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Republic ofthe Philippines aN
RECEIVED a

HOUSE OF REPRESENTATIVES
Quezon City, Philippines

of

SIXTEENTH CONGRESS
First Regular Session

HOUSE BILLNO.__2485

INTRODUCED BY REP. MARCELINO “MARCY” R. TEODORO

EXPLANATORY NOTE

No less than the 1987 Constitution mandates the establishment of a central
Monetary authority that shall provide policy direction in the areas of money, banking, and
credit, and exercise supervision over the operations of banks, finance companies and
other institutions performing similar functions.

With these in mind, Congress enacted a new Central Bank law in 1993 to replace
the old one, which was in effect as early as 1948. While the old Central Bank law —
Republic Act 265 — was amended four times during its lifetime, the new law or R.A. No.
7653 has never been changed in its 17 years of effectivity.

Itis therefore imperative that RA 7653 — the law that created the present Bangko
Sentral ng Pilipinas (BSP) — be revisited and amended accordingly to respond to the
changing times. The prevailing situation 17 years ago is not the same as today and there
is a need to redefine or clarify some concepts in the BSP charter in order to render it
more effective.

This bill aims to amend the BSP charter to strengthen the institution and plug the
supposed gaps and loopholes which the present law's authors failed to anticipate 17
years ago.

One of the most important amendments of this proposed measure is to
incorporate the promotion of full employment as one of two primary objectives of the
BSP in its formulation of monetary policy, along with maintaining price stability

It is the contention of the author that the inclusion of advancing full employment
as one of the primary objectives of the BSP will have significant and positive effects on
the country’s economic and financial development. It will also affirm the State's mandate
to make labor a primary social economic force

Other salient provisions of the bill include the following

‘* Establishing a mechanism for the full payment of the national government's
unpaid subscription to the BSP as mandated by RA 7653.

‘* Expanding the BSP's supervisory powers to include credit card companies,
e-money issuers, remittance agents and institutions performing similar
functions.

‘* Deletion of the provision requiring the confirmation of the BSP Governor by
the Commission on Appointments.

* Proposing that no member of the Monetary Board, including the BSP
governor and vice governors, shall be elected as director, or employed as
officer or employee, or hired as consultant, adviser, lawyer, or in any other
capacity in institutions regulated by the BSP three (3) years after their term.


‘* Allowing the Monetary Board to conduct a meeting through video
conferencing or teleconferencing, as required by circumstances

‘* Increasing the number of deputy governors from three (3) to five (5).

‘* Semi-annual appearance before key committees in both houses of
Congress.

Other key features of the bill include amendments to provisions governing
Reports of Examination (ROEs); appointment of conservators; proceedings in
receivership and liquidation; prompt corrective actions; bridge banking; credit facilities for
Islamic banks; and the BSP's exemption from taxes and Customs duties.

These amendments are seen to improve the BSP in its mandate to provide policy
direction in the areas of money, banking, and credit. They will also aid the BSP in the
exercise of its regulatory and supervisory powers over the operations of banks, finance
‘companies and other institutions performing similar functions.

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

MARCELINO “MARCY” R. TEODORO
Representative
1st District, City of Marikina


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

‘SIXTEENTH CONGRESS
First Regular Session

HOUSE BILLNO.__2485

INTRODUCED BY REP. MARCELINO “MARCY” R. TEODORO

AN ACT PROVIDING FOR A COMPREHENSIVE REVISION OF THE CHARTER OF
THE BANGKO SENTRAL NG PILIPINAS (BSP) BY AMENDING REPUBLIC ACT
NO. 7653, OTHERWISE KNOWN AS "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 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 Fifty Billion Pesos (P50,000,000,000),
to be fully subscribed by the Government of the Republic, hereafter referred to as
the Government, Ten Billion Pesos (P10,000,000,000) of which shall be fully paid
for by the Government upon the effectivity of this Act [and the balance to be paid
for within two (2) years from the effectivity of this Act in such manner and form as
the Government, through the Secretary of Finance and the Secretary of Budget
and Management, may thereafter determine]. 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 TO THE BALANCE OF THE UNPAID
SUBSCRIPTION OF THE GOVERNMENT TO THE BANGKO SENTRAL:
PROVIDED, THAT THE CASH OR GOVERNMENT SECURITIES ISSUED
PURSUANT HERETO ARE HEREBY AUTHORIZED AND SHALL BE DEEMED
AUTOMATICALLY APPROPRIATED FOR THE PURPOSE OF ENABLING
THE GOVERNMENT TO COMPLY WITH ITS OBLIGATION TO PAY FOR ITS
UNPAID SUBSCRIPTION TO THE BANGKO SENTRAL."

SEC. 2. Section 3 of Republic Act No. 7653 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, INCLUDING CREDIT CARD
COMPANIES, E-MONEY ISSUERS, REMITTANCE AGENTS and institutions
performing similar functions REGULATED BY THE BANGKO SENTRAL
UNDER THIS ACT OR UNDER SPECIAL LAWS.

The primary objective of the Bangko Sentral is to maintain price stability
conducive to a balanced and sustainable growth of the economy.] IN THE
FORMULATION OF MONETARY POLICY, THE BANGKO SENTRAL SHALL
PROMOTE AND ADVANCE THE PRIMARY GOALS OF FULL EMPLOYMENT
AND PRICE STABILITY CONDUCIVE TO A BALANCED AND SUSTAINABLE
GROWTH OF THE ECONOMY. It shall also promote and maintain monetary
stability and the convertibility of the peso.”


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
Bangko 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 for 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. [The Governor of the Bangko Sentral shall be head of a
department and his appointment shall be subject to confirmation by the
Commission on Appointments.] Whenever the Governor is unable to
attend a meeting of the Board, he shall designate a Deputy Governor to
act as his alternate AND THE ATTENDANCE OF THE LATTER AS AN
ALTERNATE TO THE GOVERNOR SHALL BE CONSIDERED IN
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 acting Chairman;

b) a member of the Cabinet to be designated by the President of the
Philippines. Whenever the designated Cabinet Member is unable to
attend a 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 CONSIDERED IN
DETERMINING A QUORUM BUT SAID ALTERNATE, WHILE
ENTITLED TO BE HEARD, SHALL HAVE NO RIGHT TO VOTE; and

) 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 this 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:

"SEC. 9. Disqualifications. - In addition to 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 is subject to supervision or
examination by the Bangko Sentral, in which case such member shall resign
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 office or public employment during their tenure.

No person shall be a member of the Monetary Board if he has been
connected directly with any [multilateral] banking or financial institution or has a
substantial interest in any private bank in the Philippines, within one (1) year prior
to his appointment [; likewise, no member of the Monetary Board shall be
employed in any such institution within two (2) years after the expiration of his
term except when he serves as an official representative of the Philippine
Government to such institution]. 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 INTERMEDIARY, OR
IN SIMILAR CAPACITIES IN OTHER INSTITUTIONS THAT ARE
SUPERVISED/REGULATED BY THE BANGKO SENTRAL WITHIN THREE (3)


YEARS AFTER THE EXPIRATION OF THEIR RESPECTIVE TERMS OF
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
AS 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. 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 MEETING OF THE MONETARY BOARD, AS REQUIRED BY
CIRCUMSTANCES, MAY BE CONDUCTED THROUGH
TELECONFERENCING OR VIDEO CONFERENCING SUBJECT TO PRIOR
NOTICE TO ALL THE MEMBERS OF THE BOARD OF THE CALL FOR SUCH
METHOD OF CONFERENCING AND SUBJECT FURTHER TO THE
REQUIREMENT THAT THE CHAIRMAN OF THE BOARD OR THE
ALTERNATE PRESIDING OFFICER IS PHYSICALLY PRESENT, TOGETHER
WITH THREE (3) OTHER MEMBERS OF THE BOARD, AT THE DESIGNATED
VENUE OF THE MEETING.

THE GOVERNOR SHALL VOTE, AT MEETINGS OF THE MONETARY
BOARD SUBJECT TO THE LIMITATIONS OF SECTION 14 (WITHDRAWAL
DUE TO PERSONAL OR PECUNIARY INTEREST) HEREIN. EACH AND.
EVERY VOTE OF THE GOVERNOR AND THE 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 notesf, either] in their original form, for] in
microfilm OR IN OTHER RECORDING MEDIA."

SEC. 6. Section 12 of Republic Act No. 7653 is hereby amended to read as follows:

"SEC. 12. Attendance of the Deputy Governors. - The Deputy Governors [may]
SHALL, UPON THE ORDER OF THE GOVERNOR OR THE MONETARY
BOARD, attend the meetings of the Monetary 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 PER MEETING BASIS IF THEIR EXPERTISE IS
NEEDED IN A PARTICULAR AGENDA OR MATTER.”

SEC. 7. 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 the responsibilities and exercise of the powers vested upon the Monetary
Board and 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 SUBJECT
TO PUBLIC HEARINGS OF THE PARTIES AND INSTITUTIONS TO BE
AFFECTED.

