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Dizon Summary

Dizon Summary

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Banking Laws - Dizon

G.
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.

I. J.

A.
B.

C.

D.

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

E. F.

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)

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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.

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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.

2.

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

F. -

G. -

-

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.

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H. I.

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.

-

J.

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

B.

-

-

C. • • • •

B.

C. 1. 2.

D.
E.

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D.

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.

3.

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.

II. A.

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

B.

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.

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A.

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.

3.

B.

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

b.

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ar past due. even before 8am or after 8pm. the judiciary. 5. 3. Banking Days and Hours A. Automated Teller Machines A. indorser or surety of loans 2. 3. Working days mean Mon-Fri excpet holidays. VIII. Persons who are deinquent in the payment of their obligations: a. university campuses. Shall transact business on all working days for at least 6 hours a day. Mobile ATMs 1. underdifferent credit lines or loan contracts. b. Should allowed to visit only centers of activity and should confine their itinerary to Metro Manila until futher notice.3. V. 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. A corporation. The spouse or child under the parental authority of the director or officer 3. VII. Shall be installed only in the centers of activity like shopping. and shall contain such informations as required in the BSP regualtions. Shall submit to the appropriate supervising and examining dept.an obligation of a person with a bank/quasibank/trust entity where he is a director or officer. Disqualification? Prohibitions under NCBA D. 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. rules and regulations. C. supermarkets. 4. MB shall require a bank etc. DELINQUENT IN THE PAYMENT OF OBLIGATIONS. His spouse is the managing partner or a general partner owning a controlling interest in the partnership 5. When penalty is suspension from office or fine is imposed. Obligations shall include all borrowings from a bank/quasibank obtained by: 1. and to submit a report of such audit. Those are administratively liable for violation of banking laws. To review the internal audit and control system of teh bank etc.27. If so. Director or officer for his own account or acts as guarantor. Independent Auditor 1. 10. swindling. Estafa. Off-ite Automated Teller Machines (ATMs) 1. 8. 2. 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. Financial Statements Every bank etc. Of the BSP fianncial statements. such is found to be administratively liable. 7. May open for business on Sat. malversation. Banks hall notify the supervising and examining department of the BSP of the tual date a mobile ATM become oprational and when terminated. subsidiaries and affiliates. hospitals. It shall be of a specific date designated by BSP and shall show actual financial conditions of the institution submitting the statements. Number of Days and Hour 1. 6. 12. Must comply with these. From a list of certified public accountants acceptable to the MB 2. 3. Any person found by MB to be unfit for th position of directors or officers. that adequate internal control and security measures shall be adopted nd submitted to BSP. 13. Term of engagement hall be prescribed by MB. to all to open off site ATMS. trustee or officer of any corporation. Board of Directors shall also conduct an annual balance sheet audit of the bank etc. and of its branhes. Sun or holidays for at least 3 hours a day. forgery. To engage the services of an independent auditor to be chosen by a bank etc. 4. or at least 2 obligations with other banks/financial institutions. 11. Shall secure insurance coverage or adopt a self-insurance scheme to protect itself against losses of whatever nature in ita mobile ATM oprations 3. must repot to the Bangko Sentrl the additional days 6|Page . Philippine National Police. 9. Those under preventive suspension Persons with derogatory records as certified by. B. or on the official files of. 4. Any person whose loan proceeds were credited to an acount for the benefit of a director or officer. 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. quasi judicial bodies. 2. offices. VI. whenther as continuing basis or special engagements. Provided. physically attend at east 25% of all meetings in an year except those with notarized certification executed by the corporate secretary. 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. extortion. Must submit a report to the appropriate department of the BSP on ATMs which they establish 2. National Bureau of Investigation.

20 or more lenders at any one time. 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. Of Labor who may assume jurisdiction over the dispute and decide it or certify the same. officers or stockholders. Reports of Strikes and lockouts The bank shal disclose pertinent info: 1. XI. a. DUTY OF BANKS TO KNOW SIGNATURES A bank is bound to know the signatures of its customers.Banks may issue long-term negotiable tax exempt certificates of time deposit without approval of the BSP.- If there is local emergency or imminent panic. Cause of the strike/lockout and bank management’s position on its legality 2. 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. Includes also. All officers. NOTES: page 54-55 (IMPORTANT) IX. QUASI – BANKING FUNCTIONS: Essential elements of quasi-banking are: A. 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. B. Publication of Capital Stock X. . Time deposits – one the payment of which cannot legally be required within such a specified number of days. Rural Banks Act. The spouse. Agencies in actions and proceedings brought before them involving controversies in banks etc. the amount o its capital actually paid-up. relatives within 2nd degree of consanguinity and affinity of the officers and employee covered by the prohibition. The President. 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. 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. other than deposits D. Cooperative Code For Islamic banks. It shll not publish the amount of its authorized or subscribed capital stock without indicating at the same tme and with equal prominence. 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. b. NO OBLI. DEPOSIT FUNCTIONS OF BANKS Demand deposits – are all those liabilities of the BSP and other banks which are denominated in Phil. or acceptance of debt instruments of any kind. Unsettles Labor Disputes The banking industry is indispensable to the national interest. Methods of borrowing are issuance. Strikes and Lockouts A. natural or juridical may deposit with such Phil. The purpose of which is (1) relending. NEGOTIABLE CERTIFICATES OF TIME DEPOSITS (NCTD’s) a. Bank oprations affected XII. B. or (2) purchasing receivables or other obligations Any person. The followings are prohibited from maintaining demand deposits or current accounts with the bank office in which they are assigned. may intervene and assume juridiction over suh labor dispute in order to settle and terminate the same. Laws Governing other Types of Banks Thrift Banks Act. endorsement. as well as disputes between any all or all of them which theya re the directors. 7|Page . If unsettled afer 7 days shall be reported by the BSP to the Sec. the provisions of the Gbl shall govern. borrowing of funds for the borrower’s own account. Thrift banks/Rural banks/Cooperative banks need approval of BSP NON – NEGOTIABLE CTD . Currency and are subject to payment in legal tender upon demand by presentation of checks. entitles the drawer to substantial damage without any proof of actual damages.special laws For purposes of prescribing the minimum ration which the net worth of a thrift bank must bear to its total risk assets. Universal banks / commercial banks may issue NCTDs without approval of BSP b. CHAPTER 3. Settlement of Disputes BSP shall be consulted by other gov. 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. 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. Failure of the bank to pay the check. 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. C.

a. 1. In every case the depositor expects the bank to treat his account with the utmost fidelity. however. V. agencies.000 without the said certification. Provided. 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. its operation or effect may be violative of the law. bureau or office except upon. 3. 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. C. and extension office doing business in the Philippines. if any. provided. 3.A. able to read and write. 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. 1. Allied enterprises: financial or non-financial ii. 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. and withdraw the same without the assistance of their parents or guardians. there is probable cause that the deposits or investments are related to an unlawful activity. belonged to the survivor. 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. who have the right to expect high standards of integrity and performance from it. Although survivorship agreement is per se not contrary to law. 2. 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. b. not otherwise disqualified by any other incapacity. 4. b. Provided. Powers of a commercial bank b. 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. 4. have sufficient discretion. Minors are vested with special capacity and power to make savings. Corporations a. inquired or looked into by any person. Allied or non-allied i. Incorporation Stage – payment of subscription is in cash. Parents may nevertheless deposit for their minor children and guardians for their wards.bank financial institution upon order of any competent court in cases of violation. where the money deposited or invested is the subject matter of the litigation. government official. at the discretion of the bank.Anonymous accounts or accounts under fictitious name should not be kept allowed. II. Post Incorporation – in opening a bank account. PAYMENT TO PROPER PARTY Operations of a Universal Bank a. R. when it has been established that. upon order of a competent court in cases of bribery or dereliction of duty of public officials. and the balance. Total investment shall not exceed 50% of the net worth of the bank 8|Page . any taxpayer who has filed an application for compromise of his tax liability by reason of financial incapacity to pay his tax liability. however. in case of impeachment. b. a decedent to determine his gross estate. a money laundering offense. IN CASE OF DEATH OF DEPOSITOR National revenue code provides: If a bank has knowledge of the death of the depositor. a. III. Duties of Banks A. to give encouragement to the people to deposit their money in banking institutions. Secrecy of bank Deposits Purposes a. 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. Equity Investments of a Universal Bank a. 2. upon the death of either. in cases. whether such account consists only of a few hundred pesos or of millions. B. the board of directors issues a resolution authorizing the signatories and specifying the depository bank. Powers of an inverstment house c. 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. Authority of the Commissioner of Internal Revenue to inquire into deposits In cases. CHAPTER 4 IV. provided the f requirements are met. METICULOUS CARE A bank is required to take meticulous care of the deposits of its clients. Power to invest in non-allied enterprises II. the SEC requires a bank certificate of deposit of paid-up capital notarized in place where signed. deposits received shall be booked likewise. written permission of the depositor. b. at least 7 years of age. 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.

Shall not exceed 40% equity Operations of Commercial Banks I. Rural/Cooperative Banks may invest. Discounting negotiating promissory notes.total of the unimpaired paid-in capital including paid-in surplus. May own up to 100% b. financial and commercial complex projects. Only equities in allied enterprises: either financial or non-financial b.automatic appropriation of the pledged or mortgaged property by the creditor in payment of the loan upon its maturity. safe deposit box. IV. etc. Investments in Quasi-Banks a. donation. Buying and selling foreign exchange and gold or silver vi. Be an obligor to the bank except with the written approval of the majority of all the directors of the bank II. Loans specified as non-risk items IV. Deposits of rural banks with GOC financial institutions b. Total investment in one enterprise shall not exceed 25% of the net worth of the bank IV. Loans under letters of credit covered by margin deposits d. Contingent Accounts of borrowers may be included among those subject to the limits VI. Bank Guarantee. 100% of the equity of a thrift bank or a rural bank b. mining. banks. Effect of Non. it shall also be subject to the limits herein prescribed V. Extending credit v. The limit maybe increased by 10% provided the additional loans are secured II. Net worth. Restrict or prohibit acquisition of major assets Limits on Loans. home building and home development c. Uniformly applied for banks in the same category II. Assignment of Credit.assures the seller of prompt payment even if buyer has not yet reimbursed as long as the seller presents the necessary documents III. by a legal cause. Single Borrower’s Limit. Warehousing and postharvest facilities ii.irrevocable commitment of bank binding itself to pay in the vent of non-performance by a third party.iii. and without the need of the consent of the debtor. Become a guarantor or indorses or surety for loans from such bank to others c. Investments in Non-Allied Enterprises a. transfers his credit to another who acquires the power to enforce it to the same extent as the creditor could have. May own up to 100% Risk-Based Capital I. Credit Accommodations and Guarantees I. Only universal banks can investment in non-allied enterprises: i. Loans secured by the BSP or government b. In other financial allied enterprises. May be altered or suspended for a maximum of one year when necessary b.etc. VI. as a non-financial allied undertaking in the ff: i. retained earnings and undivided profit. Direct liability of the maker of paper sold or discounted with the bank b. V. dation in payment. Investments in Financial Allied a. Total investments in allied enterprises shall not exceed 35% of the net worth of the bank c. Loans covered by assignment of deposits maintained in the bank c. VII. Accepting drafts and issuance of letters of credit ii. investment houses. Total investment in any one enterprise shall not exceed 25% of the net worth of the bank. Letters of Credit a. A publicly-listed universal or commercial bank can own only one other universal or commercial bank c.shall not exceed 20% of the net worth of the bank a. management of mutual funds. In case of partnership or association. Receiving deposit substitutes iv. Industrial park projects. the liabilities of the members thereof III. Pacto Commissorio. As provided by the monetary board for reasons of national interest ii. buyer and seller b. the liabilities of said corporation is included c. iv. ration of the net worth of the bank to its total risk assets which may include contingent accounts a. Such powers necessary to carry on the business of commercial banking: i. Transportation of agricultural products iv. reserves and other adjustments b. Marketing of agri products v. SBL should exclude: a. credit card companies. Investments of a Commercial Bank a. SBL should include: a. a rural bank or others within this category b. Powers a. 3 relationships created: bank and buyer. Powers incident to corporations b. Leasing V. storage. net of valuation. Independence Principle. Farm equipment distribution iii. II. Limit or prohibit the distribution of net profits b. bank and seller. manufacturing. The approval shall entered on the records of the bank 9|Page . investment shall only be a minority holding Investments in non-financial allied a. etc. providing computer services. Prohibits the ff: a. Shall not exceed 35% of the total equity in that enterprise nor shall it exceed 35% of the voting stock b. Acquisition is subject to prior approval of the Monetary Board III. Liabilities of subsidiaries of a corporation who is borrowing from the bank d. insurance companies. Equity Investments of a Universal Bank in Non-financial allied enterprises a.monetary board shall prescribe. financing companies. activities in agri. Can own up to 100% of the equity in a thrift bank. Warehousing. Minimum Ratio. insurance agencies.Compliance a. It is not allowed in assignment of deposits.agreement by virtue of which the owner of a credit. Accepting or creating demand deposits iii. Except: i. If the borrower owns ac majority interest in a corporation. holding company. Financial Allied: leasing companies. Direct or indirectly borrow from the bank b. such as sales. Equity investments of a Universal Bank in Financial Allied Enterprises a. DOSRI I.

5% per month or 66% per annum. hospitals. Will be considered as void. Loans are used for purposes not initially producing revenue. Finance Charge. Corporation wholly or majority owned or owned by at least 20% by the DOSRI or those in a) VIII. If the purpose stated was not followed. Secretary. Only in the amount and for the period of time essential for the completion of the operations to be financed. This shall be done consistent with safe and sound banking practice b. With those whose maturities are more than 5 years. Secured by Real Estate a. Definitions: a.The MB is authorized to issue regulations with respect to unsecured loans V. Even in the absence of this provision.The bank invests the money it holds in trust for the depositors.raising of interest i. XII. The cash price of the property or service to be acquired b. Effect of Violation. Statement of their income and expenditure c.Disclosure of Finance Charges) I. Secured by Chattels and Intangible Properties a. Penalty.SC: 5. a. vice-chairman or any other position who performs functions of management Stockholder. Statement of assets and liabilities b. Shall not exceed to 75% Grant and Purpose of Loans I. VII. Trust Officer b. MB shall fix the amount of reserves for bad debts Truth In Lending (RA 3765. VIII. mortgage. esacalation will be allowed f. Shall not exceed 75% of the appraised value plus 60% of the insured improvements II. Amount and Purpose a.after due notice. XI. IX. d. the bank may still demand immediate repayment because the borrower has lost the benefit of the period under Art. Both instances should be present before escalation clause is allowed iii. IV.prior to the maturity date. any loan. low-cost housing. Corporation owned by the stockholder or his wife Related Interests VI.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.interest and fees incident to the extension of credit c. Authority to Prescribe Terms and Conditions of Loans Amortization on Loans a.The MB may prescribe further security requirements shall be subject to. the court may reduce the interest rate Prepayment of Loans. The purpose shall be stated in the application c. Elected in meetings of the stockholders c. GM.debts due to on which interest is past due and unpaid b. V. Includes: Spouse and/or relative within the 1st degree or consanguinity or affinity ii. the payment of a finance charge IV. For this reason. Amount to be financed e. Finance charge III. or both) V. VP. Rental-purchase contract b. Unsecured Loans or Other Credit Accommodations. X. borrower may pay subject to such reasonable terms agreed upon with the bank Development Assistance Incentive. Treasurer. advance or discount ii. the bank may terminate the loan and demand immediate repayment II. Unconscionable and exorbitant interests. Elected to fill vacancies Officers: a. Disclosure shall include: a. Other information prescribed by law or by the Monetary Board d. Any conditional sales contract iii. Pres. Policy. Shall be adapted to the nature o the operations to be financed b. Other Security Requirements.stockholder or record in the books of the bank a. 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.either civil or criminal (1k-5k fine or imprisonment for 6-12 months.protect the citizens from a lack of awareness of the true cost of credit by assuring a full disclosure of such cost II. cooperatives. Chairman. c. VP. Arms Length Rule-Dealings with DOSRI shall be upon terms not less favorable to the bank Directors: a. Microfinance. and LGUs Renewal of Exntension of Loans.amortization may be deferred until such time as said revenues are sufficient but in no case shall it be later than 5 years d. VI. 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. Bad debts.take into consideration the projected cash flow of the borrower e. Exception: if the creditor unilaterally decreased the interest even if it was not stipulated. Government is exempted from the punishment or penalty Foreclosure of Real Estate 10 | P a g e . Charges which are paid in connection with the transaction d. the office of the person violating shall be declared vacant and shal be subject to the penal provisions of NCBA Securities on Loans I. Hence.BSP shall give incentives to banks who extend loans to education.periodic amortization but must be made annually c. Amounts for downpayment c. Creditor: any person engaged in the business of extending credit who requires as an incident to the extension of credit. Names in the articles of incorporation b. 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. IV. Escalation clause. i. Reason for Stringent Rules in Granting Loans. b.III. EVP. VII. deed of trust. Sr. Requirements: a. Crediti. 1198 of the Civil Code III.

