On March 24, 2023, the Bangko Sentral ng Pilipinas (“BSP”) issued Circular No. 1169 providing for the Rules of Procedure for the Consumer Assistance Mechanism, Mediation and Adjudication of Cases in the BSP.
The Rules shall apply to all compaints filed after May 1, 2023 (the date on which the Rules became effective), provided that the cause or causes of action subject of the complaint accrued after June 3, 2022 (the date on which the Financial Products and Services Consumer Protection Act [the “FCPA”] took effect).
• CONSUMER ASSISTANCE MECHANISM:
1. What are the recourse mechanisms for financial consumers?
The first-level recourse mechanism for financial consumers who are dissatisfied with a financial product or service is the BSP-Supervised Institution’s (“BSI”) Financial Consumer Protection Assistance Mechanism (“FCPAM”). The second-level recourse mechanism for financial consumers who have reported their concerns to the BSI involved, through the BSI’s FCPAM, and are still not satisfied with how the BSI handled their concerns (or whose concerns were not acted upon by the BSI’s FCPAM within a reasonable period), is the BSP Consumer Assistance Mechanism (“BSP-CAM”). The BSP-CAM is a condition precedent to both the mediation and adjudication of consumer complaints. If complainants remain unsatisfied after resorting to BSP-CAM, they have the option to proceed to either mediation or adjudication.
2. What is the scope of the Rule on Consumer Assistance Mechanism (Rule III of Circular No. 1169)?
Rule III applies to all concerns relating to the financial products and services of BSIs and/or violations of the provisions of the FCPA. However, Rule III does not apply to certain cases that are more properly resolved before another court or agency. These include (but are not limited to) the following: (a) cases with an application for provisional remedies under the Rules of Court; (b) cases involving administrative and criminal sanctions under other laws; (c) disputes which are not covered by banking or related laws, or BSP rules and regulations (e.g., administrative policies or labor/employment, and intra-corporate disputes) (d) cases that are pending before, or which have already been decided by, another court or quasi-judicial body; (e) cases involving disqualification or administrative cases against directors, trustees, officers, employees or third-party agents of the BSI, as covered by relevant laws and BSP regulations; (f) claims against closed banks (which are more properly resolved before the Philippine Deposit Insurance Corporation (“PDIC”) or liquidation courts); and (g) cases where the resolution of BSP will depend on the prior resolution of issues by the courts or other government offices/agencies. Cases such as the foregoing shall be dismissed by the BSP, without prejudice to refiling by the complainant with the appropriate court or government agency.
3. Who is the Real Party-in-Interest in a CAM proceeding?
The real party-in-interest is the party named in the records of the BSI as the actual or prospective depositor, purchaser, lessee, recipient of a financial transaction with a BSI; or the account owner, credit card holder, borrower, lessee, mortgagor in an existing or prospective financial transaction with a BSI. A party may be represented in the BSP-CAM provided he submits a written and signed authorization giving the representative authority to appear and act on his behalf during the proceedings, with full power and authority to bind the party on any matter. The representative need not be a lawyer.
4. What is the process for BSP-CAM?
a. Filing: Financial consumers may submit their complaints in the required format to the Consumer Protection and Market Conduct Office (“CPMCO”) either personally or through BSP Online Buddy (“BOB”) Chatbot, postal mail, courier, electronic mail, or through other electronic means, or with the nearest BSP Regional Offices or Branches. The complaint must show that the complainant has previously availed himself of the BSI’s FCPAM.
b. Exchange of replies: The BSP shall acknowledge receipt of complaints. The acknowledgment may include a request for additional details or relevant documents and records to support the claim. The BSI and the complainant are given the opportunity to exchange their answer, reply and rejoinder, as the case may be.
c. Escalation to Mediation and/or Adjudication. CPMCO shall offer the complainant the option of resolving the dispute through mediation. If the complainant consents within the prescribed period of five days from the offer, the CPMCO shall refer the matter to the Consumer Complaints Resolution Office (“CCRO”). Otherwise, if the complainant does not consent to mediation, the BSP-CAM shall be terminated.
