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BANKING LAWS
FISCAL TAMBASACAN

II. NEW CENTRAL BANK ACT 3. If the member is guilty of acts or operations
which are of fraudulent or illegal character
(RA 7653) or which are manifestly opposed to the
administer the monetary, banking, and credit aims and interests of the Bangko Sentral;
>
system of the country
A. BSP FUNCTIONS or
> • examination of bank/non-bank 4. If the member no longer possesses the
performing quasi bank functions
• a GOCC qualifications specified in Section 8 of this
SEC. 3
Act.
1. provide policy directions in the areas of
money, banking, and credit. ex.) new interest rates SEC. 9: DISQUALIFICATIONS
2. supervision over the operations of banks
ex.) audit
3. regulatory powers as provided in this Act • a member of the Monetary Board is
and other pertinent laws over the disqualified from being
operations of a director, officer, employee, consultant,
• finance companies and lawyer, agent or stockholder of any
• n o n - b a n k fi n a n c i a l i n s t i t u t i o n s - bank,
performing quasi-banking functions, - quasi-bank or
hereafter referred to as quasi-banks, and - any other institution which is subject to
• institutions performing similar functions. supervision or examination by the
ex.) Pera padala, Palawan, etc.
Bangko Sentral,
PRIMARY OBJECTIVE OF BSP
1. to maintain price stability conducive to a IN SUCH INSTANCE member shall
balanced and sustainable growth of the 1. resign from, and
economy. Price Control/Inflation INTEREST INTERVENTION
High inflation = High interest rates =
>
Low spending/borrowing
- 2. divest himself of any and all
2. to promote and maintain monetary stability interests in such institution
and the convertibility of the peso. BEFORE assumption of office
Exchange Rates = enjoying growth from OFWs
as member of the Monetary
B. MONETARY BOARD; QUALIFICATIONS Board. Get rid of interest BEFORE becoming a member
AND DISQUALIFICATIONS
Monetary
↑ Board • The members of the Monetary Board coming
SEC. 6: COMPOSITION OF THE MB from the private sector
Governor of BSP - Chairman of MB SHALL NOT HOLD
Member of Cabinet
7 MEMBERS -5 members from Private Sector any other public office or public
- appointed by the president employment during their tenure.
-*for
For a3 term of =6 6years.
persons years term
- Vacancy (death,
resignation, removal)
• appoint new
For 2 persons = 3 years term members to • No person shall be a member of the
complete the term
SEC. 8: QUALIFICATIONS Monetary Board if
The members of the Monetary Board must be 1. he has been connected directly with
1. natural-born citizens of the Philippines, any multilateral banking or financial
2. at least thirty-five (35) years of age, with the institution; or
exception of the Governor who should at - has a substantial interest in any
least be forty (40) years of age, private bank in the Philippines,
3. of good moral character, of unquestionable WITHIN 1 YEAR
integrity, of known probity and patriotism, prior to his appointment;
and
4. with recognized competence in social and 2. likewise, no member of the
economic disciplines. Monetary Board shall be employed in
any such institution
SEC. 10: GROUNDS FOR REMOVAL WITHIN 2 YEARS
The President may remove any member of the after the expiration of his term
Monetary Board for any of the following EXCEPT
reasons: when he serves as an
1. If the member is subsequently disqualified official representative of
under the provisions of Section 8 of this the Philippine Government
Act; or to such institution.
2. If he is physically or mentally incapacitated
that he cannot properly discharge his duties
and responsibilities and such incapacity
has lasted for more than six (6) months; or

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BANKING LAWS
FISCAL TAMBASACAN

C . C O N S E RVATO R S H I P A N D SALARY OF THE CONSERVATOR

appointment of MB of a person/
RECEIVERSHIP organization to manage the affairs of fixed by the Monetary Board in an amount
another due to limitations/incapacity NOT TO EXCEED
SEC. 29: APPOINTMENT OF 2/3 of the salary of the president of the
CONSERVATOR institution in one (1) year,
payable in twelve (12) equal
GROUNDS FOR PLACING BANKS AND monthly payments:
QUASI BANKS UNDER CONSERVATORSHIP
If after the MB finds, based on the report RULE: WHEN CONSERVATORSHIP IS
submitted by the appropriate supervising or TERMINATED BEFORE 1 YR PERIOD
examining department EXPIRES,
that the bank or quasi bank is
in the state of continuing inability or I. if on the ground that the institution can
unwillingness to maintain a condition operate on its own,
of liquidity, the conservator shall receive the
deemed adequate to protect balance of the remuneration
the interest of the depositors which he would have
and creditors received up to the end of
the year; Whole Salary
POWERS OF CONSERVATOR II. if the conservatorship is terminated
such powers as the Monetary Board shall on other grounds,
deem necessary to the conservator shall not be
1. take charge of the assets, liabilities, and entitled to such remaining
the management thereof, balance. Partial Salary
2. reorganize the management,
3. collect all monies and debts due said WHEN NOT ENTITLED TO
institution, and RENUMERATION
4. exercise all powers necessary to restore its when the conservator appointed by the
viability. MB is connected with the BSP
5. to overrule or revoke the actions of the
previous management and board of E X P E N S E S AT T E N D A N T T O T H E
directors of the bank or quasi-bank. CONSERVATORSHIP; shall be borne by:
only as to contracts that are defective - the bank or quasi-bank concerned.
DUTIES OF THE CONSERVATOR
report and be responsible to the Monetary G R O U N D S F O R T E R M I N AT I O N O F
Board CONSERVATORSHIP
The Monetary Board shall terminate the
QUALIFICATIONS OF THE CONSERVATOR. conservatorship when it is satisfied that
should be competent and knowledgeable in 1. the institution can continue to operate on its
bank operations and management. own and the conservatorship is no longer
necessary; or
TERM OF THE CONSERVATORSHIP 2. on the basis of the report of the conservator
shall not exceed one (1) year. or of its own findings, determine that the
continuance in business of the institution
would involve probable loss to its
depositors or creditors, in which case the
provisions of Section 30 shall apply.

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BANKING LAWS
FISCAL TAMBASACAN

SEC. 30: PROCEEDINGS IN RECEIVERSHIP 4. determine as soon as possible, but not later
appointment of a
ANDLIQUIDATION receiver to manage than ninety (90) days from take over,
selling company's asset affairs
to satisfy liabilities whether the institution
GROUNDS FOR PLACING BANKS AND • may be rehabilitated or otherwise
QUASI BANKS UNDER R AND L • placed in such a condition so that it
may be permitted to resume
Whenever, upon report of the head of the business with safety to its
supervising or examining department, the depositors and creditors and the
Monetary Board finds that a bank or quasi- general public:
bank: PROVIDED,
1. is unable to pay its liabilities as they That any determination for the
become due in the ordinary course of resumption of business of the
business: Provided, That this shall not institution
ex.) sudden
surge of include inability to pay caused by shall be subject to
withdrawal
requests due to extraordinary demands induced by financial prior approval of the MB
false rumors
panic in the banking community;
2. has insufficient realizable assets, as SHOULD THE RECEIVER
determined by the Bangko Sentral, to meet D E T E R M I N E S T H AT T H E
its liabilities; Insolvent INSTITUTION CANNOT BE
3. cannot continue in business without REHABILITATED OR PERMITTED TO
involving probable losses to its depositors RESUME BUSINESS
or creditors; or
4. has willfully violated a cease and desist Monetary Board shall
order under Section 37 that has become notify in writing the board of directors
final, involving acts or transactions which of its findings and direct the receiver to
amount to fraud or a dissipation of the proceed with the liquidation of the
assets of the institution; institution.

SHOULD THE GROUNDS ARE PRESENT

the Monetary Board may
summarily and without need for prior hearing
1. FORBID the institution
from doing business in the Philippines
and PH Deposit Insurance
Corporation
2. DESIGNATE PDIC
as receiver of the banking institution.
FOR QUASI BANKS
any person of recognized
competence in banking or
finance may be designed as
receiver.

DUTIES OF THE RECEIVER

The receiver shall
1. immediately gather and take charge of all
the assets and liabilities of the institution,
2. administer the same for the benefit of its
creditors, and
3. exercise the general powers of a receiver
under the Revised Rules of Court
BUT SHALL NOT
pay or commit any act that will involve
the transfer or disposition of any asset
of the institution:
EXE:
a. administrative expenditures,
b. deposit or place the funds of the
institution in non-speculative
investments.

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BANKING LAWS
FISCAL TAMBASACAN

IN HERE: FF DUTIES OF THE RECEIVER The assets of an institution under

in custody of the
• file ex parte with the proper regional trial receivership or liquidation law

:
court, and without requirement of prior • shall be deemed in custodia legis in
notice or any other action, the hands of the receiver and
a petition for assistance in the • from the moment the institution was
liquidation of the institution placed under such receivership or
pursuant to a liquidation plan liquidation,
adopted by the PDIC BE EXEMPT FROM
for general application any order of garnishment, levy,
to all closed banks. attachment, or execution.
IN CASE IF QUASI BANKS,
the liquidation plan shall be NOTE:
any person w/
adopted by the MB. recognizedT
The actions of the Monetary Board
competence
taken under this section or under
THE COURT SHALL THEN Section 29 of this Act shall be
Upon acquiring jurisdiction, 1. final and executory, and
upon motion by the receiver 2. may not be restrained or set
after due notice, aside by the court
1. a d j u d i c a t e d i s p u t e d EXCEPT request made to
higher court
claims against the petition for certiorari
institution, Resolving Disputes
2. assist the enforcement of on the ground Acted outside the
limit of power
individual liabilities of the - that the action taken
stockholders, directors was in excess of
and officers, and jurisdiction or with
3. decide on other issues as such GAD as to
may be material to amount to lack or
implement the liquidation excess of jurisdiction.
plan adopted.
****The receiver shall pay the who can file
cost of the proceedings can only be filed by
from the assets of the the SH of record - By SH w/n 10 days of
court order receipt
institution. • representing the
majority of the
• convert the assets of the institutions to capital stock
money, within ten (10)
days
• dispose of the same to creditors and from receipt
other parties, by the BOD of
PURPOSE the institution
paying the debts of such institution in of the order
accordance with the rules on directing
concurrence and preference of credit receivership,
under the Civil Code of the Philippines liquidation or
and he may, in the name of the conservatorsh
institution, and ip.

