Data privacy

Definition

Section 3 (g)

Personal information refers to any information whether recorded in a material form or not, from which
the identity of an individual is apparent or can be reasonably and directly ascertained by the entity holding
the information, or when put together with other information would directly and certainly identify an
individual.
Section 3(l)

(l) Sensitive personal information refers to personal information:

(1) About an individual’s race, ethnic origin, marital status, age, color, and religious,
philosophical or political affiliations;

(2) About an individual’s health, education, genetic or sexual life of a person, or to any
proceeding for any offense committed or alleged to have been committed by such person, the
disposal of such proceedings, or the sentence of any court in such proceedings;

(3) Issued by government agencies peculiar to an individual which includes, but not limited to,
social security numbers, previous or current health records, licenses or its denials, suspension or
revocation, and tax returns; and

(4) Specifically established by an executive order or an act of Congress to be kept classified.

2. PERSONAL INFORMATION CONTROLLER ABD PERSONAL INFORMATION

PROCESSOR

(h) Personal information controller refers to a person or organization who controls the
collection, holding, processing or use of personal information, including a person or organization
who instructs another person or organization to collect, hold, process, use, transfer or disclose
personal information on his or her behalf. The term excludes:

(1) A person or organization who performs such functions as instructed by another person or
organization; and

(2) An individual who collects, holds, processes or uses personal information in connection with
the individual’s personal, family or household affairs.

(i) Personal information processor refers to any natural or juridical person qualified to act as
such under this Act to whom a personal information controller may outsource the processing of
personal data pertaining to a data subject.

3. PROCESSING
(j) Processing refers to any operation or any set of operations performed upon personal
information including, but not limited to, the collection, recording, organization, storage,
updating or modification, retrieval, consultation, use, consolidation, blocking, erasure or
destruction of data.

4. Section 4

SEC. 4. Scope. – This Act applies to the processing of all types of personal information and to
any natural and juridical person involved in personal information processing including
those personal information controllers and processors who, although not found or established in
the Philippines, use equipment that are located in the Philippines, or those who maintain an
office, branch or agency in the Philippines subject to the immediately succeeding
paragraph: Provided, That the requirements of Section 5 are complied with.

This Act does not apply to the following:

(a) Information about any individual who is or was an officer or employee of a government
institution that relates to the position or functions of the individual, including:

(1) The fact that the individual is or was an officer or employee of the government institution;

(2) The title, business address and office telephone number of the individual;

(3) The classification, salary range and responsibilities of the position held by the individual; and

(4) The name of the individual on a document prepared by the individual in the course of
employment with the government;

(b) Information about an individual who is or was performing service under contract for a
government institution that relates to the services performed, including the terms of the contract,
and the name of the individual given in the course of the performance of those services;

(c) Information relating to any discretionary benefit of a financial nature such as the granting of a
license or permit given by the government to an individual, including the name of the individual
and the exact nature of the benefit;

(d) Personal information processed for journalistic, artistic, literary or research purposes;

(e) Information necessary in order to carry out the functions of public authority which includes
the processing of personal data for the performance by the independent, central monetary
authority and law enforcement and regulatory agencies of their constitutionally and statutorily
mandated functions. Nothing in this Act shall be construed as to have amended or repealed
Republic Act No. 1405, otherwise known as the Secrecy of Bank Deposits Act; Republic Act
No. 6426, otherwise known as the Foreign Currency Deposit Act; and Republic Act No. 9510,
otherwise known as the Credit Information System Act (CISA);
(f) Information necessary for banks and other financial institutions under the jurisdiction of the
independent, central monetary authority or Bangko Sentral ng Pilipinas to comply with Republic
Act No. 9510, and Republic Act No. 9160, as amended, otherwise known as the Anti-Money
Laundering Act and other applicable laws; and

(g) Personal information originally collected from residents of foreign jurisdictions in

accordance with the laws of those foreign jurisdictions, including any applicable data privacy
laws, which is being processed in the Philippines.

5. Section 3, e and f

(e) Filing system refers to any act of information relating to natural or juridical persons to the
extent that, although the information is not processed by equipment operating automatically in
response to instructions given for that purpose, the set is structured, either by reference to
individuals or by reference to criteria relating to individuals, in such a way that specific
information relating to a particular person is readily accessible.

(f) Information and Communications System refers to a system for generating, sending,
receiving, storing or otherwise processing electronic data messages or electronic documents and
includes the computer system or other similar device by or which data is recorded, transmitted or
stored and any procedure related to the recording, transmission or storage of electronic data,
electronic message, or electronic document.

