HOUSE °F REPRESENTATIVES
RECEIVED
|, pire, JUN 208

TWwE_72/Y py

REGISTRATION UNIT
BILLS AND INDEX SERVICE

Republic of the Philippines
HOUSE OF REPRESENTATIV!
Quezon City, Metro Manila

SEVENTEENTH CONGRES'
First Regular Session

731

HOUSE BILL NO.

Introduced by: Hon. Karlo A. B. Nograles AND Hon. Jericho Jonas B. Nograles

EXPLANATORY NOTE

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

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

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

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

Approval of this bill is earnestly sought.

HON. KARLO A. B. NOGRALES HON. JE] [AS B. NOGRALES


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

SEVENTEENTH CONGRESS
First Regular Session
731
HOUSE BILL NO.

INTRODUCED BY: Hon, Karlo A. B. Nograles AND Hon. Jericho Jonas B. Nograles

AN ACT
AMENDING REPUBLIC ACT NO. 7653, 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, otherwise known as “The New Central
Bank Act”, 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 [FiftyJTWO HUNDRED billion pesos
(P[50,]200,000,000,000), 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] THE UNPAID SUBSCRIPTION shall be fully paid for by the Government IN
CASH AND/OR GOVERNMENT SECURITIES UPON EFFECTIVITY OF THIS
ACT. THE CAPITALIZATION SHALL BE SUBJECT TO REVIEW EVERY
FIVE (5) YEARS UPON JOINT RECOMMENDATION BY THE SECRETARY
OF FINANCE, THE SECRETARY OF BUDGET AND MANAGEMENT AND
THE MONETARY BOARD. THE PAYMENT OF ANY UNPAID
SUBSCRIPTION AND/OR INCREASE IN CAPITALIZATION SHALL BE
APPROPRIATED IN THE ANNUAL GENERAL APPROPRIATIONS ACT [upon
the effectivity of this Act and the balance to be paid for within a period of two (2) years
from the effectivity of this Act in such manner and form as the Government, through the

Secretary of Finance and the Secretary of Budget and Management, may thereafter


determine].”
SEC. 2. Section 3 of the same Act 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,] CREDIT CARD COMPANIES, MONEY CHANGING BUSINESSES,
PAWNSHOPS, E-MONEY ISSUERS, MONEY FORWARDING BUSINESSES,
PAYMENT AND SETTLEMENT SYSTEM OPERATORS and OTHER institutions
performing similar functions, AS MAY BE DETERMINED BY THE MONETARY
BOARD, CONSISTENT WITH THE MANDATE OF THE BANGKO SENTRAL
TO PROVIDE POLICY DIRECTION IN THE AREAS OF MONEY,
BANKING AND CREDIT.

“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 AND FINANCIAL stability and the convertibility of the peso.

“THE BANGKO SENTRAL SHALL OVERSEE THE PAYMENT AND
SETTLEMENT SYSTEMS IN THE PHILIPPINES IN ACCORDANCE WITH
SOUND AND PRUDENT PRACTICES. FOR PURPOSES OF THIS ACT, A
PAYMENT AND SETTLEMENT SYSTEM SHALL REFER TO ANY SYSTEM
THAT CONSISTS OF A SET OF INSTRUMENTS AND ARRANGEMENTS
THAT ENSURES THE EFFICIENT CIRCULATION OF MONEY AND SAFE
TRANSFER OF FINANCIAL VALUES.”

SEC. 3. Section 11 of the same Act is hereby amended to read as follows:

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

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

“Unless otherwise provided in this Act, all decisions of the Monetary Board shall
require the concurrence of at least four (4) members.

“The 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.

“THE MEETINGS OF THE MONETARY BOARD MAY BE CONDUCTED
THROUGH MODERN TECHNOLOGIES SUCH AS TELECONFERENCING
AND VIDEOCONFERENCING.”

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

“SEC. 16. Responsibility. - THE GENERAL RULE AND THE EXCEPTION
THEREFROM ON THE LIABILITY OF PUBLIC OFFICERS AS PROVIDED IN
SECTIONS 38 AND 39 OF CHAPTER 9, BOOK 1 OF THE REVISED
ADMINISTRATIVE CODE OF 1987 SHALL APPLY TO [M]|Members of the
Monetary Board|, officials, examiners, and employees] AND OTHER PERSONNEL of
the Bangko Sentral [who willfully violate this Act or who are guilty of negligence, abuses
or acts of malfeasance or misfeasance or fail to exercise extraordinary diligence in the
performance of his duties shall be held liable for any loss or injury suffered by the
Bangko Sentral or other banking institutions as a result of such violation, negligence,

abuse, malfeasance, misfeasance or failure to exercise extraordinary diligence]

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

“THE BANGKO SENTRAL, ITS OFFICIALS AND EMPLOYEES SHALL BE
INDEMNIFIED FOR ANY AND ALL LIABILITIES, LOSSES, CLAIMS,
DEMANDS, DAMAGES, DEFICIENCIES, COSTS AND EXPENSES OF
WHATSOEVER KIND AND NATURE THAT MAY ARISE IN CONNECTION
WITH THE PERFORMANCE OF THEIR DUTIES DONE IN GOOD FAITH AND
CONSISTENT WITH THE POWERS AND FUNCTIONS AUTHORIZED.”

SEC. 5. Section 21 of the same Act is hereby amended to read as follows:


“SEC. 21. Deputy Governors. — The Governor of the Bangko Sentral, with the
approval of the Monetary Board, shall appoint not more than [three (3)] FIVE (5) Deputy
Governors who shall perform duties as may be assigned to them by the Governor and the
Board.

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

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

“SEC. 23. Authority to Obtain Data and Information. ~ The Bangko Sentral shall
have the authority to [request] REQUIRE from ANY PERSON OR ENTITY,
INCLUDING government offices and instrumentalities, or government-owned or -
controlled corporations, any data [which it may require for] OR INFORMATION FOR
STATISTICAL AND POLICY DEVELOPMENT PURPOSES IN RELATION TO
the proper discharge of its functions and responsibilities. The Bangko Sentral through
the Governor or in his absence, a duly authorized representative shall have the power to
issue a subpoena for the production of the books and records for the aforesaid purpose.
Those who refuse the subpoena without justifiable cause, or who refuse to supply the
bank with data requested or required, shall be subject to punishment for contempt in
accordance with the provisions of the Rules of Court]: PROVIDED, THAT
DISAGGREGATED DATA OR INFORMATION GATHERED ARE SUBJECT
TO PREVAILING CONFIDENTIALITY LAWS.