land. Act as managing agent. mortgages. Total investment in real estate including improvements shall not exceed 50% of combined capital accounts c. Credit card services e. With approval of the MB.The mortgagor or debtor has the right within one year after the sale of the real estate. construction. Purchased at sales under judgments. consultant or administrator of an investment management with the approval of the MB V. to redeem the property by paying the amount due in the mortgage w/ interest and all the cost and expenses II. 54. as insurer. Prohibited Transactions. quipmet. bank forms and promotional materials d. documents and other objects II. leasehold rights. Rules of Court) iii.1. If a box is rented by two persons. No director.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. officer. Other Banking Services I. *Includes: a) b) c) d) making or proposing to make. the purchaser at the auction shall have the right to take possession immediately after the date of the confirmation of the auction sale III. Real Property acquired under this provision shall be disposed by the bank within a period of 5 years c. Service level and contract management e. including a reinsurance business. Ceiling on Investments a. Janitorial services g. However. Right of Redemption may be extended Major Investments I. or agent of any bank shall – 11 | P a g e . Acquire real estate necessary for its own use in the conduct of its business i. Receive in custody funds. The MB shall establish a criteria for reviewing major acquisitions by a bank II. chattel purchased by the bank in its name b. Strategic planning for the use of IT b. Printing of bank deposit statement. Bank premises. Credit investigation f. 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. Acquisition of Real Estate by way of satisfaction of claims a. .A bank shall not directly engage in insurance business as the insurer. Equity of Redemption. Rent out safety deposit boxes VI. 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.can be done with prior approval of the MB except: a. but not after. bank loan statements. Equity of Redemption v. 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. decrees. Conveyed to it in satisfaction of debts previously contracted iii. or trust deeds held by it b. Act as financial agent and buy and sell for their customers III.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. VII. 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. The SC said that the rent of a safety deposit box is that of a bailor an bailee Electronic Transactions I. the registration of the certificate of foreclosure with the Register of Deeds within 3 months V. Notwithstanding the limitations given above. Chapter 5 Sec. adviser. 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. Shall be mortgaged to it in good faith by way of security of debts ii. 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. Safety Deposit Box. Determination of system functionalities c. Outsourcing of IT systems. Juridical Persons shall have the right to redeem the property until. (Rule 68. However. right of redemption exits ii. Data imaging b. any insurance contract making or proposing to make. buildings. it may continue to hold such property beyond the period given if the limitations given in the previous provision are not yet reached. Make collection and payments for the account of others IV. Right of Redemption exists only in extrajudicial foreclosure sale i. fixtures. furniture ii. Right of Redemption a. Security policy and administration Outsourcing of other functions I. 55. as surety. improvement. 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. Clearing and processing of checks not in the Philippine Clearing House system c. Change management inclusive of quality assurance and testing d. In a judicial foreclosure sale where the mortgagee is the PNB or a banking institution. Real property. Procurement services h. Prohibition to Act as Insurer. banks may outsource the ff: a. employee. a bank may acquire real estate under the ff circumstances: i. the agreement between them shall govern VIII. 55.

*Grounds for appointment of conservator Whenever. 55.” “banking. corporations. which is not otherwise prohibited by any law. trust entity.” “trust corporation. stability. rule or regulation affecting banks. disclose to any unauthorized person any information relative to the funds or properties in the custody of the bank belonging to private individuals. The act or omission has resulted or may result in material loss or damage.” “quasi-bank. evident bad faith or gross inexcusable negligence. office. 67. the manpower to service the deposit transactions of the former  intended to ensure secrecy of bank deposits 55.” “trust company” or words of similar import or transact in any manner the business of any such bank. commission. employee or agent of a bank any gift. the bank or any person. the provisions of law to the contrary notwithstanding. That with respect to bank deposits. examine. the Monetary Board finds that a bank or quasi-bank is in a state of: 12 | P a g e .3.2. fees. The act or omission has caused any undue injury. 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. the Monetary Board may. (b) Furnish false or make misrepresentation or suppression of material facts for the purpose of obtaining. renewing.4. quasi-bank. No examiner. It does not comply with the liquidity standards/ratios prescribed by the Bangko Sentral for purposes of determining funds available for dividend declaration. or 57. the word or words “bank. officer. The act or omission has resulted or may result in material loss or damage or abnormal risk to the institution's depositors. No borrower of a bank shall (a) Fraudulently overvalue property offered as security for a loan or other credit accommodation from the bank. creditors.In determining whether a particular act or omission. bureau. (c) Attempt to defraud the said bank in the event of a court action to recover a loan or other credit accommodation. or increasing a loan or other credit accommodation or extending the period thereof. shall advertise or hold itself out as being engaged in the business of such bank. Unauthorized Advertisement or Business Representation. – The grounds and procedures for placing a bank under conservatorship. officer or employee of the Bangko Sentral or of any department. 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. or use in connection with its business title.” “banker. 57.3. Sec. or commissions or any other form of remuneration in connection with the approval of a loan or other credit accommodation from said bank. (b) Without order of a court of competent jurisdiction. quasi-bank.The act or omission involves entering into any contract or transaction manifestly and grossly disadvantageous to the bank. 55. take action under Section 30 of the same Act and/or immediately exclude the erring bank from clearing. Conducting Business in an Unsafe or Unsound Manner . or has given any unwarranted benefits. the provisions of existing laws shall prevail. or 56. or any other form of compensation in order to influence such persons into approving a loan or other credit accommodation application. on the basis of a report submitted by the appropriate supervising or examining department. quasi-bank or trust entity. or any other entity: Provided. Its clearing account with the Bangko Sentral is overdrawn. It is deficient in the required liquidity floor for government deposits for five (5) or more consecutive days. branch or agency of the Government that is assigned to supervise.1. the Monetary Board shall consider any of the following circumstances: 56. 1405.(a) Make false entries in any bank report or statement or participate in any fraudulent transaction.2. or savings and loan association as defined in this Act.” “quasi-banker. – No bank or quasi-bank shall declare dividends. corporation or association.3. or other banking laws. thereby affecting the financial interest of. association. – No person. It has committed a major violation as may be determined by the Bangko Sentral.” “savings and loan association. investors. liquidity or solvency of the institution. 56. or abnormal risk or danger to the safety. 56. or corporation unless duly authorized to engage in the business of a bank. no bank shall employ casual or non regular personnel or too lengthy probationary personnel in the conduct of its business involving bank deposits. if at the time of declaration: 57. or (e) Outsource inherent banking functions. That this Section shall also apply to conservatorship proceedings of quasi-banks. or causing damage to.4. . Consistent with the provisions of Republic Act No. (c) Accept gifts.” “quasi-banking. may be deemed as conducting business in an unsafe or unsound manner for purposes of this Section. without prejudice to the administrative sanctions provided in Section 37 of the New Central Bank Act. or any act whereby the latter supplies. (d) Overvalue or aid in overvaluing any security for the purpose of influencing in any way the actions of the bank or any bank. stockholders or to the Bangko Sentral or to the public in general. fee. 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. or .4. quasi-banks or trust entities.2.1. Sec.  refers to any contract between the bank and a service provider for the latter to supply. or association. or (d) Offer any director. trust entity. or 57. quasi-bank or trust entity persists in conducting its business in an unsafe or unsound manner. Whenever a bank. otherwise known as the Banks Secrecy Law. Prohibition on Dividend Declaration. Conservatorship. whether or not the director or officer profited or will profit thereby. Sec. 64. as well as. Sec. 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. 56. 57.

– In case of voluntary liquidation of any bank organized under the laws of the Philippines. *Grounds for receivership and liquidation: The bank or quasi-bank: 1. determine that the continuance in business of the institution would involve probable loss to its depositors or creditors. collection of loans. a. *Effects of receivership and liquidation: 1. thus providing the ability to pay debts *Qualifications of conservator: 1. person. knowledgeable in bank operations and management *Period of conservatorship – shall not exceed 1 year *Termination of conservatorship: 1. 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. 5. 3. cannot continue in business without involving probable losses to its depositors or creditors 4. *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. 2. continuing inability. or by a receiver appointed by the bank  no voluntary dissolution shall be undertaken by a bank without prior approval of the Monetary Board. in such capacity. estate. 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. f. or of any branch or office in the Philippines of a foreign bank. provided further.  may be undertaken by the bank itself through its board of directors. and exercise all powers necessary to restore its viability. deemed to be defective. b. and the management thereof. 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 . 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. g. 2. A hearing may be subsequent to the closure. property. in which case the provisions on receivership and liquidation shall apply. depositors. by a trustee appointed by the bank. This is to prevent unwarranted dissipation of the bank’s assets and is a valid exercise of police power to protect the creditors. collect all monies and debts due said institutions. d. f. or unwillingness to maintain a condition of liquidity deemed adequate to protect the interests of depositors and creditors. on the basis of the report of the conservator or of its own findings. 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. Sec. liabilities. 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. competent 2. e. 68. c. under existing law. 3. 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. 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. as determined by the Bangko Sentral. to meet its liabilities 3. is unable to pay its liabilities as they become due in the ordinary course of business 2. e. Voluntary Liquidation. 4. i. *Powers of conservator cannot impair the obligations of contracts – the law merely gives him the power to revoke contracts that are. b. 6. to bring and defend. h. has willfully violated a cease-and-desist order that has become final. c. has insufficient realizable assets. 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. take charge of the assets. stockholders.1. reorganize the management. 2. d. 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. and the general public. It should likewise be terminated should the Monetary Board. 4. and the Monetary Board shall have the right to intervene and take such steps as may be necessary to protect the interests of creditors. refusing to turn over the bank’s records and assets to the designated receiver tampering with bank records appropriating for himself or another party.

. designating a resident of the Phil. 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.our courts acquires jurisdiction over such bank. bank shall designate a new one. Wthin 7 yrs from effectivitiy of GBL. Before said deposits could be withdrawn. if it desires to do business here. branches of FB. 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. or who tampers with banks records. A contract of sale entered into by a bank cannot be revoked if at the time of the transaction. What enables a bank to pay stipulated interest on money deposited with it is that thru the other aspects of its operation. Penalty for Transactions After a Bank Becomes Insolvent. or who appropriates for himself for another party or destroys or causes the misappropriation and destruction of the bank’s assets. 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. If authority of agent or head revoked. 133. who are creditors shall have preferential rights to assets of such branch. C deposited money with O bank. even if adverse to it. Consistent with Corporation Code…. courts though on any valid cause. to further acquire voting shares to extent necessary for it to own up to 100%. 128. Sending of copy is necessary part of services and shall complete service. Primary purpose of Statute: to compel foreign corp. the price agreed upon was reasonable. shall transmit by mail to president or secretary of bank at its head or principal office a duly certified copy. Registry receipt is prima facie evidence of transmission. shall notify SEC in writing. 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. hence it cannot pay the interest. or no person authorized . the bank became insolvent before the buyer learned of the acceptance. The latter upon receipt. suit or proceeding in any court or adm. By securing a license. Power of conservator cannot impair the obligations of contracts. If it is closed. latter shall transmit it by mail to the head office of such bank. 14 | P a g e . Sec. thru establishments of branches governed by Foreign Bank Liberazation Act. service of process: SEC shall require foreign bank to file with SEC a written power of atty. howver. Within same period.Sec. File with SEC a duly authenticated nomination of such agent. before it issues a license for it to transact business in Phil. Any right or incentive granted to foreign bank shall be equally enjoyed by banks organized under laws of RP. Is the revocation valid?  No. . Offshore banking unit – branch. If summons be made with SEC. annulled said resolution. may maintain or intervene in any action. The accepted offer became ineffective when the bank became insolvent before the bank’s acceptance of said offer came to the offeror’s knowledge. The SC. it cannot generate such funds. Residents and citizens of the Phil. However. – 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.no access to our courts and cannot transact business in Phil. 3. Doing business without a license – foreign corporation transacting business in Phil. the BSP passed a resolution suspending the bank’s operations. whom summons must be served. a foreign entity would be giving assurance that it wll abide by the decisions of our courts. Foreign Banks – entry to Phils. In absence of agent or head. **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. or he became mentally incompetent. NOTES: all branches of foreign bank shall be treated as one unit for purpose of GBL. To protect interests of depositors and creditors of Phil. branches of foreign banks shall be held to refer to such unit. within 10 days. A buyer offered to buy the property of a bank which the latter accepted. Chapter 6: Foreign Banks and Trust Operations I. Is O bank liable for interest thereon during the period it was closed?  No. . 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. 70. In case of change of address of resident agent. subsidiary. collection of loans and/or receivables. Notes: Corporation Code Summons and Legal Process: If served on agent or head of foreign bank. If “without license”. Was there a perfected contract?  None.binds the bank which it represents. Acquisition of Voting Stock in a Domestic Bank: 1. 2. it is able to generate funds to cover the payment of such interest. 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. their head office shall fully guarantee prompt payment of all liabilities of its Phil. affiliate of a foreign banking corporation authorized to transact offshore banking business in Phil. branch. summons and legal process and notices be made upon Bangko Sentral Deputy Governor In-Charge of the supervising and examining departments. Sec. MB may authorize foreign bank to acquire up to 100% of voting stock of ONLY one bank organized under laws of RP. Resident agent. and all reference to Phil. Foreign bank shall execute and file with SEC an agreement. Agency n Phil but cannot sue before Phil. 4.

global reputation and stability in competitive environment of applicant. Trust Operations I. BSP shall take action to protect creditors and public.minimum capital equal to that prescribed by MB for domestic banks of same category. After revocation. 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. prevents dominant market position by one bank 3. Locally Incorporated Subsidiaries .000 and shall be entitled to 3 branches o capital shall include those permanently assigned plus net due to head office outside the Philippines. it cannot transact business unless license is renewed or reissued. of its country.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. 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). unless owned by govt. II. Establishment of Additional Branches 1. 3. Foreign Bank Branches (entry under the 3rd mode) not less than US dollar equal to P210. secures the listing in SEC of shares of stocks 15 | P a g e . acquiring up to 60% of voting stocks of an existing bank b. Liberalized Entry of Foreign Banks: Purpose: 1. Additional 4 may be allowed on recommendation by MB and approval of President.shall guarantee prompt payment of all liabilities of its Philippine branches Board of Directors. unless accompanied by a certificate of authority issued by the BSP IV. investing up to 60% of voting stocks of new banking subsidiary incorporated under Phil. 15% of which shall be inwardly remitted and converted into Philippine currency. Capital Requirements: 1. and country of FB.- All costs incurred in transmission shall be paid in advance by the party whose instance the service is made. provided that amounts invested in productive or export activities shall not be subject to conversion. study capacity. to encourage greater foreign participation Policies: 1. develop self-reliant economy controlled by Filipinos. c. 2. ensures that 70% of resources and assets is held by domestic bank majority owned by Filipinos 2. ensure geographic representation. Establishing branches with full banking authority. 5. P35 Million per additional branch. V. in imminent danger. or its continuance will involve probable loss to those it transacts business with. 3 branches in locations designated by MB to insure balanced economic development in all regions. capital to risk asset ratio. From effectivity of RA 7721. it must be widely-owned and publicly listed in its country of origin. 3. FB may open 3 branches in location of their choice. Guidance for Approval: MB shall 1. Head Office Guarantee.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. 2. Registration of Articles of incorporation and by-laws The SEC shall not register the same or any amendment thereto. FB can open three additional branches by inwardly remitting and converting into Philippine currency as permanently assigned capital. To establish a branch or subsidiary. 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. After revocation. New Central Bank Act provides the sanction and penalties. II.aliens may become members of the Board of a bank to the extent of the foreign participation in the equity of said bank. Revocation of license of Foreign Bank: By Monetay Board. consider strategic trade and investment relationship between Phil. Adoption of measures: MB adopt those which 1. FB shall be allowed entry under 3rd mode within 5 yrs.trust entity shall comply with the minimum paid-in capital requirements which will be determined by the MB. to create more competitive environment. laws. 2. ensure reciprocity rights are enjoyed by Phil banks in applicant’s country. 2. Equal treatment. 4. 6 FB may be allowed by MB. consider willingness to fully share their technology. development loans incentives etc. 4. Minimum Capital. promote a competitive and stable banking system provide a wider variety of financial services enhance competitiveness in international market to promote industrialization. If insolvent.foreign banks shall also be subject to limitations imposed upon a Philippine bank such as the SBL.

