Banking!Laws!&!Jurisprudence! ! ! Chapter!1!: Law) Of) 2000) !

1(
PARTY'DUH!NOTES!for!Banking!Laws!&!Jurisprudence!©(2009(
!
BANKING!LAWS!&!JURISPRUDENCE! III. NATURE(OF(BANKING(BUSINESS(
! (
A. Debtor'!Creditor!Relationship!
!
Art.(1980.(Fixed,(savings,(and(current(deposits(of(
CHAPTER!1! money(in(banks(and(similar(institutions(shall(be(governed(by(
! the(provisions(concerning(loan.(
I. DECLARED(POLICY(OF(THE(STATE( • The(contract(between(the(bank(and(its(depositor(is(governed(by(
( the(provisions(of(the(Civil(Code(on(simple(loan…(The(bank(is(the(
“The!State!recognizes!the!vital!role!of!banks!in!providing! debtor(and(the(depositor(is(the(creditor.(The(depositor(lends(
for!an!environment!conducive!to!the!sustained!development! the(bank(money(and(the(bank(agrees((to(pay(the(depositor(on(
of!the!national!economy!and!the!fiduciary!nature!of!banking!
demand.((Consolidated,Bank,and,Trust,Corporation,vs.,Court,of,
that!requires!high!standards!of!integrity!and!performance.!In!
Appeals)(
furtherance!thereof,!the!State!shall!promote!and!maintain!a!
stable!and!efficient!banking!system!that!is!globally! • Bank(deposits(are(in(the(nature(of(irregular(deposits.(They(are(
competitive,!dynamic!and!responsive!to!the!demands!of!a! really(loans(because(they(earn(interest.((Serrano,vs.,Central,
developing!economy.!“!(Section)2)of)RA)8791,)General)Banking) Bank,of,the,Philippines)(
Law)of)2000)! (
( B. Fiduciary!Duty!
II. DEFINITION(OF(BANKS( “fiduciary(nature(of(banking(which(requires(high(
( standards(of(integrity(and(performance.”(
Banks(are(entities(engaged(in(the(lending(of(funds(obtained(in( • Treat(the(accounts(of(its(depositors(with(meticulous(care,(
the(form(of(deposits.( always(having(in(mind(the(fiduciary(nature(of(their(relationship.(
P A(moneyed(institute(founded(to(facilitate(the(borrowing,(
• Requires(banks(to(assume(a(degree(of(diligence(higher(than(that(
lending(and(selfPkeeping(of(money(and(to(deal,(in(notes,(
of(a(good(father(of(a(family(
bills(of(exchange,(and(credits.(
• Higher(level(of(accountability(than(that(expected(of(a(depositor.(
P An(investment(company(which(loans(out(the(money(of(its(
!
customers,(collects(the(interest(and(charges(a(commission( C. Not!a!Trust!Agreement!
to(both(lender(and(borrower,(is(a(bank.( The(fiduciary(nature(of(a(bankPdepositor(
P Any(person(engaged(in(the(business(carried(on(by(banks(of( relationship(does(not(convert(the(contract(between(the(
deposit,(of(discount,(or(of(circulation(is(doing(a(banking( bank(and(its(depositors(from(a(simple(loan(to(a(trust(
business,(although(but(one(of(these(functions(is(exercised.( agreement,(whether(express(or(implied.(
(
Balamban,(Loyola,(Machado,(Menguito,(Paniagua,(Vibandor,(Villareal(
(
2(
!
• Failure(by(the(bank(to(pay(the(depositor(is(failure(to(pay(a( fiduciary(nature(of(their(relationship.((Simex,Internationsl,vs.,
simple(loan,(and(not(a(breach(of(trust.( Court,of,Appeals)(
• Banks(do(not(accept(deposits(to(enrich(depositors(but(to(earn( • Degree(of(diligence(higher(than(that(of(a(good(father(of(a(family,(
money(for(themselves.( as(prescribed(by(Section(2(of(the((GBL.(
( • Same(higher(degree(of(diligence(is(not(expected(to(be(exerted(
D. Indispensable!Institution! by(banks(in(commercial(transactions(that(do(not(involve(their(
Plays(a(vital(role(in(the(economic(life(of(every( fiduciary(relationship(with(their(depositors.(
civilized(nation.( • Diligence(extends(to(financial(institutions:(
• Banks(have(become(an(ubiquitous(presence(among(the(people,(
o A(government(financial(institution,(like(banks,(is(
who(have(come(to(regard(them(with(respect(and(even(
expected(to(exercise(greater(care(and(prudence(in(the(
gratitude,(and(most(of(all,(confidence.(
dealings,(including(those(involving(registered(lands.(
(
o Due(diligence(required(of(banks(extend(even(to(persons,(
E. Impressed!with!Public!Interest!
or(institutions,(regularly(engaged(in(the(business(of(
The(stability(of(banks(largely(depends(on(the(
confidence(of(the(people(in(the(honesty(and(efficiency(of( lending(money(secured(by(real(estate(mortgages.(
banks.( (
• In(every(case,(the(depositor(expects(the(bank(to(treat(his( G. Treatment!of!Accounts!with!Meticulous!Care!
account(with(the(utmost(fidelity,(whether(such(account(consist( In(every(case,(the(depositor(expects(the(bank(to(
treat(his(account(with(the(utmost(fidelity,(whether(such(
only(of(a(few(hundred(pesos(or(of(millions.(The(bank(must(
account(consist(only(of(a(few(hundred(pesos(or(of(millions.(
record(every(single(transaction(accurately,(down(to(the(last(
• A(blunder(on(the(part(of(the(bank,(such(as(the(dishonor(of(a(
centavo,(and(as(promptly(as(possible.(This(has(to(be(done(if(the(
check(without(good(reason,(can(cause(the(depositor(not(a(little(
account(is(to(reflect(at(any(given(time(the(amount(of(the(money(
embarrassment(if(not(also(financial(loss(perhaps(even(civil(and(
the(depositor(can(dispose(of(as(he(sees(fit,(confident(that(the(
criminal(litigation.(
bank(will(deliver(it(as(and(to(whomever(he(directs.(
• No(law(mandating(banks(to(call(up(their(clients(whenever(their(
!
representatives(withdraw(significant(amounts(from(their(
F. Degree!of!Diligence!
accounts.(
The(law(imposes(on(banks(high(standards(in(view(of(
the(fiduciary(nature(of(banking.( (
• The(bank(is(under(obligation(to(treat(the(accounts(of(its( H. Duty!to!Keep!Records!
A(bank(has(a(fiduciary(duty(to(keep(efficiently(a(
depositors(with(meticulous(care,(always(having(in(mind(the(
record(of(its(transactions(with(its(depositors.(Banks(shall(
have(a(true(and(accurate(account,(record(or(statement(of(
(
3(
!
their(daily(transactions,(particularly(those(referring(to(their( L. Banks!may!Exclude!Persons!in!their!Premises!
deposit(liabilities.( Banks(are(mandated(to(exercise(a(higher(degree(of(
• Making(of(any(false(entry(or(the(willful(omissionof(entries(is(a( diligence(in(the(handling(of(its(affairs(than(that(expected(of(
ground(for(the(imposition(of(administrative(sanctions(and(the( an(ordinary(business(enterprise.(
disqualification(from(office(of(any(director(or(officer(responsible( • Banks(may(impose(reasonable(conditions(or(limitations(to(
therefor,(without(prejudice(to(their(criminal(liability.( access(by(nonPemployees(to(its(premises(and(records,(such(as(
! the(exclusion(of(nonPemployees(from(the(working(areas(for(
I. Banks!are!not!Gratuitous!Bailees! employees,(even(absent(any(imminent(or(actual(unlawful(
Banks(are(run(for(gain,(and(they(solicit(deposits(in( aggression(on(or(an(invasion(of(its(properties(or(usurpation(
order(that(they(can(use(the(money(for(that(very(purpose.( thereof,(provided(that(such(limitations(are(not(contrary(to(the(
! law.((
J. Banks!not!Expected!to!be!Infallible!
!
However,(it(must(bear(the(blame(for(not(discovering( M. Charging!of!Interest!for!Loans!
mistakes(if(there(are(established(procedures(and(the(same(
Very(essential(and(fundamental(element(of(the(
have(not(been(followed.(
banking(business;(it(may(be(considered(to(be(the(very(core(
!
of(the(banking(existence(or(being.(
K. Dealing!with!Registered!Lands!
!
Banks(should(exercise(more(care(and(prudence(in( IV. LIABILITY(FOR(ACTS(OF(OFFICERS(AND(EMPLOYEES(
dealing(with(registered(lands,(than(private(individuals,(for(
(
their(business(is(one(affected(with(public(interest.(
By(the(very(nature(of(their(work(the(degree(of(
• The(rule(that(persons(dealing(with(registered(lands(can(rely( responsibility,(care(and(trustworthiness(expected(of(their(
solely(on(the(certificate(of(title(does(not(apply(to(banks.( employees(and(officials(are(far(greater(than(those(of(ordinary(clerks(
• Judicial(notice(is(taken(of(the(standard(practice(for(banks,( and(employees.(Banks(are(expected(to(exercise(the(highest(degree(
before(approving(a(loan,(to(send(representatives(to(the( of(diligence(in(the(selection(and(supervision(of(their(employees.(
premises(of(the(land(offered(as(collateral(and(to(investigate(who( • A(bank(is(liable(for(the(wrongful(acts(of(its(officers(done(in(the(
the(real(owners(thereof(are.(A(mortgageePbank(must(exercise( interest(of(the(bank(or(in(their(dealings(as(bank(representatives(
due(diligence(before(entering(into(said(contracts.( but(not(for(acts(outside(the(scope(of(their(authority.(
• Any(investigation(previously(conducted(on(the(property(offered( (
as(collateral(does(not(preclude(a(bank(from(considering( A. Negligence!of!Manager!
The(bank,(as(an(employer,(is(liable.(Confidence(in(
information(on(the(same(property(as(security(for(a(subsequent(
the(banking(system,(which(necessarily(includes(reliance(on(
loan.((Sps.,Omengan,vs.,Philippine,National,Bank)(
bank(managers,(is(vital(in(the(economic(life(of(our(society.(
!
(
4(
!
! E. Liability!for!Damages!
B. Negligence!of!Officers! There(must(be(a(breach(before(damages(may(be(
A(bank(will(be(held(liable(for(the(negligence(of(its( awarded(and(the(breach(of(such(duty(should(be(the(
officers(or(agents(when(acting(within(the(course(and(scope( proximate(cause(of(the(injury.(
of(their(employment.( !
• If(a(corporation(knowingly(permits(its(officer,(or(any(other( 1. Actual!and!Compensatory!Damages!
agent,(to(perform(acts(within(the(scope(of(an(apparent( (1) when(the(obligation(is(breached,(and(it(
authority,(holding(him(out(to(the(public(as(possessing(power(to( consists(in(the(payment(of(a(sum(of(money,(
do(those(acts,(the(corporation(will,(as(against(any(person(who( the(interest(due(should(be(that(which(may(
has(dealt(in(good(faith(with(the(corporation(through(such(agent,( have(been(stipulated(in(writing.(It(shall(itself(
be(stopped(from(denying(such(authority.(( earn(interest(from(the(time(it(is(judicially(
( demanded.(In(the(absence(of(stipulation,(
C. Negligence!of!Tellers! interest(must(be(12%(per(annum.!
Bank’s(tellers(must(exercise(a(high(degree(of( (2) may(be(imposed(at(the(discretion(of(the(
diligence(in(insuring(that(they(return(the(passbook(only(to( court(at(the(rate(of(6%(per(annum.!
the(depositor(or(his(authorized(representative.(The(tellers(
(3) When(the(judgement(of(the(court(awarding(
know,(or(should(know,(that(the(rules(on(savings(account(
a(sum(of(money(becomes(final(and(
provide(that(any(person(in(possession(of(the(passbook(is(
presumptively(its(owner.( executor,(the(rate(of(legal(interest(whether(
• Appropriation(of(money(by(a(teller(is(not(estafa.(If(the(teller( the(case(falls(under((1)(or((2),(shall(be(12%(
appropriates(the(money(for(his(personal(gain,(and(since(he( per(annum(from(such(finality(until(
occupies(a(position(of(confidence,(the(felony(of(qualified(theft( satisfaction.!
would(be(committed.( !
( 2. Exemplary!Damages!
D. Right!to!Recover!from!Employees! Law(allows(the(grant(of(exemplary(damages(by(way(
Banks(may(recover(from(its(employees(for(any( of(example(for(the(public(good.(The(public(relies(on(the(
payment(made(in(view(of(the(latter’s(negligent(or(criminal( banks’(fiduciary(duty(to(observe(the(highest(degree(of(
acts.( diligence.(
• “Whoever(pays(for(the(damages(caused(by(his(dependents(or( !
3. Moral!Damages!
employees(may(recover(from(the(latter(what(he(has(paid(or(
As(a(general(rule,(a(corporation(is(not(entitled(to(
delivered(in(satisfaction(of(the(claim.”((
moral(damages,(because(it(cannot(experience(physical(
! suffering(and(mental(anguish.(However,(for(the(breach(
(
5(
!
of(fiduciary(duty(required(of(a(bank,(a(coporate(client( complete(defense(in(culpa(contractual,(unlike(in(culpa(
may(claim(such(damages(when(its(good(reputation(is( aquiliana.!
besmirched(by(such(breach,(and(social(humiliation(
results(therefrom.( !
• In(culpa(contractual(or(breach(of(contract,(moral(damages(are( Classification!of!Banks!(CUT'RICO)(
recoverable(only(if(the(defendant(has(acted(fraudulently(or(in( (
bad(faith,(or(is(found(guilty(of(gross(negligence(amounting(to( a. Commercial!Bank/s!(C)!
! Exercise(the(general(powers(incident(to(a(corporations(
bad(faith,(or(in(wanton((reckless)(disregard(of(his(contractual(
! Shall( have( all( powers( as( may( be( necessary( to( carry( on(
obligations.( business(of(commercial(banking:(
• Banks(may(not(be(held(responsible(in(the(absence(of(bad(faith,( a. Accepting(drafts(and(issuing(letters(of(credit(
malice,(or(wanton(attitude.(The(law(affords(no(remedy(for( b. Discounting( and( negotiating( promissory( notes,(
damages(resulting(from(an(act(which(does(not(amount(to(a(legal( drafts,( bills( of( exchange( and( other( evidence( of(
injury(or(wrong.((DAMNUM(ABSQUE(INJURIA)( debt(
c. Accepting(or(creating(demand(deposits(
! INJURYP(illegal(invasion(of(a(legal(right(
d. Receiving( other( types( of( deposits( and( deposits(
! DAMAGEP(the(loss,(hurt,(or(harm(which(results(
substitute(
from(the(injury( e. Buying(and(selling(foreign(exchange(and(gold(or(
• Depositor(may(recover(moral(damages(even(if(the(bank’s( silver( bullion,( acquiring( marketable( bonds( and(
negligence(may(not(have(been(attended(with(bad(faith,(if(the( other(debt(securities(
former(suffered(mental(anguish,(serious(anxiety,( f. Extending( credit,( subject( to( such( rules( as( the(
embarrassment(and(humiliation.(Moral(damages(are(not(meant( Monetary(Board(may(promulgate(
! See(section(29(of(GBL(and(chapter(4(for(
to(enrich(a(complainant(at(the(expense(of(the(defendant.(It(is(
discussion(of(operations.(
only(intended(to(alleviate(the(moral(suffering(she(has( b. Universal!Banks!(U)(
undergone.( ! They( are( large( banks( licensed( by( Bangko( Sentral( ng(
! Pilipinas( to( do( both( commercial( and( investment(
F. Respondeat!Superior,!Diligence!in!the!Selection!and! banking.(
Supervision!of!Employees! ! In( addition( to( the( powers( of( commercial( bank,( a(
o Banks(is(bound(by(the(negligence(of(its(employees( universal( bank( can( exercise( the( powers( of( an(
investment( house( as( well( as( invest( in( nonPallied(
under(the(principle(of(repondeat(superior(or(command(
enterprises.(
responsibility.!
! A( universal( bank( may( perform( the( functions( of( an(
o The(defense(of(exercising(the(required(diligence(in(the( investment( either( directly( (through( a( sepatate( and(
selection(and(supervision(of(employees(is(not(a( distinct( department( or( within( the( unit( if( the( bank)( or(
(
6(
!
indirectly( (through( a( separate( subsidiary( investment( ! Thrift(banks(may(perform(such(services(only(upon(prior(
house).( In( either( case,( the( underwriting( of( equity( approval(of(Monetary(Board.(
securities( or( securities( dealing( will( be( subject( to( ! (
pertinent( laws,( as( well( as( applicable( regulations( of( the( d. Rural!Banks!(R)!
SEC.( ! Recognizes( the( need( to( promote( comprehensive( rural(
( development(with(the(end(view(of(attaining(acquitable(
c. Thrift!Banks!(T)( distribution(of(opportunities,(income(and(wealth.(
! Aside(from(the(powers(conferred(on(it(by(other(laws,(a( ! Encourages( and( assists( in( the( establishment( of( rural(
thrift(bank(namely(a(savings(and(mortgage(bank,(a(stock( banking( system( designed( to( make( needed( credit(
savings( and( loan( association( or( a( private( development( available(and(readily(accessible(in(the(rural(areas(on(the(
bank.( reasonable(terms.(
! Recognize( the( indispensable( role( of( the( private( sector,( ! Loans( or( advances( extended( by( rural( banks( shall( be(
to( encourage( private( enterprise( and( to( provide( primarily( for( the( purpose( of( meeting( the( normal( credit(
incentives(to(needed(investment.( needs(of(farmers,(fishermen(or(farm(families(as(well(as(
! The(following(are(powers(of(a(thrift(bank:( the(normal(credit(needs(of(cooperatives(and(merchants.(
a. Grant(loans,(whether(secured(or(not( e. Islamic!(I)(
b. Invest( marketable( bonds( and( other( debt( ! RA( 6848( created( the( AlPAmanah( Islamic( Investment(
securities( Bank( of( the( Philippines.( The( domicile( and( place( of(
c. Issue(domestic(letters(of(credit( business(is(in(Zamboanga(City.(
d. Extend( credit( facilities( to( private( and( ! Primary(purpose(of(the(Islamic(Bank(is(to(promote(and(
government(employees( accelerate( the( socioPeconomic( development( of( the(
e. Extend( credit( against( the( security( of( jewelry( or( Autonomous( Region( by( performing( banking,( financing(
other(precious(stones.( and(investment(operations.(
f. Accept(savings(and(time(deposits( f. Cooperative!(C)(
g. Rediscount( paper( with( the( Land( Bank( of( the( ! Organized(by(the(majority(shares(of(which(is(owned(and(
Philippines,( Development( Bank( of( the( controlled(by(cooperatives(primarily(to(provide(financial(
Philippines(and(other(GOCC( and(credit(services(to(cooperatives.(
h. Accept( foreign( currency( deposits( as( provided( ! May(perform(all(the(functions(of(rural(bank.(
under(Foreign(Currency(Deposit(Act( ! Membership( of( cooperative( bank( shall( include( only(
i. Act( as( correspondent( for( other( financial( cooperative(and(federations(of(cooperative.(
institutions( g. Other!Banks!(O)(
j. Purchase,( hold( and( convey( real( estate( as( ! The( Monetary( Board( is( authorized( to( make( other(
specified(in(sections(51(and(52(of(GBL( classification(of(banks,(as(it(may(deem(proper.(
k. Offer( other( banking( services( as( provided( in(
section(53(of(GBL.(
(
7(
!
Philippine( Veterans( Bank,( Land( Bank( of( the( Philippines(
! banking( institution…( xxx( governed( by( special( laws( shall(
Development( Bank( of( the( Philippines( is( considered( to( be(accepted(by(the(Commission(unless(accompanied(by(
be(GovernmentPOwned(Banks.( a( favorable( recommendation( of( the( appropriate(
! ( government( agency( to( the( effect( that( such( articles( or(
OTHER!CLASSIFICATION!OF!BANKS!OTHER!THAN!MENTIONED!IN!SECTION! amendment(is(in(accordance(with(law;((b.)(the(SEC(shall(
3! not( accept( for( filing( the( byPlaws( or( any( amendment(
1. Non'Stock!Savings!and!Loan!Associations( thereto( of( any( bank,( banking( institution…( xxx( unless(
! Is( a( nonPstock,( nonPprofit( corporation( engaged( in( the( accompanied( by( a( certificate( of( the( appropriate(
business( of( accumulating( engaged( in( the( business( of( government( agency( to( the( effect( that( such( byPlaws( or(
accumulating(the(savings(of(its(members(and(using(such( amendments(are(in(accordance(with(law.(
accumulations( for( loans( to( members( to( service( the( B. Determination!by!the!Monetary!Board(
needs( of( households( by( providing( longPterm( financing( ! The( Monetary( Board( shall( decide( the( determination( of(
for( home( building( and( development( and( for( personal( whether( a( person( or( entity( is( performing( banking( or(
finance.( quasiPbanking(functions.(
2. Quasi'Banks! a. To( resolve( such( issue( through( inspection,(
! Refers( to( entities( engaged( in( the( borrowing( of( funds( investigation(and(examination.(
through(the(issuance,(endorsement(or(assignment(with( b. Upon( issuance( of( this( authority( banking(
recourse( or( acceptance( of( deposit( substitutes( for( operations( shall( continue( to( do( so( unless( such(
purposes( of( relending( or( purchasing( of( receivables( and( authority(is(revoked,(suspended(or(annulled(by(
other(obligations.( BSP.(
3. Offshore!Banks( c. Existence( of( a( victim( is( not( necessary( to(
! Refers(to(the(conduct(of(banking(transactions(in(foreign( determine( whether( an( entity( is( in( illegal(
currencies( involving( the( receipt( of( funds( from( external( banking.(
sources(and(the(utilization(of(such(funds.( C. Authority!of!Supervising!and!Examining!Department!
