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

16" Congress
First Regular Session

860

House Bill No.

Introduced by Honorable Sergio A. F. Apostol =

EXPLANATORY NOTE

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

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

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

‘The Bangko Sentral should also be able to function as a more 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 data from any person or entity in the Philippines, similar
to what was enjoyed before by the defunct Central Bank of the Philippines, for completion of information
and efficiency in the formulation of monetary policy. As an institution performing governmental functions,
‘the Bangko Sentral should also be exempted from taxation.

Approval of this bill is therefore earnestly sought.

‘Second District, Leyte


10
u
2
3
14
15
16
wv
18
19
20

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

16” Congress
First Regular Session

House sino, 8GO

Introduced by Honorable Sergio A. F. Apostol

AN ACT

PROVIDING FOR A COMPREHENSIVE REVISION OF THE CHARTER OF THE BANGKO SENTRAL NG

PILIPINAS BY AMENDING REPUBLIC ACT NUMBERED SEVENTY-SIX HUNDRED AND FIFTY-THREE
ENTITLED "THE NEW CENTRAL BANK ACT”

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

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

"SEC. 2. Creation of the Bangko Sentral. — There is hereby established an independent
central monetary authority, which shall be a body corporate known as the Bangko Sentral ng
Pilipinas, hereafter referred to as the Bangko Sentral. The capital of the Bangko Sentral shall be Fifty
billion pesos (250,000,000,000), to be fully subscribed by the Government of the Republic, hereafter
referred to as the Government, Ten billion pesos (#10,000,000,000) of which shall be fully paid for
by the Government upon the effectivity of this Act [and-the-balance-to-be-paid-for- within two-{2}
youre Htectivity-of in-cuch é-for he-Gove th hi
Secretary of-Finanee-and-the Seeretary-of Budget and Management, may thereafter determine}. THE
BALANCE SHALL BE PAID FOR IN CASH AVAILABLE TO THE GOVERNMENT OR THROUGH THE
ISSUANCE OF READILY MARKETABLE GOVERNMENT SECURITIES OF EQUIVALENT MARKET VALUE TO
THE BALANCE OF THE UNPAID SUBSCRIPTION OF THE GOVERNMENT TO THE BANGKO SENTRAL:
PROVIDED, THAT THE MANNER AND TENOR OF ISSUANCE OF GOVERNMENT SECURITIES AS
AUTHORIZED HEREIN, THE APPROPRIATIONS, PAYMENT AND OTHER TERMS OF REFERENCE SHALL
BE AGREED UPON BY THE BANGKO SENTRAL, THE DEPARTMENT OF FINANCE AND THE
DEPARTMENT OF BUDGET AND MANAGEMENT, AS BASIS FOR IMPLEMENTATION.”

SEC. 2, Section 3 of Republic Act No. 7653 is hereby amended to read as follows:

"SEC. 3. Responsibility and Primary Objective. — The Bangko Sentral shall provide policy
directions in the areas of money, banking, and credit. It shall have supervision over the operations of

banks and exercise such regulatory powers as provided in this Act and other pertinent laws over the


Cav ane wne

10
wn
12
3
14
15
16
wv
18
19
20
21
2
23
24
25
26
27
28
29
30
a1
32
33
34

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

‘The primary objective of the Bangko Sentral is to maintain price stability conducive to
balanced and sustainable growth of the economy. It shall also promote and maintain [monetary]
FINANCIAL stability and the convertibility of the peso”.

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

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

‘The seven (7) members are:

(a) the Governor of the Bangko Sentral who shall be the Chairman of the Monetary Board.

ith ‘of the Bangk al-shall-be-head-of 2-dep: rd-his-app% shall-be

bj rion by-th : .]_ Whenever the Governor is unable to
attend a meeting of the Board, he shall designate a Deputy Governor to act as his alternate AND THE
ATTENDANCE OF THE LATTER AS AN ALTERNATE TO THE GOVERNOR SHALL BE COUNTED FOR
DETERMINING THE QUORUM BUT SAID ALTERNATE, WHILE ENTITLED TO BE HEARD, SHALL HAVE
NO RIGHT TO VOTE: Provided, HOWEVER, That in [sueh-event; ] THE ABSENCE OF THE GOVERNOR AT
‘THE MEETING OF THE BOARD, the Monetary Board shall designate one of its members as acting
Chairman;

(b) a member of the Cabinet to be designated by the President of the Philippines. Whenever
the designated Cabinet Member is unable to attend a meeting of the Board, he shall designate an
Undersecretary in his Department to attend as his alternate WHOSE ATTENDANCE AT THE MEETING
OF THE BOARD SHALL BE COUNTED FOR DETERMINING A QUORUM BUT WHILE HE HAS THE RIGHT
‘TO BE HEARD, HE HAS NO RIGHT TO VOTE; and

(0) five (5) members who shall come from the private sector, all of whom shall serve full-
time: Provided, however, That of the members first appointed under the provisions of this
subsection, three (3) shall have a term of six (6) years, and the other two (2), three (3) years.

No member of the Monetary Board may be reappointed more than onc

SEC. 4. Section 9 of Republic Act No. 7653 is hereby amended to read as follows:
“SEC. 9. Disqualifications, — In addi
6713, a member of the Monetary Board is disqualified from being a director, officer, employee,

n to the disqualifications imposed by Republic Act No.


Corvrannewne

10
1
12
13
14
15
16
7
18
19
20
2a
22
23
24
25
26
27
28
29
30
31
32
33
34

consultant, lawyer, agent or stockholder of any bank, quasi-bank or any other institution which is
subject to supervision or examination by the Bangko Sentral, in which case such member shall resign
from, and divest himself of any and all interests in such institution before assumption of office as
member of the Monetary Board.

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

No person shall be a member of the Monetary Board if he has been connected directly with
‘any multilateral banking or financial institution or has a substantial interest in any private bank in the
appointment {-Hikewise;-ne-member-of-the-Monetary
Board shall-be-employed-in-any-such-institution-withi 2}. years-after-the-expiration-of his-term
‘excopt_wher—he ficial 4-the—Philippine—Gover h
institution]. NO MEMBER OF THE MONETARY BOARD, INCLUDING THE GOVERNOR AND ANY DEPUTY
GOVERNOR OF THE BANGKO SENTRAL SHALL BE ELECTED AS DIRECTOR, OR EMPLOYED AS OFFICER
OR EMPLOYEE, OR HIRED AS CONSULTANT, ADVISER, LAWYER OR IN OTHER CONTRACTUAL

Philippines, within one (1) year prior to

CAPACITY OF ANY BANK, QUASI-BANK, FINANCE COMPANY, NON-BANK FINANCIAL INTERMEDIARY,
OR IN SIMILAR CAPACITIES IN OTHER INSTITUTIONS THAT ARE SUPERVISED/REGULATED BY THE
BANGKO SENTRAL WITHIN THREE (3) YEARS AFTER THE EXPIRATION OF THEIR RESPECTIVE TERMS OF
OFFICE OR AFTER ANY OF SUCH OFFICIALS RETIRES OR RESIGNS FROM THEIR RESPECTIVE POSITIONS
IN THE BANGKO SENTRAL EXCEPT WHEN ANY OF SUCH OFFICIALS IS APPOINTED OR DESIGNATED AS
AN OFFICIAL REPRESENTATIVE OF THE PHILIPPINE GOVERNMENT IN A MULTILATERAL OR
INTERNATIONAL FINANCIAL INSTITUTION.”

SEC. 5. Section 11 of Republic Act No. 7653 is hereby amended to read as follows:

“SEC. 10, Removal. ~The President may remove any member of the Monetary Board for any
of the following reasons:

(a) If the member is subsequently disqualified under the provisions of Section [8] 9 of this
Act; o1 xxx"

SEC. 6, Section 11 of Republic Act No. 7653 is hereby amended to read as follows:

“SEC. 11, Meetings. ~ The Monetary Board shall meet at least once a week, The Board may
be called to a meeting by the 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 ENTITLED TO VOTE,


wor ane one

10
1
12
13
14
15
16
7
18
19
20
2a
22
23
24
25
26
27
28
29
30
31
32
33

THE MEETING OF THE MONETARY BOARD, AS REQUIRED BY CIRCUMSTANCES, MAY BE
CONDUCTED THROUGH TELECONFERENCING OR VIDEO CONFERENCING SUBJECT TO PRIOR NOTICE
TO ALL THE MEMBERS OF THE BOARD OF THE CALL FOR SUCH METHOD OF CONFERENCING AND
SUBJECT FURTHER TO THE REQUIREMENT THAT THE CHAIRMAN OF THE BOARD OR THE ALTERNATE
PRESIDING OFFICER IS PHYSICALL Y PRESENT, TOGETHER WITH THREE (3) OTHER MEMBERS OF THE
BOARD, AT THE DESIGNATED VENUE OF THE MEETING.

