Transcript for:
Overview of the New Central Bank Act

good day everyone today we will discuss our topic three under the regulatory framework which is republic act 7653 as amended by a later law republic act 11 21 1 or the new central banked act so what is this particular law proceed to the law at brief the new central bank act is the law that basically created and um established the structure and governance of an important banking and financial institution in the philippines which is the banco central pilipinas or the psp the bsp is the state central monetary authority it is the government agency that is charged with the responsibility of administering the monetary banking and credit system of the country and is granted the power of supervision and examination over bank and non-bank financial institutions performing quasi banking functions including savings and loan associations this was um enough shaded by um the supreme court case of vesuago versus court of appeals held june 30 1987. so from this particular um discussion of the supreme court we can say that the banco central pilipinas or the bsp is the american equivalent to the federal reserve the bsp or the bank of central pilipinas is not only the chief regulator um agency over banks and banking of banking institutions as well as those nand bank financial institutions that perform quasi banking functions but it is also charged in setting up the central monetary and fiscal policy of the government um the banco central pilipinas is charged with the responsibility of establishing uh the credit system of the country as well as um the administration of the monetary system meaning the printing of money um to be used as legal tender in the philippines and um you probably learned legal tender already in your negotiable instruments law and other business laws for that matter now how do we classify banco central pilipinas is this an um um what we call a department of the government is this a um um adjunct or or connected to a specific department well as an institution the bank of central pilipinas is classified as a government-owned corporation so it's it's one of the gocc's if you'll ask because it's not governed under a specific department so they're answerable to a particular cabinet secretary because it is um it is a gocc that enjoys fiscal and administrative autonomy meaning there is a semblance of of independence and freedom that the bank of central pilipinas is enjoying um as opposed to other departments which are subject to the direct supervision and um um authority of the president of the republic of the philippines when you say fiscal autonomy the banco central pilipinas um would decide how they would spend their own budget without being subject to um approval or regulation by the department of budget and management while the budget of the bank of central pilipinas will be included in the general appropriations act but how this money is spent by the bank of central pilipinas it is up to them is up to the officers of the bank of central and the pilipinas they are not subject to the um issuance of the sorrow or even the allotment issuances by the dbm this is similar to the fiscal autonomy enjoyed by the supreme court of the philippines as well as other constitutional commissions such as the commission and human rights they enjoy fiscal autonomy now let's proceed to the state policy behind the new central bank act well the new central bank act um the particular law the policy with respect to the creation of the bsp or the banco central pilipinas take note classes that it is called the new central bank act because the old central bank act or the previous incarnation of the law calls the bank of central pilipinas the central bank of the philippines this particular new law the new central bank act um has now created the body and renamed it and as as banco central pilipinas the state through the bank of central pilipinas shall maintain a central money the state through the creation of the bsp will maintain a central monetary authority that shall function and operate as an independent and accountable body corporate in the discharge of its mandated responsibilities concerning money banking and credit while it is a government-owned corporation it is it enjoys fiscal and administrative autonomy fiscal meaning related to its treasury and how it spends its own budget and administrative that it is regulatory agency in accordance with its policy directions now let's check the sealant considerations in the creation of banco central pilipinas it is established as a central monetary authority it has a initial capitalization with which will be 50 billion uh 200 billion 200 um billion to be fully subscribed by the philippine government the increase in capitalization shall be funded solely from the declared dividends of the banco central in favor of the national government and any declared dividends of the banco central in favor of account in general fund and earmarks for the payment of banco central's increase in capitalization such payments shall be released and distributed immediately and shall continue until the increase in capitalization is fully paid now let's responsibility and primary objective of the banco central papinas so what are their responsibilities what are the responsibilities of the bsp first is to provide policy directions in areas of money banking and credit if you notice you'll always hear the bsp to be the primary agency that will discuss and will announce uh the media the new um interest charges or interest rates set on for bankings and financial institutions it's because um credit