The capital of the Bangko Sentral shall be Fifty billion pesos
Session1: The Philippine Financial System - The Players
The Bangko Sentral ng Pilipinas:
• Philippine Constitution, Article XII, Section 20
Section 20. 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. They shall also be subject to such other
qualifications and disabilities as may be prescribed by law. The authority shall
provide policy direction in the areas of money, banking, and credit. It shall have
supervision over the operations of banks and exercise such regulatory powers as
may be provided by law over the operations of finance companies and other
institutions performing similar functions.
Until the Congress otherwise provides, the Central Bank of the Philippines
operating under existing laws, shall function as the central monetary authority.
• The New Central Bank Act; Article I
ARTICLE I
CREATION, RESPONSIBILITIES AND CORPORATE POWERS OF THE
BANGKO SENTRAL
Section 1. Declaration of Policy. - The State shall maintain a central
monetary authority that shall function and operate as an independent and
accountable body corporate in the discharge of its mandated responsibilities
concerning money, banking and credit. In line with this policy, and considering its
unique functions and responsibilities, the central monetary authority established
under this Act, while being a government-owned corporation, shall enjoy fiscal
and administrative autonomy.
Section 2. Creation of the Bangko Sentral. - There is hereby established
an independent central monetary authority, which shall be a body corporate
known as the Bangko Sentral ng Pilipinas, hereafter referred to as the Bangko
Sentral.
(P50,000,000,000), to be fully subscribed by the Government of the Republic,
hereafter referred to as the Government, Ten billion pesos (P10,000,000,000) of
which shall be fully paid for by the Government upon the effectivity of this Act and
the balance to be paid for within a period of two (2) years from the effectivity of
this Act in such manner and form as the Government, through the Secretary of
Finance and the Secretary of Budget and Management, may thereafter determine.
Section 3. Responsibility and Primary Objective. - The Bangko Sentral
shall provide policy directions in the areas of money, banking, and credit. It shall
have supervision over the operations of banks and exercise such regulatory
powers as provided in this Act 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.
The primary objective of the Bangko Sentral is to maintain price stability
conducive to a balanced and sustainable growth of the economy. It shall also
promote and maintain monetary stability and the convertibility of the peso.
Section 4. Place of Business. - The Bangko Sentral shall have its principal
place of business in Metro Manila, but may maintain branches, agencies and
correspondents in such other places as the proper conduct of its business may
require.
Section 5. Corporate Powers. - The Bangko Sentral is hereby authorized
to adopt, alter, and use a corporate seal which shall be judicially noticed; to enter
into contracts; to lease or own real and personal property, and to sell or otherwise
dispose of the same; to sue and be sued; and otherwise to do and perform any
and all things that may be necessary or proper to carry out the purposes of this
Act.
The Bangko Sentral may acquire and hold such assets and incur such
liabilities in connection with its operations authorized by the provisions of this Act,
or as are essential to the proper conduct of such operations.
The Bangko Sentral may compromise, condone or release, in whole or in
part, any claim of or settled liability to the Bangko Sentral, regardless of the
amount involved, under such terms and conditions as may be prescribed by the
Monetary Board to protect the interests of the Bangko Sentral
• General Banking Law, Sections 3, 4-7
Section 3. Definition and Classification of Banks. -
3.1. Banks shall refer to entities engaged in the lending of funds obtained in the
form of deposits. (2a)
3.2. Banks shall be classified into:
(a) Universal banks;
(b) Commercial banks;
(c) Thrift banks, composed of: (i) Savings and mortgage banks, (ii) Stock
savings and loan associations, and (iii) Private development banks, as
defined in the Republic Act No. 7906 (hereafter the Thrift Banks Act );
(d) Rural banks, as defined in Republic Act No. 73S3 (hereafter the Rural
Banks Act );
(e) Cooperative banks, as defined in Republic Act No 6938 (hereafter the
Cooperative Code );
(f) Islamic banks as defined in Republic Act No. 6848, otherwise known as
the Charter of Al Amanah Islamic Investment Bank of the Philippines ;
and
(g) Other classifications of banks as determined by the Monetary Board of
the Bangko Sentral ng Pilipinas. (6-Aa)
CHAPTER II
AUTHORITY OF THE BANGKO SENTRAL
Section 4. Supervisory Powers. The operations and activities of banks shall be
subject to supervision of the Bangko Sentral. Supervision shall include the
following:
4.1. The issuance of rules of, conduct or the establishment standards of operation
for uniform application to all institutions or functions covered, taking into
consideration the distinctive character of the operations of institutions and the