‘THE GOVERNOR SHALL VOTE AT MEETINGS OF THE MONETARY BOARD SUBJECT TO THE
LIMITATIONS OF SECTION 14 HEREIN, EACH AND EVERY VOTE OF THE GOVERNOR AND THE
MONETARY BOARD MEMBERS, BE IT IN THE AFFIRMATIVE OR NEGATIVE ANY ABSTENTION SHOULD
BE REFLECTED IN THE MINUTES OF THE MEETING.

‘The Bangko Sentral shall maintain and preserve a complete record of the proceedings and
deliberations of the Monetary Board, including the tapes and transcripts of the stenographic notes,

jinal form or in microfilm OR OTHER RECORDING MEDIA.”

SEC. 7. Section 12 of Republic Act No. 7653 is hereby amended to read as follows:

“SEC. 12. Attendance of the Deputy Governors. — The Deputy Governors [may] SHALL UPON
‘THE ORDER OF THE GOVERNOR OR THE MONETARY BOARD attend the meetings of the Monetary
Board with the right to be heard. OTHER OFFICIALS OF THE BANGKO SENTRAL MAY BE DIRECTED TO
ATTEND THE MONETARY BOARD MEETINGS UPON INVITATION OF THE MONETARY BOARD ON A PER
MEETING BASIS IF THEIR EXPERTISE IS NEEDED IN A PARTICULAR AGENDA MATTER.”

‘SEC. 8. Section 15 of Republic Act No. 7653 is hereby amended to read as follows:

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

(a) issue rules and regulations it considers necessary for the effective discharge of the
responsibilities and exercise of the powers vested upon the Monetary Board and the Bangko Sentral.
The rules and regulations issued shall be reported to the President and the Congress within fifteen
(15) days from the date of their issuance[;). PRIOR TO THE ISSUANCE OF ANY RULE OR REGULATION
THAT AFFECTS THIRD PARTIES OR IMPOSES A PENALTY OR SANCTION AGAINST THE INSTITUTIONS
SUPERVISED/REGULATED BY THE BANGKO SENTRAL OR THEIR DIRECTORS OR OFFICERS , WRITTEN
NOTICE WITH RIGHT TO BE HEARD SHALL BE ACCORDED THE SUBJECT ENTITY OR PARTIES. NO
RULES AND REGULATIONS SHALL BECOME EFFECTIVE UNLESS PUBLISHED IN TWO (2) NEWSPAPERS
OF NATIONAL CIRCULATION;

(b) direct the management, operations, and administration of the Bangko Sentral, reorganize
personnel, and issue such rules and regulations as it may deem necessary or convenient for this
purpose. IN CASE OF SEPARATION FROM THE SERVICE AS A RESULT OF THE REORGANIZATION, THE
EMPLOYEE HAS THE OPTION TO RETIRE UNDER EXISTING RETIREMENT LAWS OR BE ENTITLED TO


Cow nunawn

10
11
12
13
4
15
16
7
18
19
20
oa
22
23
24
25
26
2
28
29
30
31
32
33

SEPARATION BENEFITS AS PROVIDED UNDER EXISTING LAWS. The legal units of the Bangko Sentral
shall be under the exclusive supervision and control of the Monetary Board;

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

‘A compensation structure, based on job evaluation studies and wage surveys and subject to
the Board's approval, shall be instituted as an integral component of the Bangko Sentral’s human
resource development program: Provided, That the Monetary Board shall make its own system
conform as closely as possible with the principles provided for under Republic Act No. 6758, AS

AMENDED[;: [Provided,—however,—That-compr is ployee
positions fall-under-salary—grade-19-and-below-shall-be-i m bth bed
under Republic Act No- 6758]

‘On the recommendation of the Governor, appoint, fix the remunerations and other
‘emoluments, and remove personnel of the Bangko Sentral, subject to pertinent civil service laws:
Provided, That the Monetary Board shall have exclusive and final authority to promote, transfer,
assign, or reassign personnel of the Bangko Sentral and these personnel actions are deemed made in
the interest of the service and ARE not disciplinary IN NATURE: Provided, further, That the Monetary
Board may delegate such authority to the Governor under such guidelines as it may determine;

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

(e) indemnify its members and other officials of the Bangko Sentral, including personnel [of
‘the-departments] performing supervision and examination functions, CREDIT AND MONETARY
POLICY OPERATIONS against all costs and expenses reasonably incurred by such persons in

connection with any civil or criminal action, suit or proceedings to which he may be, or is, made a

party by reason of the performance of his functions or duties, unless he is finally adjudged in such
action or proceeding to be liable for BAD FAITH, MALICE, GROSS negligence or misconduct.

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

‘The costs and expenses incurred in defending the aforementioned action, suit or proceeding

‘may be paid by the Bangko Sentral in advance of the final disposition of such action, suit or


eC evoanenwne

10
aa
12
3
4
15
16
7
18
19
20
24
2
23
24
25
26
27
28
29
30
31
32
33
34

proceeding upon receipt of an undertaking by or on behalf of the member, officer, or employee

REFERRED TO IN SUBSECTION (e) to repay the amount advanced should it ultimately be determined
by the Monetary Board that he is not entitled to be indemnified as provided in this subsection ON
‘ACCOUNT OF BAD FAITH, MALICE, GROSS NEGLIGENCE OR MISCONDUCT.”

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

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

(a) AT HIS INITIATIVE, OR UPON THE RECOMMENDATION OF A MEMBER OF THE MONETARY
BOARD, prepare the agenda for the meetings of the Monetary Board and to submit for the
consideration of the Board the policies and measures [which-he-believes] DEEMED to be necessary
to carry out the purposes and provisions of this Act, THE SUPPORTING MEMORANDUM FOR ANY
ITEM INCLUDED IN THE AGENDA FOR THE MEETINGS OF THE MONETARY BOARD SHALL BE
DISTRIBUTED TO THE MEMBERS AT LEAST THREE (3) WORKING DAYS BEFORE THE SCHEDULED
MEETING TO ENABLE THEM TO STUDY, REVIEW, AND EVALUATE EACH AND EVERY ITEM INCLUDED
IN THE AGENDA; PROVIDED, HOWEVER, THAT IN EMERGENCY CASES, THE DISTRIBUTION OF THE
AGENDA SHALL BE MADE AR LEAST ONE (1) WORKING DAY BEFORE THE SCHEDULED MEETING;

(b) execute and administer the policies and measures approved by the Monetary Board
UPON THEIR EFFECTIVITYS

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

(4) appoint and fix the remunerations and other emoluments of personnel below the rank of

a department head in accordance with the position and compensation plans approved by the


wear aune one

10
cE
2
13
14
15
16
7
18
19
20
21
2
23
24
25
26
27
28
29
30
31
32
33
34

Monetary Board, as well as to impose disciplinary measures upon personnel of the Bangko Sentral,

subject to the provisions of Section 15(c) of this Act: Provided, That removal of personnel shall be

with the approval of the Monetary Board; AND

odified bythe Fy-Boardd-On-m sardine applic enforcement-of-t
\l-as-regulations,-pelicles-or-inste Jssued-by-th Fy Board andthe i
thereofrand}

{(6)] (e) exercise such other powers as may be vested in him by the Monetary Board,

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

“SEC. 19. Authority of the Governor In Emergencies. — In case of emergencies where time is
insufficient to call a FORMAL meeting of the Monetary Board, the Governor of the Bangko Sentral,
with the concurrence of [twe-{2}] THREE (3) other members of the Monetary Board, may decide
[any] AN URGENT matter or take [any] action [within-the-authority-of the Board] RELEVANT TO THE
EMERGENCY INVOLVED, WITHOUT FORMALLY CONVENING A MEETING OF THE MONETARY BOARD

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

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

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

"SEC. 21. Deputy Governors. — The Governor of the Bangko Sentral, with the approval of the
Monetary Board, shall appoint not more than [thee-(3}} FIVE (5) Deputy Governors who shall
perform duties { be 40 them bythe Gow «d-the Board:] AND RESPONSIBILITIES

