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REPUBLIC ACT NO.

8791

May 23, 2000

AN ACT PROVIDING FOR THE REGULATION OF THE ORGANIZATION AND OPERATION OF BAN! , "UA I#BAN! , TRU T ENTITIE AND FOR OTHER PURPO E CHAPTER I TITLE AND CLA IFICATION OF BAN! $%&'() 1. Title. The short title of this Act shall be "The General Banking Law of 2000." (1a) $%&'() 2. Declaration Of Policy. - The State recogni es the !ital role of banks "ro!i#ing an en!iron$ent con#%ci!e to the s%staine# #e!elo"$ent of the national econo$& an# the fi#%ciar& nat%re of banking that re'%ires high stan#ar#s of integrit& an# "erfor$ance. (n f%rtherance thereof) the State shall "ro$ote an# $aintain a stable an# efficient banking an# financial s&ste$ that is globall& co$"etiti!e) #&na$ic an# res"onsi!e to the #e$an#s of a #e!elo"ing econo$&. (n) $%&'() 3. Definition and Classification of Banks. *.1. "Banks" shall refer to entities engage# in the len#ing of f%n#s obtaine# in the for$ of #e"osits. (2a) *.2. Banks shall be classifie# into+ (a) ,ni!ersal banks(b) .o$$ercial banks(c) Thrift banks) co$"ose# of+ (i) Sa!ings an# $ortgage banks) (ii) Stock sa!ings an# loan associations) an# (iii) /ri!ate #e!elo"$ent banks) as #efine# in the 0e"%blic Act 1o. 2304 (hereafter the "Thrift Banks Act")(#) 0%ral banks) as #efine# in 0e"%blic Act 1o. 2*S* (hereafter the "0%ral Banks Act")(e) .oo"erati!e banks) as #efine# in 0e"%blic Act 1o 43*5 (hereafter the ".oo"erati!e .o#e")(f) (sla$ic banks as #efine# in 0e"%blic Act 1o. 4565) otherwise known as the ".harter of Al A$anah (sla$ic (n!est$ent Bank of the /hili""ines"- an# (g) 7ther classifications of banks as #eter$ine# b& the 8onetar& Boar# of the Bangko Sentral ng /ili"inas. (4-Aa) CHAPTER II AUTHORIT* OF THE BANG!O ENTRAL

$%&'() +. Supervisory Powers. The o"erations an# acti!ities of banks shall be s%b9ect to s%"er!ision of the Bangko Sentral. "S%"er!ision" shall incl%#e the following+ 6.1. The iss%ance of r%les of) con#%ct or the establish$ent stan#ar#s of o"eration for %nifor$ a""lication to all instit%tions or f%nctions co!ere#) taking into consi#eration the #istincti!e character of the o"erations of instit%tions an# the s%bstanti!e si$ilarities of s"ecific f%nctions to which s%ch r%les) $o#es or stan#ar#s are to be a""lie#6.2 The con#%ct of e:a$ination to #eter$ine co$"liance with laws an# reg%lations if the circ%$stances so warrant as #eter$ine# b& the 8onetar& Boar#6.* 7!erseeing to ascertain that laws an# reg%lations are co$"lie# with6.6 0eg%lar in!estigation which shall not be oftener than once a &ear fro$ the last #ate of e:a$ination to #eter$ine whether an instit%tion is con#%cting its b%siness on a safe or so%n# basis+ /ro!i#e#) That the #eficiencies;irreg%larities fo%n# b& or #isco!ere# b& an a%#it shall be i$$e#iatel& a##resse#6.< (n'%iring into the sol!enc& an# li'%i#it& of the instit%tion (2-=)- or 6.4 >nforcing "ro$"t correcti!e action. (n) The Bangko Sentral shall also ha!e s%"er!ision o!er the o"erations of an# e:ercise reg%lator& "owers o!er '%asi-banks) tr%st entities an# other financial instit%tions which %n#er s"ecial laws are s%b9ect to Bangko Sentral s%"er!ision. (2-.a) ?or the "%r"oses of this Act) "'%asi-banks" shall refer to entities engage# in the borrowing of f%n#s thro%gh the iss%ance) en#orse$ent or assign$ent with reco%rse or acce"tance of #e"osit s%bstit%tes as #efine# in Section 3< of 0e"%blic Act 1o. 24<* (hereafter the "1ew .entral Bank Act") for "%r"oses of re-len#ing or "%rchasing of recei!ables an# other obligations. (2-=a) $%&'() ,. Policy Direction; Ratios, Ceilings and i!itations. - The Bangko Sentral shall "ro!i#e "olic& #irection in the areas of $one&) banking an# cre#it. (n) ?or this "%r"ose) the 8onetar& Boar# $a& "rescribe ratios) ceilings) li$itations) or other for$s of reg%lation on the #ifferent t&"es of acco%nts an# "ractices of banks an# '%asi-banks which shall) to the e:tent feasible) confor$ to internationall& acce"te# stan#ar#s) incl%#ing of the Bank for (nternational Settle$ents (B(S). The 8onetar& Boar# $a& e:e$"t "artic%lar categories of transactions fro$ s%ch ratios) ceilings. an# li$itations) b%t not li$ite# to e:ce"tional cases or to enable a bank or '%asi-bank %n#er rehabilitation or #%ring a $erger or consoli#ation to contin%e in b%siness) with safet& to its cre#itors) #e"ositors an# the general "%blic. (2-.a) $%&'() -. "ut#ority to $ngage in Banking and %uasi&Banking 'unctions. - 1o "erson or entit& shall engage in banking o"erations or '%asi-banking f%nctions witho%t a%thorit& fro$ the Bangko Sentral+ ./ro!i#e#) howe!er) That an entit& a%thori e# b& the Bangko Sentral to "erfor$

%ni!ersal or co$$ercial banking f%nctions shall likewise ha!e the a%thorit& to engage in '%asibanking f%nctions. The #eter$ination of whether a "erson or entit& is "erfor$ing banking or '%asi-banking f%nctions witho%t Bangko Sentral a%thorit& shall be #eci#e# b& the 8onetar& Boar#. To resol!e s%ch iss%e) the 8onetar& Boar# $a&- thro%gh the a""ro"riate s%"er!ising an# e:a$ining #e"art$ent of the Bangko Sentral) e:a$ine) ins"ect or in!estigate the books an# recor#s of s%ch "erson or entit&. ,"on iss%ance of this a%thorit&) s%ch "erson or entit& $a& co$$ence to engage in banking o"erations or '%asi-banking f%nction an# shall contin%e to #o so %nless s%ch a%thorit& is sooner s%rren#ere#) re!oke#) s%s"en#e# or ann%lle# b& the Bangko Sentral in accor#ance with this Act or other s"ecial laws. The #e"art$ent hea# an# the e:a$iners of the a""ro"riate s%"er!ising an# e:a$ining #e"art$ent are hereb& a%thori e# to a#$inister oaths to an& s%ch "erson) e$"lo&ee) officer) or #irector of an& s%ch entit& an# to co$"el the "resentation or "ro#%ction of s%ch books) #oc%$ents) "a"ers or recor#s that are reasonabl& necessar& to ascertain the facts relati!e to the tr%e f%nctions an# o"erations of s%ch "erson or entit&. ?ail%re or ref%sal to co$"l& with the re'%ire# "resentation or "ro#%ction of s%ch books) #oc%$ents) "a"ers or recor#s within a reasonable ti$e shall s%b9ect the "ersons res"onsible therefore to the "enal sanctions "ro!i#e# %n#er the 1ew .entral Bank Act. /ersons or entities fo%n# to be "erfor$ing banking or '%asi-banking f%nctions witho%t a%thorit& fro$ the Bangko Sentral shall be s%b9ect to a""ro"riate sanctions %n#er the 1ew .entral Bank Act an# other a""licable laws. (6a) $%&'() 7. $(a!ination )y t#e Bangko Sentral. - The Bangko Sentral shall) when e:a$ining a bank) ha!e the a%thorit& to e:a$ine an enter"rise which is wholl& or $a9orit&-owne# or controlle# b& the bank. (2-Ba) CHAPTER III ORGANIZATION, MANAGEMENT AND ADMINI TRATION OF BAN! . "UA I# BAN! AND TRU T ENTITIE $%&'() 8. Organi*ation. - The 8onetar& Boar# $a& a%thori e the organi ation of a bank or '%asi-bank s%b9ect to the following con#itions+ 5.1 That the entit& is a stock cor"oration (2)5.2 That its f%n#s are obtaine# fro$ the "%blic) which shall $ean twent& (20) or $ore "ersons (2-=a)- an# 5.* That the $ini$%$ ca"ital re'%ire$ents "rescribe# b& the 8onetar& Boar# for each categor& of banks are satisfie#. (n) 1o new co$$ercial bank shall be establishe# within three (*) &ears fro$ the effecti!it& of this Act. (n the e:ercise of the a%thorit& grante# herein) the 8onetar& Boar# shall take into

consi#eration their ca"abilit& in ter$s of their financial reso%rces an# technical e:"ertise an# integrit&. The bank licensing "rocess shall incor"orate an assess$ent of the bank@s ownershi" str%ct%re) #irectors an# senior $anage$ent) its o"erating "lan an# internal controls as well as its "ro9ecte# financial con#ition an# ca"ital base. $%&'() 9. +ssuance of Stocks. - The 8onetar& Boar# $a& "rescribe r%les an# reg%lations on the t&"es of stock a bank $a& iss%e) incl%#ing the ter$s thereof an# rights a""%rtenant thereto to #eter$ine co$"liance with laws an# reg%lations go!erning ca"ital an# e'%it& str%ct%re of banks/ro!i#e#) That banks shall iss%e "ar !al%e stocks onl&. $%&'() 10. Treasury Stocks. - 1o bank shall "%rchase or ac'%ire shares of its own ca"ital stock or acce"t its own shares as a sec%rit& for a loan) e:ce"t when a%thori e# b& the 8onetar& Boar#+ /ro!i#e#) That in e!er& case the stock so "%rchase# or ac'%ire# shall) within si: (4) $onths fro$ the ti$e of its "%rchase or ac'%isition) be sol# or #is"ose# of at a "%blic or "ri!ate sale. (26a) $%&'() 11. 'oreign Stock#oldings. - ?oreign in#i!i#%als an# non-bank cor"orations $a& own or control %" to fort& "ercent (60A) of the !oting stock of a #o$estic bank. This r%le shall a""l& to ?ili"inos an# #o$estic non-bank cor"orations. (12a- 12-Aa) The "ercentage of foreign-owne# !oting stocks in a bank shall be #eter$ine# b& the citi enshi" of the in#i!i#%al stockhol#ers in that bank. The citi enshi" of the cor"oration which is a stockhol#er in a bank shall follow the citi enshi" of the controlling stockhol#ers of the cor"oration) irres"ecti!e of the "lace of incor"oration. (n) $%&'() 12. Stock#oldings of 'a!ily ,roups of Related +nterests. - Stockhol#ings of in#i!i#%als relate# to each other within the fo%rth #egree of consang%init& or affinit&) legiti$ate or co$$onlaw) shall be consi#ere# fa$il& gro%"s or relate# interests an# $%st be f%ll& #isclose# in all transactions b& s%ch cor"orations or relate# gro%"s of "ersons with the bank. (12-Ba) $%&'() 13. Corporate Stock#oldings. - Two or $ore cor"orations owne# or controlle# b& the sa$e fa$il& gro%" or sa$e gro%" of "ersons shall be consi#ere# relate# interests an# $%st be f%ll& #isclose# in all transactions b& s%ch cor"orations or relate# gro%" of "ersons with the bank. (12-Ba) $%&'() 1+. Certificate of "ut#ority to Register. - The Sec%rities an# >:change .o$$ission shall no register the articles of incor"oration of an& bank) or an& a$en#$ent thereto) %nless acco$"anie# b& a certificate of a%thorit& iss%e# b& the 8onetar& Boar#) %n#er it seal. S%ch certificate shall not be iss%e# %nless the 8onetar& Boar# is satisfie# fro$ the e!i#ence s%b$itte# to it+ 16.1 That all re'%ire$ents of e:isting laws an# reg%lations to engage in the b%siness for which the a""licant is "ro"ose# to be incor"orate# ha!e been co$"lie# with16.2 That the "%blic interest an# econo$ic con#itions) both general an# local) 9%stif& the a%thori ation- an#