uh policy of the government is set by the monetary board under the bank of central pilipinas another responsibility is to supervise bank operations so most compliance by banks whether these are rural thrift banks or even universal banks and um the agency that will handle the random audits to be conducted with banks to do a certain and to check to whether this particular bank is still compliant with on the requirements the rules and regulations set by the bank central pilipinas it is the bsp who'll send people to do it and to exercise regulatory and examination powers over quasi banking operations of non-bank financial institutions including money service businesses like the remittances these are all still subject of regulation examination by the bsp credit granting businesses like these microfinance and lending institutions and payment system operations we also prep primary objectives of the bsp uh we had which is to maintain price stability conducive to a balance and sustainable growth of the economy so the primary concern of the bsp is really to work hand-in-hand with uh the department of finance and other um related um irrelevant governments institutions to curb uh price controls or even inflation rates in the country and inflation basically one factor of which to control this one is to basically the government intervene with interest rates um with respect to credit as well as borrowings and to which the bsp will figure in um significantly second is to promote and maintain monetary stability and convert convertibility of the past so so it it all it is also the responsibility of the bsp to maintain the um desired conversion rates or the exchange rate levels of the philippine peso um and um visibility or against um foreign foreign currencies especially with the us dollar because you also have to balance properly the fact that the philippines is remittance reliant country a massive portion of our economy relies on remittances from filipinos working abroad so we also don't want the exchange rate of the philippine peso to a dollar to go down um especially in an era or in a particular period where the philippines is enjoying economic prosperity or economic growth because if the philippine peso will rally against the u.s dollar the the automatic effect would be the philippine pesos equivalent to a dollar would probably go down it will decrease but as a country with um reliance on remittances we don't want the filipino families receiving this dollar remittances to suffer as well um so we wanted it to uh maintain in such level that it's not also disadvantages to filipinos so that's why if you notice even if we're growing um economically or fast growing economically the philippine peso cannot go down basically to 20 pesos to a dollar considering that we're also protecting the remittances or foreign exchange of remittances as well as our exports because we will be paid um in dollar so we won't we don't want that the equivalent peso that will be paid to the exporters would also go down um and um another responsibility of the bsp um um but i mean the function of the bsp is um the chief banker of the government um the bsp will be the official depository of the government and shall represent the government in all monetary fund dealings um the banco central pilipinas also serves as custodian of our uh foreign currency and gold reserves it is also the financial advisor of the government which was um specifically provided under article 7 section 20 of the 1987 constitution where the president may contract or guarantee foreign loans but this must be with prior concurrence of the monetary board the bsp is also considered as a government agent a source of credit it is the issuer of the currency the philippine peso is printed by the banco central pilipinas it is also the clearing channel or house um especially where the pca pc hc does not operate so the debacle central pilipinas serve as a clearinghouse for banking transactions that's why you'll definitely hear banks will say that we will have to cut off the 3 pm because we will have to clear this one before we forward uh the list or the records of a transaction to the bsp for every um so that the the transactions especially those paid via checks be cleared within that particular day um the bank of central pilipinas also serves as supervisor of the banking system which includes now the examination uh the power extends to enterprises that are holy or majority owner controlled by the bank so even if it's not a bank if it is majority owned or wholly controlled by the bank then these particular entities or agencies may now be will now fall under the ambit of the supervisory powers of the bsp um this power may not be restrained by a writ of injunction unless uh there is a convincing proof that the action of the bsp is plainly arbitrary when we say it cannot be restrained by a written injunction it means that the examination powers of the banco center in the philippines cannot be easily stopped by a bank or a financial institution by filing an injunction with court because basically allowing this would curtail the supervisory powers of our regulatory powers of the bsp over the banking institutions or over the banking industry however if there is a convincing proof that the particular uh review or regulation conducted by the bsp over a specific bank was done arbitrarily meaning this is without a reasonable basis but rather probably um has risen from say arbitrariness or capriciousness or targeted harassment by the bsp then that can be subject to an injunction that's the only exemption and of course under the