( ! Department(head(and(examiners(are(authorized(to:(
Authority!to!Engage!in!Banking!and!Quasi'Banking!Functions! a. To( administer( oaths( to( any( person( such( as(
A. Authority!from!Bangko!Sentral!ng!Pilipinas( officer(or(director.(
! No(person(or(entity(shall(engage(in(banking(operations( b. To( compel( the( presentation( or( production( of(
or(quasiPbanking(functions(without(authority(from(BSP.( books,( documents,( papers( or( records( that( are(
! An(entity(authorized(by(the(BSP(to(perform(universal(or( reasonably( necessary( to( ascertain( the( facts(
commercial( banking( the( functions( shall( likewise( have( relative( to( the( true( functions( and( operation( of(
the(authority(to(engage(in(quasiPbanking(functions.( entity.(
! According( to( the( provisions( of( the( Corporation( Code( c. Failure( or( refusal( to( comply( with( the( required(
that:( (a.)( no( article( of( incorporation( or( amendment( to( presentation( within( reasonable( time( shall(
articles( of( incorporation( of( banks,( banking( and( quasiP subject( the( person( responsible( for( penal(
(
8(
!
sanctions( provided( in( the( NCBA( (New( Central( managing( partner,( general( manager,( corporate(
Bank(Act).( secretary,(treasurer(or(inPhouse(counsel.(
D. Extension!of!Examining!Powers( ! Sec(12,(Rule(14(of(Rules(of(Court:(Service(upon(a(private(
! BSP( shall( have( the( authority( to( examine( an( enterprise,( juridical(entity.(When(the(defendant(is(a(foreign(private(
which( is( wholly,( or( majority( owned( or( controlled( bank.( juridical( entity,( service( may( be( on( its( resident( agent(
This(is(available(only(when(BSP(is(examining(a(bank.( designated(in(accordance(with(law.(
E. Certificate!of!Authority!to!Register( B. Strict!Compliance!is!Necessary(
! The(SEC(shall(not(register(the(articles(of(incorporation(of( ! Basic(is(the(rule(that(a(strict(compliance(with(the(mode(
any( bank( or( any( amendment( unless( accompanied( by( a( of(service(is(necessary(to(confer(jurisdiction(of(the(court(
certificate(of(authority(issued(by(Monetary(Board(under( over(a(corporation.((
its(seal.( ! The(officer(upon(who(services(is(made(must(be(one(who(
! Such(certificate(shall(not(be(issued(unless(the(Monetary( is(named(in(the(statute(otherwise(service(is(insufficient.(
Board( is( satisfied( from( the( evidence( submitted( to( it:( ! The( purpose( is( to( render( it( reasonably( certain( that( the(
(RPC)( corporation( will( receive( prompt( and( proper( notice( in(
a. All! Requirements( of( existing( laws( and( action(against(it.(
regulations(to(engage(in(business(for(which(the( ! Serving(of(summons(on(a(branch(manager(is(invalid,(as(
applicant( is( proposed( to( be( incorporated( have( stated( in( the( case( of( BPI( vs.( Spouses( Santiago,( the(
been(complied(with.( service( of( summons( on( BPI’s( Branch( Manager( did( not(
b. Public( Interest( and( economic( conditions( both( bind( the( corporation( for( the( branch( manager( is( not(
general(and(local,(justify(the(authorization.( included( in( the( enumeration( of( the( statute( of( the(
c. Amount( of( Capital,! financing,( organization,( persons( whom( service( of( summons( can( be( validly( be(
direction( and( administration( as( well( as( the( made(in(behalf(of(corporation.(Such(service(is(void.(
integrity( and( responsibility( of( the( organizers( (
and(administrators(reasonably(assure(the(safety( !
of(deposits(and(public(interest.(
!
! The( SEC( shall( not( register( the( byPlaws( of( any( bank(
unless! accompanied! by! a! certificate! of! authority! from! !
BSP.( !
! !
Service!of!Summons!Upon!Banks!
A. Service!under!the!Rules!of!Court(
!
! Sec(11,(Rule(14(of(Rules(of(Court:(Service(upon(domestic( !
private( juridical( entity.( When( the( defendant( is( a( !
corporation,( service( may( be( made( on( the( president,( !
(
9(
!
CHAPTER!2! (
C. Capital!Requirements!
Organization,!Management!and!Administration!of!Banks,! 1. Minimum(capital(prescribed(by(the(Monetary(Board(
Quasi'Banks!and!Trust!Entities! AMOUNTS!
! TYPE!OF!BANK! (In!Million!Pesos)!
( Universal!Banks! 4950.0(
( Commercial!Banks! 2400.0(
(
Thrift!banks! ((
I. Organization!of!Banks! ((((P(With(head(office(within( ((
(
(((((((((((((Metro(Manila( 325.0(
A. Conditions!
((((P(With(head(office(outside( ((
The(Monetary(Board(may(authorize(the(organization(of(a(
bank(or(quasiPbank(subject(to(the(following(conditions:((SPC)( (((((((((((((Metro(Manila( 52.0(
1. That(the(entity(is(a(stock(corporation.( Rural!Banks! ((
2. That(its(funds(are(obtained(from(the(public,(which(shall( ((((P(within(Metro(Manila( 26.0(
mean(twenty((20)(or(more(persons.( ((((P(cities(of(Cebu(and(Davao( 13.0(
3. That(the(minimum(capital(requirements(prescribed(by( ((((P(In(1st,(2nd(&(3rd(class(cities(and( ((
the(Monetary(Board(for(each(category(of(banks(are(
(((((((((((first(class(municipalities( 6.5(
satisfied.(
((((P(in(4th,(5th(&(6th(class(cities(and(in( ((
(
! (((((((((((2nd,(3rd(&(4th(class(( ((
B. Capabilities! (((((((((((municipalities( 3.9(

The(Monetary(Board(shall(take(into(consideration(their( ((((P(in(5th(&(6th(class(municipalities( 2.6(
capability,in,terms,of,their,financial)resources,and,technical) (
expertise,and,integrity.,(FTI)( 2. At(least(25%(of(the(total(authorized(capital(stock(shall(be(
( subscribed(by(the(subscribers(of(the(proposed(bank,(and(at(
The(bank(licensing(process(shall(incorporate(an(assessment( least(25%(of(such(subscription(shall(be(paidPup,(provided(that(
of:( in(no(case(shall(be(the(paidPup(capital(be(less(than(the(
a. The(bank’s(ownership(structure( minimum(required(capital(stated(above.((25%(subscribed(and(
b. Directors(and(senior(management( 25%(of(the(subscribed(shall(be(paid(and(shall(not(be(less(than(
c. Its(operating(plan( the(minimum)(
d. Internal(control( (
e. Its(projected(financial(condition(and(capital(base( (
( (
(
10(
!
( (
( A. Treasury!Stocks!
D. Incorporators/Subscribers/Proposed!Directors!(I/S/PD)! The(GBL(provides(that(no(bank(shall:(
• I,(S(&(PD(P(Must(be(Persons(of(integrity(and(of(good(credit(standing( • Purchase(or(acquire(shares(of(its(own(capital(stock(
in(the(business(community.( • Accept(its(own(shares(as(security(for(a(loan(
• S(P(Must(have(adequate(financial(strength(to(pay(for(their(proposed( Exception:((
subscriptions(in(the(bank.( ( When(authorized(by(the(Monetary(Board.((
• I,(S(&(PD(–(must(not(have(been(convicted(of(any(crime(involving( ( (The(stock(so(purchases(or(acquired(shall,(within(six(months(
from(the(time(of(its(purchase(or(acquisition,(be(sold(or(disposed(of(at(a(
moral(turpitude( public(or(private(sale.)(
• I,(S(&(PD(–(unless(otherwise(allowed(by(law,(are(not(offices(and( !
employees(of(a(government(agency,(instrumentality,(department(or( B. Foreign!Stockholdings!
office(charged(with(the(supervision(of,(or(granting(of(loans(to(banks.( Section(11,(GBL(
( • Foreign(individuals(and(nonPbank(corporations(may(own(or(
***(A(bank(may(be(organized(with(not(less(than(five((5)(nor(more(thank((15)( control(up(to(40%(of(the(voting(stocks(of(a(domestic(bank.(
incorporators.(In(excess(of(15(may(be(listed(among(the(original(subscribers( This(rule(shall(apply(to(Filipinos(and(domestic(nonPbank(
in(the(Articled(of(Incorporation.( corporations.(!
( • The(percentage(of(foreignPowned(voting(stocks(shall(be(
E. Bank!Branches! determined(by(the(citizenship(of(the(individual(
! stockholders.!
1. Universal!or(Commercial!banks!may(open(branches(or(other(offices( • The(citizenship(of(the(corporation(which(is(a(stockholder(in(
within(or(outside(the(Philippines(prior!approval!of!the!Bangko! a(bank(shall(follow(the(citizenship(of(the(controlling(
Sentral.( stockholders(of(the(corporation,(irrespective(of(the(place(of(
2. Branching(by(all!other!banks!shall(be(governed!by!pertinent!laws.( incorporation.!
( “controlling(stockholders”(–(individuals(holding(more(that((
***(A(bank(may(use(any(or(all(of(its(branches(as(outlets(for(the(presentation( 50%(of(the(voting(stock(of(the(corporate(stockholders(of(the(bank.!
and/or(sale(of(the(financial(products(of(its(allied(undertaking(or(of(its( • Commercial(bank(–(at(least(60%(of(voting(stock(shall(be(
investment(house(units.( owned(by(Filipino(citizens.(
***(A(bank(shall(be(responsible(for(all(business(conducted(in(such(branches( • Any(thrift(bank(–(at(least(40%(of(voting(stock(shall(be(owned(
and(offices(to(the(same(extent(and(in(the(same(manner(as(though(business( by(Filipino(citizens.(
had(all(been(conducted(in(the(head(office.( • Rural(bank(–(100%(shall(be(owned(and(held,(directly(or(
***(A(bank(and(its(branches(shall(be(treated(as(one(unit.( indirectly,(by(Filipino(citizens(or(corporations,(associations(
( or(cooperatives(qualified(under(the(Philippine(laws(to(own(
and(hold(such(capital(stock.(
!
(
II. Stockholdings! ***(Control(test(is(applied(in(determining(the(nationality(of(banks.(
(
11(
!
( 5. Is(not!acting!as!a!nominee!or!representative(of(any(director(or(substantial(shareholder(
or( the( bank/quasiPbank/( trust( entity,( any( of( its( related( companies( or( any( of( its(
( substantial(shareholders;(and(
C. Acquisition!of!Voting!Stock!in!a!Domestic!Bank! 6. Is( free! from! any! business! or! other! relations! with! the! institution( or( any( of( its( major(
stockholders(which(could(materially(interfere(with(the(exercise(of(his(judgment.(
Section(73,(GBL(
(
( (
D. Family!Groups!or!Related!Interests! (
Is(formed(when:( B. Directors!of!Merged!or!Consolidated!Banks!
• Stockholdings(of(individuals(related(to(each(other(within(4th( In( the( case( of( a( bank( merger( or( consolidation,( the! number! of!
degree(or(consanguinity(or(affinity,(legitimate(or(commonP directors!shall!not!exceed!twenty'one.!
law;(or( !
• Two(or(more(corporations(owned(and(controlled(by(the( !
same(family(or(same(group(of(persons.( C. Meetings!
( May(be(conducted(through:(
***(such(situations(must(be(fully(disclosed(in(all( • Teleconferencing(
transactions(by(such(corporations(or(related(groups(of( • VideoPconferencing(
persons(with(bank.( ***(Banks(shall(include(in(their(bylaws(a(provision(that(meetings(of(
( board(of(directors(shall(be(held(only(within(the(Philippines.(
( (
III. Board!of!Directors! D. Compensation!and!other!Benefits!of!Directors!and!Officers!
The( Monetary( Board( may( regulate( the( payment( by( the( bank( to( its(
!
directors( and( officers( or( compensation,( allowance,( etc.( only( in(
A. Number!of!Directors(!
exceptional(cases(such(as:((CUU)(
((( At(least(five((5),(and(a(maximum(of(fifteen((15)(members(of(
1. When(a(bank(is(under(comptrollership(or(conservatorship;(
the( board( of( directors( of( bank,( two( (2)( or( whom( shall( be(
2. When(a(bank(is(found(by(the(Monetary(Board(to(be(conducting(
independent(directors.(
( business(in(an(unsafe(or(unsound!manner;(
“Independent( Director”( –( a( person( other( than( an( officer( or( employee( of( the( bank,( its( 3. When( a( bank( is( found( by( the( Monetary( Board( to( be( in( an(
subsidiaries(or(affiliates(or(related(interests.(
unsatisfactory!financial!condition.(
1. Is( not( or( has! not! been! an! officer! or! employee( of( the( bank/quasiPbank/trust( entity,( its(
subsidiaries( or( affiliates( or( related( interests( during( the( past( three( years( counted( from( (
the(date(of(his(election;( (
2. Is( not! a! director! or! officer( of( the( related( companies( of( the( institution’s( majority(
stockholder;(
(
3. Is(not!a!majority!shareholder(of(the(institution,(any(of(its(related(companies,(or(of(its( IV. Fit!and!Proper!Rule!
majority(shareholder;(
4. Is( not! a! relative! within( the( fourth( degree( of( consanguinity( or( affinity,( legitimate( or( !
commonPlaw( of( any( director,( officer( or( majority( shareholder( or( the( bank/quasiP A. Powers!of!the!Monetary!Board!
bank/trust(entity,(or(any(of(its(related(companies;((
The(GBL(provides(for(the(following(rules:(
(
12(
!
1. The(Monetary(Board(shall(prescribe,(pass(upon(and(review(the( agency(for(violation(of(banking(laws,(rules(and(regulations(
qualifications(and(disqualifications(of(individuals(elected(or( or(any(offense/violation(involving(dishonesty(or(breach(or(
appointed(bank(directors(and(disqualify(those(unfit.( trust(and(which(finding(of(said(government(agency(has(
2. After(due(notice(to(the(board(of(directors(of(the(bank,(the( become(final(and(executory.((
Monetary(Board(may(disqualify,(suspend(or(remove(any(bank( (
director(or(officer(who(commits(or(omits(an(act(which(render( b. Temporarily!disqualified!from!being!directors:!
him(unfit(for(the(position( 1. Persons( who( full( refuse( to( ( fully( disclose( the( extent( of( their(
3. CITEE(–(integrity,(experience,(education,(training(and( business(interest(or(any(material(information(to(the(appropriate(
competence(–(of(an(individual(shall(be(considered.( supervising(and(examining(department(when(required(pursuant(
( to(a(provision(of(law;(
B. Disqualifications! 2. Directors( who( have( been( absent( or( who( have( not( participated(
a. Permanently!disqualified!from!being!directors:! for( whatever( reasons( on( more( than( 50%( of( all( meetings,( both(
1. Persons(who(have(been(convicted(by(final(judgment(of(a( regular( and( special,( of( the( board( of( directors( during( their(
court(for(offenses(involving(dishonesty(or(breach(of(trust;( incumbency,( and( directors( who( failed( to( physically( attend( for(
2. Persons(who(have(been(convicted(by(final(judgment(of(a( whatever( reasons( in( at( least( 25%( of( all( boar( meeting( in( any(
court(sentencing(them(to(serve(a(maximum(term(of( year,(except(that(when(a(notarized(certification(executed(by(the(
imprisonment(of(more(than(six(years;( corporate( secretary( has( been( submitted( attesting( the( said(
3. Persons(who(have(been(convicted(by(final(judgment(of(the( directors(were(given(the(agenda(materials(prior(to(the(meeting(
court(for(violation(of(banking(laws,(rules(and(regulations;( and( that( their( decisions( thereon( were( submitted( for(
4. Persons(who(have(been(judicially(declared(insolvent,( deliberations( and( were( taken( up( in( actual( board( meeting,( said(
spendthrift,(or(incapacitated(to(contract;( directors( shall( be( present( in( the( board( meeting.( This(
5. Directors,(officers(or(employees(of(closed(banks,(quasiP disqualification( applies( only( for( purposes( of( the( immediately(
banks/trust(entities(who(were(found(to(be(culpable(for(such( succeeding(election;(
institutions(closure(as(determined(by(the(monetary(board.( 3. Persons(who(are(delinquent(in(the(payment(of(their(obligations.(
**(one(past(due(obligation(to(the(bank(where(he/she(is(a(director(or(office;(at(least(two(
6. Directors(and(officers(of(banks,(quasiPbank(and(trust(entities( obligation(with(other(banks(or(financial(institution)(
found(by(the(monetary(board(as(administratively(liable(for( ***( obligations( shall( include( all( borrowings( obtained( by:( a( director,( spouse( or( child( of(
violation(of(banking(laws,(rules(and(regulations(where(a( the( director,( any( person( person( whose( loan( proceeds( were( used( for( the( benefit( of( a(
director( or( office,( a( partnership( where( a( director( or( his( spouse( is( the( managing( or(
penalty(of(removal(from(office(is(imposed,(and(which( general( partner,( a( corporation,( association( or( ( firms( wholly( owned( ( or( majority( of( the(
finding(of(the(monetary(board(has(become(final(and( capital(stocks(are(owned(by(the(director(or(his(spouse.(
executory;( 4. Persons( who( have( been( convicted( by( a( court( for( offenses(
7. Directors(and(officers(of(banks,(quasiPbanks(and(trust( involving(dishonesty(or(breach(of(trust.(
entities(or(any(person(found(by(the(monetary(board(to(be( 5. Directors(and(officers(of(closed(banks/quasiPbanks/trust(entities(
unfit(for(the(position(of(directors(or(officers(because(they( pending(their(clearance(by(the(Monetary(Board(
were(found(administratively(liable(by(another(government(
(
13(
!
6. Directors( disqualified( for( failure( to( observe( their( duties( and( (
responsibilities(prescribed(under(existing(regulations.( C. Disqualifications/Prohibitions!under!the!Corporation!Code!
7. Directors(who(failed(to(attend(the(special(seminar(for(board(of( Sec.(27,(Corporation(Code(
directors.( This( disqualification( applies( until( the( director( (

concerned(has(attended(such(seminar;( D. Disqualifications/Prohibitions!under!the!NCBA(
8. Persons(dismissed(from(employment(for(cause,(until(they(have( Disqualification(Sec.(9,(NCBA(
cleared(themselves(of(involvement(in(the(alleged(irregularity.( Prohibitions(Sec.(27,(NCBA(
(
9. Those(under(preventive(suspension(
E.!!!Disqualification/Prohibition!under!the!PDIC!Law!
