SIXTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES )
First Regular Session )

HOUSE OF REPRESENTATIVES.

Introduced by Representative Rufus B. Rodriguez and
Representative Maximo B. Rodriguez, Jr.

House Bill No, 2999

EXPLANATORY NOTE

In 1993, the Philippine Congress enacted Republic Act (R.A.) No. 7653 (The New
Central Bank Act) creating the Bangko Sentral ng Pilipinas (BSP) pursuant to the directive in
the 1987 Constitution mandating the establishment of an independent central monetary
authority (Section 20, Article XII). Twenty years hence, the economic milieu in the
Philippines has changed, globalization has increased the integration of financial markets,
and the scope of operations of financial institutions has evolved. In light of these, there is,
undoubtedly, a need to respond to contemporary challenges by amending R.A. No. 7653 in
order that the BSP remains effective in its conduct of monetary policy and supervision of
entities within the financial system

Towards this end, this bill proposes to strengthen the tools which the BSP exercises
in performing its mandates, supplement the mechanisms in protecting savings of depositors
and in ensuring the smooth flow of transactions in the financial sytem, as well as to enhance
the corporate viability of the BSP. The proposed amendments in this bill are three-fold and
the salient features thereof include:

4. Strengthening BSP’s Monetary Stability Function

a. Restoration of authority to obtain data from private persons or entities, and
authority to Issue negotiable certificates of indebtedness even during normal
times, both of which were powers granted to the old Central Bank of the
Philippines;

b. Removal of thresholds in the growth of monetary aggregates, credit and
prices as guiding principles in monetary administration, in view of current
international trends in monetary policy frameworks adopting inflation
targeting

2, Strengthening BSP’s Financial Stability Function

a. Formal recognition of financial stability in BSP’s statutory mandate, as well as
providing statutory oversight of payment and settlement systems;

b. Enhancing BSP’s supervisory authority by expanding the entities it supervises
to include other categories of financial institutions; granting authority to
impose sanctions on transfers and acquisitions of substantial shares of banks
and quasi-banks without BSP approval; allowing full flexibility to conduct risk-
based supervision of financial institutions; strengthening of administrative and
criminal sanctions to include, among other things, forfeiture of profits
unauthorized financial transactions; and improve resolution mechanisms to
deal with problem financial institutions; and

¢. Legal protection for BSP officials and staff when performing official duties
similar to that provided to officers and employees of the Philippine Deposit
Insurance Corporation.

3. Strengthening BSP’s Corporate and Financial Viability


a. Additional BSP capitalization of P150 billion, payable in 3 years;

b. Similar to other central banks, flexibility to establish adequate loss allowances
and create reserve buffers against future risks and contingencies, and
restoration of tax exemption;

c. Enhancement to credit operations by granting exemption from court
processes relating to collateral obtained from banks similar to that enjoyed by
Land Bank of the Philippines (LBP); and authority to deputize legal staff in
extrajudicial foreclosure of mortgaged properites in the same manner that
legal staff of LBP and Development Bank of the Philippines (DBP) are
authorized to do so.

These amendments, once enacted into law, will empower the BSP to effectively
respond to challenges and innovations of a globalized economy; and, more significantly, in
performing its constitutional mandates. Indeed, an empowered BSP is indispensable in
ensuring a competitive, robust and inclusive economy, and a financial system that delivers a
high quality of life for Filipinos,

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

Ulu

RUFYS B, RODRIGUEZ

4x
ue: JR.

MAXIMO B. ROI

Page 2 of 21


SIXTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES )
First Regular Session )

HOUSE OF REPRESENTATIVES

Introduced by Representative Rufus B. Rodriguez and
Representative Maximo B, Rodriguez, Jr.

2999

House Bill No.

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

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

SECTION 1. Section 2 of Republic Act No. 7653, otherwise known as “The New
Central Bank Act’ is hereby amended to read as follows:

“SEC. 2. Creation of the Bangko Sentral. - There is hereby
established an independent central monetary authority, which shall be a body
corporate known as the Bangko Sentral ng Pilipinas, hereafter referred to as
the Bangko Sentral

“The capital of the Bangko Sentral shall be TWO HUNDRED [Fifty
billion pesos (P{60;]200,000,000,000), to be fully subscribed by the
Government of the Republic, hereafter referred to as the Government. [Fen
billion—pesos(P-40,000,000,000)-of-which] THE UNPAID SUBSCRIPTION
shall be fully paid for by the Government IN THREE (3) CONSECUTIVE
ANNUAL INSTALLMENTS UNTIL 2047, [upon the-ff

SEC. 2. Section 3 of the same Act is hereby amended to read as follows:

"SEC. 3. Responsibility and Primary Objective. — The Bangko Sentral
shall provide policy directions in the areas of money, banking, and credit. It
shall have supervision over the operations of banks and exercise such
regulatory powers as provided in this Act and other pertinent laws over the
operations of finance companies and non-bank financial institutions
performing quasi-banking functions, [ |
CREDIT CARD COMPANIES, MONEY CHANGERS, E-MONEY ISSUERS,
REMITTANCE AGENTS, PAYMENT AND SETTLEMENT SYSTEM
OPERATORS and OTHER institutions performing similar functions AS MAY
BE DETERMINED BY THE MONETARY BOARD.

“The primary objective of the Bangko Sentral is to maintain price
stability conducive to a balanced and sustainable growth of the economy. It
shall also promote and maintain monetary AND FINANCIAL stability and the
convertibility of the peso,

Page 3 of 21


“THE BANGKO SENTRAL SHALL OVERSEE THE PAYMENTS
AND SETTLEMENTS SYSTEMS IN THE PHILIPPINES IN ACCORDANCE.
WITH SOUND AND PRUDENT PRACTICES.”

