Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

receiven A
23 wens”

DME

SIXTEENTH CONGRESS

First Regular Session
House Bill No._ 1692

Introduced by Hon. Karlo A. B. Nograles

EXPLANATORY NOTE

Since Republic Act No. 7653, otherwise known as the New Central Bank Act, was
enacted in 1993, there have been dramatic developments in the banking environment
brought about by automation, technology, globalization and the influence of best practices,
on one hand, and by some structural weaknesses on the other hand, which may have abetted
or tolerated instances of unsafe and unsound practices, poor governance, or even fraud

The amendments hereby being proposed seeks to enhance the administration of the
monetary, credit and banking system of the Republic by, among. other things, affirming the
authority of the Bangko Sentral to administer the payments and settlement systems, This
will promote the safe, reliable and final settlement of financial transactions thereby
contributing to good economic order.

This measure will be complemented by the proposed supervisory powers of the
Bangko Sentral which will oblige transparency in the disclosure of bank ownerships;
subject the bank owners to the fit and proper test, and compel restructuring and
rehabilitation of distressed banks. To address early, the commission of frauds and
regularities, it is also proposed that the authority of the examiners to access deposit
accounts, which was granted before and was exercised without abuse, be restored,

The Bangko Sentral should also be able to function as a more tesponsive
organization. Towards this end, its officials and personnel should be granted the same legal
protection given to the PDIC under Republic Act No. 9576. It should be able to access data
from any person or entity in the Philippines, similar to what was enjoyed before by the
defunct Central Bank of the Philippines, for completion of information and efficiency in the
formulation of monetary policy. As an institution performing governmental functions, the
Bangko Sentral should also be exempted from taxation

Approval of this bill is therefore eamestly sougi

HOX. KARLO A. B. NOGR LES



Republic of the Philippines

HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

SIXTEENTH CONGRESS

First Regular Session

House Bill No. _ 1692

Introduced by Hon. Karlo A. B. Nograles

AN ACT
STRENGTHENING FURTHER THE REGULATORY POWERS OF THE BANGKO.
SENTRAL NG PILIPINAS, AMENDING FOR THE PURPOSE REPUBLIC ACT NO.
7653, ENTITLED "THE NEW CENTRAL BANK ACT," AND FOR OTHER
PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:

SECTION 1. Section 3 of Republic Act No. 7653 is hereby amended to read as
follows:

"SEC. 3. Responsibility and Primary Objective. - The Bangko Sentral shall
provide policy directions in the areas of money, banking, and credit. It shall have
supervision over the operations of banks and exercise such regulatory powers as
provided in this Act and other pertinent ieee overtine copeanonsronmirente
companies and non-bank financial institutions performing quasi-banking functions,
hereafter referred to as quasi-banks and institutions performing similar functions.

‘The primary objective of the Bangko Sentral is to maintain price stability conducive
to a balanced and sustainable growth of the economy. It shall also promote and
maintain monetary stability and the convertibility of the peso. IT SHALI
LIKEWISE PROMOTE, OVERSEE, AND MAINTAIN THE STABILITY OF THE

FINANCIAL AND PAYMENT. SYSTEMS OF THE COUNTRY IN


ACCORDANCE WITH INTERNATIONALLY ACCEPTED PRINCIPLES
TOWARDS THIS END, THE BANGKO SENTRAL SHALL ISSUE AND ENFORCE

APPROPRIATE REGULATIONS.”
SEC. 2. Section 11 of the same Act is hereby.amended to read as follows

"SEC. 11. Meetings. - The Monetary Board shall meet at least once a week
The Board may be called to a meeting by the Governor of the Bangko Sentral or by
two (2) other members of the Board

The presence of four (4) members shall constitute a quorum: Provided, That in
all cases the Governor or his duly designated alternate shall be among the four (4)

Unless otherwise provided in this Act, all decisions of the Monetary Board
shall require the concurrence of at least four (4) members
THE MEETING OF THE MONETARY BOARD MAY BE CONDUCTED
THROUGH THE USE OF MODERN TECHNOLOGY INCLUDING, BUT
NOT LIMITED TO, TELECONFERENCING OR VIDEO CONFERENCING

The Bangko Sentral shall maintain and preserve a complete record of the
proceedings and deliberations of the Monetary Board, including the tapes and
transcripts of the stenographic notes, either in their original form or in microfilm.”
SEC.3. Section 15, paragraphs (b) and (e) of the same Act is hereby amended

to read as follows:

"SEC. 15. Exervise of Authority. - In the exercise of its authority, the Monetary
Board shall

a) XXX

b) direct the management, operations, and administration of the Bangko
Sentral, reorganize its personnel, PROVIDE SEPARATION BENEFITS

WHENEVER NECESSARY, and issue such rules and regulations as it may deem


necessary or convenient for this purpose. The legal units of Bangko Sentral shall be
under the exclusive supervision and control of the Monetary Board;
c) XXX BOGE oe

o4 XXX XXX

4d) XS

e) indemnify its members and other [officials] PERSONNEL of the
Bangko Sentral, [including personnel of the peers performing supervision and
examination functions] against all costs and expenses reasonably incurred by such
persons in connection with any civil or cra action, suit or proceedings to
which he may be, or is, made a party by reason of the performance of his functions or
duties, unless he is finally adjudged in such action or proceeding to be liable for
BAD FAITH, MALICE, GROSS negligence or GROSS misconduct.

