevented. purchase or sale of readily saleable goods and products. Emergency Loans and Advances A. Loans To Banking And Other Financial Institutions A. c. Commercial Credits. Loans for Liquidity Purposes -BSP may extend loans and advances to banks for a period not exceeding 7 days without collateral to provide liquidity in times of need VIII. Utilized portions of advances in current amount covered by regular overdraft agreements related to commercial and production credits. mineral or industrial products. discount. B. Other commercial or other banking risks 3. When Granted a. Such transfers shall be at the established rates and may be required of certain currencies only. -5 votes of MB members must concur C.BSP may grant advances against the following for fixed periods not exceeding 180 days except number 4 (360 days): 1. A lien or mortgage on real prop. . Guiding Priciples -rediscounts. Advances. discounts. Banks shall report to the BSP the volume and composition of their purchases and sales of gold and ForEx each day. Production credits 5. VII. A pledge of the crops or products or 2. promissory notes and other credit instruments with maturities of not more than 180 days from the date of rediscount. animal. Commercial credits 4. While such loans are outstanding. The MB may also require other persons and entities to report to it all transactions as stated above. Nature of Emergency Loans or Advances -intended to assist a bank with serious liquidity problems arising from causes beyond the control of the management. Production Credits. They shall be granted reasonable time to adjust. and certified as to the amount and liquidity by the institution soliciting the advance 6. Authorized Types of Credit Operations -carried on by the BSP with banks a. Non-compliance with the terms of the ForEx documents and instruments they buy and sell. discounts. Must be secured by: 1. (ii) Advances made against the collateral in 6 and 7 may not exceed 80% of the current market value of the collateral C. Other credits. The importation. 2. MB shall prescribes for additional safeguards for the same.credit instruments not rediscountable under a and b may be rediscounted in accordance with BSP rules and regulations. loans and advances which the BSP is authorized to extend shall be used to influence the volume of credit consistent with the objective of price stability. -MB may determine the net assets and liabilities of banks and consider the bank’s networth. discount or acquisition and resulting from transactions related to: 1. Gold coins or bullions 2.BSP may rediscount. It shall prescribe the form such declarations must be made. BSP may provide funds from noninflationary sources. b. or 2. and must furnish requested additional info. Negotiable treasury bills. Regulation of Non-spot Exchange Transaction -MB may issue regulations on such transaction to restrain banks from speculating future fluctuations in ForEx D. The storing of non-perishable goods and products. exportation. notes and other negotiable obligations of the Govt maturing within 3 yrs from the date of the advance 7. -such powers shall be exercised only under special circumstances which warrant the same C. or their transportation within the Philippines. or other ratios it may deem appropriate. Limits -amount o loan must not exceed 50% of total deposits or deposit substitutes of a bank -shall be disbursed in 2 or more tranches D. First Tranche 1. Securities representing obligations of the BSP or of other domestic institutions of recognized solvency 3. Negotiable bonds issued by the Govt and its subdivisions and instrumentalities having maturities of not more tan 10 years from the date of the advance Notes: (i) The rediscounts. Bank with uncertain financial condition but is not insolvent -MB may authorize the BSP to extend such loans even during normal times to assist a bank in a precarious financial condition brought by unforeseen events or though foreseeable. loans and advances made in accordance with the above provisions may not be renewed or extended unless extraordinary circumstances fully justify such renewal or extension.
exceed 20 % of the average annual income of the borrower for the last 3 preceding years. bought or accepted as collateral by the BSP shall bear the endorsement of the bank. C. Provided that the advances be: 1. If MB determined that the emergency warrant a greater loan.-secured by govt securities and other unencumbered first class collaterals the MB may approve 2. receivership or liquidation of the bank. for the purpose of relending or purchasing of receivables and other obligations. available to the public in denominations of thousand pesos or more. G. Definition of Deposit Substitutes Section 95. E. through the issuance. Prior to the release of the first tranche. industrial and other X. Other Requirements -MB may prescribe additional requirements to obtain loan from the BSP. or acceptance of debt instruments for the borrower's own account. discounted. Overdraft -shall be eliminated within 5 consecutive banking days IX. Purchases and Sales of Government Securities -BSP may purchase and sell in open market: a. The Monetary Board shall determine what specific instruments shall be considered as deposit substitutes for the purposes of Section 94 of this Act: Provided. C. Endorsement -the documents rediscounted. regularly serviced. These instruments may include. Prohibitions. -acquired by the BSP through purchases or redemptions. If the BSP acquired any of such shares. That outstanding loans obtained or extended for development financing shall not be affected by the prohibition of this section. endorsement. buy and sell freely negotiable evidences of indebtedness of the Bangko Sentral . Issue and Negotiation of the BSP Obligations -BSP may issue. either directly or indirectly. certificates of assignment and similar instruments with recourse. and shall not participate in the ownership or management of any enterprise. evidences of indebtedness issued directly by the Govt and its subdivisions b. but need not be limited to. place. participations. such shall be disposed in a public bidding within one year from the date of consolidation of title by the BSP. the bank must submit to the BSP a resolution by its board authorizing the BSP to evaluate their assets certified by an external auditor to be good and available for collateral purposes. Reserve Requirements -banks are required to maintain reserves against their deposit liabilities -MB may also require all banks and/or quasi-banks to maintain reserves against funds held in trust and liabilities for deposit substitutes -proportional to the volume of its deposit liabilities and shall ordinarily take the form of a deposit in the BSP . -This provision shall not be applicable to acceptance as collateral of shares and their acquisition as a result f foreclosure proceeding. F.issuance of such certificates of indebtedness shall be made only in cases of extraordinary movement in price levels. Prohibitions Section 128. in order that a contraction in BSP credit may be effected promptly whenever the national monetary policy so requires XII. Provide acceptable security adequate (in the opinion of the MB) to supplement the assets tendered by the bank to collateralize the subsequent tranche. Shares as Collateral Section 128.Reserves against deposit substitutes shall be determined in the same manner as provided for reserve requirements against regular bank deposits -MB may exempt from the reserve requirements those with remaining maturities of 2 yrs or more and interbank borrowings -Maintenance of bank reserves is for the purpose of controlling the volume of money -BSP shall not pay interest unless required by the MB B. evidences of indebtedness issued by govt instrumentalities and guaranteed by the Govt -such evidences must be freely negotiable. — The Bangko Sentral shall not acquire shares of any kind or accept them as collateral. -MB may determine the interest rates. -principal stockholders must furnish an acceptable undertaking to indemnify and hold harmless from suit a conservator appointed by MB 3. other than deposits. Furnish the undertaking the same as in number 2 above 2. 33 | P a g e . and repurchase agreements. Definition of Deposit Substitutes. The Bangko Sentral shall not engage in development banking or financing: Provided. bankers acceptances. XI. and shall be immediately retired and cancelled. Bank Reserves A. -The MB shall fix the interest and rediscount rates (applied uniformly to banks of the same category) B. Interest and Rediscount -The BSP shall collect interest and other charges on loans it extends notwithstanding the closure. it may exceed 25% -must be secured by govt securities and other unencumbered first class collaterals the MB may approve. This shall apply prospectively. F. supra Open Market Operations For The Account Of The Bangko Sentral A. shall not. aggregately. Credit Terms A. Banks have the right to withdraw such collaterals upon payment of the debt and its interest D. maturities and other characteristics of said obligations of the BSP and may denominate the obligations in gold or foreign currencies. however. — The term "deposit substitutes" is defined as an alternative form of obtaining funds from the public. E. Composition of the BSP’s Portfolio Review of the BSP’s Portfolio -by the MB in relation to its future credit policy -shall consider whether a sufficiently large part of the portfolio consists of assets with early maturities. Provisional Advances to the National Government -may be made with or without interest by the BSP to finance expenditures authorized in its annual operations. That deposit substitutes of commercial. Repayment of Credits a. promissory notes. Second Tranche -vote of 5 MB members may authorize the release of a second tranche on condition that the principal stockholders of the institution: 1. -shall not be included among its assets. repaid within 3 months (may be extended up to the same period if allowed by the MB) from the date such advances are received by the National Govt 2. however. Principles of Open Market Operations -made exclusively in accordance with the objective of achieving price stability B. The collaterals must be withdrawn by the bank on maturity date or upon the liquidation of the obligation which they represent b.
