Fernand Joseph D. Miranda | Juan Paulo M. Santos
On 15 December 2025, the Bangko Sentral ng Pilipinas (“BSP”) issued Circular No. 1226, Series of 2025 (the “Circular”), amending Section 138 of the Manual of Regulations for Banks (“MORB”) and Section 137-Q of the Manual of Regulations for Non-Bank Financial Institutions (“MORNBFI”), the provisions governing the disqualification and watchlisting of directors and officers of banks and non-bank financial institutions. Approved by the Monetary Board (“MB”) in its Resolution No. 1072 dated 30 October 2025, the Circular introduces a significant policy change by establishing a uniform five (5)-year period of temporary disqualification followed by automatic delisting, subject to clearly defined exceptions. While the amendments modify the timelines and manner of delisting, they do not affect the substantive grounds that originally triggered temporary disqualification.
Under Sections 138 of the MORB and 137-Q of the MORNBFI, a wide range of circumstances could temporarily disqualify a person from serving as a director or officer of a bank or non-bank financial institution. These grounds include delinquency to settle financial obligations, such as failure to satisfy a court-adjudicated debt, filing for insolvency or suspension of payments that undermined a person’s fitness and propriety, or becoming past due on an obligation with a bank where they are a director or officer, or at least two (2) obligations with other banks/financial institutions. Persons involved in the closure of banks/quasi-banks awaiting MB clearance, as well as those involved in any irregularity/violation that constitutes a just cause for dismissal/termination, were likewise temporarily disqualified. These core grounds, among others enumerated in the foregoing sections of the MORB and MORNBFI, as applicable, have long formed the basis of the watchlisting framework and remain unchanged by the Circular, which focuses, instead, on revising how temporary disqualification is treated, specifically, the duration of the disqualification and the rules on delisting.
Under the Circular, the period for temporary disqualification now commences from the time the BSP officially notifies the person of such status. From that point, the person remains on the disqualification list for a fixed period of five (5) years, after which they are, generally, automatically delisted. This automatic delisting, however, does not apply when specific conditions exist. If the person has a pending case before a court or administrative body or is under investigation by the Office of the General Counsel and Legal Services-BSP, or as may be determined by the MB based on an assessment of the person’s fitness and propriety to become a director or officer of a bank or quasi-bank, they will not be automatically removed once the five (5)-year period lapses. Instead, they must file a request for delisting and submit documentary proof showing that the cases filed against them were resolved in their favor, or that they were cleared by the appropriate body. Thereafter, the MB will determine whether to approve or deny the request for delisting.
The Circular retains the provision on automatic delisting in favor of persons known to be dead, upon proof of such death.
Another consequential feature of the Circular is its retroactive application. Persons who were previously placed under temporary disqualification may now benefit from the automatic delisting rule, provided they do not fall under any of the enumerated exceptions.
In essence, the Circular streamlines the treatment of temporary disqualification without altering any of the substantive grounds that trigger it. By introducing a uniform five (5)-year period, establishing a clearer and more predictable delisting mechanism, and defining the limited circumstances in which MB review remains necessary, the Circular promotes consistency across banks and non-bank financial institutions while preserving the BSP’s fitness and propriety standards.