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New Central Bank Act: Banking Law Cmtfalcon Notes
New Central Bank Act: Banking Law Cmtfalcon Notes
New Central Bank Act: Banking Law Cmtfalcon Notes
CMTFALCON NOTES
NEW CENTRAL BANK ACT c. Good moral character;
d. Unquestionable Integrity;
1. STATE POLICY e. Of known probity and patriotism; and
The state shall maintain a central monetary authority that shall function and f. With recognized competence in social economic disciplines.
operate as an independent and accountable body corporate in the discharge of its DISQUALIFICATION OF MONETARY BOARD MEMBERS
mandated responsibilities concerning money, banking and credit. In line with this a. Disqualification imposed by RA 6713;
policy, and considering its functions and responsibility, the central monetary authority b. Disqualified from being a director which is subject to the supervision
established under NCBA, while being government owned corporation, shall enjoy fiscal and examination of BSP;
and administrative autonomy. c. No member of the MB must be connected to multilateral banking or
financial institution or has substantial interest in a private bank; and
2. CREATION OF THE BSP d. No member of MB shall be employed in any institution within 2 years
SECTION 2 OF NCBA after expiration of term.
BSP’s capital is 50 B GROUNDS FOR REMOVAL IF MB MEMBER
SECTION 4 OF NCBA The PRES has the power to remove.
BSP’s Principal location is at Metro Manila
SECTION 20, ARTICLE 12 of 1987 Constitution a. If the member is subsequently disqualified under NCBA
“Congress shall establish an independent central authority.” b. Physically and mentally incapacitated and cannot perform his duties for more
than 6 months
3. RESPONSIBILITY AND PRIPARY OBJECTIVE OF BSP c. Guilty of acts that are fraudulent and illegal
a. Provide policy directions in areas on money, banking and credit d. The member no longer possess the qualification
b. Supervision over the operation of bank
c. Exercise regulatory powers over the operation of finance companies and non- SCOPE AND AUTHORITY OF MB
bank financial institutions performing quasi-banking functions a. Issue rules and regulations relating to BSP
d. Maintain price stability conducive to a balanced and sustainable growth of b. Direct the management, operations and administration of BSP
economy c. Establish a human resource management system and shall govern the hiring,
e. Promote and maintain financial stability and convertibility of peso appointment, transfer, promotion or dismissal of personnel in BSP
f. The responsibility to administer the monetary, banking and credit system of the d. Adopt annual budget for BSP
country e. Indemnify its members and other officials of BSP
4. MONETARY BOARD POWERS AND FUNTIONS 5. HOW BSP HANDLES BANK DISTRESS
The powers and functions of the BSP shall be exercised by the BSP-MB. a. CONSERVATORSHIP
COMPOSITION First Phil International Bank v CA
The MB is composed of 7 members appointed by the PRES for a term of 6 “The conservator’s power is not unilateral and he cannot simply repudiate
years valid obligations of the bank. His authority would be only to bring court actions to
VACANCIES assail contracts.”
Any vacancy of the MB by death, resignation or removal of any member to NOTES:
complete the unexpired term of the member concerned. a. GOVERNING LAW
QUALIFICATION OF MEMBERS OF MB SECTION 29 of NCBA
a. Natural born citizen of the Philippines; b. GROUNDS FOR APPOINTMENT OF CONSERVATOR
b. At least 35, exc: governor at least 40; When the MB finds the bank in a state of:
Banking Law
CMTFALCON NOTES
1. Continuing liability; pr “The bank is allowed to collect interest on its loans while under liquidation,
2. Unwillingness to maintain a condition of liquidity provided that the interests were legal.”
deemed adequate to protect the interest of its Rural bank of San Miguel vs MB
depositors. “The absence of an examination before the closure of a bank did not mean
that there was no basis of closure order. Needless to say, the decision of the MB
The MB may appoint a conservator with the power of:
and BSP, like any other administrative body, must have something to support
1. Take charge of the assets, liabilities, and the itself and its findings of fact must be supported by substantial evidence. The basis
management need not arise from an examination as required by the old law before the MB can
2. Reorganize the management order its closure.”
3. Collect all monies and debts due said institution “Closure of bank may be considered exercise of police power. The actions of
4. Exercise powers necessary to restore it viability the MB are final and executor. Such exercise may be subjected to judicial inquiry
c.DEFINITION and be set aside if found to be excess of jurisdiction or with such grave abuse of
a. LIQUIDITY- the ability of an asset to be converted into cash quickly discretion as amount to lack or excess of jurisdiction.”
and without any price discount
c. RECIEVERSHIP
b. SOLVENCY- the condition that exists when liabilities amount to less
than the total assets, thus providing the ability to pay debts. Abacus Real Estate v Manila Banking Corp
d. QUALIFICATION OF CONSERVATOR
The conservator should be competent and knowledgeable in bank NOTES:
operations a. RECIEVERSHIP AND INVOLUNTARY LIQUIDATION
e. PERIOD OF CONSERVATORSHIP Governed by SECTION 30,31,32 and 33 of NCBA
Not exceed 1 year
f. THE POWERS OF CONSERVATOR CANNOT IMPAIR OBLIGATIONS AND 1. GROUNDS FOR RECIEVERSHIP AND LIQUIDATION
CONTRACT The MB may w/o prior hearing forbid the institution from doing business in the
b. CLOSURE Philippines and designate the PDIC as receiver of the banking institution, upon report
“CLOSE NOW HEAR LATER RULE” of the head of the supervising department, it finds that the bank:
Central Bank v CA a. Is unable to pay its liabilities
“The law does not contemplate prior notice and hearing before a bank may b. Insufficient realizable assets
be directed to stop operations and placed under receivership. When the law c. Cannot continue business without involving losses to its creditors
provides for the filing of a case within 10 days after the receiver takes charge of d. Has violated a cease and desist order that has become final, involving transactions
the assets of the bank, it is unmistakable that the assailed actions should precede which amount to fraud.
