HULS. OF RB ORCSENL TIVES:
Ls ida Veo
SEP 2016
Republic of the Philippines Dare:
HOUSE OF REPRESENTATIVES = te rim
Quezon City, Metro Manil ey a

SEVENTEENTH CONGRES: cm
First Regular Session | (3

345

House Bill No. 2 **

RATION UNIT

NO ONAT ¥ SROVICE

Introduced by Representative Henry S. Oaminal

EXPLANATORY NOTE

Since the enactment of Republic Act (R.A.) No. 7653 or The New Central Bank Act that created the
Bangko Sentral ng Pilipinas (BSP) in 1993, many developments in both the banking and economic sectors
have changed the milieu upon which the Bank has been founded.

The onset of globalization and advancements in technology, as well as international best
practices, as well as the exposition of structural weaknesses that may have aided instances of unsafe and
unsound practices, poor governance, and fraud are present challenges that the BSP faces. While the BSP
has responded well to these challenges in the past, this does not eliminate the need for the BSP to be
empowered not only to respond to present challenges, but also in anticipation of the future.

The amendments proposed by this bill seek to enhance the tools of the BSP in performing its
mandates, supplement the mechanisms in protecting savings of depositors, and in ensuring the smooth
flow of transactions in the financial system, as well as to enhance the corporate viability of the BSP.

The amendments seek to improve the administration of the monetary, credit and banking system
of the country by affirming the authority of the BSP to administer the payments and settlements systems.
This will promote the safe, reliable and final settlement of financial transactions thereby contributing to
good economic order.

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

The BSP should also be able to function as a more responsive organization. The bill also seeks to
grant the same legal protection given to the Philippine Deposit Insurance Corporation under Republic Act
No. 9576 to officials and personnel of the BSP. It should be able to access from any person or entity in the
Philippines, similar to what was enjoyed before by the defunct Central Bank of the Philippines, for
completion of information and efficiency in the formulation of monetary policy. As an institution
performing governmental functions, the BSP should also be exempted from taxation.


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

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

SEVENTEENTH CONGRESS
First Regular Session

3456

House Bill No.

Introduced by Representative Henry S. Oaminal

AN ACT
AMENDING REPUBLIC ACT NO. 7653, ENTITLED “THE NEW CENTRAL BANK ACT’

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

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

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

“The capital of the Bangko Sentral shall be TWO HUNDRED [Fifty] billion pesos
(P{50,1200,000,000,000), to be fully subscribed by the Government of the Republic,
hereafter referred to as the Government. [Fen-bition-pesas-{P:20,000,000,000}-0F
which] THE UNPAID SUBSCRIPTION shall be fully paid for by the Government IN CASH
AND/OR GOVERNMENT SECURITIES UPON EFFECTIVITY OF THIS ACT. THE
CAPITALIZATION SHALL BE SUBJECT TO REVIEW EVERY FIVE (5) YEARS UPON JOINT
RECOMMENDATION BY THE SECRETARY OF FINANCE, THE SECRETARY OF BUDGET
AND MANAGEMENT AND THE MONETARY BOARD. THE PAYMENT OF ANY UNPAID
‘SUBSCRIPTION AND/OR INCREASE IN CAPITALIZATION SHALL BE APPROPRIATED IN
‘THE ANNUAL GENERAL APPROPRIATIONS ACT [upon-the-effectivity-of this Actand

he-bak be paid for within. of. -years-from-the-effectivity of this
he id formm-aeth hrough-the- yol-Finance
the ey of Budget and M thereafter d



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

“SEC. 3. Responsibility and Primary Objective. - The Bangko Sentral shall
provide policy directions in the areas of money, banking, and credit. It shall have
supervision over the operations of banks and exercise such regulatory powers as
provided in this Act and other pertinent laws over the operations of finance
companies and non-bank financial institutions performing quasi-banking functions,
[hereafter referred-to-as-quasi-banks,} CREDIT CARD COMPANIES, MONEY CHANGING
BUSINESSES, PAWNSHOPS, E-MONEY ISSUERS, MONEY FORWARDING BUSINESSES,
PAYMENT AND SETTLEMENT SYSTEM OPERATORS and OTHER institutions performing
similar functions, AS MAY BE DETERMINED BY THE MONETARY BOARD, CONSISTENT
WITH THE MANDATE OF THE BANGKO SENTRAL TO PROVIDE POLICY DIRECTION IN
‘THE AREAS OF MONEY, BANKING AND CREDIT.

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

‘THE BANGKO SENTRAL SHALL OVERSEE THE PAYMENT AND SETTLEMENT
SYSTEMS IN THE PHILIPPINES IN ACCORDANCE WITH SOUND AND PRUDENT
PRACTICES. FOR PURPOSES OF THIS ACT, A PAYMENT AND SETTLEMENT SYSTEM
SHALL REFER TO ANY SYSTEM THAT CONSISTS OF A SET OF INSTRUMENTS AND
ARRANGEMENTS THAT ENSURES THE EFFICIENT CIRCULATION OF MONEY AND SAFE
‘TRANSFER OF FINANCIAL VALUES.”

SEC. 3. Section 11 of the same Act is hereby amended to read as follows:

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

“The presence of four (4) members shall constitute a quorum: Provided, That
in all cases the Governor or his duly designated alternate shall be among the four (4).

“Unless otherwise provided in this Act, all decisions of the Monetary Board
shall require the concurrence of at least four (4) members.

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

“THE MEETINGS OF THE MONETARY BOARD MAY BE CONDUCTED THROUGH
MODERN TECHNOLOGIES + SUCH AS_-—TELECONFERENCING = AND
\VIDEOCONFERENCING.”


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SEC. 4. Section 16 of the same Act is hereby amended to read as follows:
“SEC. 16. Responsibility. - THE GENERAL RULE AND THE EXCEPTION
‘THEREFROM ON THE LIABILITY OF PUBLIC OFFICERS AS PROVIDED IN SECTIONS 38
AND 39 OF CHAPTER 9, BOOK 1 OF THE REVISED ADMINISTRATIVE CODE OF 1987
SHALL APPLY TO [MiJmembers of the Monetary Board frofficials-examiners-and
employees] AND OTHER PERSONNEL of the Bangko Sentral [whe-wilfully islate-this

‘Act or-who-are-guilty-of negligence, abuse: mall ‘
failto-ex tracrdinary-diige " pis duties shall-beheld
liableforanylossorinjury —_siffered-by the Bangko Sentralorother banking

1:-of euch vielationneglig ro i" isfes
or failure-to-exercise-extraordinany diligence)

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

“THE BANGKO SENTRAL, ITS OFFICIALS AND EMPLOYEES SHALL BE
INDEMNIFIED FOR ANY AND ALL LIABILITIES, LOSSES,CLAIMS, DEMANDS, DAMAGES,
DEFICIENCIES, COSTS AND EXPENSES OF WHATSOEVER KIND AND NATURE THAT MAY
[ARISE IN CONNECTION WITH THE PERFORMANCE OF THEIR DUTIES DONE IN GOOD
FAITH AND CONSISTENT WITH THE POWERS AND FUNCTIONS AUTHORIZED.

