Republic of the Philippines
House of Representatives
Quezon City
Thirteenth Congress

First Regular Session

HOUSE BILLNO.__ 123

Introduced by Representative JOEY SARTE SALCEDA

EXPLANATORY NOTE

In 1993, Congress enacted Republic Act No. 7653, entitled the “New Central Bank Act" which created
the Bangko Sentral ng Pilipinas (BSP). Pursuant to Section 20, Article XII of the Constitution, the law
established an "independent central monetary authority...that shall provide policy direction in the areas of
money, banking and credit”.

Changes in the world of finance and economics have created a global financial community in which
transactions do not recognize borders. But this development of financial efficiency is not without a price. The
experience gained and the lessons learned from the volatile financial environment and adverse developments
arising from the regional financial turmoil have provided us with basis to refine and improve some of the
provisions of the law. Such revisions would certainly the Bangko Sentral's effectiveness and strengthen its
supervisory capabilities to promote greater stability in the banking system.

The key provisions of this bill include (a) the removal of the five-year time limit on the Bangko
Sentral's tax exemption, (b) the granting of authority to the Monetary Board (MB) to provide a compensation
structure based on job evaluation studies and wage surveys, but not lower than those of any other government
financial institutions and, (c) the clarification that financial derivatives are subject to the regulation of the MB.

To further strengthen the supervisory capability of the BSP, this bill grants the Governor or the head of
the supervision and examination department the authority to conduct an examination of the books of banks at
least once in every calendar year. Moreover, the bill extends the requirement of a balanced currency position to
subsidiaries and affiliates of banks and authorizes the BSP to impose service fees on financial institutions. More
importantly, the measure increases the penalties for violations of RA 7653 and other banking laws.

Finally, in addressing the threats to the overall stability of the banking system, the measure grants the
BSP authority to provide liquidity loans in situations which in the judgment of the MB could lead to the
illiquidity of the banking system. Under this measure, overdrafts are treated as emergency loans and removes
the five-day overdraft privilege granted to banks. Also, this bill clarifies the grounds for placing a bank or
quasi-bank under receivership and liquidation.

In view of the foregoing, approval of this bill is eamestly sought.



Republic of the Philippines
House of Representatives
Quezon City
Thirteenth Congress

First Regular Session

House Bill No. 1.23

Introduced by Representative JOEY SARTE SALCEDA

AN ACT
AMENDING REPUBLIC ACT NO. 7653, OTHERWISE KNOWN AS THE
THE NEW CENTRAL BANK ACT

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

SECTION 1. The last paragraph of Section 9 of Republic Act No. 7653 is hereby amended to
read as follows
“No person shall be a member of the Monetary Board if he has been connected directly with

any muitilateral banking or financial institution or has a substantial interest in any private bank in the
Philippines, within one (1) year prior to his appointment; likewise, no member of the Monetary Board
shall be [employed} AN OFFICER, EMPLOYEE, AGENT OR STOCKHOLDER in any such
institution within [two (2)] ONE year[s} after the expiration of his term [except when he serves as an
official representative of the Philippine Government to such institution]: PROVIDED, HOWEVER,
THAT THIS PROHIBITION SHALL NOT APPLY IF SUCH INSTITUTION IS CREATED
AFTER THE EXPIRATION OF THE TERM OR RESIGNATION OF MEMBER
CONCERNED NOR TO PRIVATE PRACTICE OF HIS PROFESSION, EXCEPT IF SUCH
PRACTICE IS IN CONNECTION WITH ANY MATTER BEFORE THE BANGKO

SENTRAL. THE FOREGOING RESTRICTIONS SHALL NOT APPLY WHEN THE



PERSON CONCERNED SERVES AS AN OFFICIAL REPRESENTATIVE OF THE
PHILIPPINE GOVERNMENT TO SUCH INSTITUTION.”

Section 2. Section 15, paragraph (c), of the same Act is hereby amended to read as follows:

(0) establish a human resource management system which shall govern the selection, hiring
appointment, transfer, promotion, or dismissal of all personnel. Such system shail aim to establish
professionalism and excellence at all levels of the Bangko Sentral in accordance with sound principles
of management.