• with the assistance of counsel as he The designation of a conservator under

may retain, institute such actions as may Section 29 of this Act or the appointment of a
be necessary to collect and recover receiver under this section shall be vested
accounts and assets of, or defend any
action against, the institution. exclusively with the Monetary Board.
Collection of money owed to institution, reclaim
assets, and defend against legal claims
Furthermore, the designation of a
conservator is not a precondition to the
designation of a receiver. Can appoint receiver even if
conservator's appointment

Conservator = manager (the institution can still

·

be salvaged)
Receiver = who wrap things up (institution
cannot be saved)

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 CONSERVATORSHIP RECEIVERSHIP LIQUIDATION

GROUNDS 1. Continuing 1. Inability to pay 1. Insolvency

inability liabilities as 2. Continuance
2. Unwillingness they fall due would involve
to maintain 2. Assets are less probable loss to
condition of than its its creditors
liquidity liabilities 3. Bank cannot be
3. Cannot continue rehabilitated
business
without causing
damages
4. Violation of a
cease and desist
order
5. Bank holiday for
more than 30
days

EFFECTS 1. Juridical 1. Juridical 1. Juridical

personality is personality is personality is
retained retained retained
2. Perfected 2. Suspension of 2. Perfected
transactions operation/stopp transactions
cannot be age of business cannot be
repudiated 3. Assets deemed repudiated
in custodia legis

WHEN After 1 year Within 90 days if When debts have been

TERMINATED liquidation is decided paid in accordance with
upon; Until the bank is the liquidation plan
viable again, if
rehabilitation is
decided upon
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BANKING LAWS
FISCAL TAMBASACAN

D . C U R R E N C Y; L E G A L T E N D E R ; SEC. 56: REPLACEMENT OF CURRENCY

REPLACEMENT AND RETIREMENT OF UNIT FOR CIRCULATION
CURRENCIES ThE BSP shall
• withdraw from circulation and
SEC: 49: CURRENCY; DEFINED • shall demonetize all notes and coins Removal of "Legal
Tender Status"
all Philippine notes and coins issued or which for any reason whatsoever are
circulating in accordance with the provisions of - unfit for circulation
this Act. • and shall replace them by adequate notes
and coins.
IN ACCORDANCE WITH THIS ACT; NOTE:
means: damaged/ Notes and coins in such
- Phil currency issued by the BSP altered mutilated conditions shall be
- withdrawn from circulation
SEC. 52: LEGAL TENDER and
All notes and coins issued by the BSP - demonetized
• shall be fully guaranteed by the W I T H O U T
- Government of the Republic of the compensation to the
Philippines bearer
• and shall be legal tender in the
Philippines PROVIDED HOWEVER,
- for all debts, both public and private: That the BSP SHALL NOT
replace notes and coins
Provided, however, That, unless otherwise 1. the identification of which is
fixed by the Monetary Board, coins shall be impossible, alters shapes

legal tender in amounts 2. coins which show

removal of metal portion
signs
creating holes
of filing,
clipping or perforation, and Tampering
not exceeding Php 50 3. notes which have lost more than
for denominations of 25 c and above, two-fifths (2/5) of their surface or
not exceeding P20.00 all of the signatures inscribed
for denominations of 10 c or less. thereon. Significantly damaged
.
SEC. 55: INTERCONVERTABILITY OF SEC. 57: RETIREMENT OF OLD NOTES
CURRENCY AND COINS
The BSP may call in for replacement
BSP SHALL EXCHANGE, ON DEMAND AND
WITHOUT CHARGE FOR NOTES
Philippine currency of any denomination for those more than 5 years old
Philippine notes and coins of any other
denomination requested. ex.) ₱20 for four ₱5 FOR COINS
those which are more than 10 yrs old.
If for any reason the Bangko Sentral is
temporarily unable to provide notes or Notes and coins called in for replacement in
coins of the denominations requested, accordance with this provision
it shall meet its obligations by: SHALL REMAIN A LEGAL TENDER
delivering notes and coins of the • for a period of 1 year
denominations • from the date of call.
which most nearly
approximate those AFTER THIS PERIOD
requested. ex.) ₱5 not available,
two ₱10 will do
(LAPSE OF 1 YR FROM CALL)
they shall cease to be legal tender

BUT DESPITE OF SUCH LAPSE

• during the following year, or
• for such longer period as the
Monetary Board may determine,
THEY MAY BE EXCHANGED
- at par and without charge ex.) ₱10 for ₱10
- in the BSP and by agents duly
authorized by the BSP for this
purpose.
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BANKING LAWS
FISCAL TAMBASACAN

AFTER THE EXPIRATION OF 1

YR PERIOF AFTER THE
EXPIRATION OF 1 YR FROM
CALL OF RETIREMENT
- and the notes and coins which
have not been exchanged shall
• cease to be a liability of the
Bangko Sentral and
• shall be demonetized.

The Bangko Sentral shall also

demonetize all notes and coins
which have been called in and
replaced.

G I S T: T H E F F S H A L L B E
DEMONITIZED
• all notes and coins which have been
called in and replaced
- those unfit for circulation
- those which has been
mutilated
• all coins and notes which has not
been exchanged after the lapse of 1
year, counted from the expiration of
1 year from the call of retirement by
the BSP AFTER 2 years from retirement notice

SEC. 60: LEGAL CHARACTER

GR: Not a legal tender
Xpn: Option of creditor
CHECKS Cleared/Credited checks = Cash delivery
representing demand deposits
DO NOT HAVE
legal tender power and
their acceptance in the payment
of debts, both public and private,
is at the option of the creditor:
PROVIDED HOWEVER
That a check which has been cleared
and credited to the account of the
creditor
SHALL BE EQUIVALENT TO
a delivery to the creditor of cash
in an amount equal to the amount
credited to his account.

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BANKING LAWS
FISCAL TAMBASACAN

E. RESERVES SEC. 66: COMPOSITION OF

INTERNATIONAL RESERVES
SEC. 65: INTERNATIONAL RESERVES
The international reserves of the Bangko
PURPOSE Sentral may include but shall not be limited to
In order to maintain the international stability the following assets:
and convertibility of the Philippine peso. 1. gold; and
2. assets in foreign currencies in the form of:
FOR THIS PURPOSE (Sec. 66) a. d o c u m e n t s a n d i n s t r u m e n t s
The Monetary Board shall customarily employed for the
1. endeavor to hold the foreign international transfer of funds;
exchange resources of the b. demand and time deposits in central
Bangko Sentral in freely banks, treasuries and commercial
convertible currencies; banks abroad;
2. give particular consideration to the c. foreign government securities; and
prospects of continued strength d. foreign notes and coins.
and convertibility of the currencies
in which the reserve is maintained, .
as well as to the anticipated NOTE:
demands for such currencies. The Bangko Sentral shall be free to
3. issue regulations determining the convert any of the assets in its
other qualifications which foreign international reserves into other assets
exchange assets must meet in as described in 1 and 2.
order to be included in the
international reserves of the SEC. 94: RESERVE REQUIREMENTS
Bangko Sentral Assets held by BSP in
foreign currencies
• stablize peso value PURPOSE OF MAKING A RESERVE
• international
DUTY REPOSED UPON transactions In order to control the volume of money
BSP shall maintain international reserves created by the credit operations of the banking
adequate to meet any foreseeable net system ex.) 10% reserve, it can be used to satisfy the
loan request while remaining 90% can be used
demands on the Bangko Sentral for for other activities
foreign currencies. DUTY IMPOSED UPON

GUIDELINES IN JUDGING THE ADEQUACY 1. all banks operating in the Philippines

OF INTERNATIONAL RESERVES shall be required to maintain reserves
1. the prospective receipts and payments of against their deposit liabilities
foreign exchange by the Philippines. 2. all banks and/or quasi-banks
2. the volume and maturity of the Bangko to maintain reserves
Sentral's own liabilities in foreign against funds held in trust and
currencies, to the volume and maturity of liabilities for deposit substitutes.
the foreign exchange assets and liabilities As the MB my prescribe in
of other banks operating in the Philippines its discretion.
and, BSP's liabilities in foreign currency vs. Other Banks'
3. insofar as they are known or can be
estimated, the volume and maturity of the
foreign exchange assets and liabilities of all
other persons and entities in the
Philippines.

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BANKING LAWS
FISCAL TAMBASACAN

***DEPOSIT SUBSTITUTE with respect to the imposition,

an alternative form of obtaining funds increase, and computation of
from the public, other than deposits, reserves.
through the
• issuance, W H E N R E S E RV E R E Q U I R E M E N T I S
• endorsement, or DISPENSED WITH May be WAIVED:
• acceptance of deposits and deposit substitutes
debt instruments for the 1. with remaining maturities of 2 yrs or more,
borrower's own account, 2. as well as interbank borrowings.
borrowed to ANOTHER bank
for the purpose of
relending or purchasing of receivables FOR RESERVE DEPOSITS, BSP IS NOT
and other obligations. LIABLE TO PAY FOR INTEREST

These instruments may RATION

include, but need not be Since the requirement to maintain bank
limited to, reserves is imposed primarily to control
1. bankers acceptances, the volume of money,
2. promissory notes,
3. participations, EXE:
4. c e r t i fi c a t e s of MB decides otherwise as warranted by
assignment and circumstances.
5. similar instruments with
recourse, and
repurchase agreements.

THE FF SHALL NOT BE

CONSIDERED AS A
DEPOSIT SUBSTITUTE
The deposit substitutes of
commercial, industrial and
o t h e r n o n - fi n a n c i a l
companies for the limited
purpose of
1. fi n a n c i n g t h e i r o w n
needs or
2. t h e n e e d s o f t h e i r
agents or
3. dealers

REQUIRED RESERVES

BANKS
shall be proportional to the volume of its
deposit liabilities ex.) total deposit: 1M
reserve of 10%: 100k
FORM
ordinarily, deposit to BSP

NOTE:
Reserve requirements shall be
applied to all banks of the same
category uniformly and without
discrimination.

R E S E RV E S A G A I N S T D E P O S I T
SUBSTITUTE,
if imposed,
shall be determined in the same manner
as provided for reserve requirements
against regular bank deposits,

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BANKING LAWS
FISCAL TAMBASACAN

SEC. 102: INTERBANK SETTLEMENT SEC. 103: EXEMPTION FROM

ATTACHMENT AND OTHER
• The BSP shall establish facilities for Deposits maintained by banks with the Bangko
interbank clearing under such rules and Sentral as part of their reserve requirements
regulations as the Monetary Board may shall be exempt from
prescribe: • attachment,
seizing portion of wage/asset held by
• The BSP may charge administrative and • garnishments, or 3rd party to satisfy debt
other fees for the maintenance of such • any other order or process of any
facilities. court, government agency or any
other administrative body
The deposit reserves maintained by the banks issued to satisfy the claim of a
in the Bangko Sentral in accordance with the party
provisions of Section 94 of this Act EXE:
SHALL SERVE AS A BASIS for claim of the
• for the clearing of checks and 1. Government, or
• the settlement of interbank balances, 2. its political subdivisions or
subject to such rules and regulations as 3. instrumentalities.
the MB may issue with respect to such
operations: bank has negative balance
• withdrawal > available
↑ funds
SHOULD A BANK INCUR OVERDRAWING IN
ITS DEPOSIT ACCOUNT WITH BSP
shall fully cover said overdraft, including
interest thereon
AT A RATE
• equivalent to 1/10 of 1% per day or
• the prevailing ninety-one-day
treasury bill rate
PLUS three percentage points,
= whichever is higher, not later than the
next clearing day:

***and the overdrawing bank must be officially

notified of such overdrawn.

