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

SEVENTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 4283

Introduced by Hon. BEN P. EVARDON)
Lone District, Eastern Samar

EXPLANATORY NOTE

Pursuant to its constitutional mandate to establish an independent central
monetary authority, Congress enacted Republic Act (R.A.) No. 7653 (The New
Central Bank Act) creating the Bangko Sentral ng Pilipinas (BSP) which took over
the functions of the old Central Bank. The changes introduced in R.A. No. 7653 were
meant to strengthen the BSP and ensure its independence in compliance with the
express requirements of the Constitution. More than twenty years after the enactment
of R.A. No. 7653, the economic and financial milieu in the Philippines has changed
significantly in scale, scope, reach and complexity. There is a need therefore to
improve the ability of the BSP to respond to the challenges being faced by the
financial system by amending R.A. No. 7653. The amendments shall ensure that the
BSP shall remain effective in its conduct of monetary policy and supervision of
entities within the financial system.

The bill proposes the following amendments to the BSP Charter:

A. Reinforcing Corporate and Financial lity
1. Additional BSP capitalization of P150 billion
2. Restoration of tax exemption
3. Flexibility to establish adequate loss allowances and create reserve
buffers against future risks and contingencies
4. Revaluation of profits and losses
5, Enhancements to credit operations

B. Strengthening of Monetary Stability Function
1. Restoration of authority to obtain data from any private person/entity
2. Removal of the thresholds in the growth of monetary aggregates and
credit as guiding principles in monetary administration
3. Restoration of authority to issue negotiable certificates of indebtedness
even during normal times


Ci Strengthening of Financial Stability Function

10.
iy

12.
13.
14,
15.

Formal recognition of financial stability in BSP mandate

. Oversight of payment and settlement systems/operators

Expansion of supervisory authority to include additional categories of
financial institutions

. Legal protection for BSP officials and staff when performing official

duties

. Lifting of the laws on deposit secrecy with respect to BSP examination

Power to examine transactions between a supervised institution and its
parent company

Imposition of sanctions on transfers and acquisitions of substantial
shares of banks and quasi-banks without BSP approval

. Borrowings of BSP personnel from banks transacted on an arm’s

length basis

Expansion of examination authority to include subsidiaries and
affiliates of banks and quasi-banks engaged in allied activities

Allow full flexibility to conduct risk-based supervision

Consultation with the BSP before licenses of banks and supervised
entities may be revoked by other government agencies

Placing non-stock savings and loans association under receivership
Strengthening of administrative and criminal sanctions

Issuance of provisional remedies against BSP action

Inclusion of financial stability as guiding principle for BSP credit
policies

In order to strengthen the legal framework of central banking and empower
BSP to effectively perform its constitutional mandates, the approval of this bill is
earnestly sought.

avon

Page 2 of 33


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

SEVENTEENTH CONGRESS
First Regular Session

HOUSE BILL NO.4283

Introduced by: Hon. BEN P. EVARDONE
Lone District, Eastern Samar

AN ACT AMENDING REPUBLIC ACT NUMBER 7653,
OTHERWISE KNOWN AS “THE NEW CENTRAL BANK ACT”,
AND FOR OTHER PURPOSES

Be it enacted by the Senate and the 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
[Fi8y] billion pesos (P[59;}200,000,000,000), to be fully subscribed
by the Government of the Republic, hereafter referred to as the
Government. [en-biltion-pesesP10,000,000,000}-0f whieh] THE
UNPAID SUBSCRIPTION shall be fully paid for by the
Government IN CASH AND/OR GOVERNMENT SECURITIES
UPON EFFECTIVITY OF THIS ACT. THEREAFTER THE
ADEQUACY OF THE CAPITALIZATION SHALL BE
SUBJECT TO REVIEW EVERY FIVE (5) YEARS AND
ADJUSTED UPON JOINT RECOMMENDATION BY THE
SECRETARY OF FINANCE, THE SECRETARY OF BUDGET
AND MANAGEMENT AND THE MONETARY BOARD. THE
PAYMENT OF ANY UNPAID SUBSCRIPTION AND/OR
INCREASE IN CAPITALIZATION SHALL BE
AUTOMATICALLY APPROPRIATED IN THE ANNUAL
GENERAL APPROPRIATIONS ACT. [upon te effetivin- ofthis

Page 3 of 33


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 AND EXAMINATION powers
as provided in this Act and other pertinent laws over the QUASI-
BANKING operations of [finanee—eempanies—and] non-bank
financial institutions. Lpeitoesting Senet Seng eee hereafter
referred —te—as—q ns—performing—similar
funetions) AS MAY TE DETERMINED DETERMINED BY THE MONETARY
BOARD, IT SHALL LIKEWISE EXERCISE REGULATORY
AND EXAMINATION POWERS OVER MONEY SERVICE
BUSINESSES, CREDIT GRANTING BUSINESSES, AND
PAYMENT SYSTEM OPERATORS. THE MONETARY
BOARD IS HEREBY EMPOWERED TO AUTHORIZE
ENTITIES OR PERSONS TO ENGAGE IN MONEY SERVICE
BUSINESSES.

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

“THE BANGKO SENTRAL SHALL PROMOTE
FINANCIAL STABILITY AND CLOSELY WORK WITH
OTHER RELEVANT BODIES INCLUDING, BUT NOT
LIMITED TO, THE SECURITIES AND EXCHANGE
COMMISSION, THE INSURANCE COMMISSION, THE
PHILIPPINE DEPOSIT INSURANCE CORPORATION AND
‘THE NATIONAL GOVERNMENT.

“THE BANGKO SENTRAL SHALL OVERSEE THE
PAYMENT AND SETTLEMENT SYSTEMS IN THE
PHILIPPINES, INCLUDING CRITICAL — FINANCIAL
MARKET INFRASTRUCTURES, IN ORDER TO PROMOTE
SOUND AND PRUDENT PRACTICES CONSISTENT WITH
THE MAINTENANCE OF FINANCIAL STABILITY.