CONSISTENT WITH THE RESPECTIVE SECTORS ASSIGNED TO THEM BY THE MONETARY BOARD,
NAMELY (i) MONETARY STABILITY SECTOR ; (ii) THE FINANCIAL REGULATION SECTOR; (ii) THE
FINANCIAL SUPERVISION SECTOR TO IMPLEMENT THE FINANCIAL REGULATIONS APPROVED BY THE
MONETARY BOARD; (iv) RESOURCES MANAGEMENT SECTOR; AND (v) SUCH OTHER FUNCTIONS
THAT THE MONETARY BOARD MAY DEEM NECESSARY ;

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

[In-the-absence-of-the- Governor, a-Deputy-Governor-designated-by-the Governor shallactas
chief-executive-of the Bangke Sentral and-chall-exercise-the-pewers-and-perform-the-duties-of-the



eCmvanewene

10
cE
12
13
14
15
16
w
18
19
20
2a
22
23
24
25
26
27
28
29
30
31
32
33
34

or-as-rmay-be-designoted-by-th iekshate -with-authority-to-par 4
exercise the Fight to-votein-such- meetings”

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

“SEC. 23. Authority to Obtain Data and Information... ~ The Bangko Sentral shall have the
authority to [request] REQUIRE from ANY PERSON OR ENTITY, INCLUDING government offices and
instrumentalities, or government-owned or controlled corporations, any data which it may require
for the proper discharge of its functions and responsibilities. The Bangko Sentral through the
Governor or in his absence, a [duly-authorized-representative] DEPUTY GOVERNOR DULY
AUTHORIZED IN WRITING shall have the power to issue a subpoena [forthe production-of the-books
and_records—forthe-aforesaid_purpose] SPECIFYING THE DATA REQUIRED AND THE SPECIFIC
PURPOSE FOR WHICH SUCH DATA SHALL BE ISSUED. Those who refuse the subpoena without
justifiable cause, or who refuse to supply the [bank] BANGKO SENTRAL with THE data [requested-or]
required, shall be subject to punishment for contempt in accordance with the provisions of the Rules
of Court.

Data on individual firms, other than banks, gathered by the [Department-of Economic
Research_and-other-departments-or-units-of the] Bangko Sentral ARE CONFIDENTIAL AND WILL BE
USED FOR STATISTICAL PURPOSES ONLY. THESE DATA 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 [er
under such-conditions-as-may-be-preseribed-by the Monetary Beard]: Provided, however, That [the]
ONLY collective data [or-firms] may be released to interested persons or entities: Provided, finally,
‘That in the case of data on banks, the provisions of Section 27 of this Act shall apply.”

SEC. 13, Section 24 of Republic Act No. 7653 is hereby amended to read as follows:

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


eevoannrane

10
uw
12
3
14
15
16
7
18
19
20
a
22
23
24
23
26
27
28
29
30
31
32
33
34

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

“SEC. 25. Supervision and Examination. - The Bangko Sentral THROUGH THE FINANCIAL
SUPERVISION SECTOR DESIGNATED UNDER THIS ACT shall have supervision over, and conduct
REGULAR [periodic] or special examination{s] of [;-banking-institutions] BANKS and quasi-banks,
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.

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

‘TRANSFERS OR ACQUISITIONS, OR A SERIES THEREOF, OF SHARES OF STOCK IN BANKS
‘OR QUASI-BANKS SUFFICIENT TO ELECT AT LEAST 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 INTEGRITY,
REPUTATION AND FINANCIAL CAPACITY.

PRIOR TO BANGKO SENTRAL APPROVAL, NO SUCH TRANSFER OR ACQUISITION SHALL
HAVE LEGAL EFFECT OR SHALL BE RECOGNIZED IN THE BOOKS OF THE INSTITUTION OR BY ANY
GOVERNMENT AGENCY AND THE TRANSFEROR-STOCKHOLDERS SHALL REMAIN ACCOUNTABLE
AND RESPONSIBLE THEREFOR. 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. NOTWITHSTANDING
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.

AS USED HEREIN, A PARENT COMPANY MEANS A CORPORATION WHICH OWNS, DIRECTLY
OR INDIRECTLY. VOTING STOCK OF A SUPERVISED INSTITUTION SUFFICIENT TO CONTROL ITS
MANAGEMENT AND OPERATIONS., CONTROL EXISTS WHEN THE PARENT COMPANY OWNS
DIRECTLY OR INDIRECTLY MORE THAN ONE-HALF OF THE STOCK OF A SUPERVISED INSTITUTION.
CONTROL ALSO EXISTS EVEN WHEN THE PARENT OWNS ONE-HALF OR LESS OF THE VOTING STOCK


we eavanewne

10
un
12
3
14
1s
16
7
18
19
20
a
22
23
24
25
26
27
28
29
30
3a
32
33
34

OF THE SUPERVISED INSTITUTION WHEN THERE IS POWER OVER MORE THAN ONE-HALF OF THE
VOTING RIGHTS BY PROXY OR BY VIRTUE OF AN AGREEMENT WITH OTHER INVESTORS, OR OTHER
SIMILAR ARRANGEMENTS, WHICH THEREBY ENABLES THE PARENT COMPANY TO CAST THE
MAJORITY OF VOTES AT MEETINGS OF THE STOCKHOLDERS OF THE SUPERVISED INSTITUTION, OR
TO ELECT THE MAJORITY OF MEMBERS OF THE BOARD OF DIRECTORS OF THE SUPERVISED
INSTITUTION OR TO APPOINT KEY EXECUTIVE OFFICERS WHO SHALL DIRECTLY OR INDIRECTLY
CONTROL THE MANAGEMENT AND OPERATIONS OF THE SUPERVISED INSTITUTION,

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 bya

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.

The department heads and the examiners of the supervising and/or examining
departments are hereby authorized to administer oaths to any director, officer, or employee of
any institution under their respective supervision or subject to their examination and to
compel the presentation of all books, documents, papers or records necessary in their judgment
to. ascertain the facts relative to the true condition of any institution as well as the books and
records of persons and entities relative to or in connection with the operations, activities or
transactions of the institution under examination, subject to the provision of] existing laws
protecting or safeguarding the secrecy or confidentiality of bank deposits as well as

investments. of private persons, natural or juridical, in debt instruments issued by the

Government.
[testes deror_tnj halle db : he-Bangko
|_from-enamnining-aryy sb xammination—bythe—Bangke
I, ‘ incing—proof—that—th he—Bangko—Sentralte-plaialy
ive
tart in-which-the-action s-pendiny c- executed_infavor of the-Bangko Sentral noun
to-be fined-by-the-court—the- Rule 58-of the New Rul ofar-as-they-
applicable-andnot-inconsistent—with-the-provisions-of this-section-shall-govern-the-issuance-and
dissolution of the-restraining ord. \ction-contemplated in this Section,]”"

SEC. 15, Section 26 of Republic Act No. 7653 is hereby amended to read as follows:
“SEC. 26. Bank Deposits fand-tnvestments]. — Any director, officer or stockholder who,
together with his related interest, contracts a loan or any form of financial accommodation from: (1)

his bank; of (2) from a bank (a) which is a subsidiary of a bank holding company of which both his

10


10
a
12
2B
4
15
16
W
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33

bank and the lending bank are subsidiaries or (b) in which a controlling proportion of the shares is
‘owned by the same interest that owns a controlling proportion of the shares of his bank, in excess of
five percent (5%) of the capital and surplus of the bank, or in the maximum amount permitted by
law, whichever is lower, shall be required by the lending bank to waive the secrecy of his deposits of
whatever nature in (al-banks-in-the-Philippines} SAID BANKS, Any information obtained from an
examination of his deposits shall be held strictly confidential and may be used by the examiners only
in connection with their supervisory and examination responsibility or by the Bangko Sentral in an
appropriate legal action it has initiated involving the deposit account,

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

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

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

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

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

(©) revealing in any manner, except under orders of the court, the [Congress] HOUSE OF
REPRESENTATIVES OR THE SENATE OR ANY OF THE APPROPRIATE COMMITTEES THEREIN. or any
government office or agency authorized by law, or under such conditions as may be prescribed by
the Monetary Board, information relating to the condition or business of any institution UNDER THE
SUPERVISION OF THE BANGKO SENTRAL. This prohibition shall not be held to apply to the giving of

co


wow nnenwne

10
co
12
13
14
15
16
wv
18
19
20
aa
22
23
24
25
26
2
28
29
30
31
32
33
34

information to the Monetary Board or the Governor of the Bangko Sentral, or to any person
authorized by either of them, in writing, to receive such information; and

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

SEC. 17. Section 28 of Republic Act No. 7653 is hereby amended to read as follows”

"SEC, 28. Examination And Fees. — The supervising and examining department head,
personally or by deputy, shall examine the books AND RECORDS of every banking, OR QUASI-
BANKING OR NON-BANK FINANCIAL institution once in every twelve (12) months, and at such other
times as the Monetary Board by an affirmative vote of five (5) members, may deem expedient and
to [make-a—report-on—the-same] SUBMIT AN EXECUTIVE SUMMARY OF THE FINDINGS OF
EXAMINATION WITH THE REPORT OF EXAMINATION ATTACHED THERETO FOR READY REFERENCE
to the Monetary Board: Provided, That there shall be an interval of at least twelve (12) months
between annual examinations.

