THE 1987 CONSTITUTION OF THE REPUBLIC OF THE PHILIPPINES

ARTICLE XII
NATIONAL ECONOMY AND PATRIMONY
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.
REPUBLIC ACT No. 7653
THE NEW CENTRAL BANK ACT

CHAPTER I ESTABLISHMENT AND ORGANIZATION OF THE BANGKO
SENTRAL NG PILIPINAS

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.
The capital of the Bangko Sentral shall be Fifty billion pesos
(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.
REPUBLIC ACT NO. 8791
AN ACT PROVIDING FOR THE REGULATION OF THE ORGANIZATION AND
OPERATIONS OF BANKS, QUASI-BANKS, TRUST ENTITIES AND FOR OTHER
PURPOSES

CHAPTER I
TITLE AND CLASSIFICATION OF BANKS

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)

CHAPTER IV
DEPOSITS. LOANS AND OTHER OPERATIONS

Article I
Operations Of Universal Banks

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.
PRESIDENTIAL DECREE No. 129
GOVERNING THE ESTABLISHMENT, OPERATION AND REGULATION OF
INVESTMENT HOUSES

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 the 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.
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 or securities; deal in
options, rights or warrants relating to securities and such other
powers which a dealer may exercise under the Securities Act (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 porfolio manager, and/or financial agent, but not as
trustee of a trust fund or trust property as provided for in Chapter
VII of Republic Act No. 337, as amended;
8. Encourage companies to go public, and initiate and/or promote,
whenever warranted, the formation, merger, consolidation,
reorganization, or recapitalization of productive enterprises, by
providing assistance or participation 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; and
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.
Nothing in this section shall preclude other enterprises not covered by this
Decree from engaging in the activities listed under subsections (3) to (11) of
this section, except as may otherwise be governed by special laws.
REPUBLIC ACT NO. 8556
AN ACT AMENDING REPUBLIC ACT NO. 5980, AS AMENDED, OTHERWISE
KNOWN AS THE FINANCING COMPANY ACT

Sec. 3. Definition of Terms. As used in this Act, the term:
(a) 'Financing companies' hereinafter called companies, are
corporations, except banks, investments houses, savings and loan
associations, insurance companies, cooperatives, and other financial
institutions organized or operating under other special laws, which are
primarily organized for the purpose of extending credit facilities to
consumers and to industrial, commercial, or agricultural enterprises, by
direct lending or by discounting or factoring commercial papers or accounts
receivable, or by buying and selling contracts, leases, chattel mortgages, or
other evidences of indebtedness, or by financial leasing of movable as well
as immovable property;
(b) 'Securities and Exchange Commission' shall mean the office of
the Securities and Exchange Commission of the Philippines;
(c) 'Credit' shall mean any loan, mortgage, financial lease, deed of
trust, advance or discount, any conditional sales contract, contract to sell,
or sale or contract of sale of property or service, either for present or future
delivery, under which, part of all or the price is payable subsequent to the
making of such sale or contract; any contract, any option, demand, lien or
pledge, or to the other claims against, or for the delivery of, property or
money, any purchase, or other acquisition of or any credit upon the
security of, any obligation or claim arising out of the foregoing, and any
transaction or series of transactions having similar purpose or effect; and
(d) 'Financial leasing' is a mode of extending credit through a non-
cancellable lease contract under which the lessor purchases or acquires, at
the instance of the lessee, machinery, equipment, motor vehicles,
appliances, business and office machines, and other movable or immovable
property in consideration of the periodic payment by the lessee of a fixed
amount of money sufficient to amortize at least seventy (70%) of the
purchase price or acquisition cost, including any incidental expenses and a
margin of profit over an obligatory period of not less than two (2) years
during which the lessee has the right to hold and use the leased property
with the right to expense the lease rentals paid to the lessor and bears the
cost of repairs, maintenance, insurance and preservation thereof, but with
no obligation or option on his part to purchase the leased property from
the owner-lessor at the end of the lease contract.
(e) 'Purchase discount' is the difference between the value of the
receivable purchased or credit assigned, and the net amount paid by the
finance company for such purchases or assignment, exclusive of fees,
services, charges, interest and other charges incident to the extension of
credit.
(f) 'Lease rentals' shall refer to the periodic payments made by the
lessee to the lessor under Section 3(d), above.