“IN THE ATTAINMENT OF ITS OBJECTIVES, THE
BANGKO SENTRAL SHALL PROMOTE BROAD AND
CONVENIENT ACCI TO HIGH QUALITY FINANCIAL
SERVICES AND CONSIDER THE INTEREST OF THE
GENERAL PUBLIC.”

Page 4 of 33,


SEC.

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

a
2

3

4 “SEC. 11, Meetings. — The Monetary Board shall meet at
5 least once a week. The Board may be called to a meeting by the
6 Governor of the Bangko Sentral or by two (2) other members of the
7

8

9

Board.

“The presence of four (4) members shall constitute a quorum:
10 Provided, That in all cases the Governor or his duly designated
sty alternate shall be among the four (4).
2
2B “Unless otherwise provided in this Act, all decisions of the
14 Monetary Board shall require the concurrence of at least four (4)
15 members.
16
v7 “The Bangko Sentral shall maintain and preserve a complete
48 record of the proceedings and deliberations of the Monetary Board,
19 including the tapes and transcripts of the stenographic notes, either in
20 their original form or in microfilm.
a
22 “THE MEETINGS OF THE MONETARY BOARD MAY
23 BE CONDUCTED THROUGH MODERN TECHNOLOGIES
24 SUCH AS, BUT NOT LIMITED TO, TELECONFERENCING
25 AND VIDEOCONFERENCING.”
26
a
28 SEC. 4. Section 15(e) of the same Act is hereby amended to read as follows:
29
30 “SEC. 15. Exercise of Authority. - In the exercise of its authority, the
31 Monetary Board shall:
32
33 XXX
34
35 “(e) indemnify its members and other officials of the Bangko
36 Sentral, including personnel of the departments performing supervision
37 and examination functions against all costs and expenses reasonably
38 incurred by such persons in connection with any civil or criminal action,
39 suit or proceedings to which he may be, or is, made a party by reason of
40 the performance of his functions or duties, unless he is finally adjudged in
a” such action or proceeding to be liable for [negligenee-ormiseonduet]
42 WILLFUL VIOLATION OF THIS ACT, PERFORMED IN
43 EVIDENT BAD FAITH OR WITH GROSS NEGLIGENCE.
4
45 “In the event of a settlement or compromise, indemnification shall
46 be provided only in connection with such matters covered by the
47 settlement as to which the Bangko Sentral is advised by external counsel
48 that the person to be indemnified did not commit [é
49 miseonduet] WILLFUL VIOLATION OF THIS ACT, PERFORMED
50 IN EVIDENT BAD FAITH OR WITH GROSS NEGLIGENCE.

Page S of 33


“The costs and expenses incurred in defending the aforementioned
action, suit or proceeding may be paid by the Bangko Sentral in advance
of the final disposition of such action, suit or proceeding upon receipt of
an undertaking by or on behalf of the member, officer, or employee 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.”

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

“SEC. 16. Responsibility. - THE GENERAL RULE AND THE
EXCEPTION THEREFROM ON THE LIABILITY OF PUBLIC
OFFICERS AS PROVIDED IN SECTIONS 38 AND 39 OF
CHAPTER 9, BOOK 1 OF THE REVISED ADMINISTRATIVE
CODE OF 1987 SHALL APPLY TO THE members of the Monetary
Board _{;—officials,—examiners,—and—employees] AND OTHER
PERSONNEL of the Bangko Sentral [whe willfully violte-this-Act-oF

“Similar responsibility shall apply to members OF THE
MONETARY BOARD, efficers—and—empleyees AND OTHER
PERSONNEL 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, MEMBERS OF
THE MONETARY BOARD AND OTHER PERSONNEL OF
THE BANGKO SENTRAL SHALL NOT BE SUBJECT TO ANY
ACTION, CLAIM OR DEMAND IN CONNECTION WITH
ANY ACT DONE OR OMITTED BY THEM IN THE
PERFORMANCE OF THEIR DUTIES AND EXERCISE OF
THEIR POWERS EXCEPT FOR THOSE ACTIONS AND
OMISSIONS DONE IN EVIDENT BAD FAITH OR WITH
GROSS NEGLIGENCE. UNLESS THE ACTIONS OR
OMISSIONS OF THE BANGKO SENTRAL, MEMBERS OF

Page 6 of 33


THE MONETARY BOARD AND ITS OTHER PERSONNEL
ARE FINALLY ADJUDGED TO BE IN WILLFUL VIOLATION
OF THIS ACT, PERFORMED IN EVIDENT BAD FAITH OR
WITH GROSS NEGLIGENCE, THEY 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 EXERCISE
OF THEIR POWERS AND PERFORMANCE OF THEIR
DUTIES AND FUNCTIONS.”

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

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

“In the absence of the Governor, a Deputy Governor
designated by the Governor shall act as chief executive of the Bangko
Sentral and shall exercise the powers and perform the duties of the
Governor. Whenever the [Government] GOVERNOR 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. 7. 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 [whieh—it-may], FOR STATISTICAL AND POLICY
DEVELOPMENT PURPOSES [require-for] IN RELATION TO.
the proper discharge of its functions and responsibilities,
PROVIDED, THAT DISAGGREGATED DATA GATHERED
ARE SUBJECT TO PREVAILING CONFIDENTIALITY
LAWS. 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.

Page 7 of 33


Data on individualS AND firms, other than banks, gathered by

the [ of Eeonomie Research-and-other depariments-or units
ofthe] Bangko Sentral shall not be made available to any person or
entity outside of the Bangko Sentral whether public or private except
under order of the court or under such conditions as may be prescribed
by the Monetary Board: Provided, however, That the collective data
on firms may be released to interested persons or entities: Provided,

finally, That in the case of data on banks, the provisions of Section 27

of this Act shall apply.”