‘THE SUPERVISED INSTITUTIONS UNDER THIS SECTION SHALL BE GIVEN THE OPPORTUNITY
‘TO REBUT/REFUTE IN WRITING ANY OR ALL OF THE FINDINGS OF THE EXAMINERS OF THE FINANCIAL
SUPERVISION SECTOR OF THE BANGKO SENTRAL IN AN EXIT CONFERENCE BEFORE THE REPORT OF
EXAMINATION IS FINALIZED. THE WRITTEN EXPLANATION, IF ANY, OF THE SUPERVISED INSTITUTION
UNDER EXAMINATION SHALL BE PART OF THE REPORT OF EXAMINATION WITH COMMENTS BY THE
EXAMINERS INVOLVED.

‘The bank, OR QUASI-BANK OR NON-BANK FINANCIAL 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, cash and available assets and general condition at any time
during banking 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, AND NON-BANK FINANCIAL institutions which are subject to

‘examination by the Bangko Sentral shall pay to the Bangko Sentral, wi

in the first thirty (30) days of
each year, an annual fee in an amount equal to a percentage as may be prescribed by the Monetary

Board of its average total assets during the preceding year as shown on its end-of-QUARTER

2


eo avanewne

10
1
12
13
14
15
16
vy
18
19
20
21
22
23
24
25
26
2
28
29
30
31
32
33
34

{month-balance-sheets] STATEMENTS OF CONDITION, after deducting cash on hand and amounts
due from banks, QUASI-BANKS, AND OTHER FINANCIAL INSTITUTIONS, including the Bangko Sentral
and banks abroad.”

SEC. 18. A new Section 28-A is hereby added to Republic Act No. 7653, as follows:

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

SEC. 19, Section 29 of Republic Act No. 7653 is hereby amended to read as follows:

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

‘The conservator should be competent and knowledgeable in bank operations and
management. The conservatorship shall not exceed one (1) year, BUT MAY BE EXTENDED FOR A
PERIOD OF NOT MORE THAN SIX (6) MONTHS, AS MAY BE APPROVED BY THE MONETARY BOARD.
‘The conservator shall receive MONTHLY remuneration to be fixed by the Monetary Board: [iran

13


eevannaune

10
a
2
13
14
15
16
v
18
19
20
aa
22
23
24
25
26
27
28
29
30
31
32
33

year, payable in-twelve-(12} equal monthly payments:] Provided, That, if at any time within the one-
year period, the conservatorship is terminated on the ground that the institution can operate on its
‘own, the conservator shall receive the balance of the remuneration which he would have received
up to the end of the year; but if the conservatorship is terminated on other grounds, the conservator
shall not be entitled to such remaining balance. The Monetary Board [may-appeint-2-conservator
connected-with-the-Bangke-Sentrah] SHALL AUTHORIZE THE CONSERVATOR TO APPOINT A CORE
GROUP OF PROFESSIONALS TO ASSIST HIM IN THE PERFORMANCE OF HIS POWERS AND DUTIES AS
CONSERVATOR, in which case, [he] THEY shall [net] be entitled to receive [any] remuneration or
emoluments THAT THE MONETARY BOARD SHALL DETERMINE [fror-the-Bangke-Sentral] during the
PERIOD OF conservatorship. The expenses attendant to the conservatorship shall be borne by the
bank or quasi-bank concerned.

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

DURING THE PERIOD OF CONSERVATORSHIP, THE PHILIPPINE DEPOSIT INSURANCE
CORPORATION SHALL HAVE THE AUTHORITY TO EXAMINE THE BANK UNDER CONSERVATORSHIP,
INQUIRE INTO OR EXAMINE THE DEPOSIT ACCOUNTS THEREIN, AND/OR CONDUCT A DUE DILIGENCE
AUDIT OF THE BANK IN PREPARATION FOR THE POSSIBLE ESTABLISHMENT, ORGANIZATION AND
OPERATION OF A BRIDGE BANK.

‘The Monetary Board shall terminate the conservatorship when it is satisfied that the
institution can continue to operate on its own and the conservatorship is no longer necessary. The
conservatorship shall likewise be terminated should the Monetary Board, on the basis of the report
of the conservator or of its own findings, determine that [the-continuance-in-business-of} the
institution, DESPITE THE REMEDIAL MEASURES THAT HAVE BEEN ADOPTED, CONTINUES TO
EXPERIENCE ILLIQUIDITY AND OTHER RELATED FINANCIAL STRESSES, SUCH THAT THE GROUNDS FOR
RECEIVERSHIP AND LIQUIDATION OF THE INSTITUTION BECOME WARRANTED, [would—involve

in which case the provisions of Section 30 shall apply.”

14


ear aunewn

10
a
12
13
14
15
16
7
18
19
20
2
22
23
24
25
26
7
28
29
30
3a
32
33
34

SEC. 20. Section 30 of Republic Act No. 7653 is hereby amended to read as follows:

“SEC. 30. Proceedings in Receivership and Liquidation. ~ Whenever, [upon] ON THE BASIS
OF A report of {the-head-of the-supervising-oF-examining department] EXAMINATION, the Monetary
Board finds OR CONFIRMS 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 THIRTY (30) DAYS OR IN ANY MANNER HAS
SUSPENDED THE PAYMENT OF ITS DEPOSIT/DEPOSIT LIABILITIES, OR is unable to pay its liabilities as
they become due in the ordinary course of business: Provided, That this shall not include inability to
pay caused by extraordinary demands induced by financial panic in the banking OR FINANCIAL
community; OR

{b) has insufficient realizable assets TO MEET ITS LIABILITIES, as determined by the Bangko
Sentral{-to-meet its liabilities} IN ACCORDANCE WITH BANKING REGULATIONS; or

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

(d) has 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 {5
in-which-cases} , the Monetary Board may summarily and without need for prior hearing forbid the
institution from doing business in the Philippines, and MAY designate the Philippine Deposit
Insurance Corporation OR ANY PERSON OF RECOGNIZED COMPETENCE IN BANKING AND FINANCE as
receiver of the banking institution.

THE MONETARY BOARD, OFFICERS AND PERSONNEL OF THE BANGKO SENTRAL SHALL BE
IMMUNE FROM SUIT IN THE PERFORMANCE OF THEIR DUTIES UNDER THIS SECTION UNLESS THEY
ARE FOUND TO BE IN WILLFUL VIOLATION OF THIS ACT OR HAVE ACTED OR PERFORMED IN BAD
FAITH, WITH MALICE AND/OR GROSS NEGLIGENCE.