SEC. 3. Section 11 of the same Act 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.

“The Bangko Sentral shall maintain and preserve a complete record of
the proceedings and deliberations of the Monetary Board, including the tapes
and transcripts of the stenographic notes, either in their original form or in
microfilm.

“THE MEETINGS OF THE MONETARY BOARD MAY BE
CONDUCTED THROUGH MODERN TECHNOLOGIES SUCH AS, BUT
NOT LIMITED TO, TELECONFERENCING AND VIDEOCONFERENCING.”

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

“SEC. 16. Responsibility. — Members of the Monetary Board,
officials, examiners, and employees of the Bangko Sentral who willfully
Violate this act or who are guilty of negligence, abuses or acts of malfeasance
of misfeasance [or failto-exerciee-extraordinary-diligenee] in the performance
of [his] THEIR duties shall be held liable for any loss or injury suffered by the
Bangko Sentral or other banking institutions as a result of such violation,
negligence, abuse, malfeasance[;] OR misfeasance [or-failure-to-exercise
extraordinary diligence

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

“THE ABOVE NOTWITHSTANDING, UNLESS THE ACTIONS OF
THE BANGKO SENTRAL OR ANY OF ITS OFFICERS AND EMPLOYEES
ARE FOUND TO BE IN WILLFUL VIOLATION OF THIS ACT,
PERFORMED IN BAD FAITH, WITH MALICE AND/OR GROSS
NEGLIGENCE, THE BANGKO SENTRAL, MEMBERS OF THE
MONETARY BOARD, ITS OFFICERS AND EMPLOYEES, ARE HELD
FREE AND HARMLESS TO THE FULLEST EXTENT PERMITTED BY LAW
FROM ANY LIABILITY, AND THEY SHALL BE INDEMNIFIED FOR ANY
AND ALL LIABILITIES, LOSSES, CLAIMS, DEMANDS, DAMAGES,
DEFICIENCIES, COSTS AND EXPENSES OF WHATSOEVER KIND AND
NATURE THAT MAY ARISE IN CONNECTION WITH THE

Page 4 of 21


PERFORMANCE OF THEIR DUTIES DONE IN GOOD FAITH AND
CONSISTENT WITH THE POWERS AND FUNCTIONS AUTHORIZED BY
LAW.”

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

"SEC. 21, Deputy Governors. — The Governor of the Bangko
Sentral, with the approval of the Monetary Board, shall appoint not more than
[three-43)] FIVE (5) Deputy Governors who shall perform duties as may be
assigned to them by the Governor and the Board,

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

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

“SEC. 23. Authority to Obtain Data and Information. — The Bangko
Sentral shall have the authority to REQUIRE [request] 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 shall have the power to issue a subpoena for the production of
the books and records for the aforesaid purpose. Those who refuse the
subpoena without justifiable cause, or who refuse to supply the [bank]
BANGKO SENTRAL with data [requested-or] required, shall be subject to
Punishment for contempt in accordance with the provisions of the Rules of
Court.

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

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

“SEC. 25. Supervision and Examination. — The Bangko Sentral shall
have supervision over, and conduct REGULAR or special examinations of,
banking institutions and quasi-banks, including their subsidiaries and affiliates
engaged in allied activities

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

“THE BANGKO SENTRAL SHALL ALSO HAVE THE POWER TO
OBTAIN INFORMATION FOR SUPERVISORY PURPOSES ON
TRANSACTIONS BETWEEN A SUPERVISED INSTITUTION AND ITS

Page 5 of 21


PARENT OR OTHER AFFILIATE COMPANIES, AND EXAMINE THESE
TRANSACTIONS. THIS POWER INCLUDES THE AUTHORITY OF THE
BANGKO SENTRAL TO LOOK INTO THE MAIN ACTIVITIES OF
COMPANIES AFFILIATED WITH THE PARENT COMPANIES THAT HAVE
A MATERIAL IMPACT ON THE SAFETY AND SOUNDNESS OF THE
BANK AND THE BANKING GROUP.

“A PARENT COMPANY MEANS A CORPORATION WHICH OWNS
DIRECTLY OR INDIRECTLY VOTING STOCK OF A SUPERVISED
INSTITUTION OF THE BANGKO SENTRAL SUFFICIENT TO CONTROL
ITS MANAGEMENT AND OPERATIONS, SUBJECT TO THE GUIDELINES
ISSUED BY THE MONETARY BOARD.

“AS USED IN THIS SECTION AND SECTION 25-A, AND SUBJECT
TO THE GUIDELINES ISSUED BY THE MONETARY BOARD, CONTROL
EXISTS WHEN THE PARENT OWNS DIRECTLY OR INDIRECTLY MORE
THAN ONE HALF OF THE STOCK OF A SUPERVISED INSTITUTION.
CONTROL ALSO EXISTS EVEN WHEN THE PARENT OWNS ONE HALF
OR LESS OF THE VOTING STOCK OF THE SUPERVISED INSTITUTION
WHEN THERE IS POWER OVER MORE THAN ONE HALF OF THE
VOTING RIGHTS BY PROXY OR BY VIRTUE OF AN AGREEMENT WITH
OTHER INVESTORS, 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 by a bank or quasi-bank or
which is related or linked to such institution or intermediary through common
stockholders or such other factors as may be determined by the Monetary
Board,

“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,
AND TO INQUIRE INTO BANK DEPOSITS AND INVESTMENT
ACCOUNTS FOR EXAMINATION PURPOSES ONLY, [subj
provision-of] NOTWITHSTANDING REPUBLIC ACT NOS. 1405 AND 6426.
existing Jaws-protecting-or safeguarding the-secrecy-or-confidentiality of bank
deposits.as welt tments-of private-pe -Ratural-or juridical in-debt

]

“No restraining order or injunction shall be issued by the court
enjoining the Bangko Sentral from examining any institution subject to
supervision or examination by the Bangko Sentral, unless there is convincing
proof that the action of the Bangko Sentral is plainly arbitrary and made in
bad faith and the petitioner or plaintiff files with the clerk or judge of the court
in which the action is pending a bond executed in favor of the Bangko

Page 6 of 21


Sentral, in an amount to be fixed by the court. The provisions of Rule 58 of
the New Rules of Court insofar as they are applicable and not inconsistent
with the provisions of this section shall govern the issuance and dissolution of
the restraining order or injunction contemplated in this section.”