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

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

“For purposes of this section, a subsidiary means a corporation
more than fifty percent (50%) of the voting stock of which is
DIRECTLY OR INDIRECTLY owned, CONTROLLED OR
HELD WITH POWER TO VOTE 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 DIRECTLY OR INDIRECTLY to such
institution or intermediary through common stockholders or such
other factors as may be determined by the Monetary Board.

“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 FROM THE PARENT
OR OTHER AFFILIATE COMPANIES OF SUPERVISED
INSTITUTIONS AND EXAMINE TRANSACTIONS BETWEEN
A SUPERVISED INSTITUTION AND SAID ENTITIES, FOR
SUPERVISORY PURPOSES.

“A PARENT COMPANY MEANS A CORPORATION
WHICH OWNS OR HOLDS WITH POWER TO VOTE
DIRECTLY OR INDIRECTLY THE 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.

Page 8 of 33


“AS USED IN THIS SECTION AND SECTION 25-A,
AND SUBJECT TO THE GUIDELINES ISSUED BY THE
MONETARY BOARD, CONTROL EXISTS WHEN THE
PARENT COMPANY OWNS DIRECTLY OR INDIRECTLY
MORE THAN ONE HALF OF THE VOTING STOCK OF A
SUPERVISED INSTITUTION. CONTROL ALSO EXISTS
EVEN WHEN THE PARENT COMPANY OWNS ONE HALF
OR LESS OF THE VOTING STOCK OF THE SUPERVISED
INSTITUTION WHEN: (1) THERE IS POWER OVER MORE
THAN ONE HALF OF THE VOTING RIGHTS BY PROXY OR
BY VIRTUE OF AN AGREEMENT WITH OTHER
INVESTORS WHICH THEREBY ENABLES THE PARENT
COMPANY TO CAST THE MAJORITY OF VOTES AT
MEETINGS OF THE STOCKHOLDERS OF THE
SUPERVISED INSTITUTION OR TO ELECT THE
MAJORITY OF MEMBERS OF THE BOARD OF DIRECTORS
OF THE SUPERVISED INSTITUTION, OR (2) THERE IS
POWER TO DETERMINE THE FINANCIAL AND
OPERATING POLICIES OF THE SUPERVISED
INSTITUTION, OR OTHER SIMILAR ARRANGEMENTS.

“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 IN THE COURSE OF AN EXAMINATION IN
ORDER TO ASCERTAIN COMPLIANCE WITH THE LAWS
AND BANKING REGULATIONS, OR IN CASES WHERE
THERE IS REASONABLE GROUND TO BELIEVE THAT A
FRAUD, IRREGULARITY OR UNLAWFUL ACTIVITY HAS
BEEN OR IS BEING COMMITTED AND THAT IT IS
NECESSARY TO LOOK INTO THE DEPOSIT OR
INVESTMENT TO ESTABLISH SUCH — FRAUD,
IRREGULARITY OR UNLAWFUL ACTIVITY. [ysubject-to-the
Se ora 2 :

operant : F ra
Government:]

“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

Page 9 of 33


1 arbitrary and made in bad faith and the petitioner or plaintiff files with
2 the clerk or judge of the court in which the action is pending a bond
3 executed in favor of the Bangko Sentral, in an amount to be fixed by
4 the court, The provisions of Rule 58 of the New Rules of Court insofar
5 as they are applicable and not inconsistent with the provisions of this
6
7
8
9

section shall govern the issuance and dissolution of the restraining
order or injunction contemplated in this section.”

C. 9, A new section entitled Section 25-A is hereby included in the same
11 Act to read as follows:

13 “SEC. 25-A. AUTHORITY TO APPROVE TRANSFER OF
4 SHARES - TRANSFERS OR ACQUISITIONS, OR A SERIES
15 THEREOF, OF AT LEAST TEN PERCENT (10%) OF THE
16 VOTING SHARES IN BANKS OR QUASI-BANKS SHALL
WwW REQUIRE THE PRIOR APPROVAL OF THE BANGKO
18 SENTRAL. THE SELLING OR CONVEYING STOCKHOLDER
19 SHALL SUBMIT SUCH TRANSFER OR ACQUISITON FOR
20 APPROVAL BY THE BANGKO SENTRAL WITHIN SUCH
a PERIOD AS MAY BE PRESCRIBED BY THE MONETARY
2 BOARD. IN APPROVING SUCH TRANSFERS OR
23 ACQUISITIONS, REGARD SHALL BE GIVEN BY THE
24 BANGKO SENTRAL TO THE FITNESS OF THE INCOMING
25 STOCKHOLDERS AS MAY BE INDICATED IN THEIR
26 INTEGRITY, REPUTATION AND FINANCIAL CAPACITY.
Pa WITHOUT BANGKO SENTRAL APPROVAL, NO SUCH
28 TRANSFER OR ACQUISITION SHALL HAVE LEGAL
23 EFFECT NOR SHALL THE SAME BE RECOGNIZED IN THE
30 BOOKS OF THE INSTITUTION OR BY ANY GOVERNMENT
31 AGENCY, AND THE TRANSFEROR-STOCKHOLDERS
32 SHALL REMAIN ACCOUNTABLE AND RESPONSIBLE
33 THEREFOR. TRANSFER OF ACTUAL CONTROL OR
34 MANAGEMENT OF THE INSTITUTION TO THE NEW
35 STOCKHOLDERS OR THEIR REPRESENTATIVES PRIOR
36 TO BANGKO SENTRAL APPROVAL SHALL MAKE THE
37 TRANSFEROR, THE TRANSFEREE AND ANY PERSON
38 RESPONSIBLE THEREFOR LIABLE UNDER SECTIONS 36
39 AND 37 OF THIS ACT. NOTWITHSTANDING ANY
40 PROVISION OF LAW TO THE CONTRARY, THE BANGKO
41 SENTRAL MAY SHARE WITH THE PHILIPPINE DEPOSIT
42 INSURANCE CORPORATION ANY INFORMATION THAT
43 THE BANGKO SENTRAL MAY OBTAIN PERTAINING TO
44 TRANSFER OR ACQUISITION OF SHARES OR SERIES OF
45 TRANSFERS OR ACQUISITION OF SHARES IN BANKS AND
46 QUASI-BANKS.”

