Purposes why the Anti-Money Laundering Act was enacted:

1.) To protect and observe integrity and confidentiality of bank accounts in the Philippines.
How can it be protected? - by ensuring that the banks are not included in dirty money.
2.) To extend cooperation in the transnational investigation and prosecution of persons involved
in money laundering wherever committed.
Why does our government do this?
-Under our Constitution, we declare that international comity shall form part of the law of
the land and we renounce war as an instrument of national policy. Therefore, we embraced,
we adopted the rule of amity, cooperation, with other sovereign states. And pursuant to that,
being consistent with foreign policies of the Philippines, the State shall extend its cooperation
in any transnational investigation
Transnational- investigation of money laundering activities beyond the Philippine
territorial jurisdiction
Ex. RCBC Money laundering offense
3.) To ensure that the Philippines shall not be made a money laundering site for the proceeds of
any unlawful activity.

What are covered transactions?

Any transaction involving money and other monetary instruments or property amounting to
more than 500,000 pesos in one banking day. Negotiable instruments are also covered such as check,
promissory note, bill of exchange, letters of credit, trust receipt, trade acceptance and other
instruments regarding money like certificate of deposit, trust certificate, bonds and other commercial
papers that cost more than 500,000 pesos in one banking day.

4 types of monetary instruments:

1.) Coins or currency of the Philippines, or of any other country

2.) Drafts, checks and notes
3.) Negotiable instruments and other commercial papers- bonds, trust certificates,
certificates of deposit, trade acceptance
4.) Other similar instruments where title thereto passes to another by endorsement,
assignment or delivery
Endorsement- part of negotiation
Delivery- also part of negotiation with respect to bearer instruments
Assignment- law provides that if the monetary instrument was not negotiated
but validly assigned and the assignee knew that the monetary instrument was from the
proceeds of an unlawful activity, he can still be held liable

 Whether the transaction is consistent with the client’s past business activities, it must be
reported by the bank, insurance company or trading houses ---> Anti-Money Laundering
Council.
What are covered institutions?

-All banks, non-banks, quasi-banking institutions, trust companies and all other similar entities or
institutions including their subsidiaries and affiliates under the supervision and regulation of the Bangko
Sentral ng Pilipinas.

Quasi-bank- parang bangko

Lending companies- puhunan ang pinapautang

Banks- accept deposits and this is what they lend to others

Universal bank- can perform both banking and non-banking services

Commercial bank- can only perform banking services

Trustee- caretaker of investment like pension fund

Ex. Bank reserved for the payment of retiree’s benefit or lump sum benefit

Such other establishments or similar institutions includes pawnshops and casinos

Subsidiary- a corporation where its controlling shares is owned by another corporation

Subsidiary of Metrobank- PSBank, Subsidiary of PNB- PNB Savings Bank

Ultra Vires transaction- when one corporation has investment in a corporation whether purpose
is same or different and that investment is controlling.

Parent corporation- the corporation owning the controlling shares of another corporation

Affiliate- a corporation where its shares of stock which is non-controlling is owned by another
corporation

-All insurance companies and other institutions under the supervision and regulation of the
Insurance Commission.

Insurance company- sells insurance policy which can be life or non-life

- Its clients are the public- private, natural or juridical entities

There are more non-life insurance firms than life insurance firms

Non-life insurance policy- can be fire, accident and other casualty policies

- Insures casualties involving properties

Accident insurance- only insures third party

Ex. Malayan Insurance, FDU Insurance

Life insurance policy-when you insure casualty involving fire

Ex. PHILAM, Insular Life, National Life, PNB Life

 Reinsurance company- its clients are the insurance companies

- Insures the insurance policy issued by an insurance company

- this is more prevalent in the non-life insurance industry for the
protection of non-life insurance companies
- shares the burden of the insurance policy with the insurance
company

Insurance firm- is usually a juridical person

Insurance broker and insurance agent- can either be a juridical or natural person

Reinsurer- usually a juridical entity

-All establishments dealing with securities market, money instruments, investment houses under
the supervision and regulation of the Securities and Exchange Commission

 Included also are trust fund companies, pre-need companies, money changer or exchange
market transaction, money markets, money remittance centers, money transfer, foreign
exchange dealers and such other establishments under the supervision and regulation of
SEC

