Republic Act 7653 The powers and functions of the Bangko Sentral shall be exercised by the

THE NEW CENTRAL BANK ACT Bangko Sentral Monetary Board, hereafter referred to as the Monetary
Be it enacted by the Senate and House of Representatives of the Philippines in Board, composed of seven (7) members appointed by the President of the
Congress assembled: Philippines for a term of six (6) years.
CHAPTER I The seven (7) members are:
ESTABLISHMENT AND ORGANIZATION a) The Governor of the Bangko Sentral, who shall be the Chairman of the
OF THE BANGKO SENTRAL NG PILIPINAS Monetary Board. The Governor of the Bangko Sentral shall be head of a
ARTICLE I. CREATION, RESPONSIBILITIES AND CORPORATE POWERS OF THE department and his appointment shall be subject to confirmation by the
BANGKO SENTRAL Commission on Appointments. Whenever the Governor is unable to attend
Section 1 Declaration policy – The state shall maintain a central a meeting of the Board, he shall designate a Deputy Governor to act as
monetary authority that shall function and operate as an independent his alternate: Provided, That in such event, the Monetary Board shall
and accountable body corporate in the discharge of its mandated designate one of its members as acting Chairman;
responsibilities concerning money, banking and credit. b) A member of the Cabinet to be designated by the President of the
It is mandated by the Constitution that the state shall maintain a central Philippines. Whenever the designated Cabinet Member is unable to attend
monetary body that has sole power and authority to issue currency. a meeting of the Board, he shall designate an Undersecretary in his
Section 1 – Declaration of Policy Department to attend as his alternate; and
1. It is mandated by the Constitution that the state shall maintain a central monetary c) Five (5) members who shall come from the private sector, all of whom
body that has sole power and authority to issue currency shall serve full-time: Provided, however, That of the members first
2. The Central Monetary Authority of the Philippines is the Bangko Sentral ng Pilipinas appointed under the provisions of this subsection, three (3) shall have a
(BSP). It was created under Republic Act. No. 7653 otherwise known as The New term of six (6) years, and the other two (2), three (3) years.
Central Bank Act. This was formally known as Republic Act No. 265. ARTICLE II – THE MONETARY BOARD
3. The Bangko Sentral is an independent and accountable body corporate. Section 6 – Composition of the Monetary Board
a. Independent because it has a separate autonomy and free from  Like a private corporation whose policy making body is the
political pressures; and Board of Directors, the powers and functions of the BSP is
b. Accountable because it is responsible to Congress and to the exercised by the Monetary Board whose members are
President of the Philippines only. appointed by the President of the Philippines.
4. It was organized and it operates like a private corporation. However, it is solely  From the composition of the Monetary Board, it will be noticed
owned by the government and falls under government-controlled financial institutions. that the majority of the members come from the private
5. Its mandated responsibilities covers: sector. The thrust is to give the private business who
 Money; spearhead the economic growth and development of the
 Banking; and country, more representation in the board.
 Credit  Composition of the Members of the Monetary Board:
6. It enjoys fiscal autonomy or independence by creating its own fiscal policy.  Governor – (Governor of the BSP) – acts as the Chairman
 Fiscal Policy means all government actions relative to taxation, whose appointment by the President of the Philippines is
expenditures and management of public debt to stabilize the economy as subject to confirmation by the Commission on Appointments
well as those that affect monetary flow and expenditures. It is an (alternate is the Deputy Governor) and with a term of six (6)
instrument used to check government expenditures. years;
 It enjoys administrative autonomy, which means it can promulgate its  Cabinet Secretary – (alternate is the Undersecretary) with a
own administrative policies. It can reorganize or change the term of six (6) years.
organizational structure to suit its operations. Correlate to sec. 133 of RA  5 Members from the Private Sector who shall serve full time.
7653. The first three (3) shall serve six (6) years and the last two (2)
Section 2 Creation of the Bangko Sentral shall serve three (3) years.
There is hereby established an independent central monetary authority,  The Monetary Board is composed of seven(7) members.
which shall be a body corporate known as the Bangko Sentral ng  The Chairman of the Monetary Board is the Governor
Pilipinas, hereafter referred to as the Bangko Sentral.  No Member of the MB shall be reappointed more than once
The capital of the Bangko Sentral shall be Fifty billion pesos  In the absence of the Governor, any member of the MB can be appointed
(P50,000,000,000), to be fully subscribed by the Government of the as acting chairman.
Republic, hereafter referred to as the Government, Ten billion pesos  By virtue of the office, the cabinet secretary ( an ex-officio member) is
(P10,000,000,000) of which shall be fully paid for by the Government
automatically becomes a member of the Monetary Board
upon the effectivity of this Act and the balance to be paid for within a
Section 7. Vacancies. –
period of two (2) years from the effectivity of this Act in such manner and
Any vacancy in the Monetary Board created by the death, resignation, or
form as the Government, through the Secretary of Finance and the
removal of any member shall be filled by the appointment of a new
Secretary of Budget and Management, may thereafter determine.
member to complete the unexpired period of the term of the member
Section 3. Responsibility and Primary Objective
concerned.
The Bangko Sentral shall provide policy directions in the areas of money,
 How are vacancies in the Monetary Board created?
banking, and credit. It shall have supervision over the operations of banks
and exercise such regulatory powers as provided in this Act and other  Vacancies are created by: (DRR)
pertinent laws over the operations of finance companies and non-bank 1. Death
financial institutions performing quasi-banking functions, hereafter referred 2. Resignation
to as quasi-banks, and institutions performing similar functions. [Link]
The primary objective of the Bangko Sentral is to maintain price stability  What will be the term of office of the newly appointed member
conducive to a balanced and sustainable growth of the economy. It shall who was appointed to fill in the vacancy?
also promote and maintain monetary stability and the convertibility of the  He shall serve to complete the unexpired period
peso. to finish the terms of the member concerned.
Section 4. Place of Business Section 8. Qualifications. –
The Bangko Sentral shall have its principal place of business in Metro The members of the Monetary Board must be natural-born citizens of the
Manila, but may maintain branches, agencies and correspondents in such Philippines, at least thirty-five (35) years of age, with the exception of the
other places as the proper conduct of its business may require. Governor who should at least be forty (40) years of age, of good moral
Section 5. Corporate Powers. – character, of unquestionable integrity, of known probity and patriotism, and
The Bangko Sentral is hereby authorized to adopt, alter, and use a with recognized competence in social and economic disciplines.
corporate seal which shall be judicially noticed; to enter into contracts; to  What are the qualifications before one can be a member of
lease or own real and personal property, and to sell or otherwise dispose the Monetary Board?
of the same; to sue and be sued; and otherwise to do and perform any  A member must be (NAGUP-C):
and all things that may be necessary or proper to carry out the purposes A. Natural born Filipino Citizen
of this Act. of the Philippines;
ARTICLE II. THE MONETARY BOARD
Section 6. Composition of the Monetary Board. –
 B. At least 35 years of age  The President of the Philippines shall fix the salary of the
except for the governor who Governor and the members of the Monetary Board at a sum
shall be at 40 years old; commensurate to the importance and responsibility attached
C. of good moral character; to the position.
D. of unquestionable integrity;  The Cabinet Secretary being a member of the Cabinet is not
E. of known probity and included in receiving salary because he is holding a
patriotism; concurrent position with a fixed salary as Cabinet Secretary.
