1. What are banks?

 

"Banks" shall refer to entities engaged in:

1. the lending of funds

2. obtained in the form of deposits. (SubSec.3.1)

 

2. Requisites/conditions to operate as a bank

 

a. No person or entity shall engage in bankingoperations or quasi-banking functions withoutauthority from the BSP. Persons or entitiesfound to be performing banking or quasibankingfunctions without authority from theBSP shall be subject to appropriate sanctionsunder the NCBA and other applicable laws.(Sec. 6)

 

b. No person, association, or corporation unlessduly authorized to engage in the business of abank, QB, trust entity, or savings and loanassociation shall advertise or hold itself out asbeing engaged in the business of such bank,QB, trust entity, or association, or use inconnection with its business title, the word orwords "bank", "banking", "banker", "QB ","quasi-banking", "quasi-banker", "savings andloan association", "trust corporation", "trustcompany" or words of similar import ortransact in any manner the business of anysuch bank, corporation or association. (Sec.64)

 

c. An entity authorized by the BSP to perform UBor KB functions shall likewise have the authority to engage in quasi-banking functions.(Sec. 6)

 

3. Minimum capital requirement

 

A trust entity, before it can engage in trust orother fiduciary business, shall comply with the minimum paid-in capital requirement which willbe determined by the MB. (Sec. 82)

 

This means it must have combined capital accounts of P250M. 

 

4. Activities of Banks

 

 

1. Receive in custody funds, documents andvaluable objects;

 

2. Act as financial agent and buy and sell, byorder of and for the account of their customers, shares, evidences of indebtedness and all typesof securities;

 

3. Make collections and payments for the accountof others and perform such other services fortheir customers as are not incompatible withbanking business;

 

4. Upon prior approval of MB, act as managingagent, adviser, consultant or administrator ofinvestment management/advisory/consultancyaccounts; and5. Rent out safety deposit boxes. (Sec. 53)

 

5.  MAY A BANK ACQUIRE REAL ESTATE?

 Sec. 51 of R.A 8791

Any bank to acquire real estate as shall be necessary for its own use in the conduct of its business. However, the following conditions must concur:

1. That The total investment in such real estate and improvements thereof  shall not exceed fifty percent (50%) of combined capital accounts.

2.  That the equity investment of a bank in another corporation engaged primarily in real estate shall be considered as part of the bank's total investment in real estate, unless otherwise provided by the Monetary Board.

Sec. 52 of RA 8791

In order to satisfy claims, a bank may acquire, hold or convey real property under the following circumstances:

1. Such as shall be mortgaged to it in good faith 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 secure debts due it.

 

 

6.     WHAT ARE THE CLASSIFICATIONS OF BANKS?

               Sec. 3, R.A. 8791

            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. (6-Aa)

 

7.  ROPOA  (La ko kabalo kung ihatagan acronym or i.define ni. Basta ang acronym kag full definition ginbutang ko. Pwede niyo man ni ma shorten. hehe)

BSP Circular 309 Series of 2000 defines ROPOA or “Real and Other Properties Owned and Acquired” as the following:

“This represents real and other properties, other than those used for business purposes or held in the investment portfolio, acquired by the non-bank in settlement of loans and/or for other reasons. The property acquired by the non-bank in settlement of loans THROUGH FORECLOSURE OR DATION IN PAYMENT shall be recorded at the balance of the loan (principal plus booked accrued interest receivable after considering allowance for uncollected interest on loan less unamortized income) or bid/PURCHASE PRICE, whichever is lower. The amount of the non-refundable capital gains tax and documentary stamp tax paid in connection with the foreclosure/purchase may be included in the book value of the acquired real estate, provided that the total book value does not exceed the appraised value of the asset acquired, as determined by an independent appraiser acceptable to Bangko Sentral ng Pilipinas. However, the property acquired for other reasons shall be recorded at cost or appraised value when cost is not involved/determinable in the acquisition of the property."

 

8.  WHAT DISTINGUISHES A UNIVERSAL BANK FROM A COMMERCIAL BANK?

The powers of a universal bank are broader in scope. It may not only exercise the powers authorized to commercial banks in Sec. 29 of R.A 8791 but it may also exercise the  powers of an investment house as provided in existing laws and the power to invest in non-allied enterprises.

