Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS
First Regular Session

H.B.No, 498

Introduced by HONORABLE JUAN EDGARDO “SONNY” M. ANGARA

EXPLANATORY NOTE

Experience in the past highlighted the inability of the Bangko Sentral ng Pilipinas (BSP)
to deal effectively and expeditiously with problem banks. The authority of the BSP over problem
banks; in general, is limited to the grant of emergency advances in case of illiquidity, or closure
in case of insolvency. Prompt corrective actions cannot be implemented due to the absence of

clear and strong legal basis. Such inability of the BSP often causes losses of hard-earned
money of the depositors and also losses of public funds.

__ Therefore, to better protect the interest of the depositors and to avoid losses of the
public funds, this Bill seeks to adopt, among others, the following international best practices in

banking supervision and other measures that will strengthen the regulatory and supervisory
powers of the BSP over banks and other financial institutions:

1.

The principle of consolidated supervision - This will authorize the BSP, when
examining a bank or other financial institution under its supervision, to examine
its subsidiaries and affiliates engaged in allied activities. This is an international
best practice and very important in our jurisdiction since the parent institution can
be adversely affected by the failure of its subsidiaries and affiliates. Hence, the
BSP should be able to evaluate and determine the financial condition, not only of
the parent institution under its supervision but also of its subsidiaries and
affiliates.

BSP’s authority to approve transfers or acquisitions of shares in a supervised
institution where such transfer or acquisition or series of transfers or acquisitions
should be sufficient to elect at least one seat in the board or would effect a
change in the majority ownership or control of the voting stock of the institution -
This is a proactive measure that would empower the BSP to prevent the entry of
undesirable persons into the supervised institution. This is very important
because failure of institutions is usually caused by the actions of controlling
stockholders.

The authority of the Monetary Board to prescribe guidelines for the examination
of supervised authorities - This proposal will result in more effective supervision
since the resources and manpower of the BSP can be properly allocated and the
‘examination of problem institutions can be prioritized.

The authority of the Monetary Board to direct existing stockholders to infuse
additional capital or in case of their inability or refusal, to direct them to accept
new investors or merge or consolidate with a qualified financial institution - This
is also a proactive measure that could prevent failures of supervised institutions.


Prescribing additional and transparent grounds for bank closure announcement
of unilateral closure, suspension of payment of deposit substitutes, or inability to
pay liabilities as they become due - These proposed additional grounds for
closing a bank will minimize losses on the part of the depositors and of public
funds. This will even enable the PDIC to recover their payments of insured
deposits.

Increase in penalties for violation of applicable laws and regulations - This is
necessary because it has been observed in the past that banks opted to commit
violations and just pay the penalty because the income from prohibited
transactions was greater than the penalty. If not corrected, these practices would
render useless some of BSP's monetary policies.

Indemnify BSP personnel for cost and expenses incurred by them in connection
with any civil, administrative or criminal action, suit or proceedings - This will
encourage BSP personnel, particularly the examiners, to discharge their duties
and responsibilities properly without fear of retaliation.

The Bill also aims to enhance the ability of the BSP to provide policy directions in the
areas of money, banking and credit through the following:

1.

Grant of authority to the BSP to request date not only from government entities
but also from any person.

Authority of the Monetary Board to require all supervised institutions including
their subsidiaries and affiliates to maintain balanced currency position between
their assets -and liabilities.

Approval of this Bill which is primarily aimed at providing better protection to the public,
Particularly the depositors and creditors of BSP's supervised institutions, is therefore earnestly

sought

JUAN EDK 5S SeoHNE M. ANGARA

Representative
Lone District, Province of Aurora



FIFTEENTH CONGRESS OF THE )
REPUBLIC OF THE PHILIPPINES >:
First Regular Session ;

H.B.No, 458

Introduced by Honorable JUAN EDGARDO “SONNY” M. ANGARA

AN ACT
AMENDING REPUBLIC ACT NUMBERED SEVENTY-SIX
HUNDRED AND FIFTY-THREE ENTITLED "THE NEW CENTRAL
BANK ACT” AND FOR OTHER PURPOSES

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

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

“SECTION 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 effectivity of this Act.
[and] T[t}he balance SHALL [to] be paid for IMMEDIATELY UPON [within a
period of two years from] the effectivity of this Act THROUGH THE ISSUANCE
OF TRADABLE GOVERNMENT SECURITIES, OF EQUIVALENT MARKET
VALUE PROVIDED THAT ANY GOVERNMENT SECURITIES ISSUED
PURSUANT HERETO SHALL BE DEEMED APPROPRIATED FOR THIS
PURPOSE. [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, Republic Act No. 7653, otherwise known as the "The New Central
Bank Act", is hereby amended to read as follows:

"SECTION 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 CHANGERS, E-MONEY ISSUERS, REMITTANCE
AGENTS and institutions performing OTHER [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 FINANCIAL [monetary] stability and the convertibility of
the peso. IT SHALL LIKEWISE PROMOTE, OVERSEE AND MAINTAIN THE
STABILITY OF THE PAYMENT AND SETTLEMENT SYSTEM OF THE
COUNTRY IN ACCORDANCE WITH SOUND AND PRUDENT PRACTICES
TOWARDS ACHIEVING THE END OF OVERALL MONETARY AND
FINANCIAL STABILITY, THE BANGKO SENTRAL SHALL ISSUE AND
ENFORCE APPROPRIATE REGULATIONS.