‘A compensation structure, based on job evaluation studies and wage surveys and subject to the
Board’s approval, shall be instituted as an integral component of the Bangko Sentral’s human resource
development program: [Provided, That the Monetary Board shall make its own system conform as
closely as possible with the principles provided for under Republic Act No. 6758: Provided, however,
That compensation and wage structure of employees whose positions fall under salary grade 19 and
below shall be in accordance with the rates prescribed under Republic Act No. 6758] PROVIDED,
THAT ALL POSITION IN THE BANGKO SENTRAL NG PILIPINAS SHALL BE
GOVERNED BY A COMPENSATION, POSITION CLASSIFICATION SYSTEM AND
QUALIFICATION STANDARDS APPROVED BY THE MONETARY BOARD BASED ON
COMPREHENSIVE JOB ANALYSIS AND AUDIT OF ACTUAL DUTIES AND
RESPONSIBILITIES. THE COMPENSATION PLAN SHALL BE COMPARABLE WITH
THE PREVAILING COMPENSATION PLANS OF OTHER GOVERNMENT FINANCIAL
INSTITUTIONS AND SHALL BE SUBJECT TO REVIEW BY THE BOARD NO MORE
THAN ONCE EVERY TWO (2) YEARS WITHOUT PREJUDICE TO YEARLY MERIT
REVIEWS OR INCREASES BASED ON PRODUCTIVITY AND PROFITABILITY. THE
BANGKO SENTRAL SHALL THEREFORE BE EXEMPT FROM EXISTING LAWS, RULES
AND REGULATIONS ON COMPENSATION, POSITION CLASSIFICATION AND

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QUALIFICATION STANDARDS. IT SHALL HOWEVER ENDEAVOR TO MAKE ITS
SYSTEM CONFORM AS CLOSELY AS POSSIBLE WITH THE PRINCIPLES UNDER
REPUBLIC ACT NO. 6758, AS AMENDED.

On the recommendation of the Governor, appoint, fix the remuneration and other emoluments,
and remove personnel of the Bangko Sentral, subject to pertinent civil service laws: Provided, That
the Monetary Board shall have exclusive and final authority to promote, transfer, assign, or resign
personnel of the Bangko Sentral and these personnel actions are deemed made in the interest of the
service and not disciplinary: Provided, further, That the Monetary Board may delegate such authority
to the Goveror OR TO ANY OF THE DEPUTY GOVERNORS, OR IN CASE OF
REASSIGNMENT WITHIN A DEPARTMENT, TO THE HEAD OF THE DEPARTMENT

CONCERNED, under such guidelines as [its] THE BOARD, may determine.”

Section 3. Section 20 of the same Act is hereby amended to read as follows:

“SEC. 20. Outside Interest of the Governor and the Full-time Members of the Board. — The
Governor of the Bangko Sentral and the full-time members of the Board shall limit their professional
activities to those pertaining directly to their positions with the Bangko Sentral. Accordingly, they
may not accept any other employment, whether public or private, remunerated or ad honorem, with
the exception of positions in eleemosynary, civic, cultural or religious organizations or whenever
AUTHORIZED BY LAW {, by designation of the President, the Governor or the full-time member is
tasked to represent the interest of the Government or other government agencies in matters connected

with or affecting the economy or the financial system of the country].”

Section 4. The second paragraph of Section 25 of the same Act is hereby amended to read as

follows:



“For purposes of this section, a subsidiary means a corporation more than fifty percent (50%)
of the voting stock of which is owned by a bank or quasi-bank and an affiliate means a corporation the
Voting stock of which, to the extent of TWENTY-FIVE PERCENT (25%) TO 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.”

Section 5. Section 28 of the same Act is hereby amended to read as follows:

“SEC. 28. Examination and Fees. ~ The supervising and examining department head,
personally, or by deputy, shall examine the books of every banking institution AT LEAST once in
every {tweive (12 months)] CALENDAR YEAR, and at such other times as EITHER the [Monetary
Board by affirmative vote of five (5) members,] GOVERNOR OR THE SUPERVISING AND
EXAMINING DEPARTMENT HEAD OR HIS DEPUTY may deem expedient and to make a
report on the same to the Monetary Board: Provided, That {there shall be an interval of at least twelve
(12) months between annual examinations] INSPECTION OF CERTAIN RECORDS FOR
VERIFICATION PURPOSES SHALL NOT BE DEEMED AN EXAMINATION FOR
PURPOSES OF THIS PROVISION.

“The bank concemed shall afford to the head of the appropriate supervising and examining
department and to his authorized deputies full opportunity to examine its books, cash and available
assets and general condition at any time during [banking] OFFICE hours when requested to do so by
the Bangko Sentral: Provided, however, That none of the reports and other papers relative to such
examinations shalt be open to inspection by the public except insofar as such publicity is incidental to
the proceedings hereinafter authorized or is necessary for the prosecution of violations in connections

with the business of such institutions.