6. NPC Advisory 2017-01

See attached

B. Guielines in Processing of Personal Information

1. principles of transparency, proportionality legitimate purpose

I. Data Privacy Principles

There are four general principles with respect to the collection and
processing of personal data: transparency, legitimate
purpose, proportionality, and data quality. Entities covered by the Act and
the Implementing Rules must adhere to these principles.6
Principle of Transparency
The principle of transparency requires that the purpose for processing a
person’s data should be determined and disclosed before its collection or
as soon as practicable.7 Also, consent of the data subject on the collection
and processing of his data should first be obtained, subject to exemptions
provided by laws and regulations.8 In obtaining his consent, the data
subject must be informed of the nature, purpose, and extent of the
processing of such personal data, including the risks and safeguards
involved, the identity of the personal information controller, his rights as a
data subject as well as how these can be
exercised.9 Moreover, information provided to a data subject must always
be in clear and plain language to ensure that they are easy to understand
and access.10
Principle of Legitimate Purpose
The principle of legitimate purpose requires that the collection and
processing of information must also be compatible with a declared and
specified purpose, which must not be contrary to law, morals, or public
policy.11 In other words, personal data should be processed fairly and
lawfully.12
Principle of Proportionality
The principle of proportionality requires that the processing of personal
information must be relevant to, and must not exceed, the declared
purpose.13 The personal information may be retained only for as long as
necessary for the fulfillment of the purposes for which the data was
obtained or for the establishment, exercise, or defense of legal claims, or
as provided by law. It may also not be retained in perpetuity in
contemplation of a possible future use yet to be determined.14 However,
personal information collected for historical, statistical, scientific
purposes, or in other cases laid down by law, as well as, personal
information kept in a form which does not permit identification of the
individual involved, may be stored for longer periods.15

2. Section 11-13, RA 10173

SEC. 11. General Data Privacy Principles. – The processing of personal information shall be
allowed, subject to compliance with the requirements of this Act and other laws allowing
disclosure of information to the public and adherence to the principles of transparency, legitimate
purpose and proportionality.

Personal information must, be:,

(a) Collected for specified and legitimate purposes determined and declared before, or as soon as
reasonably practicable after collection, and later processed in a way compatible with such
declared, specified and legitimate purposes only;

(b) Processed fairly and lawfully;

(c) Accurate, relevant and, where necessary for purposes for which it is to be used the processing
of personal information, kept up to date; inaccurate or incomplete data must be rectified,
supplemented, destroyed or their further processing restricted;

(d) Adequate and not excessive in relation to the purposes for which they are collected and
processed;

(e) Retained only for as long as necessary for the fulfillment of the purposes for which the data
was obtained or for the establishment, exercise or defense of legal claims, or for legitimate
business purposes, or as provided by law; and

(f) Kept in a form which permits identification of data subjects for no longer than is necessary
for the purposes for which the data were collected and processed: Provided, That personal
information collected for other purposes may lie processed for historical, statistical or scientific
purposes, and in cases laid down in law may be stored for longer periods: Provided, further,That
adequate safeguards are guaranteed by said laws authorizing their processing.

The personal information controller must ensure implementation of personal information

processing principles set out herein.

SEC. 12. Criteria for Lawful Processing of Personal Information. – The processing of
personal information shall be permitted only if not otherwise prohibited by law, and when at
least one of the following conditions exists:

(a) The data subject has given his or her consent;

(b) The processing of personal information is necessary and is related to the fulfillment of a
contract with the data subject or in order to take steps at the request of the data subject prior to
entering into a contract;

(c) The processing is necessary for compliance with a legal obligation to which the personal
information controller is subject;

(d) The processing is necessary to protect vitally important interests of the data subject, including
life and health;

(e) The processing is necessary in order to respond to national emergency, to comply with the
requirements of public order and safety, or to fulfill functions of public authority which
necessarily includes the processing of personal data for the fulfillment of its mandate; or
(f) The processing is necessary for the purposes of the legitimate interests pursued by the
personal information controller or by a third party or parties to whom the data is disclosed,
except where such interests are overridden by fundamental rights and freedoms of the data
subject which require protection under the Philippine Constitution.

SEC. 13. Sensitive Personal Information and Privileged Information. – The processing of
sensitive personal information and privileged information shall be prohibited, except in the
following cases:

(a) The data subject has given his or her consent, specific to the purpose prior to the processing,
or in the case of privileged information, all parties to the exchange have given their consent prior
to processing;

(b) The processing of the same is provided for by existing laws and regulations: Provided, That
such regulatory enactments guarantee the protection of the sensitive personal information and the
privileged information: Provided, further, That the consent of the data subjects are not required
by law or regulation permitting the processing of the sensitive personal information or the
privileged information;

(c) The processing is necessary to protect the life and health of the data subject or another
person, and the data subject is not legally or physically able to express his or her consent prior to
the processing;

(d) The processing is necessary to achieve the lawful and noncommercial objectives of public
organizations and their associations: Provided, That such processing is only confined and related
to the bona fide members of these organizations or their associations: Provided, further, That the
sensitive personal information are not transferred to third parties: Provided, finally, That consent
of the data subject was obtained prior to processing;

(e) The processing is necessary for purposes of medical treatment, is carried out by a medical
practitioner or a medical treatment institution, and an adequate level of protection of personal
information is ensured; or

(f) The processing concerns such personal information as is necessary for the protection of
lawful rights and interests of natural or legal persons in court proceedings, or the establishment,
exercise or defense of legal claims, or when provided to government or public authority.