F. with recognized Payment of salary to the cabinet secretary will violate the law
competence in social and on double compensation.
economic disciplines Section 14. Withdrawal of Persons Having a Personal Interest. –
Section 9. Disqualifications. In addition to the requirements of Republic Act No. 6713, any member of the
In addition to the disqualifications imposed by Republic Act No. 6713, a Monetary Board with personal or pecuniary interest in any matter in the agenda
member of the Monetary Board is disqualified from being a director, of the Monetary Board shall disclose his interest to the Board and shall retire
officer, employee, consultant, lawyer, agent or stockholder of any bank, from the meeting when the matter is taken up. The decision taken on the matter
quasi-bank or any other institution which is subject to supervision or shall be made public. The minutes shall reflect the disclosure made and the
examination by the Bangko Sentral, in which case such member shall retirement of the member concerned from the meeting.
resign from, and divest himself of any and all interests in such institution  Why must a member of the Monetary Board withdraw and not
before assumption of office as member of the Monetary Board. participate in the deliberation on matters where he has personal or
 What are the disqualifications of the members of pecuniary interest.?
the Monetary Board?  The withdrawal of a member having personal or pecuniary
 Members of the Monetary Board are interest is necessary out of delicadeza and to prevent him
disqualified from being a from exerting undue influence to other members.
(DOSELAC) Section 15. Exercise of Authority.
1. Director In the exercise of its authority, the Monetary Board shall:
2. Officer (a) issue rules and regulations it considers necessary for the effective
3. Stockholder discharge of the responsibilities and exercise of the powers vested upon
4. Employee the Monetary Board and the Bangko Sentral. The rules and regulations
5. Lawyer issued shall be reported to the President and the Congress within fifteen
6. Agent (15) days from the date of their issuance;
7. Consultant (b) direct the management, operations, and administration of the Bangko
of any bank, quasi-bank, or any other bank, which is subject Sentral, reorganize its personnel, and issue such rules and regulations as
to supervision or examination by the BSP. it may deem necessary or convenient for this purpose. The legal units of
Section 10. Removal. the Bangko Sentral shall be under the exclusive supervision and control of
The President may remove any member of the Monetary Board for any of the Monetary Board;
the following reasons: (c) establish a human resource management system which shall govern
(a) If the member is subsequently disqualified under the provisions of the selection, hiring, appointment, transfer, promotion, or dismissal of all
Section 8 of this Act; or personnel. Such system shall aim to establish professionalism and
(b) If he is physically or mentally incapacitated that he cannot properly excellence at all levels of the Bangko Sentral in accordance with sound
discharge his duties and responsibilities and such incapacity has lasted principles of management.
for more than six (6) months; or (d) adopt an annual budget for and authorize such expenditures by the
(c) If the member is guilty of acts or operations which are of fraudulent or Bangko Sentral as are in the interest of the effective administration and
illegal character or which are manifestly opposed to the aims and interests operations of the Bangko Sentral in accordance with applicable laws and
of the Bangko Sentral; or regulations; and
(d) If the member no longer possesses the qualifications specified in (e) indemnify its members and other officials of the Bangko Sentral,
Section 8 of this Act. including personnel of the departments performing supervision and
Section 11. Meetings. examination functions against all costs and expenses reasonably incurred
The Monetary Board shall meet at least once a week. The Board may be by such persons in connection with any civil or criminal action, suit or
called to a meeting by the Governor of the Bangko Sentral or by two (2) proceedings to which he may be, or is, made a party by reason of the
other members of the Board. performance of his functions or duties, unless he is finally adjudged in
 The presence of four (4) members shall such action or proceeding to be liable for negligence or misconduct.
constitute a quorum: Provided, That in all cases  The Monetary Board, in the exercise of his authority, enjoys
the Governor or his duly designated alternate administrative autonomy:
shall be among the four (4).  Who is the policy making body of the BSP?
 Unless otherwise provided in this Act, all  The Monetary Board is the policy making body of the BSP.
decisions of the Monetary Board shall require the  What is the meaning of policy?
concurrence of at least four (4) members.  Policy is the course or general plan of action.
 The Bangko Sentral shall maintain and preserve  Who issues the monetary policy?
a complete record of the proceedings and  Monetary policies are issued by the Monetary Board.
deliberations of the Monetary Board, including  Some of the Duties of the Monetary Board
the tapes and transcripts of the stenographic
(I-DEAR)
notes, either in their original form or in microfilm.
 Issues rules and regulations
Section 12. Attendance of the Deputy Governors. –
 Directs the management operation of BSP
The Deputy Governors may attend the meetings of the Monetary Board
with the right to be heard.  Establishes human resource management system
 Attendance of the Deputy Governor  Adopts annual budget
 Can the Deputy Governor attend the meetings of the  Reimburses for cost/expense arising from criminal/civil action
Monetary Board? for those who is not liable of negligence/misconduct.
 Yes, He can attend the meeting. Section 16. Responsibility. –
 Can he vote in the said meetings? Members of the Monetary Board, officials, examiners, and employees of
the Bangko Sentral who willfully violate this Act or who are guilty of
 No. While he has the right to be heard he does negligence, abuses or acts of malfeasance or misfeasance or fail to
not have the right to vote exercise extraordinary diligence in the performance of his duties shall be
Section 13. Salary. – held liable for any loss or injury suffered by the Bangko Sentral or other
The salary of the Governor and the members of the Monetary Board from banking institutions as a result of such violation, negligence, abuse,
the private sector shall be fixed by the President of the Philippines at a malfeasance, misfeasance or failure to exercise extraordinary diligence.
sum commensurate to the importance and responsibility attached to the Similar responsibility shall apply to members, officers, and employees of
position. the Bangko Sentral for: (1) the disclosure of any information of a
 confidential nature, or any information on the discussions or resolutions of  The Governor is the Chief Executive Officer of
the Monetary Board, or about the confidential operations of the Bangko the Bangko Sentral.