T H AT S E T T L E M E N T O F C L E A R I N G
BALANCES SHALL NOT BE EFFECTED FOR
ANY ACCOUNT
which continues to be overdrawn for
5 consecutive banking days
UNTIL
• such time as the overdrawing is
fully covered or
• otherwise converted into an
emergency loan or advance
pursuant to the provisions of
Section 84 of this Act:

OPTIONS OF THE OVERDRAWING BANK

1. convert the overdraft into an emergency
loan or advance with a plan of payment, or
2. settle such overdrafts, and that,

IN CASE OF AILURE TO COMPLY

the BSP shall take such action against
the bank as may be warranted under
this Act.

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BANKING LAWS
FISCAL TAMBASACAN

III. BANK SECRECY LAW HOWEVER; any

information regarding
(RA 1405) the existence of the
safety deposit box is
A. RULE AND EXCEPTIONS still considered secret
and confidentiak in
WHAT LAW GOVERNS SECRECY OF BANK
NAK view of Sec. 55, 1(b)
DEPOSITS SECTION 2 - any information
relative to FUNDS and
RA. 1405 PROPERTIES of
- all deposits of whatever nature including clients of a bank are to
investment with banks
in bonds issued by government be kept confidential by
ARE CONSIDERED such bank and its
absolutely confidential in nature; and d i r e c t o r s , o f fi c e r s ,
may not be examined, inquired, or employees or agents.
looked into by any person, govt official, - such information
bureau or office cannot be disclosed to
any unauthorized
DEPOSITS COVERED person without court
all deposits of whatever nature including order.
investment with banks
in bonds issued by government
NOTE:
HENCE bank is liable for the
not only limited to deposits but also loss of the thing kept
investment in safety deposit box
- as otherwise, the word investment - if it is due to the
should not have been included in the fraud, negligence, or
definition of the word deposit. delay or contravention
of the tenor of the
THIS INCLUDE agreement.
funds held by
trustee for the
benefit of
TRUST ACCOUNT beneficiary ***DEPOSITS
- included in the phrase - for SBD purposes; broad application,
"deposits of whatever nature" and not merely limited to account
which give rise to a creditor-debtor
BUT DOES NOT INCLUDE/COVER relationship between the depositor and
the bank.
MONEY MARKET SECTION 1
PLACEMENT short term investments
(ex. commercial paper)
RATION OF THE BROAD
- as neither it is a deposit or an APPLICATION
investment in govt funds 1. to give encouragement to
the people to deposit
ALSO; SBD does not cover their money in banking
inquiry as to the name of the institution Deposit Encouragement
drawer bank's vault used
2. to discourage private
to store valuable hoarding so that the
items
SAFETY DEPOSIT BOX same may be purely
- as not strictly a deposit, but a u ti l i z e d b y b a n k s i n
special kind of deposit. authorized loan to assist
relationship created between in the economic
the bank and the lessee of the development of ye
safety deposit box is bailee- country Discourage of keeping large
amount of money privately
bailor relationship. akin to
bailment, being for hire and
mutual benefit has been
adopted in this jurisdiction.

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BANKING LAWS
FISCAL TAMBASACAN

NOTE: EXCEPTIONS TO THE SBD SECTION 2

any information in violation of
the SBD Law, shall not be 1. in case of an examination, general or
rendered inadmissible special, of the MB FRAUD INVESTIGATION
- as nowhere in RA 1405 after being satisfied that
which provides for such - there is a reasonable ground to
- what the law merely provides believe that a bank fraud or serious
is that irregularity has been or is being
any violation of this committed
law will subject the - and that it is necessary to look into
Imprisonment: o f f e n d e r upon the deposit to establish such fraud or
< 5 years conviction, to an irregularity
Fine: < 20k
*Or both imprisonment if not 2. in case of examination by an independent
more than 5 years and auditor, hired by the bank AUDITOR EXAMINATION
a fine of not more than - for audit purposes only
20k or both, in the - and the result thereof shall be for the
discretion of the court. exclusive use of the bank
3. written permission of the depositor
PERSONS BANNED FROM LOOKING INTO 4. in case of impeachment. ex.) against gov'nt officials
BANK DEPOSITS 5. upon order of competent court,
any person, government official, bureau or in case of
inducing someone to do something in
office. - bribery exchange of thing of value
- dereliction of duty of public officials
DOS NOT COVER; neglect of
***unexplained wealth
OMBUDSMAN official appointed to
investigate/address responsibility - akin to dereliction of
complaints duty
PROVIDED; requisites ***plunder cases
1. only in-camera inspection is - akin to bribe
allowed 6. in case where the money deposited or
2. there must be a pending case invested is the subject matter of litigation LITIGATION
before a court of competent 7. in case of inquiry of the BIR of bank
jurisdiction accounts of a decedent ESTATE TAX PURPOSE
3. the account must be clearly for estate tax purposes or in case of
identified tax compromise
4. the inspection is limited to the 8. incidental disclosure of the unclaimed
dormant accounts for
account subject of the court case balances UNCLAIMED BALANCES atleast 10 yrs

5. the bank personnel and account under the Unclaimed Balance Law
holder must be notified to be 9. upon order of competent court AMLA
present during the inspection. in cases of violation of the AMLA HK-MADS
10. the examination of a bank account based
there must be a pending case in sec. 10 rule 57 of the rules of court ATTACHMENT
PROCEEDINGS
- does this cover preliminary the examination of a party whose
investigation? property is attached and person
indebted to a defendant or controlling
PERSONS BANNED FROM DISCLOSING his property.
ANY INFORMATION CONCERNING BANK
DEPOSITS; any NOTE: IN ANTI-GRAFT CASES
1. official or employee of a bank, or - inquiry into illegally acquired property
2. an independent auditor hired by the bank to / or property nor legitimately acquired
conduct its regular audit. EXTENDS
even to cases where such
DOES NOT COVER property is concealed by being
- those person who overheard such held by or recorded in the
information and thereafter disclose it. if name of the spouse,
such person is not an official or ascendants, descendants and
employee of a bank, or an relatives of the person
independent auditor hired by the bank. investigated, and those in the
name of other persons.

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BANKING LAWS
FISCAL TAMBASACAN

NOTE: inquiry by the SH on corporate

books, supposing SH of a bank, such
right must be exercised in GF or for
legitimate reasons, otherwise, would
amount to violation of the SBD law,
supposing what is being inquired into
is an specific account if a depositor.

SBD DOES NOT INCLUDE

PROHIBITION AGAINST
GARNISHMENT not for legitimate/
lawful purposes
- as there is no real inquiry, and if the
deposit is disclosed in the process,
such is merely incidental to the
execution process.

NOTE: IF THE DEPOSIT IS

M E R E LY A S U B J E C T
M AT T E R OF AN
ATTACHMENT
- it does not make it a subjct
matter of litigation
- such attachment will not
justify its disclosure

EXE TO EXE
WHEN A DEPOSIT EVEN THOUGH A
SUBJECT MATTER OF LITIGATION,
STILL CANNOT BE INQUIRED INTO
- FCDA

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BANKING LAWS
FISCAL TAMBASACAN

Authority to Deposit
I V. F O R E I G N C U R R E N C Y • Any person--natural or juridical to
those approved by Central Bank
DEPOSIT ACT
Bank's Authority to Accept Foreign Currency Deposits
RA. 6426 a. Accept deposits and foreign currency. Provided,
numbered accounts for recording/servicing are allowed.*
b. Issue certificates to evidence such deposits
A. RULE AND EXCEPTIONS c. Discount said certificates
d. Accept deposits as collateral for loans, following Central
Bank's regulations
FOREIGN CURRENCIES COVERED e. Pay interest
*Numbered Account = Identity of holder is replaced with unique number
- all kinds of foreign currency deposits,
deposited in Philippine Banks in good standing Foreign Currency Cover Requirements
• Must maintain 100% foreign currency cover for liabilities
• 15% of the cover must be in the form of foreign currency
HENCE; does not cover deposit w Central Bank
• The rest, form of foreign currency loans/securities--w
- those maintained in foreign banks guidelines of MB
• FCD can include those to export-oriented or BOI
registered enterprises
INQUIRY ON FOREIGN CURRENCY • Bankings meeting criteria = exempt from the 15% deposit
DEPOSITS requirements
• May also extend FC loans to domestic enterprises, subject
to limitations and CB approval
GEN RULE:
NOT ALLOWED Withdrawability/Transferabiliy of Deposits
• GR: no restriction
- foreign currency deposits shall not be • XPN: contract between depositor and bank
allowed to be examined, inquired into
Tax Exemption
by any person, government official, • Exempted from all taxes WHETHER made by residents or
bureau or office, non-residents (engaged or not engaged)
whether judicial or Rules and Regulations by Monetary Board
administrative or legislative • deemed necessary
• EFFECTIVE UPON: publication in the Official Gazette and in
or any other entity whether private or news paper
public. once a week for three consecutive weeks

Deposit Insurance Coverage

EXCEPTIONS: • insured under PDIC
1. upon a written permission of the
depositor Penal Provisions
• Imprisonment: 1-5 years
2. upon order of a competent court in • Fine: ₱5,000-₱25,000
case of violation of AMLA, when it *Or both
has been established that there is
a cause that the deposit involved
are in any way related to money
laundering offense.
3. Human Security Act
4. Chinabank vs. Ca (Dec 18, 2006)
- pro hac vice lang to ha.

