BANKING OPERATIONS, MANAGEMENT, & fiduciary business shall include in its by-laws, provisions on

MARKETING - PPT & IM the organization plan or structure of the department, office

⭐⭐⭐ – galing sa module or unit which shall conduct such business. The by-laws shall
also include provisions on the creation of a trust committee,
the appointment of a trust officer and other subordinate
Functions and Services of Bank officers and a clear definition of their duties and
responsibilities as well as their line and staff functional
Lesson 5 - TRUST SERVICES
relationships within the organization which shall be in
accordance with the following guidelines.
TRUST, OTHER FIDUCIARY BUSINESS AND
INVESTMENT MANAGEMENT ACTIVITIES
Trust and other fiduciary business of a bank shall be carried
The cardinal principle common to all trust and other out through a trust department which shall be
fiduciary relationships is fidelity. Policies predicated upon organizationally, operationally, administratively and
this principle shall be directed towards observance of the functionally separate and distinct from the other
following: departments and/or businesses of the institution.
● Prudent Administration – The trust, investment
management and other fiduciary accounts shall be A bank which is also engaged in investment management
administered in conformity with the intention and activities, shall conduct the same only through its trust
purpose of the client as manifested in the terms of the department and the responsibilities of the board of directors,
agreement, and with the skill, care, prudence and trust committee and trust officer shall be construed to
diligence necessary under the circumstance then include the proper administration and management of
prevailing that a prudent man acting in like capacity investment management activities
and familiar with such matters would exercise in the
conduct of an enterprise of like character and with No bank shall undertake any of the trust and other fiduciary
similar aims. business and, whenever applicable, investment
● Undivided Loyalty and Utmost Care – In the discharge management activities outside the direct control, authority
of fiduciary responsibility, the interests of clients shall and management of the trust department or through any
be placed above those of the bank. Clear policies and department or office which is involved in the other
procedures shall be developed in dealing with conflict businesses of the bank, such as the Treasury, Funds
of interest situations. The fiduciary assets shall be Management or any similar department.
objectively and fairly administered, invested and
distributed giving due regard to the beneficiaries’ The trust department, trust officer and other subordinate
respective interests. officers of the trust department shall only be directly
● Non-delegation of responsibilities – The administration responsible to the bank’s trust committee which shall, in
of the trust, investment management, or fiduciary turn, be only directly responsible to the bank’s board of
responsibilities or the performance of acts that should directors.
be personally performed shall not be delegated as the
client’s confidence is reposed on the trust entity Responsibilities of Administration
● Preserving and Protecting Property – Reasonable care Board of Directors
and diligence shall be observed to preserve and The board of directors shall ensure an appropriate degree
protect the property entrusted. Fiduciary assets shall of independence between the activities of the bank proper
be kept legally separate and distinct from proprietary and its trust department.
assets and from one (1) fiduciary/trust/investment
management account to another Trust Committee
● Keeping and Rendering Accounts – A true and The trust committee is a special committee which reports
accurate account or record of transactions entered into directly to the board of directors and is primarily responsible
shall be kept. Reports on the trust, investment for overseeing the fiduciary activities of the bank. In
management and other fiduciary accounts shall be discharging its function, it shall:
rendered to the trustor, principal, beneficiary, or other ● ensure that fiduciary activities are conducted in
party in interest, or the court concerned, or any party accordance with applicable laws, rules and regulations,
duly designated by a court order, as the case may be. and prudent practices
Likewise, all material facts within the knowledge or ● ensure that policies and procedures that translate the
reasonably discoverable by the TE, particularly board’s objectives and risk tolerance into prudent
information that would enable clients to make well operating standards are in place and continue to be
informed decisions, shall be promptly relevant, comprehensive and effective
transmitted/relayed to clients for them to protect their ● oversee the implementation of the risk management
interests framework and ensure that internal controls are in
place relative to the fiduciary activities
Organization and Management
⭐⭐⭐ A bank authorized to engage in trust and other
● adopt an appropriate organizational structure/staffing
pattern and operating budgets that shall enable the
trust department to effectively carry out its functions
● oversee and evaluate performance of the trust officer Trust Agreement
● conduct regular meetings at least once every quarter, An instrument in writing covering the terms and conditions
or more frequently as necessary, depending on the of the trust.
size and complexity of the fiduciary business
● report regularly to the board of directors on matters
arising from fiduciary activities. Each trust or fiduciary account shall be covered by a written
document establishing such account, as follows:
Trust Officer ● In the case of accounts created by an order of the court
