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CHAPTER ONE: BANK AND THE BUSINESS OF BANKING I. Declared Policy of t e State.

Read Section 2 of Republic Act 8791 (General Banking Law of 2000 II. Defi!itio! of Ba!"#. a. Bank! are defined under t"e GBL a! entitie! engaged in t"e lending of fund! obtained in t"e for# of depo!it!$ (%ote& bank! #a' engage in ot"er acti(itie! allowed b' law $. )t"er definition!& (* onl' included two out of t"e four gi(en b' +i,on i. -one'ed in!titute founded to facilitate t"e borrowing. lending and !afe/keeping of #one' and to deal. in note!. bill! of e0c"ange. and credit!$ ii. An in(e!t#ent co#pan' w"ic" loan! out t"e #one' of it! cu!to#er!. collect! t"e intere!t and c"arge! a co##i!!ion to bot" t"e lender and borrower. i! a bank$ III. Nat%re of t e Ba!"i!& B%#i!e##. a. De$tor'Creditor Relatio!# i(. Read Article 1980 of t"e 1i(il 1ode of t"e 2"ilippine!$ 3"e contract between t"e bank and it! depo!itor i! go(erned b' t"e pro(i!ion! of t"e 1i(il 1ode on !i#ple loan$ 3"e bank i! t"e debtor and t"e depo!itor i! t"e creditor$ $. Fid%ciary D%ty. Bank! are re4uired to 5treat t"e account! of it! depo!itor! wit" #eticulou! care. alwa'! "a(ing in #ind t"e fiduciar' nature of t"eir relation!"ip$ 3"e fiduciar' nature of banking re4uire! bank! to a!!u#e a degree of diligence "ig"er t"an t"at of a good fat"er of a fa#il'$ 3"u!. t"e bank6! fiduciar' dut' i#po!e! upon it a "ig"er le(el of accountabilit'$ c. Not a Tr%#t A&ree)e!t. 3"e fiduciar' nature of banking doe! not con(ert t"e contract between t"e bank and it! depo!itor! fro# a !i#ple loan to a tru!t agree#ent. w"et"er e0pre!!ed or i#plied$ 3"e law !i#pl' i#po!e! on t"e bank a "ig"er !tandard of integrit' and perfor#ance in co#pl'ing wit" it! obligation! under t"e contract of !i#ple loan. be'ond t"o!e re4uired of non/bank debtor! under a !i#ilar contract of !i#ple loan$ 3"e law allow! t"e bank! to offer t"e lowe!t po!!ible intere!t rate to depo!itor! w"ile c"arging t"e "ig"e!t po!!ible intere!t rate on t"eir own borrower! d. I!di#(e!#i$le I!#tit%tio!. Bank! "a(e beco#e an ubi4uitou! pre!ence a#ong t"e people. w"o "a(e co#e to regard t"e# wit" re!pect and e(en gratitude. and #o!t of all. confidence$ e. I)(re##ed *it P%$lic Tr%#t. 3"e bu!ine!! of banking i! i#bued wit" public intere!t$ 3"e !tabilit' of t"e bank! largel' depend! on t"e confidence of t"e people in t"e "one!t' and efficienc' of bank!$ f. De&ree of Dili&e!ce. 3"e law i#po!e! on bank! "ig" !tandard! in (iew of t"e fiduciar' nature of banking 7 #ore t"an t"at of a good fat"er of a fa#il'$ B83 t"e !a#e "ig"er degree of diligence i! not e0pected to be e0erted b' bank! in co##ercial tran!action! t"at do

&.

. i. ,. ".

l.

not in(ol(e t"eir fiduciar' relation!"ip wit" t"eir depo!itor!$ (%ote& +iligence e0tend! to 9inancial in!titution! Treat)e!t of Acco%!t# *it +etic%lo%# Care. B83 t"ere i! no law #andating bank! to call up t"eir client! w"ene(er t"eir repre!entati(e! wit"draw !ignificant a#ount! fro# t"eir account!$ D%ty to Kee( Record#. A bank "a! a fiduciar' dut' to keep efficientl' a record of it! tran!action! wit" it! depo!itor!$ Ba!"# are Not Grat%ito%# Bailee#. Bank! are run for gain. and t"e' !olicit depo!it! in order t"at t"e' can u!e t"e #one' for t"at (er' purpo!e$ Ba!"# are Not E-(ected to $e I!falli$le. Deali!& *it Re&i#tered .a!d#. i. Bank! !"ould e0erci!e #ore care and prudence in dealing e(en wit" regi!tered land!. t"an pri(ate indi(idual!. for t"eir bu!ine!! i! one affected wit" public intere!t$ Ab!ent good fait". bank! would be denied t"e protecti(e #antle of land regi!tration !tatute$ ii. Bank! "a(e acce!! to #ore facilitie! in confir#ing t"e identit' of t"eir :udg#ent debtor!$ *t !"ould act #ore cautiou!l'. e!peciall' if !o#e uncertaint' "ad been reported b' t"e apprai!er ta!ked to #ake (erification!$ 3"e uncertaint' !"ould not be treated a! fli#!' #atter$ iii. 1a!e 1& 3"e act of ; Bank of entru!ting to 1 t"e owner6! duplicate certificate entru!ted to it b' A wit"out e(en notif'ing A and ab!ent an' prior in(e!tigation on t"e (eracit' of 16! clai# and c"aracter i! a patent failure to fore!ee t"e ri!k created b' t"e act$ i/. 1a!e 2& A bank w"ic" accepted a propert' a! #ortgage de!pite t"e e0i!tence of !tructure! and occupant! ot"er t"an t"e #ortgagor !"owed t"e bank6! negligence$ /. 1a!e <& 3"u!. w"ile it i! true. 0 0 0 t"at a per!on dealing wit" regi!tered land! need not go be'ond t"e certificate of title. it i! likewi!e a well/!ettled rule t"at a purc"a!er or #ortgagee cannot clo!e "i! e'e! to fact! w"ic" !"ould put a rea!onable #an on "i! guard. and clai# t"at "e acted in good fait" under t"e belief t"at t"ere wa! no defect in t"e title of t"e (endor or #ortgagor$ Ba!"# )ay E-cl%de Per#o!# i! t eir Pre)i#e#. Bank! #a' i#po!e rea!onable condition! or li#itation! to acce!! b' non/e#plo'ee! to it! pre#i!e! and record!. !uc" a! t"e e0clu!ion of non/e#plo'ee! fro# t"e working area! for e#plo'ee!. e(en ab!ent an' i##inent or actual unlawful aggre!!ion on or an

).

in(a!ion of it! propertie! or u!urpation t"ereof. pro(ided t"at !uc" li#itation! are not contrar' to t"e law$ C ar&i!& of I!tere#t for .oa!#. 3"e c"arging of intere!t for loan! for#! a (er' e!!ential and funda#ental ele#ent of t"e banking bu!ine!!$ *n fact. it #a' be con!idered to be t"e (er' core of t"e banking6! e0i!tence or being$

I0.

.ia$ility for Act# of Officer# a!d E)(loyee# degree of re!pon!ibilit'. care and tru!twort"ine!! e0pected on bank!6 e#plo'ee! and official!/ greater t"an t"o!e ordinar' clerk! and e#plo'ee!

==Bank! are e0pected to e0erci!e t"e "ig"e!t degree of diligence in t"e !election and !uper(i!ion of t"eir e#plo'ee!& 1$ e0erci!e "ig" !tandard of perfor#ance and in!ure t"at it! e#plo'ee! will do likewi!e$ 2$ bank i! liable for t"e wrongful act! of it! officer! done in t"e intere!t of t"e bank or in t"eir dealin! a! bank repre!entati(e! but not for t"e act! out!ide t"e !cope of t"eir aut"orit'$ A. Ne&li&e!ce of a +a!a&er /bank i! liable for t"e negligence or t"e #i!deed of it! branc" #anager Ne&li&e!ce of Officer# G>% R8L>& a banking corporation i! liable for t"e wrongful or tortuou! act! and declaration! of it! officer! or agent! wit"in t"e cour!e and !cope of t"eir e#plo'#ent if a corporation knowingl' per#it! it! officer!. or an' ot"er agent. to perfor# act! wit"in t"e !cope of apparent aut"orit'/ be e!topped fro# den'ing !uc" aut"orit'$ Ne&li&e!ce of Teller# "ig" degree of diligence in in!uring t"at t"e' return t"e pa!!book onl' to t"e depo!itor or "i! aut"ori,ed aut"orit'$ 9ailure to do !o. t"e' will clot"e t"at unaut"ori,ed per!on pre!u#pti(e owner!"ip of t"e pa!!book. facilitating unaut"ori,ed wit"drawal! b' t"at per!on$ 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! Ri& t to Reco/er fro) E)(loyee# / bank! #a' reco(er fro# it! e#plo'ee! for an' pa'#ent! #ade in (iew of t"e latter6! negligent or cri#inal act! .ia$ility for Da)a&e# / concurrence of in:ur' to t"e plaintiff and legal re!pon!ibilit' b' t"e per!on cau!ing it / to award tort da#age!/ an indi(idual #u!t be in:ured in t"e conte#plation of law? t"u! t"ere #u!t be breac" before da#age!

B.

C.

D.

E.

#a' be awarded and t"e breac" of dut' !"ould be t"e pro0i#ate cau!e of t"e in:ur'$ 1$ Actual and 1o#pen!ator' +a#age! a$ w"en t"e obligation i! breac"ed/ con!i!t! in t"e pa'#ent of a !u# of #one'. i$e$ loan or forbearance t"en t"e intere!t due would be t"at w"ic" #a' "a(e been !tipulated in writing$ 3"e intere!t due it!elf !"all earn legal intere!t fro# t"e ti#e it i! :udiciall' de#anded@ 12A per annu# to be co#puted fro# default$ b$ not con!tituting a loan or forbearance an intere!t on t"e a#ount of da#age! awarded #a' be i#po!ed at t"e di!cretion of t"e court at t"e rate of BA per annu#$ c$ w"en t"e :udg#ent of t"e court awarding a !u# of #one' beco#e! final and e0ecutor'. t"e rate of legal intere!t w"et"er t"e ca!e fall! under (a or (b . !"all be 12A per annu# fro# !uc" finalit' until !ati!faction$ 2$ >0e#plar' +a#age! / law allow! t"i! b' wa' of e0a#ple for t"e public good <$ -oral +a#age! G>% R8L>/ corporation (artificial being i! not entitled to #oral da#age! B83/ for breac" of fiduciar' dut' re4uired of a bank. a corporate client #a' clai# !uc" da#age! w"en it! good reputation i! be!#irc"ed b' !uc" breac". a!n !ocial "u#iliation re!ult! t"erefro#$ F. Re#(o!deat S%(erior1 Dili&e!ce i! t e Selectio! a!d S%(er/i#io! of E)(loyee# A bank i! bound b' t"e negligence of it! e#plo'ee! under t"e principle of re!pondeat !uperior or co##and re!pon!ibilit'$ 3"e defen!e of e0erci!ing t"e re4uired diligence in t"e !election and !uper(i!ion of e#nplo'ee! i! %)3 a co#plete defen!e in culpa contractual" unlike in culpa aquiliana# 1$ C"o!e aut"orit' i! needed in order for an entit' to engage in banking or 4ua!i/banking function!D Ba!&"o Se!tral 2$ C"at agenc' of t"e go(ern#ent deter#ine! w"et"er an entit' or per!on i! perfor#ing banking or 4ua!i/banking function! wit"out aut"orit' fro# t"e Bangko SentralD EowD +o!etary Board. T e $oard t ro%& t e #%(er/i#io! of t e BSP e-a)i!e1 i!#(ect1 or i!/e#ti&ate t e $oo"# a!d record# of #%c (er#o! or e!tity. Note: E-i#te!ce of a /icti) act%ally i!,%red i# !ot !ece##ary i! deter)i!i!& * et er a! e!tity i# e!&a&ed i! ille&al $a!"i!&. <$ C"at i! t"e !cope of t"e aut"orit' of t"e Super(i!ing and >0a#ining +epart#entD a.2 to ad)i!i#ter oat to a!y #%c (er#o!1 e)(loyee1 officer or director of a!y #%c e!tity. $.2 to co)(el t e (re#e!tatio! or (rod%ctio! of #%c $oo"#1 doc%)e!t#1 (a(er# or record# t at are rea#o!a$ly !ece##ary to a#certai! t e fact# relati/e to t e tr%e f%!ctio!# a!d o(eratio!# of #%c (er#o! or e!tity.

F$ C"at i! t"e e0ten!ion of t"e e0a#ining power!D 3"e BS2 !"all al!o "a(e t"e aut"orit' to e0a#ine an enterpri!e w"ic" i! w"oll' or #a:orit'/owned or controlled b' t"e bank t"at i! under e0a#ination$(t"i! additional aut"orit' i! a(ailable onl' w"en t"e !ub:ect i! a bank$ G$ C"at i! t"e 1ertificate of Aut"orit' to Regi!terD It i# a certificate i##%ed $y t e +o!etary Board1 * ic i# a! i!di#(e!#a$le re3%ire)e!t * e! re&i#teri!& article# of i!cor(oratio! *it t e Sec%ritie# a!d E-c a!&e Co))i##io!$ B$ C"at are t"e re4uire#ent! for t"e i!!uance of !uc" certificateD >(idence !"owing t"at& 4.2 all re3%ire)e!t of e-i#ti!& la*# a!d re&%latio!# to e!&a&e i! $%#i!e## are co)(lied *it . 5.2 t e (%$lic i!tere#t a!d eco!o)ic co!ditio!#1 $ot &e!eral a!d local ,%#tify t e a%t ori6atio! 7.2 t e a)o%!t of ca(ital1 t e fi!a!ci!&1 or&a!i6atio!1 directio!1 a!d ad)i!i#tratio!1 a# *ell a# t e i!te&rity of t e or&a!i6er# a!d ad)i!i#trator# rea#o!a$ly a##%re t e #afety of de(o#it# a!d t e (%$lic i!tere#t. 7$ Eow #a' !u##on! be !er(ed to a bankD a.2 Sec. 44. Ser/ice %(o! do)e#tic (ri/ate ,%ridical e!tity. 8 e! t e defe!da!t i# a cor(oratio!1 (art!er# i( or a##ociatio! or&a!i6ed %!der t e la*# of t e P ili((i!e# *it a ,%ridical (er#o!ality1 #er/ice )ay $e )ade o! t e (re#ide!t1 )a!a&i!& (art!er1 &e!eral )a!a&er1 cor(orate #ecretary1 trea#%rer1 or i!' o%#e co%!#el. 9R%le 4:1 Sectio! 44 of t e R%le# of Co%rt.2 $.2 Sec. 45. Ser/ice %(o! forei&! (ri/ate ,%ridical e!tity. 8 e! t e defe!da!t i# a forei&! (ri/ate ,%ridical e!tity * ic a# tra!#acted $%#i!e## i! t e P ili((i!e#1 #er/ice )ay $e )ade o! it# re#ide!t a&e!t de#i&!ated i! accorda!ce *it la* for t at (%r(o#e1 or1 if t ere $e !o #%c a&e!t1 o! t e &o/er!)e!t official de#i&!ated $y la* to t at effect1 or o! a!y of it# officer# or a&e!t# *it i! t e P ili((i!e#. 9Sec. 45. R%le 4:2 8$ Strict co#pliance i! nece!!ar' wit" t"e #ode of !er(ice to confer :uri!diction of t"e court o(er a corporation$ 3"e officer upon w"o# !er(ice i! !er(ed #u!t be one w"o i! na#ed in t"e !tatute!? ot"erwi!e. t"e !er(ice i! in!ufficient$ C"at i! t"e purpo!e of t"i! ruleD To re!der rea#o!a$ly certai! t at t e cor(oratio! recei/e *ill (ro)(t a!d (ro(er !otice i! a! actio! a&ai!#t it. %ote& Ser(ice of !u##on! on a bank #anager i! in(alid$ A ca!e !"ould not be di!#i!!ed !i#pl' becau!e an original !u##on! wa! wrongfull' done$

*t i! not pertinent w"et"er t"e !u##on! i! de!ignated a! an original or an alia! !u##on a! long a! it "a! ade4uatel' !er(ed it! purpo!e$ 1EA23>R 2& )RGA%*HA3*)% -A%AG>->%3 A%+ A+-*%*S3RA3*)% )9 BA%IS. J8AS*/BA%IS A%+ 3R8S3 >%3*3*>S (pro(i!ion "alo! to kc ganun din un book parang codal )RGA%*HA3*)% 1ondition!& (S21 3"at t"e entit' i! a !tock corporation 3"at it! fund! are obtained fro# t"e public . w"ic" !"all #ean 20 or #ore per!on! 3"at t"e #ini#u# capital re4uire#ent! pre!cribed b' t"e #onetar' board for eac" categor' of bank! are !ati!fied 1apabilitie!& *n ter#! of financial re!ource! and tec"nical e0perti!e and integrit' Licen!ing proce!! !"all incorporate and acce!!#ent of 1$ 2$ <$ F$ G$ 3"e bank! owner!"ip !tructure +irector! and !enior #anage#ent *t! operation plan. and *nternal control!. a! well a! *t! pro:ected financial condition and capital ba!e

1apital Re4uire#ent! Re4uired #ini#u# capital (pre!cribed b' t"e #onetar' board 3K2> )9 BA%I A-)8%3 (-illion 8ni(er!al F9G0 co##ercial 2F00 3"rift Eead office in #anila <2G Eead office out!ide -la G2 Rural Cit"in -la 2B 1itie! of cebu and da(ao 1< 1!t. 2nd. <rd cla!! citie! and 1!t cla!! B$G #unicipalitie! Ft". Gt". Bt" cla!! citie! and 2nd. <rd. Ft" cla!! 2$B #unicipalitie! At lea!t 2GA of t"e toal aut"ori,ed capital !tock !"all be !ub!cribed b' t"e !ub!criber! of t"e propo!ed bank. and at lea!t 2GA of !uc" !ub!cription !"all be paid up. pro(ided t"at in no ca!e !"all t"e paid/up capital be le!! t"an t"e #ini#u# re4uired capital !tated abo(e$ LSec 1< 1orporation 1ode

*ncorporator!M Sub!criber! I!cor(orator# ;S%$#cri$er# < Pro(o#ed Director# -u!t be per!on! of integrit' and of good credit !tanding in t"e bu!ine!! co##unit' -u!t not "a(e been con(icted of an' cri#e in(ol(ing #oral turpitude. not officer! or e#plo'ee! of go(ern#ent agenc' c"arged wit" !uper(i!ion of loan

S%$#cri$er# -u!t "a(e ade4uate financial !trengt" to pa' for t"eir propo!ed !ub!cription in bank

9oreign indi(idual! and non/bank corporation! #a' own or control up to F0A of t"e (oting !tock of a do#e!tic bank$ O appl' to 9ilipino and do#e!tic non/bank corporation! 3"e percentage of foreign/owned (oting !tock! in a bank !"all be deter#ined b' t"e citi,en!"ip of t"e indi(idual !tock"older! in t"at bank$ 1ontrolling !tock"older! 7 indi(idual! "olding #ore t"an G0A of t"e (oting !tock of t"e corporate !tock"older! of t"e bank Poting !tock& co##ercial 7 B0A? t"rift 7 F0A? rural bank 7 full' owned and "eld b' 9ilipino +eter#ining nationalit' of bank 7 control te!t i! applied

BOARD OF DIRECTORS %u#ber of +irector! 3"ere !"all be at lea!r G and #a0i#u# of 1G #e#ber! of board of director! of bank. 2 of w"o# !"all be independent director! 1orporation 1ode& Sec. 4=. Number and qualifications of incorporators. / An' nu#ber of natural per!on! not le!! t"an fi(e (G but not #ore t"an fifteen (1G . all of legal age and a #a:orit' of w"o# are re!ident! of t"e 2"ilippine!. #a' for# a pri(ate corporation for an' lawful purpo!e or purpo!e!$ >ac" of t"e incorporator! of ! !tock corporation #u!t own or be a !ub!criber to at lea!t one (1 !"are of t"e capital !tock of t"e corporation$ %on/ 9ilipino citi,en! #a' beco#e #e#ber! of t"e board of director! of a bank to t"e e0tent of t"e foreign participation in t"e e4uit' of !aid bank$ *ndependent director 7 a per!on ot"er t"an an officer or e#plo'ee of t"e bank. it !ub!idiarie! or affiliate! or related intere!t! Specific 4ualification! on independent director (!ee banking book page G8 +irector! of -erged or 1on!olidated Bank! %u#ber of director! #u!t not e0ceed 21 -eeting! -a' be conducted t"roug" #odern tec"nologie! Cit"in 2"ilippine! 7 #u!t be !tated in b' law! Sec. 5>. Corporate officers, quorum. / *##ediatel' after t"eir election. t"e director! of a corporation #u!t for#all' organi,e b' t"e election of a pre!ident. w"o !"all be a director. a trea!urer w"o #a' or #a' not be a director. a !ecretar' w"o !"all be a re!ident and citi,en of t"e 2"ilippine!. and !uc" ot"er officer! a! #a' be pro(ided for in t"e b'/law!$ An' two (2 or #ore po!ition! #a' be "eld concurrentl' b' t"e !a#e per!on. e0cept t"at no one !"all act a! pre!ident and !ecretar' or a! pre!ident and trea!urer at t"e !a#e ti#e$ 3"e director! or tru!tee! and officer! to be elected !"all perfor# t"e dutie! en:oined on t"e# b' law and t"e b'/law! of t"e corporation$ 8nle!! t"e article! of incorporation or t"e b'/law! pro(ide for a greater #a:orit'. a #a:orit' of t"e nu#ber of director! or tru!tee! a! fi0ed in t"e article! of incorporation !"all con!titute a 4uoru# for t"e tran!action of corporate bu!ine!!. and e(er' deci!ion of at lea!t a #a:orit' of t"e director! or tru!tee! pre!ent at a #eeting at w"ic" t"ere i! a 4uoru# !"all be (alid a! a corporate act. e0cept for t"e election of officer! w"ic" !"all re4uire t"e (ote of a #a:orit' of all t"e #e#ber! of t"e board$ +irector! or tru!tee! cannot attend or (ote b' pro0' at board #eeting!$

Branc"e!

A bank #a' be organi,ed wit" not le!! t"an G nor #ore t"an 1G incorporator! *n e0ce!! of 1G. to be li!ted a#ong original !ub!criber! in Article! of incorporation 8ni(er!al and co##ercial 7 wit"in ot out!ide 2"ilippine! upon prior appro(al b' BS2 All ot"er bank! 7 go(erned b' pertinent law!