— Whenever the Monetary Board considers it advisable to prevent or check an expansion of bank credit. non-financial companies for the limited purpose of financing their own needs or the needs of their agents or dealers shall not be covered by the provisions of Section 94 of this Act. Minimum Capital Ratios. H. J. or operations with. MB may limit or prohibit the making of new loans or investments and may require the net profits be assigned to surplus . or to specific categories thereof. -the appropriate clearing office shall be officially notified of banks with overdrawn balances. including interest thereon at a rate equivalent to one-tenth of one percent (1/10 of 1%) per day or the prevailing ninety-one-day treasury bill rate plus three percentage points. for part or the entire period of a strike or lockout affecting a bank or a quasi-bank or of a national emergency affecting operations of banks or quasibanks. G. Guiding Principle. the Monetary Board may.basis for check clearing and settlement of interbank balances . CHAPTER V FUNCTIONS AS BANKER AND FINANCIAL ADVISOR OF THE GOVERNMENT ARTICLE I . Portfolio Ceilings. ARTICLE IX COORDINATION OF CREDIT POLICIES BY GOVERNMENT INSTITUTIONS Section 109. Margin Requirements Against Letters of Credit.FUNCTIONS AS BANKER OF THE GOVERNMENT Section 110. its political subdivisions and instrumentalities. whichever is higher. The MB may also modify or set aside reserved deficiency penalties for rehabilitation program of a bank. Section 108. Representation with the International Monetary Fund. said Fund. negotiations and transactions with the International Monetary Fund and shall carry such accounts as may result from Philippine membership in. D. — The Bangko Sentral may be authorized by the Government to represent it in dealings. — In order to promote liquidity and solvency of the banking system. — The Monetary Board shall use the powers granted to it under this Act to ensure that the supply. Required Security Against Bank Loans. Section 111. its subdivisions and instrumentalities. Representation with Other Financial Institutions. The Monetary Board may apply such limits to the loans and investments of each bank or to specific categories thereof. Regulations on bank operations shall be applied to all banks of the same category uniformly and without discrimination. Section 105. — The Monetary Board may at any time prescribe minimum cash margins for the opening of letters of credit. — The Monetary Board may prescribe minimum ratios which the capital and surplus of the banks must bear to the volume of their assets. Section 112. make suggestions or recommendations to such corporations for the more effective coordination of their policies with those of the Bangko Sentral. The restrictions shall be applied to all banks uniformly and without discrimination. Section 107. not later than the next clearing day. . — Government-owned corporations which perform banking or credit functions shall coordinate their general credit policies with those of the Monetary Board.any bank which incurs on overdrawing in its deposit account with the Bangko Sentral shall fully cover said overdraft.calculated daily on the basis of the amount of the institution's reserves and the amount of its liability accounts against which reserves are required to be maintained -holidays or non-banking days: the reserve position of the day immediately preceding the same shall apply -principal office + branches + agencies =SINGLE UNIT Reserve Deficiencies -if reserve position is below the minimum required: shall pay the Bangko Sentral one-tenth of one percent (1/10 of 1%) per day on the amount of the deficiency or the prevailing ninety-one-day treasury bill rate plus three percentage points. the Board may place an upper limit on the amount of loans and investments which the banks may hold. Coordination of Credit Policies. E. Interbank Settlement -BSP shall establish facilities for interbank clearing under prescribed rules and regulations of the MB. negotiations or transactions with the International Bank for Reconstruction and Development and with other foreign or international 34 | P a g e . and may relate the size of the required margin to the nature of the transaction to be financed. the Monetary Board may issue such regulations as it may deem necessary with respect to the maximum permissible maturities of the loans and investments which the banks may make. F. whichever is higher. and may alter said ratios whenever it deems necessary. whenever it deems it expedient. In no case shall the Monetary Board establish limits which are below the value of the loans or investments of the banks on the date on which they are notified of such restrictions. I. or may place a limit on the rate of increase of such assets within specified periods of time. — The Bangko Sentral shall represent the Government in all dealings. — The Bangko Sentral shall act as a banker of the Government. Toward this end.settlement of clearing balances shall not be effected for any account which continues to be overdrawn for five (5) consecutive banking days until such time as the overdrawing is fully covered or otherwise converted into an emergency loan or advance. Section 106. Required Reserves Against Peso Deposit -fixed by MB -may alter the minimum reserve ratios Required Reserves Against Foreign Currency Deposits -fixed by MB Reserves against Unused Balances of Overdraft Lines -MB may establish minimum reserve requirements Increase in Reserve Requirements -increase must be gradual -shall not exceed four percentage points in any thirty-day period -banks shall be notified in advance as to when it will take effect Computation on Reserves . Selective Regulation of Bank Operations [just for now] Section 104. and the kind and amount of security to be required against the various types of credit operations of the banks. -excess may offset deficiencies (of the same week) -MB may deny such privilege in case of abuse -if a bank chronically has a reserve deficiency. Designation of Bangko Sentral as Banker of the Government.MB may modify or set aside the reserve deficiency penalties provided in this section. XIII. BSP may charge fees. -Deposit reserves. availability and cost of money are in accord with the needs of the Philippine economy and that bank credit is not granted for speculative purposes prejudicial to the national interests. Exemption from attachment -deposits maintained by banks with the BSP as part of their reserve requirements shall be exempted to satisfy a claim of any party except the Government.C.
the Deputy Governor designated by the Governor of the Bangko Sentral shall be an ex officio member of the National Economic and Development Authority Board. — In order to assure effective coordination between the economic. — The Securities Stabilization Fund shall retain net profits which it may make on its operations. B. Section 124. — In the performance of its functions as fiscal agent. — The Bangko Sentral shall be exempt for a period of five (5) years from the approval of this Act from all national. — Before undertaking any credit operation abroad. 265 as of the effective date of this Act. charges and assessments. provincial. with only minimum working balances to be held by government-owned banks and such other banks incorporated in the Philippines as the Monetary Board may designate. The Securities Stabilization Fund. Tax Exemptions. but shall not endeavor to alter movements of the market resulting from basic changes in the pattern or level of interest rates. Profits and Losses of the Fund. as a general policy. may be made through the Bangko Sentral. — The Bangko Sentral may charge equitable rates. or its political subdivisions or instrumentalities. Fiscal Operations. their cash balances should be deposited with the Bangko Sentral. The opinion of the Monetary Board shall be based on the gold and foreign exchange resources and obligations of the nation and on the effects of the proposed operation on the balance of payments and on monetary aggregates. of bonds and other evidences of indebtedness issued or fully guaranteed by the Government. — There shall be established a "Securities Stabilization Fund" which shall be administered by the Bangko Sentral for the account of the Government. ARTICLE II THE MARKETING AND STABILIZATION OF SECURITIES FOR THE ACCOUNT OF THE GOVERNMENT A. regardless of whether said profits arise from capital gains or from interest earnings. ARTICLE III FUNCTIONS AS FINANCIAL ADVISOR OF THE GOVERNMENT Section 123. Section 115. Section 122. its political subdivisions or instrumentalities. and the balance of payments. its political subdivisions and instrumentalities as well as of government-owned or controlled corporations and. contemplates borrowing within the Philippines. Issue of Government Obligations. and for the account of. Section 116. — The Bangko Sentral may place the securities to which the preceding section refers through direct sale to financial institutions and the public. Official Deposits. Whenever the Government. the price level. fees. however. the Government or its respective subdivisions or instrumentality. The Fund shall correspondingly bear any net losses which it may incur. That for fiscal operations in foreign countries. The Monetary Board shall use the resources of the Fund to prevent. as well as on deposits of banks with the Bangko Sentral. BANGKO SENTRAL SUPPORT OF THE GOVERNMENT SECURITIES MARKET Section 120. Section 114. Remuneration for Services. in writing. the prior opinion of the Monetary Board shall likewise be requested in order that the Board may render an opinion on the probable effects of the proposed operation on monetary aggregates. but may intervene therein for the sole purpose of regulating their operations in the placing of government securities. shall reimburse the Bangko Sentral for the expenses incurred in the placing of the aforesaid securities. THE ISSUE AND PLACING OF GOVERNMENT SECURITIES Section 117. — Subject to Section 132 of this Act. the Government. or moderate. — The servicing and redemption of the public debt shall also be effected through the Bangko Sentral. financial and fiscal policies of the Government and the monetary. Other Banks as Agents of the Bangko Sentral. negotiations or transactions. Section 118. The Bangko Sentral shall not be a member of any stock exchange or syndicate. Section 113. through the Secretary of Finance. subject to such rules and regulations as the Board may prescribe: Provided. The purpose of these operations shall be to increase the liquidity and stabilize the value of said securities in order thereby to promote investment in government obligations.financial institutions or agencies. of the Monetary Board on the monetary implications of the contemplated action. Such opinions must similarly be requested by all political subdivisions and instrumentalities of the Government before any credit operation abroad is undertaken by them. Financial Advice on Official Credit Operations. the Bangko Sentral may engage the services of foreign banking and financial institutions. — The Bangko Sentral shall open a general cash account for the Treasurer of the Philippines. which may act as agent of. as the case may be: Provided. Methods of Placing Government Securities. municipal and city taxes. CHAPTER VI PRIVILEGES AND PROHIBITIONS ARTICLE I PRIVILEGES Section 125. — The Bangko Sentral shall be the official depository of the Government. Servicing and Redemption of the Public Debt. Section 121. Resources of the Securities Stabilization Fund. The Monetary Board shall issue such regulations as may be necessary to implement the provisions of this section. sharp fluctuations in the quotations of said government obligations. designate any of his other financial advisors to jointly represent the Government in such dealings. Section 119. credit and exchange policies of the Bangko Sentral. the Bangko Sentral may engage the services of other governmentowned and controlled banks and of other domestic banks for operations in localities at home or abroad in which the Bangko Sentral does not have offices or agencies adequately equipped to perform said operations: Provided. shall request the opinion. chan robles virtual law library The operations of the Securities Stabilization Fund shall consist of purchases and sales. however. in the open market. That such banks may hold deposits of the political subdivisions and instrumentalities of the Government beyond their minimum working balances whenever such subdivisions or instrumentalities have outstanding loans with said banks. — The issue of securities representing obligations of the Government. its political subdivisions and instrumentalities. the resources of the Securities Stabilization Fund shall come from the balance of the fund as held by the Central Bank under Republic Act No. 35 | P a g e . commissions or fees for services which it renders to the Government. That the Bangko Sentral shall not guarantee the placement of said securities. The President may. The Government. or any of its political subdivisions or instrumentalities. Representation on the National Economic and Development Authority. The Bangko Sentral may pay interest on deposits of the Government or of its political subdivisions and instrumentalities. Transfers of funds from this account to other accounts shall be made only upon order of the Treasurer of the Philippines. and shall not subscribe to their issue except to replace its maturing holdings of securities with the same type as the maturing securities. however. in which the liquid funds of the Government shall be deposited.