In the event of a settlement or compromise, indemnification shall be provided
only in connection with such matters covered by the settlement as to which the
Dare bose rariissted vised ourenienial course! istite nersante| se ndenntiedl aie
not commit any] HAD NOT ACTED WITH BAD FAITH, MALICE, GROSS
negligence or GROSS misconduct

The costs and expenses incurred in defending the aforementioned action, suit
or proceeding may be paid by the Bangko Sentral in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on behalf of
the member(, officer, or employee] AND OTHER PERSONNEL to repay the amount
advanced should it ultimately be determined by the Monetary Board that he is not
entitled to be indemnified as provided in this subsection ON ACCOUNT OF BAD
FAITH, MALICE, GROSS NEGLIGENCE OR GROSS MISCONDUCT."

SEC. 4. Section 16 of the same Act is hereby amended to read as follows:

"SEC.16.  Responsib-/i. - THE GENERAL RULE AND THE


EXCEPTION THEREFROM ON THE LIABILITY OF PUBLIC OFFICERS AS
PROVIDED IN SECTIONS 38 AND 39 OF CHAPTER 9, BOOK I OF THE
REVISED ADMINISTRATIVE CODE OF 1987 SHALL APPLY TO members of
the Monetary Board [, officials, examiners, and employees] AND OTHER
PERSONNEL of the Bangko Sentral [who willfully violate this Act or who are guilty
of negligence, abuses or acts of malfeasance or misfeasance or fail to exercise
extraordinary diligence in the performance of his duties shall be held liable for any
loss or injury suffered by the Bangko Sentral or other banking institutions as a result
of such violation, negligence, abuse, malfeasance, misfeasance or failure to exercise
extraordinary diligence]

Similar responsibility shall apply to members, officers, and employees of the
Bangko Sentral for: (1) the disclosure of any information of a confidential nature, or
any information on the discussions or resolutions of the Monetary Board, or about
the confidential operations of the Bangko Sentral, unless the disclosure is in
connection with the performance of official functions with the Bangko Sentral, or
is with prior authorization of the Monetary Board or the Governor; or (2) the use of
such information for personal gain or to the detriment of the Government, the
Bangko Sentral or third parties: Provided, however, That any data or
information required to _ be submitted to the President and/or the Congress, or to
be published under the provisions of this Act shall not be considered
confidential.”

"THE FOREGOING NOTWITHSTANDING, UNLESS THE ACTION OF
THE BANGKO SENTRAL OR ANY OF ITS-OFFICIALS AND EMPLOYEES
ARE FOUND TO BE IN WILLFUL VIOLATION OF THIS ACT OR

PERFORMED IN BAD FAITH, WITH MALICE AND/OR GROSS


NEGLIGENCE, THE BANGKO SENTRAL, ITS OFFICIALS, EMPLOYEES
AND AGENTS ARE HELD FREE AND* HARMLESS TO THE FULL
EXTENT PERMITTED BY LAW FROM ANY LIABILITY AND SHALL BE
INDEMNIFIED FOR ANY AND ALL. LIABILITIES, CLAIMS DEMANDS,
DAMAGES, DEFICIENCIES, COSTS AND EXPENSES OF WHATSOEVER

KIND AND NATURE THAT MAY ARISE IN CONNECTION WITH THE

PERFORMANCE OF THEIR FUNCTIONS."
SEC. 5. Section 21 of the same Act is hereby amended to read as follows

"SEC. 21. Deputy Governors. - The Governor of the Bangko Sentral, with the
approval-oi-the Monetary Baad shalltappoint nol snore ton’ [three Gy] FIVE)
Deputy Governors who shall perform duties as-may be assigned to them by the
Governor and the Board

In the absence of the Governor, a Deputy Governor designated by the
Govemor shall act as chief executive of the Bangko Sentral and shall exercise the
powers and perform the duties of the Govemor. Whenever the Goverment is unable
to attend meetings of goverment boards or councils in which he is an ex officio
member pursuant to provisions of special laws, a Deputy Governor as may be
designated by the Governor shall be vested with authority to participate and exercise
the right to vote in such meetings.”

SEC. 6. Section 23 of the same Act is hereby amended to read as follows:

"SEC. 23. Authority 10 Obtain Data and Information. - The Bangko Sentral
shall have the authority to [request] REQUIRE from ANY PERSON OR ENTITY,
INCLUDING government offices and instrumentalities, or government-owned or
controlled corporations, any data [which it may require for the proper discharge of

its] PERTAINING TO THE functions and responsibilities OF THE BANGKO


SENTRAL. The Bangko Seniral through the Governor or in his absence, a duly
authorized representative shall have the power to issue a subpoena for the production
of the books and records for the aforesaid purpose. Those who refuse the subpoena
without justifiable cause, or who refuse to supply the bank with data [requested or]
required, shall be subject to punishment for contempt in accordance with the
provisions of the Rules of Court

Data on individual firms, other than banks, gathered by the Department of
Economic Research and other departments or units of the Bangko Sentral shall not be
made available to any person or entity outside of the Bangko Sentral whether public
or private except under order of the court or under such conditions as may be
prescribed by the Monetary Board: Provided, however, That the collective data on
firms may be released to interested persons or entities: Provided, finally, That in the
case of data on banks, the provisions of Section 27 of this Act shall apply."
SEC. 7. Section 25 of the same Act is hereby amended to read as follows

