oo “EN

*Receven %
voce MAR DT 2017

Introduced by
Representatives Winston “Winnie” Castelo, Aniceto “John” D. Bertiz Ill, and
Mariano Michael M. Velarde, Jr.

EXPLANATORY NOTE

vere oat fom the Philippine States Auhorty (PSA) show thet the number of
overseas Filipino workers (OFWs) who worked abroad at any time from April to
September 2015 was estimated at 2.4 million. Bangko Sentral ng Pilipinas (BSP)
statistics, on the other hand, show that in 2015, cash remittances from overseas
Filipinos totalled $25 607 billion."

In October 2016, President Rodrigo Duterte announced that he is considering
the possibility of transforming the Philippine Postal Bank into a bank catering to
remittances and other banking needs of Filipino migrant workers all over the world.”
News reports reveal that the OFW Bank will be established through the acquisition

which will be converted into a LEP subsidiary that will be owned 30 percent (30%) by
OFWs*

While the intent of the executive branch in facilitating the immediate
establishment of the OFW Bank is laudable, the proposed scheme brings to light
questions as to the propriety of buying a cash-strapped bank and passing it on as an
OFW bank. Further, the use of LBP’s funds to purchase the Postal Bank may divert
the LBP from servicing its core clientele — the farmers, fisherfolks, and agricultural
workers in the countryside

Given the magnitude of the resources involved and the implication of the
proposal on OFWs and their families, the undersigned proponents are of the opinion
that the best way to create a bank that is truly for OFWs is through legislation. In this
manner, all issues and concems will be property and meticulously threshed out, with
the direct participation of all stakeholders, especially the OFWs themselves

Eglo Serta ra rabies: Ovetsens Pipher Renttarces
Uotw fem
seep yes anton postal Bank io an OFW bank Octobe 25. 2016.
nan -anstorm!
pocksitoar-otecbenk
‘LandBank setting up OFW Bank by September 2017. December 20. 2016.
jndex phoflandbank-setting-ub ofw-bank-by-seotember-2017/


This bill provides for the establishment of a banking institution for overseas
Filipino workers and their families, to be known as the Overseas Filipino Workers’
Bank. Under this bill, the capitalization of the Bank shall be advanced by the
Overseas Workers Welfare Administration (OWWA), subject to reimbursement within
three years. It also authorizes the bank to engage in banking practices in conformity
with Islamic law, and act as official government depository with authority to maintain
deposits of the government. Most importantly, the Bank is mandated to grant credit
assistance in easy payment terms to Filipino workers who will be deployed for
overseas employment in order to defray the payment of recruitment expenses
including placement, documentation, and other fees. The proposed OFW Bank is
also envisioned to enhance the investment potential of overseas workers as it is
mandated to provide short- or long-term loans to OFWs for the establishment,
rehabilitation or expansion of medium and small-scale enterprises.

Having such a specialty bank will provide an alternative yet viable economic

R. BERTIZ II


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH
First Regular Session

Introduced by
_. Representatives Winston “Winnie” Castelo, Aniceto “John” D. Bertiz Ill, and
Mariano Michael M. Velarde, Jr.

AN ACT CREATING THE OVERSEAS FILIPINO WORKERS BANK, AND
FOR OTHER PURPOSES

Be it enacted in the Senate and the House of Representatives of the Republic of the
Philippines in Congress assembled:

CHAPTER!
ESTABLISHMENT AND FUNCTIONS

SECTION 1. Short Title. — This Act shall be known as the “Overseas Filipino
Workers (OFW) Bank Act.”

SEC. 2. Name, Purpose and Domicile. There is hereby created a bank to be
known as the Overseas Filipino Workers Bank, hereinafter referred to as the “Bank.”
‘The Bank shall be a corporate body and shall exist for a period of fifty (50) years
from the approval of this Act.

The primary purpose of the Bank shall be to provide banking services
principally to serve the medium and long-term needs of OFWs and their dependents;
Provided, however, that the pursuit of these objectives shail be undertaken within the
context of a financially viable and stable banking institutions.

The Bank's principal office and place of business shall be in the National
Capital Region, also known as Metro Manila. it may establish and maintain branches
and remittance centers in the provinces as well as overseas, as its Board of
Directors may deem advisable, with the prior approval of the Monetary Board of the
Bangko Sentral ng Pilipinas.

