BANK SECRECY LAW

A. AN ACT PROHIBITING DISCLOSURE OF OR INQUIRY INTO DEPOSITS WITH ANY

BANKING INSTITUTION (REPUBLIC ACT NO. 1405)

a. Absolute Confidentiality of Bank Deposits and Investments in Government Bonds

i. All deposits of whatever nature in banks or banking institutions in the Philippines and
investments in government bonds are absolutely confidential in nature. (Sec. 2, Rep.
Act No. 1405).

1. Deposits refer to money or funds placed with a bank that can be withdrawn on
the depositor’s order or demand, such as deposit accounts in the form of
savings, current and time deposits. Deposits are characterized as being in the
nature of a simple loan. The placing of deposits in a bank creates a creditor-
debtor, has the obligation to pay a certain sum of money to the depositor, being
the creditor.

2. Investments in Government Bonds refer to investments in bonds issued by the

Government of the Philippines, its political subdivisions and its
instrumentalities. Government bonds are dept securities which are unconditional
obligations of State, and backed by its full taxing power, Government bonds
include treasury bills, treasury notes, retail treasury bonds, dollar linked peso
notes, and other risk-free bonds.

3. The General Banking prohibits bank directors, officers, employee or agents

from disclosing to any unauthorized person, without order of a competent court,
4 any information relative to funds or properties belonging to private
individuals, corporations, or any other entity in the custody of the bank. (Sec. 55
[b], Rep. Act No. 8791) The Thrift Banks Act and the Rural Bank Act likewise
prohibit any bank officer, employee or agent from disclosing any information
on such funds or properties. (Sec. 21 [a][2], Rep. Act No. 7906 & Sec. 26
[a][2], Rep. Act No. 7353) Prohibited Acts and Persons Liable.

b. The following are criminally liable under this law:

i. Any person or government official who, or any government bureau or office that,
examines, inquires looks into a bank deposit or government bond investment in any
of the instances not allowed in section 2;
ii. Any official or employee of a banking institution who makes a disclosure concerning
bank deposits to another in any instance not allowed by law (Sec. 5, Rep. Act No.
1405); and
iii. Any person who commits a violation of any of the provisions of law (Sec. 5, Rep.
Act No. 1405).
iv. Any bank official, director, employee or agent who discloses information relative to
funds or properties in the custody of the bank may also be held liable under the
applicable provisions of the General Banking Law, Thrift Bank Act and Rural
Banks Act.
c. Instances when Confidentiality of Domestic Bank Deposits is Not Absolute. Bank
deposits and investments in government bonds may be examined, inquired or looked in to
under limited exceptions in Republic Act o. 1405 and in other laws as enumerated below:
1. Exceptions under the Law on Secrecy of Bank Deposits. Section 2 of Republic Act
No. 1405 provides that bank deposits and government bond investments may be
examined, inquired and looked in to the following instances:
a. Upon written permission or consent in writing by the depositor. For consent to be
valid, it should be made knowingly, voluntarily and with sufficient awareness of
the relevant circumstances and likely consequences.
b. In cases of impeachment of the President, Vice President, members of the
Supreme Court, members of the Constitutional Commission (commission on
Elections, Civil Service Commission and Commission on Audit) and the
corruption, other high crimes or betrayal of public trust. (Art. XI, Sec. 2, 1987
Philippine Constitution)
c. Upon order of a competent court in cases of bribery or derilection of duty of
public officials.
d. In cases where the money deposited or invested is the subject matter of the
litigsation. The money deposited should be the very thing in dispute. (Mellon
Bank,N.A. v. Magsino, 190 S.C.R.A. 633 1990]

2. Exceptions under Other Laws. Bank deposits and investments may be examined,
inquired or looked into as provided for under other laws in the following instances:

a. The Ombudsman has the power to issue subpoena and subpoena duces tecum,
take testimony in any investigation or inquiry, as well as examine and access
banks accounts and records.

It may be exercised when the following conditions occur:

1) There must be a case pending before a court of competent jurisdiction;

2) The account must be clearly identified;
3) The inspection must be limited to the subject matter of the pending case;
and
4) The bank personnel and the account holder must be notified to be present
during the inspection.
b. Bank deposits of a public official, his spouse and unmarried children may be
taken into consideration in the enforcement of Section 8 of the Anti-Graft and
Corrupt Practices Act.