Money transfer- Western Union, LBC, M. Lhullier, Cebuana Lhullier, Palawan

Foreign exchange- market where currencies are traded

Investment houses- they are the ones who manage securities and undertake the underwriting
of investment by one entity, whether juridical or natural persons, in commercial instruments
and money market instruments

Securities market- floating of various commercial instruments can be found here such as
debenture bonds and collateral bonds

Commercial instrument- certificate of stock- quasi-negotiable

Securities broker- merely facilitates the transaction involving purchases and sales of securities

- buys securities for another person

Securities dealer - buys and sells securities for himself

Securities agent - one acting in behalf of another, can be agent of securities broker or of
securities dealer

Agent- one acting in behalf of the principal- person who gives authority to another person so
that the latter can perform its specific acts subject matter of the authority

If the authority covers acts of administration- general power of attorney

If the authority covers specific acts of ownership or strict dominion- special power of
attorney

*There are all institutions that deal with money.

*The law insures that no dirty money shall be laundered through anyone of the covered institution.

Three Government Agencies that are Supervising Authorities identified by the law:

 Bangko Sentral ng Pilipinas

 Securities and Exchange Commission
 Insurance Commission
This explains why the Anti-Money Laundering Council is composed of the Governor of the BSP,
Chairman of the SEC and Commissioner of the IC

Each of the following institution have the power of supervision and regulation

Supervise- monitor or oversee the activity of an institution

Regulate- you can regulate the business of the institution

Under the law, the following are considered suspicious transactions:

Suspicious transactions- not yet proven

1. Any transaction which has no legal or trade obligation, purpose or economic justification

Ex. Tinatanong ng brach manager ang client pero walang maibigay na specific reason
and sources kung bakit ang laki ng gustong ideposit tapos defensive ang sagot ng client
at nagbabanta na sa ibang bangko na magtatransact. Dun naman sa tanong ng source
nung pera, posible rin na magsinungaling ang client kaya trabaho ng branch manager na
iverify ang mga sinasabi nung suspicious client dahil necessary ito para sa offering ng
corporate account.

Pag hindi corporate account ang gustong iopen pero individual account, kailangang
maascertain ang identity ng person

2. Any transaction where the identification of the client has not been ascertained

Ex. A person suddenly appeared in the bank to deposit 1,000,000 and the bank
entertained the person without ascertaining who the person was. If the Anti-Money
Laundering Council discovers it, then the personnel of the bank can be held liable for
money laundering by facilitating the laundering of the proceeds of an unlawful or illegal
activity.

When a covered institution endeavored to seek the identity of the client but he
failed, that is suspicious and therefore must be reported. For instance, the address given
is fake, the business given is also a misrepresentation, the telephone number given
when dialed, is answered by a different entity.

Basic requirements that a covered institution must obtain so that a client can be
properly identified- information that can be found in a resume such as name,
nationality, civil status, address

In the case of a juridical entity, a covered institution must obtain the articles of
incorporation and bylaws, the principal place of business and the nature of the business
3. Any transaction where the amount involved is not commensurate to the financial
capabilities or capacity of the client.

Not commensurate- beyond

Ex. May-ari ng sari-sari store ang client mo pero nagdedeposit ng 1,000,000 ngayon.
Alam mo na hindi pa naman nagbabago ang kalagayan ng sari-sari store iyon

4. Any transaction which can be perceived as deviating from the usual and past
transactions of the client.

-Related to #3

Ex. The usual deposits of a client amount only to 10,000 then suddenly the client is
depositing 1,000,000

5. Any transaction which has been structured in such a way that it will avoid inclusion
under the reportorial requirements to be filed and submitted to the Anti-Money
Laundering Council.

Ex. Yung 1 million na idedeposit ay binreak down or istinructure nila into tig100,000,
1 day after another na pagdeposit or may fixed interval ng pagdedeposit, naging scheme
na ang kalabasan

6. Any transaction which in any way is related to any unlawful activity about to be, is being
or has been committed.

About to be- future, is being- present, has been- past

Dito karamihan nahuhuli ang mga covered institution

Ex. Nagsangla ng nakaw na bagay sa pawnshop

Unlawful activity:

a.) Kidnapping for ransom

b.) Dangerous Drugs Board Act- pusher, user, deliveryman atbp.
c.) Robbery and extortion
d.) Estafa or swindling
e.) Plunder
f.) Anti-Graft and Corrupt practices
g.) Violations under Republic Act No. 8792, otherwise known as the
Electronic Commerce Act of 2000;
h.) Jueteng and Masiao punished as illegal gambling
i.) Hijacking

7. Any transaction analogous or similar to the above, aforementioned or foregoing

suspicious transactions.

