Professional Documents
Culture Documents
Universal
Banks
large
commercial
banks
that
can
do
both
commercial
and
investment
banking
o
They
have
the
power
of
both
commercial
bank
and
investment
house
o
Have
the
power
to
invest
in
non-allied
enterprises
Commercial
banks
general
powers
incident
of
corporation
and
can
perform
commercial
banking
o
Does
not
have
the
power
to
invest
in
non-
allied
enterprises
Thrift
banks
encourages
the
industry,
frugality
and
accumulation
of
savings
of
the
public
o
To
make
it
within
easy
reach
to
the
people
the
credit
facilities
at
reasonable
cost
o
Includes:
(1)
savings
and
mortgage
bank,
(2)
stock
savings
and
loan
associations
and
(3)
private
development
banks
o
Thrift
Banks
Act
(RA
7906)
o
Subject
to
the
principles
and
rulings
of
Islamic
Sharia
Others
banks:
o
Philippine
Veterans-
provide
government
depository
to
veterans
for
appreciation
of
grateful
nation
(RA
3518)
o
Land
bank
of
the
Philippines
finance
distribution
of
estate
to
resale
to
small
landholders
(RA
3844)
o
Development
Bank
of
Philippines
provide
credit
facilities
for
development
in
agriculture,
commerce
and
industry
DBP
was
previously
named
as
Rehabilitation
Finance
Corporation
(RFC)
o
Non-stock
savings
and
loan
associations
non-
stock,
non-profit
corporation
engage
in
accumulation
of
savings
of
its
members
and
loans
to
meet
its
members
needs
Confines
exclusive
membership
and
cannot
transact
business
with
the
general
public
Offshore
Banks
deals
with
transaction
with
foreign
currencies
in
receiving
funds
from
external
sources
and
utilization
of
such
o
Governed
by
PD
1034
Q:
Provide
for
Section
4:
Supervisory
and
Regulatory
Powers
of
the
BSP
A:
SECTION
4.
Supervisory
Powers.
The
operations
and
activities
of
banks
shall
be
subject
to
supervision
of
the
Bangko
Sentral.
"Supervision"
shall
include
the
following:
4.1.
The
issuance
of
rules
of
conduct
or
the
establishment
of
standards
of
operation
for
uniform
application
to
all
institutions
or
functions
covered,
taking
into
consideration
the
distinctive
character
of
the
operations
of
institutions
and
the
substantive
similarities
of
specific
functions
to
which
such
rules,
modes
or
standards
are
to
be
applied;
4.2.
The
conduct
of
examination
to
determine
compliance
with
laws
and
regulations
if
the
circumstances
so
warrant
as
determined
by
the
Monetary
Board;
4.3.
Overseeing
to
ascertain
that
laws
and
regulations
are
complied
with;
4.4.
Regular
investigation
which
shall
not
be
oftener
than
once
a
year
from
the
last
date
of
examination
to
determine
whether
an
institution
is
conducting
its
business
on
a
safe
or
sound
basis:
Provided,
That
the
deficiencies/irregularities
found
by
or
discovered
by
an
audit
shall
be
immediately
addressed;
4.5.
Inquiring
into
the
solvency
and
liquidity
of
the
institution
(2-D);
or
4.6.
Enforcing
prompt
corrective
action.
(n)
The
Bangko
Sentral
shall
also
have
supervision
over
the
operations
of
and
exercise
regulatory
powers
over
quasi-banks,
trust
entities
and
other
financial
institutions
which
under
special
laws
are
subject
to
Bangko
Sentral
supervision.
(2-Ca)
For
the
purposes
of
this
Act,
"quasi-banks"
shall
refer
to
entities
engaged
in
the
borrowing
of
funds
through
the
issuance,
endorsement
or
assignment
with
recourse
or
acceptance
of
deposit
substitutes
as
defined
in
Section
95
of
Republic
Act
No.
7653
(hereafter
the
"New
Central
Bank
Act")
for
purposes
of
relending
or
purchasing
of
receivables
and
other
obligations.
Q:
What
is
the
Function
of
the
Monetary
Board
A:
The
Bangko
Sentral
shall
provide
policy
direction
in
the
areas
of
money,
banking
and
credit.
(n)
For
this
purpose,
the
Monetary
Board
may
prescribe
ratios,
ceilings,
limitations,
or
other
forms
of
regulation
on
the
different
types
of
accounts
and
practices
of
banks
and
quasi-banks
which
shall,
to
the
extent
feasible,
conform
to
internationally
accepted
standards,
including
those
of
the
Bank
for
International
Settlements
(BIS).
The
Monetary
Board
may
exempt
particular
categories
of
transactions
from
such
ratios,
ceilings
and
limitations,
but
not
limited
to
exceptional
cases
or
to
enable
a
bank
or
quasi-bank
under
rehabilitation
or
during
a
merger
or
consolidation
to
continue
in
business
with
safety
to
its
creditors,
depositors
and
the
general
public.
Q:
What
is
the
job/role
of
the
BSP
as
vanguard
of
depositor:
A:
SECTION
7.
Examination
by
the
Bangko
Sentral.
The
Bangko
Sentral
shall,
when
examining
a
bank,
have
the
authority
to
examine
an
enterprise
which
is
wholly
or
majority-owned
or
controlled
by
the
bank.
Q:
What
is
the
fit
and
proper
rule?
A:
SECTION
16.
Fit
and
Proper
Rule.
To
maintain
the
quality
of
bank
management
and
afford
better
protection
to
depositors
and
the
public
in
general,
the
Monetary
Board
shall
prescribe,
pass
upon
and
review
the
qualifications
and
disqualifications
of
individuals
elected
or
appointed
bank
directors
or
officers
and
disqualify
those
found
unfit.
After
due
notice
to
the
board
of
directors
of
the
bank,
the
Monetary
Board
may
disqualify,
suspend
or
remove
any
bank
director
or
officer
who
commits
or
omits
an
act
which
render
him
unfit
for
the
position.
In
determining
whether
an
individual
is
fit
and
proper
to
hold
the
position
of
a
director
or
officer
of
a
bank,
regard
shall
be
given
to
his
integrity,
experience,
education,
training,
and
competence
Q:
What
is
the
Bank
of
International
Settlement?
A:
Established
on
17
May
1930,
the
Bank
for
International
Settlements
(BIS)
is
the
world's
oldest
international
financial
organisation.
The
BIS
has
60
member
central
banks,
representing
countries
from
around
the
world
that
together
make
up
about
95%
of
world
GDP.
The
head
office
is
in
Basel,
Switzerland
and
there
are
two
representative
offices:
in
the
Hong
Kong
Special
Administrative
Region
of
the
People's
Republic
of
China
and
in
Mexico
City.
The
mission
of
the
BIS
is
to
serve
central
banks
in
their
pursuit
of
monetary
and
financial
stability,
to
foster
international
cooperation
in
those
areas
and
to
act
as
a
bank
for
central
banks.
Q:
What
are
the
conditions
for
Organization
of
a
bank:
A:
SECTION
8.
Organization.
The
Monetary
Board
may
authorize
the
organization
of
a
bank
or
quasi-bank
subject
to
the
following
conditions:
8.1.
That
the
entity
is
a
stock
corporation
(7);
8.2.
That
its
funds
are
obtained
from
the
public,
which
shall
mean
twenty
(20)
or
more
persons
(2-Da);
and
8.3.
That
the
minimum
capital
requirements
prescribed
by
the
Monetary
Board
for
each
category
of
banks
are
satisfied.
(n)
No
new
commercial
bank
shall
be
established
within
three
(3)
years
from
the
effectivity
of
this
Act.
In
the
exercise
of
the
authority
granted
herein,
the
Monetary
Board
shall
take
into
consideration
their
capability
in
terms
of
their
financial
resources
and
technical
expertise
and
integrity.
The
bank
licensing
process
shall
incorporate
an
assessment
of
the
bank's
ownership
structure,
directors
and
senior
management,
its
operating
plan
and
internal
controls
as
well
as
its
projected
financial
condition
and
capital
base.
Q:
Can
the
Bank
acquire
its
own
shares?
How?
A:
SECTION
10.
Treasury
Stocks.
No
bank
shall
purchase
or
acquire
shares
of
its
own
capital
stock
or
accept
its
own
shares
as
a
security
for
a
loan,
except
when
authorized
by
the
Monetary
Board:
Provided,
That
in
every
case
the
stock
so
purchased
or
acquired
shall,
within
six
(6)
months
from
the
time
of
its
purchase
or
acquisition,
be
sold
or
disposed
of
at
a
public
or
private
sale.
Q:
Can
a
Foreign
Individual
invest
in
local
banks?
How?
A:
SECTION
11.
Foreign
Stockholdings.
Foreign
individuals
and
non-bank
corporations
may
own
or
control
up
to
forty
percent
(40%)
of
the
voting
stock
of
a
domestic
bank.
This
rule
shall
apply
to
Filipinos
and
domestic
non-bank
corporations.
(12a;
12-Aa)
The
percentage
of
foreign-owned
voting
stocks
in
a
bank
shall
be
determined
by
the
citizenship
of
the
individual
stockholders
in
that
bank.
The
citizenship
of
the
corporation
which
is
a
stockholder
in
a
bank
shall
follow
the
citizenship
of
the
controlling
stockholders
of
the
corporation,
irrespective
of
the
place
of
incorporation
Q:
What
does
RA
7721
provide
for
foreign
investors
in
local
banks?
A:
REPUBLIC
ACT
NO.
7721
.
AN
ACT
LIBERALIZING
THE
ENTRY
AND
SCOPE
OF
OPERATIONS
OF
FOREIGN
BANKS
IN
THE
PHILIPPINES
AND
FOR
OTHER
PURPOSES
SECTION
1.
Declaration
of
Policy.
The
State
shall
develop
a
self-reliant
and
independent
national
economy
effectively
controlled
by
Filipinos
and
encourage,
promote,
and
maintain
a
stable,
competitive,
efficient,
and
dynamic
banking
and
financial
system
that
will
stimulate
economic
growth,
attract
foreign
investments,
provide
a
wider
variety
of
financial
services
to
Philippine
enterprises,
households
and
individuals,
strengthen
linkages
with
global
financial
centers,
enhance
the
country's
competitiveness
in
the
international
market
and
serve
as
a
channel
for
the
flow
of
funds
and
investments
into
the
economy
to
promote
industrialization.
Pursuant
to
this
policy,
the
Philippine
banking
and
financial
system
is
hereby
liberalized
to
create
a
more
competitive
environment
and
encourage
greater
foreign
participation
through
increase
in
ownership
in
domestic
banks
by
foreign
banks
and
the
entry
of
new
foreign
bank
branches.
In
allowing
increased
foreign
participation
in
the
financial
system,
it
shall
be
the
policy
of
the
State
that
the
financial
system
shall
remain
effectively
controlled
by
Filipinos
Q:
Discuss
Banks
owned
by
Family
Group.
A:
SECTION
12.
Stockholdings
of
Family
Groups
or
Related
Interests.
Stockholdings
of
individuals
related
to
each
other
within
the
fourth
degree
of
consanguinity
or
affinity,
legitimate
or
common-law,
shall
be
considered
family
groups
or
related
interests
and
must
be
fully
disclosed
in
all
transactions
by
such
an
individual
with
the
bank
Q:
Who
is
an
independent
director?
Why
is
it
required
in
a
Bank?
A:
SECTION
15.
Board
of
Directors.
The
provisions
of
the
Corporation
Code
to
the
contrary
notwithstanding,
there
shall
be
at
least
five
(5),
and
a
maximum
of
fifteen
(15)
members
of
the
board
of
directors
of
bank,
two
(2)
of
whom
shall
be
independent
directors.
An
"independent
director"
shall
mean
a
person
other
than
an
officer
or
employee
of
the
bank,
its
subsidiaries
or
affiliates
or
related
interests.
(n)
Non-Filipino
citizens
may
become
members
of
the
board
of
directors
of
a
bank
to
the
extent
of
the
foreign
participation
in
the
equity
of
said
bank.
(Sec.
7,
RA
7721)
The
meetings
of
the
board
of
directors
may
be
conducted
through
modern
technologies
such
as,
but
not
limited
to,
teleconferencing
and
video-conferencing
Q:
Discuss
Regulations
of
Banks
owned
by
Family
Groups
and
Related
Interests
A.
SECTION
12.
Stockholdings
of
Family
Groups
or
Related
Interests.
Stockholdings
of
individuals
related
to
each
other
within
the
fourth
degree
of
consanguinity
or
affinity,
legitimate
or
common-
law,
shall
be
considered
family
groups
or
related
interests
and
must
be
fully
disclosed
in
all
transactions
by
such
an
individual
with
the
bank.
SECTION
13.
Corporate
Stockholdings.
Two
or
more
corporations
owned
or
controlled
by
the
same
family
group
or
same
group
of
persons
shall
be
considered
related
interests
and
must
be
fully
disclosed
in
all
transactions
by
such
corporations
or
related
groups
of
persons
with
the
bank
Q:
May
an
elective
official
be
a
director
of
a
bank?
Are
there
exceptions,
if
any.
A:
SECTION
19.
Prohibition
on
Public
Officials.
Except
as
otherwise
provided
in
the
Rural
Banks
Act,
no
appointive
or
elective
public
official,
whether
full-time
or
part-time
shall
at
the
same
time
serve
as
officer
of
any
private
bank,
save
in
cases
where
such
service
is
incident
to
financial
assistance
provided
by
the
government
or
a
government-owned
or
controlled
corporation
to
the
bank
or
unless
otherwise
provided
under
existing
laws
EXCEPTION:
RA
7353
Sec.
5.
All
members
of
the
Board
of
Directors
of
the
rural
bank
shall
be
citizens
of
the
Philippines
at
the
time
of
their
assumption
to
office:
Provided,
however,
That
nothing
in
this
Act
shall
be
construed
as
prohibiting
any
appointive
or
elective
public
official
from
serving
as
director,
officer,
consultant
or
in
any
capacity
in
the
bank.
