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Read Section 2 of Republic Act 8791 (General Banking Law of 2000) II. Definition of Banks. a. Banks are defined under the GBL as entities engaged in the lending of funds obtained in the form of deposits. (Note: banks may engage in other activities allowed by law) b. Other definitions: (I only included two out of the four given by Dizon) i. Moneyed institute founded to facilitate the borrowing, lending and safekeeping of money and to deal, in notes, bills of exchange, and credits. ii. An investment company which loans out the money of its customers, collects the interest and charges a commission to both the lender and borrower, is a bank. III. Nature of the Banking Business. a. Debtor-Creditor Relationship. Read Article 1980 of the Civil Code of the Philippines. The contract between the bank and its depositor is governed by the provisions of the Civil Code on simple loan. The bank is the debtor and the depositor is the creditor. b. Fiduciary Duty. Banks are required to “treat the accounts of its depositors with meticulous care, always having in mind the fiduciary nature of their relationship. The fiduciary nature of banking requires banks to assume a degree of diligence higher than that of a good father of a family. Thus, the bank’s fiduciary duty imposes upon it a higher level of accountability. c. Not a Trust Agreement. The fiduciary nature of banking does not convert the contract between the bank and its depositors from a simple loan to a trust agreement, whether expressed or implied. The law simply imposes on the bank a higher standard of integrity and performance in complying with its obligations under the contract of simple loan, beyond those required of non-bank debtors under a similar contract of simple loan. The law allows the banks to offer the lowest possible interest rate to depositors while charging the highest possible interest rate on their own borrowers d. Indispensible Institution. Banks have become an ubiquitous presence among the people, who have come to regard them with respect and even gratitude, and most of all, confidence. e. Impressed with Public Trust. The business of banking is imbued with public interest. The stability of the banks largely depends on the confidence of the people in the honesty and efficiency of banks. f. Degree of Diligence. The law imposes on banks high standards in view of the fiduciary nature of banking – more than that of a good father of a family. BUT the same higher degree of diligence is not expected to be exerted by banks in commercial transactions that do not involve their fiduciary relationship with their depositors. (Note: Diligence extends to Financial institutions) g. Treatment of Accounts with Meticulous Care. BUT there is no law mandating banks to call up their clients whenever their representatives withdraw significant amounts from their accounts. h. Duty to Keep Records. A bank has a fiduciary duty to keep efficiently a record of its transactions with its depositors. i. Banks are Not Gratuitous Bailees. Banks are run for gain, and they solicit deposits in order that they can use the money for that very purpose. j. Banks are Not Expected to be Infallible. k. Dealing with Registered Lands. i. Banks should exercise more care and prudence in dealing even with registered lands, than private individuals, for their business is one affected
with public interest. Absent good faith, banks would be denied the protective mantle of land registration statute. ii. Banks have access to more facilities in confirming the identity of their judgment debtors. It should act more cautiously, especially if some uncertainty had been reported by the appraiser tasked to make verifications. The uncertainty should not be treated as flimsy matter. iii. Case 1: The act of X Bank of entrusting to C the owner’s duplicate certificate entrusted to it by A without even notifying A and absent any prior investigation on the veracity of C’s claim and character is a patent failure to foresee the risk created by the act. iv. Case 2: A bank which accepted a property as mortgage despite the existence of structures and occupants other than the mortgagor showed the bank’s negligence. v. Case 3: Thus, while it is true, x x x that a person dealing with registered lands need not go beyond the certificate of title, it is likewise a well-settled rule that a purchaser or mortgagee cannot close his eyes to facts which should put a reasonable man on his guard, and claim that he acted in good faith under the belief that there was no defect in the title of the vendor or mortgagor. l. Banks may Exclude Persons in their Premises. Banks may impose reasonable conditions or limitations to access by non-employees to its premises and records, such as the exclusion of non-employees from the working areas for employees, even absent any imminent or actual unlawful aggression on or an invasion of its properties or usurpation thereof, provided that such limitations are not contrary to the law. m. Charging of Interest for Loans. The charging of interest for loans forms a very essential and fundamental element of the banking business. In fact, it may be considered to be the very core of the banking’s existence or being. IV. Liability for Acts of Officers and Employees - degree of responsibility, care and trustworthiness expected on banks’ employees and officials-greater than those ordinary clerks and employees
**Banks are expected to exercise the highest degree of diligence in the selection and supervision of their employees: 1. exercise high standard of performance and insure that its employees will do likewise. 2. bank is liable for the wrongful acts of its officers done in the interest of the bank or in their dealins as bank representatives but not for the acts outside the scope of their authority. Negligence of a Manager -bank is liable for the negligence or the misdeed of its branch manager Negligence of Officers GEN RULE: a banking corporation is liable for the wrongful or tortuous acts and declarations of its officers or agents within the course and scope of their employment if a corporation knowingly permits its officers, or any other agent, to perform acts within the scope of apparent authority- be estopped from denying such authority. Negligence of Tellers
high degree of diligence in insuring that they return the passbook only to the depositor or his authorized authority. Failure to do so, they will clothe that unauthorized person presumptive ownership of the passbook, facilitating unauthorized withdrawals by that person. NOTE: appropriation of money by a teller is not estafa since juridical possession remains with the bank; teller only material possession☺(felony: qualified theft- abuse of confidence) Right to Recover from Employees - banks may recover from its employees for any payments made in view of the latter’s negligent or criminal acts Liability for Damages - concurrence of injury to the plaintiff and legal responsibility by the person causing it - to award tort damages- an individual must be injured in the contemplation of law; thus there must be breach before damages may be awarded and the breach of duty should be the proximate cause of the injury. 1. Actual and Compensatory Damages a. when the obligation is breached- consists in the payment of a sum of money, i.e. loan or forbearance then the interest due would be that which may have been stipulated in writing. The interest due itself shall earn legal interest from the time it is judicially demanded= 12% per annum to be computed from default. b. not constituting a loan or forbearance an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. c. when the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest whether the case falls under (a) or (b), shall be 12% per annum from such finality until satisfaction. 2. Exemplary Damages - law allows this by way of example for the public good 3. Moral Damages GEN RULE- corporation (artificial being) is not entitled to moral damages BUT- for breach of fiduciary duty required of a bank, a corporate client may claim such damages when its good reputation is besmirched by such breach, asn social humiliation results therefrom. F. Respondeat Superior, Diligence in the Selection and Supervision of Employees A bank is bound by the negligence of its employees under the principle of respondeat superior or command responsibility. The defense of exercising the required diligence in the selection and supervision of emnployees is NOT a complete defense in culpa contractual, unlike in culpa aquiliana. 1.) Whose authority is needed in order for an entity to engage in banking or quasi-banking functions? Bangko Sentral 2.) What agency of the government determines whether an entity or person is performing banking or quasi-banking functions without authority from the Bangko Sentral? How? Monetary Board. The board through the supervision of the BSP examine, inspect, or investigate the books and records of such person or entity. Note: Existence of a victim actually injured is not necessary in determining whether an entity is engaged in illegal banking.
3.)What is the scope of the authority of the Supervising and Examining Department? a.) to administer oath to any such person, employee, officer or director of any such entity. b.) to compel the presentation or production of such books, documents, papers or records that are reasonably necessary to ascertain the facts relative to the true functions and operations of such person or entity. 4.) What is the extension of the examining powers? The BSP shall also have the authority to examine an enterprise which is wholly or majorityowned or controlled by the bank that is under examination.(this additional authority is available only when the subject is a bank.) 5.) What is the Certificate of Authority to Register? It is a certificate issued by the Monetary Board, which is an indispensable requirement when registering articles of incorporation with the Securities and Exchange Commission. 6.) What are the requirements for the issuance of such certificate? Evidence showing that: 1.) all requirement of existing laws and regulations to engage in business are complied with. 2.) the public interest and economic conditions, both general and local justify the authorization 3.) the amount of capital, the financing, organization, direction, and administration, as well as the integrity of the organizers and administrators reasonably assure the safety of deposits and the public interest. 7.)How may summons be served to a bank? a.) Sec. 11. Service upon domestic private juridical entity. When the defendant is a corporation, partnership or association organized under the laws of the Philippines with a juridical personality, service may be made on the president, managing partner, general manager, corporate secretary, treasurer, or in-house counsel. (Rule 14, Section 11 of the Rules of Court.) b.) Sec. 12. Service upon foreign private juridical entity. When the defendant is a foreign private juridical entity which has transacted business in the Philippines, service may be made on its resident agent designated in accordance with law for that purpose, or, if there be no such agent, on the government official designated by law to that effect, or on any of its officers or agents within the Philippines. (Sec. 12. Rule 14) 8.) Strict compliance is necessary with the mode of service to confer jurisdiction of the court over a corporation. The officer upon whom service is served must be one who is named in the statutes; otherwise, the service is insufficient. What is the purpose of this rule?
To render reasonably certain that the corporation receive will prompt and proper notice in an action against it. Note: Service of summons on a bank manager is invalid. A case should not be dismissed simply because an original summons was wrongfully done. It is not pertinent whether the summons is designated as an original or an alias summon as long as it has adequately served its purpose. CHAPTER 2: ORGANIZATION MANAGEMENT AND ADMINISTRATION OF BANKS, QUASI-BANKS AND TRUST ENTITIES (provision halos to kc ganun din un book parang codal) ORGANIZATION Conditions: (SPC) • That the entity is a stock corporation • That its funds are obtained from the public , which shall mean 20 or more persons • That the minimum capital requirements prescribed by the monetary board for each category of banks are satisfied Capabilities: • In terms of financial resources and technical expertise and integrity • Licensing process shall incorporate and accessment of 1. The banks ownership structure 2. Directors and senior management 3. Its operation plan, and 4. Internal controls, as well as 5. Its projected financial condition and capital base Capital Requirements • Required minimum capital (prescribed by the monetary board) TYPE OF BANK Universal commercial Thrift Head office in manila Head office outside Mla Rural Within Mla Cities of cebu and davao 1st, 2nd, 3rd class cities and 1st class municipalities 4th, 5th, 6th class cities and 2nd, 3rd, 4th class AMOUNT (Million) 4950 2400 325 52 26 13 6.5 2.6
Foreign Stockholdings GBL provides . ~Sec 13 Corporation Code Incorporators/ Subscribers Incorporators Subscribers /Subscribers & Proposed Directors Must be persons of Must have integrity and of good adequate financial credit standing in the strength to pay for business community their proposed subscription in bank Must not have been convicted of any crime involving moral turpitude.municipalities • At least 25% of the toal authorized capital stock shall be subscribed by the subscribers of the proposed bank. Purchase or acquire shares of its own capital stock. Accept its own shares as a security for a loan EXCEPT WHEN AUTHORIZED BY MONETARY BOARD > stock purchased shall be sold within 6 months from time of purchase • At common law. to be listed among original subscribers in Articles of incorporation Branches • Universal and commercial – within ot outside Philippines upon prior approval by BSP All other banks – governed by pertinent laws • A bank authorized to establish branches or other offices shall be responsible for all business conducted in such branches and offices to the same extent and in the same manner as though such business had all been conducted in the head office. not officers or employees of government agency charged with supervision of loan • A bank may be organized with not less than 5 nor more than 15 incorporators • In excess of 15. or 2. a corporation has no lien upon the shares of stockholders for any indebtedness to the corporation and there is no statute creating such lien. • Bank + branches + other offices = 1 unit STOCKHOLDINGS Treasury Stocks • GBL provides no bank shall: 1. and at least 25% of such subscription shall be paid up. provided that in no case shall the paid-up capital be less than the minimum required capital stated above.
thrift – 40%. In the exercise of the authority.• Foreign individuals and non-bank corporations may own or control up to 40% of the voting stock of a domestic bank. Sec. . Within the same period. – Within seven (7) years from the effectivity of this act and subject to guidelines issued pursuant to the Foreign Banks Liberalization Act. > apply to Filipino and domestic non-bank corporations • The percentage of foreign-owned voting stocks in a bank shall be determined by the citizenship of the individual stockholders in that bank.Two or more corporations owned or controlled by the same family group or same group of persons shall be considered related interests and must be fully disclosed in all transactions by such corporations or related group of persons with the bank. Any right. • Controlling stockholders – individuals holding more than 50% of the voting stock of the corporate stockholders of the bank • Voting stock: commercial – 60%. which prior to the effectivity of this Act availed itself of the privilege to acquire up to sixty percent (60%) of the voting stock of a bank under the Foreign Banks Liberalization Act and the Thrift Banks Act. Acquisition of Voting Stock in a Domestic Bank. 2 of whom shall be independent directors . .12. privilege or incentive granted to a foreign bank under this Section shall be equally enjoyed by and extended Family Groups or Related Interest Sec. BOARD OF DIRECTORS Number of Directors • There shall be at leasr 5 and maximum of 15 members of board of directors of bank. Stockholdings of Family Groups of Related Interests. Corporate Stockholdings. rural bank – fully owned and held by Filipino • Determining nationality of bank – control test is applied Acquisition of Voting Stock in a Domestic Bank GBL provides: Sec. shall be considered family groups or related interests and must be fully disclosed in all transactions by such corporations or related groups of persons with the bank. legitimate or common-law. 13. – Stockholdings of individuals related to each other within the fourth degree of consanguinity or affinity. the Monetary Board shall adopt measures as may be necessary to ensure that at all times the control of seventy percent (70%) of the resources or assets of the entire banking system is held by banks which are at least majority-owned by Filipinos. to further acquire voting shares such bank to the extent necessary for it to own one hundred percent (100%) of the voting stock thereof. 73. the Monetary Board may authorize a foreign bank to acquire up to one hundred percent (100%) of the voting stock of only one (1) bank organized under the laws of the Republic of the Philippines. the Monetary Board may authorize any foreign bank.
