enat 
ara 
Experience in the past highlighted the inability of the Bangko Sental ng Pilipinas 
(BSP) to deal effectively and expeditiously with problem banks. The authority of the BSP 
over problem banks; in general, is limited to the grant of emergency advances in case of 
illiquidity, or closure in case of insolvency. Prompt corrective actions cannot be 
implemented due to the absence of clear and strong legal basis. Such inability of the 
BSP often causes losses of hard-earned money of the depositors and also losses of 
public funds. 
1. 
2. 
3. 
4. 
Therefore, to better protect the interest of the depositors and to avoid losses of 
the public funds, this Bill seeks to adopt, among others, the following international best 
practices in banking supervision and other measures that will strengthen the regulatory 
and supervisory powers of the BSP over banks and other financial institutions: 
l 
The principle of consolidated supervision - This will authorize the BSP, when 
examining a bank or other financial institution under its supervision, to examine 
its subsidiaries and affiliates engaged in allied activities. This is an interdational 
best practice and very important in our jurisdiction since the parent institution 
can be adversely affected by the faiEure of its subsidiaries and affiliates. Hence, 
the BSP should be able to evaluate and determine the financial condition, not 
only of the parent institution under its supervision but also of its subsidiaries and 
affiliates. 
BSP's authority to approve transfers or acquisitions of shares in a supervised 
institution where such transfer or acquisition or series of transfers or acquisitions 
should be sufficient to elect at least one seat in the board or would effect a 
change in the majority ownership or control of the voting stock of the institution 
- This is a proactive measure that would empower the BSP to prevent the entry 
of undesirable persons into the supervised institution. This is very important 
because failure of institutions is usually caused by the actions of controlling 
stockholders. 
The authority of the Monetary Board to prescribe guidelines for the examination 
of supervised authorities 
- 
This proposal will result in more effective 
Supervision since the resources and manpower of the BSP can be properly 
allocated and the examination of problem institutions can be prioritized. 
The authority of the Monetary Board to direct existing stockholders to infuse 
additional capital or in case of their inability or refusal, to direct them to accept 
new investors or merge or consoiidate with a qualified financial institution - This 
is also a proactive measure that could prevent failures of supervised institutions. 


‘
1
 
5. 
Prescribing additional and transparent grounds for bank closure 
announcement of unilateral closure, suspension of payment of 
deposit substitutes, or inability to pay liabilities as they become due - These 
proposed additional grounds for closing a bank will minimize losses on the part of 
the depositors and of public funds. This will even enable the PDIC to recover 
their payments of insured deposits. 
6. 
Increase in penalties for violation of applicable laws and regulations - This is 
necessary because it has been observed in the past that banks opted to commit 
violations and just pay the penalty because the income from prohibited 
transactions was greater than the penalty. If not corrected, these practices 
would render useless some of BSP’s monetary policies. 
Indemnifj, BSP personnel for cost and expenses incurred by them in connection 
with any civil, administrative or criminal action, suit or proceedings - This will 
encourage BSP personnel, parhcularly the examiners, to discharge their uties and 
responsibilities properly without fear of retaliation. 
The Bill also aims to enhance the ability of the BSP to provide policy directions in 
7. 
the areas of money, banking and credit through the following: 
1. 
Grant of authority to the BSP to request date not only from government entities 
but also from any person. 
Authority of the Monetary Board to require all supervised institutions including 
their subsidiaries and affiliates to maintain balanced currency position between 
their assets _and liabilities. 
Approval of this Bill which is primarily aimed at providing better protection to the 
public, particularly the depositors and creditors of BSP’s supervised institutions, is 
therefore earnestly sought. 
2. 
.- 
--. 
.I ,. ...... ;. 
, 


13TH CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
1 
first Regular Session 
1 
S E N A T E  
Introduced by 
Senator Edgardo J. Angara 
AN ACT 
AMENDING REPUBLIC ACT NUMBERED SEVENn-SIX HUNDRED AND 
FIFTY-THREE ENTITLED "THE NEW CENTRAL BANK ACT" AND 
FOR OTHER PURPOSES 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
1 
ecti~n 1. Section 3, Republic Act No. 7653, otherwise known as the "The New 
2 
Central Bank Act", is hereby amended to read as follows: 
3 
4 
"SECTION 3. Responsibility and Primary Objective. - The Bangko Skntral shall 
provide policy directions in the areas of money, banking and credit. It 
hall have 
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supervision over the operations of banks, QUASI-BANKS, TRUST ENTmES 
AND 
OTHER FINANCIAL INSTITUTIONS WHICH UNDER THIS ACT OR 
SPECIAL 
LAWS 
ARE SUBJECT TO BANGKO SENTRAL SUPERVISION and exercise such regulatory 
powers as provided in this Act and other pertinent laws over the operations of [finance 
companies and] OTHER non-bank financial institutions NOT SUPERVISED OR 
REGULATED BY OTHER GOVERNMENT AGENCIES [performing quasi-banking functions, 
hereafter referred to as quasi-banks, and institutions performing similar functions], 
The primary objective of the Bangko Sentrai is to maintain price stability 
conducive to a balanced and sustainable growth of the economy. It shall also 