Ex. A client uses another person to make it appear that a deposit is the result of a
civil obligation when in fact, they are in collusion with each other.
When the AMLA examiner finds out through investigation that the money proceeded from an unlawful
activity, the AMLA can compel the bank to disclose to them the details of the deposit. In doing this, the
Bank Secrecy Law is not violated because you are doing your lawful duty.

AMLA examiner- should be a CPA

-When a person knew that the activity has to be reported to the Anti-Money Laundering Council, and he
fails to do so, he commits the crime of money laundering.

 You are given 5 days from the occurrence of the transaction to report the covered
transaction or suspicious transaction to the council, otherwise you can be prosecuted for
the crime of money laundering
 When the transaction is both a covered and suspicious transaction, it shall be reported
only as a suspicious transaction

Money laundering- pinapalabas na ang pera ay nanggaling sa isang lawful activity

- a crime whereby the proceeds of any unlawful activity is transacted, thereby making
it appear that it originated from a legitimate source

Three Groups of Persons who can commit the offense of Money Laundering:

1.) Persons knowing that the monetary instrument or property being transacted to them was from an
unlawful activity and they did not prevent it; they transacted or attempted to transact with said
monetary instrument.
Refers to the principal- person who is really involved
Penalty: Imprisonment ranging from seven (7) to fourteen (14) years and a fine of not less
than Three million Philippine pesos (Php3,000,000.00) but not more than twice the value of the
monetary instrument or property involved
Criminal liabilty- imprisonment
Civil liability- fine

2.) Persons knowing that the monetary instrument being transacted to them was the proceeds of an
unlawful activity and yet they did not do something or they did something as a result of which
facilitated the laundering of the money
- refers to the officers and employees of the covered institution
Facilitating- you make it easy for them to launder the money
- RCBC branch manager was guilty of this
Penalty: Imprisonment from four (4) to seven (7) years and a fine of not less than One
million five hundred thousand Philippine pesos (Php1,500,000.00) but not more than Three
million Philippine pesos (Php3,000,000.00)

3.) Persons knowing that the transaction is covered by the reportorial requirements or covered in the
suspicious transactions which must be reported and filed with AMLC yet they did not report it.
 Penalty: Imprisonment from six (6) months to four (4) years or a fine of not less than One
hundred thousand Philippine pesos (Php100,000.00) but not more than Five hundred thousand
Philippine pesos (Php500,000.00), or both

Pag dinestroy ng bangko yung kanyang record or failed to keep the records of the money laundering
transaction na within a period of 5 years, ang parusa ay imprisonment from six (6) months to one (1)
year or a fine of not less than One hundred thousand Philippine pesos (Php100,000.00) but not more
than Five hundred thousand Philippine pesos (Php500,000.00), or both

Agency in charge of the implementation of the AMLA- Anti-Money Laundering Council or AMLC

 Their decision should be unanimous, not a majority vote

Bangko Sentral Governor- Chairman of the AMLC

Director-general of AMLC- must be a lawyer

- must be atleast 35 years old and of good moral character with

integrity, probity and independence

- must come from either BSP, IC or SEC

Functions of AMLC:

1.) to require and receive covered or suspicious transaction reports from covered institutions
2.) to issue orders addressed to the appropriate Supervising Authority or the covered institution
to determine the true identity of the owner of any monetary instrument or property subject
of a covered transaction or suspicious transaction report or request for assistance from a
foreign State, or believed by the Council, on the basis of substantial evidence, to be, in whole
or in part, wherever located, representing, involving, or related to, directly or indirectly, in
any manner or by any means, the proceeds of an unlawful activity
3.) to initiate civil forfeiture proceedings and all other remedial proceedings through the Office
of the Solicitor General
4.) to cause the filing of complaints through the Department of Justice or the Ombudsman for
the prosecution of money laundering offenses
5.) to investigate suspicious transactions and covered transactions deemed suspicious after an
investigation by AMLC
6.) to file a motion before the Court of Appeals, ex parte, for the freezing of any monetary
instrument or property alleged to be the proceeds of any unlawful activity and to apply for
the authority to investigate or look into any investment or deposit including related accounts
by the banks and non-banking financial instruments
7.) to implement such measures as may be necessary and justified under this Act to counteract
money laundering
8.) to receive and take action in respect of, any request from foreign states for assistance in their
own anti-money laundering operations
9.) to develop educational programs on the pernicious effects of money laundering, the methods
and techniques used in money laundering, the viable means of preventing money laundering
and the effective ways of prosecuting and punishing offenders
 10.) to enlist the assistance of any branch, department, bureau, office, agency or instrumentality
of the government, including government-owned and -controlled corporations, in
undertaking any and all anti-money laundering operations, which may include the use of its
personnel, facilities and resources for the more resolute prevention, detection and
investigation of money laundering offenses and prosecution of offenders
11.) to impose administrative sanctions for the violation of laws, rules, regulations and orders and
resolutions issued pursuant thereto