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

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

“"n the absence of the Governor, a Deputy Governor designated by the
Governor shall act as chief executive of the Bangko Sentral and shall exercise the
powers and perform the duties of the Governor. Whenever the Governor is unable to

attend meetings of government boards or councils in which [he] THE GOVERNOR is


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an ex officio member pursuant to provisions of special laws, a Deputy Governor as,
may be designated by the Governor shall be vested with authority to participate and
‘exercise the right to vote in such meetings.”
SEC.6. Section 23 of the same Act is hereby amended to read as follows:
"SEC. 23, Authority to Obtain Data and Information, — The Bangko Sentral

shall have the authority to REQUIRE [request] from ANY PERSON OR ENTITY,
INCLUDING government offices and instrumentalities, or government-owned or ~
controlled corporations, any data OR INFORMATION [whichit-mays] FOR STATISTICAL
‘AND POLICY DEVELOPMENT PURPOSES require-for IN RELATION TO the proper
discharge of its functions and responsibilities: PROVIDED, THAT DISAGGREGATED
DATA OR INFORMATION GATHERED ARE SUBJECT TO PREVAILING CONFIDENTIALITY
LAWS. TheBengke-s hrough the-Gow his absence o-daly authorized
‘representative shalt have-the power-to-issue-a-subpoena-for-the production of the
booke-and-recorde-for-the-aferesid _Those-who-refuce-the-suby
without justifiable hovel ipply-the-bankewith-d wested-or}
required,-shall-be-subject-to-punishment-for-contemptin-accordance-with-the

es

“Data OR INFORMATION on individuals AND fiers ENTITIES, other than
banks, gathered by the [Bepartmentot Economic Research-and-other-departments
‘or-units-of the] Bangko Sentral shall not be made available to any person or entity
outside of the Bangko Sentral whether public or private, exceptunderorder-of-the
courtor-under-such-conditions-as-snay-be-prescribed-by-the-Menetary-Board:
INDIVIDUAL OR FIRM-LEVEL DATA OR INFORMATION FURNISHED BY A RESPONDENT
TO A STATISTICAL INQUIRY OR SURVEY SHALL BE CONSIDERED PRIVILEGED
COMMUNICATION AND SHALL BE INADMISSIBLE AS EVIDENCE IN ANY COURT
PROCEEDINGS. DATA OR INFORMATION GATHERED SHALL BE SUBJECT TO
PREVAILING DEPOSIT SECRECY LAWS. Prowided:A-However, That-the collective data

OR INFORMATION on fires ENTITIES may be released to interested persons or entities
IN WHICH NO REFERENCE TO AN INDIVIDUAL, CORPORATION, ASSOCIATION,
PARTNERSHIP, INSTITUTION OR BUSINESS ENTERPRISE SHALL APPEAR: Provided,
[fipally,] That in the case of data OR INFORMATION on banks, the provisions of Section
27 of this Act shall apply. CONSISTENT WITH THE PREVAILING PRACTICE IN THE
PHILIPPINE STATISTICAL SYSTEM, THOSE WHO REFUSE TO SUPPLY THE BANGKO
SENTRAL WITH THE REQUIRED DATA OR INFORMATION SHALL BE SUBJECT TO A
PENALTY OF ONE (1) YEAR IMPRISONMENT AND A FINE OF ONE HUNDRED


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‘THOUSAND PESOS (P100,000.00). IN CASES WHERE THE VIOLATION IS DONE BY A
CORPORATION, THE ABOVE PENALTY SHALL BE IMPOSED AGAINST THE RESPONSIBLE
OFFICER, DIRECTOR, MANAGER AND/OR AGENT OF SAID CORPORATION. IN
ADDITION, SUCH ERRING CORPORATION OR ANY OTHER JURIDICAL ENTITY,
DEPENDING ON THE CATEGORY OF THE ENTERPRISE OR BUSINESS CONCERNED
WHETHER SMALL, MEDIUM OR LARGE, SHALL BE IMPOSED A FINE RANGING FROM
ONE HUNDRED THOUSAND PESOS (P'100,000.00) TO FIVE HUNDRED THOUSAND
PESOS (PS00,000.00).

“ANY PERSON, INCLUDING PARTIES WITHIN THE MONETARY BOARD AND THE
BANGKO SENTRAL, WHO BREACH THE CONFIDENTIALITY OF DATA OR INFORMATION,
WHETHER BY IMPROPER BEHAVIOR, BEHAVIOR WITH MALICIOUS INTENT, OR USE OF
CONFIDENTIAL INFORMATION FOR PROFIT ARE CONSIDERED GUILTY OF OFFENSE
AND SHALL BE LIABLE TO A FINE OF NOT LESS THAN FIVE THOUSAND PESOS
(P5,000,00) NOR MORE THAN TEN THOUSAND PESOS (P10,000.00) OR
IMPRISONMENT OF NOT LESS THAN THREE (3) MONTHS NOR MORE THAN ONE (1)
YEAR, OR BOTH, SUBJECT TO THE DEGREE OF BREACH OF INFORMATION, AT THE
DISCRETION OF THE COURT.”

SEC. 7, Section 25 of the same Act is hereby amended to read as follows:
“SEC, 25.Supervision and Examination.—The Bangko Sentral shall have
supervision over, and conduct periodic or special examinations of, banking
institutions and quasi-banks, including their subsidiaries and affiliates [engaged-in
allied-activities).

