BANKING - ATTY.

CABANEIRO MCL Maghirang

DOSRI(Directors, Officers, Stockholders, and Related Interest )

Single Borrower’s Limit (SBL):

Except as the Monetary Board may otherwise prescribe for reasons of national interest, the total amount
of loans, credit accommodations and guarantees as may be defined by the Monetary Board that may be
extended by a bank to any person, partnership, association, corporation or other entity shall at no time
exceed 25% of the net worth of such bank.

The basis for determining compliance with Single Borrower’s Limit is the total credit commitment of the
bank to the borrower.

Unless the Monetary Board prescribes otherwise, the total amount of loans, credit accommodations and
guarantees prescribed in the preceding paragraph may be increased by an additional 10% of the net
worth of such bank provided the additional liabilities of any borrower are adequately secured by trust
receipts, shipping documents, warehouse receipts or other similar documents transferring or securing
title covering readily marketable, non-perishable goods which must be fully covered by insurance

General Banking Law imposes restrictions (not total prohibition) on borrowings and security arrangement
by directors, officers, and stockholders of the bank. These restrictions apply when the loan or financial
accommodation of DORSI is in excess of 5% of the capital and surplus of the lending bank or in the
maximum amount permitted by law, whichever is lower.

GENERAL RULE: a director or officer of any bank shall neither, directly or indirectly, for himself or
as the representative or agent of others, borrow from such bank; nor become a guarantor,
indorser or surety for loans from such bank to others, or in any manner be an obligor or incur any
contractual liability to the bank.
EXCEPTION:when there is a written approval of the majority of all the directors of the bank, excluding
the director concerned. The required approval shall be entered upon the records of the bank and a copy
of such entry shall be transmitted forthwith to the appropriate supervising and examining department of
the BSP

1. The borrower is a director, officer, or any

stockholder of a bank and related interest;
2. He contracts a long or any form of financial
accommodation

3. The loan or financial accommodation is from:

• His Bank

• A bank that is a subsidiary of a bank

holding company of which both his bank
and the lending company
Requisites for Restrictions on are subsidiaries; or

DOSRI accounts: • A bank in which a controlling portion of

the shares is owned by the same interest
that owns a
controlling portion of the shares of his
bank

4. The loan or financial accommodation of the

DOS, singly or with that of his related interest,
is in excess of 5% of the capital and surplus of
the lending bank or in maximum amount
permitted by law, whichever is lower.

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BANKING - ATTY. CABANEIRO MCL Maghirang

• Exposures includes load or any security

arrangement like guaranty, suretyship and the
like.
Transactions Covered: • It refers to transactions which involve the grant,
renewal or extensions or increase of any loan,
discount, credit or advance in any form
whatsoever.

PROHIBITED ACTS
Prohibited acts:Section 55 of RA 8791 or “The General Banking Law of 2000” provides,No
director, officer, employee, or agent of any bank shall —

Make false entries in any bank report or statement or participate in any fraudulent FALSE REPORT
transaction, thereby affecting the financial interest of, or causing damage to, the
bank or any person;

Without order of a court of competent jurisdiction, disclose to any unauthorized DISCLOSE

person any information relative to the funds or properties in the custody of the CONFIDENTIAL
bank belonging to private individuals, corporations, or any other entity: Provided, INFORMATION
That with respect to bank deposits, the provisions of existing laws shall prevail;

Accept gifts, fees or commissions or any other form of remuneration in connection ACCEPT GIFTS,
with the approval of a loan or other credit accommodation from said bank;
FEES OR
  COMMISSIONS

Overvalue or aid in overvaluing any security for the purpose of influencing in any OVERVALUE
way the actions of the bank or any bank; or

Outsource inherent banking functions. OUTSOURCE

BANKING
FUNCTIONS

DORSI RULES: 3 CEILINGS

[Link] Ceiling -Total allowable outstanding direct credit accommodation to DOSRI

2. Aggregate Ceilings -Refers to the total credit Accomodation to DOSRI.

3. Ceiling on Unsecured -There must be a specific resolution that must be passed by the
Loans Board of Directors without the participation of the interested directors.

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BANKING - ATTY. CABANEIRO MCL Maghirang

The case of PERFECTO YASAY

Facts: On August 22, 2019, Perfecto Yasay, Jr. was arrested after a court in Manila issued a warrant of
arrest for allegedly violating various banking laws Yasay was accused of violating RA 8791 and RA 7653,
or the General Banking Law and the New Central Bank Act, for his involvement in a loan from Banco
Filipino Savings and Mortgages Bank.

How is a loan approved? The law requires the majority of “all the directors of the bank,” and not just a
majority of the directors present in the board meeting. The law therefore refers to all the directors who
were elected under the bank’s articles and bylaws. 

