REPUBLIC ACT NO.
8791             May 23, 2000 Section 4. Supervisory Powers. The operations and activities of banks shall be
AN ACT PROVIDING FOR THE REGULATION OF THE ORGANIZATION AND
OPERATIONS OF BANKS, QUASI-BANKS, TRUST ENTITIES AND FOR OTHER
PURPOSES
CHAPTER I
TITLE AND CLASSIFICATION OF BANKS
Section 1. Title. The short title of this Act shall be "The General Banking Law of
2000." (1a)
Section 2. Declaration Of Policy. - The State recognizes the vital role of banks
providing an environment conducive to the sustained development of the national
economy and the fiduciary nature of banking that requires high standards of integrity
and performance. In furtherance thereof, the State shall promote and maintain a
stable and efficient banking and financial system that is globally competitive, dynamic
and responsive to the demands of a developing economy. (n)
Section 3. Definition and Classification of Banks. -
3.1. "Banks" shall refer to entities engaged in the lending of funds obtained in the form
of deposits. (2a)
3.2. Banks shall be classified into:
(a) Universal banks;
(b) Commercial banks;
(c) Thrift banks, composed of: (i) Savings and mortgage banks, (ii) Stock savings
and loan associations, and (iii) Private development banks, as defined in the
Republic Act No. 7906 (hereafter the "Thrift Banks Act");
(d) Rural banks, as defined in Republic Act No. 73S3 (hereafter the "Rural Banks
Act");
(e) Cooperative banks, as defined in Republic Act No 6938 (hereafter the
"Cooperative Code");
(f) Islamic banks as defined in Republic Act No. 6848, otherwise known as the
"Charter of Al Amanah Islamic Investment Bank of the Philippines"; and
(g) Other classifications of banks as determined by the Monetary Board of the
Bangko Sentral ng Pilipinas. (6-Aa)
CHAPTER II
AUTHORITY OF THE BANGKO SENTRAL
subject to supervision of the Bangko Sentral. "Supervision" shall include the following:
4.1. The issuance of rules of, conduct or the establishment standards of operation for
uniform application to all institutions or functions covered, taking into consideration the
distinctive character of the operations of institutions and the substantive similarities of
specific functions to which such rules, modes or standards are to be applied;
4.2 The conduct of examination to determine compliance with laws and regulations if
the circumstances so warrant as determined by the Monetary Board;
4.3 Overseeing to ascertain that laws and regulations are complied with;
4.4 Regular investigation which shall not be oftener than once a year from the last
date of examination to determine whether an institution is conducting its business on a
safe or sound basis: Provided, That the deficiencies/irregularities found by or
discovered by an audit shall be immediately addressed;
4.5 Inquiring into the solvency and liquidity of the institution (2-D); or
4.6 Enforcing prompt corrective action. (n)
The Bangko Sentral shall also have supervision over the operations of and exercise
regulatory powers over quasi-banks, trust entities and other financial institutions which
under special laws are subject to Bangko Sentral supervision. (2-Ca)
For the purposes of this Act, "quasi-banks" shall refer to entities engaged in the
borrowing of funds through the issuance, endorsement or assignment with recourse or
acceptance of deposit substitutes as defined in Section 95 of Republic Act No. 7653
(hereafter the "New Central Bank Act") for purposes of re-lending or purchasing of
receivables and other obligations. (2-Da)
Section 5. Policy Direction; Ratios, Ceilings and Limitations. - The Bangko Sentral
shall provide policy direction in the areas of money, banking and credit. (n)
For this purpose, the Monetary Board may prescribe ratios, ceilings, limitations, or
other forms of regulation on the different types of accounts and practices of banks and
quasi-banks which shall, to the extent feasible, conform to internationally accepted
standards, including of the Bank for International Settlements (BIS). The Monetary
Board may exempt particular categories of transactions from such ratios, ceilings. and
limitations, but not limited to exceptional cases or to enable a bank or quasi-bank
under rehabilitation or during a merger or consolidation to continue in business, with
safety to its creditors, depositors and the general public. (2-Ca)
Section 6. Authority to Engage in Banking and Quasi-Banking Functions. - No person
or entity shall engage in banking operations or quasi-banking functions without
authority from the Bangko Sentral: .Provided, however, That an entity authorized by
the Bangko Sentral to perform universal or commercial banking functions shall
likewise have the authority to engage in quasi-banking functions.
The determination of whether a person or entity is performing banking or quasi-
banking functions without Bangko Sentral authority shall be decided by the Monetary
Board. To resolve such issue, the Monetary Board may; through the appropriate
supervising and examining department of the Bangko Sentral, examine, inspect or
investigate the books and records of such person or entity. Upon issuance of this
authority, such person or entity may commence to engage in banking operations or
quasi-banking function and shall continue to do so unless such authority is sooner
surrendered, revoked, suspended or annulled by the Bangko Sentral in accordance
with this Act or other special laws.
The department head and the examiners of the appropriate supervising and
examining department are hereby authorized to administer oaths to any such person,
employee, officer, or director of any such entity and to compel the presentation or
production of such books, documents, papers or records that are reasonably
necessary to ascertain the facts relative to the true functions and operations of such
person or entity. Failure or refusal to comply with the required presentation or
production of such books, documents, papers or records within a reasonable time
shall subject the persons responsible therefore to the penal sanctions provided under
the New Central Bank Act.
Persons or entities found to be performing banking or quasi-banking functions without
authority from the Bangko Sentral shall be subject to appropriate sanctions under the
New Central Bank Act and other applicable laws. (4a)
Section 7. Examination by the Bangko Sentral. - The Bangko Sentral shall, when
examining a bank, have the authority to examine an enterprise which is wholly or
majority-owned or controlled by the bank. (2-Ba)
CHAPTER III
ORGANIZATION, MANAGEMENT AND ADMINISTRATION OF BANKS. QUASI-
BANKS AND TRUST ENTITIES
Section 8. Organization. - The Monetary Board may authorize the organization of a
bank or quasi-bank subject to the following conditions:
8.1 That the entity is a stock corporation (7);
8.2 That its funds are obtained from the public, which shall mean twenty (20) or more
persons (2-Da); and
8.3 That the minimum capital requirements prescribed by the Monetary Board for each
category of banks are satisfied. (n)
No new commercial bank shall be established within three (3) years from the
effectivity of this Act. In the exercise of the authority granted herein, the Monetary
Board shall take into consideration their capability in terms of their financial resources
and technical expertise and integrity. The bank licensing process shall incorporate an
assessment of the bank's ownership structure, directors and senior management, its
operating plan and internal controls as well as its projected financial condition and
capital base.
Section 9. Issuance of Stocks. - The Monetary Board may prescribe rules and
regulations on the types of stock a bank may issue, including the terms thereof and
rights appurtenant thereto to determine compliance with laws and regulations
governing capital and equity structure of banks; Provided, That banks shall issue par
value stocks only.
Section 10. Treasury Stocks. - No bank shall purchase or acquire shares of its own
capital stock or accept its own shares as a security for a loan, except when authorized
by the Monetary Board: Provided, That in every case the stock so purchased or
acquired shall, within six (6) months from the time of its purchase or acquisition, be
sold or disposed of at a public or private sale. (24a)
Section 11. Foreign Stockholdings. - Foreign individuals and non-bank corporations
may own or control up to forty percent (40%) of the voting stock of a domestic bank.
This rule shall apply to Filipinos and domestic non-bank corporations. (12a; 12-Aa)
The percentage of foreign-owned voting stocks in a bank shall be determined by the
citizenship of the individual stockholders in that bank. The citizenship of the
corporation which is a stockholder in a bank shall follow the citizenship of the
controlling stockholders of the corporation, irrespective of the place of incorporation.
(n)
Section 12. Stockholdings of Family Groups of Related Interests. - Stockholdings of
individuals related to each other within the fourth degree of consanguinity or affinity,
legitimate or common-law, shall be considered family groups or related interests and
must be fully disclosed in all transactions by such corporations or related groups of
persons with the bank. (12-Ba)
Section 13. Corporate Stockholdings. - Two or more corporations owned or controlled
by the same family group or same group of persons shall be considered related
interests and must be fully disclosed in all transactions by such corporations or related
group of persons with the bank. (12-Ba)
Section 14. Certificate of Authority to Register. - The Securities and Exchange
Commission shall no register the articles of incorporation of any bank, or any
amendment thereto, unless accompanied by a certificate of authority issued by the
Monetary Board, under it seal. Such certificate shall not be issued unless the
Monetary Board is satisfied from the evidence submitted to it:
14.1 That all requirements of existing laws and regulations to engage in the business
for which the applicant is proposed to be incorporated have been complied with;
14.2 That the public interest and economic conditions, both general and local, justify
the authorization; and
14.3 That the amount of capital, the financing, organization, direction and
administration, as well as the integrity and responsibility of the organizers and
administrators reasonably assure the safety of deposits and the public interest. (9)
The Securities and Exchange Commission shall not register the by-laws of any bank,
or any amendment thereto, unless accompanied by a certificate of authority from the
Bangko Sentral. (10)
Section 15. Board of Directors. - The provisions of the Corporation Code to the
contrary notwithstanding, there shall be at least five (5), and a maximum of fifteen (15)
members of the board or directors of a bank, two (2) of whom shall be independent
directors. An "independent director" shall mean a person other than an officer or
employee of the bank, its subsidiaries or affiliates or related interests. (n) Non-Filipino
citizens may become members of the board of directors of a bank to the extent of the
foreign participation in the equity of said bank. (Sec. 7, RA 7721) The meetings of the
board of directors may be conducted through modern technologies such as, but not
limited to, teleconferencing and video-conferencing. (n)
Section 16. Fit and Proper Rule. - To maintain the quality of bank management and
afford better protection to depositors and the public in general the Monetary Board
shall prescribe, pass upon and review the qualifications and disqualifications of
individuals elected or appointed bank directors or officers and disqualify those found
unfit. After due notice to the board of directors of the bank, the Monetary Board may
disqualify, suspend or remove any bank director or officer who commits or omits an
act which render him unfit for the position. In determining whether an individual is fit
and proper to hold the position of a director or officer of a bank, regard shall be given
to his integrity, experience, education, training, and competence. (9-Aa)
Section 17. Directors of Merged or Consolidated Banks. - In the case of a bank
merger or consolidation, the number of directors shall not exceed twenty-one (21).
(l3a)
Section 18. Compensation and Other Benefits of Directors and Officers. To protect
the finds of depositors and creditors the Monetary Board may regulate the payment by
the bark to its directors and officers of compensation, allowance, fees, bonuses, stock
options, profit sharing and fringe benefits only in exceptional cases and when the
circumstances warrant, such as but not limited to the following:
18.1. When a bank is under comptrollership or conservatorship; or
18.2. When a bank is found by the Monetary Board to be conducting business in an
unsafe or unsound manner; or
18.3. When a bank is found by the Monetary Board to be in an unsatisfactory financial
condition. (n)
Section 19. Prohibition on Public Officials. - Except as otherwise provided in the Rural
Banks Act, no appointive or elective public official whether full-time or part-time shall
at the same time serve as officer of any private bank, save in cases where such
service is incident to financial assistance provided by the government or a government
owned or controlled corporation to the bank or unless otherwise provided under
existing laws. (13)
Section 20. Bank Branches. - Universal or commercial banks may open branches or
other offices within or outside the Philippines upon prior approval of the Bangko
Sentral. Branching by all other banks shall be governed by pertinent laws.
A bank may, subject to prior approval of the Monetary Board, use any or all of its
branches as outlets for the presentation and/or sale of the financial products of its
allied undertaking or of its investment house units. A bank authorized to establish
branches or other offices shall be responsible for all business conducted in such
branches and offices to the same extent and in the same manner as though such
business had all been conducted in the head office. A bank and its branches and
offices shall be treated as one unit. (6-B; 27)
Section 21. Banking Days and Hours. - Unless otherwise authorized by the Bangko
Sentral in the interest of the banking public, all banks including their branches and
offices shall transact business on all working days for at least six (6) hours a day. In
addition, banks or any of their branches or offices may open for business on
Saturdays, Sundays or holidays for at least three (3) hours a day: Provided, That
banks which opt to open on days other than working days shall report to the Bangko
Sentral the additional days during which they or their branches or offices shall transact
business. For purposes of this Section, working days shall mean Mondays to Fridays,
except if such days are holidays. (6-Ca)
Section 22. Strikes and Lockouts. - The banking industry is hereby declared as
indispensable to the national interest and, notwithstanding the provisions of any law to
the contrary, any strike or lockout involving banks, if unsettled after seven (7) calendar
days shall be reported by the Bangko Sentral to the secretary of Labor who may
assume jurisdiction over the dispute or decide it or certify the sane to the National
Labor Relations Commission for compulsory arbitration. However, the President of the
Philippines may at any time intervene and assume jurisdiction over such labor dispute
in order to settle or terminate the same. (6-E)
CHAPTER IV
DEPOSITS. LOANS AND OTHER OPERATIONS
Article I
Operations Of Universal Banks
Section 23. Powers of a Universal Bank - A universal bank shall have the authority to
exercise, in addition to the powers authorized for a commercial bank in Section 29, the
powers of an investment house as provided in existing laws and the power to invest in
non-allied enterprises as provided in this Act. (21-B)
Section 24. Equity Investments of a Universal Bank. - A universal bank may, subject
to the conditions stated in the succeeding paragraph, invest in the equities of allied
and non-allied enterprises as may be determined by the Monetary Board. Allied
enterprises may either be financial or non-financial. Except as the Monetary Board
may otherwise prescribe:
24.1. The total investment in equities of allied and non-allied enterprises shall not
exceed fifty percent (50%) of the net worth of the bank; and
24.2. The equity investment in any one enterprise, whether allied or non-allied, shall
not exceed twenty-five percent (25%) of the net worth of the bank.
As used in this Act, "net worth" shall mean the total of the unimpaired paid-in capital
including paid-in surplus, retained earnings and undivided profit, net of valuation
reserves and other adjustments as may be required by the Bangko Sentral.
The acquisition of such equity or equities is subject to the prior approval of the
Monetary Board which shall promulgate appropriate guidelines to govern such
investments. (21-Ba)
Section 25. Equity Investments of a Universal Bank in Financial Allied Enterprises. - A
universal bank can own up to one hundred percent (100%) of the equity in a thrift
bank, a rural bank or a financial allied enterprise. A publicly-listed universal or
commercial bank may own up to one hundred percent (100%) of the voting stock of
only one other universal or commercial bank. (21-B; 21-Ca)
Section 26. Equity Investments of a Universal Bank in Non-Financial Allied
Enterprises. - A universal bank may own up to one hundred percent (100%) of the
equity in a non-financial allied enterprise. (21-Ba)
Section 27. Equity Investments of a Universal Bank in Non-Allied Enterprises. - The
equity investment of a universal bank, or of its wholly or majority-owned subsidiaries,
in a single non-allied enterprise shall not exceed thirty-five percent (35%) of the total
equity in that enterprise nor shall it exceed thirty-five percent (35%) of the voting stock
in that enterprise. (21-B)
Section 28. Equity Investments in Quasi-Banks. - To promote competitive conditions
in financial markets, the Monetary Board may further limit to forty percent (40%) equity
investments of universal banks in quasi-banks. This rule shall also apply in the case of
commercial banks. (12-E)
Article II.
Operations Of Commercial Banks
Section 29. Powers of a Commercial Bank. - A commercial bank shall have, in
addition to the general powers incident to corporations, all such powers as may be
necessary to carry on the business of commercial banking such as accepting drafts
and issuing letters of credit; discounting and negotiating promissory notes, drafts, bills
of exchange, and other evidences of debt; accepting or creating demand deposits;
receiving other types of deposits and deposit substitutes; buying and selling foreign
exchange and gold or silver bullion; acquiring marketable bonds and other debt
securities; and extending credit, subject to such rules as the Monetary Board may
promulgate. These rules may include the determination of bonds and other debt
securities eligible for investment, the maturities and aggregate amount of such
investment.
Section 30. Equity Investments of a Commercial Bank. - A commercial bank may,
subject to the conditions stated in the succeeding paragraphs, invest only in the
equities of allied enterprises as may be determined by the Monetary Board. Allied
enterprises may either be financial or non-financial. Except as the Monetary Board
may otherwise prescribe:
30.1. The total investment in equities of allied enterprises shall not exceed thirty-five
percent (35%) of the net worth of the bark; and