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

For purposes of this section, a subsidiary means a corporation more than fifty
percent (50%) of the voting stock of which is owned by a bank or quasi-bank and an
affiliate means a corporation the voting stock of which, to the extent of fifty percent
{50%) or less, is owned by a bank or quasi-bank or which is related or linked to such
[institution] ENTITY or intermediary through common stockholders or such other
factors as may be determined by the Monetary Board,

The department heads and the examiners of the supervising and/or
‘examining departments are hereby authorized to administer oaths to any director,
officer, or employee of any [institution] ENTITY under their respective supervision or
subject to their examination, [and] to compel the presentation of all books,


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documents, papers or records necessary in their judgment to ascertain the facts
relative to the true condition of any [institution] ENTITY as well as the books and
records of persons and entities relative to or in connection with the operations,
activities or transactions of the [iastitution] ENTITY under examination, AND TO
INQUIRE INTO BANK DEPOSITS AND INVESTMENT ACCOUNTS IN THE COURSE OF AN
EXAMINATION IN ORDER TO ASCERTAIN COMPLIANCE WITH LAWS AND BANKING
REGULATIONS [548 he provision of existing tawe feguardl
the secrecy or confidentiality oF bank-depr 7

, idicalyi d-byth 1
No restraining order or injunction shall be issued by the court enjoining the
Bangko Sentral from examining any [institution] ENTITY subject of supervision or
examination by the Bangko Sentral, unless there is convincing proof that the action of
the Bangko Sentral is plainly arbitrary and made in bad faith and the petitioner or
plaintiff files with the clerk or judge of the court in which the action is pending a bond
executed in favor of the Bangko Sentral, in an amount to be fixed by the court. The
provisions of Rule 58 of the New Rules of Court insofar as they are applicable and not
inconsistent with the provisions of this section shall govern the issuance and
dissolution of the restraining order or injunction contemplated in this section.
SEC. 8, A new Section 25-A is hereby inserted in the same Act to read as follows:
“SEC. 25-8. TRANSFER OF SHARES - TRANSFERS OR ACQUISITIONS, OR A
SERIES THEREOF, OF AT LEAST TEN PERCENT (10%) OF VOTING RIGHTS IN BANKS OR
QUASI-BANKS SHALL BE REPORTED TO THE BANGKO SENTRAL WITHIN SUCH PERIOD
'AS MAY BE PRESCRIBED BY THE MONETARY BOARD. PRIOR TO SUCH NOTIFICATION,
NO SUCH TRANSFER OR ACQUISITION SHALL HAVE LEGAL EFFECT NOR SHALL THE
SAME BE RECOGNIZED IN THE BOOKS OF THE ENTITY OR BY ANY GOVERNMENT
AGENCY, AND THE TRANSFEROR - STOCKHOLDERS SHALL REMAIN ACCOUNTABLE
AND RESPONSIBLE THEREFOR. TRANSFER OF ACTUAL CONTROL OR MANAGEMENT
OF THE ENTITY TO THE NEW STOCKHOLDERS OR THEIR REPRESENTATIVES PRIOR TO
NOTIFICATION SHALL MAKE THE TRANSFEROR, THE TRANSFEREE AND ANY PERSON
RESPONSIBLE THEREFOR, LIABLE UNDER SECTIONS 36 AND 37 OF THIS ACT.
NOTWITHSTANDING ANY PROVISION OF LAW TO THE CONTRARY, THE BANGKO
SENTRAL MAY SHARE WITH THE PHILIPPINE DEPOSIT INSURANCE CORPORATION ANY
INFORMATION THAT THE BANGKO SENTRAL MAY OBTAIN PERTAINING TO TRANSFER
‘OR ACQUISITION OF SHARES OR SERIES OF TRANSFERS OR ACQUISITION OF SHARES
IN BANKS AND QUASI-BANKS.”


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

“SEC. 28. Examination and Fees. — The supervising and examining
department head, personally or by deputy, shall examine the [books] OPERATIONS of
every bank[ing] AND QUASI-BANK, INCLUDING THEIR SUBSIDIARIES AND AFFILIATES
AND OTHER ENTITIES WHICH UNDER THIS ACT OR SPECIAL LAWS ARE SUBJECT TO
BANGKO SENTRAL SUPERVISION, IN ACCORDANCE WITH THE GUIDELINES SET BY THE
MONETARY BOARD TAKING INTO CONSIDERATION SOUND AND PRUDENT PRACTICES
fence /owolve/42}menths-and-atsuch oth he Board-by

i five{s}meme deere tomen

‘on-the-same-to-the MonetaryBoard]: Provided, That there shall be an interval of at
least twelve (12) months between [annual] REGULAR examinations; PROVIDED,
FURTHER, THAT THE MONETARY BOARD, BY AN AFFIRMATIVE VOTE OF AT LEAST FIVE
(5) MEMBERS, MAY AUTHORIZE A SPECIAL EXAMINATION IF THE CIRCUMSTANCES

WARRANT.
“The INSTITUTION [bank] concerned shall afford to the head of the
appropriate supervising and examining departments and to [his] THE authorized
deputies full opportunity to examine its books AND RECORDS, cash and [available]
assets and general condition AND REVIEW ITS SYSTEMS AND PROCEDURES at any time
during BUSINESS [banking] hours when requested to do so by the Bangko Sentral:
Provided, however, That none of the reports and other papers relative to such
examinations shall be open to inspection by the public except insofar as such publicity
is incidental to the proceedings hereinafter authorized or is necessary for the
prosecution of violations in connection with the business of such institutions,
“[Banking-and-quasibanking institutions-whi bj ena Hornby
‘theBangke-Sentral]SUPERVISED INSTITUTIONS shall pay to the Bangko Sentral, NO
LATER THAN MAY 31 OF EACH YEAR [within-the-first-thirty430}-days-of-each-year], an
annual SUPERVISION fee [ip anamountequalte-a-percentage,] as may be prescribed
by the Monetary Board. [ettsaveragetotalassets-duringthe-preceding.yearas-shown

.d-of- menth-balance-sheets-afte \e-cash-on-hand. i

from-banks;-lncluding theBangke Sentraland-banks-abroad.] IN DETERMINING THE
ANNUAL SUPERVISION FEE, THE MONETARY BOARD SHALL CONSIDER THE COST OF

SUPERVISION.”

SEC. 10. A new Section 28-A is hereby inserted in the same Act to read as follows:
“SEC. 28-A.BANGKO SENTRAL COORDINATION.-THE SUSPENSION OR
REVOCATION OF ANY GOVERNMENT LICENSE NECESSARY FOR THE OPERATION OF A


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BANGKO SENTRAL-SUPERVISED ENTITY MUST BE DONE ONLY WITH PRIOR
NOTIFICATION TO THE BANGKO SENTRAL.
SEC, 11, Section 30 of the same Act is hereby amended to read as follows:

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

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

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

¢) cannot continue in business without involving probable losses to its depositors or
creditors; or

(d) has willfully violated a cease and desist order under Section 37 that has become
final, involving acts or transactions which amount to fraud or a dissipation of the
assets of the institution;

in which cases, the Monetary Board may summarily and without need for prior
hearing forbid the institution from doing business in the Philippines and, IN CASE OF
BANKING INSTITUTIONS, designate the Philippine Deposit Insurance Corporation
{PDIC) as receiver [of the-banking-instisutienJAND DIRECT THE PDIC TO PROCEED WITH
THE LIQUIDATION OF THE CLOSED BANKING INSTITUTION PURSUANT TO THIS
SECTION AND THE RELEVANT PROVISIONS OF REPUBLIC ACT NO. 3591, AS AMENDED.
‘THE MONETARY BOARD SHALL NOTIFY IN WRITING THE BOARD OF DIRECTORS OF THE
CLOSED BANK OF THE MONETARY BOARO’S FINDINGS.