_. 
- 
-. 
1 
promote and maintain monetary stability and the convertibility of the peso. IT 
2 
SHALL LIKEWISE PROMOTE AND MAINTAIN THE STABILITY OF THE FINANCIAL 
3 
AND PAYMENT SYSTEMS. 
4 
5 
ion 2. 
Section 11 of the same Act is hereby amended by inserti 
paragraph between the third and the fourth paragraphs which shall read as foliows: 
6 
"MEETINGS OF THE MONETARY BOARD MAY BE CONDUCTED THROUGH THE 
7 
USE OF MODERN TECHNOLOGY 
INCLUDING BUT 
NOT 
LIMITED TO TELE- 
8 
CONFERENCING OR VIDEO-CONFERENCING. 
9 
10 
Section 3. Section 15 (Exercise of the Authority of the Monetary Board), paragraphs 
(b) and (e), of the same Act is hereby amended to read as follows: 
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"(b) 
direct the management, operations, and administration of the Bangko 
Sentral, 
reorganize its personnel, 
PROVIDE SEPARATION BENEFITS WHENEVER 
NECESSARY, 
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; 
T.. 
-. . 
. 
, .. 
"(e) 
indemnify its members and other [officials] PERSONNEL of the 'Bangko 
Sentral [ , including personnel 
of the departments performing supervision and 
examination functions] 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 
unless he is finally adjudged in such action or proceeding to be 
negligence or GROSS misconduct. 
, .  . 
. 
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In the event of a settlement or compromise, indemnification shall be provided 
2 
only in connection with such matters covered by the settlement as to which the 
3 
Bangk Sentral is:advised 
by external counsel that the person to be indemnified did 
4 
not commit any GROSS negligence or GROSS misconduct. 
. The first paragraph of Section 21 of the same Act is hereby 
read as follows: 
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9 
The costs and expenses incurred in defending the aforementioned action, suit 
or proceeding may be paid by the Bangko Sentral in advance of the final disposition of 
such action, suit or proceeding upon receipt of an undertaking by or on be alf of the 
member [, officer, or employee] AND OTHER PERSONNEL to repay th 
amount 
advanced should it ultimately be determined by the Monetary Board that he is not 
10 
entitled to be indemnified as provided in this subsection ON ACCOUNT OF GROSS 
11 
NEGLIGENCE OR GROSS MISCONDUCT. 
1 
amended to 
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Section 4. 
The first paragraph of Section 16 of the same Act is hereby amended to 
read as follows: 
"SECTION 
16. 
Responsibility. - THE GENERAL RULE AND THE EXCEPTION 
THEREFROM ON THE LIABILIV OF PUBLIC OFFICERS AS PROVIDED I N  SECTIONS 38 
AND 39 OF CHAPTER 9, BOOK I OF THE REVISED ADMINISTRATIVE CODE OF 1987 
SHALL 
APPLY 
TO members of the Monetary Board [,officials, 
examiners, and 
employees] AND OTHER PERSONNEL of the Bangko Sentral. [who willfully violate 
this Act 
or 
who 
are guilty of negligence, abuses or acts of malfeasance or 
misfwance or fail to exercise- extraordinary diligence in the performance of his duties 
shall be held liable for any ioss or injury suffered by the Bangko Sentral or other 
banking institutions as a result of 
such violation, negiigence, abuse, malfeasance, 
misfeasance or failure to exercise extraordinary diligence.] 
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"SECTION 21. Deputy Governors.- The Governor of the Bangko Sentral, with 
2 
the approval of the Monetary Board, shall appoint not more than [three (3)] FIVE 
3 
(5) Deputy Governors who shall perform duties as may be assigned to them by the 
4 
Governor and the Board." 
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read as follows: 
. Thi- first paragraph of Section 23 of the same Act is hereby amended to 
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"SECTION 23. Authority to Obtain Data and Information.- The Bangko Sentral 
shall 
have the 
authority to request from ANY PERSON OR ENTITY, INCLUDING 
government ofices and instrumentalities, or government-owned or controlled 
corporations, any data which it may require for the proper discharge of i 
functions 
and representatives. The Bangko Sentral through the Governor or in his bsence, a 
duly authorized representative shall 
have the power to issue a subpoena for the 
production of the books and records for the aforesaid purpose. Those who refuse 
the subpoena without justifiable cause, or who refuse to supply the bank with data 
requested or required, shall be subject to punishment for contempt in accordance 
with the clrovisions of the Rules of Court." 
4 
17 
Section is, Section 25 of the same Act is hereby amended to read as follows: 
18 
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20 
21 
22 
23 
24 
25 
"SECTION 25. Supervision and Examination. - The Bangko Sentral shall have 
supervision over, and conduct periodic or special examination of [ banking institutions, 
and ] BANKS, quasi-banks, AND TRUST ENTITIES, including their 
subsidiaries and 
affiliates engaged in allied activities, AND OTHER FINANCIAL INSTITUTIONS WHICH, 
UNDER SPECIKE LAWS, ARE SUBIECT TO BANGKO 
SENTRAL 
SUPERVISION. 
PURSUANT TO THE AUTHORrrY OF THE BANGKO SENTRAL UNDER THIS SECTION, 
AND 
IN 
ADDITION 
TO SUCH OTHER AUTHORITY GRANTED BY LAW, PRIOR 
APPROVAL BY THE BANGKO SENTRAL SHALL BE REQUIRED FOR TRANSFERS 
OR 
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ACQUEIi7ONS OF SHARES OF STOCK IN BANKING INSTITUTIONS, QUASI-BANKS 
AND TRUST ENTmES WHERE ANY SUCH TRANSFER OR ACQUISITION OR SERIES OF 
TRANSFERS OR ACQUISITIONS WOULD BE SUFFICIENT TO ELECT AT LEAST ONE 
SEAT I N  THE BOARD OF DIRECTORS OR WOULD EFFECT A CHANGE I N  THE 
MAJORJTY OWNERSHIP OR CONTROL OF THE VOTING STOCK I N  ANY OFTHESE 
INSTITUTIONS. PRIOR TO SUCH APPROVAL, NO SUCH TRANSFER OR ACQUISITION 
SHALL 
BE RECOGNIZED I N  THE BOOKS OF THE INSTLTUTION NOR BY ANY 
GOVERNMENT AGENCY 
AND 
THE 
TRANSFEROR-STOCKHOLDERS, 
I N  CASES 
INVWVING TRANSFERS, SHALL 
REMAIN 
ACCOUNTABLE 
AND 
RESPONSIBLE 
THEREFOR. I N  APPROVING SAID TRANSFERS OR ACQUISITIONS, REGARD SHALL BE 
GIVEN BY THE BANGKO SENTRAL TO THE 
FITNESS 
OF 
THE 
INCOMING 
STOCKHOLDERS AS MAY BE INDICATED BY THEIR INTEGRITY AND FINANCIAL 
CAPACITY. 
For purposes of this section, a subsidiary means a corporation 'mo 
'. 
percent (50%) of the voting"stock of which is owned DIRECTLY OR INDIRE 
bank [, or] quasi-bank OR TRUST ENTlTY, and an affiliate means a corporation the 
voting stock of which, to the extent of fifty percent (50°/o) or less, is owned by a 
bank, quasi-bank, TRUST ENTITY 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, 
. 
. , . .  
~
,
,
 