regulatory powers of the of the bsp it can place a bank under receivership or liquidation you'll note that the particular sections under the nationals the new central bank act were cited for each of these functions so you basically have to check these the corresponding provisions to verify now where to check the actual red letter of the law all right so i i i would like to encourage you that these functions you refer to the specific section so that you'll definitely um see and read the actual red letter of the law in full text the regulatory powers also result or result to vesting with a bsp uh the authority or the power to initiate criminal prosecution of airing officers of banks okay and another the last function will be to extend discounts loans and advances to banking institutions in order to influence the volume of credit consistent with objective of priced stability but note that when uh availing of loan facilities of the banco central private banks assigned to the bank of central pilipinas their receivables including all collaterals thereof related so you have to um assign to the bsp so that you can actually get a loan out of these receivables or you can have it you can have these receivables discounted so basically what uh will happen is you will be receiving the proceeds out of this receivables in advance i'll bait with a discount and then um payments now will be directed to the bank central should your credit or um will now remit the the installment payments out of that particular receivable okay now with the monetary board we've mentioned the monetary board for quite some time already under this new central bank act the monetary board is the body through which the powers and functions of the banco central pilipinas are exercised so since the bank of central pilipinas is considered to be a corporation like a government-owned corporation it cannot act on its own as like as a normal person so it has to have a body that will bind the banco central pilipinas on decisions that it will make so a sort of like an equivalent of a board of directors but here the board of directors of the banco central would be called the monetary board okay so what are the powers of the monetary board well the monetary board can issue rules and regulations that it considers necessary for the effective discharge of the responsibilities and exercise of its powers it can also direct the management the operations and overall administration of the entire banco central pilipinas the mb or the monetary board can also reorganize the entire personnel of the bsp and issue rules and regulations that the mb may deem convenient uh for this purpose which is for the management operations and administration of the entire institution the monetary board will also establish its own human resource management system and adopt an annual budget for and authorize such expenditures by the bsp as are in the interest of the effective administration and operations of the bsp in accordance with applicable laws and regulations the monetary board is also authorized to indemnify its members and other officials of the bsp including the personnel of the department's performing supervision and examination functions against all costs and expenses reasonably incurred by such persons in connection with any civil or a criminal action all right now let's press position of the monetary board it shall be comprised of seven members all to be appointed by the president of the republic of the philippines with a six-year term it's it seemed that they also have uh the same uh term where the president six years in total no member of the monetary board may be reappointed more than once once you're appointed there and your term expires you can no longer be reappointed again for another term so it's like the republic of the philippines president who can only serve for a one year sixth term so who are the members of the monetary board of course one will be the bsp governor and of course her designated alternate which is the deputy governor um note class that um the um deputy governor is not a member of the monetary board but rather an alternate of the bsp governor so one sitting there as um a member is the actual bsp governor should the bsp governor is not capable of attending the meeting or is somewhere else um one will attend in behalf of the bsp governor which is the deputy governor the alternate of the bsp governor but as to membership it's only the bsp governor that has the membership and then the second member will be a cabinet member to be designated by the president or his designated alternate usually uh the one appointed here as a cabinet member as representative of the monetary board will be an under secretary and usually an undersecretary of the department of finance and then of course the rest will be five members from the private sector now what are the qualifications in order for you to become a member of the monetary board first is you have to be a natural-born citizen of the republic of the philippines so naturalized citizens are not qualified to be part of the monetary board the age requirement will be at least 35 years old for all members but in order for one to be amen uh to be the governor of the banco central pilipinas one must be at least 40 years old uh the member must be of good moral character of unquestionable integrity of known probability and patriotism and will recognize competence in social and economic disciplines okay so very vague i know um certain specific um academic requirement that you should be a graduate of finance or you should be a certified public or accountant or a