SEC. 3. Section 11 of the same Act is hereby amended by inserting a new paragraph
between the third and the fourth paragraphs which shall read as follows:

‘THE MEETING OF THE MONETARY BOARD, AS REQUIRED BY
CIRCUMSTANCES, MAY BE CONDUCTED THROUGH THE USE OF
MODERN TECHNOLOGY INCLUDING, BUT NOT LIMITED TO, TELE-
CONFERENCING OR VIDEO-CONFERENCING.”

The last paragraph of Section 11 of the same Act shall be amended to read as follows:

“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 OTHER
RECORDING MEDIA [in microfilm].”

SEC. 4. Section 15 (Exercise of the Authority of the Monetary Board), paragraphs (b)
and (e), of the same Act is hereby amended to read as follows:

"(b) direct the management, operations, and administration of the
Bangko Sentral, reorganize its personnel, AND IN CONNECTION
THEREWITH PROVIDE SEPARATION BENEFITS WHENEVER NECESSARY,
and. issue such rules and regulations as it may deem necessary or convenient
for this purpose. The legal units of the Bangko Sentral shall be under the
exclusive supervision and control of the Monetary Board;

"(e) indemnify its members and other PERSONNEL [officials] of the
Bangko Sentral, including personnel of the departments performing supervision

and examination functions against all costs and expenses reasonably incurred

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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, GROSS negligence
or GROSS misconduct.

In the event of a settlement or compromise, indemnification shall be
provided only in connection with such matters covered by the settlement as to
which the Bangko Sentral is advised by external counsel that the person to be
indemnified [did not commit any] HAD NOT ACTED WITH BAD FAITH,
MALICE, GROSS negligence or GROSS misconduct.

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

SEC. 5. Section 16 of the same Act is hereby amended to read as follows:

"SECTION 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 | OF THE
REVISED ADMINISTRATIVE CODE OF 1987 SHALL APPLY TO M[mJembers
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 fall 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]

XXX

“THE FOREGOING NOTWITHSTANDING, UNLESS THE ACTION OF
THE MEMBERS OF THE MONETARY BOARD OR ANY PERSONNEL OF THE
BANGKO SENTRAL IS FOUND TO BE IN WILLFUL VIOLATION OF THIS
ACT OR PERFORMED IN BAD FAITH, WITH MALICE AND/OR GROSS
NEGLIGENCE, THE MEMBERS OF THE MONETARY BOARD AND THE
PERSONNEL OF THE BANGKO SENTRAL SHALL BE HELD FREE AND
HARMLESS TO THE FULL EXTENT PERMITTED BY LAW FROM ANY

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LIABILITY AND SHALL BE INDEMNIFIED FOR ANY AND ALL LIABILITIES,
CLAIMS, DEMANDS, DAMAGES, DEFICIENCIES, COSTS AND EXPENSES
OF WHATSOEVER KIND AND NATURE THAT MAY ARISE IN CONNECTION
WITH THE PERFORMANCE OF THEIR FUNCTIONS.”

‘SEC. 6. The first paragraph of Section 21 of the same Act is hereby amended to read as
follows:

“SECTION 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.”

SEC. 7. The first paragraph of Section 23 of the same Act is hereby amended to read as.
follows:
“SECTION 23. Authority to Obtain Data and Information.- The Bangko

Sentral shall have the authority to REQUIRE [request] from ANY PERSON
OR ENTITY, INCLUDING government offices and instrumentalities, or
government-owned or controlled corporations, any data PERTAINING TO
THE [which it may require for the proper discharge of its] functions and
representatives OF THE BANGKO SENTRAL. 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 BANGKO SENTRAL [bank] with data [requested
of] required, shall be subject to punishment for contempt AND SHALL BE
SUBJECT TO A FINE in accordance with the provisions of the Rules of Court.”

“Data on individual$ AND PRIVATE firms, other than banks, gathered by
the [Department of Economic Research and other departments or units of the]
Bangko Sentral shall not be made available to any person or entity outside of the
Bangko Sentral whether public or private except under order of the court or under
such conditions as may be prescribed by the Monetary Board: Provided,
however, That the collective data on firms may be released to interested persons
or entities: Provided, finally, That in the case of data on banks, the provisions of
Section 27 of this Act shall apply.”

SEC. 8. Section 25 of the same Act is hereby amended to read as follows:

“SECTION 25. Supervision and Examination. - The Bangko Sentral
shall have supervision over, and conduct REGULAR [periodic] or special

examination[s] of [,] banking institutions, and quasi-banks, including their

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subsidiaries and affiliates engaged in allied activities. THE BANGKO SENTRAL
SHALL HAVE THE POWER TO REGULATE AND EXAMINE TRANSACTIONS
BETWEEN THE SUPERVISED INSTITUTIONS AND THEIR PARENT OR
OTHER AFFILIATE COMPANIES.