21 
CONTROL EXISTS WHEN THE PARENT OWNS DIRECTLY OR INDIRECTLY 
22 
MORE THAN ONE HALF OF THE VOTING STOCK OF AN ENTERPRISE. CONTROL 
23 
MAY ALSO EXIST EVEN WHEN THE PARENT OWNS ONE HALF OR LESS OF THE VOTING 
24 
STOCK OF AN ENTERPRISE WHEN THERE IS: 
25 
26 
(A) 
POWER OVER MORE THAN ONE HALF OF THE VOTING RIGHTS BY VIRTUE 
OFAN AGREEMENT WITH OTHER INVESTORS; OR 
5 


I s  
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1 
2 
(8) 
POWER TO GOVERN THE FINANCIAL AND OPERATING POLICIES OF THE 
ENTERPRISE UNDER A STATUTE OR AN AGREEMENT; OR 
3 
(C) POWER TO APPOINT OR REMOVE THE MAJORITY OF THE MEMBERS OF 
4 
THE BOARD OF DIRECTORS; OR 
5 
6 
OF DIRECTORS; OR 
(D) POWER TO CAST THE MAJORITY OF VOTES AT MEETINGS OF THE BOARD 
I 
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(E) 
OTHER ARRANGEMENTS SIMILAR TO ANY OF THE ABOVE. 
- ~- 
. . 
- -  
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, documeqts, 
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 p rsons and 
entities relative to or in connection with the operations, activities or t ansactions 
.
.
 
of the institution under examination, subject to the provision 
" 
of exi 1. 
ting 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. 
19 
No restraining order or injunction shaii be issued by the court enjoining 
20 
the 
Bangko 
Sentral 
from examining any institution subject to supervision 
or 
21 
examination by the Bangko Sentral, unless there is convincing proof that the 
22 
action of the Bangko Sentrai is plainly arbitrary and made in bad faith and the 
23 
petitioner or plaintiff files with the clerk or judge of court in which the action is 
24 
pending a bond executed in favor of the Bangko Sentral, in an amount to be fixed by 