lawyer for that matter what is required only is that you have of good moral character of unquestionable integrity of probity and patriotism and of course recognize competence in social and economic disciplines so the social economic disciplines is of very uh varied very uh vague requirements it could be of different degrees um it's not specific on a certain competency or a specific course but rather a discipline that falls under social and economic importance and of course usually the members of the bank of the monetary board and or the bsp governor are usually technocrats these are individuals who are prized for their um brains of their intelligence and their competence with respect to um providing solutions economic problems and economic problems or fiscal or monetary problems so these are usually um technocrats that are usually appointed to the monetary board okay let's put ours the bsp governor the bsp governor is the chief executive of the banco central um the powers would include the preparation of the agenda of the of the meetings with the monetary board to submit to offer the for the consideration of the board policies and measures which the governor believes to be necessary to carry out the purpose of the bsp second is to execute and administer the policies and measures that are already passed and approved by the monetary board to direct and supervise the operations and as well as the internal administration of the bsp the governor may delay may delegate um certain administrative responsibilities uh to other officers of course but these are limited only this delegation should be limited to the rules and regulations prescribed by the monetary board so it's not carte blanche authority to delegate uh to delegate uh authorities possessed by the governor of the bank of central to alternate officers or employees but rather this particular delegation is subject to um limitations or rules or regulations set by the monetary board the governor may appoint and fix the remunerations and other emoluments of the personnel below the rank of a department head as well as to impose disciplinary measures up and personal of the banco central the governor may render opinions decisions rulings which shall be final and executory until it is reversed or modified by the monetary board on matters regarding the application and enforcement of pertinent banking laws as well as to exercise other powers may be vested in him by the monetary board the liabilities of the members of the monetary board now note class that members of the monetary board the officials examiners and employees of the bsp may willfully violate 7653 or guilty of negligence abuses or acts of malfeasance or misfeasance or to fail to exercise extraordinary diligence in the performance of his duties um it is provided under the new central bank back section 16 that um the monetary board the bank of central philippines governor shall be held liable for any loss or injury suffered by the bsp or other banking institutions as a result of such violation negligence abuse malfeasance mispeacence or failure to exercise extraordinary diligence meaning if the bsp will suffer through the negligence of any of its officers examiners and employees then these particular airing employees examiners of the officers or the members of the monetary board shall be held liable um um by virtue of course of if if they're negligent or if they're found to be abusive of their possessions or if there is malfeasance misfeasance or failure to exercise extraordinary diligence so here we can infer that um the members of the bank of central pilipinas all of its employees and of course members of the monetary board are expected to exercise extraordinary diligence income in in the performance and compliance with the purpose for which the banco central nonpilipinas was created do the bsp and and bank in distress now in case of situations where there is a distressed bank it is now the bank of central pilipinas who will appoint a conservator a receiver for the closure of these distressed banks now before we proceed to these uh different powers or different forms of um response by the bank on a particular distressed bank uh what are the those considered to be distressed banks of course if a bank suffers illiquidity um if this occurs when the bank is not liquid and you say liquid it means that the liquid it means that the bank cannot meet its current liabilities so if it is if the bank is illiquid and can no longer meet its current liabilities the bsp uh will have to subject the bank to a conservatorship and it will be handled by a conservator now if you'll see liquidative class if determine what how the bank will be determined as liquid or not it is the ability of the bank's asset to be converted into cash meaning the um quickness of these assets to be converted into cash to meet the bank's current liabilities but if the particular bank's assets cannot be converted immediately into cash to meet up its current obligations then that particular entity or institution is not liquid when they fall jew okay when the obligations will fall due um if you will saying the man insolvent class it occurs when the actual market value of the assets will be insufficient to meet its liabilities it means that the total assets of the bank or or the entity or the institution is already packed at a lower amount than its liabilities unlike illiquidity where the assets are still greater or bigger than the liability it just so happened that these assets are not easily convertible into cash or not cash at all which in case which are incapable of of meeting