charges and assessments for which the Bangko Sentral itself would otherwise be liable. keeping and storing the GDI ■ To the satisfaction of the entrustee's indebtedness to the entruster The Entrustee shall receive any surpus but shall be liable for any deficiency to the Entruster G. as well as to all contracts. ARTICLE II PROHIBITIONS Section 128. Receive the proceeds in trust for the entruster and turnover the same to the entruster to the extent of the amount owing the entruster or as appears on the trust receipt. — The Bangko Sentral shall not acquire shares of any kind or accept them as collateral. it shall NOT extinguish his obligation to teh entruster for the value thereof J. The Entruster may be the purchaser. That no qualification requirements for positions in the Bangko Sentral shall be imposed other than those set by the Monetary Board: Provided. charges. shall not engage directly or indirectly in partisan activities or take part in any election except to vote. Rights of the Entruster 1. from any and all taxes if the payment of such taxes has been assumed by the Bangko Sentral. Entruster NOT Responsible on Sale by Entrustee The Entruster. Keep said goods adn proceeds thereof whether in money or whatever form. may without need of obtaining prior approval from any other government agency. and 5. theft. both as to principal and interest. H. That said exemptions shall apply only to such taxes. The Bangko Sentral shall not engage in development banking or financing: Provided. either directly or indirectly. except as to those which are policy-determining. sell the GDI at a PUBLIC or PRIVATE SALE. and Give notice to the Entrustee on or after default of the intention to SELL and may. further. The Entruster shall be entitled: To the proceed of the sale of GDI To the return of the GDI incase of non-sale\ To the enforcemet of all rights conferred on him in the trust receipt provided such are not contrary to law The Entruster may cancel the trust and take possession of the GDI OR of the proceeds at any time upon default or failure to comply with the terms and conditions or 2. Section 126. Prohibitions. or assessments payable by persons or other entities doing business with the Bangko Sentral: Provided. Validity of Entruster's Security Interest as Against Creditors The Entruster's security interest in GDI pursuant to the written terms of a trust receipt shall be VALID against all creditors of the Entrustee for the duratioon fo the trust receipt agreement L. Officers and employees of the Bangko Sentral. Rights of the Purchaser for Value and Good Faith If the entrustee has the right to sell then a purchaser of value and good faith acquires the GDI free from the entruster's security interest K. including all members of the Monetary Board. and the importation of all equipment needed for bank note production. fees. fees. and of gold and other metals to be used for purposes authorized under this Act. however. assessments and charges related to such importation or exportation. and shall not apply to taxes. the importation and exportation by the Bangko Sentral of notes and coins. Obligations of the Entrustee The entrustee shall: 1. and shall not participate in the ownership or management of any enterprise. however. 3. or ■ sent by post-paid ordinary mail to the the entrustee's last known bsiness address The proceeds of such sales shall be applied: ■ To the payment of the expenses thereof ■ To the payment of the expenses of re-taking. That outstanding loans obtained or extended for development financing shall not be affected by the prohibition of this section. Observe all other terms and conditions of the trust receipt not contrary to the provisions of the law. holding security interest or has given the entrustee the liberty to sell or dispose of the GDI. Notice of Sale shall be deemed sufficient if given in writing and either: ■ served personally to the entrustee. That. 36 | P a g e . in accordance with Sections 15(c) and 17(d) of this Act. the Monetary Board or Governor. 2. The loss of the GDI pending their disposition. respectively. shall be made only according to the Civil Service Law and regulations: Provided. agreement. deeds. receipts. NOT LESS THAN 5 DAYS. — The provision of any general or special law to the contrary notwithstanding. documents and transactions related to the conduct of the business of the Bangko Sentral: Provided. or other casualties. after serving such. expenditures. whether or not the entrustee is at fault or negligent. I. Exemption from Customs Duties. primarily confidential or highly technical in nature. profits and income of the Bangko Sentral.The exemption authorized in the preceding paragraph of this section shall apply to all property of the Bangko Sentral. 4. Liability of Entrustee for Loss Risk of Loss shall be borne by the Entrustee. Applicability of the Civil Service Law. metal refining and other security printing operations shall be fully exempt from all customs duties and consular fees and from all other taxes. minting of coins. separate and capable of identification as property of the entruster. Insure the GOODS for their total value against loss from fire. is NOT responsible as a principal or as a vendor in a sale or contract to sell made by the entrustee. to the resources. Violation of the Trust Receipts Law (Malum Prohibitum--intent is immaterial) When the Entrustee fails to: turn over the proceeds of the sale of the goods Chapter 9 (incomplete) F. That foreign loans and other obligations of the Bangko Sentral shall be exempt. pilferage. further. — Appointments in the Bangko Sentral. Section 127. Hold the GDI and shall dispose of them in accordance with the terms and conditions of the trust receipt. appoint personnel in the Bangko Sentral whose services are deemed necessary in order not to unduly disrupt the operations of the Bangko Sentral.
The Trust Receipts Law punishes dishonesty and abuse of confidence in handling of money or goods to the prejudice of pubic order. F. for the goods received in trust is evidence of conversion or misappropriation--constitutes estafa. each insured bank shall file with the Corp. this rule shall not apply if such bank shall deposit security satisfactory to PDIC for payment upon final determination of the issue (ii) VII. but to the public interest. it shall include such liabilities in its assessment base. w/o prejudice to the civil liabilities Reason: Corporation and other juridical entities CANNOT be put into jail. CTD and/or cover of checkbook for demand deposit/NOW accounts stating. whichever is applicable. and stating that the bank has failed or refused to pay. funds held as trustee. provided it shall not be later than 60 days after filing the certified statement setting forth the amount of assessment. administrator. return the goods covered by the trust receipt if the goods are not sold (iv) Failure to account. "w/o prejudice to the civil liabilities.or other officials or persons therein responsible for the offense. Any insured bank which fails to pay any certified statement may be compelled to do so by mandatory injunction or other appropriate remedy . the assessment base shall be the amount of the liability of he bank for deposits without any deduction for indebtedness of depositors. D. without being limited to. Termination PDIC shall not terminate the insured status of any bank which continues to operate or receive deposits Should any IB fail or refuse to pay any assessment required. Refund and Credit PDIC may: 1. Trust Funds means funds held by an insured bank in a fiduciary capacity and includes. Certified Statement of Assessment Base and Assessment Due (i) On or before July 31 of each year. employees. C. upon demand. inter alia. Mere failure to deliver the proceeds or return the goods constitutes a criminal offense the causes prejudice not only to the creditors. 31 and shall pay the amount of the semiannual assessment for the period ending in the following June 30 which it is required to certify. in an amount not to exceed P10. The assessment payments required from the insured banks shall be made in such manner as the Board shall prescribe. file a case for collection without prejudice to the imposition of administrative sanctions E. Each bank which becomes an insured bank shall not be required to file any certified statement for the semiannual period in which it becomes as insured bank. such funds shall be similarly insured to the FB according to the trust estates represented the amount so held by other IBs on deposit shall not for the purpose of any certified statement be considered to be a deposit liability of the FB.000 for each trust estate. 1 (b) of the RPC or RA 3815 If vilaotion is committed by corporations. Penalty Punished under Art. associations. and when deposited by the fiduciary bank in another IB. Assessment A. a certified statement showing for the 6 months ending on the preceding June 30 the amount of the assessment base and the amount of the semiannual assessment due to PDIC for the period ending on the following Dec. 31. Payment of Dividends and/or Interests no insured bank shall pay any dividend on its capital stock or interest on its capital notes or debentures or distribute any of its capital assets while it remains in default in the payment of any assessment due if such default is due to a dispute between the insured bank and PDIC over the amount of such assessment. PDIC may. at its discretion. each such bank shall comply with (b) above except that the semiannual assessment base for its first certified statement shall be the assessment base of the bank as of the close of business on the preceding June 30 or Dec. On the expiration of such period. guardian. If such bank has assumed the liabilities for deposits of another bank or banks. (v) (vi) (vii) M. the PIF b. On or before Jan. 315 par. partnerships." Chapter 10 (incomplete) G. officers. assessment collections. Duty to Indicate Insurance on Deposits All banks shall indicate the coverage of the PDIC in each passbook. or other juridical entities. the maximum amount of insurance. and should not correct such failure of refusal within 30 days after written notice has been given to an officer of the bank. VI. Deposit Insurance Fund the permanent insurance fund shall be P3 billion the DIF shall be the capital account of PDIC and shall principally consist of the ff: a. subject to the charges (iii) 37 | P a g e . 31. or agent shall be insured like other forms of deposits. credit such excess toward the payment of the assessment next becoming due from such bank and upon succeeding assessments until the credit is exhausted. refund to an IB any payment of assessment in excess of the amount due 2. 31 of each year. each insured bank shall file with the PDIC a similar certified statement for the 6 months ending on the preceding Dec. semi-assessment rate for each insured bank shall be in the amount of the product of ½ the assessment rate multiplied by the assessment base but in no case shall it be less than P250. But they are LIABLE for the civil liabilities because of the clause. but shall be considered to be a deposit liability of the IB B. Assessment Rate shall be determined by the Board of Directors shall not exceed 1/5 of 1% per annum. determined in accordance with (a) above which shall contain or be verified by a written declaration that it is made under the penalties of perjury. determined in accordance with (a) above. penalty shall be imposed on the directors. executor.