SEC. 9. Rights and Powers. Financing companies shall have the following
powers, in addition to those granted by this Act and by other laws:
(a) Engage in quasi-banking and money market operations with the
prior approval of the Bangko Sentral ng Pilipinas;
(b) Engage in trust operations subject to the provisions of the
General Banking Act upon prior approval by the Bangko Sentral ng Pilipinas;
(c) Issue bonds and other capital instruments subject to pertinent
rules and regulations of the Bangko Sentral ng Pilipinas;
(d) Rediscount their paper with government financial institutions
subject to relevant laws, rules and regulations;
(e) Participate in special loan or credit programs sponsored by or
made available through government financial institutions; and
(f) Provide foreign currency loans and leases to enterprises who
earn foreign currency by exports or other means, subject to existing laws
and rules and regulations promulgated by the Bangko Sentral ng Pilipinas.
Nothing in this section shall be construed as precluding a financing
company from performing such services or exercising such powers as may
be granted by the Bangko Sentral ng Pilipinas or the Securities and
Exchange Commission or as may be incidental to its activities as a
corporation.
REPUBLIC ACT NO. 2629
INVESTMENT COMPANY ACT

SECTION 4. Definition of investment company. (a) when used in this Act
"investment company" means any issuer which is or holds itself out as
being engaged primarily, or proposes to engage primarily, in the business of
investing, reinvesting, or trading in securities;
(b) Notwithstanding subsection (a), none of the following persons
is an investment company within the meaning of this Act;
(1) Any issuer primarily engaged, directly or through a wholly-
owned subsidiary or subsidiaries, in a business or
businesses other than that of investing, reinvesting, or
trading in securities.
(2) Any issuer which the Commission, upon application by
such issuer, finds and by order declares to be primarily
engaged in a business or businesses other than that of
investing, reinvesting, or trading in securities either
directly or (A) through majority-owned subsidiaries or (B)
through controlled companies conducting similar types of
business. The filing of an application under this paragraph
by an issuer other than a registered investment company
shall exempt the applicant for a period of sixty days from
all provisions of this Act applicable to investment
companies as such. For cause shown, the Commission by
order may extend such period of exemption for an
additional period or periods. Whenever the Commission,
upon its own motion 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.
(3) Any issuer all the outstanding securities of which (other
than short-term paper and directors' qualifying shares) are
directly or indirectly owned by a company excepted from
the definition of investment company.
(c) Notwithstanding subsection (a), and (b), none of the following
persons is an investment company within the meaning of this Act:
(1) Any issuer whose outstanding securities (other than short-
term paper) are beneficially owned by not more than
twenty-five persons and which is not making and does not
presently propose to make a public offering of its
securities. For the purpose of this paragraph, beneficial
ownership by a 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
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 paper).
(2) Any person primarily engaged in the business of
underwriting and distributing securities issued by other
persons, selling securities to customers, and acting as
broker, or any one or more of such activities, whose gross
income normally is derived principally from such business
and related activities.
(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
similar official or person thereof or therefor; any common
trust fund or similar fund maintained by a bank exclusively
for the collective investment and reinvestment of moneys
contributed thereto by the bank in its capacity as a
trustee, executor, administrator, or guardian.
(4) Any person substantially all of whose business is confined
to industrial banking or similar business.
(5) Any person who is primarily engaged in one or more of the
following business: (A) Purchasing or otherwise acquiring
notes, drafts, acceptances, 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.
(12) Any security holders' protective committee or similar
issuer having outstanding and issuing no securities other
than certificates of deposit and short-term paper.
REPUBLIC ACT NO. 7906
AN ACT PROVIDING FOR THE REGULATION OF THE ORGANIZATION AND
OPERATIONS OF THRIFT BANKS, AND FOR OTHER PURPOSES

SECTION 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:
(a) 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 home
building 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;
(b) Providing short-term working capital, medium-and long-
term financing, to businesses engaged in agriculture,
services, industry and housing; and
(c) 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.

