1
RA 7635 institution subject to supervision or examination by the
BSP – concerning Money, Banking and credit
- Government-owned corporation – enjoy Fiscal
and Administrative Autonomy
Functions:
1. Provide policy directions in the area of MBC
2. Supervision over the operations of banks
3. Regulatory powers over finance companies and
non-bank financial institutions performing quasi-
banking functions and institutions performing
similar functions
Objective
1. Maintain price stability to a balanced and
sustainable growth of the economy
2. Promote and maintain monetary stability and
convertibility of the peso
Corporate Powers
1. Adopt a zeal
2. Enter into contracts
3. Lease/own RP/PP
4. Sell/otherwise dispose the same
5. Sue/be sued
6. Others
a. May own assets and incur liabilities
b. Compromise, condone/release any
claim/settled liability to BSP
*BSP has the power to issue subpoena for production of
books and records to obtain data and information. Such
data and information shall not be available to any
person/entity outside of BSP whether public or private
EXCEPT under order of the court
SUBSIDIARY - a corporation more than fifty percent
(50%) of the voting stock of which is owned by a bank or
quasi-bank
AFFILIATE - a corporation the voting stock of which, to
the extent of fifty percent (50%) or less, is owned by a
bank or quasi-bank or which is related or linked to such
institution or intermediary through common stockholders
or such other factors as may be determined by the
Monetary Board.
*No restraining order or injunction shall be issued by the
court enjoining the Bangko Sentral from examining any
Bangko Sentral, unless there is convincing proof that the
action of the Bangko Sentral is plainly arbitrary and
made in bad faith and the petitioner or plaintiff files with
the clerk or judge of the court in which the action is
pending a bond executed in favor of the Bangko Sentral,
in an amount to be fixed by the court.
*Any director, officer or stockholder who, together with
his related interest, contracts a loan or any form of
financial accommodation from: (1) his bank; or (2) from a
bank (a) which is a subsidiary of a bank holding
company of which both his bank and the lending bank
are subsidiaries or (b) in which a controlling proportion of
the shares is owned by the same interest that owns a
controlling proportion of the shares of his bank, in
excess of five percent (5%) of the capital and surplus of
the bank, or in the maximum amount permitted by law,
whichever is lower, shall be required by the lending bank
to waive the secrecy of his deposits of whatever nature
in all banks in the Philippines. Any information obtained
from an examination of his deposits shall be held strictly
confidential and may be used by the examiners only in
connection with their supervisory and examination
responsibility or by the Bangko Sentral in an appropriate
legal action it has initiated involving the deposit account.
Prohibitions. — In addition to the prohibitions found in
Republic Act Nos. 3019 and 6713, personnel of the
Bangko Sentral are hereby prohibited from:
(a) being an officer, director, lawyer or agent,
employee, consultant or stockholder, directly or
indirectly, of any institution subject to
supervision or examination by the Bangko
Sentral, except non-stock savings and loan
associations and provident funds organized
exclusively for employees of the Bangko Sentral,
and except as otherwise provided in this Act;
(b) directly or indirectly requesting or receiving
any gift, present or pecuniary or material benefit
for himself or another, from any institution
subject to supervision or examination by the
Bangko Sentral;
(c) revealing in any manner, except under orders
of the court, the Congress or any government
office or agency authorized by law, or under
such conditions as may be prescribed by the
Monetary Board, information relating to the
condition or business of any institution. This
prohibition shall not be held to apply to the
giving of information to the Monetary Board or
the Governor of the Bangko Sentral, or to any
 2
person authorized by either of them, in writing,
to receive such information; and
(d) borrowing from any institution subject to
supervision or examination by the Bangko
Sentral shall be prohibited unless said
borrowings are adequately secured, fully
disclosed to the Monetary Board, and shall be
subject to such further rules and regulations as
the Monetary Board may prescribe: Provided,
however, That personnel of the supervising and
examining departments are prohibited from
borrowing from a bank under their supervision or
examination.