"SEC, 25. Supervision and Examination. - The Bangko Sentral shall have
supervision over, and conduct periodic or special examinations of banking
institutions and quasi-banks, including their subsidiaries and affiliates engaged in
allied activities. IN ADDITION TO SUCH OTHER AUTHORITY GRANTED BY
LAW, PRIOR APPROVAL BY THE BANGKO SENTRAL SHALL BE REQUIRED
FOR TRANSFERS OR ACQUISITIONS OF SHARES OF STOCK IN BANKS OR
QUASI-BANKS WHERE ANY SUCH TRANSFER OR ACQUISITION OR
SERIES OF TRANSFERS OR ACQUISITIONSWOULD BE SUFFICIENT TO
ELECT AT LEAST ONE SEAT IN THE BOARD OF DIRECTORS OR WOULD
EFFECT A CHANGE IN THE MAJORITY OWNERSHIP OR CONTROL OF

THE VOTING STOCK IN ANY OF THESE INSTITUTIONS. SUCH TRANSFER


OR ACQUISITION SHALL BE SUBMITTED TO THE BANGKO SENTRAL FOR
APPROVAL BY THE SELLING OR CONVEYING STOCKHOLDER WITHIN
SUCH PERIOD AS MAY BE PRESCRIBED BY THE MONETARY BOARD BY
REGULATION. PRIOR TO SUCH APPROVAL, NO SUCH TRANSFER OR
ACQUISITION SHALL HAVE LEGAL EFFECT NOR SHALL THE SAME BE

STITUTION NOR BY ANY

RECOGNIZED IN THE BOOKS OF THE D
GOVERNMENT AGENCY AND THE TRANSFEROR-STOCKHOLDERS, IN
CASES INVOLVING TRANSFERS, SHALL REMAIN ACCOUNTABLE AND
RESPONSIBLE THEREFOR. IN APPROVING SAID TRANSFERS OR
ACQUISITIONS, REGARD SHALL BE GIVEN BY THE BANGKO SENTRAL TO.
THE FITNESS OF THE INCOMING STOCKHOLDERS AS MAY BE
INDICATED IN THEIR INTEGRITY AND FINANCIAL CAPACITY.

For purposes of this section, a subsidiary means a corporation more than fifty
percent (50%) of the voting stock of which is owned DIRECTLY OR INDIRECTLY
by a bank or quasi-bank and an affiliate means a corporation the voting stock of
which, to the extent of fifty percent (50%) or less, is owned by a bank or quasi-bank
or which is related or linked to such institution or intermediary through common
stockholders or such other factors as may be determined by the Monetary Board.

CONTROL EXISTS WHEN THE PARENT INSTITUTION OWNS
DIRECTLY OR INDIRECTLY MORE THAN ONE HALF OF THE VOTING
STOCK OF AN ENTERPRISE. CONTROL MAY ALSO EXIST EVEN WHEN
THE PARENT INSTITUTION OWNS ONE: HALF OR LESS OF THE VOTING
STOCK OF AN ENTERPRISE WHEN THERE IS:

A) POWER OVER MORE THAN ONE HALF OF THE VOTING

RIGHTS BY VIRTUE OF AN AGREEMENT WITH OTHER INVESTORS; OR


B) POWER TO GOVERN THE FINANCIAL AND OPERATING
POLICIES OF THE ENTERPRISE UNDER A STATUE OR AN AGREEMENT, OR

C) POWER TO APPOINT OR REMOVE THE MAJORITY OF THE
MEMBERS OF THE BOARD OF DIRECTORS, OR

D) POWER TO CAST THE MAJORITY OF VOTES AT MEETINGS OF
THE BOARD OF DIRECTORS, OR

E) OTHER ARRANGEMENTS, SIMILAR TO ANY OF THE ABOVE.

The department heads and the examiners of the supervising and/or examining
departments are hereby authorized to administer’ oaths to any director, officer, or
employee of any institution under their respective supervision or subject to their
examination and to compel the presentation of all books, documents, papers or
records necessary in their judgment to ascertain the facts relative to the true condition
of any institution as well as the books and records of persons and entities relative to
or in connection with the operations, activities or transactions of the institution
under examination, [subject to the annem of] INCLUDING, ONLY FOR
EXAMINATION PURPOSES, DEPOSIT AND INVESTMENT ACCOUNTS,
NOTWITHSTANDING existing laws protectins or safeguarding the secrecy or
confidentiality of bank deposits as well as investments of private persons, natural or
juridical, in debt instruments issued by the Government.

