Love the Philippines? How about BSP officials cut their scandalously fat salaries
The Bangko Sentral ng Pilipinas (BSP) has fixed the interest rates on savings deposits ranging from a flat-out ridiculous 0.10 percent to a still laughable 0.25 percent per annum—less taxes at the rate of nearly 10 percent! On the other hand, when banks use those deposits for loans applied for by the depositors or the public in general, the interest rates range from a whopping 18 percent to an atrocious 28 percent per annum!
The usury law is used to proscribe the exaction of interest beyond 12 percent per annum. But the BSP tolled the death knell of that law—as if to allow more capricious profiteering by its most precious constituents. The so-called “Bombay 5-6” lending scheme (at 20 percent per month) outside the banking system thus seemed “legalized” as well. Thankfully, the Supreme Court has voided excessive interest rates in many cases (e.g., 36 percent, 66 percent, 77 percent per annum) not for being “illegal” but for just being “unconscionable.”
In sum, the jurisprudential guardrail is to the effect that banks are free to charge any interest they can fancy on any loan as long as it is not “unconscionable” as may be determined by the courts. And if the courts make that final determination of being “unconscionable,” the loan transaction stands as if no interest has been validly agreed upon, in which case, Article 1956 of the Civil Code should apply: “No interest shall be due unless it has been expressly stipulated in writing.” So then, if that stipulation is, indeed, “unconscionable” and therefore unenforceable, it should, for all intents and purposes, be deemed void and nonexistent. But the Supreme Court has ruled that since there was nonetheless a “stipulation” in such cases, the interest imposable should be 12 percent per annum.
In the news lately, BSP officials were reported to be the “highest-paid public officials” (“servants”) as of last year (“Medalla, Diokno highest paid government officials,” News, 8/4/23). As former BSP governor, Felipe Medalla fattened his own bank accounts with close to P35 million for last year alone, while Finance Secretary Benjamin Diokno, received close to P30 million for last year. Diokno ran the BSP before Medalla where he already amassed more than P40 million in 2021 alone. Other BSP satraps, not to mention the other high officials also in “public service,” have likewise been helping themselves to the billions of taxpayer money, cornering exorbitant compensation packages the country can ill afford as it continues to be hobbled by debts amounting to more than P12 trillion!
So, is the banking system all about making rich people richer? How about BSP’s lesser constituents? At the very least, shouldn’t there be a congressional act raising the interest rates on savings deposits to a more decent level, given that, among only 30 or so percent of the adult population already in the country’s banking system, depositors are far from being enthused about putting more savings in banks? Recall that in the ’70s, Banco Filipino horned in on the banking system and drew an unprecedented number of depositors grabbing the opportunity to earn from their savings at the rate of about 12 percent per annum. That must have thrown the mainstream banks for a loop. They were losing their depositors and panicked. The BSP quickly intervened and eviscerated Banco Filipino.
In the final analysis, the BSP seemed to be more concerned with the well-being of the multibillionaires owning the financial institutions than that of ordinary depositors. “Para sa ikauunlad ng bayan, mag-impok (daw) sa bangko,” anyone? But how about cutting BSP officials’ scandalously obscene emoluments in half for starters until at least half of the country’s enormous debts are paid—if only to prove how much they “love the Philippines”?!
Stephen L. Monsanto,