REPUBLIC ACT No.

7653

THE NEW CENTRAL BANK ACT

CHAPTER I — ESTABLISHMENT AND ORGANIZATION OF THE BANGKO SENTRAL NG

PILIPINAS

ARTICLE I
CREATION, RESPONSIBILITIES AND CORPORATE POWERS OF THE BANGKO SENTRAL

            Section 1. Declaration of Policy. - The State shall maintain a central monetary authority that
shall function and operate as an independent and accountable body corporate in the discharge of its
mandated responsibilities concerning money, banking and credit. In line with this policy, and
considering its unique functions and responsibilities, the central monetary authority established
under this Act, while being a government-owned corporation, shall enjoy fiscal and administrative
autonomy.

            Section 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 a period of 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.

            Section 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, and institutions performing similar functions.

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

            Section 4. Place of Business. - The Bangko Sentral shall have its principal place of business
in Metro Manila, but may maintain branches, agencies and correspondents in such other places as
the proper conduct of its business may require.

            Section 5. Corporate Powers. - The Bangko Sentral is hereby authorized to adopt, alter, and
use a corporate seal which shall be judicially noticed; to enter into contracts; to lease or own real
and personal property, and to sell or otherwise dispose of the same; to sue and be sued; and
otherwise to do and perform any and all things that may be necessary or proper to carry out the
purposes of this Act.

            The Bangko Sentral may acquire and hold such assets and incur such liabilities in connection
with its operations authorized by the provisions of this Act, or as are essential to the proper conduct
of such operations.
            The Bangko Sentral may compromise, condone or release, in whole or in part, any claim of
or settled liability to the Bangko Sentral, regardless of the amount involved, under such terms and
conditions as may be prescribed by the Monetary Board to protect the interests of the Bangko
Sentral.

ARTICLE II
THE MONETARY BOARD

            Section 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: Provided, That in such event, 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; and

(c) five (5) members who shall come from the private sector, all of whom shall serve full-time:
Provided, however, That of the members first appointed under the provisions of 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.

            Section 7. Vacancies. - Any vacancy in the Monetary Board created by the death,
resignation, or removal of any member shall be filled by the appointment of a new member to
complete the unexpired period of the term of the member concerned.

            Section 8. Qualifications. - The members of the Monetary Board must be natural-born

citizens of the Philippines, at least thirty-five (35) years of age, with the exception of the Governor
who should at least be forty (40) years of age, of good moral character, of unquestionable integrity,
of known probity and patriotism, and with recognized competence in social and economic
disciplines.

            Section 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.

            Section 10. Removal. - The President may remove any member of the Monetary Board for
any of the following reasons:

(a) If the member is subsequently disqualified under the provisions of Section 8 of this Act; or

(b) If he is physically or mentally incapacitated that he cannot properly discharge his duties
and responsibilities and such incapacity has lasted for more than six (6) months; or

(c) If the member is guilty of acts or operations which are of fraudulent or illegal character or
which are manifestly opposed to the aims and interests of the Bangko Sentral; or

(d) If the member no longer possesses the qualifications specified in Section 8 of this Act.

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

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

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

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

            Section 12. Attendance of the Deputy Governors. - The Deputy Governors may attend the
meetings of the Monetary Board with the right to be heard.

            Section 13. Salary. - The salary of the Governor and the members of the Monetary Board
from the private sector shall be fixed by the President of the Philippines at a sum commensurate to
the importance and responsibility attached to the position.

            Section 14. Withdrawal of Persons Having a Personal Interest. - In addition to the

requirements of Republic Act No. 6713, any member of the Monetary Board with personal or
pecuniary interest in any matter in the agenda of the Monetary Board shall disclose his interest to
the Board and shall retire from the meeting when the matter is taken up. The decision taken on the
matter shall be made public. The minutes shall reflect the disclosure made and the retirement of the
member concerned from the meeting.

            Section 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;

(b) direct the management, operations, and administration of the Bangko Sentral, reorganize
its personnel, 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;

(c) 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

(e) indemnify its members and other officials 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 functions or duties, unless he is finally adjudged in such action or proceeding to be liable
for 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 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 an undertaking by or on behalf of the member, officer, or employee 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.

            Section 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.

ARTICLE III
THE GOVERNOR AND DEPUTY GOVERNORS OF THE BANGKO SENTRAL

            Section 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 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 to be necessary to
carry out the purposes and provisions of this Act;

(b) execute and administer the policies and measures approved by the Monetary Board;

(c) direct and supervise the operations and internal administration of the Bangko Sentral.
The Governor may delegate certain of his administrative responsibilities 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 or subject to such
rules and regulations as the Monetary Board may prescribe;

(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;

(e) 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 well as regulations, policies or instructions issued by the Monetary Board, and the
implementation thereof; and

(f) exercise such other powers as may be vested in him by the Monetary Board.

            Section 18. Representation of the Monetary Board and the Bangko Sentral. - The Governor
of the Bangko Sentral shall be the principal representative of the Monetary Board and of the Bangko
Sentral and, in such capacity and in accordance with the instructions of the Monetary Board, he shall
be empowered to:
 (a) represent the Monetary Board and the Bangko Sentral in all dealings with other offices,
agencies and instrumentalities of the Government and all other persons or entities, public or
private, whether domestic, foreign or international;

(b) sign contracts entered into by the Bangko Sentral, notes and securities issued by the
Bangko Sentral, all reports, balance sheets, profit and loss statements, correspondence and
other documents of the Bangko Sentral.

            The signature of the Governor may be in facsimile whenever appropriate;

(c) represent the Bangko Sentral, either personally or through counsel, including private
counsel, as may be authorized by the Monetary Board, in any legal proceedings, action or
specialized legal studies; and

(d) delegate his power to represent the Bangko Sentral, as provided in subsections (a), (b)
and (c) of this section, to other officers upon his own responsibility: Provided, however, That
in order to preserve the integrity and the prestige of his office, the Governor of the Bangko
Sentral may choose not to participate in preliminary discussions with any multilateral banking
or financial institution on any negotiations for the Government within or outside the
Philippines. During the negotiations, he may instead be represented by a permanent
negotiator.

            Section 19. Authority of the Governor in Emergencies. - In case of emergencies where time

is sufficient to call a meeting of the Monetary Board, the Governor of the Bangko Sentral, with the
concurrence of two (2) other members of the Monetary Board, may decide any matter or take any
action within the authority of the 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.

            Section 20. Outside Interests of the Governor and the Full-time Members of the Board. - The
Governor of the Bangko Sentral and the full-time members of the Board shall limit their professional
activities to those pertaining directly to their positions with the Bangko Sentral. Accordingly, they may
not accept any other employment, whether public or private, remunerated or ad honorem, with the
exception of positions in eleemosynary, civic, cultural or religious organizations or whenever, by
designation of the President, the Governor or the full-time member is tasked to represent the interest
of the Government or other government agencies in matters connected with or affecting the
economy or the financial system of the country.

            Section 21. Deputy Governors. - The Governor of the Bangko Sentral, with the approval of
the Monetary Board, shall appoint not more than three (3) Deputy Governors who shall perform
duties as may be assigned to them by the Governor and the Board.

            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.

ARTICLE IV
OPERATIONS OF THE BANGKO SENTRAL

            Section 22. Research and Statistics. - The Bangko Sentral shall prepare data and conduct
economic research for the guidance of the Monetary Board in the formulation and implementation of
its policies. Such data shall include, among others, forecasts of the balance of payments of the
Philippines, statistics on the monthly movement of the monetary aggregates and of prices and other
statistical series and economic studies useful for the formulation and analysis of monetary, banking,
credit and exchange policies.

            Section 23. Authority to Obtain Data and Information. - The Bangko Sentral shall have the
authority to request from government offices and instrumentalities, or government-owned or
controlled corporations, any data which it may require for the proper discharge of its functions and
responsibilities. The Bangko Sentral through the Governor or in his absence, 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 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 shall apply.

            Section 24. Training of Technical Personnel. - The Bangko Sentral shall promote and
sponsor the training of technical personnel in the field of money and banking. 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 program of the Bangko Sentral.

            Section 25. Supervision and Examination. - The Bangko Sentral shall have supervision over,
and conduct periodic or special examinations of, banking institutions and quasi-banks, including their
subsidiaries and affiliates engaged in allied activities.

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

            The department heads and the examiners of the supervising and/or examining departments
are hereby authorized to administer oaths to any director, officer, or employee of any institution
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.

            No 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 plaintiff files with the clerk or judge of the court in which the action is
pending a bond executed in favor of the Bangko Sentral, in an amount to be fixed by the court. The
provisions of Rule 58 of the New Rules of Court insofar as they are applicable and not inconsistent
with the provisions of this section shall govern the issuance and dissolution of the restraining order
or injunction contemplated in this section.

            Section 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.

            Section 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 gift, present or pecuniary or material
benefit for himself or another, from any institution subject to supervision or examination by
the Bangko Sentral;

(c) revealing in any manner, except under orders of the court, the Congress 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. 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.
            Section 28. Examination and Fees. - The supervising and examining department head,
personally or by deputy, shall examine the books of every banking 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 to the Monetary Board: Provided,
That there shall be an interval of at least twelve (12) months between annual examinations.

            The bank 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 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-month balance sheets, after deducting cash
on hand and amounts due from banks, including the Bangko Sentral and banks abroad.

            Section 29. Appointment of Conservator. - Whenever, on the basis of a report submitted by

the appropriate supervising or examining department, the Monetary Board 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, the Monetary Board may
appoint a conservator with such powers as the Monetary Board shall deem necessary to take charge
of the assets, liabilities, and the management thereof, reorganize the management, collect all
monies and debts due said institution, and exercise all powers necessary to restore its viability. The
conservator shall report and be responsible to the Monetary Board 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.

            The conservator should be competent and knowledgeable in bank operations and

management. The conservatorship shall not exceed one (1) year.

            The conservator shall receive remuneration to be fixed by the Monetary Board 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 one-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, in which case he shall not be entitled to receive any remuneration or
emolument from the Bangko Sentral during the conservatorship. The expenses attendant to the
conservatorship shall be borne by the bank or quasi-bank concerned.

            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
would involve probable loss to its depositors or creditors, in which case the provisions of Section 30
shall apply.
            Section 30. Proceedings in Receivership and Liquidation. - Whenever, upon report of the
head of the supervising or examining department, the Monetary Board finds that a bank or quasi-
bank:

(a) is unable to pay its liabilities as they become due in the ordinary course of business:
Provided, That this shall not include inability to pay caused by extraordinary demands
induced by financial panic in the banking community;

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

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

(d) has willfully violated a cease and desist order under Section 37 that has become final,
involving acts or transactions which amount to fraud or a dissipation of the assets of the
institution; in which cases, the Monetary Board may summarily and without need for prior
hearing forbid the institution from doing business in the Philippines and designate the
Philippine Deposit Insurance Corporation as receiver of the banking institution.

            For a quasi-bank, any person of recognized competence in banking or finance may be

designed 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 creditors, and exercise the general powers of a
receiver under the Revised Rules of Court but shall not, with the exception of 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 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.

            If the receiver determines that the institution cannot be rehabilitated or permitted to resume
business in accordance with the next preceding paragraph, the Monetary Board shall notify in writing
the board of directors of its findings and direct the receiver to proceed with the liquidation of the
institution. 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 institutions 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.

            Section 31. Distribution of Assets. - In case of liquidation of a bank or quasi-bank, after

payment of the cost of proceedings, including reasonable expenses and fees of the receiver to be
allowed by the court, the receiver shall pay the debts of such institution, under order of the court, in
accordance with the rules on concurrence and preference of credit as provided in the Civil Code.

            Section 32. Disposition of Revenues and Earnings. - All revenues and earnings realized by
the receiver in winding up the affairs and administering the assets of any bank or quasi-bank within
the purview of this Act shall be used to pay the costs, fees and expenses mentioned in the preceding
section, salaries of such personnel whose employment is rendered necessary in the discharge of the
liquidation together with other additional expenses caused thereby. The balance of revenues and
earnings, after the payment of all said expenses, shall form part of the assets available for payment
to creditors.

            Section 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 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.

            Section 34. Refusal to Make Reports or Permit Examination. - Any officer, owner, agent,
manager, director or officer-in-charge of any institution subject to the supervision or examination by
the Bangko Sentral within the purview of this Act who, being required in writing by the Monetary
Board or by the head of the supervising and examining department willfully refuses to file the
required report or permit any lawful examination into the affairs of such institution shall be punished
by a fine of not less than Fifty thousand pesos (P50,000) nor more than One hundred thousand
pesos (P100,000) or by imprisonment of not less than one (1) year nor more than five (5) years, or
both, in the discretion of the court.

            Section 35. False Statement. - The willful making of a false or misleading statement on a

material fact to the Monetary Board or to the examiners of the Bangko Sentral shall be punished by
a fine of not less than One hundred thousand pesos (P100,000) nor more than Two hundred
thousand pesos (P200,000), or by imprisonment of not more than (5) years, or both, at the discretion
of the court.
            Section 36. Proceedings Upon Violation of This Act and Other Banking Laws, Rules,
Regulations, Orders or Instructions. - Whenever a bank or quasi-bank, 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) or by imprisonment of not less than two (2) years nor more than ten (10) years, or both,
at the discretion of the court.

            Whenever 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.

            Section 37. Administrative Sanctions 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 upon any bank or quasi-bank, their directors and/or
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; or any commission of
irregularities, and/or conducting business in an unsafe or unsound manner as may be determined by
the Monetary Board, the following administrative sanctions, whenever applicable:

(a) fines in amounts as may be determined by the Monetary Board to be appropriate, but in
no case to exceed Thirty thousand 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;

(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.

            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 quasi-bank 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 receipt 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, and/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.

            Section 38. Operating Departments of the Bangko Sentral. - The Monetary Board shall, in
accordance with its authority under this Act, determine and provide for such operating departments
and other offices, including a public information office, of the Bangko Sentral as it deems convenient
for the proper and efficient conduct of the operations and the accomplishment of the objectives of
the Bangko Sentral. The functions and duties of such operating departments and other offices shall
be determined by the Monetary Board.

ARTICLE V
REPORTS AND PUBLICATIONS

            Section 39. Reports and Publications. - The Bangko Sentral shall publish a general balance
sheet showing the volume and composition of its assets and liabilities as of the last working day of
the month within sixty (60) days after the end of each month except for the month of December,
which shall be submitted within ninety (90) days after the end hereof.

            The Monetary Board shall publish and submit the following reports to the President and to
the Congress:

(a) not later than ninety (90) days after the end of each quarter, an analysis of economic and
financial developments, including the condition of net international reserves and monetary
aggregates;

(b) within ninety (90) days after the end of the year, the preceding year's budget and profit
and loss statement of the Bangko Sentral showing in reasonable detail the result of its
operations;

(c) one hundred twenty (120) days after the end of each semester, a review of the state of
the financial system; and
 (d) as soon as practicable, abnormal movements in monetary aggregates and the general
price level, and, not later than seventy-two (72) hours after they are taken, remedial
measures in response to such abnormal movements.

            Section 40. Annual Report. - Before the end of March of each year, the Bangko Sentral shall
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:

(a) the monthly movement of monetary aggregates and their components;

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

(c) the balance of payments of the Philippines;

(d) monthly indices of consumer prices and of import and export prices;

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

(f) the monthly movement of the accounts of the Bangko Sentral and of other banks;

(g) 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 Bangko
Sentral or of the financial system.

            The Bangko Sentral shall publish another version of the annual report 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 salary of the
personnel concerned until the requirements are complied with.

            Section 41. Signatures on Statements. - The balance sheets and other financial statements
of the Bangko Sentral shall be signed by the officers responsible for their preparation, by the
Governor, and by the auditor of the Bangko Sentral.

ARTICLE VI
PROFITS, LOSSES, AND SPECIAL ACCOUNTS

            Section 42. Fiscal Year. - The fiscal year of the Bangko Sentral shall begin on January first
and end on December thirty-first of each year.
            Section 43. Computation of Profits and Losses. - Within the first thirty (30) days following the
end of each year, the Bangko Sentral shall determine its net profits or losses. In the calculation of
net profits, the Bangko Sentral shall make adequate allowance or establish adequate reserves for
bad and doubtful accounts.

            Section 44. Distribution of Net Profits. - Within the first sixty (60) days following the end of
each fiscal year, the Monetary Board shall determine and carry out the distribution of the net profits,
in accordance with the following rule:

            Fifty percent (50%) of the net profits shall be carried to surplus and the remaining fifty
percent (50%) shall revert back to the National Treasury, except as otherwise provided in the
transitory provisions of this Act.

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

            The Revaluation of International Reserve account shall be neither credited nor debited for
any purposes other than those specifically authorized in this section.

            Section 46. Suspense Accounts. - Sections 43 and 43-A of Republic Act No. 265, as
amended, creating the Monetary Adjustment Account (MAA) and the Exchange Stabilization
Adjustment Account (ESAA), respectively, are hereby repealed. Amounts outstanding as of the
effective date of this Act based on these accounts shall continue to be for the account of the Central
Bank and shall be governed by the transitory provisions of this Act.

            The Revaluation of International Reserve (RIR) account as of the effective date of this Act of
the Central Bank shall continue to be for the account of the same entity and shall be governed by the
provisions of Section 44 of Republic Act No. 265, as amended, until otherwise provided for in
accordance with the transitory provisions of this Act.

ARTICLE VII
THE AUDITOR

            Section 47. Appointment and Personnel. - The Chairman of the Commission on Audit shall
act as the ex officio auditor of the Bangko Sentral and, as such, he is empowered and authorized to
appoint a representative who shall be the auditor of the Bangko Sentral and, in accordance with law,
fix his salary, and to appoint and fix salaries and number of personnel to assist said representative in
his work. The salaries and other emoluments shall be paid by the Commission. The auditor of the
Bangko Sentral and personnel under him may be removed only by the Chairman of the Commission.

            The representative of the Chairman of the Commission must be a certified public accountant
with at least ten (10) years experience as such. No relative of any member of the Monetary Board or
the Chairman of the Commission within the sixth degree of consanguinity or affinity shall be
appointed such representative.
 CHAPTER II — THE BANGKO SENTRAL AND THE MEANS OF PAYMENT

ARTICLE I
THE UNIT OF MONETARY VALUE

            Section 48. The Peso. - The unit of monetary value in the Philippines is the "peso," which is
represented by the sign "P."

            The peso is divided into one hundred (100) equal parts called "centavos," which are
represented by the sign "c."

ARTICLE II
ISSUE OF MEANS OF PAYMENT

            A. CURRENCY

            Section 49. Definition of Currency. - The word "currency" is hereby defined, for purposes of
this Act, as meaning all Philippine notes and coins issued or circulating in accordance with the
provisions of this Act.

            Section 50. Exclusive Issue Power. - The Bangko Sentral shall have the sole power and
authority to issue currency, within the territory of the Philippines. No other person or entity, public or
private, may put into circulation notes, coins or any other object or document which, in the opinion of
the Monetary Board, might circulate as currency, nor reproduce or imitate the facsimiles of Bangko
Sentral notes without prior authority from the Bangko Sentral.

            The Monetary Board may issue such regulations as it may deem advisable in order to
prevent the circulation of foreign currency or of currency substitutes as well as to prevent the
reproduction of facsimiles of Bangko Sentral notes.

            The Bangko Sentral shall have the authority to investigate, make arrests, conduct searches
and seizures in accordance with law, for the purpose of maintaining the integrity of the currency.

            Violation of this provision or any regulation issued by the Bangko Sentral pursuant thereto
shall constitute an offense punishable by imprisonment of not less than five (5) years but not more
than ten (10) years. In case the Revised Penal Code provides for a greater penalty, then that penalty
shall be imposed.

            Section 51. Liability for Notes and Coins. - Notes and coins issued by the Bangko Sentral
shall be liabilities of the Bangko Sentral and may be issued only against, and in amounts not
exceeding, the assets of the Bangko Sentral. Said notes and coins shall be a first and paramount
lien on all assets of the Bangko Sentral.

            The Bangko Sentral's holdings of its own notes and coins shall not be considered as part of
its currency issue and, accordingly, shall not form part of the assets or liabilities of the Bangko
Sentral.

            Section 52. Legal Tender Power. - All notes and coins issued by the Bangko Sentral shall be
fully guaranteed by the Government of the Republic of the Philippines and shall be legal tender in
the Philippines for all debts, both public and private: Provided, however, That, unless otherwise fixed
by the Monetary Board, coins shall be legal tender in amounts not exceeding Fifty pesos (P50.00)
for denominations of Twenty-five centavos and above, and in amounts not exceeding Twenty pesos
(P20.00) for denominations of Ten centavos or less.

            Section 53. Characteristics of the Currency. - The Monetary Board, with the approval of the
President of the Philippines, shall prescribe the denominations, dimensions, designs, inscriptions
and other characteristics of notes issued by the Bangko Sentral: Provided, however, That said notes
shall state that they are liabilities of the Bangko Sentral and are fully guaranteed by the Government
of the Republic of the Philippines. Said notes shall bear the signatures, in facsimile, of the President
of the Philippines and of the Governor of the Bangko Sentral.

            Similarly, the Monetary Board, with the approval of the President of the Philippines, shall
prescribe the weight, fineness, designs, denominations and other characteristics of the coins issued
by the Bangko Sentral. In the minting of coins, the Monetary Board shall give full consideration to the
availability of suitable metals and to their relative prices and cost of minting.

            Section 54. Printing of Notes and Mining 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 shall be subject. The Monetary Board shall have the
authority to contract institutions, mints or firms for such operations.

            All expenses incurred in the printing of notes and the minting of coins shall be for the account
of the Bangko Sentral.

            Section 55. Interconvertibility of Currency. - The Bangko Sentral shall exchange, on demand

and without charge, Philippine currency of any denomination for Philippine notes and coins of any
other denomination requested. If for any reason the Bangko Sentral is temporarily unable to provide
notes or coins of the denominations requested, it shall meet its obligations by delivering notes and
coins of the denominations which most nearly approximate those requested.

            Section 56. Replacement of Currency Unfit for Circulation. - The Bangko Sentral shall
withdraw from circulation and shall demonetize all notes and coins which for any reason whatsoever
are unfit for circulation and shall replace them by adequate notes and coins: Provided, however,
That the Bangko Sentral shall not replace notes and coins the identification of which is impossible,
coins which show signs of filing, clipping or perforation, and notes which have lost more than two-
fifths (2/5) of their surface or all of the signatures inscribed thereon. Notes and coins in such
mutilated conditions shall be withdrawn from circulation and demonetized without compensation to
the bearer.

            Section 57. Retirement of Old Notes and Coins. - The Bangko Sentral may call in for
replacement notes of any series or denomination which are more than five (5) years old and coins
which are more than (10) years old.

            Notes and coins called in for replacement in accordance with this provision shall remain legal
tender for a period of one (1) year from the date of call. After this period, they shall cease to be legal
tender but during the following year, or for such longer period as the Monetary Board may
determine, they may be exchanged at par and without charge in the Bangko Sentral and by agents
duly authorized by the Bangko Sentral for this purpose. After the expiration of this latter period, the
notes and coins which have not been exchanged shall cease to be a liability of the Bangko Sentral
and shall be demonetized. The Bangko Sentral shall also demonetize all notes and coins which have
been called in and replaced.

            B. DEMAND DEPOSITS

            Section 58. Definition. - For purposes of this Act, the term "demand deposits" means all
those liabilities of the Bangko Sentral and of other banks which are denominated in Philippine
currency and are subject to payment in legal tender upon demand by the presentation of checks.

            Section 59. Issue of Demand Deposits. - Only banks duly authorized to do so may accept
funds or create liabilities payable in pesos upon demand by the presentation of checks, and such
operations shall be subject to the control of the Monetary Board in accordance with the powers
granted it with respect thereto under this Act.

            Section 60. Legal Character. - Checks representing demand deposits do not have legal
tender power and their acceptance in the payment of debts, both public and private, is at the option
of the creditor: Provided, however, That a check which has been cleared and credited to the account
of the creditor shall be equivalent to a delivery to the creditor of cash in an amount equal to the
amount credited to his account.

CHAPTER III — GUIDING PRINCIPLES OF MONETARY ADMINISTRATION BY THE BANGKO

SENTRAL

ARTICLE I
DOMESTIC MONETARY STABILIZATION

            Section 61. Guiding Principle. - The Monetary Board shall endeavor to control any
expansion or contraction in monetary aggregates which is prejudicial to the attainment or
maintenance of price stability.

            Section 62. Power to Define Terms. - For purposes of this article and of this Act, the
Monetary Board shall formulate definitions of monetary aggregates, credit and prices and shall make
public such definitions and any changes thereof.

            Section 63. Action When Abnormal Movements Occur in the Monetary Aggregates, Credit,
or Price Level. - Whenever abnormal movements in the monetary aggregates, in credit, or in prices
endanger the stability of the Philippine economy or important sectors thereof, the Monetary Board
shall:

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

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

(1) the causes of the rise or fall of the monetary aggregates, of credit or of prices;

(2) the extent to which the changes in the monetary aggregates, in credit, or in prices
have been reflected in changes in the level of domestic output, employment, wages
and economic activity in general, and the nature and significance of any such
changes; and

(3) the measures which the Monetary Board has taken and the other monetary, fiscal
or administrative measures which it recommends to be adopted.
            Whenever the monetary aggregates, or the level of credit, increases or decreases by more
than fifteen percent (15%), or the cost of living index increases by more than ten percent (10%), in
relation to the level existing at the end of the corresponding month of the preceding year, or even
though any of these quantitative guidelines have not been reached when in its judgment the
circumstances so warrant, the Monetary Board shall submit the reports mentioned in this section,
and shall state therein whether, in the opinion of the Board, said changes in the monetary
aggregates, credit or cost of living represent a threat to the stability of the Philippine economy or of
important sectors thereof.

            The Monetary Board shall continue to submit periodic reports to the President of the
Philippines and to Congress until it considers that the monetary, credit or price disturbances have
disappeared or have been adequately controlled.

ARTICLE II
INTERNATIONAL MONETARY STABILIZATION

            Section 64. International Monetary Stabilization. - The Bangko Sentral shall exercise its
powers under this Act to preserve the international value of the peso and to maintain its convertibility
into other freely convertible currencies primarily for, although not necessarily limited to, current
payments for foreign trade and invisibles.

            Section 65. International Reserves. - In order to maintain the international stability and

convertibility of the Philippine peso, the Bangko Sentral shall maintain international reserves
adequate to meet any foreseeable net demands on the Bangko Sentral for foreign currencies.

            In judging the adequacy of the international reserves, the Monetary Board shall be guided by
the prospective receipts and payments of foreign exchange by the Philippines. The Board shall give
special attention to the volume and maturity of the Bangko Sentral's own liabilities in foreign
currencies, to the volume and maturity of the foreign exchange assets and liabilities of other banks
operating in the Philippines and, insofar as they are known or can be estimated, the volume and
maturity of the foreign exchange assets and liabilities of all other persons and entities in the
Philippines.

            Section 66. Composition of the International Reserves. - The international reserves of the

Bangko Sentral may include but shall not be limited to the following assets:

(a) gold; and

(b) assets in foreign currencies in the form of: documents and instruments customarily
employed for the international transfer of funds; demand and time deposits in central banks,
treasuries and commercial banks abroad; foreign government securities; and foreign notes
and coins.

            The Monetary Board shall endeavor to hold the foreign exchange resources of the Bangko
Sentral in freely convertible currencies; moreover, the Board shall give particular consideration to the
prospects of continued strength and convertibility of the currencies in which the reserve is
maintained, as well as to the anticipated demands for such currencies. The Monetary Board shall
issue regulations determining the other qualifications which foreign exchange assets must meet in
order to be included in the international reserves of the Bangko Sentral.
            The Bangko Sentral shall be free to convert any of the assets in its international reserves into
other assets as described in subsections (a) and (b) of this section.

            Section 67. Action When the International Stability of the Peso Is Threatened. - Whenever
the international reserve of the Bangko Sentral falls to a level which the Monetary Board considers
inadequate to meet prospective net demands on the Bangko Sentral for foreign currencies, or
whenever the international reserve appears to be in imminent danger of falling to such a level, or
whenever the international reserve is falling as a result of payments or remittances abroad which, in
the opinion of the Monetary Board, are contrary to the national welfare, the Monetary Board shall:

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

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

(1) the nature and causes of the existing or imminent decline;

(2) the remedial measures already taken or to be taken by the Monetary Board;

(3) the monetary, fiscal or administrative measures further proposed; and

(4) the character and extent of the cooperation required from other government
agencies for the successful execution of the policies of the Monetary Board.

            If the resultant actions fail to check the deterioration of the reserve position of the Bangko
Sentral, or if the deterioration cannot be checked except by chronic restrictions on exchange and
trade transactions or by sacrifice of the domestic objectives of a balanced and sustainable growth of
the economy, the Monetary Board shall propose to the President, with appropriate notice of the
Congress, such additional action as it deems necessary to restore equilibrium in the international
balance of payments of the Philippines.