or acted upon by such personnel XIII. Powers 38 | P a g e . Borrowing from Banks shall be prohibited only with respect to the particular institution in which they are assigned. the operating costs and expenses of the Corp. insurance cover. or to any person authorized by either of them in writing to receive such information - XI. it is appropriate to make such designation to protect the interest of PDIC. or any other action to which such director etc. and every 5 years thereafter. is made a party by reason of or in connection with the exercise of authority or performance of functions and duties does not apply against actions initiated by PDIC against such director etc. officers. as well as the duty to gather. or transferred to another agency. assessment rate and assessment base. Prohibitions on PDIC Personnel being an officer. net of recoverable amounts from applicable assets and collaterals. Dealings by PDIC Personnel with Banks A. the net insurance and financial assistance losses sustained in said calendar year In a suit. 2. The order may also include the imposition of fines What may be violated: 1. retained earnings PDIC may. the President of the Corp. director. within 2 years from the passage of the PDIC Law. processed. criminal. reserves for insurance and financial assistance losses d. director. authorized by law. any agency of govt. rule or instruction issued by PDIC any written condition imposed in connection with any transaction with or granted by PDIC personnel are likewise prohibited from borrowing from any bank or banking institution during the time that a transaction of such institution with PDIC is being evaluated. or other agency charged by law with the duty to take charge of the assets and liabilities of a bank which has been forbidden fro doing business in the Phil. 3. Applies also to those who resigned. whether or not such bank shall have filed any such certified statement and whether or not suit shall have been brought to compel the bank to file any such statement No action or proceeding shall be brought for recovery of any assessment due of for the recovery of any amount paid in excess of the amount due. Such expenses and charges are: a. preserve and administer such assets and liabilities for the benefit of the depositors and creditors of dais bank. and to continue into liquidation whenever authorized under the law. Legal Assistance - - VIII. Designation as Directors and Officers of Banks Members of the BoD and personnel of PDIC may become directors and officers of any bank or banking institution and of any entity related to such institution in connection with financial assistance extended by PDIC to such institution and when. and thereafter make the necessary recommendation to Congress All assessment collections and income from operations after expenses and charges shall be added to the DIF. conduct a study on the need to adjust the amount of the PIF. PDIC is entitled to recover from any insured bank the amount of any unpaid assessment lawfully payable by such insured bank. information relating to the condition or business of any bank shall not apply to the giving of information to the BoD. employee or stockholder. Unsound Practice In case of commission of unsafe or unsound practices by an IB or its officers. during the calendar year c. Receivership A. or provide legal assistance to its directors. directly or indirectly. Appointment whenever it shall be appropriate for the MB of the BSP to appoint a receiver of any banking institution pursuant to existing laws. B. the MB shall give prior notice and appoint PDIC as receiver “receiver” includes a receiver. in connection with acts done during their tenure or employment with PDIC XII. or is likely to seriously weaken the condition of the bank or otherwise seriously prejudice the interests of its depositors and the Corp. any provision of the PDIC Law any order. additions to reserve to provide for insurance and financial assistance losses. commission. in the opinion of the Board. and require the bank or its directors or agents concerned to correct the practices or violations within 45 days) if the practice or violation is likely to cause insolvency or substantial dissipation of assets or earnings of the bank. the period to take corrective action shall not be more than 15 days. for the calendar year b. consultant. Congress. except as provided by law or under court order. employees. retired.- - - - c. the BoD shall motu proprio institute corrective action which it deems necessary (BoD may issue a cease-and-desist order. and report of conditions made to the BSP or its appropriate supervising dept. unless it has been brought within 5 years after the right accrued for which the claim is made X. the Board of Directors shall: submit the report of the examination to the MB to secure corrective action thereon PDIC shall underwrite or advance litigation costs and expenses. or are conducting an examination - if no such action is taken within 45 days from submission of the report. administrative. and the BSP shall also have access to such reports made by and to PDIC Each IB shall keep and maintain a true and accurate record or statement of its daily deposit transactions consistent with the standards set by the BSP and PDIC B. person... Reports by Insured Banks each IB shall make to PDIC reports of conditions in such form and at such times as the BoD may require such reports to be published in such manner not inconsistent with any applicable law as it may direct PDIC shall have access to reports of examination made by.. or agents in connection with any civil. and to dispose of the assets and to wind up the affairs of such bank - IX. of any bank or banking institution except as otherwise provided by law receiving any gift or thing of value from any officer. or employee of any bank revealing in any manner.
pledge. Any modification or reduction shall apply only to unpaid interest exercise such other powers as are inherent and necessary for the effective discharge of the duties of PDIC as receiver • 2. or to redeem foreclosed assets of the closed bank. such fees shall be paid as administrative expenses during the distribution of the assets of the closed bank. D. 4. payment of all docket and other court fees shall be deferred until the action is terminated with finality. modify. compromise or restructure the terms and conditions of such loans or claims as ma be deemed advantageous to the interest of the creditors and claimants of the bank hire or retain private counsels as ma be necessary borrow or obtain a loan. 5. PDIC may require proof of claims to be filed before paying the insured deposits. B. 3. as well as all allowances. PDIC is empowered to: 1. or mortgage. Effective immediately upon takeover as receiver of such bank: the powers. If an account is held by a juridical person jointly with an individual. C.000) A joint account shall be insured separately from any individually owned deposit account. unless a different sharing is stipulated in the document of deposit. Whenever an insured bank shall have been closed by the Monetary Board.000 No owner/holder of any negotiable certificate of deposit shall be recognized as a depositor entitled to the rights provided unless his name is registered in the books of the issuing bank. when necessary to preserve or prevent dissipation of the assets. 3. Proof of Claims 1. execution. Reasonable liquidation expenses After payment of all liabilities and claims against closed bank. manage and administer the affairs of the closed bank. The aggregate of the interests of each co-owner over several joint accounts shall likewise not exceed 250. Suits filed by PDIC (i) (ii) In all cases filed by PDIC as receiver for the recovery of or involving any asset of the closed bank. ii. levy or any other court processes In addition to the powers of a receiver pursuant to existing laws. and stockholders of such bank are suspended the relevant provisions of the Articles of Incorporation and By-laws of the closed bank are likewise suspended the assets shall be deemed in custodia legis in the hands of the receiver from the time the bank is placed under receivership. officers. - XIV. Settlement Period and Penalties in Case of Failure to Settle 39 | P a g e . 8. 5. Payment of Insured Deposits A. Before any distribution of assets of the closed bank. bring suit to enforce liabilities to or recoveries of the closed bank appoint and hire persons and entities of recognized competence in banking or finance as its deputies and assistants. Not to exceed two hundred fifty thousand (250. remunerations. PDIC shall pay any surplus dividends at the legal rate of interest from the date of takeover to the date of distribution. 7. to perform such powers and functions of PDIC as receiver and liquidator of the closed bank suspend or terminate the employment of officers and employees of the bank payment of separation pay or benefits shall be made only after the bank has been placed under liquidation pay accrued utilities. PDIC shall charge against such assets: • Reasonable receivership expenses (subject to approval of court) C. or encumber any asset of the bank. 4. Manner of Payment 1. functions and duties. payment of the insured deposits on such closed banks shall be made by the PDIC by: i. It may require final determination by the courts if not satisfied to the viability of the claim. Maximum insured deposits of Joint accounts shall be divided into as many equal shares as there are co-owners. Any such fees shall constitute as a first lien on any judgment in favor of the closed bank or in case of unfavorable judgment. 9. to creditors and claimants in accordance with legal priority before distribution to the shareholders. its assets shall not be subject to attachment. Distribution of Assets 1. 7. 6. 6. 2. it is presumed that the maximum insured deposit belongs to the juridical person. or to minimize losses to the depositors and creditors if the stipulated interest on deposits is unusually high compared with the prevailing applicable interest rate. rentals and salaries of personnel of the bank for a period not exceeding 3 months from available funds of the bank collect loans and other claims of the bank. garnishment. 2. 2. and for the purpose. PDIC as receiver may exercise such powers which may include a reduction of the interest rate to a reasonable rate. it shall control. Cash Transferred deposit Transfer deposit – deposit in an insured bank made available to a depositor by PDIC as payment of insured deposit of such depositor in a closed bank.As receiver. and perquisites of the directors.
PDCI may make loans. Failure to settle claim within six months from the date of filing claim due to grave abuse of discretion. merging or consolidating with or acquiring the assets of an insured bank in order to prevent such closing or of a closed insured bank in order to restore it to normal operation 40 | P a g e . In order to prevent an insured bank from closing. Upon payment to such depositor. BSP PNB Any bank designated as fiscal agent or depository of RP E. or make deposits in such insured bank. Investment by PDIC A. And payment of a transferred deposit by the new bank in which a transferred deposit has been made available shall discharge PDIC and the new bank. • Or does not enforce his claim within two years after the filing a claim Unless otherwise waived by PDIC. Prescription All rights of a depositor with respect to the insured deposit shall be barred if: B. or any liability of such depositor to the closed bank or to its receiver. assume liability. 2. F. bad faith. • He fails to file a claim within two years from actual take-over of the closed bank by the receiver. whose name or interest as such owner is not disclosed on the records of a closed bank. Period shall not apply if the validity of the claim depends on resolution of issues of fact or law by another office. ii. gross negligence. 2. Extension of Loans A. the operations of such bank is essential to provide adequate banking service in the community or maintain financial stability in the economy. the resumption of the operations of said bank is vital to the interest of the community Severe financial climate exists G. Withholding of Payment PDIC may withhold payment of such portions of the insured deposit of any depositor in a closed bank as may be required to provide for the payment of any liability of such depositor as a stockholder of the closed bank. 1. It shall not sell or purchase any such obligation for its own account or in its own right and interest in any one time aggregating in excess of 100. D. Notice 1. b. PDIC shall be discharged from any liability. PDIC may provide any corporation acquiring control of. Such subrogation shall include the right to receive the same dividends from the proceeds of the assets of the closed bank. All rights of the depositor subrogated to PDIC shall thereupon revert back to the depositor. Money of the PDIC not otherwise employed shall be invested in obligations of the Republic of the Philippines or by obligations guaranteed by it. The banking or checking account of PDIC shall be kept in: 2. purchase the assets. upon such conditions as the Board of Directors may prescribe. XVI. XV. which is not offset against a claim due from such bank. But such depositor shall retain his claim for any uninsured portion of his deposit. Such power may also be exercised in case of a closed insured bank if: i. 3.1. pending the determination and payment of such liability by such depositor or any other liable therefore. Reopening of said bank is subject to the approval of the Monetary Board. 2. 4. Recognition of Owner PDIC cannot recognize as the owner any person. employees. a. H. or malice shall subject the directors. Insurance Commissioner may waive the requirement of his approval as he may determine. Discharge Payment of an insured deposit shall discharge PDIC. PDIC shall publish the notice once a week for at least 3 consecutive weeks in a newspaper of general circulation or newspaper circulated in the community where the closed bank or its branches are located. or officers of PDIC Responsible for the delay to imprisonment from six months to one year. PDIC shall commence the determination of insured deposits due to depositors of the closed bank upon its actual takeover of the closed bank. PDIC shall be subrogated to all of the rights of the depositor to the extent of such payment. 1.000 without approval of the Insurance Commissioner. as part owner of any portion of a deposit appearing on the records of the closed bank under a name other than that of the claimant. B. 3.