3. Section 20, RA 10173

SEC. 20. Security of Personal Information. – (a) The personal information controller must
implement reasonable and appropriate organizational, physical and technical measures intended
for the protection of personal information against any accidental or unlawful destruction,
alteration and disclosure, as well as against any other unlawful processing.

(b) The personal information controller shall implement reasonable and appropriate measures to
protect personal information against natural dangers such as accidental loss or destruction, and
human dangers such as unlawful access, fraudulent misuse, unlawful destruction, alteration and
contamination.

(c) The determination of the appropriate level of security under this section must take into
account the nature of the personal information to be protected, the risks represented by the
processing, the size of the organization and complexity of its operations, current data privacy
best practices and the cost of security implementation. Subject to guidelines as the Commission
may issue from time to time, the measures implemented must include:

(1) Safeguards to protect its computer network against accidental, unlawful or unauthorized
usage or interference with or hindering of their functioning or availability;

(2) A security policy with respect to the processing of personal information;

(3) A process for identifying and accessing reasonably foreseeable vulnerabilities in its computer
networks, and for taking preventive, corrective and mitigating action against security incidents
that can lead to a security breach; and

(4) Regular monitoring for security breaches and a process for taking preventive, corrective and
mitigating action against security incidents that can lead to a security breach.

(d) The personal information controller must further ensure that third parties processing personal
information on its behalf shall implement the security measures required by this provision.

(e) The employees, agents or representatives of a personal information controller who are
involved in the processing of personal information shall operate and hold personal information
under strict confidentiality if the personal information are not intended for public disclosure. This
obligation shall continue even after leaving the public service, transfer to another position or
upon termination of employment or contractual relations.

(f) The personal information controller shall promptly notify the Commission and affected data
subjects when sensitive personal information or other information that may, under the
circumstances, be used to enable identity fraud are reasonably believed to have been acquired by
an unauthorized person, and the personal information controller or the Commission believes (bat
such unauthorized acquisition is likely to give rise to a real risk of serious harm to any affected
data subject. The notification shall at least describe the nature of the breach, the sensitive
personal information possibly involved, and the measures taken by the entity to address the
breach. Notification may be delayed only to the extent necessary to determine the scope of the
breach, to prevent further disclosures, or to restore reasonable integrity to the information and
communications system.

(1) In evaluating if notification is unwarranted, the Commission may take into account
compliance by the personal information controller with this section and existence of good faith in
the acquisition of personal information.
(2) The Commission may exempt a personal information controller from notification where, in
its reasonable judgment, such notification would not be in the public interest or in the interests of
the affected data subjects.

(3) The Commission may authorize postponement of notification where it may hinder the
progress of a criminal investigation related to a serious breach.

NPC Circular 2020-03

SECTION 1. Scope. — The provisions of this Circular apply to personal data under the control
or custody of a personal information controller (PIC) that is being shared, disclosed, or
transferred to another PIC. The Circular likewise applies to personal data that is consolidated by
several PICs and shared or made available to each other and/or to one or more PICs. It excludes
arrangements between a PIC and a personal information processor (PIP).

C. Rights of Data Subject

1. Section 16, RA 10173

SEC. 16. Rights of the Data Subject. – The data subject is entitled to:

(a) Be informed whether personal information pertaining to him or her shall be, are being or have
been processed;

(b) Be furnished the information indicated hereunder before the entry of his or her personal
information into the processing system of the personal information controller, or at the next
practical opportunity:

(1) Description of the personal information to be entered into the system;

(2) Purposes for which they are being or are to be processed;

(3) Scope and method of the personal information processing;

(4) The recipients or classes of recipients to whom they are or may be disclosed;

(5) Methods utilized for automated access, if the same is allowed by the data subject, and the
extent to which such access is authorized;

(6) The identity and contact details of the personal information controller or its representative;

(7) The period for which the information will be stored; and

(8) The existence of their rights, i.e., to access, correction, as well as the right to lodge a
complaint before the Commission.
Any information supplied or declaration made to the data subject on these matters shall not be
amended without prior notification of data subject: Provided, That the notification under
subsection (b) shall not apply should the personal information be needed pursuant to
a subpoena or when the collection and processing are for obvious purposes, including when it is
necessary for the performance of or in relation to a contract or service or when necessary or
desirable in the context of an employer-employee relationship, between the collector and the data
subject, or when the information is being collected and processed as a result of legal obligation;

(c) Reasonable access to, upon demand, the following:

(1) Contents of his or her personal information that were processed;

