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REPUBLIC ACT NO.

8791
AN ACT PROVIDING FOR THE REGULATION OF THE ORGANIZATION
AND
OPERATIONS OF BANKS, QUASI-BANKS, TRUST ENTITIES AND FOR
OTHER
PURPOSES
CHAPTER I
TITLE AND CLASSIFICATION OF BANKS
SECTION 1. Tit!. -- The short title of this Act shall be "The General Banking Law of
2000." (1a)
SECTION ". D!#$%$ti&' &( P&i#). -- The State recognies the !ital role of banks in
"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)
SECTION *. D!(i'iti&' $'+ C$,,i(i#$ti&' &( B$'-,. --
*.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$$ercial banks-
(c) Thrift banks) co$"ose# of+ (i) Sa!ings an# $ortgage banks) (ii) Stock sa!ings an#
loan
associations) an# (iii) /ri!ate #e!elo"$ent banks) as #efine# in 0e"%blic Act 1o. 2304
(hereafter the "Thrift Banks Act")-
(#) 0%ral banks) as #efine# in 0e"%blic Act 1o. 2*5* (hereafter the "0%ral Banks Act")-
(e) .oo"erati!e banks) as #efine# in 0e"%blic Act 1o. 43*6 (hereafter the ".oo"erati!e
.o#e")-
(f) (sla$ic banks as #efine# in 0e"%blic Act 1o. 4676) otherwise known as the ".harter
of Al
A$anah (sla$ic (n!est$ent Bank of the /hili""ines"- an#
(g) 8ther classifications of banks as #eter$ine# b& the 9onetar& Boar# of the Bangko
Sentral
ng /ili"inas. (4-Aa)
CHAPTER II
AUTHORIT. OF THE BANGKO SENTRAL
SECTION /. S01!%2i,&%) P&3!%,. -- The o"erations an# acti!ities of banks shall be
s%b:ect to
s%"er!ision of the Bangko Sentral. "S%"er!ision" shall incl%#e the following+
7.1.
The iss%ance of r%les of con#%ct or the establish$ent of stan#ar#s of o"eration for
%nifor$
a""lication to all instit%tions or f%nctions co!ere#) taking into consi#eration the
#istincti!e
character of the o"erations of instit%tions an# the s%bstanti!e si$ilarities of s"ecific
f%nctions
to which s%ch r%les) $o#es or stan#ar#s are to be a""lie#-
7.2.
The con#%ct of e;a$ination to #eter$ine co$"liance with laws an# reg%lations if the
circ%$stances so warrant as #eter$ine# b& the 9onetar& Boar#-
7.*.
8!erseeing to ascertain that laws an# reg%lations are co$"lie# with-
7.7.
0eg%lar in!estigation which shall not be oftener than once a &ear fro$ the last #ate of
e;a$ination to #eter$ine whether an instit%tion is con#%cting its b%siness on a safe or
so%n# basis+ /ro!i#e#) That the #eficiencies<irreg%larities fo%n# b& or #isco!ere# b& an
a%#it
shall be i$$e#iatel& a##resse#-
7.5.
(n'%iring into the sol!enc& an# li'%i#it& of the instit%tion (2-=)- or
7.4.
>nforcing "ro$"t correcti!e action. (n)
The Bangko Sentral shall also ha!e s%"er!ision o!er the o"erations of an# e;ercise
reg%lator&
"owers o!er '%asi-banks) tr%st entities an# other financial instit%tions which %n#er
s"ecial laws are
s%b:ect to Bangko Sentral s%"er!ision. (2-.a)
?or the "%r"oses of this Act) "'%asi-banks" shall refer to entities engage# in the
borrowing of
f%n#s thro%gh the iss%ance) en#orse$ent or assign$ent with reco%rse or acce"tance of
#e"osit
s%bstit%tes as #efine# in Section 35 of 0e"%blic Act 1o. 245* (hereafter the "1ew .entral
Bank Act") for
"%r"oses of relen#ing or "%rchasing of recei!ables an# other obligations. (2-=a)
SECTION 4. P&i#) Di%!#ti&'5 R$ti&,, C!ii'6, $'+ Li7it$ti&',. -- The Bangko
Sentral shall
"ro!i#e "olic& #irection in the areas of $one&) banking an# cre#it. (n)
?or this "%r"ose) the 9onetar& 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 those of the
Bank for
(nternational Settle$ents (B(S). The 9onetar& 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)
SECTION 8. A0t9&%it) t& E'6$6! i' B$'-i'6 $'+ Q0$,i-B$'-i'6 F0'#ti&',. -- 1o
"erson or
entit& shall engage in banking o"erations or '%asi-banking f%nctions witho%t a%thorit&
fro$ the Bangko
Sentral+ /ro!i#e#) howe!er) That an entit& a%thorie# b& the Bangko Sentral to "erfor$
%ni!ersal or
co$$ercial banking f%nctions shall likewise ha!e the a%thorit& to engage in '%asi-
banking f%nctions.
The #eter$ination of whether a "erson or entit& is "erfor$ing banking or '%asi-banking
f%nctions
witho%t Bangko Sentral a%thorit& shall be #eci#e# b& the 9onetar& Boar#. To resol!e
s%ch iss%e) the
9onetar& Boar# $a&) thro%gh the a""ro"riate s%"er!ising an# e;a$ining #e"art$ent of
the Bangko
Sentral) e;a$ine) ins"ect or in!estigate the books an# recor#s of s%ch "erson or entit&.
,"on iss%ance of
this a%thorit&) s%ch "erson or entit& $a& co$$ence to engage in banking o"erations or
'%asi-banking
f%nctions 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%thorie# 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$e shall s%b:ect the "ersons
res"onsible
therefore to the "enal sanctions "ro!i#e# %n#er the 1ew .entral Bank Act.
/ersons or entities fo%n# to be "erfor$ing banking or '%asi-banking f%nctions witho%t
a%thorit&
fro$ the Bangko Sentral shall be s%b:ect to a""ro"riate sanctions %n#er the 1ew .entral
Bank Act an#
other a""licable laws. (7a)
SECTION 7. E:$7i'$ti&' ;) t9! B$'6-& S!'t%$. -- 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
$a:orit&-owne# or
controlle# b& the bank. (21-Ba)
CHAPTER III
ORGANIZATION, <ANAGE<ENT AND AD<INISTRATION OF BANKS,
QUASI-BANKS AND TRUST ENTITIES
SECTION 8. O%6$'i=$ti&'. -- The 9onetar& Boar# $a& a%thorie the organiation of a
bank or
'%asi-bank s%b:ect to the following con#itions+
6.1.
That the entit& is a stock cor"oration (2)-
6.2.
That its f%n#s are obtaine# fro$ the "%blic) which shall $ean twent& (20) or $ore
"ersons
(2-=a)- an#
6.*.
That the $ini$%$ ca"ital re'%ire$ents "rescribe# b& the 9onetar& 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 9onetar& 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 "ro:ecte# financial con#ition an# ca"ital
base.
SECTION 9. I,,0$'#! &( St&#-,. -- The 9onetar& 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&.