NO RULES AND REGULATIONS SHALL BECOME EFFECTIVE
UNLESS PUBLISHED IN TWO (2) NEWSPAPERS OF NATIONAL
CIRCULATION;

(b) direct the management, operations, and administration of the Bangko Sentral,
reorganize its personnel AND IN CONNECTION THEREWITH PROVIDE
SEPARATION BENEFITS AS DEEMED 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
control of the Monetary Board:]

THE MONETARY BOARD SHALL ESTABLISH A LEGAL UNIT UNDER
ITS EXCLUSIVE SUPERVISION AND CONTROL THAT SHALL ASSIST THE
MONETARY BOARD IN, ITS, POLICY FORMULATION, IN THE
PROMULGATION OF IMPLEMENTING RULES AND REGULATIONS AND IN
REVIEWING THE LEGAL ASPECT OF MEASURES INCLUDED IN THE
AGENDA OF THE MEETINGS OF THE MONETARY BOARD,

(0) establish a human resource management system which shall govern the
selection, hiring, appointment, transfer, promotion, or dismissal of all personnel.
Such system shall aim to establish professionalism and excellence at all levels of
the Bangko Sentral in accordance with sound 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 for under Republic Act No, 6758[:
Provided, however, That compensation and wage structure of employees, whose
positions fall under salary grade 19 and below shall be in accordance with the
rates prescribed under Republic Act No. 6758].

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, transfer, assign, or reassign personnel
of the Bangko Sentral and these personnel actions are deemed made in the
interest of the service and not disciplinary: Provided, further, That the Monetary
Board may delegate such authority to the Governor under such guidelines as it
may determine.

(d) adopt an annual budget for and authorize such expenditures by the Bangko
Sentral as are in the interest of the effective administration and operations of the
Bangko Sentral in accordance with applicable laws and regulations; and

(©) indemnify its members and other officials of the Bangko Sentral, including
personnel [of the departments] 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 criminal action, suit or proceedings to which he may be, or is, made 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, negligence or
misconduct


In the event of a settlement or compromise, indemnification shall be
provided only in connection with such matters covered by the settlement as to
which the Bangko Sentral is advised by external counsel that the person to be
indemnified [did not commit any} HAD NOT ACTED WITH BAD FAITH,
MALICE, negligence or misconduct.

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 all undertaking by or
on behalf of the member, officer, or employee REFERRED TO IN SUBSECTION
{E) to repay the amount advanced should it ultimately be determined by the
Monetary Board that he is not entitled to be indemnified as provided in this
subsection ON ACCOUNT OF BAD FAITH, MALICE, NEGLIGENCE OR
MISCONDUCT.”

SEC. 8. Section 16 of Republic Act No. 7653 is hereby amended to read as follows:

"SEC. 16. Responsibility. -Members of the Monetary Board, officials, examiners,
and employees of the Bangko Sentral who willfully violate this Act or who are
guilty of negligence, abuses or acts of malfeasance or misfeasance or fail to
exercise extraordinary diligence in the performance of his duties shall be held
liable for any loss or injury suffered by the Bangko Sentral or other banking
institutions as a result of such violation, negligence, abuse, malfeasance,
misfeasance or failure to exercise extraordinary diligence.

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

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 THE 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 believes] 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 BE DISTRIBUTED TO THE MEMBERS AT
LEAST THREE (3) WORKING DAYS BEFORE THE SCHEDULED 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
Board UPON THEIR EFFECTIVITY;

(©) direct and supervise the operations and internal administration of the Bangko
Sentral. The Governor may delegate IN WRITING certain of his administrative
responsibilities OR SPECIFIC TASKS to other officers or 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 REPORTORIAL REQUIREMENTS AS HE SHALL
REQUIRE or subject to such rules and regulations as the Monetary Board may
prescribe FOR THE DELEGATED AUTHORITY; PROVIDED, HOWEVER,
THAT A POWER OR AUTHORITY DIRECTLY VESTED BY LAW TO 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
OTHER PERTINENT EXECUTIVE OFFICERS OF THE BANGKO SENTRAL;

(d) appoint and fix the remunerations and other emoluments of personnel below
the rank of 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 be with the
approval of the Monetary Board; AND

Ile) render opinions, decisions, or rulings, which shall be final and executory until
reversed or modified by the Monetary Board, on matters regarding application or
enforcement of laws pertaining to institutions supervised by the Bangko Sentral
and laws pertaining to quasi-banks, as welll as regulations, policies or instructions
issued by the Monetary Board, and the implementation thereof, and]

[(] (E) exercise such other powers as may be vested in him by the Monetary
Board.”

‘SEC. 10. 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 is insufficient to call a FORMAL meeting of the Monetary Board, the
Governor of the Bangko Sentral, with the concurrence of {two (2)] THREE (3)
other members of the Monetary Board, may decide [any] AN URGENT matter or
take [any] action [within the authority of the Board] RELEVANT TO THE
EMERGENCY INVOLVED, WITHOUT FORMALLY CONVENING A MEETING
OF THE MONETARY BOARD.

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 call a meeting of the
Monetary Board to 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 the Monetary Board, shall appoint not more than [three (3)] FIVE (5)
Deputy Governors who shall perform duties AND RESPONSIBILITIES
CONSISTENT WITH THEIR RESPECTIVE SECTORS ASSIGNED TO THEM
BY THE MONETARY BOARD, TO WIT: [as may be assigned to them by the
Governor and the Board.]

(A) DEPUTY GOVERNOR FOR THE MONETARY AND CURRENCY
MANAGEMENT SECTOR;

(B) DEPUTY GOVERNOR FOR SUPERVISION AND EXAMINATION OF
COMMERCIAL AND UNIVERSAL BANKS (INCLUDING THEIR
SUBSIDIARIES AND AFFILIATES ENGAGED IN FINANCIAL ALLIED


UNDERTAKINGS) AS WELL AS GOVERNMENT-OWNED AND
CONTROLLED BANKS;

(C) DEPUTY GOVERNOR FOR SUPERVISION AND EXAMINATION OF
STAND-ALONE RURAL BANKS AND T, HRIFT BANKS (WHICH ARE NOT
AFFILIATED TO UNIVERSAL OR COMMERCIAL BANKS); COOPERATIVE
BANKS; AND MICROFINANCE BANKS;

(D) DEPUTY GOVERNOR FOR SUPERVISION AND EXAMINATION OF NON-
BANK FINANCIAL INTERMEDIARIES WHICH BY SPECIAL LAWS HAVE
BEEN PLACED UNDER THE SUPERVISION OF THE BANGKO SENTRAL
WHICH INCLUDE INYESTMENT HOUSES; SAVINGS AND LOAN
ASSOCIATIONS; PAWNSHOPS; CREDIT CARD COMPANIES; REMITTANCE,
AGENTS; AND E-MONEY ISSSUERS;

(E) DEPUTY GOVERNOR FOR HUMAN RESOURCES MANAGEMENT WHO
SHALL BE IN CHARGE OF THE ADMINISTRATIVE REQUIREMENTS OF
RECRUITMENT, APPOINTMENT, PERFORMANCE EVALUATION, AND THE
IMPLEMENTATION OF COMPENSATION AND BENEFITS, PAYROLL
SERVICING, LEAVES AND RETIREMENTS AND EMPLOYEE RELATIONS,
INCLUDING THE ASSESSMENT OF THE TRAINING NEEDS OF ALL
PERSONNEL OF THE BANGKO SENTRAL, AND THE DESIGN AND
ADMINISTRATION OF TRAINING PROGRAMS FOR THE RANK AND FILE
EMPLOYEES, THE EXECUTIVE DEVELOPMENT AND VALUES
ENHANCEMENT COURSES; THE ADMINISTRATION OF THE MEDICAL AND
DENTAL CLINIC, AND WHO SHALL SUPERVISE THE CONSTRUCTION,
REPAIR AND RENOVATION OF ALL BUILDINGS, OFFICES AND FACILITIES
OF THE BANGKO SENTRAL, THE GENERAL UP-KEEP AND MAINTENANCE,
OF THE MECHANICAL, ELECTRICAL, ELECTRONIC AND
AUXILIARYIACCESSORY EQUIPMENT SYSTEMS OF THE BANGKO
SENTRAL AND THE PROTECTION AND SAFEGUARDS OF THE MAIN
OFFICE AND OTHER BRANCHES OF THE BANGKO SENTRAL.

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 AND
ASSIGNMENTS SHALL BE DEFINED OR REFINED AND PRESCRIBED BY
THE MONETARY BOARD UPON RECOMMENDATION OF THE GOVERNOR.

THE MANAGEMENT OF THE PROVIDENT FUND, THE
PROCUREMENT SERVICES, INCLUDING THE SERVICING OF THE BIDS
AND AWARDS COMMITTEE AND THE SECURITY PLANT COMPLEX SHALL
BE DEFINED AND PRESCRIBED BY THE MONETARY BOARD. THE
MONITORING, REPORTING, AND THE INFORMATION TECHNOLOGY
APPLICATIONS REQUIRED FOR EACH OF THE OFFICES AND SERVICES
REFERRED TO IN THIS PARAGRAPH SHALL ALSO BE SET FORTH BY THE
MONETARY BOARD, UPON RECOMMENDATION OF THE GOVERNOR.