(2) Sources from which personal information were obtained;

(3) Names and addresses of recipients of the personal information;

(4) Manner by which such data were processed;

(5) Reasons for the disclosure of the personal information to recipients;

(6) Information on automated processes where the data will or likely to be made as the sole basis
for any decision significantly affecting or will affect the data subject;

(7) Date when his or her personal information concerning the data subject were last accessed and
modified; and

(8) The designation, or name or identity and address of the personal information controller;

(d) Dispute the inaccuracy or error in the personal information and have the personal information
controller correct it immediately and accordingly, unless the request is vexatious or otherwise
unreasonable. If the personal information have been corrected, the personal information
controller shall ensure the accessibility of both the new and the retracted information and the
simultaneous receipt of the new and the retracted information by recipients
thereof: Provided, That the third parties who have previously received such processed personal
information shall he informed of its inaccuracy and its rectification upon reasonable request of
the data subject;

(e) Suspend, withdraw or order the blocking, removal or destruction of his or her personal
information from the personal information controller’s filing system upon discovery and
substantial proof that the personal information are incomplete, outdated, false, unlawfully
obtained, used for unauthorized purposes or are no longer necessary for the purposes for which
they were collected. In this case, the personal information controller may notify third parties who
have previously received such processed personal information; and

(f) Be indemnified for any damages sustained due to such inaccurate, incomplete, outdated, false,
unlawfully obtained or unauthorized use of personal information.
2. NPC Circular Advisory 2021-01

SECTION 1. Scope. — This Advisory shall apply to all natural or juridical persons, or any other
body in the government or private sector engaged in the processing of personal data within and
outside of the Philippines, subject to the applicable provisions of the DPA, its IRR, and issuances
by the NPC.

SECTION 2. General Principles. — This Advisory is governed by the following principles:

A. The right to data privacy refers to the right empowering individuals to have reasonable control
over the flow of their personal data;

B. The exercise of data subject rights is a demonstration that an individual takes control over his
or her own personal data. Data subjects may exercise their rights under the DPA with due
consideration of the rights and freedoms of others;

C. Personal information controllers (PICs) and processors (PIPs) shall uphold these rights,
subject to limitations as may be provided for by law, and implement mechanisms which enable
the free exercise of the same through procedures which are clear, simple, straightforward, and
convenient; and

D. The free exercise of data subject rights is an indication that PICs and PIPs adhere to the
general data privacy principles of transparency, legitimate purpose, and proportionality, and
demonstrate compliance and accountability in personal data processing

D. DATA BREACHES ANS OFFENSES

1. NPC CIRCULAR 16-03

SECTION 1. Scope.
These Rules apply to any natural and juridical person in the government
or private sector processing personal data in or outside of the
Philippines, subject to the relevant provisions of the Act and its
Implementing Rules and Regulations.

SECTION 2. Purpose. These Rules

provide the framework for personal data breach management and the
procedure for personal data breach notification and other requirements.
SEC 25-27, RA 10173

SEC. 25. Unauthorized Processing of Personal Information and Sensitive Personal Information.
– (a) The unauthorized processing of personal information shall be penalized by imprisonment
ranging from one (1) year to three (3) years and a fine of not less than Five hundred thousand
pesos (Php500,000.00) but not more than Two million pesos (Php2,000,000.00) shall be imposed
on persons who process personal information without the consent of the data subject, or without
being authorized under this Act or any existing law.

(b) The unauthorized processing of personal sensitive information shall be penalized by

imprisonment ranging from three (3) years to six (6) years and a fine of not less than Five
hundred thousand pesos (Php500,000.00) but not more than Four million pesos
(Php4,000,000.00) shall be imposed on persons who process personal information without the
consent of the data subject, or without being authorized under this Act or any existing law.

SEC. 26. Accessing Personal Information and Sensitive Personal Information Due to
Negligence. – (a) Accessing personal information due to negligence shall be penalized by
imprisonment ranging from one (1) year to three (3) years and a fine of not less than Five
hundred thousand pesos (Php500,000.00) but not more than Two million pesos
(Php2,000,000.00) shall be imposed on persons who, due to negligence, provided access to
personal information without being authorized under this Act or any existing law.

(b) Accessing sensitive personal information due to negligence shall be penalized by

imprisonment ranging from three (3) years to six (6) years and a fine of not less than Five
hundred thousand pesos (Php500,000.00) but not more than Four million pesos
(Php4,000,000.00) shall be imposed on persons who, due to negligence, provided access to
personal information without being authorized under this Act or any existing law.

SEC. 27. Improper Disposal of Personal Information and Sensitive Personal Information. – (a)
The improper disposal of personal information shall be penalized by imprisonment ranging from
six (6) months to two (2) years and a fine of not less than One hundred thousand pesos
(Php100,000.00) but not more than Five hundred thousand pesos (Php500,000.00) shall be
imposed on persons who knowingly or negligently dispose, discard or abandon the personal
information of an individual in an area accessible to the public or has otherwise placed the
personal information of an individual in its container for trash collection.