No restraining order or injunction shall be issued by the court enjoining the
Bangko Sentral from examining any institution subject to supervision or examination
by the Bangko Sentral, unless there is convincing proof that the action of the Bangko
Sentral is plainly arbitrary and made in bad fitih and the petitioner-or plaintili Hey
with the clerk or judge of the court in which the action is pending a bond executed in

favor of the Bangko Sentral, in an amount to be xed by the court. The provisions of


Rules 58 of the New Rules of Court insofar: as they are applicable and not
inconsistent with the provisions of this section shall govern the issuance and
dissolution of the restraining order or injunction contemplated in this secction.”
SEC.8. Section 30 of the same Act is hereby amended to read as follows:

"SEC. 30. Proceedings in Receivership and Liquidation. ~ Whenever, upon
report of the head of the supervising or examining department, the Monetary Board
finds that a bank or quasi-bank

a) is unable to pay its liabilities as they become due in the ordinary course
of business: Provided, That this shall not include inability to pay caused by
extraordinary demands induced by financial panic in the banking community;

b) has insufficient realizable assets, as determined by the Barto Serta
to meet its liabilities; or

©) cannot continue in business without involving probable losses to its
depositors or creditors; or

d) has willfully violated a cease and desist order under Section 37 that has
become final, involving acts or transactions which,amount to fraud or a dissipation of
the assets of the institution; in which cases, the Monetary Board may summarily and
without need for prior hearing forbid the institution from doing business in the
Philippines and designate the Philippine Deposit Insurance Corporation as receiver of
the banking institition

For a quasi-bank, any person of recognized competence in banking or finance
may be designed as receiver

The receiver shall immediately gather and take charge of all the 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 but shall


not, with the exception of administrative expenditures, pay or commit any act that
will involve the transfer or disposition of any asset of the institution: Povided, That
the receiver may deposit or place the funds off the institution in non-speculative
investments. The receiver shall determine as soon as possible, but not later than
ninety (90) days from take over, whether the institution may be rehabilitated or
otherwise placed in such a condition so that it may be permitted to resume business
with safety to its depositors and creditors and the general public: Provided, That any
determination for the resumption of business of the institution shall be subject to
prior approval of the Monetary Board

IN ORDER TO REHABILITATE THE CLOSED INSTITUTION OR TO
RESTORE ITS OPERATIONS WITH SAFETY TO ITS DEPOSITORS,
CREDITORS AND THE GENERAL PUBLIC, OR TO MERGE OR
CONSOLIDATE THE CLOSED INSTITUTION WITH ANOTHER QUALIFIED
INSTITUTION, THE RECEIVER MAY IMMEDIATELY TRANSFER OR
DISPOSE OF ANY OR ALL OF THE ASSETS OF THE CLOSED INSTITUTION
AND PERFORM SUCH OTHER ACTS AS MAY BE AUTHORIZED BY LAW.

If the receiver determines that the institution cannot be rehabilitated or
permitted to resume business in accordance with the next preceding paragraph OF
THE SECTION, the Monetary Board shall notify a writing the board of directors of
its findings and direct the receiver to proceed with the liquidation of the institution.
The receiver shall:

1) file ex parte with the proper regional trial court, and without
requirement of prior notice or any other action, a petition for assistance in the
liquidation of the institution pursuant to a liquidation plan adopted by the Philippine

Deposit Insurance Corporation for general application to all closed banks. In case of


quasi-banks, the liquidation plan shall be adopted by the Monetary Board. Upon
acquiring jurisdiction, the court shall, upon motion by the receiver after due notice,
adjudicate disputed claims against the institution, assist the enforcement of individual
liabilities of the stockholders, directors and officers, and decide on other issues as
Pred certerial tars leenent tied ccider ometeniedan eteetnenecetyershell aati
cost of the proceedings from the assets of the institution

By. eater ihe ssc Gh ie retavtonstmbney ciepaee othe series
creditors and other parties, for the purpose of paying the debts of such institution in
accordance with the rules on concurrence and preference of credit under the Civil
Code of the Philippines and he may, in the name of the institution, and with the
assistance of counsel as he may retain, institute such actions as may be necessary to
collect and recover accounts and assets of, or defend any action against, the
institution, The ‘assets’ of an’ inaitution “under receivership. or liquidation hall 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.

The actions of the Monetary Board taken under this section or under Section
29 of this Act shall be final and executory, and may not be restrained or set aside by
the court except on petition for certiorari on the ground AND UPON A FINDING
AFTER DUE HEARING 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:

JOINING OR

PROVIDED, HOWEVER, THAT ANY ORDER RESTRAINING E1
SETTING ASIDE THE ACTION COMPLAINED OF IN THE PETITION FOR
CERTIORARI, MAY ONLY BE ISSUED BY THE COURT OF APPEALS, BUT

MAY BE DISSOLVED OR STAYED UPON BY THE BANGKO SENTRAL FILING


A WRITTEN UNDERTAKING THAT IT WILL PAY ALL DAMAGES WHICH
THE PETITIONER MAY SUFFER FROM THE DENIAL, DISSOLUTION OR
STAY OF THE INJUNCTION SHOULD IT BE DECIDED IN A FINAL
JUDGMENT THAT THE PETITIONER IS ENTITLED TO HAVE THE ACTS
COMPLAINED OF PERMANENTLY ENJOINED. The petition for certiorari may
only be filed by the stockholders of 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 receivership, liquidation or conservatorship. THE
PROVISIONS OF RULE 58 OF THE 1997 RULES ON CIVIL PROCEDURE IN
SO FAR AS THEY ARE APPLICABLE AND NOT INCONSISTENT WITH THE
PROVISIONS OF THIS SECTION SHALL GOVERN THE ISSUANCE AND
DISSOLUTION OF THE RESTRAINING ORDER OR INJUNCTION