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

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

The receiver shall immediately gather, take charge of, MANAGE AND CONTROL all the
‘assets, WHICH, IN CASE OF A BANK, SHALL INCLUDE ITS LICENSE, and liabilities of the institution,

15


eoervounenwene

10
a
12
13
14
15
16
Ww
18
19
20
21
22
23
24
25
26
27
28
29
30
3a
32
33
34

administer the same for the benefit of its creditors, and, exercise the general powers of a receiver
under EXISTING LAWS AND the Revised Rules of Court. HOWEVER, THE DISPOSITION OF THE
LICENSE BY THE RECEIVER SHALL BE SUBJECT TO THE APPROVAL OF THE MONETARY BOARD. THE
RECEIVER SHALL ADDITIONALLY HAVE THE AUTHORITY TO [but-shall-not,-with-the-exception-of] (1)
PAY administrative expenditures, [pay- ramit—any—act-that-will-nvelve-the-transt
isposition~of—any-asset-of the-institution: Provided,That-the-receiver-may] (2) deposit or place
stitution in non-speculative investments, OR (3) ADOPT, IF DEEMED

the funds of the
APPROPRIATE BY THE RECEIVER, BRIDGE BANKING AS A RESOLUTION METHOD, AS GOVERNED BY
SECTION 30-8 OF THIS ACT. The receiver OF QUASI-BANKS AND NON-BANK FINANCIAL INSTITUTIONS

shall determine as soon as possible, but not later than ninety (90) days from take-over, whether
{the] SUCH institution may be rehabilitated or otherwise placed in such a condition so that it
may be permitted to resume business with safety to its (depositers—and] creditors and the

general public: Provided, That any determination for the resumption of business of the institution
shall be subject to prior approval of the Monetary Board.

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

If the receiver OF QUASI-BANK AND OTHER NON-BANK FINANCIAL INSTITUTIONS determines
that the institution cannot be rehabilitated or permitted to resume business in accordance with (the
next-preceding-paragraph] THIS SECTION, the Monetary Board shall notify in writing the board of
directors of it

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, @ 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 instit

jon, 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.

16


eoevaunnrwone

10
coy
12
13
14
15
16
7
18
19
20
21
22
23
24
25
26
a
28
29
30
31
32
33
34

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
desigt fF a-CONSEFVE 4 wecondition-te-the desigt Ea-receiver.)"”

‘SEC. 21, A new section entitled section 30-A shall be inserted in Republic Act No. 7653 to

read as follows:

"SEC, 30-A. PROMPT CORRECTIVE ACTION. ~ WHENEVER UPON THE REPORT OF THE
HEAD OF THE FINANCIAL SUPERVISION SECTOR, 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.”

7


ecevoaueune

10
un
12
23
14
15
16
wv
18
19
20
2
22
23
24
25
26
2
28
29
30
31
32
33
34

SEC. 22. Anew section entitled section 30-8 shall be inserted in Republic Act No. 7653 to
read as follows:

“SEC. 30-8. BRIDGE BANKING. - (A) THE MONETARY BOARD MAY FORM, ESTABLISH,
ORGANIZE, AND OPERATE AND/OR CONTRACT TO OPERATE SUBSIDIARIES OR CORPORATIONS, THE
PRIMARY PURPOSE OF WHICH IS TO OPERATE AS A BRIDGE BANK AND/OR MANAGE ACQUIRED
ASSETS OF THE RECEIVER,

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

(©) A BRIDGE BANK RESOLUTION MEASURE MAY BE ADOPTED ONLY IF THE BOARD OF
DIRECTORS DETERMINES THAT IT IS A COST-EFFECTIVE AND VIABLE AND THE AMOUNT NECESSARY
‘TO IMPLEMENT SUCH MEASURE IS LESS THAN THE ESTIMATED INSURED DEPOSITS OF THE FAILED
BANK; AND THE PRESERVATION OF CRITICAL BANKING FUNCTIONS IS IN THE BEST INTEREST OF THE
DEPOSITORS AND THE PUBLIC.

(D) FOR THE EFFECTIVE IMPLEMENTATION OF A BRIDGE BANK RESOLUTION MEASURE, THE
RECEIVER MAY:

1. SELL, ASSIGN, TRANSFER, OR CONVEY ITS SHAREHOLDINGS IN ITS SUBSIDIARY TO
‘THE FAILED BANK;

2. TRANSFER SUCH ASSETS AND DEPOSIT LIABILITIES OF A FAILED BANK TO THE BRIDGE
BANK, AS THE RECEIVER MAY DEEM APPROPRIATE, ALL TRANSFERS UNDER THIS
SUBSECTION SHALL:

i, NOT BE SUBJECT TO THE FOLLOWING TAXES: CAPITAL GAINS TAX, VALUE ADDED
TAX AND DOCUMENTARY STAMP TAX. HOWEVER, IF THE BRIDGE BANK IS A
GOVERNMENT CORPORATION, IT MAY AVAIL OF THE TAX EXPENDITURE
SUBSIDIES IMPLEMENTED BY THE FISCAL INCENTIVES REVIEW BOARD (FIRB) IN
[ACCORDANCE WITH THE PROVISIONS OF EXECUTIVE ORDER NO. 93 AND THE
GENERAL APPROPRIATIONS ACT.

ji, 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.

18


omy auaen

10
ud
12
13
14
15
16
7
18
19
20
2a
22
23
24
25
26
27
28
29
30
31
32
33

4.

8.

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

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

CONDITIONS AND IN SUCH FORM AND AMOUNTS, AS THE RECEIVER © 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;

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 THE PHILIPPINE DEPOSIT INSURANCE CORPORATION OR UPON

‘ORDER OF THE COURT; AND

APPOINT, INSTALL, DESIGNATE, AND/OR REMOVE THE DIRECTORS AND OFFICERS

(OF A BRIDGE BANK AND FIX THEIR COMPENSATION.

{E) THE 90-DAY PERIOD PROVIDED UNDER SECTION 30 OF HEREOF, WITHIN WHICH THE

RECEIVER SHALL DETERMINE WHETHER THE INSTITUTION MAY BE REHABILITATED SHALL NOT BE

APPLICABLE,

(F) THE BRIDGE BANK SHALL TERMINATE AT THE END OF TWO (2) YEARS FOLLOWING THE

DATE IT WAS GRANTED A BANKING LICENSE, SUBJECT TO THE HEREIN PROVISIONS OF PARAGRAPHS

(G) AND (H): PROVIDED, FURTHER, THAT THE RECEIVER MAY EXTEND THE STATUS OF THE BRIDGE

BANK IF DEEMED NECESSARY TO CONCLUDE PENDING NEGOTIATIONS FOR THE SALE, MERGER OR

ACQUISITION OF THE BRIDGE BANK BY A BUYER OR ACQUIRER: PROVIDED, FINALLY, THAT THE
(MAXIMUM EXTENSION SHALL BE ONE (1) YEAR.
(G) TERMINATION OF BRIDGE BANK. - THE STATUS OF ANY BRIDGE BANK AS SUCH SHALL
‘TERMINATE UPON THE EARLIEST OF—
1. THE MERGER OR CONSOLIDATION OF THE BRIDGE BANK WITH ANOTHER BANK THAT

1S NOT A BRIDGE BANK; OR

19


eeyonewne

10
1
12
13
14
15
16
7
18
19
20
a
22
23
24
25
26
7
28
29
30
3a
32
33
34

2. THE SALE OF THE BRIDGE BANK TO A QUALIFIED BUYER, AS MAY BE DETERMINED BY
THE RECEIVER; OR
3. THE ASSUMPTION OF ALL OR SUBSTANTIALLY ALL OF THE (i) DEPOSITS AND OTHER
LIABILITIES AND/OR (ii) ASSETS OF THE BRIDGE BANK BY AN INSURED BANK THAT IS
NOT A BRIDGE BANK, OR OTHER ENTITY AS PERMITTED UNDER APPLICABLE LAW.
FOLLOWING THE ASSUMPTION OF ALL OR SUBSTANTIALLY ALL OF THE LIABILITIES OF
THE BRIDGE BANK AND THE SALE OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF
‘THE BRIDGE BANK, THE BRIDGE BANK SHALL BE LIQUIDATED IN ACCORDANCE WITH
‘THE PROVISIONS OF LAW RELATING TO THE LIQUIDATION OF CLOSED BANKS; OR
4, THE EXPIRATION OF THE PERIOD PROVIDED IN PARAGRAPH (F) HEREIN, OR THE
EARLIER DISSOLUTION OF THE BRIDGE BANK AS PROVIDED IN PARAGRAPH (H).
(H) DISSOLUTION OF BRIDGE BANK... NOTWITHSTANDING ANY OTHER PROVISION OF LAW
TO THE CONTRARY, IF THE BRIDGE BANK'S STATUS AS SUCH HAS NOT PREVIOUSLY BEEN
‘TERMINATED BY THE OCCURRENCE OF AN EVENT SPECIFIED IN SUBPARAGRAPH (1), (2) OR (3), OF
PARAGRAPH (G), THE RECEIVER, MAY DISSOLVE A BRIDGE BANK AT ANY TIME IT DEEMS
NECESSARY. THE 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 RECEIVER SHALL HAVE ALL THE RIGHTS, POWERS, AND
PRIVILEGES, AND SHALL PERFORM THE DUTIES RELATED TO THE EXERCISE OF SUCH RIGHTS,
POWERS, OR PRIVILEGES GRANTED BY LAW TO A RECEIVER OF ANY INSURED BANK.
(I) MATTERS RELATING TO THE EXERCISE BY THE RECEIVER OF THE FUNCTIONS UNDER THIS
SECTION SHALL BE SUBJECT TO VISITORIAL AUDIT ONLY.
(J) THE ACTIONS OF THE RECEIVER 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.
(Kk) THE MONETARY BOARD SHALL PROMULGATE THE IMPLEMENTING RULES AND
REGULATIONS TO IMPLEMENT THE PROVISIONS OF THIS SECTION.
SEC. 23. Section 33 of Republic Act No. 7653 is hereby amended to read as follows:
“SEC. 33. Disposition of Banking Franchise. — The Bangko Sentral may, if public
interest so requires, award to an institution, upon such terms and conditions as the Monetary Board

may approve, the banking franchise of a CLOSED bank [under tiquidation] to operate in the area