Responsibilities and corporate Powers of the Banko Sentral A. In line with this policy. Shall be governed by the GBL an other applicable laws B. Chapter 7 The Bangko Sentral ng Pilipinas I. 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. NCBA) Operations of Trust Entity I. and considering its unique functions and responsibilities. shall enjoy fiscal and administrative autonomy. Transactions requiring prior authority Lend.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. Requirements a. Trust entities required by the court to be an administrator.those who violate the pertinent provisions of the GBL shall be subject to sanctions and penalties VI. 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. or trust deeds These properties shall be conveyed within 5 years However. 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. Investment in non-trust funds b. Advertisement of Services • In a dignified manner • Ready and willing to give full disclosure of services being offered • Conduct its dealings with transparency VIII. mortgages.VI. Creation. 16 | P a g e . real estate acquired by the trust entity shall be acquired. MB or any court of competent jurisdiction. hold. Real Estate acquired by a trust entity Unless otherwise directed by the trustor or the nature of the trust. decrees. 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. etc are not required to give a bond V.  Funds of the government which are authorized by special laws to be placed in trust II. the subject matter of the trust or any part thereof be deposited with a trust entity c. the central monetary authority established under the NCBA. 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. banking and credit. 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. Investment limitations of a trust entity Limited to those loans or investments prescribed by law. 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. the court may order reduction in the amount of the bond given d. unless directed by the instrument creating the trust III. Deposit for faithful performance of trust duties Before transacting any business. Those appointed by the court shall file a bond in such sum as the court may require b. Upon application in the court. Upon presentation of a proof that the subject matter has been deposited with a trust entity. which shall be a body corporate known as the Bangko SEntral ng Pilipinas. – There is hereby established an independent central monetary authority. while being a government owned corporation. Bond of certain person required for the faithful performance of duties I. there shall be a deposit made with the BSP cash or securities approved by the MB an amount not less that P500. Sanctions and Penalties. 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. The reduced bond shall be adequate to secure the proper administration of the property Exemption from Bond Requirement a. Creation of the bangko Sentral ng Pilipinas • Section 2 & 4 of NCBA: SECTION 2 Creation of the Bangko Sentral. (Section 1.

Adopt. • Mandate by the Constitution: The Congress shall establish an independent central monetary authority. and institutions performing similar functions. or a s essential to the proper conduct of such operations Compromise. Until the congress otherwise provides. It shall have supervision over operations of banks. Responsibility and Primary Objectives of the bangko Sentral 1. 3. Primary objective of BSP – maintain price stability conducive to a balanced and sustainable growth in the economy.The capital of the Bangko Sentral shall be Fifty Billion Pesos. through the Secretary of Finance and the Secretary of Budget and Management. The closest it can get to prosecuting is its power to sue and be sued (civil cases only). under such terms and conditions as maybe prescribed by the monetary board. condone. 2. of known probity. banking. 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. shall function as the central monetary authority. • C. or release any claim of or settled liability to the Bangko Sentral . 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. Corporate Powers of the Bngko Sentral 1. Power to Prosecute • BSP has no power to prosecute. But BSP and its officials have the duty to cause the prosecution of those who violate the banking laws. integrity. It shall also promote and maintain monetary stability and the convertibility of the peso. BSP is an artificial person limited to its statutory powers. They shall also be subject to such other qualifications and disabilities as may be prescribed by law. agencies and correspondents in such other places as the proper conduct of its business may require. 7. 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. the Central bank of the Philippines operating under existing laws. and patriotism. banking. 4. – The Bangko SEntral shall have its principal place of business in Metro Manila. SECTION 4 Place of Business. The authority shall provide policy direction in the areas of money. and credit. 4. It shall also exercise regulatory powers over the operations of finance companies and non-bank financial institutions performing quasi-banking functions. 6. Responsibility of BSP . 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. the members of whose governing board must be natural-born Filipino citizens. Prosecution of violation of banking laws is not exclusive to BSP. regardless of the amount involved. and credit. • 2. 5. may thereafter determine. 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. D. Estoppel 17 | P a g e . 3. F. 5.provide policy directions in the areas of money. E. to be fully subscribed by the Government of the Republic. alter and use a corporate seal Enter into contracts Lease or own real and personal property. but may maintain branches.

Regular investigation which shall not be oftener than once a year Inquiry into the solvency and liquidity of the institution Enforcing prompt corrective action. Issuance of rules of conduct or the establishment of standards of operation for uniform application to all institutions and functions covered. including those of the Bank of International Settlements. 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. C. Underlying this commitment however is the government’s strict and faithful adherence to basic principles of fairness and decency under the Bill of Rights. Conduct of examination to determine compliance with the laws and regulations if the circumstances so warrant and determined by the monetary board. IV. • 5 members shall come from the private sector. Ratios. 3 shall have a term of 6 years and the other 2. 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. V. he shall designate a Deputy Governor to act as his alternate. VI. • • The Monetary Board II. BSP is stopped from enforcing circulars that would deny banks or banking institutions of their rights. ceilings.• BSP is committed to maintain the stability of the country’s foreign exchange reserve position. o Composition • Composed of 7 members appointed by the president of the Philippines for a term of 6 years. o Whenever such cabinet cannot attend a meeting of the board. the BSP shall phase out and transfer its supervising and regulatory powers over building and loan associations to the Home Insurance and Guarantee Corporation. 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. o Of the members first appointed. In such event. all of whom shall serve fulltime. ceilings and limitations. Monetary Board may exempt particular categories of transactions from such ratios. Phase out of Bangko Sentral Powers Over Building Loan and Association • Within 3 years form effectivity of GBl. 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. he shall designate a Undersecretary in his department to attend as his alternate. Authority of the Bangko Sentral A. Overseeing to ascertain that laws are complied with. depositors and the general public. A member of the cabinet to be designated by the President. I. 3 years. but at the same time avoid irreparable or grave prejudice to participants of said program. 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. • The powers and functions of the bangko Sentral may be exercised by the BAngko SEntral Monetary Board. III. • III. II. Policy Direction. the Monetary Board shall designate one of its members as acting chairman. Banking and Credit Monetary Board may prescribe ratios. • B. • • BSP shall provide policy direction in the areas of Money. Ceilings and Limitations 18 | P a g e .

or imminent panic which directly monetary and banking stability. i.serves as an official representative of the Government to such Institution. chairman 40yrs old Good moral character iii. consultant. C. Member no longer possesses the qualifications. he must resign first to assume office as member of the monetary board Holding public office or public employment during their tenure. 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. Grounds for removal of Monetary Board members • The president may remove any member of the monetary board for these reasons : i. iii.. lawyer. Member is subsequently disqualified under section 9 of NCBA D. Guilty of fraudulent or illegal acts or which are manifestly opposed to the aims and interests of the bangko sentral. resignation. employee. Physically or mentally incapacitatedtaht he cannot properly discharge his duties and responsibilities as such incapacity a\has lasted for more than 6 months. iii. o v. Known probity and patriotism Unquestionable integrity Recognized competence in social and economic disciplines. 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. removal E. Being a director. iv. Person connected directly with any multilateral banking or financial institution. iv. iv. Natural born citizen 35 yrs old. vi. Disqualifications of Monetary board Members i. 19 | P a g e . v. Quorum. The Monetary Bard shall meet at least once a week. agent. Having a substantial interest in any private bank in the Philippines. Exceptions ( 5 votes are needed in these cases): ii. A new member shall be appointed who shall serve the unexpired term of the member concerned. ii. Qualifications of the Members of the monetary Board ii. i.In allowing banks to delay publication of its statements of financial condition in periods of national or local emergency. ii. upon application of a bank. vi. Vacancies • • Cause of vacancy: death. (section 9 NCBA) B. 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. stockholder of any bank or any other institution under the supervision of the bangko Sentral. Decisions and Proceedings of the Monetary board i. Sec 61 GBL . officer.

likewise authorize the Bangko Sentral to grant emergency loans or advances to banking institutions. however. and may subject all transactions in gold and foreign exchange to license by the Bangko Sentral. — The supervising and examining department head. That there shall be an interval of at least twelve (12) months between annual examinations. That while such loans or advances are outstanding. at the effective exchange rate or rates. Emergency Loans and Advances. the assets tendered by the banking institution to collateralize the subsequent tranche. — In periods of national and/or local emergency or of imminent financial panic which directly threaten monetary and banking stability. in the judgment of the Monetary Board. In connection with the exercise of these powers. The Monetary Board may. and at such other times as the Monetary Board by an affirmative vote of five (5) members. the Monetary Board. however. The Monetary Board may. 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.in the imminence of. That should the Bangko Sentral acquire any of the shares it has accepted as 20 | P a g e . the circumstances surrounding the emergency warrant a loan or advance greater than the amount provided hereinabove. except upon prior authorization by the Monetary Board. 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. shall examine the books of every banking institution once in every twelve (12) months. though foreseeable. including the exercise of voting rights pertaining to said shares: Provided. where necessary. the debtor institution shall not. 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. (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. may temporarily suspend or restrict sales of exchange by the Bangko Sentral. or in time of national emergency to give the Monetary Board and the Government time in which to take constructive measures to forestall. with the concurrence of at least five (5) of its members and with the approval of the President of the Philippines. 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. further. 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. combat. at its discretion. or events which. even during normal periods. would be adequate to supplement. by a vote of at least five (5) of its members. o Section 84. 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.o Section 28 NCBA. may deem expedient and to make a report on the same to the Monetary Board: Provided. personally or by deputy. . the Monetary Board may. That the Monetary Board has ascertained that the bank is not insolvent and has the assets defined hereunder to secure the advances: Provided. Examination and Fees. could not be prevented by the bank concerned: Provided. authorize the Bangko Sentral to grant extraordinary loans or advances to banking institutions secured by assets as defined hereunder: Provided. authorize the release of a subsequent tranche on condition that the principal stockholders of the institution: o Section 72 NCBA. for the purpose of assisting a bank in a precarious financial condition or under serious financial pressures brought by unforeseen events. That if as determined by the Monetary Board. by a vote of at least five (5) of its members. or during an exchange crisis. expand the total volume of its loans or investments. Prior to the release of the first tranche. That a concurrent vote of at least five (5) members of the Monetary Board is obtained. 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. or overcome such a crisis or emergency. and (b) provide acceptable security which.

Scope of the Authority of the Monetary Board a. 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 . That the Monetary Board may delegate such authority to the Governor under such guidelines as it may determine. i. d. and administration of the Bangko Sentral. made a party by reason of the performance of his functions or duties. and J. Establish a Human Resource management system which shall govern the selection. 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. i. or dismissal of all personnel. Direct the management. 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. reorganize its personnel and issue such rules and regulations as it may deem necessary or convenient for this purpose. unless he is finally adjudged in such action or proceeding to be liable for negligence or misconduct. transfer. based on job evaluation studies and wage surveys and subject to the Board's approval. indemnify its members and other officials of the Bangko Sentral.collateral as a result of foreclosure proceedings. 6758: Provided. c. 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. 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. I. H. Deputy Governors may Attend Meetings of the Monetary Board • He may attend with the right to be heard A compensation structure. 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. Such system shall aim to In the event of a settlement or compromise. and remove personnel of the Bangko Sentral. hiring. subject to pertinent civil service laws: Provided. G. 6758. The minutes shall reflect the disclosure made and the retirement of the member concerned from the meeting. fix the remunerations and other emoluments. ii. That the Monetary Board shall make its own system conform as closely as possible with the principles provided for under Republic Act No. assign. 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. The decision taken on the matter shall be made public. or is. or reassign personnel of the Bangko Sentral and these personnel actions are deemed made in the interest of the service and not disciplinary: Provided. suit or proceedings to which he may be. however. shall be instituted as an integral component of the Bangko Sentral's human resource development program: Provided. 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. operations. further. On the recommendation of the Governor. That the Monetary Board shall have exclusive and final authority to promote. e. b. appoint.

policies or instructions issued by the Monetary Board. direct and supervise the operations and internal administration of the Bangko Sentral. however. 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. or rulings. abuse. misfeasance or failure to exercise extraordinary diligence. or the use of such information for personal gain or to the detriment of the Government. or any information on the discussions or resolutions of the Monetary Board. i. officers. G. Members of the Monetary Board. the disclosure of any information of a confidential nature. Responsibilities of the Members of the Monetary Board. b. and employees of the Bangko Sentral who willfully violate this Act or who are guilty of negligence. on matters regarding application or enforcement of laws pertaining to institutions supervised by the Bangko Sentral and laws pertaining to quasi-banks.counsel that the person to be indemnified did not commit any negligence or misconduct. or about the confidential operations of the Bangko Sentral. That any data or information required to be submitted to the President and/or the Congress. 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. and the implementation thereof. Officials. subject to the provisions of Section 15(c) of this Act: Provided. execute and administer the policies and measures approved by the Monetary Board. as well as to impose disciplinary measures upon personnel of the Bangko Sentral. That removal of personnel shall be with the approval of the Monetary Board. and IV. and employees of the Bangko Sentral for: d. negligence. 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. which shall be final and executory until reversed or modified by the Monetary Board. render opinions. A. or is with prior authorization of the Monetary Board or the Governor. 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. examiners. a. or to be published under the provisions of this Act shall not be considered confidential. as well as regulations. suit or proceeding may be paid by the Bangko Sentral in advance of the final disposition of such action. ii. officials. malfeasance. suit or proceeding upon receipt of an undertaking by or on behalf of the member. the Bangko Sentral or third parties: Provided. b. Examiners. e. decisions. 22 | P a g e . Similar responsibility shall apply to members. Powers and Duties of the Governor a. 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. unless the disclosure is in connection with the performance of official functions with the Bangko Sentral. The costs and expenses incurred in defending the aforementioned action. and Employees of the Bangko Sentral c. officer. The Governor and Deputy Governors of the Bangko Sentral • Governor shall be chief executive officer of the Bangko Sentral ng Pilipinas.