“Data OR INFORMATION on individualS [firms,] AND ENTITIES, other than
banks, gathered by the [Department of Economic Research and other departments or units
of the] Bangko Sentral shall not be made available to any person or entity outside of the
Bangko Sentral whether public or private. [except under order of the court or under such
conditions as may be prescribed by the Monetary Board: Provided, however, That the]
INDIVIDUAL OR FIRM-LEVEL DATA OR INFORMATION FURNISHED BY A
RESPONDENT TO A STATISTICAL INQUIRY OR SURVEY SHALL BE
CONSIDERED PRIVILEGED COMMUNICATION AND SHALL BE


INADMISSIBLE AS EVIDENCE IN ANY COURT PROCEEDINGS. DATA OR
INFORMATION GATHERED SHALL BE SUBJECT TO PREVAILING
DEPOSIT SECRECY LAWS. HOWEVER, collective data OR INFORMATION on
[firms] ENTITIES may be released to interested persons or entities IN WHICH NO
REFERENCE TO AN INDIVIDUAL, CORPORATION, ASSOCIATION,
PARTNERSHIP, INSTITUTION OR BUSINESS ENTERPRISE SHALL APPEAR:
Provided, |finally,| That in the case of data OR INFORMATION on banks, the
provisions of Section 27 of this Act shall apply. CONSISTENT WITH THE
PREVAILING PRACTICE IN THE PHILIPPINE STATISTICAL SYSTEM,
THOSE WHO REFUSE TO SUPPLY THE BANGKO SENTRAL WITH THE
REQUIRED DATA OR INFORMATION SHALL BE SUBJECT TO A PENALTY
OF ONE (1) YEAR IMPRISONMENT AND A FINE OF ONE HUNDRED
THOUSAND PESOS (P100,000). IN CASES WHERE THE VIOLATION IS DONE
BY A CORPORATION, THE ABOVE PENALTY SHALL BE IMPOSED
AGAINST THE RESPONSIBLE OFFICER, DIRECTOR, MANAGER AND/OR
AGENT OF SAID CORPORATION. IN ADDITION, SUCH ERRING
CORPORATION OR ANY OTHER JURIDICAL ENTITY, DEPENDING ON
THE CATEGORY OF THE ENTERPRISE OR BUSINESS CONCERNED
WHETHER SMALL, MEDIUM OR LARGE, SHALL BE IMPOSED A FINE
RANGING FROM ONE HUNDRED THOUSAND PESOS (P100,000) TO FIVE
HUNDRED THOUSAND PESOS (P500,000).

“ANY PERSON, INCLUDING PARTIES WITHIN THE MONETARY BOARD
AND THE BANGKO SENTRAL, WHO BREACH THE CONFIDENTIALITY OF
DATA OR INFORMATION, WHETHER BY IMPROPER BEHAVIOR,
BEHAVIOR WITH MALICIOUS INTENT, OR USE OF CONFIDENTIAL
INFORMATION FOR PROFIT ARE CONSIDERED GUILTY OF OFFENSE
AND SHALL BE LIABLE TO A FINE OF NOT LESS THAN FIVE THOUSAND
PESOS (P5,000) NOR MORE THAN TEN THOUSAND PESOS (P10,000) OR
IMPRISONMENT OF NOT LESS THAN THREE (3) MONTHS NOR MORE
THAN ONE (1) YEAR, OR BOTH, SUBJECT TO THE DEGREE OF BREACH
OF INFORMATION, AT THE DISCRETION OF THE COURT.”

SEC. 7. Section 25 of the same Act is hereby amended to read as follows:

5. Supervision and Examination, — The Bangko Sentral shall have


supervision over, and conduct periodic or special examinations of, banking institutions
and quasi-banks, including their subsidiaries and affiliates [engaged in allied activities].

“THE BANGKO SENTRAL SHALL HAVE REGULATORY AUTHORITY
OVER, AND CONDUCT REGULAR OR SPECIAL EXAMINATIONS OF,
ENTITIES WHICH UNDER THIS ACT OR BY SPECIAL LAWS ARE SUBJECT
TO ITS JURISDICTION.

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

“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] ENTITY 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] ENTITY 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]
ENTITY 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 juri
TO INQUIRE INTO BANK DEPOSITS AND INVESTMENT ACCOUNTS IN
THE COURSE OF AN EXAMINATION IN ORDER TO ASCERTAIN
COMPLIANCE WITH LAWS AND BANKING REGULATIONS.

cal, in debt instruments issued by the Government] AND

“No restraining order or injunction shall be issued by the court enjoining the Bangko
Sentral from examining any [institution] ENTITY subject to supervision or examination

by the Bangko Sentral, unless there is convincing proof that the action of the Bangko

Sentral is plainly arbitrary and made in bad faith and the petitioner or plaintiff files with
the clerk or judge of the court in which the action is pending a bond executed in favor of
the Bangko Sentral, in an amount to be fixed by the court. 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. 8. A new Section 25-A is hereby inserted in the same Act to read as follows:

“SEC. 25-A. TRANSFER OF SHARES. -— TRANSFERS OR
ACQUISITIONS, OR A SERIES THEREOF, OF AT LEAST TEN PERCENT
(10%) OF VOTING RIGHTS IN BANKS OR QUASI-BANKS SHALL BE
REPORTED TO THE BANGKO SENTRAL WITHIN SUCH PERIOD AS MAY BE
PRESCRIBED BY THE MONETARY BOARD. PRIOR TO SUCH
NOTIFICATION, NO SUCH TRANSFER OR ACQUISITION SHALL HAVE
LEGAL EFFECT NOR SHALL THE SAME BE RECOGNIZED IN THE BOOKS
OF THE ENTITY OR BY ANY GOVERNMENT AGENCY, AND THE
TRANSFEROR ~ STOCKHOLDERS SHALL REMAIN ACCOUNTABLE AND
RESPONSIBLE THEREFOR. TRANSFER OF ACTUAL CONTROL OR
MANAGEMENT OF THE ENTITY TO THE NEW STOCKHOLDERS OR
THEIR REPRESENTATIVES PRIOR TO NOTIFICATION SHALL MAKE THE
TRANSFEROR, THE TRANSFEREE AND ANY PERSON RESPONSIBLE
THEREFOR, LIABLE UNDER SECTIONS 36 AND 37 OF THIS ACT.
NOTWITHSTANDING ANY PROVISION OF LAW TO THE CONTRARY, THE
BANGKO SENTRAL MAY SHARE WITH THE PHILIPPINE DEPOSIT
INSURANCE CORPORATION ANY INFORMATION THAT THE BANGKO
SENTRAL MAY OBTAIN PERTAINING TO TRANSFER OR ACQUISITION OF
SHARES OR SERIES OF TRANSFERS OR ACQUISITION OF SHARES IN
BANKS AND QUASI-BANKS.”

SEC. 9. Section 28 of the same Act is hereby amended to read as follows:

28. Examination and Fees. ~ The supervising and examining department
head, personally or by deputy, shall examine the [books] OPERATIONS of every
bank|ing 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 a report on the same to the Monetary Board:] AND QUASI-BANK, INCLUDING
THEIR SUBSIDIARIES AND AFFILIATES AND OTHER ENTITIES WHICH
UNDER THIS ACT OR SPECIAL LAWS ARE SUBJECT TO BANGKO SENTRAL
SUPERVISION, IN ACCORDANCE WITH THE GUIDELINES SET BY THE
MONETARY BOARD TAKING INTO CONSIDERATION SOUND AND
PRUDENT PRACTICES: Provided, That there shall be an interval of at least twelve


(12) months between [annual] REGULAR examinations[.]: PROVIDED, FURTHER,
THAT THE MONETARY BOARD, BY AN AFFIRMATIVE VOTE OF AT
LEAST FIVE (5) MEMBERS, MAY AUTHORIZE A SPECIAL EXAMINATION
IF THE CIRCUMSTANCES WARRANT.

“The [bank] INSTITUTION concerned shall afford to the head of the appropriate
supervising and examining departments and to [his] THE authorized deputies full
opportunity to examine its books AND RECORDS, cash and [available] assets and
general condition AND REVIEW ITS SYSTEMS AND PROCEDURES at any time
during [banking] BUSINESS hours when requested to 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 institutions.

“[Banking and quasi-banking institutions which are subject to examination by the
Bangko Sentral] SUPERVISED INSTITUTIONS shall pay to the Bangko Sentral,
{within the first thirty (30) days of] NO LATER THAN MAY 31 OF each year, an
annual SUPERVISION fee [in an amount equal to a percentage] as may be prescribed by
the Monetary Board. [of its average total assets during the preceding year as shown on its
end-of-month balance sheets, after deducting cash on hand and amounts due from
banks, including the Bangko Sentral and banks abroad.] IN DETERMINING THE
ANNUAL SUPERVISION FEE, THE MONETARY BOARD SHALL CONSIDER
THE COST OF SUPERVISION.”

SEC. 10. A new Section 28-A is hereby inserted in the same Act to read as follows:

“SEC. 28-A. BANGKO SENTRAL COORDINATION. ~ THE SUSPENSION OR
REVOCATION OF ANY GOVERNMENT LICENS
OPERATION OF A BANGKO SENTRAL-SUPERVISED ENTITY MUST BE
DONE ONLY WITH PRIOR NOTIFICATION TO THE BANGKO SENTRAL.”

NECESSARY FOR THE

SEC. 11. Section 30 of the same Act is hereby amended to read as follows:

“SEC. 30. Proceedings in Receivership and Liquidation. — Whenever, upon report
of the head of the supervising or examining department, the Monetary Board finds that a
bank, [or] quasi-bank OR NON-BANK FINANCIAL INSTITUTION:

“(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 SUBSTITUTE 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 community; OR

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

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

“(d) has willfully violated a cease and d 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
OF BANKING INSTITUTIONS, designate the Philippine Deposit Insurance
Corporation (PDIC) as receiver [of the banking institution] AND DIRECT THE PDIC
TO PROCEED WITH THE LIQUIDATION OF CLOSED BANKING
INSTITUTION PURSUANT TO THIS SECTION AND THE RELEVANT
PROVISIONS OF REPUBLIC ACT NO. 3591, AS AMENDED. THE
MONETARY BOARD SHALL NOTIFY IN WRITING THE BOARD OF
DIRECTORS OF THE CLOSED BANK OF THE MONETARY BOARD’S
FINDINGS.

“[For a quasi-bank, any person of recognized competence _in banking or finance
may be designated as receiver.| THE RECEIVER FOR QUASI-BANKS AND NON-
BANK FINANCIAL INSTITUTIONS SHALL BE DESIGNATED BY THE
MONETARY BOARD.

“The receiver shall immediately gather and take charge of all the assets and liabilities
of the institution, administer the same for the benefit of its creditors, DEPOSIT OR
PLACE THE FUNDS OF THE INSTITUTION IN NONSPECULATIVE
INVESTMENTS, PAY ADMINISTRATIVE REMEDIES and exercise the general
powers of a receiver under the Revised Rules of Court [but shall not, with the exception
of administrative expenditures, pay or commit any act that will involve the transfer or
disposition of any asset of the institution: Provided, That the receiver may deposit or

place the funds of the institution in nonspeculative investments]. 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 BANKS, QUASI-BANKS AND OTHER NON-BANK FINANCIAL
INSTITUTIONS MAY IMMEDIATELY TRANSFER OR DISPOSE OF ANY OR
ALL OF THE ASSETS OF THE CLOSED INSTITUTION, CAUSE QUASI-
REORGANIZATION OF THE INSTITUTION, AND SUCH OTHER ACTS AS
MAY BE AUTHORIZED BY LAW.

