Republic of the Philippines
House of Representatives
@uegan City

FIFTEENTH CONGRESS:
Second Regular Session

1480
: COMMITTEE. REPORT NO —
submitted by the Committee on Banks and Financial intermediaries on 1 oct 20

Oyu, 5384

Re: House Bill No.

Recommending Its approval, in substitution of House Bills No, 61, 458 and 2161

sponsor: Representatives Sergio A. F, Apostol and Luis R. Villafuerte

Mr. Speaker
‘The Committee on Banks and Financial Intermediaries to whichwerereferred:

House Bill No. 61, introduced by Representative Luis R. Villafuerte, entitied: “AN ACT PROVIDING
COR A COMPREHENSIVE REVISION OF THE CHARTER OF THE BANGKO SENTRAL NG PILIPINAS (BSP)
By AMENDING REPUBLIC ACT NUMBERED SEVENTY-SIX HUNDRED AND FIETY-THREE ENTYLF “THE
NEW CENTRAL BANK ACT”;

House Bill No. 458, introduced by Juan Edgardo M. Angara, entitled: “AN ACT AMENDING REPUBLIC
ACT NUMBERED SEVENTY-SIX HUNDRED AND FIFTY-THREE ENTITLED THE NEW CENTRAL BANK
ACT” AND FOR OTHER PURPOSES”: and

House will No. 2162, introduced by Representative Karlo A. 8. Nograles, eatitiled: “4N ACT
STRENGTHENING FURTHER THE REGULATORY POWERS OF THE BANGKO SENTRAL NG P iSPINAS.
AMENDING FOR THE PURPOSE RFPUBLIC ACT NO. 7653, ENTITLED "THE NEW CENTRAL BA'sK ACT,”
AND FOR OTHER PURPOSES”

oe 5394

has considered the same and recommends the approval of the attached bill, entitled:

“AN ACT PROVIDING FOR A COMPREHENSIVE REVISION OF THE CHARTER OF THE BANGKO SENTRAL
NG PILIPINAS BY AMENDING REPUBLIC ACT NUMBERED SEVENTY SIX HUNDRED AND FIFTY-THREE
ENTITLED “THE NEW CENTRAL BANK ACT”

with Representatives Luis R. Villafuerte, Juan Edgardo M. Angara, Karlo A. 8. Nograte anc Sergio A
F. Apostol as authors thereof. .

The HONORABLF SPEAKER
HOUSE OF REPRESENTATIVES
Quezon City


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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City
FIFTEENTH CONGRESS,

SECOND REGULAR SESSION
nousefili no, _ 5 894

Introduced by Representatives Luis R. Villafuerte, Juan Edgardo M. Angara, Karlo A. B.
Nograles and Sergio A. F. Apostol

AN ACT
PROVIDING FOR A COMPREHENSIVE REVISION OF THE CHARTER OF THE BANGKO SENTRAL NG
PILIPINAS BY AMENDING REPUBLIC ACT NUMBERED SEVENTY SIX HUNDRED AND FIFTY-THREE
ENTITLED “THE NEW CENTRAL BANK ACT”

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

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

“SEC. 2. Creation of the Bangko Sentral. — There is hereby established an independent
central monetary authority, which shatl be a body corporate known as the Bangko Sentral ~g
Pilipinas, hereafter referred to as the Bangko Sentral. The capital of the Bangko Sentral shall be Fity,
billion pesos (250,000,000,000), to be fully subscribed by the Government of the Republic, hereaf=2r
referred to as the Government, Ten billion pesos (P10,000,000,000) of which shall be fully paid “or
by the Government upon the effectivity of this Act [and-the-balance-te-be-paid-for-within two T2}
yeass-trom_the-effectivity of this Act ia such-mannerand formas the Goverament through
Secretonpottinance andthe Secretary of Buds i Management-may-thereatter detarmine}. THE
BALANCE SHALL BE PAID FOR IN CASH AVAILABLE TO THE GOVERNMENT OR THROUGH THE

ISSUANCE OF READILY MARKETABLE GOVERNMENT SECURITIES OF EQUIVALENT MARKET VALUE “0.
THE BALAN!

QF THE UNPAID SUBSCRIPTION OF THE GOVERNMENT TO THE BANGKO SENTRAL:
PROVIDED, THAT THE CASH OR GOVERNMENT SECURITIES ISSUED PURSUANT HERETO ARE HERESY
AUTHORIZED AND SHALL BE DEEMED AUTOMATICALLY APPROPRIATED FOR THE PURPOSE 2F
ENABLING THE GOVERNMENT TO COMPLY WITH ITS OBLIGATION TO PAY FOR I7S UNP=ID
SUBSCRIPTION TO THE BANGKO SEN/RAL.”

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

"SEC. 3. Responsibility ond -'rimary Objective, — The Bangko Sentral shall provide pei cy

directions in the areas of money, banking, and credit. it shall nave supervision over the operation: of


nanks 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, E-MONEY ISSUERS.
REMITTANCE AGENTS and institutions performing similar functions REGULATED BY THE BANGKC
SENTRAL UNDER THIS ACT OR UNDER SPECIAL LAWS.

The primary objective of the Bangko Sentral is to maintain price stability conducive to =
balanced and sustainable growth of the economy. tt shalt also promote and maintain [monetary
FINANCIAL stability and the convertibility of the peso”.

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

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

The seven (7) members are:

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

subject-to-confimation by the Commission-on-Appoiniments,] Whenever the Governor is unable :0
attend a meeting of the Board, he shall designate 3 Deputy Governor to act a5 his alternate AND TE
ATTENDANCE OF THE LATTER AS AN ALTERNATE TO THE GOVERNOR SHALL BE COUNTED FCR
DETERMINING THE QUORUM BUT SAID ALTERNATE WHILE ENTITLED TO BE HEARD SHALL HAVE NO
RIGHT TO VOTE: Provided, HOWEVER, That in [such-event; | THE ABSENCE OF THE GOVERNOR AT
THE MEETING OF THE BOARD, the Monetary Board shall designate one of its members as act ng
Chairman;

(b) a member of the Cabinet to be designated by the President of the Philippines. Whenev2r
the designated Cabinet Member is unable to attend 2 meeting of the Board, he shall designate an
Undersecretary in his Department to attend as his alternate WHOSE ATTENDANCE AT THE MEETING
OF THE BOARD SHALL BE COUNTED FOR DETERMINING A QUORUM BUT WHILE HE HAS THE RIGHT
TO BE HEARD, HE HAS NO RIGHT TO VOTE; and

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

No member of the Monetary Board may be reappointed more than once.”

SEC. 4. Section 9 of Republic Act No, 7653 is hereby amended to read as follows:



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SEC. 9. Disquatifications. — In addition t6 the disqualifications imposed by Republic Act No.
6713, a member of the Monetary Board is disqualified from being a director, officer, employee,
consultant, lawyer, agent or stockholder of any bank, quasi-bank or any other institution which i=
subject to supervision or examination by the Bangko Sentral, in which case such member shall resigr
from, and divest himself of any and all interests in such institution before assumption of office as
member of the Monetary Board.

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

No person shall be a member of the Monetary Board if he has been connected directly wit”
any multilateral banking or financial institution or has 2 substantial interest in any private bank in the
Philippines, within one (1) year prior to his appointment {-tkewise,-no-member-of the Monetary
Board-chall-be employed in any such institution within awe {2} years after the expiration of Ris ters
except_when-he-senvesae-an-official_representative_of the Philippine Government 40—such

instituson], NO MEMBER OF THE MONETARY BOARD, INCLUDING THE GOVERNOR AND ANY DEPUTY
GOVERNOR OF THE BANGKO SENTRAL SHALL BE ELECTED AS DIRECTOR, OR EMPLOYED AS OFFICER
OR EMPLOYEE, OR HIRED AS CONSULTANT, ADVISER, LAWYER OR IN OTHER CONTRACTUAL
CAPACITY OF ANY BANK, QUASI-BANK, FINANCE COMPANY, NON-BANK FINANCIAL INTERMEDIAR™,
(OR IN SIMILAR CAPACITIES IN OTHER INSTITUTIONS THAT ARE SUPERVISED/REGULATED 8Y THE
BANGKO SENTRAL WITHIN THREE (3) YEARS AFTER THE EXPIRATION OF THEIR RESPECTIVE TERMS CF
‘OFFICE OR AFTER ANY OF SUCH OFFICIALS RETIRES OR RESIGNS FROM THEIR RESPECTIVE POSITIONS
IN THE BANGKO SENTRAL EXCEPT WHEN ANY OF SUCH OFFICIALS IS APPOINTED OR DESIGNATED 4S
AN OFFICIAL REPRESENTATIVE OF THE PHILIPPINE GOVERNMENT IN A MULTILATERAL OR
INTERNATIONAL FINANCIAL INSTITUTION.”

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

“SEC. 10. Removal. — The President may remove any member of the Monetary Board for z>y
of the following reasons

(a) {f the member is subsequently disqualified under the provisions of Section {8] 9 of this
Act; 09 xxx"

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

“SEC. 11. Meetings. - The Monetary Board shalt meet at least once 2 week. The Board may
be called to a meeting by the Governor of the Bango Sentrai or by two (2} other members of the
Board

‘The presence of four (4) members shali constitu. a quorum: Provided, That in all cases the

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


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Uniess otherwise provided in this Act, all decisions of the Monetary Board shall require the
concurrence of at least four (4} members ENTITLED TO VOTE.

THE MEETING OF THE MONETARY BOARD, AS REQUIRED BY CIRCUMSTANCES, MAY BE
CONDUCTED THROUGH TELECONFERENCING OR VIDEO CONFERENCING SUBJECT TO PRIOR NOTICL
TO ALL THE MEMBERS OF THE BOARD OF THE CALL FOR SUCH METHOD OF CONFERENCING AND
SUBIECT FURTHER TO THE REQUIREMENT THAT THE CHAIRMAN OF THE BOARD OR THE ALTERNAT=
PRESIDING OFFICER 1S PHYSICALL ¥ PRESENT, TOGETHER WITH THREE (3) OTHER MEMBERS OF TH?
BOARD, AT THE DESIGNATED VENUE OF THE MEETING,

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

‘The Bangko Sentral shall maintain and preserve a complete record of the proceedings and
deliberations of the Monetary Board, including the tapes and transcripts of the stenographic notes,
either in theie original form or in microfilm OR OTHER RECORDING MEDIA.”

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

“SEC. 12. Attendance of the Deputy Governors. — The Deputy Governors [ray] SHALL UPCNN
THE ORDER OF THE GOVERNOR OR THE MONETARY BOARD attend the meetings of the Moncta‘y
Board with the right to be heard. OTHER OFFICIALS OF THE BANGKO SENTRAL MAY BE DIRECTED TO
ATTEND THE MONETARY BOARD MEETINGS UPON INVITATION OF THE MONETARY BOARD ON A P2R
MEETING BASIS IF THEIR EXPERTISE IS NEEDED IN A PARTICULAR AGENDA MATTER.”