SEC. 8. A new section entitled Section 25-A is hereby inserted in the same Act to
read as follows:

“SEC. 25-A. AUTHORITY TO APPROVE TRANSFER OF SHARES -
TRANSFERS OR ACQUISITIONS, OR A SERIES THEREOF, OF TEN
PERCENT (10%) OF VOTING RIGHTS IN BANKS OR QUASI-BANKS
SHALL REQUIRE THE PRIOR APPROVAL OF THE BANGKO SENTRAL.
THE SELLING OR CONVEYING STOCKHOLDER SHALL SUBMIT SUCH
TRANSFER OR ACQUISITON FOR APPROVAL BY THE BANGKO
SENTRAL WITHIN SUCH PERIOD AS MAY BE PRESCRIBED BY THE
MONETARY BOARD. IN APPROVING SUCH TRANSFERS OR
ACQUISITIONS, REGARD SHALL BE GIVEN BY THE BANGKO
SENTRAL TO THE FITNESS OF THE INCOMING STOCKHOLDERS AS
MAY BE INDICATED IN THEIR INTEGRITY, REPUTATION AND
FINANCIAL CAPACITY. WITHOUT BANGKO SENTRAL APPROVAL, NO
SUCH TRANSFER OR ACQUISITION SHALL HAVE LEGAL EFFECT NOR
SHALL THE SAME 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 MAY SHARE WITH THE
PHILIPPINE DEPOSIT INSURANCE CORPORATION ANY INFORMATION
THAT THE BANGKO SENTRAL MAY OBTAIN PERTAINING TO
TRANSFER OR ACQUISITION OF SHARES OR SERIES OF TRANSFERS
OR ACQUISITION OF SHARES IN BANKS AND QUASI-BANKS.”

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

“SEC. 28. Examination and Fees. — The supervising and examining
department head, personally or by deputy, shall examine the [books]
OPERATIONS of every bank[ing] AND QUASI-BANK, INCLUDING THEIR
SUBSIDIARIES AND AFFILIATES ENGAGED IN ALLIED ACTIVITIES,
AND OTHER ENTITIES WHICH UNDER THIS ACT OR SPECIAL LAWS
ARE SUBJECT TO BANGKO SENTRAL SUPERVISION, IN
ACCORDANCE WITH THE GUIDELINES SET BY THE MONETARY
BOARD TAKING INTO CONSIDERATION SOUND AND PRUDENT
PRACTICES. [ ry twelve-(+ ths, and_at-such- other 4

tary-Board-by-an_alfirmative_vate-of-fi bers; Py

nt-a a on—the-s o-the-Menetary cd]
Provided, That there shall be an interval of at least twelve (12) months
between [annual] REGULAR examinations; PROVIDED, FURTHER, THAT
THE MONETARY BOARD, BY AN AFFIRMATIVE VOTE OF AT LEAST
FIVE (5) MEMBERS, MAY AUTHORIZE A SPECIAL EXAMINATION IF THE
CIRCUMSTANCES WARRANT.

Page 7 of 21


“The INSTITUTION [bank] concerned shall afford to the head of the
appropriate supervising and examining departments and to his authorized
deputies full opportunity to examine its books AND RECORDS, cash and
[available] assets and general condition AND REVIEW ITS SYSTEMS AND
PROCEDURES at any time during BUSINESS [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—institutions—whieh—are—subject—to
‘examination-by-the-Bangko-Sentral] SUPERVISED INSTITUTIONS shall pay
to the Bangko Sentral, NO LATER THAN MAY 31 OF EACH YEAR [within
the-first-thirty-(30)-days-of each-year], an annual SUPERVISION fee [in-an
amount-equal_to-a-percentage;] as may be prescribed by the Monetary
Board,[,oFits average total-assets-during the-preceding-year as-shown-on-its
end-of-month-balance-sheets —after-deducting-cash-on-hand-and-amounts.
due—from—banks,—ineluding—the—Bangko—Sentral-and—banks—abroad.] IN
DETERMINING THE ANNUAL SUPERVISION FEE, THE MONETARY
BOARD SHALL CONSIDER THE COST OF SUPERVISION.”

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

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

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

“SEC. 30. Proceedings in Receivership and Liquidation. - Whenever,
upon report of the head of the supervising or examining department, the
Monetary Board finds that a bank or quasi-bank:

“(a) is unable to pay its liabilities as they become due in the ordinary
course of business: Provided, That this shall not include inability to pay
caused by extraordinary demands induced by financial panic in the banking
‘community;

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

“(c) cannot continue in business without involving probable losses to
its depositors or creditors; 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; in which cases, the Monetary
Board may summarily and without need for prior hearing forbid the institution
from doing business in the Philippines and designate the Philippine Deposit
Insurance Corporation as receiver of the banking institution

“[For-a-quasi-bank,-any-person-of ed-compet bankir
#F finance may-be-designated-as-receiver:]

“The receiver shall immediately gather and take charge of all the
assets and liabilities of the institution, administer the same for the benefit of
its creditors, and exercise the general powers of a receiver under the Revised

Page 8 of 21


Rules of Court but shall not, with the exception of administrative
expenditures, pay or commit any act that will involve the transfer or
disposition of any asset of the institution: Provided, That the receiver may
deposit or place the funds of the institution in nonspeculative investments.
The receiver shall determine as soon as possible, but not later than ninety
(90) days from takeover, whether the institution may be rehabilitated or
otherwise placed in such a condition so that it may be permitted to resume
business with safety to its depositors and creditors and the general public:
Provided, That any determination for the resumption of business of the
institution shall be subject to prior approval of the Monetary Board.