Sentral, unless the disclosure is in connection with the performance of  Powers and Duties of Governor as the Chief Executive
official functions with the Bangko Sentral, or is with prior authorization of Officer of the Bangko Sentral.
the Monetary Board or the Governor; or (2) the use of such information for  Direct and supervise the operation and internal
personal gain or to the detriment of the Government, the Bangko Sentral administration of BSP;
or third parties: Provided, however, That any data or information required  Prepares the agenda for the board meeting and
to be submitted to the President and/or the Congress, or to be published submit policies and measures for consideration;
under the provisions of this Act shall not be considered confidential.  Executes and administers the policies approved
 Who shall be liable for any loss or injury suffered by the Bangko by the Board;
Sentral or other banking institutions as a result of wilful violation,  Directs and supervises the operation and internal
negligence, abuse, malfeasance or failure to exercise extraordinary administration of the Bangko Sentral;
diligence under Republic Act. No. 7653?  Appoints and fixes the remuneration and other
The following are liable (MOEE)
emoluments of personnel;
 Members of the Monetary Board
 Renders opinions, decisions, or rulings which
 Officials
shall be final and executory until reversed or
 Examiners modified by the Monetary Board, and
 Employees of the BSP  Other powers as maybe vested in him by the
 Who shall be held responsible for the disclosure of any information Monetary Board.
of confidential nature or use of such information for personal gain or Section 18. Representation of the Monetary Board and the Bangko Sentral. –
to the detriment of the Government. Bangko Sentral of third parties? The Governor of the Bangko Sentral shall be the principal representative
 Members of the Monetary Board of the Monetary Board and of the Bangko Sentral and, in such capacity
 Officials and in accordance with the instructions of the Monetary Board.
 Examiners Sec. 18 - Representation of the Monetary Board and the Bangko Sentral
 Employees of the BSP  Who is the principal representative of the Monetary
 Exception: Board and the Bangko Sentral and what are his powers?
 Unless the disclosure is in connection with the performance of  The Governor of the Bangko Sentral is the
official functions principal representative of the Monetary Board
 When authorized by the Monetary Board or Governor and the Bangko Sentral.
 When the data or information is not considered confidential.  The Powers of the Governor as representative of the
 What is malfeasance? Monetary Board & Bangko Sentral:
 Wrong doing or misconduct especially by a public official. The  To represent the Monetary Board and Bangko
doing of an act which is positively unlawful or wrongful. Sentral in all dealings with other offices of the
 What is misfeasance? government or other persons private or public
 Performance of a lawful action in an illegal or improper whether foreign or domestic.
 To sign contract entered by the Bangko Sentral,
manner.
 What is Nonfeasance? notes and securities issued, all reports, etc., the
signature maybe in facsimile.
 A failure to act when under an obligation to do so, a refusal
 To represent Bangko Sentral in any legal
(within sufficient excuses) to do that which it is your legal duty
proceedings.
to do.
 To delegate his powers to represent the Bangko
ARTICLE III. THE GOVERNOR AND DEPUTY GOVERNORS OF THE
BANGKO SENTRAL Sentral to other officers upon his own
Section 17. Powers and Duties of the Governor. – responsibility.
The Governor shall be the chief executive officer of the Bangko Sentral.  FACSIMILE – means an exact copy or
His powers and duties shall be to: reproduction of the signature. (example those
(a) Prepare the agenda for the meetings of the Monetary Board found in the paper bills.)
and to submit for the consideration of the Board the policies Section 19. Authority of the Governor in Emergencies. –
and measures which he believes to be necessary to carry out the In case of emergencies where time is sufficient to call a meeting of the
purposes and provisions of this Act; Monetary Board, the Governor of the Bangko Sentral, with the
(b) Execute and administer the policies and measures approved by the concurrence of two (2) other members of the Monetary Board, may decide
Monetary Board; any matter or take any action within the authority of the Board.
(c) direct and supervise the operations and internal administration of the  The Governor shall submit a report to the
Bangko Sentral. The Governor may delegate certain of his administrative President and Congress within seventy-two (72)
responsibilities to other officers or may assign specific tasks or hours after the action has been taken.
responsibilities to any full-time member of the Monetary Board without  At the soonest possible time, the Governor shall
additional remuneration or allowance whenever he may deem fit or call a meeting of the Monetary Board to submit
subject to such rules and regulations as the Monetary Board may his action for ratification.
prescribe; Sec. 19- Authority of the Governor in Emergencies:
(d) appoint and fix the remunerations and other emoluments of personnel  What is the authority of the Governor in time of emergencies
below the rank of a department head in accordance with the position and where time is insufficient to call a meeting of the Monetary
compensation plans approved by the Monetary Board, as well as to Board?
impose disciplinary measures upon personnel of the Bangko Sentral,  The Governor with the concurrence of two (2)
subject to the provisions of Section 15(c) of this Act: Provided, That other members of the Monetary Board
removal of personnel shall be with the approval of the Monetary Board; may decide any matter or take any
(e) render opinions, decisions, or rulings, which shall be final and action within the
executory until reversed or modified by the Monetary Board, on matters authority of the Board. Any action taken shall
regarding application or enforcement of laws pertaining to institutions be submitted to the President within seventy-
supervised by the Bangko Sentral and laws pertaining to quasi-banks, as two (72) hours.
well as regulations, policies or instructions issued by the Monetary Board,  This is an exception to the quorum
and the implementation thereof; and requirement.
(f) exercise such other powers as may be vested in him by the Monetary  How many members must be present in an emergency
Board. meeting?
Sec. 17 - Powers & Duties of the Governor:  Three (3) – The Governor and two (2)
 Who is the Chief Executive Officer of the Bangko
members only
Sentral? Section 20. Outside Interests of the Governor and the Full-time Members of the
Board. –
 The Governor of the Bangko Sentral and the full-time members of the Monetary Board in the formulation and implementation of its policies that
Board shall limit their professional activities to those pertaining directly to include:
their positions with the Bangko Sentral. Accordingly, they may not accept 1. Forecast of the balance of payments
any other employment, whether public or private, remunerated or ad 2. Movement of the monetary aggregates and of prices, etc.
honorem, with the exception of positions in eleemosynary, civic, cultural or 3. Formulation and analysis of monetary, banking, credit and
religious organizations or whenever, by designation of the President, the exchange policies.
