Professional Documents
Culture Documents
Sept 9 Assignment
I. Authority of BSP
ii. Subsidiaries and affiliates of banks (See Section 25, RA No. 7653);
iii. Quasi-banks (See also Section 95, RA. No 7653; Elements of Quasi Banking;
Manual of Regulations for Banks Section X234, including Subsection X234.1-
234.3)
iv. Case: Baas v. Asia Pacific Corporation, GR 128703, October 18, 2000
ii. Case: GSIS Family Bank v. BPI Family Bank, G.R. No. 175278. September 23,
2015.
ii. Subsidiaries and affiliates of banks (See Section 25, RA No. 7653)
Section 25. Supervision and Examination. The Bangko Sentral shall have X234.2 Definition of terms and phrases. The following terms and phrases shall be
supervision over, and conduct periodic or special examinations of, banking understood as follows:
institutions and quasi-banks, including their subsidiaries and affiliates engaged in
a. Borrowing shall refer to all forms of obtaining or raising funds through any of the
allied activities.
methods and for any of the purposes provided in Subsec. X234.1 whether the
borrowers liability thereby is treated as real or contingent.
iii. Quasi-banks (See also Section 95, RA. No 7653; Elements of Quasi Banking; b. For the borrowers own account shall refer to the assumption of liability in ones
Manual of Regulations for Banks Section X234, including Subsection X234.1-234.3) own capacity and not in representation, or as an agent or trustee, of another.
Section 95. Definition of Deposit Substitutes. - The term "deposit substitutes" is c. Purchasing of receivables or other obligations shall refer to the acquisition of
defined as an alternative form of obtaining funds from the public, other than deposits, claims collectible in money, including interbank borrowings or borrowings between
through the issuance, endorsement, or acceptance of debt instruments for the financial institutions, or of acquisition of securities, of any amount and maturity, from
borrower's own account, for the purpose of relending or purchasing of receivables domestic or foreign sources.
and other obligations. These instruments may include, but need not be limited to,
bankers acceptances, promissory notes, participations, certificates of assignment and d. Relending shall refer to the extension of loans by an institution with antecedent
similar instruments with recourse, and repurchase agreements. The Monetary Board borrowing transactions. Relending shall be presumed, in the absence of express
shall determine what specific instruments shall be considered as deposit substitutes stipulations, when the institution is regularly engaged in lending.
for the purposes of Section 94 of this Act: Provided, however, That deposit e. Regularly engaged in lending shall refer to the practice of extending loans,
substitutes of commercial, industrial and other non-financial companies for the advances, discounts or rediscounts as a matter of business, as distinguished from
limited purpose of financing their own needs or the needs of their agents or dealers isolated lending transactions.
shall not be covered by the provisions of Section 94 of this Act.
SEC. 2. Modes of Entry. The Monetary Board may authorize foreign banks to Sec. 5. Head Office Guarantee. The head office of foreign bank branches shall
operate in the Philippine banking system through any one of the following" modes of guarantee prompt payment of all liabilities of its Philippine branches.
entry: (i) by acquiring, purchasing or owning up to one hundred percent (100%) of the
voting stock of an existing bank; (ii) by investing in up to one hundred percent (100%) REPEALED Sec. 6. Entrants under Section 2(iii). Foreign banks shall be allowed
of the voting stockof a new banking subsidiary incorporated under the laws of the entry under Section 2 (iii) within five (5) years from the effectivity of this Act. During
Philippines; or (iii) by establishing branches with full banking authority. this period, six (6) new foreign banks shall be allowed entry under Section 2(iii) upon
the approval of the Monetary Board. An additional four (4) foreign banks may be
SEC. 3. Guidelines for Approval. In approving entry applications of foreign banks, allowed entry on recommendation of the Monetary Board, subject to compliance
the Monetary Board shall: (i) ensure geographic representation and with Sections 2, 3, 4, and 5 of this Act, upon approval of the President as the national
complementation; (ii) consider strategic trade and investment relationships between interest may require.
the Philippines and the country of incorporation of the foreign bank; (iii) study the
demonstrated capacity, global reputation for financial innovations and stability in a Sec. 7. Board of Directors. Non-Filipino citizens may become members of the
competitive environment of the applicant; (iv) see to it that reciprocity rights are Board of Directors of a bank to the extent of the foreign participation in the equity of
enjoyed by Philippine banks in the applicants country; and (v) consider willingness to said bank.
fully share their technology. SEC. 8. Equal Treatment. Foreign banks authorized to operate under Section 2 of
"Only established, reputable and financially sound foreign banks shall be allowed this Act, shall perform the same functions, enjoy the same privileges, and be subject
entry in accordance with Section 2 of this Act. The foreign bank applicant must be to the same limitations imposed upon a Philippine bank of the same category. The
widely-owned and publicly-listed in its country of origin, unless the foreign bank single borrowers limit of a foreign bank branch shall be aligned with that of a
applicant is owned and controlled by the government of its country of origin. domestic bank.