How can monetary instruments or properties alleged to be involved in the proceeds of an unlawful
activity be frozen?

- By filing an official motion, ex parte

Who will file the motion or application?

-AMLC

Where?

-Court of Appeals

What is the reason why the Court of Appeals will issue the freeze order?

- When there is probable cause that the monetary instrument or property is in any way
related to an unlawful activity

Probable cause- situations where any ordinary,reasonable and prudent person would have a
thinking or belief that the offense of money laundering has been committed

- just a probability, not yet a full proof of commission

You will be applying for the freezing of the monetary instrument so that it can no longer be dissipated,
transferred, spent or withdrawn

A covered institution who has been ordered by the court to freeze the monetary instrument will keep
the instrument as is, where is

- it will not entertain any movement like withdrawal or transfer

Freeze- remedial proceedings or provisional remedy

How many days will it become effective?

- For a period of 20 days unless the court extends it any further

Can the AMLC inquire into bank deposits of persons involved in the money laundering activities?

- As a rule, before the AMLC can inquire into the details of a bank deposit supposedly owned by
a person involved in the proceeds of an unlawful activity, AMLC must first secure from a competent
court a court order

Competent court- can be Regional Trial Court, Court of Appeals

 Instances where the law empowers the AMLC to inquire into the details of the deposit without a
court order:

1.) When the unlawful activity has something to do with the violation of the Dangerous
Comprehensive Drugs Act
2.) Hijacking, destructive murder and arson
3.) Violation of the Anti- Graft and Corrupt Practices Act
4.) Kidnapping for ransom

Why was the New Central Bank Act enacted by Congress?

To have a central monetary unit to take care of everything about money,banking and
credit with independence- an independent central monetary body.

How does the law assure the independence of the BSP?

By giving the Bangko Sentral fiscal and administrative autonomy

Fiscal-money

Administrative- management

-No other government agency, bureau, department or instrumentality can interfer

with the activities of the Bangko Sentral through the Monetary Board

It can act independently without help from Congress and even the President

BSP- governed by the Monetary Board

- enjoys autonomy

- only government agency that has control of money circulation

Auditor of BSP- Chairman of the Commission on Audit but he may designate a representative who will
become the resident auditor of the BSP

No CPA can be designated a resident auditor but through the recommendation of the
Chairman of the Commission on Audit unless that person is a CPA and Provided further, that he has 10
years experience as an auditor

It can be a team, not necessarily one person

Objectives of BSP

- to maintain price stability conducive to a balanced and sustainable economic growth

Sustainable growth- continuous growth, you will not go down

How to tell if a country is experiencing economic growth- Real GDP shows improvement on a
year to year basis

Best gauge of economic growth- Real GDP, not nominal GDP

Real GDP- based on output/ production

 Output- refers to all goods and services produced by a country, both by its citizens and
other nationalities

Nominal GDP- based on revenue/ prices

Real test of economic growth- Real GDP, not real GNP

Gross National Product- analysis on revenue- money paid for goods and services

- output computed is the output of all Filipinos inside and outside the
country

Task given by law- make prices stable

Unstable prices- happens when the country experiences inflation

Stable prices- consumers are not buying more than what they need, no panic buying

Inflation- normal because it is present year after year

- happens when there is too much supply of money

- to promote and maintain monetary stability and the convertibility of the Philippine currency

Monetary stability- refers to the purchasing power of the currency

Purchasing power- quantity or volume of goods or services which the currency can purchase/buy