FFOREIGN
OREIG N C U RDEPOSIT
CURRENCY RENCY DEPOSITS,
• GR: cannotFROM
EXEMPTED be inquired or looked into.
GARNISHMENT
• XPN:
1. Written consent of the depositor.
2. WhenEXE funds in a joint account belong to one
depositor and the other unilaterally transfers
them, 1.
theamla
exemption doesn't apply to the
transferring
2. depositor.case
chinabank
3. A father can inquire into a deposit made by his
daughter's sister if the money belongs to him.
4. A foreign transient who committed a crime
cannot invoke the exemption, and his deposit
can be garnished to prevent injustice. who raped a minor
5. Tax authorities can check deposits for
deceased individuals, taxpayers seeking
compromises, and cases involving international
tax agreement.
6. AMLC investigates deposits tied to unlawful
activities
7. Justices can authorize deposit examinations for
suspected terrorism or conspiracy.
8. Deposit insurance agencies and the central
bank monitor accounts for banking safety.
9. AMLC probes deposits linked to terrorism
financing or suspects under anti-terrorism
laws.

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BANKING LAWS
FISCAL TAMBASACAN

PUBLICATION
• Newspaper in General Circulation: once a week of three
VI. UNCLAIMED BALANCE LAW consecutive weeks in atleast two newpapers
where banks are situated OR in Manila (one in
ACT 3936 PD 679 = Ferdinand Marcos (Martial Law)
EO = Corazon Aquino (After Martial Law)
spanish AND english)
• Cost: shall be paid by Bureau of Treasury, if increased
substantially more than the unclaimed balance, the
A. COVERAGE procedure for escheat proceedings to cut down expenses

SHALL INCLUDE Statement sent to Treasurer of the PH

• After effect, within month of January of every odd year
1. credits loans/borrowings
2. deposits of money savings/checking accounts 1. Name and Last known residence/post office address of
account holders
3. bullion precious metals ex. gold/silver 2. Amount and Type(Money/Security) of unclaimed balances
4. security; or collateral 3. Date of death/Last transaction of account holder, if known
4. Any interest owed on the unclaimed balance
5. other evidence of indebtedness
WITH own charter (congress law) = government bank
SECTION 3 one who represents that
government as primary lawyer
a. banks under Revised Corp. Code = private bank 1. Initiating Legal Action:
referred in Sec 2,
b. buildings and loan associations; • The Solicitor General starts legal action in the Court of
39, 56 of General
First Instance where the bank, loan association, or trust
corporation is located.
Banking Law
and
c. trust corporations • The action involves the institution and all affected account
holders.
IN FAVOR OF A PERSON • Multiple account holders or institutions can be included in
one action.
• known to be dead; or
• who has not made further deposits or 2. Service of Process:
withdrawals • Legal documents are served to the bank's president,
cashier, or managing officer.
during the preceding 10 yrs or more. • Summons are published in a local newspaper or in Manila
if no local paper exists.
3. Court Proceedings:
WHAT WILL HAPPEN TO THE UNCLAIMED • All involved parties have a chance to present their case.
• If the court finds unclaimed balances as described, it
BALANCE (including the increase and the orders them to be given to the government.
proceeds thereof) 4. Notification to Claimants:
- shall be subjected to escheat proceedings. • A notice is issued to anyone claiming an interest in the
unclaimed assets/funds are unclaimed balances.
transferred to the state • They have 60 days to appear and present their case.
SHALL BE DEPOSITED • Failure to appear results in the government applying for
the unclaimed balances.
- with the Treasurer of the RP
5. Court Jurisdiction:
• Once the summons and notice are published and served,
TO THE CREDIT OF the court has full authority over the unclaimed balances
- the Gov't of the Phil and related parties.
• It can make decisions and judgments regarding the
unclaimed balances.
TO BE USED
- as the National Assembly may direct. PENALTIES FOR NON-COMPLIANCE
(Congress) • Failure to submit: bank must pay the government ₱500 for
each month.
PUBLICATION REQUIREMENT PROTECTION FOR BANKS
(DUE PROCESS) • Who complied with this act: protected from liability brought
1. notify the owner, by sending a copy of the by any person against the bank
• Bank was sued for unclaimed balance: Solicitor General will
notice to the last known address of the defend the bank with NO COST
depositor
2. publish said notice
3. notice contained in the publication is the
name of the owner and the fact which give
rise to the escheat proceedings. note; not
the amount.

~absence, everything becomes null

and void.

NOTE:
the publication here is an
exception of SBD

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BANKING LAWS
FISCAL TAMBASACAN

VII. PHILIPPINE DEPOSIT which is consistent with banking usage

and practices,
INSURANCE CORPORATION the Board of the PDIC shall
RA 3591 attached to DOF determine and prescribe by
MEMBERSHIP IS MANDATORY: All banks are insured under PDIC regulations to be deposit
liabilities of the bank.
A. C O V E R A G E ; H O W A M O U N T
COMPUTED WHAT CIRCUMSTANCES IS COVERED?
NOTE: DEPOSIT DOES NOT COVER
• Only due to bank closure ordered
by MB Any obligations of a bank which is
PURPOSE OF PDIC payable at the office of the bank
- to insure deposit of all banks which are located outside the Phil.
entitled to the benefits of insurance HOWEVER
ex.) PDIC will step up to give the depositor her savings in case
the bank fails to do so subject to the approval of the
RISK INSURED AGAINST Board of the PDIC
- bank closure - any insured bank which
maintains a branch outside the
TYPES OF DEPOSITS COVERED Phil
1. savings account may elect to include
2. current account GR: Payable OUTSIDE
for insurance its
3. time deposits; and PH are not covered by
PDIC deposit obligations
4. deposits in acceptable foreign currencies Xpn: Approved by PDIC
payable only
pursuant to FCDA Board
at such
branch.
QUALIFICATION:
- that the deposit must be made in the INSURED DEPOSIT; defined
regular course of business amount due to any depositor for deposits in an
insured bank
NOTE: DOES NOT COVER net of any obligation of the depositor to
Trust funds the insured bank ex.) depositor has outstanding loan to the
bank, must be offset to insured amount
as of the date of closure
NATURE OF LIABILITY OF PDIC BUT NOT EXCEEDING
- statutory mandated/enforced by law 500k EXCESS can still be claimed in case of
liquidation but subject to the hierarchy
NOTE: mere statement in the NOTE:
certificate that the same is insured by HOLDER OF A NEGOTIABLE CERTIFICATE
PDIC OF DEPOSIT
- is not binding to the latter. for PDIC NOT ENTITLED TO THE RIGHT OF
be held liable, there must be AN INSURED DEPOSITOR
compliance with the requirement of RA EXE
3591. - his name is registered as owner/
holder thereof in the books of the
DEPOSIT; as defined in PDIC Law issuing bank.
unpaid balance of money or its equivalent
FUNCTIONS OF PDIC
received by a bank in the usual course of
• Deposit Insurer
business
- for which it has given or is obliged to give • Co-regulator of Banks
credit to bank acknowledged and record the deposit • Receiver or Liquidator of Closed Banks
• commercial used by business for daily transactions
• savings
• time; or fixed deposit for certain period
• thrift account; or similar to savings--from smaller banks
- as evidenced by a
• passbook
• check and/or
• certificate of deposit BSP
printed or issued Relevant Laws
in accordance with BSP rules and
regulations and other applicable laws
together with
such other obligations of a bank
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THE AWESOME NOTES Page 32 of 40