30.2. The equity investment in any one enterprise shall not exceed twenty-five percent
(25%) of tile net worth of the bank. The acquisition of such equity or equities is subject
to the prior approval of the Monetary Board which shall promulgate appropriate
guidelines to govern such investment.(2lA-a; 21-Ca)
Section 31. Equity Investments of a Commercial Bank in Financial Allied
Enterprises. - A commercial bank may own up to one hundred percent (100%) of the
equity of a thrift bank or a rural bank. Where the equity investment of a commercial
bank is in other financial allied enterprises, including another commercial bank, such
investment shall remain a minority holding in that enterprise. (21-Aa; 21-Ca)
Section 32. Equity Investments of a Commercial Bank in Non-Financial Allied
Enterprises. A commercial bank may own up to one hundred percent (100%) of the
equity in a non-financial allied enterprise. (21-Aa)
Article III.
Provisions Applicable To All Banks, Quasi-Banks, And Trust Entities
Section 33. Acceptance of Demand Deposits. - A bank other than a universal or
commercial bank cannot accept or create demand deposits except upon prior
approval of, and subject to such conditions and rules as may be prescribed by the
Monetary Board. (72-Aa)
Section 34. Risk-Based Capital. - The Monetary Board shall prescribe the minimum
ratio which the net worth of a bank must bear to its total risk assets which may include
contingent accounts. For purposes of this Section, the Monetary Board may require
such ratio be determined on the basis of the net worth and risk assets of a bank and
its subsidiaries, financial or otherwise, as well as prescribe the composition and the
manner of determining the net worth and total risk assets of banks and their
subsidiaries: Provided, That in the exercise of this authority, the Monetary Board shall,
to the extent feasible conform to internationally accepted standards, including those of
the Bank for International Settlements(BIS), relating to risk-based capital
requirements: Provided further, That it may alter or suspend compliance with such
ratio whenever necessary for a maximum period of one (1) year: Provided, finally,
That such ratio shall be applied uniformly to banks of the same category. In case a
bank does not comply with the prescribed minimum ratio, the Monetary Board may
limit or prohibit the distribution of net profits by such bank and may require that part or
all of the net profits be used to increase the capital accounts of the bank until the
minimum requirement has been met The Monetary Board may, furthermore, restrict or
prohibit the acquisition of major assets and the making of new investments by the
bank, with the exception of purchases of readily marketable evidences of
indebtedness of the Republic of the Philippines and of the Bangko Sentral and any
other evidences of indebtedness or obligations the servicing and repayment of which
are fully guaranteed by the Republic of the Philippines, until the minimum required
capital ratio has been restored. In case of a bank merger or consolidation, or when a
bank is under rehabilitation under a program approved by the Bangko Sentral,
Monetary Board may temporarily relieve the surviving bank, consolidated bank, or
constituent bank or corporations under rehabilitation from full compliance with the
required capital ratio under such conditions as it may prescribe. Before the effectivity
of rules which the Monetary Board is authorized to prescribe under this provision,
Section 22 of the General Banking Act, as amended, Section 9 of the Thrift Banks Act,
and all pertinent rules issued pursuant thereto, shall continue to be in force. (22a)
Section 35. Limit on Loans, Credit Accommodations and Guarantees
35.1 Except as the Monetary Board may otherwise prescribe for reasons of national
interest, the total amount of loans, credit accommodations and guarantees as may be
defined by the Monetary Board that may be extended by a bank to any person,
partnership, association, corporation or other entity shall at no time exceed twenty
percent (20%) of the net worth of such bank. The basis for determining compliance
with single borrower limit is the total credit commitment of the bank to the borrower.
35.2. Unless the Monetary Board prescribes otherwise, the total amount of loans,
credit accommodations and guarantees prescribed in the preceding paragraph may
be increased by an additional ten percent (10%) of the net worth of such bank
provided the additional liabilities of any borrower are adequately secured by trust
receipts, shipping documents, warehouse receipts or other similar documents
transferring or securing title covering readily marketable, non-perishable goods which
must be fully covered by insurance.
35.3 The above prescribed ceilings shall include (a) the direct liability of the maker or
acceptor of paper discounted with or sold to such bank and the liability of a general
endorser, drawer or guarantor who obtains a loan or other credit accommodation from
or discounts paper with or sells papers to such bank; (b) in the case of an individual
who owns or controls a majority interest in a corporation, partnership, association or
any other entity, the liabilities of said entities to such bank; (c) in the case of a
corporation, all liabilities to such bank of all subsidiaries in which such corporation
owns or controls a majority interest; and (d) in the case of a partnership, association
or other entity, the liabilities of the members thereof to such bank.
35.4. Even if a parent corporation, partnership, association, entity or an individual who
owns or controls a majority interest in such entities has no liability to the bank, the
Monetary Board may prescribe the combination of the liabilities of subsidiary
corporations or members of the partnership, association, entity or such individual
under certain circumstances, including but not limited to any of the following
situations: (a) the parent corporation, partnership, association, entity or individual
guarantees the repayment of the liabilities; (b) the liabilities were incurred for the
accommodation of the parent corporation or another subsidiary or of the partnership
or association or entity or such individual; or (c) the subsidiaries though separate
entities operate merely as departments or divisions of a single entity.
35.5. For purposes of this Section, loans, other credit accommodations and
guarantees shall exclude: (a) loans and other credit accommodations secured by
obligations of the Bangko Sentral or of the Philippine Government: (b) loans and other
credit accommodations fully guaranteed by the government as to the payment of
principal and interest; (c) loans and other credit accommodations covered by
assignment of deposits maintained in the lending bank and held in the Philippines; (d)
loans, credit accommodations and acceptances under letters of credit to the extent
covered by margin deposits; and (e) other loans or credit accommodations which the
Monetary Board may from time to time, specify as non-risk items.
35.6. Loans and other credit accommodations, deposits maintained with, and usual
guarantees by a bank to any other bank or non-bank entity, whether locally or abroad,
shall be subject to the limits as herein prescribed.
35.7. Certain types of contingent accounts of borrowers may be included among those
subject to these prescribed limits as may be determined by the Monetary Board.(23a)
Section 36. Restriction on Bank Exposure to Directors, Officers, Stockholders and
Their Related Interests. - No director or officer of any bank shall, directly or indirectly,
for himself or as the representative or agent of others, borrow from such bank nor
shall he become a guarantor, endorser or surety for loans from such bank to others, or
in any manner be an obligor or incur any contractual liability to the bank except with
the written approval of the majority of all the directors of the bank, excluding the
director concerned: Provided, That such written approval shall not be required for
loans, other credit accommodations and advances granted to officers under a fringe
benefit plan approved by the Bangko Sentral. The required approval shall be entered
upon the records of the bank and a copy of such entry shall be transmitted forthwith to
the appropriate supervising and examining department of the Bangko Sentral.
Dealings of a bank with any of its directors, officers or stockholders and their related
interests shall be upon terms not less favorable to the bank than those offered to
others. After due notice to the board of directors of the bank, the office of any bank
director or officer who violates the provisions of this Section may be declared vacant
and the director or officer shall be subject to the penal provisions of the New Central
Bank Act. The Monetary Board may regulate the amount of loans, credit
accommodations and guarantees that may be extended, directly or indirectly, by a
bank to its directors, officers, stockholders and their related interests, as well as
investments of such bank in enterprises owned or controlled by said directors, officers,
stockholders and their related interests. However, the outstanding loans, credit
accommodations and guarantees which a bank may extend to each of its
stockholders, directors, or officers and their related interests, shall be limited to an
amount equivalent to their respective unencumbered deposits and book value of their
paid-in capital contribution in the bank: Provided, however, That loans, credit
accommodations and guarantees secured by assets considered as non-risk by the
Monetary Board shall be excluded from such limit: Provided, further, That loans, credit
accommodations and advances to officers in the form of fringe benefits granted in
accordance with rules as may be prescribed by the Monetary Board shall not be
subject to the individual limit. The Monetary Board shall define the term "related
interests." The limit on loans, credit accommodations and guarantees prescribed
herein shall not apply to loans, credit accommodations and guarantees extended by a
cooperative bank to its cooperative shareholders. (83a)
Section 37. Loans and Other Credit Accommodations Against Real Estate. - Except
as the Monetary Board may otherwise prescribe, loans and other credit
accommodations against real estate shall not exceed seventy-five percent (75%) of
the appraised value of the respective real estate security, plus sixty percent (60%) of
the appraised value of the insured improvements, and such loans may be made to the
owner of the real estate or to his assignees. (78a)
Section 38. Loans And Other Credit Accommodations on Security of Chattels and
Intangible Properties. - Except as the Monetary Board may otherwise prescribe, loans
and other credit accommodations on security of chattels and intangible properties
such as, but not limited to, patents, trademarks, trade names, and copyrights shall not
exceed seventy-five percent (75%) of the appraised value of the security, an such
loans and other credit accommodation may be made to the title-holder of the chattels
and intangible properties or his assignees. (78a)
Section 39. Grant and Purpose of Loans and Other Credit Accommodations. - A bank
shall grant loans and other credit accommodations only in amounts and for the
periods of time essential for the effective completion of the operations to be financed.
Such grant of loans and other credit accommodations shall be consistent with safe
and sound banking practices. (75a) The purpose of all loans and other credit
accommodations shall be stated in the application and in the contract between the
bank and the borrower. If the bank finds that the proceeds of the loan or other credit
accommodation have been employed, without its approval, for purposes other than
those agreed upon with the bank, it shall have the right to terminate the loan or other
credit accommodation and demand immediate repayment of the obligation. (77)
Section 40. Requirement for Grant Of Loans or 0ther Credit Accommodations. -
Before granting a loan or other credit accommodation, a bank must ascertain that the
debtor is capable of fulfilling his commitments to the bank. Toward this end, a bank
may demand from its credit applicants a statement of their assets and liabilities and of
their income and expenditures and such information as may be prescribed by law or
by rules and regulations of the Monetary Board to enable the bank to properly
evaluate the credit application which includes the corresponding financial statements
submitted for taxation purposes to the Bureau of Internal Revenue. Should such
statements prove to be false or incorrect in any material detail, the bank may
terminate any loan or other credit accommodation granted on the basis of said
statements and shall have the right to demand immediate repayment or liquidation of
the obligation. In formulating rules and regulations under this Section, the Monetary
Board shall recognize the peculiar characteristics of micro financing, such as cash
flow-based lending to the basic sectors that are not covered by traditional collateral.
(76a)
Section 41. Unsecured Loans or Other Credit Accommodations. - The Monetary
Board is hereby authorized to issue such regulations as it may deem necessary with
respect to unsecured loans or other credit accommodations that may be granted by
banks. (n)
Section 42. Other Security Requirements for Bank Credits. - The Monetary Board
may, by regulation, prescribe further security requirements to which the various types
of bank credits shall be subject, and, in accordance with the authority granted to it in
Section 106 of the New Central Bank Act, the Board may by regulation, reduce the
maximum ratios established in Sections 36 and 37 of this Act, or, in special cases,
increase the maximum ratios established therein. (78)
Section 43. Authority to Prescribe Terms and Conditions of Loans and Other Credit
Accommodations. - The Monetary Board, may, similarly in accordance with the
authority granted to it in Section 106 of the New Central Bank Act, and taking into
account the requirements of the economy for the effective utilization of long-term
funds, prescribe the maturities, as well as related terms and conditions for various
types of bank loans and other credit accommodations. Any change by the Board in the
maximum maturities, as well as related terms and conditions for various types of bank
loans and other credit accommodations. Any change by the Board in the maximum
maturities shall apply only to loans and other credit accommodations made after the
date of such action. The Monetary Board shall regulate the interest imposed on micro
finance borrowers by lending investors and similar lenders such as, but not limited to,
the unconscionable rates of interest collected on salary loans and similar credit
accommodations. (78a)
Section 44. Amortization on Loans and Other Credit Accommodations. - The
amortization schedule of bank loans and other credit accommodations shall be
adapted to the nature of the operations to be financed. In case of loans and other
credit accommodations with maturities of more than five (5) years, provisions must be
made for periodic amortization payments, but such payments must be made at least
annually: Provided, however, That when the borrowed funds are to be used for
purposes which do not initially produce revenues adequate for regular amortization
payments therefrom, the bank may permit the initial amortization payment to be
deferred until such time as said revenues are sufficient for such purpose, but in no
case shall the initial amortization date be later than five (5) years from the date on
which the loan or other credit accommodation is granted. (79a) In case of loans and
other credit accommodations to micro finance sectors, the schedule of loan
amortization shall take into consideration the projected cash flow of the borrower and
adopt this into the terms and conditions formulated by banks. (n)
Section 45. Prepayment of Loans and Other Credit Accommodations. - A borrower
may at any time prior to the agreed maturity date prepay, in whole or in part, the
unpaid balance of any bank loan and other credit accommodation, subject to such
reasonable terms and conditions as may be agreed upon between the bank and its
borrower. (80a)
Section 46. Development Assistance Incentives. - The Bangko Sentral shall provide
incentives to banks which, without government guarantee, extend loans to finance
educational institutions cooperatives, hospitals and other medical services, socialized
or low-cost housing, local government units and other activities with social content. (n)
Section 47. Foreclosure of Real Estate Mortgage. - In the event of foreclosure,
whether judicially or extra-judicially, of any mortgage on real estate which is security
for any loan or other credit accommodation granted, the mortgagor or debtor whose
real property has been sold for the full or partial payment of his obligation shall have
the right within one year after the sale of the real estate, to redeem the property by
paying the amount due under the mortgage deed, with interest thereon at rate
specified in the mortgage, and all the costs and expenses incurred by the bank or
institution from the sale and custody of said property less the income derived
therefrom. However, the purchaser at the auction sale concerned whether in a judicial
or extra-judicial foreclosure shall have the right to enter upon and take possession of
such property immediately after the date of the confirmation of the auction sale and
administer the same in accordance with law. Any petition in court to enjoin or restrain
the conduct of foreclosure proceedings instituted pursuant to this provision shall be
given due course only upon the filing by the petitioner of a bond in an amount fixed by
the court conditioned that he will pay all the damages which the bank may suffer by
the enjoining or the restraint of the foreclosure proceeding. Notwithstanding Act 3135,
juridical persons whose property is being sold pursuant to an extrajudicial foreclosure,
shall have the right to redeem the property in accordance with this provision until, but
not after, the registration of the certificate of foreclosure sale with the applicable
Register of Deeds which in no case shall be more than three (3) months after
foreclosure, whichever is earlier. Owners of property that has been sold in a
foreclosure sale prior to the effectivity of this Act shall retain their redemption rights
until their expiration. (78a)
Section 48. Renewal or Extension of Loans and Other Credit Accommodations. - The
Monetary Board may, by regulation, prescribe the conditions and limitations under
which a bank may grant extensions or renewals of its loans and other credit
accommodations. (81)
Section 49. Provisions for Losses and Write-Offs. - All debts due to any bank on
which interest is past due and unpaid for such period as may be determined by the
Monetary Board, unless the same are welt-secured and in the process of collection
shall be considered bad debts within the meaning of this Section. The Monetary Board
may fix, by regulation or by order in a specific case, the amount of reserves for bad
debts or doubtful accounts or other contingencies. Writing off of loans, other credit
accommodations, advances and other assets shall be subject to regulations issued by
the Monetary Board. (84a)
53.4 Upon prior approval of the Monetary Board, act as managing agent, adviser,
consultant or administrator of investment management/advisory/consultancy
accounts; and
53.5. Rent out safety deposit boxes.