Ac4ui!ition of Poting Stock in a +o#e!tic Bank GBL pro(ide!& Sec$ 7<$ $cquisition of %otin& 'tock in a (omestic )ank $ 7 Cit"in !e(en (7 'ear! fro# t"e effecti(it' of t"i! act and !ub:ect to guideline! i!!ued pur!uant to t"e 9oreign Bank! Liberali,ation Act. t"e -onetar' Board #a' aut"ori,e a foreign bank to ac4uire up to one "undred percent (100A of t"e (oting !tock of onl' one (1 bank organi,ed under t"e law! of t"e Republic of t"e 2"ilippine!$ Cit"in t"e !a#e period. t"e -onetar' Board #a' aut"ori,e an' foreign bank. w"ic" prior to t"e effecti(it' of t"i! Act a(ailed it!elf of t"e pri(ilege to ac4uire up to !i0t' percent (B0A of t"e (oting !tock of a bank under t"e 9oreign Bank! Liberali,ation Act and t"e 3"rift Bank! Act. to furt"er ac4uire (oting !"are! !uc" bank to t"e e0tent nece!!ar' for it to own one "undred percent (100A of t"e (oting !tock t"ereof$ *n t"e e0erci!e of t"e aut"orit'. t"e -onetar' Board !"all adopt #ea!ure! a! #a' be nece!!ar' to en!ure t"at at all ti#e! t"e control of !e(ent' percent (70A of t"e re!ource! or a!!et! of t"e entire banking !'!te# i! "eld b' bank! w"ic" are at lea!t #a:orit'/owned b' 9ilipino!$ An' rig"t. pri(ilege or incenti(e granted to a foreign bank under t"i! Section !"all be e4uall' en:o'ed b' and e0tended 9a#il' Group! or Related *ntere!t Sec$12$ 'tockholdin&s of *amily +roups of ,elated -nterests $ 7 Stock"olding! of indi(idual! related to eac" ot"er wit"in t"e fourt" degree of con!anguinit' or affinit'. legiti#ate or co##on/law. !"all be con!idered fa#il' group! or related intere!t! and #u!t be full' di!clo!ed in all tran!action! b' !uc" corporation! or related group! of per!on! wit" t"e bank$ $ Sec$ 1<$ .orporate 'tockholdin&s# / 3wo or #ore corporation! owned or controlled b' t"e !a#e fa#il' group or !a#e group of per!on! !"all be con!idered related intere!t! and #u!t be full' di!clo!ed in all tran!action! b' !uc" corporation! or related group of per!on! wit" t"e bank$

A bank aut"ori,ed to e!tabli!" branc"e! or ot"er office! !"all be re!pon!ible for all bu!ine!! conducted in !uc" branc"e! and office! to t"e !a#e e0tent and in t"e !a#e #anner a! t"oug" !uc" bu!ine!! "ad all been conducted in t"e "ead office$ Bank N branc"e! N ot"er office! @ 1 unit

STOCKHO.DINGS 3rea!ur' Stock! GBL pro(ide! no bank !"all& 1$ 2$ 2urc"a!e or ac4uire !"are! of it! own capital !tock? or Accept it! own !"are! a! a !ecurit' for a loan >;1>23 CE>% A83E)R*H>+ BK -)%>3ARK B)AR+ O !tock purc"a!ed !"all be !old wit"in B #ont"! fro# ti#e of purc"a!e

At co##on law. a corporation "a! no lien upon t"e !"are! of !tock"older! for an' indebtedne!! to t"e corporation and t"ere i! no !tatute creating !uc" lien$

1o#pen!ation and ot"er Benefit! of +irector! and )fficer! Sec$ 18$ .ompensation and Other )enefits of (irectors and Officers $ 3o protect t"e find! of depo!itor! and creditor! t"e -onetar' Board #a' regulate t"e pa'#ent b' t"e bark to it! director! and officer! of co#pen!ation. allowance. fee!. bonu!e!. !tock option!. profit !"aring and fringe benefit! onl'

Forei&! Stoc" oldi!&# GBL pro(ide!

in e0ceptional ca!e! and w"en t"e circu#!tance! warrant. !uc" a! but not li#ited to t"e following& 18$1$ C"en a bank i! under co#ptroller!"ip or con!er(ator!"ip? or 18$2$ C"en a bank i! found b' t"e -onetar' Board to be conducting bu!ine!! in an un!afe or un!ound #anner? or 18$<$ C"en a bank i! found b' t"e -onetar' Board to be in an un!ati!factor' financial condition$ 9*3 A%+ 2R)2>R R8L> 2ower! of t"e -onetar' Board Sec$ 1B$ *it and /roper ,ule$ / 3o #aintain t"e 4ualit' of bank #anage#ent and afford better protection to depo!itor! and t"e public in general t"e -onetar' Board !"all pre!cribe. pa!! upon and re(iew t"e 4ualification! and di!4ualification! of indi(idual! elected or appointed bank director! or officer! and di!4ualif' t"o!e found unfit$ After due notice to t"e board of director! of t"e bank. t"e -onetar' Board #a' di!4ualif'. !u!pend or re#o(e an' bank director or officer w"o co##it! or o#it! an act w"ic" render "i# unfit for t"e po!ition$ *n deter#ining w"et"er an indi(idual i! fit and proper to "old t"e po!ition of a director or officer of a bank. regard !"all be gi(en to "i! integrit'. e0perience. education. training. and co#petence$ +i!4ualification! 1ircular G1< !erie! of 200B (!ee book p B1 1orporation 1ode o Sec$ 27$ (isqualification of directors" trustees or officers# / %o per!on con(icted b' final :udg#ent of an offen!e puni!"able b' i#pri!on#ent for a period e0ceeding !i0 (B 'ear!. or a (iolation of t"i! 1ode co##itted wit"in fi(e (G 'ear! prior to t"e date of "i! election or appoint#ent. !"all 4ualif' a! a director. tru!tee or officer of an' corporation$ %1BA 2ro(i!ion/ Sec 9 and 27 (!ee book p BG 2*+1 law !ec 17 (pB7 RA 7<G< !ec G (pB7 Appendi0 <8. -anual of Regulation! of Bank! Sec$ 10 (pB7 2ro"ibition on 2ublic )fficial! (RA 7<G< Sec. >. All #e#ber! of t"e Board of +irector! of t"e rural bank !"all be citi,en! of t"e 2"ilippine! at t"e ti#e of t"eir a!!u#ption to office& 2ro(ided. "owe(er. 3"at not"ing in t"i! Act !"all be con!trued a! pro"ibiting an' appointi(e or electi(e public official fro# !er(ing a! director. officer. con!ultant or in an' capacit' in t"e bank$ BANKING DA?S AND HOURS Sec$ 21$ )ankin& (ays and 0ours$ 7 8nle!! ot"erwi!e aut"ori,ed b' t"e Bangko Sentral in t"e intere!t of t"e banking public. all bank! including t"eir branc"e! and office! !"all tran!act bu!ine!! on all working da'! for at lea!t !i0 (B "our! a da'$ *n addition. bank! or an' of t"eir branc"e! or office! #a' open for bu!ine!! on Saturda'!. Sunda'! or "olida'! for at lea!t t"ree (< "our! a

da'& /ro1ided. 3"at bank! w"ic" opt to open on da'! ot"er t"an working da'! !"all report to t"e Bangko Sentral t"e additional da'! during w"ic" t"e' or t"eir branc"e! or office! !"all tran!act bu!ine!!$ 9or purpo!e! of t"i! Section. working da'! !"all #ean -onda'! to 9rida'!. e0cept if !uc" da'! are "olida'!$ Rule! and Regulation! 1ircular G00 (See book page B9 AUTO+ATED TE..ER +ACHINES )ff/!ite A3-! 1ondition!& 1$ Sub#it report to appropriate depart#ent of BS2 2$ *n!talled onl' in center of acti(it' O ade4uate internal control and !ecurit' #ea!ure! !"all be adopeted and !ub#itted to BS2 <$ )nl' bank! w"ic" "a(e !"own general co#pliance -obile A3-! 1ondition!& 1$ Pi!it onl' center! of acti(it' confined wit"in -anila 2$ Secure in!urance co(erage or !elf/in!urance !c"e#e <$ *nfor# BS2 of actual date a -obile A3- beco#e! operational I!de(e!de!t A%ditor Sec$ G8# -ndependent $uditor$ / 3"e -onetar' Board #a' re4uire a bank. 4ua!i/bank or tru!t entit' to engage t"e !er(ice! of an independent auditor to be c"o!en b' t"e bank. 4ua!i/bank or tru!t entit' concerned fro# a li!t of certified public accountant! acceptable to t"e -onetar' Board$ 3"e ter# of t"e engage#ent !"all be a! pre!cribed b' t"e -onetar' Board w"ic" #a' eit"er be on a continuing ba!i! w"ere t"e auditor !"all act a! re!ident e0a#iner. or on t"e ba!i! of !pecial engage#ent!? but in an' ca!e. t"e independent auditor !"all be re!pon!ible to t"e bank6!. 4ua!i/bank6! or tru!t entit'6! board of director!$ A cop' of t"e report !"all be furni!"ed to t"e -onetar' Board$ 3"e -onetar' Board #a' al!o direct t"e board of director! of a bank. 4ua!i/bank. tru!t' entit' andMor t"e indi(idual #e#ber! t"ereof? to conduct. eit"er per!onall' or b' a co##ittee created b' t"e board. an annual balance !"eet audit of t"e bank. 4ua!i/bank or tru!t entit' to re(iew t"e internal audit and control !'!te# of t"e bank. 4ua!i/bank or tru!t entit' and to !ub#it a report of !uc" audit 9inancial State#ent! Sec$ B0. Financial Statements$ 7 >(er' bank. 4ua!i/bank or tru!t entit' !"all !ub#it to t"e appropriate !uper(i!ing and e0a#ining depart#ent of t"e Bangko Sentral financial !tate#ent! in !uc" for# and fre4uenc' a! #a' be pre!cribed b' t"e Bangko Sentral$ Suc" !tate#ent!. w"ic" !"all be a! of a !pecific date de!ignated b' t"e Bangko Sentral. !"all !"ow t"ee actual financial condition of t"e in!titution !ub#itting t"e !tate#ent. and of it! branc"e!. office!. !ub!idiarie! and affiliate!. including t"e re!ult! of it! operation!. and !"all contain !uc" infor#ation a! #a' be re4uired in Bangko Sentral regulation!$ S>1 B1$ P%$licatio! of Fi!a!cial State)e!t#$ / >(er' bank. 4ua!i/bank or tru!t entit'. !"all publi!" a !tate#ent of it! financial condition. including t"o!e of it! !ub!idiarie! and affiliate!. in !uc" ter#! under!tandable to t"e la'#an and in !uc" fre4uenc' a! #a' be pre!cribed Bangko Sentral. in >ngli!" or 9ilipino. at lea!t once e(er' 4uarter in a new!paper of general circulation in t"e cit' or pro(ince w"ere t"e principal office. in t"e ca!e of a do#e!tic in!titution or t"e principal branc" or office in t"e ca!e of a foreign bank. i! located. but if no

new!paper i! publi!"ed in t"e !a#e pro(ince. t"en in a new!paper publi!"ed in -etro -anila or in t"e neare!t cit' or pro(ince$ 3"e Bangko Sentral #a' b' regulation pre!cribe t"e new!paper w"ere t"e !tate#ent! pre!cribed "erein !"all be publi!"ed$ $ 3"e -onetar' Board #a' allow t"e po!ting of t"e financial !tate#ent! of a bank. 4ua!i/bank or tru!t entit' in public place! it #a' deter#ine. lieu of t"e publication re4uired in t"e preceding paragrap". w"en warranted b' t"e circu#!tance!$ Additionall'. bank! !"all #ake a(ailable to t"e public in !uc" for# and #anner a! t"e Bangko Sentral #a' pre!cribe t"e co#plete !et of it! audited financial !tate#ent! a! well a! !uc" ot"er rele(ant infor#ation including t"o!e on enterpri!e! #a:orit'/owned or controlled b' t"e bank. t"at will infor# t"e public of t"e true financial condition of a bank a! of an' gi(en ti#e$ $ *n period! of national andMor local e#ergenc' or of i##inent panic w"ic" directl' t"reaten #onetar' and banking !tabilit'. t"e -onetar' Board. b' a (ote of at lea!t fi(e (G of it! #e#ber!. in !pecial ca!e! and upon application of t"e bank. 4ua!i/bank or tru!t entit'. #a' allow !uc" bank. 4ua!i/bank or tru!t entit' to defer for a !tated period of ti#e t"e publication of t"e !tate#ent of financial condition re4uired "erein$ Sec$ B2. Publication of Capital Stock . 7 A bank. 4ua!i/bank or tru!t entit' incorporated under t"e law! of t"e 2"ilippine! !"all not publi!" t"e a#ount of it! aut"ori,ed or !ub!cribed capital !tock wit"out indicating at t"e !a#e ti#e and wit" e4ual pro#inence. t"e a#ount of it! capital actuall' paid up$ %o branc" of an' foreign bank doing bu!ine!! in t"e 2"ilippine! !"all in an' wa' announce t"e a#ount of t"e capital and !urplu! of it! "ead office. or of t"e bank in it! entiret' wit"out indicating at t"e !a#e ti#e and wit" e4ual pro#inence t"e a#ount of t"e capital. if an'. definitel' a!!igned to !uc" branc". !uc" fact !"all be !tated in. and !"all for# part of t"e publication$ Sec$ B<$ 'ettlement of (isputes $ 7 3"e pro(i!ion! of an' law to t"e contrar' notwit"!tanding. t"e Bangko Sentral !"all be con!ulted b' ot"er go(ern#ent agencie! or in!tru#entalitie! in action! or proceeding! initiated b' or broug"t before t"e# in(ol(ing contro(er!ie! in bank!. 4ua!i/bank! or tru!t entitie! ari!ing out of and in(ol(ing relation! between and a#ong t"eir director!. officer! or !tock"older!. a! well a! di!pute! between an' or all of t"e# and t"e bank. 4ua!i/bank or tru!t entit' of w"ic" t"e' are director!. officer! or !tock"older!$ Sec$ 22$ Strikes and Lockouts. / 3"e banking indu!tr' i! "ereb' declared a! indi!pen!able to t"e national intere!t and. notwit"!tanding t"e pro(i!ion! of an' law to t"e contrar'. an' !trike or lockout in(ol(ing bank!. if un!ettled after !e(en (7 calendar da'! !"all be reported b' t"e Bangko Sentral to t"e Secretar' of Labor w"o #a' a!!u#e :uri!diction o(er t"e di!pute or decide it or certif' t"e !a#e to t"e %ational Labor Relation! 1o##i!!ion for co#pul!or' arbitration$ Eowe(er. t"e 2re!ident of t"e 2"ilippine! #a' at an' ti#e inter(ene and a!!u#e :uri!diction o(er !uc" labor di!pute in order to !ettle or ter#inate t"e !a#e$ Report! of Strike! and Lockout!

Appri!e deput' go(ernor of t"e !uper(i!ion and e0a#ination !ector of BS2 +i!clo!e& cau!e and bank #anage#ent6! po!ition on it! legalit'? and bank operation! affected

b$ 1a!"ier6!M-anager6!M1ertified 1"eck!? c$ bank draft!? d$ po!tal #one' order!? e$ trea!ur' warrantie!? f$ dul' funded 5on u!Q c"eck!? and

' w"ere t"at bank po!!e!!e! fund! of a depo!itor. it i! bound to "onor "i! c"eck! to t"e e0tent of t"e a#ount of "i! depo!it!$ / failure to do !o entitle! t"e drawer to !ub!tantial da#age! wit"out an' proof of actual da#age!$ / a bank i! not liable for it! refu!al to pa' a c"eck on account of in!ufficient fund! e(en if depo!it #a' be #ade later in t"e da'$ >. Re#(o!#i$ilitie# of Dra*er.

Law! go(erning ot"er t'pe! of bank! Sec$ 71$ Other )ankin& 2aws$ 7 3"e organi,ation. t"e owner!"ip and capital re4uire#ent!. power!. !uper(i!ion and general conduct of bu!ine!! of t"rift bank!. rural bank! and cooperati(e bank! !"all be go(erned b' t"e pro(i!ion! of t"e 3"rift Bank! Act. t"e Rural Bank! Act. and t"e 1ooperati(e 1ode. re!pecti(el'$ 3"e organi,ation. owner!"ip and capital re4uire#ent!. power!. !uper(i!ion and general conduct of bu!ine!! of *!la#ic bank! !"all be go(erned b' !pecial law!$ 3"e pro(i!ion! of t"i! Act. "owe(er. in!ofar a! t"e' are not in conflict wit" t"e pro(i!ion! of t"e 3"rift Bank! Act. t"e Rural Bank! Act. and t"e 1ooperati(e 1ode !"all likewi!e appl' to t"rift bank!. rural bank!. and cooperati(e bank!. re!pecti(el'$ Eowe(er. for purpo!e! of pre!cribing t"e #ini#u# ratio w"ic" t"e net wort" of a t"rift bank #u!t bear to it! total ri!k a!!et!. t"e pro(i!ion! of Section << of t"i! Act !"all go(ern$ C a(ter 7: De(o#it F%!ctio!# of Ba!"# I. Ki!d# of De(o#it#. A. De)a!d De(o#it#. / de#and depo!it! 7 all t"o!e liabilitie! of t"e BS2 and of ot"er bank! w"ic" are deno#inated in 2"ilippine currenc' and are !ub:ect to pa'#ent in legal tender upon de#and b' t"e pre!entation of depo!itor6! c"eck!$ / A 8ni(er!al and 1o##ercial Bank #a' accept or create de#and depo!it! !ub:ect to wit"drawal b' c"eck *it o%t prior aut"orit' fro# t"e BS2$ / A 3"riftMRuralM1ooperati(e Bank #a' accept or create de#and depo!it! upon prior aut"orit' fro# t"e BS2$ 4. Te)(orary O/erdra*i!&#@ Dra*i!&# a&ai!#t U!collected De(o#it#. / te#porar' o(erdrawing! again!t current account !"all not be allowed. unle!! cau!ed b' nor#al bank c"arge! and ot"er fee! incidental to "andling !uc" account!$ / tec"nical o(erdrawing! ari!ing fro# 5force po!tingQ in clearing c"eck! !"all be debited b' bank! under 5Returned 1"eck! and ot"er 1a!" *te#! %ot *n 2roce!! of 1ollectionQ w"ic" i! part of 5ot"er a!!et!Q$ 1"eck! lodged under 5Returned 1"eck! etcQ !"all eit"er be returned or "onored t"e following da' before clearing$ 3"e ite#! to be u!ed a! co(er for t"e "onored c"eck! !"ould be li#ited to t"e following& a$ 1a!"?

g$ fund tran!fer!Mcredit #e#o! wit"in t"e !a#e bank repre!enting proceed! of loan! granted under e0i!ting regulation!$ / drawing! again!t uncollected depo!it! !"all be pro"ibited e0cept w"en #ade again!t uncollected depo!it! repre!enting #anager6!. ca!"ier6! or trea!urer6! c"eck!. trea!ur' warrant!. po!tal #one' order! and dul' funded 5on u!Q c"eck! w"ic" #a' be per#itted at t"e di!cretion of eac" bank$ 5. C%rre!t Acco%!t# of Ba!" Officer# a!d E)(loyee# ' 3"e following bank officer! and e#plo'ee! are pro"ibited fro# #aintaining de#and depo!it! or current account! wit" t"e banking office in w"ic" t"e' are a!!igned$ a$ All officer!? b$ e#plo'ee! of t"e bank6! ca!" depart#ent!Mca!" unit!$

' keep track of "i! a(ailable balance in t"e bank and not rel' on t"e bank to notif' "i# of t"e nece!!it' to fund certain c"eck! "e pre(iou!l' i!!ued$ A. D%ty of Ba!"# to K!o* Si&!at%re / a bank i! bound to know t"e !ignature! of it! cu!to#er! and if it pa'! a forged c"eck. it #u!t be con!idered a! #aking t"e pa'#ent out of it! own fund! and cannot ordinaril' c"arge t"e a#ount to t"e account of t"e depo!itor w"o!e na#e wa! forged$ B. No o$li&atio! to )a"e (artial (ay)e!t ' a bank i! under no obligation to #ake a partial pa'#ent on a c"eck up to onl' t"e a#ount of t"e drawer6! fund!. w"ere t"e c"eck i! drawn for an a#ount larger t"an w"at t"e drawer "a! on depo!it$ C. No d%ty to )a"e %( t e deficie!cy fro) ot er acco%!t#.

c$ ot"er e#plo'ee! w"o "a(e direct and i##ediate re!pon!ibilit' in t"e "andling of tran!action! andMor record! pertaining to de#and depo!it! or current account!$ d$ t"e !pou!e! and relati(e! wit"in t"e !econd degree of con!anguinit' and affinit' of t"e officer! and e#plo'ee! co(ered b' t"e pro"ibition$ e$ bu!ine!! intere!t! of all t"e abo(e #entioned w"erein t"e' own a #a:orit' of t"e !tock$ 7. C ec"#. / A c"eck i! a bill of e0c"ange drawn on a bank. pa'able on de#and$ *t i! a written order addre!!ed to t"e bank b' a per!on "a(ing #one' in t"eir "and! re4ue!ting t"e# to pa' on pre!ent#ent. to a per!on na#ed t"erein or to bearer or order a na#ed !u# of #one'$ / b' (irtue of t"e contract of depo!it between banker and depo!itor. banker agree! to pa' c"eck! drawn b' t"e depo!itor pro(ided t"at t"e depo!itor "ad #one' in t"e "and! of t"e bank$ :. D%ty of t e Ba!" to Ho!or C ec"#.