None of the reports and other papers relative to such
examinations shall be open to inspection by the public
except insofar as such publicity is incidental to the
proceedings hereinafter authorized or is necessary for
the prosecution of violations in connection with the
business of such institutions.
Appointment of Conservator. — Whenever, on the basis
of a report submitted by the appropriate supervising or
examining department, the Monetary Board finds that a
bank or a quasi-bank is in a state of continuing inability
or unwillingness to maintain a condition of liquidity
deemed adequate to protect the interest of depositors
and creditors, the Monetary Board may appoint a
conservator with such powers as the Monetary Board
shall deem necessary to take charge of the assets,
liabilities, and the management thereof, reorganize the
management, collect all monies and debts due said
institution, and exercise all powers necessary to restore
its viability. The conservator shall report and be
responsible to the Monetary Board and shall have the
power to overrule or revoke the actions of the previous
management and board of directors of the bank or
quasi-bank.
The conservator should be competent and
knowledgeable in bank operations and management.
The conservatorship shall not exceed one (1) year.
The Monetary Board shall terminate the conservatorship
when it is satisfied that the institution can continue to
operate on its own and the conservatorship is no longer
necessary. The conservatorship shall likewise be
terminated should the Monetary Board, on the basis of
the report of the conservator 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.
Proceedings in Receivership and Liquidation. —
Whenever, upon report of the head of the supervising or
examining department, the Monetary Board finds that a
bank or quasi-bank:
(a)  is unable to pay its liabilities as they become
due in the ordinary course of business:
Provided, That this shall not include inability to
pay caused by extraordinary demands induced
by financial panic in the banking community;
(b)  has insufficient realizable assets, as
determined by the Bangko Sentral, to meet its
liabilities; or
(c)  cannot continue in business without
involving probable losses to its depositors or
creditors; or
(d)  has willfully violated a cease and desist
order under Section 37 that has become final,
involving acts or transactions which amount to
fraud or a dissipation of the assets of the
institution; in which cases, the Monetary Board
may summarily and without need for prior
hearing forbid the institution from doing business
in the Philippines and designate the Philippine
Deposit Insurance Corporation as receiver of the
banking institution.
For a quasi-bank, any person of recognized competence
in banking or finance may be designed as receiver.
*The receiver shall immediately gather and take charge
of all the assets and liabilities of the institution,
administer the same for the benefit of its creditors, and
exercise the general powers of a receiver under the
Revised Rules of Court but shall not, with the exception
of administrative expenditures, pay or commit any act
that will involve the transfer or disposition of any asset of
the institution: Provided, That the receiver may deposit
or place the funds of the institution in non-speculative
investments. The receiver shall determine as soon as
possible, but not later than ninety (90) days from take
over, whether the institution may be rehabilitated or
otherwise placed in such a condition so that it may be
permitted to resume business with safety to its
depositors and creditors and the general public:
Provided, That any determination for the resumption of
business of the institution shall be subject to prior
approval of the Monetary Board.
If the receiver determines that the institution cannot be
rehabilitated or permitted to resume business in
accordance with the next preceding paragraph, the
Monetary Board shall notify in writing the board of
 3
directors of its findings and direct the receiver to proceed
with the liquidation of the institution. The receiver shall:
(1) file ex parte with the proper regional trial
court, and without requirement of prior notice or
any other action, a petition for assistance in the
liquidation of the institution pursuant to a
liquidation plan adopted by the Philippine
Deposit Insurance Corporation for general
application to all closed banks. In case of quasi-
banks, the liquidation plan shall be adopted by
the Monetary Board. Upon acquiring jurisdiction,
the court shall, upon motion by the receiver after
due notice, adjudicate disputed claims against
the institution, assist the enforcement of
individual liabilities of the stockholders, directors
and officers, and decide on other issues as may
be material to implement the liquidation plan
adopted. The receiver shall pay the cost of the
proceedings from the assets of the institution.