substantive similarities of specific functions to which such rules, modes or
standards are to be applied;
4.2 The conduct of examination to determine compliance with laws and
regulations if the circumstances so warrant as determined by the Monetary Board;
4.3 Overseeing to ascertain that laws and regulations are complied with;
4.4 Regular investigation which shall not be oftener than once a year from the last
date of examination to determine whether an institution is conducting its business
on a safe or sound basis: Provided, That the deficiencies/irregularities found by or
discovered by an audit shall be immediately addressed;
4.5 Inquiring into the solvency and liquidity of the institution (2-D); or
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 re-
lending 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 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 function 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 therefore 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. (2-Ba)
Types of Banks:
• Thrift Banks (Thrift Banks Act; Sections 3 and 10)
Sec. 3. Definition of Terms. — For purposes of implementing this Act, the
following definitions shall apply: (a) Thrift banks shall include savings and
mortgage banks, private development banks, and stock savings and loans
associations organized under existing laws, and any banking corporation that may
be organized for the following purposes: (1) Accumulating the savings of
depositors and investing them, together with capital loans secured by bonds,
mortgages in real estate and insured improvements thereon, chattel mortgage,
bonds and other forms of security or in loans for personal or household finance,
whether secured or unsecured, or in financing for homebuilding and home
development; in readily marketable and debt securities; in commercial papers and
accounts receivables, drafts, bills of exchange, acceptances or notes arising out
of commercial transactions; and in such other investments and loans which the
Monetary Board may determine as necessary in the furtherance of national
economic objectives; (2) Providing short-term working capital, medium- and long-
term financing, to businesses engaged in agriculture, services, industry and
housing; and (3) Providing diversified financial and allied services for its chosen
market and constituencies specially for small and medium enterprises and
individuals. (b) Monetary Board shall mean the Monetary Board of the Bangko
Sentral ng Pilipinas. (c) Bangko Sentral shall refer to the Bangko Sentral ng
Pilipinas created under Republic Act No. 7653.
Sec. 10. Powers of Thrift Banks. — In addition to powers granted it by this Act
and existing laws, any thrift bank may: (a) Accept savings and time deposits; (b)
Open current or checking accounts: Provided, That the thrift bank has net assets
of at least Twenty million pesos (P20,000,000) subject to such guidelines as may
be established by the Monetary Board; and shall be allowed to directly clear its
demand deposit operations with the Bangko Sentral and the Philippine Clearing
House Corporation; (c) Act as correspondent for other financial institutions; (d) Act
as collection agent for government entities, including but not limited to, the
Bureau of Internal Revenue, Social Security System, and the Bureau of Customs;
(e) Act as official depository of national agencies and of municipal, city or
provincial funds in the municipality, city or province where the thrift bank is
located, subject to such guidelines as may be established by the Monetary Board;
(f) Rediscount paper with the Philippine National Bank, the Land Bank of the
Philippines, the Development Bank of the Philippines, and other government-
owned or -controlled corporations. Said institutions shall specify the nature of
paper deemed acceptable for rediscount, as well as rediscounting rate to be
charged by any of these institutions; and (g) Issue mortgage and chattel mortgage
certificates, buy and sell them for its own account or for the account of others, or
accept and receive them in payment or as amortization of its loan. Such mortgage
and chattel mortgage certificates shall be issued exclusively in national currency
and exclusively for the financing of equipment loans, mortgage loans for the
acquisition of machinery and other fixed installations, conservation, enlargement
or improvement of productive properties and real estate mortgage loans for: (1)
the construction, acquisition, expansion or improvement of rural and urban
properties; (2) the refinancing of similar loans and mortgages; and (3) such other
purposes as may be authorized by the Monetary Board. A thrift bank shall
coordinate the amounts and maturities of its certificates with those of its loans, so
as to ensure adequate cash receipts for the payment of principal and interest at
the time they become due. The bank shall accept its own certificates at least at
the actual price of issue, in any prepayment of loans which mortgage or chattel merchants and in general, the people of the rural communities, and to supervise
mortgage debtors may wish to make: Provided, That the date of maturity of the the operation of such banks.