“Banking and quasi-banking institutions which are subject to examination by the Bangko
Sentral shall pay to the Bangko Sentral, within the first thirty (30) days of each year, an annual fee in
an amount equal to a percentage as may be prescribed by the Monetary Board of its average total
assets during the preceding year as shown on its end-of-month balance sheets, after deducting cash on
hand and amounts due from banks, including the Bangko Sentral and banks abroad.”

Section 6. Section 30 of the same Act is hereby further 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:

(@) 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; OR

(b) has insufficient realizable assets, as determined by the Bangko Sentral, to meet its
liabilities; or

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

(D) HAS A CAPITAL-TO-RISK ASSETS RATIO OF LESS THAN TWO PERCENT
(2%) CONTINUOUSLY FOR MORE THAN NINETY (90) DAYS; OR

[@}(E) has willfully violated a cease and desist order under Section 37 that has become final,
involving acts or transactions which amount to fraud or 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 institution.

IN CASE A BANK OR QUASI-BANK NOTIFIES THE BANGKO SENTRAL OR
PUBLICLY ANNOUNCES A UNILATERAL BANK CLOSURE, OR IN ANY MANNER

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SUSPENDS THE PAYMENT OF ITS DEPOSIT LIABILITIES CONTINUOUSLY FOR
MORE THAN THIRTY (30) DAYS, THE MONETARY BOARD SHALL SUMMARILY AND
WITHOUT NEED FOR PRIOR HEARING CLOSE SUCH BANKING INSTITUTION AND
PLACE IT UNDER THE RECEIVERSHIP OF THE PHILIPPINE DEPOSIT INSURANCE
CORPORATION.

For a quasi-bank, any person of recognized competence in banking or finance may be
designated 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: Provided, That the receiver may deposit or place the funds of 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.

If the receiver determines that the institution cannot be rehabilitated or permitted to resume
business in accordance with the next preceding paragraph, the Monetary Board shall notify in 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.

6



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 may be material to implement the
liquidation plan adopted. The receiver shall pay the cost of the proceedings from the assets of the
institution.

(2) Convert the assets of the institution to money, dispose of the same to 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 institution under receivership or liquidation shall be deemed in custodia legis in the
hands of the receiver and shall, from the moment the institution was placed under such receivership or
liquidation, be exempt from any order of gamishment, 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 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: PROVIDED, HOWEVER, THAT ANY
ORDER RESTRAINING OR SETTING ASIDE THE ACTION COMPLAINED OF IN THE
PETITION FOR CERTIORARI MAY BE STAYED UPON APPROVAL BY THE COURT OF
A SUFFICIENT SUPERSEDEAS BOND FILED BY THE BANGKO SENTRAL,
CONDITIONED UPON THE PERFORMANCE OF THE ORDER RESTRAINING OR
SETTING ASIDE THE ACTION COMPLAINED OF, IN CASE ITS SHALL BE FINALLY
SUSTAINED IN WHOLE OR IN PART: PROVIDED, FURTHER, THAT THE BOND THUS
GIVEN MAY BE PROCEEDED AGAINST ON MOTION WITH NOTICE TO THE SURETY.
The petition for certiorari may only be filed by the stockholders of record representing the majority of

7


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 designation of a conservator under Section 29 of this Act or the appointment of a receiver
under this section shall be vested exclusively with the Monetary Board. Furthermore, the designation

of a conservator is not a precondition to the designation of receiver.”

Section 7. Section 36 of the same Act is 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 whenever any person or
entity will fully 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 (P50,000.00) nor more than {Two hundred
thousand pesos (P200,000.00)] TWO MILLION PESOS (P2,000,000.00) 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 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.”

Section 8. Section 37 of the same Act is hereby amended to read as follows

“SEC. 37. Administrative Sanctions [on 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 banks, for} quasi-bank, their
SUBSIDIARIES OR AFFILIATES, AS WELL AS directors and/or officers OF SUCH

8



INSTITUTIONS, for any willful violation of its charter or by laws, willfull delay in the submission of
reports or publications thereof as required by law, rules and regulations; any refusal to permit
examination into the affairs of the institution; any willful making of a false or misteading statement to
the Board or the appropriate supervising or examining department or its examiners; any willful failure
or refusal to comply with, or violation of, any banking law or any order, instruction or ruling by the
Govemor; or any commission or 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 determined by the Monetary Board to be appropriate, but in
case to exceed [Thirty thousand pesos (P30,000.00) a] THREE HUNDRED THOUSAND PESOS
(P300,000.00) PER BANKING 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} INSTITUTION;

(b) Suspension of rediscounting privileges pr 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]

(@) Revocation of quasi-banking license;

(F) REVOCATION OF TRUST LICENSE;

(G) PROHIBITION FROM DECLARING CASH DIVIDENDS;