SECTION 1>. T%!$,0%) St&#-,. -- 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%thorie# b& the
9onetar& 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. (27a)
SECTION 11. F&%!i6' St&#-9&+i'6,. -- ?oreign in#i!i#%als an# non-bank cor"orations
$a&
own or control %" to fort& "ercent (70A) 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
citienshi" of
the in#i!i#%al stockhol#ers in that bank. The citienshi" of the cor"oration which is a
stockhol#er in a
bank shall follow the citienshi" of the controlling stockhol#ers of the cor"oration)
irres"ecti!e of the "lace
of incor"oration. (n)
SECTION 1". St&#-9&+i'6, &( F$7i) G%&01, &% R!$t!+ I't!%!,t,. -- 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$$on-law) shall be consi#ere# fa$il& gro%"s or relate# interests an# $%st be f%ll&
#isclose# in all
transactions b& s%ch an in#i!i#%al with the bank. (12-=a)
SECTION 1*. C&%1&%$t! St&#-9&+i'6,. -- 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#
$%st be f%ll&
#isclose# in all transactions b& s%ch cor"orations or relate# gro%"s of "ersons with the
bank. (12-Ba)
SECTION 1/. C!%ti(i#$t! &( A0t9&%it) t& R!6i,t!%. -- The Sec%rities an# >;change
.o$$ission shall not register the articles of incor"oration of an& bank) or an&
a$en#$ent thereto) %nless
acco$"anie# b& a certificate of a%thorit& iss%e# b& the 9onetar& Boar#) %n#er its seal.
S%ch certificate
shall not be iss%e# %nless the 9onetar& Boar# is satisfie# fro$ the e!i#ence s%b$itte# to
it+
17.1
That all re'%ire$ents of e;isting laws an# reg%lations to engage in the b%siness for which
the a""licant is "ro"ose# to be incor"orate# ha!e been co$"lie# with-
17.2. That the "%blic interest an# econo$ic con#itions) both general an# local) :%stif& the
a%thoriation- an#
17.*. That the a$o%nt of ca"ital) the financing) organiation) #irection an#
a#$inistration) as well
as the integrit& an# res"onsibilit& of the organiers an# a#$inistrators reasonabl& ass%re
the
safet& of #e"osits an# the "%blic interest. (3)
The Sec%rities an# >;change .o$$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)
SECTION 14. B&$%+ &( Di%!#t&%,. -- The "ro!isions of the .or"oration .o#e to the
contrar&
notwithstan#ing) there shall be at least fi!e (5)) an# a $a;i$%$ of fifteen (15) $e$bers
of the boar# of
#irectors of 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 citiens $a& beco$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)
SECTION 18. Fit $'+ P%&1!% R0!. -- To $aintain the '%alit& of bank $anage$ent an#
affor#
better "rotection to #e"ositors an# the "%blic in general) the 9onetar& 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 9onetar& Boar# $a&
#is'%alif&)
s%s"en# or re$o!e an& bank #irector or officer who co$$its or o$its an act which
ren#er hi$ %nfit for the
"osition.
(n #eter$ining whether an in#i!i#%al is fit an# "ro"er to hol# the "osition of a #irector or
officer of
a bank) regar# shall be gi!en to his integrit&) e;"erience) e#%cation) training) an#
co$"etence. (3-Aa)
SECTION 17. Di%!#t&%, &( <!%6!+ &% C&',&i+$t!+ B$'-,. -- (n the case of a bank
$erger or
consoli#ation) the n%$ber of #irectors shall not e;cee# twent&-one (21). (1*a)
SECTION 18. C&71!',$ti&' $'+ Ot9!% B!'!(it, &( Di%!#t&%, $'+ O((i#!%,. -- To
"rotect the
f%n#s of #e"ositors an# cre#itors) the 9onetar& Boar# $a& reg%late the "a&$ent b& the
bank to its
#irectors an# officers of co$"ensation) allowance) fees) bon%ses) stock o"tions) "rofit
sharing an# fringe
benefits onl& in e;ce"tional cases an# when the circ%$stances warrant) s%ch as b%t not
li$ite# to the
following+
16.1. Bhen a bank is %n#er co$"trollershi" or conser!atorshi"- or
16.2. Bhen a bank is fo%n# b& the 9onetar& Boar# to be con#%cting b%siness in an
%nsafe or
%nso%n# $anner- or
16.*. Bhen a bank is fo%n# b& the 9onetar& Boar# to be in an %nsatisfactor& financial
con#ition.
(n)
SECTION 19. P%&9i;iti&' &' P0;i# O((i#i$,. -- >;ce"t as otherwise "ro!i#e# in the
0%ral
Banks Act) no a""ointi!e or electi!e "%blic official) whether f%ll-ti$e or "art-ti$e shall at
the sa$e ti$e
ser!e as officer of an& "ri!ate bank) sa!e in cases where s%ch ser!ice is inci#ent to
financial assistance
"ro!i#e# b& the go!ern$ent or a go!ern$ent-owne# or controlle# cor"oration to the
bank or %nless
otherwise "ro!i#e# %n#er e;isting laws. (1*)
SECTION ">. B$'- B%$'#9!,. -- ,ni!ersal or co$$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 $a&) s%b:ect to "rior a""ro!al of the 9onetar& Boar#) %se an& or all of its
branches as
o%tlets for the "resentation an#<or sale of the financial "ro#%cts of its allie# %n#ertaking
or of its
in!est$ent ho%se %nits.
A bank a%thorie# 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 $anner as
tho%gh s%ch
b%siness ha# all been con#%cte# in the hea# office. A bank an# its branches an# offices
shall be treate#
as one %nit. (4-B- 22)
SECTION "1. B$'-i'6 D$), $'+ H&0%,. -- ,nless otherwise a%thorie# 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 9on#a&s to ?ri#a&s) e;ce"t if s%ch
#a&s
are holi#a&s. (4-.a)
SECTION "". St%i-!, $'+ L&#-&0t,. -- The banking in#%str& is hereb& #eclare# as
in#is"ensable to the national interest an#) not withstan#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 :%ris#iction o!er the #is"%te
or #eci#e it or
certif& the sa$e to the 1ational Labor 0elations .o$$ission for co$"%lsor& arbitration.
Cowe!er) the
/resi#ent of the /hili""ines $a& at an& ti$e inter!ene an# ass%$e :%ris#iction o!er s%ch
labor #is"%te in
or#er to settle or ter$inate the sa$e. (4->)
CHAPTER IV
DEPOSITS, LOANS AND OTHER OPERATIONS
ARTICLE I - OPERATIONS OF UNIVERSAL BANKS
SECTION "*. P&3!%, &( $ U'i2!%,$ B$'-. -- A %ni!ersal bank shall ha!e the a%thorit&
to
e;ercise) in a##ition to the "owers a%thorie# for a co$$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)
SECTION "/. E?0it) I'2!,t7!'t, &( $ U'i2!%,$ B$'-. -- A %ni!ersal bank $a&)
s%b:ect 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 9onetar& Boar#. Allie# enter"rises $a& either
be financial or
non-financial.
>;ce"t as the 9onetar& Boar# $a& otherwise "rescribe+
27.1. The total in!est$ent in e'%ities of allie# an# non-allie# enter"rises shall not e;cee#
fift&
"ercent (50A) of the net worth of the bank- an#
27.2. The e'%it& in!est$ent in an& one enter"rise) whether allie# or non-allie#) shall not
e;cee#
twent&-fi!e "ercent (25A) 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#:%st$ents as
$a& be re'%ire# b& the Bangko Sentral.