d. Termination of the BSP-CAM. The BSP-CAM may also be terminated in the following circumstances:
i. where the complainant or their duly authorized representative submits a notice of voluntary withdrawal with the CPMCO;
ii. if no further communication from the complainant is received by CPMCO within 30 days from the date of the BSI’s last response;
iii. if the BSI fails to provide its: answer or rejoinder to the complainant within the prescribed periods;
iv. If the complainant and the BSI voluntarily agree to proceed directly to mediation;
v. If after two replies, the complainant remains dissatisfied with the BSI’s response, and the complainant requests, in writing, for mediation and/or adjudication.
• MEDIATION:
1. What is mediation?
Mediation is an intervention by which the BSP, through its duly authorized mediation officers, facilitates communication and negotiation between the parties, and assists them in reaching a mutually acceptable settlement. It is voluntary in nature and a strictly confidential process.
2. What is the scope of the Rule on Mediation (Rule IV)?
Rule IV applies to all concerns relating to the financial products and services of BSIs and/or violations of the provisions of the FCPA. Rule IV shall also not apply to cases not covered by Rule III. If the case falls under any of the out-of-scope cases, BSP shall dismiss the complaint without prejudice to refiling by the complainant with the appropriate court or government agency.
3. Who is the Real Party-in-Interest in a Mediation proceeding?
Similar to Rule III, the real party-in-interest is the party named in the records of the BSI as the actual or prospective depositor, purchaser, lessee, recipient of a financial transaction with a BSI; or the account owner, credit card holder, borrower, lessee, mortgagor in an existing or prospective financial transaction with a BSI. A party may be represented in the Mediation proceedings provided they submit a Special Power of Attorney authorizing the representative to appear and act on their behalf during the proceedings, with full power and authority to bind the party on any matter. The representative need not be a lawyer.
4. What is the process for Mediation proceedings?
a. Initiation. Mediation may be commenced upon referral by the CPMCO of the financial consumer complaint to the CCRO. Mediation may also be initiated by the parties upon termination of the BSP-CAM by submission to the CPMCO of a written request to undergo mediation signed by both parties.
b. Schedule of Mediation. The Mediator shall issue a Notice of Mediation within 10 days from receipt by the CCRO of the referral of CPMCO. The date of the initial mediation conference shall be set within 10 days from the expiry of the period to issue a Notice of Mediation, unless the Mediator deems that there is a justifiable reason to set it at a later date.
c. Mediation Proceedings. The mediation proceedings shall be conducted virtually or through online video conferencing. Parties who opt for in-person or face-to-face mediation may send a written request to the Mediator stating the reasons for such request. If conducted online, the online video conference shall only use the BSP-prescribed platform. The parties shall be properly identified and visible during the online video conference. If conducted in person, the mediation proceedings may be held at BSP Head Office or in any of the BSP Regional Offices or BSP Branches, as may be determined by the Mediator.
d. Mediation Period. The mediation period shall be for a period of 30 days reckoned from the date of the initial mediation conference. For meritorious reasons and as agreed upon by the parties, a longer period may be allowed. If any of the parties fail to appear in two consecutive scheduled mediation sessions despite due notice and without any valid reason, it shall be a ground for termination of the mediation proceedings and the Mediator shall issue a Notice of Termination of Mediation.
e. Termination of Mediation
i. Successful Mediation. The parties shall execute a Settlement Agreement signed by them or their representatives the prescribed BSP form annexed to BSP Circular 1169. The Settlement Agreement shall be attested by the Mediator.
ii. Failure of Mediation. If the parties are unable to settle their dispute, the Mediator shall declare a failure of mediation and terminate the proceedings by issuing a Notice of Termination of Mediation.