20


we aevaunen

10
a1
12
13
14
15
16
7
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34

where said bank or its branches were previously operating: Provided, That whatever proceeds may
be realized from such award shall be [subject-to-the-appropriate-exchisive-disposition-of the
Monetary Board) FOR THE BENEFIT OF THE CREDITORS OF THE CLOSED BANK.”

SEC. 24. Section 36 of Republic Act No. 7653 is hereby amended to read as follows:

“SEC. 36, Proceedings Upon Violation of this Act and Other Banking Laws, Rules, Regulations,
Orders or Instructions. - Whenever a bank, [oF] quasi-bank, OR OTHER FINANCIAL INSTITUTION
WHICH UNDER THIS ACT OR SPECIAL LAWS IS SUBIECT 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 [Fwo-hundredthousand-pesesP200,000)] TWO MILLION PESOS (P2,000,000.00) or by
imprisonment of not less than two (2) years nor more than [ten (10)] SIX (6) years, or both, at the
SOUND discretion of the court.

Whenever [a-bank-or—quas-bank] AN ENTITY UNDER BANGKO SENTRAL SUPERVISION
persists in carrying on its business in an [unlawful-or] unsafe or UNSOUND manner AS DETERMINED
UNDER THE PROVISIONS OF SECTION S6 OF REPUBLIC NO. 8791, OTHERWISE KNOWN AS THE
GENERAL BANKING LAW OF 2000, AND IT REFUSES OR FAILS TO CEASE AND DESIST FROM SUCH
MISCONDUCT AND TO INSTITUTE CORRECTIVE MEASURES AFTER NOTICE HAS BEEN GIVEN BY THE
BANGKO SENTRAL, the MONETARY Board may, without prejudice to the penalties provided in the
preceding paragraph of this Section and the administrative sanctions provided in Section 37 of this,
‘Act, take action under Section 30 of this Act.”

SEC. 25. Section 37 of Republic Act No. 7653 is hereby amended to read as follows:

“SEC, 37, Administrative Sanctions [On-Banks-And-Quasi-Banks].

Without prejudice to the
criminal sanctions against the culpable persons provided in Sections 34, 35, and 36 of this Act, the
Monetary Board may, at its discretion, impose upon any bank [er-quasi-bank; their-directors-and/or

‘Monetary-Board,-or-any-order,-instruction-or-ruling-by-the-Governor;] FINANCE COMPANY AND
NON-BANK FINANCIAL INSTITUTION PERFORMING QUASI-BANKING FUNCTIONS, HEREINAFTER
REFERRED TO AS QUASI-BANKING INSTITUTIONS PERFORMING SIMILAR FUNCTIONS REGULATED BY

21


10
wn
12
13
14
15
16
7
18
19
20
21
22
23
24
25
26
27
28
29
30
aa
32
33
34

THE BANGKO SENTRAL UNDER THIS ACT OR UNDER SPECIAL LAWS THAT ARE UNDER THE
SUPERVISION OF THE BANGKO SENTRAL FOR WILFUL VIOLATION OR FAILURE TO COMPLY WITH THE
PROVISIONS OF THIS ACT, OF REPUBLIC ACT NO. 8791 AND OTHER SPECIAL LAWS; or any
commission of irregularities, and/or conducting business in an unsafe or unsound manner as may be
determined by the Monetary Board the following administrative sanctions: [, whenever applicable]

(a) {fines} ADMINISTRATIVE PENALTIES in amounts as may be PRESCRIBED AND determined
by the Monetary Board to be appropriate, but in no case to exceed [Thirty-theusand pesos
(P30,000}-0-day-for-each violation, taking-into-consick the attendant clrcurns h
the. 1 gravity-of the wiolati egularity-and-the-size-of-the-bank-or-quasi-bank;) THE
MAXIMUM PENALTIES PRESCRIBED HEREIN FOR EACH VIOLATION, AS FOLLOWS:

1. FOR UNIVERSAL AND COMMERCIAL BANKS - NOT EXCEEDING 10,000 PER BANKING

DAY;
2. FOR THRIFT BANKS ~ NOT EXCEEDING P5,000 PER BANKING DAY;
3. FOR RURAL BANKS/COOPERATIVE BANKS ~ NOT EXCEEDING 22,000 PER BANKING DAY;
4. FOR FINANCE COMPANIES AND NON-BANK FINANCIAL INSTITUTIONS PERFORMING
QUASI-BANKING FUNCTIONS ~ NOT EXCEEDING P5,000 PER BANKING DAY;

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

6. FOR OTHER INSTITUTIONS THAT ARE SUPERVISED BY THE BANGKO SENTRAL ~ NOT
EXCEEDING P2,000 PER BANKING DAY.

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

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

22


Cov nne ene

10
a
12
13
14
45
16
wv
18
19
20
2a
22
23
24
25
26
27
28
29
30
31
32
33
34

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

(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; ANO/OR

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

[(e}-revecation-of quasi-banking-Heense.)

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-quastbank] 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, ifthe institution and/or the directors
and/or officers, concerned continue with or otherwise persist in the commission of the indicated
practice or violation, the Monetary Board may issue an order requiring the institution and/or the
directors, and/or officers concerned to cease and desist from the indicated practice or violation, and
may further order that immediate action be taken to correct the conditions resulting from such
practice 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-diseretion, to-impose-uper-banking institutions
for any-failure-to-comply-with-the-requirements-of law, Monetary-Boord-regulations-and-policies,

23


wavy nunawne

10
ct
12
13
14
1s
16
7
18
19
20
2a
22
23
24
25
26
27
28
29
30
31
32
33
34

; j 9 ; +
eiban=oy me "
executory until reversed, modified or lifted by the Monetary Board on appeat.|”

SEC. 26. A new Section 38-A is added to Republic Act No. 38-A as follows:

“SEC. 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 PRELIMINARY 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 THE 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 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. 27. Section 43 of Republic Act No. 7653 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 AND OTHER ACCOUNTS AS DETERMINED BY THE MONETARY BOARD TO
BE NECESSARY FOR THE PRESERVATION OF THE FINANCIAL SOUNDNESS OF THE BANGKO
SENTRAL.”

SEC. 28. Section 45 of Republic Act No. 7653 is hereby amended to read as follows:

“SEC. 45. Revaluation Profits and Losses. - Profits or losses arising from any revaluation of
‘the Bangko Sentral's net assets or liabilities in gold or foreign currencies with respect to the
Philippine peso shall not be included in the computation of the annual profits and losses of the
Bangko Sentral. Any profits or losses 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 profit or loss shall be carried in a special frozen account
which shall be named “Revaluation of International Reserve” and the net balance of which shall

24


wo eawnunwne

10
u
12
13
14
45
16
7
18
19
20
a
22
23
24
25
26
a
28
29
30
31
32
33
34

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 International Reserve account shall be (neither] credited (nor] OR debited
for [any_purposes—ether-than—these—specificatly—authorized—in-this—section] THE PERIODIC
REVALUATION AS AUTHORIZED IN THIS SECTION AND TO REFLECT THE CORRESPONDING
ADJUSTMENT RESULTING FROM THE CORRESPONDING REDUCTION IN BANGKO SENTRAL'S NET
ASSETS AND LIABILITIES IN GOLD OR FOREIGN CURRENCIES.”