Section 8 states that:

 If a public official has been found to have acquired during his
incumbency, whether in his name or in the name of other persons, an
amount of property and/or money manifestly out of proportion to his
salary and to his other lawful income, that fact shall be a ground for
dismissal or removal.
 Bank deposits shall be taken into consideration in the enforcement of
this section, notwithstanding any provision of law to the contrary.

c. Directors, officers stockholders and related interests who contract a loan or any
form of financial accommodation with their bank or related bank are required to
execute a written waiver of secrecy of deposits pursuant to The New Central
Bank Act ( Sec. 26, Rep. Act No. 7653).
 d. The Commissioner of Internal Revenue is authorized to inquire into bank deposit
accounts in relation to:
1. An application for compromise of tax liability or a determination of a
decedent’s gross estate under The National Internal Revenue Code (Rep.
Act No. 8424, as amended by Rep. Act No. 10021);
2. A request for tax information of specific taxpayers made by a foreign tax
authority pursuant to a tax treaty under The Exchange of Information on Tax
Matters Act of 2009 (Rep. Act No. 8424, as amended by Rep. Act No.
10021).
e. The Anti-Money Laundering Council may be authorized to examine and inquire
into bank deposits or investments with banks or nonbank financial institutions-
1) With court order – When there is probable cause that the deposits or
investments are related to an unlawful activity or a money laundering
offense (Secs. 3[i] and 4 of Rep. Act No. 9160); and
2) Without need of court order – When probable cause exists that a particular
deposit or investment with any banking institution is related to certain
predicate crimes , such as kidnapping for ransom, violation of the
Comprehensive Dangerous Drugs Act, hijacking and other violations under
Republic Act No. 6235, destructive arson and murder (Sec. 11 of Republic
Act No. 9160).
f. The Bangko Sentral is authorized to –
1) Inquire into or examine bank deposits or investments in the course of a
periodic or special examination to ensure compliance with the Anti-Money
Laundering Law, in accordance with the rule of examination of the Bangko
Sentral (Sec. 11, Rep. Act No. 9160, as amended); and
2) Conduct annual testing which is limited to the determination of the existence
and true identity of the owners of numbered accounts (Sec. 9, Rep. Act No.
9160, as amended).
g. The Philippine Deposit Insurance Commission and the Bangko Sentral may
inquire into bank deposits when there is a finding of unsafe or unsound banking
practices (Sec. 8, Rep. Act No. 3591, as amended).
h. The Court of Appeals, designated as a special court, may issue and order
authorizing law enforcement officers to examine and gather information on the
deposits, placements, trust accounts, assets and records in a bank or financial
institution in connection with anti-terrorism case. (Rep. Act No. 9372)
i. The Commission on Audit is authorized to examine and audit government
deposits pertaining to the revenue and receipts of, and expenditures or uses of
funds and properties, owned or held in trust by, or pertaining to, the Government
or any of its subdivisions, agencies or instrumentalities, including government-
owned and controlled corporations with original charters. ( Art. IX-D, 1987
Constitution and Pres. Dec. No. 1445)
j. The Presidential Commission on Good Government may issue subpoenas
requiring the attendance and testimony of witnesses and/or the production of
books, papers, contracts, records, statement of accounts and other documents.
(Sec. 3 [e], Exec. Order No. 1 [1986])
 To be used in the conduct of its investigations to recover ill-gotten wealth
accumulated by former President Ferdinand E. Marcos, his immediate family,
relatives, subordinates and close associates.

3. Exceptions under Jurisprudence or Decision by Supreme Court

 a) The exception in the law that is applicable in bribery also applies to plunder.
 The overt or criminal acts as described in Section 1 (d) of Republic Act No. 7080
would make the similarity between plunder and bribery even more pronounced
since bribery is essentially included among these criminal acts.
b) Cases of unexplained wealth are similar to cases of bribery or dereliction of duty
and no reason is seen why these two classes of cases cannot be expected from the
rule making bank deposits confidential. (Phil. National Bank v. Gancayo, 122
Phil. 503 [1965])

4. Authorized Disclosures by authorized and responsible bank officials are allowed

in the following instances:
a) Reporting of unclaimes balances to the Treasurer of the Philippines (Secs. 1 &2,
Act No. 3936);
b) Turn-over to the Commissioner of Internal Revenue of the amount in bank
accounts as may be sufficient to satisfy the writ of garnishment issued to collect
delinquent taxes. ( Secs. 205 & 208, Rep. Act No. 8424); and
c) Submission of report , and turn-over, to the court officer or executing sheriff of
garnished amounts pursuant to a writ of garnishment in satisfaction of a
judgment. ( Sec. 9 [c], Rule 39, Rules of Court; See China Banking Corporation
v. Ortega, 49 SCRA 355 [1973]).
d) Disclosure by a bank officer or employee upon order of the court in connection
with a deposit in a closed bank that was used in the perpetration of anomalies.

d. Violation of Republic Act No. 1405 will subject the offender, upon conviction, to the
following penalties:
1. Imprisonment of not more than five years;
2. Fine of not more than P20,000.00; or
3. Both imprisonment and fine

B. FOREIGN CURRENCY DEPOSIT ACT OF THE PHILIPPINES (R.A. 6426)

Definition
Foreign currency deposits refer to funds in foreign currencies which are accepted and held by
authorized banks in the regular course of business with the obligation to return an equivalent
amount to the owner thereof, with or without interest. The purpose of this law, when it was
enacted, was to protect foreign currency deposits in order to encourage an inflow of foreign
capital necessary for our country's industries. The law allows foreign currencies to be
incorporated into the national reserve.