            The Monetary Board shall submit periodic reports to the President and to Congress until the
threat to the international monetary stability of the Philippines has disappeared.

CHAPTER IV — INSTRUMENTS OF BANGKO SENTRAL ACTION

ARTICLE I
GENERAL CRITERION

            Section 68. Means of Action. - In order to achieve the primary objective of price stability, the
Monetary Board shall rely on its moral influence and the powers granted to it under this Act for the
management of monetary aggregates.

ARTICLE II
OPERATIONS IN GOLD AND FOREIGN EXCHANGE

            Section 69. Purchases and Sales of Gold. - The Bangko Sentral may buy and sell gold in
any form, subject to such regulations as the Monetary Board may issue.
            The purchases and sales of gold authorized by this section shall be made in the national
currency at the prevailing international market price as determined by the Monetary Board.

            Section 70. Purchases and Sales of Foreign Exchange. - The Bangko Sentral may buy and
sell foreign notes and coins, and documents and instruments of types customarily employed for the
international transfer of funds. The Bangko Sentral may engage in future exchange operations.

            The Bangko Sentral may engage in foreign exchange transactions with the following entities
or persons only:

(a) banking institutions operating in the Philippines;

(b) the Government, its political subdivisions and instrumentalities;

(c) foreign or international financial institutions;

(d) foreign governments and their instrumentalities; and

(e) other entities or persons which the Monetary Board is hereby empowered to authorize as
foreign exchange dealers, subject to such rules and regulations as the Monetary Board shall
prescribe.

            In order to maintain the convertibility of the peso, the Bangko Sentral may, at the request of
any banking institution operating in the Philippines, buy any quantity of foreign exchange offered,
and sell any quantity of foreign exchange demanded, by such institution, provided that the foreign
currencies so offered or demanded are freely convertible into gold or United States dollars. This
requirement shall not apply to demands for foreign notes and coins.

            The Bangko Sentral shall effect its exchange transactions between foreign currencies and
the Philippine peso at the rates determined in accordance with the provisions of Section 74 of this
Act.

            Section 71. Foreign Asset Position of the Bangko Sentral. - The Bangko Sentral shall
endeavor to maintain at all times a net positive foreign asset position so that its gross foreign
exchange assets will always exceed its gross foreign liabilities. In the event that the equivalent
amount in pesos of the foreign exchange liabilities of the Bangko Sentral exceed twice the
equivalent amount in pesos of the foreign exchange assets of the bank, the Bangko Sentral shall,
within sixty (60) days from the date the limit is exceeded, submit a report to the Congress stating the
origin of these liabilities, and the manner in which they will be paid.

            Section 72. Emergency Restrictions on Exchange Operations. - In order to achieve the

primary objective of the Bangko Sentral as set forth in Section 3 of this Act, or protect the
international reserves of the Bangko Sentral in the imminence of, or during an exchange crisis, or in
time of national emergency and to give the Monetary Board and the Government time in which to
take constructive measures to forestall, combat, or overcome such a crisis or emergency, the
Monetary Board, with the concurrence of at least five (5) of its members and with the approval of the
President of the Philippines, may temporarily suspend or restrict sales of exchange by the Bangko
Sentral, and may subject all transactions in gold and foreign exchange to license by the Bangko
Sentral, and may require that any foreign exchange thereafter obtained by any person residing or
entity operating in the Philippines be delivered to the Bangko Sentral or to any bank or agent
designated by the Bangko Sentral for the purpose, at the effective exchange rate or rates: Provided,
however, That foreign currency deposits made under Republic Act No. 6426 shall be exempt from
these requirements.

            Section 73. Acquisition of Inconvertible Currencies. - The Bangko Sentral shall avoid the
acquisition and holding of currencies which are not freely convertible, and may acquire such
currencies in an amount exceeding the minimum balance necessary to cover current demands for
said currencies only when, and to the extent that, such acquisition is considered by the Monetary
Board to be in the national interest. The Monetary Board shall determine the procedures which shall
apply to the acquisition and disposition by the Bangko Sentral of foreign exchange which is not freely
utilizable in the international market.

            Section 74. Exchange Rates. - The Monetary Board shall determine the exchange rate
policy of the country.

            The Monetary Board shall determine the rates at which the Bangko Sentral shall buy and sell
spot exchange, and shall establish deviation limits from the effective exchange rate or rates as it
may deem proper. The Bangko Sentral shall not collect any additional commissions or charges of
any sort, other than actual telegraphic or cable costs incurred by it.

            The Monetary Board shall similarly determine the rates for other types of foreign exchange
transactions by the Bangko Sentral, including purchases and sales of foreign notes and coins, but
the margins between the effective exchange rates and the rates thus established may not exceed
the corresponding margins for spot exchange transactions by more than the additional costs or
expenses involved in each type of transactions.

            Section 75. Operations with Foreign Entities. - The Monetary Board may authorize the
Bangko Sentral to grant loans to and receive loans from foreign banks and other foreign or
international entities, both public and private, and may engage in such other operations with these
entities as are in the national interest and are appropriate to its character as a central bank. The
Bangko Sentral may also act as agent or correspondent for such entities.

            Upon authority of the Monetary Board, the Bangko Sentral may pledge any gold or other
assets which it possesses as security against loans which it receives from foreign or international
entities.

ARTICLE III
REGULATION OF FOREIGN EXCHANGE OPERATIONS OF THE BANKS

            Section 76. Foreign Exchange Holdings of the Banks. - In order that the Bangko Sentral may
at all times have foreign exchange resources sufficient to enable it to maintain the international
stability and convertibility of the peso, or in order to promote the domestic investment of bank
resources, the Monetary Board may require the banks to sell to the Bangko Sentral or to other banks
all or part of their surplus holdings of foreign exchange. Such transfers may be required for all
foreign currencies or for only certain of such currencies, according to the decision of the Monetary
Board. The transfers shall be made at the rates established under the provisions of Section 74 of
this Act.

            The Monetary Board may, whenever warranted, determine the net assets and net liabilities of
banks and shall, in making such a determination, take into account the bank's networth, outstanding
liabilities, actual and contingent, or such other financial or performance ratios as may be appropriate
under the circumstances. Any such determination of net assets and net liabilities shall be applied in
all banks uniformly and without discrimination.
            Section 77. Requirement of Balanced Currency Position. - The Monetary Board may require
the banks to maintain a balanced position between their assets and liabilities in Philippine pesos or
in any other currency or currencies in which they operate. The banks 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 applied to all banks
alike and without discrimination.

            Section 78. Regulation of Non-spot Exchange Transactions. - In order to restrain the banks

from taking speculative positions with respect to future fluctuations in foreign exchange rates, the
Monetary Board may issue such regulations governing bank purchases and sales of non-spot
exchange as it may consider necessary for said purpose.

            Section 79. Other Exchange Profits and Losses. - The banks shall bear the risks of non-
compliance with the terms of the foreign exchange documents and instruments which they buy and
sell, and shall also bear any other typically commercial or banking risks, including exchange risks not
assumed by the Bangko Sentral under the provisions of the preceding section.

            Section 80. Information on Exchange Operations. - The banks shall report to the Bangko
Sentral the volume and composition of their purchases and sales of gold and foreign exchange each
day, and must furnish such additional information as the Bangko Sentral may request with reference
to the movements in their accounts in foreign currencies.

            The Monetary Board may also require other persons and entities to report to it currently all
transactions or operations in gold, in any shape or form, and in foreign exchange whether entered
into or undertaken by them directly or through agents, or to submit such data as may be required on
operations or activities giving rise to or in connection with or relating to a gold or foreign exchange
transaction. The Monetary Board shall prescribe the forms on which such declarations must be
made. The accuracy of the declarations may be verified by the Bangko Sentral by whatever
inspection it may deem necessary.

ARTICLE IV
LOANS TO BANKING AND OTHER FINANCIAL INSTITUTIONS

            A. CREDIT POLICY

            Section 81. Guiding Principles. - The rediscounts, discounts, loans and advances which the
Bangko Sentral is authorized to extend to banking institutions under the provisions of the present
article of this Act shall be used to influence the volume of credit consistent with the objective of price
stability.

            B. NORMAL CREDIT OPERATIONS

            Section 82. Authorized Types of Operations. - Subject to the principle stated in the

preceding section of this Act, the Bangko Sentral may normally and regularly carry on the following
credit operations with banking institutions operating in the Philippines:

(a) Commercial credits. - The Bangko Sentral may rediscount, discount, buy and sell bills,
acceptances, promissory notes and other credit instruments with maturities of not more than
one hundred eighty (180) days from the date of their rediscount, discount or acquisition by
the Bangko Sentral and resulting from transactions related to:

(1) the importation, exportation, purchase or sale of readily saleable goods and
products, or their transportation within the Philippines; or

(2) the storing of non-perishable goods and products which are duly insured and
deposited, under conditions assuring their preservation, in authorized bonded
warehouses or in other places approved by the Monetary Board.

(b) Production credits. - The Bangko Sentral may rediscount, discount, buy and sell bills,
acceptances, promissory notes and other credit instruments having maturities of not more
than three hundred sixty (360) days from the date of their rediscount, discount or acquisition
by the Bangko Sentral and resulting from transactions related to the production or
processing of agricultural, animal, mineral, or industrial products. Documents or instruments
acquired in accordance with this subsection shall be secured by a pledge of the respective
crops or products: Provided, however, That the crops or products need not be pledged to
secure the documents if the original loan granted by the Bangko Sentral is secured by a lien
or mortgage on real estate property seventy percent (70%) of the appraised value of which
equals or exceeds the amount of the loan granted.

(c) Other credits. - Special credit instruments not otherwise rediscountable under the
immediately preceding subsections (a) and (b) may be eligible for rediscounting in
accordance with rules and regulations which the Bangko Sentral shall prescribe. Whenever
necessary, the Bangko Sentral shall provide funds from non-inflationary sources: Provided,
however, That the Monetary Board shall prescribe additional safeguards for disbursing these
funds.

(d) Advances. - The Bangko Sentral may grant advances against the following kinds of
collaterals for fixed periods which, with the exception of advances against collateral named in
clause (4) of the present subsection, shall not exceed one hundred eighty (180) days:

(1) gold coins or bullion;

(2) securities representing obligations of the Bangko Sentral or of other domestic

institutions of recognized solvency;

(3) the credit instruments to which reference is made in subsection (a) of this section;

(4) the credit instruments to which reference is made in subsection (b) of this section,
for periods which shall not exceed three hundred sixty (360) days;

(5) utilized portions of advances in current amount covered by regular overdraft

agreements related to operations included under subsections (a) and (b) of this
section, and certified as to amount and liquidity by the institution soliciting the
advance;

(6) negotiable treasury bills, certificates of indebtedness, notes and other negotiable
obligations of the Government maturing within three (3) years from the date of the
advance; and
 (7) negotiable bonds issued by the Government of the Philippines, by Philippine
provincial, city or municipal governments, or by any Philippine Government
instrumentality, and having maturities of not more than ten (10) years from the date
of advance.

The rediscounts, discounts, loans and advances made in accordance with the provisions of this
section may not be renewed or extended unless extraordinary circumstances fully justify such
renewal or extension.

            Advances made against the collateral named in clauses (6) and (7) of subsection (d) of this
section may not exceed eighty percent (80%) of the current market value of the collateral.

            C. SPECIAL CREDIT OPERATION

            Section 83. Loans for Liquidity Purposes. - The Bangko Sentral may extend loans and
advances to banking institutions for a period of not more than seven (7) days without any collateral
for the purpose of providing liquidity to the banking system in times of need.

            D. EMERGENCY CREDIT OPERATION

            Section 84. Emergency Loans and Advances. - In periods of national and/or local

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

            The Monetary Board may, at its discretion, likewise authorize the Bangko Sentral to grant
emergency loans or advances to banking institutions, even during normal periods, for the purpose of
assisting a bank in a precarious financial condition or under serious financial pressures brought by
unforeseen events, or events which, though foreseeable, could not be prevented by the bank
concerned: Provided, however, That the Monetary Board has ascertained that the bank is not
insolvent and has the assets defined hereunder to secure the advances: Provided, further, That a
concurrent vote of at least five (5) members of the Monetary Board is obtained.

            The amount of any emergency loan or advance shall not exceed the sum of fifty percent
(50%) of total deposits and deposit substitutes of the banking institution and shall be disbursed in
two (2) or more tranches. The amount of the first tranche shall be limited to twenty-five percent
(25%) of the total deposit and deposit substitutes of the institution and shall be secured by
government securities to the extent of their applicable loan values and other unencumbered first
class collaterals which the Monetary Board may approve: Provided, That if as determined by the
Monetary Board, the circumstances surrounding the emergency warrant a loan or advance greater
than the amount provided hereinabove, the amount of the first tranche may exceed twenty-five
percent (25%) of the bank's total deposit and deposit substitutes if the same is adequately secured
by applicable loan values of government securities and unencumbered first class collaterals
approved by the Monetary Board, and the principal stockholders of the institution furnish an
acceptable undertaking to indemnify and hold harmless from suit a conservator whose appointment
the Monetary Board may find necessary at any time.

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

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

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

(b) provide acceptable security which, in the judgment of the Monetary Board, would be
adequate to supplement, where necessary, the assets tendered by the banking institution to
collateralize the subsequent tranche.

            In connection with the exercise of these powers, the prohibitions in Section 128 of this Act
shall not apply insofar as it refers to acceptance as collateral of shares and their acquisition as a
result of foreclosure proceedings, including the exercise of voting rights pertaining to said shares:
Provided, however, That should the Bangko Sentral acquire any of the shares it has accepted as
collateral as a result of foreclosure proceedings, the Bangko Sentral shall dispose of said shares by
public bidding within one (1) year from the date of consolidation of title by the Bangko Sentral.

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

            E. CREDIT TERMS

            Section 85. Interest and Rediscount. - The Bangko Sentral shall collect interest and other
appropriate charges on all loans and advances it extends, the closure, receivership or liquidations of
the debtor-institution notwithstanding. This provision shall apply prospectively.

            The Monetary Board shall fix the interest and rediscount rates to be charged by the Bangko
Sentral on its credit operations in accordance with the character and term of the operation, but after
due consideration has been given to the credit needs of the market, the composition of the Bangko
Sentral's portfolio, and the general requirements of the national monetary policy. Interest and
rediscount rates shall be applied to all banks of the same category uniformly and without
discrimination.

            Section 86. Endorsement. - The documents rediscounted, discounted, bought or accepted

as collateral by the Bangko Sentral in the course of the credit operations authorized in this article
shall bear the endorsement of the institution from which they are received.

            Section 87. Repayment of Credits. - Documents rediscounted, discounted or accepted as

collateral by the Bangko Sentral must be withdrawn by the borrowing institution on the dates of their
maturities, or upon liquidation of the obligations which they represent or to which they relate
whenever said obligations have been liquidated prior to their dates of maturity.

            Banks shall have the right at any time to withdraw any documents which they have presented
to the Bangko Sentral as collateral, upon payment in full of the corresponding debt to the Bangko
Sentral, including interest charges.

            Section 88. Other requirements. - The Monetary Board may prescribe, within the general
powers granted to it under this Act, additional conditions which borrowing institutions must satisfy in
order to have access to the credit of the Bangko Sentral. These conditions may refer to the rates of
interest charged by the banks, to the purposes for which their loans in general are destined, and to
any other clearly definable aspect of the credit policy of the bank.

            Section 89. Provisional Advances to the National Government. - The Bangko Sentral may
make direct provisional advances with or without interest to the National Government to finance
expenditures authorized in its annual appropriation: Provided, That said advances shall be repaid
before the end of three (3) months extendible by another three (3) months as the Monetary Board
may allow following the date the National Government received such provisional advances and shall
not, in their aggregate, exceed twenty percent (20%) of the average annual income of the borrower
for the last three (3) preceding fiscal years.

ARTICLE V
OPEN MARKET OPERATIONS FOR THE ACCOUNT OF THE BANGKO SENTRAL

            Section 90. Principles of Open Market Operations. - The open market purchases and sales
of securities by the Bangko Sentral shall be made exclusively in accordance with its primary
objective of achieving price stability.

            Section 91. Purchases and Sales of Government Securities. - In order to achieve the

objectives of the national monetary policy, the Bangko Sentral may, in accordance with the principle
stated in Section 90 of this Act and with such rules and regulations as may be prescribed by the
Monetary Board, buy and sell in the open market for its own account:

(a) evidences of indebtedness issued directly by the Government of the Philippines or by its
political subdivisions; and

(b) evidences of indebtedness issued by government instrumentalities and fully guaranteed

by the Government.

            The evidences of indebtedness acquired under the provisions of this section must be freely
negotiable and regularly serviced and must be available to the general public through banking
institutions and local government treasuries in denominations of a thousand pesos or more.

            Section 92. Issue and Negotiation of Bangko Sentral Obligations. - In order to provide the
Bangko Sentral with effective instruments for open market operations, the Bangko Sentral may,
subject to such rules and regulations as the Monetary Board may prescribe and in accordance with
the principles stated in Section 90 of this Act, issue, place, buy and sell freely negotiable evidences
of indebtedness of the Bangko Sentral: Provided, That issuance of such certificates 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.

ARTICLE VI
COMPOSITION OF BANGKO SENTRAL'S PORTFOLIO

            Section 93. Review of the Bangko Sentral's Portfolio. - At least once every month the
Monetary Board shall review the portfolio of the Bangko Sentral in relation to its future credit policy.

            In reviewing the Bangko Sentral's portfolio, the Monetary Board shall especially consider
whether a sufficiently large part of the portfolio consists of assets with early maturities, in order that a
contraction in Bangko Sentral credit may be effected promptly whenever the national monetary
policy so requires.

ARTICLE VII
BANK RESERVES

            Section 94. Reserve Requirements. - In order to control the volume of money created by the
credit operations of the banking system, all banks operating in the Philippines shall be required to
maintain reserves against their deposit liabilities: Provided, That the Monetary Board may, at its
discretion, also require all banks and/or quasi-banks to maintain reserves against funds held in trust
and liabilities for deposit substitutes as defined in this Act. The required reserves of each bank shall
be proportional to the volume of its deposit liabilities and shall ordinarily take the form of a deposit in
the Bangko Sentral. Reserve requirements shall be applied to all banks of the same category
uniformly and without discrimination.

            Reserves against deposit substitutes, if imposed, shall be determined in the same manner as
provided for reserve requirements against regular bank deposits, with respect to the imposition,
increase, and computation of reserves.

            The Monetary Board may exempt from reserve requirements deposits and deposit
substitutes with remaining maturities of two (2) years or more, as well as interbank borrowings.

            Since the requirement to maintain bank reserves is imposed primarily to control the volume
of money, the Bangko Sentral shall not pay interest on the reserves maintained with it unless the
Monetary Board decides otherwise as warranted by circumstances.

            Section 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. The Monetary
Board shall determine what specific instruments shall be considered as deposit substitutes for the
purposes of Section 94 of this Act: Provided, however, That deposit substitutes of commercial,
industrial and other non-financial companies for the limited purpose of financing their own needs or
the needs of their agents or dealers shall not be covered by the provisions of Section 94 of this Act.

            Section 96. Required Reserves Against Peso Deposits. - The Monetary Board may fix and,
when it deems necessary, alter the minimum reserve ratios to peso deposits, as well as to deposit
substitutes, which each bank and/or quasi-bank may maintain, and such ratio shall be applied
uniformly to all banks of the same category as well as to quasi-banks.

            Section 97. Required Reserves Against Foreign Currency Deposits. - The Monetary Board is
similarly authorized to prescribe and modify the minimum reserve ratios applicable to deposits
denominated in foreign currencies.

            Section 98. Reserves Against Unused Balances of Overdraft Lines. - In order to facilitate

Bangko Sentral control over the volume of bank credit, the Monetary Board may establish minimum
reserve requirements for unused balances of overdraft lines.

            The powers of the Monetary Board to prescribe and modify reserve requirements against
unused balances of overdraft lines shall be the same as its powers with respect to reserve
requirements against demand deposits.

            Section 99. Increase in Reserve Requirements. - Whenever in the opinion of the Monetary

Board it becomes necessary to increase reserve requirements against existing liabilities, the
increase shall be made in a gradual manner and shall not exceed four percentage points in any
thirty-day period. Banks and other affected financial institutions shall be notified reasonably in
advance of the date on which such increase is to become effective.

            Section 100. Computation on Reserves. - The reserve position of each bank or quasi-bank

shall be calculated daily on the basis of the amount, at the close of business for the day, of the
institution's reserves and the amount of its liability accounts against which reserves are required to
be maintained: Provided, That with reference to holidays or non-banking days, the reserve position
as calculated at the close of the business day immediately preceding such holidays and non-banking
days shall apply on such days.

            For the purpose of computing the reserve position of each bank or quasi-bank, its principal
office in the Philippines and all its branches and agencies located therein shall be considered as a
single unit.

            Section 101. Reserve Deficiencies. - Whenever the reserve position of any bank or quasi-
bank, computed in the manner specified in the preceding section of this Act, is below the required
minimum, the bank or quasi-bank shall pay the Bangko Sentral one-tenth of one percent (1/10 of
1%) per day on the amount of the deficiency or the prevailing ninety-one-day treasury bill rate plus
three percentage points, whichever is higher: Provided, however, That banks and quasi-banks shall
ordinarily be permitted to offset any reserve deficiency occurring on one or more days of the week
with any excess reserves which they may hold on other days of the same week and shall be
required to pay the penalty only on the average daily deficiency during the week. In cases of abuse,
the Monetary Board may deny any bank or quasi-bank the privilege of offsetting reserve deficiencies
in the aforesaid manner.

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

            The Monetary Board may modify or set aside the reserve deficiency penalties provided in this
section, for part or the entire period of a strike or lockout affecting a bank or a quasi-bank as defined
in the Labor Code, or of a national emergency affecting operations of banks or quasi-banks. The
Monetary Board may also modify or set aside reserved deficiency penalties for rehabilitation
program of a bank.
            Section 102. Interbank Settlement. - The Bangko Sentral shall establish facilities for
interbank clearing under such rules and regulations as the Monetary Board may prescribe: Provided,
That the Bangko Sentral may charge administrative and other fees for the maintenance of such
facilities.

            The deposit reserves maintained by the banks in the Bangko Sentral in accordance with the
provisions of Section 94 of this Act shall serve as basis for the clearing of checks and the settlement
of interbank balances, subject to such rules and regulations as the Monetary Board may issue with
respect to such operations: Provided, That any bank which incurs on overdrawing in its deposit
account with the Bangko Sentral shall fully cover said overdraft, including interest thereon at a rate
equivalent to one-tenth of one percent (1/10 of 1%) per day or the prevailing ninety-one-day treasury
bill rate plus three percentage points, whichever is higher, not later than the next clearing day:
Provided, further, That settlement of clearing balances shall not be effected for any account which
continues to be overdrawn for 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 103. Exemption from Attachment and Other Purposes. - Deposits maintained by

banks with the Bangko Sentral as part of their reserve requirements shall be exempt from
attachment, garnishments, or any other order or process of any court, government agency or any
other administrative body issued to satisfy the claim of a party other than the Government, or its
political subdivisions or instrumentalities.

ARTICLE VIII
SELECTIVE REGULATION OF BANK OPERATIONS

            Section 104. Guiding Principle. - The Monetary Board shall use the powers granted to it
under this Act to ensure that the supply, availability and cost of money are in accord with the needs
of the Philippine economy and that bank credit is not granted for speculative purposes prejudicial to
the national interests. Regulations on bank operations shall be applied to all banks of the same
category uniformly and without discrimination.

            Section 105. Margin Requirements Against Letters of Credit. - The Monetary Board may at
any time prescribe minimum cash margins for the opening of letters of credit, and may relate the size
of the required margin to the nature of the transaction to be financed.

            Section 106. Required Security Against Bank Loans. - In order to promote liquidity and
solvency of the banking system, the Monetary Board may issue such regulations as it may deem
necessary with respect to the maximum permissible maturities of the loans and investments which
the banks may make, and the kind and amount of security to be required against the various types of
credit operations of the banks.

            Section 107. Portfolio Ceilings. - Whenever the Monetary Board considers it advisable to

prevent or check an expansion of bank credit, the Board may place an upper limit on the amount of
loans and investments which the banks may hold, or may place a limit on the rate of increase of
such assets within specified periods of time. The Monetary Board may apply such limits to the loans
and investments of each bank or to specific categories thereof.
            In no case shall the Monetary Board establish limits which are below the value of the loans or
investments of the banks on the date on which they are notified of such restrictions. The restrictions
shall be applied to all banks uniformly and without discrimination.

            Section 108. Minimum Capital Ratios. - The Monetary Board may prescribe minimum ratios
which the capital and surplus 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.

ARTICLE IX
COORDINATION OF CREDIT POLICIES BY GOVERNMENT INSTITUTIONS

            Section 109. Coordination of Credit Policies. - Government-owned corporations which

perform banking or credit functions shall coordinate their general credit policies with those of the
Monetary Board.

            Toward this end, the Monetary Board may, whenever it deems it expedient, make
suggestions or recommendations to such corporations for the more effective coordination of their
policies with those of the Bangko Sentral.

CHAPTER V — FUNCTIONS AS BANKER AND FINANCIAL ADVISOR OF THE GOVERNMENT

ARTICLE I

            FUNCTIONS AS BANKER OF THE GOVERNMENT

            Section 110. Designation of Bangko Sentral as Banker of the Government. - The Bangko

Sentral shall act as a banker of the Government, its political subdivisions and instrumentalities.

            Section 111. Representation with the International Monetary Fund. - The Bangko Sentral
shall represent the Government in all dealings, negotiations and transactions with the International
Monetary Fund and shall carry such accounts as may result from Philippine membership in, or
operations with, said Fund.

            Section 112. Representation with Other Financial Institutions. - The Bangko Sentral may be
authorized by the Government to represent it in dealings, negotiations or transactions with the
International Bank for Reconstruction and Development and with other foreign or international
financial institutions or agencies. The President may, however, designate any of his other financial
advisors to jointly represent the Government in such dealings, negotiations or transactions.

            Section 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.

            The Bangko Sentral may 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.
            Section 114. Fiscal Operations. - The Bangko Sentral shall open a general cash account for
the Treasurer of the Philippines, in which the liquid funds of the Government shall be deposited.

            Transfers of funds from this account to other accounts shall be made only upon order of the
Treasurer of the Philippines.

            Section 115. Other Banks as Agents of the Bangko Sentral. - In the performance of its
functions as fiscal agent, the Bangko Sentral may engage the services of other government-owned
and controlled banks and of other domestic banks for operations in localities at home or abroad in
which the Bangko Sentral does not have offices or agencies adequately equipped to perform said
operations: Provided, however, That for fiscal operations in foreign countries, the Bangko Sentral
may engage the services of foreign banking and financial institutions.

            Section 116. Remuneration for Services. - The Bangko Sentral may charge equitable rates,
commissions or fees for services which it renders to the Government, its political subdivisions and
instrumentalities.

ARTICLE II
THE MARKETING AND STABILIZATION OF SECURITIES FOR THE ACCOUNT OF THE
GOVERNMENT

            A. THE ISSUE AND PLACING OF GOVERNMENT SECURITIES

            Section 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.

            Section 118. Methods of Placing Government Securities. - The Bangko Sentral may place
the securities to which the preceding section refers through direct sale to financial institutions and
the public.

            The Bangko Sentral shall not be a member of any stock exchange or syndicate, but may
intervene therein 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.

            Section 119. Servicing and Redemption of the Public Debt. - The servicing and redemption
of the public debt shall also be effected through the Bangko Sentral.

            B. BANGKO SENTRAL SUPPORT OF THE GOVERNMENT SECURITIES MARKET

            Section 120. The Securities Stabilization Fund. - There shall be established a "Securities

Stabilization Fund" which shall be administered by the Bangko Sentral for the account of the
Government.
            The operations of the Securities Stabilization Fund shall consist of purchases and sales, in
the open market, of bonds and other evidences of indebtedness issued or fully guaranteed by the
Government. The purpose of these operations shall be to increase the liquidity and stabilize the
value of said securities in order thereby to promote investment in government obligations.

            The Monetary Board shall use the resources of the Fund to prevent, or moderate, sharp
fluctuations in the quotations of said government obligations, but shall not endeavor to alter
movements of the market resulting from basic changes in the pattern or level of interest rates.

            The Monetary Board shall issue such regulations as may be necessary to implement the
provisions of this section.

            Section 121. Resources of the Securities Stabilization Fund. - Subject to Section 132 of this
Act, the resources of the Securities Stabilization Fund shall come from the balance of the fund as
held by the Central Bank under Republic Act No. 265 as of the effective date of this Act.

            Section 122. Profits and Losses of the Fund. - The Securities Stabilization Fund shall retain
net profits which it may make on its operations, regardless of whether said profits arise from capital
gains or from interest earnings. The Fund shall correspondingly bear any net losses which it may
incur.