Governor or the full-time member is tasked to represent the interest of the The BSP monitors and compiles various statistical series on
Government or other government agencies in matters connected with or monetary, financial and external variables useful for the
affecting the economy or the financial system of the country formulation and analysis of monetary, banking, credit and
Sec. 20 - In general, Governor and the other members (private sector) exchange policies
shall limit their professional activities to those pertaining directly to their BALANCE OF PAYMENT (BOP)- It is the systematic record of the
positions with the Bangko Sentral that may give rise to conflict of interest. economic transactions that takes place between a domestic and the
They must serve full-time and should not accept other employment public foreign countries.
or private remunerated or ad honorem. Section 23. Authority to Obtain Data and Information. –
 Ad honorem means without remuneration or The Bangko Sentral shall have the authority to request from government
salary offices and instrumentalities, or government-owned or controlled
Except: corporations, any data which it may require for the proper discharge of its
religious and charitable organization where conflict of interest is absent. functions and responsibilities. The Bangko Sentral through the Governor
Example: or in his absence, a duly authorized representative shall have the power
1. Eleemosynary to issue a subpoena for the production of the books and records for the
2. Civic aforesaid purpose. Those who refuse the subpoena without justifiable
3. Cultural cause, or who refuse to supply the bank with data requested or required,
4. Religious shall be subject to punishment for contempt in accordance with the
5. when designated by the President to represent provisions of the Rules of Court.
the interest of the government. (correlate to Sec. Data on individual firms, other than banks, gathered by the Department of
111 & 112 of this Act.) Economic Research and other departments or units of the Bangko Sentral
 Governor of the BSP or any member of the Monetary Board cannot accept shall not be made available to any person or entity outside of the Bangko
outside employment except those mentioned above and when designated Sentral whether public or private except under order of the court or under
by the President to represent the interest of the government. such conditions as may be prescribed by the Monetary Board: Provided,
Section 21. Deputy Governors. – however, That the collective data on firms may be released to interested
The Governor of the Bangko Sentral, with the approval of the Monetary persons or entities: Provided, finally, That in the case of data on banks,
Board, shall appoint not more than three (3) Deputy Governors who shall the provisions of Section 27 of this Act shall apply.
perform duties as may be assigned to them by the Governor and the Sec. 23 - In the discharge of its functions and responsibilities, the Bangko
Board. Sentral has the authority to obtain data and information from government
 In the absence of the Governor, a Deputy Governor offices, instrumentalities or government-owned or controlled corporation.
designated by the Governor shall act as chief executive of the This authority to obtain information carries with it the authority to issue
Bangko Sentral and shall exercise the powers and perform subpoena:
the duties of the Governor. Whenever the Government is 1. Ad Testificandum – personal testimony of the person
unable to attend meetings of government boards or councils 2. Duces tecum – production of books/records and other
in which he is an ex officio member pursuant to provisions of documents.
special laws, a Deputy Governor as may be designated by *Refusal to comply shall be liable for contempt and shall be subject to
the Governor shall be vested with authority to participate and punishment.
exercise the right to vote in such meetings. * All data gatheres shall be held confidential except upon order of the
A Deputy Governor heads each of the BSP’s operating sector as follows: court and the provisions of Sec. 27 of this Act.
1. Monetary Stability Sector – It takes charge of the Section 24. Training of Technical Personnel. –
formulation and implementation of the BSP’s monetary policy, The Bangko Sentral shall promote and sponsor the training of technical
including serving the banking needs of all bank through personnel in the field of money and banking. Toward this end, the Bangko
accepting deposits, servicing withdrawals and extending Sentral is hereby authorized to defray the costs of study, at home or
credit through rediscounting facility. abroad, of qualified employees of the Bangko Sentral, of promising
* Diwa C. Guinigundo university graduates or of any other qualified persons who shall be
2. Supervision and Examination Sector determined by proper competitive examinations. The Monetary Board
- It enforces and monitors compliance to banking laws shall prescribe rules and regulations to govern the training program of the
to promote a sound and healthy banking system. Bangko Sentral.
* Nestor A. Espenilla Jr. Sec. 24 - In line with the personnel advancement and development
3. Resource Management Sector program Bangko Sentral promotes and sponsors training in the field of
- It serves the human, financial and physical resource money and banking for qualified employees or promising university
needs of the BSP. graduates at home or abroad. Related expenses are shouldered by the
* Vicente S. Aquino bank.
 Not more than three (3) Deputy Governor Section 25. Supervision and Examination. –
 The Deputy Governor designated by the Governor shall be vested The Bangko Sentral shall have supervision over, and conduct periodic or
special examinations of, banking institutions and quasi-banks, including
with the authority and powers as well as exercise the right to vote in
their subsidiaries and affiliates engaged in allied activities.
such meetings where the latter is in ex-officio member.
For purposes of this section, a subsidiary means a corporation more than
*Ex-Officio member – means by virtue of the office, the
fifty percent (50%) of the voting stock of which is owned by a bank or
person occupying the same automatically becomes the
quasi-bank and an affiliate means a corporation the voting stock of which,
member without the necessary appointment.
to the extent of fifty percent (50%) or less, is owned by a bank or quasi-
ARTICLE IV. OPERATIONS OF THE BANGKO SENTRAL
bank or which is related or linked to such institution or intermediary
Section 22. Research and Statistics. –
through common stockholders or such other factors as may be
The Bangko Sentral shall prepare data and conduct economic research
determined by the Monetary Board.
for the guidance of the Monetary Board in the formulation and
Sec. 25 - The Bangko Sentral supervises and examines the operations of
implementation of its policies. Such data shall include, among others,
banking institution including their subsidiaries and/or affiliates engaged in
forecasts of the balance of payments of the Philippines, statistics on the
allied activities.
monthly movement of the monetary aggregates and of prices and other
 Subsidiary – means a corporation of which more than fifty
statistical series and economic studies useful for the formulation and
analysis of monetary, banking, credit and exchange policies. percent (50%) of the voting stocks is owned by a bank or
Sec. 22 - The Research & Statistics Department’s main functions are to quasi-bank
prepare data and conduct economic research for the guidance of the Example:
 A B examined or looked into by any person, government, official,
bureau, or office.
Parent *51% of “B’s” stock is owned by “A” However, it does provide exemptions:
Bank/Quasi Bank *”B” is the subsidiary of “A”  The depositor gives written permission
 An Affiliate – means a corporation fifty percent (50%) or less  Cases of impeachment
of the voting stock is owned by a bank or quasi-bank.  Upon order of a competent court in cases of bribery or
Example: dereliction of duty of public officials, or
A B  cases where the money deposited or invested is the subject
Parent *51% of “B’s” stock is owned by “A” matter of the litigation
Bank/Quasi-Bank * “B” is the subsidiary of “A” Those found guilty of violating the law face imprisonment of not more than
The 3 types of examination on banking institution. five years or a fine of not more then P20,000, or both,
1. General, Periodic, Regular or Annual Examination – cover  Section 27. Prohibitions. - In addition to the prohibitions
the examination of the : assets, liabilities, and capital accounts to found in Republic Act Nos. 3019 and 6713, personnel of the
determine the solvency and stability; Bangko Sentral are hereby prohibited from:
2. Special, or Spot Examination – covers examination of special or  R.A. 3019 = Anti-Graft and Corrupt Practices Act
group of accounts; limited to a specific area of activity or operation and;  R.A. 6713 = Code of Conduct and Ethical Standard for Public
3. Special Investigation – is not an examination per se. It is done Officials and Employees
when there is a complaint to institute remedial or corrective measures and
to penalize those found responsible for mismanagement of fraudulent
Sec. 27 –
acts.