"ng hanié ee wed bork
finance-may-be-designated.as-recelver:] THE RECEIVER FOR QUASI-BANKS AND NON-
BANK FINANCIAL INSTITUTIONS SHALL BE DESIGNATED BY THE MONETARY BOARD.

“The receiver shall immediately gather and take charge of all the assets and

liabilities of the institution, administer the same for the benefit of its creditors,
DEPOSIT OR PLACE THE FUNDS OF THE INSTITUTION IN NON-SPECULATIVE
INVESTMENTS, PAY ADMINISTRATIVE REMEDIES and exercise the general powers of
a receiver under the Revised Rules of Court{-but-shall-net-with the-exception-of


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ini xpenditures;} ~y-aet-that-willinvelve-the-transf

ai si o - Provided That th sal

place-thefunds-of the ati 5]. The receiver OF

QUASI-BANKS AND NON-BANK FINANCIAL INSTITUITONS shall determine as soon as
possible, but not later than ninety (90) days from takeover, whether (the] SUCH
institution may be rehabilitated or otherwise placed in such a condition so that it may
be permitted to resume business with safety to its [depesitors-and] creditors and the
general public: Provided, That any determination for the resumption of business of
the institution shall be subject to prior approval of the Monetary Board.

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

“"f the receiver OF BANKS, QUASI-BANKS AND OTHER NON-BANK FINANCIAL
INSTITUTIONS determines that the institution cannot be rehabilitated or permitted to
resume business in accordance with the next preceding paragraph, the Monetary
Board shall notify in writing the board of directors of THE RECEIVER'S [its] findings and
direct the receiver to proceed with the liquidation of the institution.

“The receiver ACTING AS THE LIQUIDATOR OF BANKS, QUASI-BANKS AND
OTHER NON-BANK FINANCIAL INSTITUTIONS shall:

x
notice or any other action, a petition for assistance in the liquidation of the institution
pursuant to a liquidation plan [adopted-by-the Philippine Depesitinsurance
Corporation for general application to-all-closed-banks] PREPARED BY THE RECEIVER
‘AND ADOPTED BY THE MONETARY BOARD. [In-case-of-quasi-banks-theJiquidation

plan-shall-be-adepted-by-the Monetary Board.) THE COURT SHALL HAVE EXCLUSIVE
JURISDICTION TO [Lip d he-court shall ion byt

Feceiverafter-due-netice,] adjudicate disputed claims against the institution, assist the

‘enforcement of individual liabilities of the stockholders, directors and officers, and

file ex parte with the proper regional trial court, and without requirement of prior

decide on other issues as may be material to implement the liquidation plan adopted,
The receiver shall pay the cost of the proceedings from the assets of the institution,

2. convert the assets of the institutions to money, dispose of the same to creditors


1 and other parties, for the purpose of paying the debts of such institution in
2 accordance with the rules on concurrence and preference of credit under the Civil
3 Code of the Philippines and he may, in the name of the institution, and with the
4 assistance of counsel as he may retain, institute such actions as may be necessary to
5 collect and recover accounts and assets of, or defend any action against, the
6 institution. The assets of an institution under receivership or liquidation shall be
7 deemed in custodia legis in the hands of the receiver and shall, from the moment the
8 institution was placed under such receivership or liquidation, be exempt from any
9 order of garnishment, levy, attachment, or execution.
10 “The actions of the Monetary Board taken under this section or under Section
n 29 of this Act shall be final and executory, and may not be restrained or set aside by
2 the court except on petition for certiorari on the ground that the action taken was in
3B excess of jurisdiction or with such grave abuse of discretion as to amount to lack or
4 excess of jurisdiction. The petition for certiorari may only be filed by the stockholders
45 of record representing the majority of the capital stock within ten (10) days from
16 receipt by the board of directors of the institution of the order directing receivership,
v7 liquidation or conservatorship.
18 “"The designation of a conservator under Section 29 of this Act or the
19 appointment of a receiver under this section shall be vested exclusively with the
20 Monetary Board. Furthermore, the designation of a conservator is not a precondition
2 to the designation of a receiver.
2 SEC, 12.Section 34 of the same Act is hereby amended to read as follows:
23 "SEC. 34,Refusal to Make Reports or Permit Examination. —Any officer,
24 ‘owner, agent, manager, director or officer-in-charge of any institution [subjectte-the
25 supervision or examination by theBangko Sentrahwithin-the-purview-ef this-act] who,
26 being required in writing by the Monetary Board or by the head of the supervising and
27 ‘examining department, WITHIN THE PURVIEW OF THIS ACT AND RELEVANT LAWS,
28 willfully refuses to file the required report or permit any lawful examination into the
29 affairs of such institution shall be punished by a fine of not less than fifty thousand
30 pesos (P50,000) nor more than [one-hundred thousand pesos-{P200,000}] TWO
31 MILLION PESOS (P2,000,000) or by imprisonment of not less than one (1) year nor
32 more than five (5) years, or both, [ia] AT the discretion of the court.”
33 SEC. 13. Section 35 of the same Act is hereby amended to read as follows:
34 "SEC. 35. False Statement. — The willful making of a false or misleading
35 statement on a material fact to the Monetary Board or to the examiners of the Bangko

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Sentral shall be punished bya __ fine of not less than One hundred thousand pesos
(P100,000.00) normore than Rwe-hundred-theusand peses{P200,000)] TWO
MILLION PESOS (P2,000,000.00), or by imprisonment of not more than FIVE (5) years,
or both, at the discretion of the court.
SEC. 14. Section 36 of the same Act is hereby amended to read as follows:

“SEC, 36,Proceedings Upon Violation of This Act and Other Banking Laws,
Rules, Regulations, Orders or Instructions, —Whenever a bank, far] quasi-bank, OR
OTHER ENTITY WHICH UNDER THIS ACT OR SPECIAL LAWS IS SUBJECT TO BANGKO
SENTRAL SUPERVISION or whenever any person or entity willfully violates this Act or
other pertinent banking laws being enforced or implemented by the Bangko Sentral
or any order, instruction, rule or regulation issued by the Monetary Board, the person
‘of persons responsible for such violation shall unless otherwise provided in this Act
be punished by a fine of not less than Fifty thousand pesos (PS0,000.00) nor more
than [Hwe-hundred-thousand-peses-4P200,000)] TWO MILLION PESOS (P2,000,000.00)
or by imprisonment of not less than two (2) years nor more than ten (10) years, or
both, at the discretion of the court