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

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

(a) issue rules and regulations it considers necessary for the effective discharge of tre
responsibilities and exercise of the powers vested upan the Monetary Board end the Bangko Sentral
The rules and regulations issued shall be reported to the President and the Congress within fifteen
(15) days from the date of their issuance[;]. ANY ISSUANCE THAT AFFECTS THIRD PARTIES OR
IMPOSES A PENALTY OR SANCTION AGAINST THE INSTITUTIONS SUPERVISED/REGULATED BY THE
BANGKO SENTRAL OR THEIR DIRECTORS OR OFFICERS SHALL, BEFORE ITS ISSUANCE BE SUBIECT TO
PRIOR WRITTEN NOTICE WITH RIGHT TO BE HEARD GIVEN TO THE SUBJECT ENTITY OR PARTIES. “O
RULES AND REGULATIONS SHALL BECOME EFFECTIVE UNLESS PUBLISHED IN TWO (2) NEWSPAPERS
OF NATIONAL CIRCULATION;

{b) direct the manayement, operations, and administration of the Bangko Sentral, reorgan ze

its personnel AND IN CONNECTION THEREWITH PROVIDE SEPARATION BENEFITS AS DEEN:2D


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APPROPRIATE, and issue such rules and regulations as it may deem necessary or convenient for this
purpose. The legal units of the Bangko Sentral shall be under the exclusive supervision and cantrot of
the Monetary Board;

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

A compensation structure, based on job evaluation studies and wage surveys and subject to
the Board's approval, shall be instituted as an integral component of the Bangko Sentral’s human
resource development program; Provided, That the Monetary Board shall make Its own system
conform as closely as possible with the principles provided fer under Republic Act No. 6758[
[Pravided, however that-comy jon aadunage structure-of empleyees whese positions faltunder

On the recommendation of the Governor, appoint, fix the remunerations and other

emoluments, and remove personnel of the Bangko Sentral, subject to pertinent civil service laws

Provided, That the Monetary Board shall have exclusive and final authority to promote, transf:

assign, of reassign personnel of the Bangka Sentral and these personnel actions are deemed made

the interest of the service and not disciplinary: Provided, further, That the Monetary Board m
delegate such authority to the Governor under such guidelines as it may determine;

{9} adopt an annual budget for and authorize such expenditures by the Bangko Sentral as c-e
in the interest of the effective administration and operations of the Bangko Sentral In accordarce
with applicable laws and regulations; and

(e} indemnify its members and other officials of the Bangko Sentral, including personnel ‘of
the-deparments] performing supervision and examination functions, CREDIT AND MONETARY
POLICY OPERATIONS against all costs and expenses reasonably incurred by such persons in
connection with any civil or criminat action, suit or proceedings to which he may be, or is, mad= a
party by reason of the performance of his functions or duties, unless he is finally adjudged in such
action or proceeding to be liable for BAD FAITH, MALICE, GROSS negligence or misconduct.

In the event of a settlement or compromise, indemnification shalt be provided only in

connection with such matters covered by the settlement as to which the Sangko Sentrat is advis2d

‘by external counsel that the person to be indemnified [di-netcoravit-aey] HAD NOT ACTED W 7H
BAD FAITH, MALICE, GROSS negligence or misconduct.


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

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

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

{a) prepare, AT HIS INITIATIVE, OR UPON THE RECOMMENDATION OF A MEMBER OF T)
MONETARY BOARD, the agenda for the meetings of the Monetary Board and to submit for the

consideration of the Board the policies and measures [which-he-belewas] DEEMED to be necessary
to carry out the purposes and provisions of this Act. THE SUPPORTING MEMORANDUM FOR ANY
ITEM INCLUDED IN THE AGENDA FOR THE MEETINGS OF THE MONETARY BOARD SHALL 3E
DISTRIBUTED TO THE MEMBERS AT LEAST THREE (3} WORKING DAYS BEFORE THE SCHEDUL=9
MEETING IN ORDER TO ENABLE THE MEMBERS OF THE BOARD TO STUDY, REVIEW, AND EVALUATE
EACH AND EVERY ITEM INCLUDED IN THE AGENDA; PROVIDED, HOWEVER, THAT IN EMERGENCY
CASES, PRIOR ONE (1) WORKING DAY BEFORE A MEETING SHALL APPLY;

{b} execute and administer the policies and measures approved by the Monetary Boavd
AFTER THEIR EFFECTIVITY;

{c) direct and supervise the operations and internal administration of the Bangko Sentral.
The Governor may delegate IN WRITING certain of his administrative responsibilities OR SPECI=IC
TASKS. to other officers ar may assign specific tasks or responsibilities to any full-time member of
the Monetary Board without additional remuneration or allowance whenever he may deem fit

SUBJECT TO SUCH GUIDELINES AND REPORTING REQUIREMENTS AS HE SHALL REQUIRE or sub.ect

to such rules and regulations as the Monetary Board may prescribe FOR THE DELEGA’
AUTHORITY; PROVIDED, HOWEVER, THAT & POWER OR AUTHORITY DIRECTLY VESTED BY LAW TC BE
EXERCISED BY THE MONETARY BOARD UNDER THIS ACT AND/OR UNDER ANY OTHER SPECIAL LAW
‘SHALL NOT BE DELEGATED TO BE EXERCISED BY THE GOVERNOR OR ANY OTHER EXECUTIVE OFFICER
OF THE BANGKO SENTRAL, BUT THE POWER OR AUTHORITY EXERCISED BY THE MONETARY BOARD
PURSUANT TO LAW THROUGH THE RULES AND REGULATIONS PROMULGATED BY IT, OR THE
DECISIONS, RULINGS OR ORDERS ISSUED BY THE MONETARY BOARD SHALL BE IMPLEMENTED OR
EXECUTED BY THE GOVERNOR AND/OR OTF“R PERTINENT EXECUTIVE OFFICERS OF THE BANGKO
SENTRAL,


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{d) appoint and fix the remunerations and other emoluments of persanne! below the rank o
a department head in accordance with the position ‘and compensation plans approved by the
Monetary Board, as well as to impose disciplinary measures upon personnel of the Bangko Sentral,

subject to the provisions of Section 15(c) of this Act: Provided, That removal of personnel shall D2

with the approval of the Monetary Board; AND:

[(8} (e) exercise such other powers as may be vested in him by the Monetary Board.

SEC. 20. Section 19 of Republic Act No. 7653 is hereby amended to read as follows:

“SEC. 19. Authority of the Governor in Emergencies. — In case of emergencies where time 's
insufficient to call a FORMAL meeting of the Monetary Board, the Governor of the Bangko Sentral,
with the concurrence of [twe-t2j] THREE (3) other members of the Monetary Board, may decide
fany] AN URGENT matter or take [any] action [within the autherity of the Beard] RELEVANT TO THE
EMERGENCY INVOLVED, WITHOUT FORMALLY CONVENING A MEETING OF THE MONETARY 8OARC

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

‘At the soonest possible time, the Governor shall cali a meeting af the Monetary Board <0
submit his action for ratification.”

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

“SEC. 21. Deputy Governors. — The Governor of the Bangko Sentral, with the approval of se
Monetary Board, shall appoint not more than [three43}} FIVE (5) Deputy Governors who shall
perform duties [a¢-may be assignedio them by the Gevernar andthe Beard:] AND RESPONSIBILIT!ES
CONSISTENT WITH THEIR RESPECTIVE SECTORS ASSIGNED TO THEM BY THE MONETARY BOARD, ~O
PERFORM AND UNDERTAKE THESE SPECIFIC TASKS AND FUNCTIONS, NAMELY (i) MONETA3Y
STABILITY SECTOR ; (ii) THE FINANCIAL REGULATION SECTOR IN COORDINATION WITH “AE
MONETARY STABILITY SECTOR; (ill) THE FINANCIAL SUPERVISION SECTOR TO IMPLEMENT ~4E
FINANCIAL REGULATIONS APPROVED BY THE MONETARY BOARD; {iv) RESOURCES MANAGEMENT
SECTOR; AND {v] SUCH OTHER FUNCTIONS THAT THE MONETARY BOARD MAY DEEM NECESSARY

‘THE SCOPE OF THE DUTIES AND RESPONSIBILITIES OF EACH AND EVERY DEPUTY GOVERNOR
AND THE OFFICES UNDER EACH OF THEM AND THE DELINEATION OF OTHER FUNCTIONS =ND


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ASSIGNMENTS SHALL BE DEFINED OR REFINED AND PRESCRIBED BY THE MONETARY BOARD UPON

RECOMMENDATION OF THE GOVERNOR.

councils-ie_which_heis-an-en-officio-member—pursuant-to-provisions-ot special_laws-3- Deputy
wernor_as-mnay-be designated by the Governor shall be vested with authority to-pat and
exercise the rightio-votein-suchmeatings |"
SEC. 12. Section 23 of Republic Act No. 7653 is hereby amended to read as follows:

“SEC. 23, Authority to Obtain Data end information., — The Bangko Sentral shall have the

authority to [reqvest] REQUIRE from ANY PERSON OR ENTITY, INCLUDING government offices and
instrumentalities, or government-owned or controlled corporations, any data which it may require
for the proper discharge of its functions and responsibilities. The Bangko Sentral through the
Governor or in his absence, 2 [duly-authorized—representative] DEPUTY GOVERNOR DU.+
AUTHORIZED IN WRITING shall have the power to issue a subpoens [forthe production of the boots
and-records_for_the-aferesaid_surpese] SPECIFYING THE DATA REQUIRED AND THE SPECIFIC
PURPOSE FOR WHICH SUCH DATA SHALL BE ISSUED. Those who refuse the subpoena without
justifiable cause, or who refuse to supply the [bank] BANGKO SENTRAL with data [requested]
required, shail be subject to punishment for contempt in accordance with the provisions of the Ru es
of Court.

Data on individual firms, other than banks, gathered by the [Department-of feenormic
Research ond otherdepariments o-units of the} Bangko Sentral ARE CONFIDENTIAL AND WALL BE
USED FOR STATISTICAL PURPOSES ONLY. THESE DATA shall not be made available to any person oF
entity outside of the Bangko Sentral [whether puble-or private] except under order of the court jar

Provided, however, That {te}
ONLY collective data [on-fiems] may be released to interested persons or entities: Provided, fino!'y,
‘That in the case of data on banks, the provisions of Section 27 of this Act shall apply.”

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

"Sec. 24. Training of Technical Personnel. — The Bangko Sentral shall promote and sponsor
the training of technical personnel in the fields of [money ond banking] BANKING, QUASI-SANKING.
NON-BANK FINANCIAL INTERMEDIARIES, MICROFINANCE, DERIVATIVES, ARBITRAGE, FORE GN
EXCHANGE, SAVINGS FORMATION, PAYMENT AND SETTLEMENT SYSTEMS, INFORMAT ON
TECHNOLOGY, MONEY AND CAPITAL MARKETS DE\

OPME’T TRENDS, INNOVATIONS 4ND
PRACTICES AND SUCH OTHER TRAINING PROGRAMS AS THE MONETARY BOARD SHALL APPROVE.


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Toward this end, the Bangko Sentral is hereby authorized to defray the costs of study, at hame o-
abroad, of qualified employees of the Bangko Sentral, of promising university graduates or of anv
‘other qualified persons who shall be determined by proper competitive examinations. The Monetare
Board shall prescribe rules and regulations to govern the training program of the Bangko Sentral.”

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

“SEC. 25. Supervision and Examination. - The Sangko Sentral THROUGH THE FINANCIAL
SUPERVISION SECTOR DESIGNATED UNDER THIS ACT shall have supervision over, and conduct
REGULAR [periodic] or special examinationis} of [banking institutions} BANKS and quasi-banks,
including their subsidiaries and affiliates engaged in allied activities AND OTHER FINANCIAL
INSTITUTIONS WHICH UNDER THIS ACT OR SPECIAL LAWS ARE SUBJECT TO BANGKO SENTRAL
SUPERVISION,

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

TRANSFERS OR ACQUISITIONS, OR A SERIES THEREOF, OF SHARES OF STOCK IN BANKS
OR QUASI-GANKS SUFFICIENT TO ELECT AT LEAST ONE SEAT IN THE BOARD OF DIRECTORS OR
TO EFFECT A CHANGE IN THE MAJORITY OWNERSHIP OR CONTROL OF THESE INSTITUTIONS,
SHALL REQUIRE THE PRIOR APPROVAL BY THE BANGKO SENTRAL. THE SELLING OR CONVEYING
STOCKHOLDER SHALL SUBMIT SUCH TRANSFER OR ACQUISITION FOR APPROVAL BY THE BANGKC
SENTRAL WITHIN SUCH PERIOD AS MAY BE PRESCRIBED BY THE MONETARY BOARD. IN APPROVING
SAID TRANSFERS OR ACQUISITIONS, REGARD SHALL 8€ GIVEN BY THE BANGKO SENTRAL TO THE
FITNESS OF THE INCOMING STOCKHOLDERS AS MAY BE INDICATED BY THEIR INTEGRITY.
REPUTATION AND FINANCIAL CAPACITY.