"In the exercise of this authority, the Monetary Board shall adopt such measures as "The foreign banks shall guarantee the observance of the rights of their employees
may be necessary to ensure that the control of at least sixty percent (60%) of the under the Constitution.
resources or assets of the entire banking system is held by domestic banks which are "Any right, privilege or incentive granted to foreign banks or their subsidiaries or
majority-owned by Filipinos. affiliates under this Act, shall be equally enjoyed by and extended under the same
SEC. 4. Capital Requirements. (i) For Locally Incorporated Subsidiaries The conditions to Philippine banks.
minimum capital required for locally incorporated subsidiaries of foreign banks shall SEC. 9. Participation in Foreclosure Proceedings.Foreign banks which are
authorized to do banking business in the Philippines through any of the modes of
entry under Section 2 hereof shall be allowed to bid and take part in foreclosure sales Sec. 14. Amendment and Repeal of Inconsistent Laws. Sections 11, 12, 12-A, 12-B,
of real property mortgaged to them, as well as to avail of enforcement and other 13, 14-A, 21-B, and 68 of Republic Act No. 337, as amended, otherwise known as the
proceedings, and accordingly take possession of the mortgaged property, for a period General Banking Act: Sections 4 and 5 of Republic Act No. 7353, otherwise known as
not exceeding five (5) years from actual possession: Provided, That in no event shall the Rural Banks Act; Sections 4 and 14 of Republic Act No. 3779, as amended,
title to the property be transferred to such foreign bank. In case said bank is the otherwise known as the Savings and Loan Association Act; and Section 4 of Republic
winning bidder, it shall, during the said five (5)-year period, transfer its rights to a Act No. 4093, as amended, otherwise known as the Private Development Banks Act
qualified Philippine national, without prejudice to a borrowers rights under insofar as they are inconsistent with this Act, are hereby repealed or modified
applicable laws. Should the bank fail to transfer such property within the five (5)-year accordingly.
period, it shall be penalized one half (1/2) of one percent (1%) per annum of the price
at which the property was foreclosed until it is able to transfer the property to a Sec. 15. Effectivity Clause. This Act shall take effect fifteen (15) days after its
qualified Philippine national. publication in the Official Gazette or in two (2) national newspapers of general
circulation.
Sec. 10. Transitory Provisions. Foreign banks which are already authorized to do
Approved: May 18, 1994
banking business in the Philippines through any of the modes of entry under Section
2 hereof may apply to change their original mode of entry.
iii. Chapter III, Sections 15-17, GBL -Board of Directors
Foreign banks operating through branches in the Philippines upon the effectivity of
this Act shall retain their original privilege upon entry to establish a limited number of
Section 15. Board of Directors. - The provisions of the Corporation Code to the
sub-branches. However, the previous restriction on the locations of such additional
contrary notwithstanding, there shall be at least five (5), and a maximum of fifteen
branches is hereby lifted.
(15) members of the board or directors of a bank, two (2) of whom shall be
The existing Philippine branches of foreign banks shall comply within one (1) year independent directors. An "independent director" shall mean a person other than an
from the effectivity of this Act with the minimum capital requirements as prescribed officer or employee of the bank, its subsidiaries or affiliates or related interests. (n)
under Section 4(ii) of this Act, unless otherwise extended by the Monetary Board. Non-Filipino citizens may become members of the board of directors of a bank to the
extent of the foreign participation in the equity of said bank. (Sec. 7, RA 7721) The
Sec. 11. Separability Clause. If any provision of this Act is declared unconstitutional, meetings of the board of directors may be conducted through modern technologies
the same shall not affect the validity of the other provisions not affected thereby. such as, but not limited to, teleconferencing and video-conferencing. (n)
SEC. 12. Applicability of Other Banking Laws. The provisions of Republic Act No. Section 16. Fit and Proper Rule. - To maintain the quality of bank management and
7653, otherwise known as the New Central Bank Act and the provisions of Republic afford better protection to depositors and the public in general the Monetary Board
Act No. 8791, otherwise known as The General Banking Law of 2000, insofar as they shall prescribe, pass upon and review the qualifications and disqualifications of
are applicable and not in conflict with any provision of this Act, shall apply to banks individuals elected or appointed bank directors or officers and disqualify those found
authorized pursuant to this Act. 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
SEC. 13. Rule-Making Powers of the Monetary Board of the Bangko Sentral ng
act which render him unfit for the position. In determining whether an individual is fit
Pilipinas and Compliance Reports. The Monetary Board is hereby authorized to
and proper to hold the position of a director or officer of a bank, regard shall be given
issue such rules and regulations as may be needed to implement "the provisions of
to his integrity, experience, education, training, and competence. (9-Aa)
this Act. On or before May 30 of each year, the Monetary Board shall file a written
report to Congress and its respective Banks Committees, on the developments in the Section 17. Directors of Merged or Consolidated Banks. - In the case of a bank
implementation of this Act. The implementing rules and regulations of this Act shall merger or consolidation, the number of directors shall not exceed twenty-one (21).