“Whenever AN ENTITY UNDERBANGKO SENTRALSUPERVISION [a-bark-oF
‘quasi-bank] persists in carrying on its business in an unlawful or unsafe manner, the
Board may, without prejudice to the penalties provided in the preceding paragraph of
this Section and the administrative sanctions provided in Section 37 of this Act, take
action under Section 30 of this Act.”
SEC. 15. Section 37 of the same Act is hereby amended to read as follows:

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

in the submission of reports or publications thereof as required by law, rules and
regulations; any refusal to permit examination into the affairs of the

ENTITY[institution); any willful making of a false or misleading statement to the Board
or the appropriate supervising and examining department or its examiners; any willful

failure or refusal to comply with, or violation of, any banking law or any order,

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instruction or regulation issued by the Monetary Board, or any order, instruction or
ruling by the Governor; or any commission of irregularities, and/or conducting
business in an unsafe or unsound manner as may be determined by the Monetary
Board, the following administrative sanctions, whenever applicable:

(a) fines in amounts as may be determined by the Monetary Board to be appropriate,
but in no case to exceed (Thirty thousand peses-4P30,000}] ONE MILLION PESOS
(P1,000,000,00) FOR EACH TRANSACTIONAL VIOLATION OR ONE HUNDRED
THOUSAND PESOS (P100,000.00) PER BANKING [a]day for each CONTINUING
violation, taking into consideration the attendant circumstances, such as the nature
and gravity of the violation or irregularity and the size of the ENTITY, [bank-or quasi
bank] PROVIDED: THAT IN CASE PROFIT IS GAINED OR LOSS IS AVOIDED AS A RESULT
(OF THE VIOLATION, A FINE OF NO MORE THAN THREE (3) TIMES THE PROFIT GAINED
OR LOSS AVOIDED MAY BE IMPOSED;

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

(c) suspension of lending or foreign exchange operations or authority to accept new
deposits or make new investments;
(d) suspension of interbank clearing privileges; and/or
(e) SUSPENSION OR revocation of quasi-banking OR OTHER SPECIAL licenses.
“Resignation or termination from office shall not exempt such director, officer
OR EMPLOYEE from administrative or criminal sanctions.
“The Monetary Board may, whenever warranted by circumstances,
preventively suspend any director or officer of (a-bank-or-quasi-bank] THE ENTITY
\: Provided, That should the case be not finally decided by the

pending an investigati
Bongko Sentral within a period of one hundred twenty (120) days after the date of
suspension, said director or officer shall be reinstated in his position: Provided,
further, That when the delay in the disposition of the case is due to the fault,
negligence or petition of the director or officer, the period of delay shall not be
counted in computing the period of suspension herein provided.

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

“Whether or not there is an administrative proceeding, if the ENTITY
{institution} and/or the directors, fand/or] officers AND/OR EMPLOYEES concerned
continue with or otherwise persist in the commission of the indicated practice or
violation, the Monetary Board may issue an order requiring the ENTITY [institution]

and/or the directors, officers and/or EMPLOYEES concerned to cease and desist from

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tthe indicated practice or violation, and may further order that immediate action be
taken to correct the conditions resulting from such practice or violation. The cease
and desist order shall be immediately effective upon service on the respondents.

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

“The Governor is hereby authorized, at his discretion, to impose upon
{banking-institutions}, BANKS AND QUASI-BANKS, INCLUDING THEIR SUBSIDIARIES
AND AFFILIATES, AND OTHER ENTITIES WHICH UNDER SPECIAL LAWS ARE SUBJECT TO
BANGKO SENTRAL SUPERVISION for any failure to comply with the requirements of
law, Monetary Board regulations and policies, and/or instructions issued by the
Monetary Board or by the Governor, fines not in excess of [Fen-theusand-pesos
{P40,000}] ONE HUNDRED THOUSAND PESOS (P:100,000.00) FOR EACH
TRANSACTIONAL VIOLATION OR THIRTY THOUSAND PESOS (P30,000.00) PER
BANKING [a] day for each CONTINUING violation, the imposition of which shall be final
and executory until reversed, modified or lifted by the Monetary Board on appeal,

SEC. 16. A new Section 38-A is hereby inserted in the same Act to read as follows:

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

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

“THE PROVISIONS OF RULE 58 OF THE 1997 RULES ON CIVIL PROCEDURE IN
SO FAR AS THEY ARE APPLICABLE AND NOT INCONSISTENT WITH THE PROVISIONS OF
‘THIS ACT SHALL GOVERN THE ISSUANCE AND DISSOLUTION OF THE RESTRAINING
ORDER OR INJUNCTION AGAINST THE BANGKO SENTRAL.”

SEC. 17. Section 43 of the same Act is hereby amended to read as follows:

“SEC. 43, Computation of Profits and Losses.—Within the first thirty (30) days

following the end of each year, the Bangko Sentral shall determine its net profits or

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losses. [la-the-caleut Fike Bettyis rallmak

He blish-aek fok-pud-ane-w .

NOTWITHSTANDING ANY PROVISION OF LAW TO THE CONTRARY, THE NET PROFIT OF
‘THE BANGKO SENTRAL SHALL BE DETERMINED AFTER ALLOWING FOR EXPENSES OF
OPERATION ADEQUATE ALLOWANCES AND PROVISIONS FOR BAD AND DOUBTFUL
DEBTS, DEPRECIATION IN ASSETS, AND SUCH OTHER ALLOWANCES AND
CONTINGENCIES OR PURPOSES AS THE MONETARY BOARD MAY DETERMINE IN
ACCORDANCE WITH PRUDENT FINANCIAL MANAGEMENT.
SEC. 18. A new Section 43-A is hereby inserted in the same Act to read as follows:

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

“THE FLUCTUATION RESERVE SHALL COVER LOSSES FROM EXCHANGE RATE
AND PRICE VOLATILITY AND SHALL BE DERIVED FROM THE NET PROFITS BEFORE
DISTRIBUTION, AS PROVIDED UNDER SECTION 44 OF THIS ACT. ALL OTHER RESERVE
FUNDS SHALL BE SOURCED FROM SURPLUS.”
SEC. 19, Section 45 of the same Act is hereby amended to read as follows:

"SEC. 45,Revaluation Profits and Losses,—UNREAUIZED [P]profits or losses
arising {rom any revaluation of the Bangko Sentral's {nes} assets [oF], liabilities OR
DERIVATIVE INSTRUMENTS DENOMINATED in (gold-or] foreign currencies with
respect to the MOVEMENTS OF PRICES AND EXCHANGE RATES FROM THIRD
CURRENCIES TO Philippine peso shall not be included in the computation of the
annual profits and losses of the Bangko Sentral. Any profit{s) or lossfes] arising in this
manner shall be offset by any amounts which, as a consequence of such revaluations,
are owed by the Philippines to any international or regional intergovernmental
financial institution of which the Philippines is a member or are owed by these
institutions to the Philippines. Any remaining UNREALIZED profit or loss shall be
carried in a special frozen account which shall be named "Revaluation of international
Reserve (RIR}", and the net balance of which shall appear either among the liabilities
or among the assets of the Bangko Sentral, depending on whether the revaluations

have produced net profits or net losses.

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The [Revaluation of tnternational Reserve} RIR account shall be
[neither|credited [nor] OR debited ONLY FOR THE PERIODIC REVALUATION AS
AUTHORIZED IN THIS SECTION AND TO REFLECT THE CORRESPONDING ADJUSTMENT
RESULTING TO REDUCTION IN THE BANGKO SENTRAL’S NET FOREIGN ASSETS,
LIABILITIES AND FOREIGN CURRENCY - DENOMINATED DERIVATIVE INSTRUMENTS.
THE RIR SHALL BE ADJUSTED AND RECOGNIZED IN THE INCOME STATEMENT UPON
SALE OF GOLD AND FOREIGN SECURITIES, OR WHEN THE FOREIGN CURRENCY IS
REPATRIATED TO LOCAL CURRENCY OR IS USED TO PAY FOREIGN OBLIGATIONS OR
UPON MATURITY OF A FOREIGN CURRENCY - DENOMINATED FORWARD OR OPTION
CONTRACT INVOLVING THE PHILIPPINE PESO. [for-any-purposes other than-those
specifically authorizedin this section!”

SEC. 20, Section 61 of the same Act is hereby amended to read as follows:

“SEC, 61.Gulding Principle. —THE MONETARY BOARD SHALL REGULARLY
ASSESS PRICE DEVELOPMENTS AND OUTLOOK AND, BASED ON ITS ANALYSIS AND
EVALUATION OF INFLATIONARY PRESSURES, USE ITS POLICY INSTRUMENTS TO
ATTAIN AND MAINTAIN PRICE STABILITY. [The-Monetary-Boaretshallendeavor-te

ies
the-attainment or maintenance of price stability.]”
SEC. 21. Section 63 of the same Act is hereby amended to read as follows:

“SEC, 63.Action when Abnormal Movements Occur in the [Monetary
Aaggregates,-Cradit,-Or] Price Level.—Whenever abnormal movements in the
[monetary-aggregates,in-eredit,-oFin] prices endanger the stability of the Philippine
economy or important sectors thereof, the Monetary Board shall:

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

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

(1) the causes of the rise or fall of [the monetary aggregates, of credit-or of]

prices;

(2) the extent to which the changes in [the-monetary aggregates, in-cradit-or

in] prices have been reflected in changes in the level of domestic output,

‘employment, wages and economic activity in general, and the nature and

significance of any sueh changes; and

(3) the measures which the Monetary Board has taken and the other

monetary, fiscal or administrative measures which it recommends to be

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adopted,

“Whenever the [ sagregates-or the level of
decreases by more than fifteen percent {15%}, oF the] cost of living index increases
by more than ten percent (10%,), [i] in relation to the level existing at the end of the
corresponding month of the preceding year, or even though [aay-ofthese] THIS
quantitative guideline[s-have] HAS not been reached when in its judgment the
circumstances so warrant, the Monetary Board shall submit the reports mentioned in
this Section, and shall state therein whether, in the opinion of the Board, said changes
in the [monetary-aggregates-eredit-or] cost of living representa threat to the stability
of the Philippine economy or of important sectors thereof.

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

SEC, 22. Section 81 of the same Act is hereby amended to read as follows:

"SEC. 81.Guiding Principles.—The rediscounts, discounts, loans and
advances which the Bangko Sentral is authorized to extend to banking institutions,
under the provisions of the present article of this Act shall be used to influence the
volume of credit consistent with the objective of price stability AND MAINTENANCE
OF FINANCIAL STABILITY.”

SEC, 23. Section 84 of the same Act is hereby amended to read as follows:

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

“The Monetary Board may, atits discretion, likewise authorize theBangko
Sentral to grant emergency loans or advances to banking institutions, even during
normal periods, for the purpose of assisting a bank in a precarious financial condition
or under serious financial pressures brought by unforeseen events, ot events which,
though foreseeable, could not be prevented by the bank concerned: Provided,
however, That the Monetary Board has ascertained that the bank is not insolvent and

has the assets defined hereunder to secure the advances: Provided, further, That a
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concurrent vote of at least five (5) members of the Monetary Board is obtained.
“The amount of any emergency loan or advance shall not exceed the sum of
fifty percent (50%) of total deposits and deposit substitutes of the banking institution,
and shall be disbursed in two (2) or more tranches. The amount of the first tranche
shall be limited to twenty-five percent (25%) of the total deposit and deposit
substitutes of the institution and shall be secured by (A) government securities, (B)
ACCEPTABLE GUARANTEES BACKED UP BY THE NATIONAL GOVERNMENT OR ITS
SECURITIES; (C) _ [to-the-extent-of- their applicable id] other
unencumbered first class collaterals and (D) OTHER KINDS OF COLLATERALS AS MAY
BE AUTHORIZED BY THE MONETARY BOARD IN ACCORDANCE WITH SOUND RISK
MANAGEMENT PRINCIPLES [which-the Monetary Board-may-approvel: Provided, That

if as determined by the Monetary Board, the circumstances surrounding the

‘emergency warrant a loan or advance greater than the amount provided hereinabove,
the amount of the first tranche may exceed twenty-five percent (25%) of the bank's
total deposit and deposit substitutes if the same is adequately secured by applicable
loan values of government securities and unencumbered first class collaterals
approved by the Monetary Board, and the principal stockholders of the institution
furnish an acceptable undertaking to indemnify and hold harmless from suit a
conservator whose appointment the Monetary Board may find necessary at any time.

