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. (As Amended)

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. (As Amended)

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. (As Amended)

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. (As Amended)

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. (As Amended)

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. (As Amended)
 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. (As Amended)

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. (As Amended)

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. (As Amended)

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. (As Amended)

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. (As Amended)

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.
[DELETED]

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. [DELETED]

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. (As Amended)

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. (As Amended)

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. (As Amended)

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. (As Amended)

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. (As Amended)

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. (As Amended)

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. (As Amended)

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. (As Amended)

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. (As Amended)

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. (As Amended)

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. (As Amended)

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. (As Amended)

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. (As Amended)

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. (As Amended)

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. (As Amended)

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. (As Amended)

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. (As Amended)

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. (As Amended)

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. (As
Amended)

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. (As
Amended)

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. (As Amended)

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. (As Amended)
 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. (As Amended)

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.