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

‘SIXTEENTH CONGRESS

Introduced by CARLOS M. PADILLA

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:

1, 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 welll 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.

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.

SrA Veze.

(LOS M. PADILLA

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

SIXTEENTH CONGRESS
First Regular Session
3021

House Bill No.

Introduced by CARLOS M. PADILLA,

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[S9,]200,000,000,000), to be fully subscribed by the
Government of the Republic, hereafter referred to as the Government. [Ten
billion_peses-4220,000,000,000} of which] THE UNPAID SUBSCRIPTION shall
be fully paid for by the Government IN THREE (3) CONSECUTIVE ANNUAL
INSTALLMENTS UNTIL 2017. [upon the -effectivity-of this Act andthe balance

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in-such_mannerand_form_as_the Government, through the Secratary of
Finance—and_the-Secretary_of Budget_and_Mai : mapsert
determine:]”

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

"SEC. 3. Responsibility and Primary Objective. — The Bangko Sentral
shall provide policy directions in the areas of money, banking, and credit. It
shall have supervision over the operations of banks and exercise such
regulatory powers as provided in this Act and other pertinent laws over the
operations of finance companies and non-bank financial institutions
performing quasi-banking functions, [hereafter referred-to-as-quasi-banks]
CREDIT CARD COMPANIES, MONEY 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.

“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.

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“The presence of four (4) members shall constitute a quorum:

Provided, That

all cases the Governor or his duly designated alternate shall
be among the four (4).

“Unless other

provided in this Act, all decisions of the Monetary
Board shalll 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 or
misfeasance [oF fail-to-exercise-extraordinary- diligence] in the performance
of [his] THEIR duties shall be held liable for any loss or injury suffered by the

Bangko Sentral or other ban!
negligence, abuse, malfeasance{;] OR misfeasance (or-failure-to-enercise
extraordinary diligence).

“similar responsibility shall apply to members, officers, and

1g institutions as a result of such violation,

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

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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 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
{2}] 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:

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"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 Economic Research and-other departments orunits-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

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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 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.

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“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

exami

@ 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, [subject-to-the provision
of] NOTWITHSTANDING REPUBLIC ACT NOS. 1405 AND 6426. [existing-taws

: ‘ 5 cern :

i ; dice,

instruments issued-by the Government]

“No restraining order or injunction shall be issued by the court
enjoining the Bangko Sentral from examining any institution subject to
supervision or examination by the Bangko Sentral, unless there is convincing

proof that the action of the Bangko Sentral is plainly arbitrary and made in

bad faith and the petitioner or plaintiff files with the clerk or judge of the
court in which the action is pending a bond executed in favor of the Bangko
Sentral, in an amount to be fixed by the court. The provisions of Rule 58 of
the New Rules of Court insofar as they are applicable and not inconsistent
with the provisions of this section shall govern the issuance and dissolution

of the restraining order or injunction contemplated in this section.”

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‘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
(109%) 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:

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“SEC. 28. Examination and Fees. — The supervising and examining
department head, personally or by deputy, shall examine the [beoks]
OPERATIONS of every bank[iag] 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-{22} ba booth

Provided, That there shall be an interval of at least twelve (12) months

between [anatal] 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] 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-bankinginstitutions—which 1
examination by the Bangke Sentral] SUPERVISED INSTITUTIONS shall pay to
the Bangko Sentral, NO LATER THAN MAY 31 OF EACH YEAR [within the first
thirty(20}-days-of each year], an annual SUPERVISION fee [ia-an-amount
equal te 2 percentage;] as may be prescribed by the Monetary Board.[eFits,

Paceeterduring th ding year ar chow -eeronth

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including the Bangke 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) ha

sufficient 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
ora 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

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Philippine Deposit Insurance Corporation as receiver of the banking

institution.
“[Fore-quasi-bank-any # deomp bank
oF 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

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 insti

ition 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

ion 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:

“4. file ex parte with the proper regional trial court, and without

requirement of prior notice or any other action, a petition for assistance in

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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 |i

idation 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

Act or the appointment of a receiver under this section shall be vested

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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

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.”

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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 [ene-hundred thousand pesos
{2100,000}] 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. 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
examiners of the Bangko Sentral shall be punished by a fine of not less than
One hundred thousand pesos (P100,000) nor more than [Fwe—hundred
thousand—peses—{P290,008}] 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:

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“SEC. 36. Proceedings Upon Violation of This Act and Other Banking
Laws, Rules, Regulations, Orders or Instructions. — Whenever a bank, [eF]
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 (PS0,000) nor more
than [Fwe-hundred_thousand_peses{?200,000}] 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

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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 pesesP30,000)]
ONE MILLION PESOS (P1,000,000.00) FOR EACH TRANSACTIONAL
VIOLATION OR ONE HUNDRED THOUSAND PESOS (P100,000.00) PER
BANKING [a]day for each CONTINUING violation, taking into consideration
the attendant circumstances, such as the nature and gravity of the violation
or irregularity and the size of the INSTITUTION, [bank—orquasi-bank]
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;

“(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 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

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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 sev

“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 [Fen-theusand
peses{P10,000}] ONE HUNDRED THOUSAND PESOS (P100,000.00) FOR

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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:

“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. [Ja the calculation of net-profits the Bangke Sentral
shall make adeq: Howane bishadaa pyeseepebtand
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

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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

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 [er],
liabilities OR DERIVATIVE INSTRUMENTS DENOMINATED in [ge!d-o+] 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

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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
evaluations have produced net profits or net losses.