Section 27 (d) of the same Act is hereby amended to read as

50

Page 10 of 33


“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:

XXX

“(@) borrowing from any institution subject to supervision or
examination by the Bangko Sentral [shall-be-prohibited] unless sai
borrowing[s~ate] IS TRANSACTED ON AN ARM’S LEN'
BASIS [adequately-seeured], fully di
and shall be subject to such rules and regulations as the Monetary
Board may_prescribe[
supervising-and-examining dlepartments-are prohibited from-borrowing
from-e-bank-under-their supervision and-examination). xx"

SEC. 11. 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 [beeks] 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. [once in-every-twelve-12)
months,—and—at_such_other_times_as_the-MonetaryBeard—by—an
aff vore-of five tS ybers;-may_deem-expedient-and-to
make-a-repe . 1o-the- Monetary Beard:] Provided, That
there shall be an interval of at least twelve (12) months between
[annual] REGULAR examinations; PROVIDED, FURTHER,
THAT THE MONETARY BOARD, BY AN AFFIRMATIVE
VOTE OF AT LEAST FIVE (5) MEMBERS, MAY AUTHORIZE
A SPECIAL EXAMINATION IF THE CIRCUMSTANCES
WARRANT.

“The INSTITUTION [bank] concemed shall afford to the
head of the appropriate supervising and examining departments and to
his authorized deputies full opportunity to examine its books AND

sets and general condition AND
EDURES 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.

Page 11 of 33


examination —by—the —Bangko—Seniral] SUPERVISED
INSTITUTIONS shall pay to the Bangko Sentral, NO LATER
THAN MAY 31 OF EACH YEAR [swithin-the-first-thirty-G0)-days
ofeach-year}, an annual SUPERVISION fee [in-an-amount-equal-to-a
pereentage;] as may be prescribed by the Monetary Board. [-of-its

averave:
40 from—banks,—inehuding—the-Bangho—Seniral-and—banks—abroad. | IN
nu DETERMINING THE AMOUNT OF THE ANNUAL
2 SUPERVISION FEE, THE MONETARY BOARD SHALL
13 CONSIDER THE COSTS OF SUPERVISION.”

14

as

16 SEC. 12. A new section entitled Section 28-A is hereby included in the same
17 Act to read as follows:

18

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

25

26

27 SEC. 13. Section 30 of the same Act is hereby amended to read as follows:
28

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

32

33 “(a) HAS NOTIFIED THE BANGKO SENTRAL OR
34 PUBLICLY ANNOUNCED A UNILATERAL CLOSURE, OR
35 HAS BEEN DORMANT FOR AT LEAST SIXTY (60) DAYS OR
36 IN ANY MANNER HAS SUSPENDED THE PAYMENT OF ITS
37 DEPOSIT/DEPOSIT SUBSTITUTE LIABILITIES, OR is unable
38 to pay its liabilities as they become due in the ordinary course of
39 business: Provided, That this shall not include inability to pay caused
40 by extraordinary demands induced by financial panic in the banking
a community;

a2

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

45

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

Page 12 of 33


“(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 IN THE CASE OF BANKS, designate the Philippine
Deposit Insurance Corporation (PDIC) as receiver [of-the-banking
institution] AND DIRECT THE PDIC TO PROCEED WITH THE
LIQUIDATION OF THE CLOSED BANK PURSUANT TO
THIS SECTION AND THE RELEVANT PROVISIONS OF
REPUBLIC ACT NO. 3591, AS AMENDED. THE MONETARY
BOARD SHALL NOTIFY IN WRITING THE BOARD OF
DIRECTORS OF THE CLOSED BANK OF ITS DECISION.

Page 13 of 33


2-shall_be-deemed_in—custedialegie- in-the-hands—of th

receiver and-shall,-from-the-moment_the institution-was-placed-under
utsrremtir rhea? mh careraar

“The actions of the Monetary Board taken under this section or
under Section 29 of this Act shall be final and executory, and may not
be restrained or set aside by the court except on petition for certiorari
on the ground that the action taken was in excess of jurisdiction or
with such grave abuse of discretion as to amount to lack or excess of
jurisdiction. The petition for certiorari may only be filed by the
stockholders of record representing the majority of the capital stock
within ten (10) days from receipt by the board of directors of the
institution of the order directing receivership, liquidation or
conservatorship. The designation of a conservator under Section 29 of
this Act or the appointment of a receiver under this section shall be
vested exclusively with the Monetary Board. Furthermore, the
designation of a conservator is not a precondition to the designation of
a receiver.

“THE AUTHORITY OF THE MONETARY BOARD TO
SUMMARILY AND WITHOUT NEED FOR PRIOR HEARING
FORBID THE BANK OR QUASI-BANK FROM DOING
BUSINESS IN THE PHILIPPINES 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 BY THE
BANGKO SENTRAL AS A RECEIVER.”

SEC. 14. Section 31 of the same Act is hereby deleted.

“[SEC-31.—_ Distribution of Assets. _tn-ease of liquidation of



pita Detgreas\s Civil Code)”

SEC. 15. Section 32 of the same Act is hereby deleted.