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

SEC. 12. Section 23 of Republic Act No. 7653 is hereby amended to read as follows:

"SEC. 23. Authority to Obtain Data and Information. - The Bangko Sentral shall
have the authority to [request] REQUIRE from goverment offices and
instrumentalities, or government-owned or controlled corporations, any data
which it may require for the proper discharge of its functions and responsibilities.


The Bangko Sentral, through the Governor or in his absence, a [duly authorized
representative] DEPUTY GOVERNOR DULY AUTHORIZED IN WRITING shall
have the power to issue a subpoena [for the production of the books and records
for the aforesaid purpose] 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 or] required, shall be subject to
punishment for contempt in accordance with the provisions of the Rules of Court.

Data on individual firms, other than banks, gathered by the Department of
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 except under order of the court or under such
conditions as may be prescribed by the Monetary Board: Provided, however,
That the collective data on firms may be released to interested persons or
entities: Provided, Finally, That in the case of data on banks, the provisions of
Section 27 of this Act shalll 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 and
banking] BANKING,  QUASI-BANKING, NON-BANK __ FINANCIAL
INTERMEDIARIES, MICROFINANCE, DERIVATIVES, ARBITRAGE, FOREIGN
EXCHANGE, SAVINGS FORMATION, PAYMENT AND SETTLEMENT
SYSTEMS, INFORMATION TECHNOLOGY, MONEY AND CAPITAL
MARKETS DEVELOPMENT TRENDS, INNOVATIONS AND PRACTICES AND
SUCH OTHER TRAINING PROGRAMS AS THE MONETARY BOARD SHALL
APPROVE. Toward this end, the Bangko Sentral is hereby authorized to defray
the costs of study, at home or abroad, of qualified employees of the Bangko
Sentral, of promising university graduates or of any other qualified persons who
shall be determined by proper competitive examinations. The Monetary Board
shall prescribe rules and regulations to govern the training programs 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. - SUBJECT TO THE PROVISIONS OF
SECTION 28 OF THIS ACT, the Bangko Sentral THROUGH THE
SUPERVISING AND EXAMINING DEPARTMENT DESIGNATED UNDER THIS
ACT shall have supervision over, and conduct [periodic] REGULAR or special
examinations of [banking institutions] BANKS and quasi-banks, including their
subsidiaries and affiliates engaged in allied activities AND OTHER FINANCIAL
INSTITUTIONS WHICH UNDER 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.

For purposes of THE FIRST PARAGRAPH OF this Section, a subsidiary
means a corporation more than fifty percent (50%) of the voting stock of which is
owned DIRECTLY OR INIDIRECTLY by a bank or quasi-bank and an affiliate
means a corporation the voting stock of which, to the extent of fifty percent (50%)
or less, is owned by a bank or quasi-bank or which is related or linked to such
institution or intermediary through common stockholders, or such other factors as
may be determined by the Monetary Board.

IN CONNECTION WITH THE SECOND PARAGRAPH OF THIS
SECTION, A PARENT COMPANY MEANS A CORPORATION WHICH OWNS
DIRECTLY OR INDIRECTLY THE VOTING STOCK OF A SUPERVISED


INSTITUTION OF THE BANGKO SENTRAL SUFFICIENT TO CONTROL ITS
MANAGEMENT AND OPEIUTIONS.

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 ALSO EXISTS EVEN WHEN
THE PARENT OWNS ONE-HALF OR LESS OF THE VOTING STOCK OF THE
SUPERVISED INSTITUTION WHEN THERE IS POWER OVER MORE THAN
ONE-HALF OF THE VOTING RIGHTS BY PROXY OR BY VIRTUE OF AN
AGREEMENT WITH OTHER INVESTORS WHICH THEREBY ENABLES THE
PARENT COMPANY TO CAST THE MAJORITY OF VOTES AT MEETINGS OF
THE STOCKHOLDERS OF THE SUPERVISED INSTITUTION, OR TO ELECT
THE MAJORITY OF MEMBERS OF THE BOARD OF DIRECTORS OF THE
SUPERVISED INSTITUTION, OR TO APPOINT KEY EXECUTIVE OFFICERS
WHO SHALL DIRECTLY OR INDIRECTLY CONTROL THE MANAGEMENT
AND OPERATIONS OF THE SUPERVISED INSTITUTION.

The department heads and the examiners of the supervising and/or
examining departments are hereby authorized to administer oaths to any
director, officer, or employee of any institution under their respective supervision
or subject to their examination and to compel the presentation of all books,
documents, papers or records necessary in their judgment to ascertain the facts
relative to the true condition of any institution as well as the books and records of
persons and entities relative to or in connection with the operations, activities or
transactions of the institution under examination, subject to the provision of
existing laws protecting or safeguarding the, secrecy or confidentiality of bank
deposits as well as investments of private persons, natural or juridical, in debt
instruments issued by the Government

INo restraining order or injunction shall be issued by the court enjoining
the Bangko Sentral from examining any institution subject to supervision or
examination by the Bangko Sentral, unless there is convincing proof that the
action of the Bangko Sentral is plainly arbitrary and made in bad faith and the
petitioner or plaintif 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. 15. Section 26 of Republic Act No. 7653 is hereby amended to read as follows

"SEC. 26. Bank Deposits [and Investments]. - Any director, officer or stockholder
who, together with his related interest, contracts a loan or any form of financial
accommodation from: (1) his bank; or (2) from a bank (a) which is a subsidiary of
a bank holding company of which both his bank and the lending bank are
subsidiaries or (b) in which a controlling proportion of the shares is owned by the
same interest that owns a 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 amount permitted by law, whichever is lower, shall be required by the
lending bank to waive the secrecy of his deposits of whatever nature in all banks
in the Philippines. Any information obtained from an examination of his deposits
shall be held strictly confidential and may be used by the examiners only 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 AS 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 TO 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 and 6713, personnel of the Bangko Sentral are hereby prohibited from:

(a) being an officer, director, lawyer or agent, employee, consultant or
stockholder, directly or indirectly, of any institution subject to supervision or
examination by the Bangko Sentral, except 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, [present] IN
KIND or pecuniary or material benefit for himself/ HERSELF or [another] FOR A
RELATIVE WITHIN THE FIRST DEGREE OF CONSANGUINITY OR AFFINITY
from any institution subject to supervision or examination by the Bangko Sentral;

(©) revealing in any manner, except under orders of the court, the [Congress]
HOUSE OF REPRESENTATIVES OR THE SENATE OR ANY OF THE
APPROPRIATE COMMITTEES THEREIN or any government office or agency
authorized by law, or under such conditions as may be prescribed by the
Monetary Board, information relating to the condition or business of any
institution UNDER ITS 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
Bangko 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 as the Monetary Board may prescribe: Provided,
however, That personnel of the supervising and examining departments are
prohibited from borrowing from a bank under their supervision or 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
head, personally or by deputy, shall examine the books AND RECORDS of every
banking, OR QUASI-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 and to [make a report
on the same] SUBMIT AN EXECUTIVE SUMMARY OF THE FINDINGS OF
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 OPPORTUNITY TO CONTEST IN WRITING ANY OR ALL OF THE
FINDINGS OF THE EXAMINERS OF THE SUPERVSING AND EXAMINATION
DEPARTMENT OF THE BANGKO SENTRAL IN AN EXIT CONFERENCE
BEFORE THE REPORT OF EXAMINATION IS FINALIZED. THE WRITTEN
EXPLANATIONS, IF ANY, OF THE SUPERVISED INSTITUTION UNDER


EXAMINATION SHALL BE PART OF THE REPORT OF EXAMINATION WITH
COMMENTS IF DEEMED WARRANTED BY THE EXAMINERS INVOLVED.

The bank, OR QUASI-BANK OR NON-BANK FINANCIAL INSTITUTION
concerned shall afford to the head of the appropriate supervising and examining
departments and to his authorized deputies 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
none of the reports and other papers relative to such examinations shall be open
to inspection by the public except insofar as such publicity is incidental to the
proceedings hereinafter authorized or is necessary for the prosecution of
violations in connection with the business of such institutions.

Banking, [and] quasi-banking, AND NON-BANK FINANCIAL institutions
which are subject to examination by the Bangko Sentral shall pay to the Bangko
Sentral, within the first thirty (30) days of 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 [month balance sheets] STATEMENT OF CONDITION, after
deducting cash on hand and amounts due from banks, QUASI-BANKS, AND
OTHER FINANCIAL INSUTUTIONS, including the Bangko Sentral and banks
abroad."