16.* That the a$o%nt of ca"ital) the financing) organi ation) #irection an# a#$inistration) as well as the integrit& an# res"onsibilit& of the organi ers an# a#$inistrators reasonabl& ass%re the safet& of #e"osits an# the "%blic interest. (3) The Sec%rities an# >:change .o$$ission shall not register the b&-laws of an& bank) or an& a$en#$ent thereto) %nless acco$"anie# b& a certificate of a%thorit& fro$ the Bangko Sentral. (10) $%&'() 1,. Board of Directors. - The "ro!isions of the .or"oration .o#e to the contrar& notwithstan#ing) there shall be at least fi!e (<)) an# a $a:i$%$ of fifteen (1<) $e$bers of the boar# or #irectors of a bank) two (2) of who$ shall be in#e"en#ent #irectors. An "in#e"en#ent #irector" shall $ean a "erson other than an officer or e$"lo&ee of the bank) its s%bsi#iaries or affiliates or relate# interests. (n) 1on-?ili"ino citi ens $a& beco$e $e$bers of the boar# of #irectors of a bank to the e:tent of the foreign "artici"ation in the e'%it& of sai# bank. (Sec. 2) 0A 2221) The $eetings of the boar# of #irectors $a& be con#%cte# thro%gh $o#ern technologies s%ch as) b%t not li$ite# to) teleconferencing an# !i#eo-conferencing. (n) $%&'() 1-. 'it and Proper Rule. - To $aintain the '%alit& of bank $anage$ent an# affor# better "rotection to #e"ositors an# the "%blic in general the 8onetar& Boar# shall "rescribe) "ass %"on an# re!iew the '%alifications an# #is'%alifications of in#i!i#%als electe# or a""ointe# bank #irectors or officers an# #is'%alif& those fo%n# %nfit. After #%e notice to the boar# of #irectors of the bank) the 8onetar& Boar# $a& #is'%alif&) s%s"en# or re$o!e an& bank #irector or officer who co$$its or o$its an act which ren#er hi$ %nfit for the "osition. (n #eter$ining whether an in#i!i#%al is fit an# "ro"er to hol# the "osition of a #irector or officer of a bank) regar# shall be gi!en to his integrit&) e:"erience) e#%cation) training) an# co$"etence. (3-Aa) $%&'() 17. Directors of -erged or Consolidated Banks. - (n the case of a bank $erger or consoli#ation) the n%$ber of #irectors shall not e:cee# twent&-one (21). (l*a) $%&'() 18. Co!pensation and Ot#er Benefits of Directors and Officers. To "rotect the fin#s of #e"ositors an# cre#itors the 8onetar& Boar# $a& reg%late the "a&$ent b& the bark to its #irectors an# officers of co$"ensation) allowance) fees) bon%ses) stock o"tions) "rofit sharing an# fringe benefits onl& in e:ce"tional cases an# when the circ%$stances warrant) s%ch as b%t not li$ite# to the following+ 15.1. Bhen a bank is %n#er co$"trollershi" or conser!atorshi"- or 15.2. Bhen a bank is fo%n# b& the 8onetar& Boar# to be con#%cting b%siness in an %nsafe or %nso%n# $anner- or 15.*. Bhen a bank is fo%n# b& the 8onetar& Boar# to be in an %nsatisfactor& financial con#ition. (n) $%&'() 19. Pro#i)ition on Pu)lic Officials. - >:ce"t as otherwise "ro!i#e# in the 0%ral Banks Act) no a""ointi!e or electi!e "%blic official whether f%ll-ti$e or "art-ti$e shall at the sa$e ti$e ser!e as officer of an& "ri!ate bank) sa!e in cases where s%ch ser!ice is inci#ent to financial

assistance "ro!i#e# b& the go!ern$ent or a go!ern$ent owne# or controlle# cor"oration to the bank or %nless otherwise "ro!i#e# %n#er e:isting laws. (1*) $%&'() 20. Bank Branc#es. - ,ni!ersal or co$$ercial banks $a& o"en branches or other offices within or o%tsi#e the /hili""ines %"on "rior a""ro!al of the Bangko Sentral. Branching b& all other banks shall be go!erne# b& "ertinent laws. A bank $a&) s%b9ect to "rior a""ro!al of the 8onetar& Boar#) %se an& or all of its branches as o%tlets for the "resentation an#;or sale of the financial "ro#%cts of its allie# %n#ertaking or of its in!est$ent ho%se %nits. A bank a%thori e# to establish branches or other offices shall be res"onsible for all b%siness con#%cte# in s%ch branches an# offices to the sa$e e:tent an# in the sa$e $anner as tho%gh s%ch b%siness ha# all been con#%cte# in the hea# office. A bank an# its branches an# offices shall be treate# as one %nit. (4-B- 22) $%&'() 21. Banking Days and .ours. - ,nless otherwise a%thori e# b& the Bangko Sentral in the interest of the banking "%blic) all banks incl%#ing their branches an# offices shall transact b%siness on all working #a&s for at least si: (4) ho%rs a #a&. (n a##ition) banks or an& of their branches or offices $a& o"en for b%siness on Sat%r#a&s) S%n#a&s or holi#a&s for at least three (*) ho%rs a #a&+ /ro!i#e#) That banks which o"t to o"en on #a&s other than working #a&s shall re"ort to the Bangko Sentral the a##itional #a&s #%ring which the& or their branches or offices shall transact b%siness. ?or "%r"oses of this Section) working #a&s shall $ean 8on#a&s to ?ri#a&s) e:ce"t if s%ch #a&s are holi#a&s. (4-.a) $%&'() 22. Strikes and ockouts. - The banking in#%str& is hereb& #eclare# as in#is"ensable to the national interest an#) notwithstan#ing the "ro!isions of an& law to the contrar&) an& strike or locko%t in!ol!ing banks) if %nsettle# after se!en (2) calen#ar #a&s shall be re"orte# b& the Bangko Sentral to the secretar& of Labor who $a& ass%$e 9%ris#iction o!er the #is"%te or #eci#e it or certif& the sane to the 1ational Labor 0elations .o$$ission for co$"%lsor& arbitration. Cowe!er) the /resi#ent of the /hili""ines $a& at an& ti$e inter!ene an# ass%$e 9%ris#iction o!er s%ch labor #is"%te in or#er to settle or ter$inate the sa$e. (4->) CHAPTER IV DEPO IT . LOAN AND OTHER OPERATION A.&'%/$ I O0$.a&'()1 O2 U)'3$.1a/ Ba)41 $%&'() 23. Powers of a /niversal Bank - A %ni!ersal bank shall ha!e the a%thorit& to e:ercise) in a##ition to the "owers a%thori e# for a co$$ercial bank in Section 23) the "owers of an in!est$ent ho%se as "ro!i#e# in e:isting laws an# the "ower to in!est in non-allie# enter"rises as "ro!i#e# in this Act. (21-B) $%&'() 2+. $0uity +nvest!ents of a /niversal Bank. - A %ni!ersal bank $a&) s%b9ect to the con#itions state# in the s%ccee#ing "aragra"h) in!est in the e'%ities of allie# an# non-allie# enter"rises as $a& be #eter$ine# b& the 8onetar& Boar#. Allie# enter"rises $a& either be financial or non-financial. >:ce"t as the 8onetar& Boar# $a& otherwise "rescribe+

26.1. The total in!est$ent in e'%ities of allie# an# non-allie# enter"rises shall not e:cee# fift& "ercent (<0A) of the net worth of the bank- an# 26.2. The e'%it& in!est$ent in an& one enter"rise) whether allie# or non-allie#) shall not e:cee# twent&-fi!e "ercent (2<A) of the net worth of the bank. As %se# in this Act) "net worth" shall $ean the total of the %ni$"aire# "ai#-in ca"ital incl%#ing "ai#-in s%r"l%s) retaine# earnings an# %n#i!i#e# "rofit) net of !al%ation reser!es an# other a#9%st$ents as $a& be re'%ire# b& the Bangko Sentral. The ac'%isition of s%ch e'%it& or e'%ities is s%b9ect to the "rior a""ro!al of the 8onetar& Boar# which shall "ro$%lgate a""ro"riate g%i#elines to go!ern s%ch in!est$ents. (21-Ba) $%&'() 2,. $0uity +nvest!ents of a /niversal Bank in 'inancial "llied $nterprises. - A %ni!ersal bank can own %" to one h%n#re# "ercent (100A) of the e'%it& in a thrift bank) a r%ral bank or a financial allie# enter"rise. A "%blicl&-liste# %ni!ersal or co$$ercial bank $a& own %" to one h%n#re# "ercent (100A) of the !oting stock of onl& one other %ni!ersal or co$$ercial bank. (21-B- 21-.a) $%&'() 2-. $0uity +nvest!ents of a /niversal Bank in 1on&'inancial "llied $nterprises. - A %ni!ersal bank $a& own %" to one h%n#re# "ercent (100A) of the e'%it& in a non-financial allie# enter"rise. (21-Ba) $%&'() 27. $0uity +nvest!ents of a /niversal Bank in 1on&"llied $nterprises. - The e'%it& in!est$ent of a %ni!ersal bank) or of its wholl& or $a9orit&-owne# s%bsi#iaries) in a single nonallie# enter"rise shall not e:cee# thirt&-fi!e "ercent (*<A) of the total e'%it& in that enter"rise nor shall it e:cee# thirt&-fi!e "ercent (*<A) of the !oting stock in that enter"rise. (21-B) $%&'() 28. $0uity +nvest!ents in %uasi&Banks. - To "ro$ote co$"etiti!e con#itions in financial $arkets) the 8onetar& Boar# $a& f%rther li$it to fort& "ercent (60A) e'%it& in!est$ents of %ni!ersal banks in '%asi-banks. This r%le shall also a""l& in the case of co$$ercial banks. (12>) Article ((. 7"erations 7f .o$$ercial Banks $%&'() 29. Powers of a Co!!ercial Bank. - A co$$ercial bank shall ha!e) in a##ition to the general "owers inci#ent to cor"orations) all s%ch "owers as $a& be necessar& to carr& on the b%siness of co$$ercial banking s%ch as acce"ting #rafts an# iss%ing letters of cre#it- #isco%nting an# negotiating "ro$issor& notes) #rafts) bills of e:change) an# other e!i#ences of #ebtacce"ting or creating #e$an# #e"osits- recei!ing other t&"es of #e"osits an# #e"osit s%bstit%tesb%&ing an# selling foreign e:change an# gol# or sil!er b%llion- ac'%iring $arketable bon#s an# other #ebt sec%rities- an# e:ten#ing cre#it) s%b9ect to s%ch r%les as the 8onetar& Boar# $a& "ro$%lgate. These r%les $a& incl%#e the #eter$ination of bon#s an# other #ebt sec%rities eligible for in!est$ent) the $at%rities an# aggregate a$o%nt of s%ch in!est$ent. $%&'() 30. $0uity +nvest!ents of a Co!!ercial Bank. - A co$$ercial bank $a&) s%b9ect to the con#itions state# in the s%ccee#ing "aragra"hs) in!est onl& in the e'%ities of allie# enter"rises as