Absolute Confidentiality of Foreign Currency Deposits

a. All foreign currency deposits are absolutely confidential and cannot be examined, inquired,
or looked into by any person, government official, bureau or office, whether judicial or
administrative or legislative, or any other private or public entity.
b. Foreign currency deposits are also exempt from attachment, garnishment, or any other order
or process of any court, legislative body, government agency or any administrative body or
whatsoever. (Sec. 8, R.A. 6426)
c. Prohibited Acts and Persons Liable. The following are liable under this law:
 i. Any person or government official who, or any government bureau or office that,
examines or looks into a foreign currency deposit without the written permission
of the depositor (Sec. 8, R.A. 6426);
ii. Any official or employee of a banking institution who makes a disclosure
concerning foreign currency deposits to another, in any instance not allowed by
law (Sec. 10, R.A. 6426);
iii. Anyone who shall attach, garnish, or subject the foreign currency deposit to any
other order or process of any court, legislative body, government agency or any
other administrative body (Sec. 8, R.A. 6426); and
iv. Any person who commits a willful violation of any of the provision of Republic
Act No. 6426 or regulation issued by the Monetary Board pursuant to the said
law (Sec. 10, R.A. 6426).
d. Instances when Confidentiality of Foreign Currency Deposit is Not Absolute. Foreign
currency deposits may be examined, inquired or looked into under the limited exceptions in
R.A. 6426 and in other laws.
i. Exception under the Foreign Currency Deposit Act. Foreign currency
deposits may be examined, inquired or looked into when there is a written
permission of the depositor. (Only one exception under R.A. 6426)
ii. Exception under Other Laws
1. Directors, officers, stockholders, and related interests who contract a
loan or any form of financial accommodation with their bank or related
bank are required to execute a written waiver of secrecy of deposits
pursuant to The New Central Bank Act. (Sec. 26, R.A. 7653)
2. The Commissioner of Internal Revenue is authorized to inquire bank
deposit in relation to: (1) an application for compromise of tax liability
or a determination of a decedent’s gross estate under the National
Internal Revenue Code (R.A. 8424, as amended by R.A. 10021); and (2)
a request for tax information of specific taxpayers made by a foreign tax
authority pursuant to a tax treaty under the Exchange of Information on
Tax Matters Act of 2009 (R.A. 8424, as amended by R.A. 10021).
3. The Anti-Money Laundering Council may be authorized to examine and
inquire into the bank deposits or investments with banking or non-bank
financial institutions – (1) with court order, when there is a probable
cause that the deposits or investments are related to an unlawful activity
or a money laundering offense (Secs. 3(i) and 4 of R.A. 9160; and (2)
without need of court order, when probable cause exist that a particular
deposit or investment with any banking institution is related to a certain
predicate crimes, such as kidnapping for ransom, violation of the
Comprehensive Dangerous Drugs Act, hijacking, and other violations
under R.A. 6235, destructive arson and murder (Sec. 11 of R.A. 9160)
4. The Bangko Sentral is authorized to – (1) inquire into or examine bank
deposits and investments in the course of a periodic or special
examination to ensure compliance with the Anti-Money Laundering Act,
in accordance with the rules of examination of the Bangko Sentral (Sec.
11 of R.A. 9160, as amended); and (2) conduct annual testing which is
limited to the determination of the existence and true identity of the
owners of numbered accounts (Sec. 9 of R.A. 9160, as amended).
5. The Philippine Deposit Insurance Commission and the Bangko Sentral
may inquire into bank deposits when there is a finding of unsafe or
unsound banking practices (Sec. 8 of R.A. 3591, as amended).
 6. The Commission on Audit is authorized to examine and audit
government deposits pertaining to the revenue and receipts of, and
expenditures or uses of funds and properties, owned or held in trust by,
or pertaining to, the Government or any of its subdivisions, agencies or
instrumentalities, including government-owned and controlled
corporations with original charters (See Art. IX-D, 1987 Constitution
and Pres. Decree No. 1445)
7. The Presidential Commission on Good Government, in the contact of its
investigations to recover ill-gotten wealth accumulated by former
President Ferdinand E. Marcos, his immediate family, relatives,
subordinated and close associates, may issue subpoenas requiring the
attendance and testimony of witness and/or the production of books,
papers, contracts, records, statement of accounts and other documents.
(Sec. 3 [e], Exec. Order No. 1 [(1986)]).
iii. Exceptions under Jurisprudence on Grounds of Equity
1. (a) Account of a Non-resident Alien. The garnishment of a foreign
currency deposit account of a non-resident alien found guilty of raping a
minor was allowed on the basis of equity. (Salvacion v. Central Bank of
the Philippines, 278 S.C.R.A. 27 [(1997)])
2. (b) Account of a Co-payee of a check. A Co-payee of a check who filed a
suit for recovery of a sum of money was considered, in a pro hac vice
ruling by the Supreme Court, as a depositor in view of the distinctive
circumstances of the case. (China Banking Corporation v. Court of
Appeals, 511 S.C.R.A. 110 [(2006)].