“| SHC. 32.-Digposit eR and Earnings:

tors."

SEC. 16. 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 [:
Bangko Sentral -within the purview-of this act] who, being required in
writing by the Monetary Board or by the head of the supervising and
examining department WITHIN THE PURVIEW OF THIS ACT
AND RELEVANT LAWS willfully refuses to file the required report
or permit any lawful examination into the affairs of such institution
shall be punished by a fine of not less than fifty thousand pesos
(P50,000) nor more than [one-hundred thousand_peses-{P100.000)
TWO MILLION PESOS (P2,000,000) or by imprisonment of not
less than one (1) year nor more than five (5) years, or both, [ia] 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. 17. Section 35 of the same Act is hereby amended to read as follows”

“SEC. 35. False Statement. — The willful making of a false or
misleading statement on a material fact to the Monetary Board or to
the examiners of the Bangko Sentral shall be punished by a fine of not
Jess than One hundred thousand pesos (P100,000) nor more than [Fwe
hundred—thousand—pesos—(P200,000)] TWO MILLION PESOS

Page 15 of 33


(P2,000,000), or by imprisonment of not more than (5) years, or both,
at the discretion of the court.”

SEC. 18. 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, [er] quasi-bank, INCLUDING THEIR
SUBSIDIARIES AND AFFILIATES ENGAGED IN ALLIED
ACTIVITIES 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 [7we-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.

“THE BANGKO SENTRAL MAY GRANT INFORMER’S
REWARD TO ANY PERSON, EXCEPT AN OFFICER OR
EMPLOYEE OF THE BANGKO SENTRAL OR OF ANY
INTELLIGENCE OR LAW ENFORCEMENT AGENCY,
INCLUDING THE RELATIVES OF SUCH OFFICER OR
EMPLOYEE WITHIN THE THIRD DEGREE OF
CONSANGUINITY OR AFFINITY, WHO VOLUNTARILY
GIVE DEFINITE INFORMATION NOT YET IN THE
POSSESSION OF THE BANGKO SENTRAL LEADING TO
THE: (A) ARREST OF BANK DIRECTORS OR OFFICERS
AND/OR BSP PERSONNEL FOR VIOLATION OF THIS ACT
OR ANY BANKING AND OTHER LAWS IMPLEMENTED OR
ENFORCED BY THE BANGKO SENTRAL, OR FOR
VIOLATION OF OTHER PENAL LAWS COMMITTED IN
CONNECTION WITH THEIR EMPLOYMENT OR
FUNCTIONS; OR (B) FILING OF CRIMINAL CHARGES
AGAINST ANY PERSON FOR VIOLATION OF SECTION 50
OF THIS ACT.

Page 16 of 33


“THE MONETARY BOARD Is HEREBY
AUTHORIZED TO PROMULGATE THE IMPLEMENTING
GUIDELINES FOR THE GRANT OF INFORMER’S REWARD,
WHICH IN NO CASE SHALL EXCEED ONE MILLION
PESOS (P1,000,000.00). SAID GUIDELINES MAY PROVIDE
FOR ADDITIONAL QUALIFICATIONS AND
DISQUALIFICATIONS OF INFORMANTS AS WELL AS THE
FORM AND MINIMUM CONTENT OF THE INFORMATION
GIVEN.

“THE CASH REWARD OF INFORMERS SHALL BE
SUBJECT TO APPLICABLE WITHHOLDING TAXES.”

SEC. 19. Section 37 of the same Act is hereby amended to read as follows:

“SEC. 37. Administrative Sanctions on [Banks—and-Quasi-
Banks] SUPERVISED ENTITIES. — Without prejudice to the
criminal sanctions against the culpable persons provided in Sections
34, 35, and 36 of this Act, the Monetary Board may, at its discretion,
impose upon any bank, [or] quasi-bank, INCLUDING THEIR
SUBSIDIARIES AND AFFILIATES ENGAGED IN ALLIED
ACTIVITIES, OR OTHER ENTITY WHICH UNDER THIS
ACT OR SPECIAL LAWS ARE SUBJECT TO THE BANGKO
SENTRAL SUPERVISION, AND/OR their directors, officers
[andor 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 [Fhirty-thousand

:000)] ONE MILLION PESOS (P1,000,000.00) FOR
EACH TRANSACTIONAL VIOLATION OR ONE HUNDRED
THOUSAND PESOS (P100,000.00) PER CALENDAR [a]day for
[eaeh] violationS OF A CONTINUING NATURE, 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] PROVIDED: THAT IN
CASE PROFIT IS GAINED OR LOSS IS AVOIDED AS A
RESULT OF THE VIOLATION, A FINE NO MORE THAN

Page 17 of 33


THREE (3) TIMES THE PROFIT GAINED OR LOSS
AVOIDED MAY ALSO BE IMPOSED;

“(b)_ suspension
Bangko Sentral credit faci

rediscounting privileges or access to
ies;

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

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

“(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, [er] officer OR
EMPLOYEE of [e—bank—orquasibank] 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 OR
EMPLOYEE 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/Jor 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/Jor
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. [f no such hearing is requested within said period,
the order shall be final. If a hearing is conducted, all issues shall be

Page 18 of 33


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 THIS ACT OR 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 [Fen-thousand-peses
(P10,000)] ONE HUNDRED THOUSAND PESOS (P100,000.00)
FOR EACH TRANSACTIONAL VIOLATION OR THIRTY
THOUSAND PESOS (P30,000.00) PER CALENDAR [a] day for
[each] violationS OF A CONTINUING NATURE, the imposition of
which shall be final and executory until reversed, modified or lifted by
the Monetary Board on appeal.”