SEC. 18. Section 29 of Republic Act No. 7653 is hereby amended to read as follows

12 "SEC. 29. Appointment of Conservator. - Whenever, on the basis of a report
OF EXAMINATION submitted by the appropriate supervising or examining
department OF THE BANGKO SENTRAL, the Monetary Board, IN
CONSULTATION WITH THE PHILIPPINE DEPOSIT INSURANCE
CORPORATION (PDIC), CONFIRMS [finds] that a bank or a quasi-bank is in a
state of continuing inability or unwillingness to maintain a condition of liquidity
deemed adequate to protect the interest of depositors and creditors, OR
CONTINUES TO SUFFER CHRONIC RESERVE OR CAPITAL DEFICIENCIES
WHICH, IF NOT CORRECTED, WILL EVENTUALLY RESULT IN
INSOLVENCY, the Monetary Board, IN ORDER TO AVERT THE
THREATENED INSOLVENCY OF THE BANK, [may] SHALL appoint a
conservator WHO 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 Board shall deem necessary to
ENABLE HIM TO take charge of the assets, liabilities, and the management
thereof, reorganize the management, collect all monies and debts due said
institution, PLACE OR INVEST ITS FUNDS IN READILY MARKETABLE
SECURITIES AND INVESTMENTS, SELL, IF NECESSARY, REAL
PROPERTIES AND OTHER FIXED ASSETS TO MEET ITS OBLIGATIONS,
and exercise all powers [necessary] to restore AND MAINTAIN its viability, The
conservator shall report and be responsible to the Monetary Board, WITH A
COPY OF SUCH REPORT FURNISHED TO THE PDIC, and shall have the
power to overrule or revoke the actions of the previous management and board
of directors of the bank or quasi-bank, EXCEPT THAT SUCH POWER CANNOT
EXTEND TO THE POST FACTO REPUDIATION OF PERFECTED
CONTRACTS THAT INFRINGE AGAINST THE NON-IMPAIRMENT CLAUSE
OF THE CONSTITUTION.

The conservator should be competent and knowledgeable in bank
operations and management. The conservatorship shall not exceed one (1) year,
WHICH MAY BE EXTENDED FOR A 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 IN MONTHLY PAYMENTS: [in an amount not to exceed two-thirds
(2/3) of the salary of the president of the institution in one (1) year, payable in
twelve (12) equal monthly payments:] Provided, That, if at any time within the


‘one (1) year period, the conservatorship is terminated on the ground that the
institution can operate on its own, the conservator shall receive the balance of
the remuneration which he would have received up to the end of the year; but if
the conservatorship is terminated on other grounds, the conservator shall not be
entitled to such remaining balance. The Monetary Board [may appoint a
conservator connected with the Bangko Sentral] 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, [he] THEY shall [not] be entitled to receive
[any] remuneration or emoluments THAT THE MONETARY BOARD SHALL
DETERMINE [from the Bangko Sentral] during the PERIOD OF conservatorship.
The expenses attendant to the conservatorship shall be borne by the bank or
quasi-bank concerned

UPON THE REQUEST OF THE CONSERVATOR, THE MONETARY
BOARD MAY AUTHORIZE THE 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 IS IN THE, PROCESS OF COLLECTING MONIES AND
DEBTS DUE THE INSTITUTION UNDER 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 PDIC 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 AND OPERATION OF A BRIDGE BANK.

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 should the Monetary Board, on the basis of the report of the,
conservator or of its own findings, determine that the continuance in business of
the institution, DESPITE THE REMEDIAL MEASURES THAT HAVE BEEN
ADOPTED, CONTINUE TO EXPERIENCE ILLIQUIDITY AND OTHER
RELATED FINANCIAL STRESSES, SUCH THAT THERE EXIST GROUNDS
FOR THE INSTITUTION TO ENTER RECEIVERSHIP AND LIQUIDATION,
[would involve probable loss to its depositors or creditors,] in which case the
provisions of Section 30 shall apply.”

SEC. 19. Section 30 of Republic Act No. 7653 is hereby amended to read as follows:

"SEC. 30. Proceedings in Receivership and Liquidation. - Whenever, [upon] ON
THE BASIS OF A report of [the head, of the supervising or examining
department] EXAMINATION, the Monetary Board finds OR CONFIRMS that a
bank or quasi-bank:

(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
DEPOSITIDEPOSIT 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 OR FINANCIAL community; OR


(b) has insufficient realizable assets TO MEET ITS LIABILITIES, as determined
by the Bangko Sentral[, to meet its liabilities] IN ACCORDANCE WITH
BANKING REGULATIONS; or

(c) cannot continue in business without involving SUBSTANTIAL probable
losses to its depositors or creditors RELATIVE TO THE SIZE OF THE
INSTITUTION CONCERNED; 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 IT IS A BANK designate the Philippine
Deposit Insurance Corporation as receiver of the banking institution. THE
MONETARY BOARD SHALL NOTIFY IN WRITING THE BOARD OF
DIRECTORS OF ITS FINDINGS AND DIRECT THE PDIC TO PROCEED WITH
THE LIQUIDATION OF THE CLOSED BANKING INSTITUTION PURSUANT
TO PARAGRAPH 6 OF THIS SECTION.

For a quasi-bank, any person of recognized competence in banking or
finance SHALL [may] be designated as receiver.

THE AUTHORITY OF THE MONETARY BOARD TO PLACE A BANK
OR QUASI-BANK UNDER RECEIVERSHIP AS PROVIDED ABOVE SHALL
ALSO BE EXERCISED OVER OTHER NON-BANK FINANCIAL 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 OF RECOGNIZED COMPETENCE IN
BANKING CREDIT AND FINANCE MAY BE DESIGNATED AS A 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 institution, 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: (1) [but shall not, with the exception of] PAY
administrative expenditures, [pay or commit any act that will involve the transfer
or disposition of any asset of the institution: Provided, That the receiver may] (2)
deposit or place the funds of the institution in non-speculative investments, OR
(3) ADOPT, IF DEEMED APPROPRIATE BY THE RECEIVER, BRIDGE
BANKING AS A RESOLUTION METHOD, AS GOVERNED BY SECTION 30-B
OF THIS ACT. The receiver OF QUASI-BANKS AND NON-BANK FINANCIAL
INSTITUTIONS shall determine as soon as possible, but not later than ninety
(80) days from take-over, 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 [depositors and] creditors and the general public
Provided, That any determination for the resumption of business of the institution
shall be subject to prior approval of the Monetary Board

IN ORDER TO REHABILITATE THE CLOSED INSTITUTION OR TO
RESTORE ITS OPERATIONS WITH SAFETY TO ITS 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 BE AUTHORIZED BY LAW.

If the receiver OF QUASI-BANK 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
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 institutions. The receiver shall:

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

2. convert the assets of the 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 as may be necessary to collect and recover
accounts and assets of, or defend any action against, the institution. The
assets of an institution under receivership or liquidation shall be deemed
in custodia legis in the hands of the receiver and shall, from the moment
the institution was placed under such receivership or liquidation, be
exempt from any order of garnishment, levy, attachment, or execution

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

The designation of a conservator under Section 29 of this Act or the
appointment of a receiver under this section shall be vested exclusively with the
Monetary Board. [Furthermore, the designation of a conservator is not a
precondition to the designation of a receiver.]"

‘SEC. 20. A new section entitled section 30-A of the same Act shall be inserted between
Section 30 and Section 30-B which shall read as follows:

"SEC. 30-A. PROMPT CORRECTIVE ACTION (PCA). - WHENEVER, ON THE
BASIS OF THE REPORT OF EXAMINATION (ROE), THE MONETARY BOARD
FINDS THAT A BANK OR NON-BANK FINANCIAL INSTITUTION
PERFORMING QUASI-BANK FUNCTIONS IS CAPITAL DEFICIENT AND
FAILS TO COMPLY WITH MINIMUM CAPITAL REQUIREMENTS
PRESCRIBED UNDER EXISTING LAWS AND IMPLEMENTING
REGULATIONS, THE MONETARY BOARD SHALL TAKE PROMPT
CORRECTIVE ACTION DIRECTING THE ENTITIES AFOREMENTIONED TO
INFUSE ADDITIONAL CAPITAL UP TO AN AMOUNT NECESSARY TO
RESTORE THEIR CAPITAL TO THE MINIMUM REQUIRED AMOUNT. THE
AFFECTED ENTITIES SHALL BE GIVEN A PERIOD OF NOT LESS THAN (10)
MONTHS FROM THE DATE OF RECEIPT OF THE DIRECTIVE OF THE
MONETARY BOARD TO COMPLY WITH THE CAPITAL RESTORATION
PROGRAM. IF IT IS SHOWN THAT THE AFFECTED ENTITY HAS TAKEN
EARNEST EFFORTS TO COMPLY WITH THE MANDATE OF THE


MONETARY BOARD, THE AFFECTED ENTITY SHALL B, GIVEN BY THE
MONETARY BOARD AN EXTENSION OF ANOTHER FOUR (4) MONTHS TO
COMPLY WITH THE MONETARY BOARD DIRECTIVE.