ARTICLE III
FUNCTIONS AS FINANCIAL ADVISOR OF THE GOVERNMENT

            Section 123. Financial Advice on Official Credit Operations. - Before undertaking any credit
operation abroad, the Government, through the Secretary of Finance, shall request the opinion, in
writing, of the Monetary Board on the monetary implications of the contemplated action. Such
opinions must similarly be requested by all political subdivisions and instrumentalities of the
Government before any credit operation abroad is undertaken by them.

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

            Whenever the Government, or any of its political subdivisions or instrumentalities,

contemplates borrowing within the Philippines, the prior opinion of the Monetary Board shall likewise
be requested in order that the Board may render an opinion on the probable effects of the proposed
operation on monetary aggregates, the price level, and the balance of payments.

            Section 124. Representation on the National Economic and Development Authority. - In

order to assure effective coordination between the economic, financial and fiscal policies of the
Government and the monetary, credit and exchange policies of the Bangko Sentral, the Deputy
Governor designated by the Governor of the Bangko Sentral shall be an ex officio member of the
National Economic and Development Authority Board.

CHAPTER VI — PRIVILEGES AND PROHIBITIONS

ARTICLE I
PRIVILEGES
            Section 125. Tax Exemptions. - 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.

            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.

            Section 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 needed for bank note production, minting of coins, metal refining and
other security printing operations 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.

            Section 127. Applicability of the Civil Service Law. - Appointments in the Bangko Sentral,
except as to those which are policy-determining, primarily confidential or highly technical in nature,
shall be made only according to the Civil Service Law and regulations: Provided, That no
qualification requirements for positions in the Bangko Sentral shall be imposed other than those set
by the Monetary Board: Provided, further, That, the Monetary Board or Governor, in accordance with
Sections 15(c) and 17(d) of this Act, respectively, may without need of obtaining prior approval from
any other government agency, appoint personnel in the Bangko Sentral whose services are deemed
necessary in order not to unduly disrupt the operations of the Bangko Sentral.

            Officers and employees of the Bangko Sentral, including all members of the Monetary Board,
shall not engage directly or indirectly in partisan activities or take part in any election except to vote.

ARTICLE II
PROHIBITIONS

            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
enterprise, either directly or indirectly.

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

CHAPTER VII — TRANSITORY PROVISIONS

            Section 129. Phase-out of Fiscal Agency Functions. - Unless circumstances warrant

otherwise and approved by the Congress Oversight Committee, the Bangko Sentral shall, within a
period of three (3) years but in no case longer than five (5) years from the approval of this Act, phase
out all fiscal agency functions provided for in Sections 117, 118, 119, and 120 as well as in other
pertinent provisions of this Act and transfer the same to the Department of Finance.
            Section 130. Phase-out of Regulatory Powers Over the Operations of Finance Corporations
and Other Institutions Performing Similar Functions. - The Bangko Sentral shall, within a period of
five (5) years from the effectivity of this Act, phase out its regulatory powers over finance companies
without quasi-banking functions and other institutions performing similar functions as provided in
existing laws, the same to be assumed by the Securities and Exchange Commission.

            Section 131. Implementing Details. - The Bangko Sentral shall be made operational by the
performance of the following acts:

(a) the President shall constitute the Monetary Board by appointing the members thereof
within sixty (60) days from the effectivity of this Act; and

(b) the transfer of such assets and liabilities from the Central Bank to the Bangko Sentral as
provided in Section 132 shall be completed within ninety (90) days from the constitution of
the Monetary Board.

            All incumbent personnel in the Central Bank as of the date of the approval of this Act shall
continue to exercise their duties and functions as personnel of the Bangko Sentral subject to the
provisions of Section 133: Provided, That such personnel in the Central Bank as may be necessary
for the purpose of implementing Section 132 may be assigned by the Bangko Sentral Monetary
Board to the Central Bank.

            Section 132. Transfer of Assets and Liabilities. - Upon the effectivity of this Act, three (3)
members of the Monetary Board, which may include the Governor, in representation of the Bangko
Sentral, the Secretary of Finance and the Secretary of Budget and Management in representation of
the National Government, and the Chairmen of the Committees on Banks of the Senate and the
House of Representatives shall determine the assets and liabilities of the Central Bank which may
be transferred to or assumed by the Bangko Sentral. The Committee shall complete its work within
ninety (90) days from the constitution of the Monetary Board submitting a comprehensive report with
all its findings and justification.

            The following guidelines shall be strictly observed in the determination of which assets and
liabilities shall be transferred to the Bangko Sentral:

(a) the Monetary Board and the Secretary of Finance shall have primary responsibility for
working out creative monetary and financial solutions to retire the Central Bank liabilities and
losses at the least cost to the Government;

(b) the Bangko Sentral shall remit seventy-five percent (75%) of its net profits to a special
deposit account (sinking fund) until such time as the net liabilities of the Central Bank shall
have been liquidated through generally accepted finance mechanisms such as, but not
limited to, write-offs, set-offs, condonation, collections, reappraisal, revaluation and bond
issuance by the National Government, or to the National Government as dividends;

(c) the assets and liabilities to be transferred shall be limited to an amount that will enable
the Bangko Sentral to perform its responsibilities adequately and operate on a viable basis:
Provided, That the assets shall exceed the liabilities as certified by the Commission on Audit
(COA), by an initial amount of Ten billion pesos (P10,000,000,000);

(d) liabilities to be assumed by the Bangko Sentral shall include liability for notes and coins in
circulation as of the effective date of this Act; and
 (e) any asset or liability of the Central Bank not transferred to the Bangko Sentral shall be
retained and administered, disposed of and liquidated by the Central Bank itself which shall
continue to exist as the CB Board of Liquidators only for the purposes provided in this
paragraph but not later than twenty-five (25) years or until such time that liabilities have been
liquidated: Provided, That the Bangko Sentral may financially assist the Central Bank of
Liquidators in the liquidation of CB liabilities: Provided, finally, That upon disposition of said
retained assets and liquidation of said retained liabilities, the Central Bank shall be deemed
abolished.

            All actions taken by the Bangko Sentral Monetary Board under this section shall be reported
to Congress and the President within thirty (30) days.

            Section 133. Mandate to Organize. - The Bangko Sentral shall be organized by the

Monetary Board without being subject to the provisions of Republic Act No. 7430, by adopting if it so
desires, an entirely new staffing pattern on organizational structure to suit the operations of the
Bangko Sentral under this Act. No preferential or priority right shall be given to or enjoyed by any
personnel for appointment to any position in the new staffing pattern, nor shall any personnel be
considered as having prior or vested rights with respect to retention in the Bangko Sentral or in any
position which may be created in the new staffing pattern, even if he should be the incumbent of a
similar position prior to organization. The formulation of the program of organization shall be
completed within six (6) months after the effectivity of this Act, and shall be fully implemented within
a period of six (6) months thereafter. Personnel who may not be retained are deemed separated
from the service.

            Section 134. Separation Benefits. - Pursuant to Section 15 of this Act, the Monetary Board is
authorized to provide separation incentives, and all those who shall retire or be separated from the
service on account of reorganization under the preceding section shall be entitled to such incentives,
which shall be in addition to all gratuities and benefits to which they may be entitled under existing
laws.

            Section 135. Repealing Clause. - Except as may be provided for in Section 46 and 132 of
this Act, Republic Act No. 265, as amended, the provisions of any other law, special charters, rule or
regulation issued pursuant to said Republic Act No. 265, as amended, or parts thereof, which may
be inconsistent with the provisions of this Act are hereby repealed. Presidential Decree No. 1792 is
likewise repealed.

            Section 136. Transfer of Powers. - All powers, duties and functions vested by law in the
Central Bank of the Philippines not inconsistent with the provisions of this Act shall be deemed
transferred to the Bangko Sentral ng Pilipinas. All references to the Central Bank of the Philippines
in any law or special charters shall be deemed to refer to the Bangko Sentral.

            Section 137. Separability Clause. - If any provision or section of this Act or the application
thereof to any person or circumstance is held 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.

            Section 138. Effectivity Clause. - This Act shall take effect fifteen (15) days following its
publication in the Official Gazette or in two (2) national newspapers of general circulation.

 Approved: June 14, 1993

REPUBLIC ACT No. 11211

An Act Amending Republic Act Number 7653, Otherwise Known as "The New Central Bank
Act", and for Other Purposes

Be it enacted by the Senate and House of Representatives of the Philippine Congress Assembled:

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

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

"The capital of the Bangko Sentral shall be Two hundred billion pesos (₱200,000,000,000), to be
fully subscribed by the Government of the Republic of the Philippines, hereafter referred to as the
Government: Provided, That the increase in capitalization shall be funded solely from the declared
dividends of the Bangko Sentral in favor of the National Government. For this purpose, any and all
declared dividends of the Bangko Sentral in favor of the National Government shall be deposited in a
special account in the General Fund, and earmarked for the payment of Bangko Sentral’s increase
in capitalization. Such payment shall be released and disbursed immediately and shall continue until
the increase in capitalization has been fully paid."

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

"Sec. 3. Responsibility and Primary Objective. - The Bangko Sentral shall provide policy directions in
the areas of money, banking, and credit. It shall have supervision over the operations of banks and
exercise such regulatory and examination powers as provided in this Act and other pertinent laws
over the quasi-banking operations of non-bank financial institutions. As may be determined by the
Monetary Board, it shall likewise exercise regulatory and examination powers over money service
businesses, credit granting businesses, and payment system operators. The Monetary Board is
hereby empowered to authorize entities or persons to engage in money service businesses.

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

"The Bangko Sentral shall promote financial stability and closely work with the National Government,
including, but not limited to, the Department of Finance, Securities and Exchange Commission, the
Insurance Commission, and the Philippine Deposit Insurance Corporation.

"The Bangko Sentral shall oversee the payment and settlement systems in the Philippines, including
critical financial market infrastructures, in order to promote sound and prudent practices consistent
with the maintenance of financial stability.

"In the attainment of its objectives, the Bangko Sentral shall promote broad and convenient access
to high quality financial services and consider the interest of the general public."

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

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

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

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

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

"The meetings of the Monetary Board may be conducted through modern technologies such as, but
not limited to, teleconferencing and videoconferencing."

Section 4. Section 15(e) of the same Act is hereby amended to read as follows:

"Sec. 16. Exercise of Authority.— In the exercise of its authority, the Monetary Board shall:

"x x x

"(e) indemnify its members and other officials 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 functions
or duties, unless he is finally adjudged in such action or proceeding to be liable for willful violation of
this Act, performed in evident bad faith or with gross negligence.

"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 willful violation of this Act, performed in
evident bad faith or with gross negligence.

"The costs and expenses incurred in defending the aforementioned action, suit or proceeding may
be paid by the Bangko Sentral in advance of the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of the member, officer, or employee 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."

Section 5. Section 16 of the same Act is hereby amended to read as follows:

"Sec. 16. Responsibility.— The general rule and the exception therefrom on the liability of public
officers as provided in Sections 38 and 39 of Chapter 9, Book 1 of the Revised Administrative Code
of 1987 shall apply to the members of the Monetary Board and other personnel of the Bangko
Sentral.

"Similar responsibility shall apply to members of the Monetary Board, and other personnel 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.

"Unless the actions or omissions of the Bangko Sentral, members of the Monetary Board and its
other personnel are finally adjudged to be in willful violation of this Act, performed in evident bad
faith or with gross negligence, they are held free and harmless to the fullest extent permitted by law
from any liability, and they shall be indemnified for any and all liabilities, losses, claims, demands,
damages, deficiencies, costs and expenses of whatsoever kind and nature that may arise in
connection with the exercise of their powers and performance of their duties and functions."

Section 6. Section 21 of the same Act is hereby amended to read as follows:

"Sec. 21. Deputy Governors. - The Governor of the Bangko Sentral, with the approval of the
Monetary Board, shall appoint not more than five (5) Deputy Governors who shall perform duties as
may be assigned to them,by the Governor and the Board.

"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 Governor 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."

Section 7. Section 23 of the same Act is hereby amended to read as follows:

"Sec. 23. Authority to Obtain Data and Information. - The Bangko Sentral shall have the authority to
require from any person or entity, including government offices and instrumentalities, or government-
owned or -controlled corporations, any data, for statistical and policy development purposes in
relation to the proper discharge of its functions and responsibilities: Provided, That disaggregated
data gathered are subject to prevailing confidentiality laws. The Bangko Sentral through the
Governor or in his absence, 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 Bangko Sentral with data
required, shall be subject to punishment for contempt in accordance with the provisions of the Rules
of Court.

"The authority of the Bangko Sentral to require data from banks shall continue to be exercised
pursuant to its supervisory powers set forth in this Act and other applicable laws.

"Data on individuals and firms, other than banks, gathered by 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 shall apply."

Section 8. Section 25 of the same Act is hereby amended to read as follows:

"Sec. 23. Supervision and Examination. - The Bangko Sentral shall have supervision over, and
conduct regular or special examinations of banking institutions and quasi-banks, including their
subsidiaries and affiliates engaged in allied activities.

"For purposes of this section, a subsidiary means a corporation more than fifty percent (50%) of the
voting stock of which is directly or indirectly owned, controlled or held with power to vote 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 directly or
indirectly to such institution or intermediary through common stockholders or such other factors as
may be determined by the Monetary Board.

"The Bangko Sentral shall have regulatory authority over, and conduct regular or special
examinations of, entities which under this Act or by special laws are subject to its jurisdiction.

"The Bangko Sentral shall establish a mechanism for issues arising from bank examinations. It shall
be independent and reports directly to the Monetary Board, without prejudice to the authority of the
Bangko Sentral and its Monetary Board to take enforcement and supervisory actions against
supervised entities.

"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.

"No 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 plaintiff files with the clerk or judge of the court in which the action is pending a
bond executed in favor of the Bangko Sentral, in an amount to be fixed by the court. The provisions
of Rule 58 of the New Rules of Court insofar as they are applicable and not inconsistent with the
provisions of this section shall govern the issuance and dissolution of the restraining order or
injunction contemplated in this section."

Section 9. A new section entitled Section 25-A is hereby included in the same Act to read as
follows:

"Sec. 25-A. Authority to Approve Transfer of Shares.— Transfers or acquisitions, or a series thereof,
of at least ten percent (10%) of the voting shares in banks or quasi-banks shall require the prior
approval of the Bangko Sentral. The selling or conveying stockholder shall submit such transfer or
acquisition for approval by the Bangko Sentral within such period as may be prescribed by the
Monetary Board. In approving such transfers or acquisitions, regard shall be given by the Bangko
Sentral to the fitness of the incoming stockholders as may be indicated in their integrity, reputation
and financial capacity. Without Bangko Sentral approval, no such transfer or acquisition shah have
legal effect nor shall the same be recognized in the books of the institution or by any government
agency, and the transferor-stockholders shall remain accountable and responsible therefor. Transfer
of actual control or management of the institution to the new stockholders or their representatives
prior to Bangko Sentral approval shall make the transferor, the transferee and any person
responsible therefor liable under Sections 36 and 37 of this Act. Notwithstanding any provision of law
to the contrary, the Bangko Sentral may share with the Philippine Deposit Insurance Corporation any
information that the Bangko Sentral may obtain pertaining to transfer or acquisition of shares or
series of transfers or acquisition of shares in banks and quasi-banks."

Section 10. Section 27(d) of the same Act 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:

"x x x

"(d) borrowing from any institution subject to supervision or examination by the Bangko Sentral
unless said borrowing is transacted on an arm’s length basis, fully disclosed to the Monetary Board,
and shall be subject to such rules and regulations as the Monetary Board may prescribe."

Section 11. Section 28 of the same Act is hereby amended to read as follows:

"Sec. 28. Examination and Fees. - The supervising and examining department head, personally or
by deputy, shall examine the operations of every bank and quasi-bank, including their subsidiaries
and affiliates engaged in allied activities, and other entities which under this Act or special laws are
subject to Bangko Sentral supervision, in accordance with the guidelines set by the Monetary Board
taking into consideration sound and prudent practices: Provided, That there shall be an interval of at
least twelve (12) months between regular examinations: Provided, further, That the Monetary Board,
by an affirmative vote of at least five (5) members, may authorize a special examination if the
circumstances warrant.

"The institution concerned shall afford to the head of the appropriate supervising and examining
departments and to his authorized deputies full opportunity to examine its books and records, cash
and assets and general condition and review its systems and procedures at any time during
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.

"Supervised institutions shall pay to the Bangko Sentral, no later than May 31 of each year, an
annual supervision fee as may be prescribed by the Monetary Board. In determining the amount of
the annual supervision fee, the Monetary Board shall consider the costs of supervision."

Section 12. A new section entitled Section 28-A is hereby included in the same Act to read as
follows:

"Sec. 28-A. Bangko Sentral Coordination. - The suspension or revocation of any government license
necessary for the operation of Bangko Sentral-supervised entity must be done only with prior
consultation with the Bangko Sentral ."

Section 13. Section 30 of the same Act is hereby amended to read as follows:

"Sec. 30. Proceedings in Receivership and Liquidation. - Whenever, upon report of the head of the
supervising or examining department, the Monetary Board finds that a bank or quasi-bank:
 "(a) has notified the Bangko Sentral or publicly announced a unilateral closure, or has been
dormant for at least sixty (60) days or in any manner has suspended the payment of its
deposit/deposit substitute liabilities, or is unable to pay its liabilities as they become due in
the ordinary course of business: Provided, That this shall not include inability to pay caused
by extraordinary demands induced by financial panic in the banking community;

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

"(c) cannot continue in business without involving probable losses to its depositors or
creditors; or

"(d) has willfully violated a cease and desist order under Section 37 of this Act 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
designate the Philippine Deposit Insurance Corporation (PDIC) as receiver in the case of
banks and direct the PDIC to proceed with the liquidation of the closed bank pursuant to this
section and the relevant provisions of Republic Act No. 3591, as amended. The Monetary
Board shall notify in writing, through the receiver, the board of directors of the closed bank of
its decision.

"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.

"The authority of the Monetary Board to summarily and without need for prior hearing forbid the bank
or quasi-bank from doing business in the Philippines as provided above may also be exercised over
non-stock savings and loan associations, based on the same applicable grounds. For quasi-banks
and non-stock savings and loan associations, any person of recognized competence in banking,
credit or finance may be designated by the Bangko Sentral as a receiver."

Section 14. Section 31 of Republic Act No. 7653 is hereby deleted.

Section 15. Section 32 of Republic Act No. 7653 is hereby deleted.

Section 16. Section 34 of the same Act is hereby amended to read as follows:

"Sec. 34. Refusal to Make Reports or Permit Examination. - Any officer, owner, agent, manager,
director or officer-in-charge of any institution who, being required in writing by the Monetary Board or
by the head of the supervising and examining department within the purview of this Act and relevant
laws willfully refuses to file the required report or permit any lawful examination into the affairs of
such institution shall be punished by a fine of not less than Fifty thousand pesos (₱50,000) nor more
than Two million pesos (₱2,000,000) or by imprisonment of not less than one (1) year nor more than
five (5) years, or both, at the discretion of the court.
"This shall also apply to the officer, owner, agent, manager, director or officer-in-charge of the
affiliate company/ies whose transactions are subject to examination under this Act."

Section 17. Section 35 of the same Act is hereby amended to read as follows:

"Sec. 35. False Statement. - The willful making of a false or misleading statement on a material fact
to the Monetary Board or to the examiners of the Bangko Sentral shall be punished by a fine of not
less than One hundred thousand pesos (₱100,000) nor more than Two million pesos (₱2,000,000),
or by imprisonment of not more than five (5) years, or both, at the discretion of the court."

Section 18. Section 36 of the same Act is hereby amended to read as follows:

"Sec. 36. Proceedings Upon Violation of This Act and Other Banking Laws, Rules, Regulations,
Orders or Instructions. - Whenever a bank, quasi-bank, including their subsidiaries and affiliates
engaged in allied activities or other entity which under this Act or special laws is subject to Bangko
Sentral supervision or whenever any person or entity willfully violates this Act or other pertinent
banking laws being enforced or implemented by the Bangko Sentral or any order, instruction, rule or
regulation issued by the Monetary Board, the person 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
(₱50,000) nor more than Two million pesos (₱2,000,000) or by imprisonment of not less than two (2)
years nor more than ten (10) years, or both, at the discretion of the court.

"Whenever an entity under feangko Sentral supervision 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.

"The Bangko Sentral may grant informer’s reward to any person, except an officer or employee of
the Bangko Sentral or of any intelligence or law enforcement agency, including the relatives of such
officer or employee within the fourth degree of consanguinity or affinity, who voluntarily give definite
information not yet in the possession of the Bangko Sentral leading to the: (a) arrest of bank
directors or officers and/or BSP personnel for violation of this Act or any banking and other laws
implemented or enforced by the Bangko Sentral, or for violation of other penal laws committed in
connection with their employment or functions; or (b) filing of criminal charges against any person for
violation of Section 50 of this Act.

"The Monetary Board is hereby authorized to promulgate the implementing guidelines for the grant
of informer’s reward, which in no case shall exceed One million pesos (₱1,000,000). Said guidelines
may provide for additional qualifications and disqualifications of informants as well as the form and
minimum content of the information given.

"The cash reward of informers shall be subject to applicable withholding taxes."

Section 19. Section 37 of the same Act is hereby amended to read as follows:

"Sec. 37. Administrative Sanctions on Supervised Entities. - The imposition of administrative

sanctions shall be fair, consistent and reasonable. Without prejudice to the criminal sanctions
against the culpable persons provided in Sections 34, 35, and 36 of this Act, the Monetary Board
may, at its discretion, impose upon any bank, quasi-bank, including their subsidiaries and affiliates
engaged in allied activities, or other entity which under this Act or special laws are subject to the
Bangko Sentral supervision, and/or their directors, officers or employees, for any willful violation of
its charter or bylaws, 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; or any commission of irregularities, and/or conducting business
in an unsafe or unsound manner as may be determined by the Monetary Board, the following
administrative sanctions, whenever applicable:

"(a) fines in amounts as may be determined by the Monetary Board to be appropriate, but in
no case to exceed One million pesos (₱1,000,000) for each transactional violation or One
hundred thousand pesos (₱100,000) per calendar day for violations of a continuing nature,
taking into consideration the attendant circumstances, such as the nature and gravity of the
violation or irregularity and the size of the institution: Provided, That in case profit is gained
or loss is avoided as a result of the violation, a fine no more than three (3) times the profit
gained or loss avoided may also be imposed;

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

"(c) suspension of lending or foreign exchange operations or authority to accept new

deposits or make new investments;

"(d) suspension of interbank clearing privileges; and/or

"(e) suspension or revocation of quasi-banking or other special licenses.

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

"The Monetary Board may, whenever warranted by circumstances, preventively suspend any
director, officer or employee of 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, officer or employee 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, officers
or employees concerned continue with or otherwise persist in the commission of the indicated
practice or violation, the Monetary Board may issue an order requiring the institution and/or the
directors, officers or employees 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 receipt 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 banks and quasi-banks,
including their subsidiaries and affiliates engaged in allied activities, and other entities which under
this Act or 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 One hundred thousand pesos (₱100,000)
for each transactional violation or Thirty thousand pesos (₱30,000) per calendar day for violations of
a continuing nature, the imposition of which shall be final and executory until reversed, modified or
lifted by the Monetary Board on appeal."

Section 20. A new section entitled Section 38-A is hereby included in the same Act to read as
follows:

"Sec. 38-A. Issuance of Injunctive Belief Against Bangko Sentral Actions. - No court, other than the
Court of Appeals and the Supreme Court, shall issue any temporary restraining order, preliminary
injunction or preliminary mandatory injunction against the Bangko Sentral for any action under this
Act.

"Any restraining order or injunction issued in violation of this section is void and of no force and
effect.

"The provisions of the Rules of Court on injunctions insofar as these are applicable and not
inconsistent with the provisions of this Act shall govern the issuance and dissolution of restraining
orders or injunctions against the Bangko Sentral."

Section 21. Section 39 of the same Act is hereby amended as follows:

"Sec. 39. Reports and Publications. - The Bangko Sentral shall publish a general balance sheet
showing the volume and composition of its assets and liabilities as of the last working day of the
month within ninety (90) days after the end of each month, which may be reasonably extended by
the Bangko Sentral as warranted.

"The Monetary Board shall publish and submit the following reports to the President and to the
Congress:

"(a) not later than ninety (90) days after the end of each quarter, an analysis of economic
and financial developments, including the condition of net international reserves and
monetary aggregates;

"(b) within ninety (90) days after the end of the year, which may be reasonably extended by
the Bangko Sentral as warranted, the preceding year’s budget and profit and loss statement
of the Bangko Sentral showing in reasonable detail the result of its operations;

"(c) one hundred twenty (120) days after the end of each semester, a review of the state of
the financial system; and

"(d) as soon as practicable, abnormal movements in monetary aggregates and the general
price level, and, not later than seventy-two (72) hours after they are taken, remedial
measures in response to such abnormal movements."
Section 22. Section 40 of the same Act is hereby amended as follows:

"Sec. 40. Annual Report. - Before the end of June of each year, the Bangko Sentral shall 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:

"(a) the monthly movement of monetary aggregates and their components;

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

"(c) the balance of payments of the Philippines;

"(d) monthly indices of consumer prices and of import and export prices;

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

"(f) the monthly movement of the accounts of the Bangko Sentral and of other banks;

"(g) 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
Bangko Sentral or of the financial system.

"The Bangko Sentral shall publish another version of the annual report in terms understandable to
the layman."

Section 23. Section 43 of the same Act is hereby amended as follows:

"Sec. 43. Computation of Profits and Losses. - Within the first sixty (60) days following the end of
each year, the Bangko Sentral shall determine its net profits or losses. Notwithstanding any
provision of law to the contrary, the net profit of the Bangko Sentral shall be determined after
allowing for expenses of operation, adequate allowances and provisions for bad and doubtful debts,
depreciation in assets, and such allowances and provisions for contingencies or other purposes as
the Monetary Board may determine in accordance with prudent financial management and effective
central banking operations."

Section 24. A new section entitled Section 43-A is hereby included in the same Act to read as
follows:

"Sec. 43-A. Bangko Sentral Reserve Fund. - The Bangko Sentral shall establish a reserve fund,
whenever it has income or positive surplus, to mitigate future risks such as, but not limited to, the
impacts of foreign exchange and price fluctuations, and to address other contingencies inherent in
carrying out the Bangko Sentral-mandated functions as central monetary authority. The reserve fund
shall consist of fluctuation reserve, contingency reserve and such other reserves as the Monetary
Board deems prudent or necessary."

Section 25. Section 45 of the same Act is hereby amended to read as follows:

"Sec. 45. Revaluation Profits and Losses. - Unrealized profits or losses arising from any revaluation
of the Bangko Sentral’s assets, liabilities or derivative instruments denominated in foreign currencies
with respect to the movements of prices and exchange rates from third currencies to Philippine peso
shall not be included in the computation of the annual profits and losses of the Bangko Sentral. Any
profits or losses arising in this manner shall be offset by any amounts which, as a consequence of
such revaluations, are owed by the Philippines to any international or regional intergovernmental
financial institution of which the Philippines is a member or are owed by these institutions to the
Philippines. Any remaining unrealized profit or loss shall be carried in an account which shall be
named ‘Revaluation of International Reserve (RIRY, and the net balance of which shall appear either
among the liabilities or among the assets of the Bangko Sentral, depending on whether the
revaluations have produced net profits or net losses.

"The RIR account shall be credited or debited for the periodic revaluation as authorized in this
section and to reflect the corresponding adjustment resulting to reduction in the Bangko Sentral’s net
foreign assets, liabilities and foreign currency-denominated derivative instruments. The RIR shall be
adjusted and recognized in the income statement upon sale of gold and foreign securities, or when
the foreign currency is repatriated to local currency or is used to pay foreign obligations, or upon
maturity of a foreign currency-denominated forward or option contract involving the Philippine peso."

Section 26. Section 61 of the same Act is hereby amended to read as follows:

"Sec. 61. Guiding Principle.- The Monetary Board shall regularly assess price developments and
outlook and, based on its analysis and evaluation of inflationary pressures, use its policy instruments
to attain and maintain price stability."

Section 27. Section 63 of the same Act is hereby amended to read as follows:

"Sec. 63. Action When Abnormal Movements Occur in the Price Level. - Whenever abnormal
movements in the prices endanger the stability of the Philippine economy or important sectors
thereof, the Monetary Board shall:

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

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

"(1) the causes of the rise or fall of prices;

"(2) the extent to which the changes in prices have been reflected in changes in the
level of domestic output, employment, wages and economic activity in general, and
the nature and significance of any such changes; and

"(3) the measures which the Monetary Board has taken and the other monetary,
fiscal or administrative measures which it recommends to be adopted. 1âwphi1
"Whenever the cost of living index increases by more than ten percent (10%), in relation to the level
existing at the end of the corresponding month of the preceding year, or even though this
quantitative guideline has not been reached when in its judgment the circumstances so warrant, the
Monetary Board shall submit the reports mentioned in this section, and shall state therein whether, in
the opinion of the Board, said changes in the cost of living represent a threat to the stability of the
Philippine economy or of important sectors thereof.