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

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

{a) furnish an acceptable undertaking to indemnify and hold harmless from suit a
conservator whose appointment the Monetary Board may find necessary at any time;
and
(b) provide acceptable security which, in the judgment of the Monetary Board, would
be adequate to supplement, where necessary, the assets tendered by the banking
institution to collateralize the subsequent tranche,

“in connection with the exercise of these powers, the prohibitions in Section

128 of this Act shall not apply insofar as it refers to acceptance as collateral of shares

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and their acquisition as a result of foreclosure proceedings, including the exercise of
voting rights pertaining to said shares: Provided, however, That should the Bangko
Sentral acquire any of the shares it has accepted as collateral as a result of foreclosure
proceedings, the Bangko Sentral shall dispose of said shares by public bidding within
‘one (1) year from the date of consolidation of title by the Bangko Sentral.

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

SEC, 24, A new Section 88-A Is hereby inserted in the same Act to read as follows:

"SEC. 88-A. EXEMPTION FROM ATTACHMENT. - EXEMPTION FROM
ATTACHMENT. - COLLATERALS ON LOANS AND ADVANCES GRANTED BY THE BANGKO.
SENTRAL, WHETHER OR NOT THE INTEREST OF THE BANGKO SENTRAL IS REGISTERED,
SHALL NOT BE SUBIECT TO ATTACHMENT, EXECUTION OR ANY OTHER COURT
PROCESS OR ADMINISTRATIVE RESTRICTIONS ON LAND USE, NOR SHALL THEY BE
INCLUDED IN THE ASSETS OF THE CLOSED BANK FOR DISTRIBUTION TO OTHER
CREDITORS: PROVIDED, HOWEVER, THAT THE PROCEEDS IN EXCESS OF THE AMOUNT
SECURED SHALL BE RETURNED BY THE BANGKO SENTRAL TO THE RECEIVER,

SEC, 25. A new Section 88-8 is hereby inserted in the same Act to read as follows:

“SEC, 88-8, DEPUTIZATION OF LEGAL STAFF. ~ IN CASE OF AN EXTRAJUDICIAL
FORECLOSURE OF MORTGAGE, THE BANGKO SENTRAL MAY DEPUTIZE ANY OF ITS
LAWYERS TO CONDUCT THE PUBLIC AUCTION PURSUANT TO ACT NO. 3135, AS
AMENDED. IN CASE OF A JUDICIAL FORECLOSURE, THE BANGKO SENTRAL MAY, WITH
‘THE APPROVAL OF THE COURT, LIKEWISE DEPUTIZE ANY OF ITS LAWYERS TO ACT AS
SPECIAL SHERIFF IN THE SALE OF A DEBTOR'S PROPERTIES AND IN THE ENFORCEMENT
OF COURT WRITS AND PROCESSES RELATED THERETO. THE SPECIAL SHERIFF OF THE
BANGKO SENTRAL SHALL MAKE A REPORT TO THE PROPER COURT AFTER ANY ACTION
HAS BEEN TAKEN BY HIM, WHICH COURT SHALL TREAT SUCH ACTION AS IF IT WERE
‘AN ACT OF ITS OWN SHERIFF IN ALL RESPECTS.

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

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‘THE ORIGINAL BOND POSTED CONDITIONED THAT THE BANGKO SENTRAL WILL PAY
‘THE DAMAGES WHICH THE PARTY MAY SUFFER BY THE REFUSAL OR DISSOLUTION OF
‘THE INJUNCTION. THE PROVISIONS OF RULE 58 OF THE NEW RULES OF COURT

INSOFAR AS THEY ARE APPLICABLE AND NOT INCONSISTENT WITH THE PROVISIONS

OF THIS SECTION SHALL GOVERN THE ISSUANCE AND DISSOLUTION OF THE
RESTRAINING ORDER OR INJUNCTION CONTEMPLATED IN THIS SECTION.

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

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

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

SEC. 27. A new Section 89-A is hereby inserted in the same Act to read as follows:

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

SEC. 28. A new Section 89-1

hereby inserted in the same Act to read as follows:
“SEC. 89-B.LOANS TO THE PHILIPPINE DEPOSIT INSURANCE CORPORATION.~
‘THE BANGKO SENTRAL, PURSUANT TO ITS MANDATE OF MAINTAINING FINANCIAL

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STABILITY, MAY LEND TO THE PHILIPPINE DEPOSIT INSURANCE CORPORATION FUNDS
FOR INSURANCE PURPOSE AND FOR FINANCIAL ASSISTANCE THAT THE LATTER IS
AUTHORIZED TO EXTEND UNDER SECTION 17(D) OF REPUBLIC ACT NO, 3591, AS
AMENDED, TO AN INSURED BANK IN DANGER OF CLOSING IN ORDER TO MINIMIZE
LOSSES TO ITS DEPOSITORS AND CREDITORS. NOTWITHSTANDING SECTION 18 OF
REPUBLIC ACT NO. 3591, AS AMENDED, THE MONETARY BOARD SHALL PRESCRIBE
INTEREST RATES AND SUCH OTHER TERMS AND CONDITIONS OF THE LOAN
SEC. 29. Section 92 of the same Act is hereby amended to read as follows:
"SEC, 92. Issue and Negotiation of Bangko Sentral Obligations. — In order to
provide the Bangko Sentral with effective instruments for open market operations,
the Bangko Sentral may, subject to such rules and regulations as the Monetary Board
may prescribe and in accordance with the principles stated in Section 90 of this Act,
issue, place, buy and sell freely negotiable evidences of indebtedness of the Bangko

Sentral, [;Provided, Fh abeuch-cortii Cindebtedness-shall-be-mad

: xtraord mmentin-price eves: Said evidences of
indebtedness may be issued directly against the international reserve of the Bangko
Sentral or against the securities which it has acquired under the provisions of Section
91 of this Act, or may be issued without relation to specific types of assets of the
Bangko Sentral

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

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

SEC. 30. Section 95 of the same Act is hereby amended to read as follows:

"SEC, 95.Definition of Deposit Substitutes, —The term "deposit substitutes"
is defined as an alternative form of obtaining funds from the public, other than
deposits, through the issuance, endorsement, or acceptance of debt instruments for
the borrower's own account, for the purpose of relending or purchasing of receivables

and other obligations. These instruments may include, but need not be limited to,