PRIOR TO BANGKO SENTRAL APPROVAL, NO SUCH TRANSFER OR ACQUISITION SHAL_
HAVE LEGAL EFFECT NOR SHALL THE SAME BE RECOGNIZED IN THE BOOKS OF THE INSTITUTION
NOR BY ANY GOVERNMENT AGENCY AND THE TRANSFEROR-STOCKHOLDERS, SHALL REMAIN
ACCOUNTABLE AND RESPONSIBLE THEREFOR. TRANSFER OF ACTUAL CONTROL CH
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 UIABLE UNDER SECTIONS 36 AND 37 OF THIS AC”
NOTWITHSTANDING ANY PROVISION OF LAW TO THE CONTRARY, THE BANGKO SENTRAL SHA.L
SHARE WITH THE PHILIPPINE DEPOSIT INSURANCE CORPORATION ANY INFORMATION THAT
BANGKO SENTRAL MAY OBTAIN PERTAINING TO TRANSFER OR ACQUISITION OF SHARES OR SE2'=S
GF TRANSFERS OR ACQUISITIONS (-£ SHARES IN BANKS,


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IN CONNECTION WITH THE SECOND PARAGRAPH OF THIS SECTION, A PARENT COMPANY
MEANS A CORPORATION WHICH OWNS DIRECTLY OR INDIRECTLY VOTING STOCK OF A SUPERVISED
INSTITUTION SUFFICIENT TO CONTROL ITS MANAGEMENT AND OPERATIONS.

‘AS USED IN THIS SECTION, CONTROL EXISTS WHEN THE PARENT OWNS DIRECTLY OR
INDIRECTLY MORE THAN ONE-HALF OF THE STOCK OF A SUPERVISED INSTITUTION. CONTROL ALSC
EXISTS EVEN WHEN THE PARENT OWNS ONE-HALF OR LESS OF THE VOTING STOCK OF TH=
SUPERVISED INSTITUTION WHEN THERE tS POWER OVER MORE THAN ONE-HALF OF THE VOTING
RIGHTS BY PROXY OR BY VIRTUE OF AN AGREEMENT WITH OTHER INVESTORS, OR OTHER SIMILAF.
ARRANGEMENTS, WHICH THEREBY ENABLES THE PARENT COMPANY TO CAST THE MAJORITY CF
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 TH:
MANAGEMENT AND OPERATIONS OF THE SUPERVISED INSTITUTION.

For purposes of this section, 3 subsidiary means a corporation more than fifty percent

te means =

(S0%} of the voting stock of which is owned by a bank or quasi-bank and an affil
corporation the voting stock of which, to the extent of fifty percent (50%) or fess, is owned by «
bank, quasi-bank or which is related or jinked to such institution or intermediary through
common stockholders or such other factors as may be determined by the Monetary Board.

The department heads and the examiners of the supervising and/or examining

departments are hereby authorized to administer oaths to any director, officer, or employee 2f
any institution under their respective supervision or subject to their examination and ~
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 ant
records of persons and entities relative to. or in connection with the operations, activities Fr
transactions of the institution under examination, subject to the provision of} existing laws

protecting or safeguarding the secrecy or confidentiality of bank deposits as well us

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

Government
(N aining—ord pjunction-shall_be—tesued by thee ning the Bancke
‘Sentral trom_exar: yHincttution- subs supervision—orexamination—by—the Barge
+ heres conv proot thatthe 26 he _Bangko—Senteal_is-plaialy

“court--s-which the action ic pending a bond executed-in_tavarel the-Bangke-Sentes “lean amnesnt
ko be fixed by the court—The_prewisions_of Rule S8_of the New Rules of Court insofaras they

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licable—and—not_inconsistent with the-prov at shall_gowern-the ote
diccolution of the-restraining orderorinjunction-contemplatedin this Section.]”

SEC. 25. Section 26 of Republic Act No. 7653 is hereby amended to read as follows:

“SEC. 26. Bonk Deposits fand-tavestments]. — Any director, officer or stockholder who
together with his related interest, contracts @ joan or any form of financial accommodation from: {21
his bank; of (2) from a bank {a} which is a subsidiary of a bank holding company of which both hy
‘bank and the lending bank are subsidiaries or (b} in which a controlling proportion of the shares 15,
‘owned by the same interest that owns 2 controlling proportion of the shares of his bank, in excess of
five percent (5%} of the capital and surplus of the bank, or in ‘the maximum arnount permitted by
law, whichever is lower, shall be required by the lending bank to waive the secrecy of his deposits =f
whatever nature in [al-banksin-the Dhilippines} SAID BANKS. Any information obtained fram an
examination of his deposits shail be held strictly confidential and may be used by the examiners or!y
in connection with their supervisory and examination responsibility or by the Bangko Sentral in an
appropriate legal action it has initiated involving the deposit account

RELATED INTEREST, AS USED IN THIS SECTION, SHALL REFER TO STOCKHOLDINGS OF FAMILY
GROUPS OR CORPORATE HOLDINGS OF THE SAME FAMILY GROUPS OR SAME GROUPS OF PERSONS:
AS DEFINED IN SECTION 12 AND SECTION 13 OF REPUBLIC ACT NO. 8791 OTHERWISE KNOWN 4S.
THE GENERAL BANKING LAW OF 2000 WHO CONTROL OR OWN AT LEAST FORTY PERCENT (40%) OF
THE VOTING STOCK OF A BANK, QUASI BANK, AND OTHER FINANCIAL INSTITUTION WHICH IS.
SUBJECT TO SUPERVISION BY THE BANGKO SENTRAL; RELATED INTEREST MAY ALSO REFER TC A
HOLDING COMPANY THAT CONTROLS OR OWNS AT LEAST FORTY PERCENT (40%) OF THE VOTING
STOCK AS A GROUP, OF BANKS, QUASI BANKS AND OTHER FINANCIAL INSTITUTIONS WHICH ARE
SUBJECT TO SUPERVISION BY THE BANGKO SENTRAL.”

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

“SEC. 27. Prohibitions. — In addition to the prohibitions found in Republic Act Nos. 3019 a7d
6713, personnel of the Bangko Sentral are hereby prohibited from

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

{b) directly or indirectly requesting or receiving any VALUABLE gift, [preseat] IN KIND or
pecuniary of material benefit for himself/HERSELF or janerher] FOR A RELATIVE WITHIN THE FI=ST
DEGREE OF CONSANGUINITY OR AFFINITY from any institution subject to supervision or

examination by the Bangko Sentral;

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(c} revealing in any manner, except under orders of the court, the [Cangress] HOUSE OF
REPRESENTATIVES OR THE SENATE OR ANY OF THE APPROPRIATE COMMITTEES THEREIN or anv
government office of agency authorized by taw, or under such conditions as may be prescribed By
the Monetary Board, information relating to the condition ar business of any mstitution UNDER 15
SUPERVISION. This prohibition shall not be held to apply to the giving of information to the
Monetary Board or the Governor of the Bangko Sentral, or to any person authorized by either of
them, in writing, to receive such information; and

{d} borrowing from any institution subject to supervision or examination by the Bangk>
Sentral shall be prohibited unless said borrowings are adequately secured,
fully disclosed to the Monetary Board, and shall be subject to such further rules and regulations 25
the Monetary Board may prescribe: Provided, however, That personne! of the supervising and

‘examining departments are prohibited from borrowing from a bank under their supervision o7

‘examination.

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

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

THE SUPERVISED INSTITUTIONS UNDER THIS SECTION SHALL BE GIVEN THE OPPORTUN “Y
TO REBUT/REFUTE IN WRITING ANY OR ALL OF THE FINDINGS OF THE EXAMINERS OF THE FINANC.AL
SUPERVISION SECTOR OF THE BANGKO SENTRAL IN AN EXIT CONFERENCE BEFORE THE REPORT OF
EXAMINATION 1S FINALIZED. THE WRITTEN EXPLANATIONS, IF ANY, OF THE SUPERVISED
INSTITUTION UNDER EXAMINATION SHALL BE PART OF THE REPORT OF EXAMINATION W"H
‘COMMENTS BY THE EXAMINERS INVOLVED.

The bank, OR QUASI-BANK OR NON-BANK FINANCIAL INSTITUTION concerned shall afforc to
the head of the appropriate supervising and examining departments and to his authorized depu- es
full opportunity to examine its books, cash and available assets and general condition at any time
during banking hours when requested to do so by the Bangko Sentral: Provided, however, That nane

of the reports and other papers relative to such examinations shall be open to inspection by the

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public except insofar as such publicity is incidental to the proceedings hereinafter authorized or is
necessary for the prosecution of violations in connection with the business of such institutions.

Banking, [and} quasi-banking, AND NON-BANK FINANCIAL institutions which are subject tc
‘examination by the Bangko Sentral shall pay to the Bangko Sentral, within the first thirty (30} days o
each year, an annual fee In an amount equal to a percentage as may be prescribed by the Monetary
Board of its average total assets during the preceding year as shown on its end-of-QUARTER,
[penth—balance sheets] STATEMENTS OF CONDITION, after deducting cash on hand and amounts
‘due from banks, QUASI-BANKS, AND OTHER FINANCIAL INSTITUTIONS, including the Bangko Sentre
and banks abroad.”

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

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

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

SEC. 29. Appointment of Conservator. — Whenever, on the basis of a report CF
EXAMINATION submitted by the appropriate supervising or examining department OF THE BANGED
SENTRAL, the Monetary Board, IN CONSULTATION WITH THE PHILIPPINE DEPOSIT INSURANCE
CORPORATION, CONFIRMS [finds] that 3 bank or a quasi-bank is in a state of continuing inability or
unwillingness to maintain 2 condition of liquidity deemed adequate to protect the interest of
depositors and creditors, OR CONTINUES TO SUFFER CHRONIC RESERVE OR CAPITAL DEFICIENCES
WHICH, IF NOT CORRECTED, WILL EVENTUALLY RESULT IN INSOLVENCY, the Monetary Board, N
ORDER TO AVERT THE THREATENED INSOLVENCY OF THE BANK, may appoint 2 conservator W-O
SHALL INTRODUCE AND ADOPT MANAGEMENT REFORMS AND ‘CORRECTIVE MEASURES THAT WiLL
ENABLE THE BANK TO RESTORE AND MAINTAIN ITS VIABILITY. THE CONSERVATOR [with] SHALL
HAVE such powers as the Monetary Boerd shall deem necessary to ENABLE HIM TO take charge of
the assets, liabilities, and the management thereof, reorganize the management, collect all mor: es
and debts due said institution, PLACE OR INVEST ITS FUNDS IN READILY MARKETABLE SECURIT ES
AND INVESTMENTS, SELL, IF NECESSARY, REAL PROPERTIES AND OTHER FIXED ASSETS TO MEET TS
OBLIGATIONS, and exercise all powers [necessary] to restore AND MAINTAIN its viability, “he
conservator shall report and be responsible to the Monetary Board, WITH A COPY OF SUCH REPCRT
FURNISHED THE PHILIPPINE DEPOSIT INSURANCE CORPORATION, and shall have the power to
‘overrule or revoke the actions of the previous management and board of directors of the bans or

quasi-bank, EXCEPT THAT SUCH POWER CANNOT EXTEND TO THE POST FACTO REPUDIATION OF

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PERFECTED CONTRACTS THAT INFRINGE AGAINST THE NON-IMPAIRMENT CLAUSE OF THF
CONSTITUTION.

The conservator should be competent and knowledgeable in bank operations ard
management. The conservatorship shall nat exceed one (1) year, WHICH MAY BE EXTENDED FOR <
PERIOD OF NOT MORE THAN SIX (6) MONTHS, AS MAY BE APPROVED BY THE MONETARY BOARD.
‘The conservator shall receive remuneration to be fixed by the Monetary Board, PAYABLE 'V
MONTHLY PAYMENTS TO BE FIXED BY THE MONETARY BOARD: [Ja-ar-amaunt- notte-excead fer
thitds {2/3} of the salary ofthe president of the ion in-one tt payee in twelve (12
equal_monthly_paymeants:] Provided, That, if at any time within the one-year period, tre
conservatorship is terminated on the ground that the institution can operate on its own, tie

conservator shall receive the balance of the remuneration which he would have reccived up to the
end of the year; but if the conservatorship is terminated on other grounds, the conservator shall r-3t
be entitled to such remaining balance. The Monetary Board |may appoint e-consemmater connected
withthe Bangko-Sesteal| SHALL AUTHORIZE THE CONSERVATOR TO APPOINT A CORE GROUP OF
PROFESSIONALS TO ASSIST HIM IN THE PERFORMANCE OF HIS POWERS AND DUTIES AS
CONSERVATOR, in which case, Jae] THEY shall [nat] be entitled to receive [ny] remuneration or
emoluments THAT THE MONETARY BOARD SHALL DETERMINE [fromthe Bangke-Seatral] during =1¢
PERIOD OF conservatorship. The expenses attendant to the conservatorship shall be borne by :76
bank or quasi-bank concerned.