e. Penalties of Violation of R.A. 6426 (Sec. 10):

i. imprisonment of not less than one (1) year nor more than five (5) years; or
ii. a fine of not less than Five Thousand Pesos (Php 5,000.00) nor more than
Twenty-five Thousand Pesos (Php 25,000.00); or
iii. both such fine and imprisonment at the discretion of the court

f. The following sanctions may also be imposed against a bank or any bank director and
officer for violation of the provision of R.A. 6426 and Bangko Sentral regulation issued
pursuant to said law.

i. Revocation of the authority of the bank to accept new foreign currency deposits;
ii. Administrative sanctions provided under Section 37 of the New Central Bank
Act (R.A. 7653), as may be applicable.
 UNCLAIMED BALANCE LAW

A. Definitions of terms

a. “Unclaimed Balances” shall include credits or deposits of money, bullion, security or other
evidence of indebtedness of any kind, and interest thereon with banks in favor of any person
known to be dead or who has not made further deposits or withdrawal during the preceding
ten(10) years or more.
b. “Applicant” pertains to the depositor or his successor-in-interest who requests for the
reactivation of the account which was reported by his depository bank to the Treasurer of the
Philippines pursuant to the Unclaimed Balances Law.
c. “Procedure” refers to the course of action to be complied with by the applicant in order that
his request be given due course.
d. “Covered Institution” refers to all banks, trust companies, savings and mortgage banks,
mutual building and loan associations, all banking institution of every kind, covered under
Act No. 3936, as amended by PD 679, which reported to the Treasurer of the Philippines as
unclaimed the account being applied for reactivation.
e. “ Affidavit of Undertaking” is a sworn statement executed by the responsible authorized
officer of the bank absolving the Bureau of Treasury from any liability that may arise due to
the granting of the Applicant’s request for reactivation.

B. Procedure for Reactivation of Unclaimed Balances Reported to the Treasurer of the Philippines

1. Letter Request of Depositor/Creditor. The depositor/creditor shall write his depository

bank requesting for the reactivation of his account which was included in the report of
unclaimed balanced to the Bureau of Treasury.
2. Authentication. The covered institution shall authenticate and verify the request for
reactivation and the signature of the depositor/creditor.
3. Letter Request of the Covered Institution. The depository bank shall write the Bureau of
Treasury through the authorized approving official, requesting authority to reactivate the
deposit account concerned attaching to its letter the stamped verified letter of the
depositor/creditor.
4. Deed of Undertaking. The covered institution, through its responsible authorized officer,
shall execute a Deed of Undertaking ensuring that the Bureau of Treasury and its officials
and employees shall be free and harmless from any liability once the account is reactivated.
5. Letter of Authority to Reactivate. Finding complete documentation supporting the request,
the Bureau of Treasury, through the authorized officer shall issue the authority to the covered
institution to reactivate the account.
6. Entity Requirements. In case the requesting party/deposit/creditor is a juridical
entity/person, the request must be accompanied with corresponding board resolutions and/or
Secretary’s Certificate showing that the signatory to the request to the request for reactivation
is fully authorized to transact with the Bureau of Treasury relative to the reactivation of its
account.
7. Approving Authority. The authority to reactivate on unclaimed balance account/s shall be
issued by the following officers:

I. Division Chief/Head, Law & Litigation Division Legal Service - aggregate

amount of unclaimed balance not exceeding P100,000.00.
II. Director, Legal Service - aggregate amount of unclaimed balance exceeding
P100,000.00 but not exceeding P500,000.00
 III.Deputy Treasurer of the Philippines - aggregate amount exceeding P500,000.00
but not exceeding P1,000,000.00.
IV. Treasurer of the Philippines - aggregate amount of unclaimed balances exceeding
P1,000,000.00.

C. Escheat Proceedings of Unclaimed Balances

Section 1. When an by whom petition filed. — When a person dies intestate, seized of real property in
the Philippines, leaving no heir or person by law entitled to the same, the Solicitor General or
his representative in behalf of the Republic of the Philippines, may file a petition in the Court of
First Instance of the province where the deceased last resided or in which he had estate, if he
resided out of the Philippines, setting forth the facts, and praying that the estate of the deceased
be declared escheated.

Section 2. Order for hearing. — If the petition is sufficient in form and substance, the court, by an order
reciting the purpose of the petition, shall fix a date and place for the hearing thereof, which date
shall be not more than six (6) months after the entry of the order, and shall direct that a copy of
the order be published before the hearing at least once a week for six (6) successive weeks in
some newspaper of general circulation published in the province, as the court shall be deem
best.

Section 3. Hearing and judgment. — Upon satisfactory proof in open court on the date fixed in the
order that such order has been published as directed and that the person died intestate, seized of
real or personal property in the Philippines, leaving no heir or person entitled to the same, and
no sufficient cause being shown to the contrary, the court shall adjudge that the estate of the
estate of the deceased in the Philippines, after the payment of just debts and charges, shall
escheat; and shall, pursuant to law, assign the personal estate to the municipality or city where
he last resided in the Philippines, and the real estate to the municipalities or cities, respectively,
in which the same is situated. If the deceased never resided in the Philippines, the whole estate
may be assigned to the respective municipalities or cities where the same is located. Shall estate
shall be for the benefit of public schools, and public charitable institutions and centers in said
municipalities or cities.