SEC. 29. Section 61 of Republic Act No. 7653 is hereby amended to read as follows:

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

‘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.”

SEC. 30. Section 63 of Republic Act No. 7653 is hereby amended to read as follows:

“Sec. 63. Action When Abnormal Movements Occur in the [Monetary-Aggregates,-Credit-oF
[the monetary aggregates; ir-credit, or in] prices

endanger the stability of the Philippine economy or important sectors thereof, the Monetary Board

1] Price Level. Whenever abnormal movements i

shall:

(2) 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 fthe- monetary aggregates, oF eredit-orf] prices;

2, the extent to which the changes in [the monetary aggregates; in-credit, Fin] 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-ageregates, oF the-tevelof credit, increases-or-decreases-by more
than-fifteon-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

2s


eavnnawne

10
a
2
13
14
15
16
7
18
19
20
21
22
23
24
25
26
7
28
29
30
31
32
33
34

[monetary-aggregates,-credit-or] cost of living INDEX 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. 31, Section 79 of Republic Act No. 7653 is hereby amended to read as follows:

"Sec, 79. Other Exchange Profits and Losses.- The banks shall bear the risks of non-
compliance with the terms of the foreign exchange documents and instruments which they buy and
sell, and shall also bear any other typically commercial or banking risks, including exchange risks not
assumed by the Bangko Sentral [under-the-provisions-of-the-preceding section.”

SEC. 32. Section 81 of Republic Act No. 7653 is hereby amended to read as follows:

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

SEC. 33. Section 83 of Republic Act No, 7653 is hereby amended to read as follows:

*SEC. 83. Loans for Liquidity Purposes. — The Bangko Sentral may extend loans and
advances to banking institutions, QUASI-BANKS AND OTHER SYSTEMICALLY CRITICAL BANGKO
SENTRAL-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. 34. Section 84 of Republic Act No. 7653 is hereby amended to read as follows:

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

‘The Monetary Board may, at its discretion, likewise authorize the Bangko Sentral to grant

emergency loans or advances to [banking] BANKS, QUASI-BANKS AND OTHER SYSTEMICALLY

26


eC oavonenene

10
11
12
13
14
15
16
Ww
18
19
20
21
2
23
24
25
26
27
28
29
30
31
32
33
34

CRITICAL BANGKO SENTRAL-SUPERVISED 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, OR IN THE CASE OF OTHER
BANGKO SENTRAL-SUPERVISED INSTITUTION, FIFTY PER CENT (50%) OF TOTAL PLACEMENTS OF THE
PUBLIC IN SUCH ENTITY, 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 (1) government securities [te-the-extent-of-theirapplicable
Jear-values-and]; (2) ACCEPTABLE GUARANTEES BACKED UP BY THE NATIONAL GOVERNMENT OR ITS
SECURITIES; (3) other unencumbered first class collaterals AND (4) PRIVATE COMMERCIAL PAPER TO
‘THE EXTENT OF THEIR APPLICABLE LOAN VALUES which the Monetary Board may approve: 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) INSTITUTION'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.

7


Cau anne ene

10
ua
12
13
14
15
16
wv
18
19
20
2a
22
23
24
25
26
a7
28
29
30
a1
32
33
34

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 (2) 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. 35. A new Section 88+

"SEC, 88-A. EXEMPTION FROM ATTACHMENT. THE PROVISIONS OF ANY LAW TO THE
CONTRARY NOTWITHSTANDING AND SECTION 31 OF THIS ACT, COLLATERALS ON LOANS AND
ADVANCES GRANTED BY THE BANGKO SENTRAL WHETHER OR NOT THE INTEREST OF THE BANGKO
SENTRAL IS REGISTERED, SHALL NOT BE SUBJECT TO ATTACHMENT, EXECUTION OR ANY OTHER
COURT PROCESS, NOR SHALL THEY BE INCLUDED IN THE PROPERTY OF INSOLVENT PERSONS OR

added to Republic Act No, 7653, as follows:

INSTITUTIONS, UNLESS THE SECURED LOANS AND ADVANCES GRANTED BY THE BANGKO SENTRAL
‘TO INSOLVENT PERSONS OR INSTITUTIONS OR A CLOSED INSTITUTION HAVE ALREADY BEEN FULLY
PAID IN WHICH CASE THE EXEMPTIONS UNDER THIS SECTION SHALL NO LONGER APPLY.”

SEC. 36, A new Section 88-8 added to Republic Act No. 7653, 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 THE DEBTOR'S
PROPERTIES AND IN THE ENFORCEMENT OF COURT WRITS AND PROCESSSES RELATED THERETO.
‘THE SPECIAL SHERIFF OF THE BANGKO SENTRAL SHALL MAKE A REPORT TO THE PROPER COURT
AFTER ANY ACTION HAS BEEN TAKEN BY HIM, WHICH COURT SHALL TREAT SUCH ACTION AS IF IT
WERE AN ACT OF ITS OWN SHERIFF IN ALL RESPECTS.

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

28


we awaursen

10
n
12
3
14
15
16
7
18
19
20
a
22
23
24
25
26
7
28
29
30
3a
32
33
34

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. 37, Anew Section 88-C is hereby added to Republic Act No. 7653, 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, REDEMPTION SHALL BE EFFECTED BY PAYING THE PRINCIPAL,
INTERESTS, CHARGES, COMMISSIONS AND ALL CLAIMS OF WHATEVER NATURE OF THE BANGKO
SENTRAL OUTSTANDING AND DUE AS OF THE DATE OF FORECLOSURE SALE, INCLUDING ALL COSTS
[AND OTHER EXPENSES INCURRED BY REASON OF THE FORECLOSURE SALE AND CUSTODY OF THE
PROPERTY.

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

SEC. 38. Anew Section 88-D is hereby added to Republic Act No. 7653, as follows:

"SEC. 88-D. UNSECURED BANGKO SENTRAL CLAIMS. ~ ALL UNSECURED CLAIMS OF THE
BANGKO SENTRAL SHALL BE CONSIDERED PREFERRED CREDITS SIMILAR TO TAXES DUE TO THE
NATIONAL GOVERNMENT IN THE ORDER OF PREFERENCE UNDER ARTICLE 2244 OF THE NEW CIVIL
cope.”

SEC. 39. Anew Section 89-A is hereby added to Republic Act No. 7653, 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 REDISCOUNTING OR OTHER SIMILAR FACILITIES
TO ISLAMIC BANKS,”

SEC, 40. Anew Section 89-8 is hereby added to Republic Act No. 7653, as follows:

“se
SENTRAL , PURSUANT TO ITS MANDATE OF MAINTAINING FINANCIAL STABILITY, MAY LEND TO THE

89-B. LOANS TO THE PHILIPPINE DEPOSIT INSURANCE CORPORATION. ~ THE BANGKO

PHILIPPINE DEPOSIT INSURANCE CORPORATION FUNDS FOR INSURANCE PURPOSE AND FOR
FINANCIAL ASSISTANCE THAT THE LATTER 1S AUTHORIZED TO EXTEND UNDER SECTION 17(D) OF

29


ear aueswne

10
ct
12
2B
14
15
16
a7
18
19
20
2
22
23
24
25
26
27
28
29
30
31
32
33

REPUBLIC ACT NO. 3591, AS AMENDED, TO AN INSURED BANK IN DANGER OF CLOSING IN ORDER TO
PREVENT SUCH CLOSING. THE INTEREST RATE SHALL BE FIXED BY THE MONETARY BOARD BUT SUCH
RATE SHALL NOT BE LOWER THAN THE EFFECTIVE COST OF FUNDS OF THE BANGKO SENTRAL. THE
MONETARY BOARD MAY PRESCRIBE ADDITIONAL TERMS AND CONDITIONS ON THE GRANT OF SUCH
LOAN.”

SEC. 41. Section 92 of Republic Act No. 7653 is hereby amended to read as follows:

“SEC, 92. ISSUE AND NEGOTIATION OF BANGKO SENTRAL OBLIGATIONS. — In order to
provide the Bangko Sentral with effective 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
negotiable evidences of indebtedness of the Bangko Sentral. {+Provided,-that-issuance-of-such
ceruficates-oF indebtedness. shall-be.made-only ib cases ob extraordinary mevementin-prcetevels |

Said evidences of indebtedness may be issued directly against the international reserve of the

Act, issue, place, buy and sell freely

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.

