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THIRTEENTH CONGRESS OF THE REPUBLIC )OF THE PHILIPPINE 1First Regular Session 1

S E N A T E

Introduced by Senator S . R. Osmeiia Ill

EXPLANATORY NOTE

In June 1993, Republic Act No. 7653 entit led, "The New Central BankAct," creating the Bangko Sentral ng Pilipinas (6SP)was s igned into law. The Actestablished the Bangko Senfral as an independent central monetary authoritywith broader supervisory and regulatory pow ers over the operations of ba nks andquasi-banks and a bigger capital to make the bank m ore effective in conductingmonetary p olicy.The primary objective o f the BSP is to m aintain price stability conducive toa balanced and sustainable growth of the economy. It shall also promotemo netary stability an d the convertibility of the peso . It shall supervise banks an dprovide policy directions in the areas of money, banking and credit.It has been noted, however, that several provisions of the law have to bemodified so that the Bangko Senfral may effectively discharge its supervisorypowers over banks and quasi-banks and for it to attain optimum operationalefficiency within the organization. Moreover, amendments to the said law areneeded to complement the provisions of the revised General Banking Act.In view of the impo rtant role that the Bangko Senfral plays in m aintaining astable and sound financial system, approvalof this bill is earnestly soug ht.

SERGIOOSMENA 1 1Senator

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THIRTEENTH CONGRESS OF THE REPUBLI )OF THE PHILIPPINES 1

First Regular Session 1

S E N A T E

Introduced by Senator S. R. OsmeAa 1 1 1

AN ACTAMENDING REPUBLIC ACT NUMBERED SEVENTY-SIX HUNDRED ANDFIFTY-THREE ENTITLED "THE NEWCENTRAL BANK ACT" AND FOR

OTHER PURPOSESBe it enac ted by the Sen ate and.the House o f Representatives o f he Repu blic ofthe P hilippines in Congress assembled:

1 SectionI.he first paragraph of Section 3, Republic Act Numb ered 76532 is hereby amended to read as follows:3 "SECTION 3. Responsibility and Primary Objective. - The4 Bangko Sentral shall provide directions in the areas of money, banking5 and credit. It shall have supervision over the operations of b anks, QU ASI-G BANKS, TRUST ENTITIES AND OTHER FINANCIAL INSTITUTIONS7 WHICH UNDER THIS ACT OR SPECIAL LAWS ARE SUBJECT TO8 BANGKO SENTRAL SUPERVISION and exercise such regulatory powers9 as provided in this Act and other pertinent laws over the operations of

I O [finance companies and] OTHER non-bank financial institutions1 1 [performing quasi-banking functions, hereafter referred to as quasi-banks,12 and institutions performing s imilar f u nctio n I.13 SEC. 2. Section I 1 of the same Act is hereby amended by inserting a new1 4 paragraph after the third paragrap h and the present fourth paragraph shall be on1 5 the fifth paragrap h. The new fourth paragraph shall read as follows:

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1 AS MAY BE WARRANTED BY COMPELLING REASONS OR2 CIRCUMSTANCES, A MEETING O F THE BOARD MAY BE3 CONDUCTED THROUGH THE USE OF MODERN TECHNOLOGY4 INCLUDING BUT NOT LIMITED TO TELEPHONE OR VIDEO5 CONFERENCING: PROVIDED, THAT IN ALL CASES, A QUORUM6 SHALL BE PHYSICALLY PRESENT.78

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1213 principles of management.14 A compensation structure, based on job evaluation studies andI5 wage surveys and subject to the Boards approval, shall be instituted asIG an integral component of the Bangko Sentrals human resource17 development program. [frovvided, That the Monetary Board shall make its

SEC. 3. Section 15, paragraphs (c) and (e) of the same Act are herebyamen ded to read as follows:

( c) establish a human resource management system which shallgovern the selection, hiring, appointment, transfer, prom otion, or dismissalof all personnel. Such system shall aim to establish professional andexcellence at all levels of the Bangko Senfral in accordance with sound

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own system conform as closely as possible with the principles provided forunder Republic Act No. 6758: Provided, however, That com pensation andwage structure of employees whose positions fall under salary grade 19and be low shall be in accordance with the rates prescribed under RepublicAct No. 6758.3 PROVIDED, THAT CONSISTENT WITH THEPROVISIONS OF ARTICLE XII, SEC. 20 OF THE CONSTITUTION OFTHE REPUBLIC OF THE PHILIPPINES MANDATING THEESTABLISHMENT OF AN INDEPENDENT CENTRAL MONETARYAUTHORITY, ALL POSITIONS IN THE BANGKO SENTRAL NGPILIPINAS SHALL BE GOVERNED BY A COMPENSATION, POSITION

28 CLASS1FICATI ON SYSTEM AND QUAL1FICATION STANDARDS29 APPROVED BY THE MONETARY BOARD BASED ON

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COMPREHENSIVE JOB ANALYSIS AND AUDIT OF ACTUAL DUTIESAND RESPONSIBILITIES. THE BANGKO SENTRAL SHALL BEEXEMPT FROM THE OPERATION O F EXISTING LAWS, RULES ANDREGULATlONS 0N CO M PENSAT1ON, POS T10N CLASS F CAT10NAND QUALIFICATION STANDARDS. IT SHALL, HOWEVER,ENDEAVOR TO MAKE ITS SYSTEM CONFORM AS CLOSELY ASPOSSIBLE TO THE PRINCIPLES UNDER REPUBLIC ACT NO .6758, ASAMENDED.