SEC. 20. A new section entitled Section 38-A is hereby included in the same
Act to read as follows:

“SEC. 38-A. ISSUANCE OF INJUNCTIVE RELIEF
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 THE RULES OF COURT ON
INJUNCTIONS INSOFAR AS THESE ARE APPLICABLE AND
NOT INCONSISTENT WITH THE PROVISIONS OF THIS
ACT SHALL GOVERN THE ISSUANCE AND DISSOLUTION
OF RESTRAINING ORDERS OR INJUNCTIONS AGAINST
THE BANGKO SENTRAL.”

SEC. 21. Section 39 of the same Act is hereby amended as follows:

“SEC. 39. Reports and Publications. - The Bangko Sentral
shall publish a general balance sheet showing the volume and
composition of its assets and liabilities as of the last working day of
the month within [sixty-(60)] NINETY (90) days after the end of
each month, WHICH MAY BE REASONABLY EXTENDED BY

Page 19 of 33


THE BANGKO SENTRAL AS WARRANTED. [except—for-the

month of December, which shall be submitted within-ninety-(90)-days
after the end thereof]

“The Monetary Board shall publish and submit the following
reports to the President and to the Congress:

“(a) not later than ninety (90) days after the end of each
quarter, an analysis of economic and financial developments,
including the condition of net international reserves and monetary
aggregates;

“(b) within ninety (90) days after the end of the year,
WHICH MAY BE REASONABLY EXTENDED BY THE
BANGKO SENTRAL AS WARRANTED, the preceding year's
budget and profit and loss statement of the Bangko Sentral showing in
reasonable detail the result of its operations;

“(©) one hundred twenty (120) days after the end of each
semester, a review of the state of the financial system: and

“(@) as soon as practicable, abnormal movements in
monetary aggregates and the general price level, and, not later than
seventy-two (72) hours after they are taken, remedial measures in
response to such abnormal movements.”

SEC, 22, Section 40 of the same Act is hereby amended as follows:

“SEC. 40. Annual Report. - Before the end of [Marek]
JUNE of each year, the Bangko Sentral shall publish and submit to the
President and the Congress an annual report on the condition of the
Bangko Sentral including a review of the policies and measures
adopted by the Monetary Board during the past year and an analysis of
the economic and financial circumstances which gave rise to said
policies and measures.

“The annual report shall also include a statement of the
financial condition of the Bangko Sentral and a statistical appendix
which shall present, as a minimum, the following data:

“(@) the monthly movement of monetary aggregates and
their components;

“(b) the monthly movement of purchases and sales of
foreign exchange and of the international reserves of the Bangko
Sentral;

“() the balance of payments of the Philippines;

Page 20 of 33


1 “(4) _ monthly indices of consumer prices and of import and
2 export prices;

3

4 “(e) the monthly movement, in summary form, of exports
5 and imports, by volume and value;

6

7 “(the monthly movement of the accounts of the Bangko
8 Sentral and of other banks;

9
10 “(g) the principal data on government receipts and
ww expenditures and on the status of the public debt, both domestic and
12 foreign; and
B
4 “(h) _ the texts of the major legal and administrative measures
1s adopted by the Government and the Monetary Board during the year
16 which relate to the functions or operations of the Bangko Sentral or of
7 the financial system.

18
19 “The Bangko Sentral shall publish another version of the
20 annual report in terms understandable to the layman.

24

25

26

2

28 SEC. 23. Section 43 of the same Act is hereby amended as follows:

29

30 “SEC. 43. Computation of Profits and Losses. — Within the
31 first [dhisty-20)] SIXTY (60) days following the end of each year, the
32 Bangko Sentral shall determine its net profits or losses. [Ix—the
34 allewanee—o z e A °

35 accounts] NOTWITHSTANDING ANY PROVISION OF LAW
36 TO THE CONTRARY, THE NET PROFIT OF THE BANGKO
37 SENTRAL SHALL BE DETERMINED AFTER ALLOWING
38 FOR EXPENSES OF OPERATION, ADEQUATE
39 ALLOWANCES AND PROVISIONS FOR BAD AND
40 DOUBTFUL DEBTS, DEPRECIATION IN ASSETS, AND
at SUCH ALLOWANCES AND PROVISIONS FOR
a2 CONTINGENCIES OR OTHER PURPOSES AS THE
43 MONETARY BOARD MAY DETERMINE IN ACCORDANCE
a4 WITH PRUDENT FINANCIAL MANAGEMENT AND
45 EFFECTIVE CENTRAL BANKING OPERATIONS.”

46

47

48 SEC. 24, A new section entitled Section 43-A is hereby included in the same
49 Act to read as follows:

50

Page 21 of 33,


“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.”

SEC. 25. 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
[ret] assets [or], liabilities OR DERIVATIVE INSTRUMENTS
DENOMINATED in [gold-oF] foreign currencies with respect to the
MOVEMENTS OF PRICES AND EXCHANGE RATES FROM
THIRD CURRENCIES TO Philippine peso shall not be included in
the computation of the annual profits and losses of the Bangko
Sentral. Any 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 aN [speeial-frozen]
account which shall be named "Revaluation of International Reserve
(RIR)", and the net balance of which shall appear either among the
liabilities or among the assets of the Bangko Sentral, depending on
whether the revaluations have produced net profits or net losses.

“The [Revaluation-of International Reserve] RIR account shall
be [neither] credited [ner] OR debited 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

Page 22 of 33,


FORWARD OR OPTION CONTRACT INVOLVING | THE
PHILIPPID iE PESO. fi
T"

SEC. 26. 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 Monetary-Board-shalt
endeavor fe cantiel iny—expansion contraction: in retary

bara
pre sabiliey” Pre

SEC. 27. Section 63 of the same Act is hereby amended to read as follows:

“SEC. 63. Action when Abnormal Movements Occur in the
[Monetery—Aggregates—CreditOr] Price Level. — Whenever
abnormal movements in the [monetaryageregatesin-creditor 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
_ prices;

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

‘“(3) the measures which the Monetary Board has taken

and the other monetary, fiscal or administrative measures
which it recommends to be adopted.