certificates is not later than the date on which the payment would otherwise
become due, in the absence of the aforesaid prepayment; (h) Purchase, hold and • Cooperative Banks (Cooperative Code, Article 6, 7 and 100)
convey real estate under the same conditions as those governing commercial
banks as specified under Section 25 of Republic Act No. 337; (i) Engage in quasi-
banking and money market operations; (j) Open domestic letters of credit; (k) Section 6. Organization of Cooperatives. A Cooperative may be organized and
Extend credit facilities to private and government employees: Provided, That in registered by at least fifteen (15) persons for any or all of the following purposes:
the case of a borrower who is a permanent employee or wage earner, the
treasurer, cashier or paymaster of the office employing him is authorized,
(1) To encourage thrift and savings mobilization among the members;
notwithstanding the provisions of any existing law, rules and regulations to the
contrary, to make deductions from his salary, wage or income pursuant to the
terms of his loan, to remit deductions to the thrift bank concerned, and collect (2) To generate funds and extend credit to the members for productive
such reasonable fee for his services; (l) Extend credit against the security of and provident purposes;
jewelry, precious stones and articles of similar nature, subject to such rules and
regulations as the Monetary Board may prescribe; and (m) Offer other banking (3) To encourage among members systematic production and marketing;
services as provided in Section 72 of Republic Act No. 337 and Republic Act No.
6426, as amended. Thrift banks may perform the services under subsections (b), (4) To provide goods and services and other requirements to the
(d), (e), (g) and (i) only upon prior approval of the Monetary Board. Nothing in this members;
Section shall be construed as precluding a thrift bank from performing, with prior
approval of the Monetary Board, commercial banking services, or from operating (5) To develop expertise and skills among its members;
under an expanded banking authority, nor from exercising, whenever applicable
and not inconsistent with the provisions of this Act and Bangko Sentral
(6) To acquire lands and provide housing benefits for the members;
regulations, and such other powers incident to a corporation.

• Rural Banks (Rural Banks Act; Sections 2 and 3) (7) To insure against losses of the members;

Sec. 2. The State hereby recognizes the need to promote comprehensive rural
development with the end in view of attaining acquitable distribution of
opportunities, income and wealth; a sustained increase in the amount of goods
and services produced by the nation of the benefit of the people; and in
expanding productivity as a key raising the quality of life for all, especially the
underprivileged.
(8) To promote and advance the economic, social and educational status
of the members;
(9) To establish, own, lease or operate cooperative banks, cooperative
wholesale and retail complexes, insurance and agricultural/industrial
processing enterprises, and public markets;

Towards these ends, the State hereby encourages and assists in the
establishment of rural banking system designed to make needed credit available
and readily accessible in the rural areas on reasonable terms.
Sec. 3. In furtherance of this policy, the Monetary Board of the Central Bank of
the Philippines shall formulate the necessary rules and regulations governing the
establishment and operation of rural banks for the purpose of providing adequate
credit facilities to farmers and merchants, or to cooperatives of such farmers and
(10) To coordinate and facilitate the activities of cooperatives; and
(11) To undertake any and all other activities for the effective and efficient
implementation of the provisions of this Code.
Section 7. Objectives of Cooperative. - The primary objective of every
cooperative is to provide goods and services to its members and thus enable
them to attain increased income and savings, investments, productivity, and
purchasing power and promote among them equitable distribution of net surplus
through maximum utilization of economies of scale, cost-sharing and risk-sharing
without, however, conducting the affairs of the cooperative for eleemosynary or
charitable purposes.
A cooperative shall provide maximum economic benefits to its members, teach
them efficient ways of doing things in a cooperative manner, and propagate
cooperative practices and new ideas in business and management and allow the
lower income groups to increase their ownership in the wealth of this nation.
Section 100. Definition, Classification and Functions. - A cooperative bank is
one organized by the majority shares of which is owned and controlled by
cooperatives primarily to provide financial and credit services to cooperatives.
The term cooperative bank shall include cooperative rural banks.
A cooperative bank may perform the following functions:
(1) To carry on banking and credit services for the cooperatives;
(2) To receive financial aid or loans from the Government and the Central
Bank of the Philippines for and in behalf of the cooperative banks and
primary cooperatives and their federations engaged in business and to
supervise the lending and collection of loans;
(3) To mobilize savings of its members for the benefit of the cooperative
movement;
(4) To act as a balancing medium for the surplus funds of cooperatives
and their federations;
(5) To discount bills and promissory notes issued and drawn by
cooperatives;
(6) To issue negotiable instruments to facilitate the activities of
cooperatives;
(7) To issue debentures subject to the approval of and under conditions
and guarantees to be prescribed by the Government;
(8) To borrow money from banks and other financial institutions within the
limit to be prescribed by the Central Bank; and
(9) To carry out all other functions as may be prescribed by the
Authority: Provided, That the performance of any banking function shall
be subject to prior approval by the Central Bank of the Philippines.