Stable currency – there is monetary stability

- would result to low interest rate, manageable inflation

Malakas ang Philippine currency sa ASEAN region due to geo-political reasons

4 Stages of Business Cycle

Drought or Depression Recovery Peak or Prosperity Recession

Drought- lowest point

Every economy wants to stay at the peak or prosperity level

Countries at peak or prosperity- US, Japan, France, UK

Characteristics of peak- low unemployment

Severe unemployment- depression

Recession- economy is experiencing reduction in output, unemployment begins to set

Opposite of recession is recovery

Philippine economy- stage of recovery

Population also affects economic progress

You can borrow money without collateral provided that your business proposal is very, very good and is
viable

5 Functions of BSP:

1.) Official depository of the government

Depository- where the money of the government is held in the form of deposits
This is why in its open market operations as a monetary policy tool, it can buy and sell
government securities

2.) Official representative of the government to the International Monetary Fund

International Monetary Fund- established by member countries all over the world,
including the Philippines, to assist member countries in its balance of payment deficiency or
deficit
Balance of payment- summary of all financial transactions of a country with
another country over the rest of the world
When the Philippines is experiencing a deficit with its balance of payment, our
international reserves is already falling below the standard
We contribute money through the form of membership fee to the IMF, but our
contribution is pro rata with the GDP of the economy

3.) Bank of banks- to extend credit facilities to the banks

-to avoid panic withdrawal, there are bank reserves

- lender of banks

If the Philippines goes to IMF to seek financial assistance when banks and other
similar institutions start suffering from its liquidity condition, they go to Bangko Sentral

- one of the mandated functions of the BSP is to assist banks and similar
institutions to prevent liquidity problems

- when a bank is experiencing liquidity problems, they can go to the Bangko

Sentral for loans that come from the bank reserves

4.) Clearinghouse

Clearinghouse- all checks are cleared through the facilities of the Bangko Sentral

Checks- demand deposits

Why are checks called demand deposits?

-All checks become the liability of the issuing public through a banking
institution
 -You cannot draw a check unless you have a checking account with a bank in
order to preserve the reliabilty of checking as a mode of payment

How does BSP protect the integrity of demand deposits?- Through the Bangko
Sentral

-By making sure that checks are cleared within 24 hours ( used to be 72 hours
but it has been abused)

When you issue a check, make sure that your check has sufficient deposit

- All banks observe cut-off time

If the cut-off time is 11 and you deposit your check past 11, it will be
considered as a deposit of the next day and will be cleared the evening of that day

When the check bounces, give the drawer of the check 5 days to redeem
the check

5.) Financial Advisor of the Philippine government

Through the Monetary Board and with the representation of the BSP Governor who is
tasked as the Chief Executive Officer, it provides financial advice to the NEDA, Congress, Executive

Everything about monetary and fiscal policy, it originates from the Bangko Sentral

Another function of Bangko Sentral is to print bills and mint coins- minter and printer of Philippine
currency

Mint- found along East Avenue near SSS

Printing facilities- not disclosed

Responsibility ng Bangko Sentral ang magprovide ng policy direction in the areas of money, banking and
credit

Money- medium of exchange

Bank- financial institution authorized by law to receive deposits

Credit- ability of a person to acquire goods and services without immediate payment but with a
promised payment at a fixed period of time or determinable future time

Policy which controls the supply of money, the activities of the banks and rules and regulations on credit
which is also a responsibility- Monetary policy

3 Types of Monetary Policy Instruments

1.) Money Market Operations or Open Market Operations- involve government securities- treasury
bills

When you buy securities, what will be the result? The volume of money will expand

You buy to expand, you sell to contract

 Expansion- increase, Contract- decrease

2.) Discount rate- lending of money by the Bangko Sentral out of the bank reserves to the private
banks
purpose is to (1) regulate interest rate- ensure that inflation rate will be within
normal level; or (2) to save and prevent a particular bank from experiencing a bank run
Tumataas inflation rate pag sobra ang money supply

Banks lend money to public out of their deposits at the discount rate

- helps lower interest rate

- lending money in the banks

3.) Legal reserve requirements- ratio between deposits and reserves

All banks are different in its legal reserve requirements.

 Universal bank - BIG banks- 15%

 Commercial banks - MEDIUM banks- 5%

 Savings and rural banks - SMALL banks- 3%

Low reserve requirements- entices the public to apply for loans

Reserves- refer to the part of deposit in all banks which the banks must deposit in the Bangko
Sentral and that is non-interest bearing

When these three monetary instruments have been used by the BSP, what is the immediate goal?