“TRANSFERS OR ACQUISITIONS OR A SERIES THEREOF OF
SHARES OF STOCK IN BANKS OR QUASI-BANKS SUFFICIENT TO ELECT
ATLEAST ONE SEAT IN THE BOARD OF DIRECTORS OR TO EFFECT
A CHANGE IN THE MAJORITY OWNERSHIP OR CONTROL OF THESE
INSTITUTIONS, SHALL REQUIRE THE PRIOR APPROVAL BY THE BANGKO
SENTRAL. THE SELLING OR CONVEYING STOCKHOLDER SHALL SUBMIT
SUCH TRANSFER OR ACQUISITION FOR APPROVAL BY THE BANGKO
SENTRAL WITHIN SUCH PERIOD AS MAY BE PRESCRIBED BY THE
MONETARY BOARD. IN APPROVING SAID TRANSFERS OR
ACQUISITIONS, REGARD SHALL BE GIVEN BY THE BANGKO SENTRAL
TO THE FITNESS OF THE INCOMING STOCKHOLDERS AS MAY BE
INDICATED BY THEIR REPUTATION AND FINANCIAL CAPACITY.

“PRIOR TO BANGKO SENTRAL APPROVAL, NO SUCH TRANSFER
OR ACQUISITION SHALL BE RECOGNIZED IN THE BOOKS OF THE
INSTITUTION NOR BY ANY GOVERNMENT AGENCY AND THE
TRANSFEROR-STOCKHOLDERS, SHALL REMAIN ACCOUNTABLE AND
RESPONSIBLE THEREFOR. MOREOVER, TRANSFER OF ACTUAL
CONTROL OR MANAGEMENT OF THE INSTITUTION TO THE NEW
STOCKHOLDERS OR THEIR REPRESENTATIVES PRIOR TO BANGKO
SENTRAL APPROVAL SHALL MAKE THE TRANSFEROR, THE
TRANSFEREE AND ANY PERSON RESPONSIBLE THEREFOR LIABLE
UNDER SECTIONS 36 AND 37 OF THIS ACT. NOTWITHSTANDNIG ANY
PROVISION OF LAW TO THE CONTRARY, THE BANGKO SENTRAL SHALL
SHARE WITH THE PHILIPPINE DEPOSIT INSURANCE CORPORATION ANY
INFORMATION THAT BANGKO SENTRAL MAY OBTAIN PERTAINING TO
TRANSFER OR ACQUISITION OF SHARES OR SERIES OF TRANSFERS OR
ACQUISITIONS OF SHARES IN BANKS.

For purposes of this section, a subsidiary means a corporation more
than fifty percent (50%) of the voting stock of which is owned DIRECTLY OR
INDIRECTLY by a bank or quasi-bank and an affiliate means a corporation
the voting stock of which, to the extent of fifty percent (50%) or less, is owned
by a bank, 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. A PARENT COMPANY MEANS A
CORPORATION WHICH OWNS DIRECTLY OR INDIRECTLY VOTING STOCK

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OF A SUPERVISED INSTITUTION SUFFICIENT TO CONTROL ITS
MANAGEMENT AND OPERATIONS.

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

(A) POWER OVER MORE THAN ONE HALF OF THE VOTING
RIGHTS BY VIRTUE OF AN AGREEMENT WITH OTHER INVESTORS; OR

(B) POWER TO GOVERN THE FINANCIAL AND OPERATING

POLICIES OF THE ENTERPRISE UNDER A STATUTE OR AN AGREEMENT;
OR

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

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

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

The department heads and the examiners of the supervising and/or
examining departments are hereby authorized to administer oaths to any
director, officer, or employee of any institution under their respective
supervision or subject to their examination and to compel the presentation of
all books, documents, papers or records necessary in their judgment to
ascertain the facts relative to the true condition of any institution as well as the
books and records of persons and entities relative to or in connection with
the operations, activities or transactions ofthe _ institution under
examination. THE BANGKO SENTRAL AND THE PHILIPPINE DEPOSIT
INSURANCE CORPORATION ARE FURTHER HEREBY AUTHORIZED TO
EXAMINE DEPOSIT AND INVESTMENT ACCOUNTS, NOTWITHSTANDING [,
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.

[No restraining order or injunction shall be issued by the court

enjoining the Bangko Sentral from examining any institution subject to

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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 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 ]

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

“SECTION 28. Examination and Fees. - The supervising and examining
department head, personally or by deputy, shall examine the OPERATIONS
[books] of every [banking institution] BANK AND QUASI-BANK, INCLUDING
THEIR SUBSIDIARIES AND AFFILIATES ENGAGED IN ALLIED
ACTIVITIES AND OTHER FINANCIAL INSTITUTIONS 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: [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:]
Provided, That there shall be an interval of at least twelve (12) months between
REGULAR [annual] 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 authorized
deputies full opportunity to examine its books AND RECORDS, cash and
available assets and general condition 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.

SUPERVISED INSTITUTIONS [Banking and quasi-banking institutions
which are subject to examination by the Bangko Sentral] shall pay to the Bangko
Sentral, within the first thirty (30) days of each year, an annual SUPERVISION
fee in an amount equal to a percentage as may be prescribed by the Monetary

‘4


Board [of] BASED ON its [average] total assets AS OF THE END OF [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]."

SEC. 10. A NEW SECTION ENTITLED SECTION 28-A OF THE SAME ACT SHALL
BE INSERTED BETWEEN SECTIONS 28 AND 29 WHICH SHALL READ AS FOLLOWS:

“SECTION 28-A, BSP COORDINATION. - THE SUSPENSION OR
REVOCATION OF ANY GOVERNMENT LICENSE NECESSARY FOR THE
OPERATION OF A BSP-SUPERVISED ENTITY MUST BE DONE ONLY WITH
PRIOR CONFORMITY FROM BANGKO SENTRAL.”