If the receiver OF BANKS, QUASI-BANKS 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, the
Monetary Board shall notify in writing the board of directors of [its] THE RECEIVER’S
findings and direct the receiver to proceed with the liquidation of the institution. The
receiver ACTING AS THE LIQUIDATOR OF BANKS, QUASI-BANKS AND
OTHER NON-BANK FINANCIAL INSTITUTIONS 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] PREPARED BY THE RECEIVER AND
ADOPTED BY THE MONETARY BOARD. [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,]| THE COURT SHALL HAVE
EXCLUSIVE JURISDICTION TO 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 receipt by the
board of directors of the institution of the order directing receivership, liquidation or
conservatorship.

“The designation of a conservator under Section 29 of this Act or the appointment of
a receiver under this section shall be vested exclusively with the Monetary Board.
Furthermore, the designation of a conservator is not a precondition to the designation of a
receiver.”

SEC. 12. Section 34 of the same Act is hereby amended to read as follows:

“SEC. 34. Refusal to Make Reports or Permit Examination. — Any officer,
‘owner, agent, manager, director or officer-in-charge of any institution [subject to the
supervision or examination by the Bangko Sentral within the purview of this Act] who,
being required in writing by the Monetary Board or by the head of the supervising and
examining department, WITHIN THE PURVIEW OF THIS ACT AND RELEVANT
LAWS, willfully refuses to file the required report or permit any lawful examination into
the affairs of such institution shall be punished by a fine of not less than Fifty thousand
pesos (P50,000) nor more than [One hundred thousand pesos (P100,000)] TWO
MILLION PESOS (P2,000,000) or by imprisonment of not less than one (1) year nor

more than five (5) years, or both, [in] AT the discretion of the court.”


SEC. 13. Section 35 of the same Act is hereby amended to read as follows:

“SEC. 35. False Statement. — The willful making of a false or misleading
statement on a material fact to the Monetary Board or to the examiners of the Bangko
Sentral shall be punished by a fine of not less than One hundred thousand pesos
(P100,000) nor more than [Two hundred thousand pesos (P200,000)] TWO MILLION
PESOS (P2,000,000), or by imprisonment of not more than five (5) years, or both, at the
discretion of the court.”

SEC. 14. Section 36 of the same Act is hereby amended to read as follows:

“SEC. 36. Proceedings Upon Violation of This Act and Other Banking Laws, Rules,
Regulations, Orders or Instructions. - Whenever a bank, [or] quasi-bank, OR OTHER
ENTITY 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 [Two hundred thousand pesos (P200,000)] TWO MILLION PESOS (P2,000,000)
or by imprisonment of not less than two (2) years nor more than ten (10) years, or both, at
the discretion of the court.

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

SEC. 15. Section 37 of the same Act is hereby amended to read as follows:

“SEC. 37. Administrative Sanctions on (Banks and Quasi-banks| SUPERVISED
ENTITIES. ~ 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 upon any bank or quasi-bank, INCLUDING THEIR SUBSIDIARIES AND
AFFILIATES, OR OTHER ENTITIES WHICH UNDER THIS ACT OR SPECIAL
LAWS ARE SUBJECT TO THE BANGKO SENTRAL SUPERVISION, AND their
directors, [and/or] officers OR EMPLOYEES, for any willful violation of its charter or

bylaws, willful delay in the submission of reports or publications thereof as required by


law, rules and regulations; any refusal to permit examination into the affairs of the
[institution] ENTITY; any willful making of a false or misleading statement to the Board
or the appropriate supervising and examining department or its examiners; any willful
failure or refusal to comply with, or violation of, any banking law or any order,
instruction or regulation issued by the Monetary Board, or any order, instruction or ruling
by the Governor; or any commission of irregularities, and/or conducting business in an
unsafe or unsound manner as may be determined by the Monetary Board, the following
administrative sanctions, whenever applicable:

“(a) fines in amounts as may be determined by the Monetary Board to be appropriate,
but in no case to exceed [Thirty thousand pesos (P30,000)] ONE MILLION PESOS
(P1,000,000) FOR EACH TRANSACTIONAL VIOLATION OR ONE HUNDRED
THOUSAND PESOS (100,000) PER BANKING [a] day for each CONTINUING
violation, taking into consideration the attendant circumstances, such as the nature and
gravity of the violation or irregularity and the size of the [bank or quasi-bank] ENTITY:
PROVIDED, THAT IN CASE PROFIT IS GAINED OR LOSS IS AVOIDED AS A
RESULT OF THE VIOLATION, A FINE OF NOT MORE THAN THREE (3)
TIMES THE PROFIT GAINED OR LOSS AVOIDED MAY BE IMPOSED;

(b) 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;

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

(c) SUSPENSION OR revocation of quasi-banking OR OTHER SPECIAL
licenses.

“Resignation or termination from office shall not exempt such director, [or] officer
OR EMPLOYEE from administrative or criminal sanctions.

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

director or officer, the period of delay shall not be counted in computing the period of


suspension herein provided.

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

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

“The respondents shall be afforded an opportunity to defend their action in a hearing
before the Monetary Board or any committee chaired by any Monetary Board member
created for the purpose, upon request made by the respondents within five (5) days from
their receipt of the order. If no such hearing is requested within said period, the order
shall be final. If a hearing is conducted, all issues shall be determined on the basis of
records, after which the Monetary Board may either reconsider or make final its order.

“The Governor is hereby authorized, at his discretion, to impose upon [banking
institutions,| BANKS AND QUASI-BANKS, INCLUDING THEIR SUBSIDIARIES
AND AFFILIATES, AND OTHER ENTITIES WHICH UNDER SPECIAL LAWS
ARE SUBJECT TO BANGKO SENTRAL SUPERVISION for any failure to comply
with the requirements of law, Monetary Board regulations and policies, and/or
instructions issued by the Monetary Board or by the Governor, fines not in excess of [Ten
thousand pesos (P10,000)] ONE HUNDRED THOUSAND PESOS (P100,000) FOR
EACH TRANSACTIONAL VIOLATION OR THIRTY THOUSAND PESOS
(P30,000) PER BANKING [a] day for each CONTINUING violation, the imposition of
which shall be final and executory until reversed, modified or lifted by the Monetary
Board on appeal.”