BANKING LAWS
FISCAL TAMBASACAN

HOW AMOUNT DUE TO DEPOSITOR SECTION 2

DETERMINED COMPOSITION OF THE BOARD
• Total Members: Consists of 3 members
Savings • Central Bank Governor: One of the members
add together Special Savings
• Appointed Members: Two members are appointed by
Demand/Checking
- all deposits in the bank Certificate of Time Deposits PH President w advice and consent of the
maintained in the same right and Commission on Appointments
capacity for his benefit • Chairman: On full time basis for SIX years
DUTIES/COMPENSATION
either in his own name or in • Chairman: Annual salary of ₱24,000
the name of others. • Per Diem: ₱50 per day, capped at ₱500 a month
ex.) entitled for
• Vacancy: Acting Governor of Central Bank shall act
I. FOR JOINT ACCOUNTS ₱500k EACH as board member/Chairman temporarily
- regardless of the conjunction used; • Post-Service Restrictions: ineligible for any position
in an insured bank for TWO years after term. XPN:
"and," "or," or "and/or" served in full term.
shall be insured separately • Certification: must certify under oath that they
from any individually owned don't hold any position under insured bank.
deposit account. POWER OF THE BOARD
1. Rule Making - if deemed necessary
2. Management - direct management, operations, and
RULE ON DIVISION AMONG administration
CO-OWNER 3. Appointments - appoints, determine the pay, can
1. equal share remove all officers/members (in accordance with
2. if there is a stipulation, Civil Code)
stipulation shall prevail. 4. Expenditures - authorizes in the interest of
Corporation
3. but if one of the co-owner is
a juridical entity SECTION 6
- all the proceeds shall be Assessment Rate Determination:
• Board's Authority:The Board of Directors determines
presumed to belong to the the assessment rate, capped at one-twelfth of one
JE. percent per annum.
• Semiannual Assessment: It's calculated as half the
4. if both are JE, apply 1 or assessment rate multiplied by the assessment base.
2. • Assessment Base: The amount of liability of the bank
for deposits, defined in Section 3(f), without deductions
for depositor indebtedness.
II. SINGLE DEPOSITOR ACCOUNT Deductions and Exclusions:
- basta, add lahat, kahit na yung • Immediate Withdrawal Deduction: Banks can deduct
depositor has different account. the balance due from the bank to a depositor if it's
immediately withdrawable.
- ie. may checking, savings and time • Cash Items: Cash items forwarded for collection and
deposit sya, yung aggregate nun held for clearings can be deducted by a specific
method.
yung basis ng computation. ex.)₱500k
only up
• Exclusions: Certain items like drafts on deposit
to accounts, cash funds held solely for securing liabilities,
etc., may be excluded.
III. IN TRUST FOR ACCOUNT
Assessment Reporting and Payment:
• Certified Statements:Insured banks must file certified
ITF ACCOUNT statements showing their assessment base and pay the
- the depositor merely acts as an semiannual assessment.
• Submission Deadlines:Statements and payments are due
agent. on or before July 15th and January 15th each year.
- hence, in this instance, the deposit • Newly Insured Banks: Newly insured banks have
specific requirements for their first assessment period.
made by such depositor shall not be
included in the computation of his Distribution of Net Assessment Income:
• Allocation:40% of net assessment income goes to the
individual aggregate deposit with the Corporation's capital account, and the rest is credited
insured bank to insured banks.
• Credit Application: Credits are applied toward future
assessment payments, with any excess applied to
BY CURRENCY
IBA ITO SA subsequent assessments.
JOHN DOE BY
• Philippine JUAN DE LA CRUZ
Peso Refunds and Remedies:
- juan dela cruz is the agent here. so • Refunds:Excess assessment payments may be refunded
• Foreign Currency considered as part or credited toward future payments.
in determining the amount
of BSP's international of the
reserves • Enforcement: The Corporation can compel banks to file
insured deposit of John Doe, the certified statements and recover unpaid assessments
through legal action.
deposit made by Juan dela cruz shall
be included in the computation of his Trust Fund Insurance:
• Fiduciary Trust Funds: Trust funds held by banks in a
aggregate individual deposits with fiduciary capacity are insured up to ₱10,000 per trust
the insured bank. estate.
• Reporting: The Board has the power to regulate the
reporting and depositing of trust funds.
BASTA: refer to Iggy's book for
concrete, blow by blow, examples. :)
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SECTION 7 SECTION 9
Termination of Insured Status: Fair Administration and Use of Mails:
(a) Termination by Board of Directors: • Fair Administration: The Board of Directors must
• Unsafe or Unsound Practices: If an insured administer the Corporation's affairs fairly and
bank continues unsafe or unsound practices impartially, without discrimination.
or violates laws/regulations, the Board can • Mailing Privileges: The Corporation can use the Philippine
issue a notice. mails freely, similar to other national government offices.
• Correction Period: The bank has 120 days to Appointment of Examiners and Claim Agents:
correct the issues or as directed by the • Examiners: The Board appoints examiners who can
Central Bank. examine insured banks or those applying to become
• Termination Notice: If issues persist, the insured banks.
Board gives a 30-day notice to the bank for • Powers of Examiners: Examiners can thoroughly inspect
a hearing. the bank's affairs, administer oaths, take testimony, and
• Hearing and Findings: A hearing is held, and submit detailed reports to the Corporation.
if the violations are proven and not • Claim Agents: Similarly, claim agents investigate and
corrected, the insured status is terminated. examine claims for insured and transferred deposits.
• Continued Insurance for Existing Deposits: Reporting Requirements:
Deposits remain insured for two years post- • Reports of Condition: Insured banks must submit reports
termination, but new deposits aren't insured. of their condition to the Corporation in the specified
• Obligations Post-Termination: The bank must format and timeframe.
continue to pay assessments and fulfill duties • Publication of Reports: The Corporation may publish
of an insured bank for two years. these reports as directed by the Board, and banks
(b) Termination for Non-Deposit Receiving Banks: failing to do so may face penalties.
• Determining Non-Deposit Receiving Status: If Access to Examination Reports:
the Board finds a bank not receiving deposits, • Access to Reports: The Corporation has access to
it terminates the insured status. examination reports made to the Superintendent of
• Notice and Publication: The bank is notified, Banks or the Governor of the Central Bank, and vice
and the Corporation may publish the versa.
termination notice. Confidentiality:
• Immediate Effect: Deposits cease to be • Confidentiality Provisions: Board members, officers, and
insured, and the bank is relieved of future employees of the Corporation are prohibited from
obligations to the Corporation. disclosing any information about the condition or
(c) Termination Due to Assumption of Liabilities: business of insured banks.
• Assumption of Liabilities: If another insured • Liability for Violation: Any violation of this provision may
bank assumes a bank's liabilities for deposits, result in liability for any loss or injury suffered by the
the insured status terminates. Corporation.
• Notice to Depositors: The bank must notify
depositors within 30 days of the assumption.
• Insurance Termination: Insurance ends six NOT COVERED BY PDIC
months after assumption unless a newly • Investment products (ex. bonds, securities, trust
insured bank assumes the liabilities. accounts, etc)
• Deposit accounts/transactions that:
• Assessment Waiver: The bank isn't required 1. Unfunded/Fictitious/Fraudulent
to pay assessments on the assumed deposits 2. Constitute crom unsafe/unsound banking practices
after the semiannual period. • Proceeds from unlawful activity
SECTION 10
Insurance Fund Establishment:
• ₱5,000,000 fund created from General Fund.
• Maximum insured deposit: # ₱10,000.
₱500,000
Definition of Bank Closure:
• Closure due to insolvency defined as lack of
provision for depositor payments during
liquidation.
Insured Deposits Payment:
• Prompt payment by Corporation in cash or
transferred deposits.
• Corporation discretion in demanding proof of
claims.
Subrogation of Rights:
• Corporation gains depositor's rights upon payment.
• Corporation can receive dividends and recoveries
from closed bank's assets.
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BANKING LAWS
FISCAL TAMBASACAN

I. GENERAL BANKING LAW PROHIBITED SERVICES

(RA 8791) SEC. 54
PROHIBITED TO ACT AS INSURER
A. DEFINITION OF BANKS - a bank shall not directly engaged in
• entities engaged in the lending of funds insurance business as the insurer
obtained in the form of deposits.
SEC. 55
B. BANKING SERVICES PROHIBITED SERVICES

SEC. 53 NO DIRECTOR, OFFICER, EMPLOYEE OR

A bank may perform the ff activities: AGENT OF ANY BANK SHALL:
1. receive in custody funds, documents and
valuable objects; • make any false entries in any bank report
2. act as a financial agent and buy and sell, statement or
by order of and for the account of their participate in any fraudulent transaction,
customers, shares, evidences of thereby affecting the financial interest
indebtedness and all type of securities; of,or causing damage to, the bank or
3. make collection and payments for the any person; ex.) falsifying documents to approve a borrower
accounts of others and perform such, other • without order of court of competent
services for their customers as are not jurisdiction
incompatible with banking business DISCLOSE
4. upon prior approval of the MB, as to any authorized person any
managing agent, adviser, consultant or information relative to the funds or
investment management/advisory/ properties in the custody of the bank
consultancy account; and belonging to private individual,
5. rent out safety deposit boxes. corporation or any other entity.
PROVIDED
*** it shall keep the funds, securities and other that with respect to bank deposits, the
effects which it receives provisions of existing laws shall
duly separate from the bank's own prevail. ex.) revealing account balance of a consumer
assets and liabilities • accepts
gifts, fees, or commissions or any
RELATIONSHIP CREATED BETWEEN BANK other form of remuneration
IN CONNECTION WITH
AND DEPOSITOR - the approval of lain loan or other
SERRANO VS. CA 96 SCRA 96 credit accommodation from
- creditor and debtor relationship established said bank ex.) accepting cash paymento expedite
loan approval
with the bank as debtor and the depositor as
• overvalue or aid in overvaluing
creditor any security
FOR THE PURPOSE OF
NATURE OF RELATIONSHIP influencing in any way the
PBCOM VS CA 269 SCRA 695 actions of the bank or any
- fiduciary in nature bank ex.) overvaluing property value offered as
collateral to secure loan
FIDUCIARY built in trust and confidence • outsource
- one assumes to ac as an agent for INHERENT
another banking functions
and the other repose ex.) contracting to 3rd party to handle consumer deposits
confidence in him,
although there is no
written contract or no
contract at all.

f f t h e fi d u c i a r y n a t u r e o f
relationship; DILIGENCE REQUIRED
- highest degree of care is required,
not merely DOAGFOAF

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THE AWESOME NOTES Page 2 of 40

BANKING LAWS
FISCAL TAMBASACAN

NO BORROWER OF A BANK SHALL in the conduct of its business involving

bank deposits
• FRAUDULENTLY OVERVALUE (consistent with Bank Secrecy law)
ex.) hiring temporary workers to handle
property offered as a security for a deposits rather than the regular ones
loan or other credit accommodation C. CLASSES OF BANKS
from the bank ex.) claiming a property is ₱1M
when it is valued at ₱500k
• FURNISH FALSE, OR MAK SEC. 3
MISREPRESENTATION OR SUPPRESSION 1. universal banks wide range of services (ex. BDO Unibank, BPI)
OF 2. commercial banks primarily on deposits/loans of business
and individuals (ex. PNB)
material facts 3. thrift banks, composed of (i) savings and
for the purpose of obtaining, renewing mortgaged banks, (ii) stock savings and
or increasing a loan or other credit loan associations, and (iii) private
accommodation or extend the period development banks focuses on savings/loans (ex. BPI Family Savings Bank)
thereof. ex.) Lying about income during loan
application 4. rural banks rural areas--usually for agricultural/small business
• ATTEMPT TO DEFRAUD 5. cooperative banks for cooperative members
said bank 6. islamic banks ethical and equitable financial services (ex. no interest)
in the event of a court action to recover 7. other classifications of banks as determined
a loan or other credit accommodation; by the MB of BSP
or ex.) Hiding assets to avoid loan payment during
litigation
• OFFER
any director, officer, agent or employee
of a bank
any gift, fee, commission, or
any other form of
compensation
in order to influence
such person into
approving a loan or
other credit
accommodation
application. ex.) bribing
officer to
expedite loan
approval
NO
- examiner, officer or employee of the BSP; or
- any department, bureau, office and or agency
of the government
that is assigned to supervise, examine,
assist, or render technical assistance
to any bank
= SHALL COMMIT
any of the ff acts enumerated in this
section or aid in the commission of the
same.

THE MAKING OF FALSE REPORTS

O R M I S R E P R E S E N TAT I O N O R
S U P P R E S S I O N O F M AT E R I A L
FACTS
BY: personnel of BSP
shall constitute fraud
and shall be subject to the
administrative and criminal
sanctions provided under the
NCBA. ex.) falsifying audit reports
to hide bank's financial
condition
NO BANK
- shall employ casual and non-regular
personnel or too lengthy probationary
personnel

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BANKING LAWS
FISCAL TAMBASACAN

IN RE: EQUITY IN RE: EQUITY

INVESTMENT IN INVESTMENT IN
UNIVERSAL COMMERCIAL FINANCIAL ALLIED FINANCIAL ALLIED
ENTERPRISES ENTERPRISES
BANKS BANKS
I. can own up to 100% of the I. can own up to 100% of the
equity in a equity in a
- thrift bank - thrift bank
AS TO THEIR POWERS AS TO THEIR POWERS - rural bank; or - rural bank; or
1. has all the powers in addition to the general - financial allied enterprises
granted to commercial powers incident to II. if on other financial allied
banks corporations II. a publicly-listed universal enterprise, including other
2. power of an investment - all such powers as may be or commercial bank may commercial bank
house as provided in necessary to carry on the own - such investment shall
existing laws and business of commercial up to 100% remain a MINORITY
3. power to invest in non- banking, such as written order to
pay specified - of the voting stock of only HOLDING in that enterprise
allied enterprises 1. accepting drafts amount one other UB or CB
2. issuing letters of credit
CORPORATE POWERS 3. discounting and
1. to adopt, alter and use a negotiating promissory IN RE: EQUITY IN RE: EQUITY
corporate seal, which shall notes, drafts, bills of INVESTMENT IN NON- INVESTMENT IN NON-
be judicially noticed exchange and other FINANCIAL ALLIED FINANCIAL ALLIED
2. to enter into contracts evidence of debts selling A/R at ENTERPRISE ENTERPRISE
discount
3. to lease or own real and 4, accepting or creating
personal property, and to demand deposits may own up to 100% may own up to 100%
sell or otherwise dispose the 5. receiving other types of - of the equity of NFAE - of the equity of NFAE
same. deposits and deposit
4. to sue and be sued substitute
5. perform any and all things 6. buying and selling foreign
that may be necessary or exchange and gold and IN RE: EQUITY N/A
proper to carry out the silver bullion INVESTMENT IN NON-
purpose 7. acquiring marketable ALLIED ENTERPRISE
bonds and other debt
securities; and the equity investment of a
8. extending credit subject to UB or of its wholly or
such rules as the MB may majority owned subsidiaries
promulgate - in a single non-allied
enterprise
***such rules may include SHALL NOT EXCEED 35%
the determination of bonds OF THE
and other debt securities - total equity in that
eligible for investment, the enterprise nor
maturities and the aggregate - voting stock in that
amount of such investment. enterprise

AS TO THEIR EQUITY AS TO THEIR EQUITY IN RE: EQUITY same.

