Article 131p. 131

COMMERCIAL LAWS NEGOTIABLE INSTRUMENTS, CORPORATION, INSURANCE, TRANSPORTATION, BANKING

who

shall

be

determined

by

proper

competitive

examinations. The Monetary Board shall prescribe rules

and regulations to govern the training program of the

Bangko Sentral .

SECTION

25.

Supervision

and

Examination .

— 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.

For

purposes

of

this section, a subsidiary means a

corporation more than fifty percent (50%) of the voting

stock of which is owned by a bank or quasi-bank and an

affiliate means 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.

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

supervisions

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.

No restraining order or injunction shall be issued by the

court enjoining the Bangko Sentral from examining any

institution subject to supervision or examination by the

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. The provisions of Rule 58

of the New Rules of Court insofar as they are applicable

and not inconsistent with the provisions of this section

shall

govern

the

issuance

and

dissolution

of

the

restraining

order

or injunction contemplated in this

section.

SECTION 26. Bank Deposits and Investments . — 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.

SECTION

27.

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 such 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 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.

SECTION 28. Examination and Fees . — The supervising

and

examining

department

head,

personally

or

by

deputy,

shall

examine

the

books

of

every

banking

institution once in every twelve (12) months, and at such

other times as the Monetary Board by an affirmative vote

of five (5) members, may deem expedient and to make a

report on the same to the Monetary Board: Provided , That

there shall be an interval of at least twelve (12) months

between annual examinations.

The bank concerned shall afford to the head of the

appropriate supervising and examining departments and

to his authorized deputies full opportunity to examine its

books, cash and available assets and general condition at

any time during banking hours when requested to do so

by the Bangko Sentral : Provided, however , That 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.

Banking and quasi-banking institutions which are subject

to examination by the Bangko Sentral shall pay to the

Bangko Sentral , within the first thirty (30) days of each

year, an annual fee in an amount equal to a percentage

as may be prescribed by the Monetary Board of its

average total assets during the preceding years as shown

on its end-of-month balance sheets, after deducting cash

on hand and amounts due from banks, including the

Bangko Sentral and banks abroad.

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. 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 conservator shall receive remuneration to be fixed by

the

Monetary

Board

in

an

amount

not

to

exceed

© Compiled by RGL

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