Special Problems in Minor Commercial Laws

(Reference: Atty. Tristan A. Catindig, Notes on Selected Commercial Laws)

Bangko Sentral ng Pilipinas Law (Republic Act No. 7653)
1.

The post-BSP employment restriction states that No Member of the Monetary Board (MB) shall be employed in any multilateral banking or financial institution within two years after the
expiration of his term except when he serves as an official representative of the Philippine Government to such institution

2.

Does this prohibition require an employer-employee relationship between the multilateral banking or financial institution and the former MB member (what about consultants, senior
advisors)?

3.

What if the former MB member is a dual or multiple citizen and he is appointed to a multilateral banking or financial institution within the two year period by his other country other than
the Philippines? Is he prohibited from accepting the appointment? What, if ever, is the remedy of the Government of the Philippines?

4.

MB members, other BSP officials, and personnel of departments performing supervision and examination functions may be indemnified against costs and expenses reasonably incurred by
such persons in connection with any civil or criminal action, suit or proceedings to which they may be made a party by reason of the performance of their functions or duties unless they
are finally adjudged in such action, suit or proceedings to be liable for negligence or misconduct.

5.

What if a non-supervisory employee is deputized and/or designated to perform ad hoc supervisory and examination functions, and he is sued as a result, is he covered by the privilege of
indemnification?

6.

Under Section 18, the Governor, subject to MB authorization, is empowered to engage the services of private counsel in any legal proceedings, action or specialized legal studies.

7.

What if the dispute of the Governor is with several members of the MB, and the MB does not grant authorization, may the Governor engage the services of private counsel nonetheless?

8.

Is the private counsel covered by the privilege of indemnification, if ever?

9.

Under the rules on Directors, Officers, Stockholders and Related Interests (DOSRI), the bank director, officer, or stockholder shall be required by the lending bank to waive the secrecy of
his deposits of whatever nature in all banks in the Philippines. In which case, it is a requisite element that he must contract a loan or any form of financial accommodation.

10. What if the bank invests equity in his business? Is this prohibited as being within the meaning of financial accommodation? Is waiver of secrecy still required?

11. The bank director, officer or stockholder shall be required by the lending bank to waive the secrecy of his deposits of whatever nature in all banks in the Philippines.
12. What if the bank deposits are in a bank outside the Philippines? Is he prohibited from borrowing without waiver of secrecy?
13. Another requisite element is that the loan or financial accommodation of the director, officer, or stockholder, singly or with that of his related interest, must be in excess of 5% of the
capital and surplus of the lending bank or in the maximum amount permitted by law, whichever is lower.
14. What if he (the DOSRI) borrows 5% or less, but from two banks of the same controlling interest and the total is in excess of 5%? Is waiver of secrecy still required?
15. What are the indicators of a state of continuing inability or unwillingness to maintain a condition of liquidity?
16. Under Section 30, after the receiver has been designated, the receiver shall immediately gather and take charge of all assets and liabilities of the institution, administer the same for the
benefit of its creditors, and exercise the general powers of a receiver under the Revised Rules of Court.
17. What is the remedy of the bank if it contests the findings of the MB?
18. The assets of an institution under receivership or liquidation shall be deemed in custodia legis in the hands of the receiver and shall, from the moment the institution was placed under such
receivership or liquidation, be exempt from any order of garnishment, levy, attachment, or execution.
19. What is the scope of this exemption? What if a debt is contested/ disputed but, if proved, turns out to be a preferred credit?
20. The actions of the MB under Sections 29 (i.e. appointing a conservator, etc.) and 30 (i.e.) closing a bank, etc.) are final and executory and may not be restrained or set aside by a court
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. The
petition for certiorari may only be filed by the stockholders on record representing the majority of the capital stock within ten (10) days from receipt by the board of directors of the
institution of the order directing conservatorship, receivership or liquidation.
21. What if the controlling interest is merely a plurality? May they validly file a petition for certiorari?
22. In Pacific Banking Corporation Employees Organization, et al. vs. CA, et al., G.R. No. 109373, March 20, 1995, the Court held: Although the claims are treated in the same
proceeding, the treatment is individual. Each claim is heard separately. And the Order issued relative to a particular claim applies only to said claim, leaving the other claims unaffected,
as each claim is considered separate and distinct from the others. Obviously, in the event that an appeal from an Order allowing or disallowing a particular claim is made, only said claim is
affected, leaving the others to proceed with their ordinary course.
23. A disapproved claim is appealed. In the meantime, an order is given to pay the approved claims. What happens to the appealed claim if eventually upheld? What if it is a preferred claim?

24. Special prohibitions on BSP personnel. They cannot be an officer, director, lawyer, agent, employee, consultant, or stockholder, directly or indirectly, of any institution subject to
supervision or examination by the BSP, except non-stock savings and loan associations and provident funds organized exclusively for BSP employees, and except as otherwise provided in
the BSP law.
25. Does this prohibition on employment extend to their spouses and children? Relatives up to the fourth degree of consanguinity or affinity?
26. They cannot directly or indirectly request or receive any gift, present or pecuniary or material benefit for themselves or for another from any institution subject to supervision or
examination by the BSP.
27. What if there was a certain degree of onerousness to the material benefit, may he accept it?
28. They cannot reveal in any manner information relating to the condition or business of any institution subject to supervision or examination by the BSP, except under orders of a court,
Congress, or any government office or agency authorized by law, or under such conditions as may be authorized by the MB, or where the information is given to the MB or the BSP
Governor, or any person authorized by either of them in writing to receive such information.
29. What is the scope of the phrase information relating to?
30. What if the BSP employee speaks in a public or televised forum or an academic symposium, is he covered by the prohibition?
31. What if he is asked by a Senator or Congressman who owns a bank outside of congressional proceedings, is he prohibited? By the chairman of the Committee on Banking, who incidentally
owns a bank, but the inquiry is made outside of congressional proceedings?