You want to control the volume of money supply, to regulate the interest rate, to change the reserve
requirements

If you have sufficient volume of money, controlled interest rate and ideal reserve
requirements, the business community is undergoing normal and improving activities.

When this happens, the ultimate destination is peak or prosperity

Money should circulate in the society to improve Philippine economy. The more you spend,
the more you contribute to the economy.

Monetary Board- policy-making body of the Bangko Sentral

- has 7 members with a term of 6 years

 2 members from the government- Governor of the BSP and a Cabinet Member
 5 members from the private sector which must be confirmed by the
Commission of Appointments

No member of the Monetary Board may be reappointed more than once

 Hindi rin pwede na ang isang Board Member ay manilbihan at the same time na
department head ng Bangko Sentral, habang member ka, hindi mo pwedeng ipractice ang iyong
profession

You cannot seat in the Monetary Board unless you have proven competence in the
discipline of social and economic disciplines:

Social – knowledge about government, about politics

Economic – everything about money, production, consumption and the like

Ex-officio Chairman of the Monetary Board- Governor of the BSP

Monetary Board acts through the Chief Executive Officer ng BSP- Governor of the BSP

Who can be appointed as Governor of the Bangko Sentral?

Must be 40 years of age and the head of a department

Department- DPWH, DOH, DOF, DBM

Current BSP Governor Benjamin Diokno- former Secretary of Department of Budget and
Management

Former Central Bank Governor Jaime Laya- Secretary of Department of Education before
becoming Governor

DBM- prepares national budget- general appropriation act which Congress deliberates and approves
every year

Stages ng mga nangyayari sa mga bangko na pinapasara ng Bangko Sentral:

These are all remedies given by the law to the Monetary Board to safeguard the depositing party

Purpose of the law is to protect the depositor and the creditors

Conservatorship- when a bank or similar institution is in a state of continuing inability or unwillingness

to maintain a condition of liquidity deemed to protect the interest of depositors and creditors

Bakit naging ganito? Maaring dahil sa mismanagement, dahil ang mga accounts ay
may too much exposure

Unwillingness- dapat ay magiinfuse sila ng additional capital but they refuse, may pera
naman sila pero ayaw na nila maginfuse

Condition of liquidity- the institution is capable of meeting its liabilities without the
need of going to the Bangko Sentro for help

Liquid ang institution- has sufficient realizable assets

 - able to meet its liabilities as they fall due in the usual course of
business

- its operation does not cause any danger or possible lossess to

its depositors and creditors

- it has never been issued a cease and desist order to refrain

from doing any particular act connected with its franchise or
license

If it is the opposite, that will be the time the examining team will make a report
that based on their findings, the institution is experiencing liquidity problem and it will be recommended
for conservatorship

Examining team- composed of CPAs with a lawyer

CPA- examine the financial statements

Lawyer-files the motion to liquidate the bank when the findings of the
CPAs indicate na taggilid na ang institution

Liquidity problem- kinukulang na ang pambayad sa mga depositors at

creditors but it has realizable assets which can be converted into cash

Purpose of placing bank under conservatorship- so that the bank can be rehabilitated

Kung sa tao, suffering from a serious disease na siya

Conservator is then appointed by the Monetary Board and may come from the BSP itself in
which he will not receive any form of remuneration

If conservator is from the private sector, he must have proven competence in the field of
banking and finance- must be an executive of a bank, of a financing or trust company or retired bank
president

Responsibilities of a conservator

1.) To start gathering the assets and liabilities of the bank

Has the power to reorganize the management team of the bank

Reorganize- you can make a shuffle or totally overhaul, you can remove the
management executives of the bank

How will you be compensated?

The Monetary Board may assign a certain amount in the form of salary but not to exceed
2/3 of the remuneration of the president of the institution under conservatorship to be paid in 12 equal
monthly payments.

Salary- remuneration for services rendered

 Provided, That, if at any time within the one-year period, the conservatorship is
terminated on the ground that the institution can operate on its own, the conservator shall receive the
balance of the remuneration which he would have received up to the end of the year. Why?

As a reward because of his intervention, he was able to draw a scheme where the bank
becomes viable one more time

When will a conservator not be entitled for remuneration?