10. all of legal age and a majority of whom are residents of the Philippines. such as but not limited to the following: 18.3.Filipino citizens may become members of the board of directors of a bank to the extent of the foreign participation in the equity of said bank.2. • Independent director – a person other than an officer or employee of the bank. stock options. Any two (2) or more positions may be held concurrently by the same person. The directors or trustees and officers to be elected shall perform the duties enjoined on them by law and the by-laws of the corporation. Compensation and other Benefits of Directors and Officers Sec.Corporation Code: Sec. or 18. it subsidiaries or affiliates or related interests • Specific qualifications on independent director (see banking book page 58) • Directors of Merged or Consolidated Banks • Number of directors must not exceed 21 Meetings • May be conducted through modern technologies • Within Philippines – must be stated in by laws Sec. the directors of a corporation must formally organize by the election of a president. Directors or trustees cannot attend or vote by proxy at board meetings. bonuses. a secretary who shall be a resident and citizen of the Philippines. except for the election of officers which shall require the vote of a majority of all the members of the board. . quorum. Corporate officers. a treasurer who may or may not be a director. Each of the incorporators of s stock corporation must own or be a subscriber to at least one (1) share of the capital stock of the corporation. When a bank is found by the Monetary Board to be conducting business in an unsafe or unsound manner. Compensation and Other Benefits of Directors and Officers. When a bank is under comptrollership or conservatorship.1. allowance.Any number of natural persons not less than five (5) but not more than fifteen (15). a majority of the number of directors or trustees as fixed in the articles of incorporation shall constitute a quorum for the transaction of corporate business. Unless the articles of incorporation or the by-laws provide for a greater majority. or 18. fees. When a bank is found by the Monetary Board to be in an unsatisfactory financial condition. 25. and such other officers as may be provided for in the by-laws. who shall be a director. FIT AND PROPER RULE Powers of the Monetary Board .Immediately after their election. To protect the finds of depositors and creditors the Monetary Board may regulate the payment by the bark to its directors and officers of compensation. except that no one shall act as president and secretary or as president and treasurer at the same time. . • Non. Number and qualifications of incorporators. and every decision of at least a majority of the directors or trustees present at a meeting at which there is a quorum shall be valid as a corporate act. 18. profit sharing and fringe benefits only in exceptional cases and when the circumstances warrant. may form a private corporation for any lawful purpose or purposes.
No person convicted by final judgment of an offense punishable by imprisonment for a period exceeding six (6) years. Rules and Regulations Circular 500 (See book page 69) AUTOMATED TELLER MACHINES Off-site ATMs • Conditions: 1. pass upon and review the qualifications and disqualifications of individuals elected or appointed bank directors or officers and disqualify those found unfit. trustee or officer of any corporation. officer. Manual of Regulations of Banks Sec. Disqualifications • Circular 513 series of 2006 (see book p 61) • Corporation Code o Sec. however. regard shall be given to his integrity. all banks including their branches and offices shall transact business on all working days for at least six (6) hours a day. In determining whether an individual is fit and proper to hold the position of a director or officer of a bank. – Unless otherwise authorized by the Bangko Sentral in the interest of the banking public. Sundays or holidays for at least three (3) hours a day: Provided. trustees or officers. In addition. Installed only in center of activity > adequate internal control and security measures shall be adopeted and submitted to BSP . shall qualify as a director. working days shall mean Mondays to Fridays.Sec.To maintain the quality of bank management and afford better protection to depositors and the public in general the Monetary Board shall prescribe. experience. For purposes of this Section. 5. Disqualification of directors. BANKING DAYS AND HOURS Sec.Sec 9 and 27 (see book p 65) • PIDC law sec 17 (p67) • RA 7353 sec 5 (p67) • Appendix 38. • NCBA Provision. All members of the Board of Directors of the rural bank shall be citizens of the Philippines at the time of their assumption to office: Provided. 27. except if such days are holidays. 10 (p67) Prohibition on Public Officials (RA 7353) Sec. . Fit and Proper Rule. 21. education. training. consultant or in any capacity in the bank. banks or any of their branches or offices may open for business on Saturdays. the Monetary Board may disqualify. 16. That nothing in this Act shall be construed as prohibiting any appointive or elective public official from serving as director. . Submit report to appropriate department of BSP 2. That banks which opt to open on days other than working days shall report to the Bangko Sentral the additional days during which they or their branches or offices shall transact business. Banking Days and Hours. suspend or remove any bank director or officer who commits or omits an act which render him unfit for the position. or a violation of this Code committed within five (5) years prior to the date of his election or appointment. After due notice to the board of directors of the bank. and competence.
quasi-bank’s or trust entity’s board of directors. in English or Filipino. quasi-bank or trust entity. The Bangko Sentral may by regulation prescribe the newspaper where the statements prescribed herein shall be published. an annual balance sheet audit of the bank. A copy of the report shall be furnished to the Monetary Board. including those of its subsidiaries and affiliates. . when warranted by the circumstances. 58. shall publish a statement of its financial condition. including the results of its operations. may . Independent Auditor. Visit only centers of activity confined within Manila 2. . that will inform the public of the true financial condition of a bank as of any given time. Publication of Financial Statements. quasi-bank or trust entity in public places it may determine.Every bank. lieu of the publication required in the preceding paragraph. quasi-bank or trust entity to review the internal audit and control system of the bank. either personally or by a committee created by the board. quasi-bank or trust entity and to submit a report of such audit Financial Statements Sec. the Monetary Board. Additionally. to conduct. 60. The Monetary Board may also direct the board of directors of a bank. SEC 61. subsidiaries and affiliates. Inform BSP of actual date a Mobile ATM becomes operational Independent Auditor Sec. quasi-bank or trust entity to engage the services of an independent auditor to be chosen by the bank. offices. quasi-bank or trust entity. but if no newspaper is published in the same province.The Monetary Board may require a bank. The term of the engagement shall be as prescribed by the Monetary Board which may either be on a continuing basis where the auditor shall act as resident examiner. quasi-bank or trust entity concerned from a list of certified public accountants acceptable to the Monetary Board. quasi-bank. and shall contain such information as may be required in Bangko Sentral regulations. by a vote of at least five (5) of its members. Only banks which have shown general compliance Mobile ATMs • Conditions: 1. in special cases and upon application of the bank. which shall be as of a specific date designated by the Bangko Sentral. but in any case. and of its branches. Financial Statements. in such terms understandable to the layman and in such frequency as may be prescribed Bangko Sentral. or on the basis of special engagements. shall show thee actual financial condition of the institution submitting the statement. is located. The Monetary Board may allow the posting of the financial statements of a bank. then in a newspaper published in Metro Manila or in the nearest city or province. – Every bank. . quasi-bank or trust entity shall submit to the appropriate supervising and examining department of the Bangko Sentral financial statements in such form and frequency as may be prescribed by the Bangko Sentral. the independent auditor shall be responsible to the bank’s. banks shall make available to the public in such form and manner as the Bangko Sentral may prescribe the complete set of its audited financial statements as well as such other relevant information including those on enterprises majority-owned or controlled by the bank. In periods of national and/or local emergency or of imminent panic which directly threaten monetary and banking stability. in the case of a domestic institution or the principal branch or office in the case of a foreign bank. at least once every quarter in a newspaper of general circulation in the city or province where the principal office. trusty entity and/or the individual members thereof.3. Such statements. . Secure insurance coverage or self-insurance scheme 3.
The banking industry is hereby declared as indispensable to the national interest and. the President of the Philippines may at any time intervene and assume jurisdiction over such labor dispute in order to settle or terminate the same. respectively. Publication of Capital Stock. No branch of any foreign bank doing business in the Philippines shall in any way announce the amount of the capital and surplus of its head office. notwithstanding the provisions of any law to the contrary. Sec. Reports of Strikes and Lockouts • Apprise deputy governor of the supervision and examination sector of BSP • Disclose: cause and bank management’s position on its legality. However. powers. supervision and general conduct of business of Islamic banks shall be governed by special laws. and the Cooperative Code. for purposes of prescribing the minimum ratio which the net worth of a thrift bank must bear to its total risk assets. Chapter 3: Deposit Functions of Banks I. officers or stockholders. . supervision and general conduct of business of thrift banks. if any. ownership and capital requirements. . as well as disputes between any or all of them and the bank. – The provisions of any law to the contrary notwithstanding. and the Cooperative Code shall likewise apply to thrift banks. Settlement of Disputes. The organization. powers. officers or stockholders. Other Banking Laws. Sec. The provisions of this Act. and bank operations affected Laws governing other types of banks Sec. and shall form part of the publication. A. Demand Deposits. rural banks and cooperative banks shall be governed by the provisions of the Thrift Banks Act. rural banks. such fact shall be stated in. 71. 63. and cooperative banks. the Bangko Sentral shall be consulted by other government agencies or instrumentalities in actions or proceedings initiated by or brought before them involving controversies in banks. if unsettled after seven (7) calendar days shall be reported by the Bangko Sentral to the Secretary of Labor who may assume jurisdiction over the dispute or decide it or certify the same to the National Labor Relations Commission for compulsory arbitration. – A bank. 62. the amount of its capital actually paid up. insofar as they are not in conflict with the provisions of the Thrift Banks Act. quasi-bank or trust entity of which they are directors. quasi-bank or trust entity to defer for a stated period of time the publication of the statement of financial condition required herein. quasi-banks or trust entities arising out of and involving relations between and among their directors. However. however. the ownership and capital requirements. the Rural Banks Act. 22. Kinds of Deposits. the Rural Banks Act. Sec. any strike or lockout involving banks. Strikes and Lockouts. quasi-bank or trust entity incorporated under the laws of the Philippines shall not publish the amount of its authorized or subscribed capital stock without indicating at the same time and with equal prominence.allow such bank. respectively. definitely assigned to such branch. the provisions of Section 33 of this Act shall govern. or of the bank in its entirety without indicating at the same time and with equal prominence the amount of the capital. – The organization.
b. fund transfers/credit memos within the same bank representing proceeds of loans granted under existing regulations. .A Universal and Commercial Bank may accept or create demand deposits subject to withdrawal by check without prior authority from the BSP. postal money orders. . unless caused by normal bank charges and other fees incidental to handling such accounts. Checks lodged under “Returned Checks etc” shall either be returned or honored the following day before clearing. d. e. postal money orders and duly funded “on us” checks which may be permitted at the discretion of each bank.A Thrift/Rural/Cooperative Bank may accept or create demand deposits upon prior authority from the BSP.drawings against uncollected deposits shall be prohibited except when made against uncollected deposits representing manager’s. Cash. The items to be used as cover for the honored checks should be limited to the following: a. Temporary Overdrawings.temporary overdrawings against current account shall not be allowed. duly funded “on us” checks. b. employees of the bank’s cash departments/cash units. Current Accounts of Bank Officers and Employees . c. . treasury warrants. All officers. . cashier’s or treasurer’s checks. 2. Cashier’s/Manager’s/Certified Checks. . 1. bank drafts. treasury warranties. other employees who have direct and immediate responsibility in the handling of transactions and/or records pertaining to demand deposits or current accounts. a. c. and g. the spouses and relatives within the second degree of consanguinity and affinity of the officers and employees covered by the prohibition. Drawings against Uncollected Deposits. f..The following bank officers and employees are prohibited from maintaining demand deposits or current accounts with the banking office in which they are assigned. d.demand deposits – all those liabilities of the BSP and of other banks which are denominated in Philippine currency and are subject to payment in legal tender upon demand by the presentation of depositor’s checks. .technical overdrawings arising from “force posting” in clearing checks shall be debited by banks under “Returned Checks and other Cash Items Not In Process of Collection” which is part of “other assets”.
. . .where that bank possesses funds of a depositor. . the bank may refuse to pay the check as it has no duty to make up the deficiency from the savings account. . Duty of Banks to Know Signature . an open and a savings account. business interests of all the above mentioned wherein they own a majority of the stock. It is a written order addressed to the bank by a person having money in their hands requesting them to pay on presentment. 8. unless such check has been cleared and credited to the account of the creditor. 5.a bank is bound to know the signatures of its customers and if it pays a forged check. 6. to a person named therein or to bearer or order a named sum of money. payable on demand. No duty to make up the deficiency from other accounts. Checks. where the check is drawn for an amount larger than what the drawer has on deposit. .they do not have legal tender power and their acceptance is at the option of the creditor.by virtue of the contract of deposit between banker and depositor.keep track of his available balance in the bank and not rely on the bank to notify him of the necessity to fund certain checks he previously issued. 9. . then it shall be equivalent to a delivery to the creditor of cash equal to that credited to his account. Legal Character of Checks representing Demand Deposits. it must be considered as making the payment out of its own funds and cannot ordinarily charge the amount to the account of the depositor whose name was forged. banker agrees to pay checks drawn by the depositor provided that the depositor had money in the hands of the bank.e. and draws a check upon the open account for more than the account contains. it is bound to honor his checks to the extent of the amount of his deposits. 4.a bank is not liable for its refusal to pay a check on account of insufficient funds even if deposit may be made later in the day. . Responsibilities of Drawer. 7. Duty of the Bank to Honor Checks. No obligation to make partial payment . Savings Deposits 1. B. . 3. Servicing deposits outside bank premises.where a depositor has two accounts.a bank is under no obligation to make a partial payment on a check up to only the amount of the drawer’s funds.A check is a bill of exchange drawn on a bank.failure to do so entitles the drawer to substantial damages without any proof of actual damages.
worn at all times by the deposit solicitors 3.no law mandating banks to call their clients when their representatives withdraw from their accounts. . second copy for posting reference and third copy to be retained in the booklet. deposit slips in booklet form. confined within a locality where there are no other banks in operation or the deposit potential of the said locality is still untapped. 9.banks may be authorized to solicit and accept deposits outside their bank premises subject to conditions. applicant bank shall institute then following minimum safeguards.NOW Accounts are interest bearing deposit accounts that combine the payable on demand feature of checks and investment feature of savings accounts.. transactions shall be recorded by the bookkeeper or any ledger clerk on the same day such are accepted and the passbooks of the depositors shall be returned not later than the following business day. 6. C. b. prenumbered in triplicate copies and in three colors – original copy to the depositor. 4. proper identification cards. Withdrawals . except for banks authorized by the BSP to adopt the no passbook withdrawal system. . 7. a. at end of each month. 2. financial condition of the bank is sound and the operations and the quality of management could reasonably assure the safety of the funds which may be entrusted to its deposit collectors or solicitors. 1. which shall be used in checking the authenticity of signatures. Authority to accept NOW accounts . 2. all collections shall be turned over to the cashier at the end of each day with a a Collection Summary Report. proposed area is clearly defined c. adequate insurance coverage for the funds in transit. d.banks are prohibited from issuing/accepting withdrawal slips or any other similar instruments designed to effect withdrawals of savings deposits without requiring the presentation of passbooks and accomplishment of the necessary withdrawal slips. 8. advise depositors in writing of their account balance. depositors shall always be required to accomplish a signature card when opening an account. places of assignment of bank solicitors shall be rotated at least quarterly. all deposit solicitors shall be bonded for at least Php 1000 subject to increase approximate to their daily collections. 5. Negotiable order of Withdrawal (NOW) Accounts 1.