10. Persons( with( derogatory( records( as( certified( by( the( judiciary,(
Sec.(17(PDIC(Law(
NBI,( PNP,( etc.( for( irregularities( that( would( adversely( affect( the(
(
integrity(of(director/officer,(until(they(have(cleared(themselves(
F.!!!!Disqualification/Prohibition!under!RA!7353!
or(after(the(lapse(of(five(years(from(the(time(of(the(complaint.(
Sec.(5,(RA(7353(
11. Directors( and( officers( of( banks,( quasiPbank( and( trust( entities(
(
found( by( the( monetary( board( as( administratively( liable( for(
G. Disqualification/Prohibition! under! Appendix! 38,! Manual! of!
violation(of(banking(laws,(rules(and(regulations(where(a(penalty(
Regulations!for!Banks!
of( removal( from( office( is( imposed,( and( which( finding( of( the(
(
monetary( board( is( pending( appeal( before( the( appellate( court,(
H. Prohibitions!on!Public!Officials!
unless(execution(is(restrained(by(court.(
Sec(19,(GBL(
12. Directors(and(officers(of(banks,(quasiPbanks(and(trust(entities(or(
(
any( person( found( by( the( monetary( board( to( be( unfit( for( the(
(
position( of( directors( or( officers( because( they( were( found(
administratively( liable( by( another( government( agency( for( V. Banking!Days!and!Hours!
violation( of( banking( laws,( rules( and( regulations( or( any( !
offense/violation( involving( dishonesty( or( breach( or( trust( and( A. Number!of!Days!and!Hours!
which( finding( of( said( government( agency( is( pending( appeal( The(GBL(provides(for(the(following(guidelines:(
before( the( appellate( court,( unless( execution( is( restrained( by( 1. Banks(shall(transact(business(on(all(working(days(for(at(least(six(
court.( hours( a( day.( Banks( may( open( for( business( on( Saturdays,(
13. Directors( and( officers( of( banks,( quasiPbank( and( trust( entities( Sundays,(or(holidays(for(at(least(three(hours(a(day.(
found( by( the( monetary( board( as( administratively( liable( for( 2. Banks(which(opt(to(open(on(days(other(than(working(days(shall(
violation(of(banking(laws,(rules(and(regulations(where(a(penalty( report( to( the( Bangko( Sentral( the( additional( days( during( which(
of(suspension(from(office(or(fine(is(imposed,(regardless(whether( they(or(their(branches(or(offices(shall(transact(business.(
the( finding( of( the( monetary( board( final( ( and( executory( or( 3. Working(days(mean(Mondays(to(Fridays,(except(if(such(days(are(
pending( appeal( before( the( appellate( court,( unless( execution( is( holidays.(
restrained( by( court.( The( disqualification( is( in( effect( during( the( (
period(of(suspension(or(so(long(as(the(fine(is(not(fully(paid.( B. Rules!and!Regulations!
(
14(
!
( closure(will(only(be(allowed(in(the(municipality(or(city(where(the(
1. All(banks(shall(observe(for(the(conduct(of(their(business(a( festivities(are(centered.(
regular(banking(week(five(days((Mondays(–(Fridays),(except( 4. Banks( shall( submit( either( individually( or( through( their( head(
when(such(days(are(holidays.(( offices,( to( the( appropriate( supervising( and( examining(
a. For(servicing(deposits(and(withdrawals,(banks(may(remain(open( department( of( the( BSP( a( prior( notice( of( their( intended( closure(
beyond(the(minimum(six(hours,(even(before(8:00am(or(after( on( account( of( a( special( local( festivity,( together( with( a( copy( of(
8:00pm.( the( resolution( of( the( local( bankers( association( approving( said(
b. For(purposes(other(than(servicing(deposits(and(withdrawals,( closure,(at(least(two(days(after(the(date(of(said(resolution.(
banks(may(open(beyond(the(minimum(six(hours(but(in(no(case(
5. The(required(notice(shall(be(supported(by(certification(that:(
shall(such(banking(hours(start(earlier(than(8:00am(nor(extend(
beyond(8:00(pm.(
a. On(the(date(of(temporary(closure,(the(bank(and/or(branch(
c. Branches(of(banks(at(any(international(airport(or(major(fish(port( will( maintain( a( skeletal( force( to( handle( “outPofPtown”(
are(allowed(on(flexible(baking(hours(within(a(twentyPfour(hour( clearing(items(
period(which(shall(in(no(case(be(less(than(six(hours(per(day.( b. The( notice( of( the( bank’s( closure( and( the( reason( thereof(
d. The(banking(days(and(hours(selected(for(each(of(the(offices(of( shall(be(posted(conspicuously(in(the(bank’s(premises(
banks(shall(be(reported(in(writing(to(the(appropriate(supervising( c. For(branches(of(banks,(the(closure(has(the(prior(approval(of(
and(examining(department(of(the(BSP.(Provided,(that(the(change( their(respective(head(offices.(
in(banking(days(and(hours(shall(not(be(made(oftener(than(once( (
every(thirty(days,(except(during(emergencies.( (
e. Notice(on(changes(in(banking(days(and(hours(shall(be(given(
through(the(fastest(means(of(communication,(at(least(seven(days( VI. Automated!Teller!Machines!
before(the(intended(effectivity(in(banking(hours(or(days.( !
f. In(case(the(bank(has(to(pen(outside(or(close(during(the(banking( A. Off'Site!Automated!Teller!Machines!(ATMs)!
hours(or(days(reported(to(the(BSP(due(to(an(emergency,(a(written( Banks( may( establish( offPsite( ATMs,( subject( to( the( following(
report(submitted(within(24(hours(from(opening(or(closing(will( conditions:(
suffice.( 1. Banks(shall(submit(a(report(to(the(appropriated(department(of(
( the(BSP(on(ATMs(which(they(establish;(
2. Subject(to(compliance(with(other(relevant(laws,(banks(may(opt( 2. ATMs(shall(be(installed(in(centers(of(activity(like(supermarkets,(
to(observe(a(banking(week(in(excess(of(five(days(after(reporting( etc.(Provided,(that(security(measures(shall(be(adopted.(
to(the(BSP(the(additional(days(during(which(such(banks(or(their( 3. Only( banks( which( have( shown( general( compliance( with( laws,(
branches( or( offices( shall( transact( business( for( at( least( three( rules(and(regulations(shall(be(allowed(to(open(offPsite(ATMs.(
hours(each(day.( B. Mobile!ATMs!
3. Without( the( need( of( approval( from( BSP,( banks( are( allowed( to( Banks( may( also( establish( mobile( ATM,( subject( to( the( following(
close( on( certain( days( in( celebration( of( important( historical( conditions:(
and/or(religious(event(in(the(locality(where(the(banks(operate:(
Provided,( that( said( closure( has( the( prior( approval( of( the(
banker’s( association( in( the( locality:( Provided( further,( that( said(
(
15(
!
1. The( mobile( ATMs( should( be( allowed( to( visit( only( centers( of( !
activity( as( mentioned( in( Item( A(2)( above( and( should( confine( A. Publication!of!Financial!Statements:!!
their(itinerary(to(Metro(Manila(until(further(notice;( The(following(are(rules(regarding(publication(of(financial(
2. The( bank( shall( secure( insurance( coverage( or( adopt( a( selfP statements:(Sec.(61,(GBL(
insurance( scheme( to( protect( itself( against( losses( of( whatever( (
nature(in(its(immobile(ATM(operations;( **(Every(bank,(quasiPbank(or(trust(entity,(shall(publish(a(statement(
3. The(bank(shall(notify(the(supervising(and(examining(department( of(its(financial(condition(
of( the( BSP( of( the( actual( date( a( mobile( ATM( becomes( (
operational(and(when(no(longer(in(operation.( • such(terms(understandable(to(the(layman((
( • in(such(frequency(as(may(be(prescribed(by(the(Bangko(Sentral(
(
• in(English(or(Filipino(
VII. Independent!Auditor! • at(least(once(every(quarter(in(a(newspaper(or(general(
The(following(are(the(rules(with(respect(to(financial(audit(of(banks:( circulation((in(the(place(where(the(bank(is(located(
( (
1. The(Monetary(Board(may(require(a(bank,(quasiPbank(or(trust(entity( **(In(periods(of(national(and/or(local(emergency(or(of(imminent(panic(
to( engage( the( services( of( an( independent( auditor( to( be( chosen( by( which(directly(threaten(monetary(and(banking(stability,(the(Monetary(
the( bank,( quasiPbank( or( trust( entity( concerned( from( a( list( of( Board,(by(a(vote(of(at(least(five(of(its(members,(in(special(cases(and(upon(
certified(public(accountants(acceptable(to(the(Monetary(Board.( application(of(the(bank,(quasiPbank(or(trust(entity,(may(allow(such(bank,(
2. The( term( of( the( engagement( shall( be( prescribed( by( the( Monetary( quasiPbank(or(trust(entity(to(defer(for(a(stated(period(of(time(the(publication(
Board(which(may(either(be(on(a(continuing(basis(where(the(auditor( of(the(statement(of(financial(condition(required(herein.(
shall( act( as( resident( examiner,( or( on( the( basis( of( special( (
engagements,( but( in( any( case,( the( independent( auditor( shall( be( (
responsible( to( the( bank’s,( quasiPbank’s( or( trust( entity’s( board( of( IX. Publication!of!Capital!Stock!
directors.( A( copy( of( the( report( shall( be( furnished( to( the( Monetary(
Board.( !
3. The( Monetary( Board( may( also( direct( the( board( of( directors( of( a( A(bank,(quasiPbank(or(trust(entity(shall(shot(publish(the(amount(of(its(
bank,( quasiPbank,( trust( entity( and/or( the( individual( members( authorized(or(subscribed(capital(stock(without(indicating(at(the(same(
thereof,(to(conduct,(either(personally(or(by(a(committee(created(by( time(and(with(equal(prominence,(the(amount(of(its(capital(actually(paidP
the(board,(an(annual(balance(sheet(audit(of(the(bank,(quasiPbank(or( up.(
trust( entity( to( review( the( internal( audit( and( control( system( of( the( (
bank,( quasiPbank( or( trust( entity( and( to( submit( a( report( of( such( X. Settlement!of!Disputes!
audit.( !
( A. Unsettled!Labor!Disputes!
VIII. FINANCIAL!STATEMENTS!
(
16(
!
Any(strike(or(lockout(involving(banks,(if(unsettled(after(seven( CHAPTER(3(
calendar(days(shall(be(reported(by(the(Bangko(Sentral(to(the(
Deposit(Function(of(Banks(
Secretary(of(Labor(who(may(assume(jurisdiction(over(the( (
dispute(and(decide(it(or(certify(the(same(to(the(NLRC(for(
• Kinds!of!Deposits!
compulsory(arbitration.(However,(the(President(may(intervene(
(
and(assume(jurisdiction(over(such(labor(dispute(in(order(to( 1)!Demand!Deposits(–(all(those(liabilities(of(the(Bangko(Sentral(and(of(other(
settle(or(terminate(the(same.( banks( which( are( denominated( in( Philippine( currency( and( are( subject( to(
( payment(in(legal(tender(upon(demand(by(the(presentation(of((depositor’s)(
B. Reports!of!Strike!and!Lockouts! checks.(
( (
The(bank(shall(disclose(the(following(pertinent(information(on( • Universal( and( Commercial( banks( may( create( or( accept( demand(
the(strike/lockout:( deposits( subject( to( withdrawal( by( check( WITHOUT( prior( authority(
a. Cause(of(the(strike/lockout(and(bank(management’s( from(BSP.(
position(on(its(legality;(( • Thrift( Bank,( Rural( Bank,( Cooperative( Bank( may( create( or( accept(
b. Bank(operations(affected.( demand( deposits( subject( to( withdrawal( by( check( WITH( prior(
authority(from(BSP.(
(
(
XI. Laws!Governing!Other!Types!of!Banks! Manner(of(making(the(deposit(
! (
• Thrift(banks(–(Thrift(Banks(Act( In(Philippine,Bank,of,Commerce,vs,CA(the(Supreme(Court(observed:(
• Rural(Bank(–(Rural(Banks(Act( (
• Cooperative(–(Cooperative(Code( ( In( the( ordinary( and( usual( course( of( banking( operations,( current(
• Islamic(Banks(–(special(laws( account( deposits( are( accepted( by( the( bank( on( the( basis( of( deposit( slips(
( prepared( and( signed( by( the( depositor,( or( the( latter’s( agent( or(
**(GBL(shall(likewise(apply(to(thrift(banks,(rural(banks(and(cooperative( representative,(who(indicates(therein(the(current(account(number(to(which(
banks(insofar(as(they(are(not(in(conflict.( the(deposit(is(to(be(credited,(the(name(of(the(depositor(or(current(account(
( holder,( the( name( of( the( deposit( and( the( amount( of( the( deposit( either( in(
**(GBL(shall(govern(for(purposes(of(prescribing(the(minimum(ratio(which( cash( or( checks.( The( deposit( slip( has( an( upper( portion( or( stub,( which( is(
the(net(worth(of(a(thrift(bank(must(bear(to(its(total(risk(assets.( detached( and( given( to( the( depositor( or( his( agent;( the( lower( portion( is(
( retained( by( the( bank.( In( some( instances( however,( the( deposit( slips( are(
( prepared( in( duplicate( by( the( depositor.( The( original( of( the( deposit( slip( is(
( retained( by( the( bank,( while( the( duplicate( copy( is( returned( or( given( to( the(
( depositor.(
(
17(
!
( Peso( demand( deposit( accounts( maintained( by( foreign( correspondent(
Regulations(on(Temporary(Overdrawings(and(Drawings(against(Uncollected( banks(with(commercial(banks(shall(NOT(be(subject(to(the(abovePmentioned(
Deposits((DAUD)( regulations(PROVIDED:(
( • The( maintenance( of( nonPresident( correspondent( bank’s( peso(
TEMPORARY( OVERDRAWINGS( against( current( account( SHALL( NOT( checking( accounts( and( overdrawings( therefrom( are( covered( by(
BE( ALLOWED,( UNLESS( caused( by( normal( bank( charges( and( other( fees( reciprocal(arrangement(
incidental(to(handling(such(accounts.( • Temporary(overdrawings(are(covered(within(15(days(from(the(date(
( overdrawings(are(incurred(
Violation:( • Such( accounts( are( credited( only( through( foreign( exchange( inward(
• Fine(of(onePtenth(of(one(percent((1/10(of(1%)(per(day(of(violation,( remittance(
computed( on( the( basis( of( the( amount( of( overdrawing( or( fines( in( (
amounts(as(may(be(determined(by(the(Monetary(Board,(but(not(to( DRAWINGS( AGAINST( UNCOLLECTED( DEPOSITS( (DAUDs)( shall( be(
exceed(P30,000(a(day(for(each(violation(whichever(is(lower.( PROHIBITED( except( when( the( drawings( are( made( against( uncollected(
( deposits( representing( manager’s/cashier’s/treasurer’s( checks,( treasurer(
Technical( overdrawings( arising( from( “force( posting”( in( clearing( warrants,(postal(money(orders(and(duly(funded(“on(us”(checks(which(may(
checks(shall(be(debited(banks(under(“Returned,Checks,and,Other,Cash,Items, be(permitted(at(the(discretion(of(each(bank.(
Not, in, Process, of, Collection”, which( is( part( of( “Other( Assets”( in( the( (
Statement( Condition.( Items( to( be( lodged( under( this( account( shall( consist( Current(Accounts(of(Banks(Officers(and(Employees(
only( of( inPclearing( checks( which( may( result( in( “technical( overdrawn”( (
accounts( and( shall( immediately( reversed( in( the( following( day.( The( checks( ( The(following(officers(and(employees(of(banks(are(PROHIBITED(from(
lodged( under( “Returned( Checks( etc.”( shall( either( be( returned( or( honored( maintaining(demand(deposits(or(current(accounts(with(the(banking(office(in(
the(following(day(before(clearing.(The(items(to(be(used(as(cover(for(honored( which(they(are(assigned:(
checks(should(only(consist(of(any(of(the(following:( • All(officers(
• Cash( • Employees(of(the(bank’s(cash(department/(cash(units(
• Cashier’s,(Manager’s(or(Certified(Checks( • Other( employees( who( have( direct( and( immediate( responsibility( in(
• Bank(Drafts( the( handling( of( transactions( and/or( records( pertaining( to( demand(
• Postal(Money(Orders( deposits(or(current(accounts.(
• Treasury(Warrants( • Includes( spouses( and( relatives( within( second( degree( of(
• Duly(funded(“On(us”(checks( consanguinity(and(affinity(
• Fund(transfers(or(credit(memos(within(the(same(bank(representing( (
proceeds(of(loans(granted(under(existing(regulations( Check(–(is(a(bill(of(exchange(drawn(on(a(bank(payable(on(demand.(
NOTE:! • Fixed( savings( and( current( deposits( of( money( shall( be( governed( by(
the(provision(so(simple(loan(
(
(
18(
!
Duty(of(Banks(to(honor(checks( ( In(State,Investment,House,vs,IAC,(the(SC(enumerated(the(different(
• Banks(are(bound(to(honor(checks(to(the(extent(of(the(amount(of(his( effects(of(crossing(a(check:(
(the(depositor)(deposits.( 1. That(the(check(may(not(be(encashed(but(only(deposited(in(the(bank(
• Failure( of( the( bank( to( honor( –( entitles( ( the( drawer( to( substantial( 2. That( the( check( may( be( negotiated( only( once( –( to( one( who( has( an(
damages(without(any(proof(of(actual(damages( account(with(a(bank(
• Banks( must( ensure( that( the( amount( of( the( check( should( be( paid( 3. That(the(act(of(crossing(the(check(serves(as(a(warning(to(the(holder(
only(to(its(designated(payee.(The(fact(that(the(drawee(bank(did(not( that( the( check( has( been( issued( for( a( definite( purpose( so( that( such(
discover(the(irregularity(seasonably(constitutes(negligence.( holder(must(inquire(if(the(check(has(been(received(pursuant(to(that(
( purpose.(
Responsibility(of(Drawer( (
• The( drawer( must( personally( keep( track( of( his( available( balance( in( Cashier’s( Check( –( is( really( the( bank’s( own( check( and( may( be( treated( as( a(
the(bank.( promissory(note(with(the(bank(as(the(maker.(
( • In(New,Pacific,Timber,and,supply,Co.,Inc.,vs,Señeris(–(cashier(check(
Duty(of(Banks(to(Know(Signatures( is(deemed(as(cash(
• A(bank(is(bound(to(know(the(signatures(of(its(customers( (
• If( it( pays( a( forged( check,( it( must( be( considered( as( making( the( SetPoff(
payment( out( of( its( own( funds( and( cannot( ordinarily( charge( the( • A( bank( may( debit( the( personal( account( of( a( depositor( for( an(
amount( so( paid( to( the( account( of( the( depositor( whose( name( was( amount(erroneously(credited(to(the(depositor’s(sole(proprietorship(
forged.( account( because( the( latter( being( a( sole( proprietorship( has( no(
( separate(and(distinct(personality(from(the(depositor.(
Banks(are(under(no(obligation(to(make(part(payment(on(a(check,(up(to(only( • Art.(1980(and(Art.(1278(of(the(Civil(Code(
the(amount(of(the(drawer’s(funds.( • The( law( imposes( a( duty( of( diligence( on( the( collecting( bank( to(
( scrutinize(checks(deposited(with(it,(for(the(purpose(of(determining(
Banks(are(under(no(duty(to(make(up(deficiency(from(the(savings(account.(If( their(genuineness(and(regularity.(
a( depositor( has( 2( accounts( with( a( bank,( an( open( account( and( a( savings( • Crossing( of( the( check( with( the( phrase( “Payee’s( Account( Only”( is( a(
account,( and( draws( a( check( upon( the( open( account( for( more( money( than( warning(that(the(check(should(be(deposited(only(in(the(account(of(
the(account(contains.( the(payee.(It(is(the(duty(of(the(bank(to(ascertain(it.(
( (
Checks(do(not(have(legal(tender(power(and(their(acceptance(in(the(payment( Relationship(of(payee(or(holder(and(the(bank((
of(debts(is(at(the(option(of(the(creditor.( • Principal(and(agent.(
( • The(bank(which(receives(such(paper(for(collection(is(the(agent(of(the(
Effects(if(a(cross(check( payee(or(holder.(
( (
Encashment(of(checks(
(
19(
!
• Banking( business( requires( that( the( one( who( first( cashes( and( • Date(
negotiates(the(check(must(take(some(precautions(to(learn(whether( • Name(and(address(of(the(depositors(
or(not(it(is(genuine.( • Deposit(slip(no.s(
( • Amount(of(deposit(
2)!Savings!Deposits! • Savings(account(and(passbook(numbers(
( • Name( and( signature( of( solicitor( rendering(
Servicing(deposits( the(report(
• Banks( may( be( authorized( by( the( BSP( to( solicit( and( accept( deposits( ! Depositors( shall( be( required( to( accomplish( a(
outside(their(bank(premises,(subject(to(ff:(conditions:( SIGNATURE(CARD(when(opening(an(account(–(used(
1. The( financial( condition( of( the( banks( is( sound( and( the( as( a( reference( in( checking( the( genuineness( and(
operations( and( the( quality( of( the( management( thereof( authenticity(of(signatures(in(withdrawals(
could(reasonably(assure(the(safety(of(the(funds(which(may( ! Deposits/withdrawals( shall( be( recorded( by( the(
be(entrusted(to(its(deposit(collectors(and/or(agents( bookkeeper(or(any(ledger(clerk(
2. Proposed(area(is(clearly(defined( ! At( the( end( of( each( month,( depositors( shall( be(
3. Solicitation( shall( be( only( confined( within( a( locality( where( advised( IN( WRITING( if( the( balances( of( their(
there( are( NO( BANKS( IN( OPERATION( or( ( where( it( can( be( deposits.(Advise(slips(shall(NEVER(be(handcarried(by(
established( that( the( deposit( potentials( in( the( said( locality( the(solicitor(themselves(
are(still(untapped( ! Place( of( assignments( of( banks( solicitors( shall( be(
4. Institute(and(maintain(following(minimum(safeguards:( rotated(at(least(quarterly.(
! Deposit( solicitors( shall( be( initially( bonded( for( at( (
least( P1,000( subject( to( the( increase( thereof( to( Individual(and(Joint(accounts(
approximate(their(daily(collections( (
! Deposit( solicitors( shall( be( provided( with( proper( Joint(account(–(may(be(an(“and”(account(or(an(“and/or”(account(
identification(cards(with(photograph(and(signature,( • “And”( account( –( signature( of( BOTH( coPdepositor( are( required( for(
certified(by(appropriate(officer(of(the(bank( withdrawal(
! Secure(adequate(insurance(coverage(for(funds( • “And/or”(account(–(either(one(of(the(coPdepositors(may(deposit(and(
! Deposit(slips(shall(be(in(booklet(form,(prenumbered( withdraw( from( the( account( without( the( knowledge,( consent( and(
and(in(triplicate((3)(copies.(The(original(issued(to(the( signature(of(the(other.(
depositor,( second( used( for( posting( reference( and( (
third(retained(in(the(booklet.( Withdrawals(
! All(collections(shall(be(turned(over(to(the(cashier(at( • Banks( are( prohibited( from( issuing( or( accepting( withdrawal( slips(
the(end(of(each(day(accompanied(by(a(COLLECTION( without(requiring(depositors(concerned(to(present(their(passbooks(
SUMMARY( REPORT( which( shall( contain( the( except(for(banks(authorized(by(BSP.(
following(information.(
(
(
20(
!