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

“if the receiver determines that the institution cannot be rehabilitated
or permitted to resume business in accordance with the next preceding
paragraph, the Monetary Board shall notify in writing the board of directors of
THE RECEIVER'S [its] findings and direct the receiver to proceed with the
liquidation of the institution, The receiver shall

“1. file ex parte with the proper regional trial court, and without
requirement of prior notice or any other action, a petition for assistance in the
liquidation of the institution pursuant to a liquidation plan adopted by the
Philippine Deposit Insurance Corporation for general application to all closed
banks. In case of quasi-banks, the liquidation plan shall be adopted by the
Monetary Board, Upon acquiring jurisdiction, the court shall, upon motion by
the receiver after due notice, adjudicate disputed claims against the
institution, assist the enforcement of individual liabilities of the stockholders,
directors and officers, and decide on other issues as may be material to
implement the liquidation plan adopted. The receiver shall pay the cost of the
proceedings from the assets of the institution.

“2. convert the assets of the institutions 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

Page 9 of 21


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

“THE AUTHORITY OF THE MONETARY BOARD TO PLACE A
BANK OR QUASI-BANK UNDER RECEIVERSHIP AS PROVIDED ABOVE
MAY ALSO BE EXERCISED OVER NON-STOCK SAVINGS AND LOAN
ASSOCIATIONS, BASED ON THE SAME APPLICABLE GROUNDS. FOR
QUASI-BANKS AND NON-STOCK SAVINGS AND LOAN ASSOCIATIONS,
ANY PERSON OF RECOGNIZED COMPETENCE IN BANKING, CREDIT
OR FINANCE MAY BE DESIGNATED AS A RECEIVER.”

SEC. 12. Section 31 of the same Act is hereby amended to read as follows:

“SEC. 31. Distribution of Assets. — In case of liquidation of a bank,
quasi-bank OR NON-STOCK SAVINGS AND LOAN ASSOCIATION, after
payment of the cost of proceedings, including reasonable expenses and fees
of the receiver to be allowed by the court, the receiver shall pay the debts of
such institution, under order of the court, in accordance with the rules on
concurrence and preference of credit as provided in the Civil Code.”

SEC. 13. Section 32 of the same Act is hereby amended to read as follows:

“SEC. 32. Disposition of Revenues and Earnings. — All revenues and
earnings realized by the receiver in winding up the affairs and administering
the assets of any bank, quasi-bank OR NON-STOCK SAVINGS AND LOAN
ASSOCIATION within the purview of this Act shall be used to pay the costs,
fees and expenses mentioned in the preceding section, salaries of such
personnel whose employment is rendered necessary in the discharge of the
liquidation together with other additional expenses caused thereby. The
balance of revenues and earnings, after the payment of all said expenses,
shall form part of the assets available for payment to creditors.”

SEC. 14. Section 34 of the same Act is hereby amended to read as follows:

“SEC. 34. Refusal to Make Reports or Permit Examination. — Any
officer, owner, agent, manager, director or officer-in-charge of any institution
Subject to the supervision or examination by the Bangko Sentral within the
purview of this act who, being required in writing by the Monetary Board or by
the head of the supervising and examining department willfully refuses to file
the required report or permit any lawful examination into the affairs of such
institution shall be punished by a fine of not less than fifty thousand pesos
(P50,000) nor more than [one-hundred_thousand-pesesP-400.000)] TWO
MILLION PESOS (P2,000,000) or by imprisonment of not less than one (1)
year nor more than five (6) years, or both, [in] AT the discretion of the court.

“THIS SHALL ALSO APPLY TO THE OFFICER, OWNER, AGENT,
MANAGER, DIRECTOR OR OFFICER-IN-CHARGE OF THE AFFILIATE
COMPANY/IES AND PARENT COMPANY OF A BANK OR QUASI-BANK,
AS WELL AS THE AFFILIATES OF SUCH PARENT COMPANY, WHOSE
TRANSACTIONS ARE SUBJECT TO EXAMINATION UNDER THIS LAW.”

SEC. 15. Section 35 of the same Act is hereby amended to read as follows”

“SEC. 35. False Statement. — The willful making of a false or
misleading statement on a material fact to the Monetary Board or to the

Page 10 of 21


examiners of the Bangko Sentral shall be punished by a fine of not less than
One hundred thousand pesos (P100,000) nor more than [Fwo—hundred
thousand—pesos—(P200,000)] TWO MILLION PESOS (P2,000,000), or by
imprisonment of not more than (5) years, or both, at the discretion of the
court.”