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

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

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The Monetary Board shall terminate the conservatorship when it is satisfied that the
institution can continue to operate on its own and the conservatorship Is no longer necessary. The
conservatorship shall likewise be terminated shauld the Monetary Board, on the basis of the report
of the conservator oF of its own findings, determine that the continuance in business of the
Institution, DESPITE THE REMEDIAL MEASURES THAT HAVE BEEN ADOPTED, CONTINUE TC
EXPERIENCE ILLIQUIDITY AND OTHER RELATED FINANCIAL STRESSES, SUCH THAT THE GROUNDS FO?
RECEIVERSHIP AND LIQUIDATION OF THE INSTITUTION BECOME WARRANTED, [wouldinvolve
probable joss+0-4ts-depositers-or-crediters,| in which case the provisions of Section 30 shat! apply.”

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

“SEC. 30. Proceedings in Receivership ond Liquidation. — Whenever, [upon] ON THE BAS'S
OF A report of [the-head-of the supenising or examining deparement] EXAMINATION, the Moneta-y
Board finds OR CONFIRMS thet a bank or quasi-bank:

(a) HAS NOTIFIED THE BANGKO SENTRAL OR PUBLICLY ANNOUNCED A UNILATERAL
CLOSURE, OR HAS BEEN DORMANT FOR AT LEAST THIRTY (30) DAYS OR IN ANY MANNER HAS
SUSPENDED THE PAYMENT OF ITS DEPOSIT/DEPOSIT LIABILITIES, OR ts unable to pay its liabilities <s
they become due in the ordinary course of business: Provided, That this shall not include inability :0

pay caused by extraordinary demands induced by financial panic in the banking OR FINANC:Si

(b} has insufficient realizable assets TO MEET ITS LIABILITIES, as determined by the Bangko
Sentral|;#e-meet#tsiabilities] IN ACCORDANCE WITH BANKING REGULATIONS; or

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

(4) has willfully violated @ cease and desist order under Section 37 that has become firsal,
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 =e
institution from doing business in the Philippines, and MAY designate the Philippine Depasit
Insurance Corporation OR ANY PERSON OF RECOGNIZED COMPETENCE IN BANKING AND FINANCE as
receiver of the banking institution.

THE MONETARY BOARD, OFFICERS AND PERSONNEL OF THE BANGKO SENTRAL SHALL 3E
IMMUNE FROM SUIT IN THE PERFORMANCE OF THEIR DUTIES UNDER THIS SECTION UNLESS THEY
ARE FOUND TO BE IN WILLFUL VIOLATION OF THIS ACT OR HAVE ACTED OR PERFORMED IN EAD
FAITH, WITH MALICE AND/OR GROSS NEGLIGENCE.

For a quasi-bank, any person of recognized competence in banking or finance SHALL (Fry!

be designated as receiver.

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

The receiver shall immediately gather, take charge of, MANAGE AND CONTROL all the
assets, WHICH, IN CASE OF A BANK, SHALL INCLUDE ITS LICENSE, and liabilities of the institutio-,
administer the same for the benefit of its creditors, and, exercise the general powers of a receiver
under EXISTING LAWS AND the Revised Rules of Court. HOWEVER, THE DISPOSITION OF THE
LICENSE BY THE RECEIVER SHALL BE SUBJECT TO THE APPROVAL OF THE MONETARY BOARD. THE
RECEIVER SHALL ADDITIONALLY HAVE THE AUTHORITY TO [but-shalLnet--with-the-exception-of] (-)
PAY administrative expenditures,  [pay—or—commit—any—setthat_will Involve the-transte or
dispesition_ot_any assetel the institution: Prowided That the seceiver- may] (2) deposit or place

the funds of the institution in non-speculative investments, OR (3) ADOPT, IF DEE!
APPROPRIATE BY THE RECEIVER, BRIDGE BANKING AS A RESOLUTION METHOD, AS GOVERNED 3Y
SECTION 30-B OF THIS ACT. The receiver OF QUASI-BANKS AND NON-BANK FINANCIAL INSTITUTIONS
shail determine as soon as possible, but not later than ninety (90) days from take-over, wnethe
[the] SUCH institution may be rehabilitated or otherwise placed in such a condition so that it

may be permitted to resume business with safety to its [depesiters—and] creditors and the

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

IN ORDER TO REHABILITATE THE CLOSED INSTITUTION OR TO RESTORE ITS OPERATIONS
WITH SAFETY TO ITS CREDITORS AND THE GENERAL PUBLIC OR TO MERGE OR CONSOLIDATE THE
CLOSED INSTITUTION WITH ANOTHER QUALIFIED INSTITUTION, THE RECEIVER OF QUASI-BANKS AND
OTHER NON-BANK FINANCIAL INSTITUTIONS MAY IMMEDIATELY TRANSFER OR DISPOSE OF ANY OR
ALL OF THE ASSETS OF THE CLOSED INSTITUTION AND PERFORM SUCH OTHER ACTS AS MAY 36
AUTHORIZED BY LAW.

Mf the receiver OF QUASI-BANK AND OTHER NON-BANK FINANCIAL INSTITUTIONS determi res
that the institution cannot be rehabilitated or permitted to resume business in accordance with :he
next preceding paragraph OF THIS SECTION, the Monetary Board shall notify in writing the board of
directors of its findings and direct the receiver to proceed with the liquidation of the instituticrs.

The receiver shalt:

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1. file ex parte with the proper regional trial court, and without requirement of prior notice
or any other action, a petition for assistance in the liquidation of the institution pursuant to 2
liquidation plan adopted by the Philippine Deposit insurance Corporation for general application tc
all closed banks. in case of quasi-banks, the liquidation plan shall be adopted by the Monetary
Soard. 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 0°
the stockholders, directors and officers, and decide on other issues as may be material to implemen:
the liquidation plan adopted. The receiver shall pay the cost of the proceedings from the assets cf
the institution,

2. convert the assets of the institution to money, dispose of the same to creditors and other

parties, for the purpose of paying the debts of such institution In accordance with the rules on

concurrence and preference of credit under the Civil Code of the Philippines and he may, in the
name of the institution, and with the assistance of counsel as he may retain, institute such actions #5
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, cr
execution

The actions of the Monetary Board taken under this section or under Section 29 of this Act
shali be final and executory, and may not be restrained or set aside by the court except on petiticn
for certiorari on the ground thet 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 far certiorari may only

be filed by the stockholders of record represer

ig the majority of the capital stock within ten (29)
days from receipt by the board of directors of the institution of the order directing receiverstip,
liquidation or conservatorship.

The designation of a conservator under Section 29 of this Act or the appointment of 3

receiver under this section shall be vested exclusively with the Monetary Board, [Furthermore =e

SEC. 21. A new section entitled section 30-A shall be inserted in Republic Act No. 7653 to
read as follows:

“SEC. 30-A, PROMPT CORRECTIVE ACTION. — WHENEVER UPON THE REPORT OF ~4E
HEAD OF THE FINANCIAL SUPERVISION SECTOR, THE MONETARY BOARD FINDS A BANK OR QUSI-
BANK OR OTHER SUPERVISED FINANCIAL INSTITUTION HAS INSUFFICIENT REALIZABLE ASSETS TO
MEET ITS LIABILITIES, THE MONETARY BOARD SHALL HAVE THE AUTHORITY TO DIRECT “HE

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EXISTING STOCKHOLDERS OF SAID BANK OR QUASI-BANK OR SUPERVISED FINANCIAL INSTITUTION
TO INFUSE CAPITAL WITHIN A PERIOD NOT EXCEEDING NINETY (90) DAYS FROM THE DATE OF
QIRECTIVE IN SUCH AMOUNT AS MAY BE NECESSARY TO RESTORE THE ENTITY'S CAPITAL TC
THE MINIMUM REQUIRED AMOUNT OR RATIO. IN CASE OF INABILITY OR UNWILLINGNESS OF THE
STOCKHOLDERS TO INFUSE THE REQUIRED AMOUNT OF ADDITIONAL CAPITAL WITHIN THE
PRESCRIBED PERIOD, THE MONETARY BOARD MAY ORDER A QUASI-REORGANIZATION OF SAID
ENTITY TO REFLECT THE FAIR VALUE OF ITS CAPITAL AND/OR DIRECT SAID ENTITY TO ACCEP:
INVESTMENTS FROM QUALIFIED INVESTORS OR TO MERGE OR CONSOLIDATE WITH & QUALIFIED
FINANCIAL INSTITUTION.”

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

“SEC. 30-B. BRIDGE BANKING. - (A) THE MONETARY BOARD MAY FORM, ESTABLISH,

ORGANIZE, AND OPERATE AND/OR CONTRACT TO OPERATE SUBSIDIARIES OR CORPORATION:
WHOSE PRIMARY PURPOSE IS TO OPERATE AS A BRIDGE BANK AND/OR MANAGE ACQUIRED ASSET
‘OF THE RECEIVER,

(8) A BRIDGE BANK REFERS TO A TEMPORARY BANK LICENSED BY THE BANGKO SENTRA.
ESTABLISHED AND OPERATED TO ACQUIRE ASSETS AND ASSUME LIABILITIES OF A FAILED BANK. THE

BRIDGE BANK SHALL HAVE AUTHORITY TO PURCHASE ASSETS, ASSUME DEPOSITS AND 0%
LIABILITIES WHICH THE PDIC MAY DETERMINE TO BE APPROPRIATE; AND PERFORM SUCH OTH=!

BANKING FUNCTIONS AS THE MONETARY BOARD MAY AUTHORIZE, CONSISTENT WITH TE
OBJECTIVES OF THIS SECTION

{C) A BRIDGE BANK RESOLUTION MEASURE MAY BE ADOPTED ONLY IF THE BOARD CF
DIRECTORS DETERMINES THAT IT IS A COST-EFFECTIVE AND VIABLE RESOLUTION MEASURE AND

THE AMOUNT NECESSARY TO IMPLEMENT SUCH MEASURE IS LESS THAN THE ESTIMATED INSU!
DEPOSITS OF THE FAILED BANK; AND THE PRESERVATION OF CRITICAL BANKING FUNCTIONS ISN
THE BEST INTEREST OF THE DEPOSITORS AND THE PUBLIC.
{D) FOR THE EFFECTIVE IMPLEMENTATION OF A BRIDGE BANK RESOLUTION MEASURE, THE
RECEIVER MAY:
1. SELL, ASSIGN, TRANSFER, OR CONVEY ITS SHAREHOLDINGS IN {TS SUBSIDIARY “O
THE FAILED BANK;
2. TRANSFER SUCH ASSETS AND DEPOSIT LIABILITIES OF A FAILED BANK TO THE BRIDSE
BANK, AS THE RECEIVER MAY DEEM APPROPRIATE. ALL TRANSFERS UNDER Frits
SUBSECTION SHALL:

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|. NOT BE SUBJECT TO ANY TAXES, SUCH AS CAPITAL GAINS TAX, AS WELL AS
INCOME TAX, VALUE ADDED TAX AND DOCUMENTARY STAMP TAX, AND OTHER
‘TAXES, AS MAY BE APPLICABLE;

|i, BE CONSIDERED IN CUSTODIA LEGIS IN THE HANDS OF THE BRIDGE BANK. FROM.
‘THE TIME THE ASSETS ARE TRANSFERRED TO A BRIDGE BANK, ITS ASSETS SHAL-
NOT BE SUBIECT TO ATTACHMENT, EXECUTION, GARNISHMENT, LEVY.
FORECLOSURE OR ANY OTHER COURT PROCESSES. THEREFORE, A JUDGE
OFFICER OF THE COURT OR ANY PERSON WHO SHALL ISSUE, ORDER, PROCESS
OR CAUSE THE ISSUANCE OR IMPLEMENTATION OF THE WRIT OF
GARNISHMENT, LEVY, ATTACHMENT OR EXECUTION SHALL BE LIABLE UNDES
SECTION 22 HEREOF.