the current liabilities insolvency on the other hand means that you cannot meet your liability it's because your liability now is bigger or it exceeds your total assets an entity is insolvent when it is unable to meet the current as well as the long-term obligations and if this involves insolvency now unlike illiquidity which the bank will be handled by conservatorship in insolvency the bank will be subject to a receivership or closure note that for conservatorship it shall not exceed one year so in order for the bank to meet its current liabilities it will sub it will be subject to conservatorship which will not exceed one year under section 29 of the um new central bank act so let's proceed to leadership what is conservatorship um if you subject a bank to a conservatorship the bsp will have to appoint now a conservator one one appointed the conservator is one who is appointed if the bank is in a state of illiquidity or when the bank fails refuses to maintain a certain level of liquidity adequate to protect its depositors and creditors note that we've i think we've mentioned in our previous videos that banks are required to maintain certain liquidity ratio up and um as a compliance to the tobacco central pilipinas the inability of the bank now to maintain this minimum liquidity ratio or its stern refusal to maintain such liquidity liquidity levels um the bank will now be subjected by the bank of central pilipinas into conservatorship and the conservatorship will result to the appointment of a conservator the bank still has more assets than its liabilities but the assets are not liquid or not in cash that's why the bank or the institution cannot pay its obligation when it fails falls do so what are the powers of a conservator the conservator now can collect all monies and debts due to the said bank it can take charge of all the assets liabilities and management of the bank the um conservator can be organized and reorganize this particular entity or the bank it and such other powers as the monetary board deems necessary and exercise all powers necessary to restore the viability with the power to overrule or revoke the actions of the previous management which is the previous board of directors to which the conservator takes over and of course um to bring court actions to assail or repudiate contracts entered into by the bank these powers of a conservator are first um are um enumerated under first philippine international bank versus court of appeals held by the supreme court in january 24 1996 however note classes the powers of a conservator do not extend to the revocation of valid and perfected contracts meaning the powers of a conservator to revoke um cannot extend post facto repudiation or after the fact repudiation of valid or perfected transactions say the power of repetition the conservator is limited only to transactions that are about to be entered by the banking institution that are deemed by the conservator to be non-beneficial or non-strategic that will not help the bank um recover or return to its previous liquidity so the bank can revoke that one and overrule the decision of the management and the members of the board of directors but for already existing or perfected contracts meaning there is already meeting of the minds and agreement between parties the conservator cannot on behalf of the bank unilaterally revoke such perfected contracts okay the law merely gives the conservator the power to revoke contracts that are deemed to be defective such as void voidable and enforceable or resist receivable contracts hence the conservator merely takes place of the banks board of directors close sure um what are the grounds now for closure of a bank or a quasi bank um under section 30 of the ncba or the new central bank tag we can use the cash flow test which is the inability of to pay liabilities as they become due in ordinary course of business under section 30 paragraph b we have the balance sheet test which is the insufficiency of realizable assets to meet to meet its liabilities and the inability to continue business without involving probable losses to its depositors and creditors and the willful violation of a cease and desist order under section 37 that has become final involving acts or transactions which amount to fraud or a dissipation of assets we also have the notification to the bsp or public announcement of the bank holiday and the suspension of payment of its deposit liabilities continuously for more than 30 days okay suspend and bank now payment now it's deposit liabilities meaning um depositors are no longer able to withdraw money from their banks because the bank continuously suspend its um operations for more than 30 days and the persisting in conducting its business in an unsafe or unsound manner now under the closure of banks we have what we call the close now here later doctrine which is enunciated by the supreme court in the central bank of the philippines the old name of the bsp versus court of appeals in decided on march 30 1993 uh founded on that this particular doctrine is founded on practical and legal considerations to obviate unwarranted dissipation of the bank's assets and as a valid exercise of police power to protect the depositors creditors stockholders and the general public the law does not contemplate prior notice and hearing before the bank may be directed to stop operations and place under receivership note that um the swift adequate and determined actions must be taken against financially distressed and mismanaged banks by the government agencies less the public faith in the banking system