(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 AND REGULATIONS, OR ACT OR OMISSION CONSTITUTING AN UNSAFE OR

UNSOUND PRACTICE; AND/OR



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

THE DIRECTOR OR OFFICER RESPONSIBLE FOR THE VIOLATION MAY,
AFTER DUE HEARING, BE SUSPENDED, REMOVED OR DISQUALIFIED FROM
HOLDING OFFICE FOR A PERIOD TO BE DETERMINED BY THE BANGKO SENTRAL
WHICH SHALL IN NO CASE EXCEED A PERIOD OF TWENTY (20) YEARS, TAKING
INTO CONSIDERATION THE ATTENDANT CIRCUMSTANCES, SUCH AS THE NATURE
AND GRAVITY OF THE ACT OR OMISSION AND THE SIZE OF THE INSTITUTION
CONCERNED.

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, for} quasi-bank, THEIR SUBSIDIARIES OR AFFILIATES, 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 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 proceeding, if the institution and/or the directors
and/or officers concerned 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 concerned 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

10



or violation, The cease and desist order shall be immediately effective upon service on the
respondents,

‘The respondents shall be afforded an opportunity 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,
QUASL-BANKS, THEIR SUBSIDIARIES AND AFFILIATES, for any failure to comply with the
requirements of the law, Monetary Board regulations and policies, and/or instructions issued by the
Monetary Board or by the Governor, fines not in excess of [Ten thousand pesos (P 10,000.00) a} ONE
HUNDRED THOUSAND PESOS (P100,000.00) 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.”

Section 9. Requirement of Balanced Currency Position. - The Monetary Board may require
[the] banks, QUASI-BANKS, THEIR SUBSIDIARIES AND AFFILIATES to maintain a balanced
position between their assets and liabilities in Philippines pesos or in any other currency or currencies
in which they operate, [The Banks] THEY shall be granted a reasonable period of time in which to
adjust their currency positions to any such requirement.

The powers granted under this section shall be exercised only when special circumstances
make such action necessary, in the opinion of the Monetary Board, and shall be applied to all banks,

QUASI-BANKS, THEIR SUBSIDIARIES AND AFFILIATES, alike and without discrimination.”

1


Section 10. Section 78 of the same Act is hereby amended to read as follows:

SEC. 78. Regulation of Non-spot Exchange Transactions. — In order to restrain the banks from.
taking speculative positions with respect to future fluctuations in foreign exchange rates, the Monetary
Board may issue such regulations governing banks purchases and sales of non-spot exchange as it may
consider necessary for said purpose.

NOTHING IN THIS SECTION SHALL BE CONSTRUED AS PROHIBITING BANKS
AND QUASI-BANKS FROM ENGAGING IN FINANCIAL DERIVATIVES ACTIVITIES,

SUBJECT TO REGULATIONS AS MAY BE ISSUED BY THE MONETARY BOARD.

Section 11. 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 institutions for a period of not more than seven (7) days without any collateral for the
purpose of providing liquidity to the banking system in times of need OR IN SITUATIONS WHICH
IN THE JUDGMENT OF THE MONETARY BOARD COULD LEAD TO ILLIQUIDITY OF
THE BANKING SYSTEM.”

Section 12. The last paragraph of Section 84 of the same Act is hereby amended to read as
follows

“Whenever a financial institution incurs an overdraft in its account with the Bangko Sentral,
the same shall be eliminated within the period prescribed in Section 102 of this Act. THE
OVERDRAFT MAY BE CONVERTED INTO AN EMERGENCY LOAN OR ADVANCE AND
SHALL BE GOVERNED BY THE PROVISIONS OF THIS SECTION: PROVIDED,
HOWEVER, THAT THE CEILING PRESCRIBED HEREIN ON THE AMOUNT OF ANY

EMERGENCY LOAN OR ADVANCE THAT MAY BE GRANTED TO A BANKING



INSTITUTION SHALL NOT APPLY TO THE CONVERSION OF ITS OVERDRAFT INTO

EMERGENCY LOAN OR ADVANCE.”

Section 13. Section 102 of the same Act is hereby amended to read as follows:

“SEC. 102. Interbank Settlement, - The Bangko Sentral shall establish facilities for interbank
clearing under such rules and regulations as the Monetary Board may prescribe: Provided, That the
Bangko Sentral may charge administrative and other fees for the maintenance of such facilities.