Blank NOW forms shall be prenumbered and controlled as in the case of unissued blank checks.exempt from the legal reserve requirements 3.Universal and Commercial bansk may offer NOW accounts without prior approval of BSP .shall be issued for a specific period or term 2. banks must use the form prescribed by present rules on NOW accounts. Time Deposits . deposits shall be covered by deposit slips in duplicate duly validated and initialed by the receiving teller. e.essential elements of quasi banking 1. Special time deposits. f. Rules on Servicing NOW Accounts. Negotiable Certificates of Time Deposit 1. Borrowing funds for the borrower’s own account. bank shall be responsible for the proper identification of its depositors and require 2 specimen signatures and other pertinent information. b. copy furnished to the depositor d.all may issue without need of BSP approval. . g.one the payment of which cannot be legally required within a specified number of days. Rural and Commercial banks may offer the same with need of prior BSP approval 2.. a. Thrift. 2. 1. bank statement shall be sent to each depositor at end of month for confirmation of balances. Universal and Commercial bank may issue without prior authority from BSP 2. Rural and Cooperative Bank may issue with prior approval of BSP. E.authority shall automatically be granted to any accredited bank which may participate in the supervised credit program to accept speciakl time deposits from the Agrarian Reform Fund Comission with interest at a lower rate than those allowed on time deposits. D. . b. . Twenty or more lenders at any one time. Certficates of Time Deposit a. NOW accounts shall be kept and maintained separately from the regular savings deposits. Term of time deposits . bank shall inform depositor of the terms and conditions.Thrift. c. prior or simultaneous with opening of a NOW account. Non-negotiable Certificates of Time Deposit . Deposit Substitute Operations (Quasi-banking functions) .
2. such foreign currency loans may include loans to domestic enterprises which are export oriented or registered with the Board of Investments. F. 2. . issue certificates to evidence such deposits 3. endorsement. 4. participations. or acceptance of debt instruments of any kind.no restriction on such except those arising from the contract between the depositor and bank. d. Authority to deposit foreign currencies . Foreign Currency Deposits 1.may deposit foreign currencies which are acceptable as part of the international reserve. Depositary banks qualified by the Monetary Board for expanded foreign currency deposit are exempt from the 15% cover requirement stated in (b) and may extend foreign currency loans to any domestic enterprise without the limits prescribed regarding maturity and marketability and such loans shall be eligible for purposes of the 100% foreign currency cover prescribed. 4. e. repurchase agreements. methods of borrowing are issuance. and 4. promissory notes. to discount said certificates. to pay interest in foreign currency on such deposits 3.depositary banks shall a. such as acceptances. accept deposits and foreign currencies in trust. other than deposits. except those which are required by the BSP to be surrendered. the foreign currency cover shall be in the same currency as that of the corresponding foreign currency liability. and such other instruments as the Monetary Board may determine. maintain at all times a 100% foreign currency cover for their liabilities b. Except as the Monetary Board may otherwise prescribe or allow. 1.any person may deposit foreign currency in Philippine banks designated by the BSP for the purpose of such deposits. subject to limitations imposed by the Monetary Board. trust certificates. Authority of Banks to accept foreign currency deposits. . BSP may pay interest on the foreign currency deposit and if requested shall exchange the foreign currency notes and coins into foreign currency instruments drawn on its depositary banks. of which cover at least 15% shall be in the form of foreign currency deposit with the BSP. c. accept said deposits as collateral for loans subject to such rules and regulations 5. the purpose of which is relending or purchasing receivables or other obligations. certificates of assignments or similar instruments with recourse. . Foreign currency cover requirements . withdrawability and transferability of Foreign Currency Deposits. and the balance in the form of foreign currency loans or securities. f. which shall be of short term maturities and readily marketable. numbered accounts for recording and servicing said deposits are allowed.3.
379. Except as provided in the preceding article. Anonymous and Numbered Accounts. Pen names and stage names cannot be usurped. BSP Circular No. no person shall use different names and surnames.G. evading the execution of a judgment or causing damage. ID Photos All banking institution are required to set a minimum of three (3) specimen signatures to be simultaneously required from each of their depositors and to update the specimen signatures of their depositors every (5) years or sooner. Series of 2007 provides for the list of valid identification cards as follows: i. Clients who engage in a financial transaction with the covered institutions for the first time shall be required to present the original and submit a copy of at least two valid photobearing identification documents issued and signed by an official authority. Revised Penal Code: Art. 178. In case where such is allowed. The employment of pen names or stage names is permitted. Specimen Signatures. — The penalty of arresto mayor and a fine not to exceed 500 pesos shall be imposed upon any person who shall publicly use a fictitious name for the purpose of concealing a crime.anonymous accounts and those under fictitious names should not be allowed or kept. Civil Code: Art. 564. at the discretion of the bank. Any person who conceals his true name and other personal circumstances shall be punished by arresto menor or a fine not to exceed 200 pesos. II. . provided it is done in good faith and there is no injury to third persons. Art. banks/non-bank financial institutions should ensure that the client is identified in an official or other identifying documents. 380. Using fictitious name and concealing true name. .Please see also CA 142 as amended by RA 6085. Valid IDs include the following • Passport • Driver’s license • Professional Regulations Commission (PRC) ID • National Bureau of Investigation(NBI) clearance • Police clearance • Postal ID • Voter’s ID • Barangay certification • Government Service and Insurance System(GSIS) e-Card • Social Security System(SSS) card • Philhealth card • Senior Citizen Card • Overseas Workers Welfare Administration (OWWA) ID • OFW ID . Administration of Deposits A.
Parents may nevertheless deposit for their minor children and guardian for their wards. iii. or at the commencement of a business relationship. to make savings or time deposits with and withdraw the same as well as receive interest thereon from banking institutions. in their own right and in their own names. not otherwise disqualified by any other incapacity. and 4. 2. • Other valid IDs issued by the Government and its instrumentalities ii. Minors and Corporations as Depositors 1. library ID. without the assistance of their parents or guardians. have sufficient discretion. Corporations Corporations may open bank accounts as follows: (i) Incorporation Stage – In case the payment of subscription is in cash. at least seven years of age. Banks and non-bank financial institution shall require their clients to submit clear copies of the two valid IDs on a one-time basis only. and may receive dividends and interest: Provided however. Armed Forces of the Philippines (AFP). or interest to the minor of whom he is the guardian. as falling under the definition of transaction. Other IDs may include birth certificate. if any guardian shall give notice in writing to any thrift bank not to make payments of deposits. dividends. Minors Minors are vested with special capacity and power. (ii) Post Incorporation – In opening a bank account. among others. 3. Financial transactions may include remittances. B. able to read and write.g. the Securities and Exchange Commission requires a Bank Certificate of deposit Of paid-up capital notarized in place where signed. Students who are beneficiaries of an OFW and who are not yet of voting age shall also be required to present two IDs. and membership IDs duly issued by any association or organization within the college or university and signed by the pertinent authority issuing the ID. 2. Deposits in the Thrift Banks Minors in their own rights and in their own names may make deposits and withdraw the same. They shall require their clients to submit an updated photo and other relevant information whenever the need for it arises.• Seaman’s Book • Alien Certification of Registration/Immigrant Certificate of Registration • Government office ID [e. the Board of Directors Issues a resolution authorizing the signatories and specifying the depositary bank. Time of Payment of Interest on Time Deposits/Deposit Substitutes . provided the following requirements requisites are met: 1. iv. C. That. Home Development Mutual Fund (HDMF) IDs] • Certification from the National Council for the Welfare of Disable Persons (NCWDP) • Department of Social Welfare and Development (DSWD) Certification. then such payment shall be made only to the guardian.
further. c) the deposit account balances have fallen below the required minimum monthly ADB for dormant accounts and for at least two (2) consecutive months for active amounts. agencies and extension office doing business in the Philippines. Booking of Deposits After Regular Banking Hours. received after the selected clearing cut-off time until the close of the regular banking hours. The interest or yield paid in advance shall not exceed the interest for one (1) year. Average Daily Balance i. subject to the following conditions. I. Deposits. D. . Booking of Non-cash Deposits Deposits checks including “on us” checks. after which time. be booked as deposits on the day of the receipt. H. Cash deposits received after the selected clearing cut-off time until the close of the regular banking hours shall be booked as deposits on the day of receipt. that banks which are located in areas where there are no BSP regional/clearing arrangements may set a clearing cut-off time not earlier that two (2) hours before the start of their local clearing after which time deposits received shall be booked likewise as hereinafter provided. the fall below the required minimum monthly average daily balance (ADB). however. at the option of the bank. a) the imposition of such charges or fees is clearly stated among the terms and conditions of the deposit. received after the close of the regular banking hours shall be treated as contingent accounts of the day of receipt and shall be booked as deposits the following banking day. (ii) A deposit substitute instrument no withdrawn or renewed on its maturity date shall from said date become payable on demand and shall earn an interest or yield from maturity to actual withdrawal or renewal at a rate applicable to a deposit substitute with a maturity of fifteen (15) days. (i) A time deposit not withdraw or renewed on its due date shall be treated as a saving deposit and shall earn interest from maturity to the date of actual withdrawal or renewal at a rate applicable to saving deposits. G. and not earlier than three and one half (3-1/2) hours before the start of clearing branches. That a bank may set a clearing cut-off time for its head office not earlier than two (2)hours before the start of clearing at the BSP. Banks may impose and collect service charges and/or maintenance fees on savings and demands deposits accounts. may. F. all deposits and withdrawals during regular banking hours shall be credited or debited to deposit liability accounts on the date receipt or payment thereof: Provided. Clearing Cut-off Time As a general rule. b) the rate or amount of such charges of fees is properly disclosed among the terms and conditions of the deposits. whether active or dormant. manager’s/cashier’s/treasurer’s check and demand drafts. E. Treatment of Matured Time Deposits/Deposit Substitutes. deposits received shall be booked as hereinafter provided: Provided. as well as treasury warrants and postal money orders. which are drawn against the depository bank and all its offices. whether cash or non-cash.Interest or yield on time deposit/deposit substitute may be paid at maturity or upon withdrawal or in advance: Provide. Booking of Cash Deposits. However.
ii. rural bank or any allied financial enterprise . Banks shall likewise post said information on their respective websites. Any change in the terms and conditions for the imposition of service charges and/or maintenance fee. electronic mail.d) the required minimum monthly ADB of deposits are properly disclosed among the terms and conditions of the deposits. The general powers incident to corporations 2. and other Functions of Banks Powers of a Universal Bank 1. . and other evidence of debt. allied enterprises may be financial or non-financial . CHAPTER 4: Investments. That information by regular mail. The power to invest in non-allied enterprises A universal bank may: . courier delivery and/or other alternative modes of communication on the depositor’s last known address at least sixty (60) days prior to implementation shall be considered sufficient notice: Provided. further. automated teller machines (ATM) on screen messages. and that the depositors shall be informed by registered mail with return card on his last known address at least (60) days prior to the imposition of dormancy fee. increase in the amount of such charges and fees or increase in the required minimum monthly ADB of deposits. The powers of an investment house 3.Own up to 100% of the equity in a non-financial allied enterprise .Invest in equities of non-allied enterprise .g. shall take effect only after due notice in the depositor. the period of dormancy shall be properly disclosed among the terms and conditions of the deposit. iii. Loans. and in conspicuous places within the bank premises and other places near the bank’s own ATM at least sixty (60) days prior to implementation. and e) in the case of charges and fees for dormant accounts or dormancy fee. bills of exchange. e. among others. drafts.Invest in the equities of allied and non-allied enterprises. The powers authorized to a commercial bank 2.. Provided. discounting and negotiating promissory notes. All such powers as may be necessary to carry on the business of commercial banking such as: accepting drafts and issuing letters of credit.Own up to 100% of the equity in a thrift bank. and accepting and creating demand deposits.Invest in equities of quasi-banks Powers of a Commercial Bank 1. That failure of the depositor to manifest or register his objection to the new service charges and maintenance fees or any change in their terms and conditions in writing within thirty (30) days from receipt of written notice of amendment shall be deemed to constitute acceptance of such changes. statement of account messages.