CHAPTER IV
Powers

SECTION 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 mortgage
debtors may wish to make: Provided, That the date of maturity
of the 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 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. Extend credit facilities to private and government employees:
Provided, That in 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, 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 such reasonable fee for his
services;
l. Extend credit against the security of 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 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), (d),
(e), (g) and (i) only upon prior approval of the Monetary Board.
Nothing in this Section shall be construed as precluding a thrift
bank from performing, with prior approval of the Monetary Board,
commercial banking services, or from operating under an expanded
banking authority, nor from exercising, whenever applicable and not
inconsistent with the provisions of this Act and Bangko Sentral regulations,
and such other powers incident to a corporation.
REPUBLIC ACT NO. 7353
AN ACT PROVIDING FOR THE CREATION, ORGANIZATION AND OPERATION
OF RURAL BANKS, AND FOR OTHER PURPOSES

SECTION 2. The State hereby recognizes the need to promote
comprehensive rural development with the end in view of attaining a more
equitable distribution of opportunities, income and wealth; a sustained
increase in the amount of goods and services produced by the nation for
the benefit of the people; and in expanding productivity as a key to raising
the quality of life for all, especially the underprivileged.
Towards these ends, the State hereby encourages and assists in the
establishment of a rural banking system designed to make needed credit
available and readily accessible in the rural areas on reasonable terms.

SECTION 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 merchants and, in
general, to the people of the rural communities, and to supervise the
operation of such banks.

REPUBLIC ACT NO. 9520
AN ACT AMENDING THE COOPERATIVE CODE OF THE PHILIPPINES TO BE
KNOWN AS THE "PHILIPPINE COOPERATIVE CODE OF 2008"

CHAPTER II
Organization and Registration

ART. 6. Purposes of Cooperatives. A cooperative may be
organized and registered for any or all of the following purposes:
(1) To encourage thrift and savings mobilization among the
members;
(2) To generate funds and extend credit to the members for
productive and provident purposes;
(3) To encourage among members systematic production and
marketing;
(4) To provide goods and services and other requirements to the
members;
(5) To develop expertise and skills among its members;
(6) To acquire lands and provide housing benefits for the
members;
(7) To insure against losses of the members;
(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;
(10) To coordinate and facilitate the activities of cooperatives;
(11) To advocate for the cause of the cooperative movement;
(12) To ensure the viability of cooperatives through the utilization
of new technologies;
(13) To encourage and promote self-help or self-employment as an
engine for economic growth and poverty alleviation; and
(14) To undertake any and all other activities for the effective and
efficient implementation of the provisions of this Code.

ART. 7. Objectives and Goals of a Cooperative. The primary
objective of every cooperative is to help improve the quality of life of its
members. Towards this end, the cooperative shall aim to:
a. Provide goods and services to its members to enable them to
attain increased income, savings, investments, productivity, and
purchasing power, and promote among themselves equitable
distribution of net surplus through maximum utilization of
economies of scale, cost-sharing and risk-sharing;
b. Provide optimum social and economic benefits to its members;
c. Teach them efficient ways of doing things in a cooperative manner;
d. Propagate cooperative practices and new ideas in business and
management;
e. Allow the lower income and less privileged groups to increase their
ownership in the wealth of the nation; and
f. Cooperate with the government, other cooperatives and people-
oriented organizations to further the attainment of any of the
foregoing objectives.

ART. 100. Powers, Functions and Allied Undertakings of
Cooperative Banks. A cooperative bank shall primarily provide financial,
banking and credit services to cooperative organizations and their
members. However, the BSP may prescribe appropriate guidelines, ceilings
and conditions on borrowings of a cooperative organization from a
cooperative bank.
The powers and functions of a cooperative bank shall be subject to
such rules and regulations as may be promulgated by the BSP.
In addition to the powers granted by this Code and other existing
laws, any cooperative bank may perform any or all of the banking services
offered by other types of banks subject to the prior approval of the BSP.
EXECUTIVE ORDER NO. 81
PROVIDING FOR THE 1986 REVISED CHARTER OF THE DEVELOPMENT
BANK OF THE PHILIPPINES

SECTION 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 purposes 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 countryside 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 institution; Provided, further, that the
Bank shall continue to be classified as a development bank, and 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.

SECTION 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
expansion 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 or suretyship as
are generally allowed domestic banking institutions under
the General Banking Act; and
(g) To adopt, amend, or change 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.