(b) The improper disposal of sensitive personal information shall be penalized by imprisonment
ranging from one (1) year to three (3) years and a fine of not less than One hundred thousand
pesos (Php100,000.00) but not more than One million pesos (Php1,000,000.00) shall be imposed
on persons who knowingly or negligently dispose, discard or abandon the personal information
of an individual in an area accessible to the public or has otherwise placed the personal
information of an individual in its container for trash collection.

E. npc advisory opinions relevant to banks

1. NPC ADVISORY OPINION 2017-023

 1. Can the consent of a data subject be in the form of a deemed, implied, passive or negative
consent (e.g. notice with a period for objecting, the lapse of which will be deemed
consent)? How specific must the time-bound characteristic of the consent be? Please
provide suggested wording for such notice or consent. Section 3(b) of the DPA provides:
“(b)

Consent of the data subject refers to any freely given, specific, informed indication of
will, whereby the data subject agrees to the collection and processing of personal
information about and/or relating to him or her. Consent shall be evidenced by written,
electronic or recorded means. It may also be given on behalf of the data subject by an
agent specifically authorized by the data subject to do so.”

From the definition, it is clear that consent given by a data subject must be evidenced by
written, electronic, or recorded means. An implied, passive, or negative consent does not
meet such a requirement, including means that merely provide an opt-out option (i.e., a
data subject is merely notified of the period within which he or she can object to the
processing of his or her personal data).

As regards Section 19(a)(1) of the IRR wherein it is stated that consent must be time-
bound vis-à-vis the declared, specified and legitimate purpose, the time-bound element
does not necessarily mean that a specific date or period of time has to be declared. Thus,
for instance, declaring that processing will be carried out for the duration of a contract
between the personal information controller (PIC) and the data subject may be a valid
stipulation. Where applicable, such as in cases where the period of processing can be
reasonably ascertained at the time of collection, A PIC may specifically provide for the
period of validity of a consent obtained from a data subject. It is worth noting that the
limitation merely emphasizes that consent cannot be overly broad and perpetual, for this
would undermine the very concept of consent, as defined in the law. At any rate, the
validity of the period declared, when challenged, will have to be assessed on a case-to-
case basis.

2. Please confirm if the provisions of the DPA and its IRR apply to banks with corporate
clients only, to the extent that we process personal data of (a) the authorized signatories,
officers, directors, stockholders of our clients, (b) our employees, and (c) our
candidates/applicants for employment.

The DPA and its IRR apply to the processing of personal data by any natural and juridical person
in the government or private sector.2 Personal data refers to all types of personal information3,
which, in turn, refers to “any information, whether recorded in a material form or not, from
which the identity of an individual is apparent or can be reasonably and directly ascertained by
the entity holding the information, or when put together with other information would directly
and certainly identify an individual”. 4
In the case of banks, whenever one engages in the processing of personal data, it is subject to the
provisions of the law, unless otherwise provided in the DPA. This includes processing the
personal data of its corporate clients’ authorized signatories, officers, directors, and stockholders,
and that of its own, including job applicants and other natural persons it may have transactions
and/or dealings with.

3. Please confirm that for purposes of processing the personal data of its client’s relevant
authorized signatories, officers, directors, and/or stockholders, since the personal data are
collected by the client, the bank will not be considered a PIC or personal information
processor (PIP) but will only need to comply with the data sharing requirements under
Section 20 of the IRR.

A PIC is defined under Section 3(h) of the DPA as a person or organization that controls
the collection, holding, processing or use of personal information, including a person or
organization who instructs another person or organization to collect, hold, process, use,
transfer or disclose personal information on his or her behalf. There is control if the
natural or juridical person or any other body decides on what information is collected, or
the purpose or extent of its processing.5

A bank is considered a PIC relative to all personal data it processes, regardless of the
situs for collection. The data involved may have been sourced from its own personnel,
job applicants, third-party service providers, etc., or from those of its corporate clients. In
all instances, the bank would still be a PIC with respect to those personal data, provided it
exercises control over their processing.

As a PIC (and in some cases, even as a PIP), a bank is expected to comply with all the
requirements laid out in the DPA, its IRR, and all other relevant issuances of the NPC.
Those pertaining to data sharing is but one of them.

4. Please give guidance on the extent of DPA and IRR compliance needed where a foreign
company has a Philippine branch. Please confirm that compliance with the DPA and IRR
is limited to the Philippine branch, and not the foreign bank in its entirety.

