1|Page

17. What is a DOSRI account?

DOSRI stands for directors, officers and stockholder of the bank and their related
interest. Restrictions are imposed on borrowings and security transactions by directors,
officers and stockholder and those with related interest to the lending bank if the amount
of the loan or financial accommodation in in excess of 5% of the capital and surplus of
the bank or in the maximum amount permitted by law, whichever is lower.

18. What help can the BSP extend to banks in distress or banks with liquidity problem?
The BSP extend help to bank in distress by:
1. Conservatorship
Whenever, on the basis of a report submitted by the appropriate
supervising or examining department, the Monetary Board finds that a bank or
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 bank may be placed under conservatorship.
2. Receivership
The Monetary Board may summarily and without need for prior hearing
close banking institution and place it under receivership. Receivership refers
to the stage within which the PDIC manages the affairs of the closed bank and
preserves its assets for the benefit of creditors.
3. Closure
Should the Monetary Board find that any of the grounds for receivership is
applicable to a bank or quasi-bank, the Monetary Board may forbid the
institution from doing business in the Philippines and designate the PDIC as
receiver of the
banking institution.
4. Liquidation
Liquidation refers to the recovery and conversion of assets into cash for
distribution to all creditors in accordance with the rules on concurrence and
preference of credits. The Monetary Board shall have the right to intervene
and take such steps as may be necessary to protect the interests of creditors.

19. When is a bank in distress placed under conservatorship?

Whenever, on the basis of a report submitted by the appropriate supervising or
examining department, the Monetary Board finds that a bank or quasi-bank is:
1. In a state of continuing inability; or
2. Unwillingness to maintain a condition of liquidity deemed adequate to
protect the interest of depositors and creditors.

20. What are the powers of conservator?

Powers of a conservator (CARe BEAr)
1. Collect all monies and debts due to the said bank
2. To take charge of the Assets, liabilities, and the management thereof
3. REorganize, the management thereof
4. And such other powers as the monetary Board deems necessary
2|Page

5. Exercise all powers necessary to restore its viability, with the power to
overrule or revoke the actions of the previous management and board of directors
of the bank or quasi-bank
6. To bring court actions to Assail or Repudiate contracts entered into by
the bank (First Philippine International Bank v. CA, G.R. No. 115849, Jan. 24,
1996).

21. When is conservatorship terminated?

Grounds for Termination of Conservatorship by the Monetary Board
1. When the Monetary Board is satisfied that the institution can continue
to operate on its own and the conservatorship is no longer necessary;
or
2. When, on the basis of the report of the conservator or of its own
findings, the Monetary Board determines that the continuance in
business of the institution would involve probable loss to its depositors
or creditors.

22. What are the grounds for the placement of a bank under receivership?
Whenever the Monetary Board finds that a bank or quasi-bank:
1. Has willfully violated a final cease and desist order for acts and
transactions which amounts to fraud or a dissipation of the assets of
the institution;
2. Has persisted in conducting its business in an unsafe and unsound
manner;
3. Cannot continue in business without involving probable loss to its
depositors or creditors;
4. Has announced a continuous bank holiday for more than 30 days;
5. Has in any way suspended withdrawals of any deposit account;
6. Has been dormant for at least 60 days;
7. Has notified the BSP or the public of its unilateral closure;
8. Cash flow insolvency;
9. Technical insolvency except when such inability is caused by bank
run.

23. What is the maximum duration of receivership of a bank?

Under Section 30 of RA 7653 as amended by RA 11211:
The receiver shall determine as soon as possible, but not later than ninety
(90) days from takeover, whether the institution may be rehabilitated or otherwise
placed in such a condition so that it may be permitted to resume business with
safety to its depositors and creditors and the general public. 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.
The law does not provide a maximum duration for receivership because it
shall continue until the time that the bank is liquidated or rehabilitated.
3|Page

24. What are the duties of a receiver?

The receiver shall:
1. Immediately gather and take charge of all the assets and liabilities of
the institution;
2. Administer the same for the benefit of the creditors, and exercise the
general powers of a receiver under the Revised Rules of Court;
3. 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 institution in non-speculative investments;
4. Within 90 days from the take-over, the receiver shall determine
whether the institution may be rehabilitated or otherwise placed in
such a condition that it may be permitted to resume business with
safety to its depositors and creditors and the general public; and
5. If the receiver determines that the institution cannot be rehabilitated or
permitted to resume business, then the Monetary Board shall notify in
writing the board of directors of the institution of its findings and
direct the receiver to proceed with liquidation of the institution
(NCBA, Sec 30).

