Professional Documents
Culture Documents
STATUTORY BASIS
Art. XII Sec. 20. [PHIL. CONST.] The
Congress shall establish an independent
central monetary authority, the members
of whose governing board must be
natural-born Filipino citizens, of known
probity, integrity, and patriotism, the
majority of whom shall come from the
private sector. They shall also be subject
to
such
other
qualifications
and
disabilities as may be prescribed by law.
The authority shall provide policy
direction in the areas of money, banking,
and credit. It shall have supervision over
the operations of banks and exercise such
regulatory powers as may be provided by
law over the operations of finance
companies
and
other
institutions
performing similar functions.
Until the Congress otherwise provides,
the Central Bank of the Philippines,
operating under existing laws, shall
function
as
the
central
monetary
authority.
BANGKO
SENTRAL
PILIPINAS (BSP)
NG
The
central
monetary
authority
maintained by the State to function
and operate as an independent and
accountable body corporate in the
discharge
of
its
mandated
responsibilities concerning money,
banking and credit [NCBA Sec. 1]
RESPONSIBILITY
AND
PRIMARY
OBJECTIVE
The primary objective of the BSP is to
maintain price stability conducive
to a balanced and sustainable
growth of the economy.
It shall also promote and maintain
monetary
stability
and
the
convertibility of the peso. [NCBA
Sec. 3]
AUTHORITY OF THE BSP
Supervisory Powers [GBL Sec. 4]
o issuance of rules of conduct or
the establishment of standards
of
operation
for
uniform
application to all institutions or
functions covered
o conduct of examination to
determine compliance with laws
and regulations
o Overseeing to ascertain that
laws
and
regulations
are
complied with
o Regular
investigation
which
shall not be oftener than once a
year from the last date of
examination
o Inquiring into the solvency and
liquidity of the institution
o Enforcing
prompt
corrective
action
o supervision over the operations
of and exercise regulatory
powers over quasi-banks, trust
entities and other financial
institutions which under special
laws
Policy Direction; Ratios, Ceilings
and Limitations. [GBL Sec. 5]
HOW
BSP
HANDLE
BANKS
IN
DISTRESS
Grant emergency loans to the bank
o Without collateral: not more
than 7 days for the purpose of
providing liquidity [NCBA Sec.
83]
o Upon
the
approval
of
5
members of the MB: grant
emergency loans in the amount
not exceeding 50% of its total
deposit. Loan shall be released
in 2 tranches. [NCBA Sec.84]
Appoint a conservator
CONSEVATORSHIP [NCBA Sec. 29]
ILLIQUIDITY occurs when the bank
is not liquid. It means that the bank
cannot meets its current liability.
LIQUIDITY is the ability of an asset to
be converted into cash. An nntity is
liquid when it is able to pay its
liabilities when they fall due.
Illiquidity
is
handled
by
conservatorship.
unwillingness
to
maintain
a
condition of liquidity
deemed
adequate to protect the interest of
depositors and creditors
Length of conservatorship: Not
more than 1 year
Requisites in placing a bank under
Conservatorship:
1. There
must
be
a
report
submitted by the appropriate
supervising
or
examining
department of the BSP;
2. There must be a finding that the
bank or quasi-bank falls under
either of the grounds for
conservatorship
3. The board of Directors must be
informed in writing of the order
of
the
MB
directing
conservatorship.
Powers of a conservator:
to take charge of the assets,
liabilities, and the management
thereof
reorganize the management of
the bank
collect all monies and debts due
said institution
exercise all powers necessary to
restore its viability
Qualifications and Remunerations
competent and knowledgeable
in
bank
operations
and
management
remuneration to be fixed by MB
in an amount not to exceed 2/3
of the salary of the president of
the institution in 1 year, payable
in 12 equal monthly payments
conservator shall receive the
balance of the remuneration if
terminated on the ground that
the institution can operate on
its own
conservator shall not be entitled
to such remaining balance if
terminated on other grounds
RECEIVERSHIP
&
LIQUIDATION
[NCBA Sec 30]
INSOLVENCY when the actual
market value of assets are insufficient
to pay its liabilities, not considering
capital stock and surplus which are not
liabilities for such purpose. An entity is
insolvent when it is unable to meet
current and long-term obligations. A
bank is solvent when current assets
are more than current liabilities,
providing the ability to pay debt. It is
able to meet its long term obligations
and liabilities
Insolvency is handled by a
receivership and/or closure.