The conservatorship is terminated on other grounds- when the bank is

recommended for receivership or through the absence of the bank, the owners of the bank infused
additional capital of their own volition, not by the help of the conservator or if the conservator is an
officer of the BSP

When bank is placed under conservatorship, it is a red signal to prevent further and probable
losses to the depositors and creditors

-institution still operates, accepts deposits, distributes money but the management is
no longer by the owner but by the conservator

Conservatorship shall not exceed 1 year, if not, then wala ng pag-asa iyon

If after a month or two ay nadetermine mo na na wala ng pag-asa ang bangko, you can
make a report to the Monetary Board and recommend that the bank be placed under receivership.

Receivership- happens when the BSP determines that a bank

 can no longer meet its liabilities as its matures in the usual course of business except if the
reason behind a bank's failure to meet its liabilities can be attributed to panic withdrawal
by the depositing party

Bank run- all depositors of a bank withdraw at the same time

- panic withdrawal

 has insufficient realizable assets

Realizable assets- can be converted into cash
 it cannot continue operate without involving probable losses to its depositors or creditors
 guilty of willful violation of a cease and desist order issued by the Monetary Board
Cease and desist order- inutusan ka na huminto pero ipinagpatuloy mo pa rin; if
ginawa mo ito, pwede ka i-place under receivership

Purpose of placing bank under receivership- to find out whether the bank can still be
rehabilitated or not

Conservatorship is not a prerequisite for receivership

Kung sa tao, nasa ICU na iyan, fighting for life and death

-suspended na ang banking activities including accepting deposits

Receiver is usually the PDIC (Philippine Deposit Insurance Corporation) because the PDIC pays the
insured deposits based on a maximum of P500,000 for each account

If it is a non-bank, the receiver can be anyone, not necessarily the PDIC

The receiver, as soon as possible but not later than 90 days from the designation of the receiver, shall
determine kung kaya pa ba ng bangko na marehabilitate at sabihin sa Monetary Board

- the receiver will just reserve the assets, collect receivables and schedule payment of
liabilities

Kapag hindi na kaya, then liquidation na

Liquidation- isasara na ang bangko

The only entity who can kill banks is the Monetary Board, the weapon- liquidation

Unit of monetary value- Philippine peso- currency in the form of notes and coins

- regional currency

Kuwait dollars- pinakamataas na kapalitan na pera

Monetary value of the Philippine currency- 0.1,0.5, 0.251, 5, 10, 20, 50, 100, 200, 500, 1000

Legal tender- currency or type of money which any debtor can compel his creditor to accept as payment
for his debt in money

When do you think the Philippine currency may be retired or may be demonetized or may be replaced?

When it is already considered unfit for circulation

Circulation- umiikot sa mga negosyo

Fit for circulation- malutong pa ang bill at yung kahit hindi na malutong pero hindi pa
defaced

Hindi pa defaced- lahat ng features at contents, malinaw mo pang nababasa

What percentage of a bill’s surface will warrant recall and retirement from its circulation?

When coins show signs of filing, clipping or perforation and bills lost more than 2/5 of its
surface or all the signatures found therein, it cannot be replaced at its face value- par value

Tungkulin ng bangko na ang matatanggap nilang lumang pera ay isusurrender nila sa Bangko
Sentral

The amount that is printed by the Bangko Sentral is equal to the total amount of money unfit
for circulation surrendered to them.

When a currency is demonetized- inaalis mo yung monetary value

- the public must be given a period of 1 year to help the

demonetized currency be replaced by the Bangko Sentral or authorized banking institutions
 -after 1 year, magpapapalit ka na sa mismong Bangko Sentral at
hindi na tatanggapin ang pera mo bilang legal tender

Law requires the Bangko Sentral to make certain periodic reports to the President of
the Philippines and the Congress

Periodic- annual- 1 year, quarterly- 3 months, semestrally- 6 months, monthly-

30 days

What should be reported by the Bangko Sentral not later than 90 days from the end
of each quarter? Economic and financial development of the Philippines

Within the month of March of every year, the Bangko Sentral submits to the
President and Congress an annual report which contains the budget of the preceding year and the profit
or loss statement for the year ended December 31 of a particular year, with appendices or attachment
or addendum dealing with what?

a.) the monthly movement of monetary aggregates;

b.) the monthly movement of purchases and sales of foreign exchange and of the
international reserves of the Bangko Sentral;

International reserves- a certain minimum the Bangko Sentral must keep in the
form of gold bullions and foreign currencies

- influenced by balance of payment

c.) the balance of payments of the Philippines;

d.) monthly indices of consumer prices;

e.) the monthly movement, in summary form, of exports and imports, by volume and
value;

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 texts 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 system