Article 153p. 153

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

to the president or the secretary of the bank at its head or

principal office shall be paid in advance by the party at

whose instance the service is made. (17)

SECTION 77. Laws Applicable . — In all matters not

specifically covered by special provisions applicable only

to a foreign bank or its branches and other offices in the

Philippines, any foreign bank licensed to do business in

the Philippines shall be bound by the provisions of this

Act, all other laws, rules and regulations applicable to

banks organized under the laws of the Philippines of the

same class, except those that provide for the creation,

formation, organization or dissolution of corporations or

for the fixing of the relations, liabilities, responsibilities, or

duties of stockholders, members, directors or officers of

corporations to each other or to the corporation. (18)

SECTION 78. Revocation of License of a Foreign Bank . —

The Monetary Board may revoke the license to transact

business in the Philippines of any foreign bank, if it finds

that the foreign bank is insolvent or in imminent danger

thereof or that its continuance in business will involve

probable loss to those transacting business with it. After

the revocation of its license, it shall be unlawful for any

such foreign bank to transact business in the Philippines

unless

its

license

is

renewed or reissued. After the

revocation of such license, the Bangko Sentral shall take

the necessary action to protect the creditors of such

foreign bank and the public. The provisions of the New

Central Bank Act on sanctions and penalties shall likewise

be applicable. (16)

CHAPTER IX Trust Operations

SECTION 79. Authority to Engage in Trust Business . —

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 behoof of

others. For purposes of this Act, such a corporation shall

be referred to as a trust entity. (56a; 57a)

SECTION 80. Conduct of Trust Business . — 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.

No trust entity shall, for the account of the trustor or the

beneficiary of the trust, purchase or acquire property

from, or sell, transfer, assign or lend money or property to,

or purchase debt instruments of, any of the departments,

directors, officers, stockholders, or employees of the trust

entity, relatives within the first degree of consanguinity or

affinity, or the related interests, of such directors, officers

and stockholders, unless the transaction is specifically

authorized by the trustor and 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.

The Monetary Board shall promulgate such rules and

regulations

as

may

be

necessary

to

prevent

circumvention of this prohibition or the evasion of the

responsibility herein imposed on a trust entity. (56)

SECTION 81. Registration of Articles of Incorporation

and By-Laws of a Trust Entity . — The Securities and

Exchange Commission 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 Bangko Sentral. (n)

SECTION 82. 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 Monetary

Board. (n)

SECTION 83. Powers of a Trust Entity . — A trust entity, in

addition to the general powers incident to corporations,

shall have the power to:

83.1. Act as trustee on any mortgage or bond issued by

any municipality, corporation, or any body politic and to

accept and execute any trust consistent with law;

83.2. Act under the order or appointment of any court as

guardian, receiver, trustee, or depositary 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 proceedings and of property of any kind

which may be brought under the jurisdiction of the court;

83.3. Act as the executor of any will when it is named the

executor thereof;

83.4. Act as administrator of the estate of any deceased

person, with the will annexed, or as administrator of the

estate of any deceased person when there is no will;

83.5. 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

83.6. Establish and manage common trust funds, subject

to such rules and regulations as may be prescribed by the

Monetary Board. (58)

SECTION 84. Deposit for the Faithful Performance of

Trust Duties . — Before transacting trust business, every

trust entity shall deposit with the Bangko Sentral as

security for the faithful performance of its trust duties,

cash or securities approved by the Monetary Board in an

amount equal to not less than Five hundred thousand

pesos (P500,000.00) or such higher amount as may be

fixed by the Monetary Board: Provided , however , That the

Monetary Board shall require every trust entity to increase

the amount of its cash or securities on deposit with the

Bangko Sentral whenever in its judgment such increase

is necessary by reason of the trust business of such entity:

Provided , further , That the paid-in capital and surplus of

such entity must be at least equal to the amount required

to be deposited with the Bangko Sentral in accordance

with the provisions of this paragraph. Should the capital

and surplus fall below said amount, the Monetary Board

shall have the same authority as that granted to it under

the provisions of the fifth paragraph of Section 34 of this

Act.

A trust entity so long as it shall continue to be solvent and

comply with laws or regulations shall have the right to

collect the interest earned on such securities deposited

with the Bangko Sentral and, from time to time, with the

approval

of

the

Bangko

Sentral,

to

exchange

the

securities for others. If the trust entity fails to comply with

any law or regulation, the Bangko Sentral shall retain

such interest on the securities deposited with it for the

benefit of rightful claimants. All claims arising out of the

trust business of a trust entity shall have priority over all

other claims as regards the cash or securities deposited

as above provided. The Monetary Board may not permit

the cash or securities deposited in accordance with the

provisions

of this Section to be reduced below the

prescribed minimum amount until the depositing entity

shall discontinue its trust business and shall satisfy the

Monetary

Board

that

it

has

complied

with

all

its

obligations in connection with such business. (65a)

SECTION 85. Bond of Certain Persons for the Faithful

Performance

of

Duties .

—

Before

an

executor,

administrator, guardian, trustee, receiver or depositary

appointed by the court enters upon the execution of his

duties, he shall, upon order of the court, file a bond in

such sum as the court may direct.

Upon the application of any executor, administrator,

guardian, trustee, receiver, depositary or any other person

in interest, the court may, after notice and hearing, order

that the subject matter of the trust or any part thereof be

deposited with a trust entity. Upon presentation of proof

to the court that the subject matter of the trust has been

deposited with a trust entity, the court may order that the

bond given by such persons for the faithful performance

of their duties be reduced to such sums as it may deem

proper: Provided , however , That the reduced bond shall

be

sufficient

to

secure

adequately

the

proper

administration and care of any property remaining under

© Compiled by RGL

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