deteriorate to prejudice the national economy because of the um the need to have a quick action um against these um banks and financial institutions that are mismanaged and could no longer comply or make good of their deposit liabilities there is a need now for the state especially the the regulatory agency or regulatory body which is the bank of central pilipinas to swiftly act in order to preserve as well as save the remaining confidence and trust and public faith and faith of the public in the banking system and that's why there is a policy that the bank may close now these bank distressed banking institutions without first hearing their side close first before you hear them or investigate or verify now uh the capabilities of these banks to continue operating the bsp may also order the closure of the bank even without prior hearing the bsp may rely on the report of either the conservator receiver or the head of the supervising and examining department it is not required to conduct a thorough audit of the bank before ordering its closure the close now here later doctrine justifies the bsp in ordering the bank closures even without prior hearing thus in zhang does not lie against the bsp and the exercise of its power and function so if you're ordered by the by the bsp to close as a bank you cannot seek remedy to courts and ask for injunction to stop the ban the bsp to close your operations because the bank now uh the bsp now has the right to close you before hearing and therefore there is no need to for you to be heard first before the bsp can take action and close your operations that's why the injunction order may we may be found to be not proper in this particular situation or particular case now note that judicial review comes only or only proper after the monetary board if the same was attended with bad faith and grave abuse of discretion but note that judicial review may take place after the order of closure by the bsp okay proceed to um receivership receivership is when a receiver is appointed take note when the bank is already installed then it is appointed um um by um the bsp okay take note that the appointment powers of the bsb is exclusive it means that the court has no authority to appoint a receiver for a bank subjected to receivership that is solely under the power of the bank of central pilipinas now for um in case of banks remember so the bsp will appoint the receiver right but take note that for banks the only receiver allowed would be the philippine deposit insurance corporation or pdic but for quasi banks it could be any person of recognized competence in the banking or finance industry so note that it could be someone who's competent enough to take over the running of the bank or affair taking over the affairs of the nun non-bank fine or the quasi-banking financial institutions it could be a certain person but for banks it could not be someone else it should always be the pdic so what are the duties now of a receiver we have now e and y uh which is to immediately gather and take charge of all assets and liabilities of the institution to administer the same for the benefit of the creditors and exercise the general powers of receiver under the revised rules of court to not with the exception of administrative expenditures pay or commit any act that will involve the transfer or dispossession of any asset of the institution provided that the receiver may deposit or place the funds of the institution in non-speculative investments and within 90 days from takeover the receiver shall determine whether the banking institution or the quasi bank may still be subject to rehabilitation or otherwise place in the condition that it may be permitted to resume its operations okay with the safety to its depositors and creditors and the general public if the receiver determines that the the institution or the bank institution or the nand bank we say bank uh performing question bank function cannot be rehabilitated or permitted to resume business then the monetary board shall notify in writing uh the board of directors of such institution of its findings and direct the receiver to proceed with liquidation okay irrehability and bank then the monetary board will notify the board of directors of that particular bank that it will now proceed to liquidation so what is liquidation liquidation is the act which constitutes now the conversion of the assets of the banking institution to money or the sale assignment or disposition of the same to its creditors and other parties for the purpose of paying the debts of such institution the liquidator of a distressed bank can prosecute and defend suits against the bank prosecution of suits collection and foreclosure of mortgages against um debtors of the bank by the liquidator among the usual and ordinary transactions pertaining to the administration of the bank the bank converts assets in assets into cash and there are still receivables from say debtors or um obligors of the banks then the liquidator now will have the authority to file cases in behalf of the banking institution to try to collect from the debtors as well as the foreclosure of real estate or shuttle mortgages that may be maybe used or established to secure this receivables then let's run after the mortgages and these mortgages will then be very close the proceeds of which will be subject will be applied to the um pending uh or or a jew obligation of that particular debt or so since if there will be proceeds then it will now add to the total cash that will be um generated but by the liquidator which is basically the goal of liquidation which