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Not an accredited gov’t depository bank


By Fil C. Sionil

Considering its impact on doing business, the market is closely watching the flurry of activities on the political front.

Topping the list is the continuation of the investigation on the alleged ill-gotten wealth of Commission on Elections (Comelec) Chairman Andres Bautista by the Senate Committee on Banks and Financial Institutions and Currencies chaired by Sen. Chiz Escudero.

Senate Majority leader Vicente “Tito” Sotto III  and Escudero assured that  the probe will proceed notwithstanding the decision of the House Committee on Justice led by Oriental Mindoro 2nd district Rep.  Reynaldo Umali to trash the impeachment complaint against the poll chief since it is insufficient in substance and form.

Based on reports that Bautista has 35 accounts with  Luzon Development Bank (LDB), Sotto and Sen. Panfilo Lacson co-authored a resolution calling on the Senate panel to look into the possible violations by LDB of Republic Act 9160, the Anti-Money Laundering Act.

Specifically, the market is interested in the disclosure of National Bureau of Investigation (NBI) Anti-Fraud Division Executive Director Atty. Minerva Retanal that during his term as chair of the Presidential Commission on Good Government (PCGG), Bautista opened accounts of sequestered companies being managed by the LDB.

Retanal, on August 23, informed the Senate that the  PCGG transferred the accounts  from another financial institution in 2010. The NBI lawyer, however, failed to mention the number of accounts opened. Retanal disclosed the accounts were closed sometime in 2016, a year after Bautista was named Comelec  chairman.

From my corner, Retanal’s revelation provides a new element to the Bautista saga.

A bit of sleuthing indicates the Bangko Sentral ng Pilipinas (BSP) has not accredited LDB as depository bank of government sequestered accounts. Sequestered assets/companies are imbued with public interest.

Section 4 of Circular 110 issued by the Monetary Board on June 13, 1996, states, among others, that “no private bank shall, without prior approval of the Monetary Board, accept, as depository, any fund or money from the Government, its political subdivisions and instrumentalities, and Government-owned or controlled corporations.”

The same circular, which details the guidelines covering the acceptance of banks and financial institutions of deposits of government and   its political subdivisions, allows “private banks incorporated in the Philippines” to act as depository of government funds only with the prior approval of the BSP provided that private bank has loan exposure to such government instrumentalities.

Taking these in hand, a handful of clarifications are needed. Who has administrative liability in this case? Is it the bank, the officers, and Bautista, then the PCGG chair?

Republic Act 7653, the law creating the autonomous BSP, stipulates a maximum monetary fine of P30,000 per day for a remiss financial institution. How will the fine be handled? What is the formula in computing the monetary fine? Will it be on a per-account basis?

One banking legal luminary said the BSP will “have to evaluate the extent of the omission” before rendering judgment, including the monetary fine and administrative sanctions, if merited.


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