The Monetary Board in its Resolution No. 1338 dated 1 September 2011, approved the following amendments to the regulations requiring the submission of the Report on the Sworn Statement on Real Estate/Chattel Transactions.

Section 1. Section X148, and its subsections, are hereby added to the Manual of Regulations for Banks (MORB) to read as follows:

œSection X148. Real Estate and Chattel Transactions with DOSRI and Employees. The following regulations shall govern all real estate/chattel transactions (such as, but not limited to, rentals or leases, purchases and sales; of the bank ™s owned property, including foreclosed assets) entered between the bank and its director(s), officer(s), stockholder(s) or related interest(s), as defined under items œa , œb , œc  and œe , respectively, of Subsec. X326.1 or between the bank and its employee(s).

œReal estate/chattel transactions with DOSRI and employee(s) shall require the prior written approval of the majority members of the board of directors, with the exclusion of the director(s) concerned in cases where the transaction involves the director(s) or his related interest(s): Provided, however, That real estate/chattel transactions with a bank ™s officer(s)/employee(s)that are availed in strict conformity with the terms and conditions of a BSP-approved fringe benefit program shall require the prior written approval of the bank ™s duly authorized committee/officer(s).

œReal estate/chattel transactions with DOSRI and/or employee(s) shall, at all times, be entered into in the best interest of the bank. Records and supporting documents on such real estate/chattel transactions shall be adequately maintained and made available for inspection and/or submitted upon request of the BSP.

œSubsection X148.1 Certification on real estate/chattel transactions with DOSRI and employee(s).

œBanks shall, within ten (10) banking days from approval by a majority of its board of directors, submit to the appropriate department of the SES, the Certification on Real Estate/Chattel Transactions with DOSRI and Employee(s) (prescribed format attached as Annex A), covering real estate/chattel transactions between the bank and its director(s), officer(s), stockholder(s), related interest(s) and employee(s), except those that are availed in strict conformity with the terms and conditions of a fringe benefit program approved by the bank ™s board of directors and by the BSP.

œThe Certification on Real Estate/Chattel Transactions with DOSRI and Employee(s) shall be accompanied by a certified true copy of the resolution of the board of directors authorizing said transaction(s) and shall be signed by at least the majority members of the bank ™s board of directors (excluding the director(s) concerned in the case of trans- actions involving the director(s) or his related interest(s)) who shall be required to certify therein, that:

œ(a)  The transactions were approved by a majority of the bank ™s board of directors, excluding the director concerned (in the case of transactions involving the director or his related interest(s)), in a meeting held for such purpose;

œ(b)   A certified true copy of said approval as manifested in a resolution passed by the board of directors is attached as an annex to the certification;

œ(c)   The reported transactions have been thoroughly reviewed and verified as having been entered into in the best interest of the bank; and

œ(d)   The records and underlying documents (e.g. contracts/agreements, etc.) supporting such transactions are adequately maintained and shall be made available for inspection by BSP examiners and submitted upon request of the appropriate department of the SES.

œSaid Certification on Real Estate/Chattel Transactions with DOSRI and Employee(s) shall, at a minimum, disclose the following information:

œ(a)   Board Resolution No. and date,
œ(b)   Name of DOSRI/employee,
œ(c)   Transaction date,
œ(d)   Type of transaction (i.e., sale, lease, etc.),
œ(e)   Description of real estate or chattel property (e.g., TCT No. or CCT No., location and area in square meters in case of real property, and certificate of registration number, make, model number, serial number, motor number and/or chassis number, as may be applicable, for chattels),
œ(f)    Appraised or market value or prevailing rental rate,
œ(g)   Reference or source of the amount reported under item œ(f)  above,
œ(h)   Net carrying value of the property, and
œ(i) œ(i) Transaction price (i.e., selling price, rental, etc.).

  œSubsections X148.2 - X148.8 (Reserved)

  œSubsection X148.9 Sanctions

œThe following sanctions shall be imposed on the bank and/or its concerned directors/officers for violations noted:

œ1. On the bank

œa.  Monetary fines

A bank which fails to comply with the provisions of this Section shall be subject to monetary penalties under Appendix 67.

œ1)   For non-submission of the Certification on Real Estate/Chattel Transactions with DOSRI and Employee(s) and/or the certified true copy of the resolution of the bank ™s board of directors

A bank which fails to submit the Certification on Real Estate/Chattel Trans- actions with DOSRI and Employee(s) and/or the certified true copy of the resolution of the board of directors authorizing such transaction within the prescribed deadline shall be subject to the monetary penalties applicable to less serious offenses under Appendix 67 which shall be reckoned on a daily basis from the day following the due date of submission until the required Certification on Real Estate/Chattel Transactions with DOSRI and Employee(s) and/or the certified true copy of the resolution of the board of directors is filed with the BSP.

œ2)  For the willful making of a false/misleading statement in the Certification on Real Estate/Chattel Transactions with DOSRI and Employee(s)and/or the certified true copy of the resolution of the bank ™s board of directors

A bank which has been found to have willfully made a false or misleading statement in the Certification on Real Estate/Chattel Transactions with DOSRI and Employee(s) and/or the certified true copy of the resolution of the bank ™s board of directors shall be subject to the monetary penalties applicable to less serious offenses under Appendix 67 for the willful making of a false or misleading statement which shall be reckoned on a daily basis from the day following the due date of the said certification until such time that an amended or corrected Certification on Real Estate/Chattel Transactions with DOSRI and Employee(s) and/or certified true copy of the resolution of the board of directors has been submitted to the BSP.

œ2. On the concerned director/officer

œa. For willful non-compliance

Directors/officers of the bank who willfully fail/refuse to comply with the provisions of this Section shall be subject to the monetary penalties applicable to less serious offenses under Appendix 67.

œb. For false/misleading statements

Directors/officers which have been found to have willfully falsely certified or will- fully submitted misleading statements in the Certification on Real Estate/Chattel Transactions with DOSRI and Employee(s) and/or the certified true copy of the resolution of the board of directors shall be subject to the monetary penalties applicable to less serious offenses under Appendix 67, which shall be reckoned on a daily basis from the day following the due date of the said certification until such time that an amended or corrected certification or certified true copy of the resolution of the board of directors has been submitted to the BSP.

The imposition of the above sanctions is without prejudice to the filing of appropriate criminal charges against culpable persons as provided under Section 35 of R.A. No. 7653 for the willful making of a false/misleading statement. 

Section 2. Subsections X192.5 and X192.15 of the MORB are hereby deleted.

Section 3. Appendix 6 of the MORB on reports required of banks is hereby amended by deleting the œSworn Statement on Real Estate/Chattel Transaction to DOS  (attached as Annex B^[*] ) as a regular report which is required to be submitted by banks.

Section 4. Effectivity. This Circular shall take effect fifteen (15) calendar days following its publication either in the Official Gazette or in a newspaper of general circulation.