SEC. 3. Corporate Powers. The OFW Bank, upon its organization, shall be a
corporate body and shail have the power:

(a) To prescribe its bylaws and its operating policies;
(b) To adopt, alter and use a corporate seal;
(c) To make contracts, to sue and be sued;


(d)To acquire property, real or personal, which may be necessary or
expedient for the proper conduct of its operation and introduce
improvements thereon, and to sell, mortgage or otherwise dispose of the
same;

(e) To employ such officers and personnel, preferably from the qualified OFW
sector, as may be necessary to carry out its banking business;

7) To perform the folowing banking services:

Open current or checking accounts and savings accounts;
m Accept such deposits as are allowed under existing law and Bangko
Sentral ng Pilipinas regulations, including but not limited to demand,

iii — Buy and sell foreign exchange,

iv. Act as correspondent of banks and institutions to handle
remittances or any fund transfers;

v. Accept drafts and issue letters of credit or letters of guarantee,
negotiate notes and bills of exchange and other evidence of
indebtedness; and

vi. Undertake various banking transactions allowed by Islamic Shari'a
in such a way that shall not permit the haram (forbidden), nor forbid
the halal (permissible),

(g) To grant short-term or long-term loans and advances preferably to
Overseas Filipino Workers and their dependents against security and real
estate and/or other acceptable assets for the establishment, rehabilitation
‘or expansion of medium and small-scale enterprises as well as
agricultural, commercial, or industrial enterprises;

(h) To grant loan and credit assistance in easy payment terms to Filipino
workers who will be deployed for overseas employment in order to defray
the payment of recruitment expenses including placement, documentation,
and other fees;

() To accept and manage trust funds and properties and cary on the
business of a trust

(i) To acquire, receive, or hold by way of purchase or otherwise, public or
private property for the purpose of undertaking housing projects preferably
for the benefit of Filipino overseas workers and their dependents;

(k) To provide, free of charge, investment advice and guidance to OFWs and
their families;

(l) To act as official government depository with sushory to maintain deposia
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,

(m)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.

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 Bangko Sentral ng Pilipinas.


SEC. 4. Definition. For purposes of determining the OFWs entitled to benefit
from this Act, the following definition of terms shail be used:

(a) “Overseas Filipino Worker (OFW)” shail refer to a person who is to be
engaged, is engaged, or has been engaged in a remunerated activity in a
‘State of which the person is not a citizen, or on board a vessel navigating
the foreign seas other than a government ship used for military or non-
commerce PeTpOROR: ‘or on an installation located offshore or on the high

(b) “Sapo any oe low

CHAPTER It
CAPITAL RESOURCES OF THE BANK
SEC. 5. Authorized Capital Stock Par Value. The capital stock of the Bank
shall be Two Billion Pesos (P2,000,000,000.00) to be divided into Twenty Million
shares with par value of P100 per share. Fifty one percent (51%) of the total shares

provided herein shall be common shares, while the remaining forty-nine percent
(49%) shares shall be preferred.

The Government of the Republic of the Philippines shall, on behalf of the
overseas contract workers, fully subscribe to the total common shares of the Bank.
‘The amount necessary for the govemment's subscription shall be advanced by the
Overseas Workers Welfare Administration (OWWA): Provided, that, the National
Government shail, wit 2 pened ot fee OC) a retum to OWWA the amount
herele Deke seine: Eom further, that OWWA shail hold and represent the

shares corresponding to the amount it has advanced until it shall have been fully
reimbursed from the sale of the stocks subscribed by the national government in
favor of overseas contract workers.

SEC. 6. Grants and Donations. The Bank shall accept grants, donations,
endowments, and subsidies, or funds and/or property offered by individuals and
organizations, who may earmark such grants for a specific purpose or for such other

Purposes beneficial to OFWs and their families, without prejudice to the general
Gbjectives of he Bank

The financial statement and books of accounts of such funds shall be
Maintained separately but may be supplemented to the Bank's balance sheet.