$a& be #eter$ine# b& the 8onetar& Boar#. Allie# enter"rises $a& either be financial or nonfinancial. >:ce"t as the 8onetar& Boar# $a& otherwise "rescribe+ *0.1. The total in!est$ent in e'%ities of allie# enter"rises shall not e:cee# thirt&-fi!e "ercent (*<A) of the net worth of the bark- an# *0.2. The e'%it& in!est$ent in an& one enter"rise shall not e:cee# twent&-fi!e "ercent (2<A) of tile net worth of the bank. The ac'%isition of s%ch e'%it& or e'%ities is s%b9ect to the "rior a""ro!al of the 8onetar& Boar# which shall "ro$%lgate a""ro"riate g%i#elines to go!ern s%ch in!est$ent.(2lA-a- 21-.a) $%&'() 31. $0uity +nvest!ents of a Co!!ercial Bank in 'inancial "llied $nterprises. - A co$$ercial bank $a& own %" to one h%n#re# "ercent (100A) of the e'%it& of a thrift bank or a r%ral bank. Bhere the e'%it& in!est$ent of a co$$ercial bank is in other financial allie# enter"rises) incl%#ing another co$$ercial bank) s%ch in!est$ent shall re$ain a $inorit& hol#ing in that enter"rise. (21-Aa- 21-.a) $%&'() 32. $0uity +nvest!ents of a Co!!ercial Bank in 1on&'inancial "llied $nterprises. A co$$ercial bank $a& own %" to one h%n#re# "ercent (100A) of the e'%it& in a non-financial allie# enter"rise. (21-Aa) Article (((. /ro!isions A""licable To All Banks) D%asi-Banks) An# Tr%st >ntities $%&'() 33. "cceptance of De!and Deposits. - A bank other than a %ni!ersal or co$$ercial bank cannot acce"t or create #e$an# #e"osits e:ce"t %"on "rior a""ro!al of) an# s%b9ect to s%ch con#itions an# r%les as $a& be "rescribe# b& the 8onetar& Boar#. (22-Aa) $%&'() 3+. Risk&Based Capital. - The 8onetar& Boar# shall "rescribe the $ini$%$ ratio which the net worth of a bank $%st bear to its total risk assets which $a& incl%#e contingent acco%nts. ?or "%r"oses of this Section) the 8onetar& Boar# $a& re'%ire s%ch ratio be #eter$ine# on the basis of the net worth an# risk assets of a bank an# its s%bsi#iaries) financial or otherwise) as well as "rescribe the co$"osition an# the $anner of #eter$ining the net worth an# total risk assets of banks an# their s%bsi#iaries+ /ro!i#e#) That in the e:ercise of this a%thorit&) the 8onetar& Boar# shall) to the e:tent feasible confor$ to internationall& acce"te# stan#ar#s) incl%#ing those of the Bank for (nternational Settle$ents(B(S)) relating to risk-base# ca"ital re'%ire$ents+ /ro!i#e# f%rther) That it $a& alter or s%s"en# co$"liance with s%ch ratio whene!er necessar& for a $a:i$%$ "erio# of one (1) &ear+ /ro!i#e#) finall&) That s%ch ratio shall be a""lie# %nifor$l& to banks of the sa$e categor&. (n case a bank #oes not co$"l& with the "rescribe# $ini$%$ ratio) the 8onetar& Boar# $a& li$it or "rohibit the #istrib%tion of net "rofits b& s%ch bank an# $a& re'%ire that "art or all of the net "rofits be %se# to increase the ca"ital acco%nts of the bank %ntil the $ini$%$ re'%ire$ent has been $et The 8onetar& Boar# $a&) f%rther$ore) restrict or "rohibit the ac'%isition of $a9or assets an# the $aking of new in!est$ents b& the bank) with the e:ce"tion of "%rchases of rea#il& $arketable e!i#ences of in#ebte#ness of the 0e"%blic of the /hili""ines an# of the Bangko Sentral an# an& other e!i#ences of in#ebte#ness or obligations the ser!icing an# re"a&$ent of which are f%ll& g%arantee# b& the 0e"%blic of the /hili""ines) %ntil the $ini$%$ re'%ire# ca"ital ratio has been restore#. (n case of a bank $erger or consoli#ation) or when a bank is %n#er rehabilitation %n#er a "rogra$ a""ro!e# b& the Bangko Sentral)

8onetar& Boar# $a& te$"oraril& relie!e the s%r!i!ing bank) consoli#ate# bank) or constit%ent bank or cor"orations %n#er rehabilitation fro$ f%ll co$"liance with the re'%ire# ca"ital ratio %n#er s%ch con#itions as it $a& "rescribe. Before the effecti!it& of r%les which the 8onetar& Boar# is a%thori e# to "rescribe %n#er this "ro!ision) Section 22 of the General Banking Act) as a$en#e#) Section 3 of the Thrift Banks Act) an# all "ertinent r%les iss%e# "%rs%ant thereto) shall contin%e to be in force. (22a) $%&'() 3,. i!it on oans, Credit "cco!!odations and ,uarantees *<.1 >:ce"t as the 8onetar& Boar# $a& otherwise "rescribe for reasons of national interest) the total a$o%nt of loans) cre#it acco$$o#ations an# g%arantees as $a& be #efine# b& the 8onetar& Boar# that $a& be e:ten#e# b& a bank to an& "erson) "artnershi") association) cor"oration or other entit& shall at no ti$e e:cee# twent& "ercent (20A) of the net worth of s%ch bank. The basis for #eter$ining co$"liance with single borrower li$it is the total cre#it co$$it$ent of the bank to the borrower. *<.2. ,nless the 8onetar& Boar# "rescribes otherwise) the total a$o%nt of loans) cre#it acco$$o#ations an# g%arantees "rescribe# in the "rece#ing "aragra"h $a& be increase# b& an a##itional ten "ercent (10A) of the net worth of s%ch bank "ro!i#e# the a##itional liabilities of an& borrower are a#e'%atel& sec%re# b& tr%st recei"ts) shi""ing #oc%$ents) wareho%se recei"ts or other si$ilar #oc%$ents transferring or sec%ring title co!ering rea#il& $arketable) non"erishable goo#s which $%st be f%ll& co!ere# b& ins%rance. *<.* The abo!e "rescribe# ceilings shall incl%#e (a) the #irect liabilit& of the $aker or acce"tor of "a"er #isco%nte# with or sol# to s%ch bank an# the liabilit& of a general en#orser) #rawer or g%arantor who obtains a loan or other cre#it acco$$o#ation fro$ or #isco%nts "a"er with or sells "a"ers to s%ch bank- (b) in the case of an in#i!i#%al who owns or controls a $a9orit& interest in a cor"oration) "artnershi") association or an& other entit&) the liabilities of sai# entities to s%ch bank- (c) in the case of a cor"oration) all liabilities to s%ch bank of all s%bsi#iaries in which s%ch cor"oration owns or controls a $a9orit& interest- an# (#) in the case of a "artnershi") association or other entit&) the liabilities of the $e$bers thereof to s%ch bank. *<.6. >!en if a "arent cor"oration) "artnershi") association) entit& or an in#i!i#%al who owns or controls a $a9orit& interest in s%ch entities has no liabilit& to the bank) the 8onetar& Boar# $a& "rescribe the co$bination of the liabilities of s%bsi#iar& cor"orations or $e$bers of the "artnershi") association) entit& or s%ch in#i!i#%al %n#er certain circ%$stances) incl%#ing b%t not li$ite# to an& of the following sit%ations+ (a) the "arent cor"oration) "artnershi") association) entit& or in#i!i#%al g%arantees the re"a&$ent of the liabilities- (b) the liabilities were inc%rre# for the acco$$o#ation of the "arent cor"oration or another s%bsi#iar& or of the "artnershi" or association or entit& or s%ch in#i!i#%al- or (c) the s%bsi#iaries tho%gh se"arate entities o"erate $erel& as #e"art$ents or #i!isions of a single entit&. *<.<. ?or "%r"oses of this Section) loans) other cre#it acco$$o#ations an# g%arantees shall e:cl%#e+ (a) loans an# other cre#it acco$$o#ations sec%re# b& obligations of the Bangko Sentral or of the /hili""ine Go!ern$ent+ (b) loans an# other cre#it acco$$o#ations f%ll& g%arantee# b& the go!ern$ent as to the "a&$ent of "rinci"al an# interest- (c) loans an# other cre#it

