REPUBLIC OF THE PHILIPPINES
HOUSE OF REPRESENTATIVES
Quezon City
Fifteenth Congress

First Regular Session

HOUSE BILLNO.. GL *

Introduced by Representative Luis R. Villafuerte

AN ACT
PROVIDING FOR A COMPREHENSIVE REVISION OF THE CHARTER OF THE
BANGKO SENTRAL NG PILIPINAS (BSP) BY AMENDING REPUBLIC ACT
NUMBERED SEVENTY-SIX HUNDRED AND FIFTY-THREE
ENTITLED “THE NEW CENTRAL BANK ACT”

EXPLANATORY NOTE

Republic Act No. 7653 otherwise known as the New Central Bank Act took effect
on July 3, 1993. (Earlier in 1948, Republic Act No. 265 commonly known as the Old
Central Bank Act was promulgated. This was later amended four (4) times starting in
1972 and the latest amendment was in 1981.)

By July 3, 2010, seventeen (17) years would have lapsed since the New Central
Bank Act took effect. Application and implementation of the provisions of the New
Central Bank Act for the past seventeen (17) years have shown that there is an urgent
need to revisit, reexamine, review, clarify, and amend some provisions to keep the
provisions attuned to the changing times and to render more effective and efficient the
supervision of banks and non-bank financial institutions by the Bangko Sentral.

Based on experiences encountered in the administration and supervision of the
operations of banks, non-bank financial intermediaries and financial services that have
emerged, it has become imperative that there are concepts that have to be redefined
and their applications clarified. There are gaps and loopholes in the present BSP
Charter that need to be plugged as there are problems that have cropped up that were
not anticipated in the enactment of the BSP Charter seventeen (17) years ago that now
need to be addressed through statutory amendments.


‘Among many others that have been incorporated in this Bill as proposed
revisions of the BSP Charter, the salient features of this amendatory legislation are
explained hereunder.

A Technical Working Group was organized by the Committee on Banks and
Financial Intermediaries in the 14" Congress and the stakeholders were given the
opportunity to submit their proposals, and their comments on the proposals from
Members of the House of Representatives. The Technical Working Group headed by
Congressman Luis R. Villafuerte conducted a series of hearings that lasted several
months, after which a Committee Report was submitted with a matrix of comparison
between the provisions of the present BSP Charter and the proposed amendments
provided in this bill. The specific language of each and every proposed amendment was
incorporated in a revised bill which when submitted to the Committee on Banks and
Financial Intermediaries obtained approval of said Committee. Forty-seven (47)
Congressmen representing the majority of the members of the Committee signed their
approval and concurrence to the recommendations of the Technical Working Group.
Among those who participated in the hearings are representatives of the Bangko Sentral
ng Pilipinas (BSP), Department of Finance (DOF), Philippine Deposit Insurance
Corporation (PDIC), Securities and Exchange Commission (SEC), Bankers Association
of the Philippines (BAP), Rural Bankers Association of the Philippines (RBAP), Chamber
of Thrift Banks (CTB), and Investment Houses Association of the Philippines (IHAP).

The proposed amendments proposed under this Bill which shall constitute as the
core provisions for a comprehensive reform of the BSP Charter covered by RA 7653,
include among others, the following:

1. A formula and mechanism for the full payment by the National Government of
its unpaid subscription to the Bangko Sentral is established under this bill.

It will be recalled that the capital of the Bangko Sentral ng Pilipinas (BSP) was
fixed by law to Fifty Billion Pesos (P50,000,000,000.00) which was fully subscribed by
the National Government. It was originally stipulated that the National Government shall
pay initially upon the effectivity of the New Central Bank Act the sum of Ten (10) Billion
Pesos (P.10,000,000,000.00) and the balance to be paid for within two (2) years from the
effectivity of said Act in such manner and form as the Government through the Secretary
of Finance and the Secretary of Budget and Management may thereafter determine.

However, seventeen (17) years have lapsed since the effectivity of the New
Central Bank Act but the National Government has not paid the P40 Billion balance of its
subscription to the capital of the Bangko Sentral.

In order to remedy this problem, it is provided under this Bill as a proposed
amendment that the balance of P40 Billion Pesos unpaid subscription of the National


Government shall be paid for in cash available to the Government or through the
issuance of readily marketable government securities of equivalent market value to settle
the balance of the unpaid subscription of the Government to the Bangko Sentral:
Provided, that the cash or government securities issued pursuant hereto are authorized
and shall be deemed automatically appropriated for the purpose of enabling the
government to comply with its obligation to pay for its unpaid subscription to the Bangko
Sentral.

2. The supervisory powers of the BSP was clarified to include not only
supervision over the operation of banks, finance companies and non-bank financial
institutions performing quasi-banking functions but also supervisory power of BSP over
credit card companies, e-money issuers, remittance agents and institutions performing
similar functions which are regulated by the Bangko Sentral under this Act or under
special laws.

3. The existing provision under the New Central Bank prescribing that the
appointment of the Governor of the Bangko Sentral shall be subject to confirmation by
the Commission on Appointments has been deleted under this Bill because of Supreme
Court decisions that only Presidential appointees expressly mentioned in Section 16 of
Article VII of the Constitution require confirmation by the Commission on Appointments
and the Governor of the BSP is not one of those specifically mentioned in the
Constitution.

4. On disqualifications. - It is provided as a proposed amendment under this
bill that no Member of the Monetary Board, including the Governor and any Deputy
Governor of the Bangko Sentral shall be elected as director, or employed as officer or
employee, or hired as consultant, adviser, lawyer or in other contractual capacity of any
bank, quasi-bank, finance company, non-bank financial intermediary, or in similar
capacities in other institutions that are supervised/regulated by the Bangko Sentral within
three (3) years after the expiration of their respective terms of office or after any of such
officials retires or resigns from their respective positions in the Bangko Sentral except
when any of such officials is appointed or designated as an official representative of the
Philippine Government in a multilateral or international financial institution.

This proposed amendment enlarges the present disqualification provision which
merely provided that no member of the Monetary Board shall be employed in any
banking or financial institution within two (2) years after the expiration of his/her term.
The prohibited two (2) year period under the present law has been increased to three (3)
years after the expiration of the term of office or after the official retires or resigns from
his position in the Bangko Sentral. Also, the officials subject to disqualification under the
proposed amendment shall not be limited to the term “employment” but has been
Clarified to include election as director, officer, employee, consultant, lawyer, agent or
stockholder of any bank, quasi-bank or any other institution which is subject to


supervision or examination by the Bangko Sentral, in which case such member shall
resign from, and divest himself of any and all interests in such institution before
assumption of office as member of the Monetary Board.

5. On Meetings of the Monetary Board. - It is proposed that the meeting of the
Monetary Board, as required by circumstances, may be conducted through
teleconferencing or video conferencing subject to the prescribed procedure outlined in
the proposed amendment.

6. On the issuance of rules and regulations. - Under the present law, there is
no distinction between issuances of the Monetary Board and the Governor that affect
only the internal operations and administrative functions of the Bangko Sentral and those
that affect third parties and imposes a penalty to such third parties.

It is provided by way of amendment under the proposed bill that any issuance
that affects third parties or imposes penalties or sanctions against the institutions
supervised/regulated by the Bangko Sentral or their directors or officers shall, before its
issuance be subject to public hearings of the parties and institutions to be affected.

7. On the preparation of agenda and distribution of supporting documents.
~ It is provided under this bill that the supporting memorandum for any item included in
the agenda for the meetings of the Monetary Board shall be distributed to the members
of the Monetary Board at least three (3) working days before the scheduled meeting in
order to enable the members of the Board to study, review, and evaluate each and every
item included in the agenda; Provided, however, that in emergency cases, a prior one (1)
working day before a meeting shall apply in the distribution of said supporting documents
to agenda items.

8. On alternate Representatives to the Monetary Board. - While in the
absence of the Governor, a Deputy Governor maybe designated by the Govemor as his
alternate and while members of the cabinet, serving as ex-officio members of the
Monetary Board, in their absence, may send an alternate/representative, such alternates
shall have the right of voice but not the right of vote - the reason being that they are not
the duly appointed members of the Monetary Board that by law exercise the powers and
functions of Monetary Board Members. However, the attendance of such alternates
shall be considered in the determination of quorum.

9. On Deputy Governors. - The proposed bill increases the number of Deputy
Governors from the existing three (3) to five (5). The respective assignments of the two
(2) additional Deputy Governors are enumerated in the proposed bill.

10. On Reports of Examination (ROE). - It is proposed that the authority of the
Supervising and examining department head, personally or by deputy to examine the


books and records of banks shall be expanded to include also quasi-banking or non-
bank financial institutions once every 12 months and at other times as the Monetary
Board by an affirmative vote of five (5) members.

41.0n the Appointment of Conservator. - Under the existing law, the
appointment of a conservator is discretionary on the part of BSP while under the
proposed bill the appointment of conservator under prescribed conditions is mandatory
subject fo compliance with the procedure provided for under the proposed bill

12.On Proceedings in Receivership and Liquidation. - The authority of the
Monetary Board to place a bank or quasi-bank under receivership under Section 30 of
the New Central Bank Act has been enlarged to include non-bank financial institutions.

13.On Prompt Corrective Action (PCA). - The proposed bill is limiting the
existing grounds for the imposition of prompt corrective action to only one ground namely
capital deficiency (below the minimum capital requirements prescribed under existing
laws and implementing regulations), since there are monetary tools other than prompt
corrective action that the BSP can avail of to remedy or correct other supervisory and/or
governance concerns,

14. On Bridge Banking. - The concept of bridge banking is introduced under the
proposed bill.

15. On Administrative Penalties. - Under the proposed bill, penalties that may
be imposed by Bangko Sentral have been classified according to categories and types of
banks. And the reckoning of penalties shall be based on banking days rather than
calendar days. The said penalties have been expanded to apply also to finance
companies and non-bank financial institutions performing quasi-banking functions

16.On Exemption from Attachment. - This is a new provision under the
proposed bill not found in the New Central Bank Act (RA 7653) which provides that:

The provisions of any law to the contrary notwithstanding, collaterals on loans
and advances granted by the Bangko Sentral 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 the secured loans and advances granted by the
Bangko Sentral to insolvent persons or institutions or a closed institution have already
been fully paid in which case the exemptions under this Section shall no longer apply.

17.On Credit Facilities for Islamic Banks. - Under the proposed bill, the
Bangko Sentral may provide for the extension of rediscounting or other similar facilities
to Islamic Banks. This is a new provision.


48. On Right of Redemption of Foreclosed Real Property. - A new provision
is proposed as an amendment, as follows:

‘The mortgagor shall have the right to redeem the property within one year from
the date of foreclosure sale of the real estate, in case the mortgagor is a natural person,
and within ninety days but not later than the date of registration of the certificate of
foreclosure sale, in case the mortgagor is a juridical person. Redemption shall be
effected by paying the principal, interests, charges, commissions and all claims of
whatever nature of the Bangko Sentral outstanding and due as of the date of foreclosure
sale, including all costs and other expenses incurred by reason of the foreclosure sale
and custody of the property.

The Bangko Sentral, as purchaser in the foreclosure sale and without need of
posting a bond, may take possession of the foreclosed property during the redemption
period. The Bangko Sentral shall be entitled to the fruits of the property, the same to be
applied against the redemption price.

19. On Tax Exemptions. - A revised provision on tax exemptions has been
provided, to wit:

“The provisions of any general or special law to the contrary notwithstanding,
financial transactions of the Bangko Sentral arising from its open market operations shall
be exempt from all national, and local taxes, fees, charges and assessments.”

20. On Exemption from Customs Duties. - The exemption from customs
duties has been limited to importation of all supplies needed by the Bangko Sentral for
bank note production, minting of coins, metal refining and other security printing
operations and transport of currency.

21. Other proposed amendments to the BSP Charter incorporated under
this bill are shown in detail on the matrix of comparison between the provisions of the
present BSP Charter and the proposed amendments of specific sections thereof.

Approval of this Bill is hereby earnestly sought.
yh
LUIS R.\VILLAFUERTE

Representing the 3” District
of Camarines Sur


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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS
FIRST REGULAR SESSION
GL

HOUSE BILL No.