SEC. 16. Section 36 of the same Act is hereby amended to read as follows:

“SEC. 36. Proceedings Upon Violation of This Act and Other Banking
Laws, Rules, Regulations, Orders or Instructions, — Whenever a bank, [of]
quasi-bank, OR OTHER ENTITY WHICH UNDER THIS ACT OR SPECIAL
LAWS IS SUBJECT TO BANGKO SENTRAL SUPERVISION or whenever
any person or entity willfully violates this Act or other pertinent banking laws
being enforced or implemented by the Bangko Sentral or any order,
instruction, rule or regulation issued by the Monetary Board, the person or
persons responsible for such violation shall unless otherwise provided in this
Act be punished by a fine of not less than Fifty thousand pesos (P50,000) nor
more than [Fwe—hundred—thousand—pesos—{P200,000)] TWO MILLION
PESOS (P2,000,000.00) or by imprisonment of not less than two (2) years
nor more than ten (10) years, or both, at the discretion of the court,

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

SEC. 17. Section 37 of the same Act is hereby amended to read as follows:

"SEC. 37. Administrative Sanctions on Banks and Quasi-Banks, —
Without prejudice to the criminal sanctions against the culpable persons
provided in Sections 34, 35, and 36 of this Act, the Monetary Board may, at
its discretion, impose upon any bank or quasi-bank, INCLUDING THEIR
SUBSIDIARIES AND AFFILIATES ENGAGED IN ALLIED ACTIVITIES, OR
OTHER ENTITIES WHICH UNDER THIS ACT OR SPECIAL LAWS ARE
SUBJECT TO THE BANGKO SENTRAL SUPERVISION, AND/OR their
directors, officers and/or EMPLOYEES, for any willful violation of its charter
or by-laws, willful delay in the submission of reports or publications thereof as
required by law, rules and regulations; any refusal to permit examination into
the affairs of the institution; any willful making of a false or misleading
statement to the Board or the appropriate supervising and examining
department or its examiners; any willful failure or refusal to comply with, or
violation of, any banking law or any order, instruction or regulation issued by
the Monetary Board, or any order, instruction or ruling by the Governor; or
any commission of irregularities, and/or conducting business in an unsafe or
unsound manner as may be determined by the Monetary Board, the following
administrative sanctions, whenever applicable:

“(a) fines in amounts as may be determined by the Monetary Board to
be appropriate, but in no case to exceed [Thirty thousand_pesos-(P30,000)]
ONE MILLION PESOS (P1,000,000.00) FOR EACH TRANSACTIONAL
VIOLATION OR ONE HUNDRED THOUSAND PESOS (P100,000.00) PER
BANKING [alday for each CONTINUING violation, taking into consideration
the attendant circumstances, such as the nature and gravity of the violation or
irregularity and the size of the INSTITUTION, [bank—or—quasi-bank]

Page 11 of 21,


PROVIDED: THAT IN CASE PROFIT IS GAINED OR LOSS IS AVOIDED
AS A RESULT OF THE VIOLATION, A FINE OF NO MORE THAN THREE
(3) TIMES THE PROFIT GAINED OR LOSS AVOIDED MAY BE IMPOSED;

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

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

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

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

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

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

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

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

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

“The Governor is hereby authorized, at his discretion, to impose upon
{banking—institutions], BANKS AND QUASI-BANKS, INCLUDING THEIR
SUBSIDIARIES AND AFFILIATES ENGAGED IN ALLIED ACTIVITIES,
AND OTHER ENTITIES WHICH UNDER SPECIAL LAWS ARE SUBJECT
TO BANGKO SENTRAL SUPERVISION for any failure to comply with the
requirements of law, Monetary Board regulations and policies, and/or
instructions issued by the Monetary Board or by the Governor, fines not in
excess of [Ten-thousand-pesos-(P40,000)] ONE HUNDRED THOUSAND
PESOS (P100,000.00) FOR EACH TRANSACTIONAL VIOLATION OR
THIRTY THOUSAND PESOS (P30,000.00) PER BANKING [a] day for each
CONTINUING violation, the imposition of which shall be final and executory
until reversed, modified or lifted by the Monetary Board on appeal.”

SEC. 18. A new section entitled Section 38-A is hereby inserted in the same Act to
read as follows:

Page 12 of 21


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

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

“THE PROVISIONS OF RULE 58 OF THE 1997 RULES ON CIVIL
PROCEDURE IN SO FAR 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, 19. Section 43 of the same Act is hereby amended 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. Ils the caloula tion of-net-profits; the
shaltmake- oF -establish-adequat nad
doubtful-accounts]. NOTWITHSTANDING ANY PROVISION OF LAW TO
THE CONTRARY, THE NET PROFIT OF THE BANGKO SENTRAL SHALL
BE DETERMINED AFTER ALLOWING FOR EXPENSES OF OPERATION
ADEQUATE ALLOWANCES AND PROVISIONS FOR BAD AND
DOUBTFUL DEBTS, DEPRECIATION IN ASSETS, AND SUCH OTHER
ALLOWANCES AND CONTINGENCIES OR PURPOSES AS THE
MONETARY BOARD MAY DETERMINE IN ACCORDANCE WITH
PRUDENT FINANCIAL MANAGEMENT.”

SEC. 20. A new section entitled Section 43-A is hereby inserted in the same Act to
read as follows:

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

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

SEC. 21. Section 45 of the same Act is hereby amended to read as follows:

“SEC. 45. Revaluation Profits and Losses. — UNREALIZED profits or
losses arising from any revaluation of the Bangko Sentral's {net] assets [oF],
liabilities OR DERIVATIVE INSTRUMENTS DENOMINATED in [gold—or]
foreign currencies with respect to the MOVEMENTS OF PRICES AND

Page 13 of 21


EXCHANGE RATES FROM THIRD CURRENCIES TO Philippine peso shall
not be included in the computation of the annual profits and losses of the
Bangko Sentral. Any 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 UNREALIZED profit or loss shall
be carried in a special frozen account which shall be named "Revaluation of
International Reserve (RIR)", and the net balance of which shall appear either
among the liabilities or among the assets of the Bangko Sentral, depending
on whether the revaluations have produced net profits or net losses.