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

“SECTION 30. Proceedings in Receivership and Liquidation.-
Whenever, upon report of the head of the supervising [or] AND examining
department, the Monetary Board finds that 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 SUBSTITUTES 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 IN ACCORDANCE WITH THE
BANKING REGULATIONS [to meet its liabilities]; or

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

(a) HAS REFUSED TO PERMIT ANY LAWFUL EXAMINATION INTO
THE AFFAIRS OF SUCH INSTITUTION; OR

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

8


business in the Philippines and IN CASE IT IS A BANK, designate the
Philippine Deposit Insurance Corporation (PDIC) as receiver of the banking
institution. THE MONETARY BOARD SHALL 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 may be designated as receiver.

THE AUTHORITY OF THE MONETARY BOARD TO PLACE A BANK
OR QUASI-BANK UNDER RECEIVERSHIP AS PROVIDED ABOVE MAY
ALSO BE EXERCISED OVER OTHER NON-BANK FINANCIAL
INSTITUTIONS WHICH ARE 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 and take charge of all the assets
and liabilities of the institution, administer the same for the benefit of its creditors,
and exercise the general powers of a receiver under EXISTING LAWS AND the
Revised Rules of Court. [but shall not, with the exception of] THE RECEIVER
SHALL ADDITIONALLY HAVE THE AUTHORITY TO: (1) PAY 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] AND (2) deposit
or place the funds of the institution in non-speculative investments; OR (3)
ADOPT, IF APPROPRIATE, BRIDGE BANKING AS A RESOLUTION
METHOD, AS GOVERNED BY SECTION 30-B OF THIS ACT. HOWEVER,
THE RECEIVER OF QUASI-BANKS AND OTHER NON-BANK FINANCIAL
INSTITUTIONS CANNOT PAY OR COMMIT ANY ACT THAT WILL INVOLVE
THE TRANSFER OR DISPOSITION OF ANY ASSET OF THE INSTITUTION.
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 SUCH [the] institution may be rehabilitated or otherwise
placed in such a condition so that it may be permitted to resume business with
safety to its [depositors and] creditors and the general public: Provided, That
any determination for the resumption of business of the institution shall be
subject to prior approval of the Monetary Board.

IN ORDER TO REHABILITATE THE CLOSED INSTITUTION OR TO
RESTORE ITS OPERATIONS WITH SAFETY TO ITS CREDITORS AND THE

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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-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] 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 AND
UPON A FINDING AFTER DUE HEARING that the action taken was in

10


excess of jurisdiction or with such grave abuse of discretion as to amount to
lack or excess of jurisdiction ‘he 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 receiver.”

‘SEC. 12. New sections entitled Section 30-A and Section 30-B of the same Act shall be
inserted between Sectioris 30 and 31 which shall read as follows:

"SECTION 30-A. QUICK RESOLUTION ACTION. - WHENEVER
UPON THE REPORT OF THE HEAD OF THE SUPERVISING AND
EXAMINING DEPARTMENT, THE MONETARY BOARD FINDS A BANK OR
QUASI-BANK OR OTHER SUPERVISED FINANCIAL INSTITUTION HAS
INSUFFICIENT REALIZABLE ASSETS TO MEET ITS LIABILITIES, THE
MONETARY BOARD SHALL HAVE THE AUTHORITY TO DIRECT THE
EXISTING STOCKHOLDERS OF SAID BANK OR QUASI-BANK OR
SUPERVISED FINANCIAL INSTITUTION TO INFUSE CAPITAL WITHIN A
PERIOD NOT EXCEEDING NINETY (90) DAYS FROM THE DATE OF
DIRECTIVE IN SUCH AMOUNT AS MAY BE NECESSARY TO RESTORE
THE ENTITY'S CAPITAL TO THE MINIMUM REQUIRED AMOUNT OR
RATIO. IN CASE OF INABILITY OR UNWILLINGNESS OF THE
STOCKHOLDERS TO INFUSE THE REQUIRED AMOUNT OF ADDITIONAL
CAPITAL WITHIN THE PRESCRIBED PERIOD, THE MONETARY BOARD
MAY ORDER A QUASI-REORGANIZATION OF SAID ENTITY TO REFLECT
THE FAIR VALUE OF ITS CAPITAL AND/OR DIRECT SAID ENTITY TO
ACCEPT INVESTMENTS FROM QUALIFIED INVESTORS OR TO MERGE
OR CONSOLIDATE WITH A QUALIFIED FINANCIAL INSTITUTION.”

“SECTION 30-B. BRIDGE BANKING. - THE 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.

(1) A BRIDGE BANK REFERS TO A TEMPORARY BANK LICENSED
BY THE BANGKO SENTRAL NG PILIPINAS (BSP), ESTABLISHED AND

1


OPERATED TO ACQUIRE ASSETS AND ASSUME LIABILITIES OF A FAILED
BANK TO FACILITATE ITS RESOLUTION. THE BRIDGE BANK SHALL:

(A) HAVE AUTHORITY TO PURCHASE ASSETS, ASSUME
DEPOSITS AND OTHER LIABILITIES WHICH THE PDIC MAY DETERMINE
TO BE APPROPRIATE; AND

(B) | PERFORM SUCH BANKING FUNCTIONS AS THE MONETARY
BOARD MAY AUTHORIZE, CONSISTENT WITH THE OBJECTIVES OF THIS
SECTION.