The designated head of the trust department in-charge of or other competent authority, the written order of said
the management of day-to-day fiduciary activities. In this court or authority
regard, the trust officer shall: ● In the case of accounts created by corporations,
● ensure adherence to the basic standards in the business firms, organizations or institutions, the
administration of trust, other fiduciary and investment voluntary written agreement or indenture entered into
management accounts by the parties, accompanied by a copy of the board
● develop and implement relevant policies and resolution or other evidence authorizing the
procedures on fiduciary activities establishment of, and designating the signatories to,
● observe sound risk management practices and the trust or other fiduciary account.
maintain necessary controls to protect assets under ● In the case of accounts created by individuals, the
custody and held in trust or other fiduciary capacity voluntary written agreement or indenture entered into
● carry out investment and other fiduciary activities in by the parties. The voluntary written agreement or
accordance with agreements with clients and indenture shall include the following minimum
parameters set by the trust committee as approved by provisions:
the board of directors, report regularly to the trust ○ Title or nature of contractual agreement in
committee on business performance and other matters noticeable print
requiring its attention ○ Legal capacities, in noticeable print, of parties
● maintain adequate books, records and files for each sought to be covered
trust or other fiduciary account and provide timely and ○ Purposes and objectives
regular disclosure to clients on the status of their ○ Funds and/or properties subject of the arrangement
accounts ○ Distribution of the funds and/or properties
● submit periodic reports to regulatory agencies on the ○ Duties and powers of trustee or fiduciary
conduct of the trust operations ○ Liabilities of the trustee or fiduciary
○ Reports to the client
TRUST ○ Termination of contractual arrangement and, in
A relationship or an arrangement whereby a person called a appropriate cases, provision for successor-trustee
trustee is appointed by a person called a trustor to or fiduciary
administer, hold and manage funds and/or property of the ○ The amount or rate of the compensation of trustee
trustor for the benefit of a beneficiary or fiduciary
○ A statement in noticeable print to the effect that trust
and other fiduciary business are not covered by the
Parties to a Trust
PDIC and that losses, if any, shall be for the
account of the client
Trustee Any person who holds legal title to the
○ Disclosure requirements for transactions requiring
funds and/or property of a trust
prior authority and/or specific written investment
Trustor Any person who creates a trust directive from the client, court of competent
jurisdiction or other competent authority.
Beneficiary Any person for whose benefit a trust is
created Trust Services
Individual/Personal Trust Services
This refers to trust arrangements established by an
Trust Business individual or a natural person, usually consisting of the
Any activity resulting from a trustor-trustee relationship disposition of assets to designated beneficiaries and
(trusteeship) involving the appointment of a trustee by a settlement of the estate of the deceased.
trustor for the administration, holding, management of funds
and/or properties of the trustor by the trustee for the use,
benefit or advantage of the trustor or of others called Living Trust Testamentary Trust
beneficiaries.
A living trust (or inter-vivos A testamentary trust is a
trust) is established before specific type of trust that’s
Trust Account
a grantor’s death and created as part of a last will
An account where transactions arising from a trusteeship
managed by a trustee while and testament. A grantor
are kept and recorded
the grantor is still alive. (the creator of the trust)
 the account is being established. Said purpose(s) shall be
This type of trust allows the leaves instructions in their
consistent with the general objectives of the PMT which is
grantor more say in the will for a named executor
the preservation of the assets or property for the current or
execution of the trust than detailing how their assets
future needs or use of the designated beneficiaries. Some
a testamentary trust, which are managed by a trustee
of the examples that may be identified and defined in a PMT
is established after death. and distributed to
are, but not limited to:
beneficiaries. The trust
● Living Sustenance (present and/or financial
becomes operational itself is established after
support)
during the lifetime of the the grantor’s death.
● Present and/or future medical/health maintenance
trustor as soon as the Creating a testamentary
requirements
agreement is accomplished trust for minor children,
● Education Lifestyle Support, e.g., Travel and
relatives, or others who
Recreation
may inherit estate assets is
● Gift-giving or Important Milestone
most common. However, a
● Purchase of Personal and Real Properties
testamentary trust can be
● Other financial needs or purpose which the trustor
established to manage
intends for the named beneficiary/ies
charitable distributions as
well.
⭐⭐⭐ Some of the allowable investment outlets for PMT
are special bank deposits, government securities,
A living trust can be revocable or irrevocable, but a investment-grade private securities, and UITFs. A PMT
testamentary trust is always a kind of irrevocable trust. It account shall meet the following criteria:
can’t be changed after the grantor’s death ● The minimum entry amount and maintaining
balance shall be equivalent to at least P100,000.
PMT with balances of up to P500,000 shall only be
Revocable Trust Irrevocable Trust
invested in deposits and government securities