(2) convert the assets of the institutions to
money, dispose of the same to creditors and
other parties, for the purpose of paying the debts
of such institution in accordance with the rules
on concurrence and preference of credit under
the Civil Code of the Philippines and he may, in
the name of the institution, and with the
assistance of counsel as he may retain, institute
such actions as may be necessary to collect and
recover accounts and assets of, or defend any
action against, the institution. The assets of an
institution under receivership or liquidation shall
be deemed in custodia legis in the hands of the
receiver and shall, from the moment the
institution was placed under such receivership or
liquidation, be exempt from any order of
garnishment, levy, attachment, or execution.
The actions of the Monetary Board taken under this
section or under Section 29 of this Act shall be final and
executory, and may not be restrained or set aside by the
court except on petition for certiorari on the ground that
the action taken was in excess of jurisdiction or with
such grave abuse of discretion as to amount to lack or
excess of jurisdiction. The petition for certiorari may only
be filed by the stockholders of record representing the
majority of the capital stock within ten (10) days from
receipt by the board of directors of the institution of the
order directing receivership, liquidation or
conservatorship.
The designation of a conservator under Section 29 of
this Act or the appointment of a receiver under this
section shall be vested exclusively with the Monetary
Board. Furthermore, the designation of a conservator is
not a precondition to the designation of a receiver.
The following administrative sanctions, whenever
applicable:
(a) fines in amounts as may be determined by
the Monetary Board to be appropriate, but in no
case to exceed Thirty thousand pesos (P30,000)
a day for each violation, taking into
consideration the attendant circumstances, such
as the nature and gravity of the violation or
irregularity and the size of the bank or quasi-
bank;
(b) suspension of rediscounting privileges or
access to Bangko Sentral credit facilities;
(c) suspension of lending or foreign exchange
operations or authority to accept new deposits or
make new investments;
(d) suspension of interbank clearing privileges;
and/or
(e) revocation of quasi-banking license.
The above administrative sanctions need not be applied
in the order of their severity.
Whether or not there is an administrative proceeding, if
the institution and/or the directors and/or officers
concerned continue with or otherwise persist in the
commission of the indicated practice or violation, the
Monetary Board may issue an order requiring the
institution and/or the directors and/or officers concerned
to cease and desist from the indicated practice or
violation, and may further order that immediate action be
taken to correct the conditions resulting from such
practice or violation. The cease and desist order shall be
immediately effective upon service on the respondents.
Currency - all Philippine notes and coins issued or
circulating in accordance with the provisions of this Act
*The Bangko Sentral shall have the sole power and
authority to issue currency, within the territory of the
Philippines.
*The Bangko Sentral shall have the authority to
investigate, make arrests, conduct searches and
seizures in accordance with law, for the purpose of
maintaining the integrity of the currency.
*Notes and coins issued by the Bangko Sentral shall be
liabilities of the Bangko Sentral and may be issued only
against, and in amounts not exceeding, the assets of the
Bangko Sentral. Said notes and coins shall be a first and
paramount lien on all assets of the Bangko Sentral.
 4
*The Bangko Sentral's holdings of its own notes and
coins shall not be considered as part of its currency
issue and, accordingly, shall not form part of the assets
or liabilities of the Bangko Sentral.
*All notes and coins issued by the Bangko Sentral shall
be fully guaranteed by the Government of the Republic
of the Philippines and shall be legal tender in the
Philippines for all debts, both public and private:
Provided, however, That, unless otherwise fixed by the
Monetary Board, coins shall be legal tender in amounts
not exceeding Fifty pesos (P50.00) for denominations of
Twenty-five centavos and above, and in amounts not
exceeding Twenty pesos (P20.00) for denominations of
Ten centavos or less.