The court, at the instance of an interested party, or on its own motion, may order the
establishment of a permanent trust, so that the only income from the property shall be used.

Section 4. When and by whom claim to estate filed. — If a devisee, legatee, heir, widow, widower, or
other person entitled to such estate appears and files a claim thereto with the court within five
(5) years from the date of such judgment, such person shall have possession of and title to the
same, or if sold, the municipality or city shall be accountable to him for the proceeds after
deducting reasonable charges for the care of the estate; but a claim not made within the said
time shall be forever barred.

Section 5. Other actions for escheat. — Until otherwise provided by law, actions reversion or escheat
of properties alienated in violation of the Constitution or of any statute shall be governed by this
rule, except that the action shall be instituted in the province where the land lies in whole or in
part.
 THE NEW CENTRAL BANK LAW (RA 7653)

A. Characteristics and Nature of BangkoSentralngPilipinas (BSP)

a. It is a public corporation created by special law particularly RA 7653.
b. It is fully government owned and control corporation with original capital stock of P50B.
c. It is an independent central monetary authority which is governed by the Monetary Board
d. It enjoys fiscal and administrative autonomy.
e. The BSP shall be exempt for a period of five (5) years from the approval RA 7653 from all
national, provincial, municipal and city taxes, fees, charges and assessment.
f. The provisions of any general and special law, to the contrary notwithstanding, the
exportation and importation by the BangkoSentral of notes and coins, and of gold and other
metals to be used for purposes authorized under this Act, and the importations of all
equipment needed for bank note production, minting of coins, metal refining and other
security printing operations shall be fully exempt from all custom duties and consular fees
and from all other taxes, assessments and charges related to such exportation or importation.
g. Appointments n BangkoSentral, except at to those which are policy-determining, primarily
confidential or highly technical in nature, shall be made only according to Civil Service Law
and regulation: Provided that no qualification requirements for positions in BangkoSentral
shall be imposed other than those set by the Monetary Board: Provided, further, That, the
Monetary Board or Governer, in accordance with Section 15 (c) and 17(d) RA 7653,
respectively, may without need of obtaining prior approval from any government agency,
appoint personnel in the BangkoSentral whose services are deemed necessary in order not to
unduly disrupt the operations of BangkoSentral.
h. Officers and employees of BangkoSentral, including all members of the Monetary Board,
shall not engage directly or indirectly in partisan activities or take part in any election except
to vote.
i. The BangkoSentral not shall not acquire shares of any kind or accept them as collateral, and
shall not participate in the ownership and management of any enterprise, either directly or
indirectly.
j. The Bangko Sentral shall not engage in development banking and financing: Provided,
however, That outstanding loans obtained or extended for development financing shall not be
affected by the prohibition of this section.
B. Primary Responsibilities and Objectives of BSP
a. It shall provide policy directions in the areas of money, banking and credit.
b. It shall have supervision over the operation of banks and exercise such regulatory powers as
provided in RA 7653 and other pertinent laws over the operations of finance companies and
non-bank financial institutions performing quasi-banking functions, hereafter referred to as
quasi-banks, and institutions performing similar functions.
c. Its primary objective s to maintain price stability conducive to a balance and sustainable
growth of the economy.
d. It shall also promote and maintain monetary stability and the convertibility of the peso
C. Governing Body of BSP (BSP Monetary Board)
a. Composition of BSP Monetary Board
i. It is composed of seven (7) members appointed by the President of the Philippines for
a term of six (6) years.
ii. The BSP governer shall serve a chairman of the monetary board
iii. Another member of the Cabinet shall be designated by the President of the
Philippines.
iv. Five (5) members who shall come from the private sector, all of whom shall serve
full-time.
 b. Qualifications of members of the BSP Monetary Board
i. Natural-citizen of the Philippines
ii. 35 years of age with exception of BSP governer who must be 40 years of age.
iii. Of good moral character, of unquestionable integrity, of known probity and
patriotism.
iv. With recognize competence in social and economic disciplines.
c. Inhibitions and disqualifications of members of the BSP Monetary Board
i. Disqualifications imposed by RA 7653
ii. A member of the monetary board is disqualified from being a director, officer,
employee, consultant, lawyer, agent or stockholder of any bank, quasi-bank or any
other institution which is subject to supervision or examination by the BangkoSentral.
iii. The members of the Monetary Board coming from the private sector shall not hold
any other public office of public employment during their tenure.
iv. No person shall be a member of the Monetary Board if he has been connected directly
with any multilateral banking or financial institution or has a substantial internet in
any private bank in the Philippines within one (1) year prior to his appointment;
likewise, no member of the Monetary Board shall be employed in any such
institutions within two (2) years after the expiration of his term except when he serves
as an official representative of the Philippine Government to such institution.
d. Grounds for removal of members of the BSP Monetary Board by the President of the
Philippines
i. If the member is subsequently disqualified under the provisions of RA 7653.
ii. If he is physically and mentally incapacitated that he cannot discharge his duties and
responsibilities and such incapacity has lasted for more than six (6) months.
iii. If the member is guilty of acts or operations which are fraudulent or illegal character
or which are manifestly, opposed to the aims and interests of Bangko Sentral.
iv. If the member no longer possesses the qualifications specified in Section 8 RA 7653.
D. Legal Tender Power over Coins and Notes

a. Unit of Monetary Value

i. The Peso- The unit of monetary value in the Philippines is the “peso’’ which is
represented by the sign “P.”
ii. The peso is divided into one hundred (100) equal parts called “centavos,” which are
represented by the sign “c.”