CHAPTER It
MANAGEMENT OF THE BANK

SEC. 7. Board of Directors. The affairs and business of the Bank shall be
directed and its properties managed and preserved and its corporate powers
exercised, unless otherwise provided in this Act, by a Board of Directors consisting
of nine (9) members, to be appointed by the President of the Philippines from a
shortlist prepared by the Governance Commission for Government-Owned or —
Controlled Corporations (GCG). The term of office of the Chairman, Vice-Chairman,
and the members of the Board of Directors shall be for a period of one year, unless
‘sooner removed for cause: Provided, however, That they shall continue to hold office
until their successor is appointed.

SEC. 8. Fit and Proper Rule. To maintain the quality of bank management
and afford better protection to its depositors and the public in general, the Monetary
Board shall prescribe, pass upon and review the qualifications and disqualifications
of individuals elected or appointed Bank directors or officers and disqualify those
found unfit. After due notice to the board of directors of the Bank, the Monetary
Board may disqualify, suspend or remove any bank director or officer who commits
or omits an act which renders him unfit for the position. In determining whether an
individual is fit and proper to hold the position of a director or officer of the Bank,
regard shall be given to his integrity, experience, education, training, and
competence.

‘SEC. 9. Powers and Duties of the Board of Directors. The Board of Directors
shall have, among others, the following duties, powers and authority:

(a) To formulate policies necessary to carry out effectively the provisions of
this Charter and to prescribe, amend, and repeal by-laws, niles and
regulations for the effective operation of the Bank, and the manner in
which the general business of the Bank may be conducted and the powers
granted by law to the Bank exercised;

(b) To approve loans, to fix rates of interest on loans and to prescribe such
terms and conditions for loans and credits as may be deemed necessary,
consistent with the provisions of this Charter, Provided, that the Board may
delegate the authority to approve loans to such officers as may be deemed
necessary,

(c) To adopt an annual budget for the effective operation and administration of
the Bank;

(d) To create and establish a "Provident Fund” which shall consist of
contributions, made both by the Bank and its officers or employees, to a
‘common fund for the payment of benefits to such officers or employees, or
qeeners: under such terms and conditions as the Board of Directors may

(Chie cxerotine or reeelk in whole or in part, any claim or settled liability
to the Bank regardless of the amount involved, under such terms and
conditions it may impose to protect the interests of the Bank. This authority
to compromise shall extend to claims against the Bank; and


(f) To appoint, promote or remove officers from the rank of Vice President or
its equivalent, and other more senior officer positions, excluding the
Chairman and the Vice Chairman.

SEC. 10. Chairman and Chief Executive Officer. The Chairman shall be the

Executive Officer of the Bank and as such, shall, on behalf of the Board, have
the direction and control of the business affairs and properties of the Bank in all
matters which are not by this Charter or by the By-Laws of the Bank specifically
reserved to be done by the Board or other officers of the Bank. For this purpose, he
shall, among other powers and duties, execute, carry out, and administer the
policies, measures, orders, and resolutions approved by the Board; direct and
Supervise the operation and administration of the Bank; and exercise such other
Powers and perform such other functions or duties as may be directed or assigned to
him by law or by the Board from time to time.

Particularly, he shall have the power and duty:

(a) To sign and execute all contracts concluded by the Bank and enter into all
necessary obligations required or permitted by this Charter, upon proper
authorization by the Board; and sign all notes, securities certificates, and
‘other major documents of the Bank,

(b) To exercise, as Chief Executive Officer of the Bank, the powers of control
and supervision over decisions and actions of subordinate officers and all
other powers that may be granted by the Board:

(c) To report to the Board the main facts conceming the operations of the
Bank and to recommend changes in policies which he may deem

advisable;

(d) To submit an annual report to the President of the Philippines on the result
of the operations of the Bank;

(e) To recommend to the Board the appointment, promotion, or removal of all
officers of the Bank, with the rank of at least vice-president or its
equivalent;

(f) To appoint, promote or remove employees and officers below the rank of
vice-president or its equivalent, Provided, that promotions, transfers,
assignments or reassignments of officers and personnel of the Bank are
personnel actions deemed made in the interest of the service and not
disciplinary, any provision of the Civil Service Law to contrary

notwithstanding; and

(g) As required by circumstances, to delegate any of his powers, duties or

a ee SI Ofer yee, OF Se ants, Wie tne appears OF:

SEC. 11. Vice Chairman and Chief Operating Officer. The Vice Chairman
Shall be the Chief Operating Officer of the Bank and shall assume and exercise such
specific duties and responsibilities as may be delegated to him by the Chairman.