Credit Accommodations and Guarantees Single Borrowers Limit: shall not exceed 20% of the net worth of such bank Except: . Generally. Except with the written approval of the majority of all the directors of the bank. credit accommodations.e. Stockholders. evp.deposits of rural banks with government owned and controlled financial institutions Restriction on Bank Exposure to Directors. indorser. secretary. and their Related Interests (DOSRI) Limits of Loans: 1) The Monetary Board may regulate the amount of loans.as the Monetary Board may otherwise prescribe .* Letters of credit: an engagement by a bank or other person made at the request of a customer that the issuer will honor drafts or other demands for payment upon compliance with the conditions specified in the credit. surety for loans from such bank to others 3. 2) the bank issuing the LOC. borrow from such bank 2. in any manner be an obligor or incur any contractual liability to the bank Directors include those: 1) named as such in the articles of incorporation.Own up to 100% of allied financial enterprises .Invest only in equities of allied enterprises. credit accommodations and guarantees that may be extended by a bank to its DOSRI as well as investments of such bank in the enterprises owned and controlled by its DOSRI 2) The outstanding loans. there are 3 parties: 1) the buyer. and guarantees which a bank may extend to its DOSRI shall be limited to an amount equivalent to their respective unencumbered deposits and book value of their paid-in capital contribution in the bank. vice-chairman) . senior vp. 2) duly elected in the meetings of stockholders. treasurer) and 2) who performs functions of management (i. general manager. it is the engagement of the bank to pay the seller once the draft and the required shipping documents are presented to it. 3) elected to fill the vacancies in the board of directors. no director or officer of any bank shall: 1. directly or indirectly. chairman. who procures LOC and obliges himself to reimburse the issuing bank. excluding the director concerned. A commercial bank may: . president. which may be financial or non-financial . and 3) the seller who ships the goods to the buyer. become a guarantor. Officers. Officers include those: 1) whose duties are defined by the by-laws or are generally known to be officers of the bank (i.e.Own up to 100% of allied nonfinancial enterprises Limit on Loans.
amount to ONE PERCENT or more of the total subscribed capital stock of the bank. Authority to Prescribe Terms and Conditions of Loans and Other Credit Accommodations The MB shall prescribe related terms and conditions for various types of bank LOCA. associations or firms of which DOSRI owns at least 20% of the subscribed capital 6) Corporations. The purpose shall be stated in the contract between the bank and borrower. pledged or assigned to secure the loans or credit accommodations 4) Corporations or associations of which DOSRI is also a director or officer 5) Corporations. by regulation. their Related Interests 1) spouse or relative within the first degree of consanguinity or affinity. it is expected to ascertain and verify the identities of the persons it transacts business.small loans granted to basic sectors like the poor and lowincome households for their microenterprises and small businesses C. whose stockholdings in the same. If the proceeds were used other than the purpose stated. individually or collectively. or relative by legal adoption. increase the established maximum ratio. interest. prescribe further security requirements and reduce or. Other Security Requirements for Bank Cradits The MB shall. and regulate the interest imposed on microfinance borrowers. or right mortgaged. of a director. associations or firms wholly or majority-owned and controlled by DOSRI Grant and Purpose of Loans and Other Credit Accommodations (LOCA) A. in special cases. Amount and Purpose of Loans Banks shall grant only in amounts and for periods of time essential for the effective completion of the operation. quasi-bank. Requirements for Grant of Loan Statement of assets and liabilities Statement of income and expenditures Other requirements prescribed by law to ascertain borrower’s ability to pay Microfinancing Loans.Stockholders are any stockholder in the books of the bank. Amortization on Loans and Other Credit Accommodations • > Amortization schedule of bank LOCA shall be adapted to the nature of the operation . for which reason the bank should guard against loss due to negligence or bad faith. officer or stockholder of a bank 2) Partnership of which DOSRI is a partner 3) Co-owner with DOSRI of the property. Reason for Stringent Rules in Granting Loans The business of a bank is one affected with public interest. E. D. or trust entity. or trust entity. From the nature of its business. Unsecured Loans and Other Credit Accommodations The Monetary Board (MB) is authorized to issue such regulations as it may deem necessary with respect to unsecured LOCA that may be granted by banks. quasi-bank. banks may terminate the LOCA and demand immediate payment of the obligation. F. G. B.
Iniquitous. In such case. hence. > 5. provisions shall be made for periodic amortization payments. Iniquitous. 26-35% per annum. Prepayment of LOCA > The borrower may at anytime prior to the maturity date prepay. In most cases. it is as if there was no express contract thereon.> In case of LOCA with maturities of more than 5years. Unilateral Increase of Rates > The unilateral determination and imposition of increased rates is violative of the principle of mutuality of contracts under Article 1308of the Civil Code. the schedule of loan amortization shall take into consideration the project cash flow of the borrower and adopt this into the terms and conditions formulated by banks. but the same must be made annually. in whole or in part. M. *Exception to the Rule: > If the creditor unilaterally and actually decreased the interest charges whenever the maximum rate of interest is reduced by law or the MB. Unconscionable and Exorbitant. the court reduced it to 12% per annum. One-sided impositions are void. Development Assistance Incentives . L. but in no case shall the initial amortization date be later than 5years from the date on which the LOCA is granted. This rule is to prevent the one-sidedness in favor of the lender. the bank may permit the initial amortization payment to be deferred until revenues are sufficient for such purpose. Unconscionable and Exorbitant Interests are against public policy.5% per month. K. Unconscionable and Exorbitant Interest > Notwithstanding the inexistence of the Usury Law. Escalation Clause. when allowable > Parties may agree that the rate of the interest agreed upon be increased in the event that the maximum rate of interest is increased by the MB: provided that there is also a stipulation that the interest would be reduced in the event that the maximum rate of interest is reduced. > When the borrowed funds are to be used for purposes which do not initially produce revenues adequate for regular amortization payments therefrom. I. J. > In case of LOCA to microfinance sectors. void. The same shall take effect on or after the date the maximum interest rate is increased or decreased. Effect of Void Interest Rate > Since it is void. are held to be Iniquitous. the unpaid balance. The de-escalation clause is an indispensable requisite to the validity and enforceability of an escalation clause in the contract. subject to the terms and conditions of the contract. the court will fix a more reasonable and equitable rate. H.
RATIONALE: Protect users from lack of awareness of the true cost thereof. and the like. unless the same are well-secured and in the process of collection shall be considered bad debts. cooperatives. Banks cannot extend Peso Loans to Non-Residents > This is to curb speculation in the foreign exchange market and to further reinforce the memorandum that peso deposits should be funded from inward foreign exchange remittance. hospitals and other medical services. The charges. a statement in writing setting forth the ff. prior to the consummation of the transaction. local government units and other activities with social content. prescribe. which are paid to or be paid by such person in connection with the transaction but which are not incident to the extension of credit. The finance charge1 expressed in terms of pesos and centavos. 6. 5.> The Bangko Sentral shall provide for incentives to banks extending loans to finance educational institutions. if any. socialized or low-cost housing. The percentage that the finance bears to the total amount to be financed expressed as a simple annual rate on the outstanding unpaid balance of the obligation. Renewal or Extension of LOCA > The MB may. 3. N. 7. Provisions for Losses and Write-Offs > Debts on which interest is past due and unpaid. by regulation. prescribe the conditions and limitations extension or renewals of LOCA. whichever is greater. The total amount to be financed. 2. to be credited as down payment and/or trade-in. uncertainty of interest rates. The MB shall fix the amount of reserves for bad debts or doubtful accounts or other contingencies. discounts and such other charges incident to the extension of credit as the board may. proceeding from the experience that banks are able to conceal such true cost by hidden charges. fees. TRUTH IN LENDING DISCLOSURE: Any creditor shall furnish to each other to whom credit is extended. Writing off LOCA shall be subject to regulations issued by the MB. except that such liability shall not exceed P2000 on any credit transaction. . P. The amounts. PENALTY: CIVIL= P100 or in the amount equal to twice the finance charged required by such creditor in connection with such transaction. by regulation.: 1. 1 Interest. deduction of interest rates from the loaned amount. individually itemized . 4. O. The difference between the amounts set forth under clauses 1 and 2. service charges. The cash price or delivered price of the property or service to be acquired.
CRIMINAL= FINE by not less P1K or more than P5K or imprisonment for more than 6 months. of any mortgage on real estate which is security for any loan or other credit accommodation granted. violation shall not affect the validity or enforceability of any contract or transactions. No. 133 as amended by R. both individuals and corporations (R. the loans had not yet become due and demandable . the purchaser at the auction sale concerned whether in a judicial or extrajudicial foreclosure. NOTE: *pursuant to TRUTH LENDING ACT. *SC held that the lender cannot charge those that are not stipulated in the promissory notes (Consolidated Bank and Trust Co. CA) *no punishment or penalty shall apply to the Philippine Government or agency or any political subdivision thereof. penalties and other charges at the latter’s sole discretion and without giving prior notice to or securing the borrower’s consent. if not.A. with interest thereon at the rate specified in the mortgage. 4882) *demand before foreclosure is essential. NOTE: * the one year period is to be reckoned from the date of the registration of the sale. shall have the right to enter upon and take possession of such property immediately after the date of the confirmation of the auction sale and administer the same in accordance with law. vs. FORECLOSURE OF REAL ESTATE MORTGAGE Sec. nor more than one year or both. to redeem the property by paying the amount due under the mortgage deed. (ii) However. whether judicially or extrajudicially.A. the mortgagor or debtor whose real property has been sold for the full or partial payment of his obligation shall have the right within one year after the sale of the real estate. and all the cost and expenses incurred by the bank or institution from the sale and custody of said property less the income derived therefrom. action for annulment of the mortgage does not toll the running of the period to redeem the foreclosed property *Real property may be mortgaged to aliens. 47 of the GBL provides: (i) In the event of foreclosure. * Courts have the authority to strike down or modify provisions in the promissory notes that grant lenders unrestrained power to increase interest rates.
*Offer to repurchase is not a waiver to question the sale * no right to repurchase if the sale is invalid * preferred status of bank. Nevertheless. Ans: NO. if exercised after the prescriptive period is not really redemption but a repurchase. No such obligation imposed in repurchase. *exercise of the right of redemption. the purchaser is bound to accept the redemption. QUESTION: Whether an alien-owned bank can acquire ownership of residential lot by virtue of a deed of transfer as settlement of a debt. real properties.e. writ of possession becomes a matter of right and its issuance is merely a ministerial function Major investments Banks are reviewed by the Monetary Board (MB) as to their major acquisitions and investments. bank premises. Other Banking Services. or trust deeds held by it.* right of redemption may be extended by agreement * estoppel.The total investment in a real estate and improvements. A. mortgages. Banks can acquire. Ceiling on Investment. hold or convey Real estate by way of satisfaction of claims under the following circumstances: 1. not impaired in case the borrower is under rehabilitation * after consolidation title in the buyer’s name. the bank may continue to hold the property subject to the 50% limitation on total investment. The purpose of the Constitution is to place and keep in the hands of the people the ownership of private lands in order not to endanger the security of the nation. Those which the bank shall purchase at sales under judgments. decrees. Equity investment of the bank in another corporation engaged primarily in real estate B. 2. If leased for 50 years. Those which shall be conveyed to it in satisfaction of debts 3. All real estate and equipment necessary for the bank’s immediate use in the transaction of its business (i.the bank consented to the extension of redemption period if it had time to object but did not. permissible. equipment and other chattels) and 2. DISTINCTION: Redemption is by force of law. buildings. and those which the bank shall purchase to secure debts due it. Any real property acquired or held under these circumstances must be disposed of within 5 years or as may be prescribed by the MB. land. including bank equipment shall not exceed 50% of combined capital accounts. What constitutes total investment? 1. . Those which shall be mortgaged to it in good faith by way of security of debts.
The Bangko Sentral shall have full authority in the regulation of electronic transactions. documents. Lessor of safety deposit boxes The funds. or services on credit.non-payment of any amount less than the minimum amount due within two cycle dates . Bank is not liable in case loss attributable to joint renters who each has one renter key. Financial agent (buy and sell shares. The stamps deposited were damaged. The bank knew of a flood and the possibility of it seeping through the deposit boxes. consultant of investment management upon prior approval of MB 5. Managing agent.Minimum amount that the credit card holder needs to pay on or before the payment due date for a particular cycle Default or delinquency. Either one could open it without the other. securities.The bank may also act as: (CFCML) 1. Refer to our latest assignment on the nature of functions which a bank may outsource. securities) 3. Banks may also outsource other functions as may be approved by the MB. Collector of payments 4. (Guard key is with the bank. the bailment being for hire and mutual benefit. The bank failed to exercise reasonable care and prudence expected of a good father of a family. Since it is a contract. Definition of terms Credit card. A customer deposited his collection of stamps and the bank placed them at the lowest level of the safety deposit boxes. Credit Card Transactions A. adviser. The contract for a Safety Deposit Box is a special kind of deposit since the full possession and control over the box is not given to the renter. property. Bank failed to give notice of such event. Credit card receivables.any card. renter’s key is with the renter). duties may be defined by the parties. plate or credit device existing for the purpose of obtaining money. funds) 2. XIV. Minimum amount due. Is the Bank liable? Yes.e. and other effects received by a bank as a depository or as an agent shall be separate from the bank’s assets and liabilities. evidences of indebtedness.total outstanding balance of credit card holders. The relation created here is that of a bailor and a bailee. Subject to approval of the MB. labor. Custodian of valuable objects (i. banks may outsource all information technology systems and processes except for inherent banking functions.
submission or exchange of customer info with other financial institutions 3. The following constitute a violation: 1. communicating a credit info which is false 6.Acceleration clause-provision giving the right to the bank to demand the obligation in full in case of default or non-payment B.e. payment scheme. net take home pay. methods of determining the balance and the interest. and other fees. disclosure to collection agencies of the bank 5. There must be a risk management system which shall cover the organizational set-up. Additional deposits does not increase credit limit. accounting.pursuant to Arts. E. F. Some examples on types of information to be disclosed: Non-finance charges. Minimum Requirements. C. any false representation or deceptive means 7. profane language 3. release. policies and procedures and internal control. upon order of the court 4. Offsets. . net worth or cash flow) D. records and reports. use of threat of violence or other criminal means 2. insults. disclosure to insurance companies solely for the purpose of preventing loss and fraud G. 1278 to 1290 of the NCC. use of obscenities. H. Banks shall keep strictly confidential the data on the cardholder or consumer except: 1. making contact at inconvenient times (10pm-6am) I. disclosure of the names 4. percentage of interest. financial capability (i. Finance charges shall refer to interest charged to the cardholder. Basks must ascertain the applicant’s credit standing. net monthly receipts of a business of the applicant. With consent 2. the use of a person’s credit card will subject his deposits with the bank to offset any amount due and payable on his credit card which have not yet been paid. Unfair Collection Practices Banks may resort to all reasonable and legally permissible means to collect amounts due them. threat to take any action which cannot be legally taken 5. disclosure to third party service solely for the assistance and service to the bank 6.
shall include: a. doing or proposing to do any business in substance B. or additional charge over and above the price tag Chapter 5: PROHIBITED TRANSACTIONS AND CESSATION OF BANKING BUSINESS I. employee or agent of any bank shall— a. including a reinsurance business d. making or proposing any contract of suretyship as a vocation c. 3. Accept gifts. or on instalment. he shall pay only the price indicated in the price tag. The term “doing insurance business” or “transacting an insurance business”. officer. Without order of a court of competent jurisdiction. Overvalue or aid in overvaluing any security for the purpose of influencing in any way the actions of the ban or any bank. Cash price tag and card price tag is also not allowed Surcharging by retailers is not allowed. 2. or .J. card. when through a credit card. only the price in the tag price. Cash price tag and regular price tag on each product or service is not allowed 5. Contracts between banks and cardholders are contracts of adhesion because their terms are prepared by only one party. fees or commissions or any other form of remuneration in connection with the approval of a loan. the same is allowed provided the payment options shall be disclosed by way of a separate info but not in the price tag 4. any insurance contract. Prohibited Acts 1. 1. When the consumer pays in cash. doing any kind of business. b. It must be written clearly. No director. Practices which must be considered relative to the mode of payment. Prohibition to Act as Insurer -A bank shall not directly engage in insurance business as the insurer. making or promising to make. disclose to any unauthorized person any information relative to the funds or properties in the custody of the bank c. Make false entries in any bank report or statement or participate in any fraudulent transaction b. as insurer. One price tag Requirement Every retailer is required to display a price tag to indicate the price. Prohibited Transactions A. or other credit accommodation from said bank d. Extra charge. Must include VAT if vatable. when retailer offers the consumer an option to pay in cash.