Section 50. Major Investments. - For the purpose or enhancing bank supervision, the
Monetary Board shall establish criteria for reviewing major acquisitions of investments
by a bank including corporate affiliations or structures that may expose the bank to
undue risks or in any way hinder effective supervision.
Section 51. Ceiling on Investments in Certain Assets. - Any bank may acquire real
estate as shall be necessary for its own use in the conduct of its business: Provided,
however, That the total investment in such real estate and improvements thereof
including bank equipment, shall not exceed fifty percent (50%) of combined capital
accounts: Provided, further, That the equity investment of a bank in another
corporation engaged primarily in real estate shall be considered as part of the bank's
total investment in real estate, unless otherwise provided by the Monetary Board.
(25a)
The bank shall perform the services permitted under Subsections 53.1, 53.2,53.3 and
53.4 as depositary or as an agent. Accordingly, it shall keep the funds, securities and
other effects which it receives duly separate from the bank's own assets and liabilities:
The Monetary Board may regulate the operations authorized by this Section in order
to ensure that such operations do not endanger the interests of the depositors and
other creditors of the bank. In case a bank or quasi-bark notifies the Bangko Sentral or
publicly announces a bank holiday, or in any manner suspends the payment of its
deposit liabilities continuously for more than thirty (30) days, the Monetary Board may
summarily and without need for prior hearing close such banking institution and place
it under receivership of the Philippine Deposit Insurance Corporation. (72a)
Section 54. Prohibition to Act as Insurer. - A bank shall not directly engage in
insurance business as the insurer. (73)