● The agreement shall clearly state the specific
type of trust wherein the cannot be modified after it
purpose(s) for which the account was established
trustor can change the has been created
which shall be consistent with the general
terms of the account such
objectives of the PMT which is the preservation of
as the beneficiaries and
the assets or property for the future use of the
the stipulations after it has
beneficiaries and/or to answer for their current
been created.
needs
● The distribution clause shall clearly and specifically
Personal Management Trust define the manner and conditions under which the
PMT refers to a living trust created by an agreement assets (including income thereof) will be distributed.
whereby the trustor conveys property or a sum of money to Any distribution/withdrawal of assets (including
be managed by the trustee, as the agreement dictates, income thereof) shall be consistent with the
generally for the preservation of the assets or property for purpose of the PMT, strictly in accordance with the
future use of the beneficiaries and/or to answer for their distribution clause, and made only to the
current needs. It is a type of arrangement that is ideal for designated beneficiary/ies. Consequently, the
those who wish to preserve or grow their assets to answer trustee is expected to obtain adequate
for the current or future needs of the trustor and/or his documentation to ensure the propriety of
beneficiaries. distribution/withdrawal of assets (including income
thereof).
The trust agreement must specify the name/s of the
beneficiary/ies The beneficiary/ies can either be: Pre-printed PMT agreements may be allowed for
● The Trustor/s only expediency: Provided, That the section for the trust purpose
● Third-Party Beneficiary/ies and the distribution clause shall not be pre-printed and shall
● Trustor/s and Third-Party Beneficiaries be filled up only upon signing thereof by the trustor
● The length of PMT’s existence should be consistent
The trustor may or may not nominate third-party with the purpose of the trustor. Any termination for
beneficiary/ies. If there is one, the Trust Agreement must causes that are inconsistent with the purpose/
specifically state the names thereof. distribution clause shall render the trustor ineligible
from opening a new PMT within a period of one
There is no maximum number of stated beneficiaries and year from termination date
they need not be related to the trustor by consanguinity or ● Management of the trust assets shall be aligned
affinity. with the investment objective/s and risk parameters
set forth by the trustor
A PMT may either be a revocable or irrevocable trust.
Living Insurance
The PMT should have a clearly stated purpose(s) for which Trust An arrangement where the bank collects the proceeds
of the life insurance policy of the client upon the death of the agreement.
insured to distribute the same to assigned beneficiaries
stated in the agreement. Employee Benefit Trust
A type of discretionary trust that is established by a
Personal Retirement Trust Account company with a Trustee to manage its funds and provide
A PRTA is an agreement established between a client benefits to its qualified employees upon their retirement or
(trustor) and the bank with the purpose of providing for the separation from service in accordance with the law and the
retirement needs of the trustor upon his retirement or his approved plan rules
designated beneficiaries upon the trustor’s death.
The EBT shall be invested in investment outlets stated in
This type of arrangement is ideal for those who wish to the Investment Policy Statement (IPS) of the institution. The
establish a retirement nest egg and preserve or earn from IPS shall be prepared based on the result of the Client
their assets to help ensure that they have enough to answer Suitability Assessment (CSA) and shall be in accordance
for future needs such as medication, hospitalization, burial with the client’s by-laws, applicable laws, etc.
and emergency needs.
Some of the allowable investment outlets for an EBT are
Clients have the option to gradually build-up their PRTA or special bank deposits, government securities, and
invest one-time (lumpsum investment). Through build-up, a investment-grade private securities
client is given the flexibility to set-up his PRTA for a lower
minimum initial amount and steadily save for his retirement A company that will set up a retirement fund with a trust
nest egg through regular contributions. For those who opt entity may benefit from the following:
for lump-sum investment, they have the advantage of ● Avail of possible tax privileges under the law with the
potential higher returns and diversification because of the proper structure and tax qualification
volume of their funds. ○ Annual contributions to fund a retirement plan
are deductible from taxable income of the
Unit Investment Trust Funds company because funds placed in a Trust for the
Unit Investment Trust Funds (UITFs) refers to open-ended retirement benefits of qualified employees are
pooled trust funds denominated in pesos or any acceptable considered as an expense and are off the
currency, which are operated and administered by a trust company’s books
entity and made available by participation. ○ Investment earnings of a trust fund are not
subject to tax
As an open-ended fund, participation or redemption is ○ Benefits received by eligible retirees are not
allowed as often as stated in its plan rules. subject to tax
● To help it formulate investment guidelines for its fund
Unit Investment Trust Funds (UITFs) are not deposit ○ The Trust entity may be given sole discretion on
accounts and, therefore, are not insured or governed by the where the funds would be invested taking into
Philippine Deposit Insurance Corporation (PDIC). consideration the company’s setup, risk &