SEC. 12. Staffing Pattem and Employee Remuneration. The Board of
Directors shall determine the organizational structure and staffing pattern of the
Bank. The salaries, emoluments and other benefits of the Bank's officers and
employees shall be in accordance with the compensation and position classification


system for government-owned or —controlled corporations (GOCCs) as approved by
the President of the Philippines, upon recommendation by the GCG.

CHAPTER IV
BANKING OPERATIONS

SEC. 13. Loans and other Investments, Loans and other investments of the
Bank shall be subject to the same limits and ceilings applicable to banks of its
category under existing provisions of law and regulations promulgated by the
Monetary Board.

SEC. 14. issuance of Bonds. The Bank

applicable law, esd los Bel ropphantis pectadguiot by fee Menatmy Soar

The Bank shall provide for appropriate reserves for the redemption or
retirement of the bonds. These bonds and other obligations shall be redeemable at
the option of the Bank at or before maturity and in such manner as may be stipulated
therein and shall bear such rate of interest as may be fixed by the Bank

‘Such obligations shall be secured by the assets of the Bank, including the
stocks, bonds, debentures, and other securities purchased or held by it under the
provisions of this Charter. These bonds and debentures may be long-term, medium,
or short-term, with fixed interest rate or floating interest rate.

SEC. 15. Legal Matters and Cases. The Bank shall have its own Legal
Department, the head of which shall be appointed by the Board of Directors of the
Bank upon recommendation of the Chairman.

In appropriate cases, the Bank may avail also of the legal services of any
government legal office authorized to render such services to government-owned or
controlled corporations.

The Bank may, upon the recommendation of its Chief Legal Counsel,
deputize any member of its legal staff to act as special sheriff in foreclosure cases, in
the sale or attachment of the debtor's properties and in the enforcement of court
writs and processes in cases involving the Bank. The special sheriff of the Bank shall
make a report to the proper court after any action taken by him, which shall treat
such action as if it were an act of its own shenffs in all respects.

SEC. 16. Independent Auditor. The Bank shall engage the services of an
independent auditor to be chosen by the Bank from a list of certified public
accountants acceptable to the Monetary Board. The term of the engagement shall be
as prescribed by the Monetary Board which may either be on a continuing basis
where the auditor shall act as resident examiner, or on the basis of special
engagements, but in any case, the independent auditor shall be responsible to the
Bank's Board of Directors.


SEC. 17. Examination of the Bank. The Bank shall be subject to supervision
and examination by the appropriate department of the Bangko Sentral ng Pilipinas.

SEC. 18. Tax Exemption. The Bank assets, profits distributions and all
contracts, deeds documents and transactions related to the conduct of its business
‘shall be exempted from all taxes under the National intemal Revenue Code to
commence from the first taxable year, following its actual banking operation as
Certified by the Bangko Sentral ng Pilipinas, to the extent as herein made allowable:

(a) One hundred per centum (100%) for the first five (5) years; and

(b) Seventy-five per centum (75%) for the sixth through the eight year
Provided, however, that said exemption shall apply only to such taxes,
fees, charges and assessments for which the Bank would otherwise be
liable, and shall not apply to the taxes, fees, charges or assessments
payable by persons or other entities doing business with the Bank.

‘SEC. 19. Exemption from Customs Duties. Within the first five (5) years of
operation of the Bank, all importations by the Bank of machinery, equipment,
calculators and computers and accompanying spare parts, as may be necessary for
its operation, shall be exempted from customs duties and taxes payable thereon:
Provided, however, that same shall not be disposed of domestically unless payment
is made of all duties thereof at the tanff rates and according to their condition at the
time of disposal and upon compliance with all import and exchange procedures.

CHAPTER V
PROHIBITIONS AND RESTRICTIONS

SEC. 20. Inhibition from Board Meeting of Member with Personal Interest.
Whenever any member attending a meeting of the Board of Directors has a direct
personal interest in the discussion or resolution of any given matter, or any of his
relatives within the second civil degree or consanguinity or second civil degree of
affinity has such an interest, said member shall not participate in the discussion or
resolution of the matter and must retire from the meeting during the deliberation
thereon.

For this purpose, the member of the Board shall, at the beginning of their
respective terms, disclose to the board any and all interests they may have in any
corporation, partnership or association and shall, thereafter, disclose to the Board
any charges thereto.