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

Section 55. Prohibited Transactions.
Notwithstanding the limitations of the preceding Section, a bank may acquire, hold or
convey real property under the following circumstances:
55.1. No director, officer, employee, or agent of any bank shall -
52.1. Such as shall be mortgaged to it in good faith by way of security for debts;
(a) Make false entries in any bank report or statement or participate in any
fraudulent transaction, thereby affecting the financial interest of, or causing
52.2. Such as shall be conveyed to it in satisfaction of debts previously contracted in
damage to, the bank or any person;
the course of its dealings, or

(b) Without order of a court of competent jurisdiction, disclose to any

52.3. Such as it shall purchase at sales under judgments, decrees, mortgages, or trust
unauthorized person any information relative to the funds or properties in the
deeds held by it and such as it shall purchase to secure debts due it.
custody of the bank belonging to private individuals, corporations, or any other
entity: Provided, That with respect to bank deposits, the provisions of existing
Any real property acquired or held under the circumstances enumerated in the above laws shall prevail;
paragraph shall be disposed of by the bank within a period of five (5) years or as may
be prescribed by the Monetary Board: Provided, however, That the bank may, after
(c) Accept gifts, fees, or commissions or any other form of remuneration in
said period, continue to hold the property for its own use, subject to the limitations of
connection with the approval of a loan or other credit accommodation from said
the preceding Section. (25a)
bank;

Section 53. Other Banking Services. - In addition to the operations specifically

(d) Overvalue or aid in overvaluing any security for the purpose of influencing in
authorized in this Act, a bank may perform the following services:
any way the actions of the bank or any bank; or

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

(e) Outsource inherent banking functions.