The ac'%isition of s%ch e'%it& or e'%ities is s%b:ect to the "rior a""ro!al of the 9onetar&
Boar#
which shall "ro$%lgate a""ro"riate g%i#elines to go!ern s%ch in!est$ents. (21-Ba)
SECTION "4. E?0it) I'2!,t7!'t, &( $ U'i2!%,$ B$'- i' Fi'$'#i$ Ai!+
E't!%1%i,!,. -- 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)
SECTION "8. E?0it) I'2!,t7!'t, &( $ U'i2!%,$ B$'- i' N&'-Fi'$'#i$ Ai!+
E't!%1%i,!,.
-- 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)
SECTION "7. E?0it) I'2!,t7!'t, &( $ U'i2!%,$ B$'- i' N&'-Ai!+ E't!%1%i,!,. --
The
e'%it& in!est$ent of a %ni!ersal bank) or of its wholl& or $a:orit&-owne# s%bsi#iaries) in
a single non-
allie# enter"rise shall not e;cee# thirt&-fi!e "ercent (*5A) of the total e'%it& in that
enter"rise nor shall it
e;cee# thirt&-fi!e "ercent (*5A) of the !oting stock in that enter"rise. (21-B)
SECTION "8. E?0it) I'2!,t7!'t, i' Q0$,i-B$'-,. -- To "ro$ote co$"etiti!e
con#itions in
financial $arkets) the 9onetar& Boar# $a& f%rther li$it to fort& "ercent (70A) e'%it&
in!est$ents of
%ni!ersal banks in '%asi-banks. This r%le shall also a""l& in the case of co$$ercial
banks. (12->)
ARTICLE II - OPERATIONS OF CO<<ERCIAL BANKS
SECTION "9. P&3!%, &( $ C&77!%#i$ B$'-. -- A co$$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$$ercial banking) s%ch as acce"ting #rafts an# iss%ing letters of cre#it-
#isco%nting an#
negotiating "ro$issor& notes) #rafts) bills of e;change) an# other e!i#ences of #ebt-
acce"ting or creating
#e$an# #e"osits- recei!ing other t&"es of #e"osits an# #e"osit s%bstit%tes- b%&ing an#
selling foreign
e;change an# gol# or sil!er b%llion- ac'%iring $arketable bon#s an# other #ebt
sec%rities- an# e;ten#ing
cre#it) s%b:ect to s%ch r%les as the 9onetar& Boar# $a& "ro$%lgate. These r%les $a&
incl%#e the
#eter$ination of bon#s an# other #ebt sec%rities eligible for in!est$ent) the $at%rities
an# aggregate
a$o%nt of s%ch in!est$ent. (21a)
SECTION *>. E?0it) I'2!,t7!'t, &( $ C&77!%#i$ B$'-. -- A co$$ercial bank $a&)
s%b:ect
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 9onetar& Boar#. Allie# enter"rises $a& either be financial or
non-financial.
>;ce"t as the 9onetar& 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
(*5A) of the net worth of the bank- an#
*0.2. The e'%it& in!est$ent in an& one enter"rise shall not e;cee# twent&-fi!e "ercent
(25A) of the
net worth of the bank.
The ac'%isition of s%ch e'%it& or e'%ities is s%b:ect to the "rior a""ro!al of the 9onetar&
Boar#
which shall "ro$%lgate a""ro"riate g%i#elines to go!ern s%ch in!est$ents. (21A-a- 21-
.a)
SECTION *1. E?0it) I'2!,t7!'t, &( $ C&77!%#i$ B$'- i' Fi'$'#i$ Ai!+
E't!%1%i,!,. --
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$$ercial bank) s%ch in!est$ent shall re$ain a $inorit& hol#ing in
that enter"rise.
(21-Aa- 21-.a)
SECTION *". E?0it) I'2!,t7!'t, &( $ C&77!%#i$ B$'- i' N&'-Fi'$'#i$ Ai!+
E't!%1%i,!,. -- A co$$ercial bank $a& own %" to one h%n#re# "ercent (100A) of the
e'%it& in a non-
financial allie# enter"rise. (21-Aa)
ARTICLE III - PROVISIONS APPLICABLE TO ALL BANKS,
QUASI-BANKS, AND TRUST ENTITIES
SECTION **. A##!1t$'#! &( D!7$'+ D!1&,it,. -- 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%b:ect to
s%ch con#itions an# r%les as $a& be "rescribe# b& the 9onetar& Boar#. (22-Aa)
SECTION */. Ri,--B$,!+ C$1it$. -- The 9onetar& 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 9onetar& Boar# $a& re'%ire that 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 9onetar& 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 9onetar& 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
9onetar& Boar# $a&) f%rther$ore) restrict or "rohibit the ac'%isition of $a:or 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) the 9onetar& 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 the r%les which the 9onetar& Boar# is a%thorie# 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)
SECTION *4. Li7it &' L&$',, C%!+it A##&77&+$ti&', $'+ G0$%$'t!!,. --
*5.1. >;ce"t as the 9onetar& 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
9onetar& 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$$it$ent of the bank to the borrower.
*5.2. ,nless the 9onetar& Boar# "rescribes otherwise) the total a$o%nt of loans) cre#it
acco$$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.
*5.*. 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 in#orser) #rawer
or
g%arantor who obtains a loan or other cre#it acco$$o#ation fro$ or #isco%nts "a"er with
or
sells "a"ers to s%ch bank- (b) in the case of an in#i!i#%al who owns or controls a $a:orit&
interest in a cor"oration) "artnershi") association or an& other entit&) the liabilities of sai#
entities to s%ch bank- (c) in the case of a cor"oration) all liabilities to s%ch bank of all
s%bsi#iaries in which s%ch cor"oration owns or controls a $a:orit& interest- an# (#) in the
case of a "artnershi") association or other entit&) the liabilities of the $e$bers thereof to
s%ch bank.
*5.7. >!en if a "arent cor"oration) "artnershi") association) entit& or an in#i!i#%al who
owns or
controls a $a:orit& interest in s%ch entities has no liabilit& to the bank) the 9onetar&
Boar#
$a& "rescribe the co$bination of the liabilities of s%bsi#iar& cor"orations or $e$bers of
the
"artnershi") association) entit& or s%ch in#i!i#%al %n#er certain circ%$stances) incl%#ing
b%t
not li$ite# to an& of the following sit%ations+ (a) the "arent cor"oration) "artnershi")
association) entit& or in#i!i#%al g%arantees the re"a&$ent of the liabilities- (b) the
liabilities
were inc%rre# for the acco$$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&.
*5.5. ?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 9onetar& Boar#
$a& fro$
ti$e to ti$e) s"ecif& as non-risk ite$s.
*5.4. Loans an# other cre#it acco$$o#ations) #e"osits $aintaine# with) an# %s%al
g%arantees b&
a bank to an& other bank or non-bank entit&) whether locall& or abroa#) shall be s%b:ect to
the li$its as herein "rescribe#.