IN THIS SECTION

CONTEMPLATE!
The designation of a conservator under Section 29 of this Act ot the
appointment of a receiver under this section shall be vested exclusively with the
Monetary Board. Furthermore, the designation of @ conservator is not a precondition
to the designation of a receiver.
THE AUTHORITY OF THE MONETARY BOARD TO PLACE A BANK
OR QUASI-BANK UNDER RECEIVERSHIP AS PROVIDED ABOVE MAY
ALSO BE EXERCISED OVER NON-STOCK SAVINGS AND LOAN
ASSOCIATIONS, BASED ON THE SAME APPLICABLE GROUNDS. FOR THIS
PURPOSE, ANY PERSON OF RECOGNIZED COMPETENCE IN BANKING
CREDIT AND FINANCE MAY BE DESIGNATED AS RECEIVER."
SEC. 9. A new section designated as Gest 30-A is hereby inserted between

Section 30 and Section 31 of the same Ac: ‘o read as follows:


"SEC. 30-A. WHENEVER UPON THE REPORT OF THE HEAD OF THE
SUPERVISING AND EXAMINING DEPARTMENT, THE MONETARY BOARD
FINDS THAT THE ADJUSTED CAPITAL ACCOUNTS OF A BANK OR QUASI-
BANK IS LOWER THAN THE MINIMUM CAPITAL REQUIRED UNDER
EXISTING RULES AND REGULATIONS, OR IT HAS A CAPITAL ADEQUACY

RATIO LOWER THAN THE MINIMUM RATIO PRESCRIBED UNDER

EXISTING REGULATIONS, THE MONETARY BOARD SHALL HAVE
THE AUTHORITY TO DIRECT THE EXISTING STOCKHOLDERS OF SAID
BANK OR QUASI-BANK TO INFUSE. CAPITAL WITHIN A PERIOD NOT

EXCEEDING NINETY (90) DAYS FROM THE DATE OF THE
DIRECTIVEIN SUCH AMOUNT AS MAY BE NECESSARY TO RESTORE
THE ENTITY'S CAPITAL TO THE MINIMUM REQUIRED AMOUNT OR
RATIO IN CASE OF INABILITY OR UNWILLINGNESS OF THE
STOCKHOLDERS TO INFUSE THE REQUIRED AMOUNT OF ADDITIONAL.
CAPITAL WITHIN THE PRESCRIBED PERIOD, THE MONETARY BOARD
MAY DIRECT SAID BANK OR QUASI-BANK TO ACCEPT INVESTMENTS
FROM QUALIFIED THIRD PARTIES OR TO MERGE OR CONSOLIDATE
WITH A QUALIFIED FINANCIAL INSTITUTION

THE MONETARY BOARD MAY ALSO AUTHORIZE OR ORDER THE
EXISTING STOCKHOLDERS OF THE CONCERNED ENTITY TO EFFECT A
QUASI-REORGANIZATION OF SAID ENTITY TO REFLECT THE FAIR
VALUE OF ITS CAPITAL."

SEC. 10. Section 36 and Section 37 of the same Act are hereby amended to read as

follows:

"SEC. 36. Proceedings Upon Violation of This Act and Other Banking Laws,


Rules, Regulations,Orders or Instructions. - Whenever a bank, [or] quasi-bank, OR
OTHER FINANCIAL INSTITUTION WHICH UNDER THIS ACT OR SPECIAL

TRAL SUPERVISION or whenever any

LAWS IS SUBJECT TO BANGKO SE}
person or entity willfully violates this Act or other pertinent banking laws being
enforced or implemented by the Bangko Sentral or any order, instruction, rule or
regulation issued by the Monetary Board, the person or persons responsible for such
violation shall unless otherwise provided in this Act be punished by a fine of not less
than Fifty thousand pesos (P 50,000) nor more than [Two hundred thousand pesos (P
200,000)] TWO MILLION PESOS (P 2,000,000.00) or by imprisonment of not less
than two (2) years nor more than ten (10) years, or both, at the discretion of the
court.

Whenever AN ENTITY UNDER BANGKO SENTRAL SUPERVISION [a
bank or quasi-bank} persists in carrying on its business in an unlawful or unsafe
manner, the Board may, without prejudice to the penalties provided in the preceding
paragraph of this section and the administrative sanctions provided in Section 37 of
this Act, take action under Section 30 of this Act."

"SEC. 37, Administrative Sanctions fon Banks and Quasi-banks]. ~ Without
prejudice to the criminal sanctions against the culpable persons provided in Section
34, 35, and 36 of this Act, the Monetary Board may, at its discretion, impose upon
any bank or quasi-bank, INCLUDING THEIR SUBSIDIARIES AND AFFILIATES
ENGAGED IN ALLIED ACTIVITIES, OR OTHER INSTITUTIONS WHICH
UNDER SPECIAL LAWS ARE SUBJECT TO THE BANGKO SENTRAL
SUPERVISION, their directors 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, «sles and regulatioas,-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; any willfal failure or refusal to comply with , or violation of, any
banking law or any order, instruction or regulation issued by the Monetary Board, or
any order, instruction or ruling by the Governor; or any commission of irregularities,
and/or conducting business in an unsafe or unsound manner as may be determined by
the Monetary Board, the following administrative sanctions, whenever applicable

a) fines in amounts as may be PRESCRIBED AND determined by the
Monetary Board to be appropriate, [but in no case to exceed Thirty thousand pesos (P
30,000) a day for each violation, taking into consideration the attendant
circumstances, such as the nature and gravity of the violation or irregularity and the
size of the bank or quasi-bank,] THE MONETARY BOARD SHALL, BY
REGULATION, DEFINE SERIOUS OR GRAVE, LESS SERIOUS OR LESS
GRAVE, AND MINOR OFFENSES TAKING INTO CONSIDERATION THE
ATTENDANT CIRCUMSTANCES, SUCH AS THE NATURE AND GRAVITY OF