Q:
Distinguish
Universal
Bank
from
Commercial
Bank
A:
SECTION
23.
Powers
of
a
Universal
Bank.
A
universal
bank
shall
have
the
authority
to
exercise,
in
addition
to
the
powers
authorized
for
a
commercial
bank
in
Section
29,
the
powers
of
an
investment
house
as
provided
in
existing
laws
and
the
power
to
invest
in
non-allied
enterprises
as
provided
in
this
Act.
SECTION
29.
Powers
of
a
Commercial
Bank.
A
commercial
bank
shall
have,
in
addition
to
the
general
powers
incident
to
corporations,
all
such
powers
as
may
be
necessary
to
carry
on
the
business
of
commercial
banking,
such
as
accepting
drafts
and
issuing
letters
of
credit;
discounting
and
negotiating
promissory
notes,
drafts,
bills
of
exchange,
and
other
evidences
of
debt;
accepting
or
creating
demand
deposits;
receiving
other
types
of
deposits
and
deposit
substitutes;
buying
and
selling
foreign
exchange
and
gold
or
silver
bullion;
acquiring
marketable
bonds
and
other
debt
securities;
and
extending
credit,
subject
to
such
rules
as
the
Monetary
Board
may
promulgate.
These
rules
may
include
the
determination
of
bonds
and
other
debt
securities
eligible
for
investment,
the
maturities
and
aggregate
amount
of
such
investment.
Q:
Discuss
how
Universal
Banks
can
invest
in
financial
allied
sources
A:
Equity
investments
of
Universal
bank
in
Financial
Allied
enterprise
1. Universal
bank
can
own
100%
of
the
equity
in
a
thrift,
rural
bank
or
financial
allied
enterprise
2. Publicly-listed
universal
or
commercial
bank
may
own
100%
of
voting
stock
of
another
universal
or
commercial
bank
3. If
not
publicly-list
then
only
49%
own
4. Following
are
financial
allied
enterprises:
Leasing
companies
Banks
Investment
houses
Financing
companies
Credit
card
companies
Financial
institutions
Companies
in
stock
brokerage
and
foreign
exchange
dealership
Insurance
companies
Holding
company
provided
that
the
equities
of
the
entity
is
confined
under
universal
bank
BSP
regulation
Q:
Discuss
how
Universal
Banks
can
invest
in
non-financial
allied
sources
A:
Equity
investments
of
universal
bank
in
non-financial
allied
enterprise
Universal
bank
may
own
up
to
100%
of
equity
in
non-financial
allied
Examples
are:
1.
Warehousing
companies
2.
Storage
3.
Safe
deposit
box
4.
Companies
engaged
in
management
of
mutual
funds
and
not
funds
itself
5.
Computer
services
6.
Home
building
and
development
7.
Service
bureaus
8.
PCHC
Q:
Discuss
how
Universal
Banks
can
invest
in
non-allied
sources
A:
Equity
investment
of
Universal
Bank
in
Non-allied
enterprise
-
Equity
investment
in
a
single
non-
allied
enterprise
shall
not
exceed
35%
in
total
equity
or
voting
stock
Investments
in
non-allied
enterprises
Universal
bank
may
invest
in
equity
of
enterprise
of
eligibles:
1.
Enterprises
engaged
in
agriculture,
mining,
quarrying,
manufacturing,
public
utilities
2.
Industrial
parks
3.
Commercial
project
with
government
privatization
program
Equity
investment
in
Quasi-banks
universal
bank
can
only
invest
up
to
40%
in
equity
of
quasi-banks
Q:
Discuss
the
SINGLE-BORROWERS
LIMIT
A:
SECTION
35.
Limit
on
Loans,
Credit
Accommodations
and
Guarantees
35.1
Except
as
the
Monetary
Board
may
otherwise
prescribe
for
reasons
of
national
interest,
the
total
amount
of
loans,
credit
accommodations
and
guarantees
as
may
be
defined
by
the
Monetary
Board
that
may
be
extended
by
a
bank
to
any
person,
partnership,
association,
corporation
or
other
entity
shall
at
no
time
exceed
twenty
percent
(20%)
of
the
net
worth
of
such
bank.
The
basis
for
determining
compliance
with
single-borrower
limit
is
the
total
credit
commitment
of
the
bank
to
the
borrower.
Total
amount
of
loans,
credits
accommodation
and
guarantees
extended
to
any
person,
partnership
or
corporation
shall
not
exceed
20%
of
net
worth
of
bank
In
Circular
425
of
2004
of
BSP,
the
SBL
was
increased
to
25%
Exceptions
to
SBL:
1. MB
may
otherwise
prescribe
for
reasons
of
national
interest
2. Deposit
of
rural
banks
with
GOC
financial
institutions
such
as
LB,
DBP
and
PNB
Basis
for
determining
SBL
is
the
total
credit
commitment
of
bank
to
borrower
Loans
-
to
all
accounts
under
loan
portfolio
Credit
accommodations
-
to
credit
and
market
risk
exposure
of
banks
arising
from
accommodation
other
than
the
loan
Total
credit
commitment
-
include
loans,
credit
accommodation,
deferred
letters
of
credit
less
margin
deposits
and
guarantees
Total
credit
commitment
can
be
increased
by
10%
provided
additional
liabilities
are
secured
by
trust
receipts,
shipping
documents
or
readily
marketable
goods
Readily
marketable
goods
articles
of
commerce,
agriculture
or
industry
as
constant
dealings
in
ready
market
and
price
is
easily
ascertainable
and
disposable
Parent
corporation
s
total
credit
commitment
shall
also
include
its
subsidiaries
if
it
guarantees,
accommodate
or
subsidiary
is
merely
a
department
of
it
Wholesale
lending
of
government
banks
shall
not
exceed
35%
of
net
worth
to
participating
financial
institutions
PFI
institutions
for
relending
to
end-user
borrowers
The
end-user
borrower
shall
be
subject
to
the
25%
SBL
In
municipalities
where
there
are
no
government
banks,
deposits
of
rural
and
coop
banks
in
private
banks
shall
not
be
subject
to
SBL
Deposit
in
private
depository
bank
used
by
thrift,
rural
and
coop
banks,
with
authority
to
accept
demand
deposits,
after
being
cleared,
shall
be
exempted
from
SBL
Bank
guarantee
irrevocable
commitment
of
a
bank
binding
to
pay
a
sum
of
money
in
event
of
non-performance
of
third
party
Credit
Risk
Transfer
arrangement
that
allows
the
bank
to
transfer
the
credit
risk
associated
with
its
loan
or
other
credit
accommodation
to
a
third
party
Control
of
majority
interest
or
controlling
interest
parent
owns,
directly
or
indirectly
through
its
subsidiaries,
more
than
half
of
voting
power
ofenterprise
o
Even
if
less
than
half
of
said
voting
power,
it
shall
still
have
controlling
interest
if:
1.
Agreement
with
investors
2.
Govern
financial
and
operations
3.
Can
appoint
majority
of
directors
4.
Cast
majority
vote
on
meetings
Subsidiary
corporation
where
more
than
50%
of
the
voting
stock
is
owned
by
a
parent
corporation
Bill
of
exchange
drawn
in
good
faith
against
actually
existing
values
drawn
by
a
seller
on
the
purchase
for
the
price
of
commodity
sold
Commercial
paper
owned
by
person
negotiating
the
same
paper
arising
from
business
transaction
Exclusion
from
SBL
include
the
following:
1.
Discount
bills
of
exchange
and
discount
commercial
paper
2.
Credit
accommodation
to
finance
importation
of
rice
or
corn
up
to
100%
net
worth
of
bank
Must
be
approved
by
NEDA
3. Loans
and
credit
accommodation
guaranteed
by
Industrial
Guarantee
and
Loan
Fund
4. Liabilities
of
commercial
paper
issuer
for
commercial
paper
held
by
UB
as
firm
underwriter.
Only
180
days
and
not
exceed
5%
from
normal
SBL
5. Loans
and
credit
accommodations
covered
by
international
or
regional
institutions
No
DOSRI
can
directly
or
indirectly
borrow
from
such
bank
or
become
a
guarantor,
indorser
or
surety
for
loan
Exception
is
when
there
is
a
written
approval
of
the
majority
of
all
directors
of
the
bank
excluding
the
DOSRI
concerned
Such approval is not required if it is under a fringe benefit plan approved by BSP
Related
interest
includes
souse
or
relative
within
1 degree
or
by
legal
adoption.
This
includes
partnership,
co-ownership
of
DOSRIs
Corporations
where
the
above
mentioned
owns
20%
of
subscribed
capital,
then
the
prohibition
shall
apply
Can
also
be
less
than
50%
if
the
DOS
sits
as
representative
of
the
bank
in
the
board
of
such
corporation
Effect
of
violation
:
The
director
or
officer
who
violates
may
be
declared
vacant
and
subject
to
penal
provisions
of
NCBA
Limit
on
loans
:
MB
can
limit
the
valid
loan
given
to
DOSRI
provided
that
it
shall
be
based
on
their
unencumbered
deposits
and
book
value
of
their
paid
in
capital
contribution
Exclusion
to
Limit:
Loans
and
credit
accommodations
to
officers
in
for
of
fringe
benefits
Limit
on
loans
and
credit
accommodations
shall
not
apply
on
those
extended
by
coop
bank
to
its
coop
shareholders
Applicability
of
DOSRI
Rules
and
Regulation
to
Government
Borrowings:
Circular
547
of
2006
provides
that
DOSRI
rules
shall
also
apply
to
loans
and
credit
accommodations
granted
to
RP
,
subdivisions,
instrumentalities
and
GOCCs
Exceptions
would
be:
1.Loans
and
credit
accommodations
that
are
non-risk
and
not
subject
to
ceiling
2.Those
made
by
BSP
3.LGU
due
to
full
autonomy
in
their
propriety
function
4.Director
who
acts
as
government
Q:
Discuss
Microfinancing
A:
CIRCULAR
NO.
272
[Series
of
2001
]
Pursuant
to
Monetary
Board
Resolution
No.
40
dated
January
11,
2001,
the
following
guidelines
shall
be
observed
in
implementing
the
provisions
of
Sections
40,
43
and
44
of
the
General
Banking
Law
of
2000
with
respect
to
microfinancing
loans:
1.
Microfinancing
loans
are
small
loans
granted
to
the
basic
sectors,
as
defined
in
the
Social
Reform
and
Poverty
Alleviation
Act
of
1997
(Republic
Act
8425),
and
other
loans
granted
to
the
poor
and
low-income
households
for
their
microenterprises
and
small
businesses
so
as
to
enable
them
to
raise
their
income
levels
and
improve
their
living
standards.
These
loans
are
granted
on
the
basis
of
the
borrowers
cash
flow
and
are
typically
unsecured.
2.
The
maximum
principal
amount
of
microfinance
loans
shall
not
exceed
P150,000.
This
is
equivalent
to
the
maximum
capitalization
of
microenterprise
under
R.A.
8425.
Q:
Can
the
Bank
acquire
Real
Estate:
A:
SECTION
51.
Ceiling
on
Investments
in
Certain
Assets.
Any
bank
may
acquire
real
estate
as
shall
be
necessary
for
its
own
use
in
the
conduct
of
its
business:
Provided,
however,
That
the
total
investment
in
such
real
estate
and
improvements
thereof,
including
bank
equipment,
shall
not
exceed
fifty
percent
(50%)
of
combined
capital
accounts:
Provided,
further,
That
the
equity
investment
of
a
bank
in
another
corporation
engaged
primarily
in
real
estate
shall
be
considered
as
part
of
the
bank's
total
investment
in
real
estate,
unless
otherwise
provided
by
the
Monetary
Board.
(25a)
SECTION
52.
Acquisition
of
Real
Estate
by
Way
of
Satisfaction
of
Claims.
Notwithstanding
the
limitations
of
the
preceding
Section,
a
bank
may
acquire,
hold
or
convey
real
property
under
the
following
circumstances:
52.1.
Such
as
shall
be
mortgaged
to
it
in
good
faith
by
way
of
security
for
debts;
52.2.
Such
as
shall
be
conveyed
to
it
in
satisfaction
of
debts
previously
contracted
in
the
course
of
its
dealings;
or
52.3.
Such
as
it
shall
purchase
at
sales
under
judgments,
decrees,
mortgages,
or
trust
deeds
held
by
it
and
such
as
it
shall
purchase
to
secure
debts
due
it.
Any
real
property
acquired
or
held
under
the
circumstances
enumerated
in
the
above
paragraph
shall
be
disposed
of
by
the
bank
within
a
period
of
five
(5)
years
or
as
may
be
prescribed
by
the
Monetary
Board:
Provided,
however,
That
the
bank
may,
after
said
period,
continue
to
hold
the
property
for
its
own
use,
subject
to
the
limitations
of
the
preceding
Section.
(25a)
Q:
Discuss
the
Confidentiality
Rule
in
All
Bank
Transactions
A:
SECTION
55.
Prohibited
Transactions.
55.4.
Consistent
with
the
provisions
of
Republic
Act
No.
1405,
otherwise
known
as
the
Banks
Secrecy
Law,
no
bank
shall
employ
casual
or
nonregular
personnel
or
too
lengthy
probationary
personnel
in
the
conduct
of
its
business
involving
bank
deposits
REPUBLIC
ACT
NO.1405
-
AN
ACT
PROHIBITING
DISCLOSURE
OF
OR
INQUIRY
INTO,
DEPOSITS
WITH
ANY
BANKING
INSTITUTION
AND
PROVIDING
PENALTY
THEREFOR
SECTION
1.
It
is
hereby
declared
to
be
the
policy
of
the
Government
to
give
encouragement
to
the
people
to
deposit
their
money
in
banking
institutions
and
to
discourage
private
hoarding
so
that
the
same
may
be
properly
utilized
by
banks
in
authorized
loans
to
assist
in
the
economic
development
of
the
country.
SECTION
2.