53.2. Act as financial agent and buy and sell, by order of and for the account of their
55.2. No borrower of a bank shall -
customers, shares, evidences of indebtedness and all types of securities;

(a) Fraudulently overvalue property offered as security for a loan or other credit
53.3. Make collections and payments for the account of others and perform such other
accommodation from the bank;
services for their customers as are not incompatible with banking business;
 (b) Furnish false or make misrepresentation or suppression of material facts for
the purpose of obtaining, renewing, or increasing a loan or other credit
accommodation or extending the period thereof;
(c) Attempt to defraud the said bank in the event of a court action to recover a
loan or other credit accommodation; or
(d) Offer any director, officer, employee or agent of a bank any gift, fee,
commission, or any other form of compensation in order to influence such
persons into approving a loan or other credit accommodation application.
55.3 No examiner, officer or employee of the Bangko Sentral or of any department,
bureau, office, branch or agency of the Government that is assigned to supervise,
examine, assist or render technical assistance to any bank shall commit any of the
acts enumerated in this Section or aid in the commission of the same. (87-Aa)
The making of false reports or misrepresentation or suppression of material facts by
personnel of the Bangko Sental ng Pilipinas shall be subject to the administrative and
criminal sanctions provided under the New Central Bank Act.
55.4. Consistent with the provisions of Republic Act No. 1405, otherwise known as the
Banks Secrecy Law, no bank shall employ casual or non regular personnel or too
lengthy probationary personnel in the conduct of its business involving bank deposits.
Section 56. Conducting Business in an Unsafe or Unsound Manner - In determining
whether a particular act or omission, which is not otherwise prohibited by any law, rule
or regulation affecting banks, quasi-banks or trust entities, may be deemed as
conducting business in an unsafe or unsound manner for purposes of this Section, the
Monetary Board shall consider any of the following circumstances:
56.1 The act or omission has resulted or may result in material loss or damage, or
abnormal risk or danger to the safety, stability, liquidity or solvency of the institution;
56.2 The act or omission has resulted or may result in material loss or damage or
abnormal risk to the institution's depositors, creditors, investors, stockholders or to the
Bangko Sentral or to the public in general;
56.3 The act or omission has caused any undue injury, or has given any unwarranted
benefits, advantage or preference to the bank or any party in the discharge by the
director or officer of his duties and responsibilities through manifest partiality, evident
bad faith or gross inexcusable negligence; or
56.4 The act or omission involves entering into any contract or transaction manifestly
and grossly disadvantageous to the bank, quasi-bank or trust entity, whether or not
the director or officer profited or will profit thereby.
Whenever a bank, quasi-bank or trust entity persists in conducting its business in an
unsafe or unsound manner, the Monetary Board may, without prejudice to the
administrative sanctions provided in Section 37 of the New Central Bank Act, take
action under Section 30 of the same Act and/or immediately exclude the erring bank
from clearing, the provisions of law to the contrary notwithstanding. (n)
Section 57. Prohibition on Dividend Declaration. - No bank or quasi-bank shall
declare dividends, if at the time of declaration:
57.1 Its clearing account with the Bangko Sentral is overdrawn; or
57.2 It is deficient in the required liquidity floor for government deposits for five (5) or
more consecutive days, or
57.3 It does not comply with the liquidity standards/ratios prescribed by the Bangko
Sentral for purposes of determining funds available for dividend declaration; or
57.4 It has committed a major violation as may be determined by the Bangko Sentral
(84a)
Section 58. Independent Auditor. - The Monetary Board may require a bank, quasi-
bank or trust entity to engage the services of an independent auditor to be chosen by
the bank, quasi-bank or trust entity concerned from a list of certified public
accountants acceptable to the Monetary Board. The term of the engagement shall be
as prescribed by the Monetary Board which may either be on a continuing basis
where the auditor shall act as resident examiner, or on the basis of special
engagements; but in any case, the independent auditor shall be responsible to the
bank's, quasi-bank's or trust entity's board of directors. A copy of the report shall be
furnished to the Monetary Board. The Monetary Board may also direct the board of
directors of a bank, quasi-bank, trusty entity and/or the individual members thereof; to
conduct, either personally or by a committee created by the board, an annual balance
sheet audit of the bank, quasi-bank or trust entity to review the internal audit and
control system of the bank, quasi-bank or trust entity and to submit a report of such
audit. (6-Da)
Section 59. Authority to Regulate Electronic Transactions. - The Bangko Sentral shall
have full authority to regulate the use of electronic devices, such as computers, and
processes for recording, storing and transmitting information or data in connection
with the operations of a bank; quasi-bank or trust entity, including the delivery of
services and products to customers by such entity. (n)
Section 60. Financial Statements. - Every bank, quasi-bank or trust entity shall submit
to the appropriate supervising and examining department of the Bangko Sentral
financial statements in such form and frequency as may be prescribed by the Bangko
Sentral. Such statements, which shall be as of a specific date designated by the
Bangko Sentral, shall show thee actual financial condition of the institution submitting
the statement, and of its branches, offices, subsidiaries and affiliates, including the
results of its operations, and shall contain such information as may be required in
Bangko Sentral regulations. (n)
Section 61. Publication of Financial Statements. - Every bank, quasi-bank or trust
entity, shall publish a statement of its financial condition, including those of its
subsidiaries and affiliates, in such terms understandable to the layman and in such
frequency as may be prescribed Bangko Sentral, in English or Filipino, at least once
every quarter in a newspaper of general circulation in the city or province where the 37 of the New Central Bank Act. If the offender is a director or officer of a bank, quasi-
principal office, in the case of a domestic institution or the principal branch or office in bank or trust entity, the Monetary Board may also suspend or remove such director or
the case of a foreign bank, is located, but if no newspaper is published in the same officer. If the violation is committed by a corporation, such corporation may be
province, then in a newspaper published in Metro Manila or in the nearest city or dissolved by quo warranto proceedings instituted by the Solicitor General. (87)
province. The Bangko Sentral may by regulation prescribe the newspaper where the
statements prescribed herein shall be published. The Monetary Board may allow the
CHAPTER V
posting of the financial statements of a bank, quasi-bank or trust entity in public places
PLACEMENT UNDER CONSERVATORSHIP
it may determine, lieu of the publication required in the preceding paragraph, when
warranted by the circumstances. Additionally, banks shall make available to the public
in such form and manner as the Bangko Sentral may prescribe the complete set of its Section 67. Conservatorship. - The grounds and procedures for placing a bank under
audited financial statements as well as such other relevant information including those conservatorship, as well as, the powers and duties of the conservator appointed for
on enterprises majority-owned or controlled by the bank, that will inform the public of the bank shall be governed by the provisions of Section 29 and the last two
the true financial condition of a bank as of any given time. In periods of national and/or paragraphs of Section 30 of the New Central Bank Act: Provided, That this Section
local emergency or of imminent panic which directly threaten monetary and banking shall also apply to conservatorship proceedings of quasi-banks. (n)
stability, the Monetary Board, by a vote of at least five (5) of its members, in special
cases and upon application of the bank, quasi-bank or trust entity, may allow such
CHAPTER VI
bank, quasi-bank or trust entity to defer for a stated period of time the publication of
CESSATION OF BANKING BUSINESS
the statement of financial condition required herein. (n)

Section 68. Voluntary Liquidation. - In case of voluntary liquidation of any bank