25. What is the distinction between liquidation and rehabilitation of banks?

Liquidation is the winding up of a bank so that assets are distributed to
those entitled to receive them. It is the process of reducing assets to cash,
discharging liabilities and returning the deposits to the depositors. Rehabilitation
contemplates a continuance of the bank activities in an effort to restore and
reinstate the bank to its former position of successful operation and solvency.

26. What is the purpose of the law on the Secrecy of Bank Deposits?
1. To encourage the people to deposit their money in banking
institutions;
2. To discourage private hoarding;
3. To encourage the people to deposit their money in banks; and
4. To discourage private hoarding, so that the funds can be used by the
bank to grant loans to assist in economic development.

27. What deposits are covered by the Law on Secrecy of Bank Deposits?
1. All deposits of whatever nature with banks or banking institutions
found in the Philippines
2. Investments in bonds issued by the Philippine government, its
branches, and institutions (R.A. 1405, Sec. 2).
3. Trust accounts

28. What are exceptions to the secrecy of bank deposits or under what instances when the
protection under the law on secrecy of bank deposits cannot be invoked?
4|Page

Instances where examination or disclosure of information about deposits

can be allowed:
1. Upon written consent of the depositor (RA 1405,Sec. 2);
2. In cases of impeachment;
3. Upon order of competent court in cases of bribery or dereliction of
duty of public officials;
4. In cases where the money deposited or invested is the subject matter of
the litigation;
5. Upon order of the Commissioner of Internal Revenue in respect of the
bank deposits of a decedent for the purpose of determining such
decedent’s gross estate (NIRC, Sec. 6[F][1]);
6. Upon the order of the Commissioner of Internal Revenue in respect of
bank deposits of a taxpayer who has filed an application for
compromise of his tax liability by reason of financial incapacity to pay
his tax liability;
7. The Commissioner of Internal Revenue is authorized to inquire into
bank deposits of a specific taxpayer upon request for tax information
from a foreign tax authority pursuant to an international convention or
agreement on tax matters to which the Philippines is a party;
8. In case of dormant accounts/deposits for at least 10 years under the
Unclaimed Balances Act (Act No. 3936, Sec. 2)
9. The prohibition against examination of bank deposit does not preclude
its garnishment to satisfy a judgment against the depositor (Oñate v.
Abrogar, G.R. No. 107303, February 21, 1994)
10. Presidential Commission on Good Government (PCGG) may require
the production of bank records material to its investigation (Opinion of
the Secretary of Justice, February 27, 1987)
11. The Anti-Money Laundering Council (AMLC) may inquire into any
deposit with any bank in case of violation of the RA 9160 or the
AMLA if there is probable cause that it is related to an unlawful
activity (RA 9160, as amended, Sec. 11)
12. The PDIC and the BSP may examine deposit accounts and all
information related to them in case of a finding of unsafe or unsound
banking practices (RA 3591, as amended, Sec. 8)
13. With court order:
i. In cases of unexplained wealth under Sec. 8 of the Anti-Graft
and Corrupt Practices Act
ii. In cases filed by the Ombudsman and upon the latter’s
authority to examine and have access to bank accounts and
records (Marquez v. Desierto, GR 138569, September 11,
2003)
14. Without court order: If the AMLC determines that a particular deposit
or investment with any banking institution is related to the following
(HK-MADS):
i. Hijacking,
ii. Kidnapping,
5|Page

iii. Murder,
iv. Destructive Arson, and
v. Violation of the Dangerous Drugs Act.
vi. Acts of Terrorism or in violation of Human Security Act.
15. In case the law is repealed, superseded or modified by any law to the
contrary.