That in order to preserve the integrity and the prestige of his office. E. profit and loss statements. exercise such other powers as may be vested in him by the Monetary Board. the Governor of the Bangko Sentral. 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. represent the Monetary Board and the Bangko Sentral in all dealings with other offices. Emergencies The Governor of the Bangko Sentral. 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. B. f. remunerated or ad honorem. c. whether public or private. At the soonest possible time. agencies and instrumentalities of the Government and all other persons or entities. correspondence and other documents of the Bangko Sentral. whether domestic. with the approval of the Monetary Board. including private counsel. 23 | P a g e .a. either personally or through counsel. the Governor shall call a meeting of the Monetary Board to submit his action for ratification. 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. public or private. d. as may be authorized by the Monetary Board. in any legal proceedings. D. all reports. by designation of the President. not accept any other employment. with the exception of positions in eleemosynary. with the concurrence of two (2) other members of the Monetary Board. Number and Functions of Deputy Governors a. 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. The Governor shall submit a report to the President and Congress within seventy-two (72) hours after the action has been taken. action or specialized legal studies b. notes and securities issued by the Bangko Sentral. C. (b) and (c) of this section. to other officers upon his own responsibility: Provided. balance sheets. limit their professional activities to those pertaining directly to their positions with the Bangko Sentral. in such capacity and in accordance with the instructions of the Monetary Board. 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. civic. During the negotiations. however. delegate his power to represent the Bangko Sentral. sign contracts entered into by the Bangko Sentral. foreign or international b. he may instead be represented by a permanent negotiator. represent the Bangko Sentral. a. b. as provided in subsections (a). cultural or religious organizations or whenever. may decide any matter or take any action within the authority of the Board. with the following powers: c. In case of emergencies where time is sufficient to call a meeting of the Monetary Board.

other htan banks. administer oaths to any director. Toward this end. or government-owned or controlled corporations. the Bangko Sentral is hereby authorized to defray the costs of study. or employee of any institution under their respective supervision or subject to their examination and to c. 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. shall be subject to punishment for contempt in accordance with the provisions of the Rules of Court. i. released to interested persons or entities: provided finally. 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. a duly authorized representative shall have the power to issue a subpoena for the production of the books and records for the aforesaid purpose. any data which it may require for the proper discharge of its functions and responsibilities. theth the case of data on banks. the provisions of section 27 shall apply. 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. of promising university graduates or of any other qualified persons who shall be determined by proper competitive examinations. 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. documents. 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. The Bangko Sentral through the Governor or in his absence. subject to the provision of existing laws protecting or safeguarding the secrecy or 24 | P a g e . Such data shall include. The Bangko Sentral shall have the authority to request from government offices and instrumentalities.V. The BSP shall have supervision over. b. forecasts of the balance of payments of the Philippines. ii. In the absence of the Governor. Scope of the Supervision and Examination by the bangko Sentral a. Scope of authority of bangko Sentral to Obtain data and Information a. among others. banking. that the collected data on firms may be ii. and conduct periodic or special examination of. of qualified employees of the Bangko Sentral. banking institutions and quasi-banks. Subsidiary – more than 50% of the voting stock is owned by a bank Affiliate – 50% or less. officer. The department heads and the examiners of the supervising and/or examining departments are hereby authorized to i. 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. 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. compel the presentation of all books. Those supply the bank with data requested or required. Training of technical Personnel • The Bangko Sentral shall promote and sponsor the training of technical personnel in the field of money and banking. including their subsidiaries and affiliates. activities or transactions of the institution under examination. Data on individual firms. B. b. 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. The Monetary Board shall prescribe rules and regulations to govern the training program of the Bangko Sentral. D. at home or abroad. credit and exchange policies. Operations of the Bangko Sentral A. C.

contracts a loan or any form of financial accommodation from: i. ii. B. i. natural or juridical. whichever is lower. shall be required by the lending bank to waive the secrecy of his deposits of whatever nature in all banks in the Philippines. Examination of Banking Institutions A. Director. Court cannot order restraining order prohibiting the BSP from examining any institution subject to the supervision and examination of the BSP. his bank. in excess of five percent (5%) of the capital and surplus of the bank. Provisions of the Rules of court regarding Preliminary injunction. officer or stockholder who. C. or in the maximum amount permitted by law. shall examine the books of every banking institution once in every twelve (12) months. in debt instruments issued by the Government. E. 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. or from a bank 1. VI. Frequency of Examination • b. Any director. Prohibitions Against Personnel of the Bangko Sentral (same as disqualifications of MB Member) VII. together with his related interest. 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. in so far as they are applicable. Restraining Order or Injunction a. B. Contracting Loans a.confidentiality of bank deposits as well as investments of private persons. The supervising and examining department head. 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. may deem expedient and to make a report on the same to the Monetary Board: Provided. 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. Service Fees 25 | P a g e . personally or by deputy. b. 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. Officer or Stockholder and Related Interests A. and at such other times as the Monetary Board by an affirmative vote of five (5) members. That there shall be an interval of at least twelve (12) months between annual examinations. and not inconsistent shall govern the issuance and dissolution of the restraining order or injunction.

the principal data on government receipts and expenditures and on the status of the public debt. i. MB shall publish the ff reports and submit them to the President and to congress. • Abnormal movements in monetary aggregates and the general price level. an annual fee. which shall be submitted 90 days after end of month. (within 90 days after end of year) Review of the state of the financial system ( 120 days after end of semester) c. Operating Departments of the Bangko Sentral • The Monetary Board shall. and remedial measures in response to such abnormal movements (not later than 27 hours) C. 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. ii. Administration A. The annual report shall also include a statement of the financial condition of the Bangko Sentral and a statistical appendix which shall present. including a public information office. after deducting cash on hand and the amount due from banks. d. Required Reports and Publications of the Bangko Sentral a. the monthly movement of purchases and sales of foreign exchange and of the international reserves of the Bangko Sentral. as a minimum. (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. The functions and duties of such operating departments and other offices shall be determined by the Monetary Board. The BSP shall publish a general balance sheet within 60 days after the end of each month except December. vi. b. the monthly movement of the accounts of the Bangko Sentral and of other banks. vii. the monthly movement. determine and provide for such operating departments and other offices. It shall contain the volume and compositions of its assets and liabilities as of the last working day of the month. by volume and value. b. iv. in accordance with its authority under this Act. iii. It would be a percentage of its average total assets during the preceding year as shown by its end of month balance sheets. and viii. 26 | P a g e . iv. iii. the balance of payments of the Philippines. including the condition of net international reserves and monetary aggregate. Amount of fee is prescribed by the MB. v. monthly indices of consumer prices and of import and export prices. the following data: i. in summary form. B. (as soon as practicable). 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. Analysis of economic and financial developments. Annual Report of the Bangko Sentral VIII. the monthly movement of monetary aggregates and their components. 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. ii. including the bangko sentral and the banks abroad. 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. a.• Banks and quasi-banks subject to examination of the BSP shall pay the BSP within 30 days of each year. of exports and imports. Before the end of March of each year. The Bangko Sentral shall publish another version of the annual report in terms understandable to the layman. both domestic and foreign.

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. 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. The Auditor The Chairman of the Commission on Audit shall act as the ex officio auditor of the Bangko Sentral and. in accordance with law. C. fix his salary. The Revaluation of International Reserve account shall be neither credited nor debited for any purposes other than those specifically authorized in this section. depending on whether the revaluations have produced net profits or net losses. the Bangko Sentral shall make adequate allowance or establish adequate reserves for bad and doubtful accounts. 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. Signatures on Statements Balance sheets and statements shall be signed by the officers responsible for their preparation. 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. b. Fifty percent (50%) of the net profits shall be carried to surplus the remaining fifty percent (50%) shall revert back to the National Treasury. until otherwise provided for in accordance with the transitory provisions of this Act. 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. Revaluation of Profits and Losses a. c.D. D. depending on whether the revaluations have produced net profits or net losses. The Revaluation of International Reserve account shall be neither credited nor debited for any purposes other than those specifically authorized in this section. and to appoint and fix salaries and number of personnel to assist said representative in his work. except as otherwise provided in the transitory provisions of this Act. Any profits or losses arising in this manner shall be offset by any amounts which. In the calculation of net profits. Any profits or losses arising in this manner shall be offset by any amounts which. 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. 265. as a consequence of such revaluations. Distribution of Net Profits F. The auditor of the Bangko Sentral and personnel under him may be removed only by the Chairman of the Commission. as a consequence of such revaluations. Computation of Profits and Losses Within the first thirty (30) days following the end of each year. 27 | P a g e . The representative of the Chairman of the Commission must be a certified public accountant with at least ten (10) years experience as such. Profits. in accordance with the following rule: a. as amended. B. c. E. No relative of any • Within the first sixty (60) days following the end of each fiscal year. 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 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. the Monetary Board shall determine and carry out the distribution of the net profits. Fiscal Year a. The salaries and other emoluments shall be paid by the Commission. IX. Losses. and Special accounts A. as such. he is empowered and authorized to appoint a representative who shall be the auditor of the Bangko Sentral and. b. the Bangko Sentral shall determine its net profits or losses.

shall be punished by a fine not less than 50. Fines not exceeding 30. or any order. at the discretion of the court. 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. Orders or Instructions a. Any willful failure or refusal to comply with. at the discretion of the court.000 or imprisonment of not less than 2 years. the violation of any of the provisions of this Act shall be subject to Sections 34. 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. rule or regulation issued by the monetary board. ii. vi. A bank. 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. Penalty for Violation Unless otherwise herein provided. the Monetary Board may also suspend or remove such director or officer. v. instruction. iv. Mb would take into consideration the attendant circumstances.000) nor more than Two hundred thousand pesos (P200. B. but not more than 10 years. or whenever any person or entity willfully violates this Act or other pertinent banking laws being enforced or Imposable sanctions: i. such as the nature and gravity of the violation or irregularity and the size of the bank. instruction. Any officer. suspension of interbank clearing privileges. X. owner. Penalty for Refusal to make Reports i. v. If the offender is a director or officer of a bank. Rules Regulations. iii. implemented by the Bangko Sentral or any order. C. and/or revocation of quasi-banking license. If the violation is committed by a corporation. person. iv. or both. iii. Whenever a bank or quasi-bank.000) or by imprisonment of not less than one (1) year nor more than five (5) years. ii. instruction or regualtin issued by the Monetary Board. 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 any entity who willfully the NCBA or other banking laws implemented by BSP. quasi-bank or trust entity. 000 and not more than 200.000) or by imprisonment of not less than two (2) years nor more than ten (10) years. or violation of any banking law or any rder.000) nor more than Two hundred thousand pesos (P200. 35.member of the Monetary Board or the Chairman of the Commission within the sixth degree of consanguinity or affinity shall be appointed such representative. Proceedings Upon and Penalty for Violation of NCBA and Other banking laws. such corporation may be dissolved by quo warranto proceedings instituted by the Solicitor General. in the discretion of the court. Administrative Sanctions on Banks and Quasi Banks a. 28 | P a g e .000 for each day of violation. agent.000). 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. or both. Administrative violation and penalties: Grounds for administrative sanctions imposable by the MB to any bank or quasi-bank: A. b. 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.000) nor more than One hundred thousand pesos (P100. or by imprisonment of not more than (5) years. instruction or ruling by the governor Conducting business in an unsafe or unsound manner as may be determined by the MB. manager. quasi-bank. or any order. D. rule or regulation issued by the Monetary Board. or both.

currency substitutes. Chapter 8: Currency. for any failure to comply with the requirements of law.has authority to investigate. substituting. 25c and above denominations shall not exceed P50.may issue regulations to prevent circulation of foreign currency. the order shall be final. defined -all Philippine notes and coins issued or circulating in accordance with the NCBA. 169. words or signs contained therein. 163. Art. Without Connivance 4. and may further order that immediate action be taken to correct the conditions resulting from such practice or violation.00 29 | P a g e . The cease and desist order shall be immediately effective upon service on the respondents. against those who: 1. Art. payable to bearer or order mentioned therein. The Peso (P) -unit of monetary value in the Philippines -divided into 100 equal parts: centavos (c) -legal tender. upon request made by the respondents within five (5) days from their receipt of the order. 2. Exclusive Issue Power (i) Bangko Sentral. (iii) Bangko Sentral. Value of Currency -has value because people are willing to accept it in exchange of goods. or 5. and/or instructions issued by the Monetary Board or by the Governor. Art.SOLE power to issue currency (ii) Monetary Board. and in amounts not exceeding. search and seize for the purpose of maintaining the integrity of the currency. 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. Monetary Board regulations and policies. accordingly.chan robles virtual law library 3. C. Mutilation of Coins. Issue of Means of Payment A. The Governor is hereby authorized. shall not form part of the assets or liabilities of the BSP. Such shall be a first and paramount lien on all assets of the BSP. b. modified or lifted by the Monetary Board on appeal. Application of its provisions. — The forgery referred to in this section may be committed by any of the following means: 1. Counterfeiting. letters. all issues shall be determined on the basis of records. Forging Treasury or Bank Notes on Other Documents Payable to Bearer. but also outside of its jurisdiction. Selling of Flase or Mutilated Coin. 167. 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. While being public officers or employees. Art. should commit an offense in the exercise of their functions. the imposition of which shall be final and executory until reversed. Importing and Uttering Instruments Not Payable to Bearer 6. Should commit any of the crimes against national security and the law of nations. counterfeiting or altering by any means the figures. Monetary Stabilization and Functions of the BSP I. *An Exception to Territoriality of Penal Laws (RPC) Art. to impose upon banking institutions. B. (iv) Violation: imprisonment of not less than five years but not more than ten years. Currency. fines not in excess of Ten thousand pesos (P10. 165. services or payment of debts. — Except as provided in the treaties and laws of preferential application. Art. If a hearing is conducted. including its atmosphere. 4. 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. Liability for Notes and Coins (i) Notes and coins issued by the BSP shall be liabilities of the BSP. Whether or not there is an administrative proceeding. 10c or less denominations shall not exceed P20. B. How forgery is committed. Importing. Such may be issued only against. Art.000) a day for each violation. By giving to a treasury or bank note or any instrument. c. Legal Tender Power -all notes and coins issued by the BSP= Legal Tender for all debts *coins: a. By erasing. Illegal Possession and Use of False Treasury or Bank Notes and Other Instruments of Credit 7. arrest. the latter shall prevail. 164. Should commit an offense while on a Philippine ship or airship 2. defined in Title One of Book Two of this Code. Making and Importing and Uttering False Coins 2. 166. at his discretion. its interior waters and maritime zone. The Unit of Monetary Value A. 168.00 b. after which the Monetary Board may either reconsider or make final its order. 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. 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. and Uttering Such False or Forged Notes and Documents 5. d. the appearance of a true genuine document. If no such hearing is requested within said period.II. Art. (ii) The Bangko Sentral’s holdings of its own notes and coins shall not be considered as part of its currency issue and. Importation and Utterance of Mutilated Coins 3. 2. Should be liable for acts connected with the introduction into these islands of the obligations and securities mentioned in the presiding number. In case the RPC provides for a greater penalty. *Related Crimes under the RPC 1. the assets of the BSP. or to prevent the reproduction of facsimiles of Bangko Sentral notes. C. the provisions of this Code shall be enforced not only within the Philippine Archipelago.

the notes and coins shall cease to be a liability of the BSP and shall be demonitized. Fineness 3. the identification of which is impossible.) -MB shall judge such adequacy based on: prospective receipts and payments of ForEx by the Philippines. 10 years old III. (ii) Monetary Board. Art. shall prescribe: 1. 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. 2. the circumstances warrant. shall deliver the notes and coins of the denominations which most nearly approximate those requested. B. IV. (ii) Expenses incurred for the operations shall be for the account of the BSP. BSP’s own liabilities in foreign currencies 2. and the nature and significance of any such changes. When in its judgment.-checks representing demand deposits do not have legal tender power: one cannot be compelled to accept the same. Lapse of one year. also shall bear the signatures of the President of the Philippines and the Governor of the BSP. Such notes called in for replacement shall remain legal tender for one year since the date of the call. employment. Retirement of Old Notes and Coins (i) The BSP may call in for replacement: notes. and if it is not possible to deliver such currency. in credit. mints or firms for such operations. with approval of the President. In case an extraordinary inflation or deflation of the currency stipulated should supervene. The called in notes and coins shall likewise be demonitized. *Related Civil Code Provisions Art. International Monetary Stabilization -preserved by the BSP -maintain convertibility into other currencies primarily for foreign trade and invisibles. Designs 3. on demand and with no charge. a description and analysis: 1. filed. credit and prices and shall make public such definitions and any changes thereof. may be exchanged at par and without charge during the following year or for a period determined by the MB. Other characteristics of notes Provided that: the notes state that they are liabilities of the BSP and are guaranteed by the Government. *a check cleared and credited to the account of the creditor = delivery of cash to such creditor. Philippine currency of any denomination to any other denomination of such currency. Action When Abnormal Movements Occur in the Monetary Aggregates. b. Interconvertibility of Currency -BSP shall exchange. wages and economic activity in general. ForEx assets and liabilities of other banks operating in the Philippines (ii) 30 | P a g e . Other characteristics of the coins The MB shall consider the availability and cost of materials E. 1250. 1249. or bills of exchange or other mercantile documents shall produce the effect of payment only when they have been cashed. F. or when through the fault of the creditor they have been impaired. (ii) Whenever: a. or in prices endanger the stability of the Philippine economy or important sectors. International Monetary Stabilization A. Denominations 5. If BSP is temporarily unable to do so. Inscriptions 4. Lapse of such period. The cost of living index increases by more than 10%. Extent to which such changes have been reflected in the level of domestic output. Designs 4. (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. 5 years old. B. (iii) The MB shall continue to make periodic reports until the disturbances have disappeared or have been controlled. (mutilated conditions) H. Power to Define Terms -MB shall formulate definitions of monetary aggregates. the action derived from the original obligation shall be held in the abeyance. Denominations 2. or c. C. the value of the currency at the time of the establishment of the obligation shall be the basis of payment. clipped. Causes of the rise or fall of such monetary aggregates. unless there is an agreement to the contrary. 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. with approval of the President. the MB shall: a) Take appropriate remedial measures b) Submit a report to the President and the Congress (also made public. or the level of credit. Weight 2. 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. It shall also have the authority to contract institutions. Measures taken and measures proposed to be adopted. coins. perforated coins. -MB shall pay special attention to the volume and maturity of: 1. The payment of debts in money shall be made in the currency stipulated. increases or decreases by more than 15%. Characteristics of the Currency (i) Monetary Board. or Price Level (i) Whenever abnormal movements in the monetary aggregates. D. notes which have lost 2/5 of their surface or all of the signatures therein. G. shall prescribe: 1. 3. In the meantime. The monetary aggregates. Credit. Replacement of Currency Unfit for Circulation -shall be withdrawn and demonitized by the BSP from circulation and replace them with adequate ones. The delivery of promissory notes payable to order. then in the currency which is legal tender in the Philippines. Domestic Monetary Stabilization A. shall not replace: notes and coins.