Section 62. Publication of Capital Stock. - A bank, quasi-bank or trust entity
organized under the laws of the Philippines, or of any branch or office in the
incorporated under the laws of the Philippines shall not publish the amount of its
Philippines of a foreign bank, written notice of such liquidation shall be sent to the
authorized or subscribed capital stock without indicating at the same time and with
Monetary Board before such liquidation shall be sent to the Monetary Board before
equal prominence, the amount of its capital actually paid up. No branch of any foreign
such liquidation is undertaken, and the Monetary Board shall have the right to
bank doing business in the Philippines shall in any way announce the amount of the
intervene and take such steps as may be necessary to protect the interests of
capital and surplus of its head office, or of the bank in its entirety without indicating at
creditors. (86)
the same time and with equal prominence the amount of the capital, if any, definitely
assigned to such branch, such fact shall be stated in, and shall form part of the
publication. (82) Section 69. Receivership and Involuntary Liquidation. - The grounds and procedures
for placing a bank under receivership or liquidation, as well as the powers and duties
of the receiver or liquidator appointed for the bank shall be governed by the provisions
Section 63. Settlement of Disputes. - The provisions of any law to the contrary
of Sections 30, 31, 32, and 33 of the New Central Bank Act: Provided, That the
notwithstanding, the Bangko Sentral shall be consulted by other government agencies
petitioner or plaintiff files with the clerk or judge of the court in which the action is
or instrumentalities in actions or proceedings initiated by or brought before them
pending a bond, executed in favor of the Bangko Sentral, in an amount to be fixed by
involving controversies in banks, quasi-banks or trust entities arising out of and
the court. This Section shall also apply to the extent possible to the receivership and
involving relations between and among their directors, officers or stockholders, as well
liquidation proceedings of quasi-banks. (n)
as disputes between any or all of them and the bank, quasi-bank or trust entity of
which they are directors, officers or stockholders. (n)
Section 70. Penalty for Transactions After a Bank Becomes Insolvent. - Any director
or officer of any bank declared insolvent or placed under receivership by the Monetary
Section 64. Unauthorized Advertisement or Business Representation. - No person,
Board who refuses to turn over the bank's records and assets to the designated
association, or corporation unless duly authorized to engage in the business of a
receivers, or who tampers with banks records, or who appropriates for himself for
bank, quasi-bank, trust entity, or savings and loan association as defined in this Act,
another party or destroys or causes the misappropriation and destruction of the bank's
or other banking laws, shall advertise or hold itself out as being engaged in the
assets, or who receives or permits or causes to be received in said bank any deposit,
business of such bank, quasi-bank, trust entity, or association, or use in connection
collection of loans and/or receivables, or who pays out or permits or causes to be
with its business title, the word or words "bank", "banking", "banker", "quasi-bank",
transferred any securities or property of said bank shall be subject to the penal
"quasi-banking", "quasi-banker", "savings and loan association", "trust corporation",
provisions of the New Central Bank Act. (85a)
"trust company" or words of similar import or transact in any manner the business of
any such bank, corporation or association. (6)
CHAPTER VII
LAWS GOVERNING OTHER TYPES OF BANKS
Section 65. Service Fees. - The Bangko Sentral may charge equitable rates,
commissions or fees, as may be prescribed by the Monetary Board for supervision,
examination and other services which it renders under this Act. (n) Section 71. Other Banking Laws. - The organization, the ownership and capital
requirements, powers, supervision and general conduct of business of thrift banks,
rural banks and cooperative banks shall be governed by the provisions of the Thrift
Section 66. Penalty for Violation of this Act. - Unless otherwise herein provided, the
Banks Act, the Rural Banks Act, and the Cooperative Code, respectively. The
violation of any of the provisions of this Act shall be subject to Sections 34, 35, 36 and
organization, ownership and capital requirements, powers, supervision and general
conduct of business of Islamic banks shall be governed by special laws. The
provisions of this Act, however, insofar as they are not in conflict with the provisions of
the Thrift Banks Act, the Rural Banks Act, and the Cooperative Code shall likewise
apply to thrift banks, rural banks, and cooperative banks, respectively. However, for
purposes of prescribing the minimum ratio which the net worth of a thrift bank must
bear to its total risk assets, the provisions of Section 33 of this Act shall govern. (n)
CHAPTER VIII
FOREIGN BANKS
Section 72. Transacting Business in the Philippines. - The entry of foreign banks in
the Philippines through the establishment of branches shall be governed by the
provisions of the Foreign Banks Liberalization Act. The conduct of offshore banking
business in the Philippines shall be governed by the provisions of the Presidential
Decree No. 1034, otherwise known as the "Offshore Banking System Decree." (14a)
Section 73. Acquisition of Voting Stock in a Domestic Bank. - Within seven (7) years
from the effectivity of this act and subject to guidelines issued pursuant to the Foreign
Banks Liberalization Act, the Monetary Board may authorize a foreign bank to acquire
up to one hundred percent (100%) of the voting stock of only one (1) bank organized
under the laws of the Republic of the Philippines. Within the same period, the
Monetary Board may authorize any foreign bank, which prior to the effectivity of this
Act availed itself of the privilege to acquire up to sixty percent (60%) of the voting
stock of a bank under the Foreign Banks Liberalization Act and the Thrift Banks Act, to
further acquire voting shares such bank to the extent necessary for it to own one
hundred percent (100%) of the voting stock thereof. In the exercise of the authority,
the Monetary Board shall adopt measures as may be necessary to ensure that at all
times the control of seventy percent (70%) of the resources or assets of the entire
banking system is held by banks which are at least majority-owned by Filipinos. Any
right, privilege or incentive granted to a foreign bank under this Section shall be
equally enjoyed by and extended under the same conditions to banks organized under
the laws of the Republic of the Philippines. (Secs. 2 and 3, RA 7721
Section 74. Local Branches of Foreign Banks. - In the case of a foreign bank which
has more than one (1) branch in the Philippines, all such branches shall be treated as
one (1) unit for the purpose of this Act, and all references to the Philippine branches of
foreign banks shall be held to refer to such units. (68)
Section 75. Head Office Guarantee. - In order to provide effective protection of the
interests of the depositors and other creditors of Philippine branches of a foreign bank,
the head office of such branches shall fully guarantee the prompt payment of all
liabilities of its Philippine branch. (69) Residents and citizens of the Philippines who
are creditors of a branch in the Philippines of a foreign bank shall have preferential
rights to the assets of such branch in accordance with the existing laws. (19)
Section 76. Summons and Legal Process. - Summons and legal process served upon
the Philippine agent or head of any foreign bank designated to accept service thereof
shall give jurisdiction to the courts over such bank, and service of notices on such
agent or head shall be as binding upon the bank which he represents as if made upon
the bank itself. Should the authority of such agent or head to accept service of
summons and legal processes for the bank or notice to it be revoked, or should such
agent or head become mentally incompetent or otherwise unable to accept service
while exercising such authority, it shall be the duty of the bank to name and designate
promptly another agent or head upon whom service of summons and processes in
legal proceedings against the bank and of notices affecting the bank may be made,
and to file with the Securities and Exchange Commission a duly authenticated
nomination of such agent. In the absence of the agent or head or should there be no
person authorized by the bank upon whom service of summons, processes and all
legal notices may be made, service of summons, processes and legal notices may be
made upon the Bangko Sentral Deputy Governor In-Charge of the supervising and
examining departments and such service shall be as effective as if made upon the
bank or its duly authorized agent or head. In case of service for the bank upon the
Bangko Sentral Deputy Governor In-charge of the supervising and examining
departments, the said deputy Governor shill register and transmit by mail to the
president or the secretary of the bank at its head or principal office a copy, duly
certified by him, of the summons, process, or notice. The sending of such copy of the
summons, process, or notice shall be a necessary part of the services and shall
complete the service. The registry receipt of mailing shall be prima facie evidence of
the transmission of the summons, process or notice. All costs necessarily incurred by
the said Deputy Governor for the making and mailing and sending of a copy of the
summons, process, or notice to the president or the secretary of the bank at its head
or principal office shall be paid in advance by the party at whose instance the service
is made. (17)
Section 77. Laws Applicable. - In all matters not specifically covered by special
provisions applicable only to a foreign bank or its branches and other offices in the
Philippines any foreign bank licensed to do business in the Philippines shall be bound
by the provisions of this Act, all other laws, rules and regulations applicable to banks
organized under the laws of the Philippines of the same class, except those that
provide for the creation, formation, organization or dissolution of corporations or for
the fixing of the relations, liabilities, responsibilities, or duties of stockholders,
members, directors or officers of corporations to each other or to the corporation. (18)
Section 78. Revocation of License of a Foreign Bank - The Monetary Board may
revoke the license to transact business in the Philippines of, any foreign bank, if it
finds that the foreign bank is insolvent or in imminent danger thereof or that its
continuance in business will involve probable loss to those transacting business with
it. After the revocation of its license, it shall be unlawful for any such foreign banks to
transact business in the Philippines unless its license is renewed or reissued. After the
revocation of such license, the Bangko Sentral shall take the necessary action to
protect the creditors of such foreign bank and the public. The provisions of the New
Central Bank Act on sanctions and penalties shall likewise be applicable. (16)
CHAPTER IX
TRUST OPERATIONS
Section 79. Authority to Engage in Trust Business. - Only a stock corporation or a
person duly authorized by the Monetary Board to engage in trust business shall act as
a trustee or administer any trust or hold property in trust or on deposit for the use,
benefit, or behoof of others. For purposes of this Act, such a corporation shall be
referred to as a trust entity. (56a; 57a)
Section 80. Conduct of Trust Business. - A trust entity shall administer the funds or
property under its custody with the diligence that a prudent man would exercise in the
conduct of an enterprise of a like character and with similar aims. No trust entity shall,
for the account of the trustor or the beneficiary of the trust, purchase or acquire
property from, or sell, transfer, assign, or lend money or property to, or purchase debt
instruments of, any of the departments, directors, officers, stockholders, or employees
of the trust entity, relatives within the first degree of consanguinity or affinity, or the
related interests, of such directors, officers and stockholders, unless the transaction is
specifically authorized by the trustor and the relationship of the trustee and the other
party involved in the transaction is fully disclosed to the trustor of beneficiary of the
trust prior to the transaction. The Monetary Board shall promulgate such rules and
regulations as may be necessary to prevent circumvention of this prohibition or the
evasion of the responsibility herein imposed on a trust entity. (56)
Section 81. Registration of Articles of Incorporation and By-Laws of a Trust Entity. -
The Securities and Exchange Commission shall not register the articles of
incorporation and by-laws or any amendment thereto, of any trust entity, unless
accompanied by a certificate of authority issued by the Bangko Sentral. (n)
Section 82. Minimum Capitalization. - A trust entity, before it can engage in trust or
other fiduciary business, shall comply with the minimum paid-in capital requirement
which will be determined by the Monetary Board. (n)
Section 83. Powers of a Trust Entity. - A trust entity, in addition to the general powers
incident to corporations, shall have the power to:
83.1 Act as trustee on any mortgage or bond issued by any municipality, corporation,
or any body politic and to accept and execute any trust consistent with law;
83.2 Act under the order or appointment of any court as guardian, receiver, trustee, or
depositary of the estate of any minor or other incompetent person, and as receiver
and depositary of any moneys paid into court by parties to any legal proceedings and
of property of any kind which may be brought under the jurisdiction of the court;
83.3. Act as the executor of any will when it is named the executor thereof;
83.4 Act as administrator of the estate of any deceased person, with the will annexed,
or as administrator of the estate of any deceased person when there is no will;
83.5. Accept and execute any trust for the holding, management, and administration
of any estate, real or personal, and the rents, issues and profits thereof; and
83.6. Establish and manage common trust funds, subject to such rules and
regulations as may be prescribed by the Monetary Board.
Section 84. Deposit for the Faithful Performance of Trust Duties. - Before transacting
trust business, every trust entity shall deposit with the Bangko Sentral, as security for
the faithful performance of its trust duties, cash or securities approved by the
Monetary Board in an amount equal to or not less than Five hundred thousand pesos
(P500,000.00) or such higher amount as may fixed by the Monetary Board: Provided,
however, That the Monetary Board shall require every trust entity to increase the
amount of its cash or securities on deposit with the Bangko Sentral in accordance with
the provisions of this paragraph. Should the capital and surplus fall below said
amount, the Monetary Board shall have the same authority as that granted to it under
the provisions of the fifth paragraph of Section 34 of this Act. A trust entity so long as it
shall continue to be solvent and comply with laws or regulations shall have the right to
collect the interest earned on such securities deposited with the Bangko Sentral and,
from time to time, with the approval of the Bangko Sentral, to exchange the securities
for others. If the trust entity fails to comply with any law or regulation, the Bangko
Sentral shall retain such interest on the securities deposited with it for the benefit of
rightful claimants. Al claims rising out of the trust business of a trust entity shall have
priority over all other claims as regards the cash or securities deposited as above
provided. The Monetary Board may not permit the cash or securities deposited in
accordance with the provisions of this Section to be reduced below the prescribed
minimum amount until the depositing entity shall discontinue its trust business and
shall satisfy the Monetary Board that it has complied with all its obligations in
connection with such business. (65a)
Section 85. Bond of Certain Persons for the Faithful Performance of Duties. - Before
an executor, administrator, guardian, trustee, receiver or depositary appointed by the
court enters upon the execution of his duties, he shall, upon order of the court, file a
bond in such sum as the court may direct. Upon the application of any executor,
administrator, guardian, trustee, receiver, depositary or any other person in interest,
the court may, after notice and hearing, order that the subject matter of the trust or
any part, thereof be deposited with a trust entity. Upon presentation of proof to the
court that the subject matter of the trust has been deposited with a trust entity. Upon
presentation of proof to the court that the subject matter of the trust has been
deposited with a trust entity, the court may order that the bond given by such persons
for the faithful performance of their duties be reduced to such sums as it may deem
proper: Provided, however, That the reduced bond shall be sufficient to secure
adequately the proper administration and care of any property remaining under the
control of such persons and the proper accounting for such property. Property
deposited with any trust entity in conformity with this Section shall be held by such
entity under the orders and direction of the court. (59)
Section 86. Exemption of Trust Entity from Bond Requirement. - No bond or other
security shall be required by the court from a trust entry for the faithful performance of
its duties as court-appointed trustee, executor, administrator, guardian, receiver, or
depositary. However, the court may, upon proper application with it showing special
cause therefore, require the trust entity to post a bond or other security for the
protection of funds or property confided to such entity. (59)
Section 87. Separation of Trust Business from General Business. - The trust business
and all funds, properties or securities received by any trust entity as executor,
administrator, guardian, trustee, receiver, or depositary shall be kept separate and
distinct from the general business including all other funds, properties, and assets of
such trust entity. The accounts of all such funds, properties, or securities shall likewise
be kept separate and distinct from the accounts of the general business of the trust
entity. (61)
Section 88. Investment Limitations of a Trust Entity. - Unless otherwise directed by
the instrument creating the trust, the lending and investment of funds and other assets
acquired by a trust entity as executor, administrator, guardian, trustee, receiver or
depositary of the estate of any minor or other incompetent person shall be limited to
loans or investments as may be prescribed by law, the Monetary Board or any court of
competent jurisdiction. (63a)
Section 89. Real Estate Acquired by a Trust Entity. - Unless otherwise specifically
directed by the trustor or the nature of the trust, real estate acquired by a trust entity in
whatever manner and for whatever purposes, shall likewise be governed by the
relevant provisions of Section 52 of this Act. (64a)
Section 90. Investment of Non-Trust Funds. - The investment of funds other than trust
funds of a trust entity which is a bank, financing company or an investment house
shall be governed by the relevant provisions of this Act and other applicable laws. (64)
or sections of this Act, and the application of such provision or section to other
persons or circumstances shall not be affected thereby. (n)
Section 97. Effectivity Clause - This Act shall take effect fifteen (15) days following its
publication in the Official Gazette or in two (2) national newspapers of general
circulation. (91)
Approved,