⭐⭐⭐
investment profile, plan rules, and the result of
Due to the nature of investments, yields and its actuarial valuation
potential yields cannot be guaranteed. Any income or loss ○ The company still has the right to give specific
arising from market fluctuations and price volatility of the instructions on where the funds would be
securities held by the Fund, even if invested in government invested if they opt to have control over the
securities, is for the account of the investor. As such, units investment function of the account.
of participation of the investor in the UITF, when redeemed, ○ A company may take advantage of the expertise
may be worth more or be worth less than his/her initial of well-equipped and dedicated Fund Managers
investment/contributions. Historical performance, when and Analysts for sound investment decisions
presented, is purely for reference purposes and not a ● To have someone assist in the proper administration of
guarantee of similar future results. the company’s retirement plan
○ The Trust Entity will ensure that funds set aside
The bank, as trustee, is not liable for losses unless upon for the company’s retirement fund will solely be
willful default, fraud, bad faith, or gross negligence. used for that purpose. A trust entity also ensures
Trustor/Investor must read the complete details of the fund that a company’s funds have enough liquidity to
in the Plan Rules/Declaration of Trusts, make his/her own ensure that funds are readily available when
risks assessment, and when necessary, he/she must seek needed
independent/professional opinion before making an ● To ensure that retirement benefits are properly
investment. computed and disbursed to qualified employees
○ Based on the established retirement plan, the
Institutional Trust Services Trust Entity will assist the company to compute
These types of arrangements require a bank to act as the for the retirement benefits of qualified employees
depository of the assets and properties that shall manage and manage its disbursement.
the same in accordance with the provisions of the ● To ensure that employees benefits are protected from
 creditors in case the company declares bankruptcy Escrow Agency
○ Funds placed in a Trust are separate from the The Escrow Agency is an arrangement wherein the bank
Employer’s assets as these are already acts as an independent third party to protect the interests of
considered as an expense of the company, thus, contracting parties pending the fulfillment of certain
in cases wherein a company goes under, the conditions. The bank makes sure that the terms and
company’s creditors cannot go after the conditions of the agreement are complied with by all parties
employee retirement fund. This ensures that involved.
employee benefits are paid
With an Escrow Agency Account, parties will worry less
Mortgage Trust Indenture about breach and noncompliance with contract terms.
A Mortgage Trust Indenture is a service provided by the
bank wherein it is appointed as a Trustee that acts as an The service is suitable for the following clients:
impartial intermediary between a company and its creditors ● Buyers or sellers of properties or services to be
in the administration of properties securing the company's rendered in exchange for final payments
loans – For example, in a buy and sell transaction, the buyer
delivers cash representing the purchase price of a property
The bank holds a pool of properties, real estate and/or to the Escrow Agent (bank) while the seller delivers the
chattel mortgages on behalf of creditors. Mortgage document of ownership over the property being purchased.
Participation Certificates are issued to represent the The escrow deposit, therefore, comprises cash and/or
proportionate share of creditors on the collateral pool With documents. The escrow account that will hold the cash
and/or documents will be covered by an escrow agreement
Mortgage Trust Indenture, corporate clients can optimize which will specify the conditions to be fulfilled prior to the
the use of substantially large collateral/s in dealing with a release of the cash to the seller and the document of
number of creditor-funders. The key benefits of this service ownership to the buyer
are:
● The regular checking and monitoring of collaterals ● Individuals who want to avail of the BIR exemption
for the benefit of both the borrower and the on the capital gains tax for selling their principal
creditors residence
● The borrowers are able to borrow from multiple – Sellers of their principal residence may be exempted from
creditors to maximize the loanable amounts against Capital Gains Tax (CGT) imposed by the Bureau of Internal
their existing properties or assets Revenue (BIR) if they intend to use the sales proceeds to
construct or acquire a new principal residence. The BIR
Fiduciary Any person or entity engaged in Escrow Account is one of the requirements to avail of the
any of the other fiduciary business CGT exemption
where no trustor-trustee relation – Funds that are intended for CGT are initially placed with
exists the bank for safekeeping and maintenance. Upon
compliance with regulatory requirements together with the