1 
the court. The provisions of Rule 58 of the New Rules of Court 
2 
applicable and not inconsistent with the provisions of this 
3 
4 
section. 
issuance and dissolution of the restraining order or injunction contemplated in this 
appropriate legal action it has initiated involving the deposit account." 
, .  
. 
. 
. .  
. Section 28 of the same Act is hereby amended to read as fo 
5 
, ..... ..,,. ,, . . 
.. 
I 
. 
lows: 
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21 
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24 
25 
. Section 26 of the same Act is hereby amended to read as follows: 
"SECTION 
28. Examination and 
Fees. - The supervising and examining 
department head, personally or by deputy, shall examine the books of every [banking 
institution] BANK, QUASI-BANK AND TRUST ENTITY, INCLUDING ITS SUBSIDIARIES 
AND 
AFFILIATES 
ENGAGED IN ALLIED ACTIVITIES 
AND 
OTHER FINANCIAL 
INSTJTUTIONS WHICH UNDER SPECIAL LAWS ARE SUBJECT TO BANGKO SENTWL 
SUPERVISION, I N  ACCORDANCE WITH THE GUIDELINES SET BY THE MONETARY 
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26 
27 
BOARD: [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 to the Monetary Board: Provided, That there hall be an 
interval of at least twelve (12) months between 
REGULAR [annual] exa inations: 
PROVIDED, FURTHER, THAT THE MONETARY BOARD BY AN AFFIRMATIV 1 
VOTE OF 
AT LEAST FIVE (5) MEMBERS MAY AUTHORIZE A SPECIAL EXAMINATION IF THE 
CIRCUMSTANCES SO WARRANT. 
The 
[bank] 
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] BUSINESS 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] BANKS, [and quasi-banking institutions] QUASI-BANKS AND TRUST 
ENTITIES AND OTHER FINANCIAL INSTITUTIONS WHICH UNDER SPECIAL LAWS, 
[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 [ofl 
ASED ON 
its average total assets during 
the preceding year 
[as shown on ts end-of- 
month balance sheets, after deducting cash on hand and amounts due I 
rom banks, 
including the Bangko Sentral and banks abroad]. I N  CONSOLIDATED EXAMINATION 
OF RESOURCES, THE FEES 
FOR THE EXAMINATION OF SUBSIDIARIES AND 
AFFILIATES ENGAGED IN ALLIED ACTIVITIES SHALL BE CHARGED AGAINST THEIR 
PARENT INSTITUTION UNDER EXAMINATION. 
8 


1 
2 
become final, involving acts or transactions which amount to fraud or a 
the assets of the institution; 
3 
dissipation of 
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19 
20 
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22 
- 
-* 
- 
THE 
MONETARY BOARD MAY LIKEWISE IMPOSE SIMILAR FEES ON OTHER 
FINANCIAL INSTITUTIONS UNDER BANGKO SENTRAL SUPERVISION." 
. Section 30 of the same Act is hereby amended to read as follows: 
"SECTION 
30. 
Proceedings 
in Receivership and Liquidation.- 
upon report of the head of the supervising [or] AND examining depart 
Monetary Board finds that a bank, [or] quasi-bank OR A TRUST ENTITY: 
(a) 
HAS NOTIFIED THE BANGKO SENTRAL OR PUBLICLY ANNOUNCED A 
UNILATERAL CLOSURE, OR IN ANY MANNER HAS SUSPENDED THE PAYMENT OF 
ITS DEPOSIT/DEPOSIT 
SUBSmUTES 
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 I N  ACCORDANCE WITH THE BANKING 
REGULATIONS [to meet its liabilities]; or 
- _- 
. 
- -  
. 
... . , .~. 
: . . 
, 
, 
(c) 
cannot 
continue in business without involving probable losses to its 
depositors or creditors; or 
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IT IS A BANK, designate the Philippine Deposit Insurance Corporation as receiver of the 
banking institution. 
- 
.- . 
-- 
- 
For a quasi-bank OR A TRUST ENTITY, any person of recognized competence in 
banking or finance may be designated as receiver. 
The receiver shall immediately gather and take charge of all the assets and 
liabilities of the institution, administer the same for the benefit of its credi ors, 
and, 
exercise the general powers of a receiver under the Revised Rules of Court bu shall not, 
with the exception of administrative expenditures, pay or commit any a t: that will 
involve the transfer or disposition of any asset of the institution: Provided, That the 
receiver may deposit or 
place the funds of the institution in non-speculative 
investments. 
The receiver shall determine as soon as possible, but not later than 
ninety (90) days from take-over, whether the 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. 
I 
IN ORDER TO REHABILITATE THE CLOSED INSTITUTION OR TO RESTORE ITS 
OPERATIONS WITH SAFETY TO ITS DEPOSRORS, CREDITORS AND THE GENERAL- 
PUBLIC OR TO MERGE OR CONSOLIDATE THE CLOSED INSTITUTION WITH ANOTHER 
QUALIFIED INSIJTUTION, 
THE 
RECEIVER 
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 determines that the institution cannot be rehabilitated or 
permitted to 
resume 
business 
in 
accordance with [ the nex preceding 
paragraph ] THIS SECTION, the Monetary Board shall notify in writing t e board of 
! 


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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 
pursu-ant to a liquidation plan adopted 
by 
the 
Philippine 
Deposit 
Insurance Corporation for general application to all closed banks. In case of quasi- 
banks OR TRUST ENTITIES, 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 decid on other 
issues as may be material to implement the liquidation plan adopted. T e receiver 
shall pay the cost of the proceedings from the assets of the institution. i 
(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 acUiens 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 AND UPON A FINDING 
AFTER DUE HEARING 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: 
.
.
 