“Whenever the [monetaryageregates_or the level of eredit,

ing index increases by more than ten percent (10%), in

Page 23 of 33,


relation to the level existing at the end of the corresponding month of
the preceding year, or even though [any-ef-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
ef] 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,-eredit-or] price disturbances have disappeared or
have been adequately controlled.”

SEC. 28. 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. 29. 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 (50%) of total deposits and deposit

Page 24 of 33,


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) [te-the
extent-of their-applicabletoan-values-and] other unencumbered first
class collaterals and (D) OTHER KINDS OF COLLATERALS AS
MAY BE AUTHORIZED BY THE MONETARY BOARD IN
ACCORDANCE WITH SOUND RISK MANAGEMENT
PRINCIPLES [whieh-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
eoHaterals] ANY OF THE COLLATERALS SET FORTH
ABOVE AS 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
tights 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

Page 25 of 33


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.”

eavausuene

SEC. 30. A new section entitled Section 88-A is hereby included in the same
Act to read as follows:

Ss

2 “SEC. 88-A. EXEMPTION OF COLLATERALS FROM
13 ATTACHMENTS, EXECUTIONS AND OTHER RESTRICTIONS.
“4 - COLLATERALS ON LOANS AND ADVANCES GRANTED
15 BY THE BANGKO SENTRAL, WHETHER OR NOT THE
16 INTEREST OF THE BANGKO SENTRAL IS REGISTERED,
v7 SHALL NOT BE SUBJECT TO ATTACHMENT, EXECUTION
18 OR ANY OTHER COURT PROCESS OR ADMINISTRATIVE
19 RESTRICTIONS ON LAND USE, NOR SHALL THEY BE
20 INCLUDED IN THE PROPERTY OF INSOLVENT PERSONS
2 OR INSTITUTIONS.”

2

2B

24 SEC, 31. A new section entitled Section 88-B is hereby included in the same
25 Act to read as follows:

26

27 “SEC. 88-B. DEPUTIZATION OF LEGAL STAFF IN
28 CASE OF FORECLOSURES. - IN CASE OF AN
29 EXTRAJUDICIAL FORECLOSURE OF MORTGAGE IN
30 CONNECTION WITH LOANS AND ADVANCES UNDER THIS,
31 ARTICLE, THE BANGKO SENTRAL MAY DEPUTIZE ANY
32 OF ITS LAWYERS TO CONDUCT THE PUBLIC AUCTION
33 PURSUANT TO ACT NO. 3135, AS AMENDED.

34

35 “LIKEWISE, IN CASE OF A_ JUDICIAL
36 FORECLOSURE IN CONNECTION WITH LOANS AND
37 ADVANCES UNDER THIS ARTICLE, THE BANGKO
38 SENTRAL MAY, WITH THE APPROVAL OF THE COURT,
39 DEPUTIZE ANY OF ITS LAWYERS TO ACT AS SPECIAL
40 SHERIFF IN THE SALE OF A DEBTOR’S PROPERTIES AND
a IN THE ENFORCEMENT OF COURT WRITS AND
42 PROCESSES RELATED THERETO. THE SPECIAL SHERIFF
43 OF THE BANGKO SENTRAL SHALL MAKE A REPORT TO
44 THE PROPER COURT AFTER ANY ACTION HAS BEEN
45 TAKEN BY HIM, WHICH COURT SHALL TREAT SUCH
46 ACTION AS IF IT WERE AN ACT OF ITS OWN SHERIFF IN
a7 ALL RESPECTS.

48

49 “NO RESTRAINING ORDER OR INJUNCTION SHALL
50 BE ISSUED BY THE COURT ENJOINING THE BANGKO

Page 26 of 33


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
THE RULES OF COURT ON INJUNCTIONS 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. 32. A new section entitled Section 88-C is hereby included 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 EVENT OF
FORECLOSURE, WHETHER JUDICIALLY OR
EXTRAJUDICIALLY, THE MORTGAGOR, WHO IS A
NATURAL PERSON, SHALL HAVE THE RIGHT TO
REDEEM THE PROPERTY WITHIN ONE (1) YEAR FROM
THE DATE OF FORECLOSURE SALE. IN CASE THE
MORTGAGOR IS A _ JURIDICAL PERSON, THE
MORTGAGOR SHALL HAVE THE RIGHT TO REDEEM THE
PROPERTY SOLD IN A JUDICIAL FORECLOSURE SALE
WITHIN ONE (1) YEAR FROM THE DATE OF
FORECLOSURE SALE; PROVIDED, THAT IN CASE OF AN
EXTRAJUDICIAL FORECLOSURE, NOTWITHSTANDING
ACT NO. 3135, THE MORTGAGOR SHALL HAVE THE
RIGHT TO REDEEM THE PROPERTY SOLD WITHIN
NINETY (90) DAYS FROM THE FORECLOSURE SALE BUT
NOT LATER THAN THE REGISTRATION OF THE
CERTIFICATE OF FORECLOSURE SALE. 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 27 of 33


1
2 “THE BANGKO SENTRAL, AS PURCHASER IN THE
3 FORECLOSURE SALE AND WITHOUT NEED OF POSTING
4 A BOND, MAY TAKE POSSESSION OF THE FORECLOSED
3 PROPERTY DURING THE REDEMPTION PERIOD. THE
6 BANGKO SENTRAL SHALL BE ENTITLED TO THE FRUITS
7 OF THE PROPERTY, THE SAME TO BE APPLIED AGAINST
8 THE REDEMPTION PRICE.”