 

9. Other banking services (functions of banks?) 

 

1.basic fx a.)deposit functionb.)loan function other functionsuniversal banks and commercial banks (as well as other banks depending on the type of bank and/or the corresponding authority given by the monetary board) may also exercise any of the following fx: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 accounts of others and perform such other services for their customers as are not incompatible with banking business;

 

4) upon prior approval of the monetary board, act as managing agent,adviser,consultant or administrator of investment management/advisory/consultancyaccounts; and

 

5) rent out safety deposit boxes.

 

10. Prohibited transactions

 

a) banks are prohibited from engaging in insurance business.

 

b) outsourcing of functions are generally prohibited

 

11. Outsourcing of inherent banking functions? ( ano ni teh.... kaloka)

 

outsourcing of functions are generally prohibited.example: a bank cannot hire another company to accept deposits. 

 

12) quasi-banks - entities engaged in the borrowing of funds through the issuance, endorsement or assignment with recourse or acceptance of deposit substitutes for purposes of relending or purchasing of receivables and other obligations

 

13) deposit substitutes are alternative forms 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

 

14) organization of banks (pls check kakulangan )

 

organization of banks- monetary board may authorize organization of a bank or quasi-bank subject to the ff conditions:a) entity is a stock corporation;- only par value stocka may be issued.

 

b) funds are obtained from the public, which shall mean twenty (20) or more persons; and

 

c) minimum capital requirements prescribed by monetary board for each category of banks are satisfied. 

 

SEC shall not register AOI and/or by-laws of any bank, or any amendment thereto, unless accompanied by a certificate of authority issued by the monetary board.

 

15) grandfather rule: percentage of foreign owned voting stocks in a bank shall be determined by citizenship of individual sh in that bank. CItizenship of corp which is a sh in a bank shall follow the citizenship of controlling sh of the corp, irrespective of place of incorporation.

 

foreign individuals and non- bank corp may own or control up to 40% of voting if domestic bank. rule shall apply to filipinos and domestic non-bank corporations. 

 

60% fil

 

????????????? 

 

16) stockholdings of family groups or related interests- stockholdings of individual related to each other within the fourth degree of consanguinity or affinity, legitimate or common-law, shall be considered family groups or related interests and must be fully disclosed in all transactions by such an individual with the bank. 

 

2 or more corp owned or controlled by the same family group or same group of persons shall be considered related interests, which must fully be disclosed in all transactions with the bank

17. Fit and Proper Rule - is the standards for determining whether a member of the Board of Directors/Trustees or CEO is fit and proper to hold a position in a banking institution, which shall include, but not be limited to, standards of integrity, experience, education,

training and competence.

-the “Fit and Proper Rule” empowers the BSP to pass upon the fitness and qualifications of bank directors and officers.  This is to ensure that officials tasked to manage banks and other financial institutions possess the required integrity and competence to ensure that these entities are prudently and soundly managed. Thus, this will afford better protection to depositors and the public, in general. (Sec. 16 of the General Banking Law of 2000, RA 8791)

18. YES!

Under Sec. 18 of the General Banking Law of 2000, to protect the funds of depositors and creditors, the Monetary Board may regulate the payment by the bank to its directors and officers of compensation, allowance, fees, bonuses, stock options, profit sharing and fringe benefits only in exceptional cases and when the circumstances warrant, such as but not limited to the following:

 

18.1. When a bank is under comptrollership or conservatorship; or

 

18.2. When a bank is found by the Monetary Board to be conducting business in an unsafe or

unsound manner; or

 

 

18.3. When a bank is found by the Monetary Board to be in an unsatisfactory financial condition

19.   

Under Sec. 19 of the General Banking Law of 2000, as a general rule, 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.

 

The exeption is provided under the Rural Banks Act.