• Development Bank of the Philippines (Revised Charter of the
Development Bank of the Philippines; Sections 2 and 3)
Sec. 2. Name, Purpose and Domicile. The Development Bank of the Philippines,
hereinafter called the Bank, operating under the provisions of Republic Act No.
85, as amended, shall henceforth operate under the provisions of this 1986
Revised Charter. The Bank shall be a body corporate and shall exist for a period
of fifty years.
The primary purpose of the Bank shall be to provide banking services principally
to service the medium and long term needs of agricultural and industrial
enterprises, particularly in the country-side and preferably for small and medium
scale enterprises; Provided, however, that the pursuit of these objectives shall be
undertaken within the context of a financially viable and stable banking
institutions; Provided, further that the Bank shall continue to be classified as a
development Bank, Provided, finally, that unless otherwise provided herein, the
Bank may perform all other functions of a thrift bank.
The Bank's principal office and place of business shall be in the National Capital
Region, also known as Metro Manila. It may open and maintain branches,
agencies or other offices at such places in the Philippines as its Board of
Directors may deem advisable, with the prior approval of the Monetary Board of
the Central Bank of the Philippines.
Sec. 3. Corporate Powers. The Development Bank of the Philippines shall have
the power.
(a) To accept such deposits as are allowed thrift banks under existing law
and Central Bank regulations, including but not limited to demand,
savings, and time deposits.
(b) To grant loans for the establishment, development or expression of
any agricultural or industrial enterprise;
(c) To accept and manage trust funds and properties and carry on the
business of a trust corporation;
 (d) To act as official government depository with authority to maintain
deposits of the government, its subdivisions, branches, and
instrumentalities, and of government-owned or controlled corporations,
subject to such rules and regulations as the Monetary Board may
prescribe;
(e) To acquire, assign, or otherwise dispose of marketable securities and
other debt instruments which are essential to the effective conduct of its
general banking activities;
(f) To enter into such contracts of guaranty on suretyship as are generally
allowed domestic banking institutions under the General Banking Act; and
(g) To adopt, amend, or charge its By-laws; to adopt, alter and use a seal;
to make contracts; to sue and be sued; and to exercise the general
powers of a corporation mentioned in the Corporation Code of the
Philippines, and of a thrift bank under the General Banking Act, insofar as
such powers are not inconsistent or incompatible with the provisions of
this Charter.
Unless otherwise provided in this Charter, the exercise of the above-mentioned
powers on banking shall be subject to applicable law, as well as regulations
promulgated by the Central Bank of the Philippines.
• Land Bank of the Philippines (Republic Act 3844 as amended; Sections
74 and 75)
CHAPTER IV
LAND BANK
Section 74. Creation - To finance the acquisition by the Government of landed
estates for division and resale to small landholders, as well as the purchase of the
landholding by the agricultural lessee from the landowner, there is hereby
established a body corporate to be known as the Land Bank of the Philippines ,
hereinafter called the Bank , which shall have its principal place of business in
Manila. The legal existence of the Bank shall be for a period of fifty years counting
from the date of the approval hereof. The Bank shall be subject to such rules and
regulations as the Central Bank may from time to time promulgate.
Section 75. Powers in General - To carry out this main purpose, the Bank shall
have the power:
(1) To prescribe, repeal, and alter its own by laws, to determine its
operating policies, and to issue such rules and regulations as may be
necessary to achieve the main purpose for the creation of the Bank;
(2) To adopt, alter and use a corporate seal;
(3) To acquire and own real and personal property and to sell, mortgage
or otherwise dispose of the same;
(4) To sue and be sued, make contracts, and borrow money from both
local and foreign sources. Such loans shall be subject to approval by the
President of the Philippines and shall be fully guaranteed by the
Government of the Philippines;
(5) Upon recommendation of the Committee on Investments, to hold,
own, purchase, acquire, sell or otherwise invest, or reinvest in stocks,
bonds or other securities capable of giving the Bank a reasonably assured
income sufficient to support its financing activities and give its private
stockholders a fair return on their holdings: Provided, however, That
pending the organization of the Committee on Investments, the Bank may
exercise the powers herein provided without the recommendation of said
Committee on Investments: Provided, further, That in case of the
dissolution of the Land Bank all unsold public lands transferred to it which
may be allocated to the Government of the Philippines in the course of
liquidation of the business of the Bank shall revert to the Department of
Agriculture and Natural Resources; and
(6) To provide, free of charge, investment counselling and technical
services to landowners whose lands have been acquired by the Land
Bank. For this purpose, the Land Bank may contract the services of
private consultants.