*5.2. .ertain t&"es of contingent acco%nts of borrowers $a& be incl%#e# a$ong those
s%b:ect to
these "rescribe# li$its as $a& be #eter$ine# b& the 9onetar& Boar#. (2*a)
SECTION *8. R!,t%i#ti&' &' B$'- E:1&,0%! t& Di%!#t&%,, O((i#!%,, St&#-9&+!%,
$'+ T9!i%
R!$t!+ I't!%!,t,. -- 1o #irector or officer of an& bank shall) #irectl& or in#irectl&) for
hi$self or as the
re"resentati!e or agent of others) borrow fro$ s%ch bank nor shall he beco$e a
g%arantor) in#orser or
s%ret& for loans fro$ s%ch bank to others) or in an& $anner be an obligor or inc%r an&
contract%al liabilit&
to the bank e;ce"t with the written a""ro!al of the $a:orit& of all the #irectors of the
bank) e;cl%#ing the
#irector concerne#+ /ro!i#e#) That s%ch written a""ro!al shall not be re'%ire# for loans)
other cre#it
acco$$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%b:ect
to the "enal "ro!isions of the 1ew .entral Bank Act.
The 9onetar& 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$$o#ations an# g%arantees sec%re# b& assets consi#ere# as non-risk b& the
9onetar& Boar# shall
be e;cl%#e# fro$ s%ch li$it+ /ro!i#e#) f%rther) That loans) cre#it acco$$o#ations an#
a#!ances to
officers in the for$ of fringe benefits grante# in accor#ance with r%les as $a& be
"rescribe# b& the
9onetar& Boar# shall not be s%b:ect to the in#i!i#%al li$it.
The 9onetar& 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. (6*a)
SECTION *7. L&$', $'+ Ot9!% C%!+it A##&77&+$ti&', A6$i',t R!$ E,t$t!. --
>;ce"t as
the 9onetar& Boar# $a& otherwise "rescribe) loans an# other cre#it acco$$o#ations
against real estate
shall not e;cee# se!ent&-fi!e "ercent (25A) of the a""raise# !al%e of the res"ecti!e real
estate sec%rit&)
"l%s si;t& "ercent (40A) of the a""raise# !al%e of the ins%re# i$"ro!e$ents) an# s%ch
loans $a& be
$a#e to the owner of the real estate or to his assignees. (26a)
SECTION *8. L&$', $'+ Ot9!% C%!+it A##&77&+$ti&', &' S!#0%it) &( C9$tt!, $'+
I't$'6i;! P%&1!%ti!,. -- >;ce"t as the 9onetar& Boar# $a& otherwise "rescribe) loans
an# other cre#it
acco$$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 (25A) of
the a""raise#
!al%e of the sec%rit&) an# s%ch loans an# other cre#it acco$$o#ations $a& be $a#e to
the title-hol#er of
the chattels an# intangible "ro"erties or his assignees. (26a)
SECTION *9. G%$'t $'+ P0%1&,! &( L&$', $'+ Ot9!% C%!+it A##&77&+$ti&',. -- A
bank
shall grant loans an# other cre#it acco$$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$$o#ations shall be consistent with safe an# so%n# banking "ractices. (25a)
The "%r"ose of all loans an# other cre#it acco$$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$$e#iate re"a&$ent of the obligation. (22)
SECTION />. R!?0i%!7!'t (&% G%$'t &( L&$', &% Ot9!% C%!+it A##&77&+$ti&',. --
Before
granting a loan or other cre#it acco$$o#ation) a bank $%st ascertain that the #ebtor is
ca"able of
f%lfilling his co$$it$ents to the bank.
Towar# this en#) a bank $a& #e$an# fro$ its cre#it a""licants a state$ent of their assets
an#
liabilities an# of their inco$e an# e;"en#it%res an# s%ch infor$ation as $a& be
"rescribe# b& law or b&
r%les an# reg%lations of 9onetar& Boar# to enable the bank to "ro"erl& e!al%ate the
cre#it a""lication
which incl%#es the corres"on#ing financial state$ents s%b$itte# for ta;ation "%r"oses to
the B%rea% of
(nternal 0e!en%e. Sho%l# s%ch state$ents "ro!e to be false or incorrect in an& $aterial
#etail) the bank
$a& ter$inate an& loan or other cre#it acco$$o#ation grante# on the basis of sai#
state$ents an# shall
ha!e the right to #e$an# i$$e#iate re"a&$ent or li'%i#ation of the obligation.
(n for$%lating r%les an# reg%lations %n#er this Section) the 9onetar& Boar# shall
recognie the
"ec%liar characteristics of $icrofinancing) s%ch as cash flow-base# len#ing to the basic
sectors that are
not co!ere# b& tra#itional collateral. (24a)
SECTION /1. U',!#0%!+ L&$', &% Ot9!% C%!+it A##&77&+$ti&',. -- The 9onetar&
Boar# is
hereb& a%thorie# to iss%e s%ch reg%lations as it $a& #ee$ necessar& with res"ect to
%nsec%re# loans or
other cre#it acco$$o#ations that $a& be grante# b& banks. (n)
SECTION /". Ot9!% S!#0%it) R!?0i%!7!'t, (&% B$'- C%!+it,. -- The 9onetar&
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%b:ect) 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. (26)
SECTION /*. A0t9&%it) t& P%!,#%i;! T!%7, $'+ C&'+iti&', &( L&$', $'+ Ot9!%
C%!+it
A##&77&+$ti&',. -- The 9onetar& 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 %tiliation 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$$o#ations. An& change
b& the Boar# in
the $a;i$%$ $at%rities shall a""l& onl& to loans an# other cre#it acco$$o#ations $a#e
after the #ate of
s%ch action.