He was accused of violation the following provisions:

Violation Law Criminal Sanction Administrative Sanctions

A bank shall grant loans New Central Bank Act (RA 11211)
and other credit SEC. 36. Proceedings Upon Violation of This
accommodations only in Act and Other Banking Laws, Rules,
amounts and for the Regulations, Orders or Instructions.
periods of time essential
for the effective Whenever a bank, quasi-bank, including their
completion of the subsidiaries and affiliates engaged in allied
Willful refusal operations to be activities or other entity which under this Act
to stop the financed. Such grant of or special laws is subject to Bangko Sentral
conduct of loans and other credit supervision or whenever any person or entity New Central Bank Act (RA 11211)
u n s a f e , accommodations shall be willfully violates this Act or other pertinent SEC. 37. Administrative Sanctions
hazardous, consistent with safe and banking laws being enforced or implemented on Supervised Entities
and unsound sound banking practices.
by the Bangko Sentral or any order,
b a n k i n g instruction, rule or regulation issued by the The imposition of administrative
practices The purpose of all loans Monetary Board, the person or persons sanctions shall be fair, consistent
and other credit responsible for such violation shall unless and reasonable. Without prejudice
accommodations shall be otherwise provided in this Act be punished by to the criminal sanctions against
stated in the application a fine of not less than Fifty thousand pesos the culpable persons provided in
and in the contract (₱50,000) nor more than Two million pesos Sections 34, 35, and 36 of this Act,
between the bank and (₱2,000,000) or by imprisonment of not less the Monetary Board may, at its
the borrower. than two (2) years nor more than ten (10) discretion, impose upon any bank,
years, or both, at the discretion of the court. quasi-bank, including their
subsidiaries and affiliates engaged
in allied activities, or other entity
All DOSRI loans should which under this Act or special
be reported to the laws are subject to the Bangko
Bangko Sentral within the Sentral supervision, and/or their
deadline prescribed by New Central Bank Act (RA 11211) directors, officers or employees, for
the Monetary Board. SEC. 34. Refusal to Make Reports or Permit any willful violation of its charter or
Wilful refusal
Violations of the law and Examination. bylaws, willful delay in the
to report
regulations on DOSRI submission of reports or
d o s r i
loans are subject to Any officer, owner, agent, manager, director or publications thereof as required by
(directors,
sanctions and these are officer-in-charge of any institution willfully law, rules and regulations
o ffi c e r s ,
quite severe. Section 36 refuses to file the required report or permit any
stockholders,
provides that “the office lawful examination into the affairs of such
and other
of any bank director or institution shall be punished by a fine of not
r e l a t e d
officer who violates the less than P50,000 nor more than P100,000 or
interest)
provisions of this Section by imprisonment of not less than one (1) year
loans
may be declared vacant nor more than five (5) years, or both, in the
and the director or officer discretion of the court.
shall be subject to the
penal provisions of the
New Central Bank Act.”

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BANKING - ATTY. CABANEIRO MCL Maghirang

REPUBLIC ACT (RA) NO. 9160 OTHERWISE KNOWN AS THE “ANTI-MONEY

LAUNDERING ACT OF 2001, AS AMENDED

MONEY LAUNDERING is committed by any person who, knowing that any monetary instrument or
property represents, involves, or relates to the proceeds of any unlawful activity. It is committed by the
following: 

a) Any person knowing that any monetary d) attempts or conspires to commit money
instrument or property represents, involves, or laundering offenses referred to in paragraphs
relates to, the proceeds of any unlawful (a), (b) or (c); 

activity, transacts or attempts to transact said e) aids, abets, assists in or counsels the
monetary instrument or property.
commission of the money laundering offenses
b) Any person knowing that any monetary referred to in paragraphs (a), (b) or (c) above;
instrument or property involves the proceeds and 

of any unlawful activity, performs or fails to f) performs or fails to perform any act as a
perform any act as a result of which he result of which he facilitates the offense of
facilitates the offense of money laundering money laundering referred to in paragraphs
referred to in paragraph (a) above.
(a), (b) or (c) above.

c) conceals or disguises the true nature, source, g) Money laundering is also committed by any
location, disposition, movement or ownership covered person who, knowing that a covered
of or rights with respect to said monetary or suspicious transaction is required under
instrument or property; 
this Act to be reported to the Anti-Money
Laundering Council (AMLC), fails to do so.

Who are the covered persons supervised or regulated by the BSP?

• Banks;
• Foreign exchange dealers;

• Offshore banking units;

• Money changers;

• Quasi-banks;
• Money remittance or transfer
• Trust entities;
companies;

• Non-stock savings and loan • Electronic money issuers; and

associations;
• All other persons and their subsidiaries
• Pawnshops; and affiliates supervised or regulated by
the BSP.

Who are the covered persons supervised or regulated by the SEC?

i. Securities dealers, brokers, salesmen, investment houses and other similar persons
managing securities or rendering services as investment agent, advisor, or consultant;

ii. Mutual funds, close-end investment companies, common trust funds, and other
similar persons; and

iii. Other entities administering or otherwise dealing in currency, commodities or financial

derivatives based thereon, valuable objects, cash substitutes and other similar monetary
instruments or property supervised or regulated by the SEC

Who are the covered persons supervised or regulated by the Insurance Commission?

Insurance companies, pre-need companies and all other persons supervised or regulated by
the IC.
How is money laundering prosecuted?