NOTE:(There(is(now(law(mandating(banks(to(call(up(their(clients(whenever( Reform(Fund(Commission(with(interest(lower(than(the(rate(allowed(
their(representatives(withdraw(significant(amounts(from(their(accounts.( on(time(deposits(accepted(from(the(general(public.(
! (
3)!Negotiable!Order!of!Withdrawal!(NOW)!Accounts! Rules(regarding(issuance(of(Certificates(of(Time(Deposit((CTD)(
( • Negotiable(Certificates(on(Time(Deposit((NCTD)(
NOW( accounts( –( interest( bearing( accounts( that( combine( the( payable( on( o Universal/Commercial( Banks( may( issue( WITHOUT( prior(
demand(feature(of(checks(and(investment(feature(of(savings(account.( approval(of(BSP(
• Universal/Commercial( Bank( may( offer( NOW( accounts( WITHOUT( o Thrift/Rural/Cooperative(Banks(may(issue(UPON(THE(PRIOR(
prior(authority(of(the(monetary(board( approval(of(BSP(
• Thrift/Rural/Cooperative(Bank(may(offer(UPON(prior(approval(of(the( • NonPNegotiable(Certificates(of(Time(Deposit(
monetary(board.( o Bank( may( issue( longPterm( nonPnegotiable( taxPexempt(
( certificates( to( time( deposit( without( prior( approval( of( the(
Rules(on(servicing(NOW(accounts( BSP(
• Prior( to( or( simultaneous( with( the( opening( of( a( NOW( account,( the( (
bank(shall(inform(the(depositor(of(its(terms(and(conditions( 5)!Deposit!Substitute!Operations!(Quasi'Banking!Functions)!
• Banks( shall( be( responsible( for( the( proper( identification( of( its( (
depositors( and( require( 2( specimen( signatures( and( such( other( Elements:(
pertinent(information( 1. Borrowing(funds(for(the(borrower’s(own(account(
• Deposit(shall(be(covered(by(deposit(slips(in(duplicate(duly(validated( 2. 20(or(more(lenders(at(any(one(time(
and(initialed(by(the(teller(received(the(deposit( 3. Methods(of(borrowing(are(issuance,(endorsement(or(acceptance(of(
• NOW( accounts( shall( be( kept( and( maintained( separately( from( the( debt(instruments(of(any(kind(
regular(savings(deposits( 4. Purpose( of( which( is( relending( or( purchasing( receivables( or( other(
• Blank(NOW(forms(shall(be(prenumbered(and(shall(be(controlled(as( obligations(
in(the(case(of(unissued(blank(checks( (
• A(bank(statement(shall(be(sent(to(each(depositor(at(the(end(of(each( NOTE:((
month(for(confirmation(of(balances( 1. Borrowing( shall( refer( to( all( forms( of( obtaining( or( raising( funds(
• Banks(must(use(the(form(prescribed(by(the(present(rules(for(NOW( through(any(of(the(methods(and(for(any(purposes(provided(in(no.4(
accounts.( above(
( 2. Purchasing( receivables( or( other( obligations( shall( refer( to( the(
4)! Time! Deposits! –( one( the( payment( of( which( cannot( legally( be( required( acquisition(of((claims(collectible(in(money(
within(such(a(specified(number(of(days.( 3. Relending(shall(refer(to(the(extension(of(loans(by(an(institution(with(
• Time(deposits(shall(be(issued(for(a(specific(period(of(term( antecedent( borrowing( transactions.( Relending( is( presumed( when(
• Authority( shall( be( automatically( granted( to( any( accredited( banking( the(institution(is(regularly(engaged(in(lending(
institution( to( accept( SPECIAL( TIME( DEPOSITS( from( the( Agrarian(
(
21(
!
4. Regularly(engaged(in(lending(shall(refer(to(the(practice(of(extending( 6. Central(Bank(may(pay(interest(on(the(foreign(currency(deposit(and(if(
loans,(advances,(discounts(or(rediscounts(as(a(matter(of(business( requested(shall(exchange(the(foreign(currency(notes(and(coins(into(
( foreign(currency(instruments(drawn(on(its(depository(banks.(
( (
6)!Foreign!Currency!Deposits! Depository( banks( on( account( of( networth,( resources,( past( performance( or(
( other( pertinent( criteria,( have( been( qualified( by( the( Monetary( board( to(
Authority(to(deposit(foreign(currencies( function( under( an( expanded( foreign( currency( deposit( system( shall( be(
P(Any(person(may(deposit(with(such(Phil.(Banks(in(good(standing.( exempt(in(no.2(above.(
( (
Authority(of(Banks(to(accept(foreign(currency(deposits:( There(is(no(restriction(on(the(withdrawal(by(the(depositor(of(his(deposit(or(
• Banks(designated(by(Central(Bank(shall(have(the(authority(to:( on( the( transferability( of( the( same( abroad( EXCEPT( those( arising( from( the(
1. Accept( Deposits( and( to( accept( foreign( currencies( in( trust.( contract(bet.(the(depositor(and(the(bank.(
Numbered( accounts( for( recording( and( servicing( of( said( (
deposits(are(allowed.( 7)!Anonymous!and!Numbered!Accounts(–(should(not(be(allowed(
2. Issue(certificates(to(evidence(such(deposits.( (
3. Discount(said(certificates( In( case( where( numbered( accounts( are( allowed,( banks( or( financial(
4. Accept( said( deposits( as( collateral( for( loans( subject( to( such( institutions(should(ensure(that(the(client(is(identified(in(an(official(or(other(
rules(and(regulations( identifying(documents.(
5. Pay(interest(in(foreign(currency(on(such(deposits( (
( Related(Laws:((
Foreign(Currency(Cover(Requirements:( • Art(178(RPC(
Depository(banks(shall:( • Art(379,(Art(380(of(Civil(Code(
1. Maintain( at( all( times( a( 100%( foreign( currency( cover( for( their( • Commonwealth(Act(142(as(amended(by(Republic(Act(No.(6085(
liabilities( !
2. Of(which(cover(at(least(15%(shall(be(in(the(form(of(foreign(currency( • Administration!of!Deposits!
deposit(with(the(Central(Bank( (
3. The(balance(in(the(form(of(the(foreign(currency(loans(or(securities,( All( banking( institutions( are( required( to( set( a( minimum( of( 3( specimen(
which(loan(or(securities(shall(be(of(shortPterm(maturities(and(readily( signatures(to(be(simultaneously(required(from(each(of(their(depositors(and(
marketable( to( update( the( specimen( signatures( of( their( depositors( every( 5( years( or(
4. Such( foreign( currency( loans( may( include( loans( to( domestic( sooner.(
enterprises(which(are(exportPoriented(or(registered(with(the(Board( (
of(Investments( • BSP( Circular( No.( 564( Series( of( 2007( provides( for( a( valid( list( of(
5. Foreign(Currency(cover(shall(be(in(the(same(currency(as(that(of(the( identification(cards(
corresponding(foreign(currency(deposit(liability(
(
22(
!
• Students( who( are( beneficiaries( of( an( OFW( and( not( on( voting( age( earn(an(interest(or(yield(from(maturity(to(actual(withdrawal(or(renewal(at(a(
shall(be(required(of(2(valid(ID( rate(applicable(to(a(deposit(substitute(with(a(maturity(of(15(days.(
• The(requirement(on(presenting(2(valid(IDs(shall(on(1(time(basis(only( (
or(at(the(commencement(of(business(relationship.( All( deposits( and( withdrawals( during( regular( banking( hours( shall( be(
• Financial(transactions(may(include(remittances( credited( or( debited( to( deposit( liability( accounts( on( the( day( receipt( or(
( payment(thereof.(
Minors( are( vested( with( special( capacity( and( power( to( make( savings( or( Provided:!
time( deposits( with( and( withdraw( the( same( as( well( as( receive( interest( That(a(bank(may(set(clearing(cutPoff(time(for(its(head(office(not(earlier(
thereon.(( than( 2( hours( before( the( start( of( clearing( at( BSP( and( not( earlier( than( 3½((
Requirements:( hours(before(the(start(of(clearing(of(all(its(branches,(agencies(and(extension(
• At(least(7(years(of(age( offices(
• Able(to(read(and(write( Provided!further:(
• Sufficient(discretion( That( banks( which( are( located( in( areas( where( there( are( no( BSP(
• Not(otherwise(disqualified(by(any(other(incapacity( regional/clearing( arrangements( may( set( a( clearing( cutPoff( time( not( earlier(
than( 2( hours( before( the( start( of( their( local( clearing( after( which( time(
(
deposits(received(shall(be(booked(likewise(as(hereinafter(provided.(
If(a(guardian(shall(give(notice(in(writing(to(any(thrift(bank(not(to(make(
(
payments(of(deposits(dividends(or(interest(to(the(minor(of(whom(he(is(the(
Cash( deposits( received( after( the( selected( clearing( cutPoff( time( shall( be(
guardian,(then(such(payment(shall(be(made(only(to(the(guardian.(
booked(s(deposits(on(the(day(of(receipt.(
(
(
Corporations(may(open(bank(accounts(as(follows:(
Deposits( on( checks( including( “on( us”( checks( etc.( may( be( booked( as(
1) Incorporation(Stage(
deposits(on(the(day(of(receipt.(
2) Post(Incorporation(
(
(
Deposits( received( after( the( close( of( the( regular( banking( hours( shall( be(
Interest(or(yield(on(time(deposit/deposit(substitute(may(be(paid(at(the(
booked(as(deposits(the(following(banking(day.(
maturity( or( upon( withdrawal( or( in( advance( PROVIDED,( it( shall( not( exceed(
(
the(interest(in(1(year.(
Banks(impose(and(collect(service(charges(on(savings(and(demands(deposits(
(
that(fall(below(the(required(minimum(monthly(average(daily(balance((ADB)(
A( time( deposit( not( withdrawn( or( renewed( on( its( due( date( shall( be(
subject(to(ff:(conditions:(
treated( as( a( savings( deposit( and( shall( earn( interest( from( maturity( to( the(
• The( imposition( of( such( charges( is( clearly( stated( among( the( terms(
date( of( actual( withdrawal( or( renewal( at( a( rate( applicable( to( savings(
and(conditions(of(the(depositor(
deposits.(
• The( rate( or( amount( of( such( charges( or( fees( is( properly( disclosed(
Deposit( substitute( instrument( not( withdrawn( or( renewed( on( its(
among(the(terms(and(conditions(of(the(deposit(
maturity( date( shall( from( said( date( become( payable( on( demand( and( shall(
(
23(
!
• The( deposit( account( balances( have( fallen( below( the( required( • Survivorship, agreement, not, invalid, per, se, but, may, be, violative, of,
minimum( monthly( ADB( for( dormant( account( and( for( at( least( 2( law,(such(instances:(
consecutive(months(for(active(accounts( P(a(mere(cloak(to(hide(an(inofficious(donation(
• The( required( minimum( monthly( ADB( of( deposits( are( properly( P(to(transfer(property(in(fraud(of(creditors(
disclosed(among(the(terms(and(conditions(of(the(deposit.( P(to(defeat(the(legitime(of(a(forced(heir(
( (
Any(change(in(the(terms(and(conditions(for(the(imposition(of(service( IV.(Nature(of(Bank(Deposits(
charges(and/or(maintenance(fees(shall(take(effect(only(after(due(notice( (
to(the(depositor.( A. Nature(
PROVIDED! (
Information( by( regular( mail,( electronic( mail,( statement( of( account( 1. Fixed,( savings( and( current( deposits( of( money( in( banks( and( similar(
messages( or( alternative( modes( of( communication( on( the( depositor’s( institutions(are(the(true(deposits(and(are(considered(simple(loans.(
last( known( address( at( least( 60( days( prior( to( implementation( shall( be( 2. Irregular( deposits( in( nature( for( they( are( really( loans( because( they(
considered(sufficient(notice.( earn(interest.(
PROVIDED!FURTHER! P( In( reality:( depositor( is( the( creditor( while( bank( is( the(
Failure(of(the(depositor(to(manifest(or(register(his(objection(to(the( debtor.(
new(service(within(30(days(from(receipt(shall(be(deemed(acceptance(of( P(Failure(of(the(bank(to(honor(the(time(deposit(is(failure(to(
such(changes( pay(its(obligation(as(a(debtor((((((((((((and(not(a(breach(of(trust(
( arising( from( a( depository’s( failure( to( return( the( subject(
( Banks( shall( likewise( post( said( information( on( their( respective( matter(of(the(deposit.(
websites,( ATM( onPscreen( messages( and( in( conspicuous( places( ( within( 3. The( relationship( between( the( depositor( and( the( Savings( and( Loan(
the(bank(premises(at(least(60(days(prior(to(implementation.( Association(is(that(of(creditor(and(debtor.(
( P( Bank( has( the( obligation( to( return( the( amount, deposited,(
III.(Survivorship(Agreement( however,(it(has(no(obligation(to(return(or(deliver(the(same,
( money(that(was(deposited.((Principle(of(NonPFungible)(
P when( joint( (and( several)( owners( of( a( deposit( agree( that( either( of( P( Failure( of( the( bank( the( amount( deposited( will( not(
them(could(withdraw(any(part(or(the(whole(of(said(account(during( constitute( estafa( through( misappropriation( but( it( will( only(
the( lifetime( of( both( and( the( balance,( if( any,( upon( the( death( of( give(rise(to(civil(liability.(
either,(belonged(to(the(survivor.( 4. The(contract(between(the(bank(and(its(depositor(is(governed(by(the(
P an( ALEATORY( CONTRACT( (Art.( 1790),( by( which( the( mutual( provisions(of(the(Civil(Code(on(simple(loan.(
agreement( of( the( joint( depositors( permitting( either( of( them( to( 5. A( bank( ultimately( acquires( ownership( of( the( deposits( but( such(
withdraw( the( whole( deposit( during( their( lifetime( and( transferring( ownership( is( coupled( with( a( corresponding( obligation( to( pay( the(
the(balance(to(the(survivor(upon(the(death(of(one(of(them.( depositor(an(equal(amount(on(demand.(
( P( A( bank( does( not( have( unilateral( right( to( freeze( the(
accounts(of(depositor(based(on(its(mere(suspicion,(granting(
(
24(
!
such( rights( would( open( the( floodgates( of( public( distrust( in( “If(a(bank(has(knowledge(of(death(of(a(person,(
banking(industry.((BPI(Family(Bank(vs.(Franco)( who(maintained(a(bank(deposit(account(alone,(it(
( shall(not(allow(any(withdrawal(from(the(said(
B. SetPOff( deposit(account,(UNLESS(the(Commissioner(has(
( certified(the(taxes(imposed(thereon(by(this(title(
General( Rule:( When( a( depositor( is( indebted( to( a( bank,( and( the( have(been(paid:(Provided,(however,(that(the(
debts( are( mutual,( the( bank( may( apply( the( deposit( or( such( portion( administrator(of(the(estate(or(any(one(of(the(heirs(
thereof(as(may(be(necessary(to(the(payment(of(the(debt(due(it(by( of(decedent(may(upon(authorization(by(the(
the(depositor.( Commissioner,(withdraw(an(amount(not(
( exceeding(P20,000(without(the(said(certification.”(
Exception:( (
( P(There(is(no(express(agreement.( VI.!Secrecy!of!Bank!Deposits!
( P( The( deposit( is( not( specifically( applicable( to( some( other( (
particular(purpose.( A. Purposes(
V.(Duties(of(Banks( 1. To(give(encouragement(to(the(people(to(deposit(their(money(in(
( banking(institutions.(
A. Meticulous(Care( 2. To(discourage(private(hoarding(so(that(the(same(may(be(utilized(
P(Knowing(the(signatures(of(its(clients.( by( banks( in( authorized( loans( to( assist( in( the( economic(
P( Depositors( are( not( estopped( from( questioning( wrongful( development(of(the(country.(
withdrawals,( even( if( they( failed( to( question( those( errors( in( the( (
statements(sent(by(the(bank(to(them(for(verification.( B. Privacy(
( P( Civil( Code( provides( that( “every( person( shall( respect( the( dignity,(
B. Payment(to(Proper(Party( personality,( privacy( and( peace( of( mind( of( his( neighbors( and( the(
P(The(bank(has(no(right(to(pay(to(persons(other(than(those(in(whose( other( persons”( and( punishes( as( actionable( torts( several( acts( for(
favor(the(obligation(was(constituted(or(whose(right(or(authority(to( meddling(and(prying(into(the(privacy(of(another.(
receive(payment(is(indisputable.( P( It( also( holds( public( officer( or( employee( or( any( private( individual(
P(Payment(made(by(the(debtor((bank)(to(the(wrong(party(does(not( liable( for( damages( for( any( violation( of( the( rights( and( liberties( of(
extinguish( the( obligation( as( to( the( creditor( (depositor)( who( is( another( person,( and( recognizes( the( privacy( of( letters( and( other(
without(fault(or(negligence,(even(if(the(debtor(acted(in(utmost(good( private(communications.(
faith( and( by( mistake( as( to( the( person( of( the( creditor( or( through( (
error(induced(by(fraud(of(a(third(person.( C. Absolute(Confidentiality(
( P(All(deposits(of(whatever(nature(with(banks(or(banking(institutions(
C. In(Case(of(Death(of(Depositor( in( the( Philippines( are( considered( as( of( an( absolutely( confidential(
National(Internal(Revenue(Code(provides:(
(
25(
!
nature( and( may( not( be( examined,( inquired( or( looked( into( by( any( 4. In(cases(where(the(money(deposited(or(invested(is(the(subject(
person,(government(official,(bureau(or(office.( matter(of(litigation(
( (
1. Prohibition( against( inquiry( into( or( disclosure( of( deposits( under( B. Garnishment(
republic(Act(No.(8367((An,Act,Providing,for,the,Regulation,of,the, P(A(legal(proceeding(by(which(the(officer(may(levy(on(debts(due(the(
Organization, and, Operation, of, NonKStock, Savings, and, Loan, judgment( obligor( and( other( credits,( including( bank( deposits,(
Associations)( –( all( deposits( of( whatever( nature( are( considered( financial( interests,( royalties,( commissions( and( other( personal(
absolutely( confidential( in( nature( EXCEPT,( (1)( upon( written( property(not(capable(of(manual(delivery(in(the(possession(or(control(
permission( of( the( depositor;( (2)( in( cases( of( impeachment;( (3)( of(third(parties.(
upon( order( of( a( competent( court( in( cases( of( bribery( or( P(Levy(shall(be(made(by(serving(NOTICE(upon(the(person(owing(such(
dereliction(of(duty(of(public(officials;(and((4)(in(cases(where(the( debts( or( having( in( his( possession( or( control( such( credits( to( which(
money(deposited(or(invested(is(the(subject(matter(of(litigation.( the(judgment(obligor(is(entitled.(
( P( The( garnishment( shall( cover( only( such( amount( as( will( satisfy( the(
2. Foreign(Currency(Deposits( judgment(and(all(lawful(fees.(
P(All(foreign(currency(deposits(are(of(an(absolutely(confidential( (
in( nature( EXCEPT,( upon( the( written( permission( of( the( • Property(exempt(from(execution/garnishment:(
depositors.( 1. Family(home(or(the(homestead(in(which(he(resides.(
P(It(shall(be(exempt(from(attachment,(garnishment(or(any(other( 2. Ordinary( tools( and( implements( personally( used( in( his( trade,(
order( or( process( of( any( court,( legislative( body,( government( employment(or(livelihood.(
agency(or(any(administrative(body(whatsoever.( 3. Three( horses,( or( (3)( cows,( or( (3)( carabaos,( or( there( beasts( of(
( burden(necessarily(used(by(him(in(his(ordinary(occupation.(
3. Confidentiality(of(Deposits(in(Islamic(Banks( 4. Necessary( clothing( and( articles( for( ordinary( personal( use,(
P(All(deposits(of(whatever(nature(are(confidential(EXCEPT:( excluding(jewelry.(
1. inspection(by(the(bank’s(auditor( 5. Household( furnitures( and( utensils( used( for( housekeeping( not(
2. upon(written(permission(by(the(depositor( exceeding(P100,000.(
3. in(cases(where(the(money(deposited(or(the(transaction( 6. Provisions(for(individual(or(family(use(sufficient(for(four(months.(
concerned(is(the(subject(matter(of(a(court(order( 7. Professional(libraries(and(equipment(not(exceeding(P300,000(in(
( value.(
VII.(Exceptions(to(Secrecy(of(Deposits( 8. One( fishing( boat( and( accessories( not( exceeding( the( total( value(
( of( P100,000( and( by( the( lawful( use( of( which( he( earns( his(
A. Exceptions(to(the(Bank(Secrecy(Law:( livelihood(as(fisherman.(
1. Upon(written(permission(of(the(depositor( 9. Salaries,( wages( or( earnings( within( the( four( months( preceding(
2. In(cases(of(impeachment( the(levy(as(are(necessary(for(the(support(of(his(family.(
3. Upon( order( of( a( competent( court( in( cases( of( bribery( or( 10. Lettered(gravestones.(
dereliction(of(duty(of(public(officials(
(
26(
!
