 Constitutional Mandate

 Enabling Charter and Historical Antecedents

 The Monetary Board
 General Principle and Mandate
 Key Functions
 Relevant Jurisprudence and
 Case Laws Related to Operation
“…need to establish a central monetary
authority which shall provide policy
direction in the areas of money, banking
and credit.”
– 1973 and 1987 Constitution
“…while being a government-owned
corporation, shall enjoy fiscal and
administrative autonomy.
The New Central Bank Act (1993)
(Republic Act 7653)
Central Bank Act of 1948
(Republic Act 265)
 maintain price stability
 promote and preserve monetary stability and
the convertibility of the national currency
 supervise the operations of the banks and
regulating the operations of finance
companies, quasi-banks, and institutions
performing similar functions
 1. Liquidity management
 2. Currency issue
 3. Lender of last resort
 4. Financial supervision
 5. Management of foreign currency reserves
 6. Determination of exchange rate policy
 7. Other activities as banker, financial advisor,
and official depository of the government
 Issue rules and regulations it considers
necessary
 Direct the management, operation, and
administration of the Bangko Sentral
 Establish a human resource management
system
 Adopt an annual budget for the organization
 Indemnify its personnel performing
supervision and examination functions
 Manual of Regulations for Non-
Banks Financial Institutions
(MORNBFI), which consolidates
Philippine rules and policy
issuances governing quasi-banks,
investment houses, non-stock
savings and loan associations and
pawnshops in the country.
 Manual of Regulations on Foreign
Exchange Transactions
 complaint desk for erring banks/financial institutions
 a mediation court for administrative-related offenses
of bank officers
 sale of publications and corporate
gifts/commemorative coins
 library/research service
 exchange of coins
 examination of doubtful currency
 redemption of mutilation currency
 sale or lease of real properties
 purchase of gold from the public
 security plant or museum tour
POWER TO ISSUE SUBPOENA
POWER TO MAKE ARREST AND
CONDUCT SEARCHES
Issuance of rules of conduct for the operation of
standards of operation; All of the rules of BSP
on its supervised entities are published in the
following:

 Conduct of examination to determine

compliance with laws and regulations as
determined by the Monetary Board;
 Overseeing to ascertain that laws and
regulations are complied with;
 Regular investigation;
 Inquiring into the solvency and liquidity of the
institution;
 Enforcing prompt corrective action
 “Banking business as one impressed with public
interest.”—Supreme Court

 Because of the broad scope of the power of the

examination, the prohibition against the issuance of a
restraining order or injunction is not limited to the actual
conduct of the onsite examination of the bank but extends
it to its general power of examination.
 This power includes the determination of the suitability
and fitness of directors and officers of a bank pertaining to
the appraisal and management of the bank.
 According to the Supreme Court, the
“close now, hear later” scheme is
grounded on practical and legal
considerations to prevent unwarranted
dissipation of the bank assets and as a
valid exercise of police power to protect
the public.
 Held: Even in the Banco Filipino case, it was
reiterated that Section 29 (central bank’s
authority to determine bank condition) does
not require a previous hearing before the
Monetary Board can implement the
resolution closing a bank since its action is
subject to judicial scrutiny as provided by law.
 The heavy reliance of the respondent on the
Banco Filipino case is misplaced in view of
factual circumstances not attendant in the
present case. We ruled in Banco Filipino that
the closure of the bank was arbitrary and with
grave abuse of discretion, not because of the
absence of prior notice and hearing. Section
29 also does not altogether
divest a bank of the opportunity to be heard
and present evidence of arbitrariness and bad
faith in view of the 10-day period within
which the bank management may resort to
judicial review.
 Inability to pay liabilities as they become due in
the ordinary course of business, unless liability
to pay is caused by extraordinary demands
induced by financial panic in the banking
community (equity test)
 Insufficiency of realizable assets, as determined
by the Bangko Sentral, to meet its liabilities
(balance sheet test)
 Inability to continue in business without
involving probable losses to its depositors or
creditors
 Willful violation of a cease and desist order
issued under Section 37 of RA 7653 that has
become final, involving acts or transactions,
which amount to fraud or dissipation of the
assets of the institution
 Notification to the Bangko Sentral or public
announcement of a bank holiday, or
suspension in any manner of payment of its
deposit liabilities continuously for more than
thirty days
 June 1964. Founded by Aguirre family with a
fifty-year term
 January 1985. Ordered closed by Central Bank
 December 1991. Ruled by Supreme Court to
reopen; BSP’s closure “illegal”
 June 1992/1994. Reopened
 March 2011. Closed down for the second time by
Bangko Sentral for inability to pay liabilities
 January 2012. Ordered reopened by Court of
Appeals for alleged lack of due process on the
part of BSP and ordered BSP to infuse P25 billion
to BF
 Nov 2012. Reversed ruling by Court of Appeals;
disagreed with this court's earlier finding of grave
abuse of discretion amounting to lack or excess of
jurisdiction on the part of any of the respondents BSP,
Monetary Board, and the PDIC. “All of them have
merely exercised their legal and statutory duties as
expressly granted to them by the law.”
 July 2016. Dismissed by Court of Appeals the petition
shareholders of shuttered Banco Filipino Savings and
Mortgage Bank to order the extension of its corporate
life for another 50 years up to 2064.
 February 2017. Reversed by the Supreme
Court the Court of Appeals’ January 2006
ruling, which previously affirmed the
inclusion of BSP and its Monetary Board as
new parties in the case before the Makati City
Regional Trial Court (RTC).
 The Supreme Court said it was erroneous to admit
Banco Filipino’s Second Amended/Supplemental
Complaint because it raised new issues regarding
alleged acts of harassment which were not related to
the original suit against the CB. But it clarified the
decision was only limited to the propriety of admitting
the BSP and its MB through the Second
Amended/Supplemental Complaint. It said it would
not address yet the issue of whether the BSP and its
MB are successors-in-interest of the CB and its MB
and considered transferees of the old central bank’s
possible liabilities.