All
deposits
of
whatever
nature
with
banks
or
banking
institutions
in
the
Philippines
including
investments
in
bonds
issued
by
the
Government
of
the
Philippines,
its
political
subdivisions
and
its
instrumentalities,
are
hereby
considered
as
of
an
absolutely
confidential
nature
and
may
not
be
examined,
inquired
or
looked
into
by
any
person,
government
official,
bureau
or
office,
except
upon
written
permission
of
the
depositor,
or
in
cases
of
impeachment,
or
upon
order
of
a
competent
court
in
cases
of
bribery
or
dereliction
of
duty
of
public
officials,
or
in
cases
where
the
money
deposited
or
invested
is
the
subject
matter
of
the
litigation.
SECTION
3.
It
shall
be
unlawful
for
any
official
or
employee
of
a
banking
institution
to
disclose
to
any
person
other
than
those
mentioned
in
Section
two
hereof
any
information
concerning
said
deposits.
Q:
What
is
the
purpose
of
the
GBL?
A:
The
GBL
of
2000
as
well
as
improving
market
access,
upgraded
the
rules
governing
the
operation
of
the
BSP
to
conform
to
international
banking
standards.
The
aim
was
to
promote
and
maintain
a
stable
and
efficient
banking
and
financial
system
that
is
globally
competitive,
dynamic,
and
responsive
to
the
demands
of
a
developing
economy
ADDITIONAL
QUESTIONS
FOR
MIDTERM
REVIEW
Q:
What
are
the
functions
that
a
bank
can
outsource?
A:
BSP
Circular
765,
pursuant
to
the
Money
Board
Resolution
No.
1179
dated
July
19,
2012,
approved
the
revisions
to
the
outsourcing
framework
of
banks,
amending
the
entirety
of
relevant
sections
and
other
provisions
of
the
Manual
of
Regulations
for
Banks.
An
amended
Section
X162.2
on
the
Prohibition
against
outsourcing
of
inherent
banking
functions.
No
bank
shall
outsource
functions
such
as:
1. Services
normally
associated
with
placement
of
deposits
and
withdrawals
including
the
recognition
based
on
recording
of
movements
in
the
deposit
accounts;
2.
3.
4.
5.
Q:
What
is
the
degree
of
diligence
required
of
Banks
to
be
exercised?
A:
The
time-honored,
and
still
current,
judicial
doctrine
on
the
degree
of
bank
diligence
is
that
every
bank,
in
dealing
with
the
public
must
exercise
the
highest
degree
of
diligence,
the
highest
degree
of
care
or
extra-ordinary
diligence.
The
diligence
of
an
ordinary
prudent
man,
or
ordinary
diligence,
is
not
enough.
The
reasons
for
the
strict
and
highest
standard
required
are
the
following:
(1)
the
business
of
banking
is
so
impressed
with
public
interest;
(2)
trust
and
confidence
of
the
public
in
general
is
of
paramount
interest,
and
(3)
the
fiduciary
nature
of
its
function.
With
particular
reference
to
deposits,
the
doctrine
is
a
bank
is
under
obligation
to
treat
the
accounts
of
its
depositors
with
meticulous
care,
always
having
in
mind
the
fiduciary
nature
of
their
relationship,
whether
such
account
consists
only
of
a
few
hundred
pesos
or
of
millions
of
pesos.
The
point
is
that
as
a
business
affected
with
public
interest
and
because
of
the
nature
of
its
functions,
the
bank
is
under
obligation
to
treat
the
account
of
its
depositors
with
meticulous
care,
always
having
in
mind
the
fiduciary
nature
of
their
relationship.
In
the
recent
case
of
Philippine
National
Bank
vs.
Court
of
Appeals,
we
held
that
a
bank
is
under
obligation
to
treat
the
accounts
of
its
depositors
with
meticulous
care
whether
such
account
consists
only
of
a
few
hundred
pesos
or
of
millions
of
pesos.
Responsibility
arising
from
negligence
in
the
performance
of
every
kind
of
obligation
is
demandable.
While
petitioners
negligence
in
this
case
may
not
have
been
attended
with
malice
and
bad
faith,
nevertheless,
it
caused
serious
anxiety,
embarrassment
and
humiliation.
Hence
we
ruled
that
the
offended
party
in
said
case
was
entitled
to
recover
reasonable
moral
damages.
Q:
What
is
the
nature
of
the
depositor
bank
relationship?
A:
SECTION
2.
Declaration
of
Policy.
The
State
recognizes
the
vital
role
of
banks
in
providing
an
environment
conducive
to
the
sustained
development
of
the
national
economy
and
the
fiduciary
nature
of
banking
that
requires
high
standards
of
integrity
and
performance.
It
is
impressed
with
public
interest
where
the
trust
and
confidence
of
the
public
in
general
is
of
paramount
importance
such
that:
1. The
appropriate
standard
of
diligence
must
be
very
high,
if
not
the
highest,
degree
of
diligence;
highest
degree
of
care
(PCI
Bank
vs.
CA,
350
SCRA
446,
PBCom
vs.
CA,
G.R.
No.121413,
29
Jan.
2001)
>>
This
applies
only
to
cases
where
banks
are
acting
in
their
fiduciary
capacity,
that
is,
as
depository
of
the
deposits
of
their
depositors
(Reyes
vs.
CA,
G.R.
No.118492,
15
Aug.
2001)
2. Subject
to
reasonable
regulation
under
the
police
power
of
the
state
Q:
Reconcile
the
situation
where
in
a
combination
account
(deposit
and
current/checking
account),
an
officer
of
the
bank
is
not
alert
enough
to
transfer
funds
from
the
deposit
account
to
the
current
account
which
leads
to
the
dishonoring
of
the
check
issued
by
the
depositor
in
BP
22
cases.
A:
In
PNB
vs.
CA
&
Pujol
the
depositor
opened
a
checking
account
together
with
a
savings
account
under
what
is
known
as
Combination
Deposit
Plan
or
Combo
Account
under
which
checks
drawn
against
the
checking
account
shall
be
charged
automatically
against
the
savings
account.
The
operation
and
effectivity
of
the
automatic
transfer
arrangement
(ATA)
was
however
subject
to
the
submission
of
certain
documents,
like
business
permit
and
the
like.
Notwithstanding
the
non-
submission
of
the
documentary
requirements
the
bank
staff
already
stamped
on
the
passbook
Combo
Deposit
Plan
which
led
depositor
to
believe
that
the
ATA
was
already
in
effect.
Depositor
then
issued
two
checks
which
the
bank
dishonored
for
insufficiency
of
funds.
In
the
suit
for
damages
against
the
bank,
the
Court
ruled
that
PNB
was
in
estoppel,
i.e.,
estopped
to
deny
the
existence
and
perfection
of
the
ATA
because
by
stamping
Combo
Deposit
Plan
on
the
passbook,
depositor
was
led
to
believe
that
the
ATA
was
already
effective.
The
Court
ruled
that
a
bank
is
under
obligation
to
treat
the
accounts
of
its
depositors
with
meticulous
care
whether
such
account
consists
a
few
hundred
pesos
or
millions
of
pesos.
The
Court
continued
that
while
the
banks
negligence
may
not
have
been
attended
by
malice
or
bad
faith,
nevertheless
it
caused
serious
anxiety,
embarrassment
and
humiliation
to
the
depositor
which
entitled
her
to
moral
damages.
In
Prudential
Bank
vs.
CA
&
Valenzuela,
7
depositor
maintained
current
and
savings
accounts
with
automatic
transfer
arrangement.
The
bank
misposted
depositors
check
deposit
to
the
savings
account
for
P35,993.48
made
on
June
1,
1988
to
another
account.
The
mistake
was
corrected
and
credited
only
on
June
24,
or
after
23
days.
In
the
meantime,
a
check
issued
by
the
depositor
was
dishonored
for
insufficiency
of
funds.
In
awarding
damages
in
favor
of
the
depositor,
the
Court
ruled
that
the
misposting
of
plaintiffs
check
deposit
to
another
account
and
the
delayed
posting
of
the
same
x
x
x
is
a
clear
proof
of
lack
of
supervision
on
the
part
of
the
bank
x
x
x
while
it
may
true
that
the
banks
negligence
in
dishonoring
the
properly
funded
check
x
x
x
might
not
have
been
attended
with
malice
and
bad
faith,
x
x
x
nevertheless,
it
is
the
result
of
lack
of
due
care
and
caution
expected
of
an
employee
of
a
firm
engaged
in
so
sensitive
and
accurately
demanding
task
as
banking.
Q:
When
a
bank
grants
a
securitized
or
collateralized
loan,
what
is
the
duty
of
the
bank
in
relation
to
the
Certificate
of
Title?
A:
It
is
the
duty
of
the
bank
to
confirm
that
the
COT
provided
by
the
person
applying
for
a
loan
is
clean,
by
comparing
the
title
submitted
to
that
which
is
in
the
Register
of
Deeds,
in
order
to
verify
the
existence
of
tax
liens,
and/or
adverse
claims
that
may
be
attached
to
the
title.
The
bank
also
has
the
duty
to
register
the
mortgage/lien
obtained
by
the
person
applying
for
the
same,
in
order
to
bind
the
land.
Q:
Reconcile
the
law
on
secrecy
of
bank
deposits
and
survivorship
agreements
with
regard
to
deposit
accounts.
A:
A
survivorship
agreement
is
an
aleatory
contract
supported
by
a
lawful
consideration
-
the
mutual
agreement
of
the
joint
depositors
permitting
either
of
them
to
withdraw
the
whole
during
their
lifetime,
and
transferring
the
balance
to
the
survivor
upon
the
death
of
one
of
them.
But
while
the
survivorship
agreement
is
per
se
not
contrary
to
law,
its
operation
or
effect
may
be
violative
of
law
where
it
is
shown
that
such
agreement
is
a
mere
cloak
to
hide
an
inofficious
donation
to
transfer
property
in
fraud
of
creditors,
or
to
defeat
the
legitime
of
a
forced
heir.
Section
97,
NIRC
provide
that
If
a
bank
has
knowledge
of
the
death
of
a
person,
who
has
a
deposit
account
with
it
alone
or
jointly
with
another,
it
must
not
allow
any
withdrawal
from
said
account,
unless
the
Commissioner
of
Internal
Revenue
certified
that
the
estate
tax
thereon
has
been
paid.
Considering
that
the
joint
account
is
co-owned
by
the
depositors,
there
is
a
presumption
that
they
owned
it
equally
or
in
50/50
shares,
in
which
case,
the
transfer
of
the
remaining
balance
of
the
whole
deposit
to
the
surviving
co-depositor/s
upon
death
of
the
other
co-depositor
pursuant
to
their
Survivorship
Agreement
is
a
transfer
made
by
the
said
depositor
in
contemplation
of
death,
as
provided
under
Section
85(B)
of
the
1997
Tax
Code,
viz:
(B)
Transfer
in
Contemplation
of
Death
To
the
extent
of
any
interest
therein
of
which
the
decedent
has
at
any
time
made
a
transfer,
by
trust
or
otherwise,
in
contemplation
of
or
intended
to
take
effect
in
possession
or
enjoyment
at
or
after
death,
or
of
which
he
has
at
any
time
made
a
transfer,
by
trust
or
otherwise,
under
which
he
has
retained
for
his
life
or
for
any
period
which
does
not
in
fact
end
before
his
death
(1)
the
possession
or
enjoyment
of,
or
the
right
to
the
income
from
the
property,
or
(2)
the
right,
either
alone
or
in
conjunction
with
any
person,
to
designate
the
person
who
shall
possess
or
enjoy
the
property
or
the
income
therefrom;
except
in
case
of
a
bona
fide
sale
for
an
adequate
and
full
consideration
in
money
or
moneys
worth.
Thus,
upon
the
death
of
the
co-depositors,
the
50%
share
of
the
deceased
co-depositor
in
the
deposit
shall
be
included
in
computing
the
value
of
his
gross
estate.
Hence,
the
funds
in
the
joint
deposit
account
cannot
be
withdrawn
by
the
surviving
co-depositor/s
unless
the
Commissioner
has
certified
that
the
taxes
imposed
thereon
by
Title
III
of
the
1997
Tax
Code
have
been
paid;
Provided,
however,
That
the
administrator
of
the
estate
or
any
one
(1)
of
the
heirs
of
the
deceased
co-depositor
may,
upon
the
authorization
by
the
Commissioner,
withdraw
an
amount
not
exceeding
Twenty
thousand
pesos
(P20,000.00)
without
the
said
certification.
Section
97
does
not
apply
when
there
is
a
survivorship
agreement
between
the
co-depositors
and
it
is
known
to
the
bank.
Q:
Provide
the
exceptions
to
RA
1405
(Secrecy
of
Bank
Deposits)
A:
Section
2
of
RA
1405
provides:
All
deposits
of
whatever
nature
with
banks
or
banking
institutions
in
the
Philippines
including
investments
in
bonds
issued
by
the
Government
of
the
Philippines,
its
political
subdivisions
and
its
instrumentalities,
are
hereby
considered
as
of
an
absolutely
confidential
nature
and
may
not
be
examined,
inquired
or
looked
into
by
any
person,
government
official,
bureau
or
office,
except
upon
written
permission
of
the
depositor,
or
in
cases
of
impeachment,
or
upon
order
of
a
competent
court
in
cases
of
bribery
or
dereliction
of
duty
of
public
officials,
or
in
cases
where
the
money
deposited
or
invested
is
the
subject
matter
of
the
litigation.
Q:
Discuss
the
duties
of
a
Trust
Entity
A:
SECTION
79.
Authority
to
Engage
in
Trust
Business.
Only
a
stock
corporation
or
a
person
duly
authorized
by
the
Monetary
Board
to
engage
in
trust
business
shall
act
as
a
trustee
or
administer
any
trust
or
hold
property
in
trust
or
on
deposit
for
the
use,
benefit,
or
behoof
of
others.
For
purposes
of
this
Act,
such
a
corporation
shall
be
referred
to
as
a
trust
entity.
SECTION
80.
Conduct
of
Trust
Business.
A
trust
entity
shall
administer
the
funds
or
property
under
its
custody
with
the
diligence
that
a
prudent
man
would
exercise
in
the
conduct
of
an
enterprise
of
a
like
character
and
with
similar
aims.