INTRODUCED BY REPRESENTATIVE LUIS R. VILLAFUERTE

AN ACT
PROVIDING FOR A COMPREHENSIVE REVISION OF THE CHARTER OF THE
BANGKO SENTRAL NG PILIPINAS (BSP) BY AMENDING REPUBLIC ACT
NUMBERED SEVENTY-SIX HUNDRED AND FIFTY-THREE
ENTITLED “THE NEW CENTRAL BANK ACT”

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

SECTION 1. Section 2 of Republic Act No. 7653 is hereby amended to read as
follows:

“SEC. 2. Creation of the Bangko Sentral. — There is hereby established an
independent central monetary authority, which shall be a body corporate known as
the Bangko Sentral ng Pilipinas, hereafter referred to as the Bangko Sentral. The
capital of the Bangko Sentral shall be Fifty billion pesos (P50,000,000,000), to be fully
subscribed by the Government of the Republic, hereafter referred to as the
Government, Ten billion pesos (P10,000,000,000) of which shall be fully paid for by the
Government upon the ereciMy, of this Act lene she palace 10.00 eae. seratrae

ee ea THE BALANCE SHALL BE PAID FOR IN CASH
AVAILABLE TO THE GOVERNMENT OR THROUGH THE ISSUANCE OF READILY
MARKETABLE GOVERNMENT SECURITIES OF EQUIVALENT MARKET VALUE TO THE
BALANCE OF THE UNPAID SUBSCRIPTION OF THE GOVERNMENT TO THE BANGKO
SENTRAL: PROVIDED, THAT THE CASH OR GOVERNMENT SECURITIES ISSUED PURSUANT
HERETO ARE HEREBY AUTHORIZED AND SHALL BE DEEMED AUTOMATICALLY
APPROPRIATED FOR THE PURPOSE OF ENABLING THE GOVERNMENT TO COMPLY WITH
ITS OBLIGATION TO PAY FOR ITS UNPAID SUBSCRIPTION TO THE BANGKO SENTRAL.”


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SEC. 2. 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 laws over the operations of finance
companies and non-bank financial institutions performing quasi-banking functions,
hereafter referred to as quasi-banks, INCLUDING CREDIT CARD COMPANIES, E-
MONEY ISSUERS, REMITTANCE AGENTS and institutions performing similar functions
REGULATED BY THE BANGKO SENTRAL UNDER THIS ACT OR UNDER SPECIAL LAWS.

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."

SEC, 3. Section 6 of Republic Act No. 7653 is hereby amended to read as
follows:

“SEC. 6. Composition of the Monetary Board. — The powers and functions of
the Bangko Sentral shall be exercised by the Ban@kd Sentral Monetary Board,
hereafter referred to as the Monetary Board, composed of seven (7) members
appointed by the President of the Philippines for a term of six (6) years.

The seven (7) members are:

{a) the Governor of the Bangko Sentral who shall be the Chairman of the
Monetary Board. [the—Gover {theBangke Sentai shall_be—read—of a
depart | GARG his_Gogeinteent son oe.
Goramission—on—Appointments.] Whenever the Governor is unable to attend a
meeting of the Board, he shall designate a Deputy Governor to act as his alternate
AND THE ATTENDANCE OF THE LATTER AS AN ALTERNATE TO THE GOVERNOR SHALL BE
COUNTED FOR DETERMINING THE QUORUM BUT SAID ALTERNATE WHILE ENTITLED TO BE
HEARD SHALL HAVE NO RIGHT TO VOTE: Provided, HOWEVER, That in [such-event, |
THE ABSENCE OF THE GOVERNOR AT THE MEETING OF THE BOARD, the Monetary
Board shall designate one of its members as acting Chairman;

+ to—cenfirmation—py—ih

{b) a member of the Cabinet to be designated by the President of the
Philippines. Whenever the designated Cabinet Member is unable to attend a
meeting of the Board, he shall designate an Undersecretary in his Department to
attend as his alternate WHOSE ATTENDANCE AT THE MEETING OF THE BOARD SHALL


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BE COUNTED FOR DETERMINING A QUORUM BUT WHILE HE HAS THE RIGHT TO BE
HEARD, HE HAS NO RIGHT TO VOTE: and

{c) five (5) members who shall come from the private sector, all of whom
shall serve full-time: Provided, however, That of the members first appointed under
the provisions of this subsection, three (3) shall have a term of six (6) years, and the
other two (2), three (3) years. No member of the Monetary Board may be
reappointed more than once.”

SEC. 4. Section 9 of Republic Act No. 7653 is hereby amended {o read as
follows:

“SEC. 9. Disqualifications. — In addition to the disqualfications imposed by
Republic Act No. 6713, a member of the Monetary Board is disqualified from being a
director, officer, employee, consultant, lawyer, agent or stockholder of any bank,
quasi-bank or any other institution which is subject to supervision or examination by
the Bangko Sentral, in which case such member shall resign from, and divest himself
of any and alll interests in such institution before assumption of office as member of
the Monetary Board.

The members of the Monetary Board coming fort the private sector shall not
hold any other public office or public employment during their tenure.

No person shall be a member of the Monetary Board if he has been
connected directly with any [mulileteral] banking or financial institution or has a
substantial interest in any private bank in the Philippines, within one (1) year prior to
his appoiniment {likewise per-etthe- Monetary Board shalbe employed

Yy SUCH InSilohca tine sto Herne expiration of his jerm except when
he-serves—as—an_cfficial_representativeof the Philippine _Gevernment_to—such
institution]. NO MEMBER OF THE MONETARY BOARD, INCLUDING THE GOVERNOR AND
ANY DEPUTY GOVERNOR OF THE BANGKO SENTRAL SHALL BE ELECTED AS DIRECTOR,
OR EMPLOYED AS OFFICER OR EMPLOYEE, OR HIRED AS CONSULTANT, ADVISER,
LAWYER OR IN OTHER CONTRACTUAL CAPACITY OF ANY BANK, QUASI-BANK,
FINANCE COMPANY, NON-BANK FINANCIAL INTERMEDIARY, OR IN SIMILAR
CAPACITIES IN OTHER INSTITUTIONS THAT ARE SUPERVISED/REGULATED BY THE
BANGKO SENTRAL WITHIN THREE (3) YEARS AFTER THE EXPIRATION OF THEIR
RESPECTIVE TERMS OF OFFICE OR AFTER ANY OF SUCH OFFICIALS RETIRES OR RESIGNS
FROM THEIR RESPECTIVE POSITIONS IN THE BANGKO SENTRAL EXCEPT WHEN ANY OF
SUCH OFFICIALS IS APPOINTED OR DESIGNATED AS AN OFFICIAL REPRESENTATIVE OF



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THE PHILIPPINE GOVERNMENT IN A MULTILATERAL OR INTERNATIONAL FINANCIAL
INSTITUTION.”

SEC. 5. Section 11 of Republic Act No. 7653 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 Govemor 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
alll 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, AS REQUIRED BY CIRCUMSTANCES,
MAY BE CONDUCTED THROUGH TELECONFERENCING OR VIDEO CONFERENCING
SUBJECT TO PRIOR NOTICE TO ALL THE MEMBERS OF THE BOARD OF THE CALL FOR
SUCH METHOD OF CONFERENCING AND SUBJECT FURTHER TO THE REQUIREMENT THAT
THE CHAIRMAN OF THE BOARD OR THE ALTERNATE PRESIDING OFFICER I$ PHYSICALL Y
PRESENT, TOGETHER WITH THREE (3) OTHER MEMBERS OF THE BOARD, AT THE
DESIGNATED VENUE OF THE MEETING.

THE GOVERNOR SHALL VOTE AT MEETINGS OF THE MONETARY BOARD SUBJECT
TO THE LIMITATIONS OF SECTION 14 (WITHDRAWAL DUE TO PERSONAL OR PECUNIARY
INTEREST) HEREIN. EACH AND EVERY VOTE OF THE GOVERNOR AND THE MONETARY
BOARD MEMBERS BE IT IN THE AFFIRMATIVE, NEGATIVE OR ABSTENTION SHOULD BE
REFLECTED IN THE MINUTES OF THE MEETING.

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 OR
OTHER RECORDING MEDIA."

SEC. 6. Section 12 of Republic Act No. 7653 is hereby amended to read as
follows:

“SEC. 12. Attendance of the Deputy Governors. — The Deputy Governors
[pray] SHALL UPON THE ORDER OF THE GOVERNOR OR THE MONETARY BOARD.
attend the meetings of the Monetary Board with the right to be heard. OTHER
OFFICIALS OF THE BANGKO SENTRAL MAY BE DIRECTED TO ATTEND THE MONETARY


BOARD MEETINGS UPON INVITATION OF THE MONETARY BOARD ON A PER MEETING
BASIS IF THEIR EXPERTISE IS NEEDED IN A PARTICULAR AGENDA MATTER.”

SEC. 7. Section 15 of Republic Act No. 7653 is hereby amended fo read as
follows:

“SEC. 15, Exercise of Authority. — In the exercise of its authority, the Monetary
Board shall:

(a) issue rules and regulations it considers necessary for the effective
discharge of the responsbililies and exercise of the powers vested upon the
Monetary Board and the Bangko Sentral. The rules and regulations issued shall be
reported to the President and the Congress within fifteen (15) days from the date of
their issuance;

ANY ISSUANCE THAT AFFECTS THIRD PARTIES OR IMPOSES A PENALTY OR
SANCTION AGAINST THE INSTITUTIONS SUPERVISED/REGULATED BY THE BANGKO
SENTRAL OR THEIR DIRECTORS OR OFFICERS SHALL, BEFORE ITS ISSUANCE BE SUBJECT
TO PUBLIC HEARINGS OF THE PARTIES AND INSTITUTIONS TO BE AFFECTED.

NO RULES AND REGULATIONS SHALL BECOME EFFECTIVE UNLESS PUBLISHED IN
TWO (2) NEWSPAPERS OF NATIONAL CIRCULATION:

(0) direct the management, operations, and administration of the Bangko
Sentral, reorganize its personnel AND IN CONNECTION THEREWITH PROVIDE
SEPARATION BENEFITS AS DEEMED APPROPRIATE, and issue such rules and regulations
as it may deem necessary or convenient for this purpose. [FreJegal_units_of the
Bangke Sentral shall be under-the-exclusive- supenision and -control_of the Monetary
Board]

THE MONETARY BOARD SHALL ESTABLISH A LEGAL UNIT UNDER ITS EXCLUSIVE
SUPERVISION AND CONTROL THAT SHALL ASSIST THE MONETARY BOARD IN ITS POLICY
FORMULATION, IN THE PROMULGATION OF IMPLEMENTING. RULES AND REGULATIONS
AND IN REVIEWING THE LEGAL ASPECT OF MEASURES INCLUDED IN THE AGENDA TO
BE DISCUSSED AT THE MEETINGS OF THE MONETARY BOARD.

(c) establish a human resource management system which shall govern the

selection, hiring, appointment, transfer, promotion, or dismissal of all personnel. Such
system shall 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


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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[: [Previdedhoweverthat
compensation-and-wage siucture-_of employ Rese-positi
grade19_and_pelew shall-pe-t dance-withthe—rates-preseribed_under
Republic Act No. 6758}.

On the recommendation of the Governor, appoint, fix the remunerations 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 reassign 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 Governor under such guidelines as it may determine.

{d) adopt an annual budget for and authorize such expenditures by the
Bangko Sentral as are in the interest of the effective administration and operations of
the Bangko Sentral in accordance with applicable laws and regulations; and

(e) indemnify its members and other officials of Bangko Sentral, including
personnel [ef +he-deperments] performing supervision and examination functions,
CREDIT AND MONETARY POLICY OPERATIONS against all costs and expenses
reasonably incurred by such persons in connection with any civil or criminal 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, negligence or 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
Bangko Sentral is advised by external counsel that the person fo be indemnified [did
net—commit-any] HAD NOT ACTED WITH BAD FAITH, MALICE, negligence or
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 REFERRED TO IN SUBSECTION (E) 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, NEGLIGENCE OR MISCONDUCT.”

SEC. 8. Section 16 of Republic Act No. 7653 is hereby amended to read as
follows:

“SEC. 16. Responsibility. -Members of the Monetary Board, officials,
examiners, and employees 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
ee eer ee ee solutions-of- the Menetary-Beard,] 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 G8Vemor; 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.”

SEC. 9. Section 17 of Republic Act No. 7653 is hereby amended to read as
follows:

“SEC. 17. Powers and Duties of the Governor. — The Governor shall be the
chief executive officer of the Bangko Sentral. His powers and duties shall be to:

(a) prepare, AT HIS INITIATIVE, OR UPON THE RECOMMENDATION OF A
MEMBER OF THE MONETARY BOARD, the agenda for the meetings of the Monetary
Board and to submit for the consideration of the Board the policies and measures
[which-he—believes] DEEMED to be necessary to camy out the purposes and
provisions of this Act. THE SUPPORTING MEMORANDUM FOR ANY ITEM INCLUDED IN
THE AGENDA FOR THE MEETINGS OF THE MONETARY BOARD SHALL BE DISTRIBUTED TO
THE MEMBERS AT LEAST THREE (3) WORKING DAYS BEFORE THE SCHEDULED MEETING
IN ORDER TO ENABLE THE MEMBERS OF THE BOARD TO STUDY, REVIEW, AND EVALUATE


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EACH AND EVERY ITEM INCLUDED IN THE AGENDA; PROVIDED, HOWEVER, THAT IN
EMERGENCY CASES, PRIOR ONE (1) WORKING DAY BEFORE A MEETING SHALL APPLY;

(b) execute and administer the policies and measures approved by the
Monetary Board AFTER THEIR EFFECTIVITY;

(c) direct and supervise the operations and intemal administration of the
Bangko Sentral. The Governor may delegate IN WRITING certain of his administrative
responsibilities OR SPECIFIC TASKS to other officers or may assign specific tasks or
responsibilities to any full-time member of the Monetary Board without additional
remuneration or allowance whenever he may deem fit SUBJECT TO SUCH
GUIDELINES AND REPORTING REQUIREMENTS AS HE SHALL REQUIRE or subject to such
rules and regulations as the Monetary Board may prescribe FOR THE DELEGATED
AUTHORITY; PROVIDED, HOWEVER, THAT A POWER OR AUTHORITY DIRECTLY VESTED BY
LAW TO BE EXERCISED BY THE MONETARY BOARD UNDER THIS ACT AND/OR UNDER
ANY OTHER SPECIAL LAW SHALL NOT BE DELEGATED TO BE EXERCISED BY THE
GOVERNOR OR ANY OTHER EXECUTIVE OFFICER OF THE BANGKO SENTRAL, BUT THE
POWER OR AUTHORITY EXERCISED BY THE MONETARY BOARD PURSUANT TO LAW
THROUGH THE RULES AND REGULATIONS PROMULGATED BY IT, OR THE DECISIONS,
RULINGS OR ORDERS ISSUED BY THE MONETARY BOARD SHALL BE IMPLEMENTED OR
EXECUTED BY THE GOVERNOR AND/OR OTHER PERTINENT EXECUTIVE OFFICERS OF THE
BANGKO SENTRAL.