' w"ere a depo!itor "a! two account!. an open and a !a(ing! account. and draw! a c"eck upon t"e open account for #ore t"an t"e account contain!. t"e bank #a' refu!e to pa' t"e c"eck a! it "a! no dut' to #ake up t"e deficienc' fro# t"e !a(ing! account$ D. .e&al C aracter of C ec"# re(re#e!ti!& De)a!d De(o#it#. ' t"e' do not "a(e legal tender power and t"eir acceptance i! at t"e option of t"e creditor. unle!! !uc" c"eck "a! been cleared and credited to t"e account of t"e creditor. t"en it !"all be e4ui(alent to a deli(er' to t"e creditor of ca!" e4ual to t"at credited to "i! account$ B. Sa/i!&# De(o#it# 4. Ser/ici!& de(o#it# o%t#ide $a!" (re)i#e#. ' bank! #a' be aut"ori,ed to !olicit and accept depo!it! out!ide t"eir bank pre#i!e! !ub:ect to condition!$

a$ financial condition of t"e bank i! !ound and t"e operation! and t"e 4ualit' of #anage#ent could rea!onabl' a!!ure t"e !afet' of t"e fund! w"ic" #a' be entru!ted to it! depo!it collector! or !olicitor!$ b$ propo!ed area i! clearl' defined

/ no law #andating bank! to call t"eir client! w"en t"eir repre!entati(e! wit"draw fro# t"eir account!$ C. Ne&otia$le order of 8it dra*al 9NO82 Acco%!t# 4. A%t ority to acce(t NO8 acco%!t#

/ aut"orit' !"all auto#aticall' be granted to an' accredited bank w"ic" #a' participate in t"e !uper(i!ed credit progra# to accept !peciakl ti#e depo!it! fro# t"e Agrarian Refor# 9und 1o#i!!ion wit" intere!t at a lower rate t"an t"o!e allowed on ti#e depo!it!$ / e0e#pt fro# t"e legal re!er(e re4uire#ent! 7. Certficate# of Ti)e De(o#it a$ %egotiable 1ertificate! of 3i#e +epo!it 1$ 8ni(er!al and 1o##ercial bank #a' i!!ue wit"out prior aut"orit' fro# BS2 2$ 3"rift. Rural and 1ooperati(e Bank #a' i!!ue wit" prior appro(al of BS2$ b$ %on/negotiable 1ertificate! of 3i#e +epo!it / all #a' i!!ue wit"out need of BS2 appro(al$ E. De(o#it S%$#tit%te O(eratio!# 9E%a#i'$a!"i!& f%!ctio!#2

c$ confined wit"in a localit' w"ere t"ere are no ot"er bank! in operation or t"e depo!it potential of t"e !aid localit' i! !till untapped$ d$ applicant bank !"all in!titute t"en following #ini#u# !afeguard!$ 1$ all depo!it !olicitor! !"all be bonded for at lea!t 2"p 1000 !ub:ect to increa!e appro0i#ate to t"eir dail' collection!$ 2$ proper identification card!. worn at all ti#e! b' t"e depo!it !olicitor! <$ ade4uate in!urance co(erage for t"e fund! in tran!it$ F$ depo!it !lip! in booklet for#. prenu#bered in triplicate copie! and in t"ree color! 7 original cop' to t"e depo!itor. !econd cop' for po!ting reference and t"ird cop' to be retained in t"e booklet$ G$ all collection! !"all be turned o(er to t"e ca!"ier at t"e end of eac" da' wit" a a 1ollection Su##ar' Report$ B$ depo!itor! !"all alwa'! be re4uired to acco#pli!" a !ignature card w"en opening an account. w"ic" !"all be u!ed in c"ecking t"e aut"enticit' of !ignature!$ 7$ tran!action! !"all be recorded b' t"e bookkeeper or an' ledger clerk on t"e !a#e da' !uc" are accepted and t"e pa!!book! of t"e depo!itor! !"all be returned not later t"an t"e following bu!ine!! da'$ 8$ at end of eac" #ont". ad(i!e depo!itor! in writing of t"eir account balance$ 9$ place! of a!!ign#ent of bank !olicitor! !"all be rotated at lea!t 4uarterl'$ 5. 8it dra*al# / bank! are pro"ibited fro# i!!uingMaccepting wit"drawal !lip! or an' ot"er !i#ilar in!tru#ent! de!igned to effect wit"drawal! of !a(ing! depo!it! wit"out re4uiring t"e pre!entation of pa!!book! and acco#pli!"#ent of t"e nece!!ar' wit"drawal !lip!. e0cept for bank! aut"ori,ed b' t"e BS2 to adopt t"e no pa!!book wit"drawal !'!te#$

' %)C Account! are intere!t bearing depo!it account! t"at co#bine t"e pa'able on de#and feature of c"eck! and in(e!t#ent feature of !a(ing! account!$ / 8ni(er!al and 1o##ercial ban!k #a' offer %)C account! wit"out prior appro(al of BS2 / 3"rift. Rural and 1o##ercial bank! #a' offer t"e !a#e wit" need of prior BS2 appro(al 5. R%le# o! Ser/ici!& NO8 Acco%!t#. a$ prior or !i#ultaneou! wit" opening of a %)C account. bank !"all infor# depo!itor of t"e ter#! and condition!$ b$ bank !"all be re!pon!ible for t"e proper identification of it! depo!itor! and re4uire 2 !peci#en !ignature! and ot"er pertinent infor#ation$ c$ depo!it! !"all be co(ered b' depo!it !lip! in duplicate dul' (alidated and initialed b' t"e recei(ing teller. cop' furni!"ed to t"e depo!itor d$ %)C account! !"all be kept and #aintained !eparatel' fro# t"e regular !a(ing! depo!it!$ e$ Blank %)C for#! !"all be prenu#bered and controlled a! in t"e ca!e of uni!!ued blank c"eck!$ f$ bank !tate#ent !"all be !ent to eac" depo!itor at end of #ont" for confir#ation of balance!$ g$ bank! #u!t u!e t"e for# pre!cribed b' pre!ent rule! on %)C account!$ D. Ti)e De(o#it# / one t"e pa'#ent of w"ic" cannot be legall' re4uired wit"in a !pecified nu#ber of da'!$ 4. Ter) of ti)e de(o#it# / !"all be i!!ued for a !pecific period or ter# 5. S(ecial ti)e de(o#it#.

' e!!ential ele#ent! of 4ua!i banking 1$ Borrowing fund! for t"e borrower6! own account$ 2$ 3went' or #ore lender! at an' one ti#e? <$ #et"od! of borrowing are i!!uance. endor!e#ent. or acceptance of debt in!tru#ent! of an' kind. ot"er t"an depo!it!. !uc" a! acceptance!. pro#i!!or' note!. participation!. certificate! of a!!ign#ent! or !i#ilar in!tru#ent! wit" recour!e. tru!t certificate!. repurc"a!e agree#ent!. and !uc" ot"er in!tru#ent! a! t"e -onetar' Board #a' deter#ine? and F$ t"e purpo!e of w"ic" i! relending or purc"a!ing recei(able! or ot"er obligation!$ F. Forei&! C%rre!cy De(o#it# 4. A%t ority to de(o#it forei&! c%rre!cie# ' an' per!on #a' depo!it foreign currenc' in 2"ilippine bank! de!ignated b' t"e BS2 for t"e purpo!e of !uc" depo!it!$ / #a' depo!it foreign currencie! w"ic" are acceptable a! part of t"e international re!er(e. e0cept t"o!e w"ic" are re4uired b' t"e BS2 to be !urrendered$ 5. A%t ority of Ba!"# to acce(t forei&! c%rre!cy de(o#it#. 1$ accept depo!it! and foreign currencie! in tru!t? nu#bered account! for recording and !er(icing !aid depo!it! are allowed$

i!!ue certificate! to e(idence !uc" depo!it! to di!count !aid certificate!$ accept !aid depo!it! a! collateral for loan! !ub:ect to !uc" rule! and regulation! G$ to pa' intere!t in foreign currenc' on !uc" depo!it! 7. Forei&! c%rre!cy co/er re3%ire)e!t# ' depo!itar' bank! !"all a$ #aintain at all ti#e! a 100A foreign currenc' co(er for t"eir liabilitie! b$ of w"ic" co(er at lea!t 1GA !"all be in t"e for# of foreign currenc' depo!it wit" t"e BS2$ c$ and t"e balance in t"e for# of foreign currenc' loan! or !ecuritie!. w"ic" !"all be of !"ort ter# #aturitie! and readil' #arketable. d$ !uc" foreign currenc' loan! #a' include loan! to do#e!tic enterpri!e! w"ic" are e0port oriented or regi!tered wit" t"e Board of *n(e!t#ent!. !ub:ect to li#itation! i#po!ed b' t"e -onetar' Board$ e$ >0cept a! t"e -onetar' Board #a' ot"erwi!e pre!cribe or allow. t"e foreign currenc' co(er !"all be in t"e !a#e currenc' a! t"at of t"e corre!ponding foreign currenc' liabilit'$ f$ BS2 #a' pa' intere!t on t"e foreign currenc' depo!it and if re4ue!ted !"all e0c"ange t"e foreign currenc' note! and coin! into foreign currenc' in!tru#ent! drawn on it! depo!itar' bank!$ +epo!itar' bank! 4ualified b' t"e -onetar' Board for e0panded foreign currenc' depo!it are e0e#pt fro# t"e 1GA co(er re4uire#ent !tated in (b and #a' e0tend foreign currenc' loan! to an' do#e!tic enterpri!e wit"out t"e li#it! pre!cribed regarding #aturit' and #arketabilit' and !uc" loan! !"all be eligible for purpo!e! of t"e 100A foreign currenc' co(er pre!cribed$ :. *it dra*a$ility a!d tra!#fera$ility of Forei&! C%rre!cy De(o#it#. ' no re!triction on !uc" e0cept t"o!e ari!ing fro# t"e contract between t"e depo!itor and bank$ G. A!o!y)o%# a!d N%)$ered Acco%!t#. / anon'#ou! account! and t"o!e under fictitiou! na#e! !"ould not be allowed or kept$ *n ca!e w"ere !uc" i! allowed. bank!Mnon/bank financial in!titution! !"ould en!ure t"at t"e client i! identified in an official or ot"er identif'ing docu#ent!$ Re(i!ed 2enal 1ode& Art$ 178$ 8!ing fictitiou! na#e and concealing true na#e$ R 3"e penalt' of arre!to #a'or and a fine not to e0ceed G00 pe!o! !"all be i#po!ed upon an'

2$ <$ F$

per!on w"o !"all publicl' u!e a fictitiou! na#e for t"e purpo!e of concealing a cri#e. e(ading t"e e0ecution of a :udg#ent or cau!ing da#age$ An' per!on w"o conceal! "i! true na#e and ot"er per!onal circu#!tance! !"all be puni!"ed b' arre!to #enor or a fine not to e0ceed 200 pe!o!$ 1i(il 1ode& Art$ <79$ 3"e e#plo'#ent of pen na#e! or !tage na#e! i! per#itted. pro(ided it i! done in good fait" and t"ere i! no in:ur' to t"ird per!on!$ 2en na#e! and !tage na#e! cannot be u!urped$ Art$ <80$ >0cept a! pro(ided in t"e preceding article. no per!on !"all u!e different na#e! and !urna#e!$ / 2lea!e !ee al!o 1A 1F2 a! a#ended b' RA B08G$ II. Ad)i!i#tratio! of De(o#it# A. S(eci)e! Si&!at%re#1 ID P oto# All banking in!titution are re4uired to !et a #ini#u# of t"ree (72 #(eci)e! #i&!at%re# to be !i#ultaneou!l' re4uired fro# eac" of t"eir depo!itor! and to %(date t e #(eci)e! #i&!at%re# of t eir de(o#itor# e/ery 9>2 year# or #oo!er. at t"e di!cretion of t"e bank$ BS2 1ircular %o$ GBF. Serie! of 2007 pro(ide! for t"e li!t of (alid identification card! a! follow!& i$ 1lient! w"o engage in a financial tran!action wit" t"e co(ered in!titution! for t"e fir!t ti#e !"all be re4uired to pre!ent t"e original and !ub#it a cop' of at lea!t two (alid p"oto/bearing identification docu#ent! i!!ued and !igned b' an official aut"orit'$ Palid *+! include t"e following 2a!!port +ri(er6! licen!e 2rofe!!ional Regulation! 1o##i!!ion (2R1 *+ %ational Bureau of *n(e!tigation(%B* clearance 2olice clearance 2o!tal *+ Poter6! *+ Baranga' certification Go(ern#ent Ser(ice and *n!urance S'!te#(GS*S e/1ard Social Securit' S'!te#(SSS card 2"il"ealt" card Senior 1iti,en 1ard )(er!ea! Corker! Celfare Ad#ini!tration ()CCA *+ )9C *+ Sea#an6! Book Alien 1ertification of Regi!trationM*##igrant 1ertificate of Regi!tration Go(ern#ent office *+ Se$g$ Ar#ed 9orce! of t"e 2"ilippine! (A92 . Eo#e +e(elop#ent -utual 9und (E+-9 *+!T 1ertification fro# t"e %ational 1ouncil for t"e Celfare of +i!able 2er!on! (%1C+2

+epart#ent of Social Celfare and +e(elop#ent (+SC+ 1ertification$ )t"er (alid *+! i!!ued b' t"e Go(ern#ent and it! in!tru#entalitie!

ii$ Student! w"o are beneficiarie! of an )9C and w"o are not 'et of (oting age !"all al!o be re4uired to pre!ent two *+!$ )t"er *+! #a' include birt" certificate. librar' *+. and #e#ber!"ip *+! dul' i!!ued b' an' a!!ociation or organi,ation wit"in t"e college or uni(er!it' and !igned b' t"e pertinent aut"orit' i!!uing t"e *+$ iii$ Bank! and non/bank financial in!titution !"all re4uire t"eir client! to !ub#it clear copie! of t"e two (alid *+! on a one/ti#e ba!i! onl'. or at t"e co##ence#ent of a bu!ine!! relation!"ip$ 3"e' !"all re4uire t"eir client! to !ub#it an updated p"oto and ot"er rele(ant infor#ation w"ene(er t"e need for it ari!e!$ i($ 9inancial tran!action! #a' include re#ittance!. a#ong ot"er!. a! falling under t"e definition of tran!action$ B. +i!or# a!d Cor(oratio!# a# De(o#itor# 1. +i!or# -inor! are (e!ted wit" !pecial capacit' and power. in t"eir own rig"t and in t"eir own na#e!. to #ake !a(ing! or ti#e depo!it! wit" and wit"draw t"e !a#e a! well a! recei(e intere!t t"ereon fro# banking in!titution!. wit"out t"e a!!i!tance of t"eir parent! or guardian!. pro(ided t"e following re4uire#ent! re4ui!ite! are #et& 1$ at lea#t #e/e! year# of a&e1 5. a$le to read a!d *rite1 7. a/e #%fficie!t di#cretio!1 a!d :. !ot ot er*i#e di#3%alified $y a!y ot er i!ca(acity. 2arent! #a' ne(ert"ele!! depo!it for t"eir #inor c"ildren and guardian for t"eir ward!$ De(o#it# i! t e T rift Ba!"# -inor! in t"eir own rig"t! and in t"eir own na#e! #a' #ake depo!it! and wit"draw t"e !a#e. and #a' recei(e di(idend! and intere!t& Provided however1 3"at. if an' guardian !"all gi(e notice in writing to an' t"rift bank not to #ake pa'#ent! of depo!it!. di(idend!. or intere!t to t"e #inor of w"o# "e i! t"e guardian. t"en !uc" pa'#ent !"all be #ade onl' to t"e guardian$ 5. Cor(oratio!# 1orporation! #a' open bank account! a! follow!& (i *ncorporation Stage 7 *n ca!e t"e pa'#ent of !ub!cription i! in ca!". t"e Securitie! and >0c"ange 1o##i!!ion re4uire! a Bank 1ertificate of depo!it )f paid/up capital notari,ed in place w"ere !igned$ (ii 2o!t *ncorporation 7 *n opening a bank account. t"e Board of +irector! *!!ue! a re!olution aut"ori,ing t"e !ignatorie! and !pecif'ing t"e depo!itar' bank$ C. Ti)e of Pay)e!t of I!tere#t o! Ti)e De(o#it#;De(o#it S%$#tit%te#

*ntere!t or 'ield on ti#e depo!itMdepo!it !ub!titute #a' be paid at #aturit' or upon wit"drawal or in ad(ance: Provide, However, 3"e intere!t or 'ield paid in ad(ance !"all not e0ceed t"e intere!t for one (1 'ear$ D. Treat)e!t of +at%red Ti)e De(o#it#;De(o#it S%$#tit%te#. (i A ti#e depo!it not wit"draw or renewed on it! due date !"all be treated a! a !a(ing depo!it and !"all earn intere!t fro# #aturit' to t"e date of actual wit"drawal or renewal at a rate applicable to !a(ing depo!it!$ (ii A depo!it !ub!titute in!tru#ent no wit"drawn or renewed on it! #aturit' date !"all fro# !aid date beco#e pa'able on de#and and !"all earn an intere!t or 'ield fro# #aturit' to actual wit"drawal or renewal at a rate applicable to a depo!it !ub!titute wit" a #aturit' of fifteen (1G da'!$ E. Cleari!& C%t'off Ti)e A! a general rule. all depo!it! and wit"drawal! during regular banking "our! !"all be credited or debited to depo!it liabilit' account! on t"e date receipt or pa'#ent t"ereof& Provided, however, 3"at a bank #a' !et a clearing cut/off ti#e for it! "ead office not earlier t"an two (2 "our! before t"e !tart of clearing at t"e BS2. and not earlier t"an t"ree and one "alf (</1M2 "our! before t"e !tart of clearing branc"e!. agencie! and e0ten!ion office doing bu!ine!! in t"e 2"ilippine!. after w"ic" ti#e. depo!it! recei(ed !"all be booked a! "ereinafter pro(ided& Provided, further, t"at bank! w"ic" are located in area! w"ere t"ere are no BS2 regionalMclearing arrange#ent! #a' !et a clearing cut/off ti#e not earlier t"at two (2 "our! before t"e !tart of t"eir local clearing after w"ic" ti#e depo!it! recei(ed !"all be booked likewi!e a! "ereinafter pro(ided$ F. Boo"i!& of Ca# De(o#it#. 1a!" depo!it! recei(ed after t"e !elected clearing cut/off ti#e until t"e clo!e of t"e regular banking "our! !"all be booked a! depo!it! on t"e da' of receipt$ G. Boo"i!& of No!'ca# De(o#it# +epo!it! c"eck! including 3on us4 c"eck!" mana&er5s6cashier5s6treasurer5s check and demand drafts. w"ic" are drawn again!t t"e depo!itor' bank and all it! office!. a! well a! trea!ur' warrant! and po!tal #one' order!. recei(ed after t"e !elected clearing cut/off ti#e until t"e clo!e of t"e regular banking "our!. #a'. at t"e option of t"e bank. be booked a! depo!it! on t"e da' of t"e receipt$ H. Boo"i!& of De(o#it# After Re&%lar Ba!"i!& Ho%r#. +epo!it!. w"et"er ca!" or non/ca!". recei(ed after t"e clo!e of t"e regular banking "our! !"all be treated a! contingent account! of t"e da' of receipt and !"all be booked a! depo!it! t"e following banking da'$ I. A/era&e Daily Bala!ce i$ Bank! #a' i#po!e and collect !er(ice c"arge! andMor #aintenance fee! on !a(ing! and de#and! depo!it! account!. w"et"er acti(e or dor#ant. t"e fall below t"e re4uired #ini#u# #ont"l' a(erage dail' balance (A+B . !ub:ect to t"e following condition!$ a t"e i#po!ition of !uc" c"arge! or fee! i! clearl' !tated a#ong t"e ter#! and condition! of t"e depo!it? b t"e rate or a#ount of !uc" c"arge! of fee! i! properl' di!clo!ed a#ong t"e ter#! and condition! of t"e depo!it!?

c t"e depo!it account balance! "a(e fallen below t"e re4uired #ini#u# #ont"l' A+B for dor#ant account! and for at lea!t two (2 con!ecuti(e #ont"! for acti(e a#ount!? d t"e re4uired #ini#u# #ont"l' A+B of depo!it! are properl' di!clo!ed a#ong t"e ter#! and condition! of t"e depo!it!? and e in t"e ca!e of c"arge! and fee! for dor#ant account! or dor#anc' fee. t"e period of dor#anc' !"all be properl' di!clo!ed a#ong t"e ter#! and condition! of t"e depo!it. and t"at t"e depo!itor! !"all be infor#ed b' regi!tered #ail wit" return card on "i! la!t known addre!! at lea!t (B0 da'! prior to t"e i#po!ition of dor#anc' fee$ ii$ An' c"ange in t"e ter#! and condition! for t"e i#po!ition of !er(ice c"arge! andMor #aintenance fee. e$g$. increa!e in t"e a#ount of !uc" c"arge! and fee! or increa!e in t"e re4uired #ini#u# #ont"l' A+B of depo!it!. !"all take effect onl' after due notice in t"e depo!itor? Pro/ided1 3"at infor#ation b' regular #ail. !tate#ent of account #e!!age!. electronic #ail. courier deli(er' andMor ot"er alternati(e #ode! of co##unication on t"e depo!itor6! la!t known addre!! at lea!t !i0t' (B0 da'! prior to i#ple#entation !"all be con!idered !ufficient notice& Pro/ided1 f%rt er1 3"at failure of t"e depo!itor to #anife!t or regi!ter "i! ob:ection to t"e new !er(ice c"arge! and #aintenance fee! or an' c"ange in t"eir ter#! and condition! in writing wit"in t"irt' (<0 da'! fro# receipt of written notice of a#end#ent !"all be dee#ed to con!titute acceptance of !uc" c"ange!$ iii$ Bank! !"all likewi!e po!t !aid infor#ation on t"eir re!pecti(e web!ite!. auto#ated teller #ac"ine! (A3- on !creen #e!!age!. and in con!picuou! place! wit"in t"e bank pre#i!e! and ot"er place! near t"e bank6! own A3- at lea!t !i0t' (B0 da'! prior to i#ple#entation$ CHAPTER :: I!/e#t)e!t#1 .oa!#1 a!d ot er F%!ctio!# of Ba!"# Po*er# of a U!i/er#al Ba!" 1$ 2$ <$ 3"e power! aut"ori,ed to a co##ercial bank 3"e power! of an in(e!t#ent "ou!e 3"e power to in(e!t in non/allied enterpri!e!

Po*er# of a Co))ercial Ba!" 1$ 2$ 3"e general power! incident to corporation! All !uc" power! a! #a' be nece!!ar' to carr' on t"e bu!ine!! of co##ercial banking !uc" a!& accepting draft! and i!!uing letter! of credit? di!counting and negotiating pro#i!!or' note!. draft!. bill! of e0c"ange. and ot"er e(idence of debt? and accepting and creating de#and depo!it!. a#ong ot"er!$ = Letter! of credit& an engage#ent b' a bank or ot"er per!on #ade at t"e re4ue!t of a cu!to#er t"at t"e i!!uer will "onor draft! or ot"er de#and! for pa'#ent upon co#pliance wit" t"e condition! !pecified in t"e credit? it i! t"e engage#ent of t"e bank to pa' t"e !eller once t"e draft and t"e re4uired !"ipping docu#ent! are pre!ented to it$ Generall'. t"ere are < partie!& 1 t"e bu'er. w"o procure! L)1 and oblige! "i#!elf to rei#bur!e t"e i!!uing bank? 2 t"e bank i!!uing t"e L)1? and < t"e !eller w"o !"ip! t"e good! to t"e bu'er$ A co##ercial bank #a'& *n(e!t onl' in e4uitie! of allied enterpri!e!. w"ic" #a' be financial or non/financial )wn up to 100A of allied financial enterpri!e! )wn up to 100A of allied nonfinancial enterpri!e!

.i)it o! .oa!#1 Credit Acco))odatio!# a!d G%ara!tee# Single Borrower! Li#it& !"all not e0ceed 20A of t"e net wort" of !uc" bank >0cept& / a! t"e -onetar' Board #a' ot"erwi!e pre!cribe / depo!it! of rural bank! wit" go(ern#ent owned and controlled financial in!titution! Re#trictio! o! Ba!" E-(o#%re to Director#1 Officer#1 Stoc" older#1 a!d t eir Related I!tere#t# 9DOSRI2 .i)it# of .oa!#: 42 T e +o!etary Board )ay re&%late t e a)o%!t of loa!#1 credit acco))odatio!# a!d &%ara!tee# t at )ay $e e-te!ded $y a $a!" to it# DOSRI a# *ell a# i!/e#t)e!t# of #%c $a!" i! t e e!ter(ri#e# o*!ed a!d co!trolled $y it# DOSRI T e o%t#ta!di!& loa!#1 credit acco))odatio!#1 a!d &%ara!tee# * ic a $a!" )ay e-te!d to it# DOSRI # all $e

A uni(er!al bank #a'& *n(e!t in t"e e4uitie! of allied and non/allied enterpri!e!? allied enterpri!e! #a' be financial or non/financial )wn up to 100A of t"e e4uit' in a t"rift bank. rural bank or an' allied financial enterpri!e )wn up to 100A of t"e e4uit' in a non/financial allied enterpri!e *n(e!t in e4uitie! of non/allied enterpri!e *n(e!t in e4uitie! of 4ua!i/bank!