etc b. Placement Under Conservatorship A. Outsource inherent banking functions. Unauthorized Advertisement or Business Representation V. officer. take charge of the assets. employee or agent of a bank. Attempt to defraud the said bank d. Conducting Business In an Unsafe or Unsound Manner III. A corporation is liquid if it has ready access to cash. and Exercise all powers necessary to restore its viability. Prohibition on Dividend Declaration -No bank or quasi-bank shall declare dividends greater than its accumulated net profits then on hand. no bank shall employ casual or nonregular personnel or too lengthy probationary personnel in the conduct of its business involving bank deposits. No borrower of a bank shall— a. Furnish fake or make misrepresentation of material facts c. Note: (Section 43 of the Corporation Code) IV. collect all monies and debts due said institution. Grounds for Appointment of Conservator -Whenever on the basis of a report submitted by the appropriate supervising or examining department. GBL) II. any gift. deducting therefrom its losses and bad debts. 2. reorganize management. continuing inability. 3. C. No examiner. unwillingness to maintain a condition of liquidity deemed adequate to protect the interest of depositors and creditors. Consistent with the Banks Secrecy Law.the ability of an asset to be converted into cash quickly and without any price discount. commission etc in order to influence such persons in approving loan and the like. Fraudulently overvalue property offered as security for a loan. Prohibition Against Outsourcing Certain Banking Function (Section 55. the Monetary Board (MB) finds that a bank or a quasi-bank is in a state of: 1.55. fee. . GBL) 2. (Section 67 of the GBL) B.e. 3. (Sec. officer or employee of the BSP shall commit any of the foregoing act or aid in the commission of the same. liabilities and management thereof. or 2. 4. MB shall appoint a conservator as the MB shall deem necessary to: 1. • LIQUIDITY. Offer any director.
Receivership and Involuntary Liquidation (Section 69 of the GBL) 1. The test of insolvency is measured by determining whether the realizable assets of a bank are less than its liabilities. thus providing the ability to pay debts. to meet its liabilities . is unable to pay its liablities as they become due in the ordinary course of business b. Remuneration F. C. has insufficient realizable assets. Terminations of Conservatorship -MB is satisfied that the institution can continue to operate on its own -MB shall. Final and Executory -actions of MB. Expenses of Conservatorship -shall be borne by the bank or the quasi-bank concerned H.• SOLVENCY. G. Powers of Conservatorship cannot Impair the Obligations of Contracts VI. determine that the continuance thereof would involve probable loss to its depositors or creditors I. Voluntary Liquidation -written notice of L shall be sent to MBB before such liquidation is undertaken. Period of Conservatorship -does not exceed one (1) year E. except on petition for certiorari J. Not a Precondition L. Qualifications of Conservator -competent -konowledgeable in bank operations and management D.if the MB finds that the institution: a. Exclusive Power to Appoint -vested exclusively with the MB K. written notice shall be sent to MB before actual L) B. and the MB has the right to intervene and take such steps as may be necessary to protect the interests of creditors -voluntary L may be undertaken by the bank itself through its board of directors. Cessation of Banking Business A. Grounds for Receivership and Liquidation .the condition that exists when liabilities amount to less tan total assets. as determined by the BSP. on the basis of the report of the C or its own findings. or by a receiver appointed to the bank upon voluntary dissolution of a bank pursuant to the Corporation Code -no voluntary dissolution of a bank shall be undertake without prior approval of the MB (accompanied by a L plan. by a trustee appointed by the bank.
Inc. Procedures -The receiver shall immediately: 2. with the exception of the administrative expenditures. pay or commit any act that will involve the transfer or disposition of any asset of the institution. Exercise the general powers of a receiver under the Revise Rules of Court. the decision of the MB and BSP. But it is clear under R. d. 5. or d. must have something to support itself and its findings of fact must be supported by substantial evidence. b. Current and Complete Examination Not Necessary -The absence of an examination before the closure of a bank did not mean that there was no basis for the closure order. like any other administrative body. c. b. or destroying or causing misappropriation and destruction of the bank’s assets. any person of recognized competence in banking or finance may be desinated as receiver. a. Transferring or permitting or causing to be transferred any securities or property of said bank. Gather and take charge of all the assets and liabilities of the institution. 4. -The receiver may deposit or place the funds of the institution in nonspeculative investments. involving acts or transactions which amount to fraud or a dissipation of the assets of the institution. Tampering with bank records. but d. and c. -Any determination for the resumption of business of the institution shall be subject to the approval of the MB. and e. Administer the same for the benefit of its creditors. Monetary Board) 3. acts: a. Paying out or permitting or causing to be paid out any fund of said bank. -For a quasi-bank. No 7653 that the basis need not arise from an examination as required by the old law. PROHIBITED ACTS: Any director or officer of bank declared insolvent or plaed under receivership by the Monetary Board shall not commit any of the ff. -The receiver shall determine ASAP but not later than ninety (90) days from take over. WHEN INSTITUTION CANNOT BE REHABILITATED . cannot continue in business without involving probable losses to its depositors or creditrs. has willfully violated a cease and desist order that has become final.A. whether the institution may be rehabilitated or otherwise placed in such a condition so that it may be permitted to resume business with safety to its depositors and creditors and the general public. Appropriating for himself or another party. Refusing to turn over the bank’s record and assets to the designated receivers. Shall not.c. (Rural Bank of San Miguel. vs. Needless to say.
e. In case of quasi banks. E. a. REASON BEHIND RECEIVERSHIP AND INVOLUNTARY LIQUIDATION It is a valid exercise of police power to protect the depositors. File ex parte with the proper RTC. for the purpose of paying the debts of such institution in accordance with the rules on concurrence and preference of credit under the Civil Code of the Philippines. the liquidation plan shall be adopted by the Monetory Board. FINAL AND EXECUTORY As in the case of conservatorship: The actions of the Monetary Board shall be final and executor. C. stockholders and the general public. CLOSE NOW HEAR LATER SCHEME – is grounded on practical and legal considerations to prevent unwarranted dissipation of the bank’s assets and as a valid exercise of police power to protect the depositors. i. a fiduciary relationship is created between the banking institutions and their depositors. EXCLUSIVE POWER TO APPOINT – vested exclusively with the Monetory Board. If the receiver determines that the institution cannot be rehabilitated or permitted to resume business. 6. dispose of the same to creditors and other parties. creditors. and may not be restrained or set aside by the court except on petition for certiorari on the ground that the action taken was in excess of jurisdiction or with such grave abuse of discretion as to amount to lack or excess of jurisdiction. the Monetory Board shall notify in writing the board of directors of its findings and direct the receiver to proceed with the liquidation of the institution. The receiver shall: 1. 2. Due to the nature of bank’s transactions and functions. liquidation or conservatorship. . A previous hearing nor due process demand that the correctness of Monetary Board’s Resolution to stop operation and proceed to liquidation of first adjudged before making the resolution effective. prosecution of suits against debtors for collection and for foreclosure of mortgages. D. 3. 7. EFFECT OF FILING FOR PETITION FOR REVIEW The bank’s liquidator is allowed to continue receiving collectibles and receivables or paying off’s creditor’s claims and other transactions pertaining to normal operations of a bank. for general application to all closed banks. stockholders and the general public. creditors. Convert the assets of the institutions to money. and without requirement of prior notice or any other action. WHO WILL FILE: Stockholders of record representing the majority of the capital stock within 10 days from the receipt by the board of directors of the institution of the order directing receivership. a petition for assistance in the liquidation plan adopted by the Philippine Deposit Insurance Corp. CLOSE NOW HEAR LATER SCHEME The law does not contemplate prior notice and hearing before a bank may be directed to stop operations and placed under receivership.
levy.which can sue and be sued through its liquidator. under order of the court. It does not cover the reverse situation where it is the bank which files a claim against another person or legal entity. . 6. the receiver of the bank is obliged to collect debts owing to the bank which debts form part of the assets of the bank. Distribution of Assets In case of liquidation of a bank or quasi-bank.Restriction in relation to its property. EFFECTS OF RECEIVERSHIP AND LIQUIDATION 1. after payment of the cost of proceedings.and shall. Retention of Juridical Personality . Assets are deemed under Custodia Legis . one cannot obtain an advantage or a preference over another by an attachment. including a reasonable expenses and fees of the receiver to be allowed by the court.pertains only to the adjudication of claims against the bank. 4. Not liable to Pay interest . However. to grant new loans or to accept new deposits.F. expenses mentioned in ITEM A above salaries of such personnel whose employment is rendered necessary in the discharge of the liquidation together with the other additional expenses caused by. DISPOSITION AND DISTRIBUTION OF ASSETS A. be exempt from any order or garnishment. 2. VII. i.The bank would not be able to do NEW BUSINESS. the receiver shall pay debts of such institution.a banking institution has been declared insolvent and subsequently closed by the BSP cannot be held liable to pay interest on bank deposits which accrued during the period when bank is actually closed and non-operational. Exclusive Jurisdiction of Liquidation Court . and after its insolvency. 3. The assets of the insolvent banking institution are held in trust for equal benefit of all creditors. Restriction of Bank’s Capacity to act . DISPOSITION OF REVENUES AND EARNINGS All revenues and earnings realized by the receiver in winding up the affairs and administering the assets of any bank or quasi-bank shall be used to pay the costs. from the moment of such receivership or liquidation. B. execution or otherwise. attachment or execution. LIMITATION: The prosecution and action must be done through the liquidator. . in accordance with the rules on concurrence and preference of credit as provided in the Civil Code. 5. Stay of execution .e.is warranted if a bank was placed under receivership.
the banking franchise of a bank under liquidation to operate in the area where said bank or its branches were previously operating. Offshore Banking refers to the conduct of banking transactions in foreign currencies involving the receipt of funds from external sources and the utilization of such funds. Offshore Banking Unit means a branch. . LIABILITIES The bank is bound by the acts. At the same time. B. that whatever proceeds may be realized from such award shall be subject to the appropriate exclusive disposition of the Monetary Board. upon such terms and conditions as the Monetary Board may approve. The conduct of offshore banking business in the Philippines shall be governed by the provisions of the Offshore Banking System Decree. privilege. or failure to act of the receiver. if public interest so requires. which prior to the efffectivity of GBL availed itself to the privilege to acquire up to 60% if the voting stock of a bank under the Foreign Banks Liberalization Act and the Thrift Banks Act. the Monetary Board may authorize a foreign bank to acquire up to 100% of the voting stock of only 1 bank organized under the laws of the Philippines. the Monetary Board may authorized any foreign bank. the receiver is liable to the bank for the culpable or negligent failure to collect the assets of such bank and to safeguard said assets. Foreign Banks A. b) Within the same period. c) In the exercise of this authority. *Foreign corporations doing business in the Philippines are required to obtain a license as provided in sec. the Monetary Board shall adopt measures as may be necessary to ensure that at all times the control of 70% of the resources or assets of the entire banking system is held by banks which are at least majority-owned by Filipinos. Provided. or incentive granted to a foreign bank shall be equally enjoyed by and extended under the same conditions to banks organized under the laws of the Philippines. award to an institution. subsidiary or affiliate of a foreign banking corporation which is duly authorized by the Bangko Sentral ng Pilipinas to transact offshore banking business in the Philippines. 133 of the Corporation Code. D. d) Any of the foregoing right. Transacting Business in the Philippines The entry of foreign banks in the Philippines though the establishment of branches shall be governed by the provisions of the Foreign Banks Liberalization Act. Chapter 6 Foreign Banks and Trust Operations I. Acquisition of Voting Stock in a Domestic Bank Foreign Banks are allowed entry in the Philippines subject to the following rules: a) within 7 years from the effectivity of the GBL and subject to the guidelines issued pursuant to the Foreign Banks Liberalization Act. to further acquire voting shares of such bank to the extent necessary for it to own 100% of the voting stock thereof. DISPOSITION OF BANKING FRANCHISE The Bangko Sentral may.C.
any foreign bank licensed to do business in the Philippines shall be bound by the provisions of GBL. E. Head Office Guarantee Head office shall fully guarantee the prompt payment of all liabilities of its Philippine Branch Residents and citizens of the Philippines who are creditors of a branch in the Philippines of a foreign bank shall have preferential rights to the assets of such branch in accordance with existing laws. d) In case of service for the bank upon the Bangko Sentral Deputy Governor In-charge of the supervising and examining departments. process. it shall be the duty of the bank to name and designate promptly another agent or head upon whom service of summons and processes in legal proceedings against the bank and of notices affecting the bank may be made. or should such agent or head become mentally incompetent or otherwise unable to accept the service while exercising such authority. all such branches shall be treated as 1 unit for the purpose of the GBL. processes and all legal notices may be made. all other laws. b) Should the authority of such agent or head to accept service of summons and legal processes for the bank or notice to it be revoked. and service of notices on such agent or head shall be as binding upon the bank which he represents. Laws Applicable In all matters not specifically covered by special provisions applicable only to a foreign bank or its branches and other offices in the Philippines. F. c) In the absence of the agent or head or should there be no person authorized by the bank upon whom service of summons. the said Deputy Governor shall register and transmit by mail to the president or the secretary of the bank at its head or principal office a copy.C. or notice shall be a necessary part of the services and shall complete the service. processes and legal notices may be made upon the Bangko Sentral Deputy Governor In-Charge of the Supervising and examining departments and such service shall be as effective as if made upon the bank or its duly authorized agent or head. service of summons. Local Branches of Foreign Banks In the case of a foreign bank which has more than 1 branch in the Philippines. rules and regulations . or notice. of the summons. Summons and Legal Process Courts obtain jurisdiction over foreign banks as follows: a) Summons and legal process served upon the Philippine agent or head of any foreign bank designated to accept service thereof shall give jurisdiction to the courts over such bank. or notice. duly certified by him. The registry receipt of mailing shall be prima facie evidence of the transmission of the summons. process. and to file with the Securities and Exchange Commission a duly authenticated nomination of such agent. e) The sending of such copy of the summons. processes. D.