 

20. FOREIGN BANKS -

Sec. 2. Modes of Entry. — The Monetary Board may authorize foreign banks

 to operate in the Philippine banking system through any of the following

 modes of entry:

(i) by acquiring, purchasing or owning up to sixty percent (60%) of the voting stock of an existing bank;

 

(ii) by investing in up to sixty percent (60%) of the voting stock of a new banking subsidiary incorporated

 

under the laws of the Philippines;

 

 or (iii) by establishing branches with full banking authority:

 Provided, That a foreign bank may avail itself of only one

 

(1) mode of entry:

Provided, further,

That a foreign bank or a Philippine corporation may own up to a sixty percent (60%) of the voting stock of only

one (1) domestic bank or new banking subsidiary

 

21. Offshore Banking Unit

 

"Offshore Banking Unit" or "OBU" shall refer to a branch, subsidiary or affiliate of a foreign banking corporation which is duly authorized by the Central Bank of the Philippines to transact offshore banking business in the Philippines. (Bangko Sentral ng Pilipinas Circular Number 1389)

 

22. Supervision and Examination of Banks

 

The Bangko Sentral shall have supervision over, and conduct periodic or special examinations of, banking institutions and quasi-banks, including their subsidiaries and affiliates engaged in allied activities.

 

The department heads and the examiners of the supervising and/or examining departments are hereby authorized to administer oaths to any director, officer, or employee of any institution under their respective supervision or subject to their examination and to compel the presentation of all books, documents, papers or records necessary in their judgment to ascertain the facts relative to the true condition of any institution as well as the books and records of persons and entities relative to or in connection with the operations, activities or transactions of the institution under examination, subject to the provision of existing laws protecting or safeguarding the secrecy or confidentiality of bank deposits as well as investments of private persons, natural or juridical, in debt instruments issued by the Government. (Section 25, R.A. 7653)

23. Primary Responsibility of BSP

 

The Monetary Board (BSP) and the Secretary of Finance shall have primary responsibility for working out creative monetary and financial solutions to retire the Central Bank liabilities and losses at the least cost to the Government (Section 132, R.A. 7653)

 

24.Primary Objective of BSP

 

The primary objective of the Bangko Sentral is to maintain price stability conducive to a balanced and sustainable growth of the economy. It shall also promote and maintain monetary stability and the convertibility of the peso. (Section 3, R.A. 7653)

25. Conservatorship of Banks

 

Section 29. Appointment of Conservator. - Whenever, on the basis of a report submitted by the appropriate supervising or examining department, the Monetary Board finds that a bank or a quasi-bank is in a state of continuing inability or unwillingness to maintain a condition of liquidity deemed adequate to protect the interest of depositors and creditors, the Monetary Board may appoint a conservator with such powers as the Monetary Board shall deem necessary to take charge of the assets, liabilities, and the management thereof, reorganize the management, collect all monies and debts due said institution, and exercise all powers necessary to restore its viability.

 

26. What is conservatorship of Banks?

 

lah ko definition... rephrase lng sabat sa number 25.

 

27. Who is a conservator?

 

One who is appointed by the Monetary Board upon finding that a bank or 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.

 

28. What are the powers of the conservator?

 

The conservator has the powers to take charge of the assets, liabilities, and the management of the bank or quasi-bank, reorganize the management, collect all monies and debts due said institution, and exercise all powers necessary to restore its viability. He 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.

 

29. What is the period for limitation for conservatorship?

 

Sec 29 of RA 7653 provides: The conservator should be competent and knowledgeable in bank operations and management. The conservatorship shall not exceed one (1) year.

 

30. May the MB terminate the conservatorship?

 

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 Sec. 30 of RA 7653 shall apply.

 

31. Receivership and Liquidation of Banks

(nd ko gets kung idistinguish or idefine or what so ari ang provision)

 

  RA 7653 Section 30. Proceedings in Receivership and Liquidation. - Whenever, upon report of the head of the supervising or examining department, the Monetary Board finds that a bank or quasi-bank:

 

(a) is unable to pay its liabilities as they become due in the ordinary course of business: Provided, That this shall not include inability to pay caused by extraordinary demands induced by financial panic in the banking community;

(b) has insufficient realizable assets, as determined by the Bangko  Sentral, to meet its liabilities; or

(c) cannot continue in business without involving probable losses to its depositors or creditors; or

(d) has willfully violated a cease and desist order under Section 37 that has become final, involving acts or transactions which amount to fraud or a dissipation of the assets of the institution; in which cases, the Monetary Board may summarily and without need for prior hearing forbid the institution from doing business in the Philippines and designate the Philippine Deposit Insurance Corporation as receiver of the banking institution.