“The [Reveluatien_oftaternational_Reserve] RIR account shall be
[neither]credited [ner] 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. [ferany-purpeses

fe J

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. [Fhe

Monetary Beard _shall ende Lany-exp:
7 swhich ic prejudicial th
ioe)”

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

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“SEC. 63. Action when Abnormal Movements Occur in the [Monetary

Aggregates,-Credit, OF] Price Level. — Whenever abnormal movements in the
[monetary-ageregates,-in-credit-or-ia] 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 Phi

ines and the Congress, and
make public, a detailed report which shall include, as a minimum, a
description and analysis of:
“(1) the causes of the rise or fall of [the-monetary aggregates,
of ereditoref] 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 [ Hy agstegates or the level of credit:
er decreases-by more than fifteen percent 15%}, ofthe] cost of

increases by more than ten percent (10%), in relation to the level existing at

ing index

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 creditor] cost of living represent a threat to the stability of the

Philippine economy or of important sectors thereof.

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“The Monetary Board shall continue to submit periodic reports to the
President of the Philippines and to Congress until it considers that the
[meneter;credit-er] 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

stabil

ty 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 2 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

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defined hereunder to secure the advances: Provided, further, That a
concurrent vote of at least five (5) members of the Monetary Board is
obtained.

“The amount of any emergency loan or advance shall not exceed the
sum of fifty percent (50%) of total deposits and deposit substitutes of the
banking institution, and shall be disbursed in two (2) or more tranches. The
amount of the first tranche shall be limited to twenty-five percent (25%) of
the total deposit and deposit substitutes of the institution and shall be
secured by (A) government securities, (B) ACCEPTABLE GUARANTEES
BACKED UP BY THE NATIONAL GOVERNMENT OR ITS SECURITIES; (C) [te

he_extent_of their_applicable 4 a 4] 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 [which the Menetary Beard 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

author

ing 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.

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“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

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 Sect

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.”

Page 26 of 35

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SEC. 27. A new section entitled Section 88-8 is hereby inserted in the same Act to

read as follows:

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

“NNO 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.”

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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.

“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:

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“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 89-8 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:

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“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

f-such-certifi # indebtedness shall: be-made-only: a
extraordinary moverentin price levels] Said evidences of indebtedness may

be issued directly against the international reserve of the Bangko Sentral or

against the securities which it has acquired under the provisions of Section
91 of this Act, or may be issued without relation to specific types of assets of
the Bangko Sentral.

“The Monetary Board shall determine th

terest 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

substitute:

defined as an altern:

form of obtaining funds from the

public, other than deposits, through the issuance, endorsement, or

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acceptance of debt instruments for the borrower's own account, for the
purpose of relending or purchasing of receivables and other obligations.
These instruments may include, but need not be limited to, bankers
acceptances, promissory notes, participations, certificates of assignment and
similar instruments with recourse, and repurchase agreements. THE TERM
“PUBLIC’ MEANS BORROWING FROM TWENTY (20) OR MORE LENDERS AT
ANY ONE TIME. FOR THIS PURPOSE, “LENDERS” SHALL REFER TO
INDIVIDUALS AND CORPORATE ENTITIES THAT ARE NOT ACTING AS
FINANCIAL INTERMEDIARIES, SUBJECT TO THE SAFEGUARDS AND
REGULATIONS ISSUED BY THE MONETARY BOARD. The Monetary Board
shall determine what specific instruments shall be considered as deposit
substitutes for the purposes of SECTION 94 of this Act[:]. Provided, however,

That deposit substitutes of commercial, industrial and other 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

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or quasi-bank the privilege of offsetting reserve deficiencies in the aforesaid
manner.

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

“The Monetary Board may modify or set aside the reserve deficiency
penalties provided in this section, for part or the entire period of a strike or

lockout affecting a bank or a quasi-bank as defined in the Labor Code, or of a

national emergency affecting operations of banks or quasi-banks OR IN SUCH
OTHER INSTANCES WHERE THE GRANT OF WAIVER IS DETERMINED BY THE
MONETARY BOARD TO BE JUSTIFIABLE. The 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

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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:

“SEC. 125. TAX EXEMPTIONS. — The Bangko Sentral shall be exempt

for a-period of five {5} years fromthe approval of this Act 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,

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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 i
[:] 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

rectly;

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

sectior

SEC. 40. Repealing Clause. All provisions of e

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

Act are hereby repealed, amended or modified accordingly.

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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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