11. Monies( benefits,( privileges( or( annuities( accruing( or( in( any( P(Examination(made(by(an(independent(auditor(hired(by(the(bank(to(
manner(growing(out(of(any(life(insurance.( conduct( its( regular( audit( provide( that( the( examination( is( for( audit(
12. The( right( to( receive( legal( support( or( money( or( property( purposes(only(and(the(results(thereof(shall(be(for(the(exclusive(use(
obtained( as( such( support( or( any( pension( or( gratuity( from( the( of(the(bank.(
Government.( (
13. Properties(especially(exempt(by(law.( G. In(Camera(Inspection(by(the(Ombudsman(
( P( Section( 15(8)( of( republic( Act( No.( 6770( (The( Ombudsman( Act( of(
C. Secrecy( and( Exemption( from( Attachment( and( Garnishment( of( 1989)(provides(as(one(of(the(powers(of(the(Ombudsman:(
Foreign( Currency( Deposits( cannot( be( used( as( Device( for( (8), Administer, oaths,, issue, subpoena, and,
Wrongdoing( subpoena,duces,tecum,,and,take,,
( ,,,,,,testimony, in, any, investigation, or, inquiry,,
D. Graft(and(Corruption( including,the,power,to,
P(The(AntiPGraft(Law(directs(in(mandatory(terms(that(bank(deposits( ,,,,,,examine, and, have, access, to, bank, accounts,
shall( be( taken( into( consideration( in( its( enforcement,( and,records.,
notwithstanding(any(provision(of(law(to(the(contrary.( P( Before( in( camera( inspection( may( be( allowed,( there( must( be( a(
( pending(case(before(a(court(of(competent(jurisdiction.(The(account(
E. Authority( to( Inquire( into( Bank( Deposits( under( the( AntiPMoney( must( clearly( be( identified.( The( bank( personnel( and( the( account(
laundering(Act( holder( must( be( notified( to( be( present( during( the( inspection( and(
P( AMLC( may( inquire( into( or( examine( any( particular( deposit( r( such( inspection( may( cover( only( the( account( identified( in( the(
investment( with( any( banking( institution( or( nonPbank( financial( pending(case.(
institution(upon(order(of(any(competent(court(in(cases(of(violation,( (
when(it(has(established(that:( H. Preliminary(Attachment(
a. there(is(probable(cause(that(the(deposits(or(investments(are( P(Section(10,(Rule(57(of(the(Rules(of(Court(is(compatible(with(the(law(
related(to(an(unlawful(activity;(or( on( secrecy( of( bank( deposits( because( it( provides( an( exception( “( in(
b. a(money(laundering(offense( cases(where(the(money(deposited(or(invested(is(the(subject(matter(
(( of(the(litigation.”(
F. Periodic(or(Special(Examination( (
P( BSP( may( inquire( into( or( examine( any( deposit( or( investment( with( I. Disclosure(of(Dormant(Accounts(
any( banking( institutions( or( nonPbank( financial( institution( when( the( P( Section( 2( of( Act( No.( 3996( (An( Act( Requiring( Banks( and( Banking(
examination( is( made( in( the( course( of( a( periodic( or( special( Institutions( of( Every( Kind( to( Transfer( Unclaimed( Balances( held( by(
examination,(in(accordance(with(the(rules(of(examination(of(BSP.( them(to(the(Insular(Treasury(and(for(Other(Purposes)(
P( If( authorized( by( the( Monetary( Board( to( satisfy( a( reasonable( o All(banks(shall(forward(to(the(Insular(Treasurer(a(statement(
ground(to(believe(that(a(bank(fraud(or(serious(irregularity(has(been( under( oath( of( their( respective( managing( officers,( of( all(
or( is( being( committed( and( that( it( is( necessary( to( look( into( the( credits(and(deposits(held(by(them(in(favor(of(persons(known(
deposit(to(establish(such(fraud(or(irregularity.( to( be( dead,( or( who( have( not( made( further( deposits( or(
(
27(
!
withdrawals( during( the( preceding( ten( years( or( more,( same( interest( that( owns( a( controlling(
arranged( in( alphabetical( order( according( to( the( names( of( proportion( of( the( shares( of( his( bank,( in(
depositors.( excess( of( 5%( of( the( capital( and( surplus( of(
o Upon( receipt( by( the( Insular( Treasurer,( it( shall( publish( the( the( bank,( or( in( the( maximum( amount(
same( once( a( week( for( three( consecutive( weeks( in( at( least( permitted( by( law,( whichever( is( lower,( shall(
two(newspapers(of(general(circulation(in(the(locality(where( be( required( by( the( lending( bank( to( waive(
the(bank(or(banks(are(situated.( the( secrecy( of( his( deposits( of( whatever(
( nature(in(all(banks(in(the(Philippines.”(
J. Authority( of( the( Commissioner( of( Internal( Revenue( to( Inquire( into( (
Deposits( (
P(Section(6(of(the(1997(National(Internal(Revenue(Code(provides:( CHAPTER(4(
( (F)( Authority( of( the( Commissioner( to( inquire( into( Bank(
Deposit( Accounts.( –( Notwithstanding( any( contrary( provision( of( (
Republic( Act( No.( 1405( and( other( general( or( special( laws,( the( Chapter(4(
Commissioner(is(hereby(authorized(to(inquire(into(the(bank(deposits( Investments,(Loans(and(Other(Functions(of(Banks(
of:( (
( I. Operations(of(Universal(Banks(
(1) a(decedent(to(determine(his(gross(estate;(and( (
(2) any(taxpayer(who(has(filed(an(application(for( A. Powers(of(a(Universal(Banks(
compromise( of( his( tax( liability( under( Sec.( i. Powers(authorized(for(a(commercial(bank(
204(A)(2)( of( this( Code( by( reason( of( financial( ii. Powers(of(an(investment(house(
incapacity(to(pay(his(tax(liability.( iii. Power(to(invest(in(a(nonPallied(enterprise(
( (
K. Waiver(by(DOSRI( B. Equity(Investments(of(a(Universal(Bank(
( i. May(invest(in(the(equities(of(allied(and(nonPallied(
“Section( 26( (NCBA).( Bank( Deposits( and( enterprise(as(may(be(determined(by(the(monetary(
Investments.( –( Any( director,( officer( or( board(
stockholder( who,( together( with( his( related( • May(either(by(financial(or(nonPfinancial(
interest,( contracts( a( loan( or( any( form( of( a. Total(investment(in(equities(of(
financial(accommodation(from:((1)(his(bank;( allied(and(nonPallied(enterprise(–(
or((2)(from(a(bank:((a)(which(is(a(subsidiary( should(not(exceed(50%(of(the(net(
of( a( bank( holding( company( of( which( both( worth(of(the(bank(
his( bank( and( the( lending( bank( are( b. Equity(investment(–(should(not(
subsidiaries;( or( (b)( in( which( a( controlling( exceed(25%(of(net(worth(
proportion( of( the( shares( is( owned( by( the(
(
28(
!
c. Net(worthP(totatl(of(unimpaired( D. Equity(Investments(of(a(universal(Bank(in(NonPallied(
paidPin(capital(as(may(be(required( Enterprises(–(up(to(100%(
by(BSP( i. Examples(of(Non(Finacial(Allied(undertakings(
( • Warehousing(companies(
C. Equity!of!Investments!of!a!universal!Bank!n!Financial!Allied! • Storage(companies(
Enterprises! • Safe(deposit(box(companies(
i. Can!own!up!to!100%!of!equity!in!a!thrift!bank,! • Companies(engaged(in(management(of(
rural!bank!or!a!financial!allied!enterprise( mutual(funds(but(not(in(the(mutual(funds(
ii. PubliclyPlisted(universal(or(commercial(bankP(100%( themselves(
of(voting(stock(of(only(one(other(universal(or( • Corporations(engaged(in(any(activity(similar(
commercial(bank( to(management(of(mutual(funds(
• Financial(Allied(Undertakings( • Companies(engaged(in(providing(computer(
a. Leasing(companiesP(bank( services(
investment(of(shares(shall(be( • Insurance(Agencies/brokerages(
limited(only(in(cases(of(conversion( • Companies(engaged(in(home(building(and(
of(outstanding(loan(obligations(into( development(
equity( • Companies(providing(drying(and/or(milling(
b. Banks( facilities(for(agricultural(crops(
c. Investing(houses( • (Service(bureaus(for(outsourcing(services(
d. Financing(companies(
• Those(declared(by(the(Monetary(Board(
e. Credit(Card(companies(
(
f. Financial(institutions(catering(to(
E. Equity(Investments(of(a(Universal(Bank(in(NonPAllied(
small(and(medium(scale(industries(
enterprise(–(shall(not(exceed(35%(of(total(equity(and(voting(
g. Companies(engaged(in(stock(
stock(
brokerage/securities(dealership(
(
h. Companies(engaged(in(foreign(
F. Investments(in(NonPAllied(or(NonPRelated(Undertakings(–(
exchange(dealership/brokerage(
only(Universal(banks(may(invest(
i. In(addition:(
(
i. Insurance(companies(
i. Examples(of(nonPAllied(undertakings(
j. Holding(companies(P(investment(of(
• Enterprise(engaged(in(physically(productive(
shares(shall(be(limited(only(in(cases(
activities(in(
of(conversion(of(outstanding(loan(
a. Agriculture(
obligations(into(equity(
b. Mining(and(quarrying(
(
c. Manufacturing(
(
29(
!
d. Public(utilities( i. Nature((P(developed(by(merchants(as(a(convenient(
e. Construction( and(relatively(safe(mode(of(dealing(with(sales(of(
f. Wholesale(trade( goods(to(satisfy(the(seemingly(irreconcilable(
g. Community(and(Social(services( interests(of(a(seller,(who(refuses(to(part(with(his(
ii. Industrial(park/real(estate(projects( goods(before(he(is(paid(and(a(buyer(who(wants(to(
iii. Financial(and(commercial(complex(projects(in( have(control(of(the(goods(before(paying(
connection(with(the(Government’s(privtization( • The(buyer(may(be(required(to(contract(a(
program( bank(to(issue(a(letter(of(credit(in(favor(of(
iv. Others(declared(by(Monetary(Board( the(seller(so(that,(by(virtue(of(the(letter(of(
( credit,(the(issuing(bank(can(authorize(the(
G. Equity(Investments(in(QuasiPBanks(–(to(promote( seller(to(draw(drafts(and(engage(to(pay(
competitive(conditions(in(financial(markets,(may(own(up(to( them(upon(presentment(simultaneously(
40(%(equity(investments,(also(applicable(in(the(case(of( with(the(tender(of(documents(required(by(
commercial(banks( the(letter(of(credit.(
( (
II. Operations(of(Commercial(Banks( ii. Characteristics(–(what(sets(it(apart(from(other(
( accessory(contracts(is(the(engagement(of(the(
A. Powers(of(Commercial(Banks( issuing(bank(to(pay(the(seller(once(the(draft(and(the(
i. General(powers(incident(to(corporaton( required(shipping(documents(are(presented(to(it.(
ii. Powers(necessary(to(carry(out(commercial(banking( • “Independence(Principle”(–(assures(the(
• Accepting(drafts(and(issuing(LOC( seller(of(prompt(payment,(independent(of(
• Negotiating(promissory(notes,(bills(of( any(breach(of(the(main(sales(contract.(
exchange(and(other(evidences(of(debt( iii. Intertwined(Relationships(–(3(distinct(but(
• Accepting(or(creating(demand(deposits( intertwined(relationships(
• Receiving(other(types(of(deposits(and( • (1st(contract(relationship(–(links(the(party(
deposit(substitutes( applying(for(LOC(and(the(party(for(whose(
• Buying(and(selling(foreign(exchange,(gold( benefit(LOC(is(issued(
and(silver(bullion;(acquiring(marketable( • 2nd(contract(relationship(–(between(the(
bonds(and(other(debt(securities( accounting(party(and(the(issuing(bank.(
• Extending(credit( Accounting(party(applies(for(LOC(and(agrees(
( to(reimburse(the(bank(for(amounts(paid(by(
( that(bank.(
B. Issuance(of(Letters(of(Credit( • 3rd(contract(relationship(–(between(the(
issuing(bank(and(beneficiary.(Pay(certain(
(
30(
!
monies(to(the(beneficiary(to(support(the( (
contract.( (
iv. Parties(–(3(parties,(may(be(increased(in(most(cases( III. RiskP(Based(Capital(
of(international(trade.( (
• Buyer(–(procures(LOC(and(obliges(himself(to( A. Minimum(Ratio(–(minimum(ratio(which(the(net(worth(of(a(
reimburse(the(issuing(back(upon(receiptof( bank(must(bear(to(its(total(risk(assets(shall(be(determined(
documents(of(title( by(the(Monetary(Board(
• Bank(–(issuing(LOC(and(undertakes(to(pay( i. On(the(basis(of(the(net(worth(and(risk(assets(of(a(
the(seller(upon(receipt(of(the(draft(and( bank(and(its(subsidiaries(
proper(documents(of(titles(and(to(surrender( ii. Monetary(Board(shall(conform(to(internationally(
the(documents(to(the(buyer(upon( accepted(standards(in(the(exercise(of(such(authority(
reimbursement( iii. Alter(or(suspend(compliance(with(such(ratio(for(a(
• Seller(–(in(compliance(with(the(contract(of( maximum(period(of(1(year(
sale(ships(the(goods(to(the(buyers(and( iv. Ratio(shall(be(applied(uniformly(to(banks(of(the(
delivers(the(documents(of(title(and(draft(to( same(category(
the(issuing(bank(to(recover(payment( (
( B. Effect(of(NonPCompliance(
C. Equity(Investments(of(a(Commercial(Bank(–(may(invest(only( i. Monetary(Board(may(limit(r(prohibit(the(distribution(
in(the(equities(of(allied(enterprise((financial(or(nonP of(net(profits(by(such(bank(and(may(require(that(all(
financial)(as(may(be(determined(by(the(Monetary(Board( of(the(net(profits(be(used(to(increase(the(capital(
i. Total(investment(in(equities(–(shall(not(exceed(35%( accounts(of(the(bank(until(minimum(requirement(is(
of(the(net(worth( reached(
ii. Equity(investment(in(any(one(enterprise(–(shall(not( ii. Restrict(or(prohibit(the(acquisition(of(major(assets(
25%(net(worth( and(the(making(of(new(investments(by(the(bank(
( until(the(minimum(required(ratio(has(been(restored(
D. Equity(Investments(of(a(Commercial(Bank(in(Financial(Allied( (
Enterprises( (
i. May(own(up(to(100%(equity(ONLY(of(thrift(bank(or( IV. Limit(on(Loans,(Credit(Accomodation(And(Guarantees(
rural(bank( A. Single(Borrowers(Limit(
ii. Other(financial(allied(enterprises(–(minority(holding( i. Shall(not(exceed(20%(if(Net(Worth(of(the(Bank(
( • Exceptions:((
E. Equity(Investments(of(a(Commercial(Bank(in(NonP(Financial( a. Reasons(of(national(interest(
Allied(Enterprises((P(may(own(up(to(100%(of(the(equity(in(a( b. Deposits(of(Rural(Banks(with(
nonPfinancial(allied(enterprise( governmentPowned(or(controlled(
financial(institutions(are(exempted(
(
31(
!
c. May(be(increased(by(10%(provided( • Reason:(The(state(undoubtedly(is(always(
the(additional(liabilities(of(any( solvent(
borrower(are(adequately(secured( ii. Fully(guaranteed(by(the(government(as(to(payment(
by(securing(titles( of(pricipal(and(Interest(
( iii. Covered(by(assignment(of(deposits(maintained(in(
• As(amended(by(Circular(no.(425,(SBL(must( the(lending(bank(and(held(in(the(Philippines(
not(exceed(23%,(still(subject(to(such( iv. Under(letters(of(credit(to(the(extend(covered(by(
exceptions( margin(deposits(
( v. Specified(by(Monetary(Board(as(nonPrisk(items(
B. Inclusion(to(the(Limit( (
i. Prescribed(Ceilings(shall(include:( D. Bank(Guarantee(–(irrevocable(commitment(of(a(bank(
• Direct(liability(of(the(maker(or(acceptor(of( binding(itself(to(pay(a(sum(of(money(in(the(event(of(nonP
paper(discounted(with(or(sold(to(such(bank( performance(of(a(contract(by(a(third(party.(Distinct(from(
and(liability(of(a(general(indorser,(drawer(or( principal(debt(or(contract.(Subject(to(such(limits.(
guarantor(who(obtains(a(loan(or(other( (
credit(accommodation(( E. Contingent(Accounts(are(also(subject(to(such(limits(
• Liabilities(of(individuals(who(own(or(control( (
a(majority(interest(in(a(corporation( F. Assignment(of(Credits(–(agreement(by(virtue(of(which(the(
• CorporationP(all(liabilities(to(such(bank(of(all( owner(of(a(credit(by(a(legal(cause,(transfers(his(credit(and(its(
subsidiaries(( accessory(rights(to(an(assignee.(
• Partnership(–(liabilities(of(the(members( (
ii. Control(of(majority(interest(or(Controlling(interest(–( G. No(Pacto(Commissorio(in(Assignment(of(Deposits((
when(parent(owns(directly(of(indirectly(through( (
subsidiaries(more(than(one(half(of(the(voting(power( i. Pacto(commisorio(–(automatic(appropriation(of(the(
of(an(enterprise( pledged(or(mortgaged(property(by(the(creditor(in(
iii. Even(if(a(parent(corporation(who(owns(a(majority( payment(of(the(loan(upon(its(maturity(
interest(has(no(liabilities,(Monetary(Board(may( (
prescribe(combination(of(liabilities(in(certain( V. Restriction(on(Bank(Exposure(to(Directors,(Officers,(
situations( Stockholders(and(their(Related(Interests(
( (
C. Exclusion(to(the(Limit(–(Loans(and(other(accommodations(P(( A. Approval(and(Other(Requirements(
i. Secured(by(obligations(of(BSP(or(of(the(Philippine( i. No(director(or(officer(of(any(bank(shall:(
Government( • Directly(or(indirectly(for(himself(or(as(an(
agent(of(others(borrow(from(such(bank(
(
32(
!