(a)Any person may be charged with and convicted of both the offense of money laundering and the
unlawful activity as herein defined.

(b) The prosecution of any offense or violation under this Act shall proceed independently of any
proceeding relating to the unlawful activity 

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BANKING - ATTY. CABANEIRO MCL Maghirang

What is the composition of the AMLC?

The Anti-Money Laundering Council is hereby created and shall be composed of the Governor of the
Bangko Sentral ng Pilipinas as Chairman, the Commissioner of the Insurance Commission and the
Chairman of the Securities and Exchange Commission, as members.

What is a freeze order?

Refers to a provisional remedy aimed at blocking or restraining monetary instruments or properties in

any way related to an unlawful activity, as herein defined, from being transacted, withdrawn, deposited,
transferred, removed, converted, concealed, or otherwise moved or disposed without affecting the
ownership thereof. (2018 IRR)

How do you freeze monetary instruments?

1. Upon verified ex parte petition by the AMLC

2. After determination that probable cause exists that any monetary instruments or property is in any
way related to an unlawful activity

3. Court of Appeals (CA) may issue a freeze order

4. Effective immediately, and which shall not exceed six (6) months depending upon circumstances of
the case

How will a bank inquiry as ordered by the Court proceed?

1. By authority of the Council, the AMLC Secretariat shall file before the Court of Appeals, through the
Office of the Solicitor General, an Ex Parte Application for the Issuance of Bank Inquiry Order to
examine or inquire into any particular deposit or investment account that is related an unlawful
activity or ML offense.

2. A court order ex parte must be obtained before the AMLC can inquire into the related accounts.

3. No prior criminal charge, pendency of a case, or conviction for an unlawful activity or ML offense is
necessary for the filing or the resolution of an application for issuance of bank inquiry order.

4. The authority to inquire into or examine the main account and the related accounts shall comply with
the requirements of Article III, Sections 2 and 3 of the 1987 Constitution.

5. The Court of Appeals shall resolve the application within twenty-four (24) hours from filing thereof.

How do you conduct bank examination by the BSP?

In the course of a periodic or special examination of covered persons under its supervision and/or
regulation, the BSP may inquire into or examine bank accounts, including customer identification,
account opening, and transaction documents, for the purpose of checking compliance with the
requirements of the AMLA and TFPSA, their respective IRR, and other AMLC issuances.

How will civil forfeiture proceed?

1. Determination that probable cause exists that any monetary instrument or property is in any way
related to an unlawful activity or ML offense.

2. AMLC shall file with the regional trial court, through the Office of the Solicitor General, a verified
petition for civil forfeiture.

3. The Regional Trial Court may issue an asset preservation order in accordance with “Rule of
Procedure in Cases of Civil Forfeiture, Asset Preservation, and Freezing of Monetary Instrument,
Property, or Proceeds Representing, Involving, or Relating to an Unlawful Activity or Money
Laundering Offense under Republic Act No. 9160, as Amended” (A.M. No. 05-11-04-SC).

4. Order shall be effective immediately, forbidding any transaction, withdrawal, deposit, transfer,
removal, conversion, concealment or other disposition of the subject monetary instrument or
property.

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BANKING - ATTY. CABANEIRO MCL Maghirang

REPUBLIC ACT No. 11211- An Act Amending Republic Act Number 7653,
Otherwise Known as "The New Central Bank Act", and for Other Purposes

Why is there a need to amend R.A. 7653?

According to Espenilla, the new BSP Charter embodies a package of reforms that will further align its
operations with global best practices, improve the BSP’s corporate viability, and enhance its capacity for
crafting proactive policies amid rising interlinkages in the financial markets and the broader economy

Under the inflation targeting framework, the BSP focuses mainly on achieving price stability, instead of
targeting monetary aggregates, as the ultimate objective of monetary policy.

What is the constitutional basis of this act?

Sec. 20, Art. XII of the 1987 Constitution - The Congress shall establish an independent central
monetary authority, the members of whose governing board must be natural-born Filipino citizens, of
known probity, integrity, and patriotism, the majority of whom shall come from the private sector.


What is the amended capital of the BSP?

The capital as amended, from 50 Billion to 200 Billion pesos provided that the increase in capitalization
shall be funded solely from the declared dividends of the Bangko Sentral in favor of the National
Government.

What is the main objective of the BSP?

To maintain price stability conducive to a balanced and sustainable growth of the economy and
employment.

What institutions are supervised and examined by the BSP?

Quasi- banks (e.g. First Metro Investment Corporation, RCBC Capital Corporation) and all other
subsidiaries and affiliates engaged in allied activities


What are the powers and mandate of the BSP?

1. Supervisory function among all financial institution: transfer of shares among banks

2. Policy formulation: data gathering compulsion (private or public entry)

3. Quasi-judicial body: asset forfeiture on dubious financial transaction

Assets of the BSP Privileges of the BSP

Starting capital (two-hundred billion pesos)
 Tax exemptions (national and local)

Contingency fund Ample protection (writ of injunction or temporary
restraining order)

Attachment proceedings (collateral loans and
advancements)



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