An Act Liberalizing the Entry and Scope of Operations of Foreign Banks in the Philippines and For Other Purposes Sec. formation. c) study the demonstrated capacity. Sec. Only those among the top 150 foreign banks in the world or the top five (5) banks in their country of origin as of the date of application shall be allowed entry in accordance with sec. responsibilities. members.minimum capital required shall be equal to that prescribed by the Monetary Board for domestic banks of the same category. Revocation of License of a Foreign Bank The Monetary Board may revoke the license to transact business in the Philippines of any foreign bank.2 b and c hereof. . Sec. that a foreign bank may avail itself of only one (1) mode of entry. After the revocation of such license.3 guidelines for approval. Further. or c) by establishing branches with full banking authority: provided. Sec. global reputation for financial innovations and stability in a competitive environment of the applicant. II.a) shall ensure geographic representation and complementation. b) consider strategic trade and investment relationships between the Philippines and the country of incorporation of the foreign bank. 77 21. purchasing or owning up to 60% of the voting stock of an existing bank. or dissolution of corporations or for the fixing of the relations. or duties of stockholders.applicable to banks organized under the laws of the Philippines of the same class. or officers of corporations to each other or to the corporation. organization. it shall be unlawful for any such foreign bank to transact business in the Philippines unless its license is renewed or reissued. b) by investing in up to 60% of the voting stock of a new banking subsidiary incorporated under the laws of the Philippines. 4 Capital requirements. that a foreign bank or a Philippine corporation may own up to a 60% of the voting stock of only one (1) domestic bank or new banking subsidiary. liabilities. 2 Modes of Entry. directors. d) see to it that reciprocity rights are enjoyed by Philippine banks in the applicant’s country. except those that provide for the creation. G. e) consider willingess to fully share their technology.1 Declaration of the Policy.…… The Philippine banking and financial system is hereby liberalized to create a more competitive environment and encourage greater foreign participation through increase in ownership in domestic banks and the entry of new foreign bank branches. if it finds that the foreign bank is insolvent or in imminent danger thereof or that its continuance in business will involve palpable loss to those transacting business with it.a) for locally incorporated subsidiaries. Entry of Foreign Banks RA No.a) by acquiring..
holding. or sell.S. or purchase debt instruments of.b)For foreign bank branches. Express trusts are created by the intention of the trustor or of the parties. Dollar equivalent of 35 Million Pesos per additional branch.2 c upon the approval of the Monetary Board. or employees of the trust entity. officers. benefit or advantage of the trustor or of others called beneficiaries. upon approval by the President as the national interest may require. purchase or acquire property from. Under the Civil Code on trusts: Trustor. 5. Note: for the full text of the Act. The following shall be observed in the conduct of trust business: a) a trust entity shall administer the funds or property under its custody with the diligence that a prudent man would exercise in the conduct of an enterprise of a like character and with similar aims. The cardinal principle common to all trust and other fiduciary relationships is fidelity. stockholders. B.capital of NOT LESS than the U.Entrants under section 2. An additional 4 foreign banks may be allowed entry on recommendation of the Monetary Board. for the account of the trustor or the beneficiary of the trust. directors. Conduct of trust business. management of funds and/or properties of the trustor by the trustee for the use.7. 6. or lend money or property to. unless the transaction is specifically authorized by the trustor and the relationship of the trustee and the other party involved is fully disclosed to the trustor or beneficiary. relatives within the first degree of consanguinity or affinity. Sec. any of the departments. The foreign bank shall be entitled to three more branches with permanently assigned capital of the U.S.a person who establishes a trust Trustee. Authority to engage in Trust Business Trust Business refers to any activity resulting from a trustee-trustee relationship (trusteeship) involving the appointment of a trustee by a trustor for the administration. 6 new foreign banks shall be allowed entry under sec.*mentioned earlier Sec. Implied trusts are created by operation of law.Foreign banks shall be allowed entry under sec.2 c. b) No trust entity shall. Dollar equivalent of 210 Million pesos at the exchange rate on the date of the effectivity of this act. During this period.one in whom confidence is reposed as regards property for the benefit of another person Beneficiary. Trust Operation A. assign.the person for whose benefit the trust has been created Trusts may be express or implied. Sec. see book pages 271-276 III. .Head office guarantee. within 5 years from the effectivity of the act. transfer.Non-Filipino citizens may become members of the Board of Directors of a bank to the extent of the foreign participation in the equity of said bank. subject to compliance with the previous sections of this act.
A) no articles…. Powers of a Trust Entity (in addition the general powers incident to corporations) 1) act as trustee on any mortgage or bond issued by any instrumentality and to accept and execute any trust consistent with law 2) act under the order or appointment of any court as guardian. or in securities underwritten by the trustee or fiduciary or a corporation in which the trustee owns at least 50% of the subscribed capital or voting stock 4) Sell. B) The SEC shall not accept for filing the by-laws or any amendment thereto. issues and profits thereof. D.000. transfer. officers. or to any corporation where the trustee owns at least 50% of the subscribed capital or voting stock in its own right and not as trustee nor in a representative capacity. Transactions Requiring Prior Authority A trustee or fiduciary shall not undertake such transactions. and administration of any estate. . Registration of Articles of Incorporation and By-Laws of a Trust Entity The SEC shall not register the articles of incorporation and by-laws or any amendment thereto. sell transfer or assign money or property to any of the departments. stockholders or employees of the trustee or fiduciary or relatives within the 1st degree of consanguinity or affinity. cash or securities approved by the Monetary Board in an amount of P500.. management. beneficiary. party-ininterest.00 or such higher amount as may be fixed by the Monetary Board . 2) purchase or acquire property or debt instruments from any of the departments. and the rents. . assign or lend money or property from one trust or fiduciary account except where the investment is allowed by the Monetary Board. receiver. directors. directors. xxx (same in #1) 3) invest in equities of. such transaction has been fully disclosed and authorized by the client. Shall be approved by the SEC unless accompanied by a favorable recommendation of the appropriate government agency to the effect that such articles or amendment is in accordance with law.. E. unless accompanied by a certificate of the appropriate government agency to the effect that such by-laws or amendments are in accordance with law. Deposit for the Faithful Performance of Trust Duties 1) 1) Before transacting trust business. unless prior to its execution.C. and 6) establish and manage common trust funds F. or the related interest of such directors. unless accompanied by a certificate of authority issued by the Bangko Sentral. G. officers and stockholders. and as receiver and depositary of any moneys and of properties brought into court by parties 3) acts as the executor of any will when it is named the executor thereof 4) acts as administrator of the estate of any deceased person 5) accept and execute any trust for the holding. court of competent jurisdiction or other competent authority: lend. every trust entity shall deposit with BSP as security for the faithful performance of its trust duties. officers. of any trust entity. Minimum Capitalization A trust entity before engaging in such business must comply with the minimum paid-in capital requirement determined by the Monetary Board. real or personal. trustee or depositary of the estate of any minor or other incompetent person.
the court may require the trust entity to post a bond or other security for the protection of funds or property confided to such entity V. . . The accounts shall likewise be separate. the court may order that the bond given be reduced to such sums as it may deem proper. B. receiver. after notice and hearing. he shall.2) The Monetary Board shall require every trust entity to increase the amount of its cash/securities on deposit with BSP whenever necessary 3) The paid-in 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 above provisions. the Monetary Board or any court of competent jurisdiction. the funds and other assets acquired by a trust entity shall be limited to loans or investments as may be prescribed by law. the court may. depositary (. . the Board may limit or prohibit the distribution of net profits by such bank and may require that part or all of the profits be used to increase the capital accounts until the minimum requirement has been met. properties and assets of such trust entity. upon order of the court. administrator. Separation of Trust Business from General Business The trust business and all funds. All moneys. . 4) The reduced bond shall be sufficient to secure adequately the proper administration and care of any property remaining under the control of such persons and the proper accounting for such property. . Operations of Trust Entity A. administrator. . as the court may direct. order that the subject matter of the trust or any part thereof be deposited with a trust entity 3) Upon presentation of proof to the court that the subject matter of the trust has been deposited. IV. properties or securities received by such bank as wells as investment of each trust shall be kept physically separate and distinct from the assets of its other business and shall be under the joint custody of at least 2 persons designated by the board of directors. Should the capital and surplus fall below said amount. . executor. trustee. 2) Upon the application of any executor. shall be kept SEPARATE and DISTINCT from the general business including all other funds. Bond Requirements 1) Before an executor. administrator . guardian. Investment Limitations of a Trust Entity Unless otherwise directed by the instrument creating the trust. properties or securities received by any trust entity as executor. file a bond in such sum. 4) A trust entity so long as it shall continue to be solvent and comply with laws or regulations shall have the right to collect the interest earned on such securities deposited with the BSP and to exchange the securities for others. administrator . however. Exemption of Trust Entity from the Bond Requirement No bond or other security shall be required by the court from a trust entity as court appointed trustee. . .) appointed by the court enters upon the execution of his duties. 5) All claims arising out of the trust business of a trust entity shall have priority over all other claims as regards the cash or securities deposited as above provided. Bond of Certain Persons for the Faithful Performance of Duties A. . B.
decrees. Sanctions and Penalties Trust entity or any of its officers found to have willfully violated the provisions of GBL shall be subject to sanctions and penalties F. Issued by the trustee 4) Loans fully secured by real estate or chattels in accordance with pertinent laws Required specific directives: 1) The transaction to be entered into 2) The borrower’s name 3) Amount involved 4) Collateral securities.Assets received in trust or in other fiduciary capacity shall be administered in accordance with the terms of the instrument creating the trust. Investment of Non-trust Funds …shall be governed by GBL and other applicable laws E. chattel mort. And of the BSP and other evidences of indebtedness or obligations the servicing and repayment of which are fully guaranteed by the Republic 2) Loans fully guaranteed by the Republic as to the payment of the principal and interest 3) Loans fully secured by a hold-out on. or of deposit substitutes of the bank. C. if any. Property held by the insolvent debtor as trustee shall be excluded from the insolvency proceedings. or 3) Such as its shall purchase at sales under judgments. mortgages or trust deeds held by it and such as it shall purchase to secure debts due it. 2) Such as shall be conveyed to it in satisfaction of debts previously contracted in the course of its dealings. Exemption of Trust Assets from Claims No assets held by a trust entity in its capacity as trustee shall be subject to any claims other than those of the parties interested in the specific trusts. Loans and investments of the fund shall be limited to: 1) Evidences of indebtedness of the Phils. PROVIDED that the bank continue to hold the property for its own use subject to the ff limitations: 1) The total investment in such real estate and improvements shall not exceed 50% of combined capital accts 2) The equity investment of a bank in another corporation shall be considered as part of the total investment in real estate D. assignment or pledge of deposits maintained either with the bank proper or other banks. Establishment of Branches of a Trust Entity Ordinary business -> shall be transacted at the place of business specified in the articles of incorporation . Real Estate Acquired by a Trust Entity Such real estate shall be governed by the provisions of GBL. • Any realty shall be disposed of by the bank within a period of 5 years or as may be prescribed by the Monetary Board. G. or of mortgage. under the following circumstances: 1) Such as shall be mortgaged to it in good faith by way of security for debts.
any fund or money from the Government and its entities. PROVIDED that government-owned banks may receive or hold as trustee the following: 1) Funds of LGUS which are expected to be available for investment purposes for a relatively long period of time 2) Funds of government and government and government entities which are authorized by special laws to be placed in trust. while being a government-owned corporation. fully subscribed by the Government of the Philippines. 2. Creation. administrator. Ten Billion of which shall be fully paid for by the Government upon the effectivity of this Act and the balance to be paid for within a period of two (2) years from the effectivity of this Act in such manner and form as the Government. CHAPTER 7 – The Bangko Sentral ng Pilipinas I. Advertisement of Services Trust entities shall advertise their services in a dignified manner and enter such business only when demand for such service is evident. Declared Policy of the State The State shall maintain a central monetary authority that shall function and operate as an independent and accountable body corporate in the discharge of its mandated responsibilities concerning money. In line with this policy. banking and credit. Money of Government Banks may not receive or hold as trustee. 12. Capital Requirements: Fifty Billion Pesos. when specially equipped to render such service and upon full appreciation of the responsibilities involved. . the central monetary authority established under this Act. !987 Consitution BSP . may thereafter determine . which shall be a body corporate (Sec. . and considering its unique functions and responsibilities. B. shall enjoy fiscal and administrative autonomy. I. H. responsibilities and corporate powers of the BSP A.Trust entity shall be responsible for all business conducted in such branches as though such business had all been conducted in the head office. Creation of the BSP: mandated by Sec. agent. 20 Art. . through the Secretary of Finance and Secretary of Budget and Management. NCBA).an independent central monetary authority.
2. to maintain price ability conducive to a balanced and sustainable growth of the economy. but may maintain branches. 5. Corporate Powers of the BSP Bangko Sentral is hereby authorized to: SCP-SPAL 1. NCBA). to supervise over the operations of banks 3. 4. acquire and hold such assets and incur such liabilities in connection with its operations authorized by the provisions of this Act. to provide policy directions in the areas of money. agencies and correspondents in such other places as the proper conduct of its business may require. banking and credit system of the country and is granted the power of supervision and examination over banks and non-bank financial institutions performing quasi-banking functions of which savings and loan associations…” D. 3. to promote and maintain monetary stability and the convertibility of the peso. alter. exercise such regulatory powers as provided in this Act and other pertinent laws over the a.(Sec. any claim of or settled liability to the Bangko Sentral. operations of finance companies and non-bank financial institutions performing quasi-banking functions. condone or release. 6. and b. which is the primary objective of the Bangko Sentral. and to sell or otherwise dispose of the same. 7. or as are essential to the proper conduct of such operations. enter into contracts. under such . institutions performing similar function 4. and use a corporate seal which shall be judicially noticed. do and perform any and all things that may be necessary or proper to carry out the purposes of this Act. 4. banking. is the government agency charged with the responsibility of administering the monetary. through the Monetary Board.Principal Place of Business: Metro Manila. sue and be sued. Jurisprudence: Busuego v. lease or own real and personal property. in whole or in part. adopt. C. CA The Supreme Court ruled that “It must be remembered that the Central Bank of the Philippines (now Bangko Sentral ng Pilipinas). regardless of the amount involved. 5. Responsibility and Primary Objective of the BSP 1. and credit 2. compromise.