SEC. 16. A new Section 38-A is hereby inserted in the same Act to read as follows:

“SEC. 38-A.JSSUANCE OF PROVISIONAL REMEDIES AGAINST BANGKO
SENTRAL ACTIONS. ~ NO COURT, OTHER THAN THE COURT OF APPEALS
AND THE SUPREME COURT, SHALL ISSUE ANY TEMPORARY
RESTRAINING ORDER, PRELIMINARY INJUNCTION OR PRELIMINARY
MANDATORY INJUNCTION AGAINST THE BANGKO SENTRAL FOR ANY


ACTION UNDER THIS ACT.

“ANY RESTRAINING ORDER OR INJUNCTION ISSUED IN VIOLATION
OF THIS SECTION IS VOID AND OF NO FORCE AND EFFECT

“THE PROVISIONS OF RULE 58 OF THE 1997 RULES ON CIVIL
PROCEDURE INSOFAR AS THEY ARE APPLICABLE AND NOT
INCONSISTENT WITH THE PROVISIONS OF THIS ACT SHALL GOVERN
THE ISSUANCE AND DISSOLUTION OF THE RESTRAINING ORDER OR
INJUNCTION AGAINST THE BANGKO SENTRAL.”

SEC. 17. Section 43 of the same Act is hereby amended to read as follows:

“SEC. 43. Computation of Profits and Losses. ~ Within the first thirty (30) days
following the end of each year, the Bangko Sentral shall determine its net profits or
losses. [In the calculation of net profits, the Bangko Sentral shall make adequate
allowance or establish adequate reserves for bad and doubtful accounts.
NOTWITHSTANDING ANY PROVISION OF LAW TO THE CONTRARY, THE
NET PROFIT OF THE BANGKO SENTRAL SHALL BE DETERMINED AFTER
ALLOWING FOR EXPENSES OF OPERATION, ADEQUATE ALLOWANCES
AND PROVISIONS FOR BAD AND DOUBTFUL DEBTS, DEPRECIATION IN
ASSETS, AND SUCH OTHER ALLOWANCES AND CONTINGENCIES OR
PURPOSES AS THE MONETARY BOARD MAY DETERMINE IN
ACCORDANCE WITH PRUDENT FINANCIAL MANAGEMENT.”

18. A new Section 43-A is hereby inserted in the same Act to read as follows:

“SEC. 43-A. BANGKO SENTRAL RESERVE FUND. - THE BANGKO
SENTRAL SHALL ESTABLISH A RESERVE FUND TO MITIGATE FUTURE,
RISKS AND CONTINGENCIES INHERENT IN CARRYING OUT THE BANGKO
SENTRAL-MANDATED FUNCTIONS AS CENTRAL MONETARY
AUTHORITY, THE RESERVE FUND SHALL CONSIST OF FLUCTUATION
RESERVE, CONTINGENCY RESERVE AND SUCH OTHER RESERVES AS
THE MONETARY BOARD DEEMS PRUDENT OR NECESSARY.

“THE FLUCTUATION RESERVE SHALL COVER LOSSES FROM
EXCHANGE RATE AND PRICE VOLATILITY AND SHALL BE DERIVED
FROM THE NET PROFITS BEFORE DISTRIBUTION, AS PROVIDED UNDER
SECTION 44 OF THIS ACT. ALL OTHER RESERVE FUNDS SHALL BE
SOURCED FROM SURPLUS.”


SEC. 19. Section 45 of the same Act is hereby amended to read as follows:

“SEC. 45. Revaluation Profits and Losses. - UNREALIZED [P]Profits or losses
arising from any revaluation of the Bangko Sentral's [net] assets, [or] liabilities OR
DERIVATIVE INSTRUMENTS DENOMINATED in [gold or] foreign currencies
with respect to the MOVEMENTS OF PRICES AND EXCHANGE RATES FROM
THIRD CURRENCIES TO Philippine peso shall not be included in the computation of

the annual profits and losses of the Bangko Sentral. Any profit[s] or loss[es] arising in
this manner shall be offset by any amounts which, as a consequence of such revaluations,
are owed by the Philippines to any international or regional intergovernmental financial
institution of which the Philippines is a member or are owed by these institutions to the
Philippines. Any remaining UNREALIZED profit or loss shall be carried in a special
frozen account which shall be named "Revaluation of International Reserve (RIR)", and
the net balance of which shall appear either among the liabilities or among the assets of
the Bangko Sentral, depending on whether the revaluations have produced net profits or
net losses.

“The [Revaluation of Intemational Reserve] RIR account shall be [neither] credited
[nor] OR debited [for any purposes other than those specifically authorized in this
section.] ONLY FOR THE PERIODIC REVALUATION AS AUTHORIZED IN
THIS SECTION AND TO REFLECT THE CORRESPONDING ADJUSTMENT
RESULTING TO REDUCTION IN THE BANGKO SENTRAL’S NET FOREIGN
ASSETS, LIABILITIES AND FOREIGN CURRENCY-DENOMINATED
DERIVATIVE INSTRUMENTS. THE RIR SHALL BE ADJUSTED AND
RECOGNIZED IN THE INCOME STATEMENT UPON SALE OF GOLD AND
FOREIGN SECURITIES, OR WHEN THE FOREIGN CURRENCY IS
REPATRIATED TO LOCAL CURRENCY OR IS USED TO PAY FOREIGN
OBLIGATIONS OR UPON MATURITY OF A FOREIGN CURRENCY-
DENOMINATED FORWARD OR OPTION CONTRACT INVOLVING THE
PHILIPPINE PESO.”