52

li)ited to a! a)o%!t e3%i/ale!t to t eir re#(ecti/e %!e!c%)$ered de(o#it# a!d $oo" /al%e of t eir (aid'i! ca(ital co!tri$%tio! i! t e $a!". E-ce(t *it t e *ritte! a((ro/al of t e )a,ority of all t e director# of t e $a!"1 e-cl%di!& t e director co!cer!ed1 !o director or officer of a!y $a!" # all: 4. 5. directly or i!directly1 $orro* fro) #%c $a!" $eco)e a &%ara!tor1 i!dor#er1 #%rety for loa!# fro) #%c $a!" to ot er# i! a!y )a!!er $e a! o$li&or or i!c%r a!y co!tract%al lia$ility to t e $a!"

1orporation!. a!!ociation! or fir#! w"oll' or #a:orit'/owned and controlled b' +)SR*

Gra!t a!d P%r(o#e of .oa!# a!d Ot er Credit Acco))odatio!# 9.OCA2 A. A)o%!t a!d P%r(o#e of .oa!# Bank! !"all grant onl' in a#ount! and for period! of ti#e e!!ential for t"e effecti(e co#pletion of t"e operation$ 3"e purpo!e !"all be !tated in t"e contract between t"e bank and borrower$ *f t"e proceed! were u!ed ot"er t"an t"e purpo!e !tated. bank! #a' ter#inate t"e L)1A and de#and i##ediate pa'#ent of t"e obligation$ Re3%ire)e!t# for Gra!t of .oa! State#ent of a!!et! and liabilitie! State#ent of inco#e and e0penditure! )t"er re4uire#ent! pre!cribed b' law to a!certain borrower6! abilit' to pa'

O C"en t"e borrowed fund! are to be u!ed for purpo!e! w"ic" do not initiall' produce re(enue! ade4uate for regular a#orti,ation pa'#ent! t"erefro#. t"e bank #a' per#it t"e initial a#orti,ation pa'#ent to be deferred until re(enue! are !ufficient for !uc" purpo!e. but in no ca!e !"all t"e initial a#orti,ation date be later t"an G'ear! fro# t"e date on w"ic" t"e L)1A i! granted$ O *n ca!e of L)1A to #icrofinance !ector!. t"e !c"edule of loan a#orti,ation !"all take into con!ideration t"e pro:ect ca!" flow of t"e borrower and adopt t"i! into t"e ter#! and condition! for#ulated b' bank!$ H. E#calatio! Cla%#e@ * e! allo*a$le O 2artie! #a' agree t"at t"e rate of t"e intere!t agreed upon be increa!ed in t"e e(ent t"at t"e #a0i#u# rate of intere!t i! increa!ed b' t"e -B& pro(ided t"at t"ere i! al!o a !tipulation t"at t"e intere!t would be reduced in t"e e(ent t"at t"e #a0i#u# rate of intere!t i! reduced$ 3"e !a#e !"all take effect on or after t"e date t"e #a0i#u# intere!t rate i! increa!ed or decrea!ed$ 3"e de/ e!calation clau!e i! an indi!pen!able re4ui!ite to t"e (alidit' and enforceabilit' of an e!calation clau!e in t"e contract$ 3"i! rule i! to pre(ent t"e one/!idedne!! in fa(or of t"e lender$ 8E9ception to the ,ule: O *f t"e creditor unilaterall' and actuall' decrea!ed t"e intere!t c"arge! w"ene(er t"e #a0i#u# rate of intere!t i! reduced b' law or t"e -B$ I. U!ilateral I!crea#e of Rate# F 3"e unilateral deter#ination and i#po!ition of increa!ed rate! i! (iolati(e of t"e principle of #utualit' of contract! under Article 1<08of t"e 1i(il 1ode$ )ne/!ided i#po!ition! are (oid$ G. I!i3%ito%#1 U!co!#cio!a$le a!d E-or$ita!t I!tere#t F %otwit"!tanding t"e ine0i!tence of t"e 8!ur' Law. *ni4uitou!. 8ncon!cionable and >0orbitant *ntere!t! are again!t public polic'? "ence. (oid$ F G$GA per #ont". 2B/<GA per annu#. are "eld to be *ni4uitou!. 8ncon!cionable and >0orbitant$ K. Effect of 0oid I!tere#t Rate

7.

B.

+irector! include t"o!e& 1 na#ed a! !uc" in t"e article! of incorporation. 2 dul' elected in t"e #eeting! of !tock"older!. < elected to fill t"e (acancie! in t"e board of director!$ )fficer! include t"o!e& 1 w"o!e dutie! are defined b' t"e b'/law! or are generall' known to be officer! of t"e bank (i$e$ pre!ident. e(p. !enior (p. general #anager. !ecretar'. trea!urer and 2 w"o perfor#! function! of #anage#ent (i$e$ c"air#an. (ice/c"air#an Stock"older! are an' !tock"older in t"e book! of t"e bank. 4ua!i/bank. or tru!t entit'. w"o!e !tock"olding! in t"e !a#e. indi(iduall' or collecti(el'. a#ount to )%> 2>R1>%3 or #ore of t"e total !ub!cribed capital !tock of t"e bank. 4ua!i/ bank. or tru!t entit'$ t"eir Related *ntere!t! 1 !pou!e or relati(e wit"in t"e fir!t degree of con!anguinit' or affinit'. or relati(e b' legal adoption. of a director. officer or !tock"older of a bank 2artner!"ip of w"ic" +)SR* i! a partner 1o/owner wit" +)SR* of t"e propert'. intere!t. or rig"t #ortgaged. pledged or a!!igned to !ecure t"e loan! or credit acco##odation! 1orporation! or a!!ociation! of w"ic" +)SR* i! al!o a director or officer 1orporation!. a!!ociation! or fir#! of w"ic" +)SR* own! at lea!t 20A of t"e !ub!cribed capital

2 <

7icrofinancin& 2oans / !#all loan! granted to ba!ic !ector! like t"e poor and low/inco#e "ou!e"old! for t"eir #icroenterpri!e! and !#all bu!ine!!e! C. Rea#o! for Stri!&e!t R%le# i! Gra!ti!& .oa!# 3"e bu!ine!! of a bank i! one affected wit" public intere!t. for w"ic" rea!on t"e bank !"ould guard again!t lo!! due to negligence or bad fait"$ 9ro# t"e nature of it! bu!ine!!. it i! e0pected to a!certain and (erif' t"e identitie! of t"e per!on! it tran!act! bu!ine!!$ D. U!#ec%red .oa!# a!d Ot er Credit Acco))odatio!# 3"e -onetar' Board (-B i! aut"ori,ed to i!!ue !uc" regulation! a! it #a' dee# nece!!ar' wit" re!pect to un!ecured L)1A t"at #a' be granted b' bank!$ E. Ot er Sec%rity Re3%ire)e!t# for Ba!" Cradit# 3"e -B !"all. b' regulation. pre!cribe furt"er !ecurit' re4uire#ent! and reduce or. in !pecial ca!e!. increa!e t"e e!tabli!"ed #a0i#u# ratio$ 9$ A%t ority to Pre#cri$e Ter)# a!d Co!ditio!# of .oa!# a!d Ot er Credit Acco))odatio!# 3"e -B !"all pre!cribe related ter#! and condition! for (ariou! t'pe! of bank L)1A. and regulate t"e intere!t i#po!ed on #icrofinance borrower!$ G. A)orti6atio! o! .oa!# a!d Ot er Credit Acco))odatio!# F A#orti,ation !c"edule of bank L)1A !"all be adapted to t"e nature of t"e operation O *n ca!e of L)1A wit" #aturitie! of #ore t"an G'ear!. pro(i!ion! !"all be #ade for periodic a#orti,ation pa'#ent!. but t"e !a#e #u!t be #ade annuall'$

O Since it i! (oid. it i! a! if t"ere wa! no e0pre!! contract t"ereon$ *n !uc" ca!e. t"e court will fi0 a #ore rea!onable and e4uitable rate$ *n #o!t ca!e!. t"e court reduced it to 12A per annu#$ .. Pre(ay)e!t of .OCA

2$

3"e a#ount!. if an'. to be credited a! down pa'#ent andMor trade/ in? FOREC.OSURE OF REA. ESTATE +ORTGAGE 3"e difference between t"e a#ount! !et fort" under clau!e! 1 and 2? 3"e c"arge!. indi(iduall' ite#i,ed . w"ic" are paid to or be paid b' !uc" per!on in connection wit" t"e tran!action but w"ic" are not incident to t"e e0ten!ion of credit? 3"e total a#ount to be financed? 3"e finance c"arge1 e0pre!!ed in ter#! of pe!o! and centa(o!? 3"e percentage t"at t"e finance bear! to t"e total a#ount to be financed e0pre!!ed a! a !i#ple annual rate on t"e out!tanding unpaid balance of t"e obligation$

<$

Sec. F7 of t"e GBL pro(ide!& (i *n t"e e(ent of foreclo!ure. w"et"er :udiciall' or e0tra:udiciall'. of an' #ortgage on real e!tate w"ic" i! !ecurit' for an' loan or ot"er credit acco##odation granted. t"e #ortgagor or debtor w"o!e real propert' "a! been !old for t"e full or partial pa'#ent of "i! obligation !"all "a(e t"e rig"t *it i! o!e year after t"e !ale of t"e real e!tate. to redee# t"e propert' b' pa'ing t"e a#ount due under t"e #ortgage deed. wit" intere!t t"ereon at t"e rate !pecified in t"e #ortgage. and all t"e co!t and e0pen!e! incurred b' t"e bank or in!titution fro# t"e !ale and cu!tod' of !aid propert' le!! t"e inco#e deri(ed t"erefro#$

F$ O 3"e borrower #a' at an'ti#e prior to t"e #aturit' date prepa'. in w"ole or in part. t"e unpaid balance. !ub:ect to t"e ter#! and condition! of t"e contract$ G$ +. De/elo()e!t A##i#ta!ce I!ce!ti/e# O 3"e Bangko Sentral !"all pro(ide for incenti(e! to bank! e0tending loan! to finance educational in!titution!. cooperati(e!. "o!pital! and ot"er #edical !er(ice!. !ociali,ed or low/ co!t "ou!ing. local go(ern#ent unit! and ot"er acti(itie! wit" !ocial content$ N. Re!e*al or E-te!#io! of .OCA F 3"e -B #a'. b' regulation. pre!cribe t"e condition! and li#itation! e0ten!ion or renewal! of L)1A$ O. Ba!"# ca!!ot e-te!d Pe#o .oa!# to No!'Re#ide!t# O 3"i! i! to curb !peculation in t"e foreign e0c"ange #arket and to furt"er reinforce t"e #e#orandu# t"at pe!o depo!it! !"ould be funded fro# inward foreign e0c"ange re#ittance$ P. Pro/i#io!# for .o##e# a!d 8rite'Off# O +ebt! on w"ic" intere!t i! pa!t due and unpaid. unle!! t"e !a#e are well/!ecured and in t"e proce!! of collection !"all be con!idered bad debt!$ 3"e -B !"all fi0 t"e a#ount of re!er(e! for bad debt! or doubtful account! or ot"er contingencie!$ Criting off L)1A !"all be !ub:ect to regulation! i!!ued b' t"e -B$

6.
7$

RA3*)%AL>& 2rotect u!er! fro# lack of awarene!! of t"e true co!t t"ereof. proceeding fro# t"e e0perience t"at bank! are able to conceal !uc" true co!t b' "idden c"arge!. uncertaint' of intere!t rate!. deduction of intere!t rate! fro# t"e loaned a#ount. and t"e like$ 2>%AL3K& 1*P*L@ 2100 or in t"e a#ount e4ual to twice t"e fi!a!ce c ar&ed re3%ired b' !uc" creditor in connection wit" !uc" tran!action. w"ic"e(er i! greater. e0cept t"at !uc" liabilit' !"all not e0ceed 22000 on an' credit tran!action$ 1R*-*%AL@ 9*%> b' not le!! 21I or #ore t"an 2GI or i#pri!on#ent for #ore t"an B #ont"!. nor #ore t"an one 'ear or bot"$ %)3>& =pur!uant to 3R83E L>%+*%G A13. (iolation !"all not affect t"e (alidit' or enforceabilit' of an' contract or tran!action!$ =S1 "eld t"at t"e lender cannot c"arge t"o!e t"at are not !tipulated in t"e pro#i!!or' note! (1on!olidated Bank and 3ru!t 1o$ (!$ 1A =no puni!"#ent or penalt' !"all appl' to t"e 2"ilippine Go(ern#ent or agenc' or an' political !ubdi(i!ion t"ereof$

(ii

Eowe(er. t"e purc"a!er at t"e auction !ale concerned w"et"er in a :udicial or e0tra:udicial foreclo!ure. !"all "a(e t"e ri& t to e!ter upon and take po!!e!!ion of !uc" propert' i##ediatel' after t"e date of t"e confir#ation of t"e auction !ale and ad#ini!ter t"e !a#e in accordance wit" law$

%)3>& = t"e one 'ear period i! to be reckoned fro# t"e date of t"e regi!tration of t"e !ale? action for annul#ent of t"e #ortgage doe! not toll t"e running of t"e period to redee# t"e foreclo!ed propert' =Real propert' #a' be #ortgaged to alien!. bot" indi(idual! and corporation! (R$A$ %o$ 1<< a! a#ended b' R$A$ F882 =de#and before foreclo!ure i! e!!ential? if not. t"e loan! "ad not 'et beco#e due and de#andable = rig"t of rede#ption #a' be e0tended b' agree#ent = e!toppel/ t"e bank con!ented to t"e e0ten!ion of rede#ption period if it "ad ti#e to ob:ect but did not$ =e0erci!e of t"e rig"t of rede#ption. if e0erci!ed after t"e pre!cripti(e period i! not reall' rede#ption but a repurc"a!e$ +*S3*%13*)%& Rede#ption i! b' force of law? t"e purc"a!er i! bound to accept t"e rede#ption$ %o !uc" obligation i#po!ed in repurc"a!e$

TRUTH IN .ENDING +*S1L)S8R>& An' creditor !"all furni!" to eac" ot"er to w"o# credit i! e0tended. prior to t"e con!u##ation of t"e tran!action. a !tate#ent in writing !etting fort" t"e ff$& 1$ 3"e ca!" price or deli(ered price of t"e propert' or !er(ice to be ac4uired?

= 1ourt! "a(e t"e aut"orit' to !trike down or #odif' pro(i!ion! in t"e pro#i!!or' note! t"at grant lender! unre!trained power to increa!e intere!t rate!. penaltie! and ot"er c"arge! at t"e latter6! !ole di!cretion and wit"out gi(ing prior notice to or !ecuring t"e borrower6! con!ent$
1

Interest, fees, service charges, discounts and such other charges incident to the extension of credit as the board may, by regulation, prescribe.

J8>S3*)%& C"et"er an alien/owned bank can ac4uire owner!"ip of re!idential lot b' (irtue of a deed of tran!fer a! !ettle#ent of a debt$ 3"e bank #a' al!o act a!& (191-L An!& %)$ 3"e purpo!e of t"e 1on!titution i! to place and keep in t"e "and! of t"e people t"e owner!"ip of pri(ate land! in order not to endanger t"e !ecurit' of t"e nation$ *f lea!ed for G0 'ear!. per#i!!ible$ =)ffer to repurc"a!e i! not a wai(er to 4ue!tion t"e !ale indebtedne!!. !ecuritie! = no rig"t to repurc"a!e if t"e !ale i! in(alid <$ 1ollector of pa'#ent! = preferred !tatu! of bank. not i#paired in ca!e t"e borrower i! under re"abilitation = after con!olidation title in t"e bu'er6! na#e. writ of po!!e!!ion beco#e! a #atter of rig"t and it! i!!uance i! #erel' a #ini!terial function +a,or i!/e#t)e!t# Bank! are re(iewed b' t"e -onetar' Board (-B a! to t"eir #a:or ac4ui!ition! and in(e!t#ent!$ A$ Ceili!& o! I!/e#t)e!t / 3"e total investment in a real e!tate and i#pro(e#ent!. including bank e4uip#ent shall not e ceed !"# of combined capital accounts. C"at con!titute! total in(e!t#entD 1$ All real e!tate and e4uip#ent nece!!ar' for t"e bank6! i##ediate u!e in t"e tran!action of it! bu!ine!! (i$e$ bank pre#i!e!. land. building!. real propertie!. e4uip#ent and ot"er c"attel! and 2$ >4uit' in(e!t#ent of t"e bank in anot"er corporation engaged pri#aril' in real e!tate B. Bank! can ac4uire. "old or con(e' Real e!tate b' wa' of !ati!faction of clai#! under t"e following circu#!tance!& 4. 3"o!e w"ic" !"all be )ort&a&ed to it in good fait" $y *ay of #ec%rity of de$t#. 5. 3"o!e w"ic" !"all be co!/eyed to it i! #ati#factio! of de$t# 7. 3"o!e w"ic" t"e bank # all (%rc a#e at #ale# %!der ,%d&)e!t#1 decree#1 )ort&a&e#1 or tr%#t deed# "eld b' it. and t"o!e w"ic" t"e bank # all (%rc a#e to #ec%re de$t# d%e it$ An' real propert' ac4uired or "eld under t"e!e circu#!tance! #u!t be di!po!ed of wit"in G 'ear! or a! #a' be pre!cribed b' t"e -B$ %e(ert"ele!!. t"e bank #a' continue to "old t"e propert' !ub:ect to t"e G0A li#itation on total in(e!t#ent$ Ot er Ba!"i!& Ser/ice#. F$ -anaging agent. ad(i!er. con!ultant of in(e!t#ent #anage#ent upon prior appro(al of -B G$ Le!!or of !afet' depo!it bo0e! 3"e fund!. !ecuritie!. and ot"er effect! recei(ed b' a bank a! a depo!itor' or a! an agent !"all be !eparate fro# t"e bank6! a!!et! and liabilitie!$ 3"e co!tract for a Safety De(o#it Bo- i! a !pecial kind of depo!it !ince t"e full po!!e!!ion and control o(er t"e bo0 i! not gi(en to t"e renter$ (Guard ke' i! wit" t"e bank? renter6! ke' i! wit" t"e renter $ Bank i! not liable in ca!e lo!! attributable to :oint renter! w"o eac" "a! one renter ke'$ >it"er one could open it wit"out t"e ot"er$ Since it i! a contract. dutie! #a' be defined b' t"e partie!$ 3"e relation created "ere i! t"at of a $ailor a!d a $ailee. t"e bail#ent being for "ire and #utual benefit$ A cu!to#er depo!ited "i! collection of !ta#p! and t"e bank placed t"e# at t"e lowe!t le(el of t"e !afet' depo!it bo0e!$ 3"e bank knew of a flood and t"e po!!ibilit' of it !eeping t"roug" t"e depo!it bo0e!$ Bank failed to gi(e notice of !uc" e(ent$ 3"e !ta#p! depo!ited were da#aged$ *! t"e Bank liableD Ke!$ 3"e bank failed to e0erci!e rea!onable care and prudence e0pected of a good fat"er of a fa#il'$ T e Ba!&"o Se!tral # all a/e f%ll a%t ority i! t e re&%latio! of electro!ic tra!#actio!#. Sub:ect to appro(al of t"e -B. bank! #a' out!ource all infor#ation tec"nolog' !'!te#! and proce!!e! e0cept for in"erent banking function!$ ;*P$ Bank! #a' al!o out!ource ot"er function! a! #a' be appro(ed b' t"e -B$ Refer to our late!t a!!ign#ent on t"e nature of function! w"ic" a bank #a' out!ource$ Credit Card Tra!#actio!# A$ +efinition of ter#! 1$ 1u!todian of (aluable ob:ect! (i$e$ docu#ent!. fund! 2$ 9inancial agent (bu' and !ell !"are!. e(idence! of

Credit card/ an' card. plate or credit de(ice e0i!ting for t"e purpo!e of obtaining #one'. propert'. labor. or !er(ice! on credit$ Credit card recei/a$le#/ total out!tanding balance of credit card "older!$ +i!i)%) a)o%!t d%e/ -ini#u# a#ount t"at t"e credit card "older need! to pa' on or before t"e pa'#ent due date for a particular c'cle Defa%lt or deli!3%e!cy/ non/pa'#ent of an' a#ount le!! t"an t"e #ini#u# a#ount due wit"in two c'cle date! Acceleratio! cla%#e/pro(i!ion gi(ing t"e rig"t to t"e bank to de#and t"e obligation in full in ca!e of default or non/pa'#ent B$ 3"ere #u!t be a ri!k #anage#ent !'!te# w"ic" !"all co(er t"e organi,ational !et/up. record! and report!. accounting. policie! and procedure! and internal control$ 1$ -ini#u# Re4uire#ent!. Ba!k! #u!t a!certain t"e applicant6! credit !tanding. financial capabilit' (i$e$ net take "o#e pa'. net #ont"l' receipt! of a bu!ine!! of t"e applicant. net wort" or ca!" flow +$ So#e e0a#ple! on t'pe! of infor#ation to be di!clo!ed& %on/finance c"arge!. percentage of intere!t. pa'#ent !c"e#e. #et"od! of deter#ining t"e balance and t"e intere!t. and ot"er fee!$ >$ 9inance c"arge! !"all refer to intere!t c"arged to t"e card"older$ 9$ Bank! !"all keep !trictl' confidential t"e data on t"e card"older or con!u#er e0cept& 1$ Cit" con!ent 2$ relea!e. !ub#i!!ion or e0c"ange of cu!to#er info wit" ot"er financial in!titution! <$ upon order of t"e court F$ di!clo!ure to collection agencie! of t"e bank G$ di!clo!ure to t"ird part' !er(ice !olel' for t"e a!!i!tance and !er(ice to t"e bank B$ di!clo!ure to in!urance co#panie! !olel' for t"e purpo!e of pre(enting lo!! and fraud

G$ )ff!et!/ pur!uant to Art!$ 1278 to 1290 of t"e %11. t"e u!e of a per!on6! credit card will !ub:ect "i! depo!it! wit" t"e bank to off!et an' a#ount due and pa'able on "i! credit card w"ic" "a(e not 'et been paid$ E$ 8nfair 1ollection 2ractice! Bank! #a' re!ort to all rea!onable and legall' per#i!!ible #ean! to collect a#ount! due t"e#$ 3"e following con!titute a (iolation& 1$ u!e of t"reat of (iolence or ot"er cri#inal #ean! 2$ u!e of ob!cenitie!. in!ult!. profane language <$ di!clo!ure of t"e na#e! F$ t"reat to take an' action w"ic" cannot be legall' taken G$ co##unicating a credit info w"ic" i! fal!e B$ an' fal!e repre!entation or decepti(e #ean! 7$ #aking contact at incon(enient ti#e! (10p#/Ba# *$ Additional depo!it! doe! not increa!e credit li#it$ U$ 1ontract! between bank! and card"older! are contract! of ad"e!ion becau!e t"eir ter#! are prepared b' onl' one part'$ O!e (rice ta& Re3%ire)e!t >(er' retailer i! re4uired to di!pla' a price tag to indicate t"e price$ *t #u!t be written clearl'$ -u!t include PA3 if (atable$ Practice# * ic )%#t $e co!#idered relati/e to t e )ode of (ay)e!t. 1$ C"en t"e con!u#er pa'! in ca!". "e !"all pa' onl' t"e price indicated in t"e price tag$ 2$ w"en t"roug" a credit card. onl' t"e price in t"e tag price$ <$ w"en retailer offer! t"e con!u#er an option to pa' in ca!". card. or on in!tal#ent. t"e !a#e i! allowed pro(ided t"e pa'#ent option! !"all be di!clo!ed b' wa' of a !eparate info but not in t"e price tag F$ 1a!" price tag and regular price tag on eac" product or !er(ice i! not allowed G$ 1a!" price tag and card price tag i! al!o not allowed S%rc ar&i!& $y retailer# i# !ot allo*ed.