Hence. if any. BSP is estopped from enforcing circulars that would deny banks or banking institution of their rights. Moreover. adequate and speedy remedy in the ordinary course of law. banks/banking institutions already faithfully complied with the BSP’s directives. Monetary Board). NO POWER TO PROSECUTE VIOLATORS OF BANKING LAWS. is the government's strict and faithful adherence to basic principles of fairness and decency under the Bill of Rights. then he has a plain. specific duty on the former to do the actual prosecution of the latter.BSP and members of the Monetary Board should not be impleaded as parties to a case in compliance with section 6. Thus. it does not appear from the law that only the Central Bank or its respondent officials can cause the prosecution of alleged violations of banking laws. Said violations constitute a public offense. which makes mandamus against respondents improper. IAC) . CB circulars/memoranda must be implemented in a manner that would not only safeguard or harmonize them with government programs designed to uplift or promote the country's level of production and employment. BSP v. Jurisprudence: Power to prosecute: CENTRAL BANK. — Although the Central Bank and its respondent officials may have the duty under the Central Bank Act and the General Banking Act to cause the prosecution of those alleged violators. the prosecution of which is a matter of public interest and hence. not a prosecution agency like the fiscal's office. The Central Bank is a government corporation created principally to administer the monetary and banking system of the Republic. Estoppel Jurisprudence: The Central Bank of the Philippines is duly committed to maintain the stability of the country's foreign exchange reserve position. Being an artificial person.terms and conditions as may be prescribed by the Monetary Board to protect the interests of the Bangko Sentral. Rural Bank of San Miguel . (Central Bank of the Philippines v. the Central Bank is limited to its statutory powers and the nearest power to which prosecution of violators of banking laws may be attributed is its power to sue and be sued. yet We find nothing in said laws that imposes a clear. rule 43 of the 1997 rules of procedure. but at the same time avoid irreparable or grave prejudice to participants of said program. (Perez v. But this corporate power of litigation evidently refers to civil cases only. Underlying this commitment. Since Perez himself could cause the filing of criminal complaints against those allegedly involved in the anomalous loans. anyone — even private individuals — can denounce such violations before the prosecuting authorities. however.
ceilings. Composition . • Exempt particular categories of transactions from such rations. The BSP shall phase out and transfer its supervising and regulatory powers over building and loan associations to the Home Insurance and Guaranty Corporation which shall assume the same. B.The body through which the powers and functions of the BSP are exercised. Supervisory powers of the BSP * Includes: (REO-ISC) Issuance of Rules of conduct Conduct Examination to determine compliance with laws and regulations Overseeing to ascertain that laws and regulations are complied with Regular Investigation (not oftener than once a year) Inquiring into the Solvency and liquidity of the institution Enforcing prompt Corrective action. conform to the internationally accepted standards. * Scope: • • • • • • • Quasi-banks • Trust entities. A. Ratios. ceilings and limitations. Ceilings and Limitations * Shall be provided by the BSP in the areas of: • Money • Banking • Credit * Monetary board may: • Prescribe ratios. The Monetary Board .II. Policy Directions. III. C. limitations or other forms of regulation on the diff. depositors and the general public. Authority of the BSP A. to the extent feasible. and • Other financial institutions which under special laws are subject to BSP supervision. but not limited to exceptional cases or to enable a bank or quasi-bank under rehabilitation or during a merger or consolidation to continue in business with safety to its creditors. types of accounts and practices of banks and quasi-banks which shall. including those of the Bank for International Settlements.
has a substantial interest in any private bank in the Phils. with the exception of the Governor who should at least be 40 yrs of age. of unquestionable integrity.The President may remove any member of the Monetary Board for any of the following reasons: .any vacancy in the monetary board created by death. within one year prior to his appointment. if he has been connected directly with the multilateral banking or financial institution. Disqualifications of Monetary Board Members: (DDE-CSE) 1. quasi-bank or any other institution which is subject to supervision or examination by the BSP(in which case such member shall resign from. D. 3. Disqualifications imposed by RA No. 2. with recognized competence in social and economic disciplines. 6. lawyer. 2. officer. Vacancies . E. A member of the cabinet to be designated by the President of the Philippines. 6713. 2. A Chairman: Governor of the BSP. Natural born Citizens of the Philippines. or removal of any member shall be filled by the appointment of a new member to complete the unexpired period of the term of the member concerned. Disqualified from being a director. all of whom shall serve fulltime. 6. consultant. of known probity and patriotism. No person shall be a member of the Monetary Board. Five (5) members who shall come from the private sector. The members of the Monetary Board coming from the private sector shall not hold any other public office or public employment during their tenure. 4.Seven (7) members appointed by the President of the Philippines for a term of 6 yrs consisted of: 1. and divest himself of any and all interests in such institution before assumption of office as member of the Monetary Board). agent or stockholder of any bank. of good moral character. employee. B. Qualifications of members of the monetary board: (CA-CIPE) 1. and 3. 4. Grounds for the removal of Monetary Board Members (SIGN) . 5. at least 35 years of age. resignation. 3. employed in any such institution within 2 yrs after the expiration of his term except when he serves as an official representative of the Philippine Government to such institution. C. 5.
shall examine the books of every banking institution once in every 12 months. If he is physically or mentally incapacitated that he cannot properly discharge his duties and responsibilities and such incapacity has lasted for more than six (6) months.) unless otherwise provided in NCBA. Decisions and Proceedings of the Monetary Board 1. including subsidiaries and affiliates xxx. and in periods of national or local emergency. Quorum. The Monetary Board shall meet at least once a week. the Bangko Sentral may prescribe the newspaper shall be published.EXAMINATION AND FEES (the supervising and examining department head. That in all cases the Governor or his duly designated alternate shall be among the four (4). 2. or 3. banks shall make available also in setting the audited financial statement and relevant information that will inform the public of the true financial condition of the bank. ALL DECISIONS OF THE Monetary Board shall require concurrence of at least 4 members Note: in the following cases. If the member no longer possesses the qualifications specified in Section 8 of this Act. and at such other times as mat be prescribed by the . If the member is guilty of acts or operations which are of fraudulent or illegal character or which are manifestly opposed to the aims and interests of the Bangko Sentral. Sec. which directly threaten the monetary board. all decisions of the Monetary Board shall require the concurrence of at least four (4) members. may be called by its governor or 2 other members b. (this is a typo error. Meetings. personally or by deputy. F. vote of at least 5 members is required: 1. by a vote of at least 5 members may allow the bank to defer financial condition required therein) Sec. 61. GBL. It should refer to Section 9 of the NCBA) 2. 28. Quorum. NCBA.PUBLICATION OF FINANCIAL STATEMENT (every bank. F. Meetings. or 4. the monetary board may also allow posting of the financial statement in public places in lieu of publication.1. 3. 2.) 4 members shall constitute quorum provided that in all cases the governor or designated alternative shall be among the 4 c. If the member is subsequently disqualified under the provisions of Section 8 of this Act. Decisions and Proceedings in Monetary Board a. The presence of four (4) members shall constitute a quorum: Provided. quasi-bank or trust entity shall publish a statement of its financial conditions.) meet at least once a week. Unless otherwise provided in this Act. The Board may be called to a meeting by the Governor of the Bangko Sentral or by two (2) other members of the Board.
reorganize its personnel. The loan advanced shall not exceed 50% of total deposits and shall be disbursed in 2 or more trances) G. Deputy Governors may attend Meetings of the Monetary Board with right to be heard H. 6713. and issue such rules and regulations as it may deem necessary or convenient for this purpose . Salaries of the Governor and members of the Monetary Board SHALL BE FIXED BY THE President of the Philippines at a sum commensurate to the importance and responsibility attached to the position I. monetary board by an affirmative vote of 5 members provided that there shall be an interval of 12 months between annual examination) Sec.. 17. In addition to the requirements of RA No. Scope of Authority of the Monetary Board (IDEA-I) a) issue rules and regulations (the rules and regulations issued shall be reported to the President and the Congress within fifteen (15) days from the date of their issuance) b) direct management. expand the total volume of its loans. provided that foreign currency deposits made under RA 6426 shall be exempted from this requirement) Sec. NCBA.3. Personal or pecuniary interest by any member of the Monetary Board shall disclose his interest to the Board and shall retire from the meeting when the matter is taken up. and administration of the Bangko Sentral. may temporarily restrict or suspend sales of exchange. and shall retire from the meeting when the matter is taken up the decision taken on the matter shall be made public the minutes shall reflect the disclosure made and the retirement of the member concerned from the meetings J. 84. THE MONETARY BOARD may authorize Banko Sentral to grant extraordinary loans or advances to banking institutions secured by assets provided that debtor institution shall not except upon prior authorization of the Board. any member of the Monetary Board with personal or pecuniary interest in any matter in the agenda of the Monetary Board: a) b) c) d) shall disclose his in interest to the Board.EMERGENCY RESTRICTIONS ON EXCHANGE OPERATIONS (in order to achieve primary objectives of the Bangko Sentral or protect international reserves of the BS in the imminence of or during an exchange crisis take constructive measures to combat the crisis with the concurrence of 5 members. operations. Personal or Pecuniary Interest (DR-PR). The MB may also authorize the banko sentral to grant emergency loans for purposes os assiting the bank with its financial condition brought by unforeseen events and ascertain that such bank is not insolventand has assets to secure advances. NCBA. 4. This is in order to uphold the time-honored principle of public office as a public trust.EMERGENCY LOANS AND ADVANCES (IN PERIODS OF LOCAL AND NATIONAL EMERGENCY OR IMMINENT FINANCIAL PANIC WHICH DIRECTLY THREATEN BANKING STABILITY.
suit or proceeding upon receipt of an undertaking by or on behalf of the member. indemnification shall be provided only in connection with such matters covered by the settlement as to which the Bangko Sentral is advised by external counsel that the person to be indemnified did not commit any negligence or misconduct. subject to pertinent civil service laws Monetray Board – shall have exclusive and final authority to promote. or reassign personnel of the Bangko Sentral and these personnel actions are deemed made in the interest of the service not disciplinary – may delegate such authority to the Governor under such guidelines as it may determine d) adopt an annual budget for and authorize such expenditures by the Bangko Sentral e) indemnify its members and other officials of the Bangko Sentral against all costs and expenses reasonably incurred by such person in connection with any civil or criminal action. made a party by reason of the performance of his functions or duties. (see page 304) (ii) . or is. suit or proceeding may be paid by the Bangko Sentral in advance of the final disposition of such action. or proceedings to which he may be. transfer. unless he is finally adjudged in such action or proceeding to be liable for negligence or misconduct (i) in the event of a settlement or compromise. v. assign. suits. officer. Inc. or employee to repay the amount advanced should it ultimately be determined by the Monetary Board that he Note: The Supreme Court in the case Central Bank Employees Association. (ii) Governor – on its recommendation. can appoint. and remover personnel of the Bangko Sentral. compensation and wage structure of employees whose positions fall under salary grade 19 and below shall be in accordance with the rates prescribed under RA No. fix the remunerations and other emoluments. Bangko Sentral ng Pilipinas and the Executive Secretary declared the foregoing provision [particularly item (c) unconstitutional] unconstitutional for being violative of the equal protection clause.c) establish human resource system (such system shall aim to establish professionalism and excellence at all levels of the Bangko Sentral in accordance with sound principles of management) (i) a compensation structure based on job evaluation studies and wage surveys and subject to the Board’s approval shall be instituted as an integral component of the Bangko Sentral’s human resources development program. 6758 (Compensation and Position Classification Act of 1989). The costs and expenses incurred in defending the aforementioned action.
the bangko Sentral of third parties *any data or information required to be submitted to the President and/or the congress. The Governor and Deputy Governors of the Bangko Sentral A. or to be published under the provisions of the NCBA shall not be considered confidential IV. Responsibility of Members of the Monetary Board. officers. or f) failure to exercise extraordinary diligence (VNAMMFe) similar responsibility shall apply to members. or is with prior authorization of the Monetary Board or the Governor. or acts of malfeasance or misfeasance of fails to exercise extraordinary diligence in the performance of his duties shall be held liable for any loss or injury suffered by the Bangko Sentral or other banking institutions as a result of such: a) violation b) negligence c) abuse d) malfeasance e) misfeasance. unless the disclosure is in connection with the performance of official functions with the Bangko Sentral. Examiners. and Employees of the Bangko Sentral (i) (ii) if anyone of them willfully violate NCBA or who is guilty of negligence. Powers and Duties of the Governor (CEO PEDARE) Governor . and employees of the Bangko Sentral for: (a) the disclosure of any information of a confidential nature.K.principal representative of the MB and the BSP Powers and Duties: . or (b) the use of such information for personal gain ir the detriment of the Government. Official. or any information on the discussion or resolution of the Monetary Board or about the confidential operations of the Bangko Sentral. abuse.chief exec officer of the BSP .
domestic. sign contracts entered into by the BSP. represent the BS. balance sheets. 4. on matters regarding application/enforcement of laws pertaining to institutions supervised by the BSP and laws pertaining to quasi banks 6. or rulings. appoint and fix the remunerations and other emoluments of personnel below the rank of a department head in accordance with the position and compensation plans approved by the MB 5. the Gov of the BS + concurrence of 2 other Monetary Board members = decide on any matter or take any action within the authority of the Board. Limitations on Outside Interests of the Gov and the Full-time Members of the Board . 2. prepare the agenda for the meetings of the MB and submit policies and measures which he believes are necessary to carry out the purposes and provisions of the NBCA.The Gov shall submit a report to the Pres and Congress within 72 hours after the action has been taken. agencies and instrumentalities of the Gov’t and all other persons or entities. . Emergencies In case of emergencies . public or private. delegate his power to represent the BS as provided in 1-3 to other officers upon his own responsibility SEC 18. which shall be final and executory until reversed or modified by the MB. exercise such powers as may be vested in him by the MB. personally or through counsel. . 3.1. 2. the Gov shall call a meeting of the MB to submit his action for ratification. action or specialized legal studies 4. decisions. represent the MB and BSP in all dealings with other offices.and it is sufficient to call for a meeting of the MB. as authorized by the MB. NCBA – A permanent negotiator may take the place of the Governor in preliminary discussions with any multilateral banking or financial institutions on any negotiations for the Gov’t within or outside the Philippines in order to preserve the integrity and prestige of his office. render opinions. Powers of the Governor as Representative of Monetary Board and BSP 1. in any legal proceedings. notes and securities issued by the BSP. direct and supervise the operations and internal administration of the Bangko Sentral. correspondence and other documents 3. all reports. foreign or international.At the soonest possible time. execute and administer the policies and measures approved by the MB. profit and loss statements.
