New Central Bank Act

I. Creation, Responsibilities, and Corporate Powers of the Bangko Sentral ng Pilipinas (BSP)

Read the constitutional provisions on the central monetary authority: Article 12, Sections 20 and 21, and
Article 7, Section 20.

Is the BSP the same as the Central Bank of the Philippines? Read Sections 131, 132, and 133.

Republic Act No. 7653 or the New Central Bank is recently amended by Republic Act No. 11211. Note
the amendments. If you have no copy, download one from BSP website:
http://www.bsp.gov.ph/about/charter.asp

BSP has corporate powers. See Section 5. But is the BSP a corporation? Read Mactan-Cebu International
Airport Authority v. City of Lapu-Lapu, June 15, 2015

The BSP enjoys fiscal and administrative autonomy. What is fiscal autonomy? What is administrative
autonomy? Relate to Section 15. Does BSP rely on Congress for funding?

How much is the capitalization of the BSP? Is it already fully funded by the government?

The primary objective of the BSP is to maintain price stability conducive to a balanced and sustainable
growth of the economy and employment. What is price stability?

What are the responsibilities of the BSP? What are the entities under the supervision of the BSP?

On the BSP’s place of business, what is its implication in litigation?

II. The Monetary Board

Note the provisions on the composition, vacancies, qualifications, disqualifications, removal, and
meetings of the MB and the rotational scheme on membership.

The Governor of the Bangko Sentral shall be head of a department and his appointment shall be subject
to confirmation by the Commission on Appointments. Is this constitutional? Read Tarrosa v. Enriquez, 25
May 1994 and relate to Article 7, Section 16.

No member of the Monetary Board may be reappointed more than once. What is the maximum number
of years that a member of the Monetary Board serves as such?

Can the Civil Service Commission and/or the Ombudsman exercise administrative disciplinary powers of
the members of the Monetary Board?
The meetings of the Monetary Board may be conducted through modern technologies such as, but not
limited to, teleconferencing and videoconferencing. This amendment is in recognition of the
development in technology.

Is the Monetary Board a quasi-judicial body? Read United Coconut Planters Bank v. Ganzon, 30 June
2009 and Monetary Board v. Philippine Veterans Bank, 21 January 2015.

Read Central Bank Employees v. Bangko Sentral ng Pilipinas, 15 December 2004, on the constitutionality
of 15(c).

What is the standard of diligence required from the members of the Monetary Board and the BSP
employees? What is the legal indemnification or “free and harmless” clause? Read also additional
prohibitions under Section 27.

III. The Governor and the Deputy Governors

What are the powers and duties of the Governor?

The Governor is empowered to sign contracts entered into by the BSP, notes and securities issued by
the BSP, all reports, balance sheets, profit and loss statements, correspondence and other documents of
the BSP. Get a P20, P50, or P100 note and check if the signature of the Governor is there and whether
his signature, if there is any, is by hand or computerized. Is such signature allowed by law?

Read Bangko Sentral ng Pilipinas v. Legaspi on the power of the Governor to hire external counsel. In
hiring external counsel, is the Governor required to procure the same under Republic Act No. 9184 or the
Government Procurement Reform Act?

What are the duties of Deputy Governors?

IV. Operations of the BSP

The Bangko Sentral shall prepare data and conduct economic research for the guidance of the Monetary
Board in the formulation and implementation of its policies. Can the BSP acquire data from both public
and private persons/entities? What is the remedy is they refuse to cooperate? Will the acquisition of
data violate Republic Act No. 10173 or the Data Privacy Act? Read the Data Privacy Act.

When is an examination regular and when special? How often can you conduct either examination? Who
are covered by the examination? How can you enjoin the examination? Is the temporary restraining
order and/or injunction allowed against examination? Relate Sections 25 and 28 of the New Central
Bank Act with Sections 4 to 7 of the General Banking Law. Read Rule 58 of the Rules of Court on the
issuance of injunctive reliefs.

Section 25-A is an amendment introduced by Republic Act No. 11211 mandating that transfers or
acquisitions, or a series thereof, of at least ten percent (10%) of the voting shares in banks or quasi-
banks shall require the prior approval of the Bangko Sentral. What is the rationale of this provision?
Relate to the fit and proper rule under the General Banking Law. What is the effect if the prior approval
was not given by the BSP on the transfer of shares?

Relate Section 26 on the DOSRI loans under the General Banking Law.

Closure of banks can either be voluntary or not. For voluntary closures, read Section 28-A in relation to
Section 68 of the General Banking Law and in further relation to Sections 133 to 137 of Republic Act No.
11232 or the Revised Corporation Code.

For involuntary closures, read Sections 29 and 30 in relation to Sections 67 and 69 of the General
Banking Law.

What is conservatorship? What are the requirements to place a bank or quasi-bank under
conservatorship? What are the grounds? Who can be a conservator? For how long? Does the
conservator render his services as such for free?

What is receivership? What are the requirements to place a bank or quasi-bank under receivership?
What are the grounds? Who can be a receiver? For how long? What is the “close now, hear later”
scheme? Is it constitutional? What is your remedy if the bank or quasi-bank is placed under
conservatorship or receivership? Who should file, where and when must the remedy be availed of? Must
the bank or quasi-bank be first placed under conservatorship before proceeding receivership? Why or
why not? Note the amendments introduced by Republic Act No. 11211. Read the news regarding the
closure of AMA Bank.