• ADJUDICATION:
1. What is the jurisdiction of the BSP for adjudicating financial consumer complaints?
The BSP shall have jurisdiction over actions filed before the CCRO for financial consumer complaints arising from, or in connection with, financial transactions that are purely civil in nature, and the claim or relief prayed for is solely for payment or reimbursement of a sum of money not exceeding PhP10 million in total, exclusive of legal interest, attorney’s fees, and costs of suit. Except as to the amount of actual claim, legal interest, attorney’s fees, and costs of suit, no other form of damages shall be recoverable.
If the total amount of the claim or relief prayed for exceeds PhP10 million, it shall be dismissed unless the complainant waives the principal claim exceeding PhP10 million.
2. What is the scope of the Rule on Adjudication (Rule V)?
Rule V applies to matters of financial consumer complaints filed before the CCRO that fall under the jurisdictional amounts discussed above.
Rule V shall also not apply to cases not covered by Rule III. In addition, Rule V (Adjudication) shall not apply to the following cases:
a. cases involving questions on the financial product or service where the relief sought is to avoid or prevent payment of a sum of money to the BSI relative to the said financial product or service;
b. cases in which the relief sought is other than payment or reimbursement;
c. counterclaims, crossclaims and third (fourth, etc.)-party complaints;
d. complaints on general pricing, product features, credit or underwriting decisions, or applications to restructure or reschedule a loan or financing pertaining to commercial loan transactions, unless the BSP prescribes a specific regulation on the matter; and
e. cases where the subject matter of which is incapable of pecuniary estimation.
If the case falls under any of the out-of-scope cases, the BSP shall dismiss the formal complaint without prejudice to refiling by the complainant with the appropriate court or government agency.
For cases falling under the concurrent jurisdiction of the BSP, Cooperative Development Authority (“CDA”), Insurance Commission (“IC”), and/or Securities and Exchange Commission (“SEC”), as provided under the FCPA, BSP shall dismiss the complaint if CDA, IC, or SEC has already acquired or assumed jurisdiction over the subject matter.
If the financial product or service subject of the formal complaint is primarily or substantially regulated by another financial regulator, the BSP shall dismiss the formal complaint and refer the same to the financial regulator having jurisdiction over the financial product or service.
3. What is the nature of the proceedings before the BSP?
The proceedings before the BSP shall be summary and non-litigious in nature. The technical rules of procedure applied before the courts of law shall not apply, and the Adjudicator may avail all reasonable means to ascertain the facts of the controversy. In the exercise of its adjudicatory powers, the Adjudicator shall have the power to issue subpoena duces tecum, summon witnesses, and when appropriate, to order the examination, search, seizure and production of all documents, books of accounts, and records, whether physical or digital, of any entity or person under investigation as may be necessary for the proper disposition of cases.
4. Who in the Real Party-in-Interest in adjudication proceedings?
Similar to Rule III, the real party-in-interest is the party named in the records of the BSI as the actual or prospective depositor, purchaser, lessee, recipient of a financial transaction with a BSI; or the account owner, credit card holder, borrower, lessee, mortgagor in an existing or prospective financial transaction with a BSI.
A party may be represented in the adjudication proceedings provided they submit a Special Power of Attorney authorizing the representative to appear and act on their behalf during the proceedings, with full power and authority to bind the party on any matter.
5. What is the process for Adjudication proceedings?
a. Commencement. The action commenced by filing with the CCRO a formal complaint in the form prescribed by the BSP (annexed to BSP Circular 1169), accompanied by a Verification and Certification of Non-Forum Shopping, and supporting documents.
b. Summons. If the formal complaint is sufficient in form and substance, the Adjudicator shall issue summon directing the respondent to submit a verified Answer.
c. Answer. The respondent shall serve on the complainant and file with the CCRO a verified Answer within a non-extendible period of 30 days from receipt of summons. The Answer shall be accompanied by certified true copies of documents, as well as affidavits of witnesses and other evidence.