The deposit reserves maintained by the banks in the Bangko Sentral in accordance with the
provisions of Section 94 of this Act shall serve as basis for the clearing of checks and the settlement of
interbank balances, subject to such rules and regulations as the Monetary Board may issue with
respect to such operations: Provided, That any bank which incurs an overdrawing in its deposit
account with Bangko Sentral shall fully cover said overdraft, including interest thereon at a rate
equivalent to one-tenth of one percent (1/10 of 1%) per day or the prevailing ninety-one-day treasury
bill rate plus three percentage points, whichever is higher, not later than the next clearing day:
Provided, HOWEVER, [further], That settlement of clearing balances shall not be effected for any
account which IS [continues to be] overdrawn [for five (5) consecutive banking days] until such time
as the overdrawing is fully covered or otherwise converted into an emergency loan or advance
pursuant to the provisions of Section 84 of this Act, EXCEPT AS MAY BE DECIDED
OTHERWISE BY THE MONETARY BOARD WHENEVER WARRANTED BY THE
CIRCUMSTANCES AND IF THE BANK WHICH HAS INCURRED SUCH OVERDRAWING
IS SOLVENT: Provided, fully, That the appropriate clearing office shall be officially notified of
banks with overdrawn balances. Banks with existing overdrafts with the Bangko Sentral as of the
effectivity of this Act, with such period as may be prescribed by the Monetary Board, either convert

overdraft into an emergency loan or advance with a plan payment, or settle overdrafts, and that, upon


failure to so comply herewith, the Bangko Sentral shall take such action against the bank as may be

warranted under this Act.”

Section 14. Section 116 of the same Act is hereby amended to read as follows:

SEC. 116. Remuneration for Service. - The Bangko Sentral may charge equitable rates,
commissions or fees for services which it renders to the Government, its political subdivisions and
instrumentalities[.] AS WELL AS TO FINANCIAL INSTITUTIONS: PROVIDED, THAT IN
THE CASE OF BANKS AND QUASI-BANKS, SUCH CHARGES FOR SERVICES SHALL
BE IN ADDITION TO THE SUPERVISION FEES AUTHORIZED UNDER SECTION 28 OF
THIS ACT, PROVIDED, FURTHER, THAT BANGKO SENTRAL MAY OUTSOURCE ANY
SUCH SERVICES WHEN THE COST AND APPROPRIATE CONTROLS JUSTIFY IT.”

Section 15. Section 125 of the same Act is 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 shail be exempt [for a
period of five (5) years] from the approval of this Act from all national, provincial, municipal and city
taxes, fees, charges and assessments NOW IN FORCE OR HEREAFTER ESTABLISHED.

The exemptions authorized in the preceding paragraph of this section shall apply to ail
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 exemptions 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 other taxes if the
payment of such taxes has been assumed by the Bangko Sentral.”

Section 16. Section 126 of the same Act is hereby amended to read as follows:

SEC. 126. Exemption 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 SUPPLIES needed IN THE BANGKO SENTRAL’S
OPERATIONS SUCH AS 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.”

Section 17. 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: PROVIDED, THAT THIS PROHIBITION SHALL NOT APPLY (A) IN CASES
WHERE SUCH OWNERSHIP AND MANAGEMENT IS EXPRESSLY AUTHORIZED BY
LAW; (B) TO CLUB MEMBERSHIP SHARES WHICH THE BANGKO SENTRAL MAY
ACQUIRE FOR ITS OWN PURPOSES; AND (C) TO PROPRIETARY SHARES THE
PURCHASE OF WHICH IS REQUIRED AS A CONDITION OF AVAILMENT OF CERTAIN
UTILITIES, SUCH AS TELEPHONE SERVICES.

The Bangko Sentral shall not engage in development banking or financing shall not be affected

by the prohibition of this section.”

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Section 18. Subparagraph (b) of Section 132 of the same Act is hereby amended to read as
follows:

“(0) The Bangko Sentral shall remit [seventy-five percent (75%)] NINETY PERCENT
(90%) of its net profits to a special deposits account (sinking fund) until such time as the net liabilities
of the Central Bank shall have been liquidated through generally accepted finance mechanisms such
as, but not limited to, set-off, condonation, collections, reappraisal, revaluation and bond issuance by
the National Government as dividends.”

Section 19, Section 134 of the same Act is hereby amended to read as follows:

SEC. 134, Separation Benefits. — Pursuant to Section 15 of this Act, the Monetary Board is
authorized to provide separation incentives, and all those who shall retire or be separated from the
service on account of reorganization funder the preceding section] shall be entitled to such incentives,
which shall be in addition to all gratuities and benefits to which they may be entitled under existing

laws.”

Section 20. Effectivity. — This Act shall take effect after fifteen (15) days following its
publication either in the Official Gazette or in a newspaper of general circulation in the Philippines,

Approved,