(4) appoint and fix the remunerations and other emoluments of personnel
below the rank of a department head in accordance with the position and
compensation plans approved by the Monetary Board, as well as to impose
disciplinary measures upon personnel of the Bangko Sentral, subject to the provisions
of Section 15(c) of this Act: Provided, That removal of personnel shall be with the
approval of the Monetary Board; AND

(f) exercise such other powers as may be vested in him by the Monetary
Board.


SEC. 10. Section 19 of Republic Act No. 7653 is hereby amended to read as
follows:

“SEC. 19. Authority of the Governor In Emergencies. — In case of emergencies
where time is insufficient to call a FORMAL meeting of the Monetary Board, the
Governor of the Bangko Sentral, with the concurrence of [se-42}] THREE (3) other
members of the Monetary Board, may decide [ery] AN URGENT matter or take [any]
action [withia-+he-authority-of he Board] RELEVANT TO THE EMERGENCY INVOLVED,
WITHOUT FORMALLY CONVENING A MEETING OF THE MONETARY BOARD .

The Governor shall submit a report to the President and Congress within
seventy-two (72) hours after the action has been taken.

‘At the soonest possible time, the Governor shall call a meeting of the
Monetary Board to submit his action for ratification.”

SEC. 11. Section 21. of Republic Act No. 7653 is hereby amended to read as
follows:

“SEC. 21. Deputy Governors. — The Governor of the Bangko Sentral, with the
approval of the Monetary Board, shall appoint not more than [three-{3}} FIVE (5)
Deputy Governors who shall perform duties AND RESPONSIBILITIES CONSISTENT WITH
THEIR RESPECTIVE SECTORS ASSIGNED TO THEM BY THE MONETARY BOARD, TO WIT: [as
may-be-assignedtothem-by the Govermer-andthe Beard]

(A) DEPUTY GOVERNOR FOR THE MONETARY AND CURRENCY MANAGEMENT
SECTOR;

(8) DEPUTY GOVERNOR FOR SUPERVISION AND EXAMINATION OF
COMMERCIAL AND UNIVERSAL BANKS (INCLUDING THEIR SUBSIDIARIES AND
AFFILIATES ENGAGED IN FINANCIAL ALLIED UNDERTAKINGS) AS WELL AS
GOVERNMENT-OWNED AND CONTROLLED BANKS:

(C) DEPUTY GOVERNOR FOR SUPERVISION AND EXAMINATION OF STAND-
ALONE RURAL BANKS AND THRIFT BANKS (WHICH ARE NOT AFFILIATED TO UNIVERSAL
OR COMMERCIAL BANKS); COOPERATIVE BANKS; AND MICROFINANCE BANKS;

(D) DEPUTY GOVERNOR FOR SUPERVISION AND EXAMINATION OF NON-BANK
FINANCIAL INTERMEDIARIES WHICH BY SPECIAL LAWS HAVE BEEN PLACED UNDER THE
SUPERVISION OF THE BANGKO SENTRAL WHICH INCLUDE INVESTMENT HOUSES;
SAVINGS AND LOAN ASSOCIATIONS; PAWNSHOPS; CREDIT CARD COMPANIES;
REMITTANCE AGENTS; AND E-MONEY ISSSUERS;



(E) DEPUTY GOVERNOR FOR HUMAN RESOURCES. MANAGEMENT WHO SHALL
BE IN CHARGE OF THE ADMINISTRATIVE REQUIREMENTS OF RECRUITMENT,
APPOINTMENT, PERFORMANCE EVALUATION, AND THE IMPLEMENTATION OF
COMPENSATION AND BENEFITS, PAYROLL SERVICING, LEAVES AND RETIREMENTS AND
EMPLOYEE RELATIONS, INCLUDING THE ASSESSMENT OF THE TRAINING NEEDS OF ALL
PERSONNEL OF THE BANGKO SENTRAL, AND THE DESIGN AND ADMINISTRATION OF
TRAINING PROGRAMS FOR THE RANK AND FILE EMPLOYEES, THE EXECUTIVE
DEVELOPMENT AND VALUES ENHANCEMENT COURSES; THE ADMINISTRATION OF THE
MEDICAL AND DENTAL CLINIC, AND WHO SHALL SUPERVISE THE CONSTRUCTION,
REPAIR AND RENOVATION OF ALL BUILDINGS, OFFICES AND FACILITIES OF THE
BANGKO SENTRAL, THE GENERAL UP-KEEP AND MAINTENANCE OF THE MECHANICAL,
ELECTRICAL, ELECTRONIC AND AUXILIARY/ACCESSORY EQUIPMENT SYSTEMS OF THE
BANGKO SENTRAL AND THE PROTECTION AND SAFEGUARDS OF THE MAIN OFFICE
AND OTHER BRANCHES OF THE BANGKO SENTRAL.

THE SCOPE OF THE DUTIES AND RESPONSIBILITIES OF EACH AND EVERY DEPUTY
GOVERNOR’ AND THE OFFICES UNDER EACH OF THEM AND THE DELINEATION OF
OTHER FUNCTIONS AND ASSIGNMENTS SHALL BE "DEFINED OR REFINED AND
PRESCRIBED BY THE MONETARY BOARD UPON RECOMMENDATION OF THE
GOVERNOR.

THE MANAGEMENT OF THE PROVIDENT FUND, THE PROCUREMENT SERVICES,
INCLUDING THE SERVICING OF THE BIDS AND AWARDS COMMITTEE AND THE SECURITY
PLANT COMPLEX SHALL BE DEFINED AND PRESCRIBED BY THE MONETARY BOARD. THE
MONITORING, REPORTING, AND THE INFORMATION TECHNOLOGY APPLICATIONS
REQUIRED FOR EACH OF THE OFFICES AND SERVICES REFERRED TO IN THIS
PARAGRAPH SHALL ALSO BE SET FORTH BY THE MONETARY BOARD, UPON
RECOMMENDATION OF THE GOVERNOR.



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SEC. 12. Section 23 of Republic Act No. 7653 is hereby amended to read as
follows:

“SEC. 23. Authority to Obtain Data and Information. — The Bangko Sentral
shall have the authority to [request] REQUIRE from government offices and
insirumentalities, or government-owned or controlled corporations, any data which
it may require for the proper discharge of its functions and responsibilities. The
Bangko Sentral through the Governor or in his absence, a [duly—authorzed
representative] DEPUTY GOVERNOR DULY AUTHORIZED IN WRITING shall have thé
power to issue a subpoena [fer the-preduction-of the-books-and-tecords forthe
aferesaid-purpose] SPECIFYING THE DATA REQUIRED AND THE SPECIFIC PURPOSE FOR
WHICH SUCH DATA SHALL BE ISSUED. Those who refuse the subpoena without
justifiable cause, or who refuse to supply the [bank] BANGKO SENTRAL with data
[requested-er] 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 éf'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. 13. Section 24 of Republic Act No. 7653 is hereby amended to read as
follows:

“Sec. 24. Training of Technical Personnel. — The Bangko Sentral shall promote
and sponsor the training of technical personnel in the fields of [money-and-banking]
BANKING, QUASI-BANKING, NON-BANK FINANCIAL INTERMEDIARIES, MICROFINANCE,
DERIVATIVES, ARBITRAGE, FOREIGN EXCHANGE, SAVINGS FORMATION, PAYMENT
AND SETTLEMENT SYSTEMS, INFORMATION TECHNOLOGY, MONEY AND CAPITAL
MARKETS DEVELOPMENT TRENDS, INNOVATIONS AND PRACTICES AND SUCH OTHER
TRAINING PROGRAMS AS THE MONETARY BOARD SHALL APPROVE. Toward this end,
the Bangko Sentral is hereby authorized to defray the costs of study, at home or
abroad, of, qualified employees of the Bangko Sentral, of promising university
graduates or of any other qualified persons who shall be determined by proper


competitive examinations. The Monetary Board shall prescribe rules and regulations
to govern the training program of the Bangko Sentral.”

SEC. 14, Section 25 of Republic Act No. 7653 is hereby amended to read as
follows:

“SEC. 25. Supervision and Examination. — SUBJECT TO THE PROVISIONS OF
SECTION 28 OF THIS ACT, the Bangko Sentral THROUGH THE SUPERVISING AND
EXAMINING DEPARTMENT DESIGNATED UNDER THIS ACT shall have supervision over,
and conduct [periedic] REGULAR or special examinations of [banking-dastitutions]
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.

THE BANGKO SENTRAL SHALL ALSO HAVE THE POWER TO REGULATE AND
EXAMINE TRANSACTIONS BETWEEN A SUPERVISED INSTITUTION AND ITS PARENT
COMPANY.

For purposes of THE FIRST PARAGRAPH OF this Section, a subsidiary means a
corporation more than fifty percent (50%) of the voting stock of which is owned
DIRECTLY OR INIDIRECTLY by a bank or quasi-bor”and an offiiate means a
corporation the voting stock of which, to the extent of fifly 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.

IN CONNECTION WITH THE SECOND PARAGRAPH OF THIS SECTION, A PARENT
COMPANY MEANS A CORPORATION WHICH OWNS DIRECTLY OR INDIRECTLY VOTING
STOCK OF A SUPERVISED INSTITUTION OF THE BANGKO SENTRAL SUFFICIENT TO
CONTROL ITS MANAGEMENT AND OPERATIONS.

‘AS USED IN THIS SECTION, CONTROL EXISTS WHEN THE PARENT OWNS DIRECTLY
OR INDIRECTLY MORE THAN ONE-HALF OF THE STOCK OF A SUPERVISED INSTITUTION.
CONTROL ALSO EXISTS EVEN WHEN THE PARENT OWNS ONE-HALF OR LESS OF THE
VOTING STOCK OF THE SUPERVISED INSTITUTION WHEN THERE IS POWER OVER MORE
THAN ONE-HALF OF THE VOTING RIGHTS BY PROXY OR BY VIRTUE OF AN AGREEMENT
WITH OTHER INVESTORS WHICH THEREBY ENABLES THE PARENT COMPANY TO CAST
THE MAJORITY OF VOTES AT MEETINGS OF THE STOCKHOLDERS OF THE SUPERVISED
INSTITUTION,"OR TO ELECT THE MAJORITY OF MEMBERS OF THE BOARD OF DIRECTORS
OF THE SUPERVISED INSTITUTION OR TO APPOINT KEY EXECUTIVE OFFICERS WHO SHALL

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DIRECTLY OR INDIRECTLY CONTROL THE MANAGEMENT AND OPERATIONS OF THE
SUPERVISED INSTITUTION.

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 provision of existing laws protecting 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.

Bangko-Seniral_from-examining-any-institution subject-to-supeniision-or examination
by-the Bangke Sentral unless there is convincing proof that the-action-of- he Bangko
Hralis-plainly-arbitrary_and_made-in-oad faith and_the-petitioneror plaintiff fk

with the-clerkorjudge-of the court in which the-action is pending-a- bend ted
in-favor-of the Bangko Sentral, in-an-amount-to-be-fixed-by_the-courtthe-provisions
f-Rule-58-of the_New-Rules_of Gourt_insofar_as_they_ore—applicable-and_net
inconsistent_with—the—provisions—of this Section-shall_gevern—the—issuance—and
dissolution. of the restraining oreler-orinjuncti emplated.in-this Section,"

SEC. 15. Section 26 of Republic Act No. 7653 is hereby amended fo read as
follows:

"SEC. 26. Bank Deposits fand—avestments]. — Any director, officer or
stockholder who, together with his related interest, contracts a loan or any form of

financial accommodation from: (1) his bank; or (2) from a bank (a) which is a
subsidiary of a bank holding company of which both his bank and the lending bank
are subsidiaries or (Ib) in which a conirolling proportion of the shares is owned by the
same interest that owns a controlling proportion of the shares of his bank, in excess
of five percent (5%) of the capital and surplus of the bank, or in the maximum
‘amount permitted by law, whichever is lower, shall be required by the lending bank
to waive the secrecy of his deposits of whatever nature in all banks in the Philippines.
Any information obtained from an examination of his deposits shall be held strictly
Confidential and may be used by the examiners only in connection with their


supervisory and examination responsibility or by the Bangko Sentral in an
appropriate legal action it has initiated involving the deposit account.