9

ie SEC. 33. A new section entitled Section 88-D is hereby included in the same
12 Actto read as follows:

2B

14 “SEC. 88-D. UNSECURED BANGKO SENTRAL CLAIMS.

as - ALL UNSECURED CLAIMS OF THE BANGKO SENTRAL

16 SHALL BE CONSIDERED PREFERRED CREDITS SIMILAR

v7 TO TAXES DUE TO THE NATIONAL GOVERNMENT IN

18 THE ORDER OF PREFERENCE UNDER ARTICLE 2244 OF

19 THE NEW CIVIL CODE.”

20

21

22 SEC. 34. A new section entitled Section 89-A is hereby included in the same
23 Act to read as follows:

24

25 “SEC. 89-A. FINANCIAL FACILITIES FOR ISLAMIC

26 BANKS. - THE BANGKO SENTRAL MAY, TAKING INTO

Pa CONSIDERATION THE PECULIAR CHARACTERISTICS OF

28 ISLAMIC BANKING, FORMULATE RULES AND

29 REGULATIONS FOR THE EXTENSION OF FINANCIAL

30 FACILITIES TO ISLAMIC BANKS PROVIDED SUCH

31 EXPOSURES SHALL BE PROPERLY SECURED.”

32

33

34 SEC. 35. A new section entitled Section 89-B is hereby included in the same

35 Act to read as follows:

37 “SEC. 89-B. LOANS TO THE PHILIPPINE DEPOSIT
38 INSURANCE CORPORATION. —- THE BANGKO SENTRAL,
39 PURSUANT TO ITS MANDATE OF MAINTAINING
40 FINANCIAL STABILITY, MAY LEND FUNDS TO THE
4. PHILIPPINE DEPOSIT INSURANCE CORPORATION FOR
42 INSURANCE PURPOSES AND IN CASES OF FINANCIAL
43 ASSISTANCE THAT THE LATTER IS AUTHORIZED TO
“4 EXTEND UNDER SECTION 22(E) OF REPUBLIC ACT NO.
4s 3591, AS AMENDED. NOTWITHSTANDING SECTION 23 OF
46 REPUBLIC ACT NO. 3591, AS AMENDED, THE MONETARY
47 BOARD SHALL PRESCRIBE INTEREST RATES AND SUCH
48 OTHER TERMS AND CONDITIONS OF THE LOAN.”

Page 28 of 33,


SEC. 36. Section 92 of the same Act is hereby amended to read as follows:

EC. 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. (Geusentintaemmer
of -indebiedness—shall_be—made—onl eases—of
extraordinary—movement—in—price—levels:] Said Biase “oe
indebtedness may be issued directly against the international reserve
of the Bangko Sentral or against the securities which it has acquired
under the provisions of Section 91 of this Act, or may be issued
without relation to specific types of assets of the Bangko Sentral.

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

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

SEC. 37. 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 PHRASE ‘OBTAINING FUNDS
FROM THE PUBLI SHALL MEAN BORROWING FROM
TWENTY (20) OR MORE LENDERS AT ANY ONE TIME,
AND, 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

Page 29 of 33


the purposes of Section 94 of this Act: 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. 38. Section 101 of the same Act is hereby amended to read as follows:

BC. 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- 1440 of 19) per day on the-amount of the deficieney-or the

points; whichever is-higher] MONETARY PENALTY AS MAY BE
PRESCRIBED BY THE MONETARY BOARD: 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 [
average—daily_deficieneyduring the-week] IN ACCORDANCE
WITH THE MECHANISM APPROVED BY THE MONETARY
BOARD. In cases of abuse, the Monetary Board may deny any bank
or quasi-bank the privilege of offsetting reserve deficiencies in the
aforesaid manner.

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

“The Monetary Board may modify or set aside the reserve
deficiency penalties provided in this section, for part or the entire
period of a strike or lockout affecting a bank or a quasi-bank as
defined in the Labor Code, or of a national emergency affecting
operations of banks or quasi-banks, OR IN SUCH OTHER
INSTANCES WHERE THE GRANT OF WAIVER OF
PENALTIES 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. 39. 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

Page 30 of 33


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. 40. 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

may alter said ratios whenever it deems necessary. IN THE
EXERCISE OF ITS AUTHORITY UNDER THIS SECTION,
THE MONETARY BOARD MAY REQUIRE BANKS TO HOLD
CAPITAL BEYOND THE MINIMUM REQUIREMENTS
COMMENSURATE TO THEIR RISK PROFILE.”

SEC. 41. 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. anda 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
LICENSED TO OPERATE [incorporated] in the Philippines as the
Monetary Board may AUTHORIZE. [designate subject to-such-les,

outstanding loans withsaid- 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. 42. Section 123 of the same Act is hereby amended to read as follows:

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

Page 31 of 33


political subdivisions and instrumentalities of the Government before
any credit operation abroad is undertaken by them.

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

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

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

SEC. 43. Section 125 of the same Act is hereby amended to read as follows:

“SEC. 125. Tax Exemptions. — The Bangko Sentral shall be
exempt £ i i
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. 44. Section 128 of the same Act is hereby amended to read as follows:

Page 32 of 33,


“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, (1) DEEMS AN ACQUISITION OR
INVESTMENT TO BE NECESSARY TO QUALIFY OR AS
REQUIRED FOR MEMBERSHIP IN INTERNATIONAL AND
REGIONAL ORGANIZATIONS OR (2) DETERMINES THAT
INVESTING IN AND/OR OPERATING AN ENTERPRISE
WILL BE CONSISTENT WITH THE EFFECTIVE
FULFILLMENT OF ITS MANDATE AND WILL NOT
CONSTITUTE ANY CONFLICT OF INTEREST.

“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. 45. 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. 46. 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. 47. Effectivity. This Act shall take effect fiftcen (15) days following its
publication in the Official Gazette or in a newspaper of general circulation in the
Philippines

Page 33 of 33