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

3. MAKE ADVANCES TO THE BRIDGE BANK OR CLOSED BANK, UPON SUCH TERMS AND
CONDITIONS AND IN SUCH FORM AND AMOUNTS AS THE RECEIVER = MAY

PRESCRIBE, SUFFICIENT FUNDS FOR THE BRIDGE BANK TO OPERATE. THE’
ADVANCES SHALL PARTAKE OF THE NATURE OF PUBLIC FLINDS, AND AS SUC=.
MUST BE CONSIDERED A PREFERRED CREDIT SIMILAR TO TAXES DUE TO THE
NATIONAL GOVERNMENT IN THE ORDER OF PREFERENCE UNDER ARTICLE 2224 CF
THE NEW CIVIL CODE;

4. CONDUCT DUE DILIGENCE ON AN INSURED BANK, AND EXAMINE AND AUDIT THE
DEPOSIT ACCOUNTS AND/OR RECORDS, OF AN INSURED BANK, SO AS TO ESTABLISH
A DEPOSIT PROFILE OF THE BANK AS TO THE NUMBER OF DEPOSIT ACCOUNTS AND
TOTAL INSURED DEPOSITS: PROVIDED, THAT THE INFORMATION ON INDIVIDUAL
ACCOUNTS OBTAINED THROUGH SUCH EXAMINATION OR AUDIT SHALL NOT BE
DISCLOSED OR RELEASED TO ANY OTHER PARTY EXCEPT TO THE BOARD OF
DIRECTORS OF THE PHILIPPINE DEPOSIT INSURANCE CORPORATION OR UPCN
ORDER OF THE COURT; AND

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

(E) THE 90-DAY PERIGD PROVIDED UNDER SECTION 30 OF REPUBLIC ACT 7653, AS
AMENDED, WITHIN WHICH THE RECEIVER SHALL DFERMINE WHETHER THE INSTITUTION MAY 3E
REHABILITATED SHALL NOT BE APPLICABLE

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(F) THE BRIDGE BANK SHALL TERMINATE AT THE END OF TWO {2} YEARS FOLLOWING THE
DATE IT WAS GRANTED A BANKING LICENSE, SUBJECT TO THE PROVISIONS IN THE PARAGRAPHS (a)
[AND {H); PROVIDED, FURTHER, THAT THE RECEIVER MAY EXTEND THE STATUS OF THE BRIDGE BANK
Ik DEEMED NECESSARY TO CONCLUDE PENDING NEGOTIATIONS FOR THE SALE, MERGER OR
ACQUISITION OF THE BRIDGE BANK BY A BUYER OR ACQUIRER: PROVIDED, FINALLY, THAT THE
MAXIMUM EXTENSION SHALL BE ONE (1) YEAR,
{G) TERMINATION OF BRIDGE BANK. - THE STATUS OF ANY BRIDGE BANK AS SUCH SHALL
TERMINATE UPON THE EARLIEST OF —
1 THE MERGER OR CONSOLIDATION OF THE BRIDGE BANK WITH ANOTHER BANK THAT
IS NOT A BRIDGE BANK; OR
2. THE SALE OF THE BRIDGE BANK TO A QUALIFIED BUYER, AS MAY BE DETERMINED BY
THE RECEIVER; OR
3, THE ASSUMPTION OF ALL OR SUBSTANTIALLY ALL OF THE (i) DEPOSITS AND OTHES
LIABILITIES AND/OR (ii) ASSETS OF THE BRIDGE BANK BY AN INSURED BANK THAT IS
NOT A BRIDGE BANK, OR OTHER ENTITY AS PERMITTED UNDER APPLICABLE LAW!
FOLLOWING THE ASSUMPTION OF ALL OR SUBSTANTIALLY ALL OF THE LIABILITIES O°
THE BRIDGE BANK AND THE SALE OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS C=
THE BRIDGE BANK, THE BRIDGE BANK SHALL BE LIQUIDATED IN ACCORDANCE WITH
THE PROVISIONS OF LAW RELATING TO THE LIQUIDATION OF CLOSED BANKS: AND
4. THE EXPIRATION OF THE PERIOD PROVIDED IN PARAGRAPH [F), OR THE EARLIER
DISSOLUTION OF THE BRIDGE BANK AS PROVIDED IN PARAGRAPH (H).
(H) DISSOLUTION OF BRIDGE BANK NOTWITHSTANDING ANY OTHER PROVISION OF LAW
TO THE CONTRARY, IF THE BRIDGE BANK'S STATUS AS SUCH HAS NOT PREVIOUSLY BEEN
TERMINATED BY THE OCCURRENCE OF AN EVENT SPECIFIED IN SUBPARAGRAPH (2), (2) OR (3), 3F
PARAGRAPH (G], THE RECEIVER, MAY DISSOLVE A BRIDGE BANK AT ANY TIME IT DENS
NECESSARY, THE RECEIVER SHALL WIND UP THE AFFAIRS OF THE BRIDGE BANK IN CONFORM “Y
WITH THE PROVISIONS OF LAW RELATING TO THE LIQUIDATION OF CLOSED BANKS. WITH RESPECT
TO ANY SUCH BRIDGE BANK, THE RECEIVER SHALL HAVE ALL THE RIGHTS, POWERS, AND
PRIVILEGES, AND SHALL PERFORM THE DUTIES RELATED TO THE EXERCISE OF SUCH RIGH™S,
POWERS, OR PRIVILEGES GRANTED BY LAW TO A RECEIVER OF ANY INSURED BANK.
{l) MATTERS RELATING TO THE EXERCISE BY THE RECEIVER OF THE FUNCTIONS UNDER THIS
SECTION SHALL BE SUBJECT TO VISITORIAL AUDIT ONLY.
(J) THE ACTIONS OF THE RECEIVER UNDER THIS SECTION SHALL BE FINAL AND EXECUTC >Y,
AND MAY NOT BE RESTRAINED OR SET ASIDE BY THE COURT, EXCEPT ON PETITION FOR CERTIOF.ARI

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WITH THE COURT OF APPEALS ON THE GROUND THAT THE ACTION WAS TAKEN IN EXCESS OF
JURISDICTION OR WITH SUCH GRAVE ABUSE OF DISCRETION AS TO AMOUNT TO A LACK OR EXCESS
OF JURISDICTION. THE PETITION FOR CERTIORARI MAY ONLY BE FILED WITHIN TEN (10) DAYS FROM
PUBLICATION OF THE NOTICE ON THE ESTABLISHMENT OF A GRIDGE BANK.

(k) THE MONETARY BOARD SHALL PROMULGATE THE IMPLEMENTING RULES ANC
REGULATIONS TO IMPLEMENT THE PROVISIONS OF THIS SECTION

SEC. 23. Section 33 of Republic Act No. 7653 is hereby amended to read as follows:

“SEC. 33 Disposition of Banking Franchise. — The Sangko Sentral may. if public
interest s0 requires, award to an institution, upon such terms and conditions as the Monetary Board
may approve, the banking franchise of 2 CLOSED bank [undertiguidation] to operate in the area
where said bank or its branches were previously operating: Provided, That whatever proceeds may
be realized from such award shall be [subject-te-the-appropriate-exclusive-dispasition oF th=
Monetary Board] FOR THE BENEFIT OF THE CREDITORS OF THE CLOSED BANK.”

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

“SEC. 36. Proceedings Upon Violation of this Act and Other Banking Laws, Rules, Regulations,
Orders or instructions. - Whenever @ bank, [oF] quasi-bank, OR OTHER FINANCIAL INSTITUTICN
WHICH UNDER THIS ACT OR SPECIAL LAWS IS SUBJECT TO BANGKO SENTRAL SUPERVISION =r
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 far such violation shall unless otherwise
provided in this Act be punished by a fine of not less than Fifty thousand pesos (P50,000) nor mere
than {Twe_hundred_thevcand-peses{P200,000)] TWO MILLION PESOS (P2,000,000.00} or ay
imprisonment of not less than two (2) years nor more than [ten (10}] SIx (6) years, or both, at the
SOUND discretion of the court.

Whenever [a-bank-or—questbank] AN ENTITY UNDER BANGKO SENTRAL SUPERVISICN
persists in carrying on its business in an (watewfut-or] unsafe or UNSOUND manner AS DETERMINED
UNDER THE PROVISIONS OF SECTION SE OF REPUBLIC NO. 8791 AND IT REFUSES OR FAILS TO CEASE
AND DESIST FROM SUCH MISCONDUCT AND TO INSTITUTE CORRECTIVE MEASURES AFTER NOTICE
HAS BEEN GIVEN BY THE BANGKO SENTRAL, the MONETARY Board may, without prejudice to zne

penalties provided in the preceding paragraph of this Section and the administrative sancticns
provided in Section 37 of this Act, take action under Section 30 of this Act.”

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

“SEC. 37. Administrative Sanctions {Gn-Banks-And-Quasi-Bonks]. — Without prejudice to he

criminal sanctions against the culpable persons provided in Sections 34, 35, and 36 of this Act, che

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Monetary Board may, at its discretion, impose ADMINISTRATIVE SANCTIONS upon any bank [er
sic their dizectors, and/or officers, for-any willful vioiation-oL es charter or by-laws waite:

instruction or-reguh igaued-by-the Monatary Boarder anyorder-insteuetior Hing bythe
Governor] FINANCE COMPANY AND NON-BANK FINANCIAL INSTITUTION PERFORMING QUASI:
BANKING FUNCTIONS, HEREINAFTER REFERRED TO AS QUASI-BANKING INSTITUTIONS PERFORMING

SIMILAR FUNCTIONS REGULATED BY THE BANGKO SENTRAL UNDER THIS ACT OR UNDER SPECI.
LAWS THAT ARE UNDER THE SUPERVISION OF THE BANGKO SENTRAL FOR WILFUL VIOLATION O2
FAILURE TO COMPLY WITH THE PROVISIONS OF THIS ACT, OF REPUBLIC ACT NO. 8791 AND OTHER
SPECIAL LAWS; or any commission of irregularities, and/or conducting business in an unsafe or
unsound manner as may be determined by the Monetary Board the following administrative
sanctions, [wherever} WHEREVER OR WHICHEVER applicable.

THE FOLLOWING ADMINISTRATIVE SANCTIONS SHALL BE IMPOSED TAKING INTO
CONSIDERATION THE ATTENDANT CIRCUMSTANCES SUCH AS THE NATURE AND GRAVITY OF THE
VIOLATION OR IRREGULARITY AND THE SIZE OF THE BANK, QUASI-BANK OR NON-BANK FINANC AL
INSTITUTION INVOLVED.

{a) {fines) ADMINISTRATIVE PENALTIES in amounts as may be PRESCRIBED AND determirsd
by the Monetary Board to be appropriate, but in no case to exceed [Thirty thousand pesos
{220,000}-2-day for each viclation, taking inte consideration the atzendant circumstances such 3s
the-nature-and_gravity-of the wielation-or-irregulariay-and the size of the-bank-er-quast bank] “IE
MAXIMUM PENALTIES PRESCRIBED HEREIN FOR EACH VIOLATION, AS FOLLOWS:

1, FOR UNIVERSAL AND COMMERCIAL BANKS ~ NOT EXCEEDING 10,000 PER BANK NG

DAY;

2. FOR THRIFT BANKS — NOT EXCEEDING P5,000 PER BANKING DAY;

3. FOR RURAL BANKS/COOPERATIVE BANKS — NOT EXCEEDING 2,000 PER BANKING DAY;

4. FOR FINANCE COMPANIES AND NON-BANK FINANCIAL INSTITUTIONS PERFORMING

QUASI-BANKING FUNCTIONS - NOT EXCEEDING 5,000 PER BANKING DAY;
5. FOR FINANCE COMPANIES AND FINANCIAL INSTITUTIONS WHICH ARE NOT PERFORN: NG
QUASI-BANKING FUNCTIONS — NOT EXCEEDING P3,000 PER BANKING DAY;
6. FOR OTHER INSTITUTIONS T4AT ARE SUPERVISED BY THE BANGKO SENTRAL — NOT
EXCEEDING P2,000 PER BANKING DAY

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WITHIN THE MAXIMUM PENALTY PRESCRIBED HEREIN, FOR VIOLATIONS O8

IRREGULARILITIES COMMITTED BY EVERY CATEGORY OF BANKS, QUASI-BANKS, AND NON-BAN!
FINANCIAL INSTITUTIONS AS HEREIN PROVIDED, THE MONETARY BOARD SHALL ACCORDING TO "1

DEGREE OF SEVERITY OF VIOLATIONS OR IRREGULARITIES SUBJECT TO PENALTIES, CLASSIF’

VIOLATIONS OR IRREGULARITIES COMMITTED INTO GRAVE, LESS GRAVE AND LIGHT OFFENSES SUC#
HAT THE PENALTIES TO BE IMPOSED SHALL CORRESPONDINGLY BE GRADUATED WITHIN TH:
PRESCRIBED MAXIMUM PENALTIES.

