CHAPTER 7

Bangko Sentral ng Pilipinas (BSP)

Autonomous entity, not like the other government
entities
Regulatory authority that has supervision over
banks
Needs to be separate because it has regulatory
authority and supervision over all banks and
financial institutions
Main function maintain monetary and crisis
stability
Similar powers to a corporation
Corporate powers of the BSP [SCP SPAL]
1. Use Corporate Seal
2. Enter Contracts
3. Lease or own personal and real Property
and may dispose the same
4. Sue and be sued
5. Perform any thing that may be necessary to
carry out purpose of NCBA
6. Acquire and hold assets and incur liabilities
in connection with NCBA
7. Comprise or release claim or settled Liability
to BSP regardless of amount involved.
o Its salary is not under the Civil Service
commission
o Can do circulars, policies, rules that
govern banks and all entities engaged in
financial transactions
In the creation of a Bank, the monetary board is
the one who issues the license for any group of
persons to be organized as a bank
In charge of monitoring price stability in cases of
inflation, recession and other financial
transactions
Manned by people with a track record for honesty,
integrity
Policy making is entrusted to the Monetary Board
Main task to supervise; watchdog of the
depositors
Monetary Board (MB)
Not composed by people from the government
o Exception: Secretary of Finance
Members are composed of those from the private
sector
Purpose To shield the entity from influences from
government people
Highest policy-making body in the BSP
Manual of Regulations all rules and regulations for
financial institutions
o Compilation of the things which need to be
complied with by banks
Functions
Role of the BSP in cases the bank becomes
insolvent or on the verge of collapse
Bankruptcy need to appoint a conservator/
receiver

Case of Bangko Filipino

The bank is on the verge insolvency when they
cant anymore entertain withdrawal of
depositors, indications that the assets are not
sufficient to satisfy liabilities
Bank and depositors creditor-debtor relationship
Close Now, Hear Later scheme
o Indications that the bank is on the verge of
insolvency(?) report to the MB
o All the officers from top to bottom will be
replaced by a conservator
o Conservator takes charge of the total
management of the bank; given freedom by
the BSP to rehabilitate the bank
Why are banks being examined regularly by the
BSP? To see to it if they are doing their job in
accordance with the Manual of Regulations
Banking business is vested with public interest
Mediator/ intervenor between insolvent banks and
buyer banks

CHAPTER 8
BSP power to issue money (legal tender)
What makes money a legal tender?
Bills and coins are backed up by gold reserves in
custody of the BSP
Gold is the most precious commodity
Job of the BSP to monitor
Money must be aligned with the reserves in
custody of the BSP
Role of the BSP vis--vis gold reserves
Banker of the government
Main lender of money BSP can lend money to
banks in order for them to stabilize
Father of all banks you dont want the son to
die
Main function of BSP
Examining and regulating all the functions of the
bank

CHAPTER 9
Unclaimed Balances Law (RA 3936)
Person has money in the bank and the money is
not moving for 10 years (dormant)
Bank send notices to the depositors (no deposit for
the past 9 years)
Bank: Buhay pa kaya iyong depositor na ito?
No one claims the deposit
Send report to BSP
BSP to report to OSG to initiate escheat proceeding
to get unclaimed money
o Owner of unclaimed money government

Trust receipts
Study how letter of credit operates
Independence principle