The DPA applies to the processing of personal data, even if those engaged in it only
maintain an office, branch, or agency in the Philippines.6 This extra-territorial application
of the law is further emphasized in Section 6 thereof, which states, in part, that the law
applies to an act done or engaged in outside of the Philippines by an entity having a link
with the country (i.e., it has a branch, agency, office or subsidiary here). In view of the
foregoing, a foreign company and its Philippine branch will both be subject to the
provisions of the DPA and its IRR, except for those that apply only to processing
activities carried out in the country. That said, note that a branch office of a foreign
company has been defined as an entity that carries out the business activities of the head
office and derives income from the host country.7 As such, it has no separate and
independent personality from the head office. The latter merely obtains a license to do
business in the host country prior to establishing a branch.
2. NPC ADVISORY OPINION 2020-039

3. NPC OPINION 2021-026

4. NPC ADVISORY 2021-033

CONSERVATORSHIP

Section 29. Appointment of Conservator. - Whenever, on the basis of a report submitted

by the appropriate supervising or examining department, the Monetary Board finds that
a bank or a quasi-bank is in a state of continuing inability or unwillingness to
maintain a condition of liquidity deemed adequate to protect the interest of
depositors and creditors, the Monetary Board may appoint a conservator with such
powers as the Monetary Board shall deem necessary to take charge of the assets,
liabilities, and the management thereof, reorganize the management, collect all
monies and debts due said institution, and exercise all powers necessary to restore
its viability. The conservator shall report and be responsible to the Monetary Board and
shall have the power to overrule or revoke the actions of the previous management
and board of directors of the bank or quasi-bank. The conservator should be competent
and knowledgeable in bank operations and management. The conservatorship shall not
exceed
one (1) year.

The conservator shall receive remuneration to be fixed by the Monetary Board in an

amount not to exceed two-thirds (2/3) of the salary of the president of the institution in
one (1) year, payable in twelve (12) equal monthly payments: Provided, That, if at
any time within one-year period, the conservatorship is terminated on the ground that
the institution can operate on its own, the conservator shall receive the balance of
the remuneration which he would have received up to the end of the year; but if
the conservatorship is terminated on other grounds, the conservator shall not be
entitled to such remaining balance. The Monetary Board may appoint a
conservator connected with the Bangko
Sentral, in which case he shall not be entitled to receive any remuneration or
molument from the Bangko Sentral during the conservatorship. The expenses
attendant to the conservatorship shall be borne by the bank or quasi-bank concerned.

The Monetary Board shall terminate the conservatorship when it is satisfied that the
institution can continue to operate on its own and the conservatorship is no longer
necessary. The conservatorship shall likewise be terminated should the Monetary
Board, on the basis of the report of the conservator or of its own findings,
determine that the continuance in business of the institution would involve probable
loss to its depositors or creditors, in which case the provisions of Section 30 shall
apply.

Section 30. Proceedings in Receivership and Liquidation. - Whenever, upon

report of the head of the supervising or examining department, the Monetary
Board finds that a bank or quasi-bank:

(a) is unable to pay its liabilities as they become due in the ordinary course of
business: Provided, That this shall not include inability to pay caused by
extraordinary demands induced by financial panic in the banking community;

(b) has insufficient realizable assets, as determined by the Bangko Sentral, to meet its
liabilities; or

(c) cannot continue in business without involving probable losses to its depositors or
creditors; or

(d) has willfully violated a cease and desist order under Section 37 that has become
final, involving acts or transactions which amount to fraud or a dissipation of the assets
of the institution; in which cases, the Monetary Board may summarily and without
need for
prior hearing forbid the institution from doing business in the Philippines and
designate the Philippine Deposit Insurance Corporation as receiver of the banking
institution.
For a quasi-bank, any person of recognized competence in banking or finance may be
designed as receiver.

The receiver shall immediately gather and take charge of all the assets and
liabilities of the institution, administer the same for the benefit of its creditors, and
exercise the general powers of a receiver under the Revised Rules of Court but shall
not, with the exception of administrative expenditures, pay or commit any act that
will involve the transfer or disposition of any asset of the institution: Provided,
That the receiver may deposit or place the funds of the institution in non-
speculative investments. The receiver shall determine as soon as possible, but not
later than ninety (90) days from take over, whether the institution may be
rehabilitated or otherwise placed in such a condition so that it may be permitted to
resume business with safety to its depositors and creditors and the general public:
Provided, That any determination for the resumption of business of the institution shall
be subject to prior approval of the Monetary Board.

If the receiver determines that the institution cannot be rehabilitated or

permitted to resume business in accordance with the next preceding paragraph, the
Monetary Board shall notify in writing the board of directors of its findings and direct
the receiver to proceed with the liquidation of the institution. The receiver shall:

(1) file ex parte with the proper Regional Trial Court, and without requirement of prior
notice or any other action, a petition for assistance in the liquidation of the
institution pursuant to a liquidation plan adopted by the Philippine Deposit
Insurance Corporation for general application to all closed banks. In case of quasi-
banks, the liquidation plan shall be adopted by the Monetary Board. Upon acquiring
jurisdiction, the court shall, upon motion by
the receiver after due notice, adjudicate disputed claims against the institution,
assist the enforcement of individual liabilities of the stockholders, directors and
officers, and decide on other issues as may be material to implement the liquidation
plan adopted. The receiver shall pay the cost of the proceedings from the assets of
the institution.