PDIC shall annually make a report of its operations to the Congress as soon s practicable after Jan 1 Financial transactions shall be audited by the COA in accordance with principles and processes and procedures applicable to commercial corporate transactions. officers. PDIC shall submit a report to MB A. BoD may exempt from this requirement advertisements not relating to deposits. Insured banks shall place signs in all place of business and in its statements that its deposits are insured by PDIC. officres BoD shall determine the bonding requirement referring to directors. PDIC shall provide appropriate reserves for the redemption of said obligation. the PDIC has insufficient funds to attain its purpose. losses arising from discharge of duties. defalcation.a. PDIC may not purchase the voting or common stock of an insured bank but it can enter into or force agreements that it determines to be necessary to protect its financial interests. B. a. Within 60 days from date of assistance. Merge or consolidate with an uninsured bank Assume liability to pay any deposits made in noninsured bank Transfer assets to any noninsured bank F. PDIC is authorized to issue bonds. Such loans granted by the BSP shall be consistent with monetary policy. or arrange credit lines or other credit accommodations from any bank designated as depository or fiscal agent by the RP. and all other papers belonging to PDIC pertaining to its financial transactions. Directors. XVII. anfd employees of an insured bank If insured bank refuse to comply with any such requirement. Miscellaneous A. Officers and employees of Insured banks 41 | P a g e . PDIC shall determine the actual payoff and liquidation thereof will be more expensive than the exercise of its power prior to exercise of its powers. b. E. a. Signs a. PDIC may require an insured bank to provide protection and indemnity against burglary. BoD shall determine interest rate and other requirements of such obligation. Borrowings A. Financial assistance may take the form of equity or quasi-equity of insured banks as may be deemed necessary by the Board of Directors with concurrence by the MB. The corporation shall dispose of such equity as soon as practicable. XX. debentures. b. PDIC may add the cost thereof to the assessment otherwise payable to such bank. C. B. Likelihood of a sudden unexpected collapse of confidence in a significant portion of the banking or financial system with potentially large real economic effects. PDIC shall be authorized to borrow money. XIX. b. obtain loans. XVII. with systemic consequences with a probable failure or closure. depriving other banks of funds leading to a general shutdown of normal clearing and settlement activity. files. records. accounts. Issuance of Bonds With approval of the President of RP. “systemic risk” – possibility that failure of one bank to settle net transactions with other banks will trigger a chain reaction. Except as to matters relating to the Function of the PDIC which shall be subject to visitorial audit only. as may be necessary to prevent its failure or closure. by particular acts of its directors. 3. PDIC is authorized to borrow from the BSP on such terms as may be agreed by them. C. C. Protection Against Losses a. B. Audit shall be conducted in places where the accounts of the corporation are normally kept. and other obligations necessary fro the purpose of settlement of insured deposits in closed banks as well as for financial assistance. reports. COA shall have access to all books. c. employees. the interest rate thereon shall not exceed the treasury bill rate. D. – subject to the approval of the Monetary Board. 2. Merger or consolidation of insured banks Upon consent of PDIC. banks may: 1. PDIC may grant financial assistance to insured banks. Reports and Audit D. When in the Judgment of the Board of Directors.
assignment or delivery Unlawful Activities i. Those administering or dealing in currency. non-banks. commodities. rule. XXII. Refusal to allow PDIC to takeover a closed bank placed under its receivership Refusal to turnover or destroying or tampering bank records Fraudulent disposal . Willful failure or refusal to comply with. Related to any unlawful activity or offense g. financial derivatives or other monetary instruments or property supervised by the SEC Covered and Suspicious transaction i. Penalty for violation of this prohibition: the bank will be subject to penalty of not more than 100 for every day of violation. quasi-banks. the exemption of garnishment.Money Laundering ( RA 9160) I. advisor.000 in one banking day ii. closed-end investment company. salesmen. common trust fund and preneed companies v. No person shall be a director. trading orders. against a bank or any of its directors.a. rules. B. bonds. FINES 42 | P a g e . 6. property. consultant iv. 2. Coins/currency of legal tender of the Phil. 4. b. commercial papers. Client is not properly identified c. Insurance companies and all other institutions regulated by the insurance commission iii. or preceding a closure order issued by the MB for the purpose of availing of the maximum deposit insurance coverage. or violation.000. or violation of any provision of eh PDIC Law. iii. Chap 11 – Anti.000 or both. CONCEPTS A. Ensure that the Philippines shall not be used as a money laundering site for the proceeds of any unlawful activity. custodial receipts. liability of the closed bank under the receivership of the PDIC Violation. Other similar instruments when title passes to another by endorsement. Splitting deposits – deposit accounts with an outstanding balance of more than the statutory maximum amount of insured deposit maintained under the name of a person is broken down and transferred into two or more accounts in the names of persons who have no beneficial ownership on transferred deposits in their names within 30 days preceding or during a bank declared holiday. Structured transactions to avoid being the subject of reporting required under the act e.000-2. D. remittance. Kidnapping for ransom under Art. In no case such fine exceed 3times the amount of the damages or costs caused by the transaction for each day that the violation subsist. Transaction in cash or monetary instrument exceeding P500. No legal or trade obligation. Or any country ii. officers. or causing a person to violate. Securities or negotiable instruments. To protect and preserve the integrity and confidentiality of bank accounts ii. 8. Suspicious transactions regardless of the amount a. officer. or execution provided under the PDIC Law and the NCBA 7. deposit certificates. Drafts. Banks. or regulation issued by PDIC. Criminal Penalties A. Cooperation in transnational investigation and prosecution of persons involved in money laundering Covered Institutions i.000. Policies i. purpose or economic justification b. Any transaction that is similar to any of the foregoing Monetary instrument i. trust entities ad all other institutions regulated by the BSP ii. Amount is not commensurate with the client’s financial capacity d. levy attachment. money payments. or employee of an insured bank who has been convicted of any criminal offense involving dishonesty of breach of trust. Punishable by prision mayor or a fine of 50. confirmation of sale money market instruments iv. A. employee or agent of bank who: 1. and regulations Willful making of false statement or entry in any bank report or document Submission of false material information in connection with or in relation to any financial assistance extended to the bank Splitting of deposits or creation of fictitious loans or deposit accounts i. any director. omission. brokers. Those which deviate from the profile of the client or past transactions f. and transfer companies vi. BOD is authorized to impose administrative fines for violation of any other instruction. transfer or concealment of any asset. 9. Mutual funds. Securities. E.267 of RPC 3. Foreign exchange corporations. XXI. checks and notes iii. transaction tickets. officer. C. investment house and other entities managing securities or service as agent. 5. 10. Willful refusal to submit reports Unjustified refusal to permit examination and audit of records as required by law. trust certificates. or commission of any other irregularities and/or conducting business in an unsafe or unsound manner. or agents responsible for such act. money changers.
Institute civil forfeiture proceedings through the OSG iv. for the freezing of any monetary instrument or property Implement measures as may be necessary to counteract money laundering Receive and take action any request of assistance from foreign states in their own anti-money laundering operations Develop educational programs on the effects. the proceeds of any unlawful activity. For closed accounts. Any proceeding relating to the unlawful activity shall be given precedence over the prosecution of any offense or violation w/o prejudice to the freezing and other remedies B. Any person knowing any monetary instrument or property represents. 12-16 of the Dangerous Drugs Act of 2002 Sec. h. Maintain a system of verifying the identity and legal existence of their clients iii.3 par b. It can be committed by the ff: i. Issue orders addressed to the supervising authority of the institution to determine the true owner of a covered or suspicious transaction report or request assistance on the basis of substantial evidence iii. 294-296. A money laundering offense II. xii.F. xv. Commissioner of the Insurance Commission iii. vi. viii. Investigate suspicious and covered transactions Apply before the CA ex parte. unless supervising authority prescribes a longer period not exceeding 10 days ii. Such reporting shall not be considered as a violation of RA 1405. or b. iv. Jurisdiction and Prosecution B. involves.310 of RPC Swindling under Art. Composition i. III. Require and receive covered or suspicious transaction reports from covered institutions ii. There is probable cause that the deposit or investment s related to any unlawful activity. 4-6. may issue a freeze order ii. upon application ex parte by the AMLC and after determination that probable cause exists. transacts or attempts to transact said monetary instrument or property ii. Anti-Money Laundering Council A. and means to prevent money laundering Enlist assistance from government instrumentality for any anti-money laundering operation Impose administrative sanctions for violation of laws. 43 | P a g e . thereby making them appear to have originated from legitimate sources. Any person may be charged of both money laundering and the unlawful activity ii. x. RA 8791. iii. Governor of he BSP as chairman ii. Public persons and private persons in conspiracy with the formerSandiganbayan Prosecution i.is a crime whereby the proceeds of an unlawful activity are transacted. Records of transactions shall be maintained and stored from 5 years from the date of transaction ii. v. involves. they shall be criminally liable v. regulations and orders issued pursuant thereto Establish a secretariat a. xiii. Shall be reported to AMLC within 5 working days from the occurrence thereof. Secs. B. its records shall also be stored for 5 years from the date it was closed Reporting of Covered and Suspicious Transaction i. Customer Identification i. Prevention of Money Laundering A. or relates to. In case of violation of the prohibition above. Reporting to the AMLC is also prohibited to be disclosed to the media or any other person or entity Freezing of Monetary Instrument or Property i. Private persons. The AMLC may inquire upon order of any competent court when it has been established that: a. Unquestionable integrity and known probity IV. Anonymous. 8-10. performs or fails to perform any act as a result of which he facilitates the offense of money laundering referred to above iii. I of the Anti-Graft and Corrupt Practices Act Plunder under RA 7080 Robbery and extortion under Arts. g.RTC ii. it shall be required to report the same iii. To the CA. GMC d. ix. Member of the Bar b. E. or relates to. vii. A. Should a transaction be determined a a covered and suspicious transaction. ix. Chairman of the SEC Functions i. fails to do so ii. methods. x. e. c. Cause the filing of complaints with the DOJ or Ombudsman D. Such order shall be for 20 days unless extended by the Court Authority to inquire into bank deposits i. RA 6426. Institutions shall establish and record the true identity of its clients based on office documents ii. xiv. vii. xii. v. Jurisdiction i. Peso and foreign currency non-checking accounts shall be allowed which will be subject to test by the BSP to determine the existence and identity of the owners Record Keeping i. vi. xi. Any person knowing that any monetary instrument or property represents. but are prohibited to communicate to any other person iv. viii. Any person knowing that any monetary instrument or property is required to be disclosed and filed with the Anti-Money Laundering Council. xi. the proceeds of any unlawful activity. 299-302 of the RPC Jueteng and Masiao under PD 1602 Piracy on high seas under RPC and PD 532 Qualified theft under Art.315 of RPC Smuggling under RA 455 and 1937 Violations of Electronic Commerce Act of 2000 Hijacking and other violations of RA 6235 Destructive arson and murder under RPC Fraudulent practices under Securities Regulation Code of 2000 Felonies or offenses of similar nature punishable under penal laws of other countries Money Laundering Offense. C. 35 years of age c. fictitious an similar accounts are prohibited iv. rules.