Section 91. Sanctions and Penalties. - A trust entity or any of its officers and directors
FRANKLIN M. DRILON
found to have willfully violated any pertinent provisions of this Act, shall be subject to
President of the Senate
the sanctions and penalties provided tinder Section 66 of this Act as well as Sections
36 and 37 of the New Central Bank Act.
MANUEL B. VILLAR JR.
Speaker of the House of Representatives
Section 92. Exemption of Trust Assets from Claims. - No assets held by a trust entity
in its capacity as trustee shall be subject to any claims other than those of the parties
interested in the specific trusts. (65) This Act, which is a consolidation of Senate Bill No. 1519 and House Bill No. 6814,
was finally passed by the Senate and the House of Representatives on April 12, 2000.
Section 93. Establishment of Branches of a Trust Entity. - The ordinary business of a
trust entity shall be transacted at the place of business specified in its articles of ROBERTO P. NAZARENO
incorporation. Such trust entity may, with prior approval of the Monetary Board, Secretary General House of Representatives
establish branches in the Philippines and the said entity shall be responsible for all
business conducted in such branches to the same extent and in the same manner as
OSCAR G. YABES
though such business had all been conducted in the head office. For the purpose of
Secretary of the Senate
this Act, the trust entity and its branches shall be treated as one unit. (67)