(2) convert the assets of the institutions to money, dispose of the same to creditors and
other parties, for the purpose of paying the debts of such institution in accordance
with the rules on concurrence and preference of credit under the Civil Code of
the Philippines and he may, in the name of the institution, and with the assistance
of counsel as he may retain, institute such actions as may be necessary to collect and
recover accounts and assets of,
or defend any action against, the institution. The assets of an institution under
receivership or liquidation shall be deemed in custodia legis in the hands of the
receiver and shall, from the moment the institution was placed under such
receivership or liquidation, be exempt from any order of garnishment, levy,
attachment, or execution.

The actions of the Monetary Board taken under this section or under Section 29 of
this Act shall be final and executory, and may not be restrained or set aside by the
court except on petition for certiorari on the ground that the action taken was in
excess of jurisdiction or with such grave abuse of discretion as to amount to lack or
excess of jurisdiction. The petition for certiorari may only be filed by the
stockholders of record representing the majority of the capital stock within ten (10)
days from receipt by the board of directors of the institution of the order directing
receivership, liquidation or conservatorship.

The designation of a conservator under Section 29 of this Act or the appointment

of a receiver under this section shall be vested exclusively with the Monetary Board.
Furthermore, the designation of a conservator is not a precondition to the
designation of a receiver.

CENTRAL BANK OF THE PHILIPPINES v CA, 208 SCRA 652 (1992)

DOCTRINE: It is the Government’s responsibility to see to it that the financial interests of those
who deal with banks and banking institutions, as depositors or otherwise, are protected—this
task is delegated to the Central Bank, which is authorized to administer monetary, banking and
credit system in the Philippines.