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PROVIDED, HOWEVER, THAT ANY ORDER RESTRAINING, ENIOINING OR SElTING 
ASIDE THE ACTION COMPLAINED OF I N  THE PETJTION FOR CERTIORARI, MAY 
ONLY BE ISSUED BY THE COURT OF APPEALS, 
BUT MAY BE DISSOLVED OR 
STAYED UPON BANGKO SENTRAL FILING A WRITTEN UNDERTAKING THAT IT WILL 
PAY ALL DAMAGES WHICH THE PETITIONER MAY SUFFER 
FROM THE DENIAL, 
DISSOLUTION OR STAY OF THE INJUNCTION SHOULD IT BE DECIDED I N  A FINAL 
JUDGMENT 
THAT 
THE 
PETITIONER 
IS ENTITLED 
TO HAVE THE 
ACTS 
COMPLAINED OF PERMANENTLY ENJOINED. The petition for certiorari may only be 
filedlby the stofkholders 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 PROVISIONS OF RULE 
58 OF THE 1997 RULES ON CIVIL PROCEDURE I N  SO FAR AS THEY ARE APPLICABLE 
AND NOT INCONSISTENT WITH THE PROVISIONS OF THIS SECT'ION 
SHALL 
GOVERN THE ISSUANCE AND DISSOLUTION OF THE RESTRAINING 
RDER OR 
INJUNCTION CONTEMPLATED I N  THIS SECTION. 
i 
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 receiver." 
THE AUTHORITY OF THE MONETARY BOARD TO PLACE A BANK, QUASI-BANK 
OR A TRUST ENTITY UNDER RECEIVERSHIP AS PROVIDED ABOVE MAY ALSO BE 
EXERCISED OVER NON-STOCK SAVINGS AND LOAN ASSOCIATIONS, BASED ON THE 
SAME APPLICABLE GROUNDS. FOR THIS PURPOSE, ANY PERSON OF RECOGNIZED 
COMPETENCE I N  BANKING, CREDIT AND FINANCE MAY BE DESIGNATED AS A 
RECEIVER. 
. -&new section entitled Section 30-A of the same Act shall be inserted 
27 
between Sections 30 and 31 which shall read as follows: 
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"SECTION 30-A. WHENEVER UPON THE REPORT OF THE HEAD OF THE 
SUPERVISING AND EXAMINING DEPARTMENT, THE MONETARY BOARD FINDS THAT 
THE ADJUSTED CAPITAL ACCOUNTS OF A BANK, QUASI-BANK OR TRUST ENTITY IS 
LOWER THAN 
THE MINIMUM CAPITAL REQUIRED UNDER EXISTING RULES AND 
REGULATIONS, OR IT HAS A 
CAPITAL ADEQUACY RATIO LOWER THAN THE 
MINIMUM RATIO PRESCRIBED UNDER 
EXISTING REGULATIONS, THE MONETARY 
BOARD SHALL HAVE THE AUTHORITY TO DIRECT THE EXISTING STOCKHOLDERS OF 
SAID BANK, QUASI-BANK OR TRUST ENTITY TO INFUSE CAPITAL WlTHIN A PERIOD 
NOT EXCEEDING 90 DAYS FROM THE DATE OF DIRECTIVE I N  SUCH AMOUNT AS 
MAY 
BE 
NECESSARY TO RESTORE THE ENTITY'S CAPITAL 
TO THE MINIMUM 
REQUIRED AMOUNT AND/OR RATIO. I N  CASE OF INABILITY OR UNWILLINGNESS OF 
THESTOCKHOCDERS TO INFUSE THE REQUIRED AMOUNT OF ADDlTIONAL CAPITAL 
WITHIN THE PRESCRIBED PERIOD, THE MONETARY BOARD MAY DIRECT SAID 
BANK, QUASI-BANK OR TRUST ENTITY TO ACCEPT INVESTMENTS FROM QUALIFIED 
THIRD PARTIES OR TO MERGE OR CONSOLIDATE WITH A QUALIFIED FINANCIAL 
INSTITUTION. 
THE MONETARY 
BOARD 
MAY 
ALSO AUTHORIZE 
OR 
OR ER 
THE 
EXISTING STOCKHOLDERS OF THE CONCERNED ENTITY TO EFFECT 
A QUASI- 
I 
REORGANIZATION OF SAID ENTITY TO REFLECT THE FAIR VALUE OF ITS CAPITAL. 
.
.
 
Section 12. Section 36 of the same Act is hereby amended to read as follows: 
"SECTION 36. Proceedings Upon Violation of This Act and Other Banking 
Laws, Rules, Regulations, Orders or Instructions.- Whenever a bank, [or] quasi-bank, 
TRUST ENTITY 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 me of not 
Jess than Fifty thousand pesos (P50,OOO) nor more than [Two hundred (I thousand 
1 
2 
3 
pesos (P200,000)] 
TWO MILLION PESOS (P2,000,000) or by imprisonment of not less 
4 
than two (2) years nor more than ten (10) years, or both, at the discretion of the court. 
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Whenever AN ENTITY UNDER BANGKO SENTRAL SUPERVISION [a bank or 
quasi-bank] persists in carrying on its business in an unlawful or unsafe manner, the 
Board may, without prejudice to the penalties provided in the preceding paragraph of 
this section and the administrative sanctions provided in Section 37 of this Act, take 
action under Section 30 of this Act." 
eclion 13. Section 37 of the same Act is hereby amended to read as follows: 
"SECTION 
37. 
Administrative 
Sanctions [on Banks and Quasi-Banks]. - 
WitGut 
prejudice 
to 
the 
criminal sanctions against the culpable persons 
provided in Sections 34, 
35, 
and 36 of this Act, the Monetary Board may, at 
its discretion, impose upon any bank, [or] quasi-bank OR TRUST ENTITY, THEIR 
SUBSIDIARIES AND AFFILIATES ENGAGED IN ALLIED 
ACTIVITIES 
AND 
OTHER 
- _- 
INSTITUTIONS WHICH UNDER SPECIAL LAWS ARE SUBJECT 
TO THE BANGKO 
SENTRAL SUPERVISION, their directors and/or officers, for any willful violation of 
its charter or by-laws, willful delay in the submission of reports or publication ,thereof as" 
.
.
 