No
trust
entity
shall,
for
the
account
of
the
trust
or
or
the
beneficiary
of
the
trust,
purchase
or
acquire
property
from,
or
sell,
transfer,
assign
or
lend
money
or
property
to,
or
purchase
debt
instruments
of,
any
of
the
departments,
directors,
officers,
stockholders,
or
employees
of
the
trust
entity,
relatives
within
the
first
degree
of
consanguinity
or
affinity,
or
the
related
interests,
of
such
directors,
officers
and
stockholders,
unless
the
transaction
is
specifically
authorized
by
the
trust
or
and
the
relationship
of
the
trustee
and
the
other
party
involved
in
the
transaction
is
fully
disclosed
to
the
trust
or
or
beneficiary
of
the
trust
prior
to
the
transaction.
The
Monetary
Board
shall
promulgate
such
rules
and
regulations
as
may
be
necessary
to
prevent
circumvention
of
this
prohibition
or
the
evasion
of
the
responsibility
herein
imposed
on
a
trust
entity
Q:
Discuss
the
powers
of
a
trust
entity.
A:
SECTION
83.
Powers
of
a
Trust
Entity.
A
trust
entity,
in
addition
to
the
general
powers
incident
to
corporations,
shall
have
the
power
to:
83.1
Act
as
trustee
on
any
mortgage
or
bond
issued
by
any
municipality,
corporation,
or
any
body
politic
and
to
accept
and
execute
any
trust
consistent
with
law;
83.2
Act
under
the
order
or
appointment
of
any
court
as
guardian,
receiver,
trustee,
or
depositary
of
the
estate
of
any
minor
or
other
incompetent
person,
and
as
receiver
and
depositary
of
any
moneys
paid
into
court
by
parties
to
any
legal
proceedings
and
of
property
of
any
kind
which
may
be
brought
under
the
jurisdiction
of
the
court;
83.3.
Act
as
the
executor
of
any
will
when
it
is
named
the
executor
thereof;
83.4
Act
as
administrator
of
the
estate
of
any
deceased
person,
with
the
will
annexed,
or
as
administrator
of
the
estate
of
any
deceased
person
when
there
is
no
will;
83.5.
Accept
and
execute
any
trust
for
the
holding,
management,
and
administration
of
any
estate,
real
or
personal,
and
the
rents,
issues
and
profits
thereof;
and
83.6.
Establish
and
manage
common
trust
funds,
subject
to
such
rules
and
regulations
as
may
be
prescribed
by
the
Monetary
Board.
Q:
Discuss
duties
of
trust
entities
to
minor
beneficiaries.
A:
Testamentary
Trust
-
As
its
name
implies,
it
is
a
trust
whereby
the
trustor
transfers
his
property
in
trust
through
his
will
and
testament
and
this
is
to
take
effect
only
upon
his
death.
It
is
a
part
of
the
will
and
testament
itself
and
is
not
a
separate
legal
document.
This
is
for
clients
who
intend
to
accumulate
all
their
assets
as
may
be
allowed
by
law
into
one
fund
to
be
managed
by
a
competent
and
responsible
trustee,
specially
if
the
trustor
feels
that
he
will
be
survived
by
heirs
who
would
still
be
minors,
or
who
are
incapacitated
or
not
competent
to
manage
their
own
affairs
or
the
properties
they
stand
to
inherit
from
the
trustor.
This
prevents
the
unnecessary
division
of
the
trustors
estate
and
the
consequent
loss
of
earning
power
through
unwise
management
or
dissipation.
Depending
on
how
it
is
drafted,
the
testamentary
trust
can
also
minimize
or
avoid
a
second
tax
on
the
family
estate
as
it
is
transferred
from
the
surviving
spouse
to
the
children.
Living
or
Inter
Vivos
Trust
This
trust,
which
is
created
by
a
trust
agreement,
starts
to
operate
during
the
lifetime
of
the
trustor.
Under
this
arrangement,
the
trustor
transfers
assets
to
a
trustee
for
the
latter
to
manage
as
the
trust
agreement
dictates.
The
functions
and
authorities
to
be
exercised
by
the
trustee
are
defined
in
the
trust
agreement.
These
would
include
:
(1)
the
scope
or
extent
of
the
trustees
investment
powers;
(2)
the
beneficiaries;
(3)
the
terms
and
conditions
under
which
the
income
and/or
principal
of
the
trust
is
to
be
paid
or
to
be
disposed
of
ultimately.
Q:
Discuss
a
TRUST
BOND.
A:
SECTION
85.
Bond
of
Certain
Persons
for
the
Faithful
Performance
of
Duties.
Before
an
executor,
administrator,
guardian,
trustee,
receiver
or
depositary
appointed
by
the
court
enters
upon
the
execution
of
his
duties,
he
shall,
upon
order
of
the
court,
file
a
bond
in
such
sum,
as
the
court
may
direct.
Upon
the
application
of
any
executor,
administrator,
guardian,
trustee,
receiver,
depositary
or
any
other
person
in
interest,
the
court
may,
after
notice
and
hearing,
order
that
the
subject
matter
of
the
trust
or
any
part
thereof
be
deposited
with
a
trust
entity.
Upon
presentation
of
proof
to
the
court
that
the
subject
matter
of
the
trust
has
been
deposited
with
a
trust
entity,
the
court
may
order
that
the
bond
given
by
such
persons
for
the
faithful
performance
of
their
duties
be
reduced
to
such
sums
as
it
may
deem
proper:
Provided,
however,
That
the
reduced
bond
shall
be
sufficient
to
secure
adequately
the
proper
administration
and
care
of
any
property
remaining
under
the
control
of
such
persons
and
the
proper
accounting
for
such
property.
Property
deposited
with
any
trust
entity
in
conformity
with
this
Section
shall
be
held
by
such
entity
under
the
orders
and
direction
of
the
court
CASES
1. SIMEX
INTERNATIONAL
(MANILA)
V.
CA
A
bank
may
be
held
liable
for
damages
by
reason
of
its
unjustified
dishonor
of
a
check,
which
caused
damage
to
its
clients
credit
standing.
The
bank
must
record
every
single
transaction
accurately,
down
to
the
last
centavo,
and
as
promptly
as
possible.
This
has
to
be
done
if
the
account
is
to
reflect
at
any
given
time
the
amount
of
money
the
depositor
can
dispose
of
as
he
sees
fit,
confident
that
the
bank
will
deliver
it
as
and
to
whomever
he
directs.
The
bank
is
a
fiduciary
of
the
depositors
money.
Facts:
Simex
International
is
a
private
corporation
engaged
in
the
exportation
of
food
products.
It
buys
these
products
from
various
local
suppliers
and
then
sells
them
abroad
to
the
Middle
East
and
the
United
States.
Most
of
its
exports
are
purchased
by
the
petitioner
on
credit.
Simex
was
a
depositor
of
the
Far
East
Savings
Bank
and
maintained
a
checking
account
in
its
branch
in
Cubao,
Quezon
City
which
issued
several
checks
against
its
deposit
but
was
surprised
to
learn
later
that
they
had
been
dishonored
for
insufficient
funds.
As
a
consequence,
several
suppliers
sent
a
letter
of
demand
to
the
petitioner,
threatening
prosecution
if
the
dishonored
check
issued
to
it
was
not
made
good
and
also
withheld
delivery
of
the
order
made
by
the
petitioner.
One
supplier
also
cancelled
the
petitioners
credit
line
and
demanded
that
future
payments
be
made
by
it
in
cash
or
certified
check.
The
petitioner
complained
to
the
respondent
bank.
Investigation
disclosed
that
the
sum
of
P100,000.00
deposited
by
the
petitioner
on
May
25,
1981,
had
not
been
credited
to
it.
The
error
was
rectified
only
a
month
after,
and
the
dishonored
checks
were
paid
after
they
were
re-deposited.
The
petitioner
then
filed
a
complaint
in
the
then
Court
of
First
Instance
of
Rizal
against
the
bank
for
its
gross
and
wanton
negligence.
Issue:
Whether
or
not
the
bank
can
be
held
liable
for
negligence
by
reason
of
its
unjustified
dishonor
of
a
check
Held:
The
depositor
expects
the
bank
to
treat
his
account
with
the
utmost
fidelity
whether
such
account
consists
only
of
a
few
hundred
pesos
or
of
millions.
The
bank
must
record
every
single
transaction
accurately,
down
to
the
last
centavo,
and
as
promptly
as
possible.
This
has
to
be
done
if
the
account
is
to
reflect
at
any
given
time
the
amount
of
money
the
depositor
can
dispose
of
as
he
sees
fit,
confident
that
the
bank
will
deliver
it
as
and
to
whomever
he
directs.
A
blunder
on
the
part
of
the
bank,
such
as
the
dishonour
of
a
check
without
good
reason,
can
cause
the
depositor
not
a
little
embarrassment
if
not
also
financial
loss
and
perhaps
even
civil
and
criminal
litigation.
Article
2205
of
the
Civil
Code
provides
that
actual
or
compensatory
damages
may
be
received
(2)
for
injury
to
the
plaintiff
s
business
standing
or
commercial
credit.
There
is
no
question
that
the
petitioner
did
sustain
actual
injury
as
a
result
of
the
dishonored
checks
and
that
the
existence
of
the
loss
having
been
established
absolute
certainty
as
to
its
amount
is
not
required.
7
Such
injury
should
bolster
all
the
more
the
demand
of
the
petitioner
for
moral
damages
and
justifies
the
examination
by
this
Court
of
the
validity
and
reasonableness
of
the
said
claim.
2. BPI
CASES
BPI
vs
FRANCO
Court
of
Appeals,
GR
No.
123498,
November
23,
2007
Facts:
Franco
opened
3
accounts
with
BPI
with
the
total
amount
of
P2,000,000.00.
The
said
amount
used
to
open
these
accounts
is
traceable
to
a
check
issued
by
Tevesteco.
The
funding
for
the
P2,000,000.00
check
was
part
of
the
P80,000,000.00
debited
by
BPI
from
FMICs
account
(with
a
deposit
of
P100,000,000.00)
and
credited
to
Tevestecos
account
pursuant
to
an
Authority
to
Debit
which
was
allegedly
forged
as
claimed
by
FMIC.
Tevesteco
effected
several
withdrawals
already
from
its
account
amounting
to
P37,455,410.54
including
the
P2,000,000.00
paid
to
Franco.
Franco
issued
two
checks
which
were
dishonoured
upon
presentment
for
payment
due
to
garnishment
of
his
account
filed
by
BPI.
BPI
claimed
that
it
had
a
better
right
to
the
amounts
which
consisted
of
part
of
the
money
allegedly
fraudulently
withdrawn
from
it
by
Tevesteco
and
ending
up
in
Francos
account.
BPI
urges
us
that
the
legal
consequence
of
FMICs
forgery
claim
is
that
the
money
transferred
by
BPI
to
Tevesteco
is
its
own,
and
considering
that
it
was
able
to
recover
possession
of
the
same
when
the
money
was
redeposited
by
Franco,
it
had
the
right
to
set
up
its
ownership
thereon
and
freeze
Francos
accounts.
Issue:
WON
the
bank
has
a
better
right
to
the
deposits
in
Francos
account.
Held:
No.
Significantly,
while
Article
559
permits
an
owner
who
has
lost
or
has
been
unlawfully
deprived
of
a
movable
to
recover
the
exact
same
thing
from
the
current
possessor,
BPI
simply
claims
ownership
of
the
equivalent
amount
of
money,
i.e.,
the
value
thereof,
which
it
had
mistakenly
debited
from
FMICs
account
and
credited
to
Tevestecos,
and
subsequently
traced
to
Francos
account.
Money
bears
no
earmarks
of
peculiar
ownership,
and
this
characteristic
is
all
the
more
manifest
in
the
instant
case
which
involves
money
in
a
banking
transaction
gone
awry.
Its
primary
function
is
to
pass
from
hand
to
hand
as
a
medium
of
exchange,
without
other
evidence
of
its
title.
Money,
which
had
been
passed
through
various
transactions
in
the
general
course
of
banking
business,
even
if
of
traceable
origin,
is
no
exception.
BPI
v.
CA
[G.R.
No.
104612,
May
10,
1994]
DAVIDE,
JR.,
J.
FACTS:
Private
respondents
Eastern
and
Lim,
an
officer
and
stockholder
of
Eastern,
held
at
least
one
joint
bank
account
with
the
Commercial
Bank
and
Trust
Co.
(CBTC),
the
predecessor-in-interest
of
petitioner
BPI.
Sometime
in
March
1975,
a
joint
checking
account
("and"
account)
with
Lim
in
the
amount
of
P120,000.00
was
opened
by
Mariano
Velasco.
When
Velasco
died,
an
Indemnity
Undertaking
was
executed
by
Lim
for
himself
and
as
President
and
GM
of
Eastern,
wherein
one-half
of
the
outstanding
balance
was
provisionally
released
and
transferred
to
one
of
the
bank
accounts
of
Eastern
with
CBTC.
Later
on,
Eastern
obtained
a
loan
of
P73,000.00
from
CBTC
as
"Additional
Working
Capital,"
evidenced
by
the
"Disclosure
Statement
on
Loan/Credit
Transaction".
The
loan
was
payable
on
demand
with
interest
at
14%
per
annum.
For
this
loan,
Eastern
issued
on
the
same
day
a
negotiable
promissory
note
which
was
signed
by
Lim
both
in
his
own
capacity
and
as
President
and
General
Manager
of
Eastern.
No
reference
to
any
security
for
the
loan
appears
on
the
note.
In
addition,
Eastern
and
Lim,
and
CBTC
signed
another
document
entitled
"Holdout
Agreement,"
wherein
it
was
stated
that
as
security
for
the
Loan
[Lim
and
Eastern]
have
offered
[CBTC]
and
the
latter
accepts
a
holdout
on
said
Current
Account
in
the
joint
names
of
Lim
and
Velasco.
After
CBTC
was
merged
with
BPI,
BPI
filed
a
complaint
against
Lim
and
Eastern
demanding
payment
of
the
promissory
note
for
P73,000.00.