The 9onetar& Boar# shall reg%late the interest i$"ose# on $icrofinance borrowers b&
len#ing
in!estors an# si$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$$o#ations. (26a)
SECTION //. A7&%ti=$ti&' &' L&$', $'+ Ot9!% C%!+it A##&77&+$ti&',. -- The
a$ortiation sche#%le of bank loans an# other cre#it acco$$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$$o#ations with $at%rities of $ore than fi!e (5)
&ears)
"ro!isions $%st be $a#e for "erio#ic a$ortiation "a&$ents) b%t s%ch "a&$ents $%st be
$a#e at least
ann%all&+ /ro!i#e#) howe!er) That when the borrowe# f%n#s are to be %se# for "%r"oses
which #o not
initiall& "ro#%ce re!en%es a#e'%ate for reg%lar a$ortiation "a&$ents therefro$) the
bank $a& "er$it the
initial a$ortiation "a&$ent to be #eferre# %ntil s%ch ti$e as sai# re!en%es are s%fficient
for s%ch
"%r"ose) b%t in no case shall the initial a$ortiation #ate be later than fi!e (5) &ears fro$
the #ate on
which the loan or other cre#it acco$$o#ation is grante#. (23a)
(n case of loans an# other cre#it acco$$o#ations to $icrofinance sectors) the sche#%le of
loan
a$ortiation shall take into consi#eration the "ro:ecte# cash flow of the borrower an#
a#o"t this into the
ter$s an# con#itions for$%late# b& banks. (n)
SECTION /4. P%!1$)7!'t &( L&$', $'+ Ot9!% C%!+it A##&77&+$ti&',. -- A
borrower $a&
at an& ti$e "rior to the agree# $at%rit& #ate "re"a&) in whole or in "art) the %n"ai#
balance of an& bank
loan an# other cre#it acco$$o#ation) s%b:ect to s%ch reasonable ter$s an# con#itions as
$a& be agree#
%"on between the bank an# its borrower. (60a)
SECTION /8. D!2!&17!'t A,,i,t$'#! I'#!'ti2!,. -- 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 $e#ical ser!ices) socialie# or low-cost
ho%sing) local
go!ern$ent %nits an# other acti!ities with social content. (n)
SECTION /7. F&%!#&,0%! &( R!$ E,t$t! <&%t6$6!. -- (n the e!ent of foreclos%re)
whether :%#iciall& or e;tra:%#iciall&) of an& $ortgage on real estate which is sec%rit& for
an& loan or other cre#it acco$$o#ation grante#) the $ortgagor or #ebtor whose real
"ro"ert& has been sol# for the f%ll or "artial "a&$ent of his obligation shall ha!e the right
within one &ear after the sale of the real estate) to re#ee$ the "ro"ert& b& "a&ing the
a$o%nt #%e %n#er the $ortgage #ee#) with interest thereon at the rate s"ecifie# in the
$ortgage) an# all the costs an# e;"enses inc%rre# b& the bank or instit%tion fro$ the sale
an# c%sto#& of sai# "ro"ert& less the inco$e #eri!e# therefro$. Cowe!er) the "%rchaser
at the a%ction sale concerne# whether in a :%#icial or e;tra:%#icial foreclos%re shall ha!e
the right to enter %"on an# take "ossession of s%ch "ro"ert& i$$e#iatel& after the #ate of
the confir$ation of the a%ction sale an# a#$inister the sa$e in accor#ance with law. An&
"etition in co%rt to en:oin or restrain the con#%ct of foreclos%re "rocee#ings instit%te#
"%rs%ant to this "ro!ision shall be gi!en #%e co%rse onl& %"on the filing b& the "etitioner
of a bon# in an a$o%nt fi;e# b& the co%rt con#itione# that he will "a& all the #a$ages
which the bank $a& s%ffer b& the en:oining or the restraint of the foreclos%re "rocee#ing.
1otwithstan#ing Act *1*5) :%ri#ical "ersons whose "ro"ert& is being sol# "%rs%ant to an
e;tra:%#icial foreclos%re) shall ha!e the right to re#ee$ 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 (*) $onths
after foreclos%re) whiche!er is earlier.
8wners of "ro"ert& that has been sol# in a foreclos%re sale "rior to the effecti!it& of this
Act shall retain their re#e$"tion rights %ntil their e;"iration. (26a)
SECTION /8. R!'!3$ &% E:t!',i&' &( L&$', $'+ Ot9!% C%!+it A##&77&+$ti&',. --
The
9onetar& 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$$o#ations. (61)
SECTION /9. P%&2i,i&', (&% L&,,!, $'+ @%it!-O((,. -- All #ebts #%e to an& bank on
which
interest is "ast #%e an# %n"ai# for s%ch "erio# as $a& be #eter$ine# b& the 9onetar&
Boar#) %nless the
sa$e are well-sec%re# an# in the "rocess of collection shall be consi#ere# ba# #ebts
within the $eaning
of this Section.
The 9onetar& Boar# $a& fi;) b& reg%lation or b& or#er in a s"ecific case) the a$o%nt of
reser!es
for ba# #ebts or #o%btf%l acco%nts or other contingencies.
Briting off of loans) other cre#it acco$$o#ations) a#!ances an# other assets shall be
s%b:ect to
reg%lations iss%e# b& the 9onetar& Boar#. (67a)
SECTION 4>. <$A&% I'2!,t7!'t,. -- ?or the "%r"ose of enhancing bank s%"er!ision)
the
9onetar& Boar# shall establish criteria for re!iewing $a:or ac'%isitions or in!est$ents
b& a bank incl%#ing
cor"orate affiliations or str%ct%res that $a& e;"ose the bank to %n#%e risks or in an& wa&
hin#er effecti!e
s%"er!ision.
SECTION 41. C!ii'6 &' I'2!,t7!'t, i' C!%t$i' A,,!t,. -- 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"$ent) shall
not e;cee# fift&
"ercent (50A) of co$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$ent in real estate) %nless otherwise "ro!i#e# b& the 9onetar& Boar#. (25a)
SECTION 4". A#?0i,iti&' &( R!$ E,t$t! ;) @$) &( S$ti,($#ti&' &( C$i7,. --
1otwithstan#ing the li$itations of the "rece#ing Section) a bank $a& ac'%ire) hol# or
con!e& real
"ro"ert& %n#er the following circ%$stances+
52.1. S%ch as shall be $ortgage# to it in goo# faith b& wa& of sec%rit& for #ebts-
52.2. S%ch as shall be con!e&e# to it in satisfaction of #ebts "re!io%sl& contracte# in the
co%rse of
its #ealings- or
52.*. S%ch as it shall "%rchase at sales %n#er :%#g$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 (5) &ears or as $a& be "rescribe#
b& the
9onetar& Boar#+ /ro!i#e#) howe!er) That the bank $a&) after sai# "erio#) contin%e to
hol# the "ro"ert&
for its own %se) s%b:ect to the li$itations of the "rece#ing Section. (25a)
SECTION 4*. Ot9!% B$'-i'6 S!%2i#!,. -- (n a##ition to the o"erations s"ecificall&
a%thorie#
in this Act) a bank $a& "erfor$ the following ser!ices+
5*.1. 0ecei!e in c%sto#& f%n#s) #oc%$ents an# !al%able ob:ects-
5*.2. Act as financial agent an# b%& an# sell) b& or#er of an# for the acco%nt of their
c%sto$ers)
shares) e!i#ences of in#ebte#ness an# all t&"es of sec%rities-
5*.*. 9ake 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-
5*.7. ,"on "rior a""ro!al of the 9onetar& 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#
5*.5. 0ent o%t safet& #e"osit bo;es.
The bank shall "erfor$ the ser!ices "er$itte# %n#er S%bsections 5*.1) 5*.2) 5*.* an#
5*.7 as
#e"ositar& or as an agent. Accor#ingl&) it shall kee" the f%n#s) sec%rities an# other effects
which it
recei!es #%l& se"arate fro$ the bank@s own assets an# liabilities.