IN CASE THE REPORT OF EXAMINATION (ROE) OF THE AFFECTED
ENTITY ALSO SHOWS THAT IT ALSO FAILED TO ADDRESS CORPORATE
MANAGEMENT INADEQUACIES AND/OR NEEDS TO __ INSTITUTE
ADMINISTRATIVE REFORMS THAT ARE AUTHORIZED UNDER THIS ACT
OR SPECIAL LAWS, THE MONETARY BOARD, IN ADDITION TO
INSTITUTING PROMPT CORRECTIVE ACTION THAT DEALS SPECIFICALLY
WITH THE CAPITAL DEFICIENCY PROBLEM, MAY IMPOSE OTHER
SUPERVISORY INTERVENTIONS THAT ARE AUTHORIZED UNDER THIS
ACT OR SPECIAL LAWS.

IN THE EVENT THAT THE AFFECTED BANK IS A RURAL BANK
WHICH IS UNABLE TO COMPLY WITH THE CAPITAL RESTORATION
PROGRAM INSTITUTED BY THE MONETARY BOARD WITHIN THE
PRESCRIBED PERIOD AND IN ORDER TO PREVENT THE RURAL BANK
AFFECTED FROM BEING CLOSED, ANOTHER RURAL BANK SHALL BE
GIVEN THE RIGHT OF FIRST REFUSAL TO INVEST, CONSOLIDATE OR
MERGE WITH THE SAID BANK OR TO ACQUIRE THE ASSETS AND
ASSUME THE LIABILITIES OF SAID RURAL BANK IN ORDER TO RESTORE
THE NORMAL OPERATIONS OF SAID RURAL BANK, TO THE EXCLUSION
OF OTHER CATEGORIES OF BANKS UNLESS NO OTHER RURAL BANK
OF GOOD STANDING EXPRESSES TO EXERCISE THE RIGHT OF FIRST
REFUSAL PROVIDED UNDER THIS SECTION. THE RURAL BANKERS
ASSOCIATION OF THE PHILIPPINES SHALL BE OFFICIALLY NOTIFIED BY
THE MONETARY BOARD IN WRITING OF THE RIGHT OF FIRST REFUSAL
MADE AVAILABLE UNDER THIS SECTION IN ORDER THAT ALL RURAL
BANKS OF GOOD STANDING SHALL BE NOTIFIED ACCORDINGLY.

IN CASE THE AFFECTED BANK IS A GOVERNMENT BANK OR A
GOVERNMENT QUASI-BANK WITH ORIGINAL STATUTORY CHARTERS,
INFUSION OF ADDITIONAL CAPITAL BEYOND WHAT IS PRESCRIBED IN
THEIR CHARTERS SHALL BE UNDERTAKEN THROUGH AMENDATORY
LEGISLATION. HOWEVER, ISSUES OF CAPITAL NOTES SUBORDINATED
TO OTHER CREDITS BUT SUPERIOR TO THE EQUITY OF STOCKHOLDERS,
IN THE ORDER OF PREFERENCE OF CLAIMS AGAINST THE AFFECTED
GOVERNMENT FINANCIAL INSTITUTION IS HEREBY AUTHORIZED TO BE
ISSUED, WITH NATIONAL GOVERNMENT GUARANTEE AND SHALL BE
QUALIFIED AS EQUIVALENT TO THE REQUIRED CAPITAL INFUSION."

SEC. 21. A new section entitled section 30-B of the said Act shall be inserted between
Sections 30-A and 31 which shall read as follows:

"SEC. 30-B. BRIDGE BANKING. - (A) THE PHILIPPINE DEPOSIT
INSURANCE CORPORATION (PDIC) MAY FORM, ESTABLISH, ORGANIZE,
AND OPERATE AND/OR, CONTRACT TO OPERATE SUBSIDIARIES OR
CORPORATIONS WHOSE PRIMARY PURPOSE IS TO OPERATE AS A
BRIDGE BANK AND/OR MANAGE ACQUIRED ASSETS OF THE PDIC.

(B) A BRIDGE BANK REFERS TO A TEMPORARY BANK LICENSED BY THE
BANGKO SENTRAL, 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 OTHER LIABILITIES WHICH THE PDIC MAY DETERMINE
TO BE APPROPRIATE; AND PERFORM SUCH OTHER BANKING
FUNCTIONS AS THE MONETARY BOARD MAY AUTHORIZE, CONSISTENT
WITH THE OBJECTIVES OF THIS SECTION.

(C) A BRIDGE BANK RESOLUTION MEASURE MAY BE ADOPTED ONLY IF
THE BOARD OF 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 INSURED
DEPOSITS OF THE FAILED BANK; AND THE PRESERVATION OF CRITICAL
BANKING FUNCTIONS IS IN THE BEST INTEREST OF THE DEPOSITORS
AND THE PUBLIC.

(D) FOR THE EFFECTIVE IMPLEMENTATION OF A BRIDGE BANK
RESOLUTION MEASURE, THE PDIC MAY:

1, SELL, ASSIGN, TRANSFER, OR CONVEY ITS SHAREHOLDINGS
IN ITS SUBSIDIARY TO THE FAILED BANK;

2. TRANSFER SUCH ASSETS AND DEPOSIT LIABILITIES OF A
FAILED BANK TO THE BRIDGE BANK, AS THE PDIC MAY DEEM
APPROPRIATE. ALL TRANSFERS UNDER THIS SUBSECTION
SHALL:

|, 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;

Il, 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 SHALL NOT
BE SUBJECT 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 UNDER SECTION 22 HEREOF.

il, BE EFFECTIVE WITHOUT ANY CONSENT FROM THE
STOCKHOLDERS, CREDITORS, STAKEHOLDERS OF THE
FAILED BANK, NOTWITHSTANDING ANY PROVISION OF 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 PDIC MAY PRESCRIBE, SUFFICIENT FUNDS FOR THE
BRIDGE BANK TO OPERATE. THESE ADVANCES SHALL PARTAKE OF
THE NATURE OF PUBLIC FUNDS, AND AS SUCH, MUST BE CONSIDERED
A PREFERRED CREDIT SIMILAR TO TAXES DUE TO THE NATIONAL
GOVERNMENT IN THE ORDER OF PREFERENCE UNDER ARTICLE 2224 OF
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 PDIC OR UPON 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 PERIOD PROVIDED UNDER SECTION 30 OF REPUBLIC
ACT 7653, AS AMENDED, WITHIN WHICH THE RECEIVER SHALL
DETERMINE WHETHER THE INSTITUTION MAY BE REHABILITATED
SHALL NOT BE APPLICABLE.

(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 PARAGRAPHS (G) AND (H); PROVIDED,
FURTHER, THAT THE PDIC MAY EXTEND THE STATUS OF THE BRIDGE
BANK IF 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 PDIC; OR

3. THE ASSUMPTION OF ALL OR SUBSTANTIALLY ALL OF THE (i)
DEPOSITS AND OTHER 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
LAWS. FOLLOWING THE ASSUMPTION OF ALL OR
SUBSTANTIALLY ALL OF THE LIABILITIES OF THE BRIDGE BANK
AND THE SALE OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS
OF 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 (1), (2) OR
(3), OF PARAGRAPH (G), THE BOARD OF DIRECTORS OF PDIC, MAY
DISSOLVE A BRIDGE BANK, AT ANY TIME IT DEEMS NECESSARY. THE
PDIC, AS SUCH RECEIVER, SHALL WIND UP THE AFFAIRS OF THE
BRIDGE BANK IN CONFORMITY WITH THE PROVISIONS OF LAW
RELATING TO THE LIQUIDATION OF CLOSED BANKS. WITH RESPECT TO
ANY SUCH BRIDGE BANK, THE PDIC, AS SUCH RECEIVER, SHALL HAVE
ALL THE RIGHTS, POWERS, AND PRIVILEGES, AND SHALL PERFORM
THE DUTIES RELATED TO THE EXERCISE OF SUCH RIGHTS, POWERS,
OR PRIVILEGES GRANTED BY LAW TO A RECEIVER OF ANY INSURED
BANK.

(l) MATTERS RELATING TO THE EXERCISE BY THE PDIC OF THE
FUNCTIONS UNDER THIS SECTION SHALL BE SUBJECT TO VISITORIAL
AUDIT ONLY.

(J) THE ACTIONS OF THE PDIC UNDER THIS SECTION SHALL BE FINAL
AND EXECUTORY, AND MAY NOT BE RESTRAINED OR SET ASIDE BY THE
COURT, EXCEPT ON PETITION FOR CERTIORARI 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 BRIDGE
BANK.

(K) THE PDIC SHALL PROMULGATE THE IMPLEMENTING RULES AND
REGULATIONS TO IMPLEMENT THE PROVISIONS OF THIS SECTION."

SEC.22. Section 33 of Republic Act No. 7653 is hereby amended to read as follows:

"SEC. 33, Disposition of Banking Franchise. - The Bangko Sentral may, if public
interest so requires, award to an institution, upon such terms and conditions as
the Monetary Board may approve, the banking franchise of a CLOSED bank
[under liquidation] 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 to the appropriate exclusive disposition of the
Monetary Board] FOR THE BENEFIT OF THE CREDITORS OF THE CLOSED
BANK."