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bankers acceptances, promissory notes, participations, certificates of assignment and
similar instruments with recourse, and repurchase agreements. THE TERM ‘PUBLIC’
MEANS BORROWING FROM TWENTY (20) OR MORE LENDERS AT ANY ONE TIME. FOR
THIS PURPOSE, “LENDERS” SHALL REFER TO INDIVIDUALS AND CORPORATE ENTITIES
THAT ARE NOT ACTING AS FINANCIAL INTERMEDIARIES, SUBJECT TO THE
SAFEGUARDS AND REGULATIONS ISSUED BY THE MONETARY BOARD. The Monetary
Board shall determine what specific instruments shall be considered as deposit,
substitutes for the purposes of SECTION 94 of this Act{:). Provided, however, That
deposit substitutes of commercial, industrial and other non-financial companies for
the limited purpose of financing their own needs or the needs of their agents or
dealers shall not be covered by the provisions of Section 94 of this Act.”
SEC, 31. Section 101 of the same Act is hereby amended to read as follows:
“SEC. 101 Reserve Deficiencies.- Whenever the reserve position of any bank
or quasi-bank, computed in the manner specified in the preceding section of this Act,
is below the required minimum, the bank or quasi-bank shall pay the Bangko Sentral
‘one-tenth of one percent (1/10 of 19) per day on the amount of the deficiency or the
prevailing ninety-one-day treasury bill rate plus three percentage points, whichever is
higher: Provided, however, That banks and quasi-banks shall ordinarily be permitted
to offset any reserve deficiency occurring on one or more days of the week with any
‘excess reserves which they may hold on other days of the same week and shall be
required to pay the penalty only on the average daily deficiency during the week. in

cases of abuse, the Monetary Board may deny any bank or quasi-bank the privilege of
offsetting reserve deficiencies in the aforesaid manner.

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

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

‘SEC. 32. Section 104 of the same Act is hereby amended to read as follows:

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“SEC, 104,Guiding Principle.- The Monetary Board shall use the powers,
granted to it under this Act to ensure that the supply, availability and cost of money

are in accord with the needs of the Philippine economy and that bank credit is not

granted for speculative purposes prejudicial to the national interests, Regulations on
bank operations shall be applied to all banks of the same category AS MAY BE DEFINED
BY THE MONETARY BOARD uniformly and without discrimination.”
SEC. 33, Section 108 of the same Act is hereby amended to read as follows:
“SEC. 108.Minimum Capital Ratios. — The Monetary Board may prescribe

minimum RISK-BASED CAPITAL ADEQUACY ratios BASED ON INTERNATIONALLY
ACCEPTED STANDARDS [which-the-capital and surplus of-the banks must-bearte-the

| hh to specifications and may alter said ratios
whenever it deems necessary. IN THE EXERCISE OF ITS AUTHORITY UNDER THIS
SECTION, THE MONETARY BOARD MAY REQUIRE BANKS TO HOLD CAPITAL BEYOND
THE MINIMUM REQUIREMENTS COMMENSURATE TO THEIR RISK PROFILE.PRESCRIBE
ALHIGHER-MINIMUM-CARFFAL ADEQUACY RAHO-FOR-DIFFERENT-BANK- CATEGORIES
AS-MAY-BE-ANARRANTED-BY-THER-RISK PROFIEE
SEC. 34. Section 113 of the same Act is hereby amended to read as follows:

“SEC, 113.Official Deposits.—TheBangko Sentralshall be the official
depository of the Government, its political subdivisions and instrumentalities as well
‘as of government-owned or -controlled corporations.and,-aAs a general policy, thelr
cash balances should be deposited with the Bangko Sentral, with only minimum
working balances to be held by government-owned banks and such other banks
LICENSED TO OPERATE incorporated in the Phil

pines as the Monetary Board may

AUTHORIZE. designate, subje he ih regulati he Board-may
prescsibe-Prowded, That oks-may-hold-depesits of the political-subdiv
and instrumentalities of-the Gevernment-beyond their minimum-working balances
by spsubdi ad ities hi ndings sth-sald
banks.

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

SEC. 35. Section 123 of the same Act is hereby amended to read as follows:

“SEC. 123, Financial Advice on Official Credit Operations.—Before

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undertaking any credit operation abroad, the Government, through the Secretary of
Finance, shall request the opinion, in writing, of the Monetary Board on the monetary
implications of the contemplated action. Such opinions must similarly be requested
byall political subdivisions and instrumentalities of the Government before any credit
operation abroad is undertaken by them,

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

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

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

SEC. 36. Section 125 of the same Act is hereby amended to read as follow:

"SEC. 125, Tax Exemptions. ~ The Bangko Sentral shall be exempt fore-perod
of five{5)-years from-the-approvatof this Aet from all national, provincial, municipal
and city taxes, fees, charges and assessments, WHETHER DIRECT OR INDIRECT,
EXCEPT ON THE FOLLOWING:

1, ADMINISTRATIVE FEES AND CHARGES IMPOSED BY ANY GOVERNMENT
AGENCIES;

2, MUNICIPAL/CITY FEES FOR SERVICES PROVIDED;

3. INCOME FROM SALE OF (a) BSP FORMS, (b) BID DOCUMENTS, (c) SCRAP
ITEMS, WASTE MATERIALS, SHREDDED RECORDS; (d) CAR STICKERS, SECURITY PASS,
IDENTIFICATION PARAPHERNALIA; (e) DEMONITIZED COMMEMORATIVE NOTES AND
COINS; (f) COMMEMORATIVE MEDALS; AND (g) UNSERVICEABLE FURNITURE AND
EQUIPMENT THROUGH AUCTION;

4, INCOME FROM (a) LEASE OF BSP OFFICES AND OTHER PROPERTIES; (b)
LEASE OF BSP VAULTS; AND (c) USE OF BSP-OWNED PROPERTIES;

5. PENALTIES AND CHARGES FOR (a) LATE DELIVERY OF

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PURCHASES/SERVICES; AND (b) LATE PAYMENT OF LEASE

pot apply to tates, fos chong payable
doing business with theBangke-Sentral:Provided, further That THE EXEMPTION
FROM THE DOCUMENTARY STAMP TAX AS PROVIDED UNDER SECTION 199 (L) OF

REPUBLIC ACT NO, 9337, AS AMENDED (THE 1997 NATIONAL INTERNAL REVENUE
CODE) SHALL CONTINUE TO BE OPERATIVE. Foreign loans and other obligations of the
Bangko Sentral shall ALSO be exempt, both as to principal and interest, from any and
all taxes if the payment of such taxes [has-been] IS assumed by the Bangko Sentral.”
SEC. 37. Section 128 of the same Act Is hereby amended to read as follows:

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

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

SEC. 38. Repealing Clause.All provisions of existing laws, orders, rules and

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

of this Act are hereby repealed, amended or modified accordingly.

SEC. 39. Separability Clause.|f any provision or section of this Act is held to be

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

affected thereby shall continue to be in full force and effect.

SEC. 40. Effectivity.This Act shall take effect fifteen (15) days after its

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

Approved,

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