The 9onetar& Boar# $a& reg%late the o"erations a%thorie# 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 '%asi-bank 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 9onetar& Boar# $a& s%$$aril& an# witho%t nee# for "rior hearing close s%ch
banking instit%tion an#
"lace it %n#er recei!ershi" of the /hili""ine =e"osit (ns%rance .or"oration. (22a)
SECTION 4/. P%&9i;iti&' t& A#t $, I',0%!%. -- A bank shall not #irectl& engage in
ins%rance
b%siness as the ins%rer. (2*)
SECTION 44. P%&9i;it!+ T%$',$#ti&',. --
55.1. 1o #irector) officer) e$"lo&ee) or agent of an& bank shall --
(a) 9ake false entries in an& bank re"ort or state$ent or "artici"ate in an& fra%#%lent
transaction) thereb& affecting the financial interest of) or ca%sing #a$age to) the bank or
an& "erson-
(b) Bitho%t or#er of a co%rt of co$"etent :%ris#iction) #isclose to an& %na%thorie#
"erson
an& infor$ation relati!e to the f%n#s or "ro"erties in the c%sto#& of the bank belonging to
"ri!ate in#i!i#%als) cor"orations) or an& other entit&+ /ro!i#e#) That with res"ect to bank
#e"osits) the "ro!isions of e;isting laws shall "re!ail-
(c) Acce"t gifts) fees or co$$issions or an& other for$ of re$%neration in connection
with
the a""ro!al of a loan or other cre#it acco$$o#ation fro$ sai# bank-
(#) 8!er!al%e or ai# in o!er!al%ing an& sec%rit& for the "%r"ose of infl%encing in an&
wa& the
actions of the bank or an& bank- or
(e) 8%tso%rce inherent banking f%nctions.
55.2. 1o borrower of a bank shall --
(a)
?ra%#%lentl& o!er!al%e "ro"ert& offere# as sec%rit& for a loan or other cre#it
acco$$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
(#)
8ffer 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.
55.*. 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. (62-Aa)
The $aking of false re"orts or $isre"resentation or s%""ression of $aterial facts b&
"ersonnel of
the Bangko Sentral ng /ili"inas shall constit%te fra%# an# shall be s%b:ect to the
a#$inistrati!e an#
cri$inal sanctions "ro!i#e# %n#er the 1ew .entral Bank Act.
55.7. .onsistent with the "ro!isions of 0e"%blic Act 1o. 1705) otherwise known as the
Banks
Secrec& Law) no bank shall e$"lo& cas%al or nonreg%lar "ersonnel or too length&
"robationar& "ersonnel in the con#%ct of its b%siness in!ol!ing bank #e"osits.
SECTION 48. C&'+0#ti'6 B0,i'!,, i' $' U',$(! &% U',&0'+ <$''!%. -- (n
#eter$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# $anner for "%r"oses of this Section) the 9onetar& Boar# shall consi#er an& of
the following
circ%$stances+
54.1. The act or o$ission has res%lte# or $a& res%lt in $aterial loss or #a$age) or
abnor$al risk
or #anger to the safet&) stabilit&) li'%i#it& or sol!enc& of the instit%tion-
54.2. The act or o$ission has res%lte# or $a& res%lt in $aterial loss or #a$age or
abnor$al risk
to the instit%tion@s #e"ositors) cre#itors) in!estors) stockhol#ers or to the Bangko Sentral
or
to the "%blic in general-
54.*. The act or o$ission has ca%se# an& %n#%e in:%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 $anifest "artialit&) e!i#ent ba# faith or gross
ine;c%sable negligence- or
54.7. The act or o$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 9onetar& Boar# $a&) witho%t "re:%#ice to the a#$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$$e#iatel&
e;cl%#e the erring bank fro$ clearing) the "ro!isions of law to the contrar&
notwithstan#ing. (n)
SECTION 47. P%&9i;iti&' &' Di2i+!'+ D!#$%$ti&'. -- 1o bank or '%asi-bank shall
#eclare
#i!i#en#s greater than its acc%$%late# net "rofits then on han#) #e#%cting therefro$ its
losses an# ba#
#ebts. 1either shall the bank nor '%asi-bank #eclare #i!i#en#s) if at the ti$e of
#eclaration+
52.1
(ts clearing acco%nt with the Bangko Sentral is o!er#rawn- or
52.2
(t is #eficient in the re'%ire# li'%i#it& floor for go!ern$ent #e"osits for fi!e (5) or $ore
consec%ti!e #a&s- or
52.*
(t #oes not co$"l& with the li'%i#it& stan#ar#s<ratios "rescribe# b& the Bangko Sentral
for
"%r"oses of #eter$ining f%n#s a!ailable for #i!i#en# #eclaration- or
52.7
(t has co$$itte# a $a:or !iolation as $a& be #eter$ine# b& the Bangko Sentral. (67a)
SECTION 48. I'+!1!'+!'t A0+it&%. -- The 9onetar& 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
9onetar& Boar#. The
ter$ of the engage$ent shall be as "rescribe# b& the 9onetar& 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 9onetar&
Boar#. The
9onetar& 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)
SECTION 49. A0t9&%it) t& R!60$t! E!#t%&'i# T%$',$#ti&',. -- 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)
SECTION 8>. Fi'$'#i$ St$t!7!'t,. -- >!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 the 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)
SECTION 81. P0;i#$ti&' &( Fi'$'#i$ St$t!7!'t,. -- >!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# b& the
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 9etro 9anila 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 9onetar& 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) in 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 $a:orit&-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 9onetar& Boar#) b& a !ote of at least fi!e (5) 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$ent of
financial
con#ition re'%ire# herein. (n)
SECTION 8". P0;i#$ti&' &( C$1it$ St&#-. -- A bank) '%asi-bank or tr%st entit&
incor"orate#
%n#er the laws of the /hili""ines shall not "%blish the a$o%nt of its a%thorie# or
s%bscribe# ca"ital stock
witho%t in#icating at the sa$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. (n case no ca"ital has been #efinitel& assigne# to s%ch branch) s%ch fact shall be
state# in) an#
shall for$ "art of the "%blication. (62)
SECTION 8*. S!tt!7!'t &( Di,10t!,. -- 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)
SECTION 8/. U'$0t9&%i=!+ A+2!%ti,!7!'t &% B0,i'!,, R!1%!,!'t$ti&'. -- 1o
"erson)
association) or cor"oration %nless #%l& a%thorie# 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)
SECTION 84. S!%2i#! F!!,. -- The Bangko Sentral $a& charge e'%itable rates)
co$$issions
or fees) as $a& be "rescribe# b& the 9onetar& Boar# for s%"er!ision) e;a$ination an#
other ser!ices
which it ren#ers %n#er this Act. (n)
SECTION 88. P!'$t) (&% Vi&$ti&' &( t9i, A#t. -- ,nless otherwise herein "ro!i#e#)
the