acco$$o#ations co!ere# b& assign$ent of #e"osits $aintaine# in the len#ing bank an# hel# in the /hili""ines- (#) loans) cre#it acco$$o#ations an# acce"tances %n#er letters of cre#it to the e:tent co!ere# b& $argin #e"osits- an# (e) other loans or cre#it acco$$o#ations which the 8onetar& Boar# $a& fro$ ti$e to ti$e) s"ecif& as non-risk ite$s. *<.4. Loans an# other cre#it acco$$o#ations) #e"osits $aintaine# with) an# %s%al g%arantees b& a bank to an& other bank or non-bank entit&) whether locall& or abroa#) shall be s%b9ect to the li$its as herein "rescribe#. *<.2. .ertain t&"es of contingent acco%nts of borrowers $a& be incl%#e# a$ong those s%b9ect to these "rescribe# li$its as $a& be #eter$ine# b& the 8onetar& Boar#.(2*a) $%&'() 3-. Restriction on Bank $(posure to Directors, Officers, Stock#olders and T#eir Related +nterests. - 1o #irector or officer of an& bank shall) #irectl& or in#irectl&) for hi$self or as the re"resentati!e or agent of others) borrow fro$ s%ch bank nor shall he beco$e a g%arantor) en#orser or s%ret& for loans fro$ s%ch bank to others) or in an& $anner be an obligor or inc%r an& contract%al liabilit& to the bank e:ce"t with the written a""ro!al of the $a9orit& of all the #irectors of the bank) e:cl%#ing the #irector concerne#+ /ro!i#e#) That s%ch written a""ro!al shall not be re'%ire# for loans) other cre#it acco$$o#ations an# a#!ances grante# to officers %n#er a fringe benefit "lan a""ro!e# b& the Bangko Sentral. The re'%ire# a""ro!al shall be entere# %"on the recor#s of the bank an# a co"& of s%ch entr& shall be trans$itte# forthwith to the a""ro"riate s%"er!ising an# e:a$ining #e"art$ent of the Bangko Sentral. =ealings of a bank with an& of its #irectors) officers or stockhol#ers an# their relate# interests shall be %"on ter$s not less fa!orable to the bank than those offere# to others. After #%e notice to the boar# of #irectors of the bank) the office of an& bank #irector or officer who !iolates the "ro!isions of this Section $a& be #eclare# !acant an# the #irector or officer shall be s%b9ect to the "enal "ro!isions of the 1ew .entral Bank Act. The 8onetar& Boar# $a& reg%late the a$o%nt of loans) cre#it acco$$o#ations an# g%arantees that $a& be e:ten#e#) #irectl& or in#irectl&) b& a bank to its #irectors) officers) stockhol#ers an# their relate# interests) as well as in!est$ents of s%ch bank in enter"rises owne# or controlle# b& sai# #irectors) officers) stockhol#ers an# their relate# interests. Cowe!er) the o%tstan#ing loans) cre#it acco$$o#ations an# g%arantees which a bank $a& e:ten# to each of its stockhol#ers) #irectors) or officers an# their relate# interests) shall be li$ite# to an a$o%nt e'%i!alent to their res"ecti!e %nenc%$bere# #e"osits an# book !al%e of their "ai#-in ca"ital contrib%tion in the bank+ /ro!i#e#) howe!er) That loans) cre#it acco$$o#ations an# g%arantees sec%re# b& assets consi#ere# as non-risk b& the 8onetar& Boar# shall be e:cl%#e# fro$ s%ch li$it+ /ro!i#e#) f%rther) That loans) cre#it acco$$o#ations an# a#!ances to officers in the for$ of fringe benefits grante# in accor#ance with r%les as $a& be "rescribe# b& the 8onetar& Boar# shall not be s%b9ect to the in#i!i#%al li$it. The 8onetar& Boar# shall #efine the ter$ "relate# interests." The li$it on loans) cre#it acco$$o#ations an# g%arantees "rescribe# herein shall not a""l& to loans) cre#it acco$$o#ations an# g%arantees e:ten#e# b& a coo"erati!e bank to its coo"erati!e sharehol#ers. (5*a) $%&'() 37. oans and Ot#er Credit "cco!!odations "gainst Real $state. - >:ce"t as the 8onetar& Boar# $a& otherwise "rescribe) loans an# other cre#it acco$$o#ations against real estate shall not e:cee# se!ent&-fi!e "ercent (2<A) of the a""raise# !al%e of the res"ecti!e real

estate sec%rit&) "l%s si:t& "ercent (40A) of the a""raise# !al%e of the ins%re# i$"ro!e$ents) an# s%ch loans $a& be $a#e to the owner of the real estate or to his assignees. (25a) $%&'() 38. oans "nd Ot#er Credit "cco!!odations on Security of C#attels and +ntangi)le Properties. - >:ce"t as the 8onetar& Boar# $a& otherwise "rescribe) loans an# other cre#it acco$$o#ations on sec%rit& of chattels an# intangible "ro"erties s%ch as) b%t not li$ite# to) "atents) tra#e$arks) tra#e na$es) an# co"&rights shall not e:cee# se!ent&-fi!e "ercent (2<A) of the a""raise# !al%e of the sec%rit&) an s%ch loans an# other cre#it acco$$o#ation $a& be $a#e to the title-hol#er of the chattels an# intangible "ro"erties or his assignees. (25a) $%&'() 39. ,rant and Purpose of oans and Ot#er Credit "cco!!odations. - A bank shall grant loans an# other cre#it acco$$o#ations onl& in a$o%nts an# for the "erio#s of ti$e essential for the effecti!e co$"letion of the o"erations to be finance#. S%ch grant of loans an# other cre#it acco$$o#ations shall be consistent with safe an# so%n# banking "ractices. (2<a) The "%r"ose of all loans an# other cre#it acco$$o#ations shall be state# in the a""lication an# in the contract between the bank an# the borrower. (f the bank fin#s that the "rocee#s of the loan or other cre#it acco$$o#ation ha!e been e$"lo&e#) witho%t its a""ro!al) for "%r"oses other than those agree# %"on with the bank) it shall ha!e the right to ter$inate the loan or other cre#it acco$$o#ation an# #e$an# i$$e#iate re"a&$ent of the obligation. (22) $%&'() +0. Re0uire!ent for ,rant Of oans or 2t#er Credit "cco!!odations. - Before granting a loan or other cre#it acco$$o#ation) a bank $%st ascertain that the #ebtor is ca"able of f%lfilling his co$$it$ents to the bank. Towar# this en#) a bank $a& #e$an# fro$ its cre#it a""licants a state$ent of their assets an# liabilities an# of their inco$e an# e:"en#it%res an# s%ch infor$ation as $a& be "rescribe# b& law or b& r%les an# reg%lations of the 8onetar& Boar# to enable the bank to "ro"erl& e!al%ate the cre#it a""lication which incl%#es the corres"on#ing financial state$ents s%b$itte# for ta:ation "%r"oses to the B%rea% of (nternal 0e!en%e. Sho%l# s%ch state$ents "ro!e to be false or incorrect in an& $aterial #etail) the bank $a& ter$inate an& loan or other cre#it acco$$o#ation grante# on the basis of sai# state$ents an# shall ha!e the right to #e$an# i$$e#iate re"a&$ent or li'%i#ation of the obligation. (n for$%lating r%les an# reg%lations %n#er this Section) the 8onetar& Boar# shall recogni e the "ec%liar characteristics of $icro financing) s%ch as cash flow-base# len#ing to the basic sectors that are not co!ere# b& tra#itional collateral. (24a) $%&'() +1. /nsecured oans or Ot#er Credit "cco!!odations. - The 8onetar& Boar# is hereb& a%thori e# to iss%e s%ch reg%lations as it $a& #ee$ necessar& with res"ect to %nsec%re# loans or other cre#it acco$$o#ations that $a& be grante# b& banks. (n) $%&'() +2. Ot#er Security Re0uire!ents for Bank Credits. - The 8onetar& Boar# $a&) b& reg%lation) "rescribe f%rther sec%rit& re'%ire$ents to which the !ario%s t&"es of bank cre#its shall be s%b9ect) an#) in accor#ance with the a%thorit& grante# to it in Section 104 of the 1ew .entral Bank Act) the Boar# $a& b& reg%lation) re#%ce the $a:i$%$ ratios establishe# in Sections *4 an# *2 of this Act) or) in s"ecial cases) increase the $a:i$%$ ratios establishe# therein. (25)

$%&'() +3. "ut#ority to Prescri)e Ter!s and Conditions of oans and Ot#er Credit "cco!!odations. - The 8onetar& Boar#) $a&) si$ilarl& in accor#ance with the a%thorit& grante# to it in Section 104 of the 1ew .entral Bank Act) an# taking into acco%nt the re'%ire$ents of the econo$& for the effecti!e %tili ation of long-ter$ f%n#s) "rescribe the $at%rities) as well as relate# ter$s an# con#itions for !ario%s t&"es of bank loans an# other cre#it acco$$o#ations. An& change b& the Boar# in the $a:i$%$ $at%rities) as well as relate# ter$s an# con#itions for !ario%s t&"es of bank loans an# other cre#it acco$$o#ations. An& change b& the Boar# in the $a:i$%$ $at%rities shall a""l& onl& to loans an# other cre#it acco$$o#ations $a#e after the #ate of s%ch action. The 8onetar& Boar# shall reg%late the interest i$"ose# on $icro finance borrowers b& len#ing in!estors an# si$ilar len#ers s%ch as) b%t not li$ite# to) the %nconscionable rates of interest collecte# on salar& loans an# si$ilar cre#it acco$$o#ations. (25a) $%&'() ++. "!orti*ation on oans and Ot#er Credit "cco!!odations. - The a$orti ation sche#%le of bank loans an# other cre#it acco$$o#ations shall be a#a"te# to the nat%re of the o"erations to be finance#. (n case of loans an# other cre#it acco$$o#ations with $at%rities of $ore than fi!e (<) &ears) "ro!isions $%st be $a#e for "erio#ic a$orti ation "a&$ents) b%t s%ch "a&$ents $%st be $a#e at least ann%all&+ /ro!i#e#) howe!er) That when the borrowe# f%n#s are to be %se# for "%r"oses which #o not initiall& "ro#%ce re!en%es a#e'%ate for reg%lar a$orti ation "a&$ents therefro$) the bank $a& "er$it the initial a$orti ation "a&$ent to be #eferre# %ntil s%ch ti$e as sai# re!en%es are s%fficient for s%ch "%r"ose) b%t in no case shall the initial a$orti ation #ate be later than fi!e (<) &ears fro$ the #ate on which the loan or other cre#it acco$$o#ation is grante#. (23a) (n case of loans an# other cre#it acco$$o#ations to $icro finance sectors) the sche#%le of loan a$orti ation shall take into consi#eration the "ro9ecte# cash flow of the borrower an# a#o"t this into the ter$s an# con#itions for$%late# b& banks. (n) $%&'() +,. Prepay!ent of oans and Ot#er Credit "cco!!odations. - A borrower $a& at an& ti$e "rior to the agree# $at%rit& #ate "re"a&) in whole or in "art) the %n"ai# balance of an& bank loan an# other cre#it acco$$o#ation) s%b9ect to s%ch reasonable ter$s an# con#itions as $a& be agree# %"on between the bank an# its borrower. (50a) $%&'() +-. Develop!ent "ssistance +ncentives. - The Bangko Sentral shall "ro!i#e incenti!es to banks which) witho%t go!ern$ent g%arantee) e:ten# loans to finance e#%cational instit%tions coo"erati!es) hos"itals an# other $e#ical ser!ices) sociali e# or low-cost ho%sing) local go!ern$ent %nits an# other acti!ities with social content. (n) $%&'() +7. 'oreclosure of Real $state -ortgage. - (n the e!ent of foreclos%re) whether 9%#iciall& or e:tra-9%#iciall&) of an& $ortgage on real estate which is sec%rit& for an& loan or other cre#it acco$$o#ation grante#) the $ortgagor or #ebtor whose real "ro"ert& has been sol# for the f%ll or "artial "a&$ent of his obligation shall ha!e the right within one &ear after the sale of the real estate) to re#ee$ the "ro"ert& b& "a&ing the a$o%nt #%e %n#er the $ortgage #ee#) with interest thereon at rate s"ecifie# in the $ortgage) an# all the costs an# e:"enses inc%rre# b& the bank or instit%tion fro$ the sale an# c%sto#& of sai# "ro"ert& less the inco$e #eri!e# therefro$. Cowe!er) the "%rchaser at the a%ction sale concerne# whether in a 9%#icial or e:tra9%#icial foreclos%re shall ha!e the right to enter %"on an# take "ossession of s%ch "ro"ert& i$$e#iatel& after the #ate of the confir$ation of the a%ction sale an# a#$inister the sa$e in