"The Monetary Board shall continue to submit periodic reports to the President of the Philippines and
to Congress until it considers that the price disturbances have disappeared or have been adequately
controlled."

Section 28. Section 66 of the same Act is hereby amended to read as follows:

"Sec. 66. Composition of the International Reserves. - The international reserves of the Bangko
Sentral may include, but shall not be limited to, the following assets:

"(a) gold; and

"(b) assets in foreign currencies in the form of: documents and instruments customarily
employed for the international transfer of funds; demand and time deposits in central banks,
treasuries and commercial banks abroad; foreign government securities; and foreign notes
and coins.

"The Monetary Board shall endeavor to hold the foreign exchange resources of the Bangko Sentral
in freely convertible currencies. The Monetary Board shall issue regulations determining the other
qualifications which foreign exchange assets must meet in order to be included in the international
reserves of the Bangko Sentral.

"The Bangko Sentral shall be free to convert any of the assets in its international reserves into other
assets as described in subsections (a) and (b) of this section."

Section 29. Section 81 of the same Act is hereby amended to read as follows:

"Sec. 81. Guiding Principles. - The rediscounts, discounts, loans and advances which the Bangko
Sentral is authorized to extend to banking institutions, under the provisions of the present article of
this Act shall be used to influence the volume of credit consistent with the objective of price stability
and maintenance of financial stability."

Section 30. Section 84 of the same Act is hereby amended to read as follows:

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

"The Monetary Board may, at its discretion, likewise authorize the Bangko Sentral to grant
emergency loans or advances to banking institutions, even during normal periods, for the purpose of
assisting a bank in a precarious financial condition or under serious financial pressures brought by
unforeseen events, or events which, though foreseeable, could not be prevented by the bank
concerned: Provided, however, That the Monetary Board has ascertained that the bank is not
insolvent and has the assets defined hereunder to secure the advances: Provided, further, That a
concurrent vote of at least five (5) members of the Monetary Board is obtained.

"The amount of any emergency loan or advance shall not exceed the sum of fifty percent (50%) of
total deposits and deposit substitutes of the banking institution, and shall be disbursed in two (2) or
more tranches. The amount of the first tranche shall be limited to twenty-five percent (25%) of the
total deposit and deposit substitutes of the institution and shall be secured by (a) government
securities; (b) acceptable guarantees backed up by the national government or its securities; (c)
other unencumbered first class collaterals; and (d) other kinds of collaterals as may be authorized by
the Monetary Board in accordance with sound risk management principles: Provided, That if as
determined by the Monetary Board, the circumstances surrounding the emergency warrant a loan or
advance greater than the amount provided hereinabove, the amount of the first tranche may exceed
twenty-five percent (25%) of the bank’s total deposit and deposit substitutes if the same is
adequately secured by any of the collaterals set forth above as approved by the Monetary Board,
and the principal stockholders of the institution furnish an acceptable undertaking to indemnify and
hold harmless from suit a conservator whose appointment the Monetary Board may find necessary
at any time."Prior to the release of the first tranche, the banking institution shall submit to the Bangko
Sentral a resolution of its board of directors authorizing the Bangko Sentral to evaluate other assets
of the banking institution certified by its external auditor to be good and available for collateral
purposes should the release of the subsequent tranche be thereafter applied for.

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

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

"(b) provide acceptable security which, in the judgment of the Monetary Board, would be
adequate to supplement, where necessary, the assets tendered by the banking institution to
collateralize the subsequent tranche.

"In connection with the exercise of these powers, the prohibitions in Section 128 of this Act shall not
apply insofar as it refers to acceptance as collateral of shares and their acquisition as a result of
foreclosure proceedings, including the exercise of voting rights pertaining to said shares: Provided,
however, That should the Bangko Sentral acquire any of the shares it has accepted as collateral as
a result of foreclosure proceedings, the Bangko Sentral shall dispose of said shares by public
bidding within one (1) year from the date of consolidation of title by the Bangko Sentral.

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

Section 31. A new section entitled Section 88-A is hereby included in the same Act to read as
follows:

"Sec. 88-A. Exemption of Collaterals from Attachments, Executions and Other Restrictions. -

Collaterals on loans and advances granted by the Bangko Sentral, whether or not the interest of the
Bangko Sentral is registered, shall not be subject to attachment, execution or any other court
process or administrative restrictions on land use, nor shall they be included in the property of
insolvent persons or institutions."
Section 32. A new section entitled Section 88-B is hereby included in the same Act to read as
follows:

"Sec. 88-B. Deputization of Legal Staff in Case of Foreclosures. - In case of an extrajudicial

foreclosure of mortgage in connection with loans and advances under this article, the Bangko
Sentral may deputize any of its lawyers to conduct the public auction pursuant to Act No. 3135, as
amended.

"Likewise, in case of a judicial foreclosure in connection with loans and advances under this article,
the Bangko Sentral may, with the approval of the court, deputize any of its lawyers to act as special
sheriff in the sale of a debtor’s properties and in the enforcement of court writs and processes
related thereto. The special sheriff of the Bangko Sentral shall make a report to the proper court after
any action has been taken by him, which court shall treat such action as if it were an act of its own
sheriff in all respects.

"No restraining order or injunction shall be issued by the court enjoining the Bangko Sentral from
proceeding with the foreclosure of the mortgage unless a bond is posted in favor of the Bangko
Sentral in an amount equivalent to the total claim of the Bangko Sentral. The restraining order or
injunction shall be refused or, if granted, shall be dissolved upon filing by the Bangko Sentral of a
bond, which shall be in the form of a Bangko Sentral check, in an amount twice the amount of 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 the Rules of Court on
injunctions 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."

Section 33. A new section entitled Section 88-C is hereby included in the same Act to read as
follows:

"Sec. 88-C. Right of Redemption of Foreclosed Real Property; Right of Possession During

Redemption Period. - In the event of foreclosure, whether judicially or extrajudicially, the mortgagor,
who is a natural person, shall have the right to redeem the property within one (1) year from the date
of foreclosure sale. In case the mortgagor is a juridical person, the mortgagor shall have the right to
redeem the property sold in a judicial foreclosure sale within one (1) year from the date of
foreclosure sale: Provided, That in case of an extrajudicial foreclosure, notwithstanding Act No.
3135, the mortgagor shall have the right to redeem the property sold within ninety (90) days from the
foreclosure sale but not later than the registration of the certificate of foreclosure sale. 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."

Section 34. A new section entitled Section 88-D is hereby included in the same Act to read as
follows:

"Sec. 88-D. Unsecured Bangko Sentral Claims. - All unsecured claims of the Bangko Sentral shall
be considered preferred credits similar to taxes due to the National Government in the order of
preference under Article 2244 of the new Civil Code."
Section 35. A new section entitled Section 89-A is hereby included in the same Act to read as
follows:

"Sec. 89-A. Financial Facilities for Islamic Banks. - The Bangko Sentral may, taking into
consideration the peculiar characteristics of islamic banking, formulate rules and regulations for the
extension of financial facilities to islamic banks: Provided, That such exposures shall be properly
secured."

Section 36. A new section entitled Section 89-B is hereby included in the same Act to read as
follows:

"Sec. 89-B. Loans to the Philippine Deposit Insurance Corporation (PDIC). - The Bangko Sentral,
pursuant to its mandate of maintaining financial stability, may lend funds to the PDIC for insurance
purposes and in cases of financial assistance that the latter is authorized to extend under Section
22(e) of Republic Act No. 3591, as amended. Notwithstanding Section 23 of Republic Act No. 3591,
as amended, the Monetary Board shall prescribe interest rates and such other terms and conditions
of the loan."

Section 37. Section 92 of the same Act is hereby amended to read as follows:

"Sec. 92. Issue and Negotiation of Bangko Sentral Obligations. - In order to provide the Bangko
Sentral with effective instruments for open market operations, the Bangko Sentral may, subject to
such rules and regulations as the Monetary Board may prescribe and in accordance with the
principles stated in Section 90 of this Act, issue, place, buy and sell freely negotiable evidences of
indebtedness of the Bangko Sentral. 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."

Section 38. Section 95 of the same Act is hereby amended to read as follows:

"Sec. 95. Definition of Deposit Substitutes. - The term ‘deposit substitutes’ is defined as an

alternative form of obtaining funds from the public, other than deposits, through the issuance,
endorsement, or acceptance of debt instruments for the borrower’s own account, for the purpose of
relending or purchasing of receivables and other obligations. These instruments may include, but
need not be limited to, bankers acceptances, promissory notes, participations, certificates of
assignment and similar instruments with recourse, and repurchase agreements. The phrase
obtaining funds from the public’ shall mean borrowing from twenty (20) or more lenders at any one
time, and, for this purpose, Tenders’ shall refer to individuals and corporate entities that are not
acting as financial intermediaries, subject to the safeguards and regulations issued by the Monetary
Board. The Monetary Board shall determine what specific instruments shall be considered as
deposit substitutes for the purposes of Section 94 of this Act: Provided, however, That deposit
substitutes of commercial, industrial and other nonfinancial 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."

Section 39. Section 101 of the same Act is hereby amended to read as follows:

"Sec. 101. Reserve Deficiencies. - Whenever the reserve position of any bank or quasi-bank,
computed in the manner specified in the preceding section of this Act, is below the required
minimum, the bank or quasi-bank shall pay the Bangko Sentral monetary penalty as may be
prescribed by the Monetary Board: Provided, however, That banks and quasi-banks shall ordinarily
be permitted to offset any reserve deficiency occurring on one or more days of the week with any
excess reserves which they may hold on other days of the same week and shall be required to pay
the penalty in accordance with the mechanism approved by the Monetary Board. In cases of abuse,
the Monetary Board may deny any bank or quasi-bank the privilege of offsetting reserve deficiencies
in the aforesaid manner.

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

"The Monetary Board may modify or set aside the reserve deficiency penalties provided in this
section, for part or the entire period of a strike or lockout affecting a bank or a quasi-bank as defined
in the Labor Code, or of a national emergency affecting operations of banks or quasi-banks, or in
such other instances where the grant of waiver of penalties is determined by the Monetary Board to
be justifiable. The Monetary Board may also modify or set aside reserve deficiency penalties for
rehabilitation program of a bank."

Section 40. Section 104 of the same Act is hereby amended to read as follows:

"Sec. 104. Guiding Principle. - The Monetary Board shall use the powers granted to it under this Act
to ensure that the supply, availability and cost of money are in accord with the needs of the
Philippine economy and that bank credit is not granted for speculative purposes prejudicial to the
national interests. Regulations on bank operations shall be applied to all banks of the same
category, as may be defined by the Monetary Board, uniformly and without discrimination."

Section 41. Section 108 of the same Act is hereby amended to read as follows:

"Sec. 108. Minimum Capital Ratios. - The Monetary Board may prescribe minimum risk-based
capital adequacy ratios based on internationally accepted standards and may alter said ratios
whenever it deems necessary. In the exercise of its authority under this section, the Monetary Board
may require banks to hold capital beyond the minimum requirements commensurate to then risk
profile."

Section 42. Section 113 of the same Act 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. 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
licensed to operate in the Philippines as the Monetary Board may authorize.
"The Bangko Sentral may accept deposits and pay interest on such deposits and other similar
placements of the Government or of its political subdivisions and instrumentalities, banks and other
Bangko Sentral-supervised institutions."

Section 43. Section 123 of the same Act is hereby amended to read as follows:

"Sec. 123. Financial Advice on Official Credit Operations. - Before undertaking any credit operation
abroad, the Government, through the Secretary of Finance, shall request the opinion, in writing, of
the Monetary Board on the monetary implications of the contemplated action. Such opinions must
similarly be requested by all political subdivisions and instrumentalities of the Government before
any credit operation abroad is undertaken by them.

"The opinion of the Monetary Board shall be based on the gold and foreign exchange resources and
obligations of the nation and on the effects of the proposed operation on the balance of payments
and on monetary aggregates. 1âwphi1

"Whenever the Government, or any of its political subdivisions or instrumentalities, contemplates

borrowing within the Philippines, the prior opinion of the Monetary Board shall likewise be requested
in order that the Board may render an opinion on the probable effects of the proposed operation on
monetary aggregates, the price level, and the balance of payments.

"A credit operation or borrowing as provided herein may take the form of different credit facilities
such as, but not limited to, a single loan, series of loans under a borrowing program, or credit lines.
No prior Monetary Board opinion shall be required for individual drawdowns or borrowings within
approved credit lines or borrowing programs."

Section 44. Section 125 of the same Act is hereby amended to read as follows:

"Sec. 125. Tax Exemptions. - The Bangko Sentral shall be exempt from all national, provincial,
municipal and city taxes on income derived from its governmental functions, specifically:

"(a) income from its activities or transactions in the exercise of its supervision over the operations of
banks and its regulatory and examination powers over non-bank financial institutions performing
quasi-banking functions, money service businesses, credit granting businesses and payment system
operators; and

"(b) income in pursuit of its primary objective to maintain price stability conducive to a balanced and
sustainable growth of the economy, and the promotion and maintenance of monetary and financial
stability and the convertibility of the peso.

"All other incomes not included in the above enumeration shall be considered as proprietary income
and shall be subject to all taxes, charges, fees and assessments."

Section 45. Section 128 of the same Act is hereby amended to read as follows:

"Sec. 128. Prohibitions. - The Bangko Sentral shall not acquire shares of any kind or accept them as
collateral, and shall not participate in the ownership or management of any enterprise, either directly
or indirectly: Provided, That this prohibition shall not apply whenever the Monetary Board, by a vote
of at least five (5) of its members, (1) deems an acquisition or investment to be necessary to qualify
or as required for membership in international and regional organizations; or (2) determines that
investing in and/or operating an enterprise will be consistent with the effective fulfillment of its
mandate and will not constitute any conflict of interest.

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

Section 46. Section 132 of the same Act is hereby amended to read as follows:

"Sec. 132. Transfer of Assets and Liabilities. - x x x.

"x x x.

"(b) the Bangko Sentral shall remit seventy-five percent (75%) of its net profits as computed in this
Act to a special deposit account (sinking fund) or to the National Treasury as dividends, until such
time as the net liabilities of the Central Bank shall have been liquidated through generally accepted
finance mechanisms such as, but not limited to, write-offs, set-offs, condonation, collections,
reappraisal, revaluation and bond issuance by the National Government. Thereafter, it shall remit
fifty percent (50%) of its said net profits to the National Treasury;

Section 47. Repealing Clause. - All provisions of existing laws, orders, rules and regulations, or
parts thereof which are in conflict or inconsistent with the provisions of this Act are hereby repealed,
amended or modified accordingly.

Section 48. Separability Clause. - If any provision or section of this Act is held to be unconstitutional
or invalid, the other provisions or sections hereof, which are not affected thereby shall continue to be
in full force and effect.

Section 49. Effectivity. - This Act shall take effect fifteen (15) days following its publication in the
Official Gazette or in a newspaper of general circulation.

Approved,

VICENTE C. SOTTO III

President of the Senate

GLORIA MACAPAGAL-ARROYO
Speaker of the House of Representatives

This Act which is a consolidation of House Bill No. 7742 and Senate Bill No. 1297 was passed by the
House of Representatives and the Senate on November 27, 2018 and November 28, 2018,
respectively

MYRA MARIE D. VILLARICA

Secretary of the Senate

DANTE ROBERTO P. MALING

Acting Secretary General
House of Representatives

Approved: February 14, 2019

(Sgd.) RODRIGO ROA DUTERTE
President of the Philippines

REPUBLIC ACT NO. 8791             May 23, 2000

AN ACT PROVIDING FOR THE REGULATION OF THE ORGANIZATION AND OPERATIONS OF

BANKS, QUASI-BANKS, TRUST ENTITIES AND FOR OTHER PURPOSES

CHAPTER I
TITLE AND CLASSIFICATION OF BANKS

Section 1. Title. The short title of this Act shall be "The General Banking Law of 2000." (1a)

Section 2. Declaration Of Policy. - The State recognizes the vital role of banks providing an
environment conducive to the sustained development of the national economy and the fiduciary
nature of banking that requires high standards of integrity and performance. In furtherance thereof,
the State shall promote and maintain a stable and efficient banking and financial system that is
globally competitive, dynamic and responsive to the demands of a developing economy. (n)

Section 3. Definition and Classification of Banks. -

3.1. "Banks" shall refer to entities engaged in the lending of funds obtained in the form of deposits.
(2a)

3.2. Banks shall be classified into:

(a) Universal banks;

(b) Commercial banks;

(c) Thrift banks, composed of: (i) Savings and mortgage banks, (ii) Stock savings and loan
associations, and (iii) Private development banks, as defined in the Republic Act No. 7906
(hereafter the "Thrift Banks Act");

(d) Rural banks, as defined in Republic Act No. 73S3 (hereafter the "Rural Banks Act");

(e) Cooperative banks, as defined in Republic Act No 6938 (hereafter the "Cooperative
Code");

(f) Islamic banks as defined in Republic Act No. 6848, otherwise known as the "Charter of Al
Amanah Islamic Investment Bank of the Philippines"; and

(g) Other classifications of banks as determined by the Monetary Board of the Bangko
Sentral ng Pilipinas. (6-Aa)

CHAPTER II
AUTHORITY OF THE BANGKO SENTRAL

Section 4. Supervisory Powers. The operations and activities of banks shall be subject to

supervision of the Bangko Sentral. "Supervision" shall include the following:
4.1. The issuance of rules of, conduct or the establishment standards of operation for uniform
application to all institutions or functions covered, taking into consideration the distinctive character
of the operations of institutions and the substantive similarities of specific functions to which such
rules, modes or standards are to be applied;

4.2 The conduct of examination to determine compliance with laws and regulations if the
circumstances so warrant as determined by the Monetary Board;

4.3 Overseeing to ascertain that laws and regulations are complied with;

4.4 Regular investigation which shall not be oftener than once a year from the last date of
examination to determine whether an institution is conducting its business on a safe or sound basis:
Provided, That the deficiencies/irregularities found by or discovered by an audit shall be immediately
addressed;

4.5 Inquiring into the solvency and liquidity of the institution (2-D); or

4.6 Enforcing prompt corrective action. (n)

The Bangko Sentral shall also have supervision over the operations of and exercise regulatory
powers over quasi-banks, trust entities and other financial institutions which under special laws are
subject to Bangko Sentral supervision. (2-Ca)

For the purposes of this Act, "quasi-banks" shall refer to entities engaged in the borrowing of funds
through the issuance, endorsement or assignment with recourse or acceptance of deposit
substitutes as defined in Section 95 of Republic Act No. 7653 (hereafter the "New Central Bank Act")
for purposes of re-lending or purchasing of receivables and other obligations. (2-Da)

Section 5. Policy Direction; Ratios, Ceilings and Limitations. - The Bangko Sentral shall provide
policy direction in the areas of money, banking and credit. (n)

For this purpose, the Monetary Board may prescribe ratios, ceilings, limitations, or other forms of
regulation on the different types of accounts and practices of banks and quasi-banks which shall, to
the extent feasible, conform to internationally accepted standards, including of the Bank for
International Settlements (BIS). The Monetary Board may exempt particular categories of
transactions from such ratios, ceilings. and limitations, but not limited to exceptional cases or to
enable a bank or quasi-bank under rehabilitation or during a merger or consolidation to continue in
business, with safety to its creditors, depositors and the general public. (2-Ca)

Section 6. Authority to Engage in Banking and Quasi-Banking Functions. - No person or entity shall
engage in banking operations or quasi-banking functions without authority from the Bangko
Sentral: .Provided, however, That an entity authorized by the Bangko Sentral to perform universal or
commercial banking functions shall likewise have the authority to engage in quasi-banking functions.

The determination of whether a person or entity is performing banking or quasi-banking functions

without Bangko Sentral authority shall be decided by the Monetary Board. To resolve such issue, the
Monetary Board may; through the appropriate supervising and examining department of the Bangko
Sentral, examine, inspect or investigate the books and records of such person or entity. Upon
issuance of this authority, such person or entity may commence to engage in banking operations or
quasi-banking function and shall continue to do so unless such authority is sooner surrendered,
revoked, suspended or annulled by the Bangko Sentral in accordance with this Act or other special
laws.

The department head and the examiners of the appropriate supervising and examining department
are hereby authorized to administer oaths to any such person, employee, officer, or director of any
such entity and to compel the presentation or production of such books, documents, papers or
records that are reasonably necessary to ascertain the facts relative to the true functions and
operations of such person or entity. Failure or refusal to comply with the required presentation or
production of such books, documents, papers or records within a reasonable time shall subject the
persons responsible therefore to the penal sanctions provided under the New Central Bank Act.

Persons or entities found to be performing banking or quasi-banking functions without authority from
the Bangko Sentral shall be subject to appropriate sanctions under the New Central Bank Act and
other applicable laws. (4a)

Section 7. Examination by the Bangko Sentral. - The Bangko Sentral shall, when examining a bank,
have the authority to examine an enterprise which is wholly or majority-owned or controlled by the
bank. (2-Ba)

CHAPTER III
ORGANIZATION, MANAGEMENT AND ADMINISTRATION OF BANKS. QUASI-BANKS AND
TRUST ENTITIES

Section 8. Organization. - The Monetary Board may authorize the organization of a bank or quasi-
bank subject to the following conditions:

8.1 That the entity is a stock corporation (7);

8.2 That its funds are obtained from the public, which shall mean twenty (20) or more persons (2-
Da); and

8.3 That the minimum capital requirements prescribed by the Monetary Board for each category of
banks are satisfied. (n)

No new commercial bank shall be established within three (3) years from the effectivity of this Act. In
the exercise of the authority granted herein, the Monetary Board shall take into consideration their
capability in terms of their financial resources and technical expertise and integrity. The bank
licensing process shall incorporate an assessment of the bank's ownership structure, directors and
senior management, its operating plan and internal controls as well as its projected financial
condition and capital base.

Section 9. Issuance of Stocks. - The Monetary Board may prescribe rules and regulations on the
types of stock a bank may issue, including the terms thereof and rights appurtenant thereto to
determine compliance with laws and regulations governing capital and equity structure of banks;
Provided, That banks shall issue par value stocks only.

Section 10. Treasury Stocks. - No bank shall purchase or acquire shares of its own capital stock or
accept its own shares as a security for a loan, except when authorized by the Monetary Board:
Provided, That in every case the stock so purchased or acquired shall, within six (6) months from the
time of its purchase or acquisition, be sold or disposed of at a public or private sale. (24a)
Section 11. Foreign Stockholdings. - Foreign individuals and non-bank corporations may own or
control up to forty percent (40%) of the voting stock of a domestic bank. This rule shall apply to
Filipinos and domestic non-bank corporations. (12a; 12-Aa) The percentage of foreign-owned voting
stocks in a bank shall be determined by the citizenship of the individual stockholders in that bank.
The citizenship of the corporation which is a stockholder in a bank shall follow the citizenship of the
controlling stockholders of the corporation, irrespective of the place of incorporation. (n)

Section 12. Stockholdings of Family Groups of Related Interests. - Stockholdings of individuals

related to each other within the fourth degree of consanguinity or affinity, legitimate or common-law,
shall be considered family groups or related interests and must be fully disclosed in all transactions
by such corporations or related groups of persons with the bank. (12-Ba)

Section 13. Corporate Stockholdings. - Two or more corporations owned or controlled by the same
family group or same group of persons shall be considered related interests and must be fully
disclosed in all transactions by such corporations or related group of persons with the bank. (12-Ba)

Section 14. Certificate of Authority to Register. - The Securities and Exchange Commission shall no
register the articles of incorporation of any bank, or any amendment thereto, unless accompanied by
a certificate of authority issued by the Monetary Board, under it seal. Such certificate shall not be
issued unless the Monetary Board is satisfied from the evidence submitted to it:

14.1 That all requirements of existing laws and regulations to engage in the business for which the
applicant is proposed to be incorporated have been complied with;

14.2 That the public interest and economic conditions, both general and local, justify the
authorization; and

14.3 That the amount of capital, the financing, organization, direction and administration, as well as
the integrity and responsibility of the organizers and administrators reasonably assure the safety of
deposits and the public interest. (9)

The Securities and Exchange Commission shall not register the by-laws of any bank, or any
amendment thereto, unless accompanied by a certificate of authority from the Bangko Sentral. (10)

Section 15. Board of Directors. - The provisions of the Corporation Code to the contrary
notwithstanding, there shall be at least five (5), and a maximum of fifteen (15) members of the board
or directors of a bank, two (2) of whom shall be independent directors. An "independent director"
shall mean a person other than an officer or employee of the bank, its subsidiaries or affiliates or
related interests. (n) Non-Filipino citizens may become members of the board of directors of a bank
to the extent of the foreign participation in the equity of said bank. (Sec. 7, RA 7721) The meetings
of the board of directors may be conducted through modern technologies such as, but not limited to,
teleconferencing and video-conferencing. (n)

Section 16. Fit and Proper Rule. - To maintain the quality of bank management and afford better
protection to depositors and the public in general the Monetary Board shall prescribe, pass upon and
review the qualifications and disqualifications of individuals elected or appointed bank directors or
officers and disqualify those found unfit. After due notice to the board of directors of the bank, the
Monetary Board may disqualify, suspend or remove any bank director or officer who commits or
omits an act which render him unfit for the position. In determining whether an individual is fit and
proper to hold the position of a director or officer of a bank, regard shall be given to his integrity,
experience, education, training, and competence. (9-Aa)
Section 17. Directors of Merged or Consolidated Banks. - In the case of a bank merger or
consolidation, the number of directors shall not exceed twenty-one (21). (l3a)

Section 18. Compensation and Other Benefits of Directors and Officers. To protect the finds of
depositors and creditors the Monetary Board may regulate the payment by the bark to its directors
and officers of compensation, allowance, fees, bonuses, stock options, profit sharing and fringe
benefits only in exceptional cases and when the circumstances warrant, such as but not limited to
the following:

18.1. When a bank is under comptrollership or conservatorship; or

18.2. When a bank is found by the Monetary Board to be conducting business in an unsafe or
unsound manner; or

18.3. When a bank is found by the Monetary Board to be in an unsatisfactory financial condition. (n)

Section 19. Prohibition on Public Officials. - Except as otherwise provided in the Rural Banks Act,
no appointive or elective public official whether full-time or part-time shall at the same time serve as
officer of any private bank, save in cases where such service is incident to financial assistance
provided by the government or a government owned or controlled corporation to the bank or unless
otherwise provided under existing laws. (13)

Section 20. Bank Branches. - Universal or commercial banks may open branches or other offices
within or outside the Philippines upon prior approval of the Bangko Sentral. Branching by all other
banks shall be governed by pertinent laws.

A bank may, subject to prior approval of the Monetary Board, use any or all of its branches as outlets
for the presentation and/or sale of the financial products of its allied undertaking or of its investment
house units. A bank authorized to establish branches or other offices shall be responsible for all
business conducted in such branches and offices to the same extent and in the same manner as
though such business had all been conducted in the head office. A bank and its branches and
offices shall be treated as one unit. (6-B; 27)

Section 21. Banking Days and Hours. - Unless otherwise authorized by the Bangko Sentral in the
interest of the banking public, all banks including their branches and offices shall transact business
on all working days for at least six (6) hours a day. In addition, banks or any of their branches or
offices may open for business on Saturdays, Sundays or holidays for at least three (3) hours a day:
Provided, That banks which opt to open on days other than working days shall report to the Bangko
Sentral the additional days during which they or their branches or offices shall transact business. For
purposes of this Section, working days shall mean Mondays to Fridays, except if such days are
holidays. (6-Ca)

Section 22. Strikes and Lockouts. - The banking industry is hereby declared as indispensable to the
national interest and, notwithstanding the provisions of any law to the contrary, any strike or lockout
involving banks, if unsettled after seven (7) calendar days shall be reported by the Bangko Sentral to
the secretary of Labor who may assume jurisdiction over the dispute or decide it or certify the sane
to the National Labor Relations Commission for compulsory arbitration. However, the President of
the Philippines may at any time intervene and assume jurisdiction over such labor dispute in order to
settle or terminate the same. (6-E)
 CHAPTER IV
DEPOSITS. LOANS AND OTHER OPERATIONS

Article I
Operations Of Universal Banks

Section 23. Powers of a Universal Bank - A universal bank shall have the authority to exercise, in
addition to the powers authorized for a commercial bank in Section 29, the powers of an investment
house as provided in existing laws and the power to invest in non-allied enterprises as provided in
this Act. (21-B)

Section 24. Equity Investments of a Universal Bank. - A universal bank may, subject to the
conditions stated in the succeeding paragraph, invest in the equities of allied and non-allied
enterprises as may be determined by the Monetary Board. Allied enterprises may either be financial
or non-financial. Except as the Monetary Board may otherwise prescribe:

24.1. The total investment in equities of allied and non-allied enterprises shall not exceed fifty
percent (50%) of the net worth of the bank; and

24.2. The equity investment in any one enterprise, whether allied or non-allied, shall not exceed
twenty-five percent (25%) of the net worth of the bank.