“The [Revaluation—oftnternational-Reserve] RIR account shall be
[neither|credited [rer] OR debited ONLY FOR THE PERIODIC
REVALUATION AS AUTHORIZED IN THIS SECTION AND TO REFLECT
THE CORRESPONDING ADJUSTMENT RESULTING TO REDUCTION IN
THE BANGKO SENTRAL’S NET FOREIGN ASSETS, LIABILITIES AND
FOREIGN CURRENCY-DENOMINATED DERIVATIVE INSTRUMENTS.
THE RIR SHALL BE ADJUSTED AND RECOGNIZED IN THE INCOME
STATEMENT UPON SALE OF GOLD AND FOREIGN SECURITIES, OR
WHEN THE FOREIGN CURRENCY IS REPATRIATED TO LOCAL
CURRENCY OR IS USED TO PAY FOREIGN OBLIGATIONS OR UPON
MATURITY OF A FOREIGN CURRENCY-DENOMINATED FORWARD OR
OPTION CONTRACT INVOLVING THE PHILIPPINE PESO, _ [for—any
purpeses-other-than-those-specificaly authorized. in-this-section.]’

SEC. 22. Section 61 of the same Act is hereby amended to read as follows:

“SEC, 61. Guiding Principle. — THE MONETARY BOARD SHALL
REGULARLY ASSESS PRICE DEVELOPMENTS AND OUTLOOK AND,
BASED ON ITS ANALYSIS AND EVALUATION OF INFLATIONARY
PRESSURES, USE ITS POLICY INSTRUMENTS TO ATTAIN AND
MAINTAIN PRICE STABILITY. [The—MonetaryBeard—shall-endeavorto
control_any—expansion—orcontraction—in_monetary—aggregates—which—is

prejudiciato-the attainment or maintenance of price stability)"

SEC. 23. Section 63 of the same Act is hereby amended to read as follows:

“SEC. 63. Action when Abnormal Movements Occur in the [Monetary
. F] Price Level. — Whenever abnormal movements in

the [monetary aggregates,-in-credit,-or-in] prices endanger the stability of the
Philippine economy or important sectors thereof, the Monetary Board shall

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

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

"(1) the causes of the rise or fall of [the monetary aggregates,
ot ereditor-of] prices;

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

Page 14 of 21


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

“Whenever the [monetary-aggregates.-or the level-of credit 28

a by-more-than fifteen peraent{45%),-oFthe] cost of living index
increases by more than ten percent (10%), in relation to the level existing at
the end of the corresponding month of the preceding year, or even though
[any-of-these] THIS quantitative guideline[s-have] HAS not been reached
when in its judgment the circumstances so warrant, the Monetary Board shall
submit the reports mentioned in this Section, and shall state therein whether,
in the opinion of the Board, said changes in the [monetary-aggregates, credit
o] cost of living represent a threat to the stability of the Philippine economy
or of important sectors thereof.

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

SEC. 24. Section 81 of the same Act 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, under the provisions of the present article of this Act shall be
used to influence the volume of credit consistent with the objective of price
stability AND MAINTENANCE OF FINANCIAL STABILITY.”

SEC. 25. Section 84 of the same Act is hereby amended to read as follows:

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

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

“The amount of any emergency loan or advance shall not exceed the
sum of fifty percent (60%) of total deposits and deposit substitutes of the
banking institution, and shall be disbursed in two (2) or more tranches. The
amount of the first tranche shall be limited to twenty-five percent (25%) of the
total deposit and deposit substitutes of the institution and shall be secured by
(A) government securities, (B) ACCEPTABLE GUARANTEES BACKED UP
BY THE NATIONAL GOVERNMENT OR ITS SECURITIES; (C) [tothe

extent-of_their-applicabletoan_values-and] other unencumbered first class

Page 15 of 21


collaterals and (D) OTHER KINDS OF COLLATERALS AS MAY BE
AUTHORIZED BY THE MONETARY BOARD IN ACCORDANCE WITH
SOUND RISK MANAGEMENT PRINCIPLES [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 total deposit and deposit
substitutes if the same is adequately secured by applicable loan values of
government securities and unencumbered first class collaterals approved by
the Monetary Board, and the principal stockholders of the institution furnish
an acceptable undertaking to indemnify and hold harmless from suit a
conservator whose appointment the Monetary Board may find necessary at
any time,

“Prior to the release of the first tranche, the banking institution shall
submit to the Bangko Sentral a resolution of its board of directors authorizing
the Bangko Sentral to evaluate other assets of the banking institution certified
by its external auditor to be good and available for collateral purposes should
the release of the subsequent tranche be thereafter applied for.

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

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

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

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

“Whenever a financial institution incurs an overdraft in its account with
the Bangko Sentral, the same shall be eliminated within the period prescribed
in Section 102 of this Act.”

SEC. 26. A new section entitled Section 88-A is hereby inserted in the same Act to
read as follows:

“SEC. 88-A. EXEMPTION FROM ATTACHMENT. - COLLATERALS
ON LOANS AND ADVANCES GRANTED BY THE BANGKO SENTRAL,
WHETHER OR NOT THE INTEREST OF THE BANGKO SENTRAL IS
REGISTERED, SHALL NOT BE SUBJECT TO ATTACHMENT,
EXECUTION OR ANY OTHER COURT PROCESS OR ADMINISTRATIVE
RESTRICTIONS ON LAND USE, NOR SHALL THEY BE INCLUDED IN
THE PROPERTY OF INSOLVENT PERSONS OR INSTITUTIONS.”