Defendants
Lim
and
Eastern,
in
turn,
filed
a
counterclaim
against
BPI
for
the
return
of
the
balance
in
the
disputed
account
subject
of
the
Holdout
Agreement
and
the
interests
thereon
after
deducting
the
amount
due
on
the
promissory
note.
ISSUE:
Whether
BPI
can
demand
payment
of
the
loan
of
P73,000.00
despite
the
existence
of
the
Holdout
Agreement.
Whether
or
not
BPI
is
still
liable
to
the
private
respondents
on
the
account
subject
of
the
Holdout
Agreement
after
its
withdrawal
by
the
heirs
of
Velasco.
HELD:
The
deposit
under
the
questioned
account
was
an
ordinary
bank
deposit;
hence,
it
was
payable
on
demand
of
the
depositor.
When
the
ownership
of
a
particular
property
is
disputed,
the
determination
by
a
probate
court
of
whether
that
property
is
included
in
the
estate
of
a
deceased
is
merely
provisional
in
character
and
cannot
be
the
subject
of
execution.
The
payment
of
the
money
deposited
with
BPI
that
will
extinguish
its
obligation
to
the
creditor-
depositor
is
payment
to
the
person
of
the
creditor
or
to
one
authorized
by
him
or
by
the
law
to
receive
it.
Payment
made
by
the
debtor
to
the
wrong
party
does
not
extinguish
the
obligation
as
to
the
creditor
who
is
without
fault
or
negligence,
even
if
the
debtor
acted
in
utmost
good
faith
and
by
mistake
as
to
the
person
of
the
creditor,
or
through
error
induced
by
fraud
of
a
third
person
BPI
v.
Roxas
GR
157833
Macalinao
vs.
BPI
GR
175490
POST
MIDTERMS:
Chapters
7,8,9,10,
&
11
Chapter
7:
THE
BANGKO
SENTRAL
NG
PILIPINAS
Q:
What
is
the
Declared
Policy
of
the
State
A:
The
State
shall
maintain
a
central
monetary
authority
that
shall
function
and
operate
as
an
independent
and
accountable
body
corporate
in
the
discharge
of
its
mandated
responsibilities
concerning
its
unique
functions
and
responsibilities,
the
central
monetary
authority
established
under
the
NCBA,
while
being
a
government
owned
corporation,
shall
enjoy
fiscal
and
administrative
autonomy
[Sec.
1
NCBA}
Q:
What
are
the
changes
made
to
the
BSP
by
virtue
of
the
NCBA?
A:
SEC.
2.
Creation
of
the
Bangko
Sentral.
_
There
is
hereby
established
an
independent
central
monetary
authority,
which
shall
be
a
body
corporate
known
as
the
Bangko
Sentral
ng
Pilipinas,
hereafter
referred
to
as
the
Bangko
Sentral.
As
mandated
by
Sec
20,
Art.
XII
of
the
1987
Constitution,
Congress
shall
establish
an
independent
central
monetary
authority,
the
members
of
whose
governing
board
must
be
natural-born
Filipino
citizens,
of
known
probity,
integrity,
and
patriotism,
the
majority
of
whom
shall
come
from
the
private
sector.
They
shall
also
be
subject
to
such
other
qualifications
and
disabilities
as
may
be
prescribed
by
law.
The
authority
shall
provide
policy
direction
in
the
areas
of
money,
banking,
and
credit.
It
shall
have
supervision
over
the
operations
of
banks
and
exercise
such
regulatory
powers
as
may
be
provided
by
law
over
the
operations
of
finance
companies
and
other
institutions
performing
similar
functions.
Until
the
Congress
otherwise
provides,
the
Central
Bank
of
the
Philippines
operating
under
existing
laws,
shall
function
as
the
central
monetary
authority.
Q:
What
is
the
primary
objective
of
the
BSP?
A:
The
primary
objective
of
the
Bangko
Sentral
is
to
maintain
price
stability
conducive
to
a
balanced
and
sustainable
growth
of
the
economy.
It
shall
also
promote
and
maintain
monetary
stability
and
the
convertibility
of
the
peso.
[Sec
3[2]
NCBA]
Q:
What
are
the
functions
and
the
responsibilities
of
the
BSP
1. It
provides
policy
directions
in
the
areas
of
money,
credit,
and
banking;
2. It
shall
have
supervision
over
the
operations
of
banks
3. It
shall
exercise
regulatory
powers
over
the
operations
of
finance
companies
and
non
bank
financial
institutions
performing
quasi
banking
functions
4. It
shall
have
the
sole
power
and
authority
to
issue
currency
within
the
territory
of
the
republic
of
the
Philippines
5. The
power
to
issue
regulations
to
prevent
the
circulation
of
foreign
currencies
or
currency
substitutes
as
well
as
the
reproduction
of
facsimiles
of
BSP
notes.
6. It
has
the
power
to
investigate,
make
arrest,
conduct
searches
and
seizure
for
maintaining
the
integrity
of
currency
7. To
engage
in
foreign
exchange
transactions
to
maintain
price
stability
8. To
make
rediscounts,
discounts,
loans
and
advances
to
banking
and
other
financial
institutions
to
influence
the
volume
of
credit
consistent
with
the
objectives
of
price
stability
9. To
engage
in
open
market
operations
purchase
and
sale
securities
exclusively
in
accordance
with
its
objective
of
achieving
price
stability
10. To
act
as
the
banker
of
government
11. To
engage
in
marketing
and
stabilization
of
securities
for
the
account
of
the
government
12. To
act
as
financial
advisor
of
the
government
Q:
What
are
the
responsibilities
of
the
BSP?
A:
Responsibilities-
The
BSP
provides
policy
directions
in
the
areas
of
money,
banking
and
credit.
It
supervises
operations
of
banks
and
exercises
regulatory
powers
over
non-bank
financial
institutions
with
quasi-banking
functions.
Under
the
New
Central
Bank
Act,
the
BSP
performs
the
following
functions,
all
of
which
relate
to
its
status
as
the
Republics
central
monetary
authority.
Liquidity
Management.
The
BSP
formulates
and
implements
monetary
policy
aimed
at
influencing
money
supply
consistent
with
its
primary
objective
to
maintain
price
stability.
Currency
issue.
The
BSP
has
the
exclusive
power
to
issue
the
national
currency.
All
notes
and
coins
issued
by
the
BSP
are
fully
guaranteed
by
the
Government
and
are
considered
legal
tender
for
all
private
and
public
debts.
Lender
of
last
resort.
The
BSP
extends
discounts,
loans
and
advances
to
banking
institutions
for
liquidity
purposes.
Financial
Supervision.
The
BSP
supervises
banks
and
exercises
regulatory
powers
over
non-bank
institutions
performing
quasi-banking
functions.
Management
of
foreign
currency
reserves.
The
BSP
seeks
to
maintain
sufficient
international
reserves
to
meet
any
foreseeable
net
demands
for
foreign
currencies
in
order
to
preserve
the
international
stability
and
convertibility
of
the
Philippine
peso.
Determination
of
exchange
rate
policy.
The
BSP
determines
the
exchange
rate
policy
of
the
Philippines.
Currently,
the
BSP
adheres
to
a
market-oriented
foreign
exchange
rate
policy
such
that
the
role
of
Bangko
Sentral
is
principally
to
ensure
orderly
conditions
in
the
market.
Other
activities.
The
BSP
functions
as
the
banker,
financial
advisor
and
official
depository
of
the
Government,
its
political
subdivisions
and
instrumentalities
and
government-owned
and
-controlled
corporations.
10
misconduct.
In
the
event
of
a
settlement
or
compromise,
indemnification
shall
be
provided
only
in
connection
with
such
matters
covered
by
the
settlement
as
to
which
the
Bangko
Sentral
is
advised
by
external
counsel
that
the
person
to
be
indemnified
did
not
commit
any
negligence
or
misconduct.
The
costs
and
expenses
incurred
in
defending
the
aforementioned
action,
suit
or
proceeding
may
be
paid
by
the
Bangko
Sentral
in
advance
of
the
final
disposition
of
such
action,
suit
or
proceeding
upon
receipt
of
an
undertaking
by
or
on
behalf
of
the
member,
officer,
or
employee
to
repay
the
amount
advanced
should
it
ultimately
be
determined
by
the
Monetary
Board
that
he
is
not
entitled
to
be
indemnified
as
provided
in
this
subsection.
Q:
Provide
for
the
role
of
Conservators
in
situations
of
delinquent
banks
A:
SECTION
29.
Appointment
of
Conservator.
Whenever,
on
the
basis
of
a
report
submitted
by
the
appropriate
supervising
or
examining
department,
the
Monetary
Board
finds
that
a
bank
or
a
quasi-
bank
is
in
a
state
of
continuing
inability
or
unwillingness
to
maintain
a
condition
of
liquidity
deemed
adequate
to
protect
the
interest
of
depositors
and
creditors,
the
Monetary
Board
may
appoint
a
conservator
with
such
powers
as
the
Monetary
Board
shall
deem
necessary
to
take
charge
of
the
assets,
liabilities,
and
the
management
thereof,
reorganize
the
management,
collect
all
monies
and
debts
due
said
institution,
and
exercise
all
powers
necessary
to
restore
its
viability.
The
conservator
shall
report
and
be
responsible
to
the
Monetary
Board
and
shall
have
the
power
to
overrule
or
revoke
the
actions
of
the
previous
management
and
board
of
directors
of
the
bank
or
quasi-bank.
The
conservator
should
be
competent
and
knowledgeable
in
bank
operations
and
management.
The
conservatorship
shall
not
exceed
one
(1)
year.
The
powers
that
may
be
conferred
to
the
conservator
are
such
powers
as
may
be
necessary
for
the
following
purposes:
1. To
take
charge
of
assets,
liabilities,
and
the
management
thereof
2. TO
reorganize
the
management
of
the
subject
bank
3. To
collect
all
monies
and
debts
due
said
institution
4. To
exercise
all
powers
necessary
to
restore
its
viability.
Application
in
the
case
of
Banco
Filipino
vs
MB
G.R.
No.
70054,
December
11,
1991
Facts:
Banco
Filipino
filed
the
petition
for
certiorari
questioning
the
validity
of
the
resolutions
[finding
Banco
Filipino
insolvent
and
placing
it
under
receivership
and
subsequently
placing
the
bank
under
liquidation
and
designated
a
liquidator]
issued
by
the
Monetary
Board
authorizing
the
receivership
and
liquidation
of
Banco
Filipino.A
temporary
restraining
order
was
issued
enjoining
the
respondents
from
executing
further
acts
of
liquidation
of
the
bank.
However,
acts
and
other
transactions
pertaining
to
normal
operations
of
a
bank
are
not
enjoined.
Subsequently,
Top
Management
and
Pilar
Development
failed
to
pay
their
loans
on
the
due
date.
Hence,
the
law
firm
of
Sycip,
Salazar,
et
al.
acting
as
counsel
for
Banco
Filipino
under
authority
of
the
liquidator,
applied
for
extra-judicial
foreclosure
of
the
mortgage
over
Top
Management
and
Pilar
Developments
properties.
Thus,
the
Ex-Officio
Sheriff
of
the
Regional
Trial
Court
of
Cavite
issued
a
notice
of
extra-judicial
foreclosure
sale
of
the
properties.
Top
Management
and
Pilar
Development
filed
2
separate
petitions
for
injunction
and
prohibition
with
the
respondent
appellate
court
seeking
to
enjoin
the
Regional
Trial
Court
of
Cavite,
the
ex-officio
sheriff
of
said
court
and
Sycip,
Salazar,
et
al.
from
proceeding
with
foreclosure
sale
which
were
subsequently
dismissed
by
the
court.
Hence
this
petition
Issues:
11
1)
Whether
or
not
the
liquidator
has
the
authority
to
prosecute
as
well
as
to
defend
suits
and
to
foreclose
mortgages
for
and
behalf
of
the
bank
while
the
issue
on
the
validity
of
the
receivership
and
liquidation
is
still
pending
resolution.
Section
29
of
the
Republic
Act
No.
265,
as
amended
known
as
the
Central
Bank
Act,
provides
that
when
a
bank
is
forbidden
to
do
business
in
the
Philippines
and
placed
under
receivership,
the
person
designated
as
receiver
shall
immediately
take
charge
of
the
banks
assets
and
liabilities,
as
expeditiously
as
possible,
collect
and
gather
all
the
assets
and
administer
the
same
for
the
benefit
of
its
creditors,
and
represent
the
bank
personally
or
through
counsel
as
he
may
retain
in
all
actions
or
proceedings
for
or
against
the
institution,
exercising
all
the
powers
necessary
for
these
purposes
including,
but
not
limited
to,
bringing
and
foreclosing
mortgages
in
the
name
of
the
bank.
If
the
Monetary
Board
shall
later
determine
and
confirm
that
banking
institution
is
insolvent
or
cannot
resume
business
safety
to
depositors,
creditors
and
the
general
public,
it
shall,
public
interest
requires,
order
its
liquidation
and
appoint
a
liquidator
who
shall
take
over
and
continue
the
functions
of
receiver
previously
appointed
by
Monetary
Board.
The
liquid
for
may,
in
the
name
of
the
bank
and
with
the
assistance
counsel
as
he
may
retain,
institute
such
actions
as
may
necessary
in
the
appropriate
court
to
collect
and
recover
a
counts
and
assets
of
such
institution
or
defend
any
action
ft
against
the
institution.
Pendency
of
the
case
did
not
diminish
the
powers
and
authority
of
the
designated
liquidator
to
effectuate
and
carry
on
the
administration
of
the
bank.
The
Court
did
not
prohibit
however
acts
a
as
receiving
collectibles
and
receivables
or
paying
off
credits
claims
and
other
transactions
pertaining
to
normal
operate
of
a
bank.
There
is
no
doubt
that
the
prosecution
of
suits
collection
and
the
foreclosure
of
mortgages
against
debtors
the
bank
by
the
liquidator
are
among
the
usual
and
ordinary
transactions
pertaining
to
the
administration
of
a
bank.