As used in this Act, "net worth" shall mean the total of the unimpaired paid-in capital including paid-in
surplus, retained earnings and undivided profit, net of valuation reserves and other adjustments as
may be required by the Bangko Sentral.

The acquisition of such equity or equities is subject to the prior approval of the Monetary Board
which shall promulgate appropriate guidelines to govern such investments. (21-Ba)

Section 25. Equity Investments of a Universal Bank in Financial Allied Enterprises. - A universal

bank can own up to one hundred percent (100%) of the equity in a thrift bank, a rural bank or a
financial allied enterprise. A publicly-listed universal or commercial bank may own up to one hundred
percent (100%) of the voting stock of only one other universal or commercial bank. (21-B; 21-Ca)

Section 26. Equity Investments of a Universal Bank in Non-Financial Allied Enterprises. - A

universal bank may own up to one hundred percent (100%) of the equity in a non-financial allied
enterprise. (21-Ba)

Section 27. Equity Investments of a Universal Bank in Non-Allied Enterprises. - The equity

investment of a universal bank, or of its wholly or majority-owned subsidiaries, in a single non-allied
enterprise shall not exceed thirty-five percent (35%) of the total equity in that enterprise nor shall it
exceed thirty-five percent (35%) of the voting stock in that enterprise. (21-B)

Section 28. Equity Investments in Quasi-Banks. - To promote competitive conditions in financial

markets, the Monetary Board may further limit to forty percent (40%) equity investments of universal
banks in quasi-banks. This rule shall also apply in the case of commercial banks. (12-E) Article II.
Operations Of Commercial Banks

Section 29. Powers of a Commercial Bank. - A commercial bank shall have, in addition to the
general powers incident to corporations, all such powers as may be necessary to carry on the
business of commercial banking such as accepting drafts and issuing letters of credit; discounting
and negotiating promissory notes, drafts, bills of exchange, and other evidences of debt; accepting
or creating demand deposits; receiving other types of deposits and deposit substitutes; buying and
selling foreign exchange and gold or silver bullion; acquiring marketable bonds and other debt
securities; and extending credit, subject to such rules as the Monetary Board may promulgate.
These rules may include the determination of bonds and other debt securities eligible for investment,
the maturities and aggregate amount of such investment.

Section 30. Equity Investments of a Commercial Bank. - A commercial bank may, subject to the
conditions stated in the succeeding paragraphs, invest only in the equities of allied enterprises as
may be determined by the Monetary Board. Allied enterprises may either be financial or non-
financial. Except as the Monetary Board may otherwise prescribe:

30.1. The total investment in equities of allied enterprises shall not exceed thirty-five percent (35%)
of the net worth of the bark; and

30.2. The equity investment in any one enterprise shall not exceed twenty-five percent (25%) of tile
net worth of the bank. The acquisition of such equity or equities is subject to the prior approval of the
Monetary Board which shall promulgate appropriate guidelines to govern such investment.(2lA-a;
21-Ca)

Section 31. Equity Investments of a Commercial Bank in Financial Allied Enterprises. - A

commercial bank may own up to one hundred percent (100%) of the equity of a thrift bank or a rural
bank. Where the equity investment of a commercial bank is in other financial allied enterprises,
including another commercial bank, such investment shall remain a minority holding in that
enterprise. (21-Aa; 21-Ca)

Section 32. Equity Investments of a Commercial Bank in Non-Financial Allied Enterprises. A

commercial bank may own up to one hundred percent (100%) of the equity in a non-financial allied
enterprise. (21-Aa) Article III. Provisions Applicable To All Banks, Quasi-Banks, And Trust Entities

Section 33. Acceptance of Demand Deposits. - A bank other than a universal or commercial bank
cannot accept or create demand deposits except upon prior approval of, and subject to such
conditions and rules as may be prescribed by the Monetary Board. (72-Aa)

Section 34. Risk-Based Capital. - The Monetary Board shall prescribe the minimum ratio which the
net worth of a bank must bear to its total risk assets which may include contingent accounts. For
purposes of this Section, the Monetary Board may require such ratio be determined on the basis of
the net worth and risk assets of a bank and its subsidiaries, financial or otherwise, as well as
prescribe the composition and the manner of determining the net worth and total risk assets of banks
and their subsidiaries: Provided, That in the exercise of this authority, the Monetary Board shall, to
the extent feasible conform to internationally accepted standards, including those of the Bank for
International Settlements(BIS), relating to risk-based capital requirements: Provided further, That it
may alter or suspend compliance with such ratio whenever necessary for a maximum period of one
(1) year: Provided, finally, That such ratio shall be applied uniformly to banks of the same category.
In case a bank does not comply with the prescribed minimum ratio, the Monetary Board may limit or
prohibit the distribution of net profits by such bank and may require that part or all of the net profits
be used to increase the capital accounts of the bank until the minimum requirement has been met
The Monetary Board may, furthermore, restrict or prohibit the acquisition of major assets and the
making of new investments by the bank, with the exception of purchases of readily marketable
evidences of indebtedness of the Republic of the Philippines and of the Bangko Sentral and any
other evidences of indebtedness or obligations the servicing and repayment of which are fully
guaranteed by the Republic of the Philippines, until the minimum required capital ratio has been
restored. In case of a bank merger or consolidation, or when a bank is under rehabilitation under a
program approved by the Bangko Sentral, Monetary Board may temporarily relieve the surviving
bank, consolidated bank, or constituent bank or corporations under rehabilitation from full
compliance with the required capital ratio under such conditions as it may prescribe. Before the
effectivity of rules which the Monetary Board is authorized to prescribe under this provision, Section
22 of the General Banking Act, as amended, Section 9 of the Thrift Banks Act, and all pertinent rules
issued pursuant thereto, shall continue to be in force. (22a)

Section 35. Limit on Loans, Credit Accommodations and Guarantees

35.1 Except as the Monetary Board may otherwise prescribe for reasons of national interest, the
total amount of loans, credit accommodations and guarantees as may be defined by the Monetary
Board that may be extended by a bank to any person, partnership, association, corporation or other
entity shall at no time exceed twenty percent (20%) of the net worth of such bank. The basis for
determining compliance with single borrower limit is the total credit commitment of the bank to the
borrower.

35.2. Unless the Monetary Board prescribes otherwise, the total amount of loans, credit
accommodations and guarantees prescribed in the preceding paragraph may be increased by an
additional ten percent (10%) of the net worth of such bank provided the additional liabilities of any
borrower are adequately secured by trust receipts, shipping documents, warehouse receipts or other
similar documents transferring or securing title covering readily marketable, non-perishable goods
which must be fully covered by insurance.

35.3 The above prescribed ceilings shall include (a) the direct liability of the maker or acceptor of
paper discounted with or sold to such bank and the liability of a general endorser, drawer or
guarantor who obtains a loan or other credit accommodation from or discounts paper with or sells
papers to such bank; (b) in the case of an individual who owns or controls a majority interest in a
corporation, partnership, association or any other entity, the liabilities of said entities to such bank;
(c) in the case of a corporation, all liabilities to such bank of all subsidiaries in which such
corporation owns or controls a majority interest; and (d) in the case of a partnership, association or
other entity, the liabilities of the members thereof to such bank.

35.4. Even if a parent corporation, partnership, association, entity or an individual who owns or
controls a majority interest in such entities has no liability to the bank, the Monetary Board may
prescribe the combination of the liabilities of subsidiary corporations or members of the partnership,
association, entity or such individual under certain circumstances, including but not limited to any of
the following situations: (a) the parent corporation, partnership, association, entity or individual
guarantees the repayment of the liabilities; (b) the liabilities were incurred for the accommodation of
the parent corporation or another subsidiary or of the partnership or association or entity or such
individual; or (c) the subsidiaries though separate entities operate merely as departments or
divisions of a single entity.

35.5. For purposes of this Section, loans, other credit accommodations and guarantees shall
exclude: (a) loans and other credit accommodations secured by obligations of the Bangko Sentral or
of the Philippine Government: (b) loans and other credit accommodations fully guaranteed by the
government as to the payment of principal and interest; (c) loans and other credit accommodations
covered by assignment of deposits maintained in the lending bank and held in the Philippines; (d)
loans, credit accommodations and acceptances under letters of credit to the extent covered by
margin deposits; and (e) other loans or credit accommodations which the Monetary Board may from
time to time, specify as non-risk items.
35.6. Loans and other credit accommodations, deposits maintained with, and usual guarantees by a
bank to any other bank or non-bank entity, whether locally or abroad, shall be subject to the limits as
herein prescribed.

35.7. Certain types of contingent accounts of borrowers may be included among those subject to
these prescribed limits as may be determined by the Monetary Board.(23a)

Section 36. Restriction on Bank Exposure to Directors, Officers, Stockholders and Their Related
Interests. - No director or officer of any bank shall, directly or indirectly, for himself or as the
representative or agent of others, borrow from such bank nor shall he become a guarantor, endorser
or surety for loans from such bank to others, or in any manner be an obligor or incur any contractual
liability to the bank except with the written approval of the majority of all the directors of the bank,
excluding the director concerned: Provided, That such written approval shall not be required for
loans, other credit accommodations and advances granted to officers under a fringe benefit plan
approved by the Bangko Sentral. The required approval shall be entered upon the records of the
bank and a copy of such entry shall be transmitted forthwith to the appropriate supervising and
examining department of the Bangko Sentral. Dealings of a bank with any of its directors, officers or
stockholders and their related interests shall be upon terms not less favorable to the bank than those
offered to others. After due notice to the board of directors of the bank, the office of any bank
director or officer who violates the provisions of this Section may be declared vacant and the director
or officer shall be subject to the penal provisions of the New Central Bank Act. The Monetary Board
may regulate the amount of loans, credit accommodations and guarantees that may be extended,
directly or indirectly, by a bank to its directors, officers, stockholders and their related interests, as
well as investments of such bank in enterprises owned or controlled by said directors, officers,
stockholders and their related interests. However, the outstanding loans, credit accommodations and
guarantees which a bank may extend to each of its stockholders, directors, or officers and their
related interests, shall be limited to an amount equivalent to their respective unencumbered deposits
and book value of their paid-in capital contribution in the bank: Provided, however, That loans, credit
accommodations and guarantees secured by assets considered as non-risk by the Monetary Board
shall be excluded from such limit: Provided, further, That loans, credit accommodations and
advances to officers in the form of fringe benefits granted in accordance with rules as may be
prescribed by the Monetary Board shall not be subject to the individual limit. The Monetary Board
shall define the term "related interests." The limit on loans, credit accommodations and guarantees
prescribed herein shall not apply to loans, credit accommodations and guarantees extended by a
cooperative bank to its cooperative shareholders. (83a)

Section 37. Loans and Other Credit Accommodations Against Real Estate. - Except as the
Monetary Board may otherwise prescribe, loans and other credit accommodations against real
estate shall not exceed seventy-five percent (75%) of the appraised value of the respective real
estate security, plus sixty percent (60%) of the appraised value of the insured improvements, and
such loans may be made to the owner of the real estate or to his assignees. (78a)

Section 38. Loans And Other Credit Accommodations on Security of Chattels and Intangible
Properties. - Except as the Monetary Board may otherwise prescribe, loans and other credit
accommodations on security of chattels and intangible properties such as, but not limited to, patents,
trademarks, trade names, and copyrights shall not exceed seventy-five percent (75%) of the
appraised value of the security, an such loans and other credit accommodation may be made to the
title-holder of the chattels and intangible properties or his assignees. (78a)

Section 39. Grant and Purpose of Loans and Other Credit Accommodations. - A bank shall grant
loans and other credit accommodations only in amounts and for the periods of time essential for the
effective completion of the operations to be financed. Such grant of loans and other credit
accommodations shall be consistent with safe and sound banking practices. (75a) The purpose of all
loans and other credit accommodations shall be stated in the application and in the contract between
the bank and the borrower. If the bank finds that the proceeds of the loan or other credit
accommodation have been employed, without its approval, for purposes other than those agreed
upon with the bank, it shall have the right to terminate the loan or other credit accommodation and
demand immediate repayment of the obligation. (77)

Section 40. Requirement for Grant Of Loans or 0ther Credit Accommodations. - Before granting a
loan or other credit accommodation, a bank must ascertain that the debtor is capable of fulfilling his
commitments to the bank. Toward this end, a bank may demand from its credit applicants a
statement of their assets and liabilities and of their income and expenditures and such information as
may be prescribed by law or by rules and regulations of the Monetary Board to enable the bank to
properly evaluate the credit application which includes the corresponding financial statements
submitted for taxation purposes to the Bureau of Internal Revenue. Should such statements prove to
be false or incorrect in any material detail, the bank may terminate any loan or other credit
accommodation granted on the basis of said statements and shall have the right to demand
immediate repayment or liquidation of the obligation. In formulating rules and regulations under this
Section, the Monetary Board shall recognize the peculiar characteristics of micro financing, such as
cash flow-based lending to the basic sectors that are not covered by traditional collateral. (76a)

Section 41. Unsecured Loans or Other Credit Accommodations. - The Monetary Board is hereby
authorized to issue such regulations as it may deem necessary with respect to unsecured loans or
other credit accommodations that may be granted by banks. (n)

Section 42. Other Security Requirements for Bank Credits. - The Monetary Board may, by
regulation, prescribe further security requirements to which the various types of bank credits shall be
subject, and, in accordance with the authority granted to it in Section 106 of the New Central Bank
Act, the Board may by regulation, reduce the maximum ratios established in Sections 36 and 37 of
this Act, or, in special cases, increase the maximum ratios established therein. (78)

Section 43. Authority to Prescribe Terms and Conditions of Loans and Other Credit
Accommodations. - The Monetary Board, may, similarly in accordance with the authority granted to it
in Section 106 of the New Central Bank Act, and taking into account the requirements of the
economy for the effective utilization of long-term funds, prescribe the maturities, as well as related
terms and conditions for various types of bank loans and other credit accommodations. Any change
by the Board in the maximum maturities, as well as related terms and conditions for various types of
bank loans and other credit accommodations. Any change by the Board in the maximum maturities
shall apply only to loans and other credit accommodations made after the date of such action. The
Monetary Board shall regulate the interest imposed on micro finance borrowers by lending investors
and similar lenders such as, but not limited to, the unconscionable rates of interest collected on
salary loans and similar credit accommodations. (78a)

Section 44. Amortization on Loans and Other Credit Accommodations. - The amortization schedule
of bank loans and other credit accommodations shall be adapted to the nature of the operations to
be financed. In case of loans and other credit accommodations with maturities of more than five (5)
years, provisions must be made for periodic amortization payments, but such payments must be
made at least annually: Provided, however, That when the borrowed funds are to be used for
purposes which do not initially produce revenues adequate for regular amortization payments
therefrom, the bank may permit the initial amortization payment to be deferred until such time as
said revenues are sufficient for such purpose, but in no case shall the initial amortization date be
later than five (5) years from the date on which the loan or other credit accommodation is granted.
(79a) In case of loans and other credit accommodations to micro finance sectors, the schedule of
loan amortization shall take into consideration the projected cash flow of the borrower and adopt this
into the terms and conditions formulated by banks. (n)

Section 45. Prepayment of Loans and Other Credit Accommodations. - A borrower may at any time
prior to the agreed maturity date prepay, in whole or in part, the unpaid balance of any bank loan
and other credit accommodation, subject to such reasonable terms and conditions as may be agreed
upon between the bank and its borrower. (80a)

Section 46. Development Assistance Incentives. - The Bangko Sentral shall provide incentives to
banks which, without government guarantee, extend loans to finance educational institutions
cooperatives, hospitals and other medical services, socialized or low-cost housing, local government
units and other activities with social content. (n)

Section 47. Foreclosure of Real Estate Mortgage. - In the event of foreclosure, whether judicially or
extra-judicially, of any mortgage on real estate which is security for any loan or other credit
accommodation granted, the mortgagor or debtor whose real property has been sold for the full or
partial payment of his obligation shall have the right within one year after the sale of the real estate,
to redeem the property by paying the amount due under the mortgage deed, with interest thereon at
rate specified in the mortgage, and all the costs and expenses incurred by the bank or institution
from the sale and custody of said property less the income derived therefrom. However, the
purchaser at the auction sale concerned whether in a judicial or extra-judicial foreclosure shall have
the right to enter upon and take possession of such property immediately after the date of the
confirmation of the auction sale and administer the same in accordance with law. Any petition in
court to enjoin or restrain the conduct of foreclosure proceedings instituted pursuant to this provision
shall be given due course only upon the filing by the petitioner of a bond in an amount fixed by the
court conditioned that he will pay all the damages which the bank may suffer by the enjoining or the
restraint of the foreclosure proceeding. Notwithstanding Act 3135, juridical persons whose property
is being sold pursuant to an extrajudicial foreclosure, shall have the right to redeem the property in
accordance with this provision until, but not after, the registration of the certificate of foreclosure sale
with the applicable Register of Deeds which in no case shall be more than three (3) months after
foreclosure, whichever is earlier. Owners of property that has been sold in a foreclosure sale prior to
the effectivity of this Act shall retain their redemption rights until their expiration. (78a)

Section 48. Renewal or Extension of Loans and Other Credit Accommodations. - The Monetary
Board may, by regulation, prescribe the conditions and limitations under which a bank may grant
extensions or renewals of its loans and other credit accommodations. (81)

Section 49. Provisions for Losses and Write-Offs. - All debts due to any bank on which interest is
past due and unpaid for such period as may be determined by the Monetary Board, unless the same
are welt-secured and in the process of collection shall be considered bad debts within the meaning
of this Section. The Monetary Board may fix, by regulation or by order in a specific case, the amount
of reserves for bad debts or doubtful accounts or other contingencies. Writing off of loans, other
credit accommodations, advances and other assets shall be subject to regulations issued by the
Monetary Board. (84a)

Section 50. Major Investments. - For the purpose or enhancing bank supervision, the Monetary
Board shall establish criteria for reviewing major acquisitions of investments by a bank including
corporate affiliations or structures that may expose the bank to undue risks or in any way hinder
effective supervision.

Section 51. Ceiling on Investments in Certain Assets. - Any bank may acquire real estate as shall
be necessary for its own use in the conduct of its business: Provided, however, That the total
investment in such real estate and improvements thereof including bank equipment, shall not exceed
fifty percent (50%) of combined capital accounts: Provided, further, That the equity investment of a
bank in another corporation engaged primarily in real estate shall be considered as part of the bank's
total investment in real estate, unless otherwise provided by the Monetary Board. (25a)

Section 52. Acquisition of Real Estate by Way of Satisfaction of Claims. - Notwithstanding the

limitations of the preceding Section, a bank may acquire, hold or convey real property under the
following circumstances:

52.1. Such as shall be mortgaged to it in good faith by way of security for debts;

52.2. Such as shall be conveyed to it in satisfaction of debts previously contracted in the course of
its dealings, or

52.3. Such as it shall purchase at sales under judgments, decrees, mortgages, or trust deeds held
by it and such as it shall purchase to secure debts due it.

Any real property acquired or held under the circumstances enumerated in the above paragraph
shall be disposed of by the bank within a period of five (5) years or as may be prescribed by the
Monetary Board: Provided, however, That the bank may, after said period, continue to hold the
property for its own use, subject to the limitations of the preceding Section. (25a)

Section 53. Other Banking Services. - In addition to the operations specifically authorized in this Act,
a bank may perform the following services:

53.1. Receive in custody funds, documents and valuable objects;

53.2. Act as financial agent and buy and sell, by order of and for the account of their customers,
shares, evidences of indebtedness and all types of securities;

53.3. Make collections and payments for the account of others and perform such other services for
their customers as are not incompatible with banking business;

53.4 Upon prior approval of the Monetary Board, act as managing agent, adviser, consultant or
administrator of investment management/advisory/consultancy accounts; and

53.5. Rent out safety deposit boxes.

The bank shall perform the services permitted under Subsections 53.1, 53.2,53.3 and 53.4 as
depositary or as an agent. Accordingly, it shall keep the funds, securities and other effects which it
receives duly separate from the bank's own assets and liabilities: The Monetary Board may regulate
the operations authorized by this Section in order to ensure that such operations do not endanger
the interests of the depositors and other creditors of the bank. In case a bank or quasi-bark notifies
the Bangko Sentral or publicly announces a bank holiday, or in any manner suspends the payment
of its deposit liabilities continuously for more than thirty (30) days, the Monetary Board may
summarily and without need for prior hearing close such banking institution and place it under
receivership of the Philippine Deposit Insurance Corporation. (72a)

Section 54. Prohibition to Act as Insurer. - A bank shall not directly engage in insurance business as
the insurer. (73)
Section 55. Prohibited Transactions.

55.1. No director, officer, employee, or agent of any bank shall -

(a) Make false entries in any bank report or statement or participate in any fraudulent
transaction, thereby affecting the financial interest of, or causing damage to, the bank or any
person;

(b) Without order of a court of competent jurisdiction, disclose to any unauthorized person
any information relative to the funds or properties in the custody of the bank belonging to
private individuals, corporations, or any other entity: Provided, That with respect to bank
deposits, the provisions of existing laws shall prevail;

(c) Accept gifts, fees, or commissions or any other form of remuneration in connection with
the approval of a loan or other credit accommodation from said bank;

(d) Overvalue or aid in overvaluing any security for the purpose of influencing in any way the
actions of the bank or any bank; or

(e) Outsource inherent banking functions.

55.2. No borrower of a bank shall -

(a) Fraudulently overvalue property offered as security for a loan or other credit
accommodation from the bank;

(b) Furnish false or make misrepresentation or suppression of material facts for the purpose
of obtaining, renewing, or increasing a loan or other credit accommodation or extending the
period thereof;

(c) Attempt to defraud the said bank in the event of a court action to recover a loan or other
credit accommodation; or

(d) Offer any director, officer, employee or agent of a bank any gift, fee, commission, or any
other form of compensation in order to influence such persons into approving a loan or other
credit accommodation application.

55.3 No examiner, officer or employee of the Bangko Sentral or of any department, bureau, office,
branch or agency of the Government that is assigned to supervise, examine, assist or render
technical assistance to any bank shall commit any of the acts enumerated in this Section or aid in
the commission of the same. (87-Aa)

The making of false reports or misrepresentation or suppression of material facts by personnel of the
Bangko Sental ng Pilipinas shall be subject to the administrative and criminal sanctions provided
under the New Central Bank Act.

55.4. Consistent with the provisions of Republic Act No. 1405, otherwise known as the Banks
Secrecy Law, no bank shall employ casual or non regular personnel or too lengthy probationary
personnel in the conduct of its business involving bank deposits.
Section 56. Conducting Business in an Unsafe or Unsound Manner - In determining whether a
particular act or omission, which is not otherwise prohibited by any law, rule or regulation affecting
banks, quasi-banks or trust entities, may be deemed as conducting business in an unsafe or
unsound manner for purposes of this Section, the Monetary Board shall consider any of the following
circumstances:

56.1 The act or omission has resulted or may result in material loss or damage, or abnormal risk or
danger to the safety, stability, liquidity or solvency of the institution;

56.2 The act or omission has resulted or may result in material loss or damage or abnormal risk to
the institution's depositors, creditors, investors, stockholders or to the Bangko Sentral or to the public
in general;

56.3 The act or omission has caused any undue injury, or has given any unwarranted benefits,
advantage or preference to the bank or any party in the discharge by the director or officer of his
duties and responsibilities through manifest partiality, evident bad faith or gross inexcusable
negligence; or

56.4 The act or omission involves entering into any contract or transaction manifestly and grossly
disadvantageous to the bank, quasi-bank or trust entity, whether or not the director or officer profited
or will profit thereby.

Whenever a bank, quasi-bank or trust entity persists in conducting its business in an unsafe or
unsound manner, the Monetary Board may, without prejudice to the administrative sanctions
provided in Section 37 of the New Central Bank Act, take action under Section 30 of the same Act
and/or immediately exclude the erring bank from clearing, the provisions of law to the contrary
notwithstanding. (n)

Section 57. Prohibition on Dividend Declaration. - No bank or quasi-bank shall declare dividends, if

at the time of declaration:

57.1 Its clearing account with the Bangko Sentral is overdrawn; or

57.2 It is deficient in the required liquidity floor for government deposits for five (5) or more
consecutive days, or

57.3 It does not comply with the liquidity standards/ratios prescribed by the Bangko Sentral for
purposes of determining funds available for dividend declaration; or

57.4 It has committed a major violation as may be determined by the Bangko Sentral (84a)

Section 58. Independent Auditor. - The Monetary Board may require a bank, quasi-bank or trust
entity to engage the services of an independent auditor to be chosen by the bank, quasi-bank or
trust entity concerned from a list of certified public accountants acceptable to the Monetary Board.
The term of the engagement shall be as prescribed by the Monetary Board which may either be on a
continuing basis where the auditor shall act as resident examiner, or on the basis of special
engagements; but in any case, the independent auditor shall be responsible to the bank's, quasi-
bank's or trust entity's board of directors. A copy of the report shall be furnished to the Monetary
Board. The Monetary Board may also direct the board of directors of a bank, quasi-bank, trusty
entity and/or the individual members thereof; to conduct, either personally or by a committee created
by the board, an annual balance sheet audit of the bank, quasi-bank or trust entity to review the
internal audit and control system of the bank, quasi-bank or trust entity and to submit a report of
such audit. (6-Da)

Section 59. Authority to Regulate Electronic Transactions. - The Bangko Sentral shall have full
authority to regulate the use of electronic devices, such as computers, and processes for recording,
storing and transmitting information or data in connection with the operations of a bank; quasi-bank
or trust entity, including the delivery of services and products to customers by such entity. (n)

Section 60. Financial Statements. - Every bank, quasi-bank or trust entity shall submit to the
appropriate supervising and examining department of the Bangko Sentral financial statements in
such form and frequency as may be prescribed by the Bangko Sentral. Such statements, which shall
be as of a specific date designated by the Bangko Sentral, shall show thee actual financial condition
of the institution submitting the statement, and of its branches, offices, subsidiaries and affiliates,
including the results of its operations, and shall contain such information as may be required in
Bangko Sentral regulations. (n)

Section 61. Publication of Financial Statements. - Every bank, quasi-bank or trust entity, shall
publish a statement of its financial condition, including those of its subsidiaries and affiliates, in such
terms understandable to the layman and in such frequency as may be prescribed Bangko Sentral, in
English or Filipino, at least once every quarter in a newspaper of general circulation in the city or
province where the principal office, in the case of a domestic institution or the principal branch or
office in the case of a foreign bank, is located, but if no newspaper is published in the same
province, then in a newspaper published in Metro Manila or in the nearest city or province. The
Bangko Sentral may by regulation prescribe the newspaper where the statements prescribed herein
shall be published. The Monetary Board may allow the posting of the financial statements of a bank,
quasi-bank or trust entity in public places it may determine, lieu of the publication required in the
preceding paragraph, when warranted by the circumstances. Additionally, banks shall make
available to the public in such form and manner as the Bangko Sentral may prescribe the complete
set of its audited financial statements as well as such other relevant information including those on
enterprises majority-owned or controlled by the bank, that will inform the public of the true financial
condition of a bank as of any given time. In periods of national and/or local emergency or of
imminent panic which directly threaten monetary and banking stability, the Monetary Board, by a
vote of at least five (5) of its members, in special cases and upon application of the bank, quasi-bank
or trust entity, may allow such bank, quasi-bank or trust entity to defer for a stated period of time the
publication of the statement of financial condition required herein. (n)

Section 62. Publication of Capital Stock. - A bank, quasi-bank or trust entity incorporated under the
laws of the Philippines shall not publish the amount of its authorized or subscribed capital stock
without indicating at the same time and with equal prominence, the amount of its capital actually paid
up. No branch of any foreign bank doing business in the Philippines shall in any way announce the
amount of the capital and surplus of its head office, or of the bank in its entirety without indicating at
the same time and with equal prominence the amount of the capital, if any, definitely assigned to
such branch, such fact shall be stated in, and shall form part of the publication. (82)

Section 63. Settlement of Disputes. - The provisions of any law to the contrary notwithstanding, the
Bangko Sentral shall be consulted by other government agencies or instrumentalities in actions or
proceedings initiated by or brought before them involving controversies in banks, quasi-banks or
trust entities arising out of and involving relations between and among their directors, officers or
stockholders, as well as disputes between any or all of them and the bank, quasi-bank or trust entity
of which they are directors, officers or stockholders. (n)
Section 64. Unauthorized Advertisement or Business Representation. - No person, association, or
corporation unless duly authorized to engage in the business of a bank, quasi-bank, trust entity, or
savings and loan association as defined in this Act, or other banking laws, shall advertise or hold
itself out as being engaged in the business of such bank, quasi-bank, trust entity, or association, or
use in connection with its business title, the word or words "bank", "banking", "banker", "quasi-bank",
"quasi-banking", "quasi-banker", "savings and loan association", "trust corporation", "trust company"
or words of similar import or transact in any manner the business of any such bank, corporation or
association. (6)