FACTS During the regular examination of the Producers Bank of the Philippines, Central Bank
examiners stumbled upon some highly questionable loans which had been extended by the PBP
management to several entities. Upon further examination, it was discovered that these loans,
totalling approximately P300 million, were "fictitious" as they were extended, without collateral,
to certain interests related to PBP owners themselves. Said loans were deemed to be anomalous
particularly because the total paid-in capital of PBP at that time was only P 140.544 million. This
means that the entire paid-in capital of the bank, together with some P160 million of depositors'
money, was utilized by PBP management to fund these unsecured loans. Several blind items
about a family-owned bank in Binondo which granted fictitious loans to its stockholders
appeared in major newspapers. These news items triggered a bank-run in PBP which resulted in
continuous overdrawings on the bank's demand deposit account with the Central Bank. The
Monetary Board (MB), pursuant to its authority under Section 28-A of R.A. No. 265 and by
virtue of MB Board Resolution No. 164, placed PBP under conservatorship. The Monetary
Board gave PBP several opportunities to submit a viable rehabilitation plan in order to salvage
the bank and lift the conservatorship. PBP failed to respond to the notices of the Monetary
Board, hence the conservatorship was maintained. Later on, PBP filed an action for damages
against CB and MB. The suit prayed for the lifting of the conservatorship and payment of
damages allegedly suffered by PBP due to the malicious and untimely declaration of
conservatorship. It also prayed for a preliminary injunction /TRO against the conservatorship.
RTC granted the injunction. ISSUE Whether the conservatorship was proper HELD YES. It
must be stressed in this connection that the banking business is properly subject to reasonable
regulation under the police power of the state because of its nature and relation to the fiscal
affairs of the people and the revenues of the state. 55 Banks are affected with public interest
because they receive funds from the general public in the form of deposits. Due to the nature of
their transactions and functions, a fiduciary relationship is created between the banking
institutions and their depositors. Therefore, banks are under the obligation to treat with
meticulous care and utmost fidelity the accounts of those who have reposed their trust and
confidence in them. It is then Government's responsibility to see to it that the financial interests
of those who deal with banks and banking institutions, as depositors or otherwise, are protected.
In this country, that task is delegated to the Central Bank which, pursuant to its Charter, 57 is
authorized to administer the monetary, banking and credit system of the Philippines. Under both
the 1973 and 1987 Constitutions, the Central Bank is tasked with providing policy direction in
the areas of money, banking and credit; corollarily, it shall have supervision over the operations
of banks. 58 Under its charter, the CB is further authorized to take the necessary steps against
any banking institution if its continued operation would cause prejudice to its depositors,
creditors and the general public as well. This power has been expressly recognized by this Court.
In Philippine Veterans Bank Employees UnionNUBE vs. Philippine Veterans Bank, 59 this
Court held that: . . . Unless adequate and determined efforts are taken by the government against
distressed and mismanaged banks, public faith in the banking system is certain to deteriorate to
the prejudice of the national economy itself, not to mention the losses suffered by the bank
depositors, creditors, and stockholders, who all deserve the protection of the government. The
government cannot simply cross its arms while the assets of a bank are being depleted through
mismanagement or irregularities. It is the duty of the Central Bank in such an event to step in and
salvage the remaining resources of the bank so that they may not continue to be dissipated or
plundered by those entrusted with their management. Strikes and Lockouts The banking industry
is hereby declared as indispensable to the national interest and, not withstanding the provisions
of any law to the contrary, any strike or lockout involving banks, if unsettled after seven (7)
calendar days shall be reported by the Bangko Sentral to the Secretary of Labor who may assume
jurisdiction over the dispute or decide it or certify the same to the National Labor Relations
Commission for compulsory arbitration. However, the President of the Philippines may at any
time intervene and assume jurisdiction over such labor dispute in order to settle or terminate the
same (Sec. 22, GBL) When, in his opinion, there exists a labor dispute causing or likely to cause
a strike or lockout in an industry indispensable to the national interest, the Secretary of Labor
and Employment may assume jurisdiction over the dispute and decide it or certify the same to
the Commission for compulsory arbitration. Such assumption or certification shall have the
effect of automatically enjoining the intended or impending strike or lockout as specified in the
assumption or certification order. If one has already taken place at the time of assumption or
certification, all striking or locked out employees shall immediately return-to-work and the
employer shall immediately resume operations and readmit all workers under the same terms and
conditions prevailing before the strike or lockout. The Secretary of Labor and Employment or
the Commission may seek the assistance of law enforcement agencies to ensure compliance with
this provision as well as with such orders as he may issue to enforce the same. In line with the
national concern for and the highest respect accorded to the right of patients to life and health,
strikes and lockouts in hospitals, clinics and similar medical institutions shall, to every extent
possible, be avoided, and all serious efforts, not only by labor and management but government
as well, be exhausted to substantially minimize, if not prevent, their adverse effects on such life
and health, through the exercise, however legitimate, by labor of its right to strike and by
management to lockout. In labor disputes adversely affecting the continued operation of such
hospitals, clinics or medical institutions, it shall be the duty of the striking union or locking-out
employer to provide and maintain an effective skeletal workforce of medical and other health
personnel, whose movement and services shall be unhampered and unrestricted, as are necessary
to insure the proper and adequate protection of the life and health of its patients, most especially
emergency cases, for the duration of the strike or lockout. In such cases, therefore, the Secretary
of Labor and Employment may immediately assume, within twenty four (24) hours from
knowledge of the occurrence of such a strike or lockout, jurisdiction over the same or certify it to
the Commission for compulsory arbitration. For this purpose, the contending parties are strictly
enjoined to comply with such orders, prohibitions and/or injunctions as are issued by the
Secretary of Labor and Employment or the Commission, under pain of immediate disciplinary
action, including dismissal or loss of employment status or payment by the locking-out employer
of backwages, damages and other affirmative relief, even criminal prosecution against either or
both of them. The foregoing notwithstanding, the President of the Philippines shall not be
precluded from determining the industries that, in his opinion, are indispensable to the national
interest, and from intervening at any time and assuming jurisdiction over any such labor dispute
in order to settle or terminate the same (Art. 263 (g), Labor Code)

First Philippine International Bank v. Court of Appeals, 252 SCRA 259 (1996)

FACTS

Producer Bank (now FPIB) obtained six parcels of land with a size o totaling to 101 hectares.
Demetrio Demeteria and Jose Janolo wanted to buy the property, for which they wrote a letter
with Mercurio Rivera, Manager of the Property Management Department of the bank, offering
P3.5M. Rivera wrote back, making a counter-offer worth P5.5M. Demetria and Janolo made
another counter-offer worth P4.25M for which the bank did not reply to. Two weeks later, they
met with the majority stockholder, Mr. Co and Rivera, and eventually accepted the P5.5M
counter-offer. Two weeks had passed, the bank was put under conservatorship. Demetria and
Janolo demanded the compliance for their agreement, which the bank ignored. After multiple
demands, they filed a case for specific performance, tendering payment with the court. The bank
lost with the RTC and CA level. ISSUES Whether there was a perfected contract of sale
RULING 1. Yes. Although a counter-offer was made for P4.25M and was rejected by the bank,
the previous offer of P5.5M was revived when the respondents met with Co and Rivera, to which
they acceded two days after. This was evidenced by the letter and their meetings. Since there was
meeting of the minds, when the bank offered a price, to which respondents accepted, object, the
six parcels of land, and price, worth P5.5M, there was a perfected contract of sale. ***Petitioners
contend that Rivera did not have the authority to negotiate as to the property involved in the
litigation. There had been an apparent authority when Rivera was the Manager of the Property
Management Department; he was the one who talks to potential buyers of such property;