Give information needed iii. b. Civil forfeiture a. 6m-4years and a fine not less than P100. Signed or certified by a judge or equivalent officer in or of the requesting state b. By the secretary of embassy. Except: if there is a treaty between the Phil. Give all the particulars necessary for the issuance by the court in the requested state of the orders needed by th requesting state h. Penalties VI. Ask from the institution for any info which may be of assistance to the investigation or prosecution f. Forfeiture A. D. Substantially altered. Alien. May execute a request by: i. to the extent allowed by the law of the foreign state d. Authenticated copy of the order of a court in the requesting state ordering the forfeiture ii. Authenticated by the oath or affirmation of a witness or sealed with an official seal of a minister or secretary of the government of the requesting state c. When there is a report made. it cannot be located ii. Tracking down. Destructive arson and murder including those perpetrated by terrorists E. freezing. Apply for an order of forfeiture b. Hijacking and other violations of RA 6235 d. Apply for an order of forfeiture and must be accompanied by the order of the RTC and an affidavit of the Clerk of Court that the conviction and forfeiture are final Limitations on request Crime of money laundering a. It shall be filed with the court which rendered the judgment of forfeiture within 15 days from the order of forfeiture Payment in lieu of forfeiture a. Tracking down. Concealed. removed. transacts or attempts to transact said monetary instrument or property i. Imprisonment of 7 to 14 years and a fine not less than P3M b. Any person knowing any monetary instrument or property represents. Juridical person. and the Court. Request for assistance from a foreign state a. freezing. the Rules of Court on civil forfeiture applies Claim on Forfeiture Assets a. fails to do so i. Mutual assistance among states A. 44 | P a g e . Those claiming an interest may apply. Contain other info as may assist in the execution of the request Authentication of documents a. destroyed.000. consul general. Enter into the premises belonging to or in the possession of the persons named in the request. With due diligence. the proceeds of any unlawful activity.upon the responsible officers iii. VII. in a petition filed for the purpose of seizure. Certification or affidavit of a competent officer of the requesting stat that the conviction and order of forfeiture are final Obtaining assistance from foreign state a. diminished in value or rendered worthless by any act or omission attributable to the offender iii. consul or any officer in the foreign service of the Philippines stationed in the foreign state Extradition a.000. B. Specify the manner in which such info will be obtained or produced g. Commingled with other instrument or property rendering it difficult to be identified or segregated F.suspend or revoke its license iv. Negotiate for the inclusion of money laundering offenses among extraditable offenses a. 6m-1year or fine not less than P100. with malice or bad faith. No court order shall be required in the following activities a.5M not more than P3M c. or relates to. Violations of Dangerous Drug Act of 2002 c. 6m-4years or fine not less than P100. involves. V. reports a completely unwarranted or false info relative to money laundering i.ii. If corporation.000 not more than P500. Any person knowing that any monetary instrument or property is required to be disclosed and filed with the Anti-Money Laundering Council. for a declaration that the seized instrument or property legitimately belongs to him and pray for the segregation and exclusion b. G. restraining and seizing assets b. restraining and seizing assets ii. When it contravenes the constitution Prejudicial to the interest of the Philippines i. C. B. 4-7 years and fin not less than P1. And the requesting State relating to the provisions of assistance in money laundering offense Requirement for request from a foreign state a. Give particulars sufficient to identify the institution believed to have any info e. the proceeds of any unlawful activity. by verified petition. Any person knowing that any monetary instrument or property represents. Confirm that an investigation or prosecution is being conducted b.000 not more than P500. Any person who. Court will issue such order only when accompanied by: i. A. or both Failure to keep records a. or relates to. involves. Give sufficient particulars as to the identity of the person d. C. State the grounds on which any person is being investigated or prosecuted for c.000 ii. or both Malicious reporting a. converted or transferred to prevent from being found or avoid forfeiture iv.000 not more than P500.deportation C. The AMLC may execute or refuse to execute such request and inform the state of any valid reason for not executing such request Powers of the AMLC to act on a request for assistance a. performs or fails to perform any act as a result of which he facilitates the offense of money laundering referred to above i. Kidnapping for ransom b. Located outside the Philippine or outside the jurisdiction of the court v. Obtain info that it needs relating to covered transaction and money laundering offense c. B. Is allowed because forfeiture cannot be enforced due to the ff: i.
• 4. manager. If an account is held by a juridical person jointly with an individual. 3. development of internal policies. payment of the insured deposits on such closed banks shall be made by the PDIC by: i. Payment of Insured Deposits I. XI. Covered institutions shall formulate their own prevention programs X. unless a different sharing is stipulated in the document of deposit. Manner of Payment 1. PDIC shall charge against such assets: • Reasonable receivership expenses (subject to approval of court) K.000. Banks should avoid business with criminals 9. B. D. B. anonymous or fictitious accounts should not be allowed 4. audit function. Implementing rules and Regulations A. J.same penalties above Breach of Confidentiality a. ii. respectively.employee training. 5. identity of clients should be updated 5. Congressional Oversight Committee A. Whenever an insured bank shall have been closed by the Monetary Board. 2.000) A joint account shall be insured separately from any individually owned deposit account. 3-8years and fine P500.D. Public official who refuses to testify.perpetual or temporary absolute disqualification from office vi. Proof of Claims 1. Cash Transferred deposit Transfer deposit – deposit in an insured bank made available to a depositor by PDIC as payment of insured deposit of such depositor in a closed bank. it is presumed that the maximum insured deposit belongs to the juridical person. These rules shall be submitted to the congressional oversight committee for approval. obtain the true identity of the persons on whose behalf an account is opened 3. VIII. Distribution of Assets 3. and SEC shall promulgate rules to effectively implement this Act. Shall be appointed by the Senate President and the Speaker. writer. Not to exceed two hundred fifty thousand (250. Maximum insured deposits of Joint accounts shall be divided into as many equal shares as there are co-owners. Before any distribution of assets of the closed bank. shall not be used for political persecution or harassment or as an instrument to hamper competition in trade and commerce B. special attention should be given to complex. 7 members from the Senate and 7 members from the House of Representatives b. Take reasonable measures to establish and record the true identity and legal existence of their clients 2. Power to promulgate rules to overse the implementation of the law and to review and revise the rules issued by the AMLC within 30 days from promulgation XIV. 2.reporter. other suspicious transactions not involving deposit should be reported 8. unusual large transactions and all unusual patterns of transaction 7.000 No owner/holder of any negotiable certificate of deposit shall be recognized as a depositor entitled to the rights provided unless his name is registered in the books of the issuing bank. 7. 4. Prohibitions against political harassment A. PDIC may require proof of claims to be filed before paying the insured deposits. in case of doubt. Reasonable liquidation expenses After payment of all liabilities and claims against closed bank. Programs against money laundering. necessary records of transactions should be maintained 6. publisher. 6. Composition a. no case may be filed against and no assets shall be frozen or forfeited to the prejudice of a candidate for electoral office during election period IX. The aggregate of the interests of each co-owner over several joint accounts shall likewise not exceed 250. to creditors and claimants in accordance with legal priority before distribution to the shareholders. editor v. The BSP. Settlement Period and Penalties in Case of Failure to Settle 45 | P a g e . PDIC shall pay any surplus dividends at the legal rate of interest from the date of takeover to the date of distribution. Public official. IC. based on proportional representation of parties Powers a.P1M b. It may require final determination by the courts if not satisfied to the viability of the claim. Rules and Regulation for banks and non-financial institutions to combat money laundering 1. If disclosed to media.