Section 65. Service Fees. - The Bangko Sentral may charge equitable rates, commissions or fees,
as may be prescribed by the Monetary Board for supervision, examination and other services which
it renders under this Act. (n)

Section 66. Penalty for Violation of this Act. - Unless otherwise herein provided, the violation of any
of the provisions of this Act shall be subject to Sections 34, 35, 36 and 37 of the New Central Bank
Act. If the offender is a director or officer of a bank, quasi-bank or trust entity, the Monetary Board
may also suspend or remove such director or officer. If the violation is committed by a corporation,
such corporation may be dissolved by quo warranto proceedings instituted by the Solicitor General.
(87)

CHAPTER V
PLACEMENT UNDER CONSERVATORSHIP

Section 67. Conservatorship. - The grounds and procedures for placing a bank under
conservatorship, as well as, the powers and duties of the conservator appointed for the bank shall
be governed by the provisions of Section 29 and the last two paragraphs of Section 30 of the New
Central Bank Act: Provided, That this Section shall also apply to conservatorship proceedings of
quasi-banks. (n)

CHAPTER VI
CESSATION OF BANKING BUSINESS

Section 68. Voluntary Liquidation. - In case of voluntary liquidation of any bank organized under the
laws of the Philippines, or of any branch or office in the Philippines of a foreign bank, written notice
of such liquidation shall be sent to the Monetary Board before such liquidation shall be sent to the
Monetary Board before such liquidation is undertaken, and the Monetary Board shall have the right
to intervene and take such steps as may be necessary to protect the interests of creditors. (86)

Section 69. Receivership and Involuntary Liquidation. - The grounds and procedures for placing a
bank under receivership or liquidation, as well as the powers and duties of the receiver or liquidator
appointed for the bank shall be governed by the provisions of Sections 30, 31, 32, and 33 of the New
Central Bank Act: Provided, That the petitioner or plaintiff files with the clerk or judge of the court in
which the action is pending a bond, executed in favor of the Bangko Sentral, in an amount to be
fixed by the court. This Section shall also apply to the extent possible to the receivership and
liquidation proceedings of quasi-banks. (n)

Section 70. Penalty for Transactions After a Bank Becomes Insolvent. - Any director or officer of any
bank declared insolvent or placed under receivership by the Monetary Board who refuses to turn
over the bank's records and assets to the designated receivers, or who tampers with banks records,
or who appropriates for himself for another party or destroys or causes the misappropriation and
destruction of the bank's assets, or who receives or permits or causes to be received in said bank
any deposit, collection of loans and/or receivables, or who pays out or permits or causes to be
transferred any securities or property of said bank shall be subject to the penal provisions of the New
Central Bank Act. (85a)

CHAPTER VII
LAWS GOVERNING OTHER TYPES OF BANKS

Section 71. Other Banking Laws. - The organization, the ownership and capital requirements,
powers, supervision and general conduct of business of thrift banks, rural banks and cooperative
banks shall be governed by the provisions of the Thrift Banks Act, the Rural Banks Act, and the
Cooperative Code, respectively. The organization, ownership and capital requirements, powers,
supervision and general conduct of business of Islamic banks shall be governed by special laws.
The provisions of this Act, however, insofar as they are not in conflict with the provisions of the Thrift
Banks Act, the Rural Banks Act, and the Cooperative Code shall likewise apply to thrift banks, rural
banks, and cooperative banks, respectively. However, for purposes of prescribing the minimum ratio
which the net worth of a thrift bank must bear to its total risk assets, the provisions of Section 33 of
this Act shall govern. (n)

CHAPTER VIII
FOREIGN BANKS

Section 72. Transacting Business in the Philippines. - The entry of foreign banks in the Philippines
through the establishment of branches shall be governed by the provisions of the Foreign Banks
Liberalization Act. The conduct of offshore banking business in the Philippines shall be governed by
the provisions of the Presidential Decree No. 1034, otherwise known as the "Offshore Banking
System Decree." (14a)

Section 73. Acquisition of Voting Stock in a Domestic Bank. - Within seven (7) years from the
effectivity of this act and subject to guidelines issued pursuant to the Foreign Banks Liberalization
Act, the Monetary Board may authorize a foreign bank to acquire up to one hundred percent (100%)
of the voting stock of only one (1) bank organized under the laws of the Republic of the Philippines.
Within the same period, the Monetary Board may authorize any foreign bank, which prior to the
effectivity of this Act availed itself of the privilege to acquire up to sixty percent (60%) of the voting
stock of a bank under the Foreign Banks Liberalization Act and the Thrift Banks Act, to further
acquire voting shares such bank to the extent necessary for it to own one hundred percent (100%) of
the voting stock thereof. In the exercise of the authority, the Monetary Board shall adopt measures
as may be necessary to ensure that at all times the control of seventy percent (70%) of the
resources or assets of the entire banking system is held by banks which are at least majority-owned
by Filipinos. Any right, privilege or incentive granted to a foreign bank under this Section shall be
equally enjoyed by and extended under the same conditions to banks organized under the laws of
the Republic of the Philippines. (Secs. 2 and 3, RA 7721

Section 74. Local Branches of Foreign Banks. - In the case of a foreign bank which has more than
one (1) branch in the Philippines, all such branches shall be treated as one (1) unit for the purpose
of this Act, and all references to the Philippine branches of foreign banks shall be held to refer to
such units. (68)

Section 75. Head Office Guarantee. - In order to provide effective protection of the interests of the
depositors and other creditors of Philippine branches of a foreign bank, the head office of such
branches shall fully guarantee the prompt payment of all liabilities of its Philippine branch. (69)
Residents and citizens of the Philippines who are creditors of a branch in the Philippines of a foreign
bank shall have preferential rights to the assets of such branch in accordance with the existing laws.
(19)
Section 76. Summons and Legal Process. - Summons and legal process served upon the Philippine
agent or head of any foreign bank designated to accept service thereof shall give jurisdiction to the
courts over such bank, and service of notices on such agent or head shall be as binding upon the
bank which he represents as if made upon the bank itself. Should the authority of such agent or
head to accept service of summons and legal processes for the bank or notice to it be revoked, or
should such agent or head become mentally incompetent or otherwise unable to accept service
while exercising such authority, it shall be the duty of the bank to name and designate promptly
another agent or head upon whom service of summons and processes in legal proceedings against
the bank and of notices affecting the bank may be made, and to file with the Securities and
Exchange Commission a duly authenticated nomination of such agent. In the absence of the agent
or head or should there be no person authorized by the bank upon whom service of summons,
processes and all legal notices may be made, service of summons, processes and legal notices may
be made upon the Bangko Sentral Deputy Governor In-Charge of the supervising and examining
departments and such service shall be as effective as if made upon the bank or its duly authorized
agent or head. In case of service for the bank upon the Bangko Sentral Deputy Governor In-charge
of the supervising and examining departments, the said deputy Governor shill register and transmit
by mail to the president or the secretary of the bank at its head or principal office a copy, duly
certified by him, of the summons, process, or notice. The sending of such copy of the summons,
process, or notice shall be a necessary part of the services and shall complete the service. The
registry receipt of mailing shall be prima facie evidence of the transmission of the summons, process
or notice. All costs necessarily incurred by the said Deputy Governor for the making and mailing and
sending of a copy of the summons, process, or notice to the president or the secretary of the bank at
its head or principal office shall be paid in advance by the party at whose instance the service is
made. (17)

Section 77. Laws Applicable. - In all matters not specifically covered by special provisions
applicable only to a foreign bank or its branches and other offices in the Philippines any foreign bank
licensed to do business in the Philippines shall be bound by the provisions of this Act, all other laws,
rules and regulations applicable to banks organized under the laws of the Philippines of the same
class, except those that provide for the creation, formation, organization or dissolution of
corporations or for the fixing of the relations, liabilities, responsibilities, or duties of stockholders,
members, directors or officers of corporations to each other or to the corporation. (18)

Section 78. Revocation of License of a Foreign Bank - The Monetary Board may revoke the license
to transact business in the Philippines of, any foreign bank, if it finds that the foreign bank is
insolvent or in imminent danger thereof or that its continuance in business will involve probable loss
to those transacting business with it. After the revocation of its license, it shall be unlawful for any
such foreign banks to transact business in the Philippines unless its license is renewed or reissued.
After the revocation of such license, the Bangko Sentral shall take the necessary action to protect
the creditors of such foreign bank and the public. The provisions of the New Central Bank Act on
sanctions and penalties shall likewise be applicable. (16)

CHAPTER IX
TRUST OPERATIONS

Section 79. Authority to Engage in Trust Business. - Only a stock corporation or a person duly . For
purposes of this Act, such a corporation shall be referred to as a trust entity. (56a; 57a)

Section 80. Conduct of Trust Business. - A trust entity shall administer the funds or property under
its custody with the diligence that a prudent man would exercise in the conduct of an enterprise of a
like character and with similar aims. No trust entity shall, for the account of the trustor or the
beneficiary of the trust, purchase or acquire property from, or sell, transfer, assign, or lend money or
property to, or purchase debt instruments of, any of the departments, directors, officers,
stockholders, or employees of the trust entity, relatives within the first degree of consanguinity or
affinity, or the related interests, of such directors, officers and stockholders, unless the transaction is
specifically authorized by the trustor and the relationship of the trustee and the other party involved
in the transaction is fully disclosed to the trustor of beneficiary of the trust prior to the transaction.
The Monetary Board shall promulgate such rules and regulations as may be necessary to prevent
circumvention of this prohibition or the evasion of the responsibility herein imposed on a trust entity.
(56)

Section 81. Registration of Articles of Incorporation and By-Laws of a Trust Entity. - The Securities
and Exchange Commission shall not register the articles of incorporation and by-laws or any
amendment thereto, of any trust entity, unless accompanied by a certificate of authority issued by
the Bangko Sentral. (n)

Section 82. Minimum Capitalization. - A trust entity, before it can engage in trust or other fiduciary
business, shall comply with the minimum paid-in capital requirement which will be determined by the
Monetary Board. (n)

Section 83. Powers of a Trust Entity. - A trust entity, in addition to the general powers incident to
corporations, shall have the power to:

83.1 Act as trustee on any mortgage or bond issued by any municipality, corporation, or any body
politic and to accept and execute any trust consistent with law;

83.2 Act under the order or appointment of any court as guardian, receiver, trustee, or depositary of
the estate of any minor or other incompetent person, and as receiver and depositary of any moneys
paid into court by parties to any legal proceedings and of property of any kind which may be brought
under the jurisdiction of the court;

83.3. Act as the executor of any will when it is named the executor thereof;

83.4 Act as administrator of the estate of any deceased person, with the will annexed, or as
administrator of the estate of any deceased person when there is no will;

83.5. Accept and execute any trust for the holding, management, and administration of any estate,
real or personal, and the rents, issues and profits thereof; and

83.6. Establish and manage common trust funds, subject to such rules and regulations as may be
prescribed by the Monetary Board.

Section 84. Deposit for the Faithful Performance of Trust Duties. - Before transacting trust business,
every trust entity shall deposit with the Bangko Sentral, as security for the faithful performance of its
trust duties, cash or securities approved by the Monetary Board in an amount equal to or not less
than Five hundred thousand pesos (P500,000.00) or such higher amount as may fixed by the
Monetary Board: Provided, however, That the Monetary Board shall require every trust entity to
increase the amount of its cash or securities on deposit with the Bangko Sentral in accordance with
the provisions of this paragraph. Should the capital and surplus fall below said amount, the Monetary
Board shall have the same authority as that granted to it under the provisions of the fifth paragraph
of Section 34 of this Act. A trust entity so long as it shall continue to be solvent and comply with laws
or regulations shall have the right to collect the interest earned on such securities deposited with the
Bangko Sentral and, from time to time, with the approval of the Bangko Sentral, to exchange the
securities for others. If the trust entity fails to comply with any law or regulation, the Bangko Sentral
shall retain such interest on the securities deposited with it for the benefit of rightful claimants. Al
claims rising out of the trust business of a trust entity shall have priority over all other claims as
regards the cash or securities deposited as above provided. The Monetary Board may not permit the
cash or securities deposited in accordance with the provisions of this Section to be reduced below
the prescribed minimum amount until the depositing entity shall discontinue its trust business and
shall satisfy the Monetary Board that it has complied with all its obligations in connection with such
business. (65a)

Section 85. Bond of Certain Persons for the Faithful Performance of Duties. - Before an executor,
administrator, guardian, trustee, receiver or depositary appointed by the court enters upon the
execution of his duties, he shall, upon order of the court, file a bond in such sum as the court may
direct. Upon the application of any executor, administrator, guardian, trustee, receiver, depositary or
any other person in interest, the court may, after notice and hearing, order that the subject matter of
the trust or any part, thereof be deposited with a trust entity. Upon presentation of proof to the court
that the subject matter of the trust has been deposited with a trust entity. Upon presentation of proof
to the court that the subject matter of the trust has been deposited with a trust entity, the court may
order that the bond given by such persons for the faithful performance of their duties be reduced to
such sums as it may deem proper: Provided, however, That the reduced bond shall be sufficient to
secure adequately the proper administration and care of any property remaining under the control of
such persons and the proper accounting for such property. Property deposited with any trust entity in
conformity with this Section shall be held by such entity under the orders and direction of the court.
(59)

Section 86. Exemption of Trust Entity from Bond Requirement. - No bond or other security shall be
required by the court from a trust entry for the faithful performance of its duties as court-appointed
trustee, executor, administrator, guardian, receiver, or depositary. However, the court may, upon
proper application with it showing special cause therefore, require the trust entity to post a bond or
other security for the protection of funds or property confided to such entity. (59)

Section 87. Separation of Trust Business from General Business. - The trust business and all funds,
properties or securities received by any trust entity as executor, administrator, guardian, trustee,
receiver, or depositary shall be kept separate and distinct from the general business including all
other funds, properties, and assets of such trust entity. The accounts of all such funds, properties, or
securities shall likewise be kept separate and distinct from the accounts of the general business of
the trust entity. (61)

Section 88. Investment Limitations of a Trust Entity. - Unless otherwise directed by the instrument
creating the trust, the lending and investment of funds and other assets acquired by a trust entity as
executor, administrator, guardian, trustee, receiver or depositary of the estate of any minor or other
incompetent person shall be limited to loans or investments as may be prescribed by law, the
Monetary Board or any court of competent jurisdiction. (63a)

Section 89. Real Estate Acquired by a Trust Entity. - Unless otherwise specifically directed by the
trustor or the nature of the trust, real estate acquired by a trust entity in whatever manner and for
whatever purposes, shall likewise be governed by the relevant provisions of Section 52 of this Act.
(64a)

Section 90. Investment of Non-Trust Funds. - The investment of funds other than trust funds of a
trust entity which is a bank, financing company or an investment house shall be governed by the
relevant provisions of this Act and other applicable laws. (64)
Section 91. Sanctions and Penalties. - A trust entity or any of its officers and directors found to have
willfully violated any pertinent provisions of this Act, shall be subject to the sanctions and penalties
provided tinder Section 66 of this Act as well as Sections 36 and 37 of the New Central Bank Act.

Section 92. Exemption of Trust Assets from Claims. - No assets held by a trust entity in its capacity
as trustee shall be subject to any claims other than those of the parties interested in the specific
trusts. (65)

Section 93. Establishment of Branches of a Trust Entity. - The ordinary business of a trust entity
shall be transacted at the place of business specified in its articles of incorporation. Such trust entity
may, with prior approval of the Monetary Board, establish branches in the Philippines and the said
entity shall be responsible for all business conducted in such branches to the same extent and in the
same manner as though such business had all been conducted in the head office. For the purpose
of this Act, the trust entity and its branches shall be treated as one unit. (67)

CHAPTER X
FINAL PROVISIONS

Section 94. Phase Out of Bangko Sentral Powers Over Building and Loan Associations. - Within a
period of three (3) years from the effectivity of this Act, the Bangko Sentral shall phase out and
transfer its supervising and regulatory powers over building and loan associations to the Home
Insurance and Guaranty Corporation which shall assume the same. Until otherwise provided bylaw1
building and loan associations shall continue to be governed by Sections 39 to 55, Chapter VI of the
General Banking Act, as amended, including such rules and regulations issued pursuant thereto.
Upon assumption by the Home Insurance and Guaranty Corporation of supervising and regulatory
powers over building and loan associations, a references in Sections 39 to 55 of the General
Banking Act, as amended, to the Bangko Sentral and the Monetary Board shall be deemed to refer
to the Home Insurance and Guaranty Corporation and its board of directors, respectively. (n)

Section 95. Repealing Clause. - Except as may be provided for in Sections 34 and 94 of this Act,
the General Banking Act, as amended, and the provisions of any other law, special charters, rule or
regulation issued pursuant to said General Banking Act, as amended, or parts thereof, which may be
inconsistent with the provisions of this Act are hereby repealed. The provisions of paragraph 8,
Section 8, Republic Act No. 3591, as amended by republic Act No. 7400, are likewise repealed.
(90a)

Section 96. Separability Clause. - If any provision or section of this Act or the application thereof to
any person or circumstance is held 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. (n)

Section 97. Effectivity Clause - This Act shall take effect fifteen (15) days following its publication in
the Official Gazette or in two (2) national newspapers of general circulation. (91)

Approved,

FRANKLIN M. DRILON
President of the Senate

MANUEL B. VILLAR JR.

Speaker of the House of Representatives
This Act, which is a consolidation of Senate Bill No. 1519 and House Bill No. 6814, was finally
passed by the Senate and the House of Representatives on April 12, 2000.

ROBERTO P. NAZARENO
Secretary General House of Representatives

OSCAR G. YABES
Secretary of the Senate

Approved:

JOSEPH EJERCITO ESTRADA

President of the Philippines
REPUBLIC ACT No. 3765

AN ACT TO REQUIRE THE DISCLOSURE OF FINANCE CHARGES IN CONNECTION WITH

EXTENSIONS OF CREDIT.

Section 1. This Act shall be known as the "Truth in Lending Act."

Section 2. Declaration of Policy. It is hereby declared to be the policy of the State to protect its
citizens from a lack of awareness of the true cost of credit to the user by assuring a full disclosure of
such cost with a view of preventing the uninformed use of credit to the detriment of the national
economy.

Section 3. As used in this Act, the term

(1) "Board" means the Monetary Board of the Central Bank of the Philippines.

(2) "Credit" means any loan, mortgage, deed of trust, advance, or discount; any conditional
sales contract; any contract to sell, or sale or contract of sale of property or services, either
for present or future delivery, under which part or all of the price is payable subsequent to
the making of such sale or contract; any rental-purchase contract; any contract or
arrangement for the hire, bailment, or leasing of property; any option, demand, lien, pledge,
or other claim against, or for the delivery of, property or money; any purchase, or other
acquisition of, or any credit upon the security of, any obligation of claim arising out of any of
the foregoing; and any transaction or series of transactions having a similar purpose or
effect.

(3) "Finance charge" includes interest, fees, service charges, discounts, and such other
charges incident to the extension of credit as the Board may be regulation prescribe.

(4) "Creditor" means any person engaged in the business of extending credit (including any
person who as a regular business practice make loans or sells or rents property or services
on a time, credit, or installment basis, either as principal or as agent) who requires as an
incident to the extension of credit, the payment of a finance charge.

(5) "Person" means any individual, corporation, partnership, association, or other organized
group of persons, or the legal successor or representative of the foregoing, and includes the
Philippine Government or any agency thereof, or any other government, or of any of its
political subdivisions, or any agency of the foregoing.

Section 4. Any creditor shall furnish to each person to whom credit is extended, prior to the
consummation of the transaction, a clear statement in writing setting forth, to the extent applicable
and in accordance with rules and regulations prescribed by the Board, the following information:

(1) the cash price or delivered price of the property or service to be acquired;

(2) the amounts, if any, to be credited as down payment and/or trade-in;

 (3) the difference between the amounts set forth under clauses (1) and (2);

(4) the charges, individually itemized, which are paid or to be paid by such person in
connection with the transaction but which are not incident to the extension of credit;

(5) the total amount to be financed;

(6) the finance charge expressed in terms of pesos and centavos; and

(7) the percentage that the finance bears to the total amount to be financed expressed as a
simple annual rate on the outstanding unpaid balance of the obligation.

Section 5. The Board shall prescribe such rules and regulations as may be necessary or proper in
carrying out the provisions of this Act. Any rule or regulation prescribed hereunder may contain such
classifications and differentiations as in the judgment of the Board are necessary or proper to
effectuate the purposes of this Act or to prevent circumvention or evasion, or to facilitate the
enforcement of this Act, or any rule or regulation issued thereunder.

Section 6. (a) Any creditor who in connection with any credit transaction fails to disclose to any
person any information in violation of this Act or any regulation issued thereunder shall be liable to
such person in the amount of P100 or in an amount equal to twice the finance charged required by
such creditor in connection with such transaction, whichever is the greater, except that such liability
shall not exceed P2,000 on any credit transaction. Action to recover such penalty may be brought by
such person within one year from the date of the occurrence of the violation, in any court of
competent jurisdiction. In any action under this subsection in which any person is entitled to a
recovery, the creditor shall be liable for reasonable attorney's fees and court costs as determined by
the court.

(b) Except as specified in subsection (a) of this section, nothing contained in this Act or any
regulation contained in this Act or any regulation thereunder shall affect the validity or
enforceability of any contract or transactions.

(c) Any person who willfully violates any provision of this Act or any regulation issued
thereunder shall be fined by not less than P1,00 or more than P5,000 or imprisonment for
not less than 6 months, nor more than one year or both.

(d) No punishment or penalty provided by this Act shall apply to the Philippine Government
or any agency or any political subdivision thereof.

(e) A final judgment hereafter rendered in any criminal proceeding under this Act to the effect
that a defendant has willfully violated this Act shall be prima facie evidence against such
defendant in an action or proceeding brought by any other party against such defendant
under this Act as to all matters respecting which said judgment would be an estoppel as
between the parties thereto.

Section 7. This Act shall become effective upon approval.

Approved: June 22, 1963

REPUBLIC ACT No. 1405

AN ACT PROHIBITING DISCLOSURE OF OR INQUIRY INTO, DEPOSITS WITH ANY BANKING

INSTITUTION AND PROVIDING PENALTY THEREFOR.

Section 1. It is hereby declared to be the policy of the Government to give encouragement to the
people to deposit their money in banking institutions and to discourage private hoarding so that the
same may be properly utilized by banks in authorized loans to assist in the economic development
of the country.

Section 2. 1 All deposits of whatever nature with banks or banking institutions in the Philippines
including investments in bonds issued by the Government of the Philippines, its political subdivisions
and its instrumentalities, are hereby considered as of an absolutely confidential nature and may not
be examined, inquired or looked into by any person, government official, bureau or office, except
upon written permission of the depositor, or in cases of impeachment, or upon order of a competent
court in cases of bribery or dereliction of duty of public officials, or in cases where the money
deposited or invested is the subject matter of the litigation.

Section 3. It shall be unlawful for any official or employee of a banking institution to disclose to any
person other than those mentioned in Section two hereof any information concerning said deposits.

Section 4. All Acts or parts of Acts, Special Charters, Executive Orders, Rules and Regulations
which are inconsistent with the provisions of this Act are hereby repealed.

Section 5. Any violation of this law will subject offender upon conviction, to an imprisonment of not
more than five years or a fine of not more than twenty thousand pesos or both, in the discretion of
the court.

Section 6. This Act shall take effect upon its approval.

Approved: September 9, 1955

Footnote

This Section and Section 3 were both amended by PD No. 1792 issued January 16, 1981,
1 

PD 1792 was expressly repealed by Sec 135 of R.A. No. 7653, approved June 14, 1993.
The original sections 2 and 3 of R.A. No.1405 are hereby reproduced for reference, as
follows; "Sec 2 All deposits of whatever nature with banks or banking institutions in the
Philippines including investments in bonds issued by the Government of the Philippines, its
political subdivisions and its instrumentalities, are hereby considered as of an absolutely
confidential nature and may not be examined, inquired or looked into by any person,
government official, bureau or office, except upon written per-mission of the depositor, or in
 cases of impeachment, or upon order of a competent court in cases of bribery or dereliction
of duty of public officials. or in cases where the money deposited or invested is the subject
matter of the litigation," "Sec. 3. It shall be unlawful for any official or employee of a banking
institution to disclose to any person other than those mentioned in Section two hereof any
information concerning said deposits."

REPUBLIC ACT NO. 9160       September 29, 2001

AN ACT DEFINING THE CRIME OF MONEY LAUNDERING, PROVIDING PENALTIES

THEREFOR AND FOR OTHER PURPOSES

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

assembled:

Section 1. Short Title. – This Act shall be known as the "Anti-Money Laundering Act of 2001."

Section 2. Declaration of Policy. – It is hereby declared the policy of the State to protect and
preserve the integrity and confidentiality of bank accounts and to ensure that the Philippines shall
not be used as a money laundering site for the proceeds of any unlawful activity. Consistent with its
foreign policy, the State shall extend cooperation in transnational investigations and prosecutions of
persons involved in money laundering activities whenever committed.

Section 3. Definitions. For purposes of this Act, the following terms are hereby defined as follows:

(a) "Covered Institution" refers to:

(1) banks, non-banks, quasi-banks, trust entities, and all other institutions and their
subsidiaries and affiliates supervised or regulated by the Bangko Sentral ng Pilipinas
(BSP);

(2) Insurance companies and all other institutions supervised or regulated by the
Insurance Commission; and

(3) (i) securities dealers, brokers, salesmen, investment houses and other similar
entities managing securities or rendering services as investment agent, advisor, or
consultant, (ii) mutual funds, close and investment companies, common trust funds,
pre-need companies and other similar entities, (iii) foreign exchange corporations,
money changers, money payment, remittance, and transfer companies and other
similar entities, and (iv) other entities administering or otherwise dealing in currency,
commodities or financial derivatives based thereon, valuable objects, cash
substitutes and other similar monetary instruments or property supervised or
regulated by Securities and Exchange Commission.

(b) "Covered transaction" is a single, series, or combination of transactions involving a total

amount in excess of Four million Philippine pesos (Php4,000,000.00) or an equivalent
amount in foreign currency based on the prevailing exchange rate within five (5) consecutive
banking days except those between a covered institution and a person who, at the time of
the transaction was a properly identified client and the amount is commensurate with the
business or financial capacity of the client; or those with an underlying legal or trade
obligation, purpose, origin or economic justification.
It likewise refers to a single, series or combination or pattern of unusually large and complex
transactions in excess of Four million Philippine pesos (Php4,000,000.00) especially cash
deposits and investments having no credible purpose or origin, underlying trade obligation or
contract.

(c) "Monetary Instrument" refers to:

(1) coins or currency of legal tender of the Philippines, or of any other country;

(2) drafts, checks and notes;

(3) securities or negotiable instruments, bonds, commercial papers, deposit

certificates, trust certificates, custodial receipts or deposit substitute instruments,
trading orders, transaction tickets and confirmations of sale or investments and
money marked instruments; and

(4) other similar instruments where title thereto passes to another by endorsement,
assignment or delivery.

(d) "Offender" refers to any person who commits a money laundering offense.

(e) "Person" refers to any natural or juridical person.

(f) "Proceeds" refers to an amount derived or realized from an unlawful activity.

(g) "Supervising Authority" refers to the appropriate supervisory or regulatory agency,

department or office supervising or regulating the covered institutions enumerated in Section
3(a).

(h) "Transaction" refers to any act establishing any right or obligation or giving rise to any
contractual or legal relationship between the parties thereto. It also includes any movement
of funds by any means with a covered institution.

(l) "Unlawful activity" refers to any act or omission or series or combination thereof
involving or having relation to the following:

(1) Kidnapping for ransom under Article 267 of Act No. 3815, otherwise known as the
Revised Penal Code, as amended;

(2) Sections 3, 4, 5, 7, 8 and 9 of Article Two of Republic Act No. 6425, as amended,
otherwise known as the Dangerous Drugs Act of 1972;

(3) Section 3 paragraphs B, C, E, G, H and I of Republic Act No. 3019, as amended;

otherwise known as the Anti-Graft and Corrupt Practices Act;

(4) Plunder under Republic Act No. 7080, as amended;

(5) Robbery and extortion under Articles 294, 295, 296, 299, 300, 301 and 302 of the
Revised Penal Code, as amended;
 (6) Jueteng and Masiao punished as illegal gambling under Presidential Decree No.
1602;

(7) Piracy on the high seas under the Revised Penal Code, as amended and
Presidential Decree No. 532;

(8) Qualified theft under, Article 310 of the Revised Penal Code, as amended;

(9) Swindling under Article 315 of the Revised Penal Code, as amended;

(10) Smuggling under Republic Act Nos. 455 and 1937;

(11) Violations under Republic Act No. 8792, otherwise known as the Electronic
Commerce Act of 2000;

(12) Hijacking and other violations under Republic Act No. 6235; destructive arson
and murder, as defined under the Revised Penal Code, as amended, including those
perpetrated by terrorists against non-combatant persons and similar targets;

(13) Fraudulent practices and other violations under Republic Act No. 8799,
otherwise known as the Securities Regulation Code of 2000;

(14) Felonies or offenses of a similar nature that are punishable under the penal laws
of other countries.