If the respondent fails to file an Answer, the Adjudicator may proceed to render a decision based on the allegations and evidence of the complainant. The Adjudicator may also conduct the proceedings ex parte.
d. Preliminary Conference. Within 15 days from receipt of the Answer, the Adjudicator shall issue a notice to the parties or their authorized representative directing them to appear in the Preliminary Conference.
The Preliminary Conference shall be called for the purpose of:
i. Discussing the possibility of an amicable settlement;
ii. Defining, simplifying, or clarifying the issues in the case;
iii. Entering into admissions and stipulations of facts and documents;
iv. Confirmation of the pre-markings on the evidence of the parties; and
v. Taking up such other matters which may aid the Adjudicator in the prompt disposition of the case.
The failure of the complainant to appear at the preliminary conference without valid ground shall cause the dismissal of the formal complaint without prejudice. Meanwhile, the failure of the respondent to appear in the preliminary conference without valid ground shall be the cause to allow the complainant to present his case ex parte and the Adjudicator to render judgment on the basis of documents and evidence presented.
e. Preliminary Conference Brief. The parties are required to file with CCRO and furnish each other in such a manner that shall ensure their receipt thereof at least five days before the date of the preliminary conference, their respective Preliminary Conference Briefs.
The failure to submit the Preliminary Conference Brief shall have the same effect as the failure to appear in the preliminary conference.
f. Preliminary Conference Order. After the preliminary conference, the Adjudicator shall issue the Preliminary Conference Order detailing the matters taken up during the preliminary conference, the actions taken, and the agreements or admissions made by the parties.
g. Filing of Position Papers. The Adjudicator shall issue an order directing the parties to simultaneously submit their respective position papers, together with the supporting affidavits and/or documentary evidence, on a date set by the Adjudicator within 30 days from the date of termination of the preliminary conference.
Failure of a party to file a position paper within the given period shall be deemed a waiver of the right to file the same.
Upon the submission of the position papers or the lapse of the period to submit, the case shall be deemed submitted for decision unless the Adjudicator calls for a clarificatory hearing.
h. Clarificatory Hearing. This hearing may be done personally or through video conferencing to elicit facts or information for the prompt and just resolution of the case. During the clarificatory hearing, a party may raise clarificatory questions which shall only be coursed through the Adjudicator. The Adjudicator has the discretion to require an answer or response, depending on the question’s relevancy and materiality to the issue.
i. Decision. The Adjudicator shall render a decision within 60 days from the issuance of the order submitting the case for resolution. The period of time to resolve may be extended, for good cause, upon approval of the CCRO Director.
j. Execution of Decision. The Adjudicator shall issue a writ of execution directing the sheriff of the relevant court to enforce the decision or order. The Writ of Execution shall be effective for a period of five years from the date of issuance. After the lapse of five years, the decision or order shall become dormant, and an award may only be enforced by filing an independent action before the CCRO within a period of 10 years from the date of its finality.
6. Can parties enter into a compromise agreement? If yes, what would be the effect if the parties decided to compromise?
Yes, the parties may enter into a compromise agreement at any time before the case is deemed submitted for decision. A compromise agreement shall be final and executory unless an action for nullification of the compromise has been filed before the proper court. A compromise based on the terms stated therein shall have the same effect as a determination on the merits of the complaint.
7. What are the remedies available to a party against whom the case is decided?
A party may move for a reconsideration of a decision or order of the Adjudicator within 10 days from receipt thereof. A second motion for reconsideration shall not be allowed.
A motion for reconsideration shall be based on any of the following grounds:
i. Evidence is insufficient to justify the decision or final order; or
ii. Decision or final order is contrary to law.
A comment on, or opposition to, the motion may be filed within 10 days from receipt thereof.
8. When does the decision become final?
The decision shall be final and executory after the lapse of 10 days from receipt thereof by the parties unless a motion for reconsideration is filed. After the decision or order becomes final and executory, the same shall be entered in the book of entries of judgments.
Read the latest Banking Bulletin here or via this link.