RELATED INTEREST, AS USED IN THIS SECTION, SHALL REFER TO STOCKHOLDINGS
OF FAMILY GROUPS OR CORPORATE HOLDINGS OF THE SAME FAMILY GROUPS OR
SAME GROUPS OF PERSONS AS DEFINED IN SECTION 12 AND SECTION 13 OF REPUBLIC
ACT NO. 8791 OTHERWISE KNOWN AS THE GENERAL BANKING LAW OF 2000 WHO
CONTROL OR OWN AT LEAST FORTY PERCENT (40%) OF THE VOTING STOCK OF A
BANK, QUASI BANK, AND OTHER FINANCIAL INSTITUTION WHICH IS SUBJECT TO
SUPERVISION BY THE BANGKO SENTRAL; RELATED INTEREST MAY ALSO REFER TO A
HOLDING COMPANY THAT CONTROLS OR OWNS AT LEAST FORTY PERCENT (40%) OF
THE VOTING STOCK AS A GROUP, OF BANKS, QUASI BANKS AND OTHER FINANCIAL
INSTITUTIONS WHICH ARE SUBJECT TO SUPERVISION BY THE BANGKO SENTRAL."

SEC. 16. Section 27 of Republic Act No. 7653 is hereby amended to read as
follows:

“SEC. 27. Prohibitions. — In addition to the prohibitions found in Republic Act
Nos. 3019 and 6713, personnel of the Bangko Sentral are hereby prohibited from:

(a) being an officer, director, lawyer or agent, employee, consultant or
stockholder, directly or indirectly, of any institution subject to supervision or
examination by the Bangko Sentral, except non-stock savings and loan associations
and provident funds organized exclusively for employees of the Bangko Sentral, and
except as otherwise provided in this Act;

(b) directly or indirectly requesting or receiving any VALUABLE gift, [present]
IN KIND or pecuniary or material benefit for himself/HERSELF or [another] FOR A
RELATIVE WITHIN THE FIRST DEGREE OF CONSANGUINITY OR AFFINITY from any
institution subject to supervision or examination by the Bangko Sentral;

(c] revealing in any manner, except under orders of the court, the [Congress]
HOUSE OF REPRESENTATIVES OR THE SENATE OR ANY OF THE APPROPRIATE
COMMITTEES THEREIN or any government office or agency authorized by law, or
under such conditions as may be prescribed by the Monetary Board, information
relating to the condition or business of any institution UNDER ITS SUPERVISION, This
Prohibition shail not be held to apply to the giving of information to the Monetary
Board or the Governor of the Bangko Sentral, or to any person authorized by either
of them, in writing, to receive such information; and


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{(d) borrowing from any institution subject to supervision or examination by the
Bangko Sentral shall be prohibited unless said borrowings are adequately secured,
fully disclosed to the Monetary Board, and shall be subject fo such further rules and
regulations as the Monetary Board may prescribe: Provided, however, That
personnel of the supervising and examining departments are prohibited from
borrowing from a bank under their supervision or examination.”

SEC. 17. Section 28 of Republic Act No. 7653 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 AND RECORDS
of every banking, OR QUASI-BANKING OR:NON-BANK FINANCIAL institution once in
every twelve (12) months, and at such other times as the Monetary Board by an
affirmative vote of five (5) members, may deem expedient and to [make-c-report
‘@n-the-same] SUBMIT AN EXECUTIVE SUMMARY OF THE FINDINGS OF EXAMINATION
WITH THE REPORT OF EXAMINATION ATTACHED THERETO FOR READY REFERENCE to
the Monetary Board: Provided, That there shall be an interval of at least twelve (12)
months belween annual examinations. “

THE SUPERVISED INSTITUTIONS UNDER THIS SECTION SHALL BE GIVEN THE
OPPORTUNITY TO REBUT/REFUTE IN WRITING ANY OR ALL OF THE FINDINGS OF THE
EXAMINERS OF THE SUPERVSING AND EXAMINATION DEPARTMENT OF THE BANGKO
SENTRAL IN AN EXIT CONFERENCE BEFORE THE REPORT OF EXAMINATION IS FINALIZED.
THE WRITTEN EXPLANATIONS, IF ANY, OF THE SUPERVISED INSTITUTION UNDER
EXAMINATION SHALL BE PART OF THE REPORT OF EXAMINATION WITH COMMENTS IF
DEEMED WARRANTED BY THE EXAMINERS INVOLVED.

The bank, OR QUASI-BANK OR NON-BANK FINANCIAL INSTITUTION concemed
shall afford to the head of the appropriate supervising and examining departments
and to his authorized deputies full opportunity to examine its books, cash and
available assets and general condition at any time during banking hours when
Tequested fo do so by the Bangko Sentral: Provided, however, That none of the
reports and other papers relative to such examinations shall 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 connection
with the business of such inslitutions.


Banking, [and] quast-banking, AND NON-BANK FINANCIAL insfitutions which
are subject to examination by the Bangko Sentral shall pay to the Bangko Seniral,
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-QUARTER [month-balance
sheets] STATEMENT OF CONDITION. after deducting cash on hand and amounts due
from banks, QUASI-BANKS, AND OTHER FINANCIAL INSTITUTIONS, including the
Bangko Sentral and banks abroad."

SEC. 18. Section 29 of Republic Act No. 7653 is hereby amended to read as
follows:

SEC. 29. Appointment of Conservator. — Whenever, on the basis of a report
OF EXAMINATION submitted by the appropriate supervising or examining
department OF THE BANGKO SENTRAL, the Monetary Board, IN CONSULTATION WITH
THE PHILIPPINE DEPOSIT INSURANCE CORPORATION (PDIC], CONFIRMS {finds} that a
bank or a quasi-bankis in a state of continuing inability or unwillingness to maintain a
condition of liquidity deemed adequate to protect the interest of depositors and
creditors, OR CONTINUES TO SUFFER CHRONIC RESERVETOR CAPITAL DEFICIENCIES
WHICH, IF NOT CORRECTED, WILL EVENTUALLY RESULT IN INSOLVENCY, the Monetary
Board, IN ORDER TO AVERT THE THREATENED INSOLVENCY OF THE BANK, [pray] SHALL
appoint a conservator WHO SHALL INTRODUCE AND ADOPT MANAGEMENT
REFORMS AND CORRECTIVE MEASURES THAT WILL ENABLE THE BANK TO RESTORE AND.
MAINTAIN ITS VIABILITY. THE CONSERVATOR [with] SHALL HAVE such powers as the
Monetary Board shall deem necessary to ENABLE HIM TO take charge of the assets,
liabilities, and the management thereof, reorganize the management, collect all
monies and debts due said institution, PLACE OR INVEST ITS FUNDS IN READILY
MARKETABLE SECURITIES AND INVESTMENTS, SELL, IF NECESSARY, REAL PROPERTIES
AND OTHER FIXED ASSETS TO MEET ITS OBLIGATIONS, and exercise all powers
[necessary] to restore AND MAINTAIN its viability. The conservator shall report and be
responsible to the Monetary Board, WITH A COPY OF SUCH REPORT FURNISHED THE
PDIC, and shall have the power to overrule or revoke the actions of the previous
management and board of directors of the bank or quasi-bank, EXCEPT THAT SUCH
POWER CANNOT EXTEND TO THE POST FACTO REPUDIATION OF PERFECTED

CONTRACTS THAT INFRINGE AGAINST THE NON-IMPAIRMENT CLAUSE OF THE
CONSTITUTION.


The conservator should be competent and knowledgeable in bank
operations and management. The conservatorship shall not exceed one (1) year.
WHICH MAY BE EXTENDED FOR A PERIOD OF NOT MORE THAN SIX (6) MONTHS, AS
MAY BE APPROVED BY THE MONETARY BOARD. The conservator shall receive
remuneration to be fixed by the Monetary Board, PAYABLE IN MONTHLY PAYMENTS
TO BE FIXED BY THE MONETARY BOARD: [in-an-amount net to-exceed-two-thitds {2/3}

{-the-selary_of the president-of-the institution jn-one 1} year payable in-twelve-12}
equal menthly-payments'] Provided, That, if at any time within the one-year period,
the conservatorship is terminated on the ground that the institution can operate on

its own, the conservator shall receive the balance of the remuneration which he
would have received up to the end of the year; but if the conservatorship is
terminated on other grounds, the conservator shall not be entitled to such remaining
balance. The Monetary Board [may-appoini-c-consewaterconnected_with the
Bangke-Sentrat] SHALL AUTHORIZE THE CONSERVATOR TO APPOINT A CORE GROUP.
OF PROFESSIONALS TO ASSIST HIM IN THE PERFORMANCE OF HIS POWERS AND DUTIES
‘AS CONSERVATOR, in which case, [he] THEY shall [ret] be entitled to receive [any]
remuneration or emoluments THAT THE MONETARY BOARD SHALL DETERMINE [from
#he-Bangke-Seniral] during the PERIOD OF conservatorship. The expenses attendant
to the conservatorship shall be bome by the bank or quasi-bank concemed.

UPON THE REQUEST OF THE CONSERVATOR, THE MONETARY BOARD MAY
AUTHORIZE THE GRANT OF EMERGENCY LOANS OR ADVANCES TO THE INSTITUTION TO
MEET IN A TIMELY MANNER ITS MATURING OBLIGATIONS OR UNUSUAL DEPOSIT
WITHDRAWALS WHILE THE CONSERVATOR IS IN THE PROCESS OF COLLECTING MONIES
AND DEBTS DUE THE INSTITUTION UNDER CONSERVATORSHIP, OR LIQUEFYING ITS
ASSETS TO RECOVER FROM ITS ILLIQUID CONDITION AND THEREBY RESTORE THE BANK
TO NORMALCY. THE BANGKO SENTRAL SHALL REQUIRE COLLATERALS FOR SUCH
EMERGENCY LOANS OR ADVANCES, PROVIDED THAT IF THE COLLATERALS ARE
AUTHORIZED TO BE SOLD OR DISPOSED OF, THE PROCEEDS SHALL BE APPLIED TO PAY
OR PREPAY THE LOANS OR ADVANCES, OR PORTIONS THEREOF, AS THE BANGKO
SENTRAL MAY STIPULATE.

DURING THE PERIOD OF CONSERVATORSHIP, THE PDIC SHALL HAVE THE
AUTHORITY TO EXAMINE THE BANK UNDER CONSERVATORSHIP, INQUIRE INTO OR
EXAMINE THE DEPOSIT ACCOUNTS THEREIN, AND/OR CONDUCT A DUE DILIGENCE


AUDIT OF THE BANK IN PREPARATION FOR THE POSSIBLE ESTABLISHMENT,
ORGANIZATION AND OPERATION OF A BRIDGE BANK.

The Monetary Board shall terminate the conservatorship when it is satisfied
that the institution can continue to operate on its own and the conservatorship is no
longer necessary. The conservatorship shall likewise be terminated should the
Monetary Board, on the basis of the report of the conservator or of its own findings,
determine that the continuance in business of the institution, DESPITE THE REMEDIAL
MEASURES THAT HAVE BEEN ADOPTED, CONTINUE TO EXPERIENCE ILLIQUIDITY AND
OTHER RELATED FINANCIAL STRESSES, SUCH THAT THE GROUNDS FOR RECEIVERSHIP
AND LIQUIDATION OF THE INSTITUTION BECOME WARRANTED, [would—invelve
probebleloss-to-its- depositors-or-crediters)] in which case the provisions of Section 30
shall apply."

SEC. 19. Section 30 of Republic Act No. 7653 is hereby amended to read as
follows:

"SEC. 30. Proceedings in Receivership and Liquidation. - Whenever, [upon]
ON THE BASIS OF A report of [the head of the supervising or examining department]
EXAMINATION, the Monetary Board finds OR CONFIRMS" hat a bank or quasi-bank:

(a) HAS NOTIFIED THE BANGKO SENTRAL OR PUBLICLY ANNOUNCED A
UNILATERAL CLOSURE, OR HAS BEEN DORMANT FOR AT LEAST SIXTY (60) DAYS OR IN
ANY MANNER HAS SUSPENDED THE PAYMENT OF ITS DEPOSIT/DEPOSIT LIABILITIES, OR 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 OR FINANCIAL community; OR

(b) has insufficient realizable assets TO MEET ITS LIABILITIES, as determined by
the Bangko Sentral[—to—mee!—itstiabiliies] IN ACCORDANCE WITH BANKING
REGULATIONS; or

(c) cannot continue in business without involving SUBSTANTIAL probable losses
to its depositors or creditors RELATIVE TO THE SIZE OF THE INSTITUTION CONCERNED; or

{d) has wilfully 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 IN CASE IT IS A BANK designate the Philippine Deposit insurance
Corporation as receiver of the banking institution. THE MONETARY BOARD SHALL

18


NOTIFY IN WRITING THE BOARD OF DIRECTORS OF ITS FINDINGS AND DIRECT THE PDIC
TO PROCEED WITH THE LIQUIDATION OF THE CLOSED BANKING INSTITUTION PURSUANT
TO PARAGRAPH 6 OF THIS SECTION.