>0tra c"arge. or additional c"arge o(er and abo(e t"e price tag

C a(ter >: PROHIBITED TRANSACTIONS AND CESSATION OF BANKING BUSINESS I. Pro i$ited Tra!#actio!# A. 2ro"ibition to Act a! *n!urer /A bank !"all not directl' engage in in!urance bu!ine!! a! t"e in!urer$ 3"e ter# 5doing in!urance bu!ine!!Q or 5tran!acting an in!urance bu!ine!!Q.!"all include& a$ #aking or pro#i!ing to #ake. a! in!urer. an' in!urance contract? b$ #aking or propo!ing an' contract of !uret'!"ip a! a (ocation c$ doing an' kind of bu!ine!!. including a rein!urance bu!ine!! d$ doing or propo!ing to do an' bu!ine!! in !ub!tance B. 2ro"ibited Act! 4$ %o director. officer. e#plo'ee or agent of an' bank !"allR a$ -ake fal!e entrie! in an' bank report or !tate#ent or participate in an' fraudulent tran!action b$ Cit"out order of a court of co#petent :uri!diction. di!clo!e to an' unaut"ori,ed per!on an' infor#ation relati(e to t"e fund! or propertie! in t"e cu!tod' of t"e bank c$ Accept gift!. fee! or co##i!!ion! or an' ot"er for# of re#uneration in connection wit" t"e appro(al of a loan. or ot"er credit acco##odation fro# !aid bank d$ )(er(alue or aid in o(er(aluing an' !ecurit' for t"e purpo!e of influencing in an' wa' t"e action! of t"e ban or an' bank? or e$ )ut!ource in"erent banking function!$ ('ec#::" +)2! 5. %o borrower of a bank !"allR a$ 9raudulentl' o(er(alue propert' offered a! !ecurit' for a loan. etc b$ 9urni!" fake or #ake #i!repre!entation of #aterial fact! c$ Atte#pt to defraud t"e !aid bank C.

d$ )ffer an' director. officer. e#plo'ee or agent of a bank. an' gift. fee. co##i!!ion etc in order to influence !uc" per!on! in appro(ing loan and t"e like$ 7. %o e0a#iner. officer or e#plo'ee of t"e BS2 !"all co##it an' of t"e foregoing act or aid in t"e co##i!!ion of t"e !a#e$ :. 1on!i!tent wit" t"e Bank! Secrec' Law. no bank !"all e#plo' ca!ual or nonregular per!onnel or too lengt"' probationar' per!onnel in t"e conduct of it! bu!ine!! in(ol(ing bank depo!it!$ 2ro"ibition Again!t )ut!ourcing 1ertain Banking 9unction ('ection ::" +)2! Co!d%cti!& B%#i!e## I! a! U!#afe or U!#o%!d +a!!er Pro i$itio! o! Di/ide!d Declaratio! /%o bank or 4ua!i/bank !"all declare di(idend! greater t"an it! accu#ulated net profit! t"en on "and. deducting t"erefro# it! lo!!e! and bad debt!$ %ote& (Section F< of t"e 1orporation 1ode I0. 0. U!a%t ori6ed Ad/erti#e)e!t or B%#i!e## Re(re#e!tatio! Place)e!t U!der Co!#er/ator# i( A. (Section B7 of t"e GBL B. Ground! for Appoint#ent of 1on!er(ator /C"ene(er on t"e ba!i! of a report !ub#itted b' t"e appropriate !uper(i!ing or e0a#ining depart#ent. t"e -onetar' Board (-B find! t"at a bank or a 4ua!i/bank i! in a !tate of& 1$ continuing inabilit'. or 2$ unwillingne!! to #aintain a condition of li4uidit' dee#ed ade4uate to protect t"e intere!t of depo!itor! and creditor!. -B !"all appoint a con!er(ator a! t"e -B !"all dee# nece!!ar' to& 1$ take c"arge of t"e a!!et!. liabilitie! and #anage#ent t"ereof? 2$ reorgani,e #anage#ent? <$ collect all #onie! and debt! due !aid in!titution. and >0erci!e all power! nece!!ar' to re!tore it! (iabilit'$ L*J8*+*3K/ t"e abilit' of an a!!et to be con(erted into ca!" 4uickl' and wit"out

II. III.

an' price di!count$ A corporation i! li4uid if it "a! read' acce!! to ca!"$ S)LP>%1K/ t"e condition t"at e0i!t! w"en liabilitie! a#ount to le!! tan total a!!et!. t"u! pro(iding t"e abilit' to pa' debt!$ 3"e te!t of in!ol(enc' i! #ea!ured b' deter#ining w"et"er t"e reali,able a!!et! of a bank are le!! t"an it! liabilitie!$ C. Jualification! of 1on!er(ator /co#petent /konowledgeable in bank operation! and #anage#ent D. 2eriod of 1on!er(ator!"ip /doe! not e0ceed one (1 'ear E. Re#uneration F. G. >0pen!e! of 1on!er(ator!"ip /!"all be borne b' t"e bank or t"e 4ua!i/bank concerned H. 3er#ination! of 1on!er(ator!"ip /-B i! !ati!fied t"at t"e in!titution can continue to operate on it! own /-B !"all. on t"e ba!i! of t"e report of t"e 1 or it! own finding!. deter#ine t"at t"e continuance t"ereof would in(ol(e probable lo!! to it! depo!itor! or creditor! I. 9inal and >0ecutor' /action! of -B? e0cept on petition for certiorari G. >0clu!i(e 2ower to Appoint /(e!ted e0clu!i(el' wit" t"e -B K. .. %ot a 2recondition 2ower! of 1on!er(ator!"ip cannot *#pair t"e )bligation! of 1ontract!

/no (oluntar' di!!olution of a bank !"all be undertake wit"out prior appro(al of t"e -B (acco#panied b' a L plan. written notice !"all be !ent to -B before actual L B. Recei(er!"ip and *n(oluntar' Li4uidation (Section B9 of t"e GBL 4. a$ Ground! for Recei(er!"ip and Li4uidation if t"e -B find! t"at t"e in!titution& i! unable to pa' it! liablitie! a! t"e' beco#e due in t"e ordinar' cour!e of bu!ine!! b$ "a! in!ufficient reali,able a!!et!. a! deter#ined b' t"e BS2. to #eet it! liabilitie! c$ cannot continue in bu!ine!! wit"out in(ol(ing probable lo!!e! to it! depo!itor! or creditr!. or d$ "a! willfull' (iolated a cea!e and de!i!t order t"at "a! beco#e final. in(ol(ing act! or tran!action! w"ic" a#ount to fraud or a di!!ipation of t"e a!!et! of t"e in!titution$ /9or a 4ua!i/bank. an' per!on of recogni,ed co#petence in banking or finance #a' be de!inated a! recei(er$ 5. 1urrent and 1o#plete >0a#ination %ot %ece!!ar' /3"e ab!ence of an e0a#ination before t"e clo!ure of a bank did not #ean t"at t"ere wa! no ba!i! for t"e clo!ure order$ %eedle!! to !a'. t"e deci!ion of t"e -B and BS2. like an' ot"er ad#ini!trati(e bod'. #u!t "a(e !o#et"ing to !upport it!elf and it! finding! of fact #u!t be !upported b' !ub!tantial e(idence$ But it i! clear under R$A$ %o 7BG< t"at t"e ba!i! need not ari!e fro# an e0a#ination a! re4uired b' t"e old law$ (,ural )ank of 'an 7i&uel" -nc# 1s# 7onetary )oard! 2rocedure! /3"e recei(er !"all i##ediatel'& a$ Gat"er and take c"arge of all t"e a!!et! and liabilitie! of t"e in!titution. Ad#ini!ter t"e !a#e for t"e benefit of it! creditor!. and >0erci!e t"e general power! of a recei(er under t"e Re(i!e Rule! of 1ourt. but S"all not. wit" t"e e0ception of t"e ad#ini!trati(e e0penditure!. pa' or co##it an' act t"at will in(ol(e t"e tran!fer or di!po!ition of an' a!!et of t"e in!titution$ /3"e recei(er #a' depo!it or place t"e fund! of t"e in!titution in non/!peculati(e in(e!t#ent!$

/3"e recei(er !"all deter#ine ASA2 but not later t"an ninet' (90 da'! fro# take o(er. w"et"er t"e in!titution #a' be re"abilitated or ot"erwi!e placed in !uc" a condition !o t"at it #a' be per#itted to re!u#e bu!ine!! wit" !afet' to it! depo!itor! and creditor! and t"e general public$ /An' deter#ination for t"e re!u#ption of bu!ine!! of t"e in!titution !"all be !ub:ect to t"e appro(al of t"e -B$ :. PROHIBITED ACTS: An' director or officer of bank declared in!ol(ent or plaed under recei(er!"ip b' t"e -onetar' Board !"all not co##it an' of t"e ff$ act!& Refu!ing to turn o(er t"e bank6! record and a!!et! to t"e de!ignated recei(er!? b$ 3a#pering wit" bank record!? c$ Appropriating for "i#!elf or anot"er part'. or de!tro'ing or cau!ing #i!appropriation and de!truction of t"e bank6! a!!et!? d$ 2a'ing out or per#itting or cau!ing to be paid out an' fund of !aid bank? and e$ 3ran!ferring or per#itting or cau!ing to be tran!ferred an' !ecuritie! or propert' of !aid bank$ >. 8HEN INSTITUTION CANNOT BE REHABI.ITATED *f t"e recei(er deter#ine! t"at t"e in!titution cannot be re"abilitated or per#itted to re!u#e bu!ine!!. t"e -onetor' Board !"all notif' in writing t"e board of director! of it! finding! and direct t"e recei(er to proceed wit" t"e li4uidation of t"e in!titution$ 3"e recei(er !"all& 1$ 9ile e0 parte wit" t"e proper R31. and wit"out re4uire#ent of prior notice or an' ot"er action. a petition for a!!i!tance in t"e li4uidation plan adopted b' t"e 2"ilippine +epo!it *n!urance 1orp$ for general application to all clo!ed bank!$ a$ *n ca!e of 4ua!i bank!. t"e li4uidation plan !"all be adopted b' t"e -onetor' Board$ 2$ 1on(ert t"e a!!et! of t"e in!titution! to #one'. di!po!e of t"e !a#e to creditor! and ot"er partie!. for t"e purpo!e of pa'ing t"e debt! of !uc" in!titution in accordance wit" t"e rule! on concurrence and preference of credit under t"e 1i(il 1ode of t"e 2"ilippine!$ <$ B. FINA. AND EHECUTOR? A! in t"e ca!e of con!er(ator!"ip& a$

7.

0I.

Ce##atio! of Ba!"i!& B%#i!e## A. Poluntar' Li4uidation /written notice of L !"all be !ent to -BB before !uc" li4uidation i! undertaken. and t"e -B "a! t"e rig"t to inter(ene and take !uc" !tep! a! #a' be nece!!ar' to protect t"e intere!t! of creditor! /(oluntar' L #a' be undertaken b' t"e bank it!elf t"roug" it! board of director!. b' a tru!tee appointed b' t"e bank. or b' a recei(er appointed to t"e bank upon (oluntar' di!!olution of a bank pur!uant to t"e 1orporation 1ode

b$ c$ d$

3"e action! of t"e -onetar' Board !"all be final and e0ecutor. and #a' not be re!trained or !et a!ide b' t"e court e0cept on petition for certiorari on t"e ground t"at t"e action taken wa! in e0ce!! of :uri!diction or wit" !uc" gra(e abu!e of di!cretion a! to a#ount to lack or e0ce!! of :uri!diction$ CE) C*LL 9*L>& Stock"older! of record repre!enting t"e #a:orit' of t"e capital !tock wit"in 10 da'! fro# t"e receipt b' t"e board of director! of t"e in!titution of t"e order directing recei(er!"ip. li4uidation or con!er(ator!"ip$ 7$ >;1L8S*P> 2)C>R 3) A22)*%3 7 (e!ted e0clu!i(el' wit" t"e -onetor' Board$ C. C.OSE NO8 HEAR .ATER SCHE+E 3"e law doe! not conte#plate prior notice and "earing before a bank #a' be directed to !top operation! and placed under recei(er!"ip$ A pre(iou! "earing nor due proce!! de#and t"at t"e correctne!! of -onetar' Board6! Re!olution to !top operation and proceed to li4uidation of fir!t ad:udged before #aking t"e re!olution effecti(e$ C.OSE NO8 HEAR .ATER SCHE+E I i! grounded on practical and legal con!ideration! to pre(ent unwarranted di!!ipation of t"e bank6! a!!et! and a! a (alid e0erci!e of police power to protect t"e depo!itor!. creditor!. !tock"older! and t"e general public$ D. EFFECT OF FI.ING FOR PETITION FOR RE0IE8 3"e bank6! li4uidator i! allowed to continue recei(ing collectible! and recei(able! or pa'ing off6! creditor6! clai#! and ot"er tran!action! pertaining to nor#al operation! of a bank$ i#e# prosecution of suits a&ainst debtors for collection and for foreclosure of mort&a&es# E. REASON BEHIND RECEI0ERSHIP AND IN0O.UNTAR? .IEUIDATION *t i! a (alid e0erci!e of police power to protect t"e depo!itor!. creditor!. !tock"older! and t"e general public$ +ue to t"e nature of bank6! tran!action! and function!. a fiduciar' relation!"ip i! created between t"e banking in!titution! and t"eir depo!itor!$

/ and !"all. fro# t"e #o#ent of !uc" recei(er!"ip or li4uidation. be e0e#pt fro# an' order or garni!"#ent. le('. attac"#ent or e0ecution$ D. :. Stay of e-ec%tio! / i! warranted if a bank wa! placed under recei(er!"ip$ 3"e a!!et! of t"e in!ol(ent banking in!titution are "eld in tru!t for e4ual benefit of all creditor!. and after it! in!ol(enc'. one cannot obtain an ad(antage or a preference o(er anot"er b' an attac"#ent. e0ecution or ot"erwi!e$ >. Re#trictio! of Ba!"J# Ca(acity to act / Re!triction in relation to it! propert'$ / 3"e bank would not be able to do %>C B8S*%>SS. i#e# to &rant new loans or to accept new deposits# Eowe(er. t"e recei(er of t"e bank i! obliged to collect debt! owing to t"e bank w"ic" debt! for# part of t"e a!!et! of t"e bank$ A. E-cl%#i/e G%ri#dictio! of .i3%idatio! Co%rt / pertain! onl' to t"e ad:udication of clai#! again!t t"e bank$ *t doe! not co(er t"e re(er!e !ituation w"ere it i! t"e bank w"ic" file! a clai# again!t anot"er per!on or legal entit'$ 0II. DISPOSITION AND DISTRIBUTION OF ASSETS A. Di#tri$%tio! of A##et# *n ca!e of li4uidation of a bank or 4ua!i/bank. after pa'#ent of t"e co!t of proceeding!. including a rea!onable e0pen!e! and fee! of t"e recei(er to be allowed b' t"e court. t"e recei(er !"all pa' debt! of !uc" in!titution. under order of t"e court. in accordance wit" t"e rule! on concurrence and preference of credit a! pro(ided in t"e 1i(il 1ode$ B. DISPOSITION OF RE0ENUES AND EARNINGS All re(enue! and earning! reali,ed b' t"e recei(er in winding up t"e affair! and ad#ini!tering t"e a!!et! of an' bank or 4ua!i/bank !"all be u!ed to pa' t"e co!t!. e0pen!e! #entioned in *3>- A abo(e !alarie! of !uc" per!onnel w"o!e e#plo'#ent i! rendered nece!!ar' in t"e di!c"arge of t"e li4uidation toget"er wit" t"e ot"er additional e0pen!e! cau!ed b'$ .IABI.ITIES 3"e bank i! bound b' t"e act!. or failure to act of t"e recei(er$ At t"e !a#e ti#e. t"e recei(er i! liable to t"e bank for t"e culpable or negligent failure to collect t"e a!!et! of !uc" bank and to !afeguard !aid a!!et!$

C a(ter A Forei&! Ba!"# a!d Tr%#t O(eratio!# *$ A$ 9oreign Bank! 3ran!acting Bu!ine!! in t"e 2"ilippine!

3"e entr' of foreign bank! in t"e 2"ilippine! t"oug" t"e e!tabli!"#ent of branc"e! !"all be go(erned b' t"e pro(i!ion! of t"e 9oreign Bank! Liberali,ation Act$ 3"e conduct of off!"ore banking bu!ine!! in t"e 2"ilippine! !"all be go(erned b' t"e pro(i!ion! of t"e )ff!"ore Banking S'!te# +ecree$ Offshore )ankin& refer! to t"e conduct of banking tran!action! in foreign currencie! in(ol(ing t"e receipt of fund! fro# e0ternal !ource! and t"e utili,ation of !uc" fund!$ Offshore )ankin& ;nit #ean! a branc". !ub!idiar' or affiliate of a foreign banking corporation w"ic" i! dul' aut"ori,ed b' t"e Bangko Sentral ng 2ilipina! to tran!act off!"ore banking bu!ine!! in t"e 2"ilippine!$ =9oreign corporation! doing bu!ine!! in t"e 2"ilippine! are re4uired to obtain a licen!e a! pro(ided in !ec$ 1<< of t"e 1orporation 1ode$ B$ Ac4ui!ition of Poting Stock in a +o#e!tic Bank 9oreign Bank! are allowed entr' in t"e 2"ilippine! !ub:ect to t"e following rule!& a wit"in 7 'ear! fro# t"e effecti(it' of t"e GBL and !ub:ect to t"e guideline! i!!ued pur!uant to t"e 9oreign Bank! Liberali,ation Act. t"e -onetar' Board #a' aut"ori,e a foreign bank to ac4uire up to 100A of t"e (oting !tock of onl' 1 bank organi,ed under t"e law! of t"e 2"ilippine!$ Cit"in t"e !a#e period. t"e -onetar' Board #a' aut"ori,ed an' foreign bank. w"ic" prior to t"e efffecti(it' of GBL a(ailed it!elf to t"e pri(ilege to ac4uire up to B0A if t"e (oting !tock of a bank under t"e 9oreign Bank! Liberali,ation Act and t"e 3"rift Bank! Act. to furt"er ac4uire (oting !"are! of !uc" bank to t"e e0tent nece!!ar' for it to own 100A of t"e (oting !tock t"ereof$ *n t"e e0erci!e of t"i! aut"orit'. t"e -onetar' Board !"all adopt #ea!ure! a! #a' be nece!!ar' to en!ure t"at at all ti#e! t"e control of 70A of t"e re!ource! or a!!et! of t"e entire banking !'!te# i! "eld b' bank! w"ic" are at lea!t #a:orit'/owned b' 9ilipino!$

F. EFFECTS OF RECEI0ERSHIP AND .IEUIDATION $. %etention of &uridical Personalit' / w"ic" can !ue and be !ued t"roug" it! li4uidator$ .I+ITATION: 3"e pro!ecution and action #u!t be done t"roug" t"e li4uidator$ 5. Not lia$le to Pay i!tere#t / a banking in!titution "a! been declared in!ol(ent and !ub!e4uentl' clo!ed b' t"e BS2 cannot be "eld liable to pa' intere!t on bank depo!it! w"ic" accrued during t"e period w"en bank i! actuall' clo!ed and non/operational$ 7. A##et# are dee)ed %!der C%#todia .e&i#

C.

DISPOSITION OF BANKING FRANCHISE 3"e Bangko Sentral #a'. if public intere!t !o re4uire!. award to an in!titution. upon !uc" ter#! and condition! a! t"e -onetar' Board #a' appro(e. t"e banking franc"i!e of a bank under li4uidation to operate in t"e area w"ere !aid bank or it! branc"e! were pre(iou!l' operating$ 2ro(ided. t"at w"ate(er proceed! #a' be reali,ed fro# !uc" award !"all be !ub:ect to t"e appropriate e0clu!i(e di!po!ition of t"e -onetar' Board$

An' of t"e foregoing rig"t. pri(ilege. or incenti(e granted to a foreign bank !"all be e4uall' en:o'ed b' and e0tended under t"e !a#e condition! to bank! organi,ed under t"e law! of t"e 2"ilippine!$

3"e !ending of !uc" cop' of t"e !u##on!. proce!!e!. or notice !"all be a nece!!ar' part of t"e !er(ice! and !"all co#plete t"e !er(ice$ 3"e regi!tr' receipt of #ailing !"all be pri#a facie e(idence of t"e tran!#i!!ion of t"e !u##on!. proce!!. or notice$

1$

Local Branc"e! of 9oreign Bank!

9$

Law! Applicable

*n t"e ca!e of a foreign bank w"ic" "a! #ore t"an 1 branc" in t"e 2"ilippine!. all !uc" branc"e! !"all be treated a! 1 unit for t"e purpo!e of t"e GBL$

+$ Eead )ffice Guarantee Eead office !"all full' guarantee t"e pro#pt pa'#ent of all liabilitie! of it! 2"ilippine Branc" Re!ident! and citi,en! of t"e 2"ilippine! w"o are creditor! of a branc" in t"e 2"ilippine! of a foreign bank !"all "a(e preferential rig"t! to t"e a!!et! of !uc" branc" in accordance wit" e0i!ting law!$ >$ Su##on! and Legal 2roce!!