BIR’s instruction, the funds shall be released to the seller.
Fiduciary An account where transactions
Account arising from any of the other ● Recruitment Agencies required by POEA to set up
fiduciary businesses are kept and an Escrow Account to answer for whatever legal
recorded claims due to employment contract violations
The Philippine Overseas Employment Administration
Fiduciary Any activity of a trust-licensed bank (POEA) mandates that a recruitment agency shall set-up an
Business resulting from a contract or Escrow Account to cover possible future liabilities arising
agreement whereby the bank binds from claims of overseas contract workers due to
itself to render services or to act in employment contract violations. In a POEA Escrow
a representative capacity such as in Account, a tri-partite agreement is entered into by the
an agency, guardianship, recruitment agency, POEA and the bank.
administrators of wills, properties
and estates, executorship, ● Government and Private/Corporate Accounts
receivership, and other similar Type of Escrow Purpose
services which do not create or Arrangement
result in a trusteeship. It shall
exclude collecting or paying agency Buy and Sell To ensure the delivery by the
arrangements and similar fiduciary Seller of the property for sale
services which are inherent in the and the payment by the Buyer
use of the facilities of the other of a specified sum
operating departments of said bank
Housing and Land Use To comply with the conditions
 indenture entered into by the parties,
Regulatory Board set by the HLURB in granting
accompanied by a copy of the board resolution
(HLURB) developers a license to sell
or other evidence authorizing the
establishment of and designating the
Bureau of Internal To comply with the
signatories to, the investment management
Revenue (BIR) requirements of BIR in order to
account.
avail of the 6.00% Capital
○ In the case of accounts created by individuals,
Gains Tax (CGT)
the voluntary written agreement or indenture
Philippine Overseas To comply with the entered into by the parties. The voluntary
Employment requirements of POEA for written agreement or contract shall include the
Administration license applications and following minimum provisions:
renewals (1) Pre-numbered contractual agreement form
(2) Title or nature of contractual agreement in
Customized To accommodate other noticeable print
arrangements specified and (3) Legal capacities, in noticeable print, of
agreed upon by the transacting parties sought to be covered
parties (4) Purposes and objectives
(5) The initial amount of funds and/or value of
securities subject of the arrangement delivered
The benefits of escrow agency to clients are the following: to the investment manager
● Protection of the parties' interests (6) Statement in underlined noticeable print
● Safekeeping and preservation of the escrow that
deposit, including professional and prudent ■ The agreement is an agency and not a
investment of funds, if applicable trust agreement. As such, the client shall
● Objectivity of an independent party at all times retain legal title to funds and
● Timely delivery of the escrow deposit to designated properties subject of the arrangement
parties ■ The arrangement does not guaranty a
yield, return or income by the investment
Investment Management Activity manager. As such, past performance of
Any activity resulting from a contract or agreement primarily the account is not a guaranty of future
for financial return whereby the bank (the investment performance and the income of
manager) binds itself to handle or manage investible funds investments can fall as well as rise
or any investment portfolio in a representative capacity as depending on prevailing market conditions
financial or managing agent, adviser, consultant or ■ The investment management agreement
administrator of financial or investment management, is not covered by the PDIC and that
advisory, consultancy or any similar arrange losses, if any, shall be for the account of
the client
Investment Management Account (7) Duties and powers of the investment
An account where transactions arising from investment manager
management activities are kept and recorded (8) Liabilities of the investment manager
(9) Reports to the client
Investment Management Department (10) The amount or rate of the compensation
The department, unit, group, division or any aggrupation of the investment manager
which carries out the investment management activities of a (11) Terms and conditions governing
bank that does not have an authority to engage in trust and withdrawals from the account
other fiduciary business (12) Termination of contractual arrangement
(13) Disclosure requirements for transactions
Investment Management Officer requiring prior authority and/or specific written
The designated head or officer-in- charge of the investment investment directives from the client.
management department of a bank which does not have the
authority to engage in trust and other fiduciary business ● Minimum size of each investment management
ment which does not create or result in a trusteeship. account