Regulation of Foreign Exchange Operations Of the Banks A. -MB shall determine the procedure F. Take appropriate remedial measures b. or 3) The international reserve is falling as a result of payments or remittances abroad which are contrary to the national welfare V. 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. D. or 2) The international reserves appear to be imminent in falling to such level. 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. that such are freely convertible into gold or US dollars. Banking institutions within the Philippines 2. (not applicable to demands for foreign notes and coins) -exchange transactions shall be based on the NCBA. The MB shall: a. 3. with notice to the Congress. Operations with Foreign Entities -MB may authorize the BSP to transact with foreign banks or entities. Require that any ForEx obtained by any person or entity in the Philippines be delivered to the BSP at the exchange rates. 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. Nature and causes of the existing or imminent decline 2. -MB may authorize the BSP to pledge any gold or other assets as securities against loans which it receives from foreign entities. (Foreign currency deposits made under RA 6426. Provided. 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. Submit a report to the President and the Congress: 1. 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. 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. but not limited to: a. 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. Give particular consideration to the prospects of continued strength and convertibility of the currencies c. Cooperation required from other government agencies for the execution of policies of the MB (ii) If such actions fail. (made within 60 days from the date of the occurrence. C. Subject all gold and ForEx transactions to license 3. exempt from this requirements) E. the MB shall propose to the President. and b. Foreign notes and coins (ii) The MB shall: a. Temporarily suspend sales of exchange 2. Measures proposed 4. 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. Documents and instruments customarily employed for the international transfer of funds 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. Foreign governments 4. Endeavour to hold the ForEx resources of the BSP b. D. 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. B. BSP shall report to the Congress the origin of the liabilities and the manner it shall be paid. Gold b. Foreign government securities 4. ForEx assets and liabilities of all other persons and entities in the Philippines Composition of the International Reserves (of the BSP): (i) May include. treasuries and commercial banks abroad 3. The BSP may also act as agent for such.C. (iv) BSP is free to convert any asset in its international reserves into other assets as described in a. Measures already taken or to be taken by the MB 3. Assets in foreign currencies in the form of: 1. International Financial Institutions 5. -If ForEx liabilities (in Pesos) > twice the ForEx assets (in Pesos). E. Demand and time deposits in central banks. 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 . Government and its subdivisions and instrumentalities 3. -with the following entities or persons only: 1. Means of Action -MB shall rely on its moral influence and the powers granted to it under the NCBA. Purchases and Sales of ForEx -by the BSP VI.

When Granted a. c.BSP may grant advances against the following for fixed periods not exceeding 180 days except number 4 (360 days): 1. Regulation of Non-spot Exchange Transaction -MB may issue regulations on such transaction to restrain banks from speculating future fluctuations in ForEx D. Loans To Banking And Other Financial Institutions A. -5 votes of MB members must concur C. 2. Must be secured by: 1. outstanding liabilities. b. buy and sell bills. Negotiable treasury bills. or their transportation within the Philippines.BSP may rediscount. 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. Other commercial or other banking risks 3. 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. Limited to 25% of the total deposits or deposit substitutes 32 | P a g e . Nature of Emergency Loans or Advances -intended to assist a bank with serious liquidity problems arising from causes beyond the control of the management. and must furnish requested additional info. Authorized Types of Credit Operations -carried on by the BSP with banks a. Othe Exchange Profits and Losses -banks bear the risks of 1. Advances. Securities representing obligations of the BSP or of other domestic institutions of recognized solvency 3.when necessary. -discretion of MB -only a temporary remedial measure -must be on a fully secured basis B. B. The importation. cannot be prevented. mineral or industrial products. BSP may provide funds from noninflationary sources. The storing of non-perishable goods and products. acceptances. Utilized portions of advances in current amount covered by regular overdraft agreements related to commercial and production credits. exportation. 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. Non-compliance with the terms of the ForEx documents and instruments they buy and sell. -MB must first ascertain that the bank is not insolvent and has assets to secure the advances. -MB may determine the net assets and liabilities of banks and consider the bank’s networth. (ii) Advances made against the collateral in 6 and 7 may not exceed 80% of the current market value of the collateral C. It shall prescribe the form such declarations must be made. Emergency Loans and Advances A. Commercial Credits. First Tranche 1. Such transfers shall be at the established rates and may be required of certain currencies only. . Gold coins or bullions 2. promissory notes and other credit instruments with maturities of not more than 180 days from the date of rediscount. discounts. discount. 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. VII. MB shall prescribes for additional safeguards for the same. and certified as to the amount and liquidity by the institution soliciting the advance 6. cert of indebtedness. discounts. duly insured and deposited. They shall be granted reasonable time to adjust. The MB may also require other persons and entities to report to it all transactions as stated above. 70% of the appraised value of which equals or exceeds the amount of the loan granted. A lien or mortgage on real prop. 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. -such powers shall be exercised only under special circumstances which warrant the same C. or 2. A pledge of the crops or products or 2. the debtor cannot expand the total volume of its loan or investments without authorization from the MB b. Requirement of Balanced Currency Position -MB may require banks to maintain a balanced position between their assets and liabilities. Banks shall report to the BSP the volume and composition of their purchases and sales of gold and ForEx each day. or other ratios it may deem appropriate. Production credits 5.convertibility of the Peso. Production Credits. Exchange risks not assumed by the BSP regarding non-spot exchange transaction E. d. The BSP may inspect such declarations for verification. Information on Exchange Operations: a. Commercial credits 4. Such determination shall be applied in all banks uniformly. discount or acquisition and resulting from transactions related to: 1. Guiding Priciples -rediscounts. notes and other negotiable obligations of the Govt maturing within 3 yrs from the date of the advance 7. 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. b. purchase or sale of readily saleable goods and products. Other credits.*same* with maturities of not more than 360 days *same* and resulting from transactions related to the production or processing of agricultural. animal. 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.credit instruments not rediscountable under a and b may be rediscounted in accordance with BSP rules and regulations. B. While such loans are outstanding.

and shall not participate in the ownership or management of any enterprise. C. Definition of Deposit Substitutes. That deposit substitutes of commercial. Endorsement -the documents rediscounted. Banks have the right to withdraw such collaterals upon payment of the debt and its interest D. That outstanding loans obtained or extended for development financing shall not be affected by the prohibition of this section. but need not be limited to. endorsement. through the issuance. for the purpose of relending or purchasing of receivables and other obligations. Prohibitions. bought or accepted as collateral by the BSP shall bear the endorsement of the bank. The Monetary Board shall determine what specific instruments shall be considered as deposit substitutes for the purposes of Section 94 of this Act: Provided. Provided that the advances be: 1. Overdraft -shall be eliminated within 5 consecutive banking days IX. Interest and Rediscount -The BSP shall collect interest and other charges on loans it extends notwithstanding the closure. Furnish the undertaking the same as in number 2 above 2. promissory notes. Other Requirements -MB may prescribe additional requirements to obtain loan from the BSP. receivership or liquidation of the bank. 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. Purchases and Sales of Government Securities -BSP may purchase and sell in open market: a. Definition of Deposit Substitutes Section 95. -MB may determine the interest rates. — The term "deposit substitutes" is defined as an alternative form of obtaining funds from the public. F. Provisional Advances to the National Government -may be made with or without interest by the BSP to finance expenditures authorized in its annual operations. maturities and other characteristics of said obligations of the BSP and may denominate the obligations in gold or foreign currencies. -acquired by the BSP through purchases or redemptions. This shall apply prospectively. 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 . XI. Issue and Negotiation of the BSP Obligations -BSP may issue. bankers acceptances. place. 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. Credit Terms A. Repayment of Credits a. evidences of indebtedness issued directly by the Govt and its subdivisions b. supra Open Market Operations For The Account Of The Bangko Sentral A. and shall be immediately retired and cancelled. -shall not be included among its assets. shall not. and repurchase agreements. The Bangko Sentral shall not engage in development banking or financing: Provided. -The MB shall fix the interest and rediscount rates (applied uniformly to banks of the same category) B. Provide acceptable security adequate (in the opinion of the MB) to supplement the assets tendered by the bank to collateralize the subsequent tranche.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. however. in order that a contraction in BSP credit may be effected promptly whenever the national monetary policy so requires XII. it may exceed 25% -must be secured by govt securities and other unencumbered first class collaterals the MB may approve. buy and sell freely negotiable evidences of indebtedness of the Bangko Sentral . If MB determined that the emergency warrant a greater loan. however. Prior to the release of the first tranche. either directly or indirectly. — The Bangko Sentral shall not acquire shares of any kind or accept them as collateral. regularly serviced. E. Prohibitions Section 128. evidences of indebtedness issued by govt instrumentalities and guaranteed by the Govt -such evidences must be freely negotiable. discounted. participations. G. 33 | P a g e . exceed 20 % of the average annual income of the borrower for the last 3 preceding years. 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. available to the public in denominations of thousand pesos or more. aggregately. or acceptance of debt instruments for the borrower's own account. Bank Reserves A. 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. -principal stockholders must furnish an acceptable undertaking to indemnify and hold harmless from suit a conservator appointed by MB 3. The collaterals must be withdrawn by the bank on maturity date or upon the liquidation of the obligation which they represent b.issuance of such certificates of indebtedness shall be made only in cases of extraordinary movement in price levels. Principles of Open Market Operations -made exclusively in accordance with the objective of achieving price stability B. F. These instruments may include. E. -This provision shall not be applicable to acceptance as collateral of shares and their acquisition as a result f foreclosure proceeding. such shall be disposed in a public bidding within one year from the date of consolidation of title by the BSP. Shares as Collateral Section 128. other than deposits. industrial and other X.-secured by govt securities and other unencumbered first class collaterals the MB may approve 2. C. certificates of assignment and similar instruments with recourse. If the BSP acquired any of such shares.

XIII. 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. negotiations or transactions with the International Bank for Reconstruction and Development and with other foreign or international 34 | P a g e . The restrictions shall be applied to all banks uniformly and without discrimination. Section 108. and may relate the size of the required margin to the nature of the transaction to be financed. — Government-owned corporations which perform banking or credit functions shall coordinate their general credit policies with those of the Monetary Board. its political subdivisions and instrumentalities. -Deposit reserves. 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 . — The Monetary Board shall use the powers granted to it under this Act to ensure that the supply. negotiations and transactions with the International Monetary Fund and shall carry such accounts as may result from Philippine membership in. Representation with Other Financial Institutions. — The Monetary Board may at any time prescribe minimum cash margins for the opening of letters of credit. — The Bangko Sentral shall act as a banker of the Government. Designation of Bangko Sentral as Banker of the Government. and may alter said ratios whenever it deems necessary. the Monetary Board may. Section 105.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. D. or to specific categories thereof. Section 111. The MB may also modify or set aside reserved deficiency penalties for rehabilitation program of a bank. 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. Minimum Capital Ratios. Section 107. E. and the kind and amount of security to be required against the various types of credit operations of the banks. — The Bangko Sentral may be authorized by the Government to represent it in dealings.FUNCTIONS AS BANKER OF THE GOVERNMENT Section 110. Toward this end. said Fund. the Board may place an upper limit on the amount of loans and investments which the banks may hold. CHAPTER V FUNCTIONS AS BANKER AND FINANCIAL ADVISOR OF THE GOVERNMENT ARTICLE I .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. H. The Monetary Board may apply such limits to the loans and investments of each bank or to specific categories thereof. -the appropriate clearing office shall be officially notified of banks with overdrawn balances. ARTICLE IX COORDINATION OF CREDIT POLICIES BY GOVERNMENT INSTITUTIONS Section 109. I. 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. or may place a limit on the rate of increase of such assets within specified periods of time. Regulations on bank operations shall be applied to all banks of the same category uniformly and without discrimination.basis for check clearing and settlement of interbank balances . -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. G. Section 106. — The Monetary Board may prescribe minimum ratios which the capital and surplus of the banks must bear to the volume of their assets. Guiding Principle. make suggestions or recommendations to such corporations for the more effective coordination of their policies with those of the Bangko Sentral. Section 112. MB may limit or prohibit the making of new loans or investments and may require the net profits be assigned to surplus . Selective Regulation of Bank Operations [just for now] Section 104. or operations with. — The Bangko Sentral shall represent the Government in all dealings. Representation with the International Monetary Fund. 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. whichever is higher. 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. 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. BSP may charge fees. Interbank Settlement -BSP shall establish facilities for interbank clearing under prescribed rules and regulations of the MB. . not later than the next clearing day. whichever is higher. Portfolio Ceilings. — Whenever the Monetary Board considers it advisable to prevent or check an expansion of bank credit. whenever it deems it expedient. Required Security Against Bank Loans. Margin Requirements Against Letters of Credit.MB may modify or set aside the reserve deficiency penalties provided in this section. Coordination of Credit Policies. F.any bank which incurs on overdrawing in its deposit account with the Bangko Sentral shall fully cover said overdraft. its subdivisions and instrumentalities.C. — In order to promote liquidity and solvency of the banking system. 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. J.