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

NON-BANK FINANCIAL INSTITUTION.

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

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

(c} suspension of lending or foreign exchange operations or authority to accept new depos ts
‘or make new investments; AND/OR

{d} suspension of interbank clearing privileges; fard/er]

[el-tewocation of quasi-benkingticense |

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

The Monetary Board may, whenever warranted by circumstances, preventively suspend eny
director or officer of [a-bank-or-quasibank] THE INSTITUTION pending an investigation: Proviced,
That should the case be not finally decided by the Bangko Sentral within a period of one huncved
twenty {120} days after the date of suspension, said director or officer shall be reinstated ir his
position: Provided, further, That when the delay in the disposition of the case is due to the fautt,

negligence or petition of the director or officer, the period of delay shall not be counte>

in
computing the period of suspension herein provided.

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


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Whether or not there is an administrative proceeding, if the Institution and/or the directors
and/or officers, concerned continue with or otherwise persist in the commission of the indicated
practice oF violation, the Monetary Board may issue an order requiring the institution and/or the
dicectors, and/or officers concerned to cease and desist from the indicated practice or violation, and

may further order that immediate action be taken to correct the conditions resulting from sucy

practice or violation. The cease and desist order shall be immediately effective upon service on 1
respondents,

“The respondents shall be afforded an opportunity to defend their action in @ 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 periad, 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.

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

“SEC. 3B-A. ISSUANCE OF PROVISIONAL REMEDIES AGAINST BANGKO SENTRAL ACTIONS. —
NO COURT OF LOWER LEVEL THAN THE COURT OF APPEALS SHALL ISSUE ANY TEMPORARY
RESTRAINING ORDER, PRELIMINARY IWUNCTION OR PRELIMINARY MANDATORY INJUNCTION
AGAINST THE BANGKO SENTRAL FOR ANY ACTION UNDER THIS ACT. SUCH TEMPORARY
RESTRAINING ORDER, PRELIMINARY INJUCTION OR PRELIMINARY MANDATORY INJUNCTION MAY
BE DISSOLVED OR STAYED UPON FILING OF A WRITTEN UNDERTAKING BY THE BANGKO SENTRSL
THAT IT WILL PAY ALL DAMAGES WHICH THE PETITTIONER MAY SUFFER FROM THE STAY OF ThE
INJUNCTION SHOULD IT BE DECIDED IN A FINAL JUOGMENT THAT THE PETITIONER 15 ENTITLED "2
HAVE ACTS COMPLAINED OF PERMANENTLY ENJOINED. ANY RESTRAINING ORDER OR INJUNCTION
ISSUED IN VIOLATION OF THIS SECTION IS VOID AND OF NO FORCE AND EFFECT. THE PROVISIONS
OF RULE 58 OF THE 1997 RULES ON CIVIL PROCEDURES IN SO FAR AS THEY ARE APPLICABLE AND
NOT INCONSISTENT WITH THE PROVISIONS OF THIS ACT SHALL GOVERN THE ISSUANCE AND
DISSOLUTION OF THE RESTRAINING ORDER OR INJUNCTION AGAINST THE BANGKO SENTRAL.”

SEC. 27. Section 43 of Republic Act No. 7653 is hereby amended to read as follows:

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“SEC. 43, Computation of Profits and Losses. — Within the first thirty (30) days following
the end of each year, the Bangko Sentral shalt determine its net profits of losses. In the calculation
of net profits, the Bangko Sentral shall make adequate allowance or establish adequate reserves for
bad and doubtful accounts AND OTHER ACCOUNTS AS DETERMINED BY THE MONETARY BOARD ¥O
GE NECESSARY FOR THE PRESERVATION OF THE FINANCIAL SOUNDNESS OF THE BANGKO
SENTRAL.”

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

"SEC, 45. Revaluation Profits and Losses. - Profits or losses arising from any revaluation of
the Bangko Sentral's net assets or liabilities in gold or foreign currencies with respect to the
Philippine peso shall not be included in the computation of the annual profits and losses of the
Bangko Seatral. Any profits or losses arising in this manner shall be offset by any amounts which, as
2 consequence of such revaluations, are owed by the Philippines to any international or regional
intergovernmental financial institution of which the Philippines is a member or are owed by these
institutions to the Philippines. Any remaining profit or loss shall be carried in a special frozen account
which shatl be named “Revaluation of international Reserve” and the net balance of which shell
appear either among the liabilities or among the assets of the Bangko Sentral, depending cn
whether the revaluations have produced net profits or net losses.

The Revaluation of International Reserve account shall be faeither] credited nor debited “ar
[any_purposesother_than_those specifically authorized_in-this-section] FOR THE PERIODIC
REVALUATION AS AUTHORIZED IN THIS SECTION AND TO REFLECT THE CORRESPONDING
ADJUSTMENT RESULTING FROM THE CORRESPONDING REDUCTION IN BANGKO SENTRAL'S NT
ASSETS AND LIABILITIES IN GOLD OR FOREIGN CURRENCIES.”

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

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

The Monetary Board shall endeavor to control any expansion or contraction in mone-3ry
ty.

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

“sec. 63. Action When Abnormal Movements Occur in the [MMenetary Aggregates, Credit oF
J Price tevel- Whenever abnormal movements in [the monetary sggregates, in creditor in] prices

aggregates which is prejudicial to the attainment or maintenance of price stal

endanger the stability of the Philippine economy or important sectors thereof, the Monetary Boe-d
shall:

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{a} take such remedial measures as are appropriate and within the powers granted to the

ions of this Act; and

Monezary Board and the Bangko Sentral under the pro

{b) submit to the President of the Philippines and the Congress, and make public, 2 detailed
report which shall include, as a minimum, a description and analysis of:

1, the causes of the rise oF fall of she monetary aggregates, oF credit-er-ef] prices;

2. the extent to which the changes in {the- monetary sggrepates, ineredit- or] prices have
been reflected in changes in the level of domestic output, employment, wages and
economic activity in general, and the nature and significance of any such changes; and

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

Whenever the [monetary aggregates, or the level of credit; increases oF decreases BY Or2
than-fifteen- percent {15%}, ar-the] cost of living. index increases by more than ten percent {10%}, 17
relation to the level existing at the end of the corresponding month of the preceding year, or eve”
though [eayefthese] THIS quantitative Buid
judgment the circumstances s0 warrant, the Monetary Board shall submit the reports mentioned .n

\e[s-have] HAS not been reached when in “5

this section, and shall state therein whether, in the opinion of the Board, sold changes in tre
[monetarpaggregates, credit-oF] 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
Phifippines and to Congress until it considers that the [mnenetary- credit of] price disturbances have
disappeared or have been adequately controlled.”

SEC. 31. Section 79 of Republic Act No. 7653 is hereby amended to read as follows:

Sec. 79, Other Exchange Profits and Losses.- The banks shall bear the risks of non-
compliance with the terms of the foreign exchange documents and instruments which they buy aad
sell, and shall also bear any other typically commercial or banking risks, including exchange risks "ot
assumed by the Bangko Sentral under the provisions of-the preceding sectian].”

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

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

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

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“SEC. 83. Loans for Liquidity Purposes. — The Bangko Sentral may extend loans and
advances to banking institutions, QUASI-BANKS AND OTHER SYSTEMICALLY CRITICAL BANGKO
SENTRAL-SUPERVISED institutions for a period of nox more than THIRTY (30} [sewea-{7)] days without
any collateral for the purpose of providing liquidity to the banking system in times of nead, SUBJEC™
TO SUCH TERMS AND CONDITIONS AS THE MONETARY BOARD MAY PRESCRIBE TO MINIMIZE
POSSIBLE LOSSES TO THE BANGKO SENTRAL”

SEC. 34. Section 84 of Republic Act No. 7652 is hereby amended to read as follows

“SEC. 84. Emergency Loans and Advances. — In periods of national and/or local emergency

ot of imminent financial panic which directly threaten monetary and (baaking} FINANCIAL stabi
the Monetary Board may, by a vote of at least five (5} of its members, authorize the Bangko Sentra
to grant extraordinary loans or advances to banking, QUASI-GANKING AND OTHER SYSTEMICALLY
CRITICAL BANGKO SENTRAL-SUPERVISED institutions TO BE secured by assets as defined hereunder
Provided, That while such loans or advances are outstanding, the debtor institution shall not, excest
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 grat
‘emergency loans or advances to banking] BANKS, QUASI-BANKS AND OTHER SYSTEMICAL.Y
CRITICAL BANGKO SENTRAL-SUPERVISED institutions, even during normal periods, for the purpese
of assisting a bank in a precarious financial condition or under serious financial pressures brought Gy
unforeseen events, or events which, though foresecable, could not be prevented by the benk
concerned: Provided, however, That the Monetary Board has ascertained that the bank is rot
insolvent and has the assets defined hereunder to secure the advances: Provided, further, Thar 9
concurrent vote of at least five (5) members of the Monetary Board is obtained.

The amount of any emergency loan or advance shall not exceed the sum of fifty percent
(50%) of total deposits and deposit substitutes of the banking institution, OR IN THE CASE OF OTHER
BANGKO SENTRAL-SUPERVISED INSTITUTION, FIFTY PER CENT (50%) OF TOTAL PLACEMENTS OF ~4E
PUBLIC IN SUCH ENTITY, and shall be disbursed in two {2} or more tranches. The amount of the first
tranche shall be limited to twenty-five percent (25%) of the total deposit and deposit substitutes of
the institution and shall be secured by {1} government securities [ke-the-cxtent-of thelr applicasic
loar-values and); (2) ACCEPTABLE GUARANTEES BACKED UP BY THE NATIONAL GOVERNMENT OR TS
SECURITIES; (3) other unencumbered first class collaterals AND (4) PRIVATE COMMERCIAL PAPER TO
‘THE EXTENT OF THEIR APPLICABLE LOAN VALUES which the Monetary Board may approve: Proviaed,
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

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tranche may exceed twenty-five percent (25%) of the [baek’s] INSTITUTION'S total deposit and
deposit substitutes if the same 1s adequately secured by applicable toan 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 hol:
harmiess 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 asse.s
of the [banking] institution certified by its external auditor to be good and available for collater<t
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:

ta} furnish an acceptable undertaking to indemnify and hold harmless from suit 3
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 2¢
adequate to supplement, where necessary, the assets tendered by the [barking] institution <0
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 a5 2
result of foreclosure proceedings, including the exercise of voting rights pertaining to said sharcs:
Provided, however, That should the 8angko 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 oy
public bidding within one (2) year from the date of consolidation of title by the Bangko Sentral

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

SEC. 35, Anew Section 88-A is added to Republic Act No. 7653, as follows:

“SEC. 8B-A. EXEMPTION FROM ATTACHMENT. THE PROVISIONS OF ANY LAW TO THE
CONTRARY NOTWITHSTANDING AND SECTION 31 OF THIS ACT, COLLATERALS ON LOANS AND
ADVANCES GRANTED BY THE BANGKO SENTRAL WHETHER OR NOT THE INTEREST OF THE BANGKO
SENTRAL IS REGISTERED, SHALL NOT BE SUBJECT TO ATTACHMENT, EXECUTION OR ANY OTHER
COURT PROCESS, NOR SHALL THEY BE INCLUDED IN THE PROPERTY OF INSOLVENT PERSONS OR
INSTITUTIONS, UNLESS THE SECURED LOANS AND ADVANCES GRANTED BY THE BANGKO SENT 2AL
TO INSOLVENT PERSONS OR INSTITUTIONS OR A CLOSED INSTITUTION HAVE ALREADY BEEN Fi. LLY
PAID IN WHICH CASE THE EXEMPTIONS UNDER THIS SECTION SHALL NO LONGER APPLY.”