On the recommendation of the Governor, appoint, fix theremunerations and other emoluments, and remove personnel of theBangko Sentral, subject to pertinent civil service laws: Provided, That theMonetary Board shall have exclusive and final authority to promote,transfer, assign, or reassign personnel of the Bangko Sentral and thesepersonnel actions are deemed made in the interest of the service and notdisciplinary: Provided, further, That the Monetary Board may delegatesuch authority to the Governor OR TO ANY OF THE DEPUTYGOVERNORS, OR IN CASE O F REASSIGNMENT WITHIN ADEPARTMENT, TO THE HEAD OF THE DEPARTMENT CONCERNED,under such guidelines as [its]THE BOARD m ay determine.

xxxxxxxxxxxx(e) indemnify its members and [other officials] OTHER

PERSONNEL of the Bangko Sentral L including personnel of thedepartments performing supervision and examination functions] against allcosts and expenses reasonably incurred by such persons in connectionwith an y civil or criminal action, suit or proceedings to which he m ay be ,oris, 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 forG R O S S negligence or misconduct.

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In the event of a settlemen t or comprom ise, indemnification shall beprovided only in connection with such matters covered by the settlementas to which the Bangko Sentral is advised by external counsel that theperson to be indemnified did not commit any GROSS negligence or

The costs and expenses incurred in defending the aforementioned7 action, suit or proceeding may be paid by the Bangko Sentral in advance8 of the final disposition of such action, suit or procee ding upo n receipt of an9 undertaking by or on behalf of the member, officer, or employee to repay

I O the am ount advanced should it ultimately be determined by the Mone tary1 1 Board that he is not entitled to be indemnified as provided in this12 subsection: PROVIDED, HOWEVER, THAT SUCH COSTS AND13 EXPENSES SHALL INCLUDE THOSE INCURRED IN FILING14 COUNTERCHARGES NECESSARY FOR THE DISPOSAL OF1 5 UNSETTLED ISSUES RELATED TO THE ACTIONS HEREIN16 MENTIONED, INCLUDING THOSE FILED FOR CLAIMS FOR17 COMPENSATORY DAmAGES.181920 Sect ion 16 . Responsibility. - THE GENERAL RULE AND THE21 EXCEPTION THEREFROM ON THE LIABILITY OF PUBLIC O FFICERS22 AS PROVIDED IN SECTIONS 38 AND 39 OF CHAPTER 9, BOOK 1 OF23 THE REVISED ADMINISTRATIVE CODE OF 1987 SHALL APPLY TO24 members of the Monetary Board, officials, examiners, and OTHER25 employees of the Bangko Sentral who SHALL NOT BE CIVILLY LIABLE76 FOR ACTS DONE IN THE PERFORMANCE OF THEIR OFFICIAL27 DUTIES, UNLESS THERE IS A CLEAR SHOWING OF WILLFUL28 VIOLATION OF THIS STATUTE, BAD FAITH, MALICE OR GROSS29 NEGLIGENCE RESULTING IN [willfully violate this Act or who are guilty

SEC. 4. The first paragraph of Section 16 of the same Act is herebyamend ed to read as follows:

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of negligence, abuses or acts of malfeasance or misfeasance or fail toexercise extraordinary dil igence in the performance of his duties shall beheld liable for] any loss or injury [suffered by] TO the Bangko Senfral orother institutions. [as a result of such violation, negligence, abuse,malfeasance, misfeasance or failure to exercise extraordinary dil igence,]

ONLY THE BANGKO SENTRAL AND/OR THE INSTITUTIONWHICH D IRECTLY SUSTAINED THE LO SS OR NJURY FROM ANY O FTHE FO REGO ING ACTS OR OMISSIONS OF BANGKO SENTRALPERSONNEL SHALL HAVE THE RIGHT TO FILE AN ACTION FORDAMAGES AGAINST THE LATTER.SEC. . Section 25 of the same Act is hereby amended to rea d as follows:

SECTION 25. Supervision and Examination. - The BangkoSentral shall have sup ervision over, and shall cond uct periodic or specialexamination of [banking institutions, and] BANKS, quasi-banks, ANDTRUST ENTITIES, including their subsidiaries and affiliates engaged inallied activit ies, AND OTHER FINANCIAL INSTITUTIONS WHICH,UNDER SPECIAL LAW S, ARE SUBJECT TO BANGKO SENTRALSUPERVISION. PURSUANT TO THE AUTHORITY O F THE BANGKOSENTRAL SHALL BE REQUIRED FOR TRANSFERS ORACQUISITIONS OR SERIES OF TRANSFERS OR ACQUISITIONSWOULD BE SUFFICIENT TO ELECT AT LEAST ONE SEAT IN THEBOARD OF DIRECTORS OR WOULD EFFECT A CHANG E IN THEMAJORITY OWNERSHIP OR CONTROL OF THE VOTING STOCK INANY OF THESE INSTITUTIONS NOR BY ANY G OVERNM ENT AGENCYAND THE TRANSFEROR-STOCKHOLDERS, IN CASES INVOLVINGTRANSFER ES, SHALL REM AIN ACCOUNTABLE AND RESPON SIBLETHEREFOR. IN APPROVING SAID 1RANSFERS OR ACQUISITIONS,REGARD SHALL BE GIVEN BY THE BANGKO SENTRAL TO THEFITNESS OF THE INCOMING STOCKHOLDERS AS MAY BE

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INDICATED BY THEIR INTEGRITY, FINANCIAL CAPACITY ANDSTANDING IN THE COMMUNITY.

For purposes o f , his section, a subsidiary means a corporationmore than fifty percent (50%) of the voting stock of which is owned by abank or quasi-bank and an affiliate means a corporation the voting stockof which, to the extent of TWENTY-FIVE PERCENT (25%) TO fiftypercent (50%) [or less], is owned by a bank or quasi-bank or which isrelated or linked to such institution or intermediary through commonstockholders or such other factors as may be determined by the MonetaryBoard.

The department heads and the examiners of the supervising and/orexamining departments are hereby authorized to administer oaths to anydirector, officer, or employee of any institution under their respectivesupervision o r subject to their exam ination an d to co mp el the presentationof all books, documents, papers or records necessary in their judgment toascertain the facts relative to the true condition of any institution as well asthe books and records of persons and entities relative to or in connectionwith the operations, activities or transactions of the institution underexamination, subject to the provision of existing laws protecting orsafeguarding the secrecy or confidentiality of bank deposits as well asinvestments of private persons, natural or juridical, in debt instrumentsissued by the Government.

No restraining order or injunction shall be issued by the Courtenjoining the Bangko Sentral from examining any institution subject tosupervision or examination by the Bangko Sentral, unless there isconvincing proof that the action of the Bangko Sentral is plainly arbitraryand made in bad faith and the petitioner or plaintiff files with the clerk orjudge of the court in which the action is pending a bond executed in favorof the Bangko Sentral, in an amount to be f ixed by the court. The

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provisions of Rule 58 of the New Rules of Court insofar as they areapplicable and not inconsistent with the provisions of this section shallgovern the issuance a nd dissolution of the restraining order of injunctioncontem plated in this section.

NO ACTION, SUIT OR PROCEEDING SHALL LIE AGAINSTOFFICIALS AND PERSONNEL OF THE SUPERVISION ANDEXAMINATION SECTOR IN CONNECTION WITH ANY ACT DONE INGOOD FAITH, OR OMISSION, IN THE EXERCISE OF THEIRFUNC TIONS UND ER THIS SECTION.SEC. . Section 26 of the same Act is hereby amended to read a s follows:

SECTION 26. Bank Deposits and Investments. - Any director,officer or stockholder who, together with his related interest, contracts aloan or any form of financial acco mm odation from: (1 ) his bank; or (2) froma bank (a) which is a subsidiary of a bank holding company of which bothhis bank and t h e lending bank a re subsidiaries or (b) in which a controllingproportion of the shares is owned by the same interest that owns acontrolling 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 amountpermitted b y law, whichever is lower,] REGA RDLE SS OF THE AMOUNTOF THE LOAN O R C REDIT ACCOMMOD ATION, shall be required by thelending ban k to waive the R IGHT TO secrecy of his deposits of whatevernature in all banks in the Philippines. Any information obtained from anexamination of his deposits shall be held strictly confidential and may beused by the examiners only in connection with their supervisory andexam ination responsibility or by the Bangko SentraI in an appropriate legalaction it has initiated involving the deposit account.Sec. 7. Section 28 of the same Act is hereby amended to read as follows:

SECTION 28. Examination and Fees. - The supervising andexamining department head, personally or by deputy, shall examine

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REGULARLY the books of every [banking institution o nce in every twelve(12) months] BANK, QUASI-BANK AND TRUST ENTITY, INCLUDINGITS SUBSIDIARIES AND AFFILIATES ENGAGED IN ALLIEDACTIVITIES AND OTHER FINANCIAL INSTITUTIONS WHICH UNDERSPECIAL LAWS ARE SUBJECT TO BANGKO SENTRALSUPERVISION, IN ACCORDANCE WITH THE GUIDELINES SET BYTHE MONETARY BOARD, and at such other t imes as the MonetaryBoard by an affirmative vote of five (5 ) members, may deem expedientand to m ake a report on the same to the Monetary Board [ :Prov ided,Thatthere shall be an interval of at least twelve (12) months between annualexaminations]. INSPECTION OF CERTAIN RECORDS FORVERIFICATION PURPOSES SHALL NOT BE DEEMED ANEXAMINATION FOR PURPOSES OF THIS PROVISION.