SEC. 27. A new section entitled Section 88-B is hereby inserted in the same Act to
read as follows:

Page 16 of 21


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

“NO RESTRAINING ORDER OR INJUNCTION SHALL BE ISSUED
BY THE COURT ENJOINING THE BANGKO SENTRAL FROM
PROCEEDING WITH THE FORECLOSURE OF THE MORTGAGE UNLESS
A BOND IS POSTED IN FAVOR OF THE BANGKO SENTRAL IN AN
AMOUNT EQUIVALENT TO THE TOTAL CLAIM OF THE BANGKO
SENTRAL, THE RESTRAINING ORDER OR INJUNCTION SHALL BE
REFUSED OR, IF GRANTED, SHALL BE DISSOLVED UPON FILING BY
THE BANGKO SENTRAL OF A BOND, WHICH SHALL BE IN THE FORM
OF A BANGKO SENTRAL CHECK, IN AN AMOUNT TWICE THE AMOUNT
OF THE ORIGINAL BOND POSTED CONDITIONED THAT THE BANGKO.
SENTRAL WILL PAY THE DAMAGES WHICH THE PARTY MAY SUFFER
BY THE REFUSAL OR DISSOLUTION OF THE INJUNCTION. THE
PROVISIONS OF RULE 58 OF THE NEW RULES OF COURT INSOFAR
AS THEY ARE APPLICABLE AND NOT INCONSISTENT WITH THE
PROVISIONS OF THIS SECTION SHALL GOVERN THE ISSUANCE AND.
DISSOLUTION OF THE RESTRAINING ORDER OR INJUNCTION
CONTEMPLATED IN THIS SECTION.”

SEC. 28. A new section entitled Section 88-C is hereby inserted in the same Act to.
read as follows:

“SEC. 88-C. RIGHT OF REDEMPTION OF FORECLOSED REAL
PROPERTY; RIGHT OF POSSESSION DURING REDEMPTION PERIOD. —
THE MORTGAGOR SHALL HAVE THE RIGHT TO REDEEM THE
PROPERTY WITHIN ONE (1) YEAR FROM THE DATE OF
FORECLOSURE SALE OF THE REAL ESTATE, IN CASE THE
MORTGAGOR IS A NATURAL PERSON, AND WITHIN NINETY (90) DAYS
BUT NOT LATER THAN THE DATE OF REGISTRATION OF THE
CERTIFICATE OF FORECLOSURE SALE, IN CASE THE MORTGAGOR IS
A JURIDICAL PERSON; PROVIDED HOWEVER, THAT FORECLOSED
REAL PROPERTIES IN THE NAME OF A BORROWER BANK, OR OTHER
CORPORATE THIRD PARTY MORTGAGOR WHOSE PROPERTIES ARE
DIRECTLY MORTGAGED TO THE BANGKO SENTRAL, PURSUANT TO.
ACT NO. 3135, THE APPLICABLE REDEMPTION PERIOD IS ONE (1)
YEAR. REDEMPTION SHALL BE EFFECTED BY PAYING THE
PRINCIPAL, INTERESTS, 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.

Page 17 of 21


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

‘SEC. 29. A new section entitled Section 88-D is hereby inserted in the same Act to
read 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 CODE.”

SEC. 30. A new section entitled Section 89-A is hereby inserted in the same Act to
read as follows:

“SEC. 89-A. FINANCIAL FACILITIES FOR ISLAMIC BANKS. - THE
BANGKO SENTRAL MAY, TAKING INTO CONSIDERATION THE
PECULIAR CHARACTERISTICS OF ISLAMIC BANKING, FORMULATE
RULES AND REGULATIONS FOR THE EXTENSION OF FINANCIAL
FACILITIES TO ISLAMIC BANKS PROVIDED SUCH EXPOSURES SHALL
BE PROPERLY SECURED.”

‘SEC. 31. A new section entitled Section 89-B is hereby inserted in the same Act to
read as follows

“SEC. 89-B. LOANS TO THE PHILIPPINE DEPOSIT INSURANCE
CORPORATION. - THE BANGKO SENTRAL, PURSUANT TO ITS
MANDATE OF MAINTAINING FINANCIAL STABILITY, MAY LEND TO
THE PHILIPPINE DEPOSIT INSURANCE CORPORATION FUNDS FOR
INSURANCE PURPOSE AND FOR FINANCIAL ASSISTANCE THAT THE
LATTER IS AUTHORIZED TO EXTEND UNDER SECTION 17(D) OF
REPUBLIC ACT NO. 3591, AS AMENDED, TO AN INSURED BANK IN
DANGER OF CLOSING IN ORDER TO MINIMIZE LOSSES TO ITS
DEPOSITORS AND CREDITORS. NOTWITHSTANDING SECTION 18 OF
REPUBLIC ACT NO. 3591, AS AMENDED, THE MONETARY BOARD
SHALL PRESCRIBE INTEREST RATES AND SUCH OTHER TERMS AND
CONDITIONS OF THE LOAN.”

SEC. 32. Section 92 of the same Act is hereby amended to read as follows:

“SEC. 92. Issue and Negotiation of Bangko Sentral Obligations. — In
order to provide the Bangko Sentral with effective instruments for open
market operations, the Bangko Sentral may, subject to such rules and
regulations as the Monetary Board may prescribe and in accordance with the
principles stated in Section 90 of this Act, issue, place, buy and sell freely
negotiable evidences of indebtedness of the Bangko Sentral [:Provided, That

1 Said evidences of indebisdness may
be issued directly against the international reserve of the Bangko Sentral or
against the securities which it has acquired under the provisions of Section

Page 18 of 21


91 of this Act, or may be issued without relation to specific types of assets of
the Bangko Sentral.

“The Monetary Board shall determine the interest rates, maturities and
other characteristics of said obligations of the Bangko Sentral, and may, if it
deems it advisable, denominate the obligations in gold or foreign currencies.