Bangko Sentral personnel are prohibited from:
Section 26. Bank Deposits and Investments. –
 a.) Being a DOSELAC (Director, Officer, Stockholder,
Any director, officer or stockholder who, together with his related interest,
contracts a loan or any form of financial accommodation from: (1) his Employee, Lawyer, Agent & Consultant)
bank; or (2) from a bank (a) which is a subsidiary of a bank holding - of any institution subject to supervision or examination of BSP except
company of which both his bank and the lending bank are subsidiaries or non-stock savings & loan assoc. & provident fund.
(b) in which a controlling proportion of the shares is owned by the same b.) Receiving/requesting any gift, present with pecuniary interest or
interest that owns a controlling proportion of the shares of his bank, in material benefit for himself or another directly or indirectly.
excess of five percent (5%) of the capital and surplus of the bank, or in the c.) Revealing in any manner information relating to the condition or
maximum amount permitted by law, whichever is lower, shall be required business of the institution except upon order of the court or as prescribed by the
by the lending bank to waive the secrecy of his deposits of whatever monetary board.
nature in all banks in the Philippines. Any information obtained from an d. Borrowing from any institution unless said borrowing is secured, fully
examination of his deposits shall be held strictly confidential and may be disclosed and subject to such rules/regulation or maybe prescribed by the Monetary
used by the examiners only in connection with their supervisory and Board.
examination responsibility or by the Bangko Sentral in an appropriate legal Personnel of the supervising and examination department are prohibited from
action it has initiated involving the deposit account. borrowing loans in a bank under their examination.
Sec. 26 - Waiver under the Secrecy Deposit Law on Loan Accomodation: Rationale: In order that their independence will not be affected . They will not be
 When a director, officer or stockholder or related biased or their reporting will never be influence.
Section 28. Examination and Fees. –
interest (DOSRI) borrows money or any form of
The supervising and examining department head, personally or by deputy,
accommodation (co-maker/guarantor/surety
shall examine the books of every banking institution once in every twelve
from:
(12) months, and at such other times as the Monetary Board by an
1. His Bank
affirmative vote of five (5) members, may deem expedient and to make a
report on the same to the Monetary Board: Provided, That there shall be
an interval of at least twelve (12) months between annual examinations.

The bank concerned shall afford to the head of the appropriate

supervising and examining departments and to his authorized deputies full
2. From Bank opportunity to examine its books, cash and available assets and general
a. which is a subsidiary of a bank holding company of which condition at any time during banking hours when requested to do so by
both his bank and the lending bank are subsidiaries; and the Bangko Sentral: Provided, however, That none of the reports and
other papers relative to such examinations shall be open to inspection by
the public except insofar as such publicity is incidental to the proceedings
hereinafter authorized or is necessary for the prosecution of violations in
connection with the business of such institutions.
Banking and quasi-banking institutions which are subject to examinations
by the Bangko Sentral shall pay to the Bangko Sentral, within the first(3)
days of each year, an annual fee in an amount equal to a percentage as
may be prescribed by the Monetary Board of its average total assets
b.) in which a controlling portion of the shares is owned by the same
during the preceding year as shown on its end of the month balance
interest hat owns a controlling portion of the shares of the bank in excess of five
sheets, after deducting cash on hand and amounts due from banks
percent (5%) of the capital and surplus of the bank or in the maximum amount
including the Bangko Sentral and banks abroad.
permitted by law, which ever is lower.
The general examination of the books of banking institution by the
Example:
supervising and examining department of the Bangko Sentral is done
Capital--------------Php.50M
yearly. However, it maybe done anytime as maybe deemed expedient,
Surplus ------------ 10M
otherwise known as spot audit or special examination for a specific
Total 60 M
purpose and specific account. Any findings from such examination
x 5%
shall be held confidential except when:
Loan Limit ------------------- Php. 3M
1. Authorized
shall waive the secrecy of his deposit
2. Necessary in prosecuting violations
The following are subject to examinations:
If the DOSRI loan is in excess of Php. 3M the lending bank can inquire into his
1. Banking Institutions ( Commercial, Thrift, Rural &
deposit account and the depositor/borrower cannot invoke the provisions on
Government Banks);
Bank Secrecy Deposit Law
2. Quasi Banking Institutions ( Investment Houses & Financing
Republic Act 1405, or The Law on Secrecy of Bank
Companies)
Deposits, is an act prohibiting the disclosure of or inquiry into
*The Bangko Sentral shall charge the above an annual examination fees.
deposits with any banking institution.
Banks/Quasi-banking institutions shall pay as amount equal to a
According to the law, all deposits with banks or banking
percentage of the average total assets of the preceding year less cash on
institutions in the country are confidential, and may not be
hand , due from banks (CB & Others).
Section 29. Appointment of Conservator. – 3. V – violates wilfully the cease and desist order.
Whenever, on the basis of a report submitted by the appropriate 4. U – unable to pay its liabilities as they become due in the
supervising or examining department, the Monetary Board finds that a ordinary course of business.
bank or a quasi-bank is in a state of continuing inability or unwillingness to * Inability to pay the withdrawals induced by financial panic constitutes
maintain a condition of liquidity deemed adequate to protect the interest of bank run.
depositors and creditors, the Monetary Board may appoint a conservator *Who is the person appointed as receiver by the Monetary Board?
with such powers as the Monetary Board shall deem necessary to take 1. For Banking Institution – PDIC
charge of the assets, liabilities, and the management thereof, reorganize 2. For Quasi-Banking Institution – Any person of recognize
the management, collect all monies and debts due said institution, and competence in banking & finance
exercise all powers necessary to restore its viability. The conservator shall *For how long shall the receivership last? What is the purpose?
report and be responsible to the Monetary Board and shall have the power 1. Not more than ninety (90) days from the take over;
to overrule or revoke the actions of the previous management and board 2. To determine if the banking institution can be rehabilitated;
of directors of the bank or quasi-bank. 3. It can resume business with the safety of the depositors
The conservator should be competent and knowledgeable in bank and creditors and the general public.
operations and management. The conservatorship shall not exceed one If the bank cannot be rehabilitated or resume business with the
(1) year. safety of the depositors and creditors, what will be the action of the
Grounds for the appointment of the conservator: Monetary Board?