The [bank] INSTITUTION concerned shall afford to the head of theappropriate supervising and examining departments and to his authorizeddeputies full opportunity to examine its books, cash and available assetsand general condit ion at any t ime during [banking] BUSINE SS hours whenrequested to do so by the Bangko Sentral : Provided, however, that noneof the reports and other papers relative to such examinations shall beopen to inspection by the public except insofar as such publicity isincidental to the proceedings hereinafter authorized or is necess ary for theprosecution of violations in connection with the business of suchinstitutions.

[Banking] BANKS, [and quasi-banking institutions] QUASI-BANKSAND TRUST ENTITIES AND OTHER FINANCIAL INSTITUTIONSWHICH UNDER SPECIAL LAWS, [which] are subject to examination byth e Bangko Senfral, shall pay to the Bangko Sentral, within the first thirty(30) days of each ye ar, .an annual fee in an amou nt equa l to a p ercentag eas may be prescribed by the Monetary Board [ofl BASED ON its average

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total assets during the preceding year [as shown on its end-of-monthbalance sheets, after deducting cash or hand and amounts due frombanks, including the Bangko Sentral and banks abroad]. INCONSOLIDATED EXAMINATION O F RESOURCES, THE FEES FORTHE EXAMINATION OF SUBSIDIARIES AND AFFILIATES SHALL BECHARGED AGAINST THEIR PRINCIPAL INSTITUTION UNDEREXAMINATION.

THE MONETARY BOARD MAY LIKEWISE IMPOSE SIMILARFEES ON OTHER FINANCIAL INSTITUTIONS UDNER BANGKOSEN TRAL SUPERVIS ION ISec. 8. Section 30 of the sam e Act is hereby amen ded to read as follows:

SECTION 30 . Proceedings in R eceivership and Liquidation. -Whenever, upon report of the head of the supervising or examiningdepartment, the Monetary Board finds that a bank, [or] quasi-bank OR ATRUST ENTITY:

[(a)] (A) HAS NOTIFIED THE BANGKO SENTRAL OR PUBLICLYANNOUNCED A UNILATERAL CLOSURE, OR IN ANY MANNER HASSUSPENDED THE PAYMENT OF ITS DEPOSIT / DEPOSITSUBSTITUTES LIABILITIES, OR in unable to pay its liabilities as theybecome due in the ordinary course of business: Provided, That this shallnot include inability to pay caused by extraordinary demands induced byfinancial panic in the banking OR FINANCIAL commun ity; OR

(b) has insufficient realizable assets, as determined by the BangkoSenfral to m eet its liabilities; or

(c ) cannot continue in business without involving probable lossesto its depositors or creditors; or

(U)HAS A CAPITAL ADEQUACY RATIO OF LESS THAN TWOPERCENT (2%) CONTINUOUSLY FOR MORE THAN THIRTY (30)DAYS; OR

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Sectionamountcases,hearingCASECorporation

[:d)] (E) has willfully violated a cease and desist order under37 that has become final, involving acts or transactions whichto fraud or a dissipation of the assets of the institution; in which

the Monetary Board may summarily and without need for priorforbid the institution from doing bu siness in the Philippines and INIT IS A BANK, designate the Philippine Deposit Insurance

as receiver of the b anking institution.

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CLOSED INSTITUTION AND PERFORMS SUCH OTHER ACTS AS MAYBE AUTHORIZED BY LAW.

If the receiver determines that the institution cannot b e rehabilitatedor permitted to resume business in accordance with [the next precedingparagraph] THIS SECTION, the Monetary Board shall notify in writing theboard of directors to proceed with the liquidation of the institutions. Thereceiver shall:

(I) file ex parfe with the proper Re gional Trial Court, and withoutrequirement o f prior notice or any other action, a petition for a ssistance inthe liquidation of the institution pursuant to a liquidation plan adopted bythe Philippine Deposit insurance Corporation for general application to allclosed banks. In case of quasi-banks OR TRUST ENTITIES, theliquidation plan shall be adopted by the Monetary Board. Upon acquiringjurisdiction, the court shall, upon motion by the receiver after due notice,adjudicate disputed claims against the institution, assist the enforcementof individual liabilities of the stockholders, directors and officers, anddecide on other issues.as may be material to implement the liquidationplan adopted. The receiver shall pay the cost of the proceedings from theassets of the institution.

(2 ) Convert the assets of the institution to mone y, dispose of thesame to creditors and other parties, for the purpose of paying t he de b t s ofsuch institution in accordance with the rules on concurrence andpreference of credit under the Civil Code of the P hilippines an d he m ay, inthe name of the institution, and with the assistance of counsel as he mayretain, institute such actions as may be necessary to collect and recoveraccounts and assets of, or defend any action against the institution. Theassets of an institution under receivership or liquidation shall be deemedin custodial legis in the hands of the receiver and shall, from the m omen t

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the institution was placed under such receivership or liquidation, beexempt from any order of garnishment, levy, attachment, or execution.