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

SEC. 42. Section 95 of Republic Act No. 7653 is hereby amended to read as follows:

“SEC. 95. Definition of Deposit Substitutes, — The term “deposit substitutes” is defined as an

alternative form of obtaining funds from the public, other than deposits, through the issuance,

30


ewe awaue

10
a
12
13
14
15
16
v
18
19
20
24
22
23
24
25
26
27
28
29
30
31
32
33
34

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) PROVIDED,
HOWEVER, THAT REPURCHASE AGREEMENTS, INCLUDING REVERSE PURCHASE AGREEMENTS
ENTERED INTO BY THE BANGKO SENTRAL SHALL NOT BE CONSIDERED DEPOSIT SUBSTITUTES.

IN THE COMPUTATION OF THE RESERVES AGAINST DEPOSIT SUBSTITUTES UNDER SECTION
94 OF THIS ACT, THE MONETARY BOARD SHALL DETERMINE WHAT SHALL BE CONSIDERED AS
DEPOSIT SUBSTITUTES SUBJECT TO RESERVE REQUIREMENTS. FINANCIAL INSTRUMENTS ISSUED BY
THE NATIONAL GOVERNMENT AND THE BANGKO SENTRAL AND IN INTERBANK BORROWINGS SHALL
NOT BE CONSTRUED AS DEPOSIT SUBSTITUTES.

‘The Monetary Board shall determine what specific instruments shall be considered as
deposit substitutes for the purposes of Section 94 of this Act[:]. THE MONETARY BOARD MAY ALSO
EXCLUDE FUNDS OBTAINED OR BORROWED FROM CERTAIN INSTITUTIONAL LENDERS FROM THIS
SECTION: Provided, however, That deposit substitutes of commercial, industrial and other non-
financial companies for 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. 43. Section 104 of Republic Act No. 7653 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. 44, Section 108 of Republic Act No. 7653 is hereby amended to read as follows

“SEC. 108, Minimum Copital Ratios. - The Monetary Board may prescribe minimum RISK-
BASED CAPITAL ADEQUACY ratios BASED ON INTERNATIONALLY ACCEPTED STANDARDS
[which-the-capita-and surphis-of the-banks—must-bear_to.the volume-of their assets, oF to-specific
categories-thereot} 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 FINANCIAL INSTITUTIONS WHICH ARE
EXPOSED TO MORE THAN NORMAL RISKS.”

SEC. 45, Section 117 of Republic Act No. 7653 is hereby amended to read as follows:

"SEC. 117. Issue of Government Obligations. — The issue of securities representing

obligations of the Government, its political subdivisions or instrumentalities, may be made through

31


wearvranawne

10
1
12
13
14
15
16
7
18
19
20
2
22
23
24
25
26
27
28
29
30
31
32
33

the Bangko Sentral, which may act as agent of, and for the account of the Government or its
respective subdivisions or instrumentality, as the case may be: Provided, however, That the Bangko

Sentral shall not guarantee the placement of said securities, and shall not subscribe to their issue

except to replace its maturing holdings of securi

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

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

‘THE BANGKO SENTRAL NG PILIPINAS SHALL UNDERTAKE THE REGULATION OF TRADING OF
GOVERNMENT SECURITIES AMONG FINANCIAL INSTITUTIONS. IN ORDER TO INSURE THAT
ACCREDITED FINANCIAL INSTITUTIONS SHALL OPERATE UNDER FAIR AND UNIFORM TRADING RULES,
THEY MAY , AS PART OF THE GUIDELINES OF ACCREDITATION, BE REQUIRED TO JOIN AN

with the same type as the maturing securities.

[ASSOCIATION OF ACCREDITED FINANCIAL INSTITUTIONS TO BE GOVERNED BY INTERNAL RULES OF
CONDUCT APPROVED BY THE SECRETARY OF FINANCE, THE LATTER BEING THE OFFICIAL
REPRESENTATIVE OF THE REPUBLIC OF THE PHILIPPINES, THE PRIMARY OBLIGOR IN THE ISSUANCE
OF SAID GOVERNMENT SECURITIES: PROVIDED, HOWEVER, THAT THE DIRECT PARTICIPATION OF
ACCREDITED FINANCIAL INSTITUTIONS IN THE OPEN MARKET OPERATIONS OF THE BANGKO
SENTRAL AS PROVIDED IN SECTIONS 90 AND 91 HEREIN SHALL BE SUBJECT TO SUCH RULES AND
REGULATIONS AS MAY BE PRESCRIBED BY THE MONETARY BOARD, IN CONSULTATION WITH THE
‘SECRETARY OF FINANCE.”

SEC. 46. Section 118 of Republic Act No. 7653 is hereby amended to read as follows:

"SEC 118 . Methods of Placing Government Securities. - The Bangko Sentral (faay] SHALL
place the securities to which the preceding section refers through direct sale to financial institutions
and the public.

‘The Bangko Sentral shall not be a member of any stock exchange or syndicate, but may
intervene therein for the sole purpose of regulating their operations in the placing of government

securities.

32


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

SEC. 47. Section 119 of Republic Act No. 7653 is hereby amended to read as follows:

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

SEC. 48, Section 125 of Republic Act No. 7653 is hereby amended to read as follows:

“SEC. 125. Tax Exemptions, — (he-Bangko-Sentral-shalt-be-exemptfor-a-period-of-five-(5)

‘Yonte-from-an real b-municipal-and-city—taxes,-fees,
charges-and-assessments. |
[Thee horized-in-th ws \graph-of-this-Section-shall-apply-to-oll
-of-the-Bangk Lto-th : ,pexpendiivescr-eroi
peers 1-25. well as-te-all deeds rm Siniel haan
of the business-ef the Bangke Sentral: Prowded, haweverthatsaid-exemptions shall apply only to-
h-taxes;-fees,-ch id for-which-the-Bangko-Sentral itself would-oth be
liable,-and-shalt A _fees,-charges,-of-assessments-payable-by-persons-or-other
panes ee Baap |: Provided, further That-foreign-loans-and-other

obligations of the Bangko Sentral shall be exempt, both as to principal and interest, from-anyand-all
taxes ifthe payment of such taxes has been assumed by-the Bangke Sentral]

BANGKO SENTRAL MAY AVAIL OF THE TAX EXPENDITURE SUBSIDIES IMPLEMENTED BY THE
FISCAL INCENTIVES REVIEW BOARD (FIRB) IN ACCORDANCE WITH THE PROVISIONS OF EXECUTIVE
ORDER NO. 93 AND THE GENERAL APPROPRIATIONS ACT.

SEC. 49, Section 126 of Republic Act No. 7653 is hereby amended to read as follows

“SEC. 126. Exemption From Customs Duties. ~ The provision of any general or special law to
the contrary notwithstanding, the importation and exportation by the Bangko Sentral of notes and
coins, and of gold and other metals to be used for purposes authorized under this Act, and the
Importation of all (equipenent] SUPPLIES needed [for] BY THE BANGKO SENTRAL FOR bank note
production, minting of coins, metal refining and other security printing operations AND
TRANSPORT OF CURRENCY, WHICH SHALL BE CONFINED ONLY TO THE IMPORTATION OF
‘SPECIALIZED VEHICLES, SUCH AS ARMORED CARS, shall be fully exempt from all customs duties and
consular fees and from all other taxes, assessments and charges related to such importation or
exportation,

SEC. 50. Section 128 of Republic Act No. 7653 is hereby amended to read as follows:

33


10
a
12
3
14
15
16
7
18
19

"SEC, 128. PROHIBITIONS. ~ The Bangko Sentral shall not require 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 MANDATES
UNDER THIS ACT OR TO QUALIFY OR AS REQUIRED FOR MEMBERSHIP IN INTERNATIONAL AND
REGIONAL ORGANIZATIONS.”

SEC. 51. Repealing Clouse. - Sections 129 and 130 of Republic Act No. 7653 are hereby
repealed. The provisions of any other law, rule or regulation which may be inconsistent with the
provisions of this Act are hereby repealed modified accordingly.

Sec. 52. Separability Clause. - If any provision or section of this Act or the application thereof
to any person or circumstance is held 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. 53. Effectivity Clause. - This Act shall take effect fifteen (15) days following its publication

in the Official Gazette or in two (2) national newspapers of general circulation.

Approved,