(2) A BRIDGE BANK RESOLUTION MEASURE MAY BE ADOPTED
ONLY IF THE PDIC DETERMINES THAT—

(A) ITIS A COST-EFFECTIVE AND VIABLE RESOLUTION MEASURE
AND THE AMOUNT NECESSARY TO IMPLEMENT SUCH MEASURE IS LESS
THAN THE ESTIMATED INSURED DEPOSITS OF THE FAILED BANK; AND

(B) THE PRESERVATION OF CRITICAL BANKING FUNCTIONS IS IN
THE BEST INTEREST OF THE DEPOSITORS AND THE PUBLIC.

(3) FOR THE EFFECTIVE IMPLEMENTATION OF A BRIDGE BANK
RESOLUTION MEASURE, THE PDIC MAY:

(A) SELL, ASSIGN, TRANSFER, OR CONVEY ITS SHAREHOLDINGS
IN ITS SUBSIDIARY TO THE FAILED BANK;

(B) 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:

(1) 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;

(2) 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,

12


ATTACHMENT OR EXECUTION SHALL BE LIABLE UNDER SECTION 21 OF
REPUBLIC ACT NO. 3591, AS AMENDED.

(3) BE EFFECTIVE WITHOUT ANY CONSENT FROM THE
STOCKHOLDERS, CREDITORS, STAKEHOLDERS OF THE FAILED BANK,
NOTWITHSTANDING ANY PROVISION OF LAW TO THE CONTRARY.

(C) 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;

(D) CONDUCT DUE DILIGENCE ON AN INSURED BANK, AND
EXAMINE AND AUDIT THE DEPOSIT ACCOUNTS AND/OR RECORDS, OF
AN INSURED 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 PDIC OR UPON ORDER OF
THE COURT; AND

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

(4) 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.

(5) 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 PARAGRAPHS (8) AND (7);
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.

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

(A) THE MERGER OR CONSOLIDATION OF THE BRIDGE BANK
WITH ANOTHER BANK THAT IS NOT A BRIDGE BANK; OR

(B) THE SALE OF THE BRIDGE BANK TO A QUALIFIED BUYER, AS
MAY BE DETERMINED BY THE PDIC; OR

(C) THE ASSUMPTION OF ALL OR SUBSTANTIALLY ALL OF THE
(1) DEPOSITS AND OTHER LIABILITIES AND/OR (2) 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

(D) THE EXPIRATION OF THE PERIOD PROVIDED IN PARAGRAPH
(5), OR THE EARLIER DISSOLUTION OF THE BRIDGE BANK AS PROVIDED
IN PARAGRAPH (7).

(7) DISSOLUTION OF BRIDGE BANK.—

(A) 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 SUBPARAGRAPHS (A), (B) OR (C), OF PARAGRAPH (6), THE
BOARD OF DIRECTORS OF PDIC MAY DISSOLVE A BRIDGE BANK AT
ANY TIME IT DEEMS NECESSARY.

(B) 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.

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

(9) THE ACTIONS OF THE PDIC UNDER THIS SECTION 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.

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

SEC. 13. 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
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 TWO MILLION PESOS (P2,000,000)
[One hundred thousand pesos (P100,000)] or by imprisonment of not less than
‘one (1) year nor more than five (5) years, or both, in the discretion of the court.”

SEC. 14. Section 35 of the same Act is hereby amended to read as follows:

“SECTION 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 MILLION PESOS
(P2,000,000) [Two hundred thousand pesos (P200,000)], or by imprisonment of
not more than (5) years, or both, at the discretion of the court.”

15


SEC. 15. Section 36 of the same Act is hereby amended to read as follows:

“SECTION 36. Proceedings Upon Violation of This Act and Other
Banking Laws, Rules, Regulations, Orders or Instructions.. Whenever a
bank, [or] quasi-bank, OR OTHER FINANCIAL INSTITUTION WHICH UNDER
THIS ACT OR SPECIAL 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 MILLION PESOS
(P2,000,000) [Two hundred thousand pesos (P200,000)] 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. 16. Section 37 of the same Act is hereby amended to read as follows:

"SECTION 37. Administrative Sanctions [on Banks and 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 quasi-bank, INCLUDING THEIR SUBSIDIARIES AND AFFILIATES
ENGAGED IN ALLIED ACTIVITIES, OR OTHER INSTITUTIONS WHICH
UNDER THIS ACT OR SPECIAL LAWS ARE SUBJECT TO THE BANGKO
SENTRAL SUPERVISION, AND/OR their directors, EMPLOYEES,
STOCKHOLDERS AND/OR MEMBERS [andlor officers], for any willful
violation of its charter or by-laws, willful delay in the submission of reports or
publications thereof as required by law, rules and regulations; any refusal to
permit examination into the affairs of the institution; any willful making of a
false or misleading statement to the MONETARY 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