The actions of the Monetary Board taken under this section orunder Section 29 of this Act shall be final and executory, and may not berestrained or set aside by the court except on petition for certiorari on theground AND UPON A FINDING AFTER DUE HEARING that the actiontaken was in excess of jurisdiction or with such grave abuse of discretionas to amount to lack or excess of jurisdiction: PROVIDED, HOWEVER,THAT ANY ORDER RESTRAINING, ENJOINING OR SETTING ASIDETHE ACTION COMPLAINED OF IN THE PETITION FO R CERTIORARI,UNLESS SUCH ORDER IS ISSUED BY THE SUPREME COURT, MAYBE DISSOLVED OR STAYED UPON BANGKO SENTRAL FILING AWRITTEN UNDERTAKING THAT IT WILL PAY ALL DA MAG ES WHICHTHE PETITIONER MAY SUFFER FROM THE DENIAL, DISSOLUTIONOR STAY OF THE INJUNCTION SHOULD IT BE DECIDED IN A FINALJUDGEMENT THAT THE PETITIONER IS ENTITLED TO HAVE THEACTS COMPLAINED OF PERMANENTLY ENJOINED. The petit ion forcerliorari may only be filed by the stockholders of record representing themajority of the cap ital stock within ten ( I O ) days from receipt by the boardof directors of the institution of the order directing receivership, liquidationor conservatorship. THE PROVISIONS O F RULE 58 OF THE 1997RULES IN CIVIL PROCEDURE IN SO FAR AS THEY ARE APPLICABLEAND NOT INCONSISTENT WITH THE PROVISIONS OF THIS SECTIONSHALL GOVERN THE ISSUANCE AND DISSOLUTION OF THERESTRAINING ORDER OR INJUNCTION CONTEMPLATED IN THISSECTION.

The d esignation of a conservator unde r Section 29 of this Act or theappointment of a receiver under this section shall be vested exclusively

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with the Mon etary Board, Furthermore, the designation of a conservator isnot a precond ition to the designa tion of receiver.SEC. 9. Section 36 of the same Act is hereby ame nded to read as follows:

SECTION 36 . Proceedings Upon Violation of This Act a ndOther Banking Laws, Rules, Regulations,Whenever a bank, [or] quasi-bank, TRUST ENTITY OR OTHERFINANCIAL INSTITUTION WHICH UNDER THIS ACT OR SPECIALLAWS IS SUBJECT TO BANGKO SENTRAL SUPERV ISION or wheneverany person or entity willfully violates this Act or other pertinent bankinglaws being enforced or implemented by t h e Bangko Sentral or any order,instruction, rules or regulation issued by the Monetary Board, the personor persons responsible for such violation shall unless otherwise providedin this Act be punished by a fine of not less than Fifty thousand pesos(P50,OOO) nor mo re than [Two hundred thousand peso s (P20 0,000 )] TW OMILLION PESOS (P2,OOO.OOO) or by imprisonment of not less than two (2)years nor m ore than ten (IO) years, or both, at the discretion of the court.THE ACCESORY PENALTY OF CONFISCATION OR FORFEITURE OFINSTRUMENTS AND PROCEEDS O F THE OFFENSE SHALL IN ALLSUCH CASES B E IMPOSED UPO N CONVICTION OF THE ACCUSED .

UPON PROBABLE CASUE BEING ESTABLISHED THAT ANOFFENSE PENALIZED UNDER THIS SECTION HAS BEENCOMMITTED OR IS BEING COMMITTED AND THAT A BANK DEPOSITOR SIMILAR ACCOUNT APPEARS TO HAVE BEEN USED, OR ISBEING USED AS A MEANS TO COMMIT THE OFFENSE, OR TOCONCEAL ITS COMMISSION OR ITS PROCEEDS, ANY COMPETENTCOURT MAY ORDER THE EXAMINATION OF THE ACCOUNT ANDTHEIR BALANCES SEQUESTERED, NOTWITHSTANDING THEPROVISIONS OF REPUBLIC ACT NO. 1405, REPUBLIC ACT NO. 6426,REPUBLIC ACT NO. 8791, A.ND OTHER LAWS. THE ORDER OF

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1 EXAMINATION AND SEQUESTRATION SHALL ISSUE UPON2 APPLICATION AND COMPLIANCE WITH THE FORMAL AND LEGAL3 REQUISITES PRESCRIBED IN RULE 126 OF THE RULES OF COURT4 FOR THE ISSUANCE OF A SEARCH WARRANT. BANK DEPOSITS5 MAY LIKEWISE BE EXAMINED BY THE ANTI-MONEY LAUNDERINGG COUNCIL PURSUANT TO SECTION 11, REPUBLIC ACT NO. 9160.7 Whenever ANY ENTITY UNDER BANGKO SENTRAL8 SUP ERV ISION [a bank o r quasi-bank] persists in carrying on its business9 in an unlawful or unsa fe manner, the Board m ay, without p rejudice to the