• Al-Amanah Islamic Bank (The Charter of the Al-Amanah Islamic
Investment Bank of the Philippines; Sections 2-6)
ESTABLISHMENT AND FUNCTIONS
Section 2. Name, Domicile and Place of Business. - There is hereby created
the Al-Amanah Islamic Investment Bank of the Philippines, which shall be
hereinafter called the Islamic Bank.ts principal domicile and place of business
shall be in Zamboanga City. It may establish branches, agencies or other offices
at such places in the Philippines or abroad subject to the laws, rules and
regulations of the Central Bank.
Section 3. Purpose and Basis. - The primary purpose of the Islamic Bank shall
be to promote and accelerate the socio-economic development of the
Autonomous Region by performing banking, financing and investment operations
and to establish and participate in agricultural, commercial and industrial ventures
based on the Islamic concept of banking.
All business dealings and activities of the Islamic Bank shall be subject to the
basic principles and rulings of Islamic Shari'a within the purview of the
aforementioned declared policy. Any zakat or ithe paid by the Islamic Bank on
behalf of its shareholders and depositors shall be its obligation to appropriate said
zakat fund and to disburse it in legitimate channels to be ascertained first by the
Shari'a Advisory Council.
Section 4. Shari'a Advisory Council. - There is hereby created a Shari'a Advisory
Council of the Islamic Bank which shall be composed of not more than five (5)
members, selected from among Islamic scholars and jurists of comparative law.
The members shall be elected at a general shareholders meeting of the Islamic
Bank every three (3) years from a list of nominees prepared by the Board of
Directors of the Islamic Bank. The Board is hereby authorized to select the
members of the first Shari'a Advisory Council and to determine their
remunerations.
Section 5. Functions of the Shari'a Advisory Council. - The functions of the
Shari'a Advisory Council shall be to offer advice and undertake reviews pertaining
to the application of the principles and rulings of the Islamic Shari'a to the Islamic
Bank's transactions, but it shall not directly involve itself in the operations of the
Bank.
Any member of the Shari'a Advisory Council may be invited to sit in the regular or
special meetings of the Board of Directors of the Islamic Bank to expound his
views on matters of the Islamic Shari'a affecting a particular transaction but he
shall not be entitled to vote on the question presented before the board meetings.
CORPORATE POWERS
Section 6. Islamic Bank's Powers. - The Al-Amanah Islamic Investment Bank of
the Philippines, upon its organization, shall be a body corporate and shall have
the power:
(1) To prescribe its bylaws and its operating policies;
(2) To adopt, alter and use a corporate seal;
(3) To make contracts, to sue and be sued;
(4) To borrow money; to own real or personal property and introduce
improvements thereon, and to sell, mortgage or otherwise dispose of the
same;
(5) To employ such officers and personnel, preferably from the qualified
Muslim sector, as may be necessary to carry Islamic banking business;
(6) To establish such branches and agencies in provinces and cities in the
Philippines, particularly where Muslims are predominantly located, and
such correspondent offices in other areas in the country or abroad as may
be necessary to carry on its Islamic banking business, subject to the
provisions of Section 2 hereof;
(7) To perform the following banking services:
(a) Open current or checking accounts;
(b) Open savings accounts for safekeeping or custody with no
participation in profit and losses except unless otherwise
authorized by the account holders to be invested;
(c) Accept investment account placements and invest the same
for a term with the Islamic Bank's funds in Islamically permissible
transactions on participation basis;
(d) Accept foreign currency deposits from banks, companies,
organizations and individuals, including foreign governments;
(e) Buy and sell foreign exchange;
(f) Act as correspondent of banks and institutions to handle
remittances or any fund transfers;
(g) Accept drafts and issue letters of credit or letters of guarantee,
negotiate notes and bills of exchange and other evidence of
 indebtedness under the universally accepted Islamic financial
instruments;
(h) Act as collection agent insofar as the payment orders, bills of
exchange or other commercial documents are exclusive of riba or
interest prohibitions;
(i) Provide financing with or without collateral by way of leasing,
sale and leaseback, or cost plus profit sales arrangement;
(j) Handle storage operations for goods or commodity financing
secured by warehouse receipts presented to the Bank;
(k) Issue shares for the account of institutions and companies
assisted by the Bank in meeting subscription calls or augmenting