"Subject to the principles stated in Section 90 of this Act, the
evidences of indebtedness of the Bangko Sentral to which this section refers
may be acquired by the Bangko Sentral before their maturity, either through
purchases in the open market or through redemptions at par and by lot if the
Bangko Sentral has reserved the right to make such redemptions. The
evidences of indebtedness acquired or redeemed by the Bangko Sentral shall
not be included among its assets, and shall be immediately retired and
cancelled,”

SEC. 33. Section 95 of the same Act is hereby amended to read as follows:

"SEC. 95. Definition of Deposit Substitutes. — The term “deposit
substitutes" is defined as an alternative form of obtaining funds from the
public, other than deposits, through the issuance, endorsement, or
acceptance of debt instruments for the borrower's own account, for the
purpose of relending or purchasing of receivables and other obligations
These instruments may include, but need not be limited to, bankers
acceptances, promissory notes, participations, certificates of assignment and
similar instruments with recourse, and repurchase agreements, THE TERM
‘PUBLIC’ MEANS BORROWING FROM TWENTY (20) OR MORE
LENDERS AT ANY ONE TIME. FOR THIS PURPOSE, “LENDERS” SHALL
REFER TO INDIVIDUALS AND CORPORATE ENTITIES THAT ARE NOT
ACTING AS FINANCIAL INTERMEDIARIES, SUBJECT TO THE
SAFEGUARDS AND REGULATIONS ISSUED BY THE MONETARY
BOARD. The Monetary Board shall determine what specific instruments
‘shall be considered as deposit substitutes for the purposes of SECTION 94 of
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. 34. Section 101 of the same Act is hereby amended to read as follows:

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

“if a bank or quasi-bank chronically has a reserve deficiency, the
Monetary Board may limit or prohibit the making of new loans or investments

Page 19 of 21


by the institution and may require that part or all of the net profits of the
institution be assigned to surplus.

“The Monetary Board may modify or set aside the reserve deficiency
penalties provided in this section, for part or the entire period of a strike or
lockout affecting a bank or a quasi-bank as defined in the Labor Code, or of a
national emergency affecting operations of banks or quasi-banks OR IN
SUCH OTHER INSTANCES WHERE THE GRANT OF WAIVER IS
DETERMINED BY THE MONETARY BOARD TO BE JUSTIFIABLE. The
Monetary Board may also modify or set aside reserve deficiency penalties for
rehabilitation program of a bank.”

SEC. 35. Section 104 of the same Act is hereby amended to read as follows’

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

SEC. 36. Section 108 of the same Act is hereby amended to read as follows:

“SEC. 108. Minimum Capital Ratios. — The Monetary Board may
prescribe minimum RISK-BASED CAPITAL ADEQUACY ratios BASED ON
INTERNATIONALLY ACCEPTED STANDARDS [which—the—capital—and
surplus-of the-banks-must-bear-to-the volume of their assets, or to-specifi
ategories-thereof,] and may alter said ratios whenever it deems necessary.
IN THE EXERCISE OF ITS AUTHORITY UNDER THIS SECTION, THE
MONETARY BOARD MAY PRESCRIBE A HIGHER MINIMUM CAPITAL
ADEQUACY RATIO FOR DIFFERENT BANK CATEGORIES AS MAY BE
WARRANTED BY THEIR RISK PROFILE.”

SEC. 37. Section 113 of the same Act is hereby amended to read as follows:

"SEC. 113. Official Deposits. — The Bangko Sentral shall be the
official depository of the Government, its political subdivisions and
instrumentalities as well as of government-owned or -controlled corporations
and, as a general policy, their cash balances should be deposited with the
Bangko Sentral, with only minimum working balances to be held by
government-owned banks and such other banks incorporated in the
Philippines as the Monetary Board may designate, subject to such rules and
regulations as the Board may prescribe: Provided, That such banks may
hold deposits of the political subdivisions and instrumentalities of the
Government beyond their minimum working balances whenever such
subdivisions and instrumentalities have outstanding loans with said banks.

"The Bangko Sentral may ACCEPT DEPOSITS AND pay interest on
SUCH deposits AND OTHER SIMILAR PLACEMENTS of the Government or
of its political subdivisions and instrumentalities, banks AND OTHER
BANGKO SENTRAL-SUPERVISED INSTITUTIONS.”

SEC. 38. Section 123 of the same Act is hereby amended to read as follows:

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“SEC, 125, TAX EXEMPTIONS. — The Bangko Sentral shall be
exempt for-a-period-of fi -years-from-the-approval-of-this-Aet from all
national, provincial, municipal and city taxes, fees, charges and assessments.

“The exemption authorized in the preceding paragraph of this section
shall apply to all property of the Bangko Sentral, to the resources, receipts,
expenditures, profits and income of the Bangko Sentral, as well as to all
contracts, deeds, documents and transactions related to the conduct of the
business of the Bangko Sentral: Provided, however, That said exemptions
shall apply only to such taxes, fees, charges and assessments for which the
Bangko Sentral itself would otherwise be liable, and shall not apply to taxes,
fees, charges, or assessments payable by persons or other entities doing
business with the Bangko Sentral: Provided, further, That foreign loans and
other obligations of the Bangko Sentral shall be exempt, both as to principal
and interest, from any and all taxes if the payment of such taxes has been
assumed by the Bangko Sentral.”

SEC. 39. Section 128 of the same Act is hereby amended to read as follows:

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

“The Bangko Sentral shall not engage in development banking or
financing: Provided, however, That outstanding loans obtained or extended
for development financing shall not be affected by the prohibition of this
section.”

SEC. 40. Repealing Clause. All provisions of existing laws, orders, rules and

regulations, or parts thereof which are in conflict or inconsistent with the provisions of this

Act are hereby repealed, amended or modified accordingly.

SEC, 41. Separability Clause. If any provision or section of this Act is held to be

unconstitutional or invalid, the other provisions or sections hereof, which are not affected

thereby shall continue to be in full force and effect.

SEC. 42. Effectivity. This Act shall take effect fifteen (15) days following its

publication in the Official Gazette or in a newspaper of general circulation in the Philippines.

Approved,

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