Article 145p. 145

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

4.6. Enforcing prompt corrective action. (n)

The Bangko Sentral shall also have supervision over the

operations

of

and

exercise

regulatory

powers

over

quasi-banks, trust entities and other financial institutions

which under special laws are subject to Bangko Sentral

supervision. (2-Ca)

For the purposes of this Act, "quasi-banks" shall refer to

entities engaged in the borrowing of funds through the

issuance, endorsement or assignment with recourse or

acceptance of deposit substitutes as defined in Section

95 of Republic Act No. 7653 (hereafter the "New Central

Bank Act ") for purposes of relending or purchasing of

receivables and other obligations. (2-Da)

SECTION

5.

Policy

Direction ;

Ratios ,

Ceilings

and

Limitations . — The Bangko Sentral shall provide policy

direction in the areas of money, banking and credit. (n)

For this purpose, the Monetary Board may prescribe

ratios, ceilings, limitations, or other forms of regulation on

the different types of accounts and practices of banks

and

quasi-banks which shall, to the extent feasible,

conform to internationally accepted standards, including

those of the Bank for International Settlements (BIS). The

Monetary Board may exempt particular categories of

transactions from such ratios, ceilings and limitations, but

not limited to exceptional cases or to enable a bank or

quasi-bank under rehabilitation or during a merger or

consolidation to continue in business with safety to its

creditors, depositors and the general public. (2-Ca)

SECTION

6.

Authority

to

Engage

in

Banking

and

Quasi-Banking Functions . — No person or entity shall

engage in banking operations or quasi-banking functions

without authority from the Bangko Sentral: Provided ,

however , That an entity authorized by the Bangko Sentral

to perform universal or commercial banking functions

shall

likewise

have

the

authority

to

engage

in

quasi-banking functions.

The determination of whether a person or entity is

performing banking or quasi-banking functions without

Bangko

Sentral

authority

shall

be

decided

by

the

Monetary Board. To resolve such issue, the Monetary

Board may, through the appropriate supervising and

examining department of the Bangko Sentral, examine,

inspect or investigate the books and records of such

person or entity. Upon issuance of this authority, such

person or entity may commence to engage in banking

operations or quasi-banking functions and shall continue

to do so unless such authority is sooner surrendered,

revoked, suspended or annulled by the Bangko Sentral in

accordance with this Act or other special laws.

The

department

head

and

the

examiners

of

the

appropriate supervising and examining department are

hereby

authorized

to

administer

oaths to any such

person, employee, officer, or director of any such entity

and to compel the presentation or production of such

books, documents, papers or records that are reasonably

necessary to ascertain the facts relative to the true

functions and operations of such person or entity. Failure

or refusal to comply with the required presentation or

production of such books, documents, papers or records

within

a

reasonable

time

shall

subject the persons

responsible therefor to the penal sanctions provided

under the New Central Bank Act .

Persons or entities found to be performing banking or

quasi-banking

functions

without

authority

from

the

Bangko Sentral shall be subject to appropriate sanctions

under the New Central Bank Act and other applicable

laws. (4a)

SECTION 7. Examination by the Bangko Sentral . — The

Bangko Sentral shall, when examining a bank, have the

authority to examine an enterprise which is wholly or

majority-owned or controlled by the bank. (21-Ba)

CHAPTER III Organization, Management and

Administration of Banks, Quasi-Banks and Trust

Entities

SECTION 8. Organization . — The Monetary Board may

authorize

the

organization of a bank or quasi-bank

subject to the following conditions:

8.1. That the entity is a stock corporation (7);

8.2. That its funds are obtained from the public, which

shall mean twenty (20) or more persons (2-Da); and

8.3. That the minimum capital requirements prescribed

by the Monetary Board for each category of banks are

satisfied. (n)

No new commercial bank shall be established within

three (3) years from the effectivity of this Act. In the

exercise of the authority granted herein, the Monetary

Board shall take into consideration their capability in

terms of their financial resources and technical expertise

and integrity. The bank licensing process shall incorporate

an

assessment

of

the

bank's

ownership

structure,

directors and senior management, its operating plan and

internal

controls

as

well

as

its

projected

financial

condition and capital base.

SECTION 9. Issuance of Stocks . — The Monetary Board

may prescribe rules and regulations on the types of stock

a bank may issue, including the terms thereof and rights

appurtenant thereto to determine compliance with laws

and regulations governing capital and equity structure of

banks: Provided , That banks shall issue par value stocks

only.

SECTION 10. Treasury Stocks . — No bank shall purchase

or acquire shares of its own capital stock or accept its own

shares as a security for a loan, except when authorized by

the Monetary Board: Provided , That in every case the

stock

so purchased or acquired shall, within six (6)

months from the time of its purchase or acquisition, be

sold or disposed of at a public or private sale. (24a)

SECTION

11.

Foreign

Stockholdings .

—

Foreign

individuals

and

non-bank

corporations

may

own or

control up to forty percent (40%) of the voting stock of a

domestic bank. This rule shall apply to Filipinos and

domestic non-bank corporations. (12a; 12-Aa)

The percentage of foreign-owned voting stocks in a bank

shall be determined by the citizenship of the individual

stockholders

in

that

bank.

The

citizenship

of

the

corporation which is a stockholder in a bank shall follow

the citizenship of the controlling stockholders of the

corporation, irrespective of the place of incorporation. (n)

SECTION 12. Stockholdings of Family Groups or Related

Interests . — Stockholdings of individuals 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. (12-Da)

SECTION 13. Corporate Stockholdings . — Two or more

corporations owned or controlled by the same family

group or same group of persons shall be considered

related

interests

and

must

be fully disclosed in all

transactions by such corporations or related groups of

persons with the bank. (12-Ba)

SECTION 14. Certificate of Authority to Register . — The

Securities and Exchange Commission shall not register

the

articles

of

incorporation

of

any

bank,

or

any

amendment thereto, unless accompanied by a certificate

of authority issued by the Monetary Board, under its seal.

Such certificate shall not be issued unless the Monetary

Board is satisfied from the evidence submitted to it:

14.1. That all requirements of existing laws and regulations

to engage in the business for which the applicant is

proposed to be incorporated have been complied with;

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