accor#ance with law. An& "etition in co%rt to en9oin or restrain the con#%ct of foreclos%re "rocee#ings instit%te# "%rs%ant to this "ro!ision shall be gi!en #%e co%rse onl& %"on the filing b& the "etitioner of a bon# in an a$o%nt fi:e# b& the co%rt con#itione# that he will "a& all the #a$ages which the bank $a& s%ffer b& the en9oining or the restraint of the foreclos%re "rocee#ing. 1otwithstan#ing Act *1*<) 9%ri#ical "ersons whose "ro"ert& is being sol# "%rs%ant to an e:tra9%#icial foreclos%re) shall ha!e the right to re#ee$ the "ro"ert& in accor#ance with this "ro!ision %ntil) b%t not after) the registration of the certificate of foreclos%re sale with the a""licable 0egister of =ee#s which in no case shall be $ore than three (*) $onths after foreclos%re) whiche!er is earlier. 7wners of "ro"ert& that has been sol# in a foreclos%re sale "rior to the effecti!it& of this Act shall retain their re#e$"tion rights %ntil their e:"iration. (25a) $%&'() +8. Renewal or $(tension of oans and Ot#er Credit "cco!!odations. - The 8onetar& Boar# $a&) b& reg%lation) "rescribe the con#itions an# li$itations %n#er which a bank $a& grant e:tensions or renewals of its loans an# other cre#it acco$$o#ations. (51) $%&'() +9. Provisions for osses and 3rite&Offs. - All #ebts #%e to an& bank on which interest is "ast #%e an# %n"ai# for s%ch "erio# as $a& be #eter$ine# b& the 8onetar& Boar#) %nless the sa$e are welt-sec%re# an# in the "rocess of collection shall be consi#ere# ba# #ebts within the $eaning of this Section. The 8onetar& Boar# $a& fi:) b& reg%lation or b& or#er in a s"ecific case) the a$o%nt of reser!es for ba# #ebts or #o%btf%l acco%nts or other contingencies. Briting off of loans) other cre#it acco$$o#ations) a#!ances an# other assets shall be s%b9ect to reg%lations iss%e# b& the 8onetar& Boar#. (56a) $%&'() ,0. -a4or +nvest!ents. - ?or the "%r"ose or enhancing bank s%"er!ision) the 8onetar& Boar# shall establish criteria for re!iewing $a9or ac'%isitions of in!est$ents b& a bank incl%#ing cor"orate affiliations or str%ct%res that $a& e:"ose the bank to %n#%e risks or in an& wa& hin#er effecti!e s%"er!ision. $%&'() ,1. Ceiling on +nvest!ents in Certain "ssets. - An& bank $a& ac'%ire real estate as shall be necessar& for its own %se in the con#%ct of its b%siness+ /ro!i#e#) howe!er) That the total in!est$ent in s%ch real estate an# i$"ro!e$ents thereof incl%#ing bank e'%i"$ent) shall not e:cee# fift& "ercent (<0A) of co$bine# ca"ital acco%nts+ /ro!i#e#) f%rther) That the e'%it& in!est$ent of a bank in another cor"oration engage# "ri$aril& in real estate shall be consi#ere# as "art of the bank@s total in!est$ent in real estate) %nless otherwise "ro!i#e# b& the 8onetar& Boar#. (2<a) $%&'() ,2. "c0uisition of Real $state )y 3ay of Satisfaction of Clai!s. - 1otwithstan#ing the li$itations of the "rece#ing Section) a bank $a& ac'%ire) hol# or con!e& real "ro"ert& %n#er the following circ%$stances+ <2.1. S%ch as shall be $ortgage# to it in goo# faith b& wa& of sec%rit& for #ebts<2.2. S%ch as shall be con!e&e# to it in satisfaction of #ebts "re!io%sl& contracte# in the co%rse of its #ealings) or

<2.*. S%ch as it shall "%rchase at sales %n#er 9%#g$ents) #ecrees) $ortgages) or tr%st #ee#s hel# b& it an# s%ch as it shall "%rchase to sec%re #ebts #%e it. An& real "ro"ert& ac'%ire# or hel# %n#er the circ%$stances en%$erate# in the abo!e "aragra"h shall be #is"ose# of b& the bank within a "erio# of fi!e (<) &ears or as $a& be "rescribe# b& the 8onetar& Boar#+ /ro!i#e#) howe!er) That the bank $a&) after sai# "erio#) contin%e to hol# the "ro"ert& for its own %se) s%b9ect to the li$itations of the "rece#ing Section. (2<a) $%&'() ,3. Ot#er Banking Services. - (n a##ition to the o"erations s"ecificall& a%thori e# in this Act) a bank $a& "erfor$ the following ser!ices+ <*.1. 0ecei!e in c%sto#& f%n#s) #oc%$ents an# !al%able ob9ects<*.2. Act as financial agent an# b%& an# sell) b& or#er of an# for the acco%nt of their c%sto$ers) shares) e!i#ences of in#ebte#ness an# all t&"es of sec%rities<*.*. 8ake collections an# "a&$ents for the acco%nt of others an# "erfor$ s%ch other ser!ices for their c%sto$ers as are not inco$"atible with banking b%siness<*.6 ,"on "rior a""ro!al of the 8onetar& Boar#) act as $anaging agent) a#!iser) cons%ltant or a#$inistrator of in!est$ent $anage$ent;a#!isor&;cons%ltanc& acco%nts- an# <*.<. 0ent o%t safet& #e"osit bo:es. The bank shall "erfor$ the ser!ices "er$itte# %n#er S%bsections <*.1) <*.2)<*.* an# <*.6 as #e"ositar& or as an agent. Accor#ingl&) it shall kee" the f%n#s) sec%rities an# other effects which it recei!es #%l& se"arate fro$ the bank@s own assets an# liabilities+ The 8onetar& Boar# $a& reg%late the o"erations a%thori e# b& this Section in or#er to ens%re that s%ch o"erations #o not en#anger the interests of the #e"ositors an# other cre#itors of the bank. (n case a bank or '%asibark notifies the Bangko Sentral or "%blicl& anno%nces a bank holi#a&) or in an& $anner s%s"en#s the "a&$ent of its #e"osit liabilities contin%o%sl& for $ore than thirt& (*0) #a&s) the 8onetar& Boar# $a& s%$$aril& an# witho%t nee# for "rior hearing close s%ch banking instit%tion an# "lace it %n#er recei!ershi" of the /hili""ine =e"osit (ns%rance .or"oration. (22a) $%&'() ,+. Pro#i)ition to "ct as +nsurer. - A bank shall not #irectl& engage in ins%rance b%siness as the ins%rer. (2*) $%&'() ,,. Pro#i)ited Transactions. <<.1. 1o #irector) officer) e$"lo&ee) or agent of an& bank shall (a) 8ake false entries in an& bank re"ort or state$ent or "artici"ate in an& fra%#%lent transaction) thereb& affecting the financial interest of) or ca%sing #a$age to) the bank or an& "erson-

(b) Bitho%t or#er of a co%rt of co$"etent 9%ris#iction) #isclose to an& %na%thori e# "erson an& infor$ation relati!e to the f%n#s or "ro"erties in the c%sto#& of the bank belonging to "ri!ate in#i!i#%als) cor"orations) or an& other entit&+ /ro!i#e#) That with res"ect to bank #e"osits) the "ro!isions of e:isting laws shall "re!ail(c) Acce"t gifts) fees) or co$$issions or an& other for$ of re$%neration in connection with the a""ro!al of a loan or other cre#it acco$$o#ation fro$ sai# bank(#) 7!er!al%e or ai# in o!er!al%ing an& sec%rit& for the "%r"ose of infl%encing in an& wa& the actions of the bank or an& bank- or (e) 7%tso%rce inherent banking f%nctions. <<.2. 1o borrower of a bank shall (a) ?ra%#%lentl& o!er!al%e "ro"ert& offere# as sec%rit& for a loan or other cre#it acco$$o#ation fro$ the bank(b) ?%rnish false or $ake $isre"resentation or s%""ression of $aterial facts for the "%r"ose of obtaining) renewing) or increasing a loan or other cre#it acco$$o#ation or e:ten#ing the "erio# thereof(c) Atte$"t to #efra%# the sai# bank in the e!ent of a co%rt action to reco!er a loan or other cre#it acco$$o#ation- or (#) 7ffer an& #irector) officer) e$"lo&ee or agent of a bank an& gift) fee) co$$ission) or an& other for$ of co$"ensation in or#er to infl%ence s%ch "ersons into a""ro!ing a loan or other cre#it acco$$o#ation a""lication. <<.* 1o e:a$iner) officer or e$"lo&ee of the Bangko Sentral or of an& #e"art$ent) b%rea%) office) branch or agenc& of the Go!ern$ent that is assigne# to s%"er!ise) e:a$ine) assist or ren#er technical assistance to an& bank shall co$$it an& of the acts en%$erate# in this Section or ai# in the co$$ission of the sa$e. (52-Aa) The $aking of false re"orts or $isre"resentation or s%""ression of $aterial facts b& "ersonnel of the Bangko Sental ng /ili"inas shall be s%b9ect to the a#$inistrati!e an# cri$inal sanctions "ro!i#e# %n#er the 1ew .entral Bank Act. <<.6. .onsistent with the "ro!isions of 0e"%blic Act 1o. 160<) otherwise known as the Banks Secrec& Law) no bank shall e$"lo& cas%al or non reg%lar "ersonnel or too length& "robationar& "ersonnel in the con#%ct of its b%siness in!ol!ing bank #e"osits. $%&'() ,-. Conducting Business in an /nsafe or /nsound -anner - (n #eter$ining whether a "artic%lar act or o$ission) which is not otherwise "rohibite# b& an& law) r%le or reg%lation affecting banks) '%asi-banks or tr%st entities) $a& be #ee$e# as con#%cting b%siness in an %nsafe

or %nso%n# $anner for "%r"oses of this Section) the 8onetar& Boar# shall consi#er an& of the following circ%$stances+ <4.1 The act or o$ission has res%lte# or $a& res%lt in $aterial loss or #a$age) or abnor$al risk or #anger to the safet&) stabilit&) li'%i#it& or sol!enc& of the instit%tion<4.2 The act or o$ission has res%lte# or $a& res%lt in $aterial loss or #a$age or abnor$al risk to the instit%tion@s #e"ositors) cre#itors) in!estors) stockhol#ers or to the Bangko Sentral or to the "%blic in general<4.* The act or o$ission has ca%se# an& %n#%e in9%r&) or has gi!en an& %nwarrante# benefits) a#!antage or "reference to the bank or an& "art& in the #ischarge b& the #irector or officer of his #%ties an# res"onsibilities thro%gh $anifest "artialit&) e!i#ent ba# faith or gross ine:c%sable negligence- or <4.6 The act or o$ission in!ol!es entering into an& contract or transaction $anifestl& an# grossl& #isa#!antageo%s to the bank) '%asi-bank or tr%st entit&) whether or not the #irector or officer "rofite# or will "rofit thereb&. Bhene!er a bank) '%asi-bank or tr%st entit& "ersists in con#%cting its b%siness in an %nsafe or %nso%n# $anner) the 8onetar& Boar# $a&) witho%t "re9%#ice to the a#$inistrati!e sanctions "ro!i#e# in Section *2 of the 1ew .entral Bank Act) take action %n#er Section *0 of the sa$e Act an#;or i$$e#iatel& e:cl%#e the erring bank fro$ clearing) the "ro!isions of law to the contrar& notwithstan#ing. (n) $%&'() ,7. Pro#i)ition on Dividend Declaration. - 1o bank or '%asi-bank shall #eclare #i!i#en#s) if at the ti$e of #eclaration+ <2.1 (ts clearing acco%nt with the Bangko Sentral is o!er#rawn- or <2.2 (t is #eficient in the re'%ire# li'%i#it& floor for go!ern$ent #e"osits for fi!e (<) or $ore consec%ti!e #a&s) or <2.* (t #oes not co$"l& with the li'%i#it& stan#ar#s;ratios "rescribe# b& the Bangko Sentral for "%r"oses of #eter$ining f%n#s a!ailable for #i!i#en# #eclaration- or <2.6 (t has co$$itte# a $a9or !iolation as $a& be #eter$ine# b& the Bangko Sentral (56a) $%&'() ,8. +ndependent "uditor. - The 8onetar& Boar# $a& re'%ire a bank) '%asi-bank or tr%st entit& to engage the ser!ices of an in#e"en#ent a%#itor to be chosen b& the bank) '%asi-bank or tr%st entit& concerne# fro$ a list of certifie# "%blic acco%ntants acce"table to the 8onetar& Boar#. The ter$ of the engage$ent shall be as "rescribe# b& the 8onetar& Boar# which $a& either be on a contin%ing basis where the a%#itor shall act as resi#ent e:a$iner) or on the basis of s"ecial engage$ents- b%t in an& case) the in#e"en#ent a%#itor shall be res"onsible to the bank@s) '%asi-bank@s or tr%st entit&@s boar# of #irectors. A co"& of the re"ort shall be f%rnishe# to the 8onetar& Boar#. The 8onetar& Boar# $a& also #irect the boar# of #irectors of a bank) '%asi-