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. the Government. provincial. The Bangko Sentral may pay interest on deposits of the Government or of its political subdivisions and instrumentalities. — In the performance of its functions as fiscal agent. — The Bangko Sentral may place the securities to which the preceding section refers through direct sale to financial institutions and the public. The Monetary Board shall issue such regulations as may be necessary to implement the provisions of this section. as the case may be: Provided. shall reimburse the Bangko Sentral for the expenses incurred in the placing of the aforesaid securities. Section 118. Methods of Placing Government Securities. or any of its political subdivisions or instrumentalities. fees. Fiscal Operations. The President may. 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 Monetary Board shall use the resources of the Fund to prevent. Section 124. The Securities Stabilization Fund. Other Banks as Agents of the Bangko Sentral. but may intervene therein for the sole purpose of regulating their operations in the placing of government securities. its political subdivisions or instrumentalities. the price level. Issue of Government Obligations. Section 115. as well as on deposits of banks with the Bangko Sentral. financial and fiscal policies of the Government and the monetary. 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. Official Deposits. commissions or fees for services which it renders to the Government. Servicing and Redemption of the Public Debt. however. Remuneration for Services. BANGKO SENTRAL SUPPORT OF THE GOVERNMENT SECURITIES MARKET Section 120. 265 as of the effective date of this Act. negotiations or transactions. Section 121. its political subdivisions and instrumentalities as well as of government-owned or controlled corporations and. — Subject to Section 132 of this Act. — The servicing and redemption of the public debt shall also be effected through the Bangko Sentral. their cash balances should be deposited with the Bangko Sentral. 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. however. of bonds and other evidences of indebtedness issued or fully guaranteed by the Government. Resources of the Securities Stabilization Fund. Transfers of funds from this account to other accounts shall be made only upon order of the Treasurer of the Philippines. Representation on the National Economic and Development Authority. sharp fluctuations in the quotations of said government obligations. THE ISSUE AND PLACING OF GOVERNMENT SECURITIES Section 117. or moderate. Section 122. contemplates borrowing within the Philippines. and for the account of. Financial Advice on Official Credit Operations. Profits and Losses of the Fund. and shall not subscribe to their issue except to replace its maturing holdings of securities with the same type as the maturing securities. as a general policy. chan robles virtual law library The operations of the Securities Stabilization Fund shall consist of purchases and sales. 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. subject to such rules and regulations as the Board may prescribe: Provided. its political subdivisions and instrumentalities. — There shall be established a "Securities Stabilization Fund" which shall be administered by the Bangko Sentral for the account of the Government. CHAPTER VI PRIVILEGES AND PROHIBITIONS ARTICLE I PRIVILEGES Section 125. but shall not endeavor to alter movements of the market resulting from basic changes in the pattern or level of interest rates. — The issue of securities representing obligations of the Government. or its political subdivisions or instrumentalities. — The Securities Stabilization Fund shall retain net profits which it may make on its operations. The Government. designate any of his other financial advisors to jointly represent the Government in such dealings. The Fund shall correspondingly bear any net losses which it may incur. in which the liquid funds of the Government shall be deposited. 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 writing. — The Bangko Sentral may charge equitable rates. — Before undertaking any credit operation abroad. B. That for fiscal operations in foreign countries. — The Bangko Sentral shall be the official depository of the Government. Section 114. Section 116. and the balance of payments. through the Secretary of Finance. ARTICLE III FUNCTIONS AS FINANCIAL ADVISOR OF THE GOVERNMENT Section 123. shall request the opinion. however. credit and exchange policies of the Bangko Sentral. 35 | P a g e . may be made through the Bangko Sentral. municipal and city taxes. — In order to assure effective coordination between the economic. regardless of whether said profits arise from capital gains or from interest earnings. the Bangko Sentral may engage the services of foreign banking and financial institutions.financial institutions or agencies. which may act as agent of. That the Bangko Sentral shall not guarantee the placement of said securities. the Government or its respective subdivisions or instrumentality. 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 Bangko Sentral shall open a general cash account for the Treasurer of the Philippines. Such opinions must similarly be requested by all political subdivisions and instrumentalities of the Government before any credit operation abroad is undertaken by them. Tax Exemptions. of the Monetary Board on the monetary implications of the contemplated action. in the open market. charges and assessments. — The Bangko Sentral shall be exempt for a period of five (5) years from the approval of this Act from all national. Section 119. ARTICLE II THE MARKETING AND STABILIZATION OF SECURITIES FOR THE ACCOUNT OF THE GOVERNMENT A. Section 113. 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. Whenever the Government. The Bangko Sentral shall not be a member of any stock exchange or syndicate.

and of gold and other metals to be used for purposes authorized under this Act. after serving such.  Notice of Sale shall be deemed sufficient if given in writing and either: ■ served personally to the entrustee. both as to principal and interest. fees. Keep said goods adn proceeds thereof whether in money or whatever form. appoint personnel in the Bangko Sentral whose services are deemed necessary in order not to unduly disrupt the operations of the Bangko Sentral. Entruster NOT Responsible on Sale by Entrustee The Entruster. metal refining and other security printing operations shall be fully exempt from all customs duties and consular fees and from all other taxes. however. — The provision of any general or special law to the contrary notwithstanding. may without need of obtaining prior approval from any other government agency. Insure the GOODS for their total value against loss from fire. further. fees. respectively. including all members of the Monetary Board. 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. Exemption from Customs Duties. That no qualification requirements for positions in the Bangko Sentral shall be imposed other than those set by the Monetary Board: Provided. sell the GDI at a PUBLIC or PRIVATE SALE. The Entruster may be the purchaser. Obligations of the Entrustee The entrustee shall: 1. Observe all other terms and conditions of the trust receipt not contrary to the provisions of the law. Section 127. That said exemptions shall apply only to such taxes. charges and assessments for which the Bangko Sentral itself would otherwise be liable. from any and all taxes if the payment of such taxes has been assumed by the Bangko Sentral. Rights of the Entruster 1. and shall not participate in the ownership or management of any enterprise. is NOT responsible as a principal or as a vendor in a sale or contract to sell made by the entrustee.The exemption authorized in the preceding paragraph of this section shall apply to all property of the Bangko Sentral. or other casualties. and the importation of all equipment needed for bank note production. charges. 36 | P a g e . 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. the importation and exportation by the Bangko Sentral of notes and coins. whether or not the entrustee is at fault or negligent. — Appointments in the Bangko Sentral. minting of coins. further. — The Bangko Sentral shall not acquire shares of any kind or accept them as collateral. and  Give notice to the Entrustee on or after default of the intention to SELL and may. pilferage. 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. either directly or indirectly. That foreign loans and other obligations of the Bangko Sentral shall be exempt. shall be made only according to the Civil Service Law and regulations: Provided. deeds. expenditures. and 5. receipts. 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. agreement. That outstanding loans obtained or extended for development financing shall not be affected by the prohibition of this section. 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. or assessments payable by persons or other entities doing business with the Bangko Sentral: Provided. 4. Prohibitions. to the resources. I. ARTICLE II PROHIBITIONS Section 128. Officers and employees of the Bangko Sentral.  The loss of the GDI pending their disposition. in accordance with Sections 15(c) and 17(d) of this Act. it shall NOT extinguish his obligation to teh entruster for the value thereof J. Section 126. Applicability of the Civil Service Law. profits and income of the Bangko Sentral. That. NOT LESS THAN 5 DAYS. holding security interest or has given the entrustee the liberty to sell or dispose of the GDI. 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. as well as to all contracts. except as to those which are policy-determining. Hold the GDI and shall dispose of them in accordance with the terms and conditions of the trust receipt. assessments and charges related to such importation or exportation. The Bangko Sentral shall not engage in development banking or financing: Provided. documents and transactions related to the conduct of the business of the Bangko Sentral: Provided. 2. and shall not apply to taxes. 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. H. the Monetary Board or Governor. theft. however. shall not engage directly or indirectly in partisan activities or take part in any election except to vote. primarily confidential or highly technical in nature. separate and capable of identification as property of the entruster. Liability of Entrustee for Loss  Risk of Loss shall be borne by the Entrustee. 3.

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. 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. inter alia. F. refund to an IB any payment of assessment in excess of the amount due 2. 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. and when deposited by the fiduciary bank in another IB. 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.or other officials or persons therein responsible for the offense. and stating that the bank has failed or refused to pay. (v) (vi) (vii) M. 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. the assessment base shall be the amount of the liability of he bank for deposits without any deduction for indebtedness of depositors. for the goods received in trust is evidence of conversion or misappropriation--constitutes estafa. On the expiration of such period. in an amount not to exceed P10. determined in accordance with (a) above. Refund and Credit PDIC may: 1. without being limited to. but shall be considered to be a deposit liability of the IB B. w/o prejudice to the civil liabilities  Reason: Corporation and other juridical entities CANNOT be put into jail. Certified Statement of Assessment Base and Assessment Due (i) On or before July 31 of each year. upon demand. administrator. "w/o prejudice to the civil liabilities. C. employees. Any insured bank which fails to pay any certified statement may be compelled to do so by mandatory injunction or other appropriate remedy . If such bank has assumed the liabilities for deposits of another bank or banks." Chapter 10 (incomplete) G. 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. guardian. D. 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. executor. the PIF b. Penalty  Punished under Art. assessment collections. 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. On or before Jan. Trust Funds means funds held by an insured bank in a fiduciary capacity and includes. or agent shall be insured like other forms of deposits. Mere failure to deliver the proceeds or return the goods constitutes a criminal offense the causes prejudice not only to the creditors. credit such excess toward the payment of the assessment next becoming due from such bank and upon succeeding assessments until the credit is exhausted. 31. PDIC may. subject to the charges (iii) 37 | P a g e . penalty shall be imposed on the directors. or other juridical entities. each insured bank shall file with the Corp. and should not correct such failure of refusal within 30 days after written notice has been given to an officer of the bank. funds held as trustee. But they are LIABLE for the civil liabilities because of the clause. Assessment Rate shall be determined by the Board of Directors shall not exceed 1/5 of 1% per annum. 315 par. it shall include such liabilities in its assessment base. 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. 1 (b) of the RPC or RA 3815  If vilaotion is committed by corporations. partnerships. associations. 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. Duty to Indicate Insurance on Deposits All banks shall indicate the coverage of the PDIC in each passbook. officers. but to the public interest. this rule shall not apply if such bank shall deposit security satisfactory to PDIC for payment upon final determination of the issue (ii) VII. CTD and/or cover of checkbook for demand deposit/NOW accounts stating. 31.    return the goods covered by the trust receipt if the goods are not sold (iv) Failure to account. at its discretion.000 for each trust estate. 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. whichever is applicable. 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. the maximum amount of insurance. Assessment A. The Trust Receipts Law punishes dishonesty and abuse of confidence in handling of money or goods to the prejudice of pubic order. provided it shall not be later than 60 days after filing the certified statement setting forth the amount of assessment.

criminal. 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. consultant. employees. Applies also to those who resigned. director. during the calendar year c. B. insurance cover. assessment rate and assessment base. 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. and every 5 years thereafter. directly or indirectly. or to any person authorized by either of them in writing to receive such information - XI. 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. the period to take corrective action shall not be more than 15 days. any provision of the PDIC Law any order. in connection with acts done during their tenure or employment with PDIC XII. authorized by law. Receivership A. 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. retired.. The order may also include the imposition of fines What may be violated: 1. Borrowing from Banks shall be prohibited only with respect to the particular institution in which they are assigned. director. Prohibitions on PDIC Personnel being an officer. of any bank or banking institution except as otherwise provided by law receiving any gift or thing of value from any officer. the MB shall give prior notice and appoint PDIC as receiver “receiver” includes a receiver. it is appropriate to make such designation to protect the interest of PDIC. any agency of govt. commission. or employee of any bank revealing in any manner. 3. preserve and administer such assets and liabilities for the benefit of the depositors and creditors of dais bank.. Powers 38 | P a g e . the operating costs and expenses of the Corp. employee or stockholder. and report of conditions made to the BSP or its appropriate supervising dept. Legal Assistance - - VIII. the net insurance and financial assistance losses sustained in said calendar year In a suit. or are conducting an examination - if no such action is taken within 45 days from submission of the report. net of recoverable amounts from applicable assets and collaterals. the BoD shall motu proprio institute corrective action which it deems necessary (BoD may issue a cease-and-desist order. Congress. Such expenses and charges are: a. conduct a study on the need to adjust the amount of the PIF. for the calendar year b. processed. PDIC is entitled to recover from any insured bank the amount of any unpaid assessment lawfully payable by such insured bank. retained earnings PDIC may. Dealings by PDIC Personnel with Banks A. or acted upon by such personnel XIII. and to dispose of the assets and to wind up the affairs of such bank - IX. as well as the duty to gather.- - - - c. 2. Unsound Practice In case of commission of unsafe or unsound practices by an IB or its officers. and to continue into liquidation whenever authorized under the law. 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. Appointment whenever it shall be appropriate for the MB of the BSP to appoint a receiver of any banking institution pursuant to existing laws. administrative. the President of the Corp. 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 is likely to seriously weaken the condition of the bank or otherwise seriously prejudice the interests of its depositors and the Corp. or agents in connection with any civil. additions to reserve to provide for insurance and financial assistance losses. reserves for insurance and financial assistance losses d. 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. person. or provide legal assistance to its directors. 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.. information relating to the condition or business of any bank  shall not apply to the giving of information to the BoD. in the opinion of the Board. within 2 years from the passage of the PDIC Law. officers. or any other action to which such director etc. 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. 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. except as provided by law or under court order. or transferred to another agency.

payment of all docket and other court fees shall be deferred until the action is terminated with finality. as well as all allowances. or encumber any asset of the bank. 2. functions and duties. to creditors and claimants in accordance with legal priority before distribution to the shareholders. 3. it shall control. PDIC shall charge against such assets: • Reasonable receivership expenses (subject to approval of court) C. D. 5. Distribution of Assets 1. - XIV. 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. manage and administer the affairs of the closed bank. Before any distribution of assets of the closed bank. 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. such fees shall be paid as administrative expenses during the distribution of the assets of the closed bank. remunerations. 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. Settlement Period and Penalties in Case of Failure to Settle 39 | P a g e . 4. and for the purpose. The aggregate of the interests of each co-owner over several joint accounts shall likewise not exceed 250. B. 4. It may require final determination by the courts if not satisfied to the viability of the claim. Payment of Insured Deposits A. levy or any other court processes In addition to the powers of a receiver pursuant to existing laws. officers. modify. Proof of Claims 1. 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. Manner of Payment 1. 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. when necessary to preserve or prevent dissipation of the assets. PDIC shall pay any surplus dividends at the legal rate of interest from the date of takeover to the date of distribution. 6. its assets shall not be subject to attachment. 5. 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. Any such fees shall constitute as a first lien on any judgment in favor of the closed bank or in case of unfavorable judgment. PDIC may require proof of claims to be filed before paying the insured deposits. payment of the insured deposits on such closed banks shall be made by the PDIC by: i. 9. 8. 3. ii. it is presumed that the maximum insured deposit belongs to the juridical person. Effective immediately upon takeover as receiver of such bank: the powers. 7. Maximum insured deposits of Joint accounts shall be divided into as many equal shares as there are co-owners.000) A joint account shall be insured separately from any individually owned deposit account. Not to exceed two hundred fifty thousand (250. 6. unless a different sharing is stipulated in the document of deposit. PDIC as receiver may exercise such powers which may include a reduction of the interest rate to a reasonable rate. 2. If an account is held by a juridical person jointly with an individual. 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. or mortgage. 2. execution. garnishment. and perquisites of the directors. or to redeem foreclosed assets of the closed bank. 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. 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. pledge. Reasonable liquidation expenses After payment of all liabilities and claims against closed bank. Whenever an insured bank shall have been closed by the Monetary Board. PDIC is empowered to: 1. C. 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.

ii. or malice shall subject the directors. assume liability. 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. B. gross negligence. Failure to settle claim within six months from the date of filing claim due to grave abuse of discretion. the operations of such bank is essential to provide adequate banking service in the community or maintain financial stability in the economy. All rights of the depositor subrogated to PDIC shall thereupon revert back to the depositor. In order to prevent an insured bank from closing. 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. 1. Notice 1. pending the determination and payment of such liability by such depositor or any other liable therefore. 1. 2. 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. bad faith. • Or does not enforce his claim within two years after the filing a claim Unless otherwise waived by PDIC.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. Prescription All rights of a depositor with respect to the insured deposit shall be barred if: B. 3. • He fails to file a claim within two years from actual take-over of the closed bank by the receiver. a. PDIC may provide any corporation acquiring control of. D. PDCI may make loans. Discharge Payment of an insured deposit shall discharge PDIC. the resumption of the operations of said bank is vital to the interest of the community Severe financial climate exists G. The banking or checking account of PDIC shall be kept in: 2. employees. whose name or interest as such owner is not disclosed on the records of a closed bank. which is not offset against a claim due from such bank. 2. 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 . XVI. or make deposits in such insured bank. Insurance Commissioner may waive the requirement of his approval as he may determine. Such power may also be exercised in case of a closed insured bank if: i. Money of the PDIC not otherwise employed shall be invested in obligations of the Republic of the Philippines or by obligations guaranteed by it. BSP PNB Any bank designated as fiscal agent or depository of RP E. PDIC shall be discharged from any liability. PDIC shall be subrogated to all of the rights of the depositor to the extent of such payment. Period shall not apply if the validity of the claim depends on resolution of issues of fact or law by another office. Upon payment to such depositor. or any liability of such depositor to the closed bank or to its receiver. upon such conditions as the Board of Directors may prescribe. 4. But such depositor shall retain his claim for any uninsured portion of his deposit. F. Recognition of Owner PDIC cannot recognize as the owner any person. purchase the assets. or officers of PDIC Responsible for the delay to imprisonment from six months to one year. H. XV. Investment by PDIC A. Extension of Loans A.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. 2. 3. Such subrogation shall include the right to receive the same dividends from the proceeds of the assets of the closed bank. Reopening of said bank is subject to the approval of the Monetary Board. PDIC shall commence the determination of insured deposits due to depositors of the closed bank upon its actual takeover of the closed bank. b.