*n all #atter! not !pecificall' co(ered b' !pecial pro(i!ion! applicable onl' to a foreign bank or it! branc"e! and ot"er office! in t"e 2"ilippine!. an' foreign bank licen!ed to do bu!ine!! in t"e 2"ilippine! !"all be bound b' t"e pro(i!ion! of GBL. all ot"er law!. rule! and regulation! applicable to bank! organi,ed under t"e law! of t"e 2"ilippine! of t"e !a#e cla!!. e0cept t"o!e t"at pro(ide for t"e creation. for#ation. organi,ation. or di!!olution of corporation! or for t"e fi0ing of t"e relation!. liabilitie!. re!pon!ibilitie!. or dutie! of !tock"older!. #e#ber!. director!. or officer! of corporation! to eac" ot"er or to t"e corporation$ G$ Re(ocation of Licen!e of a 9oreign Bank

Sec$< guideline! for appro(al$/ a !"all en!ure geograp"ic repre!entation and co#ple#entation? b con!ider !trategic trade and in(e!t#ent relation!"ip! between t"e 2"ilippine! and t"e countr' of incorporation of t"e foreign bank? c !tud' t"e de#on!trated capacit'. global reputation for financial inno(ation! and !tabilit' in a co#petiti(e en(iron#ent of t"e applicant? d !ee to it t"at reciprocit' rig"t! are en:o'ed b' 2"ilippine bank! in t"e applicant6! countr'? e con!ider willinge!! to full' !"are t"eir tec"nolog'$

)nl' t"o!e a#ong t"e top 1G0 foreign bank! in t"e world or t"e top fi(e (G bank! in t"eir countr' of origin a! of t"e date of application !"all be allowed entr' in accordance wit" !ec$2 b and c "ereof$ Sec$ F 1apital re4uire#ent!/ a for locall' incorporated !ub!idiarie!/ #ini#u# capital re4uired !"all be e4ual to t"at pre!cribed b' t"e -onetar' Board for do#e!tic bank! of t"e !a#e categor'$ b 9or foreign bank branc"e!/ capital of %)3 L>SS t"an t"e 8$S$ +ollar e4ui(alent of 210 -illion pe!o! at t"e e0c"ange rate on t"e date of t"e effecti(it' of t"i! act$ 3"e foreign bank !"all be entitled to t"ree #ore branc"e! wit" per#anentl' a!!igned capital of t"e 8$S$ +ollar e4ui(alent of <G -illion 2e!o! per additional branc"$ Sec$ G/ Eead office guarantee/ =#entioned earlier Sec$ B/ >ntrant! under !ection 2/ 9oreign bank! !"all be allowed entr' under !ec$2 c. wit"in G 'ear! fro# t"e effecti(it' of t"e act$ +uring t"i! period. B new foreign bank! !"all be allowed entr' under !ec$2 c upon t"e appro(al of t"e -onetar' Board$ An additional F foreign bank! #a' be allowed entr' on reco##endation of t"e -onetar' Board. !ub:ect to co#pliance wit" t"e pre(iou! !ection! of t"i! act. upon appro(al b' t"e 2re!ident a! t"e national intere!t #a' re4uire$ Sec$7/ %on/9ilipino citi,en! #a' beco#e #e#ber! of t"e Board of +irector! of a bank to t"e e0tent of t"e foreign participation in t"e e4uit' of !aid bank$ %ote& for t"e full te0t of t"e Act. !ee book page! 271/27B ***$ 3ru!t )peration A$ Aut"orit' to engage in 3ru!t Bu!ine!! Trust )usiness refer! to an' acti(it' re!ulting fro# a tru!tee/tru!tee relation!"ip (tru!tee!"ip in(ol(ing t"e appoint#ent of a tru!tee b' a tru!tor for t"e ad#ini!tration. "olding. #anage#ent of fund! andMor propertie! of t"e tru!tor b' t"e tru!tee for t"e u!e. benefit or ad(antage of t"e tru!tor or of ot"er! called beneficiarie!$

1ourt! obtain :uri!diction o(er foreign bank! a! follow!& a Su##on! and legal proce!! !er(ed upon t"e 2"ilippine agent or "ead of an' foreign bank de!ignated to accept !er(ice t"ereof !"all gi(e :uri!diction to t"e court! o(er !uc" bank. and !er(ice of notice! on !uc" agent or "ead !"all be a! binding upon t"e bank w"ic" "e repre!ent!$ S"ould t"e aut"orit' of !uc" agent or "ead to accept !er(ice of !u##on! and legal proce!!e! for t"e bank or notice to it be re(oked. or !"ould !uc" agent or "ead beco#e #entall' inco#petent or ot"erwi!e unable to accept t"e !er(ice w"ile e0erci!ing !uc" aut"orit'. it !"all be t"e dut' of t"e bank to na#e and de!ignate pro#ptl' anot"er agent or "ead upon w"o# !er(ice of !u##on! and proce!!e! in legal proceeding! again!t t"e bank and of notice! affecting t"e bank #a' be #ade. and to file wit" t"e Securitie! and >0c"ange 1o##i!!ion a dul' aut"enticated no#ination of !uc" agent$ *n t"e ab!ence of t"e agent or "ead or !"ould t"ere be no per!on aut"ori,ed b' t"e bank upon w"o# !er(ice of !u##on!. proce!!e! and all legal notice! #a' be #ade. !er(ice of !u##on!. proce!!e! and legal notice! #a' be #ade upon t"e Bangko Sentral +eput' Go(ernor *n/1"arge of t"e Super(i!ing and e0a#ining depart#ent! and !uc" !er(ice !"all be a! effecti(e a! if #ade upon t"e bank or it! dul' aut"ori,ed agent or "ead$ *n ca!e of !er(ice for t"e bank upon t"e Bangko Sentral +eput' Go(ernor *n/c"arge of t"e !uper(i!ing and e0a#ining depart#ent!. t"e !aid +eput' Go(ernor !"all regi!ter and tran!#it b' #ail to t"e pre!ident or t"e !ecretar' of t"e bank at it! "ead or principal office a cop'. dul' certified b' "i#. of t"e !u##on!. proce!!. or notice$

3"e -onetar' Board #a' re(oke t"e licen!e to tran!act bu!ine!! in t"e 2"ilippine! of an' foreign bank. if it find! t"at t"e foreign bank i! in!ol(ent or in i##inent danger t"ereof or t"at it! continuance in bu!ine!! will in(ol(e palpable lo!! to t"o!e tran!acting bu!ine!! wit" it$ After t"e re(ocation of !uc" licen!e. it !"all be unlawful for an' !uc" foreign bank to tran!act bu!ine!! in t"e 2"ilippine! unle!! it! licen!e i! renewed or rei!!ued$

**$ >ntr' of 9oreign Bank! RA %o$ 77 21/ An Act Liberali,ing t"e >ntr' and Scope of )peration! of 9oreign Bank! in t"e 2"ilippine! and 9or )t"er 2urpo!e! Sec$1 +eclaration of t"e 2olic'/ VV 3"e 2"ilippine banking and financial !'!te# i! "ereb' liberali,ed to create a #ore co#petiti(e en(iron#ent and encourage greater foreign participation t"roug" increa!e in owner!"ip in do#e!tic bank! and t"e entr' of new foreign bank branc"e!$ Sec$ 2 -ode! of >ntr'/ a b' ac4uiring. purc"a!ing or owning up to B0A of t"e (oting !tock of an e0i!ting bank? b b' in(e!ting in up to B0A of t"e (oting !tock of a new banking !ub!idiar' incorporated under t"e law! of t"e 2"ilippine!? or c b' e!tabli!"ing branc"e! wit" full banking aut"orit'& pro(ided. t"at a foreign bank #a' a(ail it!elf of onl' one (1 #ode of entr'$ 9urt"er. t"at a foreign bank or a 2"ilippine corporation #a' own up to a B0A of t"e (oting !tock of onl' one (1 do#e!tic bank or new banking !ub!idiar'$

3"e cardinal principle co##on to all tru!t and ot"er fiduciar' relation!"ip! i! fidelity# 8nder t"e 1i(il 1ode on tru!t!& 3ru!tor/ a per!on w"o e!tabli!"e! a tru!t 3ru!tee/ one in w"o# confidence i! repo!ed a! regard! propert' for t"e benefit of anot"er per!on Beneficiar'/ t"e per!on for w"o!e benefit t"e tru!t "a! been created 3ru!t! #a' be e0pre!! or i#plied$ E9press trusts are created b' t"e intention of t"e tru!tor or of t"e partie!$ -mplied trusts are created b' operation of law$

>$ 2ower! of a 3ru!t >ntit' (in addition t"e general power! incident to corporation! act a! tru!tee on an' #ortgage or bond i!!ued b' an' in!tru#entalit' and to accept and e0ecute an' tru!t con!i!tent wit" law 2 act under t"e order or appoint#ent of an' court a! guardian. recei(er. tru!tee or depo!itar' of t"e e!tate of an' #inor or ot"er inco#petent per!on. and a! recei(er and depo!itar' of an' #one'! and of propertie! broug"t into court b' partie! < act! a! t"e e0ecutor of an' will w"en it i! na#ed t"e e0ecutor t"ereof F act! a! ad#ini!trator of t"e e!tate of an' decea!ed per!on G accept and e0ecute an' tru!t for t"e "olding. #anage#ent. and ad#ini!tration of an' e!tate. real or per!onal. and t"e rent!. i!!ue! and profit! t"ereof? and B e!tabli!" and #anage co##on tru!t fund! 9$ 3ran!action! Re4uiring 2rior Aut"orit' A tru!tee or fiduciar' !"all not undertake !uc" tran!action!. unle!! prior to it! e0ecution. !uc" tran!action "a! been full' di!clo!ed and aut"ori,ed b' t"e client. beneficiar'. part'/in/intere!t. court of co#petent :uri!diction or ot"er co#petent aut"orit'& lend. !ell tran!fer or a!!ign #one' or propert' to an' of t"e depart#ent!. director!. officer!. !tock"older! or e#plo'ee! of t"e tru!tee or fiduciar' or relati(e! wit"in t"e 1 !t degree of con!anguinit' or affinit'. or t"e related intere!t of !uc" director!. officer! and !tock"older!? or to an' corporation w"ere t"e tru!tee own! at lea!t G0A of t"e !ub!cribed capital or (oting !tock in it! own rig"t and not a! tru!tee nor in a repre!entati(e capacit'? 2 purc"a!e or ac4uire propert' or debt in!tru#ent! fro# an' of t"e depart#ent!. director!. officer!$ $ $ 000 (!a#e in W1 < in(e!t in e4uitie! of. or in !ecuritie! underwritten b' t"e tru!tee or fiduciar' or a corporation in w"ic" t"e tru!tee own! at lea!t G0A of t"e !ub!cribed capital or (oting !tock F Sell. tran!fer. a!!ign or lend #one' or propert' fro# one tru!t or fiduciar' account e0cept w"ere t"e in(e!t#ent i! allowed b' t"e -onetar' Board$ G$ +epo!it for t"e 9ait"ful 2erfor#ance of 3ru!t +utie! 1 Before tran!acting tru!t bu!ine!!. e(er' tru!t entit' !"all depo!it wit" BS2 a! !ecurit' for t"e fait"ful perfor#ance of it! tru!t dutie!. ca!" or !ecuritie! appro(ed b' t"e -onetar' Board in an a#ount of 2G00.000$00 or !uc" "ig"er a#ount a! #a' be fi0ed b' t"e -onetar' Board 3"e -onetar' Board !"all re4uire e(er' tru!t entit' to increa!e t"e a#ount of it! ca!"M!ecuritie! on depo!it wit" BS2 w"ene(er nece!!ar' 3"e paid/in capital and !urplu! of !uc" entit' #u!t be at lea!t e4ual to t"e a#ount re4uired to be depo!ited wit" t"e BS2 in accordance wit" t"e abo(e pro(i!ion!$ S"ould t"e capital and !urplu! fall below !aid a#ount. t"e Board #a' li#it or pro"ibit t"e di!tribution of net profit! b' !uc" bank and #a' re4uire t"at part or all of t"e profit! 1 1

be u!ed to increa!e t"e capital account! until t"e #ini#u# re4uire#ent "a! been #et$ A tru!t entit' !o long a! it !"all continue to be !ol(ent and co#pl' wit" law! or regulation! !"all "a(e t"e rig"t to collect t"e intere!t earned on !uc" !ecuritie! depo!ited wit" t"e BS2 and to e0c"ange t"e !ecuritie! for ot"er!$ All clai#! ari!ing out of t"e tru!t bu!ine!! of a tru!t entit' !"all "a(e priorit' o(er all ot"er clai#! a! regard! t"e ca!" or !ecuritie! depo!ited a! abo(e pro(ided$ *P$ Bond of 1ertain 2er!on! for t"e 9ait"ful 2erfor#ance of +utie! Bond Re4uire#ent! 1 Before an e0ecutor. ad#ini!trator. guardian. tru!tee. recei(er. depo!itar' ($ $ $ appointed b' t"e court enter! upon t"e e0ecution of "i! dutie!. "e !"all. upon order of t"e court. file a bond in !uc" !u#. a! t"e court #a' direct$ 2 8pon t"e application of an' e0ecutor. ad#ini!trator. $ $ $ t"e court #a'. after notice and "earing. order t"at t"e !ub:ect #atter of t"e tru!t or an' part t"ereof be depo!ited wit" a tru!t entit' < 8pon pre!entation of proof to t"e court t"at t"e !ub:ect #atter of t"e tru!t "a! been depo!ited. t"e court #a' order t"at t"e bond gi(en be reduced to !uc" !u#! a! it #a' dee# proper$ F 3"e reduced bond !"all be !ufficient to !ecure ade4uatel' t"e proper ad#ini!tration and care of an' propert' re#aining under t"e control of !uc" per!on! and t"e proper accounting for !uc" propert'$ >0e#ption of 3ru!t >ntit' fro# t"e Bond Re4uire#ent %o bond or ot"er !ecurit' !"all be re4uired b' t"e court fro# a tru!t entit' a! court appointed tru!tee. e0ecutor. ad#ini!trator $ $ $ "owe(er. t"e court #a' re4uire t"e tru!t entit' to po!t a bond or ot"er !ecurit' for t"e protection of fund! or propert' confided to !uc" entit'

A$

B$ 1onduct of tru!t bu!ine!!$ 3"e following !"all be ob!er(ed in t"e conduct of tru!t bu!ine!!& a b a tru!t entit' !"all ad#ini!ter t"e fund! or propert' under it! cu!tod' wit" t"e diligence t"at a prudent #an would e0erci!e in t"e conduct of an enterpri!e of a like c"aracter and wit" !i#ilar ai#!$ %o tru!t entit' !"all. for t"e account of t"e tru!tor or t"e beneficiar' of t"e tru!t. purc"a!e or ac4uire propert' fro#. or !ell. tran!fer. a!!ign. or lend #one' or propert' to. or purc"a!e debt in!tru#ent! of. an' of t"e depart#ent!. director!. officer!. !tock"older!. or e#plo'ee! of t"e tru!t entit'. relati(e! wit"in t"e fir!t degree of con!anguinit' or affinit'. unle!! t"e tran!action i! !pecificall' aut"ori,ed b' t"e tru!tor and t"e relation!"ip of t"e tru!tee and t"e ot"er part' in(ol(ed i! full' di!clo!ed to t"e tru!tor or beneficiar'$ Regi!tration of Article! of *ncorporation and B'/Law! of a 3ru!t >ntit'

B$

1$

P$ )peration! of 3ru!t >ntit' A$ Separation of 3ru!t Bu!ine!! fro# General Bu!ine!! 3"e tru!t bu!ine!! and all fund!. propertie! or !ecuritie! recei(ed b' an' tru!t entit' a! e0ecutor. ad#ini!trator $ $ $ !"all be kept S>2ARA3> and +*S3*%13 fro# t"e general bu!ine!! including all ot"er fund!. propertie! and a!!et! of !uc" tru!t entit'$ 3"e account! !"all likewi!e be !eparate$ All #one'!. propertie! or !ecuritie! recei(ed b' !uc" bank a! well! a! in(e!t#ent of eac" tru!t !"all be kept p"'!icall' !eparate and di!tinct fro# t"e a!!et! of it! ot"er bu!ine!! and !"all be under t"e :oint cu!tod' of at lea!t 2 per!on! de!ignated b' t"e board of director!$ B$ *n(e!t#ent Li#itation! of a 3ru!t >ntit'

3"e S>1 !"all not regi!ter t"e article! of incorporation and b'/law! or an' a#end#ent t"ereto. of an' tru!t entit'. unle!! acco#panied b' a certificate of aut"orit' i!!ued b' t"e Bangko Sentral$ no article!V$ S"all be appro(ed b' t"e S>1 unle!! acco#panied b' a fa(orable reco##endation of t"e appropriate go(ern#ent agenc' to t"e effect t"at !uc" article! or a#end#ent i! in accordance wit" law$ B 3"e S>1 !"all not accept for filing t"e b'/law! or an' a#end#ent t"ereto$$$ unle!! acco#panied b' a certificate of t"e appropriate go(ern#ent agenc' to t"e effect t"at !uc" b'/law! or a#end#ent! are in accordance wit" law$ +$ -ini#u# 1apitali,ation A tru!t entit' before engaging in !uc" bu!ine!! #u!t co#pl' wit" t"e #ini#u# paid/in capital re4uire#ent deter#ined b' t"e -onetar' Board$ A

2 <

8nle!! ot"erwi!e directed b' t"e in!tru#ent creating t"e tru!t. t"e fund! and ot"er a!!et! ac4uired b' a tru!t entit' !"all be li#ited to loan! or in(e!t#ent! a! #a' be pre!cribed b' law. t"e -onetar' Board or an' court of co#petent :uri!diction$ A!!et! recei(ed in tru!t or in ot"er fiduciar' capacit' !"all be ad#ini!tered in accordance wit" t"e ter#! of t"e in!tru#ent creating t"e tru!t$ Loan! and in(e!t#ent! of t"e fund !"all be li#ited to& 1 >(idence! of indebtedne!! of t"e 2"il!$ And of t"e BS2 and ot"er e(idence! of indebtedne!! or obligation! t"e !er(icing and repa'#ent of w"ic" are full' guaranteed b' t"e Republic 2 Loan! full' guaranteed b' t"e Republic a! to t"e pa'#ent of t"e principal and intere!t < Loan! full' !ecured b' a "old/out on. a!!ign#ent or pledge of depo!it! #aintained eit"er wit" t"e bank proper or ot"er bank!. or of depo!it !ub!titute! of t"e bank. or of #ortgage. c"attel #ort$ *!!ued b' t"e tru!tee F Loan! full' !ecured b' real e!tate or c"attel! in accordance wit" pertinent law! Re4uired !pecific directi(e!& 1 3"e tran!action to be entered into 2 3"e borrower6! na#e < A#ount in(ol(ed F 1ollateral !ecuritie!. if an'$ Real >!tate Ac4uired b' a 3ru!t >ntit' Suc" real e!tate !"all be go(erned b' t"e pro(i!ion! of GBL. under t"e following circu#!tance!& Suc" a! !"all be #ortgaged to it in good fait" b' wa' of !ecurit' for debt!? 2 Suc" a! !"all be con(e'ed to it in !ati!faction of debt! pre(iou!l' contracted in t"e cour!e of it! dealing!? or < Suc" a! it! !"all purc"a!e at !ale! under :udg#ent!. decree!. #ortgage! or tru!t deed! "eld b' it and !uc" a! it !"all purc"a!e to !ecure debt! due it$ An' realt' !"all be di!po!ed of b' t"e bank wit"in a period of G 'ear! or a! #a' be pre!cribed b' t"e -onetar' Board. 2R)P*+>+ t"at t"e bank continue to "old t"e propert' for it! own u!e !ub:ect to t"e ff li#itation!& 1 3"e total in(e!t#ent in !uc" real e!tate and i#pro(e#ent! !"all not e0ceed G0A of co#bined capital acct! 2 3"e e4uit' in(e!t#ent of a bank in anot"er corporation !"all be con!idered a! part of t"e total in(e!t#ent in real e!tate *n(e!t#ent of %on/tru!t 9und! V!"all be go(erned b' GBL and ot"er applicable law! 1

>$

Sanction! and 2enaltie! 3ru!t entit' or an' of it! officer! found to "a(e willfull' (iolated t"e pro(i!ion! of GBL !"all be !ub:ect to !anction! and penaltie! >0e#ption of 3ru!t A!!et! fro# 1lai#! %o a!!et! "eld b' a tru!t entit' in it! capacit' a! tru!tee !"all be !ub:ect to an' clai#! ot"er t"an t"o!e of t"e partie! intere!ted in t"e !pecific tru!t!$ 2ropert' "eld b' t"e in!ol(ent debtor a! tru!tee !"all be e0cluded fro# t"e in!ol(enc' proceeding!$ >!tabli!"#ent of Branc"e! of a 3ru!t >ntit' )rdinar' bu!ine!! /O !"all be tran!acted at t"e place of bu!ine!! !pecified in t"e article! of incorporation 3ru!t entit' !"all be re!pon!ible for all bu!ine!! conducted in !uc" branc"e! a! t"oug" !uc" bu!ine!! "ad all been conducted in t"e "ead office$

A.

Declared Policy of t e State 3"e State !"all #aintain a central #onetar' aut"orit' t"at !"all function and operate a! an independent and accountable bod' corporate in t"e di!c"arge of it! #andated re!pon!ibilitie! concerning #one'. banking and credit$ *n line wit" t"i! polic'. and con!idering it! uni4ue function! and re!pon!ibilitie!. t"e central #onetar' aut"orit' e!tabli!"ed under t"i! Act. w"ile being a go(ern#ent/owned corporation. !"all en:o' fi!cal and ad#ini!trati(e autono#'$

9$

G$

B.

Creatio! of t e BSP: )a!dated $y Sec. 5= Art. 451 KDCB Co!#it%tio!

BS2 / an independent central #onetar' aut"orit'. w"ic" !"all be a bod' corporate (Sec$ 2. %1BA $

E$

Ad(erti!e#ent of Ser(ice! 3ru!t entitie! !"all ad(erti!e t"eir !er(ice! in a dignified #anner and enter !uc" bu!ine!! onl' w"en de#and for !uc" !er(ice i! e(ident. w"en !peciall' e4uipped to render !uc" !er(ice and upon full appreciation of t"e re!pon!ibilitie! in(ol(ed$

1apital Re4uire#ent!& Fifty Billio! Pe#o#. full' !ub!cribed b' t"e Go(ern#ent of t"e 2"ilippine!$ 3en Billion of w"ic" !"all be full' paid for b' t"e Go(ern#ent upon t"e effecti(it' of t"i! Act and t"e balance to be paid for wit"in a period of two (2 'ear! fro# t"e effecti(it' of t"i! Act in !uc" #anner and for# a! t"e Go(ern#ent. t"roug" t"e Secretar' of 9inance and Secretar' of Budget and -anage#ent. #a' t"ereafter deter#ine

1$

*$

-one' of Go(ern#ent Bank! #a' not recei(e or "old a! tru!tee. agent. ad#ini!trator. $ $ $ an' fund or #one' fro# t"e Go(ern#ent and it! entitie!. 2R)P*+>+ t"at go(ern#ent/owned bank! #a' recei(e or "old a! tru!tee t"e following& 1 2 9und! of LG8S w"ic" are e0pected to be a(ailable for in(e!t#ent purpo!e! for a relati(el' long period of ti#e 9und! of go(ern#ent and go(ern#ent and go(ern#ent entitie! w"ic" are aut"ori,ed b' !pecial law! to be placed in tru!t$

2rincipal 2lace of Bu!ine!!& -etro -anila. but #a' #aintain branc"e!. agencie! and corre!pondent! in !uc" ot"er place! a! t"e proper conduct of it! bu!ine!! #a' re4uire$(Sec$ F. %1BA $

C. Re#(o!#i$ility a!d Pri)ary O$,ecti/e of t e BSP

CHAPTER B I T e Ba!&"o Se!tral !& Pili(i!a#

1$ 2$ <$

+$

I. BSP

Creatio!1 re#(o!#i$ilitie# a!d cor(orate (o*er# of t e

to pro(ide polic' direction! in t"e area! of #one'. banking. and credit to !uper(i!e o(er t"e operation! of bank! e0erci!e !uc" regulator' power! a! pro(ided in t"i! Act and ot"er pertinent law! o(er t"e a$ operation! of finance co#panie! and non/bank financial in!titution! perfor#ing 4ua!i/banking function!? and

F$ G$

b$ in!titution! perfor#ing !i#ilar function to #aintain price abilit' conduci(e to a balanced and !u!tainable growt" of t"e econo#'. w"ic" i! t"e pri#ar' ob:ecti(e of t"e Bangko Sentral$ to pro#ote and #aintain #onetar' !tabilit' and t"e con(ertibilit' of t"e pe!o$

Uuri!prudence& B%#%e&o /. CA 3"e Supre#e 1ourt ruled t"at 5*t #u!t be re#e#bered t"at t"e 1entral Bank of t"e 2"ilippine! (now Bangko Sentral ng 2ilipina! . t"roug" t"e -onetar' Board. i! t"e go(ern#ent agenc' c"arged wit" t"e re!pon!ibilit' of ad#ini!tering t"e #onetar'. banking and credit !'!te# of t"e countr' and i! granted t"e power of !uper(i!ion and e0a#ination o(er bank! and non/bank financial in!titution! perfor#ing 4ua!i/banking function! of w"ic" !a(ing! and loan a!!ociation!VQ

pro!ecution of t"o!e alleged (iolator!. 'et Ce find not"ing in !aid law! t"at i#po!e! a clear. !pecific dut' on t"e for#er to do t"e actual pro!ecution of t"e latter$ 3"e 1entral Bank i! a go(ern#ent corporation created principall' to ad#ini!ter t"e #onetar' and banking !'!te# of t"e Republic. not a pro!ecution agenc' like t"e fi!calX! office$ Being an artificial per!on. t"e 1entral Bank i! li#ited to it! !tatutor' power! and t"e neare!t power to w"ic" pro!ecution of (iolator! of banking law! #a' be attributed i! it! power to !ue and be !ued$ But t"i! corporate power of litigation e(identl' refer! to ci(il ca!e! onl'$ -oreo(er. it doe! not appear fro# t"e law t"at onl' t"e 1entral Bank or it! re!pondent official! can cau!e t"e pro!ecution of alleged (iolation! of banking law!$ Said (iolation! con!titute a public offen!e. t"e pro!ecution of w"ic" i! a #atter of public intere!t and "ence. an'one R e(en pri(ate indi(idual! R can denounce !uc" (iolation! before t"e pro!ecuting aut"oritie!$ Since 2ere, "i#!elf could cau!e t"e filing of cri#inal co#plaint! again!t t"o!e allegedl' in(ol(ed in t"e ano#alou! loan!. if an'. t"en "e "a! a plain. ade4uate and !peed' re#ed' in t"e ordinar' cour!e of law. w"ic" #ake! #anda#u! again!t re!pondent! i#proper . 9Pere6 /. +o!etary Board2.