⭐⭐⭐
No investment management account shall be accepted or
The conduct of investment management activities maintained for an amount less than P1.0 million. An
shall be subject to the following regulations investment management account reduced to less than P1.0
● Minimum documentary requirements million due to investment losses shall be exempt from this
An investment management account shall be covered by a requirement.
written document establishing such account, as follows:
○ In the case of accounts created by
corporations, business firms, organizations or
institutions, the voluntary written agreement or
POSSIBLE IDENTIFICATION
funds and/or property of a trust
Fidelity The cardinal principle common to all
trust and other fiduciary relationships. Trustor/grantor Any person who creates a trust

Prudent The trust, investment management Beneficiary Any person for whose benefit a trust is
Administration and other fiduciary accounts shall be created
administered in conformity with the
intention and purpose of the client as Trust Business Any activity resulting from a
manifested in the terms of the trustor-trustee relationship
agreement. (trusteeship)

Undivided The interests of clients shall be placed Trust Account An account where transactions arising
Loyalty and above those of the bank. The fiduciary from a trusteeship are kept and
Utmost Care assets shall be objectively and fairly recorded
administered, invested and distributed
giving due regard to the beneficiaries’ Trust An instrument in writing covering the
respective interests. Agreement terms and conditions of the trust

Non-delegation The acts that should be personally Individual/ This refers to trust arrangements
of performed shall not be delegated as Personal Trust established by an individual or a
Responsibilities the client’s confidence is reposed on Services natural person, usually consisting of
the trust entity the disposition of assets to designated
beneficiaries and settlement of the
Preserving and Reasonable care and diligence shall estate of the deceased
Protecting be observed to preserve and protect
Property the property entrusted. Living Trust (or inter-vivos trust) is established
before a grantor’s death and managed
Keeping and A true and accurate account or record by a trustee while the grantor is still
Rendering of transactions entered into shall be alive.
Accounts kept. Reports on the trust, investment
management and other fiduciary Testamentary is a specific type of trust that’s created
accounts shall be rendered to the Trust as part of a last will and testament
trustor, principal, beneficiary, or other
party in interest, or the court Revocable trust is a type of trust wherein the trustor
concerned, or any party duly can change the terms of the account
designated by a court order, as the such as the beneficiaries and the
case may be stipulations after it has been created.

Board of They shall ensure an appropriate Irrevocable trust cannot be modified after it has been
Directors degree of independence between the created
activities of the bank proper and its
trust department. Personal It is a type of arrangement that is ideal
Management for those who wish to preserve or grow
Trust A special committee which reports Trust (PMT) their assets to answer for the current
Committee directly to the board of directors and is or future needs of the trustor and/or
primarily responsible for overseeing his beneficiaries. The trust agreement
the fiduciary activities of the bank must specify the name/s of the
beneficiary/ies
Trust Officer The designated head of the trust
department in-charge of the Living An arrangement where the bank
management of day-to-day fiduciary Insurance Trust collects the proceeds of the life
activities. insurance policy of the client upon the
death of the insured to distribute the
Trust A relationship or an arrangement same to assigned beneficiaries stated
whereby a person called a trustee is in the agreement
appointed by a person called a trustor
to administer, hold and manage funds Personal A PRTA is an agreement established
and/or property of the trustor for the Retirement between a client (trustor) and the bank
benefit of a beneficiary Trust Account with the purpose of providing for the
(PRTA) retirement needs of the trustor upon
Trustee Any person who holds legal title to the his retirement or his designated
 beneficiaries upon the trustor’s death. Management from investment management
Account activities are kept and recorded
Unit Investment refers to an open-ended pooled trust
Trust Funds funds denominated in pesos or any Investment The department, unit, group, division
(UITF) acceptable currency, which are Management or any aggrupation which carries out
operated and administered by a trust Department the investment management activities
entity and made available by of a bank that does not have an
participation. authority to engage in trust and other
fiduciary business
Institutional These types of arrangements require a
Trust Services bank to act as the depository of the Investment The designated head or officer-in-
assets and properties that shall Management charge of the investment management
manage the same in accordance with Officer department of a bank which does not
the provisions of the agreement. have the authority to engage in trust
and other fiduciary business ment
Employee A type of discretionary trust that is which does not create or result in a
Benefit Trust established by a company with a trusteeship
(EBT) Trustee to manage its funds and
provide benefits to its qualified
employees upon their retirement or
separation from service in accordance
with the law and the approved plan
rules

