Republic Act No.: 8791 An Act Providing For The
Republic Act No.: 8791 An Act Providing For The
Republic Act No.: 8791 An Act Providing For The
■ The Monetary Board may regulate the operations authorized by this Section in order
to ensure that such operations do not endanger the interests of the depositors and
other creditors of the bank. In case a bank or quasi-bank notifies the Bangko Sentral
or publicly announces a bank holiday, or in any manner suspends the payment of its
deposit liabilities continuously for more than thirty (30) days, the Monetary Board
may summarily and without need for prior hearing close such banking institution
and place it under receivership of the Philippine Deposit Insurance Corporation.
(72a)
■ SECTION 54. Prohibition to Act as Insurer. — A bank shall not directly engage in
insurance business as the insurer. (73)
SECTION 55. Prohibited Transactions. —
■ 55.1. 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.
■ 55.2. 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.
■ 55.3. 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 Sentral ng Pilipinas shall constitute fraud and shall be
subject to the administrative and criminal sanctions provided under the New Central
Bank Act.
■ 55.4. Consistent with the provisions of Republic Act No. 1405, otherwise known as
the Banks Secrecy Law, no bank shall employ casual or nonregular personnel or too
lengthy probationary personnel in the conduct of its business involving bank
deposits.
SECTION 56. Conducting Business in an
Unsafe or Unsound Manner.
■ In determining whether a particular act or omission, which is not otherwise prohibited by any law,
rule or regulation affecting banks, quasi-banks or trust entities, may be deemed as conducting
business in an unsafe or unsound manner for purposes of this Section, the Monetary Board shall
consider any of the following circumstances: 56.1. The act or omission has resulted or may result in
material loss or damage, or abnormal risk or danger to the safety, stability, liquidity or solvency of
the institution; 56.2. The act or omission has resulted or may result in material loss or damage or
abnormal risk to the institution's depositors, creditors, investors, stockholders or to the Bangko
Sentral or to the public in general; 56.3. The act or omission has caused any undue injury, or has
given any unwarranted benefits, advantage or preference to the bank or any party in the discharge
by the director or officer of his duties and responsibilities through manifest partiality, evident bad
faith or gross inexcusable negligence; or 56.4. The act or omission involves entering into any
contract or transaction manifestly and grossly disadvantageous to the bank, quasi-bank or trust
entity, whether or not the director or officer profited or will profit thereby. Whenever a bank, quasi-
bank or trust entity persists in conducting its business in an unsafe or unsound manner, the
Monetary Board may, without prejudice to the administrative sanctions provided in Section 37 of
the New Central Bank Act, take action under Section 30 of the same Act and/or immediately
exclude the erring bank from clearing, the provisions of law to the contrary notwithstanding. (n)
SECTION 57. Prohibition on Dividend
Declaration. —
■ No bank or quasi-bank shall declare dividends greater than its accumulated net
profits then on hand, deducting therefrom its losses and bad debts. Neither shall
the bank nor quasi-bank declare dividends, if at the time of declaration: 57.1 Its
clearing account with the Bangko Sentral is overdrawn; or 57.2 It is deficient in the
required liquidity floor for government deposits for five (5) or more consecutive days;
or 57.3 It does not comply with the liquidity standards/ratios prescribed by the
Bangko Sentral for purposes of determining funds available for dividend declaration;
or 57.4 It has committed a major violation as may be determined by the Bangko
Sentral. (84a)
SECTION 58. Independent Auditor.
■ The Monetary Board may require a bank, quasi-bank or trust entity to engage the
services of an independent auditor to be chosen by the bank, quasi-bank or trust
entity concerned from a list of certified public accountants acceptable to the
Monetary Board. The term of the engagement shall be as prescribed by the
Monetary Board which may either be on a continuing basis where the auditor shall
act as resident examiner, or on the basis of special engagements, but in any case,
the independent auditor shall be responsible to the bank's, quasi-bank's or trust
entity's board of directors. A copy of the report shall be furnished to the Monetary
Board. The Monetary Board may also direct the board of directors of a bank, quasi-
bank, trusty entity and/or the individual members thereof, to conduct, either
personally or by a committee created by the board, an annual balance sheet audit of
the bank, quasi-bank or trust entity to review the internal audit and control system of
the bank, quasi-bank or trust entity and to submit a report of such audit
SECTION 59. Authority to Regulate
Electronic Transactions.
■ The Bangko Sentral shall have full authority to regulate the use of electronic devices,
such as computers, and processes for recording, storing and transmitting
information or data in connection with the operations of a bank, quasibank or trust
entity, including the delivery of services and products to customers by such
entityThe Bangko Sentral shall have full authority to regulate the use of electronic
devices, such as computers, and processes for recording, storing and transmitting
information or data in connection with the operations of a bank, quasibank or trust
entity, including the delivery of services and products to customers by such entity
SECTION 60. Financial Statements. —
■ Every bank, quasi-bank or trust entity shall submit to the appropriate supervising
and examining department of the Bangko Sentral financial statements in such form
and frequency as may be prescribed by the Bangko Sentral. Such statements, which
shall be as of a specific date designated by the Bangko Sentral, shall show the
actual financial condition of the institution submitting the statement, and of its
branches, offices, subsidiaries and affiliates, including the results of its operations,
and shall contain such information as may be required in Bangko Sentral
regulations.