SEC, 23. 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. - Whatever a bank, for] quasi-bank,
OR OTHER FINANCIAL INSTITUTION WHICH UNDER THIS ACT OR
SPECIAL LAWS IS SUBJECT TO BANGKO SENTRAL SUPERVISION or
whenever any person or entity willfully violates this Act or other pertinent banking
laws being enforced or implemented by the Bangko Sentral or any order,
instruction, rule or regulation issued by the Monetary Board, the person or
persons responsible for such violation shall unless otherwise provided in this Act
be punished by a fine of not less than Fifty Thousand Pesos (P50,000) nor more
than [Two Hundred Thousand Pesos (P200,000)] TWO MILLION PESOS
(P2,000,000.00) or by imprisonment of not less than two (2) years nor more than
[ten (10)] SIX (6) years, or both, at the SOUND discretion of the court

Whenever [a bank or quasi-bank] AN ENTITY UNDER BANGKO
SENTRAL SUPERVISION persists in carrying on its business in an [unlawful or]
unsafe or UNSOUND manner AS DETERMINED UNDER THE PROVISIONS
OF SECTION 56 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 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. 24. Section 37 of Republic Act No. 7653 is hereby amended to read as follows:

"SEC. 37. Administrative Senctions [On Banks And Quasi-Banks]. - Without
prejudice to the criminal sanctions against the culpable persons provided in
Sections 34, 35, and 36 of this Act, the Monetary Board may, at its discretion,
impose ADMINISTRATIVE SANCTIONS upon any bank for quasi-bank, their
directors, andlor officers, for any willful violation of its charter or by-laws, willful
delay in the submission of reports or publications thereof as required by law,
rules and regulations; any refusal to permit examination into the affairs of the
institution; any willful making of a false or misleading statement to the Board or
the appropriate supervising and examining department or its examiners; any
willful failure or refusal to comply with, or violation of, any banking law or any
order, instruction or regulation issued by the Monetary Board, or any order,
instruction or ruling by the Governor] 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 SPECIAL LAWS THAT ARE
UNDER THE SUPERVISION OF THE BANGKO SENTRAL FOR WILLFUL
VIOLATION OR 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, [whenever] 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 FINANCIAL INSTITUTION INVOLVED:

{a) [fines] ADMINISTRATIVE PENALTIES in amounts as may be
PRESCRIBED AND determined by the Monetary Board to be appropriate, but in
no case to exceed [Thirty Thousand Pesos (P30,000) a day for each violation,
taking into consideration the attendant circumstances, such as the nature and
gravity of the violation or irregularity and the size of the bank or quasi-bank;] THE
MAXIMUM PENALTIES PRESCRIBED HEREIN FOR EACH VIOLATION, AS
FOLLOWS:

4. FOR UNIVERSAL AND COMMERCIAL BANKS - NOT EXCEEDING
P10,000 PER BANKING DAY;

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

3. FOR RURAL BANKS/COOPERATIVE BANKS - NOT EXCEEDING
P2,000 PER BANKING DAY;

4. FOR FINANCE COMPANIES AND NON-BANK FINANCIAL
INSTITUTIONS PERFORMING QUAS!-BANKING FUNCTIONS - NOT
EXCEEDING P5,000 PER BANKING DAY;

5. FOR FINANCE COMPANIES AND FINANCIAL INSTITUTIONS
WHICH ARE NOT PERFORMING QUASI- BANKING FUNCTIONS -
NOT EXCEEDING P3,000 PER BANKING DAY;

6. FOR OTHER INSTITUTIONS THAT ARE SUPERVISED BY THE
BANGKO SENTRAL - NOT EXCEEDING P2,000 PER BANKING DAY.

WITHIN THE MAXIMUM PENALTY PRESCRIBED HEREIN, FOR
VIOLATIONS OR IRREGULARILITIES COMMITTED BY EVERY CATEGORY
OF BANKS, QUASI-BANKS, AND NON-BANKS FINANCIAL INSTITUTIONS
AS HEREIN PROVIDED, THE MONETARY BOARD SHALL, ACCORDING TO
THE DEGREE OF SEVERITY OF VIOLATIONS OR IRREGULARITIES
SUBJECT TO PENALTIES, CLASSIFY VIOI.ATIONS OR IRREGULARITIES
COMMITTED INTO GRAVE, LESS GRAVE AND LIGHT OFFENSES SUCH
THAT THE PENALTIES TO BE IMPOSED SHALL CORRESPONDINGLY BE
GRADUATED WITHIN THE PRESCRIBED MAXIMUM PENALTIES.

IN COMPUTING THE AFOREMENTIONED PENALTIES, THE
FOLLOWING ATTENDING CIRCUMSTANCES SHALL BE TAKEN INTO
CONSIDERATION: THE CAPITAL OF THE INSTITUTION, THE NATURE OF
THE VIOLATION; A ONE-TIME VIOLATION VIS-A-VIS A CONTINUING
VIOLATION OR OFFENSE; FREQUENCY OF THE VIOLATION OR 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, BANK OR OTHER NON-BANK
FINANCIAL INSTITUTION.



THE SUPERVISION AND EXAMINATION 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 deposits or make new investments; AND/OR

(d) suspension of interbank clearing privileges; [and/or]
[(e) revocation of quasi-banking license}

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

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

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

Whether or not there is an administrative proceeding, if the institution and/
or the directors and/or officers, concerned continue with or otherwise persist in
the commission of the indicated practice or violation, the Monetary Board may
issue an order requiring the institution and/or the directors, 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 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 receiot of the order. If no such hearing is requested
within said period, the order shall be final. If a hearing is conducted, all issues
shall be determined on the basis of records, after which the Monetary Board may
either reconsider or make final its order.

[The Governor is hereby authorized, at his discretion, to impose upon
banking institutions for any failure to comply with the requirements of law,
Monetary Board regulations and policies, end/or instructions issued by the
Monetary Board or by the Governor, fines not in excess of Ten thousand pesos
(P10,000) a day for each violation, the imposition of which shall be final and
executory until reversed, modified or lifted by the Monetary Board on appeal.]"

SEC. 25. Section 40 of Republic Act No. 7653 is hereby emended to read as follows:

"SEC. 40. [Reports] APPEARANCE BEFORE CONGRESS. - {Before the end of
March of each year, the Bangko Sentral shali publish and submit to the President


and the Congress an annual report on the condition of the Bangko Sentral
including a review of the policies and measures adopted by the Monetary Board
during the past year and an analysis of the economic and financial circumstances
which gave rise to said policies and measures.

The annual report shall also include a statement of the financial condition
of the Bangko Sentral and a statistical appendix which shall present, as a
minimum, the following data] THE BSP GOVERNOR SHALL APPEAR
BEFORE THE COMMITTEES ON APPROPRIATIONS, WAYS AND MEANS,
ECONOMIC AFFAIRS, AND BANKS AND FINANCIAL INTERMEDIARIES OF
THE HOUSE OF REPRESENTATIVES ON OR BEFORE THE 2ND TUESDAY
OF MARCH AND SEPTEMBER, AND; BEFORE THE COMMITTEES ON
FINANCE, WAYS AND MEANS, ECONOMIC AFFAIRS, AND BANKS,
FINANCIAL INSTITUTIONS AND CURRENCIES OF THE SENATE ON OR
BEFORE THE 4TH TUESDAY OF MARCH AND SEPTEMBER TO REPORT
ON THE STATUS AND DIRECTIONS OF THE FISCAL AND MONETARY
POLICIES OF THE GOVERNMENT, ECONOMIC DEVELOPMENTS AND
PROSPECTS FOR THE FUTURE, TAKING INTO ACCOUNT PAST AND
PROSPECTIVE DEVELOPMENTS IN EMPLOYMENT, UNEMPLOYMENT,
PRODUCTION, INVESTMENT, REAL INCOME, PRODUCTIVITY, EXCHANGE
RATES, INTERNATIONAL TRADE AND PAYMENTS, AND PRICES.

THE GOVERNOR OF THE ESP SHALL ALSO SUBMIT A WRITTEN
REPORT TO THE PRESIDENT 4ND TO THE COMMITTEES SPECIFIED IN
THE ABOVE PARAGRAPH WHICH SHALL INCLUDE. SUT SHALL NOT BE
LIMITED TO, THE FOLLOWING:

(@) the monthly movement of monetary 2ggregates and their components;

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

(©) balance of payments of the Philippines,
(d) monthly indices of consumer prices end of import and export prices;

(©) the monthly movement, in summary form of exports and imports, by
volume and value;

(f the monthly movement of th
other banks;

counts of the Bangko Sentral and of

(@) the principal data on government receipts and expenditures and on
the status of the public debt, both domestic and foreign’ [and]

(h) the texts of the major legal and administrative measures adopted by
the Government and the Monetary Board during the year which relate to the
functions or operations of the Sangko Sentral or of the financial system; AND

(l) OTHER INFORMATION THAT MAY BE REQUESTED BY THE SAID
COMMITTEES OF CONGRESS.