29. What is the extent of the authority of the Anti-Money Laundering Council (AMLC) to
inquire into bank deposits?
The AMLC may inquire into or examine any particular deposit or
investment, including related accounts, with any banking institution or non-bank
financial institution upon order of any competent court in cases of violation of this
Act when it has been established that there is probable cause that the deposits or
investments involved are related:
i. To an unlawful activity as defined in Sec. 3(i); or
ii. To any money laundering offense under Sec.4
Exception: No court order shall be required in the following cases –
a. Kidnapping,
b. Hijacking,
c. Drugs- violation of Dangerous Drugs Act,
d. Arson,
e. Murder (Sec. 11 R.A. 9160, as amended)
f. Terrorism and conspiracy to commit terrorism as defined and
penalized under RA No. 9372

30. What details of the transaction are required to be disclosed by the lender to the borrower
under the Truth and Lending Act? In what form and in what point in time should such
disclosure be made?
A creditor shall furnish to each person to whom credit is extended, prior to
the consummation of the transaction, a clear statement in writing setting forth, to
the extent applicable and in accordance with rules and regulations prescribed by
the Board, the following information:
a. The cash price or delivered price of the property or service to be
acquired;
b. The amounts, if any, to be credited as down payment and/or trade in;
c. The difference between the amounts set forth under clauses (1) and
(2);
d. The charges, individually itemized, which are paid or to be paid by
such person in connection with the transaction but which are not
incident to the extension of credit;
e. The total amount to be financed;
f. The finance charge expressed in terms of pesos and centavos;
g. The percentage that the finance bears to the total amount to be
financed expressed as a simple annual rate on the outstanding unpaid
balance of the obligation. [Sec. 4]
6|Page

31. What is the objective of the Philippine Deposit Insurance Corporation Act?
PDIC was established:
1. To promote and safeguard the interests of the depositing public by way of
providing insurance coverage on all insured deposits;
2. To strengthen the mandatory deposit insurance coverage system;
3. To generate, preserve, and maintain faith and confidence in the country's
banking system;
4. To protect the Philippine Banking System from illegal schemes and
machinations.

32. What kinds of deposits are covered under Philippine Deposit Insurance Corporation Act?
Deposits of all commercial banks, savings and mortgage banks, rural
banks, private development banks, cooperative banks, savings and loan
associations, as well as branches and agencies in the Philippines of foreign banks
and all other corporations authorized to perform banking functions in the
Philippines, are insured with PDIC. As for Philippine banks with branches outside
the country, RA 9576 stipulates that subject to the approval of the Board of
Directors, any insured bank with branch outside the Philippines may elect to
include for insurance its deposit obligations payable at such branch.

Foreign currency deposits are also insured by PDIC pursuant to RA 6426

(“An act instituting a foreign currency deposit system in the Philippines, and for
other purposes”) and Central Bank (CB) Circular No. 1389. Depositors may
receive payment in the same currency in which the insured deposit is
denominated.
Exclusions from deposit insurance coverage as stipulated in R.A. No.
9576:
1. Investment products such as bonds, securities and trust accounts;
2. Deposit accounts which are unfunded, fictitious or fraudulent;
3. Deposit products constituting or emanating from unsafe and unsound banking
practices;
4. Deposits that are determined to be proceeds of an unlawful activity as defined
under the Anti-Money Laundering Law.

33. Who exercises the powers and functions of the Philippine Deposit Insurance
Corporation?
Under Section 2 of RA No. 3591, “the powers and functions of the
Corporation shall be vested in a board of directors consisting of three (3)
members one of whom shall be the governor of the Central Bank of the
Philippines and two of whom shall be citizens of the Republic of the Philippines
to be appointed by the President of the Philippines with the advice and consent of
the Commission on Appointments”.
The Board of Directors shall have the authority:
1. To prepare and issue rules and regulations as it considers necessary for
the effective discharge of its responsibilities;
7|Page

2. To direct the management, operations and administration of the

Corporation;
3. To appoint, fix the remunerations and remove all officers and
employees of the Corporation, subject to the Civil Service Law; and
4. To authorize such expenditures by the Corporation as are in the interest
of the effective administration and operation of the Corporation.1âшphi1