is to convert all remaining assets into cash or money liquidation proceedings may be carried out with or without the tax clearance remember that um there are sale requirements that for in order for you to sell um particular properties you you have first to acquire um or secure before the bir your um certificate of authority to register which is basically the tax clearance but because of the conditions surrounding that particular sale which is part of liquidation then the liquidation proceeding may continue which is the selling of the assets without the need of obtaining the tax clearance and like in a voluntary dissolution of a corporation under the corporation code the bank of central pilipinas can liquidate the bank with or without the tax clearance banks under liquidation by the pdic as ordered by the monetary board constitute a special case governed by the special rules and procedures provided under section 30 of the new central bank act which does not require that the tax clearance to be secured from the bir only a final tax return is required to satisfy the interest of the bir in the liquidation of the closed bank note that if the supreme court found it unreasonable for the liquidation court to require that the tax clearance be first secured as a condition for the approval of the project of distribution of a bank under liquidation because it will prolong the liquidation process further um by adding another burden which is a long process a lengthy process of securing now a tax clearance now let's distinction um i know let's proceed to the filing of the claim against the insolvent ban all claims against the insolvent banks should be filed in the liquidation proceeding it is not necessary that the claim may be initially disputed in a quarter agency before it is filed with the liquidation court an example to this requirement is when the bank that pass a claim against another person or legal entity the claim should be filed in the regular courts note that it is the claim against the bank that will have to be filed in the liquidation proceeding but if the bank itself will have a concern such as a claim against another person another entity it will not be included in the liquidation proceeding because what is required only in the liquidation proceeding are those claims against the bank but if this is the bank's claim against someone else then it will be have will have to be filed in a regular court okay judicial requisition is intended to provide an orderly mode for payment of claims in addition such petition is not in the nature of a disputed claim against the bank okay now liquidation proceedings may be carried out with or without tax clearance okay that's already discussed okay now banks under liquidation by the pdic as ordered by the monetary board constitute a special case governed by the special rules and procedures provided under section 30 of the new central bank act which does not require that the tax guarantee secured from the bir okay so that's clear under the case of pdic versus bir held june 13 2013. to the distinction between conservatorship receivership and liquidation for grounds note that conservatorship is grounded in the continuing ability and unwillingness to maintain condition of liquidity for receivership it is the inability to pay liabilities as they fall due the assets are less than the liabilities the bank cannot continue do its business without causing damage and violation of a cease and deceased order issued by the court or the banco central pilipinas and the bank has declared the banking holiday that is exceeded only for more than 30 days liquidation on the other hand is when the bank is found to be insolvent and the continuation of its operations would involve probable loss to its creditors and the bank is found by the receivership or the receiver to be to no longer be uh probably possibility of to be rehabilitated what are the effects now the conservative conservatorship will result now to the retention of the bank of its juridical personality while perfected transactions cannot be repudiated but the conservator will take over the um running of the banks as well as to determine if these transactions are to be pushed through uh or not in order for the bank to be able to return to liquidity for receivership now class their juritical personality is still retained but the suspect but there is suspension of operations and stoppage of the business and the assets will now be deemed to be in custodial ages meaning under the custody of law for liquidation now the jurical personality is still retained albeit the fact that it will be um it will the bank will lose its juridical personality upon the completion of the liquidation and perfected transactions are also cannot be repudiated um for conservatorship it should be terminated after one year reserve receivership within 90 days of liquidation is decided upon um so meaning receivership has to be finished within 90 days otherwise the receiver will have to determine if that particular bank will have to resume uh to rehabilitation or will be subjected to liquidation until the bank is viable again uh rehabilitation is to be um upheld meaning the bank will undergo rehabilitation if uh the bank will after 90 days determined by the receiver uh that will that it can still be subject to rehabilitation but if the bank can no longer be rehabilitated it will be for not forwarded now to liquidation for liquidation um it will be terminated with all when debts have been paid in accordance with the liquidation plan set all right that's the end of our topic three the new central bank act