SEC. 21. Borrowing by Directors, Officer and Employees Restriction and
Limitation. No director or officer or employees of the Bank or any corporation,

:
wherein he is a director or officer shall, either directly or indirectly, for himself or as
representative or agent of others, borrow any of the deposits of funds from the bank,
nor shall he become a guarantor, or in any manner be an obligor for money
borrowed from the bank or loaned by it.


SEC. 22. Rules and Regulations on Conflict of Interest. The foregoing
Provisions notwithstanding and in addition thereto, the Board of Directors is hereby
authorized to issue rules and regulations for the purposes of determining and
resolving conflict of interest questions, which rules shall, in particular, include the
requirement on all officers and employees of the Bank to disclose any shareholdings
they, or their relatives within the second civil degree of consanguinity or second civil
degree of affinity, may have in any corporation, partnership, or company in excess of
two percent (2%) of the equity of said corporation, partnership, or company.

SEC. 23. Prohibited Transactions. No director, officer, employee, or agent of

any bank shall

(a) Make false entries in any bank report or statement or participate in any
fraudulent transaction, thereby affecting the financial interest of, or causing
damage to, the bank or any person;

(b) Without order of a court of competent jurisdiction, disclose to any
unauthorized person any information relative to the funds or properties in
the custody of the bank belonging to private individuals, corporations, or
any other entity: Provided, That with respect to bank deposits, the
provisions of existing laws shall prevail, Provided further, That this
prohibition shall not apply to the exchange of confidential credit information
among government financial institutions or among banks, in accordance
with established banking practices or as may be allowed by law,

(c) Overvalue or aid in overvaluing any security for the purpose of influencing
in any way the actions of the bank or any bank; or

(e) Outsource inherent banking functions.

SEC. 24. Exaction of Fee, Commission, Gift or Charge. No fee, commission,
gift, or charge of any kind shall be exacted, demanded, or paid, for obtaining loans
from the Bank, and any officer, employee, or agent of the Bank found guilty of
exacting, demanding, or receiving any fee services in obtaining a loan, shall be
punished as hereinafter provided for violation of this Act.

CHAPTER VI
PENAL PROVISIONS

SEC. 25. Penal Provisions of General Banking Law. The penal provisions of
Section 66 of the General Banking Law shall be applicable to officers, employees
and borrowers of the Bank.

SEC. 26. General Penal Provisions. Any officer or employee of the Bank who
violates, or permits any of the officers, employees or agents of said Banks or any
other person to violate, any of the provision of this Chapter not specifically punished
in the preceding section and any person violating any provision of this Act or aiding
and abetting the violation thereof, shall be punished with a fine not less than One
hundred thousand pesos (P100,000.00) nor more than Two hundred thousand pesos
(200,000.00), or by imprisonment of not less than one (1) year nor more than five (5)
years, or both, at the discretion of the court.


SEC. 27. Other Liability of Guilty Officer or Employee. Any member of the
Board of Directors or officer or employee of the Bank who wilfully violates any of the
Provisions of this Act shall, in addition to the criminal and administrative liability
resulting from such act, be held liable for any loss or injury suffered by the Bank as a
result of such violation.

‘SEC. 28. [RORY Of Diwiclixs, Onmieee oF Euttners of Cemny Comerston
or Partnership. If the violation of the provisions of this Act is committed by a
‘corporation or partnership, the directors, officers or partners hereof who participated
in the violation shall be criminally liable for such violation,

CHAPTER Vil
MISCELLANEOUS PROVISIONS:

SEC. 29. Applicability of Banking Laws. The provisions of Republic Act No
8791 insofar as applicable and not in conflict with any provision of this Act, shall
apply to the Bank.

SEC. 30. Separability Clause. In the event that any provision of this Act or the
applicability of such provisions to any person or circumstances is declared invalid,
the remainder of the Act or the application of said provision to other persons or
circumstances shall not be affected by such declaration

SEC. 31. Repealing Clause. All acts, executive, orders, administrative orders,
}, tules and regulations or parts thereof inconsistent with any of the
provisions of this charter are hereby repealed or modified accordingly.

SEC. 32. Effectivity. This Act shail take effect after fifteen (15) days following
its publication in at least two (2) newspapers of general circulation.

Approved,