!iolation of an& of the "ro!isions of this Act shall be s%b:ect to Sections *7) *5) *4 an# *2
of the 1ew
.entral Bank Act. (f the offen#er is a #irector or officer of a bank) '%asi-bank or tr%st
entit&) the 9onetar&
Boar# $a& also s%s"en# or re$o!e s%ch #irector or officer. (f the !iolation is co$$itte#
b& a cor"oration)
s%ch cor"oration $a& be #issol!e# b& '%o warranto "rocee#ings instit%te# b& the
Solicitor General. (62)
CHAPTER V
PLACE<ENT UNDER CONSERVATORSHIP
SECTION 87. C&',!%2$t&%,9i1. -- 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)
CHAPTER VI
CESSATION OF BANKING BUSINESS
SECTION 88. V&0't$%) Li?0i+$ti&'. -- (n case of the !ol%ntar& li'%i#ation of an&
bank
organie# %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 9onetar& Boar# before s%ch
li'%i#ation is
%n#ertaken) an# the 9onetar& 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. (64)
SECTION 89. R!#!i2!%,9i1 $'+ I'2&0't$%) Li?0i+$ti&'. -- The gro%n#s an#
"roce#%res for
"lacing a bank %n#er recei!ershi" or li'%i#ation) as well as the "owers an# #%ties of the
recei!er or
li'%i#ator a""ointe# for the bank shall be go!erne# b& the "ro!isions of Sections *0) *1)
*2) an# ** of the
1ew .entral Bank Act+ /ro!i#e#) That the "etitioner or "laintiff files with the clerk or
:%#ge of the co%rt in
which the action is "en#ing a bon#) e;ec%te# in fa!or of the Bangko Sentral) in an
a$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)
SECTION 7>. P!'$t) (&% T%$',$#ti&', A(t!% $ B$'- B!#&7!, I',&2!'t. -- An&
#irector or
officer of an& bank #eclare# insol!ent or "lace# %n#er recei!ershi" b& the 9onetar&
Boar# who ref%ses to
t%rn o!er the bank@s recor#s an# assets to the #esignate# recei!ers) or who ta$"ers with
banks recor#s)
or who a""ro"riates for hi$self or 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$its or ca%ses to be
"ai# o%t an&
f%n#s of sai# bank) or who transfers or "er$its or ca%ses to be transferre# an& sec%rities
or "ro"ert& of
sai# bank shall be s%b:ect to the "enal "ro!isions of the 1ew .entral Bank Act. (65a)
CHAPTER VII
LA@S GOVERNING OTHER T.PES OF BANKS
SECTION 71. Ot9!% B$'-i'6 L$3,. -- The organiation) ownershi" an# ca"ital
re'%ire$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 organiation) 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 $%st bear to its total risk assets) the "ro!isions of
Section ** of this
Act shall go!ern. (n)
CHAPTER VIII
FOREIGN BANKS
SECTION 7". T%$',$#ti'6 B0,i'!,, i' t9! P9ii11i'!,. -- The entr& of foreign banks
in the
/hili""ines thro%gh the establish$ent of branches shall be go!erne# b& the "ro!isions of
the ?oreign
Banks Liberaliation 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*7) otherwise known as the "8ffshore Banking S&ste$
=ecree." (17a)
SECTION 7*. A#?0i,iti&' &( V&ti'6 St&#- i' $ D&7!,ti# B$'-. -- Bithin se!en (2)
&ears
fro$ the effecti!it& of this Act an# s%b:ect to g%i#elines iss%e# "%rs%ant to the ?oreign
Banks
Liberaliation Act) the 9onetar& Boar# $a& a%thorie a foreign bank to ac'%ire %" to one
h%n#re#
"ercent (100A) of the !oting stock of onl& one (1) bank organie# %n#er the laws of the
0e"%blic of the
/hili""ines.
Bithin the sa$e "erio#) the 9onetar& Boar# $a& a%thorie 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 Liberaliation Act an# the Thrift Banks Act) to f%rther
ac'%ire !oting
shares of 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 this a%thorit&) the 9onetar& 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 $a:orit&-owne# b& ?ili"inos.
An& right) "ri!ilege or incenti!e grante# to a foreign bank %n#er this Section shall be
e'%all&
en:o&e# b& an# e;ten#e# %n#er the sa$e con#itions to banks organie# %n#er the laws of
the 0e"%blic of
the /hili""ines. (Secs. 2 an# *) 0A 2221)
SECTION 7/. L&#$ B%$'#9!, &( F&%!i6' B$'-,. -- (n the case of a foreign bank which
has
$ore than one (1) branch in the /hili""ines) all s%ch branches shall be treate# as one (1)
%nit for the
"%r"ose of this Act) an# all references to the /hili""ine branches of foreign banks shall be
hel# to refer to
s%ch %nits. (46)
SECTION 74. H!$+ O((i#! G0$%$'t!!. -- (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# citiens 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
e;isting laws.
(13)
SECTION 78. S077&', $'+ L!6$ P%&#!,,. -- S%$$ons an# legal "rocess ser!e#
%"on the
/hili""ine agent or hea# of an& foreign bank #esignate# to acce"t ser!ice thereof shall
gi!e :%ris#iction to
the co%rts o!er s%ch bank) an# ser!ice of notices on s%ch agent or hea# shall be as
bin#ing %"on the
bank which he re"resents as if $a#e %"on the bank itself.
Sho%l# the a%thorit& of s%ch agent or hea# to acce"t ser!ice of s%$$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$ination of s%ch agent.
(n the absence of the agent or hea# or sho%l# there be no "erson a%thorie# b& the bank
%"on
who$ 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 $a#e
%"on the bank
or its #%l& a%thorie# agent or hea#.
(n case of ser!ice for the bank %"on the Bangko Sentral =e"%t& Go!ernor (n-.harge of
the
s%"er!ising an# e;a$ining #e"art$ents) the sai# =e"%t& Go!ernor shall register an#
trans$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)
SECTION 77. L$3, A11i#$;!. -- (n all $atters not s"ecificall& co!ere# b& s"ecial
"ro!isions
a""licable onl& to a foreign bank or its branches an# other offices in the /hili""ines) an&
foreign bank
license# to #o b%siness in the /hili""ines shall be bo%n# b& the "ro!isions of this Act) all
other laws) r%les
an# reg%lations a""licable to banks organie# %n#er the laws of the /hili""ines of the
sa$e class) e;ce"t
those that "ro!i#e for the creation) for$ation) organiation 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. (16)
SECTION 78. R!2&#$ti&' &( Li#!',! &( $ F&%!i6' B$'-. -- The 9onetar& 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 bank 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 IB
TRUST OPERATIONS
SECTION 79. A0t9&%it) t& E'6$6! i' T%0,t B0,i'!,,. -- 8nl& a stock cor"oration or a
"erson #%l& a%thorie# b& the 9onetar& 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&. (54a- 52a)
SECTION 8>. C&'+0#t &( T%0,t B0,i'!,,. -- 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%thorie# 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 or
beneficiar& of the
tr%st "rior to the transaction.
