BANGKO SENTRAL NG PILIPINAS LAW

1. What is the policy of the state expressed in the BSP law?

Section 1 provides: The State shall maintain a central monetary
authority that shall function and operate as an independent and
accountable body corporate in the discharge of its mandated
responsibilities concerning money, banking and credit.
2. What are the responsibilities of the BSP?
The BSP is responsible for:
1. providing policy directions in the areas of money, banking,
and credit; and
2. regulating finance companies and non-bank financial
institutions performing quasi-banking functions.
3. What are the primary objectives of the BSP?
BSPs primary objectives are:
1. to maintain price stability conducive to balanced and
sustainable economic growth; and
2. to promote and maintain monetary stability and the
convertibility of the peso.
4. The BSP Law declares it to be the policy of the state to
maintain the BSP as an independent and accountable body
with fiscal and administrative autonomy How does the BSP
Law try to achieve this policy?
Central banks must arm themselves with the capacity to read
financial markets and their correlations with the real economy
and with the necessary physical infrastructure to efficiently and
effectively conduct market transactions and assess their impact
on central bank financial statements. Meanwhile, even though
profit maximization is not the primary objective of a central
bank, keeping an eye on its bottomline is considered necessary
because, at the end of the day, its independence rests on its
ability to generate financial resources independent of
congressional appropriation. For its part, the Bangko Sentral ng
Pilipinas has embarked on activities to enhance its capabilities to
investigate and quantify the impacts of economic realities on the
transmission mechanism of monetary policy actions to the real
economy and to come up with policy prescriptions that will
strengthen BSPs adherence to its mandate of promoting and
maintaining price stability that is conducive to balanced and
sustainable growth of the economy.
5. What institutions are subject to the supervision and
examination of the BSP?
BSP shall have supervision over, and conduct periodic or special
examinations of, banking institutions and quasi-banks, including
their subsidiaries and affiliates engaged in allied activities.
6. Could a restraining order or injunction be issued by a court so
as to enjoin the BSP from examining such institutions?
No restraining order or injunction shall be issued by the court
enjoining the Bangko Sentral from examining any institution
subject to supervision or examination by the Bangko Sentral,
unless there is convincing proof that the action of the Bangko
Sentral is plainly arbitrary and made in bad faith and the
petitioner or plaintiff files with the clerk or judge of the court in
which the action is pending a bond executed in favor of the
Bangko Sentral, in an amount to be fixed by the court.
7. What obligation is imposed by the BSP on certain lending
banks to enable the BSP to monitor the loans or financial
accommodations which bank director, officer, or stockholder and
their respective related interests, may obtain from such banks?
The BSP obliges lending banks to require any director, officer or
stockholder who, together with his related interest, contracts a
loan or any form of financial accommodation from: (1) his bank;
or (2) 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, to waive the secrecy of his
deposits of whatever nature in all banks in the Philippines.
8. What action could the Monetary Board take if it finds a bank
or quasi-bank is in a state of continuing inability or unwillingness
to maintain a condition of liquidity deemed adequate to protect
the interest of depositors and creditors?
The MB may appoint a conservator with such powers as the
Monetary Board shall deem necessary to take charge of the
assets, liabilities, and the management thereof, reorganize the
management, collect all monies and debts due said institution,
and exercise all powers necessary to restore its viability.
9. On what grounds may the Monetary Board close a bank or
quasi-bank, that is prohibit it from doing business in the
Philippines?
a. is 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;
b. has insufficient realizable assets, as determined by the
Bangko Sentral, to meet its liabilities; or
c. cannot continue in business without involving probable
losses to its depositors or creditors; or
d. has 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
10. Who could be designated as a receiver?
For a quasi-bank, any person of recognized competence in
banking or finance may be designated as receiver; for a banking
institution, its the PDIC.
11. What actions are expected to be taken by the receiver after
his designation?