 

            For a quasi-bank, any person of recognized competence in banking or finance may be designed as receiver.

            If the receiver determines that the institution cannot be rehabilitated or permitted to resume business, the Monetary Board shall notify in writing the board of directors of its findings and direct the receiver to proceed with the liquidation of the institution. The receiver shall:

 

(1) file ex parte with the proper regional trial court, and without requirement of prior notice or any other action, a petition for assistance in the liquidation of the institution pursuant to a liquidation plan adopted by the Philippine Deposit Insurance Corporation for general application to all closed banks. In case of quasi-banks, the liquidation plan shall be adopted by the Monetary Board. Upon acquiring jurisdiction, the

court shall, upon motion by the receiver after due notice, adjudicate disputed claims against the institution, assist the enforcement of individual liabilities of the stockholders, directors and officers, and decide on other issues as may be material to implement the liquidation plan adopted. The receiver shall pay the cost of the proceedings from the assets of the institution.

 

(2) convert the assets of the institutions to money, dispose of the same to creditors and other parties, for the purpose of paying the debts of such institution in accordance with the rules on concurrence and preference of credit under the Civil Code of the Philippines and he may, in the name of the institution, and with the assistance of counsel as he may retain, institute such actions as may be necessary to collect and recover accounts and assets of, or defend any action against, the institution. The assets of an institution under receivership or liquidation shall be deemed in custodia legis in the hands of the receiver and shall, from the moment the institution was placed under such receivership or liquidation, be exempt from any order of garnishment, levy, attachment, or execution.

 

32. What is receivership? 

(pili lng)

 

A court order whereby all the property subject to dispute in a legal action is placed under the dominion and control of an independent person known as a receiver.

 

OR

 

Receivership is an extraordinary remedy, the purpose of which is to preserve property during the time needed to prosecute a lawsuit, if a danger is present that such property will be dissipated or removed from the jurisdiction of the court if a receiver is not appointed. Receivership takes place through a court order and is utilized only in exceptional circumstances and with or without the consent of the owner of the property.

 

33. What are the instances when a bank may be placed under receivership?

 

(RA 7653, Sec. 30) A bank or quasi-bank may be put under receivership if it:

 

(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;

 

34. Insolvency of banks

 

CESSATION OF BANKING BUSINESS (RA 8791) (???)

Section 68. Voluntary Liquidation. - 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.

 

35. Bank Holiday

 

-Any business day during which commercial banks and savings & loans institutions are closed for business to the public, specifically at physical locations. 

 

36. What are the powers of a receiver 

 

Rule 59, Rules of Court.  Section 6.  General powers of receiver. — Subject to the control of the court in which the action or proceeding is pending a receiver shall have the power to bring and defend, in such capacity, actions in his own name; to take and keep possession of the property in controversy; to receive rents; to collect debts due to himself as receiver or to the fund, property, estate, person, or corporation of which he is the receiver; to compound for and compromise the same; to make transfers; to pay outstanding debts; to divide the money and other property that shall remain among the persons legally entitled to receive the same; and generally to do such acts respecting the property as the court may authorize. However, funds in the hands of a receiver may be invested only by order of the court upon the written consent of all the parties to the action. (7a)

No action may be filed by or against a receiver without leave of the court which appointed him. (n)

 

- OR -

 

The powers of a receiver:

 

(a) May run the company in order to maximize the value of the company's assets, sell the company as a whole, or sell part of the company and close unprofitable divisions.

 

(b) Secure the assets of the company and/or entity.

 

(c) Realize the assets of the company and/or entity.

 

(d) Manage the affairs of the company in order to resolve debts owing.

37. 

 

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

 

38. 

 

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.

 

39. 

 

Bank Deposits - function of the bank to receive a thing primarily in money from depositors with the obligation of safely keeping it and returning the same. The law imposes on the bank a higher standard of integrity and performance in complying with its obligations under the contract of simple loan. 