A.

S%(er/i#ory (o*er# of t e BSP ( )ncludes* +%,-.)SC/ = Scope* Jua!i/bank! 3ru!t entitie!. and )t"er financial in!titution! w"ic" under !pecial law! are !ub:ect to BS2 !uper(i!ion$ *!!uance of Rule! of conduct 1onduct E0a#ination to deter#ine co#pliance wit" law! and regulation! O(er!eeing to a!certain t"at law! and regulation! are co#plied wit" Regular In(e!tigation (not oftener t"an once a 'ear *n4uiring into t"e Sol(enc' and li4uidit' of t"e in!titution >nforcing pro#pt Correcti(e action$

D. Cor(orate Po*er# of t e BSP BSP /. R%ral Ba!" of Sa! +i&%el Bangko Sentral i! "ereb' aut"ori,ed to& SCP'SPA. BS2 and #e#ber! of t"e -onetar' Board !"ould not be i#pleaded a! partie! to a ca!e in co#pliance wit" !ection B. rule F< of t"e 1997 rule! of procedure$ C. E#to((el B. T e BSP # all ( a#e o%t a!d tra!#fer it# #%(er/i#i!& a!d re&%latory (o*er# o/er $%ildi!& a!d loa! a##ociatio!# to t e Ho)e I!#%ra!ce a!d G%ara!ty Cor(oratio! * ic # all a##%)e t e #a)e.

1$ 2$ <$ F$ G$ B$

7$

adopt. alter. and u!e a corporate #eal w"ic" !"all be :udiciall' noticed? enter into contract!? lea!e or own real and per!onal (ropert'. and to !ell or ot"erwi!e di!po!e of t"e !a#e? #ue and be !ued? do and perfor# an' and all t"ing! t"at #a' be nece!!ar' or proper to carr' out t"e (urpo!e! of t"i! Act$ ac4uire and "old !uc" a!!et! and incur !uc" liabilitie! in connection wit" it! operation! aut"ori,ed b' t"e pro(i!ion! of t"i! Act. or a! are e!!ential to t"e proper conduct of !uc" operation!$ co#pro#i!e. condone or relea!e. in w"ole or in part. an' clai# of or !ettled liabilit' to t"e Bangko Sentral. regardle!! of t"e a#ount in(ol(ed. under !uc" ter#! and condition! a! #a' be pre!cribed b' t"e -onetar' Board to protect t"e intere!t! of t"e Bangko Sentral$

Policy Directio!#@ Ratio#1 Ceili!&# a!d .i)itatio!# ( Shall be provided b' the 0SP in the areas of* -one' Banking 1redit

Uuri!prudence& 3"e 1entral Bank of t"e 2"ilippine! i! dul' co##itted to #aintain t"e !tabilit' of t"e countr'X! foreign e0c"ange re!er(e po!ition$ 8nderl'ing t"i! co##it#ent. "owe(er. i! t"e go(ern#entX! !trict and fait"ful ad"erence to ba!ic principle! of fairne!! and decenc' under t"e Bill of Rig"t!$ Eence. 1B circular!M#e#oranda #u!t be i#ple#ented in a #anner t"at would not onl' !afeguard or "ar#oni,e t"e# wit" go(ern#ent progra#! de!igned to uplift or pro#ote t"e countr'X! le(el of production and e#plo'#ent. but at t"e !a#e ti#e a(oid irreparable or gra(e pre:udice to participant! of !aid progra#$ 3"u!. bank!Mbanking in!titution! alread' fait"full' co#plied wit" t"e BS26! directi(e!. BS2 i! e!topped fro# enforcing circular! t"at would den' bank! or banking in!titution of t"eir rig"t!. 9Ce!tral Ba!" of t e P ili((i!e# /. IAC2

( 1onetar' board ma'* 2re!cribe ratio!. ceiling!. li#itation! or ot"er for#! of regulation on t"e diff$ t'pe! of account! and practice! of bank! and 4ua!i/bank! w"ic" !"all. to t"e e0tent fea!ible. confor# to t"e internationall' accepted !tandard!. including t"o!e of t"e Bank for *nternational Settle#ent!$ >0e#pt particular categorie! of tran!action! fro# !uc" ration!. ceiling! and li#itation!. but not li#ited to e0ceptional ca!e! or to enable a bank or 4ua!i/bank under re"abilitation or during a #erger or con!olidation to continue in bu!ine!! wit" !afet' to it!

Uuri!prudence& Po*er to (ro#ec%te: 1>%3RAL BA%I? %) 2)C>R 3) 2R)S>183> P*)LA3)RS )9 BA%I*%G LACS$ R Alt"oug" t"e 1entral Bank and it! re!pondent official! #a' "a(e t"e dut' under t"e 1entral Bank Act and t"e General Banking Act to cau!e t"e II. A%t ority of t e BSP

creditor!. depo!itor! and t"e general public$

III. T e +o!etary Board

/ 3"e bod' t"roug" w"ic" t"e power! and function! of t"e BS2 are e0erci!ed$

3. A. Co)(o#itio! Se(en (7 #e#ber! appointed b' t"e 2re!ident of t"e 2"ilippine! for a ter# of B 'r! con!i!ted of& 1$ 2$ <$ A 1"air#an& Go(ernor of t"e BS2? A #e#ber of t"e cabinet to be de!ignated b' t"e 2re!ident of t"e 2"ilippine!? and 9i(e (G #e#ber! w"o !"all co#e fro# t"e pri(ate !ector. all of w"o# !"all !er(e fullti#e$ 4.

5.

B.

0aca!cie# ' an' (acanc' in t"e #onetar' board created b' deat". re!ignation. or re#o(al of an' #e#ber !"all be filled b' t"e appoint#ent of a new #e#ber to co#plete t"e une0pired period of t"e ter# of t"e #e#ber concerned$ 6.

con!ultant. law'er. agent or !tock"older of an' bank. 4ua!i/bank or an' ot"er in!titution w"ic" i! !ub:ect to !uper(i!ion or e0a#ination b' t"e BS2(in w"ic" ca!e !uc" #e#ber !"all re!ign fro#. and di(e!t "i#!elf of an' and all intere!t! in !uc" in!titution before a!!u#ption of office a! #e#ber of t"e -onetar' Board $ 3"e #e#ber! of t"e -onetar' Board co#ing fro# t"e pri(ate !ector !"all not "old an' ot"er public office or public e#plo'#ent during t"eir tenure? %o per!on !"all be a #e#ber of t"e -onetar' Board. if "e "a! been connected directl' wit" t"e #ultilateral banking or financial in!titution? "a! a #ub!tantial intere!t in an' pri(ate bank in t"e 2"il!. wit"in one 'ear prior to "i! appoint#ent? e#plo'ed in an' !uc" in!titution wit"in 2 'r! after t"e e0piration of "i! ter# e0cept w"en "e !er(e! a! an official repre!entati(e of t"e 2"ilippine Go(ern#ent to !uc" in!titution$

oppo!ed to t"e ai#! and intere!t! of t"e Bangko Sentral? or F$ *f t"e #e#ber !o longer po!!e!!e! t"e 4ualification! !pecified in Section 8 of t"i! Act$ F. +eeti!&#1 E%or%)1 Deci#io!# a!d Proceedi!&# of t e +o!etary Board 1. 3"e -onetar' Board !"all #eet at lea!t once a week$ 3"e Board #a' be called to a #eeting b' t"e Go(ernor of t"e Bangko Sentral or b' two (2 ot"er #e#ber! of t"e Board$ 2. 3"e pre!ence of four (F #e#ber! !"all con!titute a 4uoru#& 2ro(ided. 3"at in all ca!e! t"e Go(ernor or "i! dul' de!ignated alternate !"all be a#ong t"e four (F $ 8nle!! ot"erwi!e pro(ided in t"i! Act. all deci!ion! of t"e -onetar' Board !"all re4uire t"e concurrence of at lea!t four (F #e#ber!$

3.

C.

E%alificatio!# of )e)$er# of t e )o!etary $oard: 9CA'CIPE2 1. %atural born Citi,en! of t"e 2"ilippine!? 2. at lea!t <G 'ear! of age. wit" t"e e0ception of t"e Go(ernor w"o !"ould at lea!t be F0 'r! of age? 3. of good #oral c"aracter? 4. of un4ue!tionable integrit'? 5. of known (robit' and patrioti!#? 6. wit" recogni,ed co#petence in !ocial and econo#ic di!cipline!$

E.

Gro%!d# for t e re)o/al of +o!etary Board +e)$er# 9SIGN2 ' 2he President ma' remove an' member of the 1onetar' 0oard for an' of the followin3 reasons* 1$ *f t"e #e#ber i! #ub!e4uentl' di!4ualified under t"e pro(i!ion! of Section 8 of t"i! Act? (t"i! i! a t'po error$ *t !"ould refer to Section 9 of t"e %1BA 2$ *f "e i! p"'!icall' or #entall' incapacitated t"at "e cannot properl' di!c"arge "i! dutie! and re!pon!ibilitie! and !uc" incapacit' "a! la!ted for #ore t"an !i0 (B #ont"!? or <$ *f t"e #e#ber i! &uilt' of act! or operation! w"ic" are of fraudulent or illegal c"aracter or w"ic" are #anife!tl'

F. +eeti!&#1 E%or%)1 Deci#io!# a!d Proceedi!&# i! +o!etary Board a$ #eet at lea!t once a week. #a' be called b' it! go(ernor or 2 ot"er #e#ber! b$ F #e#ber! !"all con!titute 4uoru# pro(ided t"at in all ca!e! t"e go(ernor or de!ignated alternati(e !"all be a#ong t"e F c$ unle!! ot"erwi!e pro(ided in %1BA. ALL +>1*S*)%S )9 3E> -onetar' Board !"all re4uire concurrence of at lea!t F #e#ber!

D.

Di#3%alificatio!# of +o!etary Board +e)$er#: 9DDE'CSE2 1. Di!4ualification! i#po!ed b' RA %o$ B71<? 2. +i!4ualified fro# being a director. officer. e#plo'ee.

%ote& in t"e following ca!e!. (ote of at lea!t G #e#ber! i! re4uired&

1$

2$

<$

F$

Sec$ B1. GBL/ 28BL*1A3*)% )9 9*%A%1*AL S3A3>->%3 (e(er' bank. 4ua!i/bank or tru!t entit' !"all publi!" a !tate#ent of it! financial condition!. including !ub!idiarie! and affiliate! 000? t"e Bangko Sentral #a' pre!cribe t"e new!paper !"all be publi!"ed? t"e #onetar' board #a' al!o allow po!ting of t"e financial !tate#ent in public place! in lieu of publication? bank! !"all #ake a(ailable al!o in !etting t"e audited financial !tate#ent and rele(ant infor#ation t"at will infor# t"e public of t"e true financial condition of t"e bank? and in period! of national or local e#ergenc'. w"ic" directl' t"reaten t"e #onetar' board. b' a (ote of at lea!t G #e#ber! #a' allow t"e bank to defer financial condition re4uired t"erein Sec$ 28. %1BA/ >;A-*%A3*)% A%+ 9>>S (t"e !uper(i!ing and e0a#ining depart#ent "ead. per!onall' or b' deput'. !"all e0a#ine t"e book! of e(er' banking in!titution once in e(er' 12 #ont"!. and at !uc" ot"er ti#e! a! #at be pre!cribed b' t"e #onetar' board b' an affir#ati(e (ote of G #e#ber! pro(ided t"at t"ere !"all be an inter(al of 12 #ont"! between annual e0a#ination Sec$ 17. %1BA/ >->RG>%1K R>S3R*13*)%S )% >;1EA%G> )2>RA3*)%S (in order to ac"ie(e pri#ar' ob:ecti(e! of t"e Bangko Sentral or protect international re!er(e! of t"e BS in t"e i##inence of or during an e0c"ange cri!i! take con!tructi(e #ea!ure! to co#bat t"e cri!i! wit" t"e concurrence of G #e#ber!. #a' te#poraril' re!trict or !u!pend !ale! of e0c"ange? pro(ided t"at foreign currenc' depo!it! #ade under RA BF2B !"all be e0e#pted fro# t"i! re4uire#ent Sec$ 8F. %1BA/ >->RG>%1K L)A%S A%+ A+PA%1>S (*% 2>R*)+S )9 L)1AL A%+ %A3*)%AL >->RG>%1K )R *--*%>%3 9*%A%1*AL 2A%*1 CE*1E +*R>13LK 3ER>A3>% BA%I*%G S3AB*L*3K. 3E> -)%>3ARK B)AR+ #a' aut"ori,e Banko Sentral to grant e0traordinar' loan! or ad(ance! to banking in!titution! !ecured b' a!!et! pro(ided t"at debtor in!titution !"all not e0cept upon prior aut"ori,ation of t"e Board. e0pand t"e total (olu#e of it! loan!$ 3"e -B #a' al!o aut"ori,e t"e banko !entral to grant e#ergenc' loan! for purpo!e! o! a!!iting t"e bank wit" it! financial condition broug"t b' unfore!een e(ent! and a!certain t"at !uc" bank i! not in!ol(entand "a! a!!et! to !ecure ad(ance!$ 3"e loan ad(anced !"all not e0ceed G0A of total depo!it! and !"all be di!bur!ed in 2 or #ore trance!

Board a!d # all retire fro) t e )eeti!& * e! t e )atter i# ta"e! %(. T i# i# i! order to %( old t e ti)e' o!ored (ri!ci(le of (%$lic office a# a (%$lic tr%#t. *n addition to t"e re4uire#ent! of RA %o$ B71<. an' #e#ber of t"e -onetar' Board wit" per!onal or pecuniar' intere!t in an' #atter in t"e agenda of t"e -onetar' Board& a) b) c) d) !"all di!clo!e "i! in intere!t to t"e Board? and !"all retire fro# t"e #eeting w"en t"e #atter i! taken up t"e deci!ion taken on t"e #atter !"all be #ade public t"e #inute! !"all reflect t"e di!clo!ure #ade and t"e retire#ent of t"e #e#ber concerned fro# t"e #eeting! d G. Sco(e of A%t ority of t e +o!etary Board 9IDEA'I2 a i!!ue rule! and regulation! (t"e rule! and regulation! i!!ued !"all be reported to t"e 2re!ident and t"e 1ongre!! wit"in fifteen (1G da'! fro# t"e date of t"eir i!!uance b direct #anage#ent. operation!. and ad#ini!tration of t"e Bangko Sentral. reorgani,e it! per!onnel. and i!!ue !uc" rule! and regulation! a! it #a' dee# nece!!ar' or con(enient for t"i! purpo!e e!tabli!" "u#an re!ource !'!te# (!uc" !'!te# !"all ai# to e!tabli!" profe!!ionali!# and e0cellence at all le(el! of t"e Bangko Sentral in accordance wit" !ound principle! of #anage#ent (i a co#pen!ation !tructure ba!ed on :ob e(aluation !tudie! and wage !ur(e'! and !ub:ect to t"e Board6! appro(al !"all be in!tituted a! an integral co#ponent of t"e Bangko Sentral6! "u#an re!ource! de(elop#ent progra#$ e

-onetra' Board !"all "a(e e0clu!i(e and final aut"orit' to pro#ote. tran!fer. a!!ign. or rea!!ign per!onnel of t"e Bangko Sentral and t"e!e per!onnel action! are dee#ed #ade in t"e intere!t of t"e !er(ice not di!ciplinar' #a' delegate !uc" aut"orit' to t"e Go(ernor under !uc" guideline! a! it #a' deter#ine adopt an annual budget for and aut"ori,e !uc" e0penditure! b' t"e Bangko Sentral inde#nif' it! #e#ber! and ot"er official! of t"e Bangko Sentral again!t all co!t! and e0pen!e! rea!onabl' incurred b' !uc" per!on in connection wit" an' ci(il or cri#inal action. !uit!. or proceeding! to w"ic" "e #a' be. or i!. #ade a part' b' rea!on of t"e perfor#ance of "i! function! or dutie!. unle!! "e i! finall' ad:udged in !uc" action or proceeding to be liable for negligence or #i!conduct (i in t"e e(ent of a !ettle#ent or co#pro#i!e. inde#nification !"all be pro(ided onl' in connection wit" !uc" #atter! co(ered b' t"e !ettle#ent a! to w"ic" t"e Bangko Sentral i! ad(i!ed b' e0ternal coun!el t"at t"e per!on to be inde#nified did not co##it an' negligence or #i!conduct$ 3"e co!t! and e0pen!e! incurred in defending t"e afore#entioned action. !uit or proceeding #a' be paid b' t"e Bangko Sentral in ad(ance of t"e final di!po!ition of !uc" action. !uit or proceeding upon receipt of an undertaking b' or on be"alf of t"e #e#ber. officer. or e#plo'ee to repa' t"e a#ount ad(anced !"ould it ulti#atel' be deter#ined b' t"e -onetar' Board t"at "e

(ii

G. De(%ty Go/er!or# )ay atte!d +eeti!&# of t e +o!etary Board *it ri& t to $e eard

co#pen!ation and wage !tructure of e#plo'ee! w"o!e po!ition! fall under !alar' grade 19 and below !"all be in accordance wit" t"e rate! pre!cribed under RA %o$ B7G8 (1o#pen!ation and 2o!ition 1la!!ification Act of 1989 $

H. Salarie# of t e Go/er!or a!d )e)$er# of t e +o!etary Board SHA.. BE FIHED B? THE Pre#ide!t of t e P ili((i!e# at a #%) co))e!#%rate to t e i)(orta!ce a!d re#(o!#i$ility attac ed to t e (o#itio!

(ii

I. Per#o!al or Pec%!iary I!tere#t 9DR'PR2' . Per#o!al or (ec%!iary i!tere#t $y a!y )e)$er of t e +o!etary Board # all di#clo#e i# i!tere#t to t e

Go(ernor 7 on it! reco##endation. can appoint. fi0 t"e re#uneration! and ot"er e#olu#ent!. and re#o(er per!onnel of t"e Bangko Sentral. !ub:ect to pertinent ci(il !er(ice law!

%ote& 3"e Supre#e 1ourt in t"e ca!e 1entral Bank >#plo'ee! A!!ociation. *nc$ ($ Bangko Sentral ng 2ilipina! and

t"e >0ecuti(e Secretar' declared t"e foregoing pro(i!ion Sparticularl' ite# (c uncon!titutionalT uncon!titutional for being (iolati(e of t"e e4ual protection clau!e$ (!ee page <0F

=an' data or infor#ation re4uired to be !ub#itted to t"e 2re!ident andMor t"e congre!!. or to be publi!"ed under t"e pro(i!ion! of t"e %1BA !"all not be con!idered confidential

2$ <$ F$

!ign contract! entered into b' t"e BS2. note! and !ecuritie! i!!ued b' t"e BS2. all report!. balance !"eet!. profit and lo!! !tate#ent!. corre!pondence and ot"er docu#ent! repre!ent t"e BS. per!onall' or t"roug" coun!el. a! aut"ori,ed b' t"e -B. in an' legal proceeding!. action or !peciali,ed legal !tudie! delegate "i! power to repre!ent t"e BS a! pro(ided in 1/< to ot"er officer! upon "i! own re!pon!ibilit'

I0. T e Go/er!or a!d De(%ty Go/er!or# of t e Ba!&"o Se!tral

S>1 18. %1BA 7 A per#anent negotiator #a' take t"e place of t"e Go(ernor in preli#inar' di!cu!!ion! wit" an' #ultilateral banking or financial in!titution! on an' negotiation! for t"e Go(6t wit"in or out!ide t"e 2"ilippine! in order to pre!er(e t"e integrit' and pre!tige of "i! office$

K. Re#(o!#i$ility of +e)$er# of t e +o!etary Board1 Official1 E-a)i!er#1 a!d E)(loyee# of t e Ba!&"o Se!tral

A.

Po*er# a!d D%tie# of t e Go/er!or 9CEO PEDARE2

>#ergencie!

Go(ernor c"ief e0ec officer of t"e BS2 principal repre!entati(e of t"e -B and t"e BS2

*n ca!e of e#ergencie!

(i

(ii

if an'one of t"e# willfull' (iolate %1BA or w"o i! guilt' of negligence. abu!e. or act! of #alfea!ance or #i!fea!ance of fail! to e0erci!e e0traordinar' diligence in t"e perfor#ance of "i! dutie! !"all be "eld liable for an' lo!! or in:ur' !uffered b' t"e Bangko Sentral or ot"er banking in!titution! a! a re!ult of !uc"& a) (iolation b) negligence c) abu!e d) #alfea!ance e) #i!fea!ance? or f) failure to e0erci!e e0traordinar' diligence (P%A--9e !i#ilar re!pon!ibilit' !"all appl' to #e#ber!. officer!. and e#plo'ee! of t"e Bangko Sentral for& (a t"e di!clo!ure of an' infor#ation of a confidential nature. or an' infor#ation on t"e di!cu!!ion or re!olution of t"e -onetar' Board or about t"e confidential operation! of t"e Bangko Sentral. unle!! t"e di!clo!ure i! in connection wit" t"e perfor#ance of official function! wit" t"e Bangko Sentral. or i! wit" prior aut"ori,ation of t"e -onetar' Board or t"e Go(ernor? or (b t"e u!e of !uc" infor#ation for per!onal gain ir t"e detri#ent of t"e Go(ern#ent. t"e bangko Sentral of t"ird partie!