request from GOI/GOCC data needed for the proper discharge of their office .DUTY: assigned by the Gov and board .not more than three .prepare data o balance of Philippine payments o statistics on the monthly movement of the monetary aggregates o prices and other statistical series and economic studies useful for the formulation and analysis of monetary. public or private. ..conduct economic research to guide the MB in its formulation and implementation of policies SCOPE and AUTHORITY OF BS TO OBTAIN DATA AND INFO . banking.subpoena production of said books in case of non-compliance . Operations of the Bangko Sentral Research and Statistics of the BS BS . o Representation of a fulltime member of the interest of the Govt or other govt agencies in matters connected with the economy/financial system of the country Deputy Governors .limit their professional activities to those pertaining directly to their positions with the BS. .DEPUTY GOV – designated by the Gov shall take the place of the latter in his duties and responsibilities when the same is absent V. credit and exchange policies.data on firms and other banks are exclusively for the purview of the BSP exp as per court order or conditions prescribed by the MB Scope and Supervision and Examination by the Bangko Sentral .GR: accept no other employment. Gov.EXP: positions in o Eleemosynary o Civic org o Religious org o Cultural org o Designation of the Pres. remunerated or ad horem .
or (2) from a bank— which is a subsidiary of a bank holding company of which both his bank and the lending bank are subsidiaries. officer. Officer or Stockholder. officer or stockholder who together with his related interest. o SUBSIDIARY – more than 50% of the voting stock is owned by the bank or quasibank o AFFILIATE – 50 % or less is owned by bank or quasi-bank . in excess of five percent (5%) of the capital and surplus of the bank. whichever is lower. (ii) Any information obtained from an examination of his deposits shall be held strictly confidential and may be used by the examiners only in connection with their supervisory and examination responsibility or by the BSP in an appropriate legal action it has initiated involving the deposit account. documents.restraining orders can only be issued when there is convincing proof that the action of the BS is plainly arbitrary and made in bad faith and the petitioner or plaintiff files with the clerk or judge of the court in which the action is pending a bond executed in favor of the BS. And Related Interest A. personnel of the Sentral are prohibited from (P-ORRB) Bangko . Prohibition Against Personnel of the Bangko Sentral In addition to the prohibitions found in RA 3019 and 6713. VI. B. in an amt fixed by the Court.. contracts a loan or any form of financial accommodation from: (1) his bank.BS has supervision over and conduct periodic or special examinations of. including their subsidiaries and affiliates engaged in allied activities. banking institutions and quasi-banks. or in which a controlling proportion of the shares is owned by the same interest that owns a controlling proportion of the shares of his bank. Contracting Loans (i) Any director. shall be required by the lending bank to waive the secrecy of his deposits of whatever nature in all banks in the Philippines.department heads/examiners have the following supervisory authority o administration of oaths to any director. or employee of any institution under their respective supervision or subject to their examination o compel the presentation of all books. papers or records necessary in their judgment Restraining Order or Injunction . Director. or in the maximum amount permitted by law.
directly or indirectly.ADMINISTRATION A. This prohibition shall not be held to apply in the giving of information to the Monetary Board or the governor of the Bangko Sentral. fully disclosed to the Monetary Board. Operating departments of the BSP . or under such conditions as may be prescribed by the Monetary Board. from any institution subject to supervision or examination by the Bangko Sentral. except non-stock savings and loan associations and provident funds organized exclusively for employees of the Bangko Sentral. however. and (4) borrowing from any institution subject to supervision or examination by the Bangko Sentral shall be prohibited unless said borrowing are adequately secured. (2) directly or indirectly requesting or receiving any gift xxx for himself or for another.Bank or quasi-banks shall pay the BS within the first 30 days of each year. or to any person authorized by either of them.Sec 28 of NBCA Service Fees .and as approved by the Monetary Board with the affirmative vote of 5 persons . (3) revealing in any manner. and shall be subject to such further rules and regulations as the Monetary Board may prescribe: Provided.27.done by the supervising/examining board Affording Opportunity to Examine . except under orders of the court. to receive such information. of any institution subject to supervision or examination by the Bangko Sentral. NCBA) VII Examination of Baking Institutions Frequency of Examination . and except as otherwise provided in the NCBA. an annual fee in an amount equal to a percentage as may be prescribed by the MB of its average total assets during the preceding year as shown on its end-month balance sheets after deducting COH and amounts due from banks.once every 12months . That personnel of the supervising and examining departments are prohibited from borrowing from a bank under their supervision or examination (sec. information relating to the condition or business of any institution. VIII -.(1) being an officer xxx. the Congress or any government office or agency authorized by law. in writing.
of the BSP as it deems convenient for the proper and efficient conduct of the operations and the accomplishment of the objectives of the BSP. abnormal movements in monetary aggregates and the general price level.Review of the state of financial system (120 days after end of each sem) . B.An analysis of economic and financial developments + condition of net international reserves and monetary aggregates (not later than 90 days after the end of each quarter) . not later than 72 hrs after they are taken. remedial measures in response to such abnormal movements C.The preceding year’s budget and profit and loss statement of the BSP showing in reasonable detail the result of its operations (w/in 90 days after the end of year) .As soon as practicable.The monetary board shall. in accordance with its authority under the NCBA. • The Monetary board shall publish and submit the ff reports to the President and Congress: . Required reports and publications of the BSP • Publish a general balance sheet showing the volume and composition of its assets and liabilities as of the last working day of the month w/in 60 days after the end of each month (except for December = to be submitted w/in 90 days after the end thereof). determine and provide for such operating departments and other offices. including a public information office. and. Annual report of the BSP When: before the end of March of each year What: Annual Report on the Condition of the BSP + a review on the policies and measures adopted by the Monetary Board during the past year + analysis of economic and financial circumstances w/c gave rise to said policies For whom: President and Congress Shall also include statement of the financial condition of the BSP and statistical appendix w/c shall present AS A MINIMUM the ff data: . (sec 38 NCBA) The functions and duties of such operating departments and other offices shall be determined by the monetary board.
by the governor. Distribution of net profits w/in the first 60 days ff the end of each fiscal year. Monthly movement of the accounts of the BSP and other banks 7. escept as otherwise provided in the transitory provisions of the NCBA (sec 44) . Monthly movement in summary form. Monthly indices of consumer prices and of import and export prices 5. of exports and imports by volume and value 6. FAILURE TO COMPLY with the reportorial requirements pursuant to this article w/o justifiable reason as may be determined by the monetary board shall cause the withholding of the salary of the personnel concerned until the requirements are complied with (sec 40) D. it shall make adequate allowance or establish adequate reserves for bad and doubtful accounts (sec 43) C. Fiscal year = shall begin on Jan 1 and end on Dec 31 of each year (SEC 42 NCBA) B. Computation of profits and losses Within the first 30 days ff the end of each year. Monthly movement of purchases and sales of foreign exchange and of the international reserves of BSP 3. LOSSES. Principal data on government receipts and expenditures and on the status of the public debt both domestic and foreign 8. the monetary board shall determine and carry out the distribution of the net profits. Monthly movement of monetary aggregates and their components 2. in accordance with the ff rule: o 50% of the net profits shall be carried to surplus o The remaining 50% shall revert back to the National Treasury. and by the auditor of the Bangko Sentral (sec 41 NCBA) IX – PROFITS. Texts of major legal and admin measures adopted by the government and the monetary board during the year w/c relate to the functions or operations of BSP or of the financial system The BSP SHALL PUBLISH ANOTHER VERSION OF THE ANNUAL REPORT IN TERMS UNDERSTANDABLE TO THE LAYMAN. Signatures on statements Balance sheets and other financial statements of the BSP shall be signed by officers responsible for their preparation. The balance of payments of the Phils 4. AND SPECIAL ACCOUNTS A. In the calculation of net profits.1. the BSP shall determine its net profits or losses.
No relative of any member of the Monetary Board or the Chairman of the Commission within the sixth degree of consanguinity or affinity shall be appointed such representative. respectively. he is empowered and authorized to appoint a representative who shall be the auditor of the Bangko Sentral and. Suspense Accounts. are owed by the Philippines to any international or regional intergovernmental financial institution of which the Philippines is a member or are owed by these institutions to the Philippines. Suspense accounts Section 46. depending on whether the revaluations have produced net profits or net losses. The salaries and other emoluments shall be paid by the Commission. in accordance with law.The Chairman of the Commission on Audit shall act as the ex officio auditor of the Bangko Sentral and. 265. .Sections 43 and 43-A of Republic Act No. as a consequence of such revaluations. Penalty for Violation Sec 66 of the GBL provides . as amended.D. as amended.Profits or losses arising from any revaluation of the Bangko Sentral's net assets or liabilities in gold or foreign currencies with respect to the Philippine peso shall not be included in the computation of the annual profits and losses of the Bangko Sentral. Any remaining profit or loss shall be carried in a special frozen account which shall be named "Revaluation of International Reserve" and the net balance of which shall appear either among the liabilities or among the assets of the Bangko Sentral. Revaluation Profits and Losses. Amounts outstanding as of the effective date of this Act based on these accounts shall continue to be for the account of the Central Bank and shall be governed by the transitory provisions of this Act. *The Revaluation of International Reserve account shall be neither credited nor debited for any purposes other than those specifically authorized in this section E. The auditor Section 47. until otherwise provided for in accordance with the transitory provisions of this Act. as such. . creating the Monetary Adjustment Account (MAA) and the Exchange Stabilization Adjustment Account (ESAA). 265. are hereby repealed. and to appoint and fix salaries and number of personnel to assist said representative in his work. Appointment and Personnel. The auditor of the Bangko Sentral and personnel under him may be removed only by the Chairman of the Commission. The Revaluation of International Reserve (RIR) account as of the effective date of this Act of the Central Bank shall continue to be for the account of the same entity and shall be governed by the provisions of Section 44 of Republic Act No. fix his salary. . Any profits or losses arising in this manner shall be offset by any amounts which. Revaluation profits and losses Section 45. F. X. The representative of the Chairman of the Commission must be a certified public accountant with at least ten (10) years experience as such.
or both. the Board may. A. Penalty for refusal to make reports or permit examination . any refusal to permit examination into the affairs of the institution. or both. without prejudice to the penalties provided above and the administrative sanctions provided in Sec 37 of NCBA. any willful violation of its charter or by-laws. Administrative sanctions on banks and quasi-banks (Administrative Violations: CDRFLIB) 1. or by imprisonment of not more than 5 years. any willful making of a false or misleading statement to the Board or the appropriate supervising and examining department or its examiners. Proceedings upon and penalty for violation of NCBA and other banking laws. or violation of.Unless otherwise provided. 36 and 37 of the New Central Bank Act. Resignation or termination from office shall not exempt such director or officer from administrative or criminal sanctions.Whenever a bank or quasi-bank persists in carrying on its business in an unlawful or unsafe manner. and/or g. rules and regulations. c. instruction or regulation issued by the Monetary Board. orders or instructions . 2. The Monetary Board may. rules. 35.P200. regulations. the violation of any of the provisions of the GBL shall be subject to Sections 34.shall unless otherwise provided in NCBA be punished by a fine of P50. such corporation may be dissolved by quo warranto proceedings instituted by the Solicitor General. e. or by imprisonment of 1 – 5 years. instruction or ruling by the Governor. willful delay in the submission of reports or publications thereof as required by law.a fine of P50. at the discretion of the court C.000 or by imprisonment of 2 – 10 years. If the offender is a director or officer of a bank. preventively suspend any director or officer of a bank or quasi-bank pending an investigation: Provided.000 . the Monetary Board may also suspend or remove such director or officer. at the discretion of the court . whenever warranted by circumstances. any willful failure or refusal to comply with. or any order. conducting business in an unsafe or unsound manner as may be determined by the Monetary Board *Notes: 1. Administrative Violations and Penalties -without prejudice to the criminal sanctions a. at the discretion of the court B.000.a fine of P100. any commission of irregularities. b. or both. any banking law or any order. d. take action under Sec 30 (Receivership and Liquidation) of the NCBA. quasi-bank or trust entity.000 – P100.00 – P200. . If the violation is committed by a corporation. or f. Penalty for the willful making of a false or misleading statement on a material fact .000. D.
the order shall be final. the period of delay shall not be counted in computing the period of suspension herein provided. . etc. and may further order that immediate action be taken to correct the conditions resulting from such practice or violation. 2. Monetary Board regulations. If no such hearing is requested within said period. That when the delay in the disposition of the case is due to the fault. (2) The respondents shall be afforded an opportunity to defend their action in a hearing before the Monetary Board or its committee chaired by any MB member upon request made by the respondents within 5 days from their receipt of the order. for any failure to comply with the requirements of law.000 a day for each violation. fines not in excess of P10. said director or officer shall be reinstated in his position: Provided. the imposition of which is final and executory until reversed. to impose upon banking institutions. which is immediately effective upon service to the institution and/or the directors and/or officers. (3) The Governor is authorized. Administrative Proceedings (1) Whether or not there is an administrative proceeding. The above administrative sanctions need not be applied in the order of their severity. further. which is immediately effective upon service to the institution and/or the directors and/or officers. at his discretion. negligence or petition of the director or officer. modified or lifted by the Monetary Board on appeal. 3.That should the case be not finally decided by the Bangko Sentral within a period of 120 days after the date of suspension. the Monetary Board may issue a cease and desist order from the indicated practice or violation.
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