[The Bangko Sentral shall publish another version of the annual report.]
THE BSP SHALL MAKE AVAILABLE COPIES OF THE REPORTS
SUBMITTED TO CONGRESS IN THEIR OFFICIAL WEBSITES FOR A
REASONABLE PERIOD IMMEDIATELY FOLLOWING THE SUBMISSION OF
THE REPORTS in terms understandable to the layman”

Failure to comply with the reportorial requirements pursuant to this article
without justifiable reason as may be determined by the Monetary Board shall
cause the withholding of the 7
requirements are complied with"



SEC. 26. Section 54 of Republic Act No. 7653 is hereby amended to read as follows:

"SEC. 54. Printing of Notes and Minting of Coins. - The Monetary Board shall
prescribe the amounts of notes and coins to be printed and minted, respectively,
and the conditions to which the printing of notes and the minting of coins shalll be
subject. The Monetary Board shall have the authority to contract institutions,
mints or firms for such operations

THE HEAD OF THE SECURITY, PRINTING OF NOTES AND MINTING
OF COINS SHALL SUBMIT TO THE MONETARY BOARD REGULAR
REPORTS OF EACH AND EVERY PRINTING JOB OF NOTES AND MINTING
OF COINS WHETHER THE PRINTING OF NOTES AND MINTING OF COINS
IS DONE IN-HOUSE OR OUTSOURCED. A REPORT SHALL BE SUBMITTED
WITHIN THIRTY (30) DAYS FROM COMPLETION OF PRINTING OF NOTES
AND MINTING OF COINS IF IN-HOUSE AND WITHIN THIRTY (30) DAYS
FROM THE DATE OF DELIVERY TO THE BANGKO SENTRAL OF
OUTSOURCED PRINTING/MINTING JOR.

THE REGULAR REPORTS ON THE PRINTING OF NOTES/MINTING
OF COINS TO BE SUBMITTED TO THE TARY BOARD SHALL
CONTAIN THE FOLLOWING MINIMUM INFORMATION PER PRODUCTION
JOB:

(A) THE VOLUME OF NOTES/COINS AS ACTUALLY
PRINTED/MINTED;

(B) THE NOTES AND COINS PRINTED/MINTED INDICATING THE
SERIAL NUMBERS AND YEAR MARK OF THE NOTES PRINTED AS WELL
AS THE YEAR MARK OF THE CO!NS;

(C) THE NAMES £ND AODRE! OF THE ENTITIES THAT
PRINTED THE NOTES OR MINTED THE COINS, IF OUTSOURCED;
OTHERWISE INDICATE iF THE NOTES AND COINS WERE
PRINTED/MINTED IN-HOUSE;

(D) PAPERS, INK 4ND OTHER RAW MATERIALS ORDERED VS.
PRODUCTION OUTPUT;

(E) PRODUCTION CAPACITY PER DENOMINATION VS. VOLUME OF

PRODUCTION OUTPUT:

(F) DATES OF DELIVERY OF RAW MATERIALS FOR PARTICULAR
DENOMINATION AND DATES OF DELIV: .F PRINTED NOTES OR
MINTED COINS TO THE CASH DEPARTMENT;

(G) ALLOWANCE FOR WASTAGE VS. ACTUAL WASTAGE PER
PRODUCTION ORDER. THE RECORD OF WASTAGE SHALL INCLUDE
INFORMATION ON THE SHREDDING OF WASTAGE; AND

(H) RUNNING BALANCE OF THE PARTICULAR DENOMINATION
PRINTED/MINTED.

All expenses incurred in the printing of notes end the minting of coins
shall be for the accourt of the Bango Sentr

SEC. 27. 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 PRICE STABILITY,



The Monetary Board shall endeavor to contro! any SIGNIFICANT
expansion or contraction in monetary aggregates which is prejudicial to the
attainment or maintenance of price stability.”

SEC. 28. Section 81 of Republic Act No. 7653 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 AND
OTHER SUPERVISED FINANCIAL INSTITUTIONS under the provisions of the
present article of this Act shall be usec to influence the volume of credit
consistent with the MAINTENANCE OF FINANCIAL STABILITY AND THE
objective of price stability.”

SEC. 29. Section 83 of Republic Act No. 7653 is hereby amended to read as follows:

"SEC. 83. Loans for Liquidity Purposes. - The Bangko Sentral, BY A VOTE OF
AT LEAST FIVE (5) MEMBERS OF THE MONETARY BOARD, may extend
loans and advances ‘o [banking] BANKS, QUOSI-BANKS AND OTHER
SYSTEMICALLY CRITICAL BANGKO SENTRAL-SUPERVISED institutions for
a period of not more than [seven (7)] FORTY-FIVE (45) BANKING days without
any collateral for the purpose of providing liquidity to the benking system in times
of need, SUBJECT TO SUCH TERMS AND CONDITIONS AS THE
MONETARY BOARD MAY PRESCRIBE TO MINIMIZE POSSIBLE LOSSES
TO THE BANGKO SENTRA\.”

SEC. 30. Section 84 of Republic Act No. 7653

d as follows:

"SEC. 84, Emergency Loans and Advances. - In periods of national andlor local
emergency or of imminent financial panic which directly threaten monetary and
retary Board may, by a vote of at least
five (6) of its members. authorize the Bangko Senirai to grant extraordinary loans
or advances to banking, QUASI-BANKING AND OTHER SYSTEMICALLY
CRITICAL BANGKO SENTRAL-SUPERVISED instiwions TO BE 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 cr investments

‘The Monetary Board may, at its discretion likewise authorize the Bangko
Sentral to grant emergency lear: nking] BANKS, QUASI-
BANKS AND OTHER SYSTE CAL BANGKO SENTRAL-
SUPERVISED institutions. even « for the purpose of
assisting a bank in a precarious finarcia! condition or under serious financial
pressures brought by unforeseen events, or events which, though foreseeable,
Could not be prevented by the bank concerned. Provided, however, That the
Monetary Board has ascertained thst the bank is not insolvent and has the
assets defined, hereunder to secure the advenoes: Provided further, That a
concurrent vote of at least fi bers of the Hfonztary Board is obtained.

The amount of any emergency loan or advance shail not exceed the sum
of fifty percent (50%) of total {deposits and depos't substitutes] BORROWINGS
of the [banking] institution ano be disbursed in two (2) or more tranches.
The amount of the first tranche shall be limited to twenty-five nercent (25%) of
the BORROWINGS [total ceposit anc deoosit substitutes] of the institution and
shall be secured by (4) gov e ‘neir applicable
joan values and]; (B) ACCEPTABLE GUARANTEES BACKED UP BY THE
NATIONAL GOVERNMENT OR ITS SECURITIES unencumbered first
class collaterals AND (D) PR'VATE COMMERCIAL PAPER TO THE EXTENT
OF THEIR APPLICABLE LOAN VALUES wiich tie Monetary Board may
approve: Provided, That if as determined by the Monetary Board, the
circumstances surrounding the emergency warrant 2 oan or aovance greater
than the amount provided hereinabove the nt of the first tranche may
exceed twenty-five percent ( he thank S total [deposit



and deposit substitutes] BORROWINGS if the same is adequately secured by
applicable loan values of government securities and unencumbered first class
collaterals OR ACCEPTABLE GUARANTEES BACKED UP BY THE
NATIONAL GOVERNMENT OR ITS SECURITIES 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 tra
submit to the Bangko Sentral 2 resolution ard of authorizing the
Bangko Sentral to eva! e Thanking], institution certified by
its external auditor to be good and available for collateral purooses should the
release of the subsequent tranche be thereafter applied for.

he. the [banking] institution shall

The Monetary Board may. by a vote of at least ‘ive (5) of its members,
authorize the release of a subsequent tranche on ccndition that the principal
stockholders of the ins ition:

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

(b) provide acceptable security which, in the judgment of the Monetary
Board, would be adequate 'o supplement, where necessary, the asse!s tendered
by the [banking] institution to collaleraiize the subsequ

In connection with the exercise of these powers, the ovohibitions in
Section 128 of this Act shall not apply insofar as it refers to acceptance as
collateral of shares and their acquisition as a result cf foreclosure proceedings,
including the exercise cf voting rights pertaining to said shares: Provided,
however, That should the Bengxo S of the shares it has
accepted as collaterai a a result the Bangko Sentral
shall dispose of said shar: y e( (1) year from the date of
consolidation of title by the Bangko Sentra

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. 31. A new section entitled Section 68-A of the same Act shali be inserted between
Section 88 and Section 88-B which shall read 2s follows:

"SEC. 88-A. EXEMPTION FROM ATTACHMENT. - THE PROVISIONS OF ANY
LAW TO THE CONTRARY NOTWITHSTANDING AND SECTION 34 OF THIS
ACT, COLLATERALS ON LOANS AND ADVANCES GRANTED BY THE
BANGKO SENTRAL SHALL NOT SUBJECT YO ATTACHMENT,
EXECUTION OR ANY OTHER COURT R SHALL THEY BE
INCLUDED IN THE PROPERTY OF INSOLVENT PERSONS OR
INSTITUTIONS, UNLESS THE SECURED LOANS AND ADVANCES
GRANTED BY THE PANGKO SENTRAL TO INSOLYENT PERSONS OR
INSTITUTIONS OR A Ci.OS:! JTIOM HAVE ALREADY BEEN FULLY
PAID IN WHICH CASE THE F {SHALL NO
LONGER APPLY.”