bank) tr%st& entit& an#;or the in#i!i#%al $e$bers thereof- to con#%ct) either "ersonall& or b& a co$$ittee create# b& the boar#) an ann%al balance sheet a%#it of the bank) '%asi-bank or tr%st entit& to re!iew the internal a%#it an# control s&ste$ of the bank) '%asi-bank or tr%st entit& an# to s%b$it a re"ort of s%ch a%#it. (4-=a) $%&'() ,9. "ut#ority to Regulate $lectronic Transactions. - The Bangko Sentral shall ha!e f%ll a%thorit& to reg%late the %se of electronic #e!ices) s%ch as co$"%ters) an# "rocesses for recor#ing) storing an# trans$itting infor$ation or #ata in connection with the o"erations of a bank- '%asi-bank or tr%st entit&) incl%#ing the #eli!er& of ser!ices an# "ro#%cts to c%sto$ers b& s%ch entit&. (n) $%&'() -0. 'inancial State!ents. - >!er& bank) '%asi-bank or tr%st entit& shall s%b$it to the a""ro"riate s%"er!ising an# e:a$ining #e"art$ent of the Bangko Sentral financial state$ents in s%ch for$ an# fre'%enc& as $a& be "rescribe# b& the Bangko Sentral. S%ch state$ents) which shall be as of a s"ecific #ate #esignate# b& the Bangko Sentral) shall show thee act%al financial con#ition of the instit%tion s%b$itting the state$ent) an# of its branches) offices) s%bsi#iaries an# affiliates) incl%#ing the res%lts of its o"erations) an# shall contain s%ch infor$ation as $a& be re'%ire# in Bangko Sentral reg%lations. (n) $%&'() -1. Pu)lication of 'inancial State!ents. - >!er& bank) '%asi-bank or tr%st entit&) shall "%blish a state$ent of its financial con#ition) incl%#ing those of its s%bsi#iaries an# affiliates) in s%ch ter$s %n#erstan#able to the la&$an an# in s%ch fre'%enc& as $a& be "rescribe# Bangko Sentral) in >nglish or ?ili"ino) at least once e!er& '%arter in a news"a"er of general circ%lation in the cit& or "ro!ince where the "rinci"al office) in the case of a #o$estic instit%tion or the "rinci"al branch or office in the case of a foreign bank) is locate#) b%t if no news"a"er is "%blishe# in the sa$e "ro!ince) then in a news"a"er "%blishe# in 8etro 8anila or in the nearest cit& or "ro!ince. The Bangko Sentral $a& b& reg%lation "rescribe the news"a"er where the state$ents "rescribe# herein shall be "%blishe#. The 8onetar& Boar# $a& allow the "osting of the financial state$ents of a bank) '%asi-bank or tr%st entit& in "%blic "laces it $a& #eter$ine) lie% of the "%blication re'%ire# in the "rece#ing "aragra"h) when warrante# b& the circ%$stances. A##itionall&) banks shall $ake a!ailable to the "%blic in s%ch for$ an# $anner as the Bangko Sentral $a& "rescribe the co$"lete set of its a%#ite# financial state$ents as well as s%ch other rele!ant infor$ation incl%#ing those on enter"rises $a9orit&-owne# or controlle# b& the bank) that will infor$ the "%blic of the tr%e financial con#ition of a bank as of an& gi!en ti$e. (n "erio#s of national an#;or local e$ergenc& or of i$$inent "anic which #irectl& threaten $onetar& an# banking stabilit&) the 8onetar& Boar#) b& a !ote of at least fi!e (<) of its $e$bers) in s"ecial cases an# %"on a""lication of the bank) '%asi-bank or tr%st entit&) $a& allow s%ch bank) '%asi-bank or tr%st entit& to #efer for a state# "erio# of ti$e the "%blication of the state$ent of financial con#ition re'%ire# herein. (n) $%&'() -2. Pu)lication of Capital Stock. - A bank) '%asi-bank or tr%st entit& incor"orate# %n#er the laws of the /hili""ines shall not "%blish the a$o%nt of its a%thori e# or s%bscribe# ca"ital stock witho%t in#icating at the sa$e ti$e an# with e'%al "ro$inence) the a$o%nt of its ca"ital act%all& "ai# %". 1o branch of an& foreign bank #oing b%siness in the /hili""ines shall in an& wa& anno%nce the a$o%nt of the ca"ital an# s%r"l%s of its hea# office) or of the bank in its entiret& witho%t in#icating at the sa$e ti$e an# with e'%al "ro$inence the a$o%nt of the ca"ital)

if an&) #efinitel& assigne# to s%ch branch) s%ch fact shall be state# in) an# shall for$ "art of the "%blication. (52) $%&'() -3. Settle!ent of Disputes. - The "ro!isions of an& law to the contrar& notwithstan#ing) the Bangko Sentral shall be cons%lte# b& other go!ern$ent agencies or instr%$entalities in actions or "rocee#ings initiate# b& or bro%ght before the$ in!ol!ing contro!ersies in banks) '%asi-banks or tr%st entities arising o%t of an# in!ol!ing relations between an# a$ong their #irectors) officers or stockhol#ers) as well as #is"%tes between an& or all of the$ an# the bank) '%asi-bank or tr%st entit& of which the& are #irectors) officers or stockhol#ers. (n) $%&'() -+. /naut#ori*ed "dvertise!ent or Business Representation. - 1o "erson) association) or cor"oration %nless #%l& a%thori e# to engage in the b%siness of a bank) '%asi-bank) tr%st entit&) or sa!ings an# loan association as #efine# in this Act) or other banking laws) shall a#!ertise or hol# itself o%t as being engage# in the b%siness of s%ch bank) '%asi-bank) tr%st entit&) or association) or %se in connection with its b%siness title) the wor# or wor#s "bank") "banking") "banker") "'%asi-bank") "'%asi-banking") "'%asi-banker") "sa!ings an# loan association") "tr%st cor"oration") "tr%st co$"an&" or wor#s of si$ilar i$"ort or transact in an& $anner the b%siness of an& s%ch bank) cor"oration or association. (4) $%&'() -,. Service 'ees. - The Bangko Sentral $a& charge e'%itable rates) co$$issions or fees) as $a& be "rescribe# b& the 8onetar& Boar# for s%"er!ision) e:a$ination an# other ser!ices which it ren#ers %n#er this Act. (n) $%&'() --. Penalty for 5iolation of t#is "ct. - ,nless otherwise herein "ro!i#e#) the !iolation of an& of the "ro!isions of this Act shall be s%b9ect to Sections *6) *<) *4 an# *2 of the 1ew .entral Bank Act. (f the offen#er is a #irector or officer of a bank) '%asi-bank or tr%st entit&) the 8onetar& Boar# $a& also s%s"en# or re$o!e s%ch #irector or officer. (f the !iolation is co$$itte# b& a cor"oration) s%ch cor"oration $a& be #issol!e# b& '%o warranto "rocee#ings instit%te# b& the Solicitor General. (52) CHAPTER V PLACEMENT UNDER CON ERVATOR HIP $%&'() -7. Conservators#ip. - The gro%n#s an# "roce#%res for "lacing a bank %n#er conser!atorshi") as well as) the "owers an# #%ties of the conser!ator a""ointe# for the bank shall be go!erne# b& the "ro!isions of Section 23 an# the last two "aragra"hs of Section *0 of the 1ew .entral Bank Act+ /ro!i#e#) That this Section shall also a""l& to conser!atorshi" "rocee#ings of '%asi-banks. (n) CE CHAPTER VI ATION OF BAN!ING BU INE

$%&'() -8. 5oluntary i0uidation. - (n case of !ol%ntar& li'%i#ation of an& bank organi e# %n#er the laws of the /hili""ines) or of an& branch or office in the /hili""ines of a foreign bank) written notice of s%ch li'%i#ation shall be sent to the 8onetar& Boar# before s%ch li'%i#ation shall be sent to the 8onetar& Boar# before s%ch li'%i#ation is %n#ertaken) an# the 8onetar&

Boar# shall ha!e the right to inter!ene an# take s%ch ste"s as $a& be necessar& to "rotect the interests of cre#itors. (54) $%&'() -9. Receivers#ip and +nvoluntary i0uidation. - The gro%n#s an# "roce#%res for "lacing a bank %n#er recei!ershi" or li'%i#ation) as well as the "owers an# #%ties of the recei!er or li'%i#ator a""ointe# for the bank shall be go!erne# b& the "ro!isions of Sections *0) *1) *2) an# ** of the 1ew .entral Bank Act+ /ro!i#e#) That the "etitioner or "laintiff files with the clerk or 9%#ge of the co%rt in which the action is "en#ing a bon#) e:ec%te# in fa!or of the Bangko Sentral) in an a$o%nt to be fi:e# b& the co%rt. This Section shall also a""l& to the e:tent "ossible to the recei!ershi" an# li'%i#ation "rocee#ings of '%asi-banks. (n) $%&'() 70. Penalty for Transactions "fter a Bank Beco!es +nsolvent. - An& #irector or officer of an& bank #eclare# insol!ent or "lace# %n#er recei!ershi" b& the 8onetar& Boar# who ref%ses to t%rn o!er the bank@s recor#s an# assets to the #esignate# recei!ers) or who ta$"ers with banks recor#s) or who a""ro"riates for hi$self for another "art& or #estro&s or ca%ses the $isa""ro"riation an# #estr%ction of the bank@s assets) or who recei!es or "er$its or ca%ses to be recei!e# in sai# bank an& #e"osit) collection of loans an#;or recei!ables) or who "a&s o%t or "er$its or ca%ses to be transferre# an& sec%rities or "ro"ert& of sai# bank shall be s%b9ect to the "enal "ro!isions of the 1ew .entral Bank Act. (5<a) CHAPTER VII LA5 GOVERNING OTHER T*PE OF BAN! $%&'() 71. Ot#er Banking aws. - The organi ation) the ownershi" an# ca"ital re'%ire$ents) "owers) s%"er!ision an# general con#%ct of b%siness of thrift banks) r%ral banks an# coo"erati!e banks shall be go!erne# b& the "ro!isions of the Thrift Banks Act) the 0%ral Banks Act) an# the .oo"erati!e .o#e) res"ecti!el&. The organi ation) ownershi" an# ca"ital re'%ire$ents) "owers) s%"er!ision an# general con#%ct of b%siness of (sla$ic banks shall be go!erne# b& s"ecial laws. The "ro!isions of this Act) howe!er) insofar as the& are not in conflict with the "ro!isions of the Thrift Banks Act) the 0%ral Banks Act) an# the .oo"erati!e .o#e shall likewise a""l& to thrift banks) r%ral banks) an# coo"erati!e banks) res"ecti!el&. Cowe!er) for "%r"oses of "rescribing the $ini$%$ ratio which the net worth of a thrift bank $%st bear to its total risk assets) the "ro!isions of Section ** of this Act shall go!ern. (n) CHAPTER VIII FOREIGN BAN! $%&'() 72. Transacting Business in t#e P#ilippines. - The entr& of foreign banks in the /hili""ines thro%gh the establish$ent of branches shall be go!erne# b& the "ro!isions of the ?oreign Banks Liberali ation Act. The con#%ct of offshore banking b%siness in the /hili""ines shall be go!erne# b& the "ro!isions of the /resi#ential =ecree 1o. 10*6) otherwise known as the "7ffshore Banking S&ste$ =ecree." (16a) $%&'() 73. "c0uisition of 5oting Stock in a Do!estic Bank. - Bithin se!en (2) &ears fro$ the effecti!it& of this act an# s%b9ect to g%i#elines iss%e# "%rs%ant to the ?oreign Banks Liberali ation Act) the 8onetar& Boar# $a& a%thori e a foreign bank to ac'%ire %" to one