be published in at least two (2) newspapers of general circulation. (l3a)
1. Qualifications-MORB Section X141; X141.1; X141.2 (skim through) either in his personal capacity or through his firm; is independent of
management and free from any business or other relationship, has not engaged
Sec. X141 Definition and Qualifications of Directors; Responsibilities and Duties of
and does not engage in any transaction with the institution or with any of its
Board of Directors. For purposes of this Section, the following shall be the definition
related companies or with any of its substantial shareholders, whether by
and qualifications, responsibilities and duties of directors and board of directors,
himself or with other persons or through a firm of which he is a partner or a
respectively.
company of which he is a director or substantial shareholder, other than
X141.1 Definition/limits transactions which are conducted at arms length and could not materially
interfere with or influence the exercise of his judgment.
a. Definition of directors. Directors shall include:
An independent director of a bank can be elected as an independent director of its: (a)
(1) directors who are named as such in the articles of incorporation; parent or holding company; (b) subsidiary or affiliate; (c) substantial shareholder; or
(d) other related companies, or vice-versa: Provided, That he is not a substantial
(2) directors duly elected in subsequent meetings of the stockholders; and
shareholder of the bank or any of the said concerned entities.
(3) those elected to fill vacancies in the board of directors.
The foregoing terms and phrases used in Items (1) to (6) of this Section shall have
b. Limits on the number of the members of the board of directors. Pursuant to the following meaning:
Sections 15 and 17 of R.A. No. 8791, there shall be at least five (5), and a maximum of
(a) Parent is a corporation which has control over another corporation directly or
fifteen (15) members of the board of directors of a bank at least two (2) of whom
indirectly through one (1) or more intermediaries.
shall be independent directors: Provided, That in case of a bank/QB/ trust entity
merger or consolidation, the number of directors may be increased up to twenty-one (b) Subsidiary means a corporation more than fifty percent (50%) of the voting
(21). stock of which is owned or controlled directly or indirectly through one (1) or
more intermediaries by a bank.
An independent director shall mean a person who
(c) Affiliate is a juridical person that directly or indirectly, through one (1) or
(1) Is not or has not been an officer or employee of the bank, its subsidiaries or
more intermediaries, is controlled by, or is under common control with the bank
affiliates or related interests during the past three (3) years counted from the
or its affiliates.
date of his election;
(d) Related interests as defined under Sections 12 and 13 of R.A. No. 8791 shall
(2) Is not a director or officer of the related companies of the institutions
mean individuals related to each other within the fourth degree of consanguinity
majority stockholder;
or affinity, legitimate or common law, and two (2) or more corporations owned
(3) Is not a majority stockholder of the institution, any of its related companies, or controlled by a single individual or by the same family group or the same
or of its majority shareholders; group of persons.
(4) Is not a relative within the fourth degree of consanguinity or affinity, (e) Control exists when the parent owns directly or indirectly through
legitimate or common-law of any director, officer or majority shareholder of the subsidiaries more than one-half of the voting power of an enterprise unless, in
bank or any of its related companies; exceptional circumstance, it can be clearly demonstrated that such ownership
does not constitute control. Control may also exist even when ownership is one-
(5) Is not acting as a nominee or representative of any director or substantial half or less of the voting power of an enterprise when there is:
shareholder of the bank, any of its related companies or any of its substantial
shareholders; and i. power over more than one-half of the voting rights by virtue of an
agreement with other stockholders; or
(6) Is not retained as professional adviser, consultant, agent or counsel of the
institution, any of its related companies or any of its substantial shareholders,
ii. power to govern the financial and operating policies of the enterprise and that the submission of said certification shall be considered compliance with the
under a statute or an agreement; or required fifty percent (50%) minimum attendance in board meetings.