SECTION 61. Publication of Financial
Statements. —
■ Every bank, quasi-bank or trust entity, shall publish a statement of its financial condition, including those of its
subsidiaries and affiliates, in such terms understandable to the layman and in such frequency as may be prescribed by
the Bangko Sentral, in English or Filipino, at least once every quarter in a newspaper of general circulation in the city or
province where the principal office, in the case of a domestic institution, or the principal branch or office in the case of a
foreign bank, is located, but if no newspaper is published in the same province, then in a newspaper published in Metro
Manila or in the nearest city or province. The Bangko Sentral may by regulation prescribe the newspaper where the
statements prescribed herein shall be published. The Monetary Board may allow the posting of the financial statements
of a bank, quasi-bank or trust entity in public places it may determine, in lieu of the publication required in the preceding
paragraph, when warranted by the circumstances.Every bank, quasi-bank or trust entity, shall publish a statement of its
financial condition, including those of its subsidiaries and affiliates, in such terms understandable to the layman and in
such frequency as may be prescribed by the Bangko Sentral, in English or Filipino, at least once every quarter in a
newspaper of general circulation in the city or province where the principal office, in the case of a domestic institution, or
the principal branch or office in the case of a foreign bank, is located, but if no newspaper is published in the same
province, then in a newspaper published in Metro Manila or in the nearest city or province. The Bangko Sentral may by
regulation prescribe the newspaper where the statements prescribed herein shall be published. The Monetary Board
may allow the posting of the financial statements of a bank, quasi-bank or trust entity in public places it may determine,
in lieu of the publication required in the preceding paragraph, when warranted by the circumstances.
■ In periods of national and/or local emergency or of imminent panic which directly
threaten monetary and banking stability, the Monetary Board, by a vote of at least
five (5) of its members, in special cases and upon application of the bank, quasi-
bank or trust entity, may allow such bank, quasibank or trust entity to defer for a
stated period of time the publication of the statement of financial condition required
herein.
■ SECTION 62. Publication of Capital Stock. — A bank, quasi-bank or trust entity
incorporated under the laws of the Philippines shall not publish the amount of its
authorized or subscribed capital stock without indicating at the same time and with
equal prominence, the amount of its capital actually paid up. No branch of any
foreign bank doing business in the Philippines shall in any way announce the
amount of the capital and surplus of its head office, or of the bank in its entirety
without indicating at the same time and with equal prominence the amount of the
capital, if any, definitely assigned to such branch. In case no capital has been
definitely assigned to such branch, such fact shall be stated in, and shall form part
of the publication. (82)
SECTION 63. Settlement of Disputes. —
■ The provisions of any law to the contrary notwithstanding, the Bangko Sentral shall
be consulted by other government agencies or instrumentalities in actions or
proceedings initiated by or brought before them involving controversies in banks,
quasibanks or trust entities arising out of and involving relations between and
among their directors, officers or stockholders, as well as disputes between any or
all of them and the bank, quasi-bank or trust entity of which they are directors,
officers or stockholders.
SECTION 64. Unauthorized Advertisement
or Business Representation
■ No person, association, or corporation unless duly authorized to engage in the
business of a bank, quasi-bank, trust entity, or savings and loan association as
defined in this Act, or other banking laws, shall advertise or hold itself out as being
engaged in the business of such bank, quasi-bank, trust entity, or association, or
use in connection with its business title, the word or words "bank", "banking",
"banker", "quasi-bank", "quasibanking", "quasi-banker", "savings and loan
association", "trust corporation", "trust company" or words of similar import or
transact in any manner the business of any such bank, corporation or association. (
SECTION 65. Service Fees.
■ The Bangko Sentral may charge equitable rates, commissions or fees, as may be
prescribed by the Monetary Board for supervision, examination and other services
which it renders under this Act.
SECTION 66. Penalty for Violation of
this Act.
■ Unless otherwise herein provided, the violation of any of the provisions of this Act
shall be subject to Sections 34, 35, 36 and 37 of the New Central Bank Act. If the
offender is a director or officer of a bank, quasi-bank or trust entity, the Monetary
Board may also suspend or remove such director or officer. If the violation is
committed by a corporation, such corporation may be dissolved by quo warranto
proceedings instituted by the Solicitor General.
CHAPTER V PLACEMENT UNDER
CONSERVATORSHIP
■ SECTION 67. Conservatorship. — The grounds and procedures for placing a bank
under conservatorship, as well as, the powers and duties of the conservator
appointed for the bank shall be governed by the provisions of Section 29 and the
last two paragraphs of Section 30 of the New Central Bank Act: Provided, That this
Section shall also apply to conservatorship proceedings of quasi-banks. (n)