And payment of a transferred deposit by the new bank in which a transferred deposit has been made available shall discharge PDIC and the new bank. XV. Such subrogation shall include the right to receive the same dividends from the proceeds of the assets of the closed bank. Extension of Loans G. Notice 1. ii. 4. b. PDIC shall be subrogated to all of the rights of the depositor to the extent of such payment. gross negligence. or officers of PDIC Responsible for the delay to imprisonment from six months to one year. XVI. • Or does not enforce his claim within two years after the filing a claim Unless otherwise waived by PDIC. 2. bad faith. whose name or interest as such owner is not disclosed on the records of a closed bank. pending the determination and payment of such liability by such depositor or any other liable therefore. PDIC shall be discharged from any liability. D. PDIC shall publish the notice once a week for at least 3 consecutive weeks in a newspaper of general circulation or newspaper circulated in the community where the closed bank or its branches are located. a. Money of the PDIC not otherwise employed shall be invested in obligations of the Republic of the Philippines or by obligations guaranteed by it. Period shall not apply if the validity of the claim depends on resolution of issues of fact or law by another office. N.000 without approval of the Insurance Commissioner. 2. or any liability of such depositor to the closed bank or to its receiver. In order to prevent an insured bank from closing. PDIC shall commence the determination of insured deposits due to depositors of the closed bank upon its actual takeover of the closed bank. or make deposits in such insured bank. Investment by PDIC C. 3. employees. which is not offset against a claim due from such bank. • He fails to file a claim within two years from actual take-over of the closed bank by the receiver. BSP PNB Any bank designated as fiscal agent or depository of RP M. purchase the assets. the resumption of the operations of said bank is vital to the interest of the community Severe financial climate exists O. merging or consolidating with or acquiring the assets of an insured bank in order to prevent such closing or of a closed insured bank in order to restore it to normal operation 46 | P a g e . 1. Withholding of Payment PDIC may withhold payment of such portions of the insured deposit of any depositor in a closed bank as may be required to provide for the payment of any liability of such depositor as a stockholder of the closed bank. Discharge Payment of an insured deposit shall discharge PDIC. Prescription All rights of a depositor with respect to the insured deposit shall be barred if: H. the operations of such bank is essential to provide adequate banking service in the community or maintain financial stability in the economy. 3. P. It shall not sell or purchase any such obligation for its own account or in its own right and interest in any one time aggregating in excess of 100. Reopening of said bank is subject to the approval of the Monetary Board. or malice shall subject the directors. Upon payment to such depositor. upon such conditions as the Board of Directors may prescribe. PDCI may make loans.1. Insurance Commissioner may waive the requirement of his approval as he may determine. Failure to settle claim within six months from the date of filing claim due to grave abuse of discretion. assume liability. The banking or checking account of PDIC shall be kept in: 2. But such depositor shall retain his claim for any uninsured portion of his deposit. Recognition of Owner PDIC cannot recognize as the owner any person. L. 2. 1. PDIC may provide any corporation acquiring control of. All rights of the depositor subrogated to PDIC shall thereupon revert back to the depositor. Such power may also be exercised in case of a closed insured bank if: i. as part owner of any portion of a deposit appearing on the records of the closed bank under a name other than that of the claimant.
PDIC shall determine the actual payoff and liquidation thereof will be more expensive than the exercise of its power prior to exercise of its powers. or employee of an insured bank who has been convicted of any criminal offense involving dishonesty of breach of trust. No person shall be a director. by particular acts of its directors. accounts. BoD may exempt from this requirement advertisements not relating to deposits. XX. PDIC may add the cost thereof to the assessment otherwise payable to such bank.a. PDIC may grant financial assistance to insured banks. records. PDIC may require an insured bank to provide protection and indemnity against burglary. Directors. PDIC shall submit a report to MB D. reports. depriving other banks of funds leading to a general shutdown of normal clearing and settlement activity. XVII. The corporation shall dispose of such equity as soon as practicable. officers. a. PDIC shall be authorized to borrow money. PDIC shall provide appropriate reserves for the redemption of said obligation. 5. Borrowings C. the PDIC has insufficient funds to attain its purpose. K. PDIC is authorized to issue bonds. PDIC may not purchase the voting or common stock of an insured bank but it can enter into or force agreements that it determines to be necessary to protect its financial interests. BoD shall determine interest rate and other requirements of such obligation. c. Merge or consolidate with an uninsured bank Assume liability to pay any deposits made in noninsured bank Transfer assets to any noninsured bank L. I. Such loans granted by the BSP shall be consistent with monetary policy. as may be necessary to prevent its failure or closure. and all other papers belonging to PDIC pertaining to its financial transactions. D. defalcation. obtain loans. banks may: 4. When in the Judgment of the Board of Directors. Within 60 days from date of assistance. Signs a. anfd employees of an insured bank If insured bank refuse to comply with any such requirement. XVII. PDIC is authorized to borrow from the BSP on such terms as may be agreed by them. – subject to the approval of the Monetary Board. or arrange credit lines or other credit accommodations from any bank designated as depository or fiscal agent by the RP. “systemic risk” – possibility that failure of one bank to settle net transactions with other banks will trigger a chain reaction. Financial assistance may take the form of equity or quasi-equity of insured banks as may be deemed necessary by the Board of Directors with concurrence by the MB. Issuance of Bonds With approval of the President of RP. 6. F. Miscellaneous E. b. files. Insured banks shall place signs in all place of business and in its statements that its deposits are insured by PDIC. Merger or consolidation of insured banks Upon consent of PDIC. and other obligations necessary fro the purpose of settlement of insured deposits in closed banks as well as for financial assistance. Reports and Audit 47 | P a g e . a. debentures. Protection Against Losses a. employees. officres BoD shall determine the bonding requirement referring to directors. J. F. officer. the interest rate thereon shall not exceed the treasury bill rate. H. COA shall have access to all books. E. b. XIX. G. Audit shall be conducted in places where the accounts of the corporation are normally kept. Officers and employees of Insured banks a. losses arising from discharge of duties. with systemic consequences with a probable failure or closure. Likelihood of a sudden unexpected collapse of confidence in a significant portion of the banking or financial system with potentially large real economic effects. b. Except as to matters relating to the Function of the PDIC which shall be subject to visitorial audit only. PDIC shall annually make a report of its operations to the Congress as soon s practicable after Jan 1 Financial transactions shall be audited by the COA in accordance with principles and processes and procedures applicable to commercial corporate transactions.
h. Sec. Penalty for violation of this prohibition: the bank will be subject to penalty of not more than 100 for every day of violation. CONCEPTS G. 5.267 of RPC ii. or violation. liability of the closed bank under the receivership of the PDIC Violation.b. any director. the exemption of garnishment. or preceding a closure order issued by the MB for the purpose of availing of the maximum deposit insurance coverage. Coins/currency of legal tender of the Phil. checks and notes iii. Robbery and extortion under Arts. purpose or economic justification b. g. Those administering or dealing in currency. closed-end investment company.000. trust certificates. Other similar instruments when title passes to another by endorsement. 4. 4-6. Transaction in cash or monetary instrument exceeding P500. Drafts. Kidnapping for ransom under Art. Foreign exchange corporations. property. commercial papers. employee or agent of bank who: 1. consultant iv. Willful failure or refusal to comply with. trust entities ad all other institutions regulated by the BSP ii. non-banks. FINES B. Submission of false material information in connection with or in relation to any financial assistance extended to the bank Splitting of deposits or creation of fictitious loans or deposit accounts i. 7. commodities. or commission of any other irregularities and/or conducting business in an unsafe or unsound manner. Securities. quasi-banks. Plunder under RA 7080 v.000 or both. common trust fund and preneed companies v. Banks. transaction tickets. XXII. omission. Structured transactions to avoid being the subject of reporting required under the act e. Related to any unlawful activity or offense g. levy attachment. investment house and other entities managing securities or service as agent. custodial receipts. Ensure that the Philippines shall not be used as a money laundering site for the proceeds of any unlawful activity. Those which deviate from the profile of the client or past transactions f. XXI. Secs. c. or agents responsible for such act. Suspicious transactions regardless of the amount a. Securities or negotiable instruments. Mutual funds. or execution provided under the PDIC Law and the NCBA J. transfer or concealment of any asset. I. rule. confirmation of sale money market instruments iv. 12-16 of the Dangerous Drugs Act of 2002 iii. brokers. BOD is authorized to impose administrative fines for violation of any other instruction. Willful refusal to submit reports Unjustified refusal to permit examination and audit of records as required by law. remittance. or regulation issued by PDIC. 8-10. Client is not properly identified c. 9. or violation of any provision of eh PDIC Law. rules. Insurance companies and all other institutions regulated by the insurance commission iii. salesmen.000 in one banking day ii. trading orders. financial derivatives or other monetary instruments or property supervised by the SEC Covered and Suspicious transaction i. against a bank or any of its directors. In no case such fine exceed K.000-2.3 par b. money payments. iii. Policies i. advisor. Criminal Penalties B. H. Splitting deposits – deposit accounts with an outstanding balance of more than the statutory maximum amount of insured deposit maintained under the name of a person is broken down and transferred into two or more accounts in the names of persons who have no beneficial ownership on transferred deposits in their names within 30 days preceding or during a bank declared holiday. No legal or trade obligation. 2.Money Laundering ( RA 9160) I. 3times the amount of the damages or costs caused by the transaction for each day that the violation subsist. Amount is not commensurate with the client’s financial capacity d. I of the Anti-Graft and Corrupt Practices Act iv. Or any country ii. 299-302 of the RPC 3. Any transaction that is similar to any of the foregoing Monetary instrument i. e.000. 294-296. and regulations Willful making of false statement or entry in any bank report or document Chap 11 – Anti. Refusal to allow PDIC to takeover a closed bank placed under its receivership Refusal to turnover or destroying or tampering bank records Fraudulent disposal . 10. 8. assignment or delivery Unlawful Activities i. Punishable by prision mayor or a fine of 50. or causing a person to violate. and transfer companies vi. To protect and preserve the integrity and confidentiality of bank accounts ii. money changers. 48 | P a g e . bonds. Cooperation in transnational investigation and prosecution of persons involved in money laundering Covered Institutions i. officers. 6. officer. deposit certificates.