INVESTMENT different type of business
ex.) bank and restaurant
INVESTMENT INVESTMENT IN QUASI
-
BANK ***QUASI-BANKS
I. the total investment in ~ cannot invest in non-allied - entities engaged in the
equities, allied and non- enterprises to promote competitive 1. borrowing of funds
allied enterprises ~ can invest only to allied c o n d i t i o n s i n fi n a n c i a l through the issuance,
- SHALL NOT EXCEED enterprises, financial or non- markets, the MB may endorsement or assignment
50% of the net worth of the financial (exe as the MB - further limit to 40% equity with recourse; or
bank may otherwise provide) investmnt of UB in quasi- 2. acceptance of deposit
banks substitutes
II. the equity investment in I. the total investment in for the purpose of relending
any one enterprise, whether equities of allied enterprises or purchasing of receivables
allied or non-allied - SHALL NOT EXCEED and other obligations
- SHALL NOT EXCEED 35% of the net worth of the
25% of the net worth of the bank ***DEPOSIT SUBSTITUTES
bank - are alternative form of
II. the total investment in any obtaining funds from the
***NET WORTH one enterprise public, other than deposits
- the total of the unimpaired - SHALL NOT EXCEED THROUGH
paid-in capital including the 25% of the net worth of the the issuance, endorsement,
paid-in surplus, retained bank or acceptance of debt
earnings and undivided instruments for he
p r o fi t , n e t o f v a l u a t i o n borrower's own account
reserves and other FOR THE PURPOSE OF
adjustments as may be relending or purchasing of
required by the BSP. receivables and other
obligations
*** the acquisition of such
equity/ies this may include
- is subject to the approval of - banker's acceptance,
the MB promissory notes,
which shall promulgate participations, certificates of
appropriate guidelines to assignment and similar
govern such investment instruments with recourse
and repurchase agreements.

***WITH RECOURSE
- term used in indorsing
negotiable instruments
by which the indorse
indicates that he remains
liable for payment of the
instrument.

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BANKING LAWS
FISCAL TAMBASACAN

D. ACQUISITION OF REALTY; RULE AND property, included on its total capital

EXE account, does not exceed 50%...

SEC. 51: Ceiling on Investment in Certain UNION BANK VS, TIU (SEPT 7, 2011)
Assets
any bank may acquire real estate ex.) branches/
office
as shall be necessary for its own use
PROVIDED HOWEVER
- that the total investment in such real
estate and improvements thereof
including bank equipments
SHALL NOT EXCEED
50% of combined capital
accounts
PROVIDED FURTHER
- that the equity investment of 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 MB.

SEC. 52; Acquisition of real estate by way

of satisfaction of claims
NOTWITHSTANDING the limitations of the
preceding sec
A BANK MAY ACQUIRE, HOLD OR CONVEY
REAL PROPERTY UNDER THE FF
CIRCUMSTANCES
1. such as shall be, mortgaged to it in gf by
way of security for debts
2. such as shall be conveyed to it in
satisfaction of debts previously contracted
in the course of its dealings; or
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 sure debts due it. ex.) buying mortgage
property in foreclosure
sales

ANY REAL PROPERTY ACQUIRED

IN ANY OF THE ABOVE
ENUMERATED CIRCUMSTANCES
- shall be disposed of by the bank
WITHIN A PERIOD OF 5
YEARS
OR AS M AY BE
PRESCRIBED BY THE MB
PROVIDED HOWEVER;
- that the bank may, after said period,
continue to hold the property for it's
own use, subject to the limitations of
the preceding section.

NOTES:
meaning, even though 5 years had
lapse, the bank may still hold the real
estate, provided that that such real
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BANKING LAWS
FISCAL TAMBASACAN

E. BSP FUNCTIONS SEC. 5: POLICY DIRECTION,

R AT I O S , C E I L I N G S A N D
SEC. 4: SUPERVISORY FUNCTIONS LIMITATIONS
SHALL INCLUDE
BSP SHALL PROVIDE POLICY
• the issuance of rules of conduct or DIRECTIONS
the establishment of standards of - in areas of
operation for uniform application to 1. money
all institutions or functions covered, 2. banking; and
taking into consideration the 3. credit
- distinctive character of the
operations of institutions; and FOR THIS PURPOSE
ex.) risky asset holdings
- the substantive similarities of - the MB may prescribe limitations

·
specific functions to which ratio, ceilings, limitations, or
such rules, modes or other forms of regulations
standards are to be applied. ON
• the conduct of examination - different types of
to determine accounts and
- compliance with laws and - practices of banks
regulations and quasi banks
if the circumstances to the extent feasible,
so warrant as conform to internationally
determined by the MB accepted standards, including
• overseeing the Bank International
to ascertain Settlements.
- that the laws and regulations - MB may exempt particular categories
are complied with of transaction
• regular investigation from such ratio, ceilings and
which shall not be oftener than limitations
- once a year BUT NOT LIMITED TO
from the last date of 1. exceptional cases; or
examination 2. to enable a bank or quasi
to determine whether an bank under rehabilitation
institution is conducting its during a merger or
business on a safe and sound consolidation
basis. = to continue in business with
PROVIDED safety to its creditors,
t h a t t h e d e fi c i e n c i e s / depositors and general public.
irregularities found by or
discovered by an audit
shall be immediately
addressed
• inquiring
into the solvency and liquidity
of the institution
• enforcing
prompt corrective action

***ENTITIES COVERED
- aside from banks, BSP's regulatory
and supervisory power extends to the
ff entities not fully licensed bank performing banking-like
1. quasi-banks activities
ex.) financing institutions

2. trust entities managed assets in behalf of clients

3. other financial institutions which
under special laws are subject to
the BSP

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BANKING LAWS
FISCAL TAMBASACAN

F. ORGANIZATION OF BANKS SEC. 9: ISSUANCE OF STOCK

THE MB MAY PRESCRIBE RULES
SEC. 8: Requisites for organization of AND REGULATIONS
banks and quasi banks 1. on the types of stock a bank may issue
1. that the entity is a stock corporation 2. including the terms thereof; and
2. that its funds are obtained from the public, 3. the rights appurtenant thereto
privilege attached (ex. voting rights
which shall mean 20 or more persons TO DETERMINE
3. that the minimum capital requirements - compliance with laws and regulations
prescribed by the monetary board for each governing capital and equity structure
category of banks are satisfied of bank
PLUS: PROVIDED:
1. must be registered with the SEC (SEC14) bank shall issue ONLY
REQ: - par value stock
the AOI and By-Laws must be
accompanied by SEC. 10: TREASURY STOCKS
- certificate of authority, stating
compliance of all the requisites issued NO BANK SHALL
by the Mb of the BSO 1. purchase or acquire shares of its own
2. incorporate in the application capital stock; or
• bank's ownership structure 2. accept its own shares as a security for a
• directors and senior loan
• management EXE:
• its operating plan; and - when authorized by the MB
• internal control PROVIDED:
• as well as its projected financial condition that in every case the stock so
and capital base. purchased or acquired shall
- WITHIN 6 MOS
SEC. 14: REQUISITES FOR from the time of its purchase
REGISTRATION OF AOI OR ANY or acquisition,
AMENDMENT THERETO be sold or disposed of
MUST BE ACCOMPANIED BY at a public or private
- certificate of authority issued by the sale
MB, under seal
SEC. 11: FOREIGN STOCK HOLDINGS
REQ: FOR THE ISSUANCE OF
CERTIFICATE OF AUTHORITY foreign individuals and non-bank corporations
after the MB is satisfied from the MAY OWN OR CONTROL
evidence submitted to it that UP TO 40% 60% = owned by Filipinos/Domestic Entities
1. all requirement of existing laws - of the voting stock of a domestic
and regulations to engage in the bank
business for which the applicant is
proposed to be incorporated have ***this rules shall apply to all Filipinos and
been complied with domestic non-bank corporations
2. the public interest and economic
conditions, both general and local, THE PERCENTAGE OF FOREIGN-OWNED
justify the authorization; and beneficial
the public
for
VOTING STOCK IN A BANK SHALL BE
3. that the amount of capital, the DETERMINED
financing organization, direction - by the citizenship of the individual stock-
and administration, as well as the holders in that bank
integrity and responsibility of the
organizers and administrators ***the citizenship of the corporation
reasonably assure the safety of which is a SH in a bank
deposits and public interest. - shall ff the citizenship of the
controlling SH of the corporation
REQ: FOR REGISTRATION OF BY- irrespective of the place of
L AW S O R A N Y A M E N D M E N T incorporation.
THERETO
- must be also accompanied by
certificate of authority from BSP

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BANKING LAWS
FISCAL TAMBASACAN

SEC. 12: STOCKHOLDINGS IF FAMILY SEC. 16: FIT AND PROPER RULE
GROUPS OR RELATED INTEREST
RATION:
FAMILY GROUPS OR RELATED INTERESTS 1. t o m a i n t a i n t h e q u a l i t y o f b a n k
- individuals related to each other management; and
WITHIN blood relations by marriage 2. afford better protection to depositors and
4th degree of consanguinity or affinity, the public in general
legitimate or common-law
FIT AND PROPER RULE
T H E S T O C K H O L D I N G S O F FA M I LY The MB shall prescribe, pass upon and review
GROUPS OR RELATED INTERESTS the
- must be fully disclosed in all transactions 1. qualifications and disqualifications of
by such an individual with the bank individuals elected or appointed bank
directors or officers; and
NOTES: 2. disqualify those found unfit
if the family groups or related interests
transact with a bank which they belong SHOULD MB FINDS A DIRECTOR
to OR OFFICER
--- the law only requires full disclosure - commits or omits an act which render
of such transaction him unfit
AFTER DUE NOTICE
RELATED INTEREST - MB may disqualify, suspend
- two or more corporations owned or or remove him
controlled by the same family group or
same group of persons MEASURE: IN DETERMINING
WHETHER THE DIRECTOR OR
SEC. 13: CORPORATE STOCKHOLDINGS OFFICER IS FIT
--- same sa related interest mentioned above. shall consider the ff:
1. integrity
SEC. 15: BOARD OF DIRECTORS 2. experience
3. education
THERE MUST BE 4. training; and
- at least 5, but not more than 15 5. competence.
- 2 of whom must be an independent director
SEC. 17: DIRECTORS OF MERGED OR
***INDEPENDENT DIRECTOR CONSOLIDATED BANKS
- a person other than an officer or BASTA: the numbers of directors shall NOT
employee of the bank, its subsidiaries 21
EXCEED 20.
or affiliates or related interest

NON-FILIPINO CITIZEN MAY BECOME A

MEMBER OF THE BOD
- to the extent of he foreign participation in the
equity of said bank.

