Mr. Russel L. Sobrepeña

December 7, 1989 Mr. Russel L. Sobrepea Rural Bank of Caba (La Union), Inc. Rural Bank Bldg., National Highway, Caba, La Union 0517 Sir : This refers to your letter dated September 21, 1989 requesting opinion on the propriety of the position taken by the Chief S.E. Specialist, Corporate and Partnership Division, this Commission, to the effect that the term "Trust" is exclusively reserved for banks and banking institutions in accordance with SEC Rules and Regulations and further questioned the allowance granted to Philippine Educational Trust Plans Corporation, a pre-need company registered under the Revised Securities Act, to use the word "Trust" in its corporate name. Relative thereto, please be informed that Section 6 of the General Banking Act provides, and we quoted: "No person, association or corporation not conducting the business of . . . trust corporation, . . ., shall otherwise or hold of such . . . corporation . . . or use in connection with its business title word or words . . . "trust corporation", "Trust company" or words of similar import . . . without having first complied with the provision of this Act. . . . (emphasis supplied) As a general rule, therefore, the word "trust" can be used by persons, corporations or associations conducting the business of trust corporations or trust companies such as banks or banking institutions and after compliance with the applicable provisions of the General Banking Act. Philippine Educational Trust Plans was allowed to use the word "trust" as part of its corporate name after the same was cleared with the Central Bank of the Philippines, through Director R. P. Lirio, which made the following comments: "The Articles of Incorporation and By-laws of the subject corporation indicate its lack of intention to engage in the business of a trust company pursuant to Chapter VII of the General Banking Act. Neither do they carry provisions relating to non-bank financial intermediation functions over which Central Bank may assume jurisdiction." "The use of the word "Trust" is nominal and does not fall within the prohibition under Section 6 of RA 337, that its articles and by-laws, indicate its lack of intention to engage in the business of trust company and do not carry provisions relating to non-bank financial intermediation functions over which the Central Bank may assume jurisdiction." (CB 2nd Indorsement dated August 22, 1988) Moreover; it should be emphasized that in the corporate name in question, the word "TRUST" is placed between the qualifying words "Educational" and "Plans" which is clearly indicative of the fact that the company is not engaged in trust business. Hence, the use of the said term was allowed by the Commission. Finally, please be advised that you may reserve your proposed corporate name containing the word "Trust". However, the Commission shall not allow the use thereof unless accompanied by a favorable recommendation from the Central Bank. Very truly yours, (SGD.) RODOLFO L. SAMARISTA Associate Commissioner