1. When a bank or quasi-bank is in a state of continuing - The direct the receiver to proceed with the liquidation of the bank after
inability; or due notice.
Ex: Bank continuously under liquidity problem or cash - The BSP ensures that its foreclosed assets are administered, preserved
shortages to meet the withdrawals and disposed properly.
2. Unwillingness to maintain condition of liquidity deemed Section 31. Distribution of Assets. –
adequate to protect the interest of the depositor. In case of liquidation of a bank or quasi-bank, after payment of the cost of
Ex: Bank does not improve its cash position sufficient to proceedings, including reasonable expenses and fees of the receiver to
meet the daily withdrawals. be allowed by the court, the receiver shall pay the debts of such
1. When is bank said to be stable? institution, under order of the court, in accordance with the rules on
- when the asset is more than the liabilities. concurrence and preference of credit as provided in the Civil Code.
2. When is a bank said to be liquid?  What is Liquidation?
- when there is sufficient cash to meet the withdrawals.  Liquidation of a bank or quasi-bank means
3. If a bank stable is it always liquid? closing or winding the affairs of the business.
- No, Banks may have enough asset but maybe short of cash because  Who designates the liquidation?
cash is invested in securities or other assets.  The Monetary Board designates an official of the
4. What are the qualifications of the Conservator?
BSP as liquidator
-He must be knowledgeable in bank operations and management.
*Once the asset have been converted to cash, distribution shall be
5. What are the powers of the conservator (CRCR)?
as follows:
a. take charge of the assets, liabilities and management;
1. Preference of credit:
b. reorganizes the management;
1st – Preferred creditor – secured credits
c. collects all monies/debts due;
2nd – Non-preferred creditor – unsecured credits
d. exercises all powers to restore its viability
2. Preference as to ownership:
6. How long shall the conservatorship last?
1st. – Preferred stockholder
- Not exceeding one(1) year.
2nd. – Common stockholder
7. What are the instances when the conservatorship is terminated?
Section 32. Disposition of Revenues and Earnings. –
a. When the Monetary Board is satisfied that the bank can operate on its
All revenues and earnings realized by the receiver in winding up the
own. In short, the bank is already rehabilitated.
affairs and administering the assets of any bank or quasi-bank within the
b. When the continued operations would involve a probable loss
purview of this Act shall be used to pay the costs, fees and expenses
to its depositors and creditors. It would be best to close the bank rather than
mentioned in the preceding section, salaries of such personnel whose
operate at a loss.
employment is rendered necessary in the discharge of the liquidation
8. Who pays the expenses of the conservator?
together with other additional expenses caused thereby. The balance of
- the bank or quasi-bank under conservatorship.
revenues and earnings, after the payment of all said expenses, shall form
Section 30. Proceedings in Receivership and Liquidation. –
part of the assets available for payment to creditors.
Whenever, upon report of the head of the supervising or examining
 How are revenues and earnings of banking institution
department, the Monetary Board finds that a bank or quasi-bank
under liquidation disposed?
 The realized revenue and earnings during the
(a) is unable to pay its liabilities as they become due in the ordinary liquidation stage minus costs, expenses, fees,
course of business: Provided, That this shall not include inability to pay and salaries relative to the above. Any balance
caused by extraordinary demands induced by financial panic in the shall form part of the assets for the payment to
banking community; creditors. Should there be a balance, this should
(b) has insufficient realizable assets, as determined by the Bangko be distributed to the owners according to priority,
Sentral, to meet its liabilities; or by satisfying the preferred stockholders followed
(c) cannot continue in business without involving probable losses to its by the common stockholders.
depositors or creditors; or Section 33. Disposition of Banking Franchise. –
(d) has willfully violated a cease and desist order under Section 37 that The Bangko Sentral may, if public interest so requires, award to an
has become final, involving acts or transactions which amount to fraud or institution, upon such terms and conditions as the Monetary Board may
a dissipation of the assets of the institution; in which cases, the Monetary approve, the banking franchise of a bank under liquidation to operate in
Board may summarily and without need for prior hearing forbid the the area where said bank or its branches were previously operating:
institution from doing business in the Philippines and designate the Provided, That whatever proceeds may be realized from such award shall
Philippine Deposit Insurance Corporation as receiver of the banking be subject to the appropriate exclusive disposition of the Monetary Board.
institution.  What is a franchise?
Sec. 30 - The designation of a conservator under Section 29 of this Act or the  It is the right or license granted to banking
appointment of a receiver under this section shall be vested exclusively with the
institution to operate in a particular territory.
Monetary Board. Furthermore, the designation of a conservator is not a
 The franchise of a bank under liquidation maybe
precondition to the designation of a receiver.
awarded to another banking institution to operate
* Instances where a bank, quasi-bank shall be placed under
in the particular area if public interest so
receivership: (CIVU)
requires.
1. C – cannot continue business without involving probable
Section 34. Refusal to Make Reports or Permit Examination. –
loss to its depositors/creditors.
Any officer, owner, agent, manager, director or officer-in-charge of any
2. I – Insufficient realizable assets to meets its liabilities
institution subject to the supervision or examination by the Bangko Sentral
 within the purview of this Act who, being required in writing by the day for each violation, taking into consideration the attendant
Monetary Board or by the head of the supervising and examining circumstances, such as the nature and gravity of the violation or
department willfully refuses to file the required report or permit any lawful irregularity and the size of the bank or quasi-bank;
examination into the affairs of such institution shall be punished by a fine (b) suspension of rediscounting privileges or access to Bangko Sentral
of not less than Fifty thousand pesos (P50,000) nor more than One credit facilities;
hundred thousand pesos (P100,000) or by imprisonment of not less than (c) suspension of lending or foreign exchange operations or authority to
one (1) year nor more than five (5) years, or both, in the discretion of the accept new deposits or make new investments;
court. (d) suspension of interbank clearing privileges; and/or
Sec. 34. 1. Who are liable for wilfully refusing to: (e) revocation of quasi-banking license.
a. file the required report; or Sec. 37. –
b. permit lawful examination into the affairs of the bank. Aside from the criminal liability (imprisonment and/or fine as provided in
The following are liable (ODOMAO) Sections 34, 35 & 36) the Monetary Board may imposed administrative
1. Owner sanctions to banks, quasi-banks, the BSP and officers for wilful violations:
2. Director 1. of the charter or by-laws;
3. Officer 2. Delay in submissions of reports or publications;
4. Manager 3. Refusal to permit examination;
5. Agent 4. Make false and misleading statements;
6. Officer-in-charge 5. for failure or refusal to comply with any banking laws, order,
 Penalty: & instruction;
• Fine of not less than Fifty Thousand Pesos (50,000.00) 6. For committing irregularities, and
but not more than One Hundred Thousand Pesos 7. for conducting the business in an unsafe and unsound
(100,000.00) or imprisonment of not less than one (1) manner.