Demand deposits - all those liabilities of the Bangko
Sentral and of other banks which are denominated in
Philippine currency and are subject to payment in legal
tender upon demand by the presentation of checks
Issue of Demand Deposits. — Only banks duly
authorized to do so may accept funds or create liabilities
payable in pesos upon demand by the presentation of
checks, and such operations shall be subject to the
control of the Monetary Board in accordance with the
powers granted it with respect thereto under this Act.
*Checks 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.
*In order to maintain the international stability and
convertibility of the Philippine peso, the Bangko Sentral
shall maintain international reserves adequate to meet
any foreseeable net demands on the Bangko Sentral for
foreign currencies.
*The Bangko Sentral may extend loans and advances to
banking institutions for a period of not more than seven
(7) days without any collateral for the purpose of
providing liquidity to the banking system in times of need
Deposit substitutes - alternative form of obtaining funds
from the public, other than deposits, through the
issuance, endorsement, or acceptance of debt
instruments for the borrower's own account, for the
purpose of relending or purchasing of receivables and
other obligations. These instruments may include, but
need not be limited to, bankers acceptances, promissory
notes, participations, certificates of assignment and
similar instruments with recourse, and repurchase
agreements.
*The Bangko Sentral shall act as a banker of the
Government, its political subdivisions and
instrumentalities
*The Bangko Sentral shall represent the Government in
all dealings, negotiations and transactions with the
International Monetary Fund and shall carry such
accounts as may result from Philippine membership in,
or operations with, said Fund.
*The Bangko Sentral shall be the official depository of
the Government, its political subdivisions and
instrumentalities as well as of government-owned or
controlled corporations and, as a general policy, their
cash balances should be deposited with the Bangko
Sentral, with only minimum working balances to be held
by government-owned banks and such other banks
incorporated in the Philippines as the Monetary Board
may designate, subject to such rules and regulations as
the Board may prescribe: Provided, That such banks
may hold deposits of the political subdivisions and
instrumentalities of the Government beyond their
minimum working balances whenever such subdivisions
or instrumentalities have outstanding loans with said
banks.
*The Bangko Sentral shall open a general cash account
for the Treasurer of the Philippines, in which the liquid
funds of the Government shall be deposited.
*The operations of the Securities Stabilization Fund shall
consist of purchases and sales, in the open market, of
bonds and other evidences of indebtedness issued or
fully guaranteed by the Government. The purpose of
these operations shall be to increase the liquidity and
stabilize the value of said securities in order thereby to
promote investment in government obligations.
*The Bangko Sentral shall not acquire shares of any kind
or accept them as collateral, and shall not participate in
the ownership or management of any enterprise, either
directly or indirectly.
*The Bangko Sentral shall not engage in development
banking or financing: Provided, however, That
outstanding loans obtained or extended for development
financing shall not be affected by the prohibition of this
section.
 5
RA 1405
*All deposits of whatever nature with banks or banking
institutions in the Philippines including investments in
bonds issued by the Government of the Philippines, its
political subdivisions and its instrumentalities, are hereby
considered as of an absolutely confidential nature and
may not be examined, inquired or looked into by any
person, government official, bureau or office, except
upon written permission of the depositor, or in cases of
impeachment, or upon order of a competent court in
cases of bribery or dereliction of duty of public officials,
or in cases where the money deposited or invested is
the subject matter of the litigation.
RA 8791
Banks - entities engaged in the lending of funds obtained
in the form of deposits
Banks shall be classified into:
(a) Universal banks;
(b) Commercial banks;
(c) Thrift banks, composed of: (i) Savings and
mortgage banks, (ii) Stock savings and loan
associations, and (iii) Private development
banks, as defined in the Republic Act No. 7906
(hereafter the "Thrift Banks Act");
(d) Rural banks, as defined in Republic Act No.
73S3 (hereafter the "Rural Banks Act");
(e) Cooperative banks, as defined in Republic
Act No 6938 (hereafter the "Cooperative Code");
(f) Islamic banks as defined in Republic Act No.