For a quasi-bank, any person of recognized competence in banking or
finance SHALL [may] be designated as receiver.

THE AUTHORITY OF THE MONETARY BOARD TO PLACE A BANK OR QUASI-BANK
UNDER RECEIVERSHIP AS PROVIDED ABOVE SHALL ALSO BE EXERCISED OVER OTHER
NON-BANK FINANCIAL INSTITUTIONS WHICH UNDER THIS ACT OR SPECIAL LAWS ARE
SUBJECT TO: BANGKO SENTRAL SUPERVISION, BASED ON THE SAME APPLICABLE
GROUNDS. FOR THIS PURPOSE, ANY PERSON OF RECOGNIZED COMPETENCE IN
BANKING, CREDIT AND FINANCE MAY BE DESIGNATED AS A RECEIVER.

The receiver shall immediately gather, take charge of, MANAGE AND
CONTROL all the assets, WHICH, IN CASE OF A BANK, SHALL INCLUDE ITS LICENSE,
and liabilities of the institution, administer the same for the benefit of its creditors,
and, exercise the general powers of a receiver under EXISTING LAWS AND the
Revised Rules of Court. HOWEVER, THE DISPOSITION OF THE LICENSE BY THE RECEIVER
SHALL BE SUBJECT TO THE APPROVAL OF THE MONETARY'BOARD. THE RECEIVER SHALL
ADDITIONALLY HAVE THE AUTHORITY TO: (1) [but shall net-with the exeeption-of] PAY
administrative expenditures, [pay it_any_act-that-willinvelve-the-transf

clisposition—ot_any-_asset of the insiilution: Provided, Thal_Ihe-recelver-may] (2)
deposit or place the funds of the institution in non-speculative investments, OR (3)
ADOPT, IF DEEMED APPROPRIATE BY THE RECEIVER, BRIDGE BANKING AS A
RESOLUTION METHOD, AS GOVERNED BY SECTION 30-8 OF THIS ACT. The receiver OF
QUASI-BANKS AND NON-BANK FINANCIAL INSTITUTIONS shall determine as soon as
possible, but not later than ninety (90) days from take-over, whether [the] SUCH
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 CREDITORS AND THE GENERAL PUBLIC OR TO MERGE
OR CONSOLIDATE THE CLOSED INSTITUTION WITH ANOTHER QUALIFIED INSTITUTION,
THE RECEIVER OF QUASI-BANKS AND OTHER NON-BANK FINANCIAL INSTITUTIONS 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 OF QUASI-BANK AND OTHER NON-BANK FINANCIAL INSTITUTIONS,
determines that the institution cannot be rehabilitated or permitted to resume
business in accordance with the next preceding paragraph OF THIS SECTION, 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 institutions. 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 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 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 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. 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

20


ZSLe.ernaaron

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31
32
33
34

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. [Furthernerethe—designatien of -c_consenvator_is_net

SEC. 20. A new section entitled section 30-A of the same Act shall be inserted
between Section 30 and Section 30-8 which shall read as follows:

“SEC. 30-A. PROMPT CORRECTIVE ACTION (PCA). - WHENEVER ON THE BASIS
OF THE REPORT OF EXAMINATION (ROE), THE MONETARY BOARD FINDS THAT A BANK
OR NON-BANK FINANCIAL INSTITUTION PERFORMING QUASI-BANK FUNCTIONS IS
CAPITAL DEFICIENT AND FAILS TO COMPLY WITH MINIMUM CAPITAL REQUIREMENTS.
PRESCRIBED UNDER EXISTING LAWS AND IMPLEMENTING REGULATIONS, THE
MONETARY BOARD SHALL TAKE PROMPT CORRECTIVE ACTION DIRECTING THE ENTITIES.
AFOREMENTIONED TO INFUSE ADDITIONAL CAPITAL UP TO AN AMOUNT TO RESTORE
THEIR CAPITAL TO THE MINIMUM REQUIRED AMOUNT. THE AFFECTED ENTITIES SHALL BE
GIVEN A PERIOD OF NOT LESS THAN (10) MONTHS FROM THE DATE OF RECEIPT OF THE
DIRECTIVE OF THE MONETARY BOARD TO COMPLY WITH THE CAPITAL RESTORATION
PROGRAM. IF IT IS SHOWN THAT THE AFFECTED ENTITY HAS TAKEN EARNEST EFFORTS TO.
COMPLY WITH THE MANDATE OF THE MONETARY BOARD, THE AFFECTED ENTITY SHALL
BE GIVEN BY THE MONETARY BOARD AN EXTENSION OF ANOTHER FOUR (4) MONTHS
TO COMPLY WITH THE MONETARY BOARD DIRECTIVE.

IN CASE THE REPORT OF EXAMINATION (ROE) OF THE AFFECTED ENTITY ALSO.
SHOWS THAT IT ALSO FAILED TO REMEDIATE CORPORATE MANAGEMENT
INADEQUACIES AND/OR NEEDS TO INSTITUTE ADMINISTRATIVE REFORMS THAT ARE
AUTHORIZED, TO BE PRESCRIBED UNDER THIS ACT OR SPECIAL LAWS, THE MONETARY
BOARD, IN ADDITION TO AND APART FROM INSTITUTING PROMPT CORRECTIVE
ACTION THAT DEALS SPECIFICALLY WITH THE CAPITAL DEFICIENCY PROBLEM, MAY
IMPOSE OTHER SUPERVISORY INTERVENTIONS THAT ARE AUTHROIZED UNDER THIS ACT
OR SPECIAL LAWS.

IN THE EVENT THAT THE AFFECTED BANK IS A RURAL BANK WHICH IS UNABLE TO
COMPLY WITH THE CAPITAL RESTORATION PROGRAM INSTITUTED BY THE MONETARY
BOARD WITHIN THE PRESCRIBED PERIOD AND IN ORDER TO PREVENT THE RURAL BANK
AFFECTED FROM BEING CLOSED, THEN IN THAT EVENT, ANOTHER RURAL BANK SHALL

2


BE GIVEN THE RIGHT OF FIRST REFUSAL TO INVEST OR CONSOLIDATE OR MERGE WITH
THE SAID BANK OR TO ACQUIRE THE ASSETS AND ASSUME THE LIABILITIES OF SAID
RURAL BANK IN ORDER TO RESTORE THE NORMAL OPERATIONS OF SAID RURAL BANK,
TO THE EXCLUSION OF OTHER CATEGORIES OF BANKS UNLESS NO OTHER RURAL BANK
OF GOOD STANDING EXPRESSES TO EXERCISE THE RIGHT OF FIRST REFUSAL PROVIDED
UNDER THIS SECTION. THE RURAL BANKERS ASSOCIATION OF THE PHILIPPINES SHALL BE
OFFICIALLY NOTIFIED BY THE MONETARY BOARD IN WRITING OF THE RIGHT OF FIRST
REFUSAL MADE AVAILABLE UNDER THIS SECTION IN ORDER THAT ALL RURAL BANKS OF
GOOD STANDING SHALL BE NOTIFIED OF THE EXISTENCE OF THE RIGHT OF FIRST
REFUSAL.

IN CASE THE AFFECTED BANK IS A‘GOVERNMENT BANK OR A GOVERNMENT
QUASI-BANK WITH ORIGINAL STATUTORY CHARTERS, INFUSION OF ADDITIONAL
CAPITAL BEYOND WHAT IS PRESCRIBED IN THEIR CHARTERS SHALL BE UNDERTAKEN
THROUGH AMENDATORY LEGISLATION. HOWEVER, ISSUES OF CAPITAL NOTES
SUBORDINATED TO OTHER CREDITS BUT SUPERIOR TO THE EQUITY OF STOCKHOLDERS
IN THE ORDER OF PREFERENCE OF CLAIMS AGAINST THE AFFECTED GOVERNMENT
FINANCIAL INSTITUTION IS HEREBY AUTHORIZED TO™BE ISSUED, WITH NATIONAL
GOVERNMENT GUARANTEE AND SHALL BE QUALIFIED AS EQUIVALENT TO THE
REQUIRED CAPITAL INFUSION.”

SEC. 21. A new section entitled section 30-8 of the same Act shall be inserted
between Sections 30-A and 31 which shall read as follows:

“SEC. 30-B. BRIDGE BANKING. - (A) THE PHILIPPINE DEPOSIT INSURANCE
CORPORATION (PDIC) MAY FORM, ESTABLISH, ORGANIZE, AND OPERATE AND/OR
CONTRACT TO OPERATE SUBSIDIARIES OR CORPORATIONS WHOSE PRIMARY PURPOSE
IS TO OPERATE AS A BRIDGE BANK AND/OR MANAGE ACQUIRED ASSETS OF THE PDIC

(B) A BRIDGE BANK REFERS TO A TEMPORARY BANK LICENSED BY THE BANGKO
SENTRAL, ESTABLISHED AND OPERATED TO ACQUIRE ASSETS AND ASSUME LIABILITIES
OF A FAILED BANK. THE BRIDGE BANK SHALL HAVE AUTHORITY TO PURCHASE ASSETS,
ASSUME DEPOSITS AND OTHER LIABILITIES WHICH THE PDIC MAY DETERMINE TO BE
APPROPRIATE; AND PERFORM SUCH OTHER BANKING FUNCTIONS AS THE MONETARY
BOARD MAY AUTHORIZE, CONSISTENT WITH THE OBJECTIVES OF THIS SECTION.

(C) A BRIDGE BANK RESOLUTION MEASURE MAY BE ADOPTED ONLY IF THE
BOARD OF DIRECTORS DETERMINES THAT IT IS A COST-EFFECTIVE AND VIABLE
RESOLUTION MEASURE AND THE AMOUNT NECESSARY TO IMPLEMENT SUCH MEASURE

22


1

2
3
4
5
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ve
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ie}

a
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30
31
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IS LESS THAN THE ESTIMATED INSURED DEPOSITS OF THE FAILED BANK; AND THE
PRESERVATION OF CRITICAL BANKING FUNCTIONS IS IN THE BEST INTEREST OF THE
DEPOSITORS AND THE PUBLIC.
(D) FOR THE EFFECTIVE IMPLEMENTATION OF A BRIDGE BANK RESOLUTION
MEASURE, THE PDIC MAY:
ls

2

SELL, ASSIGN, TRANSFER, OR CONVEY ITS SHAREHOLDINGS IN ITS

SUBSIDIARY TO THE FAILED BANK;

TRANSFER SUCH ASSETS AND DEPOSIT LIABILITIES OF A FAILED BANK TO

THE BRIDGE BANK, AS THE PDIC MAY DEEM APPROPRIATE. ALL

TRANSFERS UNDER THIS SUBSECTION SHALL:

i, NOT BE SUBJECT TO ANY TAXES, SUCH AS CAPITAL GAINS TAX, AS
WELL AS INCOME TAX, VALUE ADDED TAX AND DOCUMENTARY
STAMP TAX, AND OTHER TAXES, AS MAY BE APPLICABLE;

fi. BE CONSIDERED IN CUSTODIA LEGIS IN THE HANDS OF THE BRIDGE

BANK. FROM THE TIME THE ASSETS ARE TRANSFERRED TO A BRIDGE

BANK, ITS ASSETS SHALL NOT BE SUBJECT TO ATTACHMENT,

EXECUTION, GARNISHMENT, LEVY, FORECLOSURE OR ANY OTHER

COURT PROCESSES. THEREFORE, A JUDGE, OFFICER OF THE COURT

OR ANY PERSON WHO SHALL ISSUE, ORDER, PROCESS OR CAUSE THE

ISSUANCE OR IMPLEMENTATION OF THE WRIT OF GARNISHMENT,

LEVY, ATTACHMENT OR EXECUTION SHALL BE LIABLE UNDER SECTION

22 HEREOF.

BE EFFECTIVE WITHOUT ANY CONSENT FROM THE STOCKHOLDERS,

CREDITORS, STAKEHOLDERS OF THE FAILED — BANK,

NOTWITHSTANDING ANY PROVISION OF LAW TO THE CONTRARY.

MAKE ADVANCES TO THE BRIDGE BANK OR CLOSED BANK, UPON SUCH

TERMS AND CONDITIONS AND IN SUCH FORM AND AMOUNTS AS THE

PDIC = MAY PRESCRIBE, SUFFICIENT FUNDS FOR THE BRIDGE BANK TO

OPERATE. THESE ADVANCES SHALL PARTAKE OF THE NATURE OF PUBLIC

FUNDS, AND AS SUCH, MUST BE CONSIDERED A PREFERRED CREDIT

SIMILAR TO TAXES DUE TO THE NATIONAL GOVERNMENT IN THE ORDER

OF PREFERENCE UNDER ARTICLE 2224 OF THE NEW CIVIL CODE:

ili.