Is receivership different from liquidation? What is the nature of liquidation? Where do you file
liquidation? Read the A.M. No. 19-12-02-SC or the Rules on Liquidation of Closed Banks effective April
16, 2020. Compare and contrast conservatorship, receivership, and liquidation.

Read the assigned cases on conservatorship, receivership, and liquidation.

Three-fold liability rule of directors, officers, and employees of entities under BSP regulation. Is there
criminal liability? Read the prohibited acts and criminal sanctions under Sections 34 to 36. Section 36
penalizes any person guilty of willfully violating the New Central Bank Act or other pertinent banking
laws being enforced or implemented by the BSP or any order, instruction, rule or regulation issued by
the Monetary Board. Relate to Section 66 of the General Banking Law. Note the provision giving
informer’s reward.

Is there administrative liability? Will resignation or termination from office exempt such director, officer
or employee from administrative or criminal sanctions? Read Section 37.

Is there civil liability? Review the previous assigned cases.

What is the administrative penalty for each transactional violation of supervised entities? How about for
violations of a continuing nature?

Section 38-A provides that no court, other than the Court of Appeals and the Supreme Court, shall issue
any temporary restraining order, preliminary injunction or preliminary mandatory injunction against the
BSP for any action under the New Central Bank Act. But see Sections 25, 30, and 88-B allowing injunctive
reliefs. Is this provision constitutional? Read Carpio-Morales v. Court of Appeals (Sixth Division), 10
November 2015. Relate to Rule 58 of the Rules of Court.

V. Reports and Publications, Profits, Losses, and Special Accounts, and the Auditor

Just read Sections 39 to 47.

Relate Section 44 to Sections 2 and 132(b).

VI. Means of Payment

What is the unit of monetary value in the Philippines? What is BSP’s exclusive issue power? How about
legal tender power?

Under Section 52, coins shall be legal tender in amounts not exceeding Fifty pesos (P50) for
denominations of Twenty-five centavos and above, and in amounts not exceeding Twenty pesos (P20)
for denominations of Ten centavos or less. Is this still true today? Read BSP Circular No. 537, Series of
2006.

Notes and coins issued by the BSP shall be liabilities of the BSP. All notes and coins issued by the Bangko
Sentral shall be fully guaranteed by the Government of the Republic of the Philippines. Get P20, P50, or
P100 bill and check what is written below the REPUBLIKA NG PILIPINAS.

Why does not BSP just simply print money so all of us can get rich? Read Section 51.

Can BSP investigate, make arrests, conduct searches and seizures in accordance with law, for the
purpose of maintaining the integrity of the currency? What are the criminal acts relative to currency
integrity? Read Articles 2, 163 to 168, and 176 of the Revised Penal Code and Presidential Decree No.
247.

There is public clamor on the apparently confusing designs of new coins, specifically P5 and P10 coins.
Who in the hell makes and approves the design of new coins? Read Sections 53 and 54.

What is interconvertibility of peso?

What are the rules on replacement of currency unfit for circulation and the retirement of old notes and
coins? Can we still exchange with BSP old notes?
What is digital money? What are virtual currencies? Does BSP regulate cryptocurrencies? What is e-
money? Are Gcash and Paymaya legit? Read the BSP circulars and advisories on the matter.

VII. Guiding principles of Monetary Administration by the BSP

The Bangko Sentral shall provide policy directions in the areas of money, banking, and credit.

What is domestic monetary stabilization? What is international monetary stabilization?

Why is gold reserve important? What is the BSP policy on foreign exchange rate?

What is inflation? What is deflation? What are the effects of inflation and deflation? When is there
extraordinary inflation or deflation? What are its effects? Read Equitable PCI Bank v. Ngor, December 19,
2007

What are the instruments of action to achieve price stability? What is moral suasion? What is the credit
policy of BSP? What are normal, special, and emergency credit operations? See Sections 88-A to 88-D on
securities used as collaterals to loans obtained from BSP. Compare Section 88-C to Section 47 of the
General Banking Law.

What is open market operation? Read Bank of Commerce v. Planters Development Bank, 24 September
2012. What is reserve requirement? What is selective regulation of bank operation?

What are the BSP’s functions as the banker of the government? As financial advisor?

What are the tax exemptions and privileges of BSP? Read Sections 125 and 126 and relate to Section 9(l),
Republic Act No. 9243 and Section 86, Republic Act No. 10963. Are BSP properties exempt from real
property taxes?

Read the transitory provisions. Is the Central Bank-Board of Liquidators still existing today?

Read https://www.gmanetwork.com/news/money/economy/731378/bsp-to-remit-p20b-dividends-to-
fight-covid-19/story/

What is the legal basis for BSP to remit P20B dividends to fight COVID-19?

What other actions can BSP take to help the economy and the country fight the COVID-19 pandemic?

Read Republic Act No. 11469 or the Bayanihan to Heal as One Act and its implementing rules directing
all lenders to grant a 30-day grace period or extension for the payment of all loans, including credit card
payments and pawnshop loans, falling due within the enhanced community quarantine (ECQ) period,
without slapping interest or any additional charges and fees on the borrowers. Is this constitutional?
Will this infringe on BSP’s power to regulate and supervise financial entities? Will the grant of 30-day
grace period constitutes unlawful taking of income due of supervised entities which is proper subject of
an expropriation case? Will this violate the non-impairment of obligations of contracts?