I O penalties provided in the preceding paragraph of this section and the1 1 administrative sanctions provided in Section 37 of this Act, take action12 under Section 30 of this Act.13 SEC. 10. Section 37 of the same Act is hereby amended to read as14 follows:15 SECTION 37.Adminisfrafive Sancfions [ on Banks and Quasi-16 Banks]. -W itho ut prejudice to the criminal sanctions against the culpable17 persons provided in Sections 34, 35, and 36 of this Act, the Monetary18 Board, may, at its discretion, impose upon any b ank, [or] quasi-bank OR19 TRUST ENTITY, their directors and/or officers, for any willful violation of20 its charter or bylaws, willful delay in t h e submission of reports or21 publications thereof as required by law, rules and regulations; any refusal22 to permit examination into the affairs of the institution; any w illful making of23 a false or misleading statement to the Board or the appropriate24 supervising and examining department or its examiners; any willful failure25 or refusal to comply with, or violation of, any banking law or any order,26 instruction or regulation issued by the Monetary Board, or any order,2728

instruction or ruling by the Governor; or any commission of irregularities,and/or condu cting business in an unsafe or unsound manner as may be

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determined by the Monetary Board, the following administrative sanctions,whenever applicable:

(a) fines in amounts as may be determined by the Monetary Boardto be appropriate, but in no cases to exceed [Thirty thousand pesos(P30,OOO) a] THREE HUNDRED THOUSAND PESOS (P300,OOO) PERBANKING day for each violation, taking into consideration the attendantcircumstances, such as the nature and gravity of the violation orirregularity and the size of the [bank or quasi-bank] INSTITUTION;

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

(c) suspension of lending or foreign exchange operations orauthority to a ccept new deposits or ma ke new investm ents;

(d) suspension of interbank clearing privileges; [and /or](e) revocation of quasi-banking license;(F) REVOCATION OF TRUST LICENSE;(G) PROHIBITION FROM DECLARING CASH DIVIDENDS;(H) CONFISCATION BY AND FORFEITURE IN FAVOR OF THE

5ANGKO SENTRAL OF ANY AND ALL PROFITS, AS MAY BEDETERMINED BY THE MONETARY BOARD, ARISING FROM THEOFFENSE OR VIOLATION OF BANKING LAWS AND REGULATIONS,OR ACT OR OMISSION CONSTITUTING AN UNSAFE OR UNSOUNDPRACTICE; AND/OR

( I ) OTHER SANCTIONS AS THE MONETARY BOARD MAYDEEM APPROPRIATE UNDER THE CIRCUMSTANCES.

THE DIRECTOR OR OFFICER RESPONSIBLE FOR THEVIOLATION M AY, AFTER DUE HEARING, BE SUSPENDED, REMO VEDOR DISQUALIFIED FROM HOLDING OFFICE, OF ANY POSITION, INAN INSTITUTION UNDER THE SUPERVISION OF THE BANGKOSENTRAL, FOR A PERIOD TO BE DETERMINED BY THE MONETARY

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BOARD WHICH SHALL IN NO CASE EXCEED A PERIOD O F FIVE (5 )YEARS, TAKING INTO CONSIDERATION THA ATTENDANTCIRCUMSTANCES, SUCH AS THE NATURE AND GRAVITY OF THEACT OR OMISSION AND THE SIZE OF THE INSTITUTION.

Resignation or termination from office shall not exempt suchdirector or officer from adm inistrative or criminal san ctions.

The Monetary Board may, whenever warranted by circumstances,preventively suspend any director or officer of [a bank or quasi-bank] THEINSTITUTION pending an investigation: Provided, That should the casebe not finally decided by the Bangku Sentral within a period of onehundred twenty (420) days after the date of suspension, said director orofficer shall be reinstated in his position: Provided further, That when thedelay in the disposition of the case is due to the fault, negligence orpetition of the director or officer, the period of delay shall not b e counted incomputing the period of suspension herein provided.

The above administrative sanctions need not be applied in theorder o f their severity.

Whether or not there is an administrative proceeding, if theinstitution and/or the directors and/or officers concerned continue with orotherwise persist in the commission of the indicated practice or violation,the Monetary Board may issue an order requiring the institution and/or thedirectors and/or officers concerned to cease and desist from the indicatedpractice or violation, and may further order that imme diate action be takento correct the conditions resulting from such practice or violation. Thecease and desist order shall be immediately effective upon service on therespondent.