_ CONDUCT DUE DILIGENCE ON AN INSURED BANK, AND EXAMINE AND.

AUDIT THE DEPOSIT ACCOUNTS AND/OR RECORDS, OF AN INSURED

23


BANK, SO AS TO ESTABLISH A DEPOSIT PROFILE OF THE BANK AS TO THE
NUMBER OF DEPOSIT ACCOUNTS AND TOTAL INSURED DEPOSITS:
PROVIDED, THAT THE INFORMATION ON INDIVIDUAL ACCOUNTS
OBTAINED THROUGH SUCH EXAMINATION OR AUDIT SHALL NOT BE
DISCLOSED OR RELEASED TO ANY OTHER PARTY EXCEPT TO THE BOARD
OF DIRECTORS OF THE PDIC OR UPON ORDER OF THE COURT; AND

5. APPOINT, INSTALL, DESIGNATE, AND/OR REMOVE THE DIRECTORS AND
OFFICERS OF A BRIDGE BANK AND FIX THEIR COMPENSATION.

(E) THE 90-DAY PERIOD PROVIDED UNDER SECTION 30 OF REPUBLIC ACT 7653,
AS AMENDED, WITHIN WHICH THE RECEIVER SHALL DETERMINE WHETHER THE
INSTITUTION MAY BE REHABILITATED SHALL NOT BE APPLICABLE.

(F) THE BRIDGE BANK SHALL TERMINATE AT THE END OF TWO (2) YEARS
FOLLOWING THE DATE IT WAS GRANTED A BANKING LICENSE, SUBJECT TO THE
PROVISIONS IN THE PARAGRAPHS (G) AND (H); PROVIDED, FURTHER, THAT THE PDIC
MAY EXTEND THE STATUS OF THE BRIDGE BANK IF DEEMED NECESSARY TO CONCLUDE
PENDING NEGOTIATIONS FOR THE SALE, MERGER OR ACQUISITION OF THE BRIDGE
BANK BY A BUYER OR ACQUIRER: PROVIDED, FINALLY, THAT THE MAXIMUM EXTENSION
SHALL BE ONE (1) YEAR.

(G) TERMINATION OF BRIDGE BANK. - THE STATUS OF ANY BRIDGE BANK AS
SUCH SHALL TERMINATE UPON THE EARLIEST OF—

1. THE MERGER OR CONSOLIDATION OF THE BRIDGE BANK WITH ANOTHER

BANK THAT IS NOT A BRIDGE BANK; OR

THE SALE OF THE BRIDGE BANK TO A QUALIFIED BUYER, AS MAY BE

DETERMINED BY THE PDIC; OR

. THE ASSUMPTION OF ALL OR SUBSTANTIALLY ALL OF THE (i) DEPOSITS AND
OTHER LIABILITIES AND/OR (ii) ASSETS OF THE BRIDGE BANK BY AN
INSURED BANK THAT IS NOT A BRIDGE BANK, OR OTHER ENTITY AS
PERMITTED UNDER APPLICABLE LAW. FOLLOWING THE ASSUMPTION OF
ALL OR SUBSTANTIALLY ALL OF THE LIABILITIES OF THE BRIDGE BANK AND
THE SALE OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE BRIDGE
BANK, THE BRIDGE BANK SHALL BE LIQUIDATED IN ACCORDANCE WITH
THE PROVISIONS OF LAW RELATING TO THE LIQUIDATION OF CLOSED
BANKS; AND

o

24


4. THE EXPIRATION OF THE PERIOD PROVIDED IN PARAGRAPH (F), OR THE
EARLIER DISSOLUTION OF THE BRIDGE BANK AS PROVIDED IN
PARAGRAPH (H).

{H) DISSOLUTION OF BRIDGE BANK NOTWITHSTANDING ANY OTHER
PROVISION OF LAW TO THE CONTRARY, IF THE BRIDGE BANK'S STATUS AS SUCH HAS
NOT PREVIOUSLY BEEN TERMINATED BY THE OCCURRENCE OF AN EVENT SPECIFIED IN
SUBPARAGRAPH (1). (2) OR (3), OF PARAGRAPH (G), THE BOARD OF DIRECTORS OF
PDIC, MAY DISSOLVE A BRIDGE BANK AT ANY TIME IT DEEMS NECESSARY. THE PDIC,
AS SUCH RECEIVER, SHALL WIND UP THE AFFAIRS OF THE BRIDGE BANK IN
CONFORMITY WITH THE PROVISIONS OF LAW RELATING TO THE LIQUIDATION OF
CLOSED BANKS. WITH RESPECT TO ANY SUCH BRIDGE BANK, THE PDIC, AS SUCH
RECEIVER, SHALL HAVE ALL THE RIGHTS, POWERS, AND PRIVILEGES, AND SHALL
PERFORM THE DUTIES RELATED TO THE EXERCISE OF SUCH RIGHTS, POWERS, OR
PRIVILEGES GRANTED BY LAW TO A RECEIVER OF ANY INSURED BANK.

{I) MATTERS RELATING TO THE EXERCISE BY THE PDIC OF THE FUNCTIONS UNDER
THIS SECTION SHALL BE SUBJECT TO VISITORIAL AUDIT ONLY.

(J) THE ACTIONS OF THE PDIC UNDER THIS SECNON SHALL BE FINAL AND
EXECUTORY, AND MAY NOT BE RESTRAINED OR SET ASIDE BY THE COURT, EXCEPT ON
PETITION FOR CERTIORARI WITH THE COURT OF APPEALS ON THE GROUND THAT THE
ACTION WAS TAKEN IN EXCESS OF JURISDICTION OR WITH SUCH GRAVE ABUSE OF
DISCRETION AS TO AMOUNT TO A LACK OR EXCESS OF JURISDICTION. THE PETITION
FOR CERTIORARI MAY ONLY BE FILED WITHIN TEN (10) DAYS FROM PUBLICATION OF
THE NOTICE ON THE ESTABLISHMENT OF A BRIDGE BANK.

(Kk) THE PDIC SHALL PROMULGATE THE IMPLEMENTING RULES AND
REGULATIONS TO IMPLEMENT THE PROVISIONS OF THIS SECTION.

SEC. 22. Section 33 of Republic Act No. 7653 is hereby amended to read as
follows:

“SEC. 33. Disposition of Banking Franchise. — The Bangko Sentral may, if
Public interest so requires, award to an institution, upon such terms and conditions as
the Monetary Board may approve, the banking franchise of a CLOSED bank [under
@vidatien] to operate in the area where said bank or its branches were previously
operating: Provided, That whatever proceeds may be realized from such award

shall be [subject to-the-oppropiiale exclusive disposition of the Monetary Board] FOR

THE BENEFIT OF THE CREDITORS OF THE CLOSED BANK."

25


SEC. 23. Section 36 of Republic Act No. 7653 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, [e#] quasi-bank, OR
OTHER FINANCIAL INSTITUTION WHICH UNDER THIS ACT OR SPECIAL LAWS IS SUBJECT
TO BANGKO SENTRAL SUPERVISION or whenever any 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
(P50,000) nor more than [Iwo-hundred-theusand_peses{2200,000}] TWO MILLION
PESOS (P2,000,000.00) or by imprisonment of not less than two (2) years nor more
than [ten (10)] SIX (6) years, or both, at the SOUND discretion of the court.

Whenever [e-bank-or—quasibank] AN ENTITY UNDER BANGKO SENTRAL
SUPERVISION persists in carrying on its business in an [unlawful-er] unsafe or
UNSOUND manner AS DETERMINED UNDER THE PROVISIONS OF SECTION 56 OF
REPUBLIC NO. 8791 AND IT REFUSES OR FAILS TO CEASE AND DESIST FROM SUCH
MISCONDUCT AND TO INSTITUTE CORRECTIVE MEASURES AFTER NOTICE HAS BEEN
GIVEN BY THE BANGKO SENTRAL, the MONETARY 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. 24. Section 37 of Republic Act No. 7653 is hereby amended to read as
follows:

“SEC. 37. Administrative Sanctions [On-BanksAnd-Quasi-Banks). — Without
Prejudice to the criminal sanctions against the culpable persons provided in Sections
34, 35, and 36 of this Act, the Monetary Board may, at its discretion, impose
ADMINISTRATIVE SANCTIONS upon any bank [or-quesi-bank, their-directers,-and/er
officers for-anywillful elation of its- charter or by4aws, wilful delayin-the-submission

teperts_or_ publications thereet_as_required_by_law,-rules_and-regulatiens_any.
refusalto-permit examination into the affais of the insitution-any-willful making-of.

fal isleading_statement_ tothe Soard_or the_appropriate_supemising-and
ining-deparimest-or its examiners;-cny-willful failure orrefusal s phuwith or
lation-of,-any_banking lo der instructi gulation ssued_by_th

26


Menetary Board,crany-order- instruction orruling- bythe Governor] FINANCE COMPANY
AND NON-BANK FINANCIAL INSTITUTION PERFORMING QUASI-BANKING FUNCTIONS,

HEREINAFTER REFERRED TO AS QUASI-BANKING INSTITUTIONS PERFORMING SIMILAR

FUNCTIONS REGULATED BY THE BANGKO SENTRAL UNDER THIS ACT OR UNDER SPECIAL

LAWS THAT ARE UNDER THE SUPERVISION OF THE BANGKO SENTRAL FOR WILFUL

VIOLATION OR FAILURE TO COMPLY WITH THE PROVISIONS OF THIS ACT, OF REPUBLIC ACT

NO. 8791 AND OTHER SPECIAL LAWS; 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] WHEREVER OR

WHICHEVER applicable.

THE FOLLOWING ADMINISTRATIVE SANCTIONS SHALL BE IMPOSED TAKING INTO
CONSIDERATION THE ATTENDANT CIRCUMSTANCES SUCH AS THE NATURE AND
GRAVITY OF THE VIOLATION OR IRREGULARITY AND THE SIZE OF THE BANK, QUASI-
BANK OR NON-BANK FINANCIAL INSTITUTION INVOLVED.

(a) [fines] ADMINISTRATIVE PENALTIES in amounts as may be PRESCRIBED AND
determined by the Monetary Board to be appropriate, but in no case to exceed
(hid ing into- consideration
the attendant circumstances, such_as_the-nature-and-gravily-of the-violation-or
ieguickity andthe sizeof the bank -quasi-pank:] THE MAXIMUM PENALTIES
PRESCRIBED HEREIN FOR EACH VIOLATION, AS FOLLOWS:

» FOR UNIVERSAL AND COMMERCIAL BANKS — NOT EXCEEDING P10,000 PER

BANKING DAY;

FOR THRIFT BANKS ~ NOT EXCEEDING P5,000 PER BANKING DAY;

FOR RURAL BANKS/COOPERATIVE BANKS ~ NOT EXCEEDING P2,000 PER

BANKING DAY;

FOR FINANCE COMPANIES AND NON-BANK FINANCIAL INSTITUTIONS

PERFORMING QUASI-BANKING FUNCTIONS — NOT EXCEEDING P5,000 PER

BANKING DAY;

. FOR FINANCE COMPANIES AND FINANCIAL INSTITUTIONS WHICH ARE NOT
PERFORMING QUASI-BANKING FUNCTIONS ~ NOT EXCEEDING P3,000 PER
BANKING DAY:

6. FOR OTHER INSTITUTIONS THAT ARE SUPERVISED BY THE BANGKO SENTRAL —

NOT EXCEEDING P2,000 PER BANKING DAY.

WITHIN THE MAXIMUM PENALTY PRESCRIBED HEREIN, FOR VIOLATIONS OR

IRREGULARILITIES COMMITTED BY EVERY CATEGORY OF BANKS, QUASI-BANKS, AND

ee

Fa

a

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NON-BANKS FINANCIAL INSTITUTIONS AS HEREIN PROVIDED, THE MONETARY BOARD.
SHALL ACCORDING TO THE DEGREE OF SEVERITY OF VIOLATIONS OR IRREGULARITIES
SUBJECT TO PENALTIES, CLASSIFY VIOLATIONS OR IRREGULARITIES COMMITTED INTO
GRAVE, LESS GRAVE AND LIGHT OFFENSES SUCH THAT THE PENALTIES TO BE IMPOSED
SHALL CORRESPONDINGLY BE GRADUATED WITHIN THE PRESCRIBED MAXIMUM
PENALTIES.