• Become(a(guarantor,(indorser(or(surety(for( • Partnership(in(which(
loans(from(such(bank( stockholder/spouse/relative(is(a(general(
• An(obligor(who(would(incur(contractual( partner(
liability(to(the(bank(( • Corporation,(association(or(firm(of(which(
• Exception:(written(approval(of(the(majority( those(mentioned(persons(own(more(than(
of(all(the(directors(of(the(bank( 50%(of(total(subscribed(capital(stock(
ii. Approval(shall(be(entered(upon(the(records(of(the( (
bank( E. Related(Interests(
iii. Dealing(shall(be(upon(terms(not(less(favorable(to( i. Spouse/Relative(within(1st(degree(of(consanguinity(
the(bank(than(those(offered(to(others( or(affinity,(relative(by(legal(adoption(of(a(director,(
( officer(or(stockholder(of(the(bank(
B. Directors( ii. Partnership(of(which(a(director,(officer,(or(
i. Named(as(such(in(the(articles(of(incorporation( stockholder(of(a(bank(or((Spouse/Relative(within(1st(
ii. Duly(elected(in(subsequent(meetings(of( degree(of(consanguinity(or(affinity,(relative(by(legal(
stockholders( adoption(
iii. Elected(to(fill(the(vacancies( iii. CoPowner(of(the(property(or(interest(or(right(
( mortgaged(
C. Officers( iv. Corporation,(association,(or(firm(of(which(a(director(
i. President,(EVP,(SVP,(General(Manager,(Secretary,( or(officer(of(the(bank,(or(his(spouse(is(also(a(director(
treasurer,(trust(officer(and(others(whose(duties(as( or(officer(of(such(corporation,(association(or(firm,(
such(are(defined(in(the(byPlaws(or(are(generally( except:(
known(to(be(officers(of(the(bank( • Securities(are(listed(and(traded(in(the(big(
ii. Chairman,(VicePchairman(or(any(other(position(of( board(of(domestic(stock(exchange(and(less(
the(boardwho(also(performs(functions(of( than(50%(of(voting(stock(is(owned(by(1(
management(such(as(those(ordinarily(performed(by( person(or(by(persons(related(to(each(other(
regular(officers( within(1st(degree(of(consanguinity(or(affinity(
( • Director,(officer(or(stockholder(sits(as(a(
D. Stockholder(–(( representative(of(the(bank(in(the(board(of(
i. Any(stockholder(of(record(in(the(books(acting( directors(of(such(corporation(
personally(or(through(an(attorneyPinPfact( a. Provided(that(the(bank(
ii. Any(other(person(duly(authorized(by(him(or(through( representative(shall(not(have(any(
a(trustee( equity(interest(in(the(borrower(
• His(spouse/(relative(within(1st(degree(of( corporation(except(for(the(
consanguinity(or(affinity(or(legal(adoption( minimum(shares(required(by(law(
(
33(
!
b. Provided(that(the(borrowing( i. Regulated(by(Monetary(Board(
corporation(is(not(among(those( ii. Outstanding(loans(shall(be(limited(to(an(amount(
mentioned(in(items(5,6,7(and(8( equivalent(to(their(respective(unencumbered(
below( deposits(and(book(value(of(their(paidPin(capital(
v. Corporation,(association(or(firm(of(which(any(or(a( contribution(in(the(bank(
group(of(directors,(officers,(stockholders(of(the( (
lending(bank(and/or(their(spouses(or(relatives( H. Exclusions(to(the(Limit(
within(the(first(degree(of(consanguinity(or(affinity,( i. Those(secured(by(assets(considered(as(nonPrisk(by(
or(relative(by(legal(adoption,(hold(or(own(at(least( the(Monetary(Board.(
20%(of(the(subscribed(capital(of(such(corporation,( ii. Those(in(the(form(of(fringe(benefits(granted(in(
or(of(the(equity(of(such(association(or(firm( accordance(with(rules(prescribed(by(the(Monetary(
vi. Corporation,(association(or(firm(wholly(or(majorityP Board(
owned(or(controlled(by(any(related(entity(or(a( iii. Those(extended(by(a(cooperative(bank(to(its(
group(of(related(entities(mentioned(in(Items(2,(4,( cooperative(shareholders(
and(5( (
vii. Corporation,(association(or(firm(which(owns(or( I. Applicabilty(of(DOSRI(Rules(and(Regulations(to(Government(
controls(directly(or(indirectly(whether(singly(or(as( Borrowings(
part(of(a(group(of(related(interest(at(least(20%(of( i. Circular(547(–(DOSRI(Rules(and(Regulations(shall(
the(subscribed(capital(of(a(substantial(stockholder( also(apply(to(loans,(other(credit(accommodations,(
of(the(lending(bank(or(which(controls(majority( and/or(guarantees(granted(to(the(National(
interest(of(the(bank( Government(of(the(Philippines,(its(political(
viii. Corporation,(association(or(firm(in(which(the( subdivisions(and(instrumentalities(as(well(as(
lending(bank(and/or(its(parent/subsidiary(holds(or( governmentPowned(or(controlled(corporations(
owns(at(least(20%(of(the(subscribed(capital(of(such( • Such(loans,(other(credit(accommodations,(
corporation,(or(in(the(equity(of(such(association(or( and/or(guarantee((LOG)(to(RP(must(be(
firm,(or(has(an(existing(management(contract(or(any( considered(as((
similar(arrangement(with(the(lending(bank(or(its( i. NonPrisk(
parent/subsidiary( ii. Not(subject(to(any(ceiling(
( (
F. Effect(of(Violation(–(After(due(notice(of(the(board(of( • LOG(to(a(GOCC(or(Corporations(where(RP(
directors(the(office(of(the(violator(may(be(declared(vacant( owns(20%(of(subscribed(capital(stock(shall(
and(subject(to(penal(provisions(in(the(New(Central(Bank(Act( be(considered(indirect(borrowings(of(RP(
( and(shall(form(part(of(the(individual(ceiling(
G. Limits(of(Loans(( as(well(as(the(aggregate(ceiling(
(
(
34(
!
• The(Following(LOGs(to(GOCCs(where(RP( A. Loans(and(Other(Credit(Accomodations(against(Real(Estate(–(
owns(20%(of(capital(stock(shall(be(excluded( shall(not(exceed(75%(of(the(appraised(value(of(the(
from(the(30%(ceiling(on(unsecured(loans(( respective(real(estate(security,(plus(60%(of(the(appraised(
a. LOGs(for(infrastructure(projects( value(of(the(insured(improvements,(such(loans(be(made(to(
consistent(with(the(MediumPterm( the(owner(of(the(real(estate(or(to(his(assignees(
Development(Plan(duly(certified(as( i. Exception:(As(otherwise(prescribed(by(the(
such(by(the(Secretary(of(SocioP Monetary(Board(
Economic(Planning( B. Loans(and(Other(Credit(Accommodations(on(Security(of(
b. LOGs(granted(to(financial( Chattels(and(Intangible(Properties(–(shall(not(exceed(75%(of(
institutions(in(the(lending(programs( the(appraised(value(of(the(security(and(the(same(may(be(
c. LOGs(to(provide(rediscounting( made(to(the(title(holder(or(his(assignment(
facilities(for(loans(granted(to( i. Exception:(As(otherwise(pescribed(by(the(Monetary(
agricultural(sector,(and(micro,(small( Board(
and(medium(enterprises( (
• Pursuant(to(RA(7653(and(independence( C. Joint(and(Solidary(Agreement(–(JSA(is(indubitably(a(surety(
under(the(Constritution,(BSP(shall(be( not(a(guaranty.(An(agreement(where(parties(consent(to(be(
considered(and(independent(entity(of(the( jointly(and(severally(liable.(Should(be(taken(contra(
RP(and(any(LOG(of(the(BSP(shall(be( proferentum(against(the(party(who(may(have(cause(any(
considered(( ambiguity(therein.(
a. NonPrisk( (
b. Not(subject(to(any(ceiling( D. Effect(of(Surety(Agreement(–(strictly(construed(against(the(
• LGUs(shall(be(considered(separate(from(the( creditor,(every(doubt(is(resolved(in(favor(of(the(solidary(
RP(and(other(governement(entities,(hence( debtor.(
not(a(related(interest(of(the(RP( (
• A(director(who(acts(as(a(government( i. A(Bank(cannot(hold(a(surety(liable(for(loans(
representative(in(the(lending(institution( obtained(in(excess(of(the(amount(or(beyond(the(
shall(not(be(excluded(in(the(deliberation( period(stipulated(in(the(original(agreement,(absent(
and(determination(of(directors(in(cases(of( any(clear(stipulation(that(he(has(waived(his(right(to(
LOGs(to(borrowing(government(entity(other( be(notified(or(to(give(consent.(
than(RP( • Reason:(Fundamental(Rules(of(fair(play(
( require(the(creditor(to(obtain(consent(of(
( surety(to(any(material(alteration(in(the(
VI. Loans(and(Other(Credit(Accomodations(( principal(agreement.(
( (
VII. Grant(and(Purpose(of(Loans(and(Other(Credit(Accomodations(
(
35(
!
( D. Unsecured(Loans(or(Other(Credit(Accomodations(–(
A. Amount(and(purpose(of(Loan( Monetary(Board(is(authorized(to(issue(regulations(necessary(
i. A(bank(shall(grant(loans(and(other(credit( with(respect(to(unsecured(Loans(or(Other(credit(
accommodations(only(in(amounts(and(periods(of( accommodations(
time(essential(for(the(effective(completion(of(the( (
operations(to(be(financed.( E. Other(Security(Requirements(for(Bank(Credits(–(Monetary(
• It(should(be(consistent(with(safe(and(sound( Board(may(prescribe(security(requirements(to(which(the(
banking(practice( various(types(of(bank(credits(shall(be(subject,(the(same(may(
ii. Purpose(must(be(stated(in(the(application( reduce(and(increase(maximum(ratios((
iii. Bank(shall(have(the(right(to(terminate(the(loan(and( (
demand(immediate(repayment(of(the(obligation(if(it( F. Authority(to(Prescribe(Terms(and(conditions(of(Loans(and(
finds(that(the(proceeds(of(the(loan(have(been( Other(Credit(Accommodations(
employed(for(purposes(other(than(those(agreed( (
upon(without(the(bank’s(approval( i. Sec.(43(of(GBL(–(Monetary(Board(has(the(authority(
( granted(in(Sec(106(of(the(new(Central(Bank(Act(to(
B. Requirement(for(Grant(of(Loans(or(Other(Accomodations(–( prescribe(the(maturities(and(conditions(for(various(
before(granting(a(loan,(the(bank(must(ascertain(that(the( types(of(bank(loans(and(other(credit(
debtor(is(capable(of(fulfilling(his(commitments(through:( accommodations(
i. Statement(of(assets(and(liabilities( ii. Sec.(106(of(NCBA(–(Monetary(Board(may(issue(such(
ii. Statemement(of(income(and(expenditure( regulation(necessary(with(respect(to(maximum(
iii. Other(information(prescribed(by(Monetary(Board( permissible(maturities(maturities(of(loans(and(
( investments(and(the(kind(and(amount(of(security(
• Also(see(1198(of(Civil(Code( required(against(various(types(of(credit(operations(
( of(the(banks(
C. Reason(for(Stringent(Rules(in(Granting(Loans( (
i. A(bank(is(one(affected(with(public(interest(for(which( G. Amortization(on(Loans(and(Other(Credit(Accommodations(
reason(the(bank(should(guard(against(loss(due(to( i. Amortization(schedule(shall(be(adapted(to(the(
negligence(or(bad(faith( nature(of(the(operations(to(be(financed(
ii. In(funding(businesses(imposed(upon(a(banking( ii. Loans(and(other(credit(accommodations(with(
corporation,(the(bank(invests(the(money(that(it( maturities(of(more(than(5(years(–(payments(must(
holds(in(trust(of(its(depositors( be(made(periodically(and(at(least(annually(
iii. Provided(by(GBL(( iii. Borrowed(funds(used(for(purposes(which(do(not(
( initially(produce(revenues(for(regular(amortization(
payments(P(The(bank(may(permit(that(initial(
amortization(be(deferred(until(funds(are(sufficient,(
(
36(
!
but(said(payment(should(not(be(later(than(5(years( Medel(v.(CA:(5.5%(per(month(or(66%(per(annum(is(IUE(
from(the(date(on(which(the(loan(is(granted( Cuaton(v.(Salud:(10%(per(month(is(IUE.((
iv. Loans(and(credit(accommodations(to(Microfinance( ( Reduction(to(12%(per(annum(is(fair(and(reasonable.(
sectors(–(schedule(shall(take(into(consideration( Dio(v.(Virgilio:(120%(per(annum(is(IUE.(
projected(cash(flow(of(borrower(and(adopt(terms( ( Reduction(legally(called(for(in(rates(of(interest(and(penalty.(
and(conditions(formulated(by(banks( (
( K.(Effect(of(Void(Interest(Rate;(
H.!Escalation!clause;!(stipulation(that(the(rate(of(interest(may(increase) ( as(if(there(was(no(express(contract(bet.(parties(
(escalation))AND)decrease,(deKescalation),if(the(applicable(maximum( (
interest(rate(is(increased/decreased(by(the(Monetary(Board(((PD(1684:( L.(Prepayment(of(Loans(and(Other(Credit(Accommodations;(sec.(45,(GBL:(
Amendment(to(the(Usury(Law).((Adjustment(takes(effect(on)or)after)MB( borrower(may(prepay(unpaid(balance(of(bank(loans(at,any,time(prior(to(the(
increases/decreases(rate.( agreed(maturity(date,(subject(to(reasonable(terms(and(conditions(agreed(
! upon(by(bank(and(borrower.(
Purpose(of(mandating!de'escalation!clause:( !
( prevent(onePsidedness(in(favor(of(the(lender.( M.(Development(Assistance(Incentives;(sec.(46,(GBL;(Bangko(Sentral(shall(
(Art(1308,(NCC:(contract(must!bind!both(parties;(validity(or(compliance( give(incentives(to(banks(that(have(activities(with(social(content((extending(
cannot(be(left(to(the(will(of(one.)( loans(to(finance(educational(institutions,(coops,(hospitals,(LGUs,(lowPcost(
( housing).(
Exception:(If(there(is(no(dePescalation(clause,(escalation(clause(is(still(valid(if( (
creditor(unilaterally)and)actually(decreased(the(interest(charges(whenever( N.(Renewal(or(Extension(of(Loans(and(Other(Credit(Accommodations;(sec.(
the(rate(is(changed(by(MB.(In(this(case,(parties(are(on(equal(footing,(thus( 48,(GBL;(MB(may(prescribe(the(conditions(and(limitations(where(a(bank(may(
preventing(the(evil(proscribed(by(PD(1684.(( grant(extensions,or(renewals(of(its(loans(and(other(credit(accommodations.(
Cessante(ratione(legis(cessat(ipsa(lex.((Llorin(v.(CA)( (
( O.(Banks(Cannot(Extend(Peso(Loans(to(NonPResidents;((1)(to(curb(undue(
*Usury!Law!has!since!been!lifted!by!Central!Bank!Circular!905! speculation(in(the(foreign(exchange(market(and((2)(to(reinforce(the(
( memorandum(that(peso(deposits(should(be(funded(from(inward(ForEx(
I.(Unilateral(Increase(of(Rates;(even(if(the(Usury(Law(was(lifted,(onePsided( remittance.(
impositions(do,not,have,the,force,of,law(bec.(it(violates(the(principle(of( (
mutuality(of(contracts.( P.(Provisions(for(Losses(and(WritePOffs;(sec.(49,(GBL;(MB(may(fix(the(amount(
( of(reserves(for(bad,debts,or(doubtful,accounts(or(other(contingencies(
J.!Iniquitous,!Unconscionable!and!Exorbitant!Interests;!if(the(court(finds(a( (interest(is(past(due).(WritePoffs(likewise(subject(to(regulations(by(MB.(
rate(iniquitous,(unconscionable(and(exorbitant,(it(should(be(VOID!bec.(it(is( (
contrary(to(morals((Art(1409(NCC:(those(contra,bonus,mores(are(inexistent( VIII.(Truth(in(Lending(
and(void(from(the(beginning).(Rate(shall(be(reduced(by(court.( (
(
(
37(
!
A.(Policy;(to(protect(citizens(from(lack(of(awareness(of(the(true(cost(of( G.(Required(Disclosures(on(Consumer(Loans(not(under(OpenPEnd(Credit(Plan(
credit,(full(disclosure(is(assured( 1.(amount(of(credit(debtor(will(have(actual(use(of(
B.(Disclosure;(creditor(shall(furnish(in(a(clear(statement(in(writing:( 2.(charges,(individually(itemized,(not(part(of(the(finance(charge(
1.(cash(price/delivered(price(of(property(or(service( 3.(total(amounts(financed(in(1(and(2(
2.(amounts(credited(as(downPpayment( 4.(finance(charge(expressed(in(pesos(and(centavos(
3.(difference(bet.(amounts(in(1(and(2( 5.(effective(interest(rate(
4.(charges,(individually(itemized,(not(incident(to(the(extension(of(credit( 6.(simple(annual(rate((percentage(of(finance(charge(to(the(total(amount(to(
5.(total(amount(to(be(financed( be(financed)(
6.(finance)charge(in(terms(of(pesos(and(centavos( 7.(default(or(delinquency(charges(payable(for(late(payments(
7.(percentage/simple(annual(rate(on(the(outstanding(unpaid(balance( 8.(descrip(of(security(interest(and(a(clear(identification(of(property(where(
(( security(interest(relates(
C.(Definitions( (
i.(Credit;(any(loan,(mortgage,(deed(of(trust,(advance,(discount;(conditional( H.(Exempted(Transaction;(extension(of(credits(for(business,and,commercial,
sales(contract;(contract(to(sale/contract(of(sale;(rentalPpurchase(contracts;( purposes,,and(sa(Gov’t,(agencies(and(instrumentalities,(juridical(entities(or(
contract(for(hire,(bailment(or(leasing(of(property;(any(option,(demand,(lien,( to(GOCCs.((
pledge(or(other(claim(against(property(or(money;(purchase/acquisition(of( (
credit;(any(transaction(having(a(similar(purpose(or(effect.( IX.!Foreclosure!of!Real!Estate!Mortgage!
( (
ii.(Finance(charge;(interest,(fees,(service(charges,(discounts,(charges(to(the( A.(Procedure(
extension(of(credit(as(the(MB(may(regularly(prescribe( If(property(was(foreclosed(judicially(or(extrajudicially,(the(mortgagor(may(
( redeem(the(real(property(sold(for(full/partial(payment(of(his(obligations(
iii.(Creditor;(any(person(engaged(in(the(business(of(extending(credit(who( within!one!year(after(the(sale(by!paying!amount!due!in!mortgage!deed,(
requires(the(payment(of(a(finance(charge(as(an(incident(to(this(extension( with(interest(at(the(rate(specified.(All(costs(and(expenses(incurred(by(the(
( bank(from(sail(is(derived(therefrom.(
D.(Penalties(for(Failure(to(Disclose( (
1.(Civil;(P100(or(2x(finance(charged.(Limit(is(P2000.( Purchaser(at(the(auction(sale(has(right(to(enter(and(take(possession(of(that(
2.(Criminal;(if(willfully(violated,(fine(of(P1,000PP5,000(and/or(6mosP1yr( property(immediately!after(the(date(of(confirmation(of(the(auction(sale.(
imprisonment( However,(sec.(7(of(Act(No(3135((An(Act(to(Regulate(the(Sale(of(Property(
( under(Special(Powers(Inserted(in(or(Annexed(to(Rent(Estate(Mortgages)(
E.(Effect(of(Violation;(violation(shall(NOT(affect(validity(and(enforceability(of( provides(that(if(property(was(registered,under,the,Mortgage,Law,(purchaser(
contract( must(first(furnish!a!bond!in!an!amount!equivalent!to!the!use!of!property!
( for!12mos.!Such(bond(must(be(approved(by(court(and(court(must(thereafter(
F.(Exemption(of(Government;(no!punishment(sa(Phil.(Gov’t,(agencies(and( issue(a(writ!of!possession!addressed(to(the(sheriff(where(property(is(
political(subdivisions( situated.(
(
(
38(
!
( E.(Redemption(of(foreclosed(property(after(the(Prescriptive(Period;(
If(property(was(foreclosed!by!banks,(purchaser(is(not(required(to(set(up(a( Right(to(redeem(becomes(functus,officio(on(the(date(of(its(expiry.(
bond.( Exercise(after(this(period(in(not(redemption(but(repurchase.(
If(property(to(be(foreclosed(is(owned(by(juridical(persons,(right(to(redeem( Redemption(is(by(force(of(law(and(the(purchaser(is(bound(to(accept(
3months!after(foreclosure.( redemption.(
If(real(property(is(mortgaged(to(alien(individuals(or(corporations,(in(no(case( Repurchase(imposes(no(such(obligation.(He(may(or(may(not(rePsell(the(
shall(actual(possession(exceed(5years.! property(after(expiration,(and(he(is(not(bound(by(bid(price(bec(after(all,(the(
Redemption!period!counted!from!the!date!of!registration!of!certificate!of! property(already(belongs(to(him(as(owner.(
sale!with!the!Register!of!Deeds.! (
Private(lands(may(only(be(transferred(to(individuals,(corporations,(or( (
associations(qualified(to(acquire(or(hold(land(of(public(domain.(Exception:( (
thru(hereditary(succession.( (
( W/N(alienPowned(bank(can(acquire(ownership(of(residential(lot(by(deed(of(
B.(Equity(of(Redemption(v.(Right(of(Redemption( transfer(as(settlement(of(debt.(
( ( NO.(Its(acquisition(jeopardizes(the(purpose(of(the(Constitution(to(
Limpin(v.(IAC:(Right(of(Redemption(exists(only(in(the(case(of(the(extrajudicial( keep(in(the(hands(of(the(people(the(ownership(over(private(lands.(
foreclosure(of(the(mortgage.(No(such(right(is(recognized(in(a(judicial( ( HOWEVER,(a(lease(of(a(parcel(of(land(for(50(years(in(favor(of(an(
foreclosure(except(only(where(the(mortgagee(in(the(PNB(or(other(bank.( alien(corp(is(registerable.(A(lease,(unlike(a(sale,(does(not(involve(the(transfer(
Right(may(be(exercised(within(a(period(of(1(year,(counted(from(the(date(of( of(dominion(over(the(land.(
registration.( (
( XI.(Other(Banking(Services;(acting(as(depositary(or(agent(
Equity(of(Redemption(is(the(right(of(the(mortgagor(to(extinguish(the( 1.(receive(in(custody(funds,(docs,(and(valuable(objects(
mortgage(and(retain(ownership(of(the(property(by(paying(the(secured(debt( 2.(act(as(financial(agent,(buy(and(sell(shares,(evidence(of(indebtedness,(all(
within(the(90Pday(period(after(the(judgment(becomes(final((Rule(68,(CivPro).( types(of(securities(
( 3.(make(collections(and(payments(and(other(services(not(incompatible(with(
C.(Right(of(Redemption(may(be(Extended(by(Agreement;(the(right(to( banking(business(for(their(customers(
redemption(must(be(exercised(within(specified,time,limits,(but(if(agreed( 4.(upon(approval(by(MB,(act(as(managing(agent,(adviser,(consultant(or(
upon(by(the(parties,(it(may(be(extended.( administration(of(investment(mgmt(accts.(
( 5.(rent(out(safety(deposit(boxes(
D.(Estoppel;(if(a(bank(had,time,to,object,and,did,not,(its(silence(can(be( (
construed(as(having(consented(to(the(extension(of(the(redemption(period.( A.!Safety!Deposit!Box!