After his designation, the receiver is expected to:
a. immediately gather and take charge of all the assets and
liabilities of the institution and administer them for the
benefit of creditors;
 b. exercise the general powers of a receiver under the Revised
Rules of Court;
c. may deposit or place funds of the institution in non-
speculative investments;
d. determine as soon as possible but not later than 90 days
from takeover, whether the institution should undergo (i)
rehabilitation or otherwise placed in such a condition so
that it may be permitted to resume business with safety to
its depositors and creditors and the general public; or (ii)
liquidation; and
e. not, with the exception of administrative expenditures, pay
or commit any act that will involve the transfer or
disposition of any asset of the institution.
12. As a liquidator, what is the receiver supposed to do?
a. Receiver shall file ex parte, with the proper RTC, a petition
for assistance in the liquidation of the institution pursuant
to a liquidation plan adopted by the PDIC for general
application to all closed banks; in case of quasi-banks, the
liquidation plan shall be adopted by the Monetary Board;
b. Receiver shall convert the assets of the institution to money
for the purpose of paying the debts of the institution; and
c. Payment shall be in accordance with the rules on
concurrence and preference of credits.
13. Are the actions of the Monetary Board under Sections 29
and 30 of the BSP Law final and executor and could they be
restrained?
The actions under Sec. 29 and 30 are final and executor, and may
not be restrained or set aside by the court t 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.
14. In the imminence of, or during an exchange crisis, or in the
time of national emergency, what could the BSP do to give itself
and the Government time in which to forestall combat or
overcome such a crisis or emergency?
The Monetary Board, with the concurrence of at least five (5) of
its members and with the approval of the President of the
Philippines, may temporarily suspend or restrict sales of
exchange by the Bangko Sentral, and may subject all
transactions in gold and foreign exchange to license by the
Bangko Sentral, and may require that any foreign exchange
thereafter obtained by any person residing or entity operating in
the Philippines be delivered to the Bangko Sentral or to any bank
or agent designated by the Bangko Sentral for the purpose, at
the effective exchange rate or rates: Provided, however, That
foreign currency deposits made under Republic Act No. 6426
shall be exempt from these requirements.
15. What are the instruments of BS action?
Gold and foreign exchange (sec 69-80);
Loans to banking and other financial institutions (sec. 81-
89);
Open market operations for the account of the BSP (sec. 90-
92);
Bank reserves (sec 94-103)
16. What are demand deposits?
Demand deposits means all those liabilities of the BSP 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.
17. What is a deposit substitute?
Deposit substitute is an alternative form of obtaining funds from
the public, other than deposits, through the issuance,
endorsement, or acceptance of debt instruments for the
borrowers own account, for the purpose of relending or
purchasing of receivables and other obligations.
18. What special prohibitions are imposed by the BSP law on
BSP personnel?
BSP personnel are prohibited from:
 1. being an officer, director, lawyer or agent, employee,
consultant or stockholder, directly or indirectly, of any
institution subject to supervision or examination by the
Bangko Sentral, except non-stock savings and loan
associations and provident funds organized exclusively for
employees of the Bangko Sentral, and except as otherwise
provided in this Act;
2. directly or indirectly requesting or receiving any gift,
present or pecuniary or material benefit for himself or
another, from any institution subject to supervision or
examination by the Bangko Sentral;
3. revealing in any manner, except under orders of the court,
the Congress or any government office or agency authorized
by law, or under such conditions as may be prescribed by
the Monetary Board, information relating to the condition or
business of any such institution. This prohibition shall not
be held to apply to the giving of information to the
Monetary Board or the Governor of the Bangko Sentral, or
to any person authorized by either of them, in writing, to
receive such information; and
4. borrowing from any institution subject to supervision or
examination by the Bangko Sentral shall be prohibited
unless said borrowings are adequately secured, fully
disclosed to the Monetary Board, and shall be subject to
such further rules and regulations as the Monetary Board
may prescribe: Provided, however, That personnel of the
supervising and examining departments are prohibited from
borrowing from a bank under their supervision or
examination.
TRUTH IN LENDING ACT
1. What is the purpose of the law?
The purposes of this law are:
1. To protect a debtor from the effect of misrepresentation and
concealment;
2. To allow him to fully appreciate and evaluate the real cost of
his borrowing; and
3. To avoid circumvention of usury laws.
2. What is the obligation imposed by the Act on creditors?
The creditors shall furnish the debtor, prior to the consummation
of a loan or sale, a written statement containing:
1. cash price or delivered price;
2. amounts, if any, to be credited as down payment and /or
trade-in;
3. difference between the amounts in (1) and (2);
4. charges not incident to the extension of credit;
5. total amount to be financed;
6. finance charge; and
7. percentage of the finance charge to the amount financed.