Section 4. Money Laundering Offense. – Money laundering is a crime whereby the proceeds of an
unlawful activity are transacted, thereby making them appear to have originated from legitimate
sources. It is committed by the following:

(a) Any person knowing that any monetary instrument or property represents, involves, or
relates to the proceeds of any unlawful activity, transacts or attempts to transact said
monetary instrument or property.

(b) Any person knowing that any monetary instrument or property involves the proceeds of
any unlawful activity, performs or fails to perform any act as a result of which he facilitates
the offense of money laundering referred to in paragraph (a) above.

(c) Any person knowing that any monetary instrument or property is required under this Act
to be disclosed and filed with the Anti-Money Laundering Council (AMLC), fails to do so.

Section 5. Jurisdiction of Money Laundering Cases. – The regional trial courts shall have
jurisdiction to try all cases on money laundering. Those committed by public officers and private
persons who are in conspiracy with such public officers shall be under the jurisdiction of the
Sandiganbayan.

Section 6. Prosecution of Money Laundering. –

(a) Any person may be charged with and convicted of both the offense of money laundering
and the unlawful activity as herein defined.
 (b) Any proceeding relating to the unlawful activity shall be given precedence over the
prosecution of any offense or violation under this Act without prejudice to the freezing and
other remedies provided.

Section 7. Creation of Anti-Money Laundering Council (AMLC). – The Anti-Money Laundering

Council is hereby created and shall be composed of the Governor of the Bangko Sentral ng Pilipinas
as chairman, the Commissioner of the Insurance Commission and the Chairman of the Securities
and Exchange Commission as members. The AMLC shall act unanimously in the discharge of its
functions as defined hereunder:

(1) to require and receive covered transaction reports from covered institutions;

(2) to issue orders addressed to the appropriate Supervising Authority or the covered
institution to determine the true identity of the owner of any monetary instrument or property
subject of a covered transaction report or request for assistance from a foreign State, or
believed by the Council, on the basis of substantial evidence to be in whole or in part,
whenever located, representing, involving, or related to, directly or indirectly, in any manner
or by any means, the proceeds of an unlawful activity;

(3) to institute civil forfeiture proceedings and all other remedial proceedings through the
Office of the Solicitor General;

(4) to cause the filing of complaints with the Department of Justice or the Ombudsman for
the prosecution of money laundering offenses;

(5) to initiate investigations of covered transactions, money laundering activities and other
violations of this Act;

(6) to freeze any monetary instrument or property alleged to be proceed of any unlawful
activity;

(7) to implement such measures as may be necessary and justified under this Act to
counteract money laundering;

(8) to receive and take action in respect of, any request from foreign states for assistance in
their own anti-money laundering operations provided in this Act;

(9) to develop educational programs on the pernicious effects of money laundering, the
methods and techniques used in money laundering, the viable means of preventing money
laundering and the effective ways of prosecuting and punishing offenders; and

(10) to enlist the assistance of any branch, department, bureau, office, agency or
instrumentality of the government, including government-owned and –controlled
corporations, in undertaking any and all anti-money laundering operations, which may
include the use of its personnel, facilities and resources for the more resolute prevention,
detection and investigation of money laundering offenses and prosecution of offenders.

Section 8. Creation of a Secretariat. – The AMLC is hereby authorized to establish a secretariat to

be headed by an Executive Director who shall be appointed by the Council for a term of five (5)
years. He must be a member of the Philippine Bar, at least thirty-five (35) years of age and of good
moral character, unquestionable integrity and known probity. All members of the Secretariat must
have served for at least five (5) years either in the Insurance Commission, the Securities and
Exchange Commission or the Bangko Sentral ng Pilipinas (BSP) and shall hold full-time permanent
positions within the BSP.

Section 9. Prevention of Money Laundering; Customer Identification Requirements and Record

Keeping. –

(a) Customer Identification, - Covered institutions shall establish and record the true
identity of its clients based on official documents. They shall maintain a system of verifying
the true identity of their clients and, in case of corporate clients, require a system of verifying
their legal existence and organizational structure, as well as the authority and identification
of all persons purporting to act on their behalf.

The provisions of existing laws to the contrary notwithstanding, anonymous accounts,

accounts under fictitious names, and all other similar accounts shall be absolutely prohibited.
Peso and foreign currency non-checking numbered accounts shall be allowed. The BSP
may conduct annual testing solely limited to the determination of the existence and true
identity of the owners of such accounts.

(b) Record Keeping – All records of all transactions of covered institutions shall be

maintained and safely stored for five (5) years from the date of transactions. With respect to
closed accounts, the records on customer identification, account files and business
correspondence, shall be preserved and safety stored for at least five (5) years from the
dates when they were closed.

(c) Reporting of Covered Transactions. – Covered institutions shall report to the AMLC all
covered transactions within five (5) working days from occurrence thereof, unless the
Supervising Authority concerned prescribes a longer period not exceeding ten (10) working
days.

When reporting covered transactions to the AMLC, covered institutions and their officers,
employees, representatives, agents, advisors, consultants or associates shall not be deemed to
have violated Republic Act No. 1405, as amended; Republic Act No. 6426, as amended; Republic
Act No. 8791 and other similar laws, but are prohibited from communicating, directly or indirectly, in
any manner or by any means, to any person the fact that a covered transaction report was made,
the contents thereof, or any other information in relation thereto. In case of violation thereof, the
concerned officer, employee, representative, agent, advisor, consultant or associate of the covered
institution, shall be criminally liable. However, no administrative, criminal or civil proceedings, shall
lie against any person for having made a covered transaction report in the regular performance of
his duties and in good faith, whether or not such reporting results in any criminal prosecution under
this Act or any other Philippine law.

When reporting covered transactions to the AMLC, covered institutions and their officers,
employees, representatives, agents, advisors, consultants or associates are prohibited from
communicating, directly or indirectly, in any manner or by any means, to any person, entity, the
media, the fact that a covered transaction report was made, the contents thereof, or any other
information in relation thereto. Neither may such reporting be published or aired in any manner or
form by the mass media, electronic mail, or other similar devices. In case of violation thereof, the
concerned officer, employee, representative, agent, advisor, consultant or associate of the covered
institution, or media shall be held criminally liable.
Section 10. Authority to Freeze. – Upon determination that probable cause exists that any deposit
or similar account is in any way related to an unlawful activity, the AMLC may issue a freeze order,
which shall be effective immediately, on the account for a period not exceeding fifteen (15) days.
Notice to the depositor that his account has been frozen shall be issued simultaneously with the
issuance of the freeze order. The depositor shall have seventy-two (72) hours upon receipt of the
notice to explain why the freeze order should be lifted. The AMLC has seventy-two (72) hours to
dispose of the depositor's explanation. If it falls to act within seventy-two (72) hours from receipt of
the depositor's explanation, the freeze order shall automatically be dissolved. The fifteen (15)-day
freeze order of the AMLC may be extended upon order of the court, provided that the fifteen (15)-
day period shall be tolled pending the court's decision to extend the period.

No court shall issue a temporary restraining order or writ of injunction against any freeze order
issued by the AMLC except the Court of Appeals or the Supreme Court.

Section 11. Authority to inquire into Bank Deposits. – Notwithstanding the provisions of Republic
Act No. 1405, as amended; Republic Act No. 6426, as amended; Republic Act No. 8791, and other
laws, the AMLC may inquire into or examine any particular deposit or investment with any banking
institution or non-bank financial institution upon order of any competent court in cases of violation of
this Act when it has been established that there is probable cause that the deposits or investments
involved are in any way related to a money laundering offense: Provided, That this provision shall
not apply to deposits and investments made prior to the effectivity of this Act.

Section 12. Forfeiture Provisions. –

(a) Civil Forfeiture. – When there is a covered transaction report made, and the court has,
in a petition filed for the purpose ordered seizure of any monetary instrument or property, in
whole or in part, directly or indirectly, related to said report, the Revised Rules of Court on
civil forfeiture shall apply.

(b) Claim on Forfeited Assets. – Where the court has issued an order of forfeiture of the
monetary instrument or property in a criminal prosecution for any money laundering offense
defined under Section 4 of this Act, the offender or any other person claiming an interest
therein may apply, by verified petition, for a declaration that the same legitimately belongs to
him and for segregation or exclusion of the monetary instrument or property corresponding
thereto. The verified petition shall be filed with the court which rendered the judgment of
conviction and order of forfeiture, within fifteen (15) days from the date of the order or
forfeiture, in default of which the said order shall become final and executory. This provision
shall apply in both civil and criminal forfeiture.

(c) Payment in Lieu of Forfeiture. – Where the court has issued an order of forfeiture of
the monetary instrument or property subject of a money laundering offense defined under
Section 4, and said order cannot be enforced because any particular monetary instrument or
property cannot, with due diligence, be located, or it has been substantially altered,
destroyed, diminished in value or otherwise rendered worthless by any act or omission,
directly or indirectly, attributable to the offender, or it has been concealed, removed,
converted or otherwise transferred to prevent the same from being found or to avoid
forfeiture thereof, or it is located outside the Philippines or has been placed or brought
outside the jurisdiction of the court, or it has been commingled with other monetary
instruments or property belonging to either the offender himself or a third person or entity,
thereby rendering the same difficult to identify or be segregated for purposes of forfeiture,
the court may, instead of enforcing the order of forfeiture of the monetary instrument or
property or part thereof or interest therein, accordingly order the convicted offender to pay an
 amount equal to the value of said monetary instrument or property. This provision shall apply
in both civil and criminal forfeiture.

Section 13. Mutual Assistance among States. –

(a) Request for Assistance from a Foreign State. – Where a foreign State makes a
request for assistance in the investigation or prosecution of a money laundering offense, the
AMLC may execute the request or refuse to execute the same and inform the foreign State
of any valid reason for not executing the request or for delaying the execution thereof. The
principles of mutuality and reciprocity shall, for this purpose, be at all times recognized.

(b) Power of the AMLC to Act on a Request for Assistance from a Foreign State. – The
AMLC may execute a request for assistance from a foreign State by: (1) tracking down,
freezing, restraining and seizing assets alleged to be proceeds of any unlawful activity under
the procedures laid down in this Act; (2) giving information needed by the foreign State
within the procedures laid down in this Act; and (3) applying for an order of forfeiture of any
monetary instrument or property in the court: Provided, That the court shall not issue such
an order unless the application is accompanied by an authenticated copy of the order of a
court in the requesting State ordering the forfeiture of said monetary instrument or properly
of a person who has been convicted of a money laundering offense in the requesting State,
and a certification of an affidavit of a competent officer of the requesting State stating that
the conviction and the order of forfeiture are final and then no further appeal lies in respect
or either.

(c) Obtaining Assistance from Foreign States. – The AMLC may make a request to any
foreign State for assistance in (1) tracking down, freezing, restraining and seizing assets
alleged to be proceeds of any unlawful activity; (2) obtaining information that it needs relating
to any covered transaction, money laundering offense or any other matter directly or
indirectly, related thereto; (3) to the extent allowed by the law of the Foreign State, applying
with the proper court therein for an order to enter any premises belonging to or in the
possession or control of, any or all of the persons named in said request, and/or search any
or all such persons named therein and/or remove any document, material or object named in
said request: Provided, That the documents accompanying the request in support of the
application have been duly authenticated in accordance with the applicable law or regulation
of the foreign State; and (4) applying for an order of forfeiture of any monetary instrument or
property in the proper court in the foreign State: Provided, That the request is accompanied
by an authenticated copy of the order of the regional trial court ordering the forfeiture of said
monetary instrument or property of a convicted offender and an affidavit of the clerk of court
stating that the conviction and the order of forfeiture are final and that no further appeal lies
in respect of either.

(d) Limitations on Request for Mutual Assistance. – The AMLC may refuse to comply
with any request for assistance where the action sought by the request contravenes any
provision of the Constitution or the execution of a request is likely to prejudice the national
interest of the Philippines unless there is a treaty between the Philippines and the requesting
State relating to the provision of assistance in relation to money laundering offenses.

(e) Requirements for Requests for Mutual Assistance from Foreign State. – A request
for mutual assistance from a foreign State must (1) confirm that an investigation or
prosecution is being conducted in respect of a money launderer named therein or that he
has been convicted of any money laundering offense; (2) state the grounds on which any
person is being investigated or prosecuted for money laundering or the details of his
 conviction; (3) gives sufficient particulars as to the identity of said person; (4) give particulars
sufficient to identity any covered institution believed to have any information, document,
material or object which may be of assistance to the investigation or prosecution; (5) ask
from the covered institution concerned any information, document, material or object which
may be of assistance to the investigation or prosecution; (6) specify the manner in which and
to whom said information, document, material or object detained pursuant to said request, is
to be produced; (7) give all the particulars necessary for the issuance by the court in the
requested State of the writs, orders or processes needed by the requesting State; and (8)
contain such other information as may assist in the execution of the request.

(f) Authentication of Documents. – For purposes of this Section, a document is

authenticated if the same is signed or certified by a judge, magistrate or equivalent officer in
or of, the requesting State, and authenticated by the oath or affirmation of a witness or
sealed with an official or public seal of a minister, secretary of State, or officer in or of, the
government of the requesting State, or of the person administering the government or a
department of the requesting territory, protectorate or colony. The certificate of
authentication may also be made by a secretary of the embassy or legation, consul general,
consul, vice consul, consular agent or any officer in the foreign service of the Philippines
stationed in the foreign State in which the record is kept, and authenticated by the seal of his
office.

(g) Extradition. – The Philippines shall negotiate for the inclusion of money laundering
offenses as herein defined among extraditable offenses in all future treaties.

Section 14. Penal Provisions. –

(a) Penalties for the Crime of Money Laundering. The penalty of imprisonment ranging
from seven (7) to fourteen (14) years and a fine of not less than Three million Philippine
pesos (Php 3,000,000.00) but not more than twice the value of the monetary instrument or
property involved in the offense, shall be imposed upon a person convicted under Section
4(a) of this Act.

The penalty of imprisonment from four (4) to seven (7) years and a fine of not less than One
million five hundred thousand Philippine pesos (Php 1,500,000.00) but not more than Three
million Philippine pesos (Php 3,000,000.00), shall be imposed upon a person convicted
under Section 4(b) of this Act.

The penalty of imprisonment from six (6) months to four (4) years or a fine of not less than
One hundred thousand Philippine pesos (Php 100,000.00) but not more than Five hundred
thousand Philippine pesos (Php 500,000.00), or both, shall be imposed on a person
convicted under Section 4(c) of this Act.

(b) Penalties for Failure to Keep Records. The penalty of imprisonment from six (6)
months to one (1) year or a fine of not less than One hundred thousand Philippine pesos
(Php 100,000.00) but not more than Five hundred thousand Philippine pesos (Php
500,000.00), or both, shall be imposed on a person convicted under Section 9(b) of this Act.

(c) Malicious Reporting. Any person who, with malice, or in bad faith, report or files a
completely unwarranted or false information relative to money laundering transaction against
any person shall be subject to a penalty of six (6) months to four (4) years imprisonment and
a fine of not less than One hundred thousand Philippine pesos (Php 100,000.00) but not
 more than Five hundred thousand Philippine pesos (Php 500,000.00), at the discretion of the
court: Provided, That the offender is not entitled to avail the benefits of the Probation Law.

If the offender is a corporation, association, partnership or any juridical person, the penalty
shall be imposed upon the responsible officers, as the case may be, who participated in the
commission of the crime or who shall have knowingly permitted or failed to prevent its
commission. If the offender is a juridical person, the court may suspend or revoke its license.
If the offender is an alien, he shall, in addition to the penalties herein prescribed, be deported
without further proceedings after serving the penalties herein prescribed. If the offender is a
public official or employee, he shall, in addition to the penalties prescribed herein, suffer
perpetual or temporary absolute disqualification from office, as the case may be;

Any public official or employee who is called upon to testify and refuses to do the same or
purposely fails to testify shall suffer the same penalties prescribed herein.

(d) Breach of Confidentiality. The punishment of imprisonment ranging from three (3) to

eight (8) years and a fine of not less than Five hundred thousand Philippine pesos (Php
500,000.00) but not more than One million Philippine pesos (Php 1,000,000.00), shall be
imposed on a person convicted for a violation under Section 9(c).

Section 15. System of Incentives and Rewards. – A system of special incentives and rewards is
hereby established to be given to the appropriate government agency and its personnel that led and
initiated an investigation, prosecution and conviction of persons involved in the offense penalized in
Section 4 of this Act.

Section 16. Prohibitions Against Political Harassment. – This Act shall not be used for political
prosecution or harassment or as an instrument to hamper competition in trade and commerce.

No case for money laundering may be filed against and no assets shall be frozen, attached or
forfeited to the prejudice of a candidate for an electoral office during an election period.

Section 17. Restitution. – Restitution for any aggrieved party shall be governed by the provisions of
the New Civil Code.

Section 18. Implementing Rules and Regulations. – Within thirty (30) days from the effectivity of
this Act, the Bangko Sentral ng Pilipinas, the Insurance Commission and the Securities and
Exchange Commission shall promulgate the rules and regulations to implement effectivity the
provisions of this Act. Said rules and regulations shall be submitted to the Congressional Oversight
Committee for approval.

Covered institutions shall formulate their respective money laundering prevention programs in
accordance with this Act including, but not limited to, information dissemination on money laundering
activities and its prevention, detection and reporting, and the training of responsible officers and
personnel of covered institutions.

Section 19. Congressional Oversight Committee. – There is hereby created a Congressional

Oversight Committee composed of seven (7) members from the Senate and seven (7) members
from the House of Representatives. The members from the Senate shall be appointed by the Senate
President based on the proportional representation of the parties or coalitions therein with at least
two (2) Senators representing the minority. The members from the House of Representatives shall
be appointed by the Speaker also based on proportional representation of the parties or coalitions
therein with at least two (2) members representing the minority.

The Oversight Committee shall have the power to promulgate its own rules, to oversee the
implementation of this Act, and to review or revise the implementing rules issued by the Anti-Money
Laundering Council within thirty (30) days from the promulgation of the said rules.

Section 20. Appropriations Clause. – The AMLC shall be provided with an initial appropriation of
Twenty-five million Philippine pesos (Php 25,000,000.00) to be drawn from the national government.
Appropriations for the succeeding years shall be included in the General Appropriations Act.

Section 21. Separability Clause. – If any provision or section of this Act or the 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.

Section 22. Repealing Clause. – All laws, decrees, executive orders, rules and regulations or parts
thereof, including the relevant provisions of Republic Act No. 1405, as amended; Republic Act No.
6426, as amended; Republic Act No. 8791, as amended and other similar laws, as are inconsistent
with this Act, are hereby repealed, amended or modified accordingly.

Section 23. Effectivity. – This Act shall take effect fifteen (15) days after its complete publication in
the Official Gazette or in at least two (2) national newspapers of general circulation.

The provisions of this Act shall not apply to deposits and investments made prior to its effectivity.

Approved,

(Sgd)

FRANKLIN M. DRILON
President of the Senate

(Sgd)

JOSE DE VENECIA, JR.

Speaker of the House of Representatives

This Act which is a consolidation of House Bill No. 3083 and Senate Bill No. 1745 was finally passed
by the House of Representatives and the Senate on September 29, 2001.

(Sgd)
OSCAR G. YARES
Secretary of the Senate

(Sgd)

ROBERTO P. NAZARENO
Secretary General
House of Representatives

Approved: September 29, 2001

(Sgd)

GLORIA MACAPAGAL-ARROYO
President of the Philippines
REPUBLIC ACT NO. 10365

AN ACT FURTHER STRENGTHENING THE ANTI-MONEY LAUNDERING LAW, AMENDING FOR

THE PURPOSE REPUBLIC ACT NO. 9160, OTHERWISE KNOWN AS THE "ANTI-MONEY
LAUNDERING ACT OF 2001″, AS AMENDED

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

assembled:

Section 1. Section 3(a) of Republic Act No. 9160, as amended, is hereby amended to read as
follows:

"(a) ‘Covered persons’, natural or juridical, refer to:

"(1) banks, non-banks, quasi-banks, trust entities, foreign exchange dealers,

pawnshops, money changers, remittance and transfer companies and other similar
entities and all other persons and their subsidiaries and affiliates supervised or
regulated by the Bangko Sentral ng Pilipinas (BSP);

"(2) insurance companies, pre-need companies and all other persons supervised or
regulated by the Insurance Commission (IC);

"(3) (i) securities dealers, brokers, salesmen, investment houses and other similar
persons managing securities or rendering services as investment agent, advisor, or
consultant, (ii) mutual funds, close-end investment companies, common trust funds,
and other similar persons, and (iii) other entities administering or otherwise dealing in
currency, commodities or financial derivatives based thereon, valuable objects, cash
substitutes and other similar monetary instruments or property supervised or
regulated by the Securities and Exchange Commission (SEC);

"(4) jewelry dealers in precious metals, who, as a business, trade in precious metals,
for transactions in excess of One million pesos (P1,000,000.00);

"(5) jewelry dealers in precious stones, who, as a business, trade in precious stones,
for transactions in excess of One million pesos (P1,000,000.00);
 "(6) company service providers which, as a business, provide any of the following
services to third parties: (i) acting as a formation agent of juridical persons; (ii) acting
as (or arranging for another person to act as) a director or corporate secretary of a
company, a partner of a partnership, or a similar position in relation to other juridical
persons; (iii) providing a registered office, business address or accommodation,
correspondence or administrative address for a company, a partnership or any other
legal person or arrangement; and (iv) acting as (or arranging for another person to
act as) a nominee shareholder for another person; and

"(7) persons who provide any of the following services:

(i) managing of client money, securities or other assets;

(ii) management of bank, savings or securities accounts;

(iii) organization of contributions for the creation, operation or management of

companies; and

(iv) creation, operation or management of juridical persons or arrangements,

and buying and selling business entities.

"Notwithstanding the foregoing, the term ‘covered persons’ shall exclude

lawyers and accountants acting as independent legal professionals in relation
to information concerning their clients or where disclosure of information
would compromise client confidences or the attorney-client
relationship: Provided, That these lawyers and accountants are authorized to
practice in the Philippines and shall continue to be subject to the provisions
of their respective codes of conduct and/or professional responsibility or any
of its amendments."

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

"(i) ‘Unlawful activity’ refers to any act or omission or series or combination thereof involving
or having direct relation to the following:

"(1) Kidnapping for ransom under Article 267 of Act No. 3815, otherwise known as
the Revised Penal Code, as amended;

"(2) Sections 4, 5, 6, 8, 9, 10, 11, 12, 13, 14, 15 and 16 of Republic Act No. 9165,
otherwise known as the Comprehensive Dangerous Drugs Act of 2002;

"(3) Section 3 paragraphs B, C, E, G, H and I of Republic Act No. 3019, as amended,

otherwise known as the Anti-Graft and Corrupt Practices Act;

"(4) Plunder under Republic Act No. 7080, as amended;

"(5) Robbery and extortion under Articles 294, 295, 296, 299, 300, 301 and 302 of
the Revised Penal Code, as amended;

"(6) Jueteng and Masiao punished as illegal gambling under Presidential Decree No.
1602;
"(7) Piracy on the high seas under the Revised Penal Code, as amended and
Presidential Decree No. 532;

"(8) Qualified theft under Article 310 of the Revised Penal Code, as amended;

"(9) Swindling under Article 315 and Other Forms of Swindling under Article 316 of
the Revised Penal Code, as amended;

"(10) Smuggling under Republic Act Nos. 455 and 1937;

"(11) Violations of Republic Act No. 8792, otherwise known as the Electronic
Commerce Act of 2000;

"(12) Hijacking and other violations under Republic Act No. 6235; destructive arson
and murder, as defined under the Revised Penal Code, as amended;

"(13) Terrorism and conspiracy to commit terrorism as defined and penalized under
Sections 3 and 4 of Republic Act No. 9372;

"(14) Financing of terrorism under Section 4 and offenses punishable under Sections
5, 6, 7 and 8 of Republic Act No. 10168, otherwise known as the Terrorism Financing
Prevention and Suppression Act of 2012:

"(15) Bribery under Articles 210, 211 and 211-A of the Revised Penal Code, as
amended, and Corruption of Public Officers under Article 212 of the Revised Penal
Code, as amended;

"(16) Frauds and Illegal Exactions and Transactions under Articles 213, 214, 215 and
216 of the Revised Penal Code, as amended;

"(17) Malversation of Public Funds and Property under Articles 217 and 222 of the
Revised Penal Code, as amended;

"(18) Forgeries and Counterfeiting under Articles 163, 166, 167, 168, 169 and 176 of
the Revised Penal Code, as amended;

"(19) Violations of Sections 4 to 6 of Republic Act No. 9208, otherwise known as the
Anti-Trafficking in Persons Act of 2003;

"(20) Violations of Sections 78 to 79 of Chapter IV, of Presidential Decree No. 705,

otherwise known as the Revised Forestry Code of the Philippines, as amended;

"(21) Violations of Sections 86 to 106 of Chapter VI, of Republic Act No. 8550,
otherwise known as the Philippine Fisheries Code of 1998;

"(22) Violations of Sections 101 to 107, and 110 of Republic Act No. 7942, otherwise
known as the Philippine Mining Act of 1995;

"(23) Violations of Section 27(c), (e), (f), (g) and (i), of Republic Act No. 9147,
otherwise known as the Wildlife Resources Conservation and Protection Act;
 "(24) Violation of Section 7(b) of Republic Act No. 9072, otherwise known as the
National Caves and Cave Resources Management Protection Act;

"(25) Violation of Republic Act No. 6539, otherwise known as the Anti-Carnapping
Act of 2002, as amended;

"(26) Violations of Sections 1, 3 and 5 of Presidential Decree No. 1866, as amended,

otherwise known as the decree Codifying the Laws on Illegal/Unlawful Possession,
Manufacture, Dealing In, Acquisition or Disposition of Firearms, Ammunition or
Explosives;

"(27) Violation of Presidential Decree No. 1612, otherwise known as the Anti-Fencing
Law;

"(28) Violation of Section 6 of Republic Act No. 8042, otherwise known as the
Migrant Workers and Overseas Filipinos Act of 1995, as amended by Republic Act
No. 10022;

"(29) Violation of Republic Act No. 8293, otherwise known as the Intellectual
Property Code of the Philippines;

"(30) Violation of Section 4 of Republic Act No. 9995, otherwise known as the Anti-
Photo and Video Voyeurism Act of 2009;

"(31) Violation of Section 4 of Republic Act No. 9775, otherwise known as the Anti-
Child Pornography Act of 2009;

"(32) Violations of Sections 5, 7, 8, 9, 10(c), (d) and (e), 11, 12 and 14 of Republic
Act No. 7610, otherwise known as the Special Protection of Children Against Abuse,
Exploitation and Discrimination;

"(33) Fraudulent practices and other violations under Republic Act No. 8799,
otherwise known as the Securities Regulation Code of 2000; and

"(34) Felonies or offenses of a similar nature that are punishable under the penal
laws of other countries."

Section 3. Section 3 of the same Act shall have new paragraphs (j) and (k).

"(j) Precious metals’ shall mean gold, silver, platinum, palladium, rhodium, ruthenium, iridium
and osmium. These include alloys of precious metals, solders and plating chemicals such as
rhodium and palladium plating solutions and potassium gold cyanide and potassium silver
cyanide and silver cyanide in salt solution.

"(k) ‘Precious stones’ shall mean diamond, ruby, emerald, sapphire, opal, amethyst, beryl,
topaz, and garnet that are used in jewelry making, including those formerly classified as
semi-precious stones."

Section 4. Section 4 of the same Act is hereby amended to read as follows:

 "SEC. 4. Money Laundering Offense. – Money laundering is committed by any person who,
knowing that any monetary instrument or property represents, involves, or relates to the
proceeds of any unlawful activity:

"(a) transacts said monetary instrument or property;

"(b) converts, transfers, disposes of, moves, acquires, possesses or uses said
monetary instrument or property;

"(c) conceals or disguises the true nature, source, location, disposition, movement or
ownership of or rights with respect to said monetary instrument or property;

"(d) attempts or conspires to commit money laundering offenses referred to in

paragraphs (a), (b) or (c);

"(e) aids, abets, assists in or counsels the commission of the money laundering
offenses referred to in paragraphs (a), (b) or (c) above; and

"(f) performs or fails to perform any act as a result of which he facilitates the offense
of money laundering referred to in paragraphs (a), (b) or (c) above.

"Money laundering is also committed by any covered person who, knowing that a covered or
suspicious transaction is required under this Act to be reported to the Anti-Money Laundering
Council (AMLC), fails to do so."

Section 5. Section 6(a) of the same Act is hereby amended to read as follows:

"SEC. 6. Prosecution of Money Laundering. –

"(a) Any person may be charged with and convicted of both the offense of money
laundering and the unlawful activity as herein defined.