required by law, 
rules 
and regulations; any refusal to permit 
'
'
 
examina 1. 
ion into the 
affairs of the institution; any willful making of a false or misleading statement to 
the 
Board 
or 
the appropriate supervising and examining 
departme$" 
or its 
examiners; any willful failure or refusal to comply with, or violation of,.any banking law 
or any order, instruction or regulation issued by the Monetary Board, or any order, 
instruction or ruling 
by 
the Governor; or any commission of irregularities, and/or 
conducting business in an unsafe or unsound manner as may be determined by the 
Monetary Board, the following administrative sanctions, whenever applicable: 
14 


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8 
9 
10 
11 
12 
13 
(a) 
fines in amounts as may be determined by the Monetary Board to be 
appropriate . but 
in no case 
to exceed [Thirty thousand pesos (P30,OOO) 
a] 
THREE HUNDRED THOUSAND PESOS (P300,OOO) 
or such other amount of maximum 
fine as may be set by the Monetary Board PER BANKING day for each viola on taking 
into consideration the attendant circumstances, such as the nature an 1 
gravity of 
the violation or irregularity and the size of the [bank or quasi-bank] INSTITUTION; 
(b) suspension of rediscounting privileges or access to Bangko Sentral credit 
facilities; 
(c) suspension of lending or foreign exchange operations or authority to accept 
new deposits or make new investments; 
(d) suspension of interbank clearing privileges; [and/or] 
(e) revocation of quasi-banking license; 
c . 
--. 
(F) REVOCATION OF TRUST LICENSE; 
14 
(G) PROHIBITION FROM DECLARING CASH DIVIDENDS; 
. 
... .. 
. . , . . 
(H) CONFISCATION BY AND FORFEITURE IN FAVOR OF THE 
OF ANY AND ALL PROFITS, AS MAY BE DETERMINED BY THE 
ARISING FROM THE OFFENSE OR VIOLATION OF BANKING 
15 
16 
17 
18 
REGULATIONS; AND/OR 
19 
(I) OTHER 
SANCTIONS 
AS 
THE 
MONETARY BOARD MAY DEEM 
20 
APPROPRIATE UNDER THE CIRCUMSTANCES. 
15 


.
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'
 
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=- 
I. 
THE DIRECTOR OR OFFICER RESPONSIBLE FOR THE VIOLATION MAY, 
AFTER DUE 
PROCESS, 
BE 
SUSPENDED, REMOVED OR DISQUALIFIED FROM 
HOLDING OFFICE, 
OR 
ANY 
POSITION, 
IN AN INSTITUTION UNDER THE 
SUPERVISION OF THE BANGKO SENTRAL, 
FOR A PERIOD TO BE DETERMINED BY 
THE MONETARY BOARD, TAKING INTO CONSIDERATION 
THE 
ATTENDANT 
CIRCUMSTANCES, 
SUCH 
AS 
THE NATURE AND GRAVITY OF TH 
OMISSION AND THE SIZE OF THE INSTITUTION 
I.. 
. 
. 
Resignation or termination from office shall not exempt such director or 
officer from administrative or criminal sanctions. 
The 
Monetary 
Board may, 
whenever 
warranted by 
circumstances, 
preventively suspend any director or officer of 
[a bank or quasj-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. 
-- 
I 
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 pers'st in the 
commission of the indicated practice or violation, the Monetary Board m y issue an 
order requiring the institution and/or the directors and/or officers concern d to cease 
and desist from the indicated practice or violation, and may further I 
order that 
immediate action be taken to correct the conditions resulting from such practice or 
16 


1 
2 
shall 
be determined on the basis of records, after which the Monetary 
either reconsider or make final its order. 
10 
11 
12 
13 
14 
15 
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Board may 
.
.
 