SEC. 20. Section 61 of the same Act is hereby amended to read as follows:

“SEC. 61. Guiding Principle. — [The Monetary Board shall endeavor to control any
expansion or contraction in monetary aggregates which is prejudicial to the attainment or
maintenance of price stability.| THE MONETARY BOARD SHALL REGULARLY
ASSESS PRICE DEVELOPMENTS AND OUTLOOK AND, BASED ON ITS


ANALYSIS AND EVALUATION OF INFLATIONARY PRESSURES, USE ITS
POLICY INSTRUMENTS TO ATTAIN AND MAINTAIN PRICE STABILITY.”
SEC. 21. Section 63 of the same Act is hereby amended to read as follows:

“SEC. 63. Action When Abnormal Movements Occur in the [Monetary Aggregates,
Credit, or Price Level. ~ Whenever abnormal movements in the [monetary aggregates, in
credit, or in] prices endanger the stability of the Philippine economy or important sectors
thereof, the Monetary Board shall:

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

“(b) submit to the President of the Philippines and the Congress, and make public, a
detailed report which shall include, as a minimum, a description and analysis of:

“(1) the causes of the rise or fall of [the monetary aggregates, of credit or of] prices;

(2) the extent to which the changes in [the monetary aggregates, in credit, or in]
prices have been reflected in changes in the level of domestic output, employment, wages
and economic activity in general, and the nature and significance of any [such] changes;
and

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

“Whenever the [monetary aggregates, or the level of credit, increases or decreases by
more than fifteen percent (15%), or the] cost of living index increases by more than ten
percent (10%), in relation to the level existing at the end of the corresponding month of
the preceding year, or even though [any of these] THIS quantitative guideline[s have]

HAS not been reached when in its judgment the circumstances so warrant, the Monetary

Board shall submit the reports mentioned in this section, and shall state therein whether,
in the opinion of the Board, said changes in the [monetary aggregates, credit or] cost of
living represent a threat to the stability of the Philippine economy or of important sectors
thereof.

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

SEC. 22. Section 81 of the same Act is hereby amended to read as follows:

EC. 81. Guiding Principles. — The rediscounts, discounts, loans and advances

which the Bangko Sentral is authorized to extend to banking institutions under the


provisions of the present article of this Act shall be used to influence the volume of credit
consistent with the objective of price stability AND MAINTENANCE OF FINANCIAL
STABILITY.”

SEC. 23. Section 84 of the same Act 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 institutions, 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 banking institutions, even 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 deposit substitutes of the banking 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 total deposit and deposit substitutes of the institution
and shall be secured by: (A) government securities; [to the extent of their applicable
loan values and} (B) ACCEPTABLE GUARANTEES BACKED UP BY THE
NATIONAL GOVERNMENT OR ITS SECURITIES; (C) other unencumbered first
class collaterals [which the Monetary Board may approve]; AND (D) OTHER KINDS
OF COLLATERALS AS MAY BE AUTHORIZED BY THE MONETARY BOARD
IN ACCORDANCE WITH SOUND RISK MANAGEMENT PRINCIPLES:

Provided, That if as determined 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 total

deposit and deposit substitutes if the same is adequately secured by applicable loan values


of government securities and unencumbered first class collaterals 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.

“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 shall not apply insofar as it refers 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.

“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. 24. A new Section 88-A is hereby inserted in the same Act to read as follows:

SEC. 88-A. EXEMPTION FROM ATTACHMENT. ~COLLATERALS
ON LOANS AND ADVANCES GRANTED BY THE BANGKO SENTRAL,
WHETHER OR NOT THE INTEREST OF THE BANGKO SENTRAL IS
REGISTERED, SHALL NOT BE SUBJECT TO ATTACHMENT, EXECUTION
OR ANY OTHER COURT PROCESS OR ADMINISTRATIVE RESTRICTIONS


ON LAND USE, NOR SHALL THEY BE INCLUDED IN THE ASSETS OF THE
CLOSED BANK FOR DISTRIBUTION TO OTHER CREDITORS: PROVIDED,
HOWEVER, THAT THE PROCEEDS IN EXCESS OF THE AMOUNT SECURED
SHALL BE RETURNED BY THE BANGKO SENTRAL TO THE RECEIVER.”
SEC. 25. A new Section 88-B is hereby inserted in the same Act to read as follows:

“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 A DEBTOR’S PROPERTIES
AND IN THE ENFORCEMENT OF COURT WRITS AND PROCESSES
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. 26. A new Section 88-C is hereby inserted in the same Act to 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 (1) YEAR FROM THE DATE OF FORECLOSURE SALE OF THE
REAL ESTATE, IN CASE THE MORTGAGOR IS A NATURAL PERSON, AND
WITHIN NINETY (90) DAYS BUT NOT LATER THAN THE DATE OF
REGISTRATION OF THE CERTIFICATE OF FORECLOSURE SALE, IN
CASE THE MORTGAGOR IS A JURIDICAL PERSON: PROVIDED,
HOWEVER, THAT FORECLOSED REAL PROPERTIES IN THE NAME OF A
BORROWER BANK, OR OTHER CORPORATE THIRD PARTY MORTGAGOR
WHOSE PROPERTIES ARE DIRECTLY MORTGAGED TO THE BANGKO
SENTRAL, PURSUANT TO ACT NO, 3135, THE APPLICABLE REDEMPTION
PERIOD IS ONE (1) YEAR. REDEMPTION SHALL BE EFFECTED BY PAYING
THE PRINCIPAL, INTERESTS, INCLUDING ALL COSTS AND OTHER
EXPENSES INCURRED BY REASON OF THE FORECLOSURE SALE.

“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. 27. A new Section 89-A is hereby inserted in the same Act to read as follows:

“SEC. 89-A. FINANCIAL 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 FINANCIAL FACILITIES TO
ISLAMIC BANKS PROVIDED SUCH EXPOSURES SHALL BE PROPERLY
SECURED.”