the filing of the case. Plainly, the legislature could not have intended to authorize
“NO PRIOR NOTICE AND HEARING” in the closure of the bank and at the same 2. CURRENT AND COMPLETE EXAMINATION NOT NECESSARY (Rural bank of San
time allow a suit to annul it on the absence there of.” Miguel v MB, RE: SECTION 30)
b. PROCEDURE
Banco Filipino Savings and Mortgage Bank
a. The receiver shall immediately:
v Ybanez a. Gather and take charge of all the assets and liabilities of the institution,
“An examination by the head of the appropriate supervising or examining b. Administer the same for the benefit of its creditors
department or his examiners or agents into the condition of the bank is c. Exercise general powers of a receiver under the ROC
necessary”
Banking Law
CMTFALCON NOTES
d. Shall not with the exception of administrative expenditures, pay or commit
any act that will involve the transfer, or disposition of any asset of the NOTE: Under Circular No. 547 Series of 2006 the maximum amount of coins
institution. considered as legal tender is adjusted to as follows:
b. The receiver may deposit or place the funds of the institution in non-speculative 1. 1K for denominations of 1P, 5P and 10P
investment 2. 100P for denominations of 1C,5C and 25C
c. The receiver shall determine as soon as possible, but not later than 90 days w-o-n
the institution is rehabilitated or not RE: NCC
d. Any determination for the resumption of business shall be subject to the approval
Art. 1249. The payment of debts in money shall be made in the currency
of the monetary board.
stipulated, and if it is not possible to deliver such currency, then in the
c. PROHIBITED ACTS
currency which is legal tender in the Philippines.
Any director of a bank declared insolvent or placed under receivership shall no commit
any of the following:
The delivery of promissory notes payable to order, or bills of exchange or
a. Refusing to turn over bank records’ and assets to designated receiver
other mercantile documents shall produce the effect of payment only when
b. Tampering with bank records
they have been cashed, or when through the fault of the creditor they have
c. Appropriating for himself or another party, or destroying or causing
been impaired.
misappropriation and destruction of banks assets
d. Receive bank deposits In the meantime, the action derived from the original obligation shall be held
e. Paying out or causing to be paid out of any funds of the said bank in the abeyance. (1170)
f. Transferring any securities or properties of said bank
d. LIQUIDATION Art. 1250. In case an extraordinary inflation or deflation of the currency
Pacific Banking vs CA stipulated should supervene, the value of the currency at the time of the
establishment of the obligation shall be the basis of payment, unless there is
an agreement to the contrary.
Manalo vs CA
“The exclusive jurisdiction of the liquidation pertains only to the adjudication 7. HOW BSP HANDLES EXCHANGE CRISIS
of claims against the bank. It does not cover the reverse situation where it is the bank a. DOMESTIC MONETARY STABILITY 331
which files a claim against another person or legal entity” b. ABNORMAL MIVEMENT IN THE MONETARY AGGREGATES, CREDIT OR PRICE LEVEL
331
6. LEGAL TENDER c. FOREIGN EXCHANGE 336
a. LEGAL TENDER POWER d. LIQUIDITY PROBLEMS OF BANK
All notes and coins issued by the BSP shall be fully guaranteed by the 1. Receivership
Government of the RP and shall be legal tender in the Philippines for all debts, 2. Closure
both public and private: Provided however, that, unless otherwise fixed by the MB
coins shall be legal tender in amount not exceeding 50P for denominations of 25C LAW ON SECRECY OF BANK DEPOSITS (106-119)
and above, and in amounts not exceeding 20P for denominations of 10C.
1. PURPOSE
Checks representing demand deposits do not have legal tender power and a. It is to encourage people to deposit their money in the bank in order to make the
their acceptance in the payment of debts is at the option of the creditor: Provided same available for business or industry.
the check has been cleared and accredited to the account to the creditor shall be b. To discourage private hoarding
equivalent to delivery to the creditor of cash in an amount equal to the amount
credited to his account. 2. PROHIBITED ACTS
Banking Law
CMTFALCON NOTES
It shall be unlawful for any official or employee of a banking institution to disclose to The Corporation shall, as a basic policy, promote and safeguard the interests of the
any person other than those mentioned in Section two hereof any information depositing public by way of providing permanent and continuing insurance coverage
concerning said deposits. on all insured deposits.
vi. FAILURE TO SETTLE CLAIM OF INSURED DEPOSITOR C. COVERED AND EXCLUDED TRANSACTIONS
vii. FAILURE OF DEPOSITOR TO CLAIM INSURED DEPOSITS D. CONSEQUENCES OF NON COMPLIANCE WITH OBLIGATIONS
a. EXAMINATION OF BANKS AND DEPOSITS ACCOUNTS The violation of the Truth in Lending Act would allow debtor to refuse payment of
b. PROHIBITION AGANINST SPLITING OF DEPOSITS financial charges or, if already paid, to recover the same. Debtor may also initiate
c. PROHIBITIONS AGAINST ISSUANCE OF TRO’s, ETC. criminal charges against the violator.