 

40. Kinds : 

Demand deposit 

Savings deposits

negotiable owner of withdrawal accounts

time deposit

 

41. WHAT IS THE NATUREOF BANK DEPOSITS?         

In a line of cases ruled by theSupreme Court, a bank deposit is in the nature of a simple loan or mutuum.

 

42. MAY BANKS USE THE MONEY DEPOSITEDWITH THEM?

Yes.

Under Article 1953 of the Civil Code, A person who receivesa loan of money or any other fungible thing acquires the ownership thereof, andis bound to pay to the creditor an equal amount of the same kind and quality.

Upon depositing the money, banks acquire ownership thereto.

As incident of ownership of the money deposited with them,banks therefore are entitled to use the money.

 

43. WHAT IS THE RELATION CREATED BETWEENA BANKAND ITS DEPOSITORS?     

In the case of Allied Banking Corp vLim Sio Wan (549 SCRA 504), the Supreme Court held that fundamental andfamiliar is the doctrine that the relationship between a bank and a client isone of debtor-creditor. Under Article 1953 of the Civil Code, A person whoreceives a loan of money or any other fungible thing acquires the ownershipthereof, and is bound to pay to the creditor an equal amount of the same kindand quality. Art. 1980 of the same code provides that fixed, savings, andcurrent deposits of money in banks and similar institutions shall be governedby the provisions concerning simple loan.

 

 

44. WHAT IS TH DEGREE REQUIRED FROM BANKSIN DEALING WITH ITS CLIENTS AND DEPOSITS?

In Simex International (Manila), Inc,vs. Court of Appeals, 183 SCRA 360, 367 (1990), and Bank ofPhilippine Islands vs. IAC, et al., 206 SCRA 408, 412-413(1992), this Court had occasion to stress the fiduciary nature of therelationship between a bank and its depositors and the extent of diligenceexpected of the former in handling the accounts entrusted to its care, thus: 

"In every case, the depositorexpects the bank to treat his account with the utmost fidelity, whether suchaccount consists only of a few hundred pesos or of millions. The bank mustrecord every single transaction accurately, down to the last centavo, and aspromptly as possible. This has to be done if the account is to reflect at anygiven time the amount of money the depositor can dispose of as he sees fit,confident that the bank will deliver it as and to whomever he directs. Ablunder on the part of bank, such as the dishonor of a check without goodreason, can cause the depositor not a little embarrassment if not alsofinancial loss and perhaps even civil and criminal litigation.

The point is that as a businessaffected with public interest and because of the nature of its functions, thebank is under obligation to treat the account of its depositors with meticulouscare, always having in mind the fiduciary nature of their relationship. 

 

45. WHAT ARE DEMAND DEPOSITS?

 

              According to Section 58, Republic Act No. 7653 "The NewCentral Bank Act”, Demanddeposits are "all those liabilities of the BangkoSentral and of other banks which are denominated in Philippinecurrency and are subject topayment in legal tender upon demand by the presentation of (depositor’s)checks. 

46. Secrecy of Bank Deposit (SBD) (RA 1405)

It is an act prohibiting disclosure of or inquiry into deposits with any banking institution and providing penalty therefor. It refers to absolute confidentiality of bank deposits and investments in government bonds.

47. What deposits are covered?

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.

48. Are safety deposit boxes covered?

The prohibition against inquiry or disclosure of bank accounts under the Secrecy of Bank Deposits Law does not to apply to safety deposit boxes since there is no creditor-debtor relationship involved. The content of safety deposit boxes cannot be used and lend out by the banks.

Taking into account the definition of “deposits” as money or funds placed with a bank that can be withdrawn on the depositor’s order or demand, such as deposit accounts in the form of savings, current and time deposits. Deposits are characterized as being in the nature of a simple loan. The placing of deposits in a bank creates a creditor-debtor relationship between the depositor and the bank. As such, the bank, being the debtor, has the obligation to pay a certain sum of money to the depositor, being the creditor

49. Who are the persons banned from looking into bank deposits?

(1) any person or(2) any government official or(3) any bureau or(4) any office

50. Is the Ombudsman covered by the SBD?

No. The Ombudsman has the power to issue subpoena and subpoena duces tecum, take testimony in any investigation or inquiry, as well as examine and access bank accounts and records. The power of the Ombudsman to subpoena deposit information of a government official may be exercised when the following conditions concur:

(1) there must be a case pending before a court of competent jurisdiction;(2) the account must be clearly identified;(3) the inspection must be limited to the subject matter of the pending case; and(4) the bank personnel and the account holder must be notified to be present during the

inspection.