THE VIOLATION OR IRREGULARITY AND THE SIZE OF THE
INSTITUTION AND PRESCRIBE THE FINES THEREFOR THAT MAY BE

IMPOSED FOR EACH DAY OF VIOLATION OR ON A PER TRANSACTION

BASIS; PROVIDED, THAT WILLFUL VIOt TIONS AND IRREGULARITIES
MAY BE AUTOMATICALLY CONSIDERED BY THE MONETARY BOARD AS

SERIOUS OR GRAVE REGARDLESS OF THEIR EFFECT TO THE
FINANCIAL CONDITION OF THE INSTITUTION: PROVIDED,
FURTHER, THAT WITHOUT PREJUDICE TO THE IMPOSITION OF
APPLICABLE SANCTION TO THE INSTITUTION THAT COMMITTED A

SPECIFIC VIOLATION OR TRREGULARITY, THE MONETARY BOARD


MAY ALSO IMPOSE SANCTIONS TO ITS PARENT UNIVERSAL OR
COMMERCIAL BANKS IF THERE IS EVIDENCE THAT SAID PARENT
INSTITUTION ABETTED THE COMMISSION OF THE VIOLATION OR
IRREGULARITY OR DID NOT EXERCISE REASONABLE MEANS TO
PREVENT THE SAME

b) suspension of rediscounting privileges or access to Bangko Sentral
credit facilities,

©) suspension of lending or foreign exchange operations or authority to
accept new deposits or make new investments;

d) suspension of interbank clearing privileges; [and/or]

e) revocation of quasi-banking license{.];

f) REVOCATION OF TRUST LICENSE,

3) PROHIBITION FROM DECLARING CASH DIVIDE!

h) CONFISCATION BY AND FORFEITURE IN FAVOR OF THE
BANGKO SENTRAL OF ANY AND ALL PROFITS, AS MAY BE DETERMINED
BY THE MONETARY BOARD, ARISING FROM THE OFFENSE OR
VIOLATION OF BANKING LAWS, RULES AND REGULATIONS, AND

i) OTHER SANCTIONS AS THE MONETARY BOARD MAY DEEM
APPROPRIATE UNDER THE CIRCUMSTANCES.

THE DIRECTOR OR OFFICER RESPONSIBLE FOR THE VIOLATION
MAY, AFTER DUE PROCESS, BE SUSPENDED, REMOVED OR
DISQUALIFIED FROM HOLDING OFFICE, OR ANY POSITION, IN AN
INSTITUTION UNDER THE SUPERVISION or THE BANGKO SENTRAL, FOR
A PERIOD TO BE DETERMINED BY THE MONETARY BOARD, TAKING

INTO CONSIDERAT!ON THE ATTENDANT CIRCUMSTANCES, SUCH AS THE


NATURE AND GRAVITY OF THE ACT OR OMISSION AND THE SIZE
OF THE INSTITUTION.

Resignation or termination from office shall not exempt such director or
officer from administrative or criminal sanctions.

The Monetary Board may, whenever warranted by circumstances,
preventively suspend any director or officer of [a bank or quasi-bank] THE
INSTITUTION pending an investigation: Provided, That should the case be not
finally decided by the Bangko Sentral within a period of one hundred twenty (120)
days after the date of suspension, said director or officer shall be reinstated in his
position: Provided, further, That when the delay in the disposition of the case is due
to the fault, negligence or petition of the director or officer, the period of delay shall
not be counted in computing the period of suspension herein provided

‘The above administrative sanctions need not be applied in the order of their
severity.

Whether or not there is an administrative eeeedines if the institution and/or
the directors and/or officers concemed continue with or otherwise persist in the
commission of the indicated practice or violation, the Monetary Board may issue an
order requiring the institution and/or the directors and/or officers concemed to cease
and desist from the indicated practice or violation, and may further order that
immediate action be taken to correct the conditions resulting from such practice or
violation, The cease and desist order shall be immediately effective upon service on
the respondents.

The respondents shall be afforded an SppUnnity to defend their action in a
hearing before the Monetary Board or any committee chaired by any Monetary

Board member created for the purpose, upon request made by the respondents within five


(5) days from their receipt of the order If no such hearing is requested within said
period, the order shall be final If a hearing is conducted, all issues shall be
determined on the basis of records, after which the Monetary Board may either
reconsider or make final its order.