year but not more than five (5) years or both in the The following are liable: (BA-QUA-D-O)
discretion of the court. a. Bank
Section 35. False Statement. – b. Quasi-bank
The willful making of a false or misleading statement on a material fact to c. Directors
the Monetary Board or to the examiners of the Bangko Sentral shall be d. Officers
punished by a fine of not less than One hundred thousand pesos Penalty
(P100,000) nor more than Two hundred thousand pesos (P200,000), or by 1. fine of not more than Thirty Thousand Pesos (Php.
imprisonment of not more than (5) years, or both, at the discretion of the 30,000.00)/day;
court. 2. suspension of rediscount privileges/credit facilities;
1. For wilfully making a false or misleading statement on a material fact to 3. suspension of lending or foreign exchange operation or
the Monetary Board or examiners; authority to accept new deposit or make new investment;
2. Persons liable same as in Section 34 (ODOMAO) 4. suspension of inter-bank clearing privileges, and
3. Penalty: 5. revocation of quasi-bank license
- Fine of not less than One Hundred Thousand Pesos (100,000) nor more Person
than Two Hundred Thousand Pesos (200,000) or imprisonment of not The director/officer of the bank/quasi-bank may be
more than five (5) years or both. preventively suspended pending investigation for a period of
4. Material fact is one with material importance or great consequence that one hundred twenty (120) days.
gives weight or affect a decision. Rationale of preventive suspension:
Example: 1. prevent undue influence; and
Window dressing – by making it appear that the bank is liquid when 2. prevent access to the documents/records
actually it is not. Section 38. Operating Departments of the Bangko Sentral. –
Section 36. Proceedings Upon Violation of This Act and Other Banking Laws, The Monetary Board shall, in accordance with its authority under this Act,
Rules, Regulations, Orders or Instructions. – determine and provide for such operating departments and other offices,
Whenever a bank or quasi-bank, or whenever any person or entity willfully including a public information office, of the Bangko Sentral as it deems
violates this Act or other pertinent banking laws being enforced or convenient for the proper and efficient conduct of the operations and the
implemented by the Bangko Sentral or any order, instruction, rule or accomplishment of the objectives of the Bangko Sentral. The functions
regulation issued by the Monetary Board, the person or persons and duties of such operating departments and other offices shall be
responsible for such violation shall unless otherwise provided in this Act determined by the Monetary Board.
be punished by a fine of not less than Fifty thousand pesos (P50,000) nor Sec. 38 –
more than Two hundred thousand pesos (P200,000) or by imprisonment For the proper and efficient conduct of the operations and
of not less than two (2) years nor more than ten (10) years, or both, at the accomplishment of the objectives of the Bangko Sentral, the Monetary
discretion of the court. Board shall create offices and determine its functions as well as its duties.
Sec. 36: The new organizational structure of Bangko Sentral as mandated in
Who are liable for wilful violations of RA 7653 and other Banking Laws, relation to Sec. 133 of RA 7653.
Rules, Regulations, Orders or Instructions? The BSP's Organizational Structure
The following are liable (BA-QUA-PEN) as of December 2015
a. Banking institution  The Executive Management Services
b. Quasi- bank
c. Any person
d. Any entity
Penalty:
Fine neither less than Fifty Thousand Pesos (Php. 50,000) nor more than
Two Hundred Thousand Pesos (Php. 200,000) or Imprisonment of not
less than two (2) years but not more than ten (10) years or both.
Section 37. Administrative Sanctions on Banks and Quasi-banks. –
Without prejudice to the criminal sanctions against the culpable persons
provided in Sections 34, 35, and 36 of this Act, the Monetary Board may,
at its discretion, impose upon any bank or quasi-bank, their directors  The Monetary Stability Sector
and/or officers, for any willful violation of its charter or by-laws, willful delay
in the submission of reports or publications thereof as required by law,
rules and regulations; any refusal to permit examination into the affairs of
the institution; any willful making of a false or misleading statement to the
Board or the appropriate supervising and examining department or its
examiners.
(a) fines in amounts as may be determined by the Monetary Board to be
appropriate, but in no case to exceed Thirty thousand pesos (P30,000) a
 for the month of December, which shall be submitted within ninety (90)
days after the end hereof.
The Monetary Board shall publish and submit the following reports to the
President and to the Congress:
a) not later than ninety (90) days after the end of each
quarter, an analysis of economic and financial developments,
including the condition of net international reserves and
monetary aggregates;
(b) within ninety (90) days after the end of the year, the
preceding year's budget and profit and loss statement of the
Bangko Sentral showing in reasonable detail the result of its
operations;
(c) one hundred twenty (120) days after the end of each
 The Supervision and Examination Sector semester, a review of the state of the financial system; and
(d) as soon as practicable, abnormal movements in monetary
aggregates and the general price level, and, not later than
seventy-two (72) hours after they are taken, remedial
measures in response to such abnormal movements.
Sec. 39 – The required reports & publications for purposes of transparency:
a. For the General Public:
Balance Sheet (monthly) showing the volume and
composition of its assets and liabilities within sixty (60) days
after the end of its month except for December which is within
ninety (90) days.
b. For the President of the Philippines and Congress
Balance sheet and reports
1. Per Quarter
- Analysis of economics and financial developments – within
 The Resource Management Sector ninety (90) days after the end of each quarter;
2. Annually
a. Previous year’s budget
b. profit and loss statement showing in reasonable detail the result of its
operations – within ninety (90) days after the end of the year;
A review of the state of the financial system every semester – within one
hundred twenty (120) days after the end of the semester; (* semester
consists of six (6) months)
c. review of the state of the financial system; and
d. abnormal movements in monetary aggregates and general price level
and the remedial measures taken as soon as practicable – within seventy
(72) hours.
Rationale:
1. To inform the public of financial condition of the BSP;
2. To inform and keep abreast the President and Congress of
the economics and financial development as well as the
stability of the financial system of the country; and
3. The effect remedial measures taken in response to this
abnormal movements in monetary aggregates.
 The Security Plant Complex
Section 40. Annual Report. –
Before the end of March of each year, the Bangko Sentral shall publish
and submit to the President and the Congress an annual report on the
condition of the Bangko Sentral including a review of the policies and
measures adopted by the Monetary Board during the past year and an
analysis of the economic and financial circumstances which gave rise to
said policies and measures.