2)
Whether
or
not
the
closure
of
the
bank
based
on
the
Tiaoqui
report
is
correct.
Clearly,
Tiaoqui
based
his
report
on
an
incomplete
examination
of
petitioner
bank
and
outrightly
concluded
therein
that
the
latters
financial
status
was
one
of
insolvency
or
illiquidity.
In
the
instant
case,
the
basic
standards
of
substantial
due
process
were
not
observed.
Time
and
again,
We
have
held
in
several
cases,
that
the
procedure
of
administrative
tribunals
must
satisfy
the
fundamentals
of
fair
play
and
that
their
judgment
should
express
a
well-supported
conclusion.
The
test
of
insolvency
laid
down
in
Section
29
of
the
Central
Bank
Act
is
measured
by
determining
whether
the
realizable
assets
of
a
bank
are
leas
than
its
liabilities.
Hence,
a
bank
is
solvent
if
the
fair
cash
value
of
all
its
assets,
realizable
within
a
reasonable
time
by
a
reasonable
prudent
person,
would
equal
or
exceed
its
total
liabilities
exclusive
of
stock
liability;
but
if
such
fair
cash
value
so
realizable
is
not
sufficient
to
pay
such
liabilities
within
a
reasonable
time,
the
bank
is
insolvent.
Examination
appraises
the
soundness
of
the
institutions
assets,
the
quality
and
character
of
management
and
determines
the
institutions
compliance
with
laws,
rules
and
regulations.
Audit
is
a
detailed
inspection
of
the
institutions
books,
accounts,
vouchers,
ledgers,
etc.
to
determine
the
recording
of
all
assets
and
liabilities.
Hence,
examination
concerns
itself
with
review
and
appraisal,
while
audit
concerns
itself
with
verification.
Q:
What
is
the
close
now,
hear
later
scheme?
A:
The
law
does
not
contemplate
prior
notice
and
hearing
before
the
bank
may
be
directed
to
stop
operations
and
placed
under
receivership.
The
purpose
is
to
prevent
unwarranted
dissipation
of
the
banks
assets
and
as
a
valid
exercise
of
police
power
to
protect
the
depositors,
creditors,
stockholders
and
the
general
public.
(Central
Bank
of
the
Philippines
v.
CA,
G.R.
No.
76118
Mar.
30,
1993)
Is
the
Close
now,
Hear
later
scheme
a
valid
practice?
This
close
now,
hear
later
scheme
is
grounded
on
practical
and
legal
considerations
to
prevent
unwarranted
dissipation
of
the
banks
assets
and
as
a
valid
exercise
of
police
power
to
protect
the
depositors,
creditors,
stockholders,
and
the
general
public.
The
close
now,
hear
later
doctrine
has
already
been
justified
as
a
measure
for
the
protection
of
the
public
interest.
Swift
action
is
called
for
on
the
part
of
the
BSP
when
it
finds
that
a
bank
is
in
dire
straits.
Unless
adequate
and
determined
efforts
are
taken
by
the
government
against
distressed
and
mismanaged
banks,
public
faith
in
the
banking
system
is
certain
to
deteriorate
to
the
prejudice
of
the
national
economy
itself,
not
to
mention
the
losses
suffered
by
the
bank
depositors,
creditors,
and
stockholders,
who
all
deserve
the
protection
of
the
government.
Q:
What
is
the
role
of
PDIC
in
close
coordination
with
the
BSP
&
MB?
A:
PDIC
was
created
to
promote
and
safeguard
the
interests
of
the
depositing
public
by
way
of
providing
permanent
and
continuing
insurance
coverage
on
all
insured
deposits.
The
PDIC
also
aims
to
strengthen
the
mandatory
deposit
insurance
coverage
system
to
generate,
preserve,
and
maintain
faith
and
confidence
in
the
countrys
banking
system,
and
protect
it
from
illegal
schemes
and
machinations.
Consistent
with
its
public
policy
objectives,
the
PDIC
has
the
following
mandates:
II.
Examination
and
Resolution.
The
PDIC
works
closely
with
the
Bangko
Sentral
ng
Pilipinas
(BSP)
in
strengthening
and
maintaining
the
stability
of
the
banking
system.
PDIC
is
authorized
to
issue
regulations
to
implement
its
Charter,
conduct
bank
examinations
and
investigations
to
determine
banks
financial
health
and
their
adherence
to
rules
and
regulations
on
banking
and
deposit
insurance,
and
extend
financial
assistance
to
eligible
distressed
banks.
Q:
Explain
the
movement
made
to
buy
weak
banks
strengthening
program
for
rural
banks
and
incentives
given
to
buyer-banks
Pursuant
to
Philippine
Deposit
Insurance
Corporation
(PDIC)
Board
Resolution
No.
2012-04-103
dated
25
April
2012
and
Bangko
Sentral
ng
Pilipinas
(BSP)
Monetary
Board
(MB)
Resolution
No.
759
dated
10
May
2012,
approving
the
Strengthening
Program
for
Rural
Banks
Plus
(SPRB
Plus),
this
implementing
guidelines
(the
Guidelines)
for
availment
of
the
SPRB
Plus
Financial
Assistance
(FA)
and
regulatory
reliefs/incentives
is
hereby
issued.
The
BSPs
Monetary
Board
extended
the
validity
of
the
program
until
the
end
of
2014.
SPRB-Plus
aims
to
strengthen
the
banking
system
and
to
minimize
bank
closures,
the
BSP
said
in
a
weekend
statement.
SPRB-Plusa
modified
version
of
the
original
SPRBis
a
joint
project
between
the
BSP
and
the
Philippine
Deposit
Insurance
Corp.
(PDIC),
which
acts
as
receiver
for
shuttered
banks.
It
provides
incentives
for
white
knight
investors
to
acquire
smaller
banks
and
encourage
consolidation
within
the
sector
that
caters
to
the
most
sensitive
segment
of
the
economy.
The
previous
SPRB
rules
limited
the
definition
of
white
knights
to
rural
banks.
SPRB-Plus
expands
this
to
12
include
bigger
thrift,
and
universal
and
commercial
lenders.
Along
with
the
extension,
the
BSPs
Monetary
Board
also
approved
certain
changes
to
the
SPRB-Plus
rules.
This
includes
the
relaxation
of
the
required
ownership
level
of
white
knights
in
banks
being
rescued.
From
the
previous
67
percent,
acquiring
banks
now
need
to
only
acquire
60
percent
of
a
smaller
bank
to
be
eligible
for
the
SPRB-
Plus
incentives.
Apart
from
making
it
easier
for
mergers
to
take
place,
this
relaxation
also
puts
the
rules
in
line
with
the
recently
passed
Rural
Banks
Act,
which
allows
foreign
firms
to
acquire
as
much
as
60
percent
of
rural
banks
in
the
country.
The
BSP
and
PDIC
also
incorporated
incentives
for
mergers
involving
banks
that
were
affected
by
Supertyphoon
Yolanda.
The
PDIC
will
now
pay
for
100
percent
of
the
required
additional
capital
to
restore
a
banks
operations,
if
that
bank
was
affected
by
the
recent
calamity.
Under
normal
circumstances,
the
deposit
insurers
financial
assistance
would
be
limited
to
50
percent.
Existing
incentives
in
the
SPRB-Plus
program
include
the
relaxation
of
rules
for
branch
expansions,
and
temporary
regulatory
relief
such
as
on
capitalization
requirements,
among
others.
Q:
Discuss
Receivership
A:
SECTION
30.
Proceedings
in
Receivership
and
Liquidation.
Whenever,
upon
report
of
the
head
of
the
supervising
or
examining
department,
the
Monetary
Board
finds
that
a
bank
or
quasi-bank:
(a)
is
unable
to
pay
its
liabilities
as
they
become
due
in
the
ordinary
course
of
business:
Provided,
That
this
shall
not
include
inability
to
pay
caused
by
extraordinary
demands
induced
by
financial
panic
in
the
banking
community;
(b)
has
insufficient
realizable
assets,
as
determined
by
the
Bangko
Sentral,
to
meet
its
liabilities;
or
(c)
cannot
continue
in
business
without
involving
probable
losses
to
its
depositors
or
creditors;
or
(d)
has
willfully
violated
a
cease
and
desist
order
under
Section
37
that
has
become
final,
involving
acts
or
transactions
which
amount
to
fraud
or
a
dissipation
of
the
assets
of
the
institution;
in
which
cases,
the
Monetary
Board
may
summarily
and
without
need
for
prior
hearing
forbid
the
institution
from
doing
business
in
the
Philippines
and
designate
the
Philippine
Deposit
Insurance
Corporation
as
receiver
of
the
banking
institution.
For
a
quasi-bank,
any
person
of
recognized
competence
in
banking
or
finance
may
be
designed
as
receiver.
The
receiver
shall
immediately
gather
and
take
charge
of
all
the
assets
and
liabilities
of
the
institution,
administer
the
same
for
the
benefit
of
its
creditors,
and
exercise
the
general
powers
of
a
receiver
under
the
Revised
Rules
of
Court
but
shall
not,
with
the
exception
of
administrative
expenditures,
pay
or
commit
any
act
that
will
involve
the
transfer
or
disposition
of
any
asset
of
the
institution:
Provided,
That
the
receiver
may
deposit
or
place
the
funds
of
the
institution
in
non-
speculative
investments.
The
receiver
shall
determine
as
soon
as
possible,
but
not
later
than
ninety
(90)
days
from
take
over,
whether
the
institution
may
be
rehabilitated
or
otherwise
placed
in
such
a
condition
so
that
it
may
be
permitted
to
resume
business
with
safety
to
its
depositors
and
creditors
and
the
general
public:
Provided,
That
any
determination
for
the
resumption
of
business
of
the
institution
shall
be
subject
to
prior
approval
of
the
Monetary
Board.
Q:
Discuss
the
procedure
in
the
liquidation
of
banks
placed
under
receivership.
A:
If
the
receiver
determines
that
the
institution
cannot
be
rehabilitated
or
permitted
to
resume
business
in
accordance
with
the
next
preceding
paragraph,
the
Monetary
Board
shall
notify
in
writing
the
board
of
directors
of
its
findings
and
direct
the
receiver
to
proceed
with
the
liquidation
of
the
institution.
The
receiver
shall:
(1)
file
ex
parte
with
the
proper
regional
trial
court,
and
without
requirement
of
prior
notice
or
any
other
action,
a
petition
for
assistance
in
the
liquidation
of
the
institution
pursuant
to
a
liquidation
plan
adopted
by
the
Philippine
Deposit
Insurance
Corporation
for
general
application
to
all
closed
banks.
In
case
of
quasi-banks,
the
liquidation
plan
shall
be
adopted
by
the
Monetary
Board.
Upon
acquiring
jurisdiction,
the
court
shall,
upon
motion
by
the
receiver
after
due
notice,
adjudicate
disputed
claims
against
the
institution,
assist
the
enforcement
of
individual
liabilities
of
the
stockholders,
directors
and
officers,
and
decide
on
other
issues
as
may
be
material
to
implement
the
liquidation
plan
adopted.
The
receiver
shall
pay
the
cost
of
the
proceedings
from
the
assets
of
the
institution.
(2)
convert
the
assets
of
the
institutions
to
money,
dispose
of
the
same
to
creditors
and
other
parties,
for
the
purpose
of
paying
the
debts
of
such
institution
in
accordance
with
the
rules
on
concurrence
and
preference
of
credit
under
the
Civil
Code
of
the
Philippines
and
he
may,
in
the
name
of
the
institution,
and
with
the
assistance
of
counsel
as
he
may
retain,
institute
such
actions
as
may
be
necessary
to
collect
and
recover
accounts
and
assets
of,
or
defend
any
action
against,
the
institution.
The
assets
of
an
institution
under
receivership
or
liquidation
shall
be
deemed
in
custodia
legis
in
the
hands
of
the
receiver
and
shall,
from
the
moment
the
institution
was
placed
under
such
receivership
or
liquidation,
be
exempt
from
any
order
of
garnishment,
levy,
attachment,
or
execution.
The
actions
of
the
Monetary
Board
taken
under
this
section
or
under
Section
29
of
this
Act
shall
be
final
and
executory,
and
may
not
be
restrained
or
set
aside
by
the
court
except
on
petition
for
certiorari
on
the
ground
that
the
action
taken
was
in
excess
of
jurisdiction
or
with
such
grave
abuse
of
discretion
as
to
amount
to
lack
or
excess
of
jurisdiction.
The
petition
for
certiorari
may
only
be
filed
by
the
stockholders
of
record
representing
the
majority
of
the
capital
stock
within
ten
(10)
days
from
receipt
by
the
board
of
directors
of
the
institution
of
the
order
directing
receivership,
liquidation
or
conservatorship.
The
designation
of
a
conservator
under
Section
29
of
this
Act
or
the
appointment
of
a
receiver
under
this
section
shall
be
vested
exclusively
with
the
Monetary
Board.
Furthermore,
the
designation
of
a
conservator
is
not
a
precondition
to
the
designation
of
a
receiver.
Q:
Discuss
Conservatorship:
A:
SECTION
29.
Appointment
of
Conservator.
Whenever,
on
the
basis
of
a
report
submitted
by
the
appropriate
supervising
or
examining
department,
the
Monetary
Board
finds
that
a
bank
or
a
quasi-
bank
is
in
a
state
of
continuing
inability
or
unwillingness
to
maintain
a
condition
of
liquidity
deemed
adequate
to
protect
the
interest
of
depositors
and
creditors,
the
Monetary
Board
may
appoint
a
conservator
with
such
powers
as
the
Monetary
Board
shall
deem
necessary
to
take
charge
of
the
assets,
liabilities,
and
the
management
thereof,
reorganize
the
management,
collect
all
monies
and
debts
due
said
institution,
and
exercise
all
powers
necessary
to
restore
its
viability.
The
conservator
shall
report
and
be
responsible
to
the
Monetary
Board
and
shall
have
the
power
to
overrule
or
revoke
the
actions
of
the
previous
management
and
board
of
directors
of
the
bank
or
quasi-bank.