6848, otherwise known as the "Charter of Al
Amanah Islamic Investment Bank of the
Philippines"; and
(g) Other classifications of banks as determined
by the Monetary Board of the Bangko Sentral ng
Pilipinas.
Supervisory Powers
1. The issuance of rules of, conduct or the
establishment standards of operation for uniform
application to all institutions or functions
covered, taking into consideration the distinctive
character of the operations of institutions and
the substantive similarities of specific functions
to which such rules, modes or standards are to
be applied;
2. The conduct of examination to determine
compliance with laws and regulations if the
circumstances so warrant as determined by the
Monetary Board;
3. Overseeing to ascertain that laws and
regulations are complied with;
4. Regular investigation which shall not be oftener
than once a year from the last date of
examination to determine whether an institution
is conducting its business on a safe or sound
basis: Provided, That the
deficiencies/irregularities found by or discovered
by an audit shall be immediately addressed;
5. Inquiring into the solvency and liquidity of the
institution (2-D); or
6. Enforcing prompt corrective action.
*Quasi-banks - entities engaged in the borrowing of
funds through the issuance, endorsement or assignment
with recourse or acceptance of deposit substitutes as
defined in Section 95 of Republic Act No. 7653
(hereafter the "New Central Bank Act") for purposes of
re-lending or purchasing of receivables and other
obligations.
*No person or entity shall engage in banking operations
or quasi-banking functions without authority from the
Bangko Sentral: Provided, however, That an entity
authorized by the Bangko Sentral to perform universal or
commercial banking functions shall likewise have the
authority to engage in quasi-banking functions.
Upon issuance of this authority, such person or entity
may commence to engage in banking operations or
quasi-banking function and shall continue to do so
unless such authority is sooner surrendered, revoked,
suspended or annulled by the Bangko Sentral in
accordance with this Act or other special laws.
*Foreign individuals and non-bank corporations may own
or control up to forty percent (40%) of the voting stock of
a domestic bank. This rule shall apply to Filipinos and
domestic non-bank corporations. The percentage of
foreign-owned voting stocks in a bank shall be
determined by the citizenship of the individual
stockholders in that bank. The citizenship of the
corporation which is a stockholder in a bank shall follow
 6
the citizenship of the controlling stockholders of the
corporation, irrespective of the place of incorporation.
Non-Filipino citizens may become members of the board
of directors of a bank to the extent of the foreign
participation in the equity of said bank.
Fit and Proper Rule. –
To maintain the quality of bank management and afford
better protection to depositors and the public in general
the Monetary Board shall prescribe, pass upon and
review the qualifications and disqualifications of
individuals elected or appointed bank directors or
officers and disqualify those found unfit. After due notice
to the board of directors of the bank, the Monetary Board
may disqualify, suspend or remove any bank director or
officer who commits or omits an act which render him
unfit for the position. In determining whether an
individual is fit and proper to hold the position of a
director or officer of a bank, regard shall be given to his
integrity, experience, education, training, and
competence.
*Except as otherwise provided in the Rural Banks Act,
no appointive or elective public official whether full-time
or part-time shall at the same time serve as officer of any
private bank, save in cases where such service is
incident to financial assistance provided by the
government or a government owned or controlled
corporation to the bank or unless otherwise provided
under existing laws.
*A universal bank shall have the authority to exercise, in
addition to the powers authorized for a commercial bank
in Section 29, the powers of an investment house as
provided in existing laws and the power to invest in non-
allied enterprises as provided in this Act
*A universal bank may, subject to the conditions stated
in the succeeding paragraph, invest in the equities of
allied and non-allied enterprises as may be determined
by the Monetary Board. Allied enterprises may either be
financial or non-financial. Except as the Monetary Board
may otherwise prescribe:
1. The total investment in equities of allied and
non-allied enterprises shall not exceed fifty
percent (50%) of the net worth of the bank; and
2. The equity investment in any one enterprise,
whether allied or non-allied, shall not exceed
twenty-five percent (25%) of the net worth of the
bank.