iii. power to appoint or remove the majority of the members of the board of
directors or equivalent governing body; or X141.2 Qualifications of a director
iv. power to cast the majority votes at meetings of the board of directors or A director shall have the following minimum qualifications:
equivalent governing body; or
a. He shall be at least twenty-five (25) years of age at the time of his election or
v. any other arrangement similar to any of the above. appointment;
(f) Related company means another company which is: (a) its parent or holding b. He shall be at least a college graduate or have at least five (5) years experience
company; (b) its subsidiary or affiliate; or (c) a corporation where a bank or its in business;
majority stockholder own such number of shares that will allow/enable him to
c. He must have attended a special seminar on corporate governance for board
elect at least one (1) member of the board of directors or a partnership where
of directors conducted or accredited by the BSP: Provided, That incumbent
such majority stockholder is a partner.
directors as well as those elected after 17 September 2001 must attend said
(g) Substantial or major shareholder shall mean a person, whether natural or seminar on or before 30 June 2003 or within a period of six (6) months from date
juridical, owning such number of shares that will allow him to elect at least one of election for those elected after 30 June 2003, as the case may be; and
(1) member of the board of directors of a bank or who is directly or indirectly the
d. He must be fit and proper for the position of a director of the bank. In
registered or beneficial owner of more than ten percent (10%) of any class of its
determining whether a person is fit and proper for the position of a director, the
equity security.
following matters must be considered: integrity/probity, competence, education,
(h) Majority stockholder or majority shareholder means a person, whether diligence and experience/training.
natural or juridical, owning more than fifty percent (50%) of the voting stock of a
The foregoing qualifications for directors shall be in addition to those required or
bank.
prescribed under R.A. No. 8791 and other existing applicable laws and regulations.
Non-Filipino citizens may become members of the board of directors of a bank to the
2. Disqualifications MORB Section X143.1 (Skim through)
extent of the foreign participation in the equity of said bank: Provided, That pursuant
to Section 23 of the Corporation Code of the Philippines (BP Blg. 68), a majority of the X143.1 Persons disqualified to become directors. Without prejudice to specific
directors must be residents of the Philippines. provisions of law prescribing disqualifications for directors, the following are
disqualified from becoming directors:
The meetings of the board of directors may be conducted through modern
technologies such as, but not limited to, teleconferencing and videoconferencing as a. Permanently disqualified
long as the director who is taking part in said meetings can actively participate in the
deliberations on matters taken up therein: Provided, That every member of the board Directors/officers/employees permanently disqualified by the Monetary Board from
shall participate in at least fifty percent (50%) and shall physically attend at least holding a director position:
twenty-five percent (25%) of all board meetings every year: Provided, further, That in
(1) Persons who have been convicted by final judgment of a court for offenses
the case of a director who is unable to physically attend or participate in board
involving dishonesty or breach of trust such as, but not limited to, estafa,
meetings via teleconferencing or videoconferencing, the corporate secretary shall
embezzlement, extortion, forgery, malversation, swindling, theft, robbery,
execute a notarized certification attesting that said director was given the agenda
falsification, bribery, violation of B.P. Blg. 22, violation of Anti-Graft and Corrupt
materials prior to the meeting and that his/ her comments/decisions thereon were
Practices Act and prohibited acts and transactions under Section 7 of R.A. No.