MEETINGS OF BOD; MANNER

- allowed; through modern technologies, such
as; tele-conferencing and video-conferencing.

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BANKING LAWS
FISCAL TAMBASACAN

SEC. 18: COMPENSATION SEC. 20: BANK BRANCHES

MB MAY REGULATE (to protect the funds of UB AND CB MAY OPEN BRANCHES OR
the creditors and depositors) OTHER OFFICES
the payment by the bank to its directors and - within or outside the PHL
officers of REQ:
1. compensation prior approval of the BSP
2. allowance
3. fees BRANCHING BY ALL OTHER BANKS
4. bonuses - shall be governed by pertinent laws
5. stock options right to purchase stocks
6. profit sharing; and A BANK, subject to prior approval of he MB,
7. fringe benefits benefits given to managerial/supervisory employees USE ANY OR ALLOF ITS BRANCHES AS
• outlet for the presentation and/or sale of the
BUT ONLY IN EXCEPTIONAL CASES financial product
AND WHEN THE CIRCUMSTANCES = of its allied undertaking or of its investment
WARRANTS house units
such as but not limited to the ff:
1. w h e n t h e b a n k i s u n d e r A BANK AUTHORIZED TO ESTABLISH
comptrollership or conservatorship BRANCHES OR OTHER OFFICE
2. when the bank is found by the MB SHALL BE RESPONSIBLE
to be conducting business in an - for all business conducted in such
unsafe or unsound manner; or branches and offices
3. when a bank is found by the MB to TO THE SAME EXTENT AND
be in an unsatisfactory financial IN THE SAME MANNER
condition. - as though such business had
all been conducted in the head
SEC. 19: PROHIBITION OF PUBLIC office
OFFICIALS
*** a bank and its branches and offices
GEN RULE shall be treated
no appointive or elective public officials, - as one unit
whether full-time or part-time,
shall, at the same time serve as officer SEC. 21: BANKING DAYS AND HOURS
of any private bank
EXE: GEN RULE
1. when such service is incidental to financial all banks including their branches and offices
assistance provided by the government or shall transact business
gocc to the bank; or directly related to government's financial assistance
ex.) appoints public officials to be conservator • on all working days
2. unless otherwise provided under existing • for at least 6 hours a day
law (Rural Banks RA 7353)
EXE:
• may open for business on Sun, Sat, or
Holidays, for at least 3 hrs
PROVIDED
- shall report to the BSP during which
they or heir branches or offices shall
transact business;or
• if authorized by the BSP in the interest of the
banking public

***WORKING DAYS
- mon to friday, unless if such days are
holidays.

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BANKING LAWS
FISCAL TAMBASACAN

G. LOAN LIMITATIONS; SBL; DOSRI; THE PRESCRIBE CEILING SHALL INCLUDE

SECURITY; FORECLOSURE
1. direct liability of the
SEC. 35: LIMITS ON LOANS, CREDIT - maker or acceptor of paper,
ACCOMMODATIONS AND GUARANTEES discounted with or sold to such bank;
and
SINGLE BORROWER LIMIT - of general indorser, drawer, or guarantor,
who obtains the loan or other credit
GEN RULE: accommodation from, or discounted
THE LIMIT; loans and credit accommodations paper with, or sells paper to such bank
and guarantees that may be extended to any 2. in case of an individual
persons, partnership, association, corporation who owns or control a majority interest
or any entity in a corporation, partnership or
SHALL NOT EXCEED association or any other entity
25% of the net worth of such bank the liability of said entity to
EXE: such bank.
as MB may prescribe for the reasons of 3. in case of corporation,
national interest all liabilities to such bank of all
subsidiaries in which such corporation
***BASIS IN DETERMINING owns or controls a majority interest
COMPLIANCE WITH SBL 4. in case of partnership, association or other
- is the total credit commitment of the entity,
bank to the borrower. the liabilities of the members thereof to
such bank.
***NET WORTH
the total of the unimpaired paid-in NOTE:
capital including the paid-in surplus, even if a parent corp, part, assoc,
retained earnings and undivided profit, entity or individual
net of valuation reserves and other - who owns or control a majority
adjustments as may be required by the interest in such entities
BSP. - has no liability to the Bank,
THE MB MAY PRESCRIBE THE
REQ: WHEN IT MAY BE INCREASED BY COMBINATION OF THE LIABILITIES
ADDITIONAL 10% OF SUBSIDIARY CORPORATIONS
- as may be prescribed by the MB OR MEMBERS OF THE
PROVIDED: PARTNERSHIPS, ASSOCIATION,
the additional liabilities if any borrower ENTITY OR SUCH INDIVIDUAL
are adequately secured by under certain circumstances, including
1. trust receipts but not limited to any of the ff
2. shipping documents situations:
3. warehouse receipts; or 1. parent corp, part, assoc, entity of
4. o t h e r s i m i l a r d o c u m e n t s individual
transferring or securing title - guarantees the repayment of he
covering: liabilities
- readily marketable, non- 2. the liabilities were incurred
perishable goods - for accommodation of the parent corp
- which must be fully covered or subsidiary or of a PAEI; or
by insurance. 3. the subsidiaries, through separate
entities
- operate merely as departments or
divisions of a single entity

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BANKING LAWS
FISCAL TAMBASACAN

LOANS, OTHER CREDIT

ACCOMMODATIONS AND GUARANTEES
SHALL EXCLUDE
1. loans and other credit accommodations
secured by obligations of the BSP or of the
Phil Govt
2. loans and other credit accommodations
fully guaranteed by the government as to
the payment of the principal and interest
3. loans and other credit accommodations
covered by assignment of deposits
maintained in the lending bank and held in
the phil. Deposits as Collateral
4. l o a n s , c r e d i t a c c o m m o d a t i o n s a n d
acceptances under letters of credit to he cash/securities that borrower provide as
collateral to cover potential losses
extent covered by margin deposits; and
5. other loans or credit accommodations
which the MB may from time to time,
specify as non-risk items

BUT SHALL INCLUDE (AS TO THE LIMIT)

- loans and other credit accommodations,
deposits Interbank / Non-Bank Entity Transactions
maintained with and usual guarantees
by a bank to any other bank or non-
bank entity, whether locally or abroad.

NOTE:
certain types of contingent accounts of
borrower may be included among
subject to these prescribed limits
- as may be determined by the MB.

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BANKING LAWS
FISCAL TAMBASACAN

DOSRI/INSIDER LENDING

SEC. 36: RESTRICTION ON BANK LIMIT OF THE OUTSTANDING LOANS,

EXPOSURE TO DIRECTORS, OFFICERS, C R E D I T A C C O M M O D AT I O N S A N D
SH AND THEIR RELATED INTERESTS G U A R A N T E E S W H I C H A B A N K M AY
EXTEND TO EACH OF ITS DOSRI
NO DIRECTOR OR OFFICER OF ANY BANK shall be limited
SHALL DIRECTLY OR INDIRECTLY by the amount equivalent to their respective
- for himself or as a representative or agent of 1. unencumbered deposits and
others, 2. book value of their paid-in capital
1. borrow from such bank contribution in the bank.
2. become a guarantor, indorser or surety for
loans from such bank to others; or BUT SHALL EXLUDE FROM SUCH
3. in any manner be an obligor or incur any LIMIT
contractual liability to the bank - loans, credit accommodations and
EXE: (REQ) guarantees secured by assets
1. with written approval of the majority of all considered as non-risk by the MB
the directors of said bank AND SHALL NOT BE SUBJECT TO
2. written approval shall be entered upon the INDIVIDUAL LIMIT
record of the bank - if extended to DOSRI in accordance
3. copy of such entry shall be transmitted with its Fringe Benefit Plan, duly
forthwith to the appropriate supervising and approved by the MB.
examining department of the BSP.
EXE TO EXE: NOTE: LIMIT SHALL NOT APPLY TO
written approval of the majority of the - to those extended by cooperative bank to is
dir shall not be required cooperative shareholders.
- when the loan, credit
accommodations or advances made to GIST: WHEN LIMITS SHALL NOT
the officer APPLY
is made pursuant to its fringe 1. secured by assets considered as
offered to employees
benefit plan non-risk by the MB as additional perks

approved by the BSP. 2. in the form of fringe benefits

granted in accordance with rules
ADD REQ: ASIDE FROM WRITTEN as may be prescribed by the MB;
APPROVAL (IGGY'S BOOK) 3. extended by a cooperative bank to
1. the dealing if a bank with any of its DOSRI its cooperative sh.
shall be upon such terms not less favorable
to the bank than those offered to others
2. the DOSRI borrower must waive the
secrecy of his or her deposits of whatever
nature in all banks in the Phil
3. the ceiling/limitations

NATURE OF BANK DEALING WITH DOSRI

- shall be upon terms
NOT LESS favorable to the bank
than those offered to others

CONSEQUENCE OF VIOLATION
- the office if any bank director or officer who
violates this shall be declared vacant; and
- the officer or director shall be subject to he
penal provisions of NCBA.
REQ:
after due notice to the BOD of the
bank

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BANKING LAWS
FISCAL TAMBASACAN