Jeorge gregori 51-55

51. what are the exceptions to the SBD?

SECTION 2. All deposits of whatever nature with banks or banking institutions in the Philippines including investments in bonds issued by the Government of the Philippines, its political subdivisions and its instrumentalities, are hereby considered as of an absolutely confidential nature and may not be examined, inquired or looked into by any person, government official, bureau or office, except upon written permission of the depositor, or in cases of impeachment, or upon order of a competent court in cases of bribery or dereliction of duty of public officials, or in cases where the money deposited or invested is the subject matter of the litigation.

52. RA 1405 and foreign currency deposit?

Secrecy of Bank Deposit

REPUBLIC ACT NO.1405 AN ACT PROHIBITING DISCLOSURE OF OR INQUIRY INTO, DEPOSITS WITH ANY BANKING INSTITUTION AND PROVIDING PENALTY THEREFOR

Foreign currency deposit

REPUBLIC ACT No. 6426

AN ACT INSTITUTING A FOREIGN CURRENCY DEPOSIT SYSTEM IN THE PHILIPPINES, AND FOR OTHER PURPOSES.

53. What foreign Currencies are covered?

All foreign currency deposits are absolutely confidential and cannot be examined, inquired, or looked into by any person, government official, bureau or office, whether judicial or administrative or legislative, or any other private or public entity. Foreign currency deposits are also exempt from attachment, garnishment, or any other order or process of any court, legislative body, government agency or any administrative body whatsoever. (Sec. 8, Rep. Act No. 6426)

Foreign currency deposits refer to funds in foreign currencies which are accepted and held by authorized banks in the regular course of business with the obligation to return an equivalent amount to the owner thereof, with or without interest.

54. Garnishment of Bank deposit

In the case of garnishment orders, the position we have consistently taken at the BSP is that responding thereto is a justiceable matter which pertains to the judgment and discretion of the bank concerned and in the exercise of which the BSP would have no authority to interfere; and that, consequently, said bank should obtain advice from their private counsel. It is also our position, on the issue of whether or not the Bureau of Internal Revenue would have authority under the tax code to issue a constructive distrait order on bank deposits, that this is a matter which requires the interpretation of the tax laws, an area which is beyond BSP’s jurisdiction. This function inherently belongs to the courts.

55. May a foreign currency be validly garnished?

(iii) Exceptions under Jurisprudence on Grounds of

Equity

(a) Account of a Non-resident Alien

The garnishment of a foreign currency deposit account of a non-resident alien found guilty of raping a minor was allowed on the basis of equity. (Salvacion v. Central Bank of the Philippines, 278 S.C.R.A. 27 [1997])

(b) Account of a Co-payee of a Check

A co-payee of a check who filed a suit for recovery of sum of money was considered, in a pro hac vice ruling by the Supreme Court, as a depositor in view of the distinctive circumstances of the case. (China Banking Corporation v. Court of Appeals, 511 S.C.R.A. 110 [2006])

Ping Ping Marzona

56.)Bank Accounts

- A bank account is a financial account between a bank customer and a financial institution. A bank account can be a deposit account, a credit card, or any other type of account offered by a financial institution. The financial transactions which have occurred within a given period of time on a bank account are reported to the customer on a bank statement and the balance of the account at any point in time is the financial position of the customer with the institution. a fund that a customer has entrusted to a bank and from which the customer can make withdrawals.

 

57.) Are numbered accounts allowed?

- Numbered accounts are allowed under the Bank Secrecy Law wherein transactions between the depositor and the bank must be kept confidential at all times. But the act of allowing a numbered account is subject to examination of the Anti-Money Laundering Council if the same is suspicious.

 

58.) May minors open accounts in their own right and names?