IN COMPUTING THE AFOREMENTIONED PENALTIES, THE FOLLOWING ATTENDING
CIRCUMSTANCES SHALL BE TAKEN INTO CONSIDERATION: THE CAPITAL OF THE
INSTITUTION, THE NATURE OF THE VIOLATION: A ONE-TIME VIOLATION VIS-A-VIS A
CONTINUING VIOLATION/OFFENSE; FREQUENCY OF THE VIOLATION/OFFENSE; AND
THE GRAVITY OF THE OFFENSE (GRAVE, LESS GRAVE AND LIGHT VIOLATIONS). GRAVE
OFFENSES ARE THOSE THAT HAVE SIGNIFICANT/MATERIAL IMPACT ON THE SOLVENCY,
LIQUIDITY AND/OR NET PROFITABILITY OF A BANK, QUASI-BANK OR OTHER NON-BANK
FINANCIAL INSTITUTION.

THE SUPERVISION AND EXAMINATION SECTOR CONCERNED SHALL SUBMIT TO
THE MONETARY BOARD A MONTHLY REPORT OF ADMINISTRATIVE PENALTIES IMPOSED
ON INSTITUTIONS, IF ANY, INDICATING IN THE REPORT*THE PENALTIES IMPOSED ON
CERTAIN INSTITUTIONS; PENALTIES THAT HAVE BEEN COLLECTED: AND PENALTIES
UNDER CONSIDERATION;

(0) suspension of rediscounting privileges or access to Bangko Sentral credit
facilities;

(c) suspension of lending or foreign exchange operations or authority to
accept new deposits or make new investments; AND/OR

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

(le }#evocation-of quasi-bankingiicense_]

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 [e-bank-erquas-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
Gfter 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

28


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 proceeding, 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 opportunity to defend their action ina
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 inducted, all issues shall be
determined on the basis of records, after which the Monetary Board may either
reconsider or make final its order.

[fhe-Govereris hereby authorized-at his diseretion,-to impose-upon-banking

stitutions failure-+ ply-with the requicements-of-law,Monetary Board
wlations-and-policies,-and/er instructions issued by the Monetary Beard-or- by the

etnerfines_netin_ex {Ten thousand_peses_{P10,000}-a-dey_for-each

SEC. 25, Section 54 of Republic Act No. 7653 is hereby amended to read as
follows:

“SEC. 54. Printing of Notes and Minting of Coins. — The Monetary Board shall
prescribe the amounts of notes and coins to be printed and minted, respectively,
‘and the conditions to which the printing of notes and the minting of coins shall be
subject. The Monetary Board shall have the authority to contract institutions, mints or
firms for such operations.

THE HEAD OF THE SECURITY PRINTING OF NOTES AND MINTING OF COINS
SHALL SUBMIT TO THE MONETARY BOARD REGULAR REPORTS OF EACH AND EVERY

29


PRINTING JOB OF NOTES AND MINTING OF COINS WHETHER THE PRINTING OF NOTES
AND MINTING OF COINS IS DONE IN-HOUSE OR OUTSOURCED. A REPORT SHALL BE
SUBMITTED WITHIN THIRTY (30) DAYS FROM COMPLETION OF PRINTING OF NOTES AND
MINTING OF COINS IF IN-HOUSE AND WITHIN THIRTY (30) DAYS FROM THE DATE OF
DELIVERY TO THE BANGKO SENTRAL OF OUTSOURCED PRINTING/MINTING JOB.

THE REGULAR REPORTS ON THE PRINTING OF NOTES/MINTING OF COINS TO BE
SUBMITTED TO THE MONETARY BOARD SHALL CONTAIN THE FOLLOWING MINIMUM
INFORMATION PER PRODUCTION JOB:

(A) THE VOLUME OF NOTES/COINS AS ACTUALLY PRINTED/MINTED:

(B) THE NOTES AND COINS PRINTED/MINTED INDICATING THE SERIAL NUMBERS
AND YEAR MARK OF THE NOTES PRINTED AS WELL AS THE YEAR MARK OF THE COINS;

(C) THE NAMES AND ADDRESSES OF THE ENTITIES THAT PRINTED THE NOTES OR
MINTED THE COINS, IF OUTSOURCED; OTHERWISE INDICATE IF THE NOTES AND COINS
WERE PRINTED/MINTED IN-HOUSE;

(D) PAPERS, INK AND OTHER RAW MATERIALS ORDERED VS. PRODUCTION
OUTPUT;

(E) PRODUCTION CAPACITY PER DENOMINATION VS. VOLUME OF
PRODUCTION OUTPUT:

(F) DATES OF DELIVERY OF RAW MATERIALS FOR PARTICULAR DENOMINATION
AND DATES OF DELIVERY OF PRINTED NOTES OR MINTED COINS TO THE CASH
DEPARTMENT;

(G) ALLOWANCE FOR WASTAGE VS. ACTUAL WASTAGE PER PRODUCTION
ORDER. THE RECORD OF WASTAGE SHALL INCLUDE INFORMATION ON THE
SHREDDING OF WASTAGE; AND

(H) RUNNING BALANCE OF THE PARTICULAR DENOMINATION PRINTED/MINTED.

All expenses incurred in the printing of notes and the minting of coins shall be
for the account of the Bangko Sentral.”

SEC. 26. Section 61 of Republic Act No. 7653 is hereby amended to read as
follows:

“SEC. 61. Guiding Principle. — THE MONETARY BOARD SHALL CONSTANTLY
ASSESS PRICE DEVELOPMENTS AND OUTLOOK AND BASED ON ITS ANALYSIS AND
EVALUATION OF INFLATIONARY PRESSURES USE ITS POLICY INSTRUMENTS PRICE
STABILITY.

30


The Monetary Board shall control any SIGNIFICANT expansion or contraction
in monetary aggregates which is prejudicial to the attainment or maintenance of
price stability.”

SEC. 27. Section 81 of Republic Act No. 7653 is hereby amended to read as
follows:

"SEC. 81. Guiding Principles. — The rediscounts, discounts, loans and
advances which the Bangko Sentral is authorized to extend to banking institutions
AND OTHER SUPERVISED FINANCIAL INSTITUTIONS under the provisions of the present
article of this Act shall be used to influence the volume of credit consistent with the
MAINTENANCE OF FINANCIAL STABILITY AND THE objective of price stability.”

SEC. 28. Section 83 of Republic Act No. 7653 is hereby amended to read as
follows:

"SEC. 83. Loans for Liquidity Purposes. — The Bangko Sentral, BY A VOTE OF AT
LEAST FIVE (5) MEMBERS OF THE MONETARY BOARD, may extend loans and
advances to [banking] BANKS, QUASI-BANKS AND OTHER SYSTEMICALLY CRITICAL
BANGKO SENTRAL -SUPERVISED institutions for a period of not more than [seven-(7}}
FORTY-FIVE (45) BANKING days without any collateral"fér the purpose of providing
liquidity to the banking system in times of need, SUBJECT TO SUCH TERMS AND
CONDITIONS AS THE MONETARY BOARD MAY PRESCRIBE TO MINIMIZE POSSIBLE
LOSSES TO THE BANGKO SENTRAL.”

SEC. 29. Section 84 of Republic Act No. 7653 is hereby amended to read as
follows:

“SEC. 84, Emergency Loans and Advances. — In periods of national and/or
local emergency or of imminent financial panic which directly threaten monetary
and [banking] FINANCIAL stability, the Monetary Board may, by a vote of at least
five (5) of its members, authorize the Bangko Sentral to grant extraordinary loans or
advances to banking, QUASI-BANKING AND OTHER SYSTEMICALLY CRITICAL BANGKO
SENTRAL-SUPERVISED institutions TO BE secured by assets as defined hereunder:
Provided, That while such loans or advances are outstanding, the debtor institution
shall not, except upon prior authorization by the Monetary Board, expand the total
volume of its loans or investments.

The Monetary Board may, at its discretion, likewise authorize the Bangko
Sentral to grant emergency loans or advances to [bankiag] BANKS, QUASI-BANKS
AND OTHER SYSTEMICALLY CRITICAL BANGKO. SENTRAL-SUPERVISED institutions, even

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during normal periods, for the purpose of assisting a bank in a precarious financial
condition or under serious financial pressures brought by unforeseen events, or
events which, though foreseeable, could not be prevented by the bank concerned:
Provided, however, That the Monetary Board has ascertained that the bank is not
insolvent and has the assets defined hereunder to secure the advances: Provided,
further, That a concurrent vote of at least five (5) members of the Monetary Board is
obtained.

The amount of any emergency loan or advance shall not exceed the sum of
fifty percent (50%) of total [deposits-and-depesit substitutes) BORROWINGS of the
{eanking] institution and shall be disbursed in two (2) or more tranches. The amount
of the first tranche shall be limited to twenty-five percent (25%) of the BORROWINGS
[total_deposit-and-depesit substitutes] of the institution and shall be secured by (A)
government securities [tethe-extent ef their epplicableloanvalues—and]; (B)
ACCEPTABLE GUARANTEES BACKED UP BY THE NATIONAL GOVERNMENT OR ITS
SECURITIES; (C) other unencumbered first class collaterals AND (D) PRIVATE
COMMERCIAL PAPER TO THE EXTENT OF THEIR APPLICABLE LOAN VALUES which the
Monetary Board may approve: Provided, That if as G8termined by the Monetary
Board, the circumstances surrounding the emergency warrant a loan or advance
greater than the amount provided hereinabove, the amount of the first tranche
may exceed twenty-five percent (25%) of the [bank's] INSTITUTION'S total [depesit
end—depeosit substitutes] BORROWINGS if the same is adequately secured by
applicable loan values of government securities and unencumbered first class
collaterals. OR ACCEPTABLE GUARANTEES BACKED UP BY THE NATIONAL
GOVERNMENT OR ITS SECURITIES approved by the Monetary Board, and the principal
stockholders of the institution furnish an acceptable undertaking to indemnify and
hold harmless from suit a conservator whose appointment the Monetary Board may
find necessary at any time.

Prior to the release of the first tranche, the [banking] institution shall submit to
the Bangko Sentral a resolution of its board of directors authorizing the Bangko
Sentral to evaluate other assets of the [banking] institution certified by its external

auditor to be good and available for collateral Purposes should the release of the
subsequent tranche be thereafter applied for.

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The Monetary Board may, by a vote of at least five (5) of its members,
authorize the release of a subsequent tranche on condition that the principal
stockholders of the institution:

(a) furnish an acceptable undertaking to indemnify and hold harmless from
suit a conservator whose appointment the Monetary Board may find necessary at
any time; and

(b) provide acceptable security which, in the judgment of the Monetary
Board, would be adequate to supplement, where necessary, the assets tendered by
the [banking] institution to collateralize the subsequent tranche.

In connection with the exercise of these powers, the prohibitions in Section
128 of this Act shalll not apply insofar as it refefs to acceptance as collateral of shares
and their acquisition as a result of foreclosure proceedings, including the exercise of
voting rights pertaining to said shares: Provided, however, That should the Bangko
Sentral acquire any of the shares it has accepted as collateral as a result of
foreclosure proceedings, the Bangko Sentral shall dispose of said shares by public
bidding within one (1) year from the date of consolidation of title by the Bangko
Sentral, Te

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.”

SEC. 30. A new section entitled Section 88-A of the same Act shall be inserted
between Section 88 and Section 88-8 which shall 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 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
THE SECURED LOANS AND ADVANCES GRANTED BY THE BANGKO SENTRAL TO
INSOLVENT PERSONS OR INSTITUTIONS OR A CLOSED INSTITUTION HAVE ALREADY BEEN
FULLY PAID IN WHICH CASE THE EXEMPTIONS UNDER THIS. SECTION SHALL NO LONGER
APPLY.”

SEC. 31. A new section entitled Section 88-B of the same Act shall be inserted
between Section 88-A and Section 88-C which shall read as follows:

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“SEC. 88-B. DEPUTIZATION OF LEGAL STAFF. - IN CASE OF AN EXTRAJUDICIAL
FORECLOSURE OF MORTGAGE, THE BANGKO SENTRAL MAY, DEPUTIZE ANY OF ITS
LAWYERS TO CONDUCT THE PUBLIC AUCTION PURSUANT TO ACT NO, 3135, AS
AMENDED. IN CASE OF A JUDICIAL FORECLOSURE, THE BANGKO SENTRAL MAY WITH
THE APPROVAL OF THE COURT, LIKEWISE DEPUTIZE ANY OF ITS LAWYERS TO ACT AS
SPECIAL SHERIFF IN THE SALE OF THE DEBTOR'S PROPERTIES AND IN THE ENFORCEMENT
OF COURT WRITS AND PROCESSSES RELATED THERETO. THE SPECIAL SHERIFF OF THE
BANGKO SENTRAL SHALL MAKE A REPORT TO THE PROPER COURT AFTER ANY ACTION
HAS BEEN TAKEN BY HIM, WHICH COURT SHALL TREAT SUCH ACTION AS IF IT WERE AN
ACT OF ITS OWN SHERIFF IN ALL RESPECTS.