2ower! and +utie!& 1$ 2$ <$ F$ G$ prepare t"e agenda for t"e #eeting! of t"e -B and !ub#it policie! and #ea!ure! w"ic" "e belie(e! are nece!!ar' to carr' out t"e purpo!e! and pro(i!ion! of t"e %B1A? e0ecute and ad#ini!ter t"e policie! and #ea!ure! appro(ed b' t"e -B? direct and !uper(i!e t"e operation! and internal ad#ini!tration of t"e Bangko Sentral? appoint and fi0 t"e re#uneration! and ot"er e#olu#ent! of per!onnel below t"e rank of a depart#ent "ead in accordance wit" t"e po!ition and co#pen!ation plan! appro(ed b' t"e -B render opinion!. deci!ion!. or ruling!. w"ic" !"all be final and e0ecutor' until re(er!ed or #odified b' t"e -B. on #atter! regarding applicationMenforce#ent of law! pertaining to in!titution! !uper(i!ed b' t"e BS2 and law! pertaining to 4ua!i bank! e0erci!e !uc" power! a! #a' be (e!ted in "i# b' t"e -B$

and it i! !ufficient to call for a #eeting of t"e -B. t"e Go( of t"e BS N concurrence of 2 ot"er -onetar' Board #e#ber! @ decide on an' #atter or take an' action wit"in t"e aut"orit' of t"e Board$ 3"e Go( !"all !ub#it a report to t"e 2re! and 1ongre!! wit"in 72 "our! after t"e action "a! been taken$ At t"e !oone!t po!!ible ti#e. t"e Go( !"all call a #eeting of t"e -B to !ub#it "i! action for ratification$

Li#itation! on )ut!ide *ntere!t! of t"e Go( and t"e 9ull/ti#e -e#ber! of t"e Board

B$

2ower! of t"e Go(ernor a! Repre!entati(e of -onetar' Board and BS2

1$

repre!ent t"e -B and BS2 in all dealing! wit" ot"er office!. agencie! and in!tru#entalitie! of t"e Go(6t and all ot"er per!on! or entitie!. public or pri(ate. do#e!tic. foreign or international?

li#it t"eir profe!!ional acti(itie! to t"o!e pertaining directl' to t"eir po!ition! wit" t"e BS$ GR& accept no ot"er e#plo'#ent. public or pri(ate. re#unerated or ad "ore# >;2& po!ition! in o >lee#o!'nar' o 1i(ic org o Religiou! org o 1ultural org o +e!ignation of t"e 2re!. Go(. o Repre!entation of a fullti#e #e#ber of t"e intere!t of t"e Go(t or ot"er go(t agencie! in #atter! connected wit" t"e econo#'Mfinancial !'!te# of t"e countr'

+eput' Go(ernor! not #ore t"an t"ree +83K& a!!igned b' t"e Go( and board +>283K G)P 7 de!ignated b' t"e Go( !"all take t"e place of t"e latter in "i! dutie! and re!pon!ibilitie! w"en t"e !a#e i! ab!ent depart#ent "ead!Me0a#iner! "a(e t"e following !uper(i!or' aut"orit' o ad#ini!tration of oat"! to an' director. officer. or e#plo'ee of an' in!titution under t"eir re!pecti(e !uper(i!ion or !ub:ect to t"eir e0a#ination o co#pel t"e pre!entation of all book!. docu#ent!. paper! or record! nece!!ar' in t"eir :udg#ent B. Pro i$itio! A&ai!#t Per#o!!el of t e Ba!&"o Se!tral *n addition to t"e (ro i$itio!# found in RA <019 and B71<. per!onnel of t"e Bangko Sentral are pro"ibited fro# (P'ORRB2

(1

0. O(eratio!# of t e Ba!&"o Se!tral

Re!training )rder or *n:unction re!training order! can onl' be i!!ued w"en t"ere i! con(incing proof t"at t"e action of t"e BS i! plainl' arbitrar' and #ade in bad fait" and t"e petitioner or plaintiff file! wit" t"e clerk or :udge of t"e court in w"ic" t"e action i! pending a bond e0ecuted in fa(or of t"e BS. in an a#t fi0ed b' t"e 1ourt$

Re!earc" and Stati!tic! of t"e BS

(2

BS prepare data o balance of 2"ilippine pa'#ent! o !tati!tic! on t"e #ont"l' #o(e#ent of t"e #onetar' aggregate! o price! and ot"er !tati!tical !erie! and econo#ic !tudie! u!eful for t"e for#ulation and anal'!i! of #onetar'. banking. credit and e0c"ange policie!$ conduct econo#ic re!earc" to guide t"e -B in it! for#ulation and i#ple#entation of policie! 0I. Director1 Officer or Stoc" older1 A!d Related I!tere#t (< A. Co!tracti!& .oa!# (i An' director. officer or !tock"older w"o toget"er wit" "i! related intere!t. contract! a loan or an' for# of financial acco##odation fro#& (1 "i! bank? or (2 fro# a bankR w"ic" i! a #%$#idiary of a bank "olding co#pan' of w"ic" bot" "i! bank and t"e lending bank are !ub!idiarie!. or in w"ic" a co!trolli!& (ro(ortio! of t e # are# i! owned b' t"e !a#e intere!t t"at own! a controlling proportion of t"e !"are! of "i! bank. in e0ce!! of fi(e percent (GA of t"e capital and !urplu! of t"e bank. or in t"e #a0i#u# a#ount per#itted b' law. w"ic"e(er i! lower.

S1)2> and A83E)R*3K )9 BS 3) )B3A*% +A3A A%+ *%9)

(F

re4ue!t fro# G)*MG)11 data needed for t"e proper di!c"arge of t"eir office !ubpoena production of !aid book! in ca!e of non/co#pliance data on fir#! and ot"er bank! are e0clu!i(el' for t"e pur(iew of t"e BS2 e0p a! per court order or condition! pre!cribed b' t"e -B

Scope and Super(i!ion and >0a#ination b' t"e Bangko Sentral

# all $e re3%ired $y t e le!di!& $a!" to *ai/e t e #ecrecy of i# de(o#it# of w"ate(er nature in all bank! in t"e 2"ilippine!$

BS "a! !uper(i!ion o(er and conduct periodic or !pecial e0a#ination! of. banking in!titution! and 4ua!i/bank!. including t"eir !ub!idiarie! and affiliate! engaged in allied acti(itie!$ o S8BS*+*ARK 7 #ore t"an G0A of t"e (oting !tock i! owned b' t"e bank or 4ua!i/bank o A99*L*A3> 7 G0 A or le!! i! owned b' bank or 4ua!i/ bank

(ii An' infor#ation obtained fro# an e0a#ination of "i! depo!it! !"all be "eld !trictl' confidential and #a' be u!ed b' t"e e0a#iner! onl' in connection wit" t"eir !uper(i!or' and e0a#ination re!pon!ibilit' or b' t"e BS2 in an appropriate legal action it "a! initiated in(ol(ing t"e depo!it account$

being an officer 000. directl' or indirectl'. of an' in!titution !ub:ect to !uper(i!ion or e0a#ination b' t"e Bangko Sentral. e0cept non/!tock !a(ing! and loan a!!ociation! and pro(ident fund! organi,ed e0clu!i(el' for e#plo'ee! of t"e Bangko Sentral. and e0cept a! ot"erwi!e pro(ided in t"e %1BA? directl' or indirectl' re3%e#ti!& or recei/i!& a!y &ift 000 for "i#!elf or for anot"er. fro# an' in!titution !ub:ect to !uper(i!ion or e0a#ination b' t"e Bangko Sentral? re/eali!& in an' #anner. e0cept under order! of t"e court. t"e 1ongre!! or an' go(ern#ent office or agenc' aut"ori,ed b' law. or under !uc" condition! a! #a' be pre!cribed b' t"e -onetar' Board. infor#ation relating to t"e condition or bu!ine!! of an' in!titution$ 3"i! pro"ibition !"all not be "eld to appl' in t"e gi(ing of infor#ation to t"e -onetar' Board or t"e go(ernor of t"e Bangko Sentral. or to an' per!on aut"ori,ed b' eit"er of t"e#. in writing. to recei(e !uc" infor#ation? and $orro*i!& fro# an' in!titution !ub:ect to !uper(i!ion or e0a#ination b' t"e Bangko Sentral !"all be pro"ibited %!le## said borrowin& are adequately secured" fully disclosed to the 7onetary )oard" and shall be subject to such further rules and re&ulations as the 7onetary )oard may prescribe: /ro1ided" howe1er" That personnel of the super1isin& and e9aminin& departments are prohibited from borrowin& from a bank under their supervision or e amination +sec.45, NC06/

0II E-a)i!atio! of Ba"i!& I!#tit%tio!#

9re4uenc' of >0a#ination once e(er' 12#ont"! and a! appro(ed b' t"e -onetar' Board wit" t"e affir#ati(e (ote of G per!on! done b' t"e !uper(i!ingMe0a#ining board

3"e -onetar' board !"all publi!" and !ub#it t"e ff report! to t"e 2re!ident and 1ongre!!& An anal'!i! of econo#ic and financial de(elop#ent! N condition of net international re!er(e! and #onetar' aggregate! (not later t"an 90 da'! after t"e end of eac" 4uarter 3"e preceding 'ear6! budget and profit and lo!! !tate#ent of t"e BS2 !"owing in rea!onable detail t"e re!ult of it! operation! (wMin 90 da'! after t"e end of 'ear Re(iew of t"e !tate of financial !'!te# (120 da'! after end of eac" !e# A! !oon a! practicable. abnor#al #o(e#ent! in #onetar' aggregate! and t"e general price le(el. and. not later t"an 72 "r! after t"e' are taken. re#edial #ea!ure! in re!pon!e to !uc" abnor#al #o(e#ent!

F$

-ont"l' indice! of con!u#er price! and of i#port and e0port price! -ont"l' #o(e#ent in !u##ar' for#. of e0port! and i#port! b' (olu#e and (alue -ont"l' #o(e#ent of t"e account! of t"e BS2 and ot"er bank! 2rincipal data on go(ern#ent receipt! and e0penditure! and on t"e !tatu! of t"e public debt bot" do#e!tic and foreign 3e0t! of #a:or legal and ad#in #ea!ure! adopted b' t"e go(ern#ent and t"e #onetar' board during t"e 'ear wMc relate to t"e function! or operation! of BS2 or of t"e financial !'!te#

G$

B$

Affording )pportunit' to >0a#ine Sec 28 of %B1A

7$

Ser(ice 9ee! / Bank or 4ua!i/bank! !"all pa' t"e BS wit"in t"e fir!t <0 da'! of eac" 'ear. an annual fee in an a#ount e4ual to a percentage a! #a' be pre!cribed b' t"e -B of it! a(erage total a!!et! during t"e preceding 'ear a! !"own on it! end/#ont" balance !"eet! after deducting 1)E and a#ount! due fro# bank!$

8$

3"e BS2 SEALL 28BL*SE A%)3E>R P>RS*)% )9 3E> A%%8AL R>2)R3 *% 3>R-S 8%+>RS3A%+ABL> 3) 3E> LAK-A%$ 9A*L8R> 3) 1)-2LK wit" t"e reportorial re4uire#ent! pur!uant to t"i! article wMo :u!tifiable rea!on a! #a' be deter#ined b' t"e #onetar' board !"all cau!e t"e wit""olding of t"e !alar' of t"e per!onnel concerned until t"e re4uire#ent! are co#plied wit" (!ec F0 D. Si&!at%re# o! #tate)e!t# Balance !"eet! and ot"er financial !tate#ent! of t"e BS2 !"all be !igned b' officer! re!pon!ible for t"eir preparation. b' t"e go(ernor. and b' t"e auditor of t"e Bangko Sentral (!ec F1 %1BA IH I PROFITS1 .OSSES1 AND SPECIA. ACCOUNTS A$ 9i!cal 'ear @ !"all begin on Uan 1 and end on +ec <1 of eac" 'ear (S>1 F2 %1BA 1o#putation of profit! and lo!!e! Cit"in t"e fir!t <0 da'! ff t"e end of eac" 'ear. t"e BS2 !"all deter#ine it! net profit! or lo!!e!$ *n t"e calculation of net profit!. it !"all #ake ade4uate allowance or e!tabli!" ade4uate re!er(e! for bad and doubtful account! (!ec F< 1$ +i!tribution of net profit! wMin t"e fir!t B0 da'! ff t"e end of eac" fi!cal 'ear. t"e #onetar' board !"all deter#ine and carr' out t"e di!tribution of t"e net profit!. in accordance wit" t"e ff rule&

0III '' AD+INISTRATION A. O(erati!& de(art)e!t# of t e BSP C. A!!%al re(ort of t e BSP C"en& before t"e end of -arc" of eac" 'ear 3"e #onetar' board !"all. in accordance wit" it! aut"orit' under t"e %1BA. deter#ine and pro(ide for !uc" operating depart#ent! and ot"er office!. including a public infor#ation office. of t"e BS2 a! it dee#! con(enient for t"e proper and efficient conduct of t"e operation! and t"e acco#pli!"#ent of t"e ob:ecti(e! of t"e BS2$ C"at& Annual Report on t"e 1ondition of t"e BS2 N a re(iew on t"e policie! and #ea!ure! adopted b' t"e -onetar' Board during t"e pa!t 'ear N anal'!i! of econo#ic and financial circu#!tance! wMc ga(e ri!e to !aid policie! 9or w"o#& 2re!ident and 1ongre!! (!ec <8 %1BA 3"e function! and dutie! of !uc" operating depart#ent! and ot"er office! !"all be deter#ined b' t"e #onetar' board$

S"all al!o include !tate#ent of t"e financial condition of t"e BS2 and !tati!tical appendi0 wMc !"all pre!ent AS A -*%*-8- t"e ff data&

B$

B.

Re3%ired re(ort# a!d (%$licatio!# of t e BSP 1$ 2ubli!" a general balance !"eet !"owing t"e (olu#e and co#po!ition of it! a!!et! and liabilitie! a! of t"e la!t working da' of t"e #ont" wMin B0 da'! after t"e end of eac" #ont" (e0cept for +ece#ber @ to be !ub#itted wMin 90 da'! after t"e end t"ereof $ -ont"l' #o(e#ent of #onetar' aggregate! and t"eir co#ponent! -ont"l' #o(e#ent of purc"a!e! and !ale! of foreign e0c"ange and of t"e international re!er(e! of BS2 3"e balance of pa'#ent! of t"e 2"il!

2$

<$

G0A of t"e net profit! !"all be carried to !urplu! 3"e re#aining G0A !"all re(ert back to t"e %ational 3rea!ur'. e!cept a! ot"erwi!e pro(ided in t"e tran!itor' pro(i!ion! of t"e %1BA (!ec FF

+$

Re(aluation profit! and lo!!e! Sectio! :>. ,e1aluation /rofits and 2osses# / 2rofit! or lo!!e! ari!ing fro# an' re(aluation of t"e Bangko SentralX! net a!!et! or liabilitie! in gold or foreign currencie! wit" re!pect to t"e 2"ilippine pe!o !"all not be included in t"e co#putation of t"e annual profit! and lo!!e! of t"e Bangko Sentral$ An' profit! or lo!!e! ari!ing in t"i! #anner !"all be off!et b' an' a#ount! w"ic". a! a con!e4uence of !uc" re(aluation!. are owed b' t"e 2"ilippine! to an' international or regional intergo(ern#ental financial in!titution of w"ic" t"e 2"ilippine! i! a #e#ber or are owed b' t"e!e in!titution! to t"e 2"ilippine!$ An' re#aining profit or lo!! !"all be carried in a !pecial fro,en account w"ic" !"all be na#ed YRe(aluation of *nternational Re!er(eY and t"e net balance of w"ic" !"all appear eit"er a#ong t"e liabilitie! or a#ong t"e a!!et! of t"e Bangko Sentral. depending on w"et"er t"e re(aluation! "a(e produced net profit! or net lo!!e!$

Sectio! :B. $ppointment and /ersonnel# / 3"e 1"air#an of t"e 1o##i!!ion on Audit !"all act a! t"e e0 officio auditor of t"e Bangko Sentral and. a! !uc". "e i! e#powered and aut"ori,ed to appoint a repre!entati(e w"o !"all be t"e auditor of t"e Bangko Sentral and. in accordance wit" law. fi0 "i! !alar'. and to appoint and fi0 !alarie! and nu#ber of per!onnel to a!!i!t !aid repre!entati(e in "i! work$ 3"e !alarie! and ot"er e#olu#ent! !"all be paid b' t"e 1o##i!!ion$ 3"e auditor of t"e Bangko Sentral and per!onnel under "i# #a' be re#o(ed onl' b' t"e 1"air#an of t"e 1o##i!!ion$ 3"e repre!entati(e of t"e 1"air#an of t"e 1o##i!!ion #u!t be a certified public accountant wit" at lea!t ten (10 'ear! e0perience a! !uc"$ %o relati(e of an' #e#ber of t"e -onetar' Board or t"e 1"air#an of t"e 1o##i!!ion wit"in t"e !i0t" degree of con!anguinit' or affinit' !"all be appointed !uc" repre!entati(e$ H. Pe!alty for 0iolatio!

D.

Ad)i!i#trati/e #a!ctio!# o! $a!"# a!d 3%a#i'$a!"# 9Ad)i!i#trati/e 0iolatio!#: CDR'F.IB2 4. Ad)i!i#trati/e 0iolatio!# a!d Pe!altie# /wit"out pre:udice to t"e cri#inal !anction! a. an' willful (iolation of it! c"arter or b'/law!? $. willful dela' in t"e !ub#i!!ion of report! or publication! t"ereof a! re4uired b' law. rule! and regulation!? c. an' refu!al to per#it e0a#ination into t"e affair! of t"e in!titution? d. an' willful #aking of a fal!e or #i!leading !tate#ent to t"e Board or t"e appropriate !uper(i!ing and e0a#ining depart#ent or it! e0a#iner!? e. an' willful failure or refu!al to co#pl' wit". or (iolation of. an' banking law or an' order. in!truction or regulation i!!ued b' t"e -onetar' Board. or an' order. in!truction or ruling b' t"e Go(ernor? or f. an' co##i!!ion of irregularitie!? andMor &. conducting bu!ine!! in an un!afe or un!ound #anner a! #a' be deter#ined b' t"e -onetar' Board

Sec BB of t"e GBL pro(ide! ;nless otherwise pro1ided" the 1iolation of any of the pro1isions of the +)2 shall be subject to 'ections @=" @:" @? and @A of the New .entral )ank $ct# -f the offender is a director or officer of a bank" quasi bank or trust entity" the 7onetary )oard may also suspend or remo1e such director or officer# -f the 1iolation is committed by a corporation" such corporation may be dissol1ed by quo warranto proceedin&s instituted by the 'olicitor +eneral# (Notes* $. %esi3nation or termination from office shall not e empt such director or officer from administrative or criminal sanctions. 4. 2he 1onetar' 0oard ma', whenever warranted b' circumstances, preventivel' suspend an' director or officer of a bank or quasi.bank pendin3 an investi3ation* Provided, 2hat should the case be not finall' decided b' the 0an3ko Sentral within a period of $4" da's after the date of suspension, said director or officer shall be reinstated in his position* Provided, further, 2hat when the dela' in the disposition of the case is due to the fault, ne3li3ence or petition of the director or officer, the period of dela' shall not be counted in computin3 the period of suspension herein provided. 7. 2he above administrative sanctions need not be applied in the order of their severit'.

(The ,e1aluation of -nternational ,eser1e account shall be neither credited nor debited for any purposes other than those specifically authori<ed in this section

>$

Su!pen!e account! Sectio! :A. 'uspense $ccounts# / Section! F< and F</A of Republic Act %o$ 2BG. a! a#ended. creating t"e -onetar' Ad:u!t#ent Account (-AA and t"e >0c"ange Stabili,ation Ad:u!t#ent Account (>SAA . re!pecti(el'. are "ereb' repealed$ A#ount! out!tanding a! of t"e effecti(e date of t"i! Act ba!ed on t"e!e account! !"all continue to be for t"e account of t"e 1entral Bank and !"all be go(erned b' t"e tran!itor' pro(i!ion! of t"i! Act$ The ,e1aluation of -nternational ,eser1e (,-,! account as of the effecti1e date of this $ct of the .entral )ank shall continue to be for the account of the same entity and shall be &o1erned by the pro1isions of 'ection == of ,epublic $ct No# >?:" as amended" until otherwise pro1ided for in accordance with the transitory pro1isions of this $ct#

A.

Pe!alty for ref%#al to )a"e re(ort# or (er)it e-a)i!atio! a fine of 2G0.000 7 2100.000. or b' i#pri!on#ent of 1 7 G 'ear!. or bot". at t"e di!cretion of t"e court

B.

Pe!alty for t e *illf%l )a"i!& of a fal#e or )i#leadi!& #tate)e!t o! a )aterial fact a fine of 2100.00 7 2200.000. or b' i#pri!on#ent of not #ore t"an G 'ear!. or bot". at t"e di!cretion of t"e court

C.

9$

3"e auditor

Proceedi!&# %(o! a!d (e!alty for /iolatio! of NCBA a!d ot er $a!"i!& la*#1 r%le#1 re&%latio!#1 order# or i!#tr%ctio!# !"all unless otherwise pro1ided in N.)$ be puni!"ed b' a fine of 2G0.000 / 2200.000 or b' i#pri!on#ent of 2 7 10 'ear!. or bot". at t"e di!cretion of t"e court C"ene(er a bank or 4ua!i/bank per!i!t! in carr'ing on it! bu!ine!! in an unlawful or un!afe #anner. t"e Board #a'. wit"out pre:udice to t"e penaltie! pro(ided abo(e and t"e ad#ini!trati(e !anction! pro(ided in Sec <7 of %1BA. take action under Sec <0 (Recei(er!"ip and Li4uidation of t"e %1BA$

5. (1

Ad)i!i#trati/e Proceedi!&# C"et"er or not t"ere i! an ad#ini!trati(e proceeding. t"e -onetar' Board #a' i!!ue a cea!e and de!i!t order fro# t"e indicated practice or (iolation. and #a' furt"er order t"at i##ediate action be taken to correct t"e condition! re!ulting fro# !uc" practice or (iolation. w"ic" i! i##ediatel' effecti(e upon !er(ice to t"e in!titution andMor t"e director! andMor officer!. w"ic" i! i##ediatel' effecti(e upon !er(ice to t"e in!titution andMor t"e director! andMor officer!$

(2

(<

3"e re!pondent! !"all be afforded an opportunit' to defend t"eir action in a "earing before t"e -onetar' Board or it! co##ittee c"aired b' an' -B #e#ber upon re4ue!t #ade b' t"e re!pondent! wit"in G da'! fro# t"eir receipt of t"e order$ *f no !uc" "earing i! re4ue!ted wit"in !aid period. t"e order !"all be final$ 3"e Go(ernor i! aut"ori,ed. at "i! di!cretion. to i#po!e upon banking in!titution!. for an' failure to co#pl' wit" t"e re4uire#ent! of law. -onetar' Board regulation!. etc$ fine! not in e0ce!! of 210.000 a da' for eac" (iolation. t"e i#po!ition of w"ic" i! final and e0ecutor' until re(er!ed. #odified or lifted b' t"e -onetar' Board on appeal$

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