The
conservator
should
be
competent
and
knowledgeable
in
bank
operations
and
management.
The
conservatorship
shall
not
exceed
one
(1)
year.
The
powers
that
may
be
conferred
to
the
conservator
are
such
powers
as
may
be
necessary
for
the
following
purposes:
1. To
take
charge
of
assets,
liabilities,
and
the
management
thereof
2. TO
reorganize
the
management
of
the
subject
bank
3. To
collect
all
monies
and
debts
due
said
institution
4. To
exercise
all
powers
necessary
to
restore
its
viability.
13
14
inadequate
to
meet
prospective
net
demands
on
the
Bangko
Sentral
for
foreign
currencies,
or
whenever
the
international
reserve
appears
to
be
in
imminent
danger
of
falling
to
such
a
level,
or
whenever
the
international
reserve
is
falling
as
a
result
of
payments
or
remittances
abroad
which,
in
the
opinion
of
the
Monetary
Board,
are
contrary
to
the
national
welfare,
the
Monetary
Board
shall:
(a)
take
such
remedial
measures
as
are
appropriate
and
within
the
powers
granted
to
the
Monetary
Board
and
the
Bangko
Sentral
under
the
provisions
of
this
Act;
and
(b)
submit
to
the
President
of
the
Philippines
and
to
Congress
a
detailed
report
which
shall
include,
as
a
minimum,
a
description
and
analysis
of:
(1)
the
nature
and
causes
of
the
existing
or
imminent
decline;
(2)
the
remedial
measures
already
taken
or
to
be
taken
by
the
Monetary
Board;
(3)
the
monetary,
fiscal
or
administrative
measures
further
proposed;
and
(4)
the
character
and
extent
of
the
cooperation
required
from
other
government
agencies
for
the
successful
execution
of
the
policies
of
the
Monetary
Board.
If
the
resultant
actions
fail
to
check
the
deterioration
of
the
reserve
position
of
the
Bangko
Sentral,
or
if
the
deterioration
cannot
be
checked
except
by
chronic
restrictions
on
exchange
and
trade
transactions
or
by
sacrifice
of
the
domestic
objectives
of
a
balanced
and
sustainable
growth
of
the
economy,
the
Monetary
Board
shall
propose
to
the
President,
with
appropriate
notice
of
the
Congress,
such
additional
action
as
it
deems
necessary
to
restore
equilibrium
in
the
international
balance
of
payments
of
the
Philippines.
The
Monetary
Board
shall
submit
periodic
reports
to
the
President
and
to
Congress
until
the
threat
to
the
international
monetary
stability
of
the
Philippines
has
disappeared.
Q:
Discuss
International
Reserves
A:
International
reserves
must
be
maintained
adequately
to
meet
foreseeable
net
demands
for
foreign
currencies
Adequacy
of
international
reserves
MB
shall
be
guided
by
prospective
receipts
and
payments
of
foreign
exchange
MB
shall
give
special
attention
to
volume
and
maturity
of
the
following:
o
Liability
of
BSP
in
foreign
currency
o
Foreign
exchange
assets
and
liabilities
of
other
banks
and
all
other
persons
Composition
of
International
Reserves
International
reserve
shall
include
but
not
limited
to:
Gold
Assets
in
foreign
currencies
which
include
(1)
documents
of
international
transfer
of
funds,
(2)
demand
and
time
deposits
of
banks
abroad
and
(3)
foreign
government
securities
and
notes
MB
shall
hold
the
FOREX
resource
of
BSP
in
freely
convertible
currencies
MB
shall
issue
regulations
that
FOREX
assets
must
meet
BSP
shall
be
free
to
convert
any
asset
in
international
reserves
into
other
assets
CHAPTER
9:
UNCLAIMED
BALANCES
LAW
[RA
3936]
Q.
Provide
for
the
definition
of
unclaimed
balances
A:
"Sec.
1.
"Unclaimed
balances",
within
the
meaning
of
this
Act,
shall
include
credits
or
deposits
of
money,
bullion,
security
or
other
evidence
of
indebtedness
of
any
kind,
and
interest
thereon
with
banks,
buildings
and
loan
associations,
and
trust
corporations,
as
hereinafter
defined,
in
favor
of
any
person
known
to
be
dead
or
who
has
not
made
further
deposits
or
withdrawals
during
the
preceding
ten
years
or
more.
Such
unclaimed
balances,
together
with
the
increase
and
proceeds
thereof,
shall
be
deposited
with
the
Treasurer
of
the
Philippines
to
the
credit
of
the
Government
of
the
Republic
of
the
Philippines
to
be
used
as
the
National
Assembly
may
direct.
Q:
What
is
the
rationale
behind
the
unclaimed
balances
law
A:
As
a
general
rule,
everything
owned
by
all
persons
is
also
owned
by
the
State.
Q:
What
are
the
elements
of
unclaimed
balances
in
order
to
be
subject
to
escheat
proceedings.
A:
1
.
There
must
be
a
claim
or
deposit
of:
a.
Money;
b.
Bullion;
c.
Security;
or
d.
other
evidence
of
indebtedness.
2.
The
credit
or
deposit
must
be
with
a
bank,
building
and
loan
association,
or
trust
corporation;
3.
The
credit
or
deposit
is
in
favor
of
a
person:
a.
who
is
dead,
or
b.
who
has
not
made
further
deposits
or
withdrawals
during
the
preceding
10
years
or
more
Q:
Provide
for
the
procedure
that
the
Bank
undergoes
in
processing
unclaimed
balances.
A:
Initially,
there
should
be
notice
to
the
depositor
of
the
unclaimed
balance.
Thereafter,
the
bank
[including
building
and
loan
associations
and
trust
companies]
is
required
to
submit
a
sworn
statement
to
the
Treasurer
of
the
Philippines
of
the
existence
of
such
deposits.
The
treasurer
will
then
inform
the
Solicitor
General
who
will
then
initiate
the
proper
escheat
proceedings
in
Court.
Publication
of
the
list
of
unclaimed
balances
is
aslo
required
in
order
to
safeguard
the
right
of
the
depositors,
heirs,
and
successors
in
interest
to
due
process.
Such
unclaimed
balances
together
wit
the
increase
and
proceeds
thereof
shall
be
deposited
with
the
Treasurer
of
the
Philippines
to
credit
the
Govt.
of
the
Philippines
to
be
used
as
Congress
may
direct.
Q:
Provide
for
the
Rules
in
Escheat
Proceedings
A:
Escheats
under
Rules
of
Court
:
Rule
91
of
ROC
applied
in
case
a
person
died
intestate
and
left
properties
in
the
Philippines
Sec
1
when
person
died
intestate,
left
properties
and
has
no
heir,
SG
may
file
petition
in
C
FI
of
province
where
deceased
last
resided
or
where
he
had
estate
Sec
2
court
shall
release
order
of
hearing
that
shall
fix
date
and
place
of
hearing
not
more
than
6
months
after
entry
of
order
and
shall
direct
publication
in
newspaper
once
a
week
for
6
consecutive
weeks
Sec
3
upon
arrival
of
date
fixed
and
no
sufficient
cause
shown
to
the
contrary,
court
shall
adjudge
estate,
after
payment
of
just
debts
and
charges,
escheated
o
Personal
estate
assigned
to
city
or
municipality
deceased
last
resided
o
Real
estate
assigned
to
city
or
municipality
property
is
situated
o
If
deceased
never
resided
here,
whole
estate
shall
be
assigned
to
city
or
municipality
where
it
is
situated
o
Such
estate
shall
be
for
benefit
of
public
schools
and
charity
Sec
4
if
devisee,
legatee,
heir,
widow,
widower
or
other
person
entitled
to
estate
claim
such
within
5
years
from
date
of
judgment,
he
shall
have
title
of
such
o
If
already
sold,
municipality
or
city
shall
be
accountable
to
proceeds
15
The
relationship
of
the
buyer
and
the
bank
is
separate
and
distinct
from
the
relationship
of
the
buyer
and
seller
in
the
main
contract;
the
bank
is
not
required
to
investigate
if
the
contract
underlying
the
LC
has
been
fulfilled
or
not
because
in
transactions
involving
LC,
banks
deal
only
with
documents
and
not
goods
(BPI
v.
De
Reny
Fabric
Industries,
Inc.,
L--2481,
Oct.
16,
1970).
In
effect,
the
buyer
has
no
course
of
action
against
the
issuing
bank.
Q:
What
is
a
Trust
Receipt
Transaction
under
PD
115
A:
A
Trust
receipt
transaction
is
any
transaction
by
and
between
entruster
and
entrustee
where
entruster
hold
absolute
title
or
security
interest
over
goods,
documents
or
instruments,
releases
the
same
to
the
entrustee.
Trust
receipt
need
not
be
in
any
particular
form
but
every
trust
receipt
must
contain:
1.
Description
of
goods,
documents
or
instruments
2.
Total
invoice
value
3.
Undertaking
of
entrustee
4.
To
hold
in
trust,
sell
or
return
for
the
entruster
the
goods,
documents
or
instruments
May
contain
other
terms
not
contrary
to
TRL
or
laws
Q:
Provide
for
the
rights
of
entruster
A:
Rights
of
Entruster
1.
Entitled
to
proceeds
to
the
extent
of
the
amount
owing
to
the
entruster
or
in
case
of
non-sale
return
of
goods
2.
Entruster
may
cancel
trust
and
take
possession
of
goods,
documents
or
instruments
at
any
time
upon
default
or
failure
of
entrustee
to
comply
with
obligation
a.
Entruster
now
in
possession
may
give
notice
to
entrustee
of
intention
to
sell
b.
May,
not
less
than
5
days
after
serving
notice,
sell
such
in
public
or
private
sale
c.
Entruster
in
public
sale
can
become
a
purchaser
3.
Proceeds
of
sale
shall
be
applied
to:
a.
Payment
of
expenses
thereof
b.
Payment
of
expenses
of
retaking,
keeping
and
storing
goods,
documents
or
instruments
c.
Satisfaction
entrustee
s
indebtedness
4.
The
entrustee
shall
receive
any
surplus
but
shall
be
liable
t
the
entruster
for
deficiency
Q:
Provide
for
the
Obligations
of
the
Entrustee
A:
Obligations
of
Entrustee
1.
Hold
the
goods
and
shall
dispose
them
in
accordance
with
conditions
of
trust
receipts
2.
Receive
proceeds
in
trust
and
turn
over
to
entruster
3.
Insure
the
goods
against
loss
4.
Keep
said
goods
or
proceeds
separate
and
capable
of
identification
5.
Return
goods
in
event
of
non-sale
or
demand
of
entruster
6.
Observe
all
other
terms
provided
Liability
of
Entrustee
for
Loss
Risk
of
loss
shall
be
borne
by
entrustee.
Loss
of
goods,
documents
or
instruments
irrespective
of
WON
it
was
due
to
the
fault
or
negligence
of
entrustee
shall
not
extinguish
his
obligation
16
A:
The
maximum
deposit
insurance
is
up
to
P500,000.
It
may
be
adjusted
in
such
amount,
for
a
period,
and
or
for
such
deposit
products
provided
that
the
following
are
complied
with:
1. the
MB
has
determined
that
there
is
a
condition
that
threatens
the
monetary
and
financial
stability
of
the
banking
system
that
may
have
systemic
consequences,
as
defined
in
Sec.
17
of
RA
3591.
2. The
adjustments
are
approved
by
a
unanimous
vote
of
the
Board
of
Directors
of
the
PDIC
in
a
meeting
called
for
the
purpose
and
chaired
by
the
Secretary
of
Finance.
3. The
adjustments
are
approved
by
the
President
of
the
Philippines.
Q:
What
financial
transactions
are
not
covered
by
Insurance:
A:
The
PDIC
shall
not
pay
deposit
insurance
for
the
following
accounts
or
transactions,
whether
denominated,
documented,
recorded,
or
booked
as
deposit
by
the
bank:
1. The
amount
in
excess
of
insured
deposit
of
P500,000.
2. Deposit
payable
in
a
place
outside
the
Philippines
[foreign
branches]
3. Investment
products
such
as
bonds
and
securities,
trust
accounts,
and
other
similar
instruments
4. Deposit
accounts
or
transactions
which
are
unfounded,
or
that
are
fictitious
and
fraudulent
5. Deposit
accounts
or
transactions
constituting
and
or
emanating
from
unsafe
and
unsound
bank
practices
6. Deposits
that
are
determined
to
be
proceeds
from
unlawful
activity
as
defined
under
the
AMLA
7. Deposit
accounts
that
resulted
from
splitting
of
deposits
8. Money
placements
by
the
head
office
of
a
foreign
bank
in
its
branch
in
the
Philippines.
Q:
Discuss
splitting
of
deposit
A:
This
occurs
whenever
a
deposit
account
with
an
outstanding
balance
of
more
than
P500,000.00
under
the
name
of
a
person
is
broken
down
and
transferred
to
two
or
more
accounts
in
the
name
of
persons
or
entities
who
have
no
beneficial
ownership
in
the
transferred
deposits
in
their
names
within
120
days
immediately
preceding
or
during
a
bank-declared
holiday
or
immediately
preceding
a
closure
order
issued
by
the
MB
for
purpose
of
availing
the
maximum
deposit
insurance
coverage.
This
is
a
criminal
act
and
the
deposits
are
not
entitled
to
any
insurance
payment.
Q:
When
payment
of
deposit
insurance
is
made
A:
The
proceeds
of
the
insurance
shall
be
paid
by
the
PDIC
to
the
depositor
whenever
the
insured
bank
is
closed
on
account
of
insolvency.
An
insured
bank
shall
be
deemed
to
have
been
closed
on
account
of
insolvency
when
ordered
closed
by
the
MB
of
the
BSP.
The
claim
must
be
filed
within
2
years
from
actual
takeover
by
the
receiver.
Q:
Provide
for
the
PDIC
function
as
regulator
of
the
bank.
A:
As
a
bank
regulator,
the
PDIC
is
empowered
to
examine
and
investigate
banks.