The Governor is hereby authorized, at his discretion, to impose upon
{banking institutions] BANKS AND QUASI-BANKS, INCLUDING THEIR
SUBSIDIARIES AND AFFILIATES ENGAGED IN ALLIED ACTIVITIES, AND
OTHER FINANCIAL INSTITUTIONS WHICH UNDER SPECIAL LAWS ARE
SUBJECT TO BANGKO SENTRAL SUPERVISION for any failure to comply with
the requirements of law, Monetary Board regulations and policies, and/or instructions
issued by the Monetary Board or by the ‘Goreme fines not in excess of [Ten
thousand pesos (P 10,000) a] ONE HUNDRED THOUSAND PESOS (P 100,000.00)
PER BANKING day for each violation, the imposition of which shall be final and
executory until reversed, modified or lifted by the Monetary Board on appeal.”

SEC. 11. Section 63 of the same Act is hereby amended to read as follows:

"SEC. 63. Action When Abnormal Movements Occur in the Moneiary
Agsrevales| Credit, or Price) Level = Whenever abnormal movements in the
monetary aggregates, in credit, or in prices endanger the stability of the Philippine
economy or important sectors thereof, the Monetary Board shall:

a) take such remedial measures as are appropriate and within the powers
granted to the Monetary Board and the Rangko Sentral under the provisions of this
Act; and

b) submit to the President of the Philippines and the Congress, and make
public, a detailed report which shall include, ds a minimum, a description and

analysis of


1) the causes of the rise or fall of the monetary aggregates, of credit

or of prices;

2) the extent to which the changes in the monetary aggregates, in

credit, or in prices have been reflected in changes in the level of domestic

ulpit-employment wages and economic activity in general, and the nature

and significance of any such changes; and

3) the measures which the Monetary Board has taken and the other
monetary, fiscal or administrative measures which it recommends to be
adopted

[Whenever the monetary aggregates, or the level of credit, increases or
decreases by more than fifteen percent (15%), or the cost of living index increases
by more than ten percent (10%), in relation to the level existing at the end of the
corresponding month of the preceding year, or even though any of these quantitative
guidelines have not been reached when in its judgment the circumstances so warrant,
the Monetary Board shall submit the reports mentioned in this section, and shall state
therein whether, in the opinion of the Board, said changes in the monetary
aggregates, credit or cost of living represent a threat to the stability of the Philippine
economy or of important sectors thereof]

The Monetary Board shall continue to submit periodic reports to the President
of the Philippines and to Congress until it considers that the monetary, credit or price
disturbances have disappeared or have been adequately controlled."

SEC. 12, Section 83 of the same Act is hereby amended to read as follows:

"SEC, 83. Loans for Liquidity Purposes. - The Bangko Sentral may extend

loans and advances to banking AND QUASI-BANKING institutions for a period of

not more than seven (7) days without any cu!lateral for the purpose of providing


liquidity to the banking system in times of need."
SEC. 13. A new section designated as Section 88-A is hereby inserted between
Section 88 and Section 89 of the same Act to read as follows

"SEC. 88-A. EXEMPTION FROM ATTACHMENT. - THE PROVISIONS OF
ANY LAW TO THE CONTRARY NOTWITHSTANDING AND SECTION 31 OF
THIS ACT, COLLATERALS ON LOANS AND ADVANCES GRANTED BY THE

BANGKO SENTRAL TO BANKING INSTITUTIONS SHALL NOT BE
SUBJECT TO ATTACHMENT, EXECUTION OR ANY OTHER COURT
PROCESS, NOR SHALL THEY BE INCLUDED IN THE PROPERTY OF
INSOLVENT PERSONS OR INSTITUTIONS, UNLESS ALL DEBTS AND
OBLIGATIONS OF THE BANKING INSTITUTIONS TO THE  B4NGKO
SENTRAL, WHETHER REGISTERED OR - NOT, HAVE BEEN PAID,
INCLUDING ACCRUED INTEREST, PENALTIES, COLLECTION EXPENSES,
AND OTHER CHARGES.”
SEC. 14, A new section designated as Section 89-A is hereby inserted between

Section 89 and Section 90 of the same Act to read as follows

"SEC. 89-A. CREDIT FACILITIES FOR ISLAMIC BANKS. - THE BANGKO
SENTRAL MAY, TAKING INTO CONSIDERATION THE PECULIAR
CHARACTERISTICS OF ISLAMIC BANKING FORMULATE RULES AND
REGULATIONS FOR THE EXTENSION OF ‘REDISCOUNTING OR OTHER
SIMILAR FACILITIES TO ISLAMIC BANKS.”
SEC. 15. Section 92 of the same Act is hereby amended to read as follows:

"SEC. 92. Issue and Negotiation of Bangko Sentral Obligations. - in order to
provide the Bangko Sentral with effective instruments for open market operations,

the Bangko Sentral may, subject to such rules and regulations as the Monetary Board


may prescribe and in accordance with the principles stated in Section 90 of this Act,
issue, place, buy and sell freely negotiable evidences of indebtedness of the Bangko
Sentral: Provided, That issuance of such certificates of indebtedness shall be made
only in cases of extraordinary movement in price levels]. Said evidences of
indebtedness may be issued directly against the international reserve of the Bangko
Seniral or against the securities which it has acquired under the provisions of Section
91 of this Act, or may be issued without relation to specific types of assets of the
Bangko Sentral. q

The Monetary Board shall determine the interest rates, maturities and other
characteristics of said obligations of the Bangko Sentral, and may, if it deems it
advisable, denominate the obligations in gold or foreign currencies

Subejct to the principles stated in Section 90 of this Act, the evidences of
indebtedness of the Bangko Sentral to which this section refers may be acquired by
the Bangko Sentral before their maturity, either hom purchases in the open market
or through redemptions at par and by lot if the Bangko Sentral has reserved the right
to make such redemptions. The evidences of indebtedness acquired or redeemed by
the Bangko Sentral shall not be included among its assets, and shall be immediately
retired and cancelled.”