submitted for deliberation/discussion and were taken up in the actual board meeting,
6713 (Code of Conduct and Ethical Standards for Public Officials and Employees);
(2) Persons who have been convicted by final judgment of a court sentencing board meeting. This disqualification applies only for purposes of the immediately
them to serve a maximum term of imprisonment of more than six (6) years; succeeding election;
(3) Persons who have been convicted by final judgment of the court for violation (3) Persons who are delinquent in the payment of their obligations as defined
of banking laws, rules and regulations; hereunder:
(4) Persons who have been judicially declared insolvent, spendthrift or (a) Delinquency in the payment of obligations means that an obligation of a
incapacitated to contract; person with a bank where he/she is a director or officer, or at least two (2)
obligations with other banks/FIs, under different credit lines or loan
(5) Directors, officers or employees of closed banks who were found to be
contracts, are past due pursuant to Sec. X306;
culpable for such institutions closure as determined by the Monetary Board;
(b) Obligations shall include all borrowings from a bank obtained by:
(6) Directors and officers of banks found by the Monetary Board as
administratively liable for violation of banking laws, rules and regulations where (i) A director or officer for his own account or as the representative or
a penalty of removal from office is imposed, and which finding of the Monetary agent of others or where he/she acts as a guarantor, endorser or surety
Board has become final and executory; or for loans from such FIs;
(7) Directors and officers of banks or any person found by the Monetary Board to (ii) The spouse or child under the parental authority of the director or
be unfit for the position of directors or officers because they were found officer;
administratively liable by another government agency for violation of banking
(iii) Any person whose borrowings or loan proceeds were credited to the
laws, rules and regulations or any offense/violation involving dishonesty or
account of, or used for the benefit of a director or officer;
breach of trust, and which finding of said government agency has become final
and executory. (iv) A partnership of which a director or officer, or his/her spouse is the
managing partner or a general partner owning a controlling interest in
b. Temporarily disqualified
the partnership; and
Directors/officers/employees disqualified by the Monetary Board from holding a
(v) A corporation, association or firm wholly-owned or majority of the
director position for a specific/ indefinite period of time. Included are:
capital of which is owned by any or a group of persons mentioned in the
(1) Persons who refuse to fully disclose the extent of their business interest or foregoing Items (i), (ii) and (iv);
any material information to the appropriate department of the SES when
This disqualification shall be in effect as long as the delinquency persists.
required pursuant to a provision of law or of a circular, memorandum, rule or
regulation of the BSP. This disqualification shall be in effect as long as the refusal (4) Persons who have been convicted by a court for offenses involving dishonesty
persists; or breach of trust such as, but not limited to, estafa, embezzlement, extortion,
forgery, malversation, swindling, theft, robbery, falsification, bribery, violation of
(2) Directors who have been absent or who have not participated for whatever
B.P. Blg. 22, violation of Anti-Graft and Corrupt Practices Act and prohibited acts
reasons in more than fifty percent (50%) of all meetings, both regular and special,
and transactions under Section 7 of R.A. No. 6713, violation of banking laws,
of the board of directors during their incumbency, and directors who failed to
rules and regulations or those sentenced to serve a maximum term of
physically attend for whatever reasons in at least twenty-five percent (25%) of all
imprisonment of more than six (6) years but whose conviction has not yet
board meetings in any year, except that when a notarized certification executed
become final and executory;
by the corporate secretary has been submitted attesting that said directors were
given the agenda materials prior to the meeting and that their comments/ (5) Directors and officers of closed banks pending their clearance by the
decisions thereon were submitted for deliberation/discussion and were taken up Monetary Board;
in the actual board meeting, said directors shall be considered present in the
(6) Directors disqualified for failure to observe/discharge their duties and (13) Directors and officers of banks found by the Monetary Board as
responsibilities prescribed under existing regulations. This disqualification applies administratively liable for violation of banking laws, rules and regulations where
until the lapse of the specific period of disqualification or upon approval by the a penalty of suspension from office or fine is imposed, regardless whether the
Monetary Board on recommendation by the appropriate department of the SES finding of the Monetary Board is final and executory or pending appeal before
of such directors election/reelection; the appellate court, unless execution or enforcement thereof is restrained by the
court. The disqualification shall be in effect during the period of suspension or so
(7) Directors who failed to attend the special seminar for board of directors long as the fine is not fully paid. (As amended by Circular Nos.584 dated 28
required under Item c of Subsec. X141.2. This disqualification applies until the September 2007 and 513 dated 10 February 2006)
director concerned had attended such seminar;
(10) Persons with derogatory records as certified by, or on the official files of, the
judiciary, NBI, Philippine National Police (PNP), quasi-judicial bodies, other
government agencies, international police, monetary authorities and similar
agencies or authorities of foreign countries for irregularities or violations of any
law, rules and regulations that would adversely affect the integrity of the
director/officer or the ability to effectively discharge his duties. This
disqualification applies until they have cleared themselves of the alleged
irregularities/violations or after a lapse of five (5) years from the time the
complaint, which was the basis of the derogatory record, was initiated;
(12) Directors and officers of banks or any person found by the Monetary Board
to be unfit for the position of director or officer because they were found
administratively liable by another government agency for violation of banking
laws, rules and regulations or any offense/violation involving dishonesty or
breach of trust, and which finding of said government agency is pending appeal
before the appellate court, unless execution or enforcement thereof is restrained
by the court; and