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SEC. 36. A new Section 88-B added to Republic Act No. 7653, as follows:

“SEC. 88-B, DEPUTIZATION OF LEGAL STAFF, ~1N CASE OF AN EXTRAJUDICIAL FORECLOSURE
(OF MORTGAGE, THE BANGKO SENTRAL MAY, DEPUTIZE ANY OF ITS LAWYERS TO CONOUCT THE
PUBLIC AUCTION PURSUANT TO ACT NO. 3135, AS AMENDED. IN CASE OF A JUDICIA-
FORECLOSURE, THE BANGKO SENTRAL MAY WITH THE APPROVAL OF THE COURT, LIKEWIS=
DEPUTIZE ANY OF ITS LAWYERS TO ACT AS SPECIAL SHERIFF IN THE SALE OF THE DEBTOR'S
PROPERTIES AND IN THE ENFORCEMENT OF COURT WRITS AND PROCESSSES RELATED THERETO.
THE SPECIAL SHERIFF OF THE BANGKO SENTRAL SHALL MAKE A REPORT TO THE PROPER COUR”
AFTER ANY ACTION HAS BEEN TAKEN BY HIM, WHICH COURT SHALL TREAT SUCH ACTION AS IF ~
WERE AN ACT OF ITS OWN SHERIFF IN ALL RESPECTS.

“NO RESTRAINING ORDER OR INJUNCTION SHALL BE ISSUED BY THE COURT ENJOINING Th=
BANGKO SENTRAL FROM PROCEEDING WITH THE FORECLOSURE OF THE MORTGAGE UNLESS A
BOND IS POSTED IN FAVOR OF THE BANGKQ SENTRAL IN AN AMOUNT EQUIVALENT TO THE TOTAL
CLAIM OF THE BANGKO SENTRAL, THE RESTRAINING ORDER OR INJUNCTION SHALL BE REFUSED O°,
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 NCT
INCONSISTENT WITH THE PROVISIONS OF THIS SECTION SHALL GOVERN THE ISSUANCE AND
DISSOLUTION OF THE RESTRAINING ORDER OR INJUNCTION CONTEMPLATED IN THIS SECTION.”

SEC. 37. Anew Section 88-C is hereby added to Republic Act No, 7653, as follows:

“SEC. 88-C. RIGHT OF REDEMPTION GF FORECLOSED REAL PROPERTY; RIGHT OF
POSSESSION DURING REDEMPTION PERIOD. - THE MORTGAGOR SHALL HAVE THE RIGHT TO
REDEEM THE PROPERTY WITHIN ONE YEAR FROM THE DATE OF FORECLOSURE SALE OF THE REAL
ESTATE, IN CASE THE MORTGAGOR IS A NATURAL PERSON, AND WITHIN NINETY DAYS BUT NOT
LATER THAN THE DATE OF REGISTRATION OF THE CERTIFICATE OF FORECLOSURE SALE, IN CASE THE
MORTGAGOR IS A JURIDICAL PERSON. REDEMPTION SHALL BE EFFECTED BY PAYING THE PRINCIPAL,
INTERESTS, CHARGES, COMMISSIONS AND ALL CLAIMS OF WHATEVER NATURE OF THE BANGKO
SENTRAL OUTSTANDING AND DUE AS OF THE DATE OF FORECLOSURE SALE, INCLUDING ALL COSTS
AND OTHER EXPENSES INCURRED BY REASON OF THE FORECLOSURE SALE AND CUSTODY OF “4E
PROPERTY.

THE BANGKO SENTRAL, AS PURCHASER IN THE FORECLOSURE SALE AND WITHOUT NEED OF
POSTING A BOND, MAY TAKE POSSESSION OF THE FORECLCSED PROPERTY DURING ~4E

29


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REDEMPTION PERIOD. THE BANGKO SENTRAL SHALL BE ENTITLED TO THE FRUITS OF THE
PROPERTY, THE SAME TO BE APPLIED AGAINST THE REDEMPTION PRICE. “

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

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

SEC. 39. Anew Section 89-A is hereby added to Republic Act No. 7653, as follows:

“SEC. 89-A. FINANCIAL FACILITIES FOR ISLAMIC BANKS. THE BANGKO SENTRAL MAY,
‘TAKING INTO CONSIDERATION THE PECULIAR CHARACTERISTICS OF ISLAMIC BANKING, FORMULATE
RULES AND REGULATIONS FOR THE EXTENSION OF REDISCOUNTING OR OTHER SIMILAR FACILITIFS
‘TO SSLAMIC BANKS.”

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

“SEC. 89-B, LOANS TO THE PHILIPPINE DEPOSIT INSURANCE CORPORATION. — THE BANG<O
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(0) OF
REPUBLIC ACT NO. 3591, AS AMENDED, TO AN INSURED BANK IN DANGER OF CLOSING IN ORDER “O
PREVENT SUCH CLOSING. THE INTEREST RATE SHALL BE FIXED BY THE MONETARY BOARD BUT SUCH
RATE SHALL NOT BE LOWER THAN THE EFFECTIVE COST OF FUNDS OF THE BANGKO SENTRAL. THE
MONETARY BOARD MAY PRESCRIBE ADDITIONAL TERMS AND CONDITIONS ON THE GRANT OF SUCH
LOAN.”

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

“SEC. 92. ISSUE AND NEGOTIATION OF BANGKO SENTRAL OBLIGATIONS. — in order to

provide the Bangko Sentral with effective instruments for open market operations, the Banz
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 frealy

negotiable evidences of indebtedness of the Bangko Sentral. j-Previdedthat_ksuanceof sch

53
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,


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The Monetary Board shall determine the interest rates, maturities and other characteristics
of said ebligations of the Bangko Sentral, and may, if It deems it advisable, denominate tte
‘obligations in gold o 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 the'r
maturity, either through purchases in the open market or through redemptions at par and by lot f
the Bangko Sentral has reserved the right to make such redemptions. The evidences of indebtedness
acquired or redeemed by the Bangko Sentral shall not be included among its assets, and shall be
immediately retired and cancelled.

THE BANGKO SENTRAL IN PURSUIT OF ITS OPEN MARKET OPERATIONS, MAY ALSO ENGAGE
IN THE PURCHASE AND RESALE OF READILY MARKETABLE COMMERCIAL PAPERS ISSUED =

FINANCIAL INSTITUTIONS DULY ACCREDITED UNDER SUCH RULES AND REGULATIONS AS TrE
MONETARY BOARD MAY PRESCRIBE TO PROVIDE LIQUIDITY TO THE FINANCIAL MARKETS FRO
TIME TO TIME, SUCH PURCHASE AND RESALE MAY BE SUBJECT TO REPURCHASE OR REVERSE
REPURCHASE AGREEMENTS AS THE BANGKO SENTRAL SHALL STIPULATE AND SUCH INSTRUMEN™S
ARE PART OF THE OPEN MARKET OPERATIONS OF THE BANGKO SENTRAL.”

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

“SEC. 95. Definition of Deposit Substitutes. — The term “deposit substitutes” is defined as an
alternative form of obtaining funds from the public, other than deposits, through the issuance,
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, Sut
need not be limited to, bankers acceptances, promissory notes, participations, certificates of
‘assignment and similar instruments with recourse, [and—repurchase—agreements:| PROVE
HOWEVER, THAT REPURCHASE AGREEMENTS, INCLUDING REVERSE PURCHASE AGREEMENTS
ENTERED INTO BY THE BANGKO SENTRAL SHALL NOT BE CONSIDERED DEPOSIT SUBSTITUTES.

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

The Monetary Board shall determine what specific instruments shalt be considerec as
deposit substitutes for the purposes of Section 94 of this Act[:]. THE MONETARY BOARD MAY A_SO
EXCLUDE FUNDS OBTAINED OR BORROWED FROM CERTAIN INSTITUTIONAL LENDERS FROM ~+IS

SECTION. Provided, however, That deposit substitutes of commercial, industrial and other ran-

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financial companies for the limited purpose of financing their own needs or the needs of their agen-s
‘or deaters shall not be covered by the provisions of Section 94 of this Act.”

SEC. 43. Section 104 of Republic Act No. 7653 is hereby amended to read as follows:

"See. 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 accard with the needs of the
Philippine economy and that bank credit is not granted for speculative purposes prejudicial to te
national interests. Regulations on bank operations shall be applied to all banks of the same categery
AS MAY BE DEFINED BY THE MONETARY BOARD uniformly and without discrimination.”

SEC. 44. Section 108 of Republic Act No. 7653 is hereby amended to read as follows:

“SEC. 108. Minimum Capita! Ratios. - The Monetary Board may prescribe minimum RISC
BASED CAPITAL ADEQUACY ratios BASED ON INTERNATIONALLY ACCEPTED STANDARDS
[winch she capital and surplus of the banks be he-volume of thelr-a: eke
categoriesthereof,] and may alter said ratios whenever it deems necessary. IN THE EXERC SE
OF ITS AUTHORITY UNDER THIS SECTION, THE MONETARY BOARD MAY PRESCRIBE A HIGHER

MINIMUM CAPITAL ADEQUACY RATIO FOR INDIVIDUAL FINANCIAL INSTITUTIONS WHICH A2E
EXPOSED TO MORE THAN NORMAL RISKS.”

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

"SEC. 117, issue of Government Obligations. — The issue of securities representing
obligations of the Government, its political subdivisions or instrumentalities, may be made through
the Bangko Sentral, which may act as agent of, and for the account of, the Government or sts
respective subdivisions or instrumentality, as the case may be: Provided, however, That the Bansko
Sentral shall not guarantee the placement of said securities, and shall not subscribe to their issue
except to replace its maturing holdings of securities with the same type as the maturing securities.

THE PRIMARY SALE OF GOVERNMENT SECURITIES MAY ALSO BE PUBLICLY UNDERWRIT™

BY, OR PRIVATELY PLACED IN, FINANCIAL INSTITUTIONS ACCREDITED BY THE DEPARTMENT OF
FINANCE OF THE NATIONAL GOVERNMENT.

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


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THE BANGKO SENTRAL NG PILIPINAS SHALL UNDERTAKE THE REGULATION OF TRADING OF
GOVERNMENT SECURITIES AMONG FINANCIAL INSTITUTIONS. iN ORDER TO INSURE THAT SAI-
ACCREDITED FINANCIAL INSTITUTIONS SHALL OPERATE UNDER FAIR AND UNIFORM TRADING RULES.
THEY MAY , AS PART OF THE GUIDELINES OF ACCREDITATION, BE REQUIRED TO JOIN AX
ASSOCIATION OF ACCREDITED FINANCIAL INSTITUTIONS TO BE GOVERNED BY INTERNAL RULES C>
CONDUCT APPROVED BY THE SECRETARY OF FINANCE, THE LATTER BEING THE OFFICIA-
REPRESENTATIVE OF THE REPUBLIC OF THE PHILIPPINES, THE PRIMARY OBLIGOR IN THE !SSUANC=
OF SAID GOVERNMENT SECURITIES; PROVIDED, HOWEVER, THAT THE DIRECT PARTICIPATION OF
ACCREDITED FINANCIAL INSTITUTIONS IN THE OPEN MARKET OPERATIONS OF THE BANGKO
SENTRAL AS PROVIDED IN SECTION 90 AND 91 HEREIN SHALL BE SUBJECT TO SUCH RULES AND
REGULATIONS AS MAY BE PRESCRIBED BY THE MONETARY BOARD, IN CONSULTATION WITH THE
SECRETARY OF FINANCE.”

SEC. 46. Section 119 of Republic Act No. 7653 is hereby amended to read as follows:

“SEC 118 . Methods of Plocing Government Securities. - The Bangko Sentral [ray] SHALL
place the securities to which the preceding section refers through direct sale to financial institutions
and the public.

The Bangko Sentral shall not be a member of any stack exchange or syndicate, but may

intervene therein for the sole purpose of regulating their operations in the placing of government

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

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

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

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

"SEC. 125. Tox Exemptions. — THE PROVISIONS OF ANY GENERAL OR SPECIAL LAW TO ~4E
CONTRARY NOTWITHSTANDING, FINANCIAL TRANSACTIONS OF the Bangko Sentral shall be exernpt
[fora pedied-of-fve15} years fromthe approvalobthis Act} from all national, AND LOCAL {previne-al,
spunicipal and city] taxes, fees, charges and assessments.