*A universal bank can own up to one hundred percent
(100%) of the equity in a thrift bank, a rural bank or a
financial allied enterprise. A publicly-listed universal or
commercial bank may own up to one hundred percent
(100%) of the voting stock of only one other universal or
commercial bank
*A universal bank may own up to one hundred percent
(100%) of the equity in a non-financial allied enterprise.
*The equity investment of a universal bank, or of its
wholly or majority-owned subsidiaries, in a single non-
allied enterprise shall not exceed thirty-five percent
(35%) of the total equity in that enterprise nor shall it
exceed thirty-five percent (35%) of the voting stock in
that enterprise.
*To promote competitive conditions in financial markets,
the Monetary Board may further limit to forty percent
(40%) equity investments of universal banks in quasi-
banks. This rule shall also apply in the case of
commercial banks.
*A commercial bank may, subject to the conditions
stated in the succeeding paragraphs, invest only in the
equities of allied enterprises as may be determined by
the Monetary Board. Allied enterprises may either be
financial or non-financial. Except as the Monetary Board
may otherwise prescribe:
1. The total investment in equities of allied
enterprises shall not exceed thirty-five percent
(35%) of the net worth of the bark; and
2. The equity investment in any one enterprise
shall not exceed twenty-five percent (25%) of tile
net worth of the bank. The acquisition of such
equity or equities is subject to the prior approval
of the Monetary Board which shall promulgate
appropriate guidelines to govern such
investment.
*A commercial bank may own up to one hundred percent
(100%) of the equity of a thrift bank or a rural bank.
Where the equity investment of a commercial bank is in
other financial allied enterprises, including another
commercial bank, such investment shall remain a
minority holding in that enterprise
*A commercial bank may own up to one hundred percent
(100%) of the equity in a non-financial allied enterprise.
*A bank other than a universal or commercial bank
cannot accept or create demand deposits except upon
 7
prior approval of, and subject to such conditions and
rules as may be prescribed by the Monetary Board
Restriction on Bank Exposure to Directors, Officers,
Stockholders and Their Related Interests. –
No director or officer of any bank shall, directly or
indirectly, for himself or as the representative or agent of
others, borrow from such bank nor shall he become a
guarantor, endorser or surety for loans from such bank
to others, or in any manner be an obligor or incur any
contractual liability to the bank except with the written
approval of the majority of all the directors of the bank,
excluding the director concerned: Provided, That such
written approval shall not be required for loans, other
credit accommodations and advances granted to officers
under a fringe benefit plan approved by the Bangko
Sentral. The required approval shall be entered upon the
records of the bank and a copy of such entry shall be
transmitted forthwith to the appropriate supervising and
examining department of the Bangko Sentral. Dealings
of a bank with any of its directors, officers or
stockholders and their related interests shall be upon
terms not less favorable to the bank than those offered
to others. After due notice to the board of directors of the
bank, the office of any bank director or officer who
violates the provisions of this Section may be declared
vacant and the director or officer shall be subject to the
penal provisions of the New Central Bank Act. The
Monetary Board may regulate the amount of loans,
credit accommodations and guarantees that may be
extended, directly or indirectly, by a bank to its directors,
officers, stockholders and their related interests, as well
as investments of such bank in enterprises owned or
controlled by said directors, officers, stockholders and
their related interests. However, the outstanding loans,
credit accommodations and guarantees which a bank
may extend to each of its stockholders, directors, or
officers and their related interests, shall be limited to an
amount equivalent to their respective unencumbered
deposits and book value of their paid-in capital
contribution in the bank: Provided, however, That loans,
credit accommodations and guarantees secured by
assets considered as non-risk by the Monetary Board
shall be excluded from such limit: Provided, further, That
loans, credit accommodations and advances to officers
in the form of fringe benefits granted in accordance with
rules as may be prescribed by the Monetary Board shall
not be subject to the individual limit. The Monetary Board
shall define the term "related interests." The limit on
loans, credit accommodations and guarantees
prescribed herein shall not apply to loans, credit
accommodations and guarantees extended by a
cooperative bank to its cooperative shareholders.