16


business in an unsafe or unsound manner as may be determined by the
Monetary Board. [] T[iJhe following administrative sanctions MAY BE
IMPOSED [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) a
day for each violation, taking into consideration the attendant circumstances,
such as the nature and gravity of the violation or irregularity and the size of the
bank or quasi-bank;] IN ACCORDANCE WITH THE IMPLEMENTING
REGULATIONS, BASED ON THE NATURE AND GRAVITY OF THE OFFENSE
AS WELL AS THE RELATIVE ASSET SIZE OF THE INSTITUTION. THE
MONETARY BOARD SHALL, BY REGULATION, DEFINE SERIOUS OR
GRAVE, LESS SERIOUS OR LESS GRAVE, AND MINOR OFFENSES
TAKING INTO CONSIDERATION THE ATTENDANT AGGRAVATING AND
MITIGATING CIRCUMSTANCES: PROVIDED, THAT WITHOUT PREJUDICE
TO THE IMPOSITION OF APPLICABLE SANCTION TO THE INSTITUTION
THAT COMMITTED A SPECIFIC VIOLATION OR IRREGULARITY, THE
MONETARY BOARD MAY ALSO IMPOSE SANCTIONS ON ITS PARENT
COMPANY IF THERE IS EVIDENCE THAT SAID PARENT COMPANY
ABETTED THE COMMISSION OF THE VIOLATION OR IRREGULARITY OR
DID NOT EXERCISE REASONABLE MEANS TO PREVENT THE SAME

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

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

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

(e) SUSPENSION OR revocation of quasi-banking license;

(F) SUSPENSION OR REVOCATION OF TRUST LICENSE;

(G) PROHIBITION FROM DECLARING CASH DIVIDENDS;

(H) CONFISCATION BY AND FORFEITURE IN FAVOR OF THE
BANGKO SENTRAL OF ANY AND ALL PROFITS, AS MAY BE

DETERMINED BY THE MONETARY BOARD, ARISING FROM THE OFFENSE.
OR VIOLATION OF BANKING LAWS, RULES AND REGULATIONS; AND/OR

7


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

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

CIRCUMSTANCES, SUCH AS THE NATURE AND GRAVITY OF THE ACT
OR OMISSION.

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

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

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

Whether or not there is an administrative proceeding, if the institution
andlor the ~— directors and/or officers, EMPLOYEES AND/OR
STOCKHOLDERS/MEMBERS 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, EMPLOYEES
ANDIOR STOCKHOLDERS/MEMBERS [and/or officers] concerned to cease
and desist from the indicated practice or violation, and may further order that
immediate action be taken to correct the conditions resulting from such practice
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

18


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

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

SEC. 16. A new section entitled Section 38-A of the same Act shall be inserted between
Sections 38 and 39 which shall be read as follows:

“SECTION 38-A. ISSUANCE OF PROVISIONAL REMEDIES AGAINST
BANGKO SENTRAL ACTIONS. —- NO COURT OF LOWER LEVEL THAN THE
COURT OF APPEALS SHALL ISSUE ANY TEMPORARY RESTRAINING
ORDER, PRELIMINARY INJUNCTION OR PRELIMINIARY MANDATORY
INJUNCTION AGAINST THE BANGKO SENTRAL FOR ANY ACTION UNDER
THIS ACT.

SUCH TEMPORARY RESTRAINING ORDER, PRELIMINARY
INJUCTION OR PRELIMINARY MANDATORY INJUNCTION MAY BE
DISSOLVED OR STAYED UPON FILING OF A WRITTEN UNDERTAKING BY
THE BANGKO SENTRAL THAT IT WILL PAY ALL DAMAGES WHICH THE
PETITTIONER MAY SUFFER FROM THE STAY OF THE INJUNCTION
SHOULD IT BE DECIDED IN A FINAL JUDGMENT THAT THE PETITIONER IS
ENTITLED TO HAVE ACTS COMPLAINED OF PERMANENTLY ENJOINED.

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

PROCEDURES IN SO FAR AS THEY ARE APPLICABLE AND NOT
INCONSISTENT WITH THE PROVISIONS OF THIS ACT SHALL GOVERN

19


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:

“SECTION 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 AND OTHER ACCOUNTS AS DETERMINED BY THE
MONETARY BOARD TO BE NECESSARY FOR THE PRESERVATION OF
‘THE FINANCIAL SOUNDNESS OF THE BANGKO SENTRAL.”

SEC, 18. Section 61 of the same Act is hereby amended to read as follows:

“SECTION 61. GUIDING PRINCIPLE. — The Monetary Board shall
[endeavor to control any expansion or contraction in monetary aggregates which
is prejudicial] ASSESS PRICE DEVELOPMENTS AND OUTLOOK AND
ACCORDINGLY USE ITS POLICY INSTRUMENTS to [the] attainment or
maintenance of] price stability.”

SEC. 19. Section 63 of the same Act is hereby amended to read as follows:

“SECTION 63. ACTION WHEN ABNORMAL MOVEMENTS OCCUR IN
PRICE LEVEL. — Whenever abnormal movements 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

20


(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 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 THIS quantitative guideline 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 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 price
disturbances have disappeared or have been adequately controlled.”

SEC. 20. Section’77 of the same Act is hereby amended to read as follows:

“SECTION 77. Requirement of Balanced Currency Position.- The
Monetary Board may require [the] banks AND QUASI-BANKS, INCLUDING
THEIR SUBSIDIARIES AND AFFILIATES ENGAGED IN ALLIED
ACTIVITIES, to maintain a balanced position between their assets and
liabilities in Philippine pesos or in any other currency or currencies in which
they operate. THEY [The Banks] shall be granted a reasonable period of time in
which to adjust their currency positions to any such requirement.