- Minors are vested with special capacity and power to make savings, and withdraw the

same without the assistance of their parents or guardians, provided the following requirements are

met;

1. at least 7 years of age;

2. able to read and write;

3. have sufficient discretion;

4. not otherwise disqualified by any other incapacity;

Parents may nevertheless deposit for their minor children and guardians for their wards.

 

59.) DOSRI ( Directors, Officers, Stockholders, and their Related Interests) Accounts and Bank loans

General Rule: A director or officer of any bank shall neither:

1. directly or indirectly, for himself or as the representative or agent of others, borrow from such bank; nor

2. become a guarantor, indorser or surety for loans from such bank to others, or in any manner be an obligor or incur any contractual liability to the bank.

Exception:

With the written approval of the majority of all the directors of the bank, excluding the director concerned. 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 BSP.

* 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 BSP.

** 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.

Principles Involved.

- 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 NCBA.

- The MB may regulate the amount of loans, credit accommodations and guarantees thatmay be extended, directly or indirectly, by

a bank to its DOSRI, as well as investments of such bank in enterprises owned or controlled by said directors, officers, stockholders and their related interests.

* The outstanding loans, credit accommodations and guarantees which a bank may extend to each of its DOSRI, shall be limited to an amount equivalent to their respective unencumbered deposits and book value of their paid-in capital contribution in the bank.

** The loans, credit accommodations and guarantees secured by assets considered as non-risk by the Monetary Board shall be excluded from such limit.

*** The 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.

 

60.) What is DOSRI?

- DOSRI is an abbreviation for Directors, Officers, Stockholders, and their Related Interests.

- Wherein a Director or Officer of a bank can obtain loan from a bank in behalf of the corporation.

61. What is Related Interests?

          (For purposes of DOSRI Ceilings)

                   “Corporation, association or firm of which a director or officer of the bank, or his spouse is also a director or officer of such corporation, association or firm except: (a) where the securities of such corporation, association or firm are listed and traded in the big board or commercial and industrial board of domestic stock exchanges ang less than 50% of the voting stock thereof is owned by one person or by persons related to each other within the first degree of consanguinity or affinity, (b) where the director, officer or stockholder of the bank sits as a representative of the bank in the board of directors of such corporation: Provided, that the bank representative shall not have any equity interest in the borrower corporation except for the minimum shares required by law, rules and regulations, or by the by-laws of the

corporation, or (c) where the corporation is at least 99%-owned by a non-stock Corporation: Provided, that the purpose of the loan is to finance hospitals and other medical services provided further that the loan is fully secured” (BSP Circular No. 695)

62. Insider Lending

            When a bank makes a loan to one or more of its own officers or directors.

63. What is SBL (Single Borrower’s Limit)?

          The total amount of loans, credit accommodations and guarantees  as  may be defined by the Monetary Board  that may be extended by a bank to any person, partnership, association, corporation or other entity shall at no time exceed twenty percent (20%) of the net worth of such bank. (Dizon, 2009)

64. What are bank reserves?

            Bank reserves are the currency deposits which are not lent out to the bank's clients. A small fraction of the total deposits is held internally by the bank or deposited with the central bank.

65: Till money

  money set aside for use by a teller, as distinguished from money keptin the vault.

66.) Any activity of a trust licensed bank resulting from a contract or agreement whereby the bank binds itself to render services or to act in a representative capacity such as in an agency, guardianship, administratorship of wills, properties and estates, executorship, receivership, and other similar services which do not create orresult in a trusteeship.

- It shall exclude collecting or paying agency arrangements and similar fiduciary services which are inherent in the use of the facilities of the other dep’ts of said bank.

67.) 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 behalf of others. For purposes of the General Banking Laws, such a corporation is referred to as a trust entity. (Sec. 79)

68.) A trust entity shall administer the funds or property under its custody with the diligence that a prudent man would exercise in the conduct of an enterprise of a like character and with similar aims. (Sec. 80 par. 1)

This rule is part of the code of conduct required of a trustee and thus set out in the behavioral guidelines of the Manual of Regulation of Banks: “Sec X401 Statement of Principles. The cardinal principle common to all trust and other fiduciary relationships is fidelity. Policies predicated upon this principle are directed towards confidentiality, scrupulous care, safety and prudent management of property including reasonable probability of income w/ proper accounting and appropriate reporting thereon. Practices are designed to promote efficiency in administration and operation; to adhere and conform w/ the terms of the instrument or contract; and to maintain absolute separation of property free from any intrusion of conflict of interest.