“NO RESTRAINING ORDER OR INJUNCTION SHALL BE ISSUED BY THE COURT
ENJOINING THE BANGKO SENTRAL FROM PROCEEDING WITH THE FORECLOSURE OF
THE MORTGAGE UNLESS A BOND IS POSTED IN FAVOR OF THE BANGKO SENTRAL IN AN
AMOUNT EQUIVALENT TO THE TOTAL CLAIM OF THE BANGKO SENTRAL. THE
RESTRAINING ORDER OR INJUNCTION SHALL BE REFUSED OR, IF GRANTED, SHALL BE
DISSOLVED UPON FILING BY THE BANGKO SENTRAL OF A BOND, WHICH SHALL BE IN
THE FORM OF A BANGKO SENTRAL CHECK, IN AN AMOUNT TWICE THE AMOUNT OF
THE ORIGINAL BOND POSTED CONDITIONED THAT THE BANGKO SENTRAL WILL PAY THE
DAMAGES WHICH THE PARTY MAY SUFFER BY THE REFUSAL OR DISSOLUTION OF THE
INJUNCTION. THE PROVISIONS OF RULE 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 SECTION.”

SEC. 30. A new section entitled Section 88-C of the same Act shall be inserted
between Section 88-B and Section 89 which shall read as follows:

"SEC. 88-C, RIGHT OF REDEMPTION OF FORECLOSED REAL PROPERTY; RIGHT
OF POSSESSION DURING REDEMPTION PERIOD. - THE MORTGAGOR SHALL HAVE THE
RIGHT TO REDEEM THE PROPERTY WITHIN ONE YEAR FROM THE DATE OF FORECLOSURE
SALE OF THE REAL ESTATE, IN CASE THE MORTGAGOR IS A NATURAL PERSON, AND
WITHIN NINETY DAYS BUT NOT LATER THAN THE DATE OF REGISTRATION OF THE
CERTIFICATE OF FORECLOSURE SALE, IN CASE THE MORTGAGOR IS A JURIDICAL
PERSON. REDEMPTION SHALL BE EFFECTED BY PAYING THE PRINCIPAL, INTERESTS,
CHARGES, COMMISSIONS AND ALL CLAIMS OF WHATEVER NATURE OF THE BANGKO.
SENTRAL OUTSTANDING AND DUE AS OF THE DATE OF FORECLOSURE SALE,

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INCLUDING ALL COSTS AND OTHER EXPENSES INCURRED BY REASON OF THE
FORECLOSURE SALE AND CUSTODY OF THE PROPERTY.

THE BANGKO SENTRAL, AS PURCHASER IN THE FORECLOSURE SALE AND
WITHOUT NEED OF POSTING A BOND, MAY TAKE POSSESSION OF THE FORECLOSED
PROPERTY DURING THE REDEMPTION PERIOD. THE BANGKO SENTRAL SHALL BE
ENTITLED TO THE FRUITS OF THE PROPERTY, THE SAME TO BE APPLIED AGAINST THE
REDEMPTION PRICE. *

SEC. 33. A new section entitled Section 89-A of the same Act shall be inserted
between Section 89 and Section 90 which shall 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. 34 Section 92 of Republic Act No. 7653 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 tAstruments 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, The! issuance-of such certificates-of
indebledness_shall-be_made-only-i of extracrainary ment
fevels.] Said evidences of indebtedness may be issued directly against the

price

international reserve of the Bangko Sentral 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.

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.

Subject 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 through 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

35


redeemed by the Bangko Seniral shall not be included among its assets, and shall
be immediately retired and cancelled.

THE BANGKO SENTRAL IN PURSUIT OF ITS OPEN MARKET OPERATIONS, MAY
ALSO ENGAGE IN THE PURCHASE AND RESALE OF READILY MARKETABLE
COMMERCIAL PAPERS ISSUED BY FINANCIAL INSTITUTIONS DULY ACCREDITED UNDER
SUCH RULES AND REGULATIONS AS THE MONETARY BOARD MAY PRESCRIBE TO
PROVIDE LIQUIDITY TO THE FINANCIAL MARKETS FROM TIME TO TIME, SUCH PURCHASE
AND RESALE MAY BE SUBJECT TO REPURCHASE OR REVERSE REPURCHASE
AGREEMENTS AS THE BANGKO SENTRAL SHALL STIPULATE AND SUCH INSTRUMENTS ARE
PART OF THE OPEN MARKET OPERATIONS OF THE BANGKO SENTRAL.”

SEC. 35. Section 95 of Republic Act No.'7653 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 acceptance of debt instruments for
the borrower's own account, for the purpose of relending or purchasing of
receivables and other obligations. These instruments fy include, but need not be
limited to, bankers acceptances, promissory notes. participations, certificates of
assignment and similar instruments with recourse, [and-sepurchase-agreements}
PROVIDED, HOWEVER, THAT REPURCHASE AGREEMENTS, INCLUDING REVERSE
PURCHASE AGREEMENTS ENTERED INTO BY THE BANGKO SENTRAL SHALL NOT BE
CONSIDERED DEPOSIT SUBSTITUTES.

IN THE COMPUTATION OF THE RESERVES AGAINST DEPOSIT SUBSTITUTES UNDER
SECTION 94 OF THIS ACT, THE MONETARY BOARD SHALL DETERMINE WHAT SHALL BE
CONSIDERED AS DEPOSIT SUBSTITUTES SUBJECT TO RESERVE REQUIREMENTS.

FINANCIAL INSTRUMENTS ISSUED BY THE NATIONAL GOVERNMENT AND THE
BANGKO SENTRAL AND INTERBANK BORROWINGS SHALL NOT BE CONSTRUED AS
DEPOSIT SUBSTITUTES.

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 FROM THIS SECTION: Provided, however, That
deposit substitutes of commercial, industrial and other non-financial companies for

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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. 36. Section 99 of Republic Act No. 7653 is hereby amended to read as
follows:

“SEC.'99. Adjustment [fnerease] In Reserve Requirements. — Whenever in the
opinion of the Monetary Board it becomes necessary to ADJUST [increase] reserve
requirements against existing liabilities, the [increase] CHANGE shall be made in a
[gradual] manner [and-shall_net-exceed four percentage points ia-any_thidy-day
period] CONSISTENT WITH THE MONETARY POLICY DETERMINED BY THE MONETARY
BOARD. Banks and other affected financial institutions shall be notified reasonably in
advance of the date on which such [inereasé] CHANGE is to become effective.”

SEC. 37. Section 113 of Republic Act No. 7653 is hereby amended to read as
follows:

“SEC. 113. Official Deposits. — The Bangko Sentral shall be the official
depository of the Government, its political subdivisions and instrumentalities as well
as of government-owned or controlled corporations. [and-as-e-general-pelicy-their

n-bal hould_be-deposited_with he BangkS"Sentral_with_only

King-bok fo-be held by (ouried banks-end suchsiner beck
incorporated in the Philispines_as_the Monetary Board_ may fe subjsctt
ntules and requis the Board_may prescribe: Provided—That-such-banks

may—held_depesits_ot the _poitical subdivisions and instrumentaiilies of jhe
“, echelon
inst talities-h standing k ite-saic-sanks,]

EXCEPT FOR DEMAND DEPOSITS, the Bangko Sentral [raay] SHALL pay interest
on deposits of the Government or of its political subdivisions and instrumentalities, as
well as on deposits of banks with the Bangko Sentral.”

SEC. 38. Section 117 of Republic Act No. 7653 is hereby amended to read as
follows:

“SEC. 117. Issue of Government Obligations. — The issue of securities
fepresenting obligations of the Government, its political subdivisions or
instrumentalities, may be made through the Bangko Sentral, which may act as
agent of, and for the account of, the Government or its respective subdivisions or
instrumentality, as the case may be: Provided, however, That the Bangko Sentral
shall not guarantee the placement of said securities, and shall not subscribe to their

37


issue except to replace its maturing holdings of securities with the same type as the
maturing securities.

THE PRIMARY SALE OF GOVERNMENT SECURITIES MAY ALSO BE PUBLICLY
UNDERWRITTEN BY, OR PRIVATELY PLACED IN, FINANCIAL INSTITUTIONS ACCREDITED
BY THE DEPARTMENT OF FINANCE OF THE NATIONAL GOVERNMENT.

THE DIRECT PURCHASE AND SALE OF GOVERNMENT SECURITIES BY AND
BETWEEN AND AMONG ACCREDITED FINANCIAL INSTITUTIONS SHALL BE DEEMED
EXEMPT TRANSACTIONS UNDER REPUBLIC ACT NO. 8799, OTHWERISE KNOWN AS THE
SECURITIES REGULATION CODE. THE SECRETARY OF FINANCE, IN CONSULTATION WITH
THE BANGKO SENTRAL, SHALL PROMULGATE SUCH RULES AND REGULATIONS, ORDERS
OR INSTRUCTIONS WHICH SHALL PROTECT FROM FRAUD THE REPUBLIC OF THE
PHILIPPINES, AS ISSUER AND THE ACCREDITED FINANCIAL INSTITUTIONS AS INVESTORS
OR TRADERS OF SAID GOVERNMENT SECURITIES.

IN ORDER TO INSURE THAT SAID ACCREDITED FINANCIAL INSTITUTIONS SHALL
OPERATE UNDER FAIR AND UNIFORM TRADING RULES, THEY SHALL, AS PART OF THE
GUIDELINES OF ACCREDITATION, BE REQUIRED TO JOIN AN ASSOCIATION OF
ACCREDITED FINANCIAL INSTITUTIONS TO BE GOVERNED BY INTERNAL RULES OF
CONDUCT APPROVED BY THE SECRETARY OF FINANCE, THE LATTER BEING THE
OFFICIAL REPRESENTATIVE OF THE REPUBLIC OF THE PHILIPPINES, THE PRIMARY
OBLIGOR IN THE ISSUANCE OF SAID GOVERNMENT SECURITIES; PROVIDED, HOWEVER,
THAT THE DIRECT PARTICIPATION OF ACCREDITED FINANCIAL INSTITUTIONS IN THE
OPEN MARKET OPERATIONS OF THE BANGKO SENTRAL AS PROVIDED IN SECTIONS 90
AND 91 HEREIN SHALL BE SUBJECT TO SUCH RULES AND REGULATIONS AS MAY BE
PRESCRIBED BY THE MONETARY BOARD, IN CONSULTATION WITH THE SECRETARY OF
FINANCE,"

SEC. 39. Section 118 of Republic Act No. 7653 is hereby amended to read as
follows:

“SEC. 118. Methods of Placing Government Securities. — The Bangko Sentral
may place the securities to which the FIRST PARAGRAPH OF THE preceding Section
refers through direct sale to financial institutions [and-the-public].

The Bangko Sentral shall not be a member of any stock exchange or
syndicate, but may intervene therein, IN COORDINATION WITH THE DEPARTMENT OF

FINANCE, for the sole purpose of regulating their operations in the placing of
government securities.

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The Govemment, or its political subdivisions or instrumentalities, shall
reimburse the Bangko Sentral for the expenses incurred in the placing of the
aforesaid securities.”

SEC. 40. Section 119 of Republic Act No. 7653 is hereby amended to read as
follows:

“SEC. 119. Servicing and Redemption of the Public Debt. — The servicing and
redemption of the public debt shall also BE DONE UNDER THE AUTHORITY OF THE
DEPARTMENT OF FINANCE. IT MAY also be effected through the Bangko Sentral.

SEC. 41. Section 125 of Republic Act No. 7653 is hereby amended to read as
follows:

“SEC. 125. Tax Exemptions. — THE PROVISIONS OF ANY GENERAL OR SPECIAL
LAW TO THE CONTRARY NOTWITHSTANDING, FINANCIAL TRANSACTIONS OF the
Bangko Sentral ARISING FROM ITS OPEN MARKET OPERATIONS shall be exempt [fora
period of five-{5)-years-from_the-approval-of this Aci} from all national, AND LOCAL
(provincial, raunicipatand-city] taxes, fees, charges and assessments.

assumed bythe Bangko Sentral)”
SEC. 42. Section 126 of Republic Act No. 7653 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 [equigment] SUPPLIES
needed [for] BY THE BANGKO SENTRAL FOR bank note production, minting of
coins, metal refining and other security printing operations AND TRANSPORT OF

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‘CURRENCY shall be fully exempt from all cusioms duties and consular fees and from
all other taxes, assessments and charges related fo such importation or exportation.

THE IMPORTATION OF MACHINERY OR EQUIPMENT REQUIRED BY THE BANGKO
SENTRAL FOR THE PRINTING OF NOTES AND THE MINTING OF COINS SHALL BE SUBJECT
TO CUSTOMS DUTIES AND OTHER RELATED ASSESSMENTS AND CHARGES RELATED TO
THE IMPORTATION OF ANY SUCH MACHINERY OR EQUIPMENT."

SEC. 43. A new section entitled Section 126-A of Republic Act No. 7653 shall
be inserted between Section 126 and Section 127 which shall read as follows:

“SEC. 126-A. ACQUISITIONS SUBJECT TO PROCUREMENT LAW. — ANY AND ALL
ACQUISITION OF GOODS AND SERVICES BY THE BANGKO SENTRAL SHALL BE SUBJECT
TO THE PROCUREMENTS LAWS.”

SEC. 44. This Act shall take effect upon approval.

40