SEC. 28. A new Section 89-B is hereby inserted in the same Act to read as follows:

“SEC. 89-B.LOANS TO THE PHILIPPINE DEPOSIT INSURANCE
CORPORATION (PDIC). - THE BANGKO SENTRAL, PURSUANT TO ITS
MANDATE OF MAINTAINING FINANCIAL STABILITY, MAY LEND TO THE


PDIC FUNDS FOR INSURANCE PURPOSE AND FOR FINANCIAL
ASSISTANCE THAT THE LATTER IS AUTHORIZED TO EXTEND UNDER
SECTION 17(D) OF REPUBLIC ACT NO, 3591, AS AMENDED, TO AN
INSURED BANK IN DANGER OF CLOSING IN ORDER TO MINIMIZE
LOSSES TO ITS DEPOSITORS AND CREDITORS. NOTWITHSTANDING
SECTION 18 OF REPUBLIC ACT NO. 3591, AS AMENDED, THE MONETARY
BOARD SHALL PRESCRIBE INTEREST RATES AND SUCH OTHER TERMS
AND CONDITIONS OF THE LOAN.”

SEC. 29. Section 92 of the same Act is hereby amended to read as follows:

“SEC, 92. Issue and Negotiation of Bangko Sentral Obligations. — In order to provide
the Bangko Sentral with effective instruments for open market operations, the Bangko
Sentral may, subject to such rules and regulations as the Monetary Board may prescribe
and in accordance with the principles stated in Section 90 of this Act, issue, place, buy
and sell freely negotiable evidences of indebtedness of the Bangko Sentral. [
Provided, That issuance of such certificates of indebtedness shall be made only in cases
of extraordinary movement in price levels.] Said evidences of indebtedness may be issued
directly against the international reserve of the Bangko 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 redeemed by the Bangko
Sentral shall not be included among its assets, and shall be immediately retired and
cancelled.”

SEC. 30. Section 95 of the same Act is hereby amended to read as follows:

“SEC. 95. Definition of Deposit Substitutes. - The term ‘deposit substitutes’ is

defined as an alternative form of obtaining funds from the public, other than deposits,

through the issuance, endorsement, or acceptance of debt instruments for the borrower's


own account, for the purpose of relending or purchasing of receivables and other
obligations. These instruments may include, but need not be limited to, bankers
acceptances, promissory notes, participations, certificates of assignment and similar
instruments with recourse, and repurchase agreements. THE TERM ‘PUBLIC’ MEANS
BORROWING FROM TWENTY (20) OR MORE LENDERS AT ANY ONE
TIME. FOR THIS PURPOSE, ‘LENDERS’ SHALL REFER TO INDIVIDUALS
AND CORPORATE ENTITIES THAT ARE NOT ACTING AS FINANCIAL
INTERMEDIARIES, SUBJECT TO THE SAFEGUARDS AND REGULATIONS
ISSUED BY THE MONETARY BOARD. The Monetary Board shall determine what
specific instruments shall be considered as deposit substitutes for the purposes of Section
94 of this Act: Provided, however, That deposit substitutes of commercial, industrial
and other nonfinancial companies issued for the limited purpose of financing their own
needs or the needs of their agents or dealers shall not be covered by the provisions of
Section 94 of this Act.”

SEC. 31. Section 101 of the same Act is hereby amended to read as follows:

“SEC. 101. Reserve Deficiencies. - Whenever the reserve position of any bank or
quasi-bank, computed in the manner specified in the preceding section of this Act, is
below the required minimum, the bank or quasi-bank shall pay the Bangko Sentral one-
tenth of one percent (1/10 of 1%) per day on the amount of the deficiency or the
prevailing ninety-one-day treasury bill rate plus three percentage points, whichever is
higher: Provided, however, That banks and quasi-banks shall ordinarily be permitted to
offset any reserve deficiency occurring on one or more days of the week with any excess
reserves which they may hold on other days of the same week and shall be required to

pay the penalty only on the average daily deficiency during the week. In cases of abuse,

the Monetary Board may deny any bank or quasi-bank the privilege of offsetting reserve
deficiencies in the aforesaid manner.

“If a bank or quasi-bank chronically has a reserve deficiency, the Monetary Board
may limit or prohibit the making of new loans or investments by the institution and may
require that part or all of the net profits of the institution be assigned to surplus.

“The Monetary Board may modify or set aside the reserve deficiency penalties
provided in this section, for part or the entire period of a strike or lockout affecting a bank
or a quasi-bank as defined in the Labor Code, or of a national emergency affecting

operations of banks or quasi-banks OR IN SUCH OTHER INSTANCES WHERE


THE GRANT OF WAIVER IS DETERMINED BY THE MONETARY BOARD
TO BE JUSTIFIABLE. The Mone

deficiency penalties for rehabilitation program of a bank.”

y Board may also modify or set aside reserved

SEC. 32. Section 104 of the same Act is hereby amended to read as follows:

“SEC. 104. Guiding Principle. ~ The Monetary Board shall use the powers
granted to it under this Act to ensure that the supply, availability and cost of money are in
accord with the needs of the Philippine economy and that bank credit is not granted for
speculative purposes prejudicial to the national interests. Regulations on bank operations
shall be applied to all banks of the same category AS MAY BE DEFINED BY THE
MONETARY BOARD uniformly and without discrimination.”

SEC. 33. Section 108 of the same Act is hereby amended to read as follows:

“SEC. 108. Minimum Capital Ratios. - The Monetary Board may prescribe
minimum [ratios which the capital and surplus of the banks must bear to the volume of
their assets, or to specific categories thereof,] RISK-BASED CAPITAL ADEQUACY
RATIOS BASED ON INTERNATIONALLY ACCEPTED STANDARDS and may
alter said ratios whenever it deems necessary. IN THE EXERCISE OF ITS
AUTHORITY UNDER THIS SECTION, THE MONETARY BOARD MAY
REQUIRE BANKS TO HOLD CAPITAL BEYOND THE MINIMUM
REQUIREMENTS COMMENSURATE TO THEIR RISK PROFILE.”

SEC. 34. Section 113 of the same Act is hereby amended to read as follows:

EC. 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, aJAs a general policy, their cash balances should
be deposited with the Bangko Sentral, with only minimum working balances to be held
by government-owned banks and such other banks [incorporated] LICENSED TO
OPERATE in the Philippines as the Monetary Board may [designate, subject to such
rules and regulations as the Board may prescribe: Provided, That such banks may hold
deposits of the political subdivisions and instrumentalities of the Government beyond
their minimum working balances whenever such subdivisions and instrumentalities have
outstanding loans with said banks] AUTHORIZE.