The powers granted under this section shall be exercised only when
special circumstances make such action necessary, in the opinion of the
Monetary Board, and shall be applied to all banks AND QUASI-BANKS,
INCLUDING THEIR SUBSIDIARIES AND AFFILIATES ENGAGED IN ALLIED
ACTIVITIES, alike and without discrimination."

SEC. 21. Section 81 of the same Act is hereby amended to read as follows:

“SECTION 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 objective of price stability AS WELL AS FINANCIAL
STABILITY.”

21


SEC. 22. Section 83 of the same Act is hereby amended to read as follows:

“SECTION 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 AND OTHER SYSTEMICALLY
CRITICAL BSP-SUPERVISED institutions for a period of not more than THIRTY
(30) [seven (7)] days without any collateral for 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. 23. Section 84 of the same Act is hereby amended to read as follows:

“SECTION 84. EMERGENCY LOANS AND ADVANCES, — In periods of

national and/or local emergency or of imminent financial panic which directly
threaten monetary and FINANCIAL [banking] 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 AND OTHER SYSTEMICALLY
CRITICAL BSP-SUPERVISED 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 BORROWINGS [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 BORROWINGS [total deposit and deposit substitutes] of the institution and
shall be secured by government securities to the extent of their applicable loan
values and other unencumbered first class collaterals AND ACCEPTABLE
GUARANTEES BACKED UP BY THE NATIONAL GOVERNMENT OR ITS
SECURITIES which the Monetary Board may approve: Provided, That if as

ae.


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 INSTITUTION’S [bank's] total BORROWINGS [deposit and deposit
subsitutes] 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 institution shall submit to the
Bangko Sentral a resolution of its board of directors authorizing the Bangko
Sentral to evaluate other assets of the 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.”

23


SEC. 24. Section 85 of the same Act is hereby amended to read as follows:

“SECTION 85. INTEREST AND OTHER CHARGES ON BSP CREDIT
FACILITIES. — The Bangko Sentral shall collect interest and other appropriate
charges on all loans and advances it extends, the closure, receivership or
liquidations of the debtor-institution notwithstanding.

The Monetary Board shall fix the interest and OTHER CHARGES
[rediscount rates] to be IMPOSED [charged] by the Bangko Sentral on its credit
operations UNDER THIS ACT in accordance with the character and term of the
operation [, but after due consideration of the Bangko Sentral's portfolio, and the
general requirements of the national monetary policy]. Interest and OTHER
CHARGES [rediscount rates] shall be applied CONSISTENTLY to all
INSTITUTIONS AS MAY BE DEFINED BY THE MONETARY BOARD [banks of
the same category uniformly and without discrimination].”

SEC. 25. A new section entitled Section 88-A of the same Act shall be inserted between
Sections 88 and 89 which shall read as follows:

“SECTION 88-A. | EXEMPTION FROM ATTACHMENT. THE
PROVISIONS OF ANY LAW TO THE CONTRARY NOTWITHSTANDING
AND SECTION 31 OF THIS ACT, COLLATERALS ON LOANS AND
ADVANCES GRANTED BY THE BANGKO SENTRAL TO BANKING
INSTITUTIONS SHALL NOT BE SUBJECT TO ATTACHMENT, EXECUTION
OR ANY OTHER COURT PROCESS, NOR SHALL THEY BE INCLUDED IN
THE PROPERTY OF INSOLVENT PERSONS OR INSTITUTIONS, UNLESS
ALL DEBTS AND OBLIGATIONS OF THE BANKING INSTITUTIONS TO THE
BANGKO SENTRAL, WHETHER REGISTERED OR NOT, HAVE BEEN PAID,
INCLUDING ACCRUED INTEREST, PENALTIES, COLLECTION
EXPENSES, AND OTHER CHARGES."

SEC. 26. A new section entitled Section 88-B of the same Act shall be inserted after
Section 88-A which shall be read as follows:

“SECTION 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

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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. 27. A new section entitled Section 88-C of the same Act shall be inserted after
Section 88-B which shall be read as follows:

“SECTION 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 (90) 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.

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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. 28. A new section entitled Section 89-A of the same Act shall be inserted between
Sections 89 which shall read as follows:

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

“SECTION 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 SUBJECT TO PRIOR
APPROVAL BY THE MONETARY BOARD [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.”

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

“SECTION 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 re-lending
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 Monetary Board shall determine what

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specific instruments shall be considered as deposit substitutes for the
purposes of Section 94 of this Actf]. The Monetary Board MAY ALSO
EXCLUDE FUNDS OBTAINED OR BORROWED FROM CERTAIN
INSTITUTIONAL LENDERS FROM THIS SECTION [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 non-financial companies issued for the
limited purpose of financing their own needs or the needs of their agents or
dealers shalll not be covered by the provisions of Section 94 of this Act."

SEC. 31. Section 99 of the same Act is hereby amended to read as follows:

“SECTION 99. Adjustment in Reserve Requirements. — Whenever in
the opinion of the Monetary Board it becomes necessary to ADJUST [increase]
reserve requirements against existing liabilities, the CHANGE [increase] shall be
made in a [gradual] manner CONSISTENT WITH THE MONETARY POLICY
DETERMINED BY THE MONETARY BOARD [and shall not exceed four
percentage points in any thirty day period]. Banks and other affected financial
institutions shall be notified reasonably in advance of the date on which such
CHANGE [increase] is to become effective.”