The exemption authorized in the preceding paragraph of this Section shail apply te all

property of the Sangke 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 conc sct

of the business of the Bangko Sentral: Provided, however, That said exemptions shall apply only to


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

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

“SEC. 126. Exemption From Customs Duties. — The provision of any general or speci
the contrary notwithstanding, the importation and exportation by the Bangko Sentral of notes and
coins, and of gold and other metals to be used for purposes authorized under this Act, and toe
importation of all [equipment] SUPPLIES needed [for] BY THE BANGKO SENTRAL FOR bank nete
production, minting of coins, metal refining and other security printing operations AND
TRANSPORT OF CURRENCY shall be fully exempt from all customs duties and consular fees and from
all other taxes, assessments and charges related to such importation or exportation.

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

“SEC. 128. PROHIBITIONS. = The Bangko Sentral shall not require shares of any kind or
accept them as collateral, and shall not participate in the ownership or management of oy
enterprise, either directly or indirectly [.}: PROVIDED, THAT THIS PROHIBITION SHALL NOT APP-¥
WHENEVER SUCH OWNERSHIP AND/OR MANAGEMENT IS EXPRESSLY AUTHORIZED BY LAW, OR THE
MONETARY BOARD BY A VOTE OF AT LEAST FIVE (5) OF ITS MEMBERS DEEMS AN ACQUISITION OR
INVESTMENT TO SE NECESSARY TO THE PERFORMANCE BY BANGKO SENTRAL OF ITS MANDATE:

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

SEC, 51. Sections 129 and 130 of Republic Act No. 7653 are hereby repealed.

SEC. 52. This Act shall take effect upon approval.

07272981

38


FACT SHEET

a 5394

Hause Bill No.
(Substitute bill to House Bills No, 61, 458, 2161)

REVISIONS TO THE BANGKO SENTRAL CHARTER
Introduced by: REPRESENTATIVES VILLAFUERTE, ANGARA AND NOGRALES

Committee Referral: COMMITTEE ON BANKS & FINANCIAL INTERMEDIARIES
Chairperson: REPRESENTATIVE SERGIO A. , APOSTOL

OBJECTIVES

1. To enhance the administration of the monetary, credit and banking system of :7e
Republic.

2, To strengthen supervisory powers of the Bangko Sentral.

3. To make Bangko Sentral a more responsive organization.

KEY PROVISIONS

1. Providing for the formula and mechanism for the full payment of National
Government's unpaid subscription to the BSP, [8 2 of RA 7653]

2, Inclusion of financial stability as an express mandate of the BSP. [§ 3]

3. Expansion of the supervisory authority of the BSP to cover credit card companies, e-
money issuers, remittance agents, and institutions performing similar functions. [5 3]

4. Removal of the requirement for the confirmation of the appointment of the
Governor. [8 61

5. Denial of the right of the alternate to the Governor to vote in Monetary Beard
meetings. (§ 6]

6. Providing a 3-year (up from 2) disqualification from end of tenure for employment in
supervised institutions, Applicable to Monetary Board members, Governor and
Deputy Governors. [8 9]

7. Requiring prior notice and opportunity to be heard before of issuance of regutat’ons
that affect third parties or impose a sanction. [§ 15]

8. Providing the instances of bad faith, malice, gross negligence and gross "misconduct
as exceptions to indemnification benefits. 1§ 15]

9. Requiring the distribution of the agenda 3 days before Monetary Board hearings [6
17

10. Providing that the power or aut:writy vested by fa in the Monetary Board can ot
be delegated to the Gavernor. [§ 17]


11, Removing the authority of the Governor ta render opinions on matters pertaining to
banking laws, (§ 17]

12, Increasing the number of votes required in emergencies. [§ 19]

13. Increasing the number of deputy governors and defining their functions. [§ 21)

14. Removing the authority of the Governor to designate an officer-in-charge from ‘3
Deputy Governors. [§ 24]

15.Granting the BSP the authority to obtain statistical data from any person or
authority. [§ 23]

16. Expanding the examination authority to include other financial institutions under
BSP supervision. {§ 25]

17, Requiring prior BSP approval on transfers of substantial number shares in banks and
supervised institutions. [§ 25]

18. Redefining “related interest” in banks by setting a minimum threshold of 40% of
voting stock. [§ 26]

19, Granting supervised institutions the opportunity to rebut/refute in writing any or al!
of the findings of the BSP examiners in an exit conference before the report of
examination is finalized, [§ 28]

20, Requiring prior coordination with the Bangko Sentral before the cancellation or
revocation of a government ficense necessary for the operation of a supervised
entity. [§ 28-A]

21, Providing for additional grounds of receivership such as unilateral closure or
suspension of payment of deposit iiabilities. {8 30]

22. Granting the Monetary Board the authority to designate any qualified person, in
addition to the PDIC, as receiver of closed banks. [5 30]

23. Providing for prompt corrective action on banks that have insufficient assets to meet
its liabilities. [§ 30-A}

24, Granting the Monetary Board the authority to form bridge banks to manage the
acquired assets of the receiver of closed banks. [§ 30-6]

25. Extending the imposition of administrative sanctions to other BSP-supervised entit’es
and subsidiaries and affiliates af banks and quasi-banks. (§ 37]

26. Limiting the issuance of provisional remedies against the BSP only from the Court of
Appeals or Supreme Court. [§ 38-Al

27. Increasing the maximum term of loans for liquidity purposes from 7 to 30 days. [§
83]

28. Allowing the grant of emergency loans to quasi-banks and other systemically crit’ca,
supervised entities, [§ 84]

29. Exernpting from attachment al! coilaterals on loans granted by BSP. [§ 88-Al


30. Providing for the deputization of of ASP legal staff in case of extrajudicial foreciosu-2
of mortgage. [§ 88-8]

31. Providing for the rules on the right of redemption of foreclosed real property. [§ 85-
qd

32. Classifying BSP unsecured claims as preferred credit. (§ 88-D]

33. Providing financial facilities for Islamic Banks, subject to collateral requirements. [§
89-A}

34. Inclusion of the authority of the BSP granted under the PDIC Charter to grant ioans
to the PDIC. [§ 89-8]

35, Removal of the requirement of extraordinary movement in price levels before t-e
BSP may engage in open market operations. {§ 92]

36. Inclusion of the authority of the Monetary Board to prescribe risk-based capical
adequacy ratio. [6 108]

37. Granting the BSP the authority to regulate trading of government securities among,
financial institutions. {§ 117]

38. Exempting financial transactions of the Bangko Sentral from nationat or local taxes.
[6125]

39. Repeal of the provisions that provide for phase-out of fiscal agency functions ad
the phase-out of regulatory functions over non-bank financial institutions. § 12° &
130]

RELATED LAWS

1. R.A. No. 8791 “The General Banking Law of 2000"
2. RA. No. 7906 “The Thrift Banks Act of 1995"
3. R.A. No. 7353 “The Rural Banks Act of 1992"

01 September 2°11


Committee on Banks and Financial Intermediaries
House of Representatives

MINUTES OF THE 15" FEBRUARY 2011 MEETING
Conference Room 1, Ramon V. Mitra Jr. Bide.
Batasan Pambansa Complex, Quezon City

Honorable Sergio Apostol, Chairman, presiding.
Present:

Honorable Roilo Golez
Honorable Rufus Rodriguez
Honorable Luis R. Villafuerte
Honorable Daryl Grace Abayon
Honorable Jed A. Lapus
Honorable Giorgidi B. Aggabao
Honorable Ma, Amelita Villarosa
Honorable Isidro Uico
Honorable Philip Pichay
Honorable Erica Aumentado
Honorable Carlos M. Padilla
Honorable, Acmad Tomawis

Resource Persons:

Mr. Simon Javier Calasanz ~ President, Credit Card Association of the Philippines (CCAP)
Miss Elizabeth Legarda — Executive Director, CCAP

Atty Romeo Mendoza ~ SVP and General Counsel, Philippine Depesit Insurance Corporation
Atty Nilo Lucinaria ~ VP, PDIC

Ms. Suzanne Felix ~ Executive Director, Chamber of Thrift Banks

Mr, Nestor Espenilla - Deputy Governor, Bangko Sentral ng Pilipinas

Mr. Diwa Guinigundo — Deputy Governor, BSP



Catt to Order

‘The meeting was called to order at 1:58 pm. On motion, the calling of the roll wes
dispensed with.

On Bills and Resoultions on Credit Cards

Representive Villafuerte raised queries on the matter of interest rates charged by
credit card companies, on what the Bangko Sentral intended to do in the light of tte
Macalinao case, and on the institutional arrangements in the credit card industry.

Representative Rodriguez sought clarification from the Credit Card Association of the
Phitippines on the following matters: over-the-imit fees, opt-in and opt-out rights of consurners,
cycle billings, limited universal default and on the need to impose 2 cap on interest rates on accourt
of the Macalinzo ruling.

Representative Aggabao manifested that he filed HB No. 330 to reinstate the Anti-Usery
law. He said the bill is a comprehensive review of the interest on all loans and forbearances uf
money, which includes credit card transactions.

Representative Abayon noted that the Bangko Sentral has failed to issue the appropriz:e
circular regarding the reduction of interests and penalty rates in line with the Supreme Court rutirg
on the Macalinao case

Representative Aumentado said that credit card companies in the Philippines charge 3.75%
interest per month which is currently among the highest ir the world. To safeguard the public fro
abuses and impositions, Representative Aumentado proposed 2 ceiling on the interest rates,
penalties, surcharges, and other finance fees charged by banks and credit card companies on crecit
card transactions.

Representative Golez underscored the importance of credit cards in €-commerce.

Deputy Governor Espenilia said that the Bangko Sentral indeed suspended the interest rate
ceilings allowed under the Usury Law and adopted a regime whereby interest rates are allowed to be
set by market. This policy , he said, resulted in the expansion of credit

Mr. Espenilla emphasized that the Macalinao case binds only the parties to the case end
does not affect interest rates on all other credit card transcactions. He said that the BSP .s
continue to adhere to a market-oriented interest rate regime

The Chairman requested the Credit Card Association of the Philippines its position paper

Consideration of HB No. 62, 458 and 2161 (BSP charter amendments)

Congressman Villafuerte manifested that HB No. 61 was the product of extens've
committee discussions in the past Congress which involved all the stakeholders. He ssid
that Congressman Angara and Congressman Nograies, authors of HB No. 458 and HB 12762
respectively have now concurred with the provisions of HB No. 61


Deputy Governor Espenilla raised several issues for the consideration of the
committee.

First is section 25 which actually expands the annual examination cycle to all the other
tinancial institutions under ASP supervision. Mr. Espenilla said that it has the effect of further
straining the resources of the BSP in conducting supervision.

Second is the proposal requiring prior approval of acquisition and transfer of shares whicl
is important in protecting the integrity of the financial system.

‘Third is the proposal pertaining to the ability of the ASP to supervise transactions of oth
entities that have a relationship with a bank, particularly upward celationships, Mr. Espenilla said
that the lack of comprehensive coverage has created blind spots in the conduct of supervision.

Fourth is the proposal ta grant the BSP to look into deposit accounts in the exercise of its
supervision function in order to detect possible fraud or unsafe and unsound banking practice being
conducted in a bank, Mr. Espenilla pointed out that experience shows situations wherein capital is
artificially created out of the proceeds of a fictitious loan, passed through a deposit account, and
then round tripped so that they would appear to be an infusion of capital when in fact there is 9
infusion of capital.

Fifth is the limitation on the issuance on certain provisional remedies against actions of te
SP which has hampered BSP's actions,

Sixth is the grant of flexibility to reorganize itself in a manner appropriate under the dynamic
and changing circumstances of the financial system.

Seventh is the proposal of BSP for full tax exemption

Representative Villafuerte opposed the proposal requiring the prior approval of shares of
stocks, He, however. agreed with the proposal of Congressman Golez to determine who ste
disqualified from owning shares of stocks and to require representations and warranties from the
buyers that the sale would be considered null and void if the buyers are found to be disquakfied
from owning shares. He Villafuerte agreed for the relaxation of the public hearing requirement for
issuances that affect third parties. He said that issuances that affect administrative matters sod
those that do not carry disciplinary or criminal sanctions may not be subject of prior public hearing,

Approval of the Bill

Congressman Pichay moved for the consolidation and final approval of HB No. 61, 458 and
2161, as amended by the committee, The motion was approved by the body.

Adjournment

‘The meeting was adjourned at 12:30 p.m

Certified correct:

RAMON R. FEDERIZON
Committee Secretary