Mortgage Trust A service provided by the bank

Indenture (MTI) wherein it is appointed as a Trustee
that acts as an impartial intermediary
POSSIBLE ENUMERATION
between a company and its creditors
Policies predicated upon this (fidelity) principle shall be
in the administration of properties
directed towards observance of the following:
securing the company's loans
● Prudent Administration Undivided
● Loyalty and Utmost Care
Fiduciary Any person or entity engaged in any of
● Non-delegation of responsibilities
the other fiduciary business where no
● Preserving and Protecting Property
trustor-trustee relation exists
● Keeping and Rendering Accounts
Fiduciary An account where transactions arising
Account from any of the other fiduciary Organization and Management (Responsibilities of
businesses are kept and recorded Administration)
● Board of Directors
Fiduciary Any activity of a trust-licensed bank ● Trust Committee
Business resulting from a contract or agreement ● Trust Officer
whereby the bank binds itself to render
services or to act in a representative Parties to a Trust
capacity which do not create or result ● Trustee
in a trusteeship ● Trustor
● Beneficiary
Escrow Agency An arrangement wherein the bank acts
as an independent third party to The voluntary written agreement or indenture shall include
protect the interests of contracting the following minimum provisions:
parties pending the fulfillment of ○ Title or nature of contractual agreement in
certain conditions. noticeable print
○ Legal capacities, in noticeable print, of parties
Investment Any activity resulting from a contract sought to be covered
Management or agreement primarily for financial ○ Purposes and objectives
Activity return whereby the bank (the ○ Funds and/or properties subject of the arrangement
investment manager) binds itself to ○ Distribution of the funds and/or properties
handle or manage investible funds or ○ Duties and powers of trustee or fiduciary
any investment portfolio in a ○ Liabilities of the trustee or fiduciary
representative capacity ○ Reports to the client
○ Termination of contractual arrangement and, in
Investment An account where transactions arising appropriate cases, provision for successor-trustee
 or fiduciary POSSIBLE ACRONYMS
○ The amount or rate of the compensation of trustee
PMT Personal Management Trust
or fiduciary
○ A statement in noticeable print to the effect that trust
PRTA Personal Retirement Trust Account
and other fiduciary business are not covered by the
PDIC and that losses, if any, shall be for the UITFs Unit Investment Trust Funds
account of the client
○ Disclosure requirements for transactions requiring PDIC Philippine Deposit Insurance Corporation
prior authority and/or specific written investment
directive from the client, court of competent EBT Employee Benefit Trust
jurisdiction or other competent authority.
IPS Investment Policy Statement
The beneficiary/ies in PMT can either be:
● The Trustor/s only CSA Client Suitability Assessment
● Third-Party Beneficiary/ies
● Trustor/s and Third-Party Beneficiaries CGT Capital Gains Tax

Some of the examples that may be identified and defined in MTI Mortgage Trust Indenture
a PMT are, but not limited to:
● Living Sustenance (present and/or financial HLURB Housing and Land Use Regulatory Board
support)
● Present and/or future medical/health maintenance BIR Bureau of Internal Revenue
requirements
● Education Lifestyle Support, e.g., Travel and POEA Philippine Overseas Employment
Recreation Administration
● Gift-giving or Important Milestone
● Purchase of Personal and Real Properties
● Other financial needs or purpose which the trustor
intends for the named beneficiary/ies

A company that will set up a retirement fund with a trust

entity may benefit from the following: (PLS LANG)
● Avail of possible tax privileges under the law with the
proper structure and tax qualification
● To help it formulate investment guidelines for its fund
● To have someone assist in the proper administration of
the company’s retirement plan
● To ensure that retirement benefits are properly
computed and disbursed to qualified employees
● To ensure that employees benefits are protected from
creditors in case the company declares bankruptcy

Fiduciary Business representative capacity such as in an

● agency
● guardianship
● administrators of wills
● properties and estates
● executorship
● receivership, and
● other similar services

The benefits of escrow agency to clients are the following:

● Protection of the parties' interests
● Safekeeping and preservation of the escrow
deposit, including professional and prudent
investment of funds, if applicable
● Objectivity of an independent party
● Timely delivery of the escrow deposit to designated
parties