20 
21 
22 
23 
24 
violation, The cease and desist order shall be immediately effective upon service on the 
respondents. 
The Governor Is hereby authorized, at his discretion, to impose upon [banking 
institutions,] 
BANKS, QUASI-BANKS, AND TRUST ENTITIES, INCLUDING THEIR 
SUBSIDIARIES 
AND AFFILIATES ENGAGED IN ALLIED ACTIVITIES, AND OTHER 
FINANCIAL INSTITUTIONS WHICH 
UNDER 
SPECIAL LAWS 
ARE SUBJECT TO 
BANGKO SENTRAL SUPERVISION for any failure to comply with the requirements of law, 
Monetary Board regulations and policies, and/or instructions issued by the Monetary 
Board or by the Governor, fines not in excess of [Ten thousand pesos (P10,OOO) 
a] 
ONE HUNDRED THOUSAND PESOS (P100,OOO) PER BANKING day for each violation, 
the imposition of which shall be final and executory until reversed, modified or lifted by 
the Monetary Board on appeal." 
ection 14. ._ 
Section 77 of the same Act is hereby amended to read as follows: 
.- 
- -  
"SECTION 77. 
Requirement of Balanced Currency Position.- The Monetary 
Board 
may require [the] 
banks, 
QUASI-BANKS, THEIR SUBSIDIARIES AND 
AFFILIATES 
ENGAGED IN ALLIED 
ACTIVITIES to maintain a balanced position 
between their assets and liabilities in Philippine pesos or in any other 
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2 
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12 
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15 
16 
17 
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23 
currencies In which they operate. [The Banks] THEY shall be granted a reasonable 
period of time in which to adjust their currency positions to any such requirement. 
The powers granted under this section shall be exercised only when special 
circumstances make such action necessary, in the opinion of the Monetary 
Board, 
and 
shall 
be-jlpplied to all banks, QUASI-BANKS, THEIR SUBSIDIARIES 
AND 
AFFILIATES ENGAGED I N  ALLIED ACTIVITIES alike and without discrimination." 
._. 
, A new section entitled Section 88-A of the same Act shall be inserted 
between Sections 88 and 89 which shall read as follows: 
"SECTION 88-A. EXEMPTION FROM ATTACHMENT. THE PROVISIO S OF ANY 
LAW TO THE CONTRARY NOTWITHSTANDING AND SECTION 31 OF THIS ACT, 
COLLATERALS ON LOANS AND ADVANCES GRANTED BY THE BANGKO SENTRAL TO 
BANKING INSTITUTIONS SHALL NOT BE SUBJECT TO ATTACHMENT, EXECUTION OR 
ANY OTHER COURT PROCESS, NOR SHALL THEY BE INCLUDED I N  THE PROPERTY 
I 
OF INSOLVENT PERSONS OR INSTITUTIONS, UNLESS ALL DEBTS AND OBLIGATIONS 
OF THE BANKING INSTITUTIONS TO THE BANGKO SENTRAL, WHETHER REGISTERED 
OR NOT, 
HAVE BEEN PAID, INCLUDING ACCRUED 
INTEREST, 
PENALTIES, 
COLLECTION EXPENSES, AND OTHER CHARGES." 
Section 16. A new section entitled Section 89-A of the same Act shall be inserted 
between Sections 89 which shall read as follows: 
"SECTION 
89-A. CREDIT FACILITIES FOR ISLAMIC BANKS. 
THE BANGKO 
SENlpaL 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." 
18 


. .  
<
-
 
1 
Section 19. Section 95 of the same Act is hereby amended to read as follows: 
2 
"SECTION 
95. 
Definition of Deposit Substitutes. - The term "deposit 
3 
substitutes" is defined as an alternative form of obtaining funds from the public, 
other 
4 
than 
deposits, 
through the 
issuance, 
endorsement, 
or acceptance of 
debt 
5 
instruments for 
the borrower's own account, for the purpose 
of 
re-lending or 
6 
purchasing of receivables and other obligations, These instruments may include, but 
7 
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9 
10 
11 
12 
13 
14 
15 
need not be limited to, bankers, acceptances, 
promissory notes, participations, 
certiicates of assignment and similar instruments with recourse, and repurchase 
agreements. 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 
issued for the limited purpose of financing their own needs or the needs of heir agents 
4 
or dealers shall not be covered by the provisions of Section 94 of this Act." 
' 
16 
17 
to read as follows: 
Section 18. The second paragraph of Section 102 of the same Act is hereby amended 
18 
"The 
deposit 
reserves maintained by the banks in the Bangko Sentral in 
19 
accordance with the provisions of Section 94 of this Act shall serve as basis for the 
20 
clearing of checks and the settlement of interbank balances, subject to such rules and 
21 
regulations 
as 
the 
Monetary 
Board 
may issue 
with respect 
to 
such 
22 
operations: Provided, That any bank which incurs an overdrawing in its deposit 
23 
account with Bangko Sentral shall fully cover said overdraft, including interest thereon at 
24 
a rate equivalent to one-tenth of 
one percent (1/10 of 1%) per day or the 
25 
prevailing ninety-one-day treasury bill rate plus three percentage points, whichever is 
26 
higher, - not later . than the next clearing day: Provided, HOWEVER,[further], 
That 
27 
settlement of clearing balances shall not be effected for 
any account which Is 
19 