may issue a freeze order iv. There is probable cause that the deposit or investment s related to any unlawful activity. Institute civil forfeiture proceedings through the OSG xvi. Commissioner of the Insurance Commission vi. but are prohibited to communicate to any other person ix. Governor of he BSP as chairman v. RA 6426. Anti-Money Laundering Council C. Composition iv. involves. Public persons and private persons in conspiracy with the formerSandiganbayan Prosecution i. In case of violation of the prohibition above. Apply before the CA ex parte. or relates to. Jueteng and Masiao under PD 1602 Piracy on high seas under RPC and PD 532 Qualified theft under Art. Customer Identification v. upon application ex parte by the AMLC and after determination that probable cause exists. Records of transactions shall be maintained and stored from 5 years from the date of transaction iv. Institutions shall establish and record the true identity of its clients based on office documents vi. Jurisdiction and Prosecution G. or relates to.L. vii. Shall be reported to AMLC within 5 working days from the occurrence thereof. Member of the Bar b. Require and receive covered or suspicious transaction reports from covered institutions xiv. xiii. The AMLC may inquire upon order of any competent court when it has been established that: a. Anonymous. xi. D. 35 years of age c. transacts or attempts to transact said monetary instrument or property ii. unless supervising authority prescribes a longer period not exceeding 10 days vii. Jurisdiction i. Private persons. Any proceeding relating to the unlawful activity shall be given precedence over the prosecution of any offense or violation w/o prejudice to the freezing and other remedies D. xii.is a crime whereby the proceeds of an unlawful activity are transacted. the proceeds of any unlawful activity. Such reporting shall not be considered as a violation of RA 1405. J. involves. Reporting to the AMLC is also prohibited to be disclosed to the media or any other person or entity Freezing of Monetary Instrument or Property iii. xv. performs or fails to perform any act as a result of which he facilitates the offense of money laundering referred to above iii. Hijacking and other violations of RA 6235 II. it shall be required to report the same viii.315 of RPC Smuggling under RA 455 and 1937 Violations of Electronic Commerce Act of 2000 Hijacking and other violations of RA 6235 Destructive arson and murder under RPC Fraudulent practices under Securities Regulation Code of 2000 Felonies or offenses of similar nature punishable under penal laws of other countries Money Laundering Offense. Prevention of Money Laundering F. thereby making them appear to have originated from legitimate sources. Receive and take action any request of assistance from foreign states in their own anti-money laundering operations Develop educational programs on the effects. xxiv. For closed accounts. xxi. xx. viii. 49 | P a g e . the proceeds of any unlawful activity.RTC ii. Any person knowing any monetary instrument or property represents. rules. Kidnapping for ransom b. Such order shall be for 20 days unless extended by the Court Authority to inquire into bank deposits iii. Maintain a system of verifying the identity and legal existence of their clients vii. methods. Violations of Dangerous Drug Act of 2002 c. Any person knowing that any monetary instrument or property is required to be disclosed and filed with the Anti-Money Laundering Council. Should a transaction be determined a a covered and suspicious transaction. Chairman of the SEC Functions xiii. Peso and foreign currency non-checking accounts shall be allowed which will be subject to test by the BSP to determine the existence and identity of the owners Record Keeping iii. xxii. x. Any person knowing that any monetary instrument or property represents. xiv. and means to prevent money laundering Enlist assistance from government instrumentality for any anti-money laundering operation Impose administrative sanctions for violation of laws. Any person may be charged of both money laundering and the unlawful activity ii. xxiii. C. or b. they shall be criminally liable x. Unquestionable integrity and known probity IV. Investigate suspicious and covered transactions xviii. Implement measures as may be necessary to counteract money laundering I. It can be committed by the ff: i. H. Cause the filing of complaints with the DOJ or Ombudsman xvii. No court order shall be required in the following activities a. III. fails to do so vi. GMC d. fictitious an similar accounts are prohibited viii. To the CA. regulations and orders issued pursuant thereto Establish a secretariat a. A money laundering offense iv. for the freezing of any monetary instrument or property xix. RA 8791. its records shall also be stored for 5 years from the date it was closed Reporting of Covered and Suspicious Transaction vi. Issue orders addressed to the supervising authority of the institution to determine the true owner of a covered or suspicious transaction report or request assistance on the basis of substantial evidence xv. ix.310 of RPC Swindling under Art.
Civil forfeiture a. Confirm that an investigation or prosecution is being conducted b. Obtain info that it needs relating to covered transaction and money laundering offense c. Except: if there is a treaty between the Phil. E. Imprisonment of 7 to 14 years and a fine not less than P3M b. The AMLC may execute or refuse to execute such request and inform the state of any valid reason for not executing such request Powers of the AMLC to act on a request for assistance a. involves. By the secretary of embassy.upon the responsible officers iii. by verified petition. or both Failure to keep records a. When there is a report made. Tracking down. Give particulars sufficient to identify the institution believed to have any info e. Public official. Those claiming an interest may apply. Tracking down. fails to do so i. Negotiate for the inclusion of money laundering offenses among extraditable offenses i. F. Ask from the institution for any info which may be of assistance to the investigation or prosecution f.suspend or revoke its license iv. Commingled with other instrument or property rendering it difficult to be identified or segregated M. Any person who. to the extent allowed by the law of the foreign state d. Signed or certified by a judge or equivalent officer in or of the requesting state b. Enter into the premises belonging to or in the possession of the persons named in the request. I. If corporation. VI. Is allowed because forfeiture cannot be enforced due to the ff: i. involves. for a declaration that the seized instrument or property legitimately belongs to him and pray for the segregation and exclusion b. With due diligence. Forfeiture D.000 not more than P500. destroyed. 50 | P a g e . 6m-4years and a fine not less than P100. Concealed.5M not more than P3M c.000 not more than P500. Apply for an order of forfeiture and must be accompanied by the order of the RTC and an affidavit of the Clerk of Court that the conviction and forfeiture are final Limitations on request a.d. Prejudicial to the interest of the Philippines E. or relates to. Give information needed iii. When it contravenes the constitution b. Any person knowing that any monetary instrument or property represents. V. Give all the particulars necessary for the issuance by the court in the requested state of the orders needed by th requesting state h.deportation v. Apply for an order of forfeiture b. and the Court. Certification or affidavit of a competent officer of the requesting stat that the conviction and order of forfeiture are final Obtaining assistance from foreign state a. or both Malicious reporting a. 6m-1year or fine not less than P100. performs or fails to perform any act as a result of which he facilitates the offense of money laundering referred to above i. Request for assistance from a foreign state a. converted or transferred to prevent from being found or avoid forfeiture iv. Specify the manner in which such info will be obtained or produced g. diminished in value or rendered worthless by any act or omission attributable to the offender iii. Destructive arson and murder including those perpetrated by terrorists L. freezing. K. restraining and seizing assets b. Penalties H. 4-7 years and fin not less than P1. removed. consul or any officer in the foreign service of the Philippines stationed in the foreign state Extradition a. consul general. G. Any person knowing any monetary instrument or property represents. Authenticated by the oath or affirmation of a witness or sealed with an official seal of a minister or secretary of the government of the requesting state c. And the requesting State relating to the provisions of assistance in money laundering offense Requirement for request from a foreign state a. or relates to. Any person knowing that any monetary instrument or property is required to be disclosed and filed with the Anti-Money Laundering Council. it cannot be located ii.000 ii. Juridical person. the proceeds of any unlawful activity. Contain other info as may assist in the execution of the request Authentication of documents a. restraining and seizing assets ii. Authenticated copy of the order of a court in the requesting state ordering the forfeiture ii.000. It shall be filed with the court which rendered the judgment of forfeiture within 15 days from the order of forfeiture Payment in lieu of forfeiture a. 6m-4years or fine not less than P100. transacts or attempts to transact said monetary instrument or property i.000. Crime of money laundering a.000 not more than P500. State the grounds on which any person is being investigated or prosecuted for c. Alien. Give sufficient particulars as to the identity of the person d. freezing. in a petition filed for the purpose of seizure. Substantially altered. reports a completely unwarranted or false info relative to money laundering i. with malice or bad faith.perpetual or temporary absolute disqualification from office J. the Rules of Court on civil forfeiture applies Claim on Forfeiture Assets a. May execute a request by: i. N. Court will issue such order only when accompanied by: i. F. Located outside the Philippine or outside the jurisdiction of the court v. the proceeds of any unlawful activity. Mutual assistance among states VII.
P1M b.same penalties above Breach of Confidentiality a. Prohibitions against political harassment C. development of internal policies. based on proportional representation of parties Powers a. respectively. audit function. Covered institutions shall formulate their own prevention programs X.000. and SEC shall promulgate rules to effectively implement this Act. XI. The BSP. writer. obtain the true identity of the persons on whose behalf an account is opened 3.H. Take reasonable measures to establish and record the true identity and legal existence of their clients 2. publisher. in case of doubt. editor VIII. manager. unusual large transactions and all unusual patterns of transaction 7. other suspicious transactions not involving deposit should be reported 8. identity of clients should be updated 5. Composition a. IC. 3-8years and fine P500. Shall be appointed by the Senate President and the Speaker. B. special attention should be given to complex. Power to promulgate rules to overse the implementation of the law and to review and revise the rules issued by the AMLC within 30 days from promulgation D. anonymous or fictitious accounts should not be allowed 4. Programs against money laundering. Implementing rules and Regulations A. 7 members from the Senate and 7 members from the House of Representatives b.reporter. vi. Congressional Oversight Committee C. Banks should avoid business with criminals 9. 51 | P a g e . Rules and Regulation for banks and non-financial institutions to combat money laundering 1. necessary records of transactions should be maintained 6. If disclosed to media. shall not be used for political persecution or harassment or as an instrument to hamper competition in trade and commerce D. Public official who refuses to testify. These rules shall be submitted to the congressional oversight committee for approval.employee training. no case may be filed against and no assets shall be frozen or forfeited to the prejudice of a candidate for electoral office during election period IX.
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