69.)General Rule: No trust entity shall, for the account of the trustor or the beneficiary of the trust, 1.purchase or acquire property from, or2.sell, transfer, assign or lend money or property to, or3.purchase debt instruments of a.any of the departments, directors, officers, stock holders, or employees of the trust entityb.relatives within the 1st degree of consanguinity or affinity, or the related interests, of such directors,

officers and stockholders,

EXCEPTIONS1. the transaction is specifically authorized by the trustor and2. the relationship of the trustee and the other party involved in the transaction is fully disclosed to the trustor or beneficiary of the trust prior to the transaction. (Sec. 80 par. 2)

The Monetary Board shall promulgate such rules and regulations as may be necessary to prevent circumvention of the self-dealing rule or the evasion of the responsibility therein imposed on a trust entity. (Sec. 80 par. 3)

Basically, a trustee cannot engage in a self dealing transaction unless: (1) the transaction is specifically authorized by the trustor and (2) the relationship of the trustee and its counterparty is fully disclosed to the trustor or beneficiary of the trust prior to the transactions (either in a separate instrument of in the trust instrument itself).

70.) REGISTRATION REQUIREMENTThe SEC shall not register the articles of incorporation and by-laws or any amendment thereto, of any trust entity, unless accompanied by a certificate of authority issued by the BSP. (Sec. 80)

Reiterates the requirements under the Corporation Code.Note:Sec 17 par 2 of the Corporation Code: “No articles of incorporation or amendment to the articles of incorporation of banks, banking and Quasi-banking institutions, building and loan associations, trust companies and other financial intermediaries, insurance companies, public utilities, educational institutions, and other corps governed by special laws shall be accepted or approved by the SEC unless accompanied by a favorable recommendation of the appropriate government agency to the effect that such articles or amendment is in accordance with law.” AND Sec 46 par 4: “The SEC shall not accept for filing the by-laws or any amendment thereto of any bank, banking institution, building and loan association, trust company, insurance company, public utility, educational institution or other special corps governed by special laws, unless accompanied by a certificate of the appropriate government agency to the effect that such by-laws or amendments are in accordance with law.The certificate of authority need not be issued by the MB itself under its seal.

MINIMUM CAPITALIZATION

A trust entity, before it can engage in trust or other fiduciary business, shall comply with the minimum paid-in capital requirement which will be determined by the MB. (Sec. 82)

This means it must have combined capital accounts of P250M. “Combined capital accounts” refers to the the total capital stock, retained earnings and profit and loss summary, net of (1) such unbooked valuation reserves and other capital adjustments as may be required by the BSP and (2) total outstanding unsecured credit accommodations, both direct and indirect, to DOSRI When applicant is a domestic bank, the combined capital accounts must not be less that the minimum capital prescribed by the MB for such bank but in no case less than P250M; and when applicant is a branch of a foreign bank, it must comply with the capital requirement applicable to such local bank.

71.) POWERS OF A TRUST ENTITYA trust entity, in addition to the general powers incident to corporations, shall have the power to:1.Act as trustee on any mortgage or bond issued by any municipality, corporation, orany body politic and to accept and execute any trust consistent with law;

2. Act under the order or appointment of any court as guardian, receiver, trustee, ordepositary of the estate of any minor or other incompetent person, and as receiver

and depositary of any moneys paid into court by parties to any legal proceedingsand of property of any kind which may be brought under the jurisdiction of the court;

3. Act as the executor of any will when it is named the executor thereof;

4.Act as administrator of the estate of any deceased person, with the will annexed, oras administrator of the estate of any deceased person when there is no will;

5. Accept and execute any trust for the holding, management, and administration of any estate, real or personal, and the rents, issues and profits thereof; and

6.Establish and manage common trust funds, subject to such rules and regulations asmay be prescribed by the Monetary Board. (Sec. 83)