. .  
6
%
 
I" 
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3 
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5 
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[continues to be] overdrawn for A PERIOD AS MAYBE DECIDED BY THE MONETARY 
BOARD WHENEVER WARRANTED BY THE CIRCUMSTANCES: PROVIDED, THAT SUCH 
PERIOD SHALL IN NO CASE EXCEED five (5) consecutive banking days until such 
time as the overdrawing is fully covered or otherwise converted into an emergency 
loan or advance pursuant to the provisions of Section 84 of this Act: Provided, 
finally, That the appropriate clearing office shall be officially notified of banks with 
overdrawn balances. Banks with existing overdrafts with the Bangko Sentral as of the 
effectivity of this Act shall, within such period as may be prescribed by the Monetary 
Board, either convert the overdraft into an emergency loan or advance with a plan 
of payment, 
or settle such overdrafts, 
and that, upon failure to so comply 
herewith, the Bangko Sentral 
shall take such action against the bank as may be 
warranted under=this Act." 
. Section 108 of the same Act is hereby amended to read as follows: 
\ 
"SECTION 108. 
Minimum Capital Ratios. 
- 
The Monetary Board may 
prescribe 
minimum 
RISK-BASED 
CAPITAL 
ADEQUACY 
ratios 
B SED 
ON 
INTERNATIONALLY 
ACCEPTED STANDARDS [which the capital and sur Ius of the 
banks must bear to the volume of their assets, or to specific categories thereof, ] 
and may alter said ratios whenever it deems necessary. I N  THE EXERCISE OF ITS 
AUTHORITY UNDER THIS SECTION, THE MONETARY BOARD MAY 
PRESCRIBE 
A 
HIGHER 
MINIMUM CAPITAL ADEQUACY RATIO FOR INDIVIDUAL BANKS WHICH 
ARE EXPOSED TO MORE THAN NORMAL RISKS." 
I 
. Section 116 of the same Act is hereby amended to read as follows: 
23 
"SECTION 116. Remuneration for Services .- The Bangko Sentral may charge 
24 
equitable rates, commissions or fees for services which it renders to the Government, 
25 
its political subdivisions and instrumentalities [.] AS WELL 
AS 
TO 
FINANCIAL 
-:. . 
20 


INSTITUTIONS 
OR 
ENTITES UNDER THE BANGKO SENTRAL SUP RVISION: 
PROVIDED, THAT IN THE CASE OF BANKS AND QUASI-BANKS, SUCH CHA GES FOR 
1 
2 
3 
SERVICES SHALL BE IN ADDITION TO THE SUPERVISION FEES AUTHORIZED 
4 
UNDER SECTION 28 OF THIS ACT. 
i; 
5 
Seaion 21. Section 125 of the same Act is hereby amended to read as follows: 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
"SECTION 
125. Tax Exemptions.- THE PROVISIONS OF ANY GENERAL OR 
SPECIAL LAW 
TO THE CONTRARY 
NOTWITHSTANDING, 
the 
Bangko Sentral 
shall be exempt [, for a period of five (5) years from the approval of this Act] from 
all national, provincial, municipal and city taxes, fees, charges and assessments [.] NOW 
I N  FORCE OR HEREAFTER ESTABLISHED. 
The 
exemptions 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%. 
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 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, fr m.'any and 
all other taxes if the payment of such taxes has been assumed by'the Bangk Sentral." 
,, 
,:, 
1.. 
. 
21 
22 
read as follows: 
Section 22. The First paragraph of Section 126 of the same Act is hereby amended to 
23 
"SECTION 126. 
Exemption from Customs Duties. - 
The provision 
of any 
24 
general or special law to the contrary notwithstanding, the importation and exportation 
25 
by the Bangko Sentral of notes and coins, and of gold and other metals to be used 
21 


1 
for purposes authorized under this Act, and the importation of all equipment AND 
2 
SUPPLIES needed [for] IN THE BANGKO SENTRAL OPERATIONS SUCH AS bank 
note production, minting of coins, metal refining, 
[and 
other] 
securi 
printing 
operations AND TRANSPORT OFCURRENCY shall be fully exempt from all customs 
duties and consular fees and from all other taxes, 
assessments a i 
d charges 
3 
4 
5 
6 
related to such importation or exportation." 
7 
8 
read as follows: 
. The first paragraph of Section 128 of the same Act is hereby amended to 
9 
10 
11 
12 
13 
14 
15 
16 
17 
"SECTION 128. 
Prohibitions.- 
The Bangko Sentral shall not acquire shares 
of any kind or accept them as collateral, and shall not participate in the ownership or 
management of [any] AN enterprise, either directly or 
indirectly [.I: PROVIDED, 
THAT THIS 
PROHIBITION 
SHALL NOT APPLY WHENEVER 
SUCH 
OWNERSHIP 
AND/OR MANAGEMENT IS EXPRESSLY AUTHORIZED BY LAW, OR THE MONETARY 
BOARD BY A VOTE OF AT LEAST FIVE (5) OF ITS MEMBERS DEEMS AN ACQUISITION 
OR INVESTMENT TO BE NECESSARY TO THE PERFORMANCE BY BANGKO SENTRAL OF 
- 
ITS- 
MANDATES UNDER THIS 
ACT OR TO QUALIFY 
OR AS REQUIRED 
FOR 
MEMBERSHIP IN INTERNATIONAL AND REGIONAL ORGANIZATIONS." 
18 
ection 24. 
Repealing Clause. All provisions of existing laws, orders, rules and 
19 
regulations, or parts thereof, in conflict or inconsistent with the provisions of this Act are hereby 
. Separability Clause. If any provision or section of this I' 
ct or the 
20 
repealed. 
application thereof to any person or circumstance is held to be invalid, the other provisions or 
sections of this Act, and the application of such provision or section to other persons or 
circumstances, shall not be affected thereby. 
.
.
 
21 
22 
23 
24 


. c  
- 
.- 
1 
Seczon 26. Effectivity. This Act shall take effect after fifteen (15) days following its 
2 
publication either in the Official Gazette or in a newspaper of general circulation in the 
3 
Philippines. 
4 
Approved. 
.., .,