SEC. 16. Section 95 of the same Act is hereby amended to read as follows:

"SEC. 95. Definition of Deposit Substitutes. - The term "deposit substitutes" is
defined as an alternative form of obtaining funds from the public, other than deposits,
through the issuance, endorsement, or coors of debt instruments for the
borrower's own account, for the purpose of relending or purchasing of receivables

and other obligations. These instruments may include, but need not be limited to,

bankers, acceptances, promissory notes -articipations, certificates of assignment and


similar instruments with recourse, and repurchase agreements. The Monetary Board
shall determine what specific instruments shall be considered as deposit substitutes
for the purposes of Section 94 of this Act[:]. THE MONETARY BOARD MAY
ALSO EXCLUDE FUNDS OBTAINED OR BORROWED FROM CERTAIN
INSTITUTIONAL LENDERS UNDER THIS SECTION: Provided, however, That
deposit substitutes of commercial, industrial and other non-financial companies for
the limited purpose of financing their own needs or the needs of their agents or
dealers shall not be covered by the provisions of section 94 of this Act.”

SEC. 17. Section 108 of the same Act is hereby amended to read as follows:

"SEC. 108. Minimum Capital Ratios. - The Moneuty Boed may prescribe
minimum RISK-BASED CAPITAL ADEQUACY ratios BASED ON
INTERNATIONALLY ACCEPTED STANDARDS [which the capital and surplus of

the banks must bear the volume of their assets, or 10 specific categories
thereof] and may alter said ratios whenever it deems necessary, IN THE EXERCISE
OF ITS AUTHORITY UNDER THIS SECTION, THE MONETARY BOARD MAY

PRESCRIBE A HIGHER MINIMUM CAPITAL ADEQUACY RATIO FOR
INDIVIDUAL BANKS WHICH ARE EXPOSED TO MORE THAN NORMAL
RISKS.”

SEC. 18, Section 125 and Section 126 of the same Act are hereby amended to
read as follows

"SEC. 125. Tax Exemptions. - THE PROVISIONS OF ANY GENERAL OR
SPECIAL LAW TO THE CONTRARY NOTWITHSTANDING, the Bangko Sentral
shall be exempt [for a period of five (5) years trom the approval of this Act] from all
national, provincial, municipal and city taxes, fees, charges and assessments|.]

[The exemption authorized in the preceding paragraph of this section shall


apply to all property of the Bangko Sentral, to the resources, receipts, expenditures,
profits and income of the Bangko Sentral, as: well as to all contracts, deeds,
documents and transactions related to the conduct of the business of the Bangko
Sentral: Provided, however, That said ‘exeniptions shall apply only to such taxes,
fees, charges and assessments for which the Bangko Sentral itself would otherwise
be liable, and shall not apply to taxes, fees, charges, or assessments payable by
persons or other entities doing business with the Bangko Sentral: Provided, further,
That foreign loans and other obligations of the Bangko Sentral shall be exempt, both
as to principal and interest, from any and all taxes if the payment of such taxes has
been assumed by the Bangko Sentral .] :

"SEC. 126. Exemprion from Customs Duties, - The provision of any general or
special law to the contrary notwithstanding, the importation and exportation by the
Bangko Sentral of notes and coins, and of gold and other metals to be used for
purposes authorized under this Act, and the importation of all equipment AND

‘KO SENTRAL OPERATIONS SUCH AS

SUPPLIES needed [for] IN THE 84
bank note production, minting of coins, metal refining, [and other] security printing
operations AND TRANSPORT OF CURRENCY shall be fully exempt from all
customs duties and consular fees and from all other taxes, assessments and charges
related to such importation or exportation.”

SEC. 19. Section 128 of the same Act is hereby amended to read as follows:

"SEC. 128. Prohibitions. - The Bangko Sentral shall not acquire shares of any
kind or accept them as collateral, and shall not participate in the ownership or
management of any enterprise, either directly or indirectly] PROVIDED, THAT
THIS PROHIBITON SHALL NOT APPLY WHENEVER SUCH OWNERSHIP OR,

MANAGEMENT IS EXPRE SLY AUTHORIZED BY LAW, OR THE


MONETARY BOARD, BY A VOTE OF AT LEAST FIVE (5) OF ITS MEMBERS,
DEEMS AN ACQUISITION OR INVESTMENT TO BE NECESSARY TO
THE PERFORMANCE BY BANGKO SENTRAL OF ITS MANDATES UNDER
THIS ACT OR TO QUALIFY OR AS REQUIRED FOR MEMBERSHIP IN
INTERNATIONAL AND REGIONAL ORGANIZATIONS
The Bangko Sentral shall not engage in development banking or financing
Provided, howwever, That outstanding loans obtained or extended for
development financing shall not be affected by the prohibition of this section.”

SEC. 20. This Act shall take effect fifteen (15) days following its publication in

at least two (2) national newspapers of general circulation

Approved,