their capital and/or fund requirements as may be allowed by law;
(l) Undertake various investments in all transactions allowed by
Islamic Shari'a in such a way that shall not permit the haram
(forbidden), nor forbid the halal (permissible);
(8) To act as an official government depository, or its branches,
subdivisions and instrumentalities and of government-owned or
controlled corporations, particularly those doing business in the
autonomous region;
(9) To issue investment participation certificates, muquaradah (non-
interest-bearing bonds), debentures, collaterals and/or the renewal or
refinancing of the same, with the approval of the Monetary Board of the
Central Bank of the Philippines, to be used by the Bank in its financing
operations for projects that will promote the economic development
primarily of the Autonomous Region;
(10) To carry out financing and joint investment operations by way of
mudarabah partnership, musharaka joint venture or by decreasing
participation, murabaha purchasing for others on a cost-plus financing
arrangement, and to invest funds directly in various projects or through
the use of funds whose owners desire to invest jointly with other
resources available to the Islamic Bank on a joint mudarabah basis;
(11) To invest in equities of the following allied undertakings:
(a) Warehousing companies;
(b) Leasing companies;
(c) Storage companies;
(d) Safe deposit box companies;
(e) Companies engaged in the management of mutual funds but
not in the mutual funds themselves; and
(f) Such other similar activities as the Monetary Board of the
Central Bank of the Philippines has declared or may declare as
appropriate from time to time, subject to existing limitations
imposed by law;
(12) To exercise the powers granted under this Charter and such
incidental powers as may be necessary to carry on its business, and to
exercise further the general powers mentioned in the Corporation Law
and the General Banking Act, insofar as they are not inconsistent or
incompatible with the provisions of this Charter.
• Universal Banks and Commercial Banks (General Banking Law, Sections
23 and 29)
Section 23. Powers of a Universal Bank - A universal bank shall have the authority
to exercise, in addition to the powers authorized for a commercial bank in Section
29, the powers of an investment house as provided in existing laws and the power
to invest in non-allied enterprises as provided in this Act. (21-B)
Section 29. Powers of a Commercial Bank. - A commercial bank shall have, in
addition to the general powers incident to corporations, all such powers as may
be necessary to carry on the business of commercial banking such as accepting
drafts and issuing letters of credit; discounting and negotiating promissory notes,
drafts, bills of exchange, and other evidences of debt; accepting or creating
demand deposits; receiving other types of deposits and deposit substitutes;
buying and selling foreign exchange and gold or silver bullion; acquiring
marketable bonds and other debt securities; and extending credit, subject to such
rules as the Monetary Board may promulgate. These rules may include the
determination of bonds and other debt securities eligible for investment, the
maturities and aggregate amount of such investment.
Non-Bank Financial Institutions:

• Investment Houses (Investment Houses Law; Sections 2, 3, 6, 7);
Section 2. Scope. Any enterprise which engages in the underwriting of securities
of other corporations shall be considered an “Investment House” and shall be
subject to the provisions of this Decree and of other pertinent laws.
Nothing in this Decree shall be understood to preclude other enterprises from
engaging in the mere buying and selling of short-term securities of other persons
or enterprises.
Section 3. Definitions. For the purpose of this Decree, unless the context
otherwise indicates, the following definition of terms are hereby adopted:
(a) “Underwriting” is the act or process of guaranteeing the distribution and sale of
securities of any kind issued by another corporation.
(b) “Securities” are written evidences of ownership, interest, or participation, in an
enterprise, or written evidences of indebtedness of a person or enterprise. It
includes, but is not limited to the instruments enumerated in Section 2 of the
Securities Act (Commonwealth Act No. 83, as amended).
Section 6. Prohibitions. Except as may be authorized by the Monetary Board, no
director or officer of an Investment House shall concurrently be a director or
officer of a bank, as defined in Section 2 of Republic Act No. 337, as amended:
Provided, however, That in no event can a person be authorized to be
concurrently an officer of an Investment House and of a bank except where the
majority or all of the equity of the Investment House is owned by the bank
No Investment House shall engage in banking operations as defined in Section 2
of Republic Act No. 337, as amended.