The corporation shall dispose of such equity as soon as practicable. XX. PDIC may require an insured bank to provide protection and indemnity against burglary. files. debentures. – subject to the approval of the Monetary Board. Such loans granted by the BSP shall be consistent with monetary policy. C. officers. B. PDIC is authorized to issue bonds. banks may: 1. 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. XVII. C. defalcation. Protection Against Losses a. and all other papers belonging to PDIC pertaining to its financial transactions.a. COA shall have access to all books. B. XIX. BoD shall determine interest rate and other requirements of such obligation. D. b. PDIC shall provide appropriate reserves for the redemption of said obligation. employees. Merger or consolidation of insured banks Upon consent of PDIC. as may be necessary to prevent its failure or closure. by particular acts of its directors. Except as to matters relating to the Function of the PDIC which shall be subject to visitorial audit only. E. Within 60 days from date of assistance. a. When in the Judgment of the Board of Directors. b. B. or arrange credit lines or other credit accommodations from any bank designated as depository or fiscal agent by the RP. Insured banks shall place signs in all place of business and in its statements that its deposits are insured by PDIC. Signs a. obtain loans. 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. with systemic consequences with a probable failure or closure. XVII. accounts. BoD may exempt from this requirement advertisements not relating to deposits. officres BoD shall determine the bonding requirement referring to directors. 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. Likelihood of a sudden unexpected collapse of confidence in a significant portion of the banking or financial system with potentially large real economic effects. reports. 2. PDIC shall submit a report to MB A. Officers and employees of Insured banks 41 | P a g e . c. Reports and Audit D. 3. PDIC may grant financial assistance to insured banks. C. PDIC may add the cost thereof to the assessment otherwise payable to such bank. Audit shall be conducted in places where the accounts of the corporation are normally kept. Issuance of Bonds With approval of the President of RP. PDIC shall be authorized to borrow money. and other obligations necessary fro the purpose of settlement of insured deposits in closed banks as well as for financial assistance. Directors. “systemic risk” – possibility that failure of one bank to settle net transactions with other banks will trigger a chain reaction. depriving other banks of funds leading to a general shutdown of normal clearing and settlement activity. Miscellaneous A. Borrowings A. the PDIC has insufficient funds to attain its purpose. a. Merge or consolidate with an uninsured bank Assume liability to pay any deposits made in noninsured bank Transfer assets to any noninsured bank F. anfd employees of an insured bank If insured bank refuse to comply with any such requirement. the interest rate thereon shall not exceed the treasury bill rate. 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. PDIC is authorized to borrow from the BSP on such terms as may be agreed by them. losses arising from discharge of duties. records. b.

Ensure that the Philippines shall not be used as a money laundering site for the proceeds of any unlawful activity. salesmen. common trust fund and preneed companies v. or execution provided under the PDIC Law and the NCBA 7. 8. 9.000 or both. Penalty for violation of this prohibition: the bank will be subject to penalty of not more than 100 for every day of violation. C. Willful refusal to submit reports Unjustified refusal to permit examination and audit of records as required by law. Coins/currency of legal tender of the Phil. trust certificates. Structured transactions to avoid being the subject of reporting required under the act e. consultant iv. assignment or delivery Unlawful Activities i. CONCEPTS A. B. Foreign exchange corporations. or violation of any provision of eh PDIC Law. or commission of any other irregularities and/or conducting business in an unsafe or unsound manner. D. officer. Those which deviate from the profile of the client or past transactions f. against a bank or any of its directors. b.000-2. Securities. levy attachment. omission. 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. rule. Related to any unlawful activity or offense g. 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. Kidnapping for ransom under Art. Those administering or dealing in currency. financial derivatives or other monetary instruments or property supervised by the SEC Covered and Suspicious transaction i. quasi-banks. or agents responsible for such act. rules. trust entities ad all other institutions regulated by the BSP ii. liability of the closed bank under the receivership of the PDIC Violation. deposit certificates. officer. Criminal Penalties A. closed-end investment company. 4. employee or agent of bank who: 1. money changers. or employee of an insured bank who has been convicted of any criminal offense involving dishonesty of breach of trust. and transfer companies vi. remittance. purpose or economic justification b. checks and notes iii. 10. Transaction in cash or monetary instrument exceeding P500. Cooperation in transnational investigation and prosecution of persons involved in money laundering Covered Institutions i. 6. No legal or trade obligation. Chap 11 – Anti.000. Amount is not commensurate with the client’s financial capacity d. Refusal to allow PDIC to takeover a closed bank placed under its receivership Refusal to turnover or destroying or tampering bank records Fraudulent disposal . non-banks. commercial papers. Banks. money payments. To protect and preserve the integrity and confidentiality of bank accounts ii.000. Mutual funds. FINES 42 | P a g e .a. Client is not properly identified c. or preceding a closure order issued by the MB for the purpose of availing of the maximum deposit insurance coverage. property. or causing a person to violate. or regulation issued by PDIC. advisor. bonds. brokers. A. 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. the exemption of garnishment. confirmation of sale money market instruments iv. 2. custodial receipts. 5. Any transaction that is similar to any of the foregoing Monetary instrument i. XXII. Securities or negotiable instruments. Or any country ii. Policies i. E. trading orders. Punishable by prision mayor or a fine of 50. XXI. No person shall be a director.000 in one banking day ii. or violation.Money Laundering ( RA 9160) I. BOD is authorized to impose administrative fines for violation of any other instruction. Suspicious transactions regardless of the amount a. commodities. investment house and other entities managing securities or service as agent. any director. Drafts. transfer or concealment of any asset. Willful failure or refusal to comply with. transaction tickets. Insurance companies and all other institutions regulated by the insurance commission iii. iii. officers. Other similar instruments when title passes to another by endorsement.267 of RPC 3.

Maintain a system of verifying the identity and legal existence of their clients iii. fictitious an similar accounts are prohibited iv. xi. 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. RA 8791. it shall be required to report the same iii. 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. 35 years of age c. or relates to.is a crime whereby the proceeds of an unlawful activity are transacted. involves. thereby making them appear to have originated from legitimate sources. Institutions shall establish and record the true identity of its clients based on office documents ii. Require and receive covered or suspicious transaction reports from covered institutions ii. Any person knowing that any monetary instrument or property represents. Shall be reported to AMLC within 5 working days from the occurrence thereof. x. Public persons and private persons in conspiracy with the formerSandiganbayan Prosecution i. c. Composition i. xiv. viii. B. 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. and means to prevent money laundering Enlist assistance from government instrumentality for any anti-money laundering operation Impose administrative sanctions for violation of laws. regulations and orders issued pursuant thereto Establish a secretariat a. vi. Anonymous. Investigate suspicious and covered transactions Apply before the CA ex parte. the proceeds of any unlawful activity.F. It can be committed by the ff: i.310 of RPC Swindling under Art. Commissioner of the Insurance Commission iii. A money laundering offense II. To the CA. unless supervising authority prescribes a longer period not exceeding 10 days ii. performs or fails to perform any act as a result of which he facilitates the offense of money laundering referred to above iii. Any person may be charged of both money laundering and the unlawful activity ii. xv. v. 294-296. or b. Records of transactions shall be maintained and stored from 5 years from the date of transaction ii. they shall be criminally liable v. Private persons. 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. rules. involves. but are prohibited to communicate to any other person iv. Secs. Customer Identification i. xii. The AMLC may inquire upon order of any competent court when it has been established that: a. Any person knowing any monetary instrument or property represents. or relates to. xii. 8-10. 299-302 of the RPC Jueteng and Masiao under PD 1602 Piracy on high seas under RPC and PD 532 Qualified theft under Art. vi. xi. g. Cause the filing of complaints with the DOJ or Ombudsman D. e. There is probable cause that the deposit or investment s related to any unlawful activity. may issue a freeze order ii. I of the Anti-Graft and Corrupt Practices Act Plunder under RA 7080 Robbery and extortion under Arts. Unquestionable integrity and known probity IV. Such reporting shall not be considered as a violation of RA 1405. Such order shall be for 20 days unless extended by the Court Authority to inquire into bank deposits i. v. Jurisdiction and Prosecution B.RTC ii. GMC d. 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. xiii. Prevention of Money Laundering A. Governor of he BSP as chairman ii. Jurisdiction i. viii. h. vii. iv. 12-16 of the Dangerous Drugs Act of 2002 Sec. C. III. In case of violation of the prohibition above. Anti-Money Laundering Council A. Should a transaction be determined a a covered and suspicious transaction. ix. Any person knowing that any monetary instrument or property is required to be disclosed and filed with the Anti-Money Laundering Council. E. iii. vii. upon application ex parte by the AMLC and after determination that probable cause exists. Institute civil forfeiture proceedings through the OSG iv. Member of the Bar b.3 par b. 43 | P a g e . A. ix. Chairman of the SEC Functions i. methods. the proceeds of any unlawful activity. x. For closed accounts. transacts or attempts to transact said monetary instrument or property ii.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. RA 6426. 4-6. fails to do so ii. its records shall also be stored for 5 years from the date it was closed Reporting of Covered and Suspicious Transaction i.

destroyed. or both Malicious reporting a.upon the responsible officers iii. Located outside the Philippine or outside the jurisdiction of the court v. When it contravenes the constitution Prejudicial to the interest of the Philippines i.000 not more than P500. No court order shall be required in the following activities a. and the Court. 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. 6m-4years or fine not less than P100. Violations of Dangerous Drug Act of 2002 c. Is allowed because forfeiture cannot be enforced due to the ff: i. 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. Contain other info as may assist in the execution of the request Authentication of documents a. Those claiming an interest may apply. diminished in value or rendered worthless by any act or omission attributable to the offender iii. Tracking down. If corporation. involves. Authenticated copy of the order of a court in the requesting state ordering the forfeiture ii. When there is a report made. it cannot be located ii. Give information needed iii. With due diligence. Any person knowing that any monetary instrument or property represents. performs or fails to perform any act as a result of which he facilitates the offense of money laundering referred to above i. freezing. By the secretary of embassy. involves. Specify the manner in which such info will be obtained or produced g. fails to do so i. 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. 6m-4years and a fine not less than P100. Ask from the institution for any info which may be of assistance to the investigation or prosecution f. C.ii.000 not more than P500. 6m-1year or fine not less than P100. Concealed. And the requesting State relating to the provisions of assistance in money laundering offense Requirement for request from a foreign state a. D.000 not more than P500. consul general. B. reports a completely unwarranted or false info relative to money laundering i. Any person knowing any monetary instrument or property represents. Give particulars sufficient to identify the institution believed to have any info e. Forfeiture A. B. Hijacking and other violations of RA 6235 d. Signed or certified by a judge or equivalent officer in or of the requesting state b. Commingled with other instrument or property rendering it difficult to be identified or segregated F. or relates to. Juridical person. freezing. Give all the particulars necessary for the issuance by the court in the requested state of the orders needed by th requesting state h. restraining and seizing assets b. Penalties VI. Alien.deportation C. Apply for an order of forfeiture b. removed. Give sufficient particulars as to the identity of the person d. VII. Civil forfeiture a. Tracking down. Negotiate for the inclusion of money laundering offenses among extraditable offenses a. State the grounds on which any person is being investigated or prosecuted for c.000. Imprisonment of 7 to 14 years and a fine not less than P3M b. for a declaration that the seized instrument or property legitimately belongs to him and pray for the segregation and exclusion b. in a petition filed for the purpose of seizure. Confirm that an investigation or prosecution is being conducted b. Mutual assistance among states A. Obtain info that it needs relating to covered transaction and money laundering offense c. Except: if there is a treaty between the Phil. by verified petition. Any person who. May execute a request by: i. the proceeds of any unlawful activity. Court will issue such order only when accompanied by: i.suspend or revoke its license iv. Substantially altered. restraining and seizing assets ii. Enter into the premises belonging to or in the possession of the persons named in the request. with malice or bad faith. converted or transferred to prevent from being found or avoid forfeiture iv.000. 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. 4-7 years and fin not less than P1.5M not more than P3M c. G. or both Failure to keep records a. to the extent allowed by the law of the foreign state d. consul or any officer in the foreign service of the Philippines stationed in the foreign state Extradition a. b. 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. Request for assistance from a foreign state a. the Rules of Court on civil forfeiture applies Claim on Forfeiture Assets a. transacts or attempts to transact said monetary instrument or property i. Kidnapping for ransom b.000 ii. or relates to. A. B. 44 | P a g e . the proceeds of any unlawful activity. Destructive arson and murder including those perpetrated by terrorists E. Any person knowing that any monetary instrument or property is required to be disclosed and filed with the Anti-Money Laundering Council. C. V.

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. Rules and Regulation for banks and non-financial institutions to combat money laundering 1.same penalties above Breach of Confidentiality a. Proof of Claims 1. J. Settlement Period and Penalties in Case of Failure to Settle 45 | P a g e . anonymous or fictitious accounts should not be allowed 4. writer. payment of the insured deposits on such closed banks shall be made by the PDIC by: i. Prohibitions against political harassment A. 2. Implementing rules and Regulations A. publisher. it is presumed that the maximum insured deposit belongs to the juridical person. 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. 6. 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. 7 members from the Senate and 7 members from the House of Representatives b. to creditors and claimants in accordance with legal priority before distribution to the shareholders. Payment of Insured Deposits I. unless a different sharing is stipulated in the document of deposit. PDIC shall pay any surplus dividends at the legal rate of interest from the date of takeover to the date of distribution. Congressional Oversight Committee A. Banks should avoid business with criminals 9. necessary records of transactions should be maintained 6. shall not be used for political persecution or harassment or as an instrument to hamper competition in trade and commerce B.000) A joint account shall be insured separately from any individually owned deposit account. If disclosed to media. IC. Shall be appointed by the Senate President and the Speaker. identity of clients should be updated 5. If an account is held by a juridical person jointly with an individual. 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.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. editor v. B. Composition a. B. PDIC shall charge against such assets: • Reasonable receivership expenses (subject to approval of court) K. VIII. 5. These rules shall be submitted to the congressional oversight committee for approval. Covered institutions shall formulate their own prevention programs X. Public official. obtain the true identity of the persons on whose behalf an account is opened 3. Manner of Payment 1. Whenever an insured bank shall have been closed by the Monetary Board. 3. ii. and SEC shall promulgate rules to effectively implement this Act. respectively. 2.000. Take reasonable measures to establish and record the true identity and legal existence of their clients 2.perpetual or temporary absolute disqualification from office vi.D. development of internal policies. 4. other suspicious transactions not involving deposit should be reported 8. D. in case of doubt. Distribution of Assets 3. 7. XI. The BSP. Public official who refuses to testify. • 4. manager. 3-8years and fine P500. based on proportional representation of parties Powers a. unusual large transactions and all unusual patterns of transaction 7.employee training. Programs against money laundering.P1M b. audit function. It may require final determination by the courts if not satisfied to the viability of the claim. The aggregate of the interests of each co-owner over several joint accounts shall likewise not exceed 250. Not to exceed two hundred fifty thousand (250. special attention should be given to complex.reporter. Reasonable liquidation expenses After payment of all liabilities and claims against closed bank. PDIC may require proof of claims to be filed before paying the insured deposits.