3. What credit transactions are within the scope of the Act?
The law applies to creditors who extend loans, sales in
installments and other credit transactions which all involve an
extension of credit.
a. any loan, mortgage, deed of trust, advance, or discount;
b. any conditional sales contract;
c. any contract to sell, or sale or contract of sale of property or
services, either for present or future delivery, under which
part or all of the price is payable subsequent to the making
of such sale or contract;
d. any rental-purchase contract;
e. any contract or arrangement for the hire, bailment, or
leasing of property;
f. any option, demand, lien, pledge, or other claim against, or
for the delivery of, property or money;
g. any purchase, or other acquisition of, or any credit upon the
security of, any obligation of claim arising out of any of the
foregoing; and
h. any transaction or series of transactions having a similar
purpose or effect.
4. What credit transactions are outside the scope of the Act?
Credit transactions in cash basis are outside the scope of this
Act.
 a. Credit transactions which do not involve the payment of any
finance charge by the debtor; and
b. Credit transaction in which the debtor is the one specifying
a definite and fixed set of credit terms such as bank
deposits, insurance contracts, sale of bonds, etc.
5. What are finance charges?
Finance charge is the amount to be paid by the debtor incident
to the extension of credit such as interest, fees, service charges,
collection charges, discounts and such other charges incident to
the extension of credit.
6. What are non-finance charges?
"Non-finance charges" correspond to the amounts advanced by
the creditor for items normally associated with the ownership of
the property or of the availment of the service purchased which
are not incident to the extension of credit. For example, in the
case of the purchase of an automobile on credit, the creditor may
advance the insurance premium as well as the registration fee
for the account of the debtor.lawphil.net
BULK SALES LAW
1. What is the purpose of the law?
The purpose is to prevent the defrauding of creditors by the
secret sale or disposal or mortgage in bulk of all or substantially
all of merchants stock of goods in bulk.
2. What are deemed to be sales and transfers in bulk under the
Bulk Sales Law?
Transactions covered by this Law are any sale, transfer,
mortgage, or assignment of:
1. a stock of goods, wares, merchandise, provisions, or
materials other than in the ordinary course of business;
2. all, or substantially all, of the business or trade conducted
by the vendor, mortgagor, transferor, or assignor; or
 3. all, or substantially all, of fixtures and equipment used in
and about the business of the seller, transferor, mortgagor
or assignor.
3. What are the duties of a person selling, mortgaging,
transferring or assigning any stock of goods, wares,
merchandise, provisions or materials in bulk?
A person selling, mortgaging, transferring or assigning any stock
of good, wares, merchandise, provisions or materials in bulk has
the duty:
1. To deliver a sworn written statement of the names and
addresses of all creditors to whom the vendor or mortgagor
may be indebted, indicating the amount of indebtedness due
or owing, or to become due or owing;
2. To apply the proceeds of the sale or mortgage pro-rata to
creditors;
3. At least 10 days before the sale or execution of mortgage, to
make detailed inventory and to preserve the same showing
the quantity and, to the extent possible, the cost price to the
vendor, etc. of each article to be included in the sale;
4. To give notice to every creditor at least 10 days; and
5. To register the documents in the Bureau of Trade
Regulation and Consumer Protection before the sale or
transfer
4. To what sale or transfer in bulk would the law not be
applicable?
The law will not be applicable to the sale or transfer in bulk (1)
when all creditors give their written waiver; or (2) when it is one
of judicial sale.
5. What are the offenses punishable under the Bulk Sales Law?
Offenses punishable under the Bulk Sales Law:
Those which involve violations of Sections:
3 Delivery of sworn written statement/list of creditors
4 Pro-rata application of proceeds
5 Written advance disclosure to creditors
6 Incomplete, false or untrue sworn written statement
7 Bulk transfers for nominal value
9 Registration with DTI