These
are
two
different
processes:
Examination
involves
an
evaluation
of
the
current
status
of
a
bank
and
determines
its
compliance
with
the
set
standards
regarding
solvency,
liquidity,
asset
valuation,
operations,
systems
management,
and
compliance
with
banking
laws,
rules
and
regulations.
Such
a
process
then
involves
an
intrusion
into
a
banks
records.
An
examination
requires
prior
consent
of
the
MB.
Investigation
is
conducted
based
on
specific
findings
of
certain
acts
or
omissions
which
are
subject
of
a
complaint
or
a
Final
Report
of
Examination
made
by
the
PDIC.
Investigation
does
not
involve
a
general
evaluation
of
the
status
of
the
bank.
It
zeroes
in
on
specific
acts
and
omissions
uncovered
via
an
examination
or
which
are
cited
in
a
complaint.
Although
it
also
involves
a
detailed
evaluation,
an
17
investigation
centers
on
specific
acts
or
omissions
and
therefore
requires
a
less
invasive
assessment.
Investigation
does
not
require
prior
consent
of
the
MB.
Q:
Why
is
the
need
of
Prior
Consent
from
MB
is
not
necessary
in
investigation
1. Time
is
always
of
the
essence,
and
it
is
prudent
to
expedite
the
proceedings,
if
an
accurate
conclusion
is
to
be
arrived
at,
as
an
investigation
is
only
as
prcises
as
the
evidence
on
which
it
is
based.
2. An
investigation
is
based
on
reports
on
examination
and
an
examination
was
conducted
pursuant
to
a
prior
MB
approval.
3.
A
lengthy
process
could
provide
unscrupulous
individuals
an
opportunity
to
cover
their
tracks.
Q:
Provide
for
the
function
of
the
PDIC
as
receiver
of
banks.
A:
The
PDIC
as
receiver
shall
control,
manage,
and
administer
the
affairs
of
a
closed
bank.
a. Suspension
of
Powers
and
Benefits
effective
immediately
upon
takeover
as
receiver
of
such
bank,
the
powers,
functions
and
duties,
as
well
as
all
allowances,
remunerations,
and
perquisites
of
the
directors,
officers,
and
stockholders
of
such
bank
are
suspended,
and
the
relevant
provisions
of
the
Articles
of
Incorporation
and
By-laws
of
the
closed
bank
are
likewise
deemed
suspended
b. Properties
in
Custodia
Legis
The
assets
of
a
closed
bank
under
receivership
shall
be
deemed
in
custodial
egis
in
the
hands
of
the
receiver.
From
the
time
the
closed
bank
is
placed
under
receivership,
its
assets
shall
not
be
subject
to
any
attachment,
garnishment,
execution,
levy
or
any
other
court
processes.
A
judge,
officer
of
the
court,
or
any
person
who
shall
issue,
order,
or
process
or
cause
the
issuance
or
implementation
of
the
writ
of
garnishment,
levy,
attachment,
or
execution
shall
be
criminally
liable.
c.
The
power
of
PDIC
as
receiver
includes
the
power
to:
a. Collect
loans
and
other
claims
of
the
closed
bank,
and
for
the
purpose,
modify,
compromise,
or
restructure
terms
and
conditions
of
such
loans
or
claims
as
may
be
deemed
advantageous
to
the
interest
of
creditors
and
claimants
of
the
closed
bank.
b. If
the
stipulated
interest
on
deposits
is
unusually
high
compared
with
the
applicable
interest
rates,
the
PDIC
as
receiver
may
exercise
such
powers
which
may
include
reduction
of
interest
rate
to
a
reasonable
rate;
any
modification
or
reduction
shall
only
apply
to
unpaid
interest.
Q:
Provide
for
the
assessment
rates:
A:
The
Board
of
Directors
of
the
PDIC
shall
determine
the
assessment
rate.
It
shall
not
exceed
1/5
of
1%
per
annum;
semi-assessment
rate
for
each
insured
bank
shall
be
in
the
amount
of
the
product
of
the
assessment
rate
multiplied
by
the
assessment
base
but
in
no
case
shall
it
be
less
than
P250.
the
assessment
base
shall
be
the
amount
of
the
liability
of
he
bank
for
deposits
without
any
deduction
for
indebtedness
of
depositors.
Q:
What
are
trust
funds.
A:
Trust
Funds
means
funds
held
by
an
insured
bank
in
a
fiduciary
capacity
and
includes,
without
being
limited
to,
funds
held
as
trustee,
executor,
administrator,
guardian,
or
agent.
Trust
funds
shall
be
insured
like
other
forms
of
deposits,
in
an
amount
not
to
exceed
P10,000
for
each
trust
estate,
and
when
deposited
by
the
fiduciary
bank
in
another
IB,
such
funds
shall
be
similarly
insured
to
the
FB
according
to
the
trust
estates
represented.
The
amount
so
held
by
other
IBs
on
deposit
shall
not
for
the
purpose
of
any
certified
statement
be
considered
to
be
a
deposit
liability
of
the
FB,
but
shall
be
considered
to
be
a
deposit
liability
of
the
IB
Q:
What
are
the
Prohibitions
on
PDIC
Personnel
A:
PDIC
Personnel
are
prohibited
from:
1.
Being
an
officer,
director,
consultant,
employee
or
stockholder,
directly
or
indirectly,
of
any
bank
or
banking
institution
except
as
otherwise
provided
by
law
2.
Receiving
any
gift
or
thing
of
value
from
any
officer,
director,
or
employee
of
any
bank
3.
Revealing
in
any
manner,
except
as
provided
by
law
or
under
court
order,
information
relating
to
the
condition
or
business
of
any
bank.
However
this
shall
not
apply
to
the
giving
of
information
to
the
BoD,
the
President
of
the
Corp.,
Congress,
any
agency
of
govt.
authorized
by
law,
or
to
any
person
authorized
by
either
of
them
in
writing
to
receive
such
information
Q:
Discuss
Dealings
by
PDIC
Personnel
with
Banks
A:
Designation
as
Directors
and
Officers
of
Banks
-
Members
of
the
BoD
and
personnel
of
PDIC
may
become
directors
and
officers
of
any
bank
or
banking
institution
and
of
any
entity
related
to
such
institution
in
connection
with
financial
assistance
extended
by
PDIC
to
such
institution
and
when,
in
the
opinion
of
the
Board,
it
is
appropriate
to
make
such
designation
to
protect
the
interest
of
PDIC.
The
Borrowing
of
PDIC
Personnel
from
Banks
shall
be
prohibited
only
with
respect
to
the
particular
institution
in
which
they
are
assigned,
or
are
conducting
an
examination
personnel
are
likewise
prohibited
from
borrowing
from
any
bank
or
banking
institution
during
the
time
that
a
transaction
of
such
institution
with
PDIC
is
being
evaluated,
processed,
or
acted
upon
by
such
personnel
Q:
What
are
the
criminal
violations
of
RA
3591.
A:
Punishable
by
prision
mayor
or
a
fine
of
50,000-2,000,000,000
or
both,
any
director,
officer,
employee
or
agent
of
bank
who:
1.
Willful
refusal
to
submit
reports
2.
Unjustified
refusal
to
permit
examination
and
audit
of
records
as
required
by
law,
rules,
and
regulations
3.
Willful
making
of
false
statement
or
entry
in
any
bank
report
or
document
4.
Submission
of
false
material
information
in
connection
with
or
in
relation
to
any
financial
assistance
extended
to
the
bank
5.
Splitting
of
deposits
or
creation
of
fictitious
loans
or
deposit
accounts
6.
Refusal
to
allow
PDIC
to
takeover
a
closed
bank
placed
under
its
receivership
7.
Refusal
to
turnover
or
destroying
or
tampering
bank
records
8.
Fraudulent
disposal
,
transfer
or
concealment
of
any
asset,
property,
liability
of
the
closed
bank
under
the
receivership
of
the
PDIC
9.
Violation,
or
causing
a
person
to
violate,
the
exemption
of
garnishment,
levy
attachment,
or
execution
provided
under
the
PDIC
Law
and
the
NCBA
10. Willful
failure
or
refusal
to
comply
with,
or
violation
of
any
provision
of
eh
PDIC
Law,
or
commission
of
any
other
irregularities
and/or
conducting
business
in
an
unsafe
or
unsound
manner.
The
BOD
is
authorized
to
impose
administrative
fines
for
violation
of
any
other
instruction,
rule,
or
regulation
issued
by
PDIC,
against
a
bank
or
any
of
its
directors,
officers,
or
agents
responsible
for
such
act,
omission,
or
violation.
In
no
case
such
fine
exceed
3times
the
amount
of
the
damages
or
costs
caused
by
the
transaction
for
each
day
that
the
violation
subsist.
18
A:
Covered
Transactions
are
transactions
in
cash
or
monetary
instrument
exceeding
P500,000
in
one
banking
day.
Suspicious
transactions
are
transactions
with
covered
institutions,
regardless
of
the
amount,
where
any
of
the
following
circumstances
exist:
a.
No
legal
or
trade
obligation,
purpose
or
economic
justification
b.
Client
is
not
properly
identified
c.
Amount
is
not
commensurate
with
the
clients
financial
capacity
d.
Structured
transactions
to
avoid
being
the
subject
of
reporting
required
under
the
act
e.
Those
which
deviate
from
the
profile
of
the
client
or
past
transactions
f.
Related
to
any
unlawful
activity
or
offense
g.
Any
transaction
that
is
similar
to
any
of
the
foregoing
Q:
Discuss
the
instruments
covered
under
the
AMLA
A:
Monetary
instrument
i.
Drafts,
checks
and
notes
ii.
Securities
or
negotiable
instruments,
bonds,
commercial
papers,
deposit
certificates,
trust
certificates,
custodial
receipts,
trading
orders,
transaction
tickets,
confirmation
of
sale
money
market
instruments
iii.
Other
similar
instruments
when
title
passes
to
another
by
endorsement,
assignment
or
delivery
iv.
Coins/currency
of
legal
tender
of
the
Phil.
Or
any
country
Q:
Discuss
the
Jurisdiction
and
Prosecution
of
violation
of
AMLA
A:
Jurisdiction
i.
Private
persons-
RTC
ii.
Public
persons
and
private
persons
in
conspiracy
with
the
former-
Sandiganbayan
Prosecution
i.
Any
person
may
be
charged
of
both
money
laundering
and
the
unlawful
activity
ii.
Any
proceeding
relating
to
the
unlawful
activity
shall
be
given
precedence
over
the
prosecution
of
any
offense
or
violation
w/o
prejudice
to
the
freezing
and
other
remedies
Q:
Discuss
the
prevention
of
money
laundering
A:
The
following
are
methods
of
prevention
of
money
laundering:
i. Customer
Identification
-
Institutions
shall
establish
and
record
the
true
identity
of
its
clients
based
on
office
documents.
They
shall
maintain
a
system
of
verifying
the
identity
and
legal
existence
of
their
clients.
In
case
of
corporate
clients,
require
a
system
of
verifying
their
legal
existence
and
organizational
structures
as
well
as
proper
authority
and
identification
of
persons
acting
on
their
behalf.
Any
anonymous,
fictitious
an
similar
accounts
are
prohibited.
Peso
and
foreign
currency
non-
checking
accounts
shall
be
allowed
which
will
be
subject
to
test
by
the
BSP
to
determine
the
existence
and
identity
of
the
owners
ii. Record
Keeping
All
records
of
transactions
shall
be
maintained
and
stored
from
5
years
from
the
date
of
transaction.
For
closed
accounts,
its
records
shall
also
be
stored
for
5
years
from
the
date
it
was
closed
iii. Reporting
of
Covered
and
Suspicious
Transaction
Shall
be
reported
to
AMLC
within
5
working
days
from
the
occurrence
thereof,
unless
supervising
authority
prescribes
a
longer
period
not
exceeding
10
days
Such
reporting
shall
not
be
considered
as
a
violation
of
RA
1405,
RA
6426,
RA
8791,
but
are
prohibited
to
communicate
to
any
other
person
19
Reporting
to
the
AMLC
is
also
prohibited
to
be
disclosed
to
the
media
or
any
other
person
or
entity
iv. Freezing
of
Monetary
Instrument
or
Property
To
the
CA,
upon
application
ex
parte
by
the
AMLC
and
after
determination
that
probable
cause
exists,
may
issue
a
Freeze
Order
The
AMLC
may
inquire
upon
order
of
any
competent
court
when
it
has
been
established
that:
a. There
is
probable
cause
that
the
deposit
or
investment
s
related
to
any
unlawful
activity;
or
b. A
money
laundering
offense
Q:
What
is
the
safe
harbor
doctrine.
A:
Safe
Harbor
Provisions.
No
administrative,
criminal
or
civil
proceedings,
shall
lie
against
any
person
for
having
made
a
covered
transaction
report
OR
A
SUSPICIOUS
transaction
report
in
the
regular
performance
of
his
duties
and
in
good
faith,
whether
or
not
such
reporting
results
in
any
criminal
prosecution
under
this
Act
or
any
other
Philippine
law.
[Rules
9.3.e
Rules
in
Implementing
RA
9160]
BSP
CIRCULAR
706:
UPDATED
ANTI-MONEY
LAUNDERING
RULES
AND
REGULATIONS
Q:
What
is
the
Money
Laundering
and
Terrorist
Financing
Prevention
Program
A:
All
covered
institutions
shall
adopt
a
comprehensive
and
risk-based
MLPP
geared
toward
the
promotion
of
high
ethical
and
professional
standards
and
the
prevention
of
the
bank
beings
used,
intentionally
or
unintentionally,
for
money
laundering
and
terrorism
financing.
The
MLPP
shall
be
consistent
with
the
AMLA
as
amended,
and
the
provisions
set
out
in
the
rules
and
designed
according
to
the
covered
institutions
corporate
structure
and
risk
profile.
It
shall
be
in
writing,
approved
by
the
BD
or
by
the
country/regional
head
or
its
equivalent
for
foreign
banks,
and
well
disseminated
to
all
officers
and
staff
who
are
obligated
by
law
and
by
their
program
to
implement
the
same.
20