b. Definition of Currency
i. The word “currency” is hereby defined, for purposes of this Act, as meaning all
Philippines notes and coins issued or circulating in accordance with the provisions of
RA 7653.

c. Exclusive Issue Power of BSP

i. The Banko Sentral shall have the sole power and authority to issue currency, within
the territory of the Philippines.
ii. No other person or entity, public or private, may put into circulation notes, coins or
any other object or document which, in the opinion of the Monetary Board, might
circulate as currency, nor reproduce or imitate the facsimiles of Banko Sentral
without prior authority of the Banko Sentral.
iii. The Monetary Board may issue such regulations as it may deem advisable in order to
prevent the circulation of foreign currency or of currency substitutes as well as to
prevent the reproduction of facsimiles of Banko Sentral notes.
 iv. The Banko Sentral shall have the authority to investigate, make arrest, conduct
searches and seizures in accordance with law, for the purpose of maintaining the
integrity of the currency.
v. Violation of this provision or any regulation issued by the Banko Sentral pursuant
thereto shall constitute an offense punishable by imprisonment of not less than five
(5) years but not more than ten (10) years. In case the Revised Penal Code provides
for a greater penalty, then that penalty shall be imposed.

d. Liability for Notes and Coins

i. Notes and coins issued by the Banko Sentral shall be liabilities of the Banko Sentral
and may be issued only against, and in amounts not exceeding , the assets of the
Banko Sentral. Said notes and coins shall be a first and paramount lien on all assets of
the Banko Sentral.
ii. The Banko Sentral’s holdings of its own notes and coins shall not be considered as
part of its currency issue and, accordingly, shall not form part of the assets or
liabilities of the Banko Sentral.

e. Legal Tender Power of BSP

i. All notes and coins issued by the Banko Sentral shall be fully guaranteed by the
government of the Republic of the Philippines and shall be legal tender in the
Philippines for all debts, both public and private.
ii. Legal Tender- It refers to the type of currency which a debtor can compel a creditor to
accept in case of obligation to pay a sum of money.

1. 5 Centavos, 10 Centavos and 25 Centavos- up to 100 only.

2. P1 Coin, P5 Coin, P 10 Coin- Up to 1,000 only.
3. P20, P50, P100, P200, P500 and P1,000 bills or notes – Unlimited legal
tender
4. Checks representing demand deposits do not have legal tender power and
their acceptance in the payment of debts, both public and private, is at the
option of the creditor: Provided however, that a check which has been
cleared and credited to the account of the creditor shall be equivalent to a
delivery to the creditor of cash in an amount equal to the amount credited
to his account. Checks produce payment only when encashed or when they
are impaired through the fault of the creditor.
iii. The Monetary Board, with the approval of the President of the Philippines, shall
prescribe the denominations, dimensions, designs, inscriptions and other
characteristics of notes issued by the Banko Sentral: Provided, however, that said
notes shall state that they are liabilities of the Banko Sentral and are fully guaranteed
by the Government of the Republic of the Philipines. Said notes shall bear the
signatures in facsimile, of the President of the Philippines and of the Governor of the
Banko Sentral.
iv. Similarly, the Monetary Board, with the approval of the President of the Philippines,
shall prescribe the weight, fineness, designs, denominations and other characteristics
of the coins issued by the Bangko Sentral. In the minting of coins, the Monetary
Board shall give full consideration to the availability of suitable metals and to their
relative prices and cost of minting.

f. Printing of Notes and Minting of Coins

 i. The Monetary Board shall prescribe the amounts of the notes and coins to be printed
and minted, respectively, and the conditions to which the printing and the minting of
coins shall be subject. The Monetary Board shall have the authority to contract
institutions, mints or firms for such operation.
ii. All expenses incurred in the printing of notes and the minting of coins shall be for the
account of the BAnko Sentral.

g. Interconvertibility of currency
i. The Banko Sentral shall exchange, on demand and without charge, Philippine currency
of any denomination for the Philippine notes and coins of any other denomination
requested. If for any reason the Banko Sentral is temporarily unable to provide notes
and coins of any other denomination requested, it shall meet its obligations by
delivering notes and coins of the denominations which most nearly approximate those
requested.