The 9onetar& 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&. (54)
SECTION 81. R!6i,t%$ti&' &( A%ti#!, &( I'#&%1&%$ti&' $'+ B)-L$3, &( $ T%0,t
E'tit). --
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)
SECTION 8". <i'i707 C$1it$i=$ti&'. -- A tr%st entit&) before it can engage in tr%st
or other
fi#%ciar& b%siness) shall co$"l& with the $ini$%$ "ai#-in ca"ital re'%ire$ent which
will be #eter$ine# b&
the 9onetar& Boar#. (n)
SECTION 8*. P&3!%, &( $ T%0,t E'tit). -- A tr%st entit&) in a##ition to the general
"owers
inci#ent to cor"orations) shall ha!e the "ower to+
6*.1. Act as tr%stee on an& $ortgage or bon# iss%e# b& an& $%nici"alit&) cor"oration) or
an& bo#&
"olitic an# to acce"t an# e;ec%te an& tr%st consistent with law-
6*.2. Act %n#er the or#er or a""oint$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 $a& be bro%ght %n#er the :%ris#iction of the co%rt-
6*.*. Act as the e;ec%tor of an& will when it is na$e# the e;ec%tor thereof-
6*.7. 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 will-
6*.5. 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#
6*.4. >stablish an# $anage co$$on tr%st f%n#s) s%b:ect to s%ch r%les an# reg%lations as
$a& be
"rescribe# b& the 9onetar& Boar#. (56)
SECTION 8/. D!1&,it (&% t9! F$it9(0 P!%(&%7$'#! &( T%0,t D0ti!,. -- Before
transacting
tr%st b%siness) e!er& tr%st entit& shall #e"osit with the Bangko Sentral as sec%rit& for the
faithf%l
"erfor$ance of its tr%st #%ties) cash or sec%rities a""ro!e# b& the 9onetar& Boar# in an
a$o%nt e'%al to
not less than ?i!e h%n#re# tho%san# "esos (/500)000.00) or s%ch higher a$o%nt as $a&
be fi;e# b& the
9onetar& Boar#+ /ro!i#e#) howe!er) That the 9onetar& Boar# shall re'%ire e!er& tr%st
entit& to increase
the a$o%nt of its cash or sec%rities on #e"osit with the Bangko Sentral whene!er in its
:%#g$ent s%ch
increase is necessar& b& reason of the tr%st b%siness of s%ch entit&+ /ro!i#e#) f%rther) That
the "ai#-in
ca"ital an# s%r"l%s of s%ch entit& $%st be at least e'%al to the a$o%nt re'%ire# to be
#e"osite# 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$o%nt) the 9onetar& Boar# shall ha!e the sa$e a%thorit& as that grante# to it
%n#er the
"ro!isions of the fifth "aragra"h of Section *7 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. All clai$s arising o%t of
the tr%st b%siness
of a tr%st entit& shall ha!e "riorit& o!er all other clai$s as regar#s the cash or sec%rities
#e"osite# as
abo!e "ro!i#e#. The 9onetar& 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$o%nt %ntil
the #e"ositing
entit& shall #iscontin%e its tr%st b%siness an# shall satisf& the 9onetar& Boar# that it has
co$"lie# with all
its obligations in connection with s%ch b%siness. (45a)
SECTION 84. B&'+ &( C!%t$i' P!%,&', (&% t9! F$it9(0 P!%(&%7$'#! &( D0ti!,. --
Before
an e;ec%tor) a#$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%b:ect
$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%b:ect
$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$it& with this Section shall be hel# b&
s%ch entit&
%n#er the or#ers an# #irection of the co%rt. (53)
SECTION 88. E:!71ti&' &( T%0,t E'tit) (%&7 B&'+ R!?0i%!7!'t. -- 1o bon# or
other
sec%rit& shall be re'%ire# b& the co%rt fro$ a tr%st entit& for the faithf%l "erfor$ance of
its #%ties as co%rt-
a""ointe# tr%stee) e;ec%tor) a#$inistrator) g%ar#ian) recei!er) or #e"ositar&. Cowe!er) the
co%rt $a&)
%"on "ro"er a""lication with it showing s"ecial ca%se therefor) re'%ire the tr%st entit& to
"ost a bon# or
other sec%rit& for the "rotection of f%n#s or "ro"ert& confi#e# to s%ch entit&. (53)
SECTION 87. S!1$%$ti&' &( T%0,t B0,i'!,, (%&7 G!'!%$ B0,i'!,,. -- 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)
SECTION 88. I'2!,t7!'t Li7it$ti&', &( $ T%0,t E'tit). -- ,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 $a& be "rescribe# b&
law) the
9onetar& Boar# or an& co%rt of co$"etent :%ris#iction. (4*a)
SECTION 89. R!$ E,t$t! A#?0i%!+ ;) $ T%0,t E'tit). -- ,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
$anner an# for
whate!er "%r"ose) shall likewise be go!erne# b& the rele!ant "ro!isions of Section 52 of
this Act. (47a)
SECTION 9>. I'2!,t7!'t &( N&'-T%0,t F0'+,. -- The in!est$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. (47)
SECTION 91. S$'#ti&', $'+ P!'$ti!,. -- 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%b:ect to
the sanctions an#
"enalties "ro!i#e# %n#er Section 44 of this Act as well as Sections *4 an# *2 of the 1ew
.entral Bank
Act. (4*)
SECTION 9". E:!71ti&' &( T%0,t A,,!t, (%&7 C$i7,. -- 1o assets hel# b& a tr%st
entit& in
its ca"acit& as tr%stee shall be s%b:ect to an& clai$s other than those of the "arties
intereste# in the
s"ecific tr%sts. (45)
SECTION 9*. E,t$;i,97!'t &( B%$'#9!, &( $ T%0,t E'tit). -- 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& $a&) with "rior a""ro!al of the 9onetar& Boar#) establish branches in the
/hili""ines) an# the sai#
entit& shall be res"onsible for all b%siness con#%cte# in s%ch branches to the sa$e e;tent
an# in the
sa$e $anner as tho%gh s%ch b%siness ha# all been con#%cte# in the hea# office.
?or the "%r"ose of this Act) the tr%st entit& an# its branches shall be treate# as one %nit.
(42)
CHAPTER B
FINAL PROVISIONS
SECTION 9/. P9$,! O0t &( B$'6-& S!'t%$ P&3!%, O2!% B0i+i'6 $'+ L&$'
A,,&#i$ti&',.
-- Bithin a "erio# of three (*) &ears fro$ 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$e. ,ntil otherwise
"ro!i#e# b& law)
b%il#ing an# loan associations shall contin%e to be go!erne# b& Sections *3 to 55)
.ha"ter D( of the
General Banking Act) as a$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) all references in Sections *3 to 55 of the General Banking
Act) as
a$en#e#) to the Bangko Sentral an# the 9onetar& Boar# shall be #ee$e# to refer to the
Co$e
(ns%rance an# G%arant& .or"oration an# its boar# of #irectors) res"ecti!el&. (n)
SECTION 94. R!1!$i'6 C$0,!. -- >;ce"t as $a& be "ro!i#e# for in Sections *7 an#
37 of this
Act) the General Banking Act) as a$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 $a& be
inconsistent with the "ro!isions of this Act are hereb& re"eale#. The "ro!isions of
"aragra"h 6) Section 6)
0e"%blic Act 1o. *531) as a$en#e# b& 0e"%blic Act 1o. 2700) are likewise re"eale#.
(30a)
SECTION 98. S!1$%$;iit) C$0,!. -- (f an& "ro!ision or section of this Act or the
a""lication
thereof to an& "erson or circ%$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)
SECTION 97. E((!#ti2it) C$0,!. -- This Act shall take effect fifteen (15) #a&s
following its
"%blication in the 8fficial Gaette or in two (2) national news"a"ers of general
circ%lation. (31)
A""ro!e#)
<ANUEL B. VILLAR CR. FRANKLIN <. DRILON
Speaker of the House President of the Senate
of Representatives
This Act) which is a consoli#ation of Senate Bill 1o. 1513 an# Co%se Bill 1o. 4617) was
finall&
"asse# b& the Senate an# the Co%se of 0e"resentati!es on A"ril 12) 2000.
ROBERTO P. NAZARENO
OSCAR G. .ABES
Secretary General
Secretary of the Senate
House of Representatives
A""ro!e#+
COSEPH ECERCITO ESTRADA
A""ro!e#+ 9a& 2*) 2000