The respondents shall be afforded an opportunity to defend theiraction in a hearing before the Monetary Board or any committee chairedby any Monetary Board member created for the purpose, upon request

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made by the respondents within five (5) days from their receipt of theorder. If no such hearing is requested within said p eriod, the o rder shall befinal. If a hearing is conducted, all issues shall be determine d on the b asisof records, after which the Monetary Board may either reconsider or make

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The Governor is hereby authorized, at his discretion, to imposeupon [banking institutions,] BANKS, QUASI-BANKS, AND TRUSTENTITIES, INCLUDING THEIR PARENTS, SUBSIDIARIES ANDAFFILIATES ENGAGED IN ALLIED ACTIVITIES, ANDOTHERFINANCIAL INSTITUTIONS WHICH UNDER SPECIAL LAWS ARESUBJECT TO BANGKO SENTRAL SUPERVISION for any failure tocomply with the requirements of law, Monetary Board regulations andpolicies, and/or instructions issued by the Monetary Baord or by theGovernor, fines not in excess of Ten tho usan d p esos (P10,OOO) a day for

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17I S follows:19 SECTION 77. Requirement of Balance Currency Position. -20 The Monetary Board may require [the] banks, QUASI-BANKS, THEIR21 SUBSIDIARIES AND AFFILIATES to maintain a balanced posit ion22 between their assets and liabilities in Philippine pesos or in any other23 currency or currencies in which they operate. [The B anks] THEY shall be24 granted a reasonable period of time in which to adjust their currency25 posit ions to any such requirement.262728

each violation, the imposition of which shall be final and executory untilreversed, mod ified or lifted by the Monetary Board on ap pea l.SEC. 11. Section 77 of the same Act is hereby amended to read as

The powers granted under this section shall be exercised onlywhen specia l circumstances make such action necessary, in the opinion ofthe Monetary Board, and shall be applied to all banks, QUASI-BANKS,

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THEIR SUBSIDIARIES AND AFFILIATES alike and withoutd sc m nation ISEC. 42 . The last paragraph of Section 84 of the same Act is hereby

amended to read as follows:Whenever a [financial] BANK [institution] incurs an overdraft in its

account with the Bangko Senfral , the same shall be eliminated within theperiod prescribed in Se ction 102 of this Act. THE OVER DRAFT M AY B ECONVERTED INTO AN EMERGENCY LOAN OR ADVANCE, ANDSHALL BE GOVERNED BY THE PROVISIONS OF THIS SECTION.PROVIDED, HOWEVER, THAT THE CEILING PRESCRIBED HEREINON THE AMOUNT OF ANY EMERGENCY LOAN OR ADVANCE THATMAY BE GRANTED TO A BANK SHALL NOT APPLY TO THECONVERSION OF THEIR OVERDRAFT INTO AN EMERGENCY LOANOR ADVANCE.SEC. 13. Section 102 of the same Act is hereby amended to read as

follows:SECTION 102. interbank Sefflemenf. The Bangko Senfral shall

establish facilities for interbank clearing under such rules and regulationsas the Mon etary Board may prescribe: Provided, That the Bangko Senfralmay charge administrative and other fees for the maintenance of suchfacilities.

The deposit reserves maintained by the banks in the BangkoSenfral in accordance with the provisions of Section 94 of this Act shallserve as basis for the clearing of checks and the settlement of interbank

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balances, subject to such rules and regulations as the Monetary Board

may issue with respect to such operations: Provided, That any bank which27282 9

incurs an overdrawing in its deposit account with Bangko Sentral sha ll fullycover said overdraft, including interest thereon at a rate equivalen t to one-tenth of one percent (1110 or 1%) per day or the prevailing ninety-one-day

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Treasury bill rate plus three percentage points, whichever is higher, notlater than the next clearing day: Provided, HOWEVER, [further] , Thatsettlemen t of clearing b alances shall not be effected for any account whichIS [continues to be] overdrawn for A PERIOD AS MAY BE DEC IDED BYTHE MONETARY BOARD WHENEVER WARRANTED BY THECIRCUMSTANCES: PROVIDED, THAT SUCH PERIOD SHALL IN NOCASE EXCEED f ive (5 ) consecutive banking days un til such time as theoverdrawing is fully covered or otherwise converted into an emergencyloan or advance pursuant to the provisions of Section 84 of this Act:Provided, finally, That the appropriate clearing office shall be officiallynotified of banks with overdrawn balances. Banks with existing overdraftswith the Bangko Sentral as of the effectivity of this Act shall, within suchperiod as may be prescribed by the Monetary Board, either convert theoverdraft into an emergency loan or advance with a plan of payment, orsettle such overdrafts, and that, upon failure to so comply herewith, theBangko Senfral shall take such action against the bank as may bewarranted under this Act.SEC. 14. 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 ratiosBASED ON INTERNATIONALLY ACCEPTED STAND ARDS INCLUDINGTHOUSE PRESCRIBED BY THE SAME COMMITTEE [which the capitaland surplus of the banks must bear to the volume of their assets, or tospecific categories thereof,] and may alter said ratios whenever it deemsnecessary. IN THE EXERCISE OF ITS AUTHORITY UNDER THISSECTION, THE MONETARY BOARD MAY PRESCRIBE A HIGHERMINIMUM CAPITAL ADEQUACY RATIO FOR BANKS WHICH AREEXPOSED TO MORE THAN NORMAL RISKS.