Section 7. Powers. In addition to the powers granted to corporations in general,
an Investment House is authorized to do the following:
(1) Arrange to distribute on a guaranteed basis securities of other corporations
and of the Government or its instrumentalities;
(2) Participate in a syndicate undertaking to purchase and sell, distribute or
arrange to distribute on a guaranteed basis securities of other corporations and of
the Government or its instrumentalities;
(3) Arrange to distribute or participate in a syndicate undertaking to purchase
and sell on a best-efforts basis securities of other corporations and of the
Government or its instrumentalities;
(4) Participate as soliciting dealer or selling group member in tender offers, block
sales, or exchange offering of securities; deal in options, rights or warrants
relating to securities and such other powers which a dealer may exercise under
the Securities Act (Commonwealth Act No. 83, as amended);
(5) Promote, sponsor, or otherwise assist and implement ventures, projects and
programs that contribute to the economy's development;
(6) Act as financial consultant, investment adviser, or broker;
(7) Act as portfolio manager, and/or financial agent;
(8) Encourage companies to go public, and initiate and/or promote, whenever
warranted, the formation, merger, consolidation, reorganization, expansion or
recapitalization of productive enterprises, by providing assistance or participate in
the form of debt or equity financing or through the extension of financial or
technical advice or service;
(9) Undertake or contract for researches, studies and surveys on such matters as
business and economic conditions of various countries, the structure of financial
markets, the institutional arrangements for mobilizing investments;
(10) Acquire, own, hold, lease or obtain an interest in real and/or personal
property as may be necessary or appropriate to carry on its objectives and
purposes;
(11) Design pension, profit-sharing and other employee benefits plans;
(12) Such other activities or business ventures as are directly or indirectly related
to the dealing in securities and other commercial papers, unless otherwise
governed or prohibited by special laws, in which case the special law shall apply;
(13) Subject to prior approval by the Monetary Board, the provisions of Chapter
IV of the Central Bank Charter, and such rules and regulations as may be issued
by the Monetary Board, engage in foreign exchange operations which the
Monetary Board identified as directly related under Subsection 8 of this section;
and
(14) Act as trustee of a trust fund or trust property, subject to the provisions of
Chapter VII of the General Banking Act.
Nothing in this section shall preclude other enterprises not covered by this
Decree from engaging in the activities listed under subsection (3) to (11) of this
section, except as may otherwise be governed by special laws.
• Financing Companies (Financing Company Act; Sections 3 and 9);
Section 3. Definition of Terms. As used in this Act, the term:
(a) "Financing companies," hereinafter called companies, are
corporations, or partnerships, except those regulated by the Central Bank
of the Philippines, the Insurance Commissioner and the Cooperatives
Administration Office, which are primarily organized for the purpose of
extending credit facilities to consumers and to industrial, commercial, or
agricultural enterprises, either by discounting or factoring commercial
papers on accounts receivable, or by buying and selling contracts, leases,
chattel mortgages, or other evidences of indebtedness, or by leasing of
 motor vehicles, heavy equipment and industrial machinery, business and
office machine and equipment, appliances and other movable property; (1) Any issuer primarily engaged, directly or through a wholly-owned
subsidiary or subsidiaries, in a business or businesses other than that of
(b) "Securities and Exchange Commission" shall mean the office of the investing, reinvesting, or trading in securities.
Securities and Exchange Commission of the Philippines;
(2) Any issuer which the Commission, upon application by such issuer, finds
(c) "Credit" shall mean any loan, mortgage, deed of trust, advance, or and by order declares to be primarily engaged in a business or businesses
discount; any conditional sales contract, any contract to sell, or sale or other than that of investing, reinvesting, or trading in securities either directly
contract of sale of property or service, either for present or future delivery, or (A) through majority-owned subsidiaries or (B) through controlled
under which, part or all the price is payable subsequent to the making of companies conducting similar types of business. The filing of an application
such sale or contract; any rental-purchase contract; any option, demand, under this paragraph by an issuer other than a registered investment
lien, pledge, or other claim against, or for the delivery of, property or company shall exempt the applicant for a period of sixty days from all
money, any purchase, or other acquisition of or any credit upon the provisions of this Act applicable to investment companies as such. For cause
security of, any obligation or claim arising out of the foregoing; and any shown, the Commission by order may extend such period of exemption for an
transaction or series of transactions having a similar purpose or effect; additional period or periods. Whenever the Commission, upon its own motion
and or upon application, finds that the circumstances which gave rise to the
issuance of an order granting an application under this paragraph no longer
exist, the Commission shall by order revoke such order.