***RELATED INTERESTS SEC. 37: LOANS AND OTHER CREDIT

(BSP CIRC NO. 170) A C C O M M O D AT I O N S A G A I N S T R E A L
1. spouse or relative within the first degree of ESTATE
consanguinity or affinity or relative by legal
adoption, of a director, officer or sh of the LIMIT
bank SHALL NOT EXCEED
2. partnership of which a DOS or his souse or • 75% of the appraised value of the real
relative within first degree of consanguinity estate security
of affinity, or relative by legal adoption, is • plus; 60% of the appraised value of the
general partner insured improvements
3. co-owner with the DOS or his SRw/1stca/ AND SUCH LOANS MAY BE MADE
Rla, of the property or interest or right TO THE
mortgaged, pledged or assigned to secure - owner of the real estate; or
the loan or credit accommodations, EXE - to his assignees
when the mortgage, pledge or assignment
covers only said co-owner's undivided
interest
4. corporations, associations, or firm of which
a DO of the bank or his spouse is also a
DO of such corporation, assoc or firm
EXE:
a. where the securities of such
corporations, assoc or firm are
listed and traded in the big board
or commercial and industrial board
of domestic stock exchange, less
than 50% of the voting stocks
thereof is owned by any one
person or by persons related to
each other within 3rd degree of
consanguinity or affinity
b. where the DOS of he lending bank
sits as a representative of the
bank in the BOD of such
corporation. PROVIDED; that the
bank representative shall not have
any equity interest in the borrower
corporation, EXE for the minimum
shares required by law,rules and
regulations, or by the by-laws of
the corporation. PROVIDED
FURTHER, that the borrowing
corporation under (a) or (b) is not
among those mentioned in item
(5) and (6) hereof
5. Corporations, assoc or firm of which any or
group if DOS of the lending bank and/or their
SRw/1stca/Rla holds/owns more than 20% of
the subscribed capital of such corporation, or
of the equity of such assoc or firm
6. corp, assoc, or firm, wholly or majority-
owned or controlled b any related entity or a
group of related entities mentioned in item (2),
(4), and (5) hereof.

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BANKING LAWS
FISCAL TAMBASACAN

VIII. ANTI-MONEY LAUNDERING B. COVERED TRANSACTIONS

ACT I. a single, series, or combination of
ex.) series of transaction in a week totalling
RA 10167, 10168, 9160, 9194 transactions 5M--will undergo review
Placement, Layering, Integration INVOLVING XPN: business transaction/known client
a total amount in excess of
MONEY LAUNDERING; defined
• Php 4M or
- is a crime, whereby the proceeds of an
• an equivalent amount in foreign
unlawful activity are transacted, currency
thereby making them appear to have based on the prevailing
originated from legitimate sources exchange rate within five (5)
consecutive banking days
A. COVERED INSTITUTIONS EXCEPT
those between a covered institution and
I. banks, non-banks, quasi-banks, trust entities, a person who,
and all other institutions and their subsidiaries at the time of the transaction
and affiliates supervised or regulated by the was a properly identified
BSP client
and the amount is commensurate
II. insurance companies and all other with
institutions supervised or regulated by the
ordinary • t h e b u s i n e s s o r fi n a n c i a l
Insurance Commission; and capacity of the client; or
course of
business • those with an underlying legal
III. or trade obligation, purpose,
• securities dealers, brokers, salesmen, origin or economic justification.
investment houses and other similar entities
managing securities or rendering services as II. single, series or combination or pattern of
investment agent, advisor, or consultant; UNUSUALLY LARGE AND COMPLEX
• mutual funds, close-end investment TRANSACTION ex.) cash deposit of 6M w/ unknown source
companies, common trust funds, pre-need in excess of Php 4M
companies and other similar entities; especially
• foreign exchange corporations, money cash deposits and investments
changers, money payment, remittance, and having no credible
transfer companies and other similar entities; purpose or origin,
and underlying trade obligation
• other entities administering or otherwise or contract.
dealing in currency, commodities or financial
derivatives based thereon, valuable objects,
PREVENTIVE MEASURES
cash substitutes and other similar monetary 1. Customer Identification prohibited accounts, customer due diligence
GR Jewelrer, Precious stones
instruments or property supervised or 2. Record Keeping 5 years
500k, 1M, 5M Casino
regulated by the SEC. 3. Transactions Reporting Covered
Suspicious circumstances
Realty
500k

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BANKING LAWS
FISCAL TAMBASACAN
destruction of property
C. SUSPICIOUS TRANSACTIONS perpetrated by terrorists against non-
combatant persons and similar targets;
1. there is no underlying legal or trade 13. Fraudulent practices and other violations
obligation, purpose, or economic under Republic Act No. 8799, otherwise
justification ex.) large cash deposit w no explanation known as the Securities Regulation Code
2. the client is not properly identified of 2000; deceitful actions or breaches
3. the amount involved is not commensurate 14. Felonies or offenses of a similar nature that
with the business or financial capacity of are punishable under the penal laws of
the client ex.) a minor depositing large amount of money other countries. serious crimes (ex. murder, theft, etc.)
4. t a k i n g i n t o a c c o u n t a l l k n o w n
circumstances, it may be perceived that the E. HOW VIOLATION COMMITTED
client's transaction is structured in order to
avoid being the subject of reporting 1. Any person knowing that any monetary
requirement under the act ex.) splitting large
transactions into smaller one instrument or property represents, TRANSACTING WITH
UNLAWFUL PROCEEDS
5. a n y c i r c u m s t a n c e s r e l a t i n g t o t h e involves, or relates to,
transaction which is observed to deviate the proceeds of any unlawful
from the profile of the client and/or the activity,
client's past transactions with the covered transacts or attempts to transact said
institution ex.) different from usual transactions like
depositing ₱500 to ₱5M
monetary instrument or property.
ex.) knows that proceeds is from drug sales but still
6. the transaction is in any way related to an deposited to his account
unlawful activity or any money laundering 2. Any person knowing that any monetary
activity or offense under this Act that is instrument or property FACILITATING MONEY LAUNDERING
about to be, is being or has been involves
committed. ex.) obtained from drug trafficking the proceeds of any unlawful
7. any transaction that is similar, analogous or activity,
identical to any of the foregoing. performs or fails to perform any act
ex.) depositing large sums into different accounts at the
same time at short period of time as a result of which
D . P R E D I C AT E C R I M E S TO M O N E Y he facilitates the offense of
LAUNDERING money laundering referred
to in paragraph (a) above.
ex.) knowingly let her friend used her bank account
1. Kidnapping for ransom to obtained illegal funds
2. Sections 3, 4, 5, 7, 8 and 9 of Article Two of 3. Any person knowing that any monetary
Dangerous Drugs Act illegal drug manuf/distribution/
trafficking instrument or property FAILURE TO DISCLOSE
3. Section 3 paragraphs B, C, E, G, H and I of is required under this Act to be
Republic Act No. 3019, as amended, • disclosed and
otherwise known as the Anti-Graft and • filed with the Anti-Money Laundering
Corrupt Practices Act Council (AMLC),
4. Plunder; misappropriation lf public funds fails to do so.
ex.) receive a large sum of money but did not report to authorities
5. Robbery and extortion under Articles 294,
295, 296, 299, 300, 301 and 302 of the F. SAFE HARBOR PROVISION
Revised Penal Code, as amended;
6. Jueteng and Masiao punished as illegal NO administrative, criminal or civil
gambling under Presidential Decree No. proceedings, SHALL LIE AGAINST
1602; any person for having made a notify abt large
financial activity
7. Piracy on the high seas under the Revised • covered transaction report; or potentially illicit
Penal Code, as amended and Presidential • a suspicious transaction report transaction
Decree No. 532; crimes at sea (ex. hijacking ships in the regular performance of his duties
8. Qualified theft under Article 310 of the and in good faith,
severe stealing
Revised Penal Code, as amended; (ex. large sums) whether or not such reporting
9. Swindling under Article 315Deceiving of theothers
Revised
for
results in any criminal
Penal Code, as amended; personal profit prosecution under this Act
10. Smuggling under Republic Act Nos. 455 or any other Philippine
and 1937; Illegal transport of goods law.
11. Violations under Republic Act No. 8792,
otherwise known as the Electronic
Commerce Act of 2000; Online transactions
12. Hijacking and other violations under
Republic Act No. 6235; destructive arson
and murder, as defined under the Revised
Penal Code, as amended, including those
prepared by: ronie ablan

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 lOMoARcPSD|17949499

THE AWESOME NOTES Page 35 of 40

BANKING LAWS
FISCAL TAMBASACAN

G. PROHIBITION AGAINST POLITICAL FREEZE ORDER

someone is prohibiited from accessing/using their bank account
PERSECUTION to unfairly target/harass
7

people for political reasons

damaging a political
UPON
THIS ACT SHALL NOT BE USED - candidate's
>
reputation
by false report
determination that probable cause exists
• for political persecution or harassment or that any deposit or similar account is in
• as an instrument to hamper competition in any way related to an unlawful activity,
unfairly distrupt business
trade and commerce. >
-

competition reports transaction to

>
= the AMLC may issue a freeze order,
harm business rival

• No case for money laundering may be filed [EFFECTIVITY]

against and effective immediately,
• no assets shall be frozen, attached or on the account for a period not
forfeited exceeding fifteen (15) days.
TO THE PREJUDICE
of a candidate for an electoral office EXTENSION
during an election period. upon order of the court,
No candidate can be targeted w money laundering
accusations or have their assets frozen w/o proper cause PROVIDED
H. FREEZE ORDER AND INQUIRY ORDER that the 15 day period
shall be tolled
INQUIRY pending the court’s
decision to extend the
NOTWITHSTANDING period.
FCDA, SBD, GBL and other laws
NOTICE TO THE DEPOSITOR
THE AMLC MAY that his account has been frozen
INQUIRE AND EXAMINE SHALL BE ISSUED
any particular deposit or investment simultaneously with the issuance of the
with any banking institution or non-bank freeze order.
financial institution
UPON UPON RECEIPT OF THE NOTICE
order of any competent court The depositor shall have
in cases of violation of this Act 72 hrs from receipt of the notice
TO
when it has been established explain why the freeze order
that there is probable cause that the should be lifted.
deposits or investments involved
are in any way related to a The AMLC has
money laundering offense: 72 hrs
PROVIDED, That this provision shall not TO
apply to deposits and investments made dispose of the depositor ’s
prior to the effectivity of this Act. explanation.

If it fails to act within 72

hrs from receipt of the
depositor’s explanation,
the freeze order shall
automatically be
dissolved.

[TRO AGAINST FREEZE] - temporary restraining order

No court shall issue a TRO or writ of injunction
against any freeze order issued by the
AMLC
EXCEPT
the CA or the SC.

prepared by: ronie ablan

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