Estoppel(arises(when(one,(by(his(own(silence(when(he(ought(to(speak(out,( 1.(Special(Kind(of(Deposit;(cannot(be(a(contract(of(lease(bec(full,and,
intentionally(or(thru(culpable(negligence,(induces(another(to(believe(that( absolute,possession,and,control(of(the(safety(deposit(box((SDB)(is(not(given(
certain(facts(exist.( to(the(renters.(Guard(key(remains(with(the(bank(without(which(renters(
(
(
39(
!
could(not(open(the(bank.(Bank(could(not(likewise(open(the(box(without(the( (
renter’s(key.( (
( XII.!Electronic!Transactions!
If(renter(duplicated(the(key(for(joint(access,(bank(is(NOT(liable(to(either(of( BSP(has(full(authority(to(regulate(the(use(of(electronic(devices((e.g.(
the(joint(renters(in(case(of(loss(attributable(to(either(of(them.( computers)(for(recording,(storing,(and(transmitting(data(in(connection(with(
If(a(bank(was(not(aware(of(an(agreement(bet(joint(renters(that(articles(shall( the(operation(of(banks.((sec(59,(GBL)(
only(be(withdrawn(from(SDB(ONLY(upon(the(joint(signatures(of(both(parties,( (
and(there(is(no(evidence(to(prove(that(loss(was(due(to(the(fraud(and( Subject(to(prior(approval(by(MB,(banks(may(outsource(all(IT(systems(and(
negligence(of(the(bank,(the(bank(is(NOT(liable.( processes(except(for(inherent(banking(functions.((
( Those(that(may(not(be(outsourced:(
2.(Bailor(and(Bailee;( those(affecting(the(ability(of(of(the(bank(to(ensure(the(fit(of(tech(services(
( The(relation(between(a(bank(and(its(SDB(customer(with(respect(to( deployed(to(meet(its(strategic(and(business(objectives;(
the(contents(of(the(box(is(that(of(a(bailor,and,bailee,,the(bailment(being(for( strategic(planning(for(the(use(of(IT;(
hire(and(mutual(benefit.( determination(of(system(formalities;(
, change(mgmt(inclusive(of(quality(assurance(and(testing;(
3.(Duties(May(Be(Defined(By(The(Parties( service(level(and(contract(mgmt(
( The(parties(may,(by(special(contract,(define(their(respective(duties( security(policy(and(administration(
or(provide(for(increasing(or(limiting(the(liability(of(the(deposit(company,( !
provided(that(it(is(not(violative(of(law(or(public(policy.(It(must(clearly,appear( XIII.!Outsourcing!Of!Other!Functions!
that(there(actually(was(a(special(contract,(in(order(to(differentiate(from( Subject(to(prior(approval(of(the(MB,(banks(may(outsource(data(imaging,(
implied(ordinary(obligations.( storage,(retrieval(and(other(related(systems,(clearing(and(processing(of(
( Doubtful(words(will(not(enlarge(or(restrict(the(liability(of(the( checks,(printing(of(bank(deposit(statements,(other(activities(det(by(the(MB.(
company.(Company(cannot(also(exempt(itself(from(liability(for(loss(of(the( (
contents(by(its(own(fraud(or(negligence,(and(if(a(provision(of(the(contract( Banks(may(outsource(
says(so,(such(provision(will(be(held(ineffective(for(the(purpose.( credit(card(services(
( printing(of(bank(loan(statements(and(other(nonPdeposit(records,(bank(
If(a(collection(of(stamps(were(in(an(SDB(at(the(lowest(row,(and(floodwater( forms,(and(promotional(materials(
entered(the(bank’s(premises(thus(damaging(the(stamps,(THE(BANK(IS( credit(investigation(and(collection(
GUILTY(OF(NEGLIGENCE,(and(must(compensate(the(renter.(Bank(was(aware( processing(of(export,(import(and(other(trading(transactions(
of(the(floods(and(it(also(knew(that(floodwaters(inundate(the(room(where( transfer(agent(services(for(debt(and(equity(securities(
said(SDB(is(located.(It(should(have(notified(the(SDB(renter,(opened(and( property(appraisal(
retrieved(the(stamps(so(as(to(save(from(further(deterioration.( property(mgmt(services(
Art.1170:(Those(who,(in(the(performance(of(their(obligations(are(guilty(of( messenger,(courier(and(postal(services(
fraud,(negligence,(or(delay,(and(those(who(in(any(manner(contravene(the( security(guard(services(
tenor(thereof,(are(liable(for(damages.( vehicle(service(contracts(
(
40(
!
janitorial(services(
public(relations(services(
procurement(services(
temporary(staffing(
legal(services(from(local(legal(counsel(
Provided,(that(they(do(not(include(servicing/handling(bank(deposits(or(
other(inherent(banking(functions.(
(
(
(
(
41(
!
Chapter(5( c. No(examiner,(officer(or(employee(of(the(Bangko(Sentral(or(of(any(
Prohibited(Transactions(and(Cessation(of(Banking(Business( department,(bureau,(office,(branch(or(agency(of(the(government(that(is(
( assigned(to(supervise,(examine,(assist(or(render(technical(assistance(t(any(
A. Prohibition(to(Act(as(Insurer;(examples:( bank(shallP(
a. Making,(or(proposing(to(make,(as(insurer(any(insurance(contract;( • Commit(any(of(the(aforementioned(acts(or(aid(in(the(
b. Making(or(proposing(to(make,(as(surety(any(contract(of(suretyship(as(a( commission(of(the(same(
vocation(and(not(as(merely(incidental;( • Furnishing(false(or(misrepresent(or(suppress(material(facts(by(
c. Doing(any(kind(of(business(within(the(meaning(of(the(Insurance(Code;( personnel(of(BSP(shall(constitute(fraud(and(shall(be(subject(
d. Doing(any(business(similar(to(aforementioned(in(a(manner(designed(to( to(administrative(and(crimina(sanctions(provided(under(the(
evade(the(provisions(of(Insurance(Code( New(Central(Bank(Act(
( (
• Profit(is(immaterial(to(constitute(the(doing(or(transacting(of( d. Consistent(with(the(Banks(Secrecy(Law,(no(bank(shall(employ(casual(or(
an(insurance(business.( nonregular(personnel(or(lengthy(probationary(personnel(in(the(conduct(
( of(it(business(involving(bank(deposits(
B. Prohibited(Acts( (
a. No(Director,(officer,(employee,(or(agent(of(any(bank(shallP(FOORD( (
• Make(false(entries(in(any(bank(report(or(statement(or( C. Prohibition(Against(Outsourcing(Certain(Banking(Functions(–((
participate(in(any(fraudulent(transaction(causing(damage(to( a. Outsourcing(inherent(banking(functions(–(any(contract(between(the(bank(
the(bank(or(any(person( and(a(service(provider(for(the(latter(to(supply(manpower(to(service(
• Disclose(to(any(unauthorized(person(any(information(relative( deposit(transactions(of(the(bank.(
to(funds(in(the(custody(of(the(bank(without(order(of(a(court( b. Banks(cannot(outsource(management(functions(unless(authorized(by(the(
of(competent(jurisdiction( Monetary(board(when(circumstances(justify(
• Accept(any(for(of(remuneration(or(commission(in(connection( c. (
with(approval(of(loan(or(other(credit(accommodation( III.!Prohibition!on!Dividend!Declaration!
• Overvalue(or(aid(in(overvaluing(any(security(for(the(purpose( *No(bank(or(quasiPbank(shall(declare(dividends(greater(than(its(accumulated(net(profits(then(
of(influencing(the(actions(of(the(bank( on(hand,(deducting(therefrom(its(losses(and(bad(debts(
• Outsource(inherent(baking(functions(–(to(ensure(secrecy(of( *Neither(shall(bank(nor(quasiPbank(declare(dividends,(if(at(the(time(of(declaration:(
1. Its(clearing(account(with(the(Bangko(Sentral(is(overdrawn;(or(
bank(deposits(
( 2. It(is(deficient(in(the(required(liquidity(floor(for(government(deposits(for(5(or(more(
b. No(borrower(shall(–(FOFA( consecutive(days;(or(
• Fraudulently(overvalue(property(offered(as(security(for(a( 3. It(does(not(comply(with(the(liquidity(standards/ratios(prescribed(by(the(Bangko(
loan(or(other(credit(accommodation( Sentral(for(purposes(of(determining(funds(available(for(dividend(declaration;(or(
• Furnish(false(or(misrepresent(or(suppress(material(facts(to( 4. It(has(committed(a(major(violation(as(may(be(determined(by(the(Bangko(Sentral.(
botain,(renew,(increase(or(extend(the(period(of(a(loan(or(
IV.!Unauthorized!Advertisement!or!Business!Representation!
other(credit(accommodation(
( No(person,(association,(or(corporation(unless(duly(authorized(to(engaged(in(the(
• Attempt(to(defraud(a(bank(in(the(event(of(a(court(action(to( business(of(a(bank,(quasiPbank,(trust(entity,(or(association,(or(use(in(connection(with(its(
recover(a(loan(or(other(credit(accommodations( business(title,(the(word(or(words(“bank”,(“banking”,(“banker”,(“quasiPbank”,(“quasiP
• Offer(any(gift(or(any(form(of(compensation(to(any(director,( banking”,(“quasiPbanker”,(“savings(and(loan(association”,(“trust(corporation”,(“trust(
officer,(employee(or(agent(of(a(bank(in(order(to(influence( company”,(or(words(of(similar(import(or(transact(any(manner(the(business(of(any(such(bank,(
such(persons(to(approve(a(loan(or(other(credit( corporation(or(association.(
accommodation( (
(
(
42(
!
( *SOLVENCYP(the(condition(that(exists(when(liabilities(amount(to(less(than(total(assets,(thus(
V.!Placement!Under!Conservatorship!
providing(the(ability(to(pay(debts.(The(test(of(insolvency(is(measured(by(determining(whether(
A.(Governing(Law(
the(realizable(assets(of(a(bank(are(less(than(its(liabilities.(
“The( grounds( and( procedures( for( placing( a( bank( under( conservatorship,( as(
(
well(as,(the(powers(and(duties(of(the(conservator(appointed(for(the(bank(shall(be(
C.(Qualifications(of(Conservator(
governed(by(the(provisions(Section(29(and(the(last(two(paragraphs(of(Section(30(of(
The(conservator(should(be(competent(and(knowledgeable(in(bank(operations(and(
the( New( Central( Bank( Act:( Provided,( That( this( Section( shall( also( apply( to(
management.(
conservatorship(proceeding(of(quasiPbanks.”((Section,67,of,the,GBL)(
D.(Period(of(Conservatorship(
B.(Grounds(for(appointment(of(conservator(
( The(conservatorship(shall(not(exceed(one((1)(year.(
• The(Monetary(Board(may(appoint(a(conservator(whenever(it(finds(that(a(bank(or(a(
(
quasiPbank(is(in(a(state(of((1)(continuing(inability(or((2)(unwillingness(to(maintain(a(
E.(Remuneration(
condition( of( liquidity( deemed( adequate( to( protect( the( interest( of( depositors( and(
(
creditors.([Section(29,(RA(7653](
• The(conservator(shall(receive(remuneration(to(be(fixed(by(the(Monetary(Board(in(
(
an(amount(not(to(exceed(twoPthirds(of(the(salary(of(the(president(of(the(institution(
*POWERS(OF(THE(CONSERVATOR(
in(1(year,(payable(in(12(equal(monthly(payments.(
1.( Take(charge(of(the(assets,(liabilities(and(management(of(the(bank(or(quasiPbank(
2.( Reorganize(the(management( • If( any( time( within( onePyear( period,( the( conservatorship( is( terminated( on( the(
3.( Collect(all(monies(and(debts(due(said(institution( ground( that( the( institution( can( operate( on( its( own,( the( conservator( shall( receive(
4.( Exercise(all(powers(necessary(to(restore(its(viability( the( balance( of( the( remuneration( which( he( would( have( received( up( to( the( end( of(
( the( year;( but( if( the( conservatorship( is( terminated( on( other( grounds,( the(
• The( conservator( has( the( power( to( overrule( or( revoke( the( actions( of( the( previous( conservator(shall(not(be(entitled(to(such(remaining(balance.(
management(and(board(of(directors(of(the(bank(or(quasiPbank.( • The( Monetary( Board( may( appoint( a( conservator( connected( with( the( Bangko(
• Section( 28PA( of( RA( No.( 265( merely( gives( the( conservator( the( power( to( revoke( Sentral,( in( which( case( he( shall( not( be( entitled( to( receive( any( remuneration( or(
contracts(that(are(deemed(to(be(defective(under(existing(law((i.e.,(void,(voidable,( emolument(from(the(Bangko(Sentral(during(the(conservatorship.((
unenforceable,(or(rescissible);(hence,(the(conservator(merely(takes(the(place(of(a( (
bank’s( board( of( directors.( What( the( board( of( directors( cannot( do,( such( as( F.(Expenses(of(Conservatorship(
repudiating(a(contract(validly(entered(into(under(the(doctrine(of(implied(authority,( (
the( conservator( cannot( do( either.( [First, Philippine, International, Bank, v., CA,( 252( ( Shall(be(borne(by(the(bank(or(quasiPbank(concerned.(
SCRA(255((1986)]( (
( G.(Termination(of(conservatorship(
*LIQUIDITYP( the( ability( of( an( asset( to( be( converted( into( cash( quickly( and( without( any( price( • The( Monetary( Board( shall( terminate( the( conservatorship( when( it( is( satisfied( that(
discount.(A(corporation(is(liquid(if(it(has(ready(access(to(cash.( the( institution( can( continue( to( operate( on( its( own( and( the( conservatorship( is( no(
( longer(necessary.((
(
43(
!
• The( conservatorship( shall( likewise( be( terminated( should( the( Monetary( Board( • Law( merely( gives( the( conservator( power( to( revoke( contracts( that( are,( under(
determine( that( the( continuance( in( business( of( the( institution( would( involve( existing(law,(deemed(to(be(defective.(
probable( loss( to( its( depositors( or( creditors,( in( which( case( proceedings( for( (
receivership(and(liquidation(shall(be(pursued.([Section(29,(RA(7653]( VI.(Cessation(of(Banking(Business(
( (
( A.(Voluntary(Liquidation(
( B.(Receivership(and(Involutary(Liquidation(
H.(Final(and(Executory( C.(Close(Now(Hear(Later(Scheme(
( D.(Effect(of(Filing(a(Petition(for(Review(
• Actions(of(Monetary(Board(shall(be(final(and(executory,(and(may(not(be(restrained( E.(Reasons(Behind(Receivership(and(Involuntary(Liquidation(
or( set( aside( by( the( court( except( on( petition( for( certiorari( on( the( ground( that( the( F.(Effects(of(Receivership(and(Liquidation(
action(taken(was(in(excess(of(jurisdiction(or(with(such(grave(abuse(of(discretion(as( (
to(amount(to(lack(or(excess(of(jurisdiction.( (
• Petition( for( certiorari( may( only( be( filed( by( the( stockholders( of( record( presenting( A.(Voluntary(Liquidation(
the( majority( of( the( capital( stock( within( 10( days( from( receipt( by( the( board( of( 1.(request(for(approval(of(voluntary(dissolution,(attaching(a(
directors( of( the( institution( of( the( order( directing( receivership,( liquidation( or( liquidation(plan(therein.(
conservatorship.( (written(notice(of(liquidation(shall(be(sent(to(the(Monetary(Board(
( prior(to(such(liquidation.)(
I.(Exclusive(Power(to(Appoint( 2.(dissolution(in(accordance(with(the(Corporation(Code(
( 3.(liquidation(undertaken(by(the(bank(itself(through(its(Board(of(Directors(
( Designation(of(conservator(is(vested(exclusively(with(the(Monetary(Board.( either((a)(by(a(trustee(or((b)(by(a(receiver(appointed(to(the(bank.(
( (
J.(Not(a(Precondition( Grounds(for(Receivership(and(Liquidation(
( The(MB(may,(summarily(&(w/o(prior(hearing,(FORBID(institution(from(
( Designation(of(conservator(is(not(a(precondition(to(the(designation(of(a(receiver.( doing(business(if(the(institution:(
( a.(is(unable(to(pay(liabilities(
K.(Powers(of(Conservator(Cannot(Impair(the(Obligations(of(Contracts.( b.(has(insufficient(assets,(as(determined(by(BSP(
( c.(will(involve(probable(loss(to(depositors(or(creditors(
• Powers( must( be( related( to( the( “(preservation( of)( the( assets( of( the( bank,( (the( d.(has(willfully(violated(a(cease(&(desist(order(involving(acts(or(
reorganization( of)( the( management( thereof( and( (the( restoration( of)( its( viability.( transactions(which(amount(to(fraud(or(a(dissipation(of(assets(
Such(power(cannot(extend(to(the(postKfacto(repudiation(of(perfected(transactions,( (50TP200T(fine(or(2P10Y(imprisonment)(
otherwise( they( would( infringe( against( the( nonPimpairment( clause( of( the( For(quasiPbanks,(any(person(of(recognized(competence(in(banking(or(
Constitution.( finance(may(be(designated(as(receiver.(
(
44(
!