“The Bangko Sentral may ACCEPT DEPOSITS AND pay _ interest on SUCH
deposits AND OTHER SIMILAR PLACEMENTS of the Government or of its political

subdivisions and instrumentalities, [as well as on deposit of] banks [with the Bangko


Sentral] AND OTHER BANGKO SENTRAL-SUPERVISED INSTITUTIONS.”
SEC. 35. Section 123 of the same Act is hereby amended to read as follows:

“SEC. 123. Financial Advice on Official Credit Operations. ~ Before undertaking
any credit operation abroad, the Government, through the Secretary of Finance, shall
request the opinion, in writing, of the Monetary Board on the monetary implications of
the contemplated action, Such opinions must similarly be requested by all political
subdivisions and instrumentalities of the Government before any credit operation abroad
is undertaken by them.

“The opinion of the Monetary Board shall be based on the gold and foreign exchange
resources and obligations of the nation and on the effects of the proposed operation on the
balance of payments and on monetary aggregates.

“Whenever the Government, or any of its political subdivisions or instrumentalities,
contemplates borrowing within the Philippines, the prior opinion of the Monetary Board
shall likewise be requested in order that the Board may render an opinion on the probable
effects of the proposed operation on monetary aggregates, the price level, and the balance
of payments.

“A CREDIT OPERATION OR BORROWING AS PROVIDED HEREIN MAY
TAKE THE FORM OF DIFFERENT CREDIT FACILITIES SUCH AS, BUT NOT
LIMITED TO, A SINGLE LOAN, SERIES OF LOANS UNDER A BORROWING
PROGRAM, OR CREDIT LINES. NO PRIOR MONETARY BOARD OPINION
SHALL BE REQUIRED FOR INDIVIDUAL DRAWDOWNS OR BORROWINGS,
WITHIN APPROVED CREDIT LINES OR BORROWING PROGRAMS.”

SEC. 36. Section 125 of the same Act is hereby amended to read as follows:

“SEC. 125. Tax Exemptions. ~ The Bangko Sentral shall be exempt [for a period of
five (5) years from the approval of this Act] from all national, provincial, municipal and
city taxes, fees, charges and assessments[.], WHETHER DIRECT OR INDIRECT,
EXCEPT ON THE FOLLOWING:

“(A) ADMINISTRATIVE FEES AND CHARGES IMPOSED BY ANY
GOVERNMENT AGENCY;

“(B)MUNICIPAL/CITY FEES FOR SERVICES PROVIDED;

“(© INCOME FROM SALE OF: (1) BSP FORMS; (2) BID
DOCUMENTS; (3) SCRAP ITEMS; WASTE MATERIALS, SHREDDED
RECORDS; (4) CAR STICKERS, SECURITY PASS, IDENTIFICATION


PARAPHERNALIA; (5) DEMONETIZED COMMEMORATIVE NOTES AND
COINS; (6) COMMEMORATIVE MEDALS; AND (7) UNSERVICEABLE
FURNITURE AND EQUIPMENT THROUGH AUCTION;

“(D) INCOME FROM: (1) LEASE OF BSP OFFICES AND OTHER
PROPERTIES; (2) LEASE OF BSP VAULTS; AND (3) USE OF BSP-OWNED
PROPERTIES;

“(E)PENALTIES AND CHARGES FOR: (1) LATE DELIVERY OF
PURCHASES/SERVICES; AND (2) LATE PAYMENT OF LEASE.

“[The exemption authorized in the preceding paragraph of this section shall apply to
all property of the Bangko Sentral, to the resources, receipts, expenditures, profits and
income of the Bangko Sentral, as well as to all contracts, deeds, documents and
transactions related to the conduct of the business of the Bangko Sentral: Provided,
however, That said exemptions shall apply only to such taxes, fees, charges and
assessments for which the Bangko Sentral itself would otherwise be liable, and shall not
apply to taxes, fees, charges, or assessments payable by persons or other entities doing
business with the Bangko Sentral: Provided, further, That]THE EXEMPTION FROM
THE DOCUMENTARY STAMP TAX AS PROVIDED UNDER SECTION 199(L)
OF REPUBLIC ACT NO. 9337, AS AMENDED (THE 1997 NATIONAL
INTERNAL REVENUE CODE) SHALL CONTINUE TO BE OPERATIVE.
[f]Foreign loans and other obligations of the Bangko Sentral shall ALSO be exempt, both
as to principal and interest, from any and all taxes if the payment of such taxes [has been]
IS assumed by the Bangko Sentral.”

SEC. 37. Section 128 of the same Act is hereby amended to read as follows:

“SEC. 128. Prohibitions. ~ The Bangko Sentral shall not acquire shares of any kind
or accept them as collateral, and shall not participate in the ownership or management of
any enterprise, either directly or indirectly[.]: PROVIDED, THAT THIS
PROHIBITION SHALL NOT APPLY WHENEVER THE MONETARY BOARD,
BY A VOTE OF AT LEAST FIVE (5) OF ITS MEMBERS, DEEMS AN
ACQUISITION OR INVESTMENT TO BE NECESSARY TO QUALIFY OR AS
REQUIRED FOR MEMBERSHIP IN INTERNATIONAL AND REGIONAL
ORGANIZATIONS.

“The Bangko Sentral shall not engage in development banking or financing:

Provided, however, That outstanding loans obtained or extended for development


financing shall not be affected by the prohibition of this section.”
SEt

8. Repealing Clause. — All provisions of existing laws, orders, rules and regulations or
parts thereof which are in conflict or inconsistent with the provisions of this Act are hereby
repealed, amended or modified accordingly.

SEC. 39.Separability Clause. — If any provision or section of this Act is held to be
unconstitutional or invalid, the other provisions or sections hereof which are not affected thereby
shall continue to be in full force and effect.

SEC. 40. Effectivity. — This Act shall take effect fifteen (15) days after its publication in the
Official Gazette or in a newspaper of general circulation.

Approved.