The annual report shall also include a statement of the financial condition
of the BSP and a statistical appendix which shall present, as a minimum,
the following data:
a.) the monthly movement of monetary aggregates and their components;
b.) the monthly movement of purchase and sales of foreign exchange
and of the international reserves of the Bangko Sentral;
c.) the balance of payments of the Philippines;
d.) monthly indices of consumer prices and of import and export prices;
e.) the monthly movement, in summary form, of exports and export prices;
f.) the monthly movement of the accounts of the Bangko Sentral and of
other banks;
g.) the principal data on government receipts and expenditures and on the
status of the public debt, both domestic and foreign; and
h.) the text of the major legal and administrative measures, adopted by
the Government and the Monetary Board during the year which relate to
the functions or operations of the Bangko Sentral or of the financial
ARTICLE V. REPORTS AND PUBLICATIONS system.
Section 39. Reports and Publications. – The Bangko Sentral shall publish another version of the annual report in
The Bangko Sentral shall publish a general balance sheet showing the terms understandable to the layman.
volume and composition of its assets and liabilities as of the last working Failure to comply with the reportorial requirements pursuant to this article
day of the month within sixty (60) days after the end of each month except without justifiable reason as may be determined by the Monetary Board
 shall cause the withholding of the salary of the personnel concerned until - No, because BSP is owned by the government and the sole
such requirements are complied with. owner/stockholder is the government itself.
Reportorial Requirements: *Dividends – refers to those, which arises from profits when
1.) To be submitted to the President and Congress: declared and distributed to stockholders either private individual or
Annual Report (Statement of Condition) or balance sheet entity.
including review of the policies adopted during the past year, Section 45. Revaluation Profits and Losses. –
and analysis of the economic and financial circumstances that Profits or losses arising from any revaluation of the Bangko Sentral's net
give rise to said policies and measures as well as statistical assets or liabilities in gold or foreign currencies with respect to the
data above on the movement of monetary aggregates, foreign Philippine peso shall not be included in the computation of the annual
exchange, price indexes, balance of payment, etc. profits and losses of the Bangko Sentral. Any profits or losses arising in
2.) For Layman/Ordinary Person: this manner shall be offset by any amounts which, as a consequence of
Annual report or balance sheet easily understandable. such revaluations, are owed by the Philippines to any international or
Sanction: regional intergovernmental financial institution of which the Philippines is a
Non-compliance to this reportorial requirement without member or are owed by these institutions to the Philippines.
justifiable reason shall cause the withholding of the salary of  Any remaining profit or loss shall be carried in a special
the personnel concerned. frozen account which shall be named "Revaluation of
Sec. 41. Signatures on Statements – International Reserve" and the net balance of which shall
The balance sheets and other financial statements of the Bangko Sentral appear either among the liabilities or among the assets of the
shall be signed by the officers responsible for their preparation, by the Bangko Sentral, depending on whether the revaluations have
Governor, and by the auditor of the Bangko Sentral. produced net profits or net losses.
The balance sheet and other financial statements shall bear the signature  Revaluation profit and losses is not included in the
of the one who prepares the same. Governor and the Auditor of the computation of annual profit and losses because there is no
Bangko Sentral. Without their signatures, the documents are worthless actual or exchange of transaction.
and of no probative value.  Revaluation refers to revaluing the asset or liabilities for
ARTICLE VI. PROFITS, LOSSES, AND SPECIAL ACCOUNTS purpose of updating the books to have a fair/realistic
Section 42. Fiscal Year. – presentation in the financial statements
The fiscal year of the Bangko Sentral shall begin on January first and end Section 46. Suspense Accounts. –
on December thirty-first of each year. Sections 43 and 43-A of Republic Act No. 265, as amended, creating the
* Fiscal Year is the accounting period of the Bangko Sentral, which begins Monetary Adjustment Account (MAA) and the Exchange Stabilization
on January 1st. and ends in December 31st of each year. Adjustment Account (ESAA), respectively, are hereby repealed. Amounts
Section 43. Computation of Profits and Losses. – outstanding as of the effective date of this Act based on these accounts
Within the first thirty (30) days following the end of each year, the Bangko shall continue to be for the account of the Central Bank and shall be
Sentral shall determine its net profits or losses. In the calculation of net governed by the transitory provisions of this Act.
profits, the Bangko Sentral shall make adequate allowance or establish  The Revaluation of International Reserve
adequate reserves for bad and doubtful accounts. (RIR) account as of the effective date of
Sec. 43. – this Act of the Central Bank shall continue
 The Bangko Sentral is not a profit oriented. However, in the to be for the account of the same entity
course of its operation it may incur profits or losses. and shall be governed by the provisions of
 The net profits and losses shall be determined within thirty Section 44 of Republic Act No. 265, as
(30) days after the end of each year taking into consideration amended, until otherwise provided for in
adequate provision for bad debts or doubtful accounts. accordance with the transitory provisions of
 Reserved for bad debts or doubtful accounts is being this Act.
considered on the assumption that not all receivables are  The provision was already replaced.
100% collectibles. Also, in order to present a fair and more ARTICLE VII. THE AUDITOR
realistic financial statement. Bad debts as an expense if not Section 47. Appointment and Personnel. –
taken up will overstate the income. The Chairman of the Commission on Audit shall act as the ex officio
Section 44. Distribution of Net Profits. – auditor of the Bangko Sentral and, as such, he is empowered and
Within the first sixty (60) days following the end of each fiscal year, the authorized to appoint a representative who shall be the auditor of the
Monetary Board shall determine and carry out the distribution of the net Bangko Sentral and, in accordance with law, fix his salary, and to appoint
profits, in accordance with the following rule: and fix salaries and number of personnel to assist said representative in
Fifty percent (50%) of the net profits shall be carried to his work. The salaries and other emoluments shall be paid by the
surplus and the remaining fifty percent (50%) shall revert Commission. The auditor of the Bangko Sentral and personnel under him
back to the National Treasury, except as otherwise provided may be removed only by the Chairman of the Commission.
in the transitory provisions of this Act.  The representative of the Chairman of the Commission must
Sec. 44.- be a certified public accountant with at least ten (10) years
The Bangko Sentral is not a profit-driven financial institution. Profit motive experience as such. No relative of any member of the
is only secondary. The operation of the Bangko Sentral is primarily for Monetary Board or the Chairman of the Commission within
public interest. the sixth degree of consanguinity or affinity shall be appointed
1.) How is the net profit of the BSP distributed? such representative.
a. 50% to surplus; and  Ex-Officio – means by virtue of the office, the chair of the
b. 50% to The National Treasury Commission on Audit is the ex-officio auditor of the Bangko
2.) Can this profit be considered dividend? Sentral.