h%n#re# "ercent (100A) of the !oting stock of onl& one (1) bank organi e# %n#er the laws of the 0e"%blic of the /hili""ines. Bithin the sa$e "erio#) the 8onetar& Boar# $a& a%thori e an& foreign bank) which "rior to the effecti!it& of this Act a!aile# itself of the "ri!ilege to ac'%ire %" to si:t& "ercent (40A) of the !oting stock of a bank %n#er the ?oreign Banks Liberali ation Act an# the Thrift Banks Act) to f%rther ac'%ire !oting shares s%ch bank to the e:tent necessar& for it to own one h%n#re# "ercent (100A) of the !oting stock thereof. (n the e:ercise of the a%thorit&) the 8onetar& Boar# shall a#o"t $eas%res as $a& be necessar& to ens%re that at all ti$es the control of se!ent& "ercent (20A) of the reso%rces or assets of the entire banking s&ste$ is hel# b& banks which are at least $a9orit&-owne# b& ?ili"inos. An& right) "ri!ilege or incenti!e grante# to a foreign bank %n#er this Section shall be e'%all& en9o&e# b& an# e:ten#e# %n#er the sa$e con#itions to banks organi e# %n#er the laws of the 0e"%blic of the /hili""ines. (Secs. 2 an# *) 0A 2221 $%&'() 7+. ocal Branc#es of 'oreign Banks. - (n the case of a foreign bank which has $ore than one (1) branch in the /hili""ines) all s%ch branches shall be treate# as one (1) %nit for the "%r"ose of this Act) an# all references to the /hili""ine branches of foreign banks shall be hel# to refer to s%ch %nits. (45) $%&'() 7,. .ead Office ,uarantee. - (n or#er to "ro!i#e effecti!e "rotection of the interests of the #e"ositors an# other cre#itors of /hili""ine branches of a foreign bank) the hea# office of s%ch branches shall f%ll& g%arantee the "ro$"t "a&$ent of all liabilities of its /hili""ine branch. (43) 0esi#ents an# citi ens of the /hili""ines who are cre#itors of a branch in the /hili""ines of a foreign bank shall ha!e "referential rights to the assets of s%ch branch in accor#ance with the e:isting laws. (13) $%&'() 7-. Su!!ons and egal Process. - S%$$ons an# legal "rocess ser!e# %"on the /hili""ine agent or hea# of an& foreign bank #esignate# to acce"t ser!ice thereof shall gi!e 9%ris#iction to the co%rts o!er s%ch bank) an# ser!ice of notices on s%ch agent or hea# shall be as bin#ing %"on the bank which he re"resents as if $a#e %"on the bank itself. Sho%l# the a%thorit& of s%ch agent or hea# to acce"t ser!ice of s%$$ons an# legal "rocesses for the bank or notice to it be re!oke#) or sho%l# s%ch agent or hea# beco$e $entall& inco$"etent or otherwise %nable to acce"t ser!ice while e:ercising s%ch a%thorit&) it shall be the #%t& of the bank to na$e an# #esignate "ro$"tl& another agent or hea# %"on who$ ser!ice of s%$$ons an# "rocesses in legal "rocee#ings against the bank an# of notices affecting the bank $a& be $a#e) an# to file with the Sec%rities an# >:change .o$$ission a #%l& a%thenticate# no$ination of s%ch agent. (n the absence of the agent or hea# or sho%l# there be no "erson a%thori e# b& the bank %"on who$ ser!ice of s%$$ons) "rocesses an# all legal notices $a& be $a#e) ser!ice of s%$$ons) "rocesses an# legal notices $a& be $a#e %"on the Bangko Sentral =e"%t& Go!ernor (n-.harge of the s%"er!ising an# e:a$ining #e"art$ents an# s%ch ser!ice shall be as effecti!e as if $a#e %"on the bank or its #%l& a%thori e# agent or hea#. (n case of ser!ice for the bank %"on the Bangko Sentral =e"%t& Go!ernor (n-charge of the s%"er!ising an# e:a$ining #e"art$ents) the sai# #e"%t& Go!ernor shill register an# trans$it b& $ail to the "resi#ent or the secretar& of the bank at its hea# or "rinci"al office a co"&) #%l& certifie# b& hi$) of the s%$$ons) "rocess) or notice. The sen#ing of s%ch co"& of the s%$$ons) "rocess) or notice shall be a necessar& "art of the ser!ices an# shall co$"lete the ser!ice. The registr& recei"t of $ailing shall be "ri$a facie e!i#ence of the trans$ission of the s%$$ons) "rocess or notice. All costs necessaril& inc%rre# b&

the sai# =e"%t& Go!ernor for the $aking an# $ailing an# sen#ing of a co"& of the s%$$ons) "rocess) or notice to the "resi#ent or the secretar& of the bank at its hea# or "rinci"al office shall be "ai# in a#!ance b& the "art& at whose instance the ser!ice is $a#e. (12) $%&'() 77. aws "pplica)le. - (n all $atters not s"ecificall& co!ere# b& s"ecial "ro!isions a""licable onl& to a foreign bank or its branches an# other offices in the /hili""ines an& foreign bank license# to #o b%siness in the /hili""ines shall be bo%n# b& the "ro!isions of this Act) all other laws) r%les an# reg%lations a""licable to banks organi e# %n#er the laws of the /hili""ines of the sa$e class) e:ce"t those that "ro!i#e for the creation) for$ation) organi ation or #issol%tion of cor"orations or for the fi:ing of the relations) liabilities) res"onsibilities) or #%ties of stockhol#ers) $e$bers) #irectors or officers of cor"orations to each other or to the cor"oration. (15) $%&'() 78. Revocation of icense of a 'oreign Bank - The 8onetar& Boar# $a& re!oke the license to transact b%siness in the /hili""ines of) an& foreign bank) if it fin#s that the foreign bank is insol!ent or in i$$inent #anger thereof or that its contin%ance in b%siness will in!ol!e "robable loss to those transacting b%siness with it. After the re!ocation of its license) it shall be %nlawf%l for an& s%ch foreign banks to transact b%siness in the /hili""ines %nless its license is renewe# or reiss%e#. After the re!ocation of s%ch license) the Bangko Sentral shall take the necessar& action to "rotect the cre#itors of s%ch foreign bank an# the "%blic. The "ro!isions of the 1ew .entral Bank Act on sanctions an# "enalties shall likewise be a""licable. (14) CHAPTER I6 TRU T OPERATION $%&'() 79. "ut#ority to $ngage in Trust Business. - 7nl& a stock cor"oration or a "erson #%l& a%thori e# b& the 8onetar& Boar# to engage in tr%st b%siness shall act as a tr%stee or a#$inister an& tr%st or hol# "ro"ert& in tr%st or on #e"osit for the %se) benefit) or behoof of others. ?or "%r"oses of this Act) s%ch a cor"oration shall be referre# to as a tr%st entit&. (<4a- <2a) $%&'() 80. Conduct of Trust Business. - A tr%st entit& shall a#$inister the f%n#s or "ro"ert& %n#er its c%sto#& with the #iligence that a "r%#ent $an wo%l# e:ercise in the con#%ct of an enter"rise of a like character an# with si$ilar ai$s. 1o tr%st entit& shall) for the acco%nt of the tr%stor or the beneficiar& of the tr%st) "%rchase or ac'%ire "ro"ert& fro$) or sell) transfer) assign) or len# $one& or "ro"ert& to) or "%rchase #ebt instr%$ents of) an& of the #e"art$ents) #irectors) officers) stockhol#ers) or e$"lo&ees of the tr%st entit&) relati!es within the first #egree of consang%init& or affinit&) or the relate# interests) of s%ch #irectors) officers an# stockhol#ers) %nless the transaction is s"ecificall& a%thori e# b& the tr%stor an# the relationshi" of the tr%stee an# the other "art& in!ol!e# in the transaction is f%ll& #isclose# to the tr%stor of beneficiar& of the tr%st "rior to the transaction. The 8onetar& Boar# shall "ro$%lgate s%ch r%les an# reg%lations as $a& be necessar& to "re!ent circ%$!ention of this "rohibition or the e!asion of the res"onsibilit& herein i$"ose# on a tr%st entit&. (<4) $%&'() 81. Registration of "rticles of +ncorporation and By& aws of a Trust $ntity. - The Sec%rities an# >:change .o$$ission shall not register the articles of incor"oration an# b&-laws