(d) "Purchase discount" is the difference between the value of the
receivable purchased or credit assigned, and the net amount paid by the
(3) Any issuer all the outstanding securities of which (other than short-term
finance company for such purchase or assignment, exclusive of fees,
paper and directors' qualifying shares) are directly or indirectly owned by a
service charges, interests and other charges incident to the extension of
company excepted from the definition of investment company.
credit.
(c) Notwithstanding subsection (a), and (b), none of the following persons is
Section 9. Revocation and Suspension of Registration. The Securities and an investment company within the meaning of this Act:
Exchange Commission may revoke or suspend the registration of any financing
company by entering an order to this effect together with its findings in respect (1) Any issuer whose outstanding securities (other than short-term paper)
thereto, if upon investigation into the affairs of said financing company or are beneficially owned by not more than twenty-five persons and which is not
complaint by any person, it shall appear that: making and does not presently propose to make a public offering of its
securities. For the purpose of this paragraph, beneficial ownership by a
(a) it is insolvent; or company shall be deemed to be beneficial ownership by one person; except
that, if such company owns ten per centum or more of the outstanding voting
(b) it has violated any provision of this Act. securities of the issuer, the beneficial ownership shall be deemed to be that of
the holders of such company's outstanding securities (other than short-term
• Investment Companies (Investment Company Act; Section 4). paper).

Sec. 4. Definition of investment company. — (a) when used in this Act (2) Any person primarily engaged in the business of underwriting and
"investment company" means any issuer which is or holds itself out as being distributing securities issued by other persons, selling securities to customers,
engaged primarily, or proposes to engage primarily, in the business of and acting as broker, or any one or more of such activities, whose gross
investing, reinvesting, or trading in securities; income normally is derived principally from such business and related
activities.
(b) Notwithstanding subsection (a), none of the following persons is an
investment company within the meaning of this Act; (3) Any bank or insurance company; any savings and loan association,
building and loan association, cooperative bank, homestead association, or
similar institution, or any receiver, conservator, liquidator, liquidating agent, or (12) Any security holders' protective committee or similar issuer having
similar official or person thereof or therefor; any common trust fund or similar outstanding and issuing no securities other than certificates of deposit and
fund maintained by a bank exclusively for the collective investment and short-term paper.
reinvestment of moneys contributed thereto by the bank in its capacity as a
trustee, executor, administrator, or guardian.
*In connection with the class to be held covering the foregoing assignment, in
(4) Any person substantially all of whose business is confined to industrial respect of the provisions of law under the headings Types of Banks and Non-
banking or similar business. Bank Financial Institutions, please read through the statutory provisions with a
view to gaining a general appreciation of the type of specialized financial
(5) Any person who is primarily engaged in one or more of the following institutions identified and their overall purpose or function. No requirement to
business: (A) Purchasing or otherwise acquiring notes, drafts, acceptances, undertake a detailed memorization of specific powers.
open accounts receivable, and other obligations representing part or all of the
sales price of merchandise, insurance, and services; (B) making loans to
manufacturers, wholesalers, and retailers of, and to prospective purchasers
of, specified merchandise, insurance, and service; and (C) purchasing or
otherwise acquiring mortgages and other liens on and interests in real estate.

(6) Any company primarily engaged, directly or through majority-owned

subsidiaries, in one or more of the businesses described in paragraphs (3), (4)
and (5), or in one or more of such businesses (from which not less than forty
per centum of such company's gross income during its last fiscal year was
derived) together with an additional business or businesses other than
investing, reinvesting, owning, holding or trading in securities.

(7) Any company ninety per centum or more of the value of whose
investment securities are represented by securities of a single issuer included
within a class of persons enumerated in paragraphs (4), (5), or (6).

(8) Any person substantially all of whose business consist of owning or

holding oil, gas, or other mineral royalties or leases, or fractional interests
therein, or certificates of interest or participation in or investment contracts
relative to such royalties, leases, or fractional interests.

(9) Any company organized and operated exclusively for religious,

educational, benevolent, fraternal, charitable, or reformatory purposes, no
part of the net earnings of which inures to the benefit of any private
shareholders or individual.

(10) Any employees' stock bonus, pension, or profit- sharing trust.

(11) Any voting trust the assets of which consist exclusively of securities of a
single issuer which is not an investment company.