Grounds for Receivership:
Unable to pay its liabilities as
they become due in the
ordinary course of business:
Provided, That this shall not
include inability to pay caused
by
extraordinary
demands
induced by financial panic in the
banking community;
Has
insufficient
realizable
assets, as determined by the
BSP, to meet its liabilities
Cannot continue in business
without
involving
probable
losses to its depositors or
creditors
Willfully violated a cease and
desist order under Section 37
that has become final, involving
acts or transactions which
amount to fraud or a dissipation
of the assets of the institution
Additional grounds from GBL:
A bank or quasi-bank notifies
the Bangko Sentral or publicly
announces a bank holiday, or in
any manner suspends the
payment of its deposit liabilities
continuously for more than 30
days [GBL Sec. 53]
a bank, quasi-bank or trust
entity persists in conducting its
business in an unsafe or
unsound manner[GBL Sec. 56]
Requisites for Receivership:
San
Miguel,
Inc.
vs.
Monetary
Board,
Bangko
Sentral ng Pilipinas (2007)]
The issuance by the RTC of writs
of preliminary injunction is an
unwarranted interference with
the powers of the MB. Secs. 29
and 30 of RA 7653 refer to the
appointment of a conservator or
a receiver for a bank, which is a
power of the MB for which they
need the ROEs done by the
supervising
or
examining
department.
The
writs
of
preliminary injunction issued by
the trial court hinder the MB
from fulfilling its function under
the law. The actions of the MB
under Secs. 29 and 30 of RA
7653 may not be restrained or
set aside by the court except on
petition for certiorari on the
ground that the action taken
was in excess of jurisdiction or
with such grave abuse of
discretion as to amount to lack
or excess of jurisdiction. The
writs of preliminary injunction
order are precisely what cannot
be done under the law by
preventing the MB from taking
action under either Sec. 29 or
Sec. 30 of RA 7653. sUnder the
law, the sanction of closure
could be imposed upon a bank
by the BSP even without notice
and hearing. The apparent lack
of procedural due process would
Conservators
hip
Closure/Receivership
cept
Con
nds
Grou
Liquidation
The assets of a
bank which is not capable
of being rehabilitated are
sold, and the proceeds are
used to pay off the banks
debts
1) The condition of the
bank
is
one
of
insolvency
2) Its continuance would
involve probable loss
depositors or creditors; or
2) Unwillingness to do so
Who
carries it out
Pow
er
and
duties
thereof
Conservator, who is an
individual appointed by the BSP
1) To take charge of the assets,
liabilities,
and
the
management thereof;
2) To
reorganize
the
management;
3) To collect all monies and debts
due said institution;
4) To
exercise
all
powers
necessary to restore its
viability;
5) To report and be responsible
to the MB;
6) To overrule or revoke the
actions of the management
and the BOD of the bank;
7) Notably does not have the
power to takeover bank affairs.
Whe
n
Terminated
After 1 year
to its creditors
3) In both cases, the MB
determines that the
bank
cannot
be
rehabilitated
Liquidation Court
and Receiver
COURT
1) Adjudicate
disputed
claims against the
institution
2) Assist the enforcement
of individual liabilities
of the stockholders,
directors, and officers,
and
3) Decide on other issues
as may be material to
implement
the
liquidation plan
RECEIVER:
1) Convert the assets of
the
institution
to
money; and
2) To dispose the same
for the purpose of
paying the debts of the
institution
Supervision and
Examination
Sec. 25
Conservators
hip
Sec. 29
Basis
Prohi
bit
No
TRO/Injunction
Rem
edy
Grou
nd
Perio
d
Rule
58
(Preliminary
Injunction)
Bad
faith/Arbitrarines
s
Any time before
the completion of
the examination
Receivership
and Liquidation
Sec 30
No
TRO/Injunct
ion
Rule
65
(Certiorari)
GAD
GAD
10
days
from
the
receipt
of
the
order
(Close nowHear Later
Scheme)
10
days
from
the
receipt
of
the
order
(Close nowHear Later
Scheme)
No
TRO/Injunct
ion
Rule
65
(Certiorari)