or an& a$en#$ent thereto) of an& tr%st entit&) %nless acco$"anie# b& a certificate of a%thorit& iss%e# b& the Bangko Sentral. (n) $%&'() 82. -ini!u! Capitali*ation. - A tr%st entit&) before it can engage in tr%st or other fi#%ciar& b%siness) shall co$"l& with the $ini$%$ "ai#-in ca"ital re'%ire$ent which will be #eter$ine# b& the 8onetar& Boar#. (n) $%&'() 83. Powers of a Trust $ntity. - A tr%st entit&) in a##ition to the general "owers inci#ent to cor"orations) shall ha!e the "ower to+ 5*.1 Act as tr%stee on an& $ortgage or bon# iss%e# b& an& $%nici"alit&) cor"oration) or an& bo#& "olitic an# to acce"t an# e:ec%te an& tr%st consistent with law5*.2 Act %n#er the or#er or a""oint$ent of an& co%rt as g%ar#ian) recei!er) tr%stee) or #e"ositar& of the estate of an& $inor or other inco$"etent "erson) an# as recei!er an# #e"ositar& of an& $one&s "ai# into co%rt b& "arties to an& legal "rocee#ings an# of "ro"ert& of an& kin# which $a& be bro%ght %n#er the 9%ris#iction of the co%rt5*.*. Act as the e:ec%tor of an& will when it is na$e# the e:ec%tor thereof5*.6 Act as a#$inistrator of the estate of an& #ecease# "erson) with the will anne:e#) or as a#$inistrator of the estate of an& #ecease# "erson when there is no will5*.<. Acce"t an# e:ec%te an& tr%st for the hol#ing) $anage$ent) an# a#$inistration of an& estate) real or "ersonal) an# the rents) iss%es an# "rofits thereof- an# 5*.4. >stablish an# $anage co$$on tr%st f%n#s) s%b9ect to s%ch r%les an# reg%lations as $a& be "rescribe# b& the 8onetar& Boar#. $%&'() 8+. Deposit for t#e 'ait#ful Perfor!ance of Trust Duties. - Before transacting tr%st b%siness) e!er& tr%st entit& shall #e"osit with the Bangko Sentral) as sec%rit& for the faithf%l "erfor$ance of its tr%st #%ties) cash or sec%rities a""ro!e# b& the 8onetar& Boar# in an a$o%nt e'%al to or not less than ?i!e h%n#re# tho%san# "esos (/<00)000.00) or s%ch higher a$o%nt as $a& fi:e# b& the 8onetar& Boar#+ /ro!i#e#) howe!er) That the 8onetar& Boar# shall re'%ire e!er& tr%st entit& to increase the a$o%nt of its cash or sec%rities on #e"osit with the Bangko Sentral in accor#ance with the "ro!isions of this "aragra"h. Sho%l# the ca"ital an# s%r"l%s fall below sai# a$o%nt) the 8onetar& Boar# shall ha!e the sa$e a%thorit& as that grante# to it %n#er the "ro!isions of the fifth "aragra"h of Section *6 of this Act. A tr%st entit& so long as it shall contin%e to be sol!ent an# co$"l& with laws or reg%lations shall ha!e the right to collect the interest earne# on s%ch sec%rities #e"osite# with the Bangko Sentral an#) fro$ ti$e to ti$e) with the a""ro!al of the Bangko Sentral) to e:change the sec%rities for others. (f the tr%st entit& fails to co$"l& with an& law or reg%lation) the Bangko Sentral shall retain s%ch interest on the sec%rities #e"osite# with it for the benefit of rightf%l clai$ants. Al clai$s rising o%t of the tr%st b%siness of a tr%st entit& shall ha!e "riorit& o!er all other clai$s as regar#s the cash or sec%rities #e"osite# as abo!e "ro!i#e#. The 8onetar& Boar# $a& not "er$it the cash or sec%rities #e"osite# in accor#ance with the "ro!isions of this Section to be re#%ce# below the "rescribe#

$ini$%$ a$o%nt %ntil the #e"ositing entit& shall #iscontin%e its tr%st b%siness an# shall satisf& the 8onetar& Boar# that it has co$"lie# with all its obligations in connection with s%ch b%siness. (4<a) $%&'() 8,. Bond of Certain Persons for t#e 'ait#ful Perfor!ance of Duties. - Before an e:ec%tor) a#$inistrator) g%ar#ian) tr%stee) recei!er or #e"ositar& a""ointe# b& the co%rt enters %"on the e:ec%tion of his #%ties) he shall) %"on or#er of the co%rt) file a bon# in s%ch s%$ as the co%rt $a& #irect. ,"on the a""lication of an& e:ec%tor) a#$inistrator) g%ar#ian) tr%stee) recei!er) #e"ositar& or an& other "erson in interest) the co%rt $a&) after notice an# hearing) or#er that the s%b9ect $atter of the tr%st or an& "art) thereof be #e"osite# with a tr%st entit&. ,"on "resentation of "roof to the co%rt that the s%b9ect $atter of the tr%st has been #e"osite# with a tr%st entit&. ,"on "resentation of "roof to the co%rt that the s%b9ect $atter of the tr%st has been #e"osite# with a tr%st entit&) the co%rt $a& or#er that the bon# gi!en b& s%ch "ersons for the faithf%l "erfor$ance of their #%ties be re#%ce# to s%ch s%$s as it $a& #ee$ "ro"er+ /ro!i#e#) howe!er) That the re#%ce# bon# shall be s%fficient to sec%re a#e'%atel& the "ro"er a#$inistration an# care of an& "ro"ert& re$aining %n#er the control of s%ch "ersons an# the "ro"er acco%nting for s%ch "ro"ert&. /ro"ert& #e"osite# with an& tr%st entit& in confor$it& with this Section shall be hel# b& s%ch entit& %n#er the or#ers an# #irection of the co%rt. (<3) $%&'() 8-. $(e!ption of Trust $ntity fro! Bond Re0uire!ent. - 1o bon# or other sec%rit& shall be re'%ire# b& the co%rt fro$ a tr%st entr& for the faithf%l "erfor$ance of its #%ties as co%rta""ointe# tr%stee) e:ec%tor) a#$inistrator) g%ar#ian) recei!er) or #e"ositar&. Cowe!er) the co%rt $a&) %"on "ro"er a""lication with it showing s"ecial ca%se therefore) re'%ire the tr%st entit& to "ost a bon# or other sec%rit& for the "rotection of f%n#s or "ro"ert& confi#e# to s%ch entit&. (<3) $%&'() 87. Separation of Trust Business fro! ,eneral Business. - The tr%st b%siness an# all f%n#s) "ro"erties or sec%rities recei!e# b& an& tr%st entit& as e:ec%tor) a#$inistrator) g%ar#ian) tr%stee) recei!er) or #e"ositar& shall be ke"t se"arate an# #istinct fro$ the general b%siness incl%#ing all other f%n#s) "ro"erties) an# assets of s%ch tr%st entit&. The acco%nts of all s%ch f%n#s) "ro"erties) or sec%rities shall likewise be ke"t se"arate an# #istinct fro$ the acco%nts of the general b%siness of the tr%st entit&. (41) $%&'() 88. +nvest!ent i!itations of a Trust $ntity. - ,nless otherwise #irecte# b& the instr%$ent creating the tr%st) the len#ing an# in!est$ent of f%n#s an# other assets ac'%ire# b& a tr%st entit& as e:ec%tor) a#$inistrator) g%ar#ian) tr%stee) recei!er or #e"ositar& of the estate of an& $inor or other inco$"etent "erson shall be li$ite# to loans or in!est$ents as $a& be "rescribe# b& law) the 8onetar& Boar# or an& co%rt of co$"etent 9%ris#iction. (4*a) $%&'() 89. Real $state "c0uired )y a Trust $ntity. - ,nless otherwise s"ecificall& #irecte# b& the tr%stor or the nat%re of the tr%st) real estate ac'%ire# b& a tr%st entit& in whate!er $anner an# for whate!er "%r"oses) shall likewise be go!erne# b& the rele!ant "ro!isions of Section <2 of this Act. (46a) $%&'() 90. +nvest!ent of 1on&Trust 'unds. - The in!est$ent of f%n#s other than tr%st f%n#s of a tr%st entit& which is a bank) financing co$"an& or an in!est$ent ho%se shall be go!erne# b& the rele!ant "ro!isions of this Act an# other a""licable laws. (46)

$%&'() 91. Sanctions and Penalties. - A tr%st entit& or an& of its officers an# #irectors fo%n# to ha!e willf%ll& !iolate# an& "ertinent "ro!isions of this Act) shall be s%b9ect to the sanctions an# "enalties "ro!i#e# tin#er Section 44 of this Act as well as Sections *4 an# *2 of the 1ew .entral Bank Act. $%&'() 92. $(e!ption of Trust "ssets fro! Clai!s. - 1o assets hel# b& a tr%st entit& in its ca"acit& as tr%stee shall be s%b9ect to an& clai$s other than those of the "arties intereste# in the s"ecific tr%sts. (4<) $%&'() 93. $sta)lis#!ent of Branc#es of a Trust $ntity. - The or#inar& b%siness of a tr%st entit& shall be transacte# at the "lace of b%siness s"ecifie# in its articles of incor"oration. S%ch tr%st entit& $a&) with "rior a""ro!al of the 8onetar& Boar#) establish branches in the /hili""ines an# the sai# entit& shall be res"onsible for all b%siness con#%cte# in s%ch branches to the sa$e e:tent an# in the sa$e $anner as tho%gh s%ch b%siness ha# all been con#%cte# in the hea# office. ?or the "%r"ose of this Act) the tr%st entit& an# its branches shall be treate# as one %nit. (42) CHAPTER 6 FINAL PROVI ION $%&'() 9+. P#ase Out of Bangko Sentral Powers Over Building and oan "ssociations. - Bithin a "erio# of three (*) &ears fro$ the effecti!it& of this Act) the Bangko Sentral shall "hase o%t an# transfer its s%"er!ising an# reg%lator& "owers o!er b%il#ing an# loan associations to the Co$e (ns%rance an# G%arant& .or"oration which shall ass%$e the sa$e. ,ntil otherwise "ro!i#e# b&law1 b%il#ing an# loan associations shall contin%e to be go!erne# b& Sections *3 to <<) .ha"ter E( of the General Banking Act) as a$en#e#) incl%#ing s%ch r%les an# reg%lations iss%e# "%rs%ant thereto. ,"on ass%$"tion b& the Co$e (ns%rance an# G%arant& .or"oration of s%"er!ising an# reg%lator& "owers o!er b%il#ing an# loan associations) a references in Sections *3 to << of the General Banking Act) as a$en#e#) to the Bangko Sentral an# the 8onetar& Boar# shall be #ee$e# to refer to the Co$e (ns%rance an# G%arant& .or"oration an# its boar# of #irectors) res"ecti!el&. (n) $%&'() 9,. Repealing Clause. - >:ce"t as $a& be "ro!i#e# for in Sections *6 an# 36 of this Act) the General Banking Act) as a$en#e#) an# the "ro!isions of an& other law) s"ecial charters) r%le or reg%lation iss%e# "%rs%ant to sai# General Banking Act) as a$en#e#) or "arts thereof) which $a& be inconsistent with the "ro!isions of this Act are hereb& re"eale#. The "ro!isions of "aragra"h 5) Section 5) 0e"%blic Act 1o. *<31) as a$en#e# b& re"%blic Act 1o. 2600) are likewise re"eale#. (30a) $%&'() 9-. Separa)ility Clause. - (f an& "ro!ision or section of this Act or the a""lication thereof to an& "erson or circ%$stance is hel# in!ali#) the other "ro!isions or sections of this Act) an# the a""lication of s%ch "ro!ision or section to other "ersons or circ%$stances shall not be affecte# thereb&. (n) $%&'() 97. $ffectivity Clause - This Act shall take effect fifteen (1<) #a&s following its "%blication in the 7fficial Ga ette or in two (2) national news"a"ers of general circ%lation. (31)

A""ro!e#) FRAN!LIN M. DRILON President of t#e Senate MANUEL B. VILLAR 7R. Speaker of t#e .ouse of Representatives This Act) which is a consoli#ation of Senate Bill 1o. 1<13 an# Co%se Bill 1o. 4516) was finall& "asse# b& the Senate an# the Co%se of 0e"resentati!es on A"ril 12) 2000. ROBERTO P. NAZARENO Secretary ,eneral .ouse of Representatives O CAR G. *ABE Secretary of t#e Senate A""ro!e#+ 7O EPH E7ERCITO E TRADA President of t#e P#ilippines