h. Replacement of Currency Unfit for Circulation

i. The Banko Sentral shall withdraw from circulation and shall demonetize all notes and
coins which for any reason whatsoever are unfit for circulation and shall replace them
by adequate notes and coins: Provided, however that the Banko Sentral shall not
replace notes and coins the identification of which is impossible, coins which show
signs of filing,clipping or perforation, and notes which have lost more than two-fifths
(2/5) of their surface or all of the signatures inscribed thereon. Notes and coins in such
mutilated conditions shall be withdrawn from circulation and demonetized without
compensation to the bearer.

i. Retirement of Old Notes and Coins

i. The Banko Sentral shall call in for replacement notes of any series or denomination
which are more than five (5) years old and coins which are more than ten (10) years
old.
ii. Notes and coins called in for replacement in accordance with this provision shall
remain legal tender for a period of one (1) year from the date of call. After this period
they shall cease to be legal tender during the following year or for such longer period
as the Monetary Board may determined, they may exchanged at par and without
charge of the Banko Sentral and by agents duly authorized by the BAnko Sentral for
this purpose. After the expiration of this latter period, the notes and coins which have
not yet been exchanged shall cease to be a liability of the Banko Sentral and shall be
demonetized. The Banko Sentral shall also demonetized all notes and coins which
have been called in and replaced.

E. Supervision and examination of banks and quasi banking institutions

a. The supervision 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 items
as the Monetary Board by an affirmative vote of (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 (12) months between annual examinations.

b. The bank concerned shall afford to the head of the appropriate supervising and examining
departments and to his authorized deputies to examine its books, cash and available assets
and general condition at any anytime 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 herein after authorized or is necessary for the prosecution of
violations in connection with the business of such institutions.
c. Banking and quasi-banking institutions which are subject to examination by the Bangko
Sentral shall pay to the Bangko Sentral, within the first (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 year as shown on its end of the month balance
sheets after deducting cash on hand and amounts due from banks, including the Bangko
Sentral and banks abroad.

F. Conservatorship of Banks

a. Grounds for placing a bank or quasi-bank under conservatorship

i. 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.

b. Responsibility of Bank Conservator appointed by BSP Monetary Board

i. To take charge of the assets, liabilities, and the management of the bank.
ii. To recognize the management of the bank.
iii. To collect all monies and debts due said institution.
iv. To exercise all powers necessary to restore its viability.
v. To report and be responsible to the Monetary Board.ent
vi. To have the power to overdue or revoke the actions of the previous manage

c. Qualifications of Bank Conservator

i. Should be competent and knowledgeable in bank operations and management.

d. Period of Conservatorship
i. The conservatorship shall not exceed one year.

e. Grounds for termination of Conservatorship

i. The Monetary Board shall terminate the conservatorship when it is satisfied that the
institution can continue to operate on its own and the conservatorship is no longer
necessary.
ii. The conservatorship shall likewise be terminated should the Monetary Board, on the
basis of the report of the conservator or of its own findings, determine that the
continuance in business of the institution would involve probable loss to its depositors
or creditors, in which case the provisions of receivership and liquidation shall apply.

G. Proceedings in Bank Receivership

a. Grounds for Bank Receivership and Liquidation

i. Bank is unable to pay its liabilities as they become due in the ordinary course of
business: Provided, that this shall not include inability to pay caused by extraordinary
demands induced by financial panic in the banking community;
ii. Bank has insufficient realizable assets, as determined by the Bangko Sentral, to meet
its liabilities; or
 iii. Bank cannot continue in business without involving probable losses to its depositors
or creditors; or
iv. Bank has willfully violated a cease and desist order under Section 37 that has become
final, involving acts or transactions which amount to fraud or a dissipation of the
assets of the institution; in which cases, the Monetary Board may summarily and
without need for prior hearing forbid the institution from doing business in the
Philippines and designate the Philippine Deposit Insurance Corporation as receiver of
the banking institution.

b. Receivers of Bank and Quasi Banks

i. PDIC for Banking Institution
ii. For a quasi-bank, any person of recognized competence in banking or finance may be
designed as receiver

c. Procedures for Bank or Quasi-Bank Receivership

i. The receiver shall immediately gather and take charge of all the assets and liabilities
of the institution, administer the same for the benefit of its creditors, and exercise the
general powers of a receiver under the Revised Rules of Court but shall not, with the
exception of administrative expenditures, pay or commit any act that will involve the
transfer or disposition of any asset of the institution: Provided, That the receiver may
deposit or place the funds of the institutions in non-speculative investments.

ii. The receiver shall determine as soon as possible, but not later than 90 days from
takeover, whether the institution may be rehabilitated or otherwise placed in such a
condition so that it may permitted to resume business with safety to its depositors and
creditors and the general public: Provided, That any determination for the resumption
of business of the institution shall be subject to prior approval of the Monetary Board.