( 3.(receive(rent,(collect(debts,(and(compound(for(such(
The(receiver(shall(immediately( 4.(make(transfers(
1.(gather(all(assets(and(liabilities( (
2.(administer(assets(and(liabilities(for(the(creditors( A(receiver(is(
3.(exercise(general(powers(under(the(Rules(of(Court( P(an(indifferent(person(between(the(parties(to(a(cause(
4.(determine(W/N(bank(may(be(rehabilitated(or(resume(business(w/in(90(days( P(not(the(agent(or(representative(of(either(
*(But(he(shall(NOT((except(for(administrative(expenses)(pay(or( P(but(an(officer(of(the(court(
transfer(any(asset(of(the(institution.( (
( Prohibited(Acts(
If(the(receiver(determines(that(the(bank(cannot(be(rehabilitated,(the( Any(director(or(officer(of(a(bank(declared(insolvent(or(placed(under(
MB(shall(notify(the(board(of(directors(of(its(findings(in(writing(and( receivership(by(the(MB(shall(not(
direct(the(receiver(to(proceed(with(the(liquidation.( 1.(refuse(to(turn(over(the(bank(records(
The(receiver(shall(file(with(the(RTC(a(petition(for(assistance(in(the( 2.(tamper(with(bank(records(
liquidation.( 3.(destroy(or(cause(misappropriation(of(the(bank's(assets(
( 4.(receive(any(deposti,(collection(of(loans,(or(receivables(
Current(and(Complete(Examination(Not(Necessary(before(the(closure(of(a(bank( 5.(pay(out(any(funds(of(the(bank(
R.A.(7653((1993)(provides(that(only(a(REPORT(of(the(head(of( 6.(transfer(securities(or(property(
supervising(or(examining(department(is(necessary.( (
The(word("report"(is(clearly(different(from("examination."(A(report(is( In(the(case(of(conservatorship,(
"something(that(gives(information"(or("a(detailed(account".(An( 1.(the(actions(of(the(MB(shall(be(final(and(executory(
examination(is("a(search,(investigation(or(scrutiny."( 2.(may(be(set(aside(by(a(petition(for(certiorari(filed(by(the(
( stockholders(of(record(within(10(days(
Rural(Bank(of(San(Miguel(Inc.(v.(Monetary(Board( (
The(closure(of(a(bank(may(be(considered(as(an(exercise(of(police(power.( (
( Close(Now(Hear(Later(Scheme((p.(213,(MemAid)(
Sec.(174(of(the(Code(of(CivPro:(A(receiver(may(be(appointed(if(the( 1.(Sec(29(of(the(Central(Bank(Act(does(NOT(contemplate(prior(notice(and(hearing.(
corporation(is( (((The(assailed(actions(should(precede(the(filing(of(the(case.(
dissolved(*(insolvent(*(in(imminent(danger(of(insolvency(*(has( 2.(Purpose(is(to(PREVENT(unwarranted(dissipation(of(the(bank's(assets(
forfeited(corporate(rights( and(as(a(valid(exercise(of(police(power(to(protect(the(depositors.(
( 3.(The(bank(is(given(full(opportunity(to(prove(arbitrariness(and(bad(
Sec.(175:(General(Powers(of(a(Receiver.( faith(in(placing(the(bank(under(receivership.(
1.(bring(and(defend(actions(in(own(name( *(The(absence(of(an(examination(does(not(mean(that(there(is(no(basis(
2.(take(possession(of(property(in(controversy( for(the(closure(order.(The(purpose(of(RA(7653(is(to(make(the(closure(
(
45(
!
of(a(bank(summary(and(expeditious(in(order(to(protect(public(interest.( The(Bangko(Sentral(may,(if(public(interest(so(requires,(award(to(an(institution,(upon(
such(terms(and(conditions(as(the(Monetary(Board(may(approve,(the(banking(franchise(of(a(
(
bank(under(liquidation(to(operate(in(the(area(where(said(bank(or(its(branches(were(
Effects(of(Receivership(and(Liquidation((p.(214,(MemAid)( previously(operating;(Provided,(That(whatever(proceeds(may(be(realized(from(such(award(
1.(Retention(of(Juridical(Personality( shall(be(subject(to(the(appropriate(exclusive(disposition(of(the(Monetary(Board.(
2.(Suspension(of(Operations(/Stoppage(of(Business( (
D. Liabilities(
3.(Assets(deemed(in(custodia(legis(and(shall(be(exempt(from(
The(bank(is(bound(by(the(acts,(or(failure(to(act,(of(the(receiver.(At(the(same(time,(
garnishment,(levy,(attachment(or(execution( the(receiver(is(liable(to(the(bank(for(culpable(or(negligent(failure(to(collect(the(assets(of(such(
4.(Execution(of(judgment(is(warranted( bank(and(to(safeguard(said(assets.(
5.(Bank(is(NOT(liable(to(pay(interest(on(deposits(that(accrue(during( (
(
the(period(of(suspension(
(
6.(But(BSP(shall(collect(interest(on(all(loans(and(advances( CHAPTER!6!
7.(Bank(cannot(do(new(business( Foreign(Banks(&(Trust(Operations(
8.(Deposits(do(not(become(preferred(credits( (
( Offshore( banking( –( refers( to( the( conduct( of( banking( transactions( in( foreign( currencies(
( involving(the(receipt(of(funds(from(external(sources(and(utilization(of(such(funds.(
( (
VII.(Disposition(and(Distribution(of(Assets( Offshore( banking( unit( –( means( a( branch,( subsidiary( or( affiliate( of( a( foreign( banking(
A. Distribution(of(Assets( corporation( which( is( a( duly( authorized( by( the( BSP( to( transact( offshore( banking( business( in(
the(Philippines.(
In(case(of(liquidation(of(a(bank(or(quasiPbank,(after(payment(of(the(cost(of(
(
proceedings,(including(reasonable(expenses(and(fees(of(the(receiver(to(be(allowed(by(the(
court,(the(receiver(shall(pay(the(debts(of(such(institution,(under(order(of(the(court,(in( • Entry( of( foreign( banks( in( the( Philippines( are( governed( by( Foreign( Banks(
Liberalization(Act((RA(7721)(
accordance(with(the(rules(on(concurrence(and(preference(of(credit(as(provided(in(the(Civil(
Code.( • The( conduct( of( offshore( banking( shall( be( governed( by( Offshore( Banking( System(
*Current(account(and(savings(account(are(not(preferred(credits(in(cases(involving(the( Decree((PD(1034)(
insolvency(and(liquidation(of(a(bank,(where(there(are(various(creditors(and(it(becomes( (
necessary(to(ascertain(the(preference(of(various(credits.(These(deposits(are(essentially( NOTE:(Foreign(Corp.(doing(business(in(the(Philippines(are(required(to(obtain(a(license.(Sec.(
mercantile(contracts(and(should,(therefore,(be(governed(by(the(provisions(of(the(Code(of( 133(of(Corporation(Code(
Commerce.( (
B. Disposition(of(Revenues(and(Earnings( • Foreign( Corp.( doing( business( in( the( Philippines( without( license( are( barred( from(
All(revenues(and(earnings(realized(by(the(receiver(in(winding(up(the(affairs(and( accessing(our(courts.(It(is(ipso(facto(incapacitated(to(bring(an(action.(
administering(the(assets(of(any(bank(or(quasiPbank(shall(be(used(to(pay(the(costs,(fees(and( • A(license(is(necessary(if(its(transacting(or(doing(business((in(the(Philippines(
expenses(mentioned(in(Item(A(above(salaries(of(such(personnel(whose(employment(is( • By(securing(a(license,(the(foreign(entity(would(give(an(assurance(that(it(will(abide(
rendered(necessary(in(the(discharge(of(the(liquidation(together(with(other(additional( by(the(decisions(of(our(courts,(even(adverse(to(it.(
expenses(caused(thereby.(The(balance(of(revenues(and(earnings,(after(the(payment(of(all( • Purpose( of( the( statute( is( to( compel( a( foreign( corporation( desiring( to( do( business(
said(expenses,(shall(form(part(of(the(assets(available(for(payment(to(creditors.( within(the(state(to(submit(itself(to(the(jurisdiction(of(the(courts(of(the(state.(
( (
C. Disposition(of(Banking(Franchise( Foreign(Banks(are(allowed(to(entry(in(the(Philippines(subject(to(the(ff:(rules:(
(
46(
!
1. Within(7(years(from(the(effectivity(of(GBL(and(subject(to(guidelines(issued(pursuant( III.!Trust!Operations!
to(the(RA(7721,(the(Monetary(Board(may(authorize(a(foreign(bank(to(acquire(up(to( !
a(100%(of(the(voting(stock(of(only(1(bank(organized(under(Phil.(Laws.( A. Authority!to!Engage!in!Trust!Business!
( ! Trust( Business( refers( to( any( activity( resulting( from( a( trustorPtrustee(
2. Within( the( same( period,( the( Monetary( Board( may( authorize( any( foreign( bank,( relationship( involving( the( appointment( of( a( trustee( for( the(
which(prior(to(the(effectivity(of(GBL(availed(itself(of(the(privilege(to(acquire(up(to( administration,( holding,( management( of( funds( and/or( properties( of( the(
60%( of( the( voting( stock( of( a( bank( under( RA( 7721( and( the( Thrift( Banks( Act,( to( trustor(for(the(use(or(advantage(of(the(beneficiaries.(
further( acquire( voting( shares( of( such( bank( to( the( extent( necessary( for( it( to( own( ! Only( stock( corporation( or( a( person( duly( authorized( by( the( Monetary(
100%(of(voting(stock(thereof.( Board(to(engage(in(trust(business(shall(act(as(a(trustee(or(administer(any(
( trust( or( hold( property( in( trust( or( on( deposit( for( the( use( or( benefit( of(
( others.(
3. In(the(exercise(of(this(authority,(the(Monetary(Board(shall(adopt(measures(as(may( ! The( cardinal( principle( common( to( all( trust( and( other( fiduciary(
be( necessary( to( ensure( that( at( all( times( the( control( of( 70%( of( the( resources( and( relationships(is(fidelity.(
assets( of( the( entire( banking( system( is( held( by( banks( which( are( at( least( majorityP ! A( bank( authorized( to( engage( in( trust( and( fiduciary( business( is( under( no(
owned(by(Filipinos.( obligation,(either(legal(or(moral,(to(accept(such(business(being(offered.(
( (
4. (Any(of(the(foregoing(right,(privilege(or(incentive(granted(to(a(foreign(bank(shall(be( B. Conduct!of!Trust!Business(
equally( enjoyed( by( and( extended( under( the( same( conditions( to( banks( organized( ! A( trust( entity( shall( administer( the( funds( or( property( under( its( custody(
under(the(Phil.(laws.( with(the(diligence(that(prudent(man(would(exercise(in(the(conduct(of(an(
( enterprise(of(a(like(character(and(similar(aims.(
In( case( of( a( foreign( bank( which( has( more( than( 1( branch( in( the( Phil,( all( such( branches( ! No(trust(entity(shall,(for(the(account(of(the(trustor(or(the(beneficiary(of(
shall( be( treated( as( on( unit( for( the( purpose( of( GBL( and( all( references( to( the( Philippine( the( trust,( unless( the( transaction( is( specifically( authorized( by( the( trustor(
branches(of(foreign(banks(shall(be(held(to(refer(to(such(units.(Sec(74(GBL)( and( the( relationship( of( the( trustee( and( the( other( party( involved( in( the(
( transaction(is(fully(disclosed(to(the(trustor(or(beneficiary.(
The(head(office(of(the(foreign(bank(shall(fully(guarantee(the(prompt(payment(of(all(the( (
liabilities(of(its(Phil.(Banks.((Sec(75(GBL)( C. Registration!of!Articles!of!Incorporation!and!By'Laws!of!a!Trust!Entity!
( ! The(SEC(shall(not(register(the(articles(of(incorporation(and(byPlaws(or(any(
Residents(and(citizens(of(the(Phil.(who(are(creditors(of(a(branch(in(the(Phil.(of(a(foreign( amendment( of( any( trust( entity,( unless( accompanied( by( a( certificate( of(
bank( shall( have( preferential( rights( to( the( assets( of( such( branch( in( accordance( with( existing( authority(issued(by(BSP.(
laws.( (
( D. Minimum!Capitalization!
• Sec( 20( of( GBL( applies( to( a( universal( or( commercial( bank( duly( established( and( ! A( trust( entity,( before( it( can( change( in( trust( or( other( fiduciary( business,(
organized(as(a(Phil.(corporation(in(accordance(with(Sec(8(of(GBL(and(authorized(to( shall( comply( with( the( minimum( paidPin( capital( requirement( determined(
establish(branches(within(or(outside(the(Phil.( by(the(Monetary(Board.(
• Home(Office(Guarantee(is(clearly(for(protection(of(the(interests(of(the(depositors( (
and(other(creditors(of(local(branches(of(a(foreign(bank.( E. Powers!of!Trust!Entity!
• The( foreign( bank( cannot( use( the( principle( for( a( reserve( purpose,( to( extend( the( 1. Act( as( trustee( on( any( mortgage( or( bond( issued( by( any( municipality,(
liability(of(a(client(to(the(foreign(bank’s(Phil.(branch(to(its(head(office.( corporation( or( any( bodily( politic( and( to( accept( and( execute( any( trust(
• OffPsetting(or(compensation(of(loans(with(Phil.(branch(using(dollar(accounts(with(a( consistent(with(law;(
foreign(bank(cannot(be(effected(unless(otherwise(stated(in(the(contract.( 2. Act(under(the(order(or(appointment(of(any(court(as(guardian,(receiver(or(
( trustee( or( depositary( of( the( estate( of( any( minor( and( as( receiver( and(
(
(
47(
!
depositary(of(any(moneys(paid(into(court(by(parties(and(legal(proceedings( such( securities( deposited( with( BSP( and( to( exchange( the( securities( for(
and(of(property.( others.(
3. Act(as(the(executor(of(any(will(when(it(is(named(the(executor.( ! All( claims( arising( out( of( the( trust( business( of( a( trust( entity( shall( have(
4. Act( as( administrator( of( the( estate( of( any( deceased( person( with( the( will( priority( over( all( other( claims( as( regards( the( cash( or( securities( deposited(
annexed(or(as(administrator(of(the(estate(of(any(deceased(person(when( as(above(provided.(
there(is(no(will.( (
5. Accept( and( execute( any( trust( for( the( holding,( management( and( IV.!Bond!of!Certain!Persons!for!the!Faithful!Performance!of!Duties!
administration( of( any( estate,( real( or( personal( and( the( rents,( issues( and( !
profits.( A. Bond!Requirements(
6. Establish( and( manage( common( trust( funds,( subject( to( such( rules( and( ! Before( an( executor,( administrator( etc.( appointed( by( the( court( enters(
regulations(as(may(be(prescribed(by(the(Monetary(Board.( upon(the(execution(of(his(duties,(upon(order(of(the(court,(file(a(bond(in(
( such(sum,(as(the(court(may(direct.(
F. Transactions!Requiring!Prior!Authority( ! Upon( the( application( of( any( executor,( administrator( etc.( the( court( may,(
! A( trustee( or( fiduciary( shall( not( undertake( any( of( the( following( after(notice(and(hearing,(order(that(subject(matter(of(the(trust.(
transactions(for(the(account(of(a(client,(unless(prior(to(its(execution.( ! Upon(presentation(of(the(proof(to(the(court(that(the(subject(matters(of(
o Lend,( sell,( transfer( or( assign( money( or( property( to( any( of( the( the(trust(has(been(deposited(with(a(trust(entity.(
departments,(directors,(officers,(stockholders,(or(employees(of( ! The( reduced( bond( shall( be( sufficient( to( secure( adequately( the( proper(
the(trustee(or(fiduciary(or(to(any(corporation(where(the(trustee( administration( and( care( of( any( property( remaining( under( the( control( of(
owns(at(least(50%(of(the(subscribed(or(voting(stock.( such(property.(
o Purchase(or(acquire(property(or(debt(instruments(from(any(the( (
DOSRI( or( to( any( corporation( where( the( trustee( or( fiduciary( B. Exemption!of!Trust!Entity!from!Bond!Requirement(
owns(at(least(50%(of(the(subscribed(capital(or(voting(stock.( ! No( bond( or( other( security( shall( be( required( by( the( court( from( a( trust(
o Invest(in(equities(or(in(securities(underwritten(by(the(trustee(or( entity( for( the( faithful( performance( of( its( duties( as( court( appointed(
fiduciary(or(a(corporation(in(which(the(trustee(or(fiduciary(owns( trustee,(executor(etc.(
at(least(50%(of(the(subscribed(capital(or(voting(stock.( (
o Sell,(transfer,(assign(or(lend(money(or(property(from(one(trust( V.!Operations!of!Trust!Entity!
or( fiduciary( account( to( another( trust( or( fiduciary( account( !
except(where(the(investment(is(allowed(by(Monetary(Board.( A. Separation!of!Trust!Business!from!General!Business(
( ! The(trust(business(and(all(funds(received(by(any(trust(entity(as(executor,(
G. Deposit!for!the!Faithful!Performance!of!Trust!Duties( administrator( etc.( shall( be( kept( separate( and( distinct( from( the( general(
! Before(transacting(trust(business,(every(trust(entity(shall(deposit(with(the( business( including( all( other( funds,( properties( and( assets( of( such( trust(
BSP( as( security( for( the( faithful( performance( of( its( trust( duties( approved( entity.(
by( the( Monetary( Board( in( an( amount( equal( to( not( less( than( Php500,( ! All(moneys,(properties(or(securities(received(by(a(bank(in(its(capacity(as(
000.00.( trustee,(fiduciary(or(investment(manager(shall(be(kept(physically(separate(
! Monetary(Board(shall(require(every(trust(entity(to(increase(the(amount(of( and(distinct(from(the(assets(of(its(other(business(and(shall(be(under(the(
its(cash(or(securities(on(deposit(with(BSP.( joint(custody(of(at(least(2(persons.(
! The( paidPin( capital( and( surplus( of( such( entity( must( be( at( least( equal( to( (
the(amount(required(to(be(deposited(with(the(BSP(in(accordance(with(the( B. Investment!Limitations!of!a!Trust!Entity(
above(provisions.( ! Unless( otherwise( directed( by( the( instrument( creating( the( trust,( the(
! A(trust(entity(so(long(as(it(shall(continue(to(be(solvent(and(comply(with( lending( and( investment( of( funds( and( other( assets( acquired( by( a( trust(
laws(or(regulations(shall(have(the(rights(to(collect(the(interest(earned(on( entity( shall( be( limited( to( loans( or( investments( as( may( be( prescribed( by(
laws,(the(Monetary(Board(or(any(court(of(competent(jurisdiction.(
(
48(
!
! Assets( received( in( trust( or( in( other( fiduciary( capacity( shall( be( of( the( total( investment( in( real( estate,( unless( otherwise(
administered(in(accordance(with(the(terms(of(the(instrument(creating(the( provided(by(the(Monetary(Board.(
trust(or(other(fiduciary(relationship.( (
( D. Investments!of!Non'Trust!Funds(
Limitations:! ! Investments( of( funds( other( than( trust( funds( of( a( trust( entity( which( is( a(
! Evidence( of( indebtedness( of( the( RP( and( of( the( BSO( and( any( other( bank,( financing( company( or( an( investment( house( shall( be( governed( by(
evidence( of( indebtedness( or( obligations( the( servicing( and( repayment( of( the(relevant(provisions(of(the(GBL(and(other(applicable(laws.(
which(are(fully(guaranteed(by(the(RP.( (
! Loans( fully( guaranteed( by( the( RP( as( to( the( payment( of( principal( and( E. Sanctions!and!Penalties!
interest.( ! A( trust( entity( or( any( of( its( officers( and( directors( found( to( have( willfully(
! Loans( fully( secured( by( a( holdout( on,( assignment( or( pledge( of( deposits( violated(any(pertinent(provisions(of(the(GBL(shall(be(subject(to(sanctions(
maintained(either(with(the(bank(proper(or(other(banks.( and(penalties.(
! Loans(fully(secured(by(real(estate(or(chattels(in(accordance(with(pertinent( !
laws.( F. Exemption!of!Trust!Assets!from!Claims(
( ! No(assets(held(by(a(trust(entity(in(its(capacity(as(trustee(shall(be(subject(
Required!Specific!Derivatives:( to( any( claims( other( than( those( of( the( parties( interested( in( the( specific(
! Transaction(to(be(entered(in(to( trusts(
! Borrower’s(name( ! Property( held( by( the( insolvent( debtor( as( a( trustee( of( an( express( or(
! Amount(Involved( implied(trust(shall(be(excluded(from(the(insolvency(proceedings.(
! Collateral(security/ies( (
( G. Establishment!of!Branches!of!a!Trust!Entity(
C. Real!Estate!Acquired!by!a!Trust!Entity( ! Ordinary( business( of( a( trust( entity( shall( be( transacted( at( the( place( of(
! Unless(otherwise(specifically(directed(by(the(trustor(or(the(nature(of(the( business(specified(in(its(articles(of(incorporation.(
trust,( real( estate( acquired( by( a( trust( entity( in( whatever( manner( and( for( (
whatever( purpose( shall( likewise( be( governed( by( the( relevant( provisions( H. Advertisement!of!Services(
of(the(GBL.( ! Trust( entities( shall( advertise( their( services( in( a( dignified( manner( and(
! The(following(circumstances(may(acquire,(hold(or(convey(real(property:( enter(such(business(only(when(demand(for(such(service(is(evident,(when(
o Mortgaged(to(in(good(faith(by(way(of(security(for(debts( specially( equipped( to( render( such( service( and( upon( full( appreciation( to(
o Conveyed(to(it(in(satisfaction(of(debts(previously(contracted(on( the(responsibilities(involved.(
the(course(of(its(dealings.( (
o Shall( purchase( under( judgments,( decrees,( mortgages( or( trust( I. Money!Government!
deeds( held( by( it( and( such( as( it( shall( purchase( to( secure( debts( ! Banks( may( receive( or( hold( as( trustee,( agent,( administrator,( financial(
due(it.( manager( or( other( similar( capacity,( any( fund( or( money( from( the(
• Any( real( property( acquired( or( held( under( the( circumstances( government(and(government(entities,(provided,(that(governmentPowned(
enumerated(above(shall(be(disposed(of(by(the(bank(within(a(period( banks(may(received(or(hold(as(trustee(the(following:(
of(5(years(provided,(that(the(bank(continue(to(hold(the(property(for( o Funds( of( local( government( units( which( are( expected( to( be(
its(own(use,(subject(to(the(following(limitations:( available(for(investment(purposes(for(a(relatively(long(period(of(
o The(total(investment(in(such(real(estate(and(improvements( time,( provided,( that( the( amounts( held( in( trust( or( otherwise(
including( equipment( shall( not( exceed( 50%( of( combined( managed/advised( for( and( in( behalf( of( LGU( shall( be( invested(
capital(accounts( only(in(government.(
o The( equity( investment( of( a( bank( in( another( corporation( o Funds( of( government( and( government( entities( which( are(
engaged(primarily(in(real(estate(shall(be(considered(as(part( authorized(by(special(laws(to(be(placed(in(trust.(
(

Banking!Laws!&!Jurisprudence! ! ! Chapter!1!: Law) Of) 2000) !

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