PDCI may make loans. Insurance Commissioner may waive the requirement of his approval as he may determine. upon such conditions as the Board of Directors may prescribe. Notice 1. L. Recognition of Owner PDIC cannot recognize as the owner any person. Such subrogation shall include the right to receive the same dividends from the proceeds of the assets of the closed bank. 1. the resumption of the operations of said bank is vital to the interest of the community Severe financial climate exists O. XVI. Such power may also be exercised in case of a closed insured bank if: i. assume liability. • He fails to file a claim within two years from actual take-over of the closed bank by the receiver. PDIC shall commence the determination of insured deposits due to depositors of the closed bank upon its actual takeover of the closed bank. pending the determination and payment of such liability by such depositor or any other liable therefore. 2. P. 2. Period shall not apply if the validity of the claim depends on resolution of issues of fact or law by another office. or any liability of such depositor to the closed bank or to its receiver. 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. PDIC shall be subrogated to all of the rights of the depositor to the extent of such payment. b. 2. 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. Extension of Loans G. Discharge Payment of an insured deposit shall discharge PDIC. employees. 3. Money of the PDIC not otherwise employed shall be invested in obligations of the Republic of the Philippines or by obligations guaranteed by it. Investment by PDIC C. or make deposits in such insured bank. The banking or checking account of PDIC shall be kept in: 2. N. ii. In order to prevent an insured bank from closing. All rights of the depositor subrogated to PDIC shall thereupon revert back to the depositor. Reopening of said bank is subject to the approval of the Monetary Board. purchase the assets. Failure to settle claim within six months from the date of filing claim due to grave abuse of discretion. or malice shall subject the directors. 3. BSP PNB Any bank designated as fiscal agent or depository of RP M. or officers of PDIC Responsible for the delay to imprisonment from six months to one year. Upon payment to such depositor. D. gross negligence.1. PDIC may provide any corporation acquiring control of. But such depositor shall retain his claim for any uninsured portion of his deposit. Prescription All rights of a depositor with respect to the insured deposit shall be barred if: H. which is not offset against a claim due from such bank. whose name or interest as such owner is not disclosed on the records of a closed bank. 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.000 without approval of the Insurance Commissioner. XV. the operations of such bank is essential to provide adequate banking service in the community or maintain financial stability in the economy. 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 . • Or does not enforce his claim within two years after the filing a claim Unless otherwise waived by PDIC. PDIC shall be discharged from any liability. bad faith. 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. 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. 4. a.

PDIC may grant financial assistance to insured banks. Borrowings C. 6. with systemic consequences with a probable failure or closure.a. 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. Miscellaneous E. When in the Judgment of the Board of Directors. Directors. banks may: 4. depriving other banks of funds leading to a general shutdown of normal clearing and settlement activity. records. employees. BoD may exempt from this requirement advertisements not relating to deposits. officer. PDIC shall provide appropriate reserves for the redemption of said obligation. “systemic risk” – possibility that failure of one bank to settle net transactions with other banks will trigger a chain reaction. as may be necessary to prevent its failure or closure. c. COA shall have access to all books. a. 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. BoD shall determine interest rate and other requirements of such obligation. No person shall be a director. XVII. officres BoD shall determine the bonding requirement referring to directors. 5. XIX. PDIC may require an insured bank to provide protection and indemnity against burglary. files. defalcation. b. obtain loans. D. Reports and Audit 47 | P a g e . E. PDIC is authorized to borrow from the BSP on such terms as may be agreed by them. losses arising from discharge of duties. b. and all other papers belonging to PDIC pertaining to its financial transactions. and other obligations necessary fro the purpose of settlement of insured deposits in closed banks as well as for financial assistance. PDIC shall be authorized to borrow money. 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. F. or arrange credit lines or other credit accommodations from any bank designated as depository or fiscal agent by the RP. by particular acts of its directors. 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. The corporation shall dispose of such equity as soon as practicable. XX. or employee of an insured bank who has been convicted of any criminal offense involving dishonesty of breach of trust. Merge or consolidate with an uninsured bank Assume liability to pay any deposits made in noninsured bank Transfer assets to any noninsured bank L. Within 60 days from date of assistance. Officers and employees of Insured banks a. J. Protection Against Losses a. officers. the interest rate thereon shall not exceed the treasury bill rate. K. the PDIC has insufficient funds to attain its purpose. Likelihood of a sudden unexpected collapse of confidence in a significant portion of the banking or financial system with potentially large real economic effects. Except as to matters relating to the Function of the PDIC which shall be subject to visitorial audit only. debentures. H. I. – subject to the approval of the Monetary Board. PDIC may add the cost thereof to the assessment otherwise payable to such bank. accounts. XVII. PDIC is authorized to issue bonds. anfd employees of an insured bank If insured bank refuse to comply with any such requirement. Audit shall be conducted in places where the accounts of the corporation are normally kept. b. F. Signs a. a. Merger or consolidation of insured banks Upon consent of PDIC. Such loans granted by the BSP shall be consistent with monetary policy. Insured banks shall place signs in all place of business and in its statements that its deposits are insured by PDIC. reports. PDIC shall submit a report to MB D. G.

Policies i. rule. In no case such fine exceed K. Insurance companies and all other institutions regulated by the insurance commission iii. quasi-banks. 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. or causing a person to violate. assignment or delivery Unlawful Activities i. e. Banks. or execution provided under the PDIC Law and the NCBA J. against a bank or any of its directors. employee or agent of bank who: 1. trading orders. officers. financial derivatives or other monetary instruments or property supervised by the SEC Covered and Suspicious transaction i. XXII. brokers. Or any country ii.000 in one banking day ii. Foreign exchange corporations. trust entities ad all other institutions regulated by the BSP ii. confirmation of sale money market instruments iv. and transfer companies vi. common trust fund and preneed companies v.3 par b. Criminal Penalties B. Amount is not commensurate with the client’s financial capacity d. BOD is authorized to impose administrative fines for violation of any other instruction. closed-end investment company. Transaction in cash or monetary instrument exceeding P500. Plunder under RA 7080 v. Willful failure or refusal to comply with. commercial papers. Any transaction that is similar to any of the foregoing Monetary instrument i.000.000-2.000 or both. remittance. 3times the amount of the damages or costs caused by the transaction for each day that the violation subsist. Penalty for violation of this prohibition: the bank will be subject to penalty of not more than 100 for every day of violation. 8. Kidnapping for ransom under Art. Those administering or dealing in currency. 294-296. No legal or trade obligation. 2. H. Coins/currency of legal tender of the Phil. 6. FINES B. I of the Anti-Graft and Corrupt Practices Act iv. Willful refusal to submit reports Unjustified refusal to permit examination and audit of records as required by law. commodities. custodial receipts. CONCEPTS G. the exemption of garnishment. Structured transactions to avoid being the subject of reporting required under the act e. 10. Sec. advisor. omission. transaction tickets. Refusal to allow PDIC to takeover a closed bank placed under its receivership Refusal to turnover or destroying or tampering bank records Fraudulent disposal .Money Laundering ( RA 9160) I. transfer or concealment of any asset. Robbery and extortion under Arts. 9. Punishable by prision mayor or a fine of 50. Secs. officer. liability of the closed bank under the receivership of the PDIC Violation. purpose or economic justification b. or preceding a closure order issued by the MB for the purpose of availing of the maximum deposit insurance coverage. checks and notes iii.b. or agents responsible for such act. levy attachment. 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. 4. XXI. deposit certificates. 5. c. non-banks. or regulation issued by PDIC. Mutual funds. Client is not properly identified c. bonds. or violation. 48 | P a g e . Drafts.000. Cooperation in transnational investigation and prosecution of persons involved in money laundering Covered Institutions i. rules. 4-6. salesmen. Securities. Ensure that the Philippines shall not be used as a money laundering site for the proceeds of any unlawful activity. I. investment house and other entities managing securities or service as agent. or commission of any other irregularities and/or conducting business in an unsafe or unsound manner. trust certificates.267 of RPC ii. 7. 8-10. Suspicious transactions regardless of the amount a. and regulations Willful making of false statement or entry in any bank report or document Chap 11 – Anti. 12-16 of the Dangerous Drugs Act of 2002 iii. Related to any unlawful activity or offense g. money payments. 299-302 of the RPC 3. h. any director. property. or violation of any provision of eh PDIC Law. Securities or negotiable instruments. g. Other similar instruments when title passes to another by endorsement. money changers. consultant iv. iii. Those which deviate from the profile of the client or past transactions f. To protect and preserve the integrity and confidentiality of bank accounts ii.

xxiii. or relates to. xi. Unquestionable integrity and known probity IV. To the CA. Require and receive covered or suspicious transaction reports from covered institutions xiv. It can be committed by the ff: i. for the freezing of any monetary instrument or property xix. unless supervising authority prescribes a longer period not exceeding 10 days vii. methods. xiii. involves. Records of transactions shall be maintained and stored from 5 years from the date of transaction iv. xx. Jurisdiction i. Any person may be charged of both money laundering and the unlawful activity ii. Should a transaction be determined a a covered and suspicious transaction. vii. RA 6426. Composition iv. Receive and take action any request of assistance from foreign states in their own anti-money laundering operations Develop educational programs on the effects. H. D. 49 | P a g e . Customer Identification v. Investigate suspicious and covered transactions xviii. xii. they shall be criminally liable x. Cause the filing of complaints with the DOJ or Ombudsman xvii.310 of RPC Swindling under Art. but are prohibited to communicate to any other person ix. fictitious an similar accounts are prohibited viii. 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. RA 8791. Such reporting shall not be considered as a violation of RA 1405. Governor of he BSP as chairman v. Public persons and private persons in conspiracy with the formerSandiganbayan Prosecution i. Jueteng and Masiao under PD 1602 Piracy on high seas under RPC and PD 532 Qualified theft under Art. rules. 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. A money laundering offense iv. may issue a freeze order iv. involves. III. C. and means to prevent money laundering Enlist assistance from government instrumentality for any anti-money laundering operation Impose administrative sanctions for violation of laws. upon application ex parte by the AMLC and after determination that probable cause exists. Institute civil forfeiture proceedings through the OSG xvi. Kidnapping for ransom b. 35 years of age c. Member of the Bar b. Anti-Money Laundering Council C. Jurisdiction and Prosecution G. or relates to.L. There is probable cause that the deposit or investment s related to any unlawful activity. Chairman of the SEC Functions xiii. xiv. performs or fails to perform any act as a result of which he facilitates the offense of money laundering referred to above iii. In case of violation of the prohibition above. Anonymous. the proceeds of any unlawful activity. xxiv. 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.is a crime whereby the proceeds of an unlawful activity are transacted. Maintain a system of verifying the identity and legal existence of their clients vii.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. its records shall also be stored for 5 years from the date it was closed Reporting of Covered and Suspicious Transaction vi. Shall be reported to AMLC within 5 working days from the occurrence thereof. No court order shall be required in the following activities a. x. Apply before the CA ex parte.RTC ii. thereby making them appear to have originated from legitimate sources. Institutions shall establish and record the true identity of its clients based on office documents vi. The AMLC may inquire upon order of any competent court when it has been established that: a. ix. transacts or attempts to transact said monetary instrument or property ii. xxi. 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. For closed accounts. Implement measures as may be necessary to counteract money laundering I. Any person knowing that any monetary instrument or property represents. Private persons. Such order shall be for 20 days unless extended by the Court Authority to inquire into bank deposits iii. the proceeds of any unlawful activity. 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. xxii. viii. Hijacking and other violations of RA 6235 II. Commissioner of the Insurance Commission vi. Prevention of Money Laundering F. xv. fails to do so vi. regulations and orders issued pursuant thereto Establish a secretariat a. or b. Any person knowing any monetary instrument or property represents. it shall be required to report the same viii. GMC d. J.

If corporation. for a declaration that the seized instrument or property legitimately belongs to him and pray for the segregation and exclusion b. 6m-1year or fine not less than P100. By the secretary of embassy. Negotiate for the inclusion of money laundering offenses among extraditable offenses i. Confirm that an investigation or prosecution is being conducted b. G. Forfeiture D. F. 6m-4years and a fine not less than P100. Give all the particulars necessary for the issuance by the court in the requested state of the orders needed by th requesting state h. or both Failure to keep records a. Give information needed iii. Concealed. removed. Mutual assistance among states VII. restraining and seizing assets b.5M not more than P3M c. or relates to. Specify the manner in which such info will be obtained or produced g.upon the responsible officers iii. Request for assistance from a foreign state a. freezing. diminished in value or rendered worthless by any act or omission attributable to the offender iii. VI. restraining and seizing assets ii. 6m-4years or fine not less than P100. in a petition filed for the purpose of seizure. freezing. involves. When there is a report made. Court will issue such order only when accompanied by: i. V. Give sufficient particulars as to the identity of the person d. Civil forfeiture a.000. Commingled with other instrument or property rendering it difficult to be identified or segregated M. And the requesting State relating to the provisions of assistance in money laundering offense Requirement for request from a foreign state a. E. F. Any person knowing any monetary instrument or property represents.000 not more than P500. Alien. or both Malicious reporting a. 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. consul general. Located outside the Philippine or outside the jurisdiction of the court v. reports a completely unwarranted or false info relative to money laundering i. by verified petition. converted or transferred to prevent from being found or avoid forfeiture iv. performs or fails to perform any act as a result of which he facilitates the offense of money laundering referred to above i. With due diligence. consul or any officer in the foreign service of the Philippines stationed in the foreign state Extradition a. Any person who.000 not more than P500.000 ii. the proceeds of any unlawful activity. May execute a request by: i. transacts or attempts to transact said monetary instrument or property i. 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. Destructive arson and murder including those perpetrated by terrorists L. and the Court.000 not more than P500. Except: if there is a treaty between the Phil. to the extent allowed by the law of the foreign state d.suspend or revoke its license iv. it cannot be located ii. Enter into the premises belonging to or in the possession of the persons named in the request.deportation v. I. Crime of money laundering a. Those claiming an interest may apply. Is allowed because forfeiture cannot be enforced due to the ff: i. 4-7 years and fin not less than P1.d. Tracking down. Penalties H. Tracking down. the proceeds of any unlawful activity. Apply for an order of forfeiture b. involves. destroyed. Substantially altered. fails to do so i. 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. Ask from the institution for any info which may be of assistance to the investigation or prosecution f. the Rules of Court on civil forfeiture applies Claim on Forfeiture Assets a. 50 | P a g e .000. N. Give particulars sufficient to identify the institution believed to have any info e. State the grounds on which any person is being investigated or prosecuted for c. Any person knowing that any monetary instrument or property is required to be disclosed and filed with the Anti-Money Laundering Council. Authenticated copy of the order of a court in the requesting state ordering the forfeiture ii. 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. Prejudicial to the interest of the Philippines E. When it contravenes the constitution b. Juridical person. with malice or bad faith. Public official. Signed or certified by a judge or equivalent officer in or of the requesting state b. Any person knowing that any monetary instrument or property represents. Obtain info that it needs relating to covered transaction and money laundering offense c. 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.perpetual or temporary absolute disqualification from office J. Contain other info as may assist in the execution of the request Authentication of documents a. K. or relates to. Imprisonment of 7 to 14 years and a fine not less than P3M b.

The BSP. Congressional Oversight Committee C. Prohibitions against political harassment C. 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. XI. Take reasonable measures to establish and record the true identity and legal existence of their clients 2. development of internal policies. necessary records of transactions should be maintained 6. based on proportional representation of parties Powers a. other suspicious transactions not involving deposit should be reported 8. editor VIII. respectively.employee training.H.same penalties above Breach of Confidentiality a. Shall be appointed by the Senate President and the Speaker.P1M b. Composition a. These rules shall be submitted to the congressional oversight committee for approval. manager. Public official who refuses to testify. Covered institutions shall formulate their own prevention programs X. B. Programs against money laundering.000. publisher. shall not be used for political persecution or harassment or as an instrument to hamper competition in trade and commerce D.reporter. 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. identity of clients should be updated 5. If disclosed to media. unusual large transactions and all unusual patterns of transaction 7. audit function. 51 | P a g e . anonymous or fictitious accounts should not be allowed 4. special attention should be given to complex. vi. 7 members from the Senate and 7 members from the House of Representatives b. Banks should avoid business with criminals 9. obtain the true identity of the persons on whose behalf an account is opened 3. in case of doubt. 3-8years and fine P500. writer. and SEC shall promulgate rules to effectively implement this Act. IC. Rules and Regulation for banks and non-financial institutions to combat money laundering 1. Implementing rules and Regulations A.

52 | P a g e .

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