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

“SECTION 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:

“SECTION 108. Minimum Capital Ratios. - The Monetary Board may
prescribe minimum RISK-BASED CAPITAL ADEQUACY ratios BASED
ON INTERNATIONALLY ACCEPTED STANDARDS [which the capital and
surplus of the banks must bear to the volume of their assets, or to specific
categories thereof] and may alter said ratios whenever it deems
necessary. IN THE EXERCISE OF ITS AUTHORITY UNDER THIS SECTION,
THE MONETARY BOARD MAY PRESCRIBE A HIGHER MINIMUM CAPITAL
ADEQUACY RATIO FOR INDIVIDUAL BANKS WHICH ARE EXPOSED TO
MORE THAN NORMAL RISKS.”

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

“SECTION 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 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 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 or instrumentalities have
outstanding loans with said banks.

‘The Bangko Sentral may pay interest on deposits of the Government or of
its political subdivisions and instrumentalities, as well as on deposits AND
OTHER SIMILAR PLACEMENTS of banks [with the Bangko Sentral] AND
OTHER BANGKO SENTRAL-SUPERVISED INSTITUTIONS.”

SEC. 35. Section 125 of the same Act is hereby amended to read as follows:

“SECTION 125. Tax Exemptions- THE PROVISIONS OF ANY
GENERAL OR SPECIAL LAW TO THE CONTRARY NOTWITHSTANDING,
ALL INTERNAL REVENUE TAX OBLIGATIONS OF THE BANGKO SENTRAL
ARISING FROM REVENUES AND RECEIPTS WITH RESPECT TO THE
EXERCISE OF ITS ESSENTIAL GOVERNMENTAL FUNCTION SHALL, FOR A
PERIOD OF FIVE (5) YEARS RECKONED FROM THE DATE OF
EFFECTIVITY OF THIS ACT, BE CHARGEABLE TO THE TAX EXPENDITURE
FUND (TEF) IN THE ANNUAL GENERAL APPROPRIATIONS ACT
PURSUANT TO THE PROVISIONS OF EXECUTIVE ORDER NO. 93, SERIES
OF 1986: PROVIDED THAT, ON THE 6™ YEAR AND THEREAFTER, THE
BANGKO SENTRAL SHALL BE EXEMPT FROM ALL NATIONAL TAXES
RESULTING FROM THE EXERCISE OF ITS ESSENTIAL GOVERNMENTAL
FUNCTION: PROVIDED HOWEVER, THAT THE BANGKO SENTRAL SHALL
BE SUBJECT TO NATIONAL TAXES SUCH AS, BUT NOT LIMITED TO, THE
INCOME TAX AND BUSINESS TAXES RESULTING FROM THE EXERCISE
OF PURELY PROPRIETARY FUNCTIONS: PROVIDED, FINALLY, THAT THE
BUREAU OF INTERNAL REVENUE SHALL ISSUE THE NECESSARY
REVENUE REGULATIONS TO IMPLEMENT THE PROVISIONS OF THIS
SECTION [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.]

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The exemptions 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 such taxes, fees, charges, and assessments for which the Bangko
Sentral itself would otherwise be liable, and shall not apply to taxes, fees,
charges, or assessments payable by persons or other entities doing business
with the Bangko Sentral: Provided, further, That foreign loans and other
obligations of the Bangko Sentral shall be exempt, both as to principal and
interest, from any and all other taxes if the payment of such taxes has been
assumed by the Bangko Sentral.”

‘SEC. 36. The first paragraph of Section 126 of the same Act is hereby amended to read
as follows:

“SECTION 126. Exemption from Customs Duties. - The provision of
any general or special law to the contrary notwithstanding, the importation and
exportation by the Bangko Sentral of notes and coins, and of gold and other
metals to be used for purposes authorized under this Act, and the importation
of all equipment AND SUPPLIES needed [for purposes authorized under this
Act, and the importation of all equipment needed for] IN THE BANGKO
SENTRAL OPERATIONS SPECIFICALLY RELATED TO bank note production,
minting of coins, metal refining, [and other] security printing operations AND
TRANSPORT OF CURRENCY shall be fully exempt from all customs duties
and consular fees and from all other taxes, assessments and charges
related to such importation or exportation: PROVIDED, THAT THE BUREAU OF
CUSTOMS SHALL ISSUE THE NECESSARY GUIDELINES TO IMPLEMENT
‘THE PROVISIONS OF THIS SECTION”

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

“SECTION 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
SUCH OWNERSHIP AND/OR MANAGEMENT IS EXPRESSLY AUTHORIZED
BY LAW, OR THE MONETARY BOARD BY A VOTE OF AT LEAST FIVE (5)

OF ITS MEMBERS DEEMS AN ACQUISITION OR INVESTMENT TO BE
NECESSARY TO THE PERFORMANCE BY BANGKO SENTRAL OF ITS

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MANDATES UNDER THIS ACT OR TO QUALIFY OR AS REQUIRED FOR
MEMBERSHIP IN INTERNATIONAL AND REGIONAL ORGANIZATIONS.”

SEC, 38. Repealing Clause. All provisions of existing laws, orders, rules and
regulations, or parts thereof, in conflict or inconsistent with the provisions of this Act are hereby
repealed,

SEC. 39. Separability Clause. If any provision or section of this Act or the application
thereof to any person or circumstance is held to be invalid, the other provisions or sections of
this Act, and the application of such provision or section to other persons or circumstances,
shall not be affected thereby.

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

Approved,

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