"(b) The prosecution of any offense or violation under this Act shall proceed
independently of any proceeding relating to the unlawful activity."

Section 6. Section 7 of the same Act is hereby amended to read as follows:

"SEC. 7. Creation of Anti-Money Laundering Council (AMLC). – The Anti-Money Laundering

Council is hereby created and shall be composed of the Governor of the Bangko Sentral ng
Pilipinas as Chairman, the Commissioner of the Insurance Commission and the Chairman of
the Securities and Exchange Commission, as members. The AMLC shall act unanimously in
the discharge of its functions as defined hereunder:

"x x x

"(6) to apply before the Court of Appeals, ex parte, for the freezing of any monetary
instrument or property alleged to be laundered, proceeds from, or instrumentalities used in or
intended for use in any unlawful activity as defined in Section 3(i) hereof;

"x x x
 "(12) to require the Land Registration Authority and all its Registries of Deeds to submit to
the AMLC, reports on all real estate transactions involving an amount in excess of Five
hundred thousand pesos (P500,000.00) within fifteen (15) days from the date of registration
of the transaction, in a form to be prescribed by the AMLC. The AMLC may also require the
Land Registration Authority and all its Registries of Deeds to submit copies of relevant
documents of all real estate transactions."

Section 7. Section 9(c), paragraphs 1 and 4 of the same Act are hereby amended to read as
follows:

"SEC. 9. Prevention of Money Laundering; Customer Identification Requirements and

Record Keeping. –

"(a) x x x

"(b) x x x

"(c) Reporting of Covered and Suspicious Transactions. – Covered persons shall report to
the AMLC all covered transactions and suspicious transactions within five (5) working days
from occurrence thereof, unless the AMLC prescribes a different period not exceeding fifteen
(15) working days.

"Lawyers and accountants acting as independent legal professionals are not required to
report covered and suspicious transactions if the relevant information was obtained in
circumstances where they are subject to professional secrecy or legal professional privilege.

"x x x

"x x x

"When reporting covered or suspicious transactions to the AMLC, covered persons and their
officers and employees are prohibited from communicating, directly or indirectly, in any
manner or by any means, to any person or entity, the media, the fact that a covered or
suspicious transaction has been reported or is about to be reported, the contents of the
report, or any other information in relation thereto. Neither may such reporting be published
or aired in any manner or form by the mass media", electronic mail, or other similar devices.
In case of violation thereof, the concerned officer and employee of the covered person and
media shall be held criminally liable."

Section 8. Section 10 of the same Act, as amended by Republic Act No. 10167, is hereby amended
to read as follows:

"SEC. 10. Freezing of Monetary Instrument or Property. – Upon a verified ex parte petition

by the AMLC and after determination that probable cause exists that any monetary
instrument or property is in any way related to an unlawful activity as defined in Section 3(i)
hereof, the Court of Appeals may issue a freeze order which shall be effective immediately,
and which shall not exceed six (6) months depending upon the circumstances of the
case: Provided, That if there is no case filed against a person whose account has been
frozen within the period determined by the court, the freeze order shall be deemed ipso
facto lifted: Provided, further, That this new rule shall not apply to pending cases in the
courts. In any case, the court should act on the petition to freeze within twenty-four (24)
 hours from filing of the petition. If the application is filed a day before a nonworking day, the
computation of the twenty-four (24)-hour period shall exclude the nonworking days.

"A person whose account has been frozen may file a motion to lift the freeze order and the
court must resolve this motion before the expiration of the freeze order.

"No court shall issue a temporary restraining order or a writ of injunction against any freeze
order, except the Supreme Court."

Section 9. Section 12 of the same Act is hereby amended to read as follows:

"(a) Civil Forfeiture. – Upon determination by the AMLC that probable cause exists that any
monetary instrument or property is in any way related to an unlawful activity as defined in
Section 3(i) or a money laundering offense under Section 4 hereof, the AMLC shall file with
the appropriate court through the Office of the Solicitor General, a verified ex parte petition
for forfeiture, and the Rules of Court on Civil Forfeiture shall apply.

"The forfeiture shall include those other monetary instrument or property having an
equivalent value to that of the monetary instrument or property found to be related in any
way to an unlawful activity or a money laundering offense, when with due diligence, the
former cannot be located, or it has been substantially altered, destroyed, diminished in value
or otherwise rendered worthless by any act or omission, or it has been concealed, removed,
converted, or otherwise transferred, or it is located outside the Philippines or has been
placed or brought outside the jurisdiction of the court, or it has been commingled with other
monetary instrument or property belonging to either the offender himself or a third person or
entity, thereby rendering the same difficult to identify or be segregated for purposes of
forfeiture.

"(b) Claim on Forfeited Assets. – Where the court has issued an order of forfeiture of the
monetary instrument or property in a criminal prosecution for any money laundering offense
defined under Section 4 of this Act, the offender or any other person claiming an interest
therein may apply, by verified petition, for a declaration that the same legitimately belongs to
him and for segregation or exclusion of the monetary instrument or property corresponding
thereto. The verified petition shall be filed with the court which rendered the judgment of
forfeiture, within fifteen (15) days from the date of the finality of the order of forfeiture, in
default of which the said order shall become final and executor. This provision shall apply in
both civil and criminal forfeiture.

"(c) Payment in Lieu of Forfeiture. – Where the court has issued an order of forfeiture of the
monetary instrument or property subject of a money laundering offense defined under
Section 4, and said order cannot be enforced because any particular monetary instrument or
property cannot, with due diligence, be located, or it has been substantially altered,
destroyed, diminished in value or otherwise rendered worthless by any act or omission,
directly or indirectly, attributable to the offender, or it has been concealed, removed,
converted, or otherwise transferred to prevent the same from being found or to avoid
forfeiture thereof, or it is located outside the Philippines or has been placed or brought
outside the jurisdiction of the court, or it has been commingled with other monetary
instruments or property belonging to either the offender himself or a third person or entity,
thereby rendering the same difficult to identify or be segregated for purposes of forfeiture,
the court may, instead of enforcing the order of forfeiture of the monetary instrument or
property or part thereof or interest therein, accordingly order the convicted offender to pay an
 amount equal to the value of said monetary instrument or property. This provision shall apply
in both civil and criminal forfeiture."

Section 10. Section 14 of the same Act, as amended, is hereby further amended to read as follows:

"SEC. 14. Penal Provisions. – (a) Penalties for the Crime of Money Laundering. The penalty
of imprisonment ranging from seven (7) to fourteen (14) years and a fine of not less than
Three million Philippine pesos (Php3,000,000.00) but not more than twice the value of the
monetary instrument or property involved in the offense, shall be imposed upon a person
convicted under Section 4(a), (b), (c) and (d) of this Act.

"The penalty of imprisonment from four (4) to seven (7) years and a fine of not less than One
million five hundred thousand Philippine pesos (Php1,500,000.00) but not more than Three
million Philippine pesos (Php3,000,000.00), shall be imposed upon a person convicted under
Section 4(e) and (f) of this Act.

"The penalty of imprisonment from six (6) months to four (4) years or a fine of not less than
One hundred thousand Philippine pesos (Php100,000.00) but not more than Five hundred
thousand Philippine pesos (Php500,000.00), or both, shall be imposed on a person
convicted under the last paragraph of Section 4 of this Act.

"(b) x x x

"(c) x x x

"(d) x x x

"(e) The penalty of imprisonment ranging from four (4) to seven (7) years and a fine
corresponding to not more than two hundred percent (200%) of the value of the monetary
instrument or property laundered shall be imposed upon the covered person, its directors,
officers or pesonnel who knowingly participated in the commission of the crime of money
laundering.

"(f) Imposition of Administrative Sanctions. The imposition of the administrative sanctions

shall be without prejudice to the filing of criminal charges against the persons responsible for
the violation.

"After due notice and hearing, the AMLC shall, at its discretion, impose sanctions, including
monetary penalties, warning or reprimand, upon any covered person, its directors, officers,
employees or any other person for the violation of this Act, its implementing rules and
regulations, or for failure or refusal to comply with AMLC orders, resolutions and other
issuances. Such monetary penalties shall be in amounts as may be determined by the AMLC
to be appropriate, which shall not be more than Five hundred thousand Philippine pesos
(P500,000.00) per violation. 1âwphi1

"The AMLC may promulgate rules on fines and penalties taking into consideration the
attendant circumstances, such as the nature and gravity of the violation or irregularity.

"(g) The provision of this law shall not be construed or implemented in a manner that will
discriminate against certain customer types, such as politically-exposed persons, as well as
their relatives, or against a certain religion, race or ethnic origin, or such other attributes or
 profiles when used as the only basis to deny these persons access to the services provided
by the covered persons. Whenever a bank, or quasi-bank, financial institution or whenever
any person or entity commits said discriminatory act, the person or persons responsible for
such violation shall be subject to sanctions as may be deemed appropriate by their
respective regulators."

Section 11. New sections are hereby inserted after Section 19 of the same Act, as amended, to
read as follows:

"SEC. 20. Non-intervention in the Bureau of Internal Revenue (BIR) Operations. – Nothing

contained in this Act nor in related antecedent laws or existing agreements shall be
construed to allow the AMLC to participate in any manner in the operations of the BIR."

"SEC. 21. The authority to inquire into or examine the main account and the related accounts
shall comply with the requirements of Article III, Sections 2 and 3 of the 1987 Constitution,
which are hereby incorporated by reference. Likewise, the constitutional injunction
against ex post facto laws and bills of attainder shall be respected in the implementation of
this Act."

Section 12. The succeeding sections are hereby renumbered accordingly.

Section 13. Separability Clause. – If any provision of this Act is declared unconstitutional, the same
shall not affect the validity and effectivity of the other provisions hereof.

Section 14. Repealing Clause. – All laws, decrees, orders, and issuances or portions thereof, which
are inconsistent with the provisions of this Act, are hereby repealed, amended or modified
accordingly.

Section 15. Effectivity. – This Act shall take effect fifteen (15) days following its publication in at
least two (2) national newspapers of general circulation.

Approved,

(Sgd.) JUAN PONCE ENRILE (Sgd.) FELICIANO BELMONTE JR.

President of the Senate Speaker of the House of Representatives

This Act which is a consolidation of House Bill No. 6565 and Senate Bill No. 3123 was finally passed
by the House of Representatives and the Seriate on February 6, 2013.

(Sgd.) EMMA LIRIO-REYES (Sgd.) MARILYN B. BARUA-YAP

Secretary of Senate Secretary General
House of Representatives

Approved: FEB 15 2013

(Sgd.) BENIGNO S. AQUINO III

President of the Philippines
REPUBLIC ACT No. 10927

An Act Designating Casinos as Covered Persons Under Republic Act No. 9160, Otherwise
Known as the "Anti-Money Laundering Act of 2001", as Amended

Be it enacted by the Senate and House of Representatives of the Philippine Congress Assembled:

Section 1. Section 3(a) of Republic Act No. 9160, as amended, is hereby further amended to read
as follows:

"(a) ‘Covered persons’, natural on juridical, refer to:

"x x x

"(8) casinos, including internet and ship-based casinos, with respect to their casino cash
transactiotus related to they gaming operations.

"x x x"

Section 2. Section 3(b) of Republic Act No. 9160 is hereby further amended to read as follows:

"(b) ‘Covered transaction’ is a transaction in cash or other equivalent monetary instrument involving
a total amount in excess of Five hundred thousand pesos (₱500,000.00) within one (1) banking day;
for covered persons under Section 3(a)(8), a single casino transaction involving an amount in excess
of Five million pesos (₱5,000,000.00) or its equivalent in any other currency.

Section 3. Sector 3 of Republic Act No. 9160, as amended, is hereby further amended by inserting
a new paragraph (l) to read as follows:

"x x x

"(l) For purposes of covered persons under Section 3(a)(8), the following terms are hereby defined
as follows:
 "(1) ‘Casino’ refers to a business authorized by the appropriate goverment agency to engage
in gaming operations:

"(i) ‘Internet-based casinos’ shall refer a casinos in which persons participate by the
use of remote communication facilities such as, but not limited to, internet, telephone,
television, radio or any other kind of electronic or other technology for facilitating
communication; and

"(ii) ‘Ship-based casino’ shall refer to casinos, the operation of which is undertaken
on board a vessel, ship, boat or any other water-based craft wholly or partly intended
for gambling;

"(2) ‘Casino cash transaction’ refers to transactions involving the receipt of cash by a casino
paid by or on behalf of a customer, or transactions involving the payout of cash by a casino
to a customer or to any person in his/her behalf; and

"(3) ‘Gaming operations’ refer to the activities of the casino offering games of chance and
any variations thereof approved by the appropriate government authorities."

Section 4. Section 10 of Republic Act. No. 9160, as amended, is hereby further amended to read as
follows:

"Sec. 10. Freezing of Monetary Instrument or Property. - Upon a verified ex parte petition by the
AMLC and after determination that probable cause exists that any monetary instrument or property
is in any way related to an unlawful activity as defined in Section 3(i) hereof, the Court of Appeals
may issue a freeze order which shall be effective immediately, for a period of twenty (20) days.
Within the twenty (20)-day period, the Court of Appeals shall conduct a summary hearing, with
notice to the parties, to determine whether or not to modify or lift the freeze order, or extend its
effectivity. The total period of the freeze order issued by the Cout of Appeals under this provision
shall not exceed six (6) months. This is without prejudice to an asset preservation order that the
Regional Trial Court having jurisdiction over the appropriate anti-money laundering case or civil
forfeiture case may issue on the same account depending upon the circumstances of the case,
where the Court of Appeals will remand the case and its records: Provided, That if there is no case
filed against a person whose account has been frozen within the period determined by the Court of
Appeals, not exceeding six (6) months, the freeze order shall be seemed ipso facto lifted: Provided,
further, That this new rule shall not apply to pending cases in the courts. In any case, the court
should act on the petition to freeze within twenty-four (24) hours from filing of the petition. If the
application is filed a day before a no working day, the computation of the twenty-four (24)-hour
period shall exclude the nonworking days.

"The freeze order or asset preservation order issued under this Act shall be limited only to the
amount of cash or monetary instrument or value of property that the court finds there is probable
cause to be considered as proceeds of a predicate offense, and the freeze order or asset
preservation order shall not apply to amounts in the same account in excess of the amount or value
of the proceeds of the predicate offense.

"x x x."

Section 5. Section of Republic Act No. 9160 is hereby amended by inserting a new paragraph a
read as follows:
"Sec. 18. Implementing Rules and Regulations.—

"x x x

"x x x

"Within ninety (90) days from the effectivity of this Act, the AMLC, the Philippine Amusement and
Gaming Corporation (PAGCOR) and other government regulatory agencies shall jointly promulgate
the rules and regulations to implement the provisions of this Act as applicable to casinos as covered
institutions. The implementing rules applicable to other covered institiations shall not apply to
casinos unless it is expressly so provided under the rules and regulations to implement the
provisions of this Act."

Section 6. Separability Clauses. - If any provision of this Act is declared unconstitutional, the same
shall not affect the validity and effectivity of other provisions hereof.

Section 7. Repealing Clause. - All laws, decrees, orders, and issuances or portions thereof, which
are inconsistent with the provisions of this Act, are hereby repealed, amended or modified
accordingly.

Section 8. Effectivity. - This Act shall take effect fifteen (15) days following its publication in the
Official Gazette or in any newspaper of general circulation.

Approved,

PANTALEON D. ALVAREZ
Speaker of the House of Representatives

AQUILINO "KOKO" PIMENTEL

President of the Senate

Senate Bill No. 1468, which was approved by the Senate on May 30, 2017, was adopted as an
amendment to House Bill No. 5663 by the House of Representatives on May 30, 2017.

CESAR STRAIT PAREJA

Secretary General
House of Representatives

LUTGARDO B. BARBO
Secretary of the Senate

Approved: July 14, 2017

(Sgd.) RODRIGO ROA DUTERTE

President of the Philippines
 [ REPUBLIC ACT NO. 11521, January 29, 2021 ]

AN ACT FURTHER STRENGTHENING THE ANTI-MONEY LAUNDERING LAW, AMENDING FOR

THE PURPOSE REPUBLIC ACT NO. 9160, OTHERWISE KNOWN AS THE "ANTI-MONEY
LAUNDERING ACT OF 2001", AS AMENDED

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

assembled:

Section 1. Section 2 of Republic Act No. 9160, as amended, is hereby amended to read as follows:

"Section 2. Declaration of Policy. - It is hereby declared the policy of the State to protect and
preserve the integrity and confidentiality of bank accounts and to ensure that the Philippines shall
not be used as a money laundering site for the proceeds of any unlawful activity. Consistent with its
foreign policy, the State shall extend cooperation in transnational investigations and prosecutions of
persons involved in money laundering activities wherever committed, as well as in the
implementation of targeted financial sanctions related to the financing of the proliferation of weapons
of mass destruction, terrorism, and financing of terrorism, pursuant to the resolution of the United
Nations Security Council."

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

"Section 3. Definitions. - For purposes of this Act, the following terms are hereby defined as follows:

"(a) Covered persons', natural or juridical refer to:

"(1) x x x;

"(9) Real estate developers and brokers;

"(10) Offshore gaming operation, as well as their service providers,

supervised, accredited or regulated by the Philippine Amusement and
Gaming Corporation (PAGCOR) or any government agency;
"(b) 'Covered transactions' is a transaction in cash or other equivalent monetary
instrument involving a total amount in excess of Five hundred thousand pesos
(P500,000.00) within one (1) banking day; for covered persons under Section 3(a)(8),
a single casino cash transaction involving an amount in excess of Five million pesos
(P5,000,000.00) or its equivalent in any other currency.

"For covered persons under Section 3(a)(9) herein, a single cash transaction
involving an amount in excess of Seven million five hundred thousand pesos
(P7,500,000.00) or its equivalent in any other currency.

"(b-1) 'Suspicious transactions' are transactions with covered persons,

regardless of the amounts involved, where any of the following
circumstances exist:

"1. There is no underlying legal or trade obligation, purpose or

economic justification;

"2. The client is not properly identified;

"3. The amount involved is not commensurate with the business or

financial capacity of the client;

"4. Taking into account all known circumstances, it may be perceived

that the client's transaction is structured in order to avoid being the
subject of reporting requirements under the Act

"5. Any circumstance relating to the transaction which is observed to

deviate from the profile of the client and/or the client's past
transactions with the covered person;

"6. The transaction is in any way related to an unlawful activity or

offense under this Act that is about to be, is being or has been
committed; or

"7. Any transaction that is similar or analogous to any of the

foregoing.

"x x x

"(i) 'Unlawful activity' refers to any act or omission or series or combination thereof
involving or having relation to the following:

"(1) x x x;

"(33) Fraudulent practice and other violations under Republic Actr No.
8799, otherwise known as "The Securities Regulation Code of 2000;

"(34) Violation of Section 9 (a)(3) of Republic Act No. 10697,

otherwise known as the "Strategic Trade Management Act", in
relation to the proliferation of weapons of mass destruction and its
 financing pursuant to United Nations Security Council Resolution
Numbers 1718 of 2006 and 2231 of 2015";

"(35) Violation of Section 254 of Chapter II, Title X of the National

Internal Revenue Code of 1997, as amended, where the deficiency
basic tax due in the final assessment is in excess of Twenty-five
million pesos (P25,000,000.00) per taxable year, for each tax type
covered and there has been a finding of probable cause by the
competent authority: Provided,further, That there must be a finding of
fraud, willful misrepresenting or malicious intent on the part of the
taxpayer: Provided, finally, That in no case shall the AMLC institute
forfeiture proceedings to recover monetary instruments, property or
proceeds representing, involving, or relating to a tax crime, if the
same has already been recovered or collected by the Bureau of
Internal Revenue (BIR) in a separate proceeding and

"(36) Felonies and offenses of a similar nature that are punishable

under the penal laws of other countries.

"x x x.

"(4) 'Offshore gaming operator' refers to an entity engaged in offering online

games of chance or sporting events via the internet using a network and
software program, by themselves or through local service providers.

"(5) 'Service providers' refer to duly constituted business corporations who

provide components of offshore gaming operations to offshore gaming
operators.

"x x x.

"(m) 'Real estate developer' refers to any natural or juridical person engaged in the
business of developing real estate development project for the account of the
developer and offering them for sale or lease.

"(n) 'Real estate broker' refers to a duly registered and licensed natural person who,
for a professional fee, omission or other valuable consideration, acts as an agent of a
party in a real estate transaction to offer, advertise, solicit, list, promote, mediate,
negotiate, or effect the meeting of the minds on the sale, purchase, exchange,
mortgage, lease or joint venture, or other similar transaction on real estate or any
interest therein.

"(o) 'Targeted financial sanctions' refer to both asset freezing and prohibition to
prevent funds or other assets from being made available, directly or indirectly, for the
benefit of any individual, natural or legal persons or entity designated pursuant to
relevant United Nations Security Council resolution and its designation processes.

"(p) 'Proliferation financing' refers when a person:

"(1) Makes available an asset; or

 "(2) Provides a financial service; or

"(3) Conducts a financial transaction; and the person knows that, or is

reckless as to whether, the asset, financial service or financial transaction is
intended to, in whole or in part, facilitate proliferation of weapons of mass
destruction in relation to UN Security Council Resolution Number 1718 0f
2006 and 2231 of 2015."

Section 3. Section 7 of the same Act is hereby amended to read as follows:

"Section 7. Creation of Anti-Money Laundering Council (AMLC). - The Anti-Money Laundering

Council is hereby created and shall be composed of the Governor of the Bangko Sentral ng Pilipinas
as Chairman, the Commissioner of the Insurance Commission and the Chairman of the Securities
and Exchange Commission, as members. The AMLC shall act unanimously in the discharge of its
functions as defined hereunder:

"(1) to investigate suspicious transactions and covered transactions deemed

suspicious after determination by AMLC, money laundering activities and other
violations of this Act.

"x x x;

"(13) in the conduct of its investigation, the AMLC shall apply for the issuance of a
search and seizure order with any competent court;

"(14) in the conduct of its investigation, the AMLC shall apply for the issuance
of subpoena ad testificandum and/or subpoena duces tecum with any competent
court;

"(15) to implement targeted financial sanctions in relation to proliferation of weapons

of mass destruction and its financing, including ex parte freeze, without delay,
against all funds and other assets that are owned and controlled, directly or
indirectly, including funds and assets derived or generated therefrom, by individuals
or entities designated and listed under United Nations Security Council Resolution
Numbers 1718 of 2006 and 2231 of 2015 and their successor resolutions as well as
any binding resolution of the Security Council; and

"(16) to preserve, manage or dispose assets pursuant to a freeze order, asset

preservation order, or judgment of forfeiture: Provided, however, That pending their
turnover to the national government, all expenses incurred in relation to the duties
herein mentioned shall be deducted from the amount to be turned over to the
national government."

Section 4. A new Section 8-A is hereby inserted after Section 8 (Creation of a Secretariat) of
Republic Act No. 9160, as amended to read as follows:

"SEC. 8-A. Information Security and Confidentiality. - The AMLC and its Secretariat shall
securely protect information received or processed and shall not reveal, in any manner, any
information known to them by reason of their office. This prohibition shall apply even after
their separation from the AMLC.
 "The AMLC shall formulate rules governing information exchange and dissemination, the
security and confidentiality of such information, including procedures for handling, storage,
and protection of, as well as access to such information."

Section 5. Section 10 of the same Act, is hereby further amended by inserting a new paragraph to
read as follows:

"Section 10. Freezing Monetary Instrument or Property. -

"(a) Upon a verified ex parte petition by the AMLC and after determination that probable cause exists
that any monetary instrument or property is in any way related to an unlawful activity as defined in
Section 3(i) hereof, the Court of Appeals may issue a freeze order which shall be effective
immediately, for a period of twenty (20) days. Within the twenty (20) day period, the Court of Appeals
shall conduct a summary hearing, with notice to the parties, to determine whether or not to modify or
lift the freeze order, or extend its effectivity. The total period of the freeze order issued by the Court
of Appeals under this provision shall not exceed six (6) months. This is without prejudice to an asset
preservation order that the Regional Trial Court having jurisdiction over the appropriate anti-money
laundering case or civil forfeiture case may issue on the same account depending on the
circumstances of the case, where the Court of Appeals will remand the case and its
records: Provided, That if there is no case filed against a person whose account has been frozen
within the period determined by the Court of Appeals, not exceeding six (6) months, the freeze order
shall be deemed ipso facto lifted: Provided,further, That this new rule shall not apply to pending
cases in the courts. In any case, the court should act on the petition to freeze within twenty-four (24)
hours from filing of the petition. If the application is filed a day before a nonworking day, the
computation of the twenty-four (24) hour period shall exclude the nonworking days.

"The freeze order or asset preservation order issued under this Act shall be limited only to the
amount of cash or monetary instrument or value of property that court finds there is probable cause
to be considered as proceeds of a predicate offense, and the freeze order or asset preservation
order shall not apply tyo amounts in the same account in excess of the amount or value of the
proceeds of the predicate offense.

"A person whose account has been frozen may file a motion to lift the freeze order and the court
must resolve this motion before the expiration of the freeze order.

"No court shall issue a temporary restraining order or a writ of injunction against any freeze order,
except the Supreme Court.

"(b) For purposes of implementing targeted financial sanctions in relation to proliferation of weapons
of mass destruction and its financing, as provided under Section 3(15), the AMLC shall have the
power to issue, ex porte, an order to freeze without delay.

"The freeze order shall be effective until the basis for its issuance shall have been lifted. During the
effectivity of the freeze order, the aggrieved party may, within twenty (20) days from issuance, file
with the Court of Appeals a petition to determine the basis of the freeze order according to the
principle of effective judicial protection: Provided, That the person whose property or funds have
been frozen may withdraw such sums as the AMLC determines to be reasonably needed for monthly
family needs and sustenance including the services of counsel and the family medical needs of such
person.
"The AMLC, if circumstance warrant, may initiate civil forfeiture proceedings to preserve the assets
and to protect it from dissipation.  No court shall issue a temporary restraining order or a writ of
ℒαwρhi ৷

injunction against the freeze order, except the Court of Appeals or the Supreme Court."

Section 6. Section 12 of the same Act is hereby amended by inserting a new paragraph to read as
follows:

"(d) No court shall issue a temporary restraining order (TRO) or a writ of injunction against any
provisional asset preservation order or asset preservation, except the Court of Appeals or the
Supreme Court."

Section 7. Section 14, paragraph (d) of Republic Act No. 9160, as amended, is hereby further
amended to read as follows:

"Section 14. Penal Provisions. -

"x x x

"(d) Breach of Information Security and Confidentiality. The punishment of imprisonment ranging

from three (3) to eight (8) years and a fine of not less than Five hundred thousand Philippine pesos
(P500,000.00) but not more than One million Philippine pesos (P1,000,000.00), shall be imposed on
a person convicted for a violation under Section 9(c) 0r Section 8-A on information security and
confidentiality of this Act. If the offender is public official or employee, he shall, in addition to the
penalties prescribed herein, suffer the penalty of perpetual or temporary absolute disqualification
from public office, as the case may be. In the case of a breach of confidentiality that is published or
reported by media, the responsible reporter, writer, president, publisher, manager and editor-in-chief
shall be liable under this Act."

Section 8. Section 20 of the same Act is hereby amended to read as follows:

"Section 20. Non-Intervention in the Bureau of Internal Revenue (BIR) Operations. - Nothing

contained in this Act nor in related antecedent laws or existing agreements shall be construed to
allow the AMLC to participate in any manner in the operation of the BIR. The AMLC, may, however,
coordinate with the BIR On investigations in relating to violations of Section 254 of NIRC, as
amended, as a predicate offense to money laundering."

Section 9. Implementing Rules and Regulations. - The AMLC shall, within ninety (90) days from the
effectivity of this Act, issue the necessary rules and regulations.

Section 10. Separability Clause. - If any provision or section of this Act is held to be unconstitutional
or invalid, the other provisions or sections hereof, which are not affected thereby shall continue to be
in full force and effect.

Section 11. Repealing Clause. - All provisions of existing laws, orders, rules and regulations, or
parts thereof which are in conflict or inconsistent with provisions of this Act are hereby repealed or
modified accordingly: Provided, That all provisions of Republic Act No. 9160, as amended, which are
not inconsistent with this Act are hereby adopted.

Section 12. Effectivity.- This Act shall take effect immediately after the completion of its publication
in the Official Gazette or in a newspaper of general circulation.
Approved,       

(SGD.) VICENTE C. SOTTO III  (SGD.) LORD ALLAN JAY Q. VELASCO

President of the Senate Speaker of the House of Representatives

This Act which is a consolidation of House Bill No. 7904 and Senate Bill No. 1495 was passed by the
House of Representatives and the Senate of the Philippines on January 20, 2021.

(SGD.) MYRA MARIE D. VILLARICA (SGD.) MARK LLANDRO L. MENDOZA

Secretary of the Senate Secretary General House of Representatives

Approved: JAN 29 2021

(SGD.) RODRIGO ROA DUTERTE

President of the Philippines