H. Proceedings for Bank Liquidation

a. Ground for Bank Liquidation

i. If the receiver determines that the institution cannot be rehabilitated or permitted to
resume business in accordance with the next preceding paragraph, the Monetary
Board shall notify in writing the board of directors of its findings and direct the
receiver to proceed with the liquidation of the institution.

b. Procedures for Bank Liquidation

i. The receiver shall file ex parte with the proper regional trial court, and without
requirement of prior notice or any other action, a petition for assistance in the
liquidation of the institution pursuant to a liquidation plan adopted by the Philippines
Deposit Insurance Corporation for general application to all closed banks. In case of
quasi-banks, the liquidation plan shall be adopted by the Monetary Board. Upon
acquiring jurisdiction, the court shall, upon motion by the receiver after due notice,
adjudicate disputed claims against the institution, assist the enforcement of individual
liabilities of the stockholders, directors and officers, and decide on other issues as
may be material to implement the liquidation plan adopted. The receiver shall pay the
cost of the proceedings from the assets of the institution.
ii. The receiver shall convert the assets of the institution to money, dispose of the same
to creditors and other parties, for the purpose of paying the debts of such institution in
accordance with the rules on concurrence and preference of credit under the Civil
Code of the Philippines and he may, in the name of the institution, and with the
 assistance of counsel as he may retain, institute such actions as may be necessary to
collect and recover accounts and assets of, or defend any action against, the
institution. The assets of an institution under receivership or liquidation shall be
deemed in custodialegis in the hands of the receiver and shall, from the moment the
institution was placed under such receivership or liquidation, be exempt from any
order of garnishment, levy, attachment, or execution.

I. Nature of actions of Monetary Board for Conservatorship, Receivership and Liquidation

a. The actions of the Monetary Board taken for conservatorship, receivership and liquidation
shall be final and executory, and may not be restrained or set aside by the court except on the
petition for certiorari on the ground that the action taken was in excess of jurisdiction or with
such grave abuse of discretion as to amount to lack or excess jurisdiction. The petition for
certiorari may only be filed by the stockholders of record representing themajority of the
capital stock within ten (10) days from the receipt by the board of directors of the institution
of the order directing receivership, liquidation or conservatorship.
b. The designation of a conservator or the appointment of a receiver under this section shall be
vested exclusively with the Monetary Board.
c. The designation of a conservator is not a precondition to the designation of a receiver.

J. “Close Now Hear Later Order by BSP Monetary Board”

a. The “close now, hear later” doctrine has already been justified as a measure for the protection
of the public interest. Swift action is called for on the part of the BSP when it finds that a
bank is in dire straits. Unless adequate and determined efforts are taken by the government
against distressed and mismanaged banks, public faith in banking system is certain to
deteriorate to the prejudice of the national economy itself, not to mention the losses suffered
by the bank depositors, creditors, and stockholders, who all deserve the protection of the
government.
b. Due process does not necessarily require a prior hearing; a hearing or an opportunity to be
heard may be subsequent to the closure. One can just imagine the dire consequences of a
prior hearing: bank runs would be the order of the day, resulting in panic and hysteria. In the
process, fortunes may be wiped out and disillusionment will run the gamut of the entire
banking community.
c. The doctrine is founded on practical and legal considerations to obviate unwarranted
dissipation of the bank’s assets and as a valid exercise of police power to protect the
depositors, creditors, stockholders, and the general public. Swift, adequate and determined
actions must be taken against financially distressed and mismanaged banks by government
agencies lest the public faith in the banking system deteriorate to the prejudice of the national
economy.
d. Accordingly, the MB can immediately implement its resolution prohibiting a banking
institution to do business in the Philippines and, thereafter, appoint the PDIC as receiver. The
procedure for the involuntary closure of a bank is summary and expeditious in nature. Such
action of the MB shall be final and executory, but may be later subjected to a judicial
scrutiny via a petition for certiorari to be filed by the stockholders of record of the bank
representing a majority of the capital stock. Obviously, this procedure is designed to protect
the interest of all concerned, that is, the depositors, creditors and stockholders, the bank itself
and the general public. The protection afforded public interest warrants the exercise of a
summary closure.

K. Administrative sanctions on Banks and Quasi-Banks

a. Grounds for sanctioning Banks and Quasi-Banks
i. Willful violation of banking laws and rules and regulations of BSP
ii. Willful delay in submission of reports to BSP
iii. Refusal to permit examination into the affairs of the institution
iv. Willful making of false or misleading statement to the Board or the appropriate
supervising and examining department or its examiners
v. A false or misleading statement to the Board or the appropriate supervising and
examining department or its examiners, any willful failure or refusal to comply
with, or violation of, any banking law or any order, instruction or regulation issued
by the Monetary Board, or any order, instruction or ruling by the Governor
vi. Commission of irregularities
vii. Conducting business in an unsafe or unsound manner as may be determined by the
Monetary Board

b. Administrative sanctions that may imposed

i. Fines in amounts as may be determined by the Monetary Board to be appropriate,
but in no case to exceed Thirty thousand pesos (P30,000) a day for each violation,
taking into consideration the attendant circumstances, such as the nature and gravity
of the violation or irregularity and the size of the bank or quasi-bank;
ii. Suspension of rediscounting privileges or access to Bangko Sentral credit facilities;
iii. Suspension of lending or foreign exchange operations or authority to accept new
deposits or make new investments;
iv. Suspension of interbank clearing privileges; and/or
v. Revocation of quasi-banking license.