Foreclosure of Real Estate Mortgage. –
In the event of foreclosure, whether judicially or extra-
judicially, of any mortgage on real estate which is
security for any loan or other credit accommodation
granted, the mortgagor or debtor whose real property
has been sold for the full or partial payment of his
obligation shall have the right within one year after the
sale of the real estate, to redeem the property by paying
the amount due under the mortgage deed, with interest
thereon at rate specified in the mortgage, and all the
costs and expenses incurred by the bank or institution
from the sale and custody of said property less the
income derived therefrom. However, the purchaser at
the auction sale concerned whether in a judicial or extra-
judicial foreclosure shall have the right to enter upon and
take possession of such property immediately after the
date of the confirmation of the auction sale and
administer the same in accordance with law. Any petition
in court to enjoin or restrain the conduct of foreclosure
proceedings instituted pursuant to this provision shall be
given due course only upon the filing by the petitioner of
a bond in an amount fixed by the court conditioned that
he will pay all the damages which the bank may suffer
by the enjoining or the restraint of the foreclosure
proceeding. Notwithstanding Act 3135, juridical persons
whose property is being sold pursuant to an extrajudicial
foreclosure, shall have the right to redeem the property
in accordance with this provision until, but not after, the
registration of the certificate of foreclosure sale with the
applicable Register of Deeds which in no case shall be
more than three (3) months after foreclosure, whichever
is earlier. Owners of property that has been sold in a
foreclosure sale prior to the effectivity of this Act shall
retain their redemption rights until their expiration.
Other Banking Services. –
1. Receive in custody funds, documents and
valuable objects;
2. Act as financial agent and buy and sell, by order
of and for the account of their customers,
shares, evidences of indebtedness and all types
of securities;
3. Make collections and payments for the account
of others and perform such other services for
their customers as are not incompatible with
banking business;
 8
4. Upon prior approval of the Monetary Board, act
as managing agent, adviser, consultant or
administrator of investment
management/advisory/consultancy accounts;
and
5. Rent out safety deposit boxes.
*A bank shall not directly engage in insurance business
as the insurer.
Prohibited Transactions.
1. No director, officer, employee, or agent of any
bank shall -
(a) Make false entries in any bank report or
statement or participate in any fraudulent
transaction, thereby affecting the financial
interest of, or causing damage to, the bank or
any person;
(b) Without order of a court of competent
jurisdiction, disclose to any unauthorized person
any information relative to the funds or
properties in the custody of the bank belonging
to private individuals, corporations, or any other
entity: Provided, That with respect to bank
deposits, the provisions of existing laws shall
prevail;
(c) Accept gifts, fees, or commissions or any
other form of remuneration in connection with
the approval of a loan or other credit
accommodation from said bank;
(d) Overvalue or aid in overvaluing any security
for the purpose of influencing in any way the
actions of the bank or any bank; or
(e) Outsource inherent banking functions.
2. No borrower of a bank shall -
(a) Fraudulently overvalue property offered as
security for a loan or other credit
accommodation from the bank;
(b) Furnish false or make misrepresentation or
suppression of material facts for the purpose of
obtaining, renewing, or increasing a loan or
other credit accommodation or extending the
period thereof;
(c) Attempt to defraud the said bank in the event
of a court action to recover a loan or other credit
accommodation; or
(d) Offer any director, officer, employee or agent
of a bank any gift, fee, commission, or any other
form of compensation in order to influence such
persons into approving a loan or other credit
accommodation application.