SEC. 32. A new section enti
Section 88-A and Section 88-C

"SEC. 88-B. DEPUT/Z4 = OF AN
EXTRAJUDICIAL PANGKO
SENTRAL MAY, DEPUTIZE ANY OF ITS LAWYERS TO CONDUCT THE
PUBLIC AUCTION PURSUANT TO ACT NO. 3135, AS ANENDED. iN CASE
OF A JUDICIAL FORECLOSURE, THE BANG



APPROVAL OF THE COURT, LIKEWISE 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 COURT
AFTER ANY ACTION HAS BEEN TAKEN BY HIM, WHICH COURT SHALL
TREAT SUCH ACTION AS IF IT WERE AN ACT OF ITS OWN SHERIFF IN
ALL RESPECTS.

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

SEC. 33. A new section entitled Section 88-C of the same. Act shall be inserted between
Section 88-B and Section 89 which shall 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. REDEMPTION SHALL BE
EFFECTED BY PAYING THE PRINCIPAL, INTERESTS, CHARGES,
COMMISSIONS AND ALL CLAIMS OF WHATEVER NATURE OF THE
BANGKO SENTRAL OUTSTANDING AND DUE AS OF THE DATE OF
FORECLOSURE SALE, INCLUDING ALL COSTS AND OTHER EXPENSES
INCURRED BY REASON OF THE FORECLOSURE SALE AND CUSTODY OF
THE PROPERTY.

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

SEC. 34. A new section entitled Section 89-A of the same Act shall be inserted between
Section 89 and Section 90 which shall read as follows:

"SEC. 89-A. CREDIT 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 FACILITIES TO ISLAMIC BANKS."

SEC. 35. 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 Bangko Sentral, subject to such rules and regulations as the
Monetary Board may prescribe and in accordance with the principles stated in
Section 90 of this Act, issue, place, buy and sell freely negotiable evidences of
indebtedness of the Bangko Sentral[: Provided, That issuance of such
cettificates of indebtedness shall be made only in cases of extraordinary
movement in price levels.] Said evidences of indebtedness may be issued
directly against the international reserve of the Bangko Sentral or against the
securities which it has acquired under the provisions of Section 91 of this Act, or
may be issued without relation to specific types of assets of the Bangko Sentral

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

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

THE BANGKO SENTRAL IN PURSUIT OF ITS OPEN MARKET
OPERATIONS, MAY ALSO ENGAGE IN THE PURCHASE AND RESALE OF
READILY MARKETABLE COMMERCIAL PAPERS ISSUED BY FINANCIAL
INSTITUTIONS DULY ACCREDITED UNDER SUCH RULES AND
REGULATIONS AS THE MONETARY BOARD MAY PRESCRIBE TO
PROVIDE LIQUIDITY TO THE FINANCIAL MARKETS FROM TIME TO TIME.
SUCH PURCHASE AND RESALE MAY BE SUBJECT TO REPURCHASE OR
REVERSE REPURCHASE AGREEMENTS AS THE BANGKO SENTRAL
SHALL STIPULATE AND SUCH INSTRUMENTS ARE PART OF THE OPEN
MARKET OPERATIONS OF THE BANGKO SENTRAL.”

SEC. 36. Section 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 but need not
be limited to, bankers acceptances, promissory notes, participations, certificates
of assignment and similar instruments with recourse, [and repurchase
agreements] PROVIDED, 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 INTERBANK
BORROWINGS SHALL NOT BE CONSTRUED AS DEPOSIT SUBSTITUTES.

The Monetary Board shall determine what specific instruments shall be
considered as deposit substitutes for the purposes of Section 94 of this Act[:].
THE MONETARY BOARD MAY ALSO EXCLUDE FUNDS OBTAINED OR


BORROWED FROM CERTAIN INSTITUTIONAL LENDERS FROM THIS
SECTION: 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. 37. Section 99 of Republic Act No. 7653 is hereby amended to read as follows’

"SEC. 99. Adjustment [Increase] in Reserve Requirements. - Whenever in the
opinion of the Monetary Board it becomes necessary to ADJUST [increase]
reserve requirements against existing liabilities, the [increase] CHANGE shall be
made in a [gradual] manner [and shall not exceed four percentage points in any
thirty-day period} CONSISTENT WITH THE MONETARY POLICY
DETERMINED BY THE MONETARY BOARD. Banks and other affected
financial institutions shall be notified reasonably in advance of the date on which
such [increase] CHANGE is to become effective.”

SEC. 38. Section 113 of Republic Act No. 7653 is hereby amended to read as follows:

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

EXCEPT FOR DEMAND DEPOSITS, the Bangko Sentral [may] SHALL
pay interest on deposits of the Government or of its political subdivisions and
instrumentalities, as well as on deposits of banks with the Bangko Sentral."

SEC. 39. 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 its respective subdivisions or
instrumentality, as the case may be: Provided, however, That the Bangko 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 UNDERWRITTEN 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, OTHWERISE 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 THE ACCREDITED
FINANCIAL INSTITUTIONS AS INVESTORS OR TRADERS OF SAID
GOVERNMENT SECURITIES.


IN ORDER TO INSURE THAT SAID ACCREDITED FINANCIAL
INSTITUTIONS SHALL OPERATE UNDER FAIR AND UNIFORM TRADING
RULES, THEY SHALL, AS PART OF THE GUIDELINES OF ACCREDITATION,
BE REQUIRED TO JOIN AN ASSOCIATION OF ACCREDITED FINANCIAL
INSTITUTIONS TO BE GOVERNED BY INTERNAL RULES OF CONDUCT
APPROVED BY THE SECRETARY OF FINANCE, THE LATTER BEING THE
OFFICIAL REPRESENTATIVE OF THE REPUBLIC OF THE PHILIPPINES,
THE PRIMARY OBLIGOR IN THE ISSUANCE 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 SECTIONS 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. 40. Section 118 of Republic Act No. 7653 is hereby, amended to read as follows:
"SEC. 118. Methods of Placing Government Securities. - The Bangko Sentral

may place the securities to which the FIRST PARAGRAPH OF THE preceding
Section refers through direct sale to financial institutions [and the public]

The Bangko Sentral shall not be a member of any stock exchange or
syndicate, but may intervene therein; IN COORDINATION WITH THE
DEPARTMENT OF FINANCE, for the sole purpose of regulating their operations
in the placing of government securities.

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

23 "SEC. 125. Tax Exemptions. - THE PROVISIONS OF ANY GENERAL OR
SPECIAL LAW TO THE CONTRARY NOTWITHSTANDING, FINANCIAL
TRANSACTIONS OF the Bangko Sentral ARISING FROM ITS OPEN MARKET
OPERATIONS shall be exempt [for a period of five (5) years from the approval of
this Act] from all national, AND LOCAL [provincial, municipal and city] taxes,
fees, charges and assessments.

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

SEC. 43. Section 126 of Republic Act No. 7653 is hereby amended to read as follows’


"SEC. 126. Exemption from Customs Duties. - The provision of any general or
special law to 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 the importation of all [equipment]
SUPPLIES needed [for] BY THE BANGKO SENTRAL FOR bank note
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.

THE IMPORTATION OF MACHINERY OR EQUIPMENT REQUIRED BY
THE BANGKO SENTRAL FOR THE PRINTING OF NOTES AND THE
MINTING OF COINS SHALL BE SUBJECT TO CUSTOMS DUTIES AND
OTHER RELATED ASSESSMENTS AND CHARGES RELATED TO THE
IMPORTATION OF ANY SUCH MACHINERY OR EQUIPMENT."

SEC. 44. A new section entitled Section 126-A of Republic Act No. 7653 shall be
inserted between Section 126 and Section 127 which shall read as follows:

"SEC. 126-A. ACQUISITIONS SUBJET TO PROCUREMENT LAW. - ANY AND.
ALL ACQUISITION OF GOODS AND SERVICES BY THE BANGKO SENTRAL
SHALL BE SUBJECT TO PROCUREMENTS LAWS.”

SEC. 45. Separability Clause. - \f any part or provision of this Act shall be held to be
unconstitutional or invalid, other parts or provisions hereof which are not affected
thereby shall continue to be in full force and effect.

SEC. 46. Repealing Clause. - All laws, decrees, executive orders, rules and
regulations, or parts thereof which are inconsistent with this Act are hereby repealed,
amended or modified accordingly.

SEC. 47. Effectivity. - This Act shall take effect fifteen days (15) days following its
publication in at least two (2) newspapers of general circulation or the Official Gazette.

Approved,