REPUBLIC ACT NO. 3844
AN ACT TO ORDAIN THE AGRICULTURAL LAND REFORM CODE AND TO
INSTITUTE LAND REFORMS IN THE PHILIPPINES, INCLUDING THE
ABOLITION OF TENANCY AND THE CHANNELING OF CAPITAL INTO
INDUSTRY, PROVIDE FOR THE NECESSARY IMPLEMENTING AGENCIES,
APPROPRIATE FUNDS THEREFOR AND FOR OTHER PURPOSES

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 is extended for a period of fifty (50) years from the
expiration of its original term on 08 August 2013, renewable for another
fifty (50) years. 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. 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;
2. To adopt, alter and use a corporate seal;
3. To hold, purchase, acquire and own real and personal
property, introduce necessary improvements thereon to
enhance and develop their social and economic values,
and to sell, mortgage or otherwise dispose of the same;
4. To sue and be sued, make contracts, negotiate and secure
loans from both local and foreign sources. Before
undertaking any such credit operation, the Bank, through
the Secretary of Finance, shall request the opinion, in
writing, of the Monetary Board on the monetary
implications of the contemplated action. All loans from
foreign sources shall be subject to approval by the
President of the Philippines and shall be fully guaranteed
by the Philippine Government;
5. To grant short, medium and long term loans and advances
against security of real estate and/or other acceptable
assets for the establishment, development or expansion of
agricultural, industrial, home building or home financing
projects and other productive enterprises;
6. To grant loans to farmers' cooperatives/associations to
facilitate production, marketing of crops and acquisition of
essential commodities;
7. To finance and/or guarantee the acquisition, under
Presidential Decree No. 85 dated December 25, 1972, of
farm lots transferred to tenant-farmers pursuant to
Presidential Decree No. 27 dated October 21, 1972;
8. To underwrite, hold, own, purchase, acquire, sell,
mortgage, dispose or otherwise invest or reinvest in
stocks, bonds, debentures, securities and other evidences
of indebtedness of other corporations and of the
government or its instrumentalities which are issued for or
in connection with any project or enterprise;
9. The provision of any law to the contrary notwithstanding,
to guarantee acceptance(s), credits, loans, transactions or
obligations of any person, co-partnership, association or
corporation in favor of any financing or banking institution,
whether foreign or domestic: Provided, That the proceeds
of such acceptances, credits, loans, transactions or
obligations are utilized or earmarked for the development
and/or expansion of agriculture and industry;
10. To borrow from, or rediscount notes, bills of exchange and
other commercial papers with, the Central Bank. The rate
of interest to be charged and the conditions on such
obligations or borrowings shall be subject to the rules and
regulations of the Monetary Board;
11. To act as trustee, or administer any trust or hold property
in trust in accordance with the provisions of law governing
trust corporations;
12. to act as an official government depository with full
authority to maintain deposits of the government, its
branches, subdivisions and instrumentalities, and of
government-owned or -controlled corporations which
deposits shall be subject to liquidity floor and/or reserve
requirements as may be imposed by the Monetary Board
upon other commercial banks;
13. for the strengthening of the capital base of the bank, to
establish a national marketing umbrella for farmers and
fisheries cooperatives to attract massive capital
formation from savings deposits of the cooperative
members nationwide; and
14. To exercise the general powers mentioned in the
Corporation Law and the General Banking Act, as
amended, insofar as they are not inconsistent or
incompatible with this Decree.
REPUBLIC ACT NO. 6848
AN ACT PROVIDING FOR THE 1989 CHARTER OF THE AL-AMANAH ISLAMIC
INVESTMENT BANK OF THE PHILIPPINES, AUTHORIZING ITS CONDUCT OF
ISLAMIC BANKING BUSINESS, AND REPEALING FOR THIS PURPOSE
PRESIDENTIAL DECREE NUMBERED TWO HUNDRED AND SIXTY-FOUR AS
AMENDED BY PRESIDENTIAL DECREE NUMBERED FIVE HUNDRED AND
FORTY-TWO (CREATING THE PHILIPPINE AMANAH BANK)

THE CHARTER OF THE AL-AMANAH ISLAMIC INVESTMENT BANK OF
THE PHILIPPINES

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. Its 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 "tithe" paid
by the Islamic Bank on behalf of its shareholders and depositors shall be
considered as part of compliance by the Islamic Bank with 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.