3. No examiner, officer or employee of the Bangko
Sentral or of any department, bureau, office,
branch or agency of the Government that is
assigned to supervise, examine, assist or render
technical assistance to any bank shall commit
any of the acts enumerated in this Section or aid
in the commission of the same. (87-Aa)
The making of false reports or misrepresentation
or suppression of material facts by personnel of
the Bangko Sental ng Pilipinas shall be subject
to the administrative and criminal sanctions
provided under the New Central Bank Act.
4. Consistent with the provisions of Republic Act
No. 1405, otherwise known as the Banks
Secrecy Law, no bank shall employ casual or
non regular personnel or too lengthy
probationary personnel in the conduct of its
business involving bank deposits.
*In case of voluntary liquidation of any bank organized
under the laws of the Philippines, or of any branch or
office in the Philippines of a foreign bank, written notice
of such liquidation shall be sent to the Monetary Board
before such liquidation shall be sent to the Monetary
Board before such liquidation is undertaken, and the
Monetary Board shall have the right to intervene and
take such steps as may be necessary to protect the
interests of creditors.
*The Monetary Board may revoke the license to transact
business in the Philippines of, any foreign bank, if it finds
that the foreign bank is insolvent or in imminent danger
thereof or that its continuance in business will involve
probable loss to those transacting business with it. After
the revocation of its license, it shall be unlawful for any
such foreign banks to transact business in the
Philippines unless its license is renewed or reissued.
After the revocation of such license, the Bangko Sentral
shall take the necessary action to protect the creditors of
such foreign bank and the public.
*Only a stock corporation or a person duly authorized by
the Monetary Board to engage in trust business shall act
as a trustee or administer any trust or hold property in
trust or on deposit for the use, benefit, or behoof of
 9

others. For purposes of this Act, such a corporation shall
be referred to as a trust entity
RA 6426
Authority of banks to accept foreign currency deposits. –
The banks designated by the Central Bank under
Section two hereof shall have the authority:
(1) To accept deposits and to accept foreign
currencies in trust Provided, That numbered
accounts for recording and servicing of said
deposits shall be allowed;
confidential nature and, except upon the written
permission of the depositor, in no instance shall foreign
currency deposits be examined, inquired or looked into
by any person, government official, bureau or office
whether judicial or administrative or legislative, or any
other entity whether public or private; Provided,
however, That said foreign currency deposits shall be
exempt from attachment, garnishment, or any other
order or process of any court, legislative body,
government agency or any administrative body
whatsoever.

(2) To issue certificates to evidence such

deposits;

(3) To discount said certificates;

(4) To accept said deposits as collateral for

loans subject to such rules and regulations as
may be promulgated by the Central Bank from
time to time; and

(5) To pay interest in foreign currency on such

deposits.

*Except as the Monetary Board may otherwise prescribe

or allow, the depository banks shall maintain at all times
a one hundred percent foreign currency cover for their
liabilities, of which cover at least fifteen percent shall be
in the form of foreign currency deposit with the Central
Bank, and the balance in the form of foreign currency
loans or securities, which loans or securities shall be of
short term maturities and readily marketable. Such
foreign currency loans may include loans to domestic
enterprises which are export-oriented or registered with
the Board of Investments, subject to the limitations to be
prescribed by the Monetary Board on such loans. Except
as the Monetary Board may otherwise prescribe or
allow, the foreign currency cover shall be in the same
currency as that of the corresponding foreign currency
deposit liability. The Central Bank may pay interest on
the foreign currency deposit, and if requested shall
exchange the foreign currency notes and coins into
foreign currency instruments drawn on its depository
banks.

*There shall be no restriction on the withdrawal by the

depositor of his deposit or on the transferability of the
same abroad except those arising from the contract
between the depositor and the bank.

*All foreign currency deposits authorized under this Act,

as amended by PD No. 1035, as well as foreign
currency deposits authorized under PD No. 1034, are
hereby declared as and considered of an absolutely