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SEC. 15. Section 116 of the same Act is hereby amended to read asfollows:

SECTION I 6. Rernunerafion for ewices . - The BangkoSentral may charge equitable rates, commissions or fees for serviceswhich it renders to the Government, its polit ical subdivisions andinstrumentalit ies 6.1 AS WELL AS TO FINANCIAL INSTITUTIONS:PROVIDED, THAT IN THE CASE OF BANKS AND QUASI-BANKS,SUCH CHARGES FOR SERVICES SHALL BE IN ADDITION TO THESUPERVISION FEES AUTHORIZED U NDER SECTION 28 OF THISACT: PROVIDED, FURTHER, THAT BANGKO SENTRAL MAYOUTSOURCE ANY SUCH SERVICES WHEN THE COST ANDAPPROPRIATE CONTROLS JUSTIFY IT.SEC. 16. Section 125 of the same Act is hereby amended to read as

follows:SECTION 125. Tax Exempfions. - The PROVISIONS OF ANY

GENERAL OR SPECIAL LAW TO THE CONTRARYNOTWITHSTANDING, the Bangko Sentral shall be exempt, [for a periodof five (5) years] from the approval of this Ac t, from all national, provincial,municipal and city taxes, fees, charges and assessments [ . ] NOW INFORC E OR HEREA FTER ESTABLISHED.

The exemptions authorized in the preceding paragraph of thissection sh all apply to all property of the Bangko Sentral, to the resources,receipts, expenditures, profits and income of the Bangko Sentral, as wellas to all contracts, deeds, documents and transactions related to theconduct of the business of the Bangko Sentral: Provided, however, Thatsaid exemptions shall apply only such taxes, fees, charges, andassessments for which the Bangko SentraI itself would otherwise be [,Il iable, and shall no t apply to taxes, fees, ch arges, or assessments payableby persons or other entit ies doing business with the Bangko Sentral:

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Provided, furfher, That foreign loans and other obligations of the BangkoSentral shall be exem pt, both as to p rincipal and interest, from any a nd allother taxes if the payment of such taxes has been assumed by the

SEC. 17. Section 126 of the same Act is hereby amended to read as67S9

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follows:SECTION 126. Exemption from Cusfoms Duties. - The

provision of any general or special law to the contrary notwithstanding, theimportation and exportation by the Bangko Sentral of notes and coins, andof gold and other metals to be used for purposes authorized under thisAct, and the importation of all equipment AND SUPPLIES needed [for] INTHE BANGKO SENTRAL OPERATIONS SUC H AS bank note production,minting of coins, metal refining, [and other] security printing operationsAND TRANSPORT OF CURRENCY shall be fully exempt from allcustoms duties a nd consular fees and from all other taxes, assessmentsand charges related to such importation or exportation.SEC. I S . Section 128 of the same Act is hereby amended to read as

follows:SECTION 128. Prohibifions. - The Bangko Sentral shall not

acquire shares of any kind or accept them as collateral, and shall notparticipate in the ownership or management of any enterprise, eitherdirectly or indirectly [.] PROVIDED, THAT THIS PROHIBITION SHALL

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26272 s The Bangko Sentral shal! not engage in development banking or29 f inancing: PROVIDED, however, That outstanding loans obtained or

NOT APPLY WHENEVER SU CH OWNERSHIP AND/OR M ANAGEM ENTIS EXPRESSLY AUTHORIZED BY LAW, OR THE MONETARY BOARDBY A VOTE OF AT LEAST FIVE (5 ) OF ITS MEMBERS DEEMS ANACQUISITION TO BE NECESSARY TO THE EXECUTION BY BANGKOSENTRAL OF ITS MANDATES UNDER THIS ACT.

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extended for de velopme nt financing sh all not be affected by the prohibit ionof this se ction.SEC. 19. Subparagraph (b) of Section 132 of the same Act is hereby

amended to read as follows:(b ) th e Bangko Sentral shall remit [seventy-five percent ( 75%) ]

NINETY PERCENT (90%) of its net profits to a special deposit account(sinking fund) until such time as the n et liabilities of the Ce ntral Bank shallhave be en liquidated through generally accepted finance mechanism suchas, but not limited to, write-offs, set-offs, condonation, collections,reappraisal, revaluation and bond issuance by the National Government,or to the N ational Government as dividends;SEC. 20 . Separabil ity C lause. If any provision of this Act is held invalid

for any rea son, the remainde r of this Act shall not be affected there by.SEC. 21. Repealing Clause.- All Jaws, decrees, orders, letters of

instruction, letters of implementation, rules and regulations, or parts thereofinconsistent with any provision of this Act are hereby amended, modified,repealed insofar as they are inconsistent with the provisions of this Act.

SEC. 22. Effectivity. This Act shall take effect fifteen (15) days from thedate of its publication in at least two (2 ) national newspapers of generalcirculation.

Approved ,