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To maintain price stability conducive to a balanced and sustainable growth of the economy. promote and maintain the monetary stability and the convertibility of the peso To provide policy directions in the areas of money, banking, and credit, with supervision over the operations of banks and with regulatory powers over the operations of finance companies and nonbank financial institutions performing quasibanking functions. (Sec 3)
ROLES OF BSP
Designation as Banker of Government Representation with International Monetary Board Representation with Other Financial Institutions Fiscal Operations
Tax Exemption Exemption from Customs Duties Prohibitions Phase-out of Fiscal Agency Functions Phase-out of Regulatory Powers Over the Operations of Finance Corporations and Other Institutions
MONETARY BOARD
Monetary Board- composed of seven (7) members appointed by the President of the Philippines for a term of six (6) years: (a) The Governor, as Chairman; (b) A member of the Cabinet designated by the President of the Philippines; (c) Five (5) members who shall come from the private sector, all of whom shall serve full time.
He shall be head of a department and his appointment shall be subject to confirmation by the Commission on Appointments; He shall be BSP Chief Executive Officer; He shall be the principal representative of the Monetary Board and of the BSP.
- endeavor to control any expansion or contraction in monetary aggregates which is prejudicial to the attainment or maintenance of price stability; - preserve the international value of peso; - maintain international reserves adequate to meet any unforeseeable net demands on BSP for foreign currencies; -determines the exchange rate policy of the country; -providing liquidity of the banking system in times of need.
DOSRI
Any director, officer or stockholder who, together with his related interest, contracts a loan or any form of financial accommodation from: (a) His banks or (b) From a bank
(a) which is a subsidiary of a bank holding company of which both his bank and the lending bank are subsidiaries; or (b) in which a controlling proportion of the shares is owned by the same interest that owns a controlling proportion of the shares of his bank, in excess of five percent (5%) of the capital and surplus of the bank, or in the maximum amount permitted by law, whichever is lower, shall be required by the lending bank to waive the secrecy of his deposits of whatever nature in all banks in the Philippines.
CONSERVATORSHIP
RECEIVERSHIP
LIQUIDATION
CONSERVATORSHIP
Appointment of a Conservator
Whenever a bank or quasi-bank is in:
A state of continuing inability Unwillingness to maintain a condition of liquidity Appoint a conservator to take charge of assets and liabilities Reorganize the management Collect all monies and debts Exercise powers necessary to restore viability
CONSERVATORSHIP
How long should the conservatorship last?
Institution can operate on its own Institution would involve probable loss to its depositors and creditors
CONSERVATORSHIP
RECEIVERSHIP
LIQUIDATION
RECEIVERSHIP
Whenever a bank or quasi-bank is:
Unable to pay its liabilities Has insufficient realizable assets Cannot continue business without involving probable losses to its depositors or creditors Has willfully violated a cease and desist order
RECEIVERSHIP
Philippine Deposit Insurance Corporation (PDIC)
Functions and Obligations:
Gather and take charge of all assets and liabilities of the institution Exercise the general powers Determine in not later than ninety (90) days from take over whether the institution should be rehabilitated or may resume business with safety
CONSERVATORSHIP
RECEIVERSHIP
LIQUIDATION
LIQUIDATION
Receiver/Liquidator shall:
File ex-parte with Regional Trial Court and a petition for assistance in the liquidation of the institution Assist the enforcement of individual liabilities of stockholders, directors & officers
LIQUIDATION
Receiver/Liquidator shall:
Convert the assets of the institutions to money and dispose to creditors and other parties Institute actions to collect and recover accounts and assets of the institution which shall be deemed in custodia legis in the hands of the receiver
award the banking franchise of a bank under liquidation where said bank or its branches were previously operating (Sec. 33)
against bank be pursued in the liquidation proceedings -Actions of the Monetary Board are declared by law to be FINAL and EXECUTORY
of monetary value in the Philippines CURRENCY All Philippine notes and coins issued or circulating
Exclusive Issue Power Liability for Notes and Coins Legal Tender Power 25 c and above not exceeding P 50.00 10 c and below not exceeding P 20.00 Replacement for Currency unfit for Circulation
Notes five (5) years old or more Coins ten (10) years old or more 10)
remain legal tender for a period of one (1) year from the date of call
may be exchanged at par and without charge in the BSP and their duly authorized agents. agents.
B. DEMAND DEPOSITS
SECTION 58. Definition
all those liabilities of the Bangko Sentral and of other banks which are denominated in Philippine currency and are subject to payment in legal tender upon demand by the presentation of checks. checks.
It shall be subject to the control of the Monetary Board in accordance with the powers granted it with respect thereto under this Act. Act.
Banks, other than a universal bank or commercial bank, cannot accept demand deposits except upon prior approval of the Monetary Board. Board.
at least five (5), and a maximum of fifteen (15) members two (2) of whom shall be independent directors
all working days for at least six (6) hours a day may open for business on Saturdays, Sundays or holidays for at least three (3) hours a day working days shall mean Mondays to Fridays unsettled after seven (7) calendar days shall be reported by the Bangko Sentral to the Secretary of Labor President of the Philippines may at any time intervene and assume jurisdiction over such labor dispute
Banks handle daily transactions involving millions of pesos. By the very nature of their work the degree of responsibility, care and trustworthiness expected of their employees and officials is far greater than those of ordinary clerks and employees. Banks are expected to exercise the highest degree of diligence in the selection and supervision of their employees.
bank dishonors the check of its client when it turned out that there was sufficient funds, even if malice or bad faith was not sufficiently proved, the fact remains that the bank has committed a serious mistake, and the bank s negligence was a result of lack of due care and caution required of managers and employees of a firm engaged in so sensitive and demanding business as banking, and entities recovery of moral damages against the bank.
In dealing with its depositors, a bank should exercise its functions not only with the diligence of a good father of a family but it should do so with the highest degree of care.
Therefore, the requirement of presentation of the passbook when withdrawing cannot be given mere lip service even though the person making the withdrawal was authorized by the depositor, and the unlawful withdrawal that resulted shall be borne by the bank.
Development Bank Vs. The Court of Appeals 125 SCAD 727, 331 SCRA 267 (2000)
While an innocent mortgagee is not expected to conduct an exhaustive investigation on the history of the mortgagor s title, in the case of a banking institution, it must exercise due diligence before entering into said contract, and cannot rely upon what is or is not annotated on the title. Judicial notice is taken of the standards, before approving a loan, to send representatives to the premises of the land offered as collateral and to investigate who are the real owners thereof.
Canlas v. The Court of Appeals 121 SCAD 752, 326 SCRA 415 (2000)
The degree of diligence required of banks is more than that of a good father of a family; in keeping with their responsibility to exercise the necessary care and prudence in dealing even on a registered or titled property. Failure by a bank to exercise such diligence, as in checking previous claims on the subject property, does not qualify them to be mortgagee in good faith .
BANKING LAW
Zaldy Quizon, Jennifer Masicat, Dianne Elaine Ozaeta, Sherwin Lyn Dela Pena, Michelle Azagra