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

Section 95. Repealing Clause. - Except as may be provided for in Sections 34 and 94

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

Section 96. Separability Clause. - If any provision or section of this Act or the

application thereof to any person or circumstance is held invalid, the other provisions

REPUBLIC ACT No. 7653
THE NEW CENTRAL BANK ACT
CHAPTER I — ESTABLISHMENT AND ORGANIZATION OF THE BANGKO
SENTRAL NG PILIPINAS
ARTICLE I
CREATION, RESPONSIBILITIES AND CORPORATE POWERS OF THE BANGKO
SENTRAL
            Section 1. Declaration of Policy. - The State shall maintain a central monetary
authority that shall function and operate as an independent and accountable body
corporate in the discharge of its mandated responsibilities concerning money, banking
and credit. In line with this policy, and considering its unique functions and
responsibilities, the central monetary authority established under this Act, while being
a government-owned corporation, shall enjoy fiscal and administrative autonomy.
            Section 2. Creation of the Bangko Sentral. - There is hereby established an
independent central monetary authority, which shall be a body corporate known as the
Bangko Sentral ng Pilipinas, hereafter referred to as the Bangko Sentral.
            The capital of the Bangko Sentral shall be Fifty billion pesos
(P50,000,000,000), to be fully subscribed by the Government of the Republic,
hereafter referred to as the Government, Ten billion pesos (P10,000,000,000) of
which shall be fully paid for by the Government upon the effectivity of this Act and the
balance to be paid for within a period of two (2) years from the effectivity of this Act in
such manner and form as the Government, through the Secretary of Finance and the
Secretary of Budget and Management, may thereafter determine.
            Section 3. Responsibility and Primary Objective. - The Bangko Sentral shall
provide policy directions in the areas of money, banking, and credit. It shall have
supervision over the operations of banks and exercise such regulatory powers as
provided in this Act and other pertinent laws over the operations of finance companies
and non-bank financial institutions performing quasi-banking functions, hereafter
referred to as quasi-banks, and institutions performing similar functions.
            The primary objective of the Bangko Sentral is to maintain price stability
conducive to a balanced and sustainable growth of the economy. It shall also promote
and maintain monetary stability and the convertibility of the peso.
            Section 4. Place of Business. - The Bangko Sentral shall have its principal
place of business in Metro Manila, but may maintain branches, agencies and
correspondents in such other places as the proper conduct of its business may
require.
            Section 5. Corporate Powers. - The Bangko Sentral is hereby authorized to
adopt, alter, and use a corporate seal which shall be judicially noticed; to enter into
contracts; to lease or own real and personal property, and to sell or otherwise dispose
of the same; to sue and be sued; and otherwise to do and perform any and all things
that may be necessary or proper to carry out the purposes of this Act.
            The Bangko Sentral may acquire and hold such assets and incur such
liabilities in connection with its operations authorized by the provisions of this Act, or
as are essential to the proper conduct of such operations.
            The Bangko Sentral may compromise, condone or release, in whole or in part,
any claim of or settled liability to the Bangko Sentral, regardless of the amount
involved, under such terms and conditions as may be prescribed by the Monetary
Board to protect the interests of the Bangko Sentral.
ARTICLE II
THE MONETARY BOARD
            Section 6. Composition of the Monetary Board. - The powers and functions of
the Bangko Sentral shall be exercised by the Bangko Sentral Monetary Board,
hereafter referred to as the Monetary Board, composed of seven (7) members
appointed by the President of the Philippines for a term of six (6) years.
            The seven (7) members are:
(a) the Governor of the Bangko Sentral, who shall be the Chairman of the
Monetary Board. The Governor of the Bangko Sentral shall be head of a
department and his appointment shall be subject to confirmation by the
Commission on Appointments. Whenever the Governor is unable to attend
a meeting of the Board, he shall designate a Deputy Governor to act as his
alternate: Provided, That in such event, the Monetary Board shall designate
one of its members as acting Chairman;
(b) a member of the Cabinet to be designated by the President of the
Philippines. Whenever the designated Cabinet Member is unable to attend a
meeting of the Board, he shall designate an Undersecretary in his
Department to attend as his alternate; and
(c) five (5) members who shall come from the private sector, all of whom
shall serve full-time: Provided, however, That of the members first appointed
under the provisions of this subsection, three (3) shall have a term of six (6)
years, and the other two (2), three (3) years.
            No member of the Monetary Board may be reappointed more than once.
            Section 7. Vacancies. - Any vacancy in the Monetary Board created by the
death, resignation, or removal of any member shall be filled by the appointment of a
new member to complete the unexpired period of the term of the member concerned.
            Section 8. Qualifications. - The members of the Monetary Board must be
natural-born citizens of the Philippines, at least thirty-five (35) years of age, with the
exception of the Governor who should at least be forty (40) years of age, of good
moral character, of unquestionable integrity, of known probity and patriotism, and with
recognized competence in social and economic disciplines.
            Section 9. Disqualifications. - In addition to the disqualifications imposed by
Republic Act No. 6713, a member of the Monetary Board is disqualified from being a
director, officer, employee, consultant, lawyer, agent or stockholder of any bank,
quasi-bank or any other institution which is subject to supervision or examination by
the Bangko Sentral, in which case such member shall resign from, and divest himself
of any and all interests in such institution before assumption of office as member of
the Monetary Board.
            The members of the Monetary Board coming from the private sector shall not
hold any other public office or public employment during their tenure.
            No person shall be a member of the Monetary Board if he has been connected
directly with any multilateral banking or financial institution or has a substantial interest
in any private bank in the Philippines, within one (1) year prior to his appointment;
likewise, no member of the Monetary Board shall be employed in any such institution
within two (2) years after the expiration of his term except when he serves as an
official representative of the Philippine Government to such institution.
            Section 10. Removal. - The President may remove any member of the
Monetary Board for any of the following reasons:
(a) If the member is subsequently disqualified under the provisions of Section 8
of this Act; or
(b) If he is physically or mentally incapacitated that he cannot properly discharge
his duties and responsibilities and such incapacity has lasted for more than six
(6) months; or
(c) If the member is guilty of acts or operations which are of fraudulent or illegal
character or which are manifestly opposed to the aims and interests of the
Bangko Sentral; or
(d) If the member no longer possesses the qualifications specified in Section 8 of
this Act.
            Section 11. Meetings. - The Monetary Board shall meet at least once a week.
The Board may be called to a meeting by the Governor of the Bangko Sentral or by
two (2) other members of the Board.
            The presence of four (4) members shall constitute a quorum: Provided, That in
all cases the Governor or his duly designated alternate shall be among the four (4).
            Unless otherwise provided in this Act, all decisions of the Monetary Board shall
require the concurrence of at least four (4) members.
            The Bangko Sentral shall maintain and preserve a complete record of the
proceedings and deliberations of the Monetary Board, including the tapes and
transcripts of the stenographic notes, either in their original form or in microfilm.
            Section 12. Attendance of the Deputy Governors. - The Deputy Governors
may attend the meetings of the Monetary Board with the right to be heard.
            Section 13. Salary. - The salary of the Governor and the members of the
Monetary Board from the private sector shall be fixed by the President of the
Philippines at a sum commensurate to the importance and responsibility attached to
the position.
            Section 14. Withdrawal of Persons Having a Personal Interest. - In addition to
the requirements of Republic Act No. 6713, any member of the Monetary Board with
personal or pecuniary interest in any matter in the agenda of the Monetary Board shall
disclose his interest to the Board and shall retire from the meeting when the matter is
taken up. The decision taken on the matter shall be made public. The minutes shall
reflect the disclosure made and the retirement of the member concerned from the
meeting.
            Section 15. Exercise of Authority. - In the exercise of its authority, the
Monetary Board shall:
(a) issue rules and regulations it considers necessary for the effective discharge
of the responsibilities and exercise of the powers vested upon the Monetary
Board and the Bangko Sentral. The rules and regulations issued shall be
reported to the President and the Congress within fifteen (15) days from the date
of their issuance;
(b) direct the management, operations, and administration of the Bangko Sentral,
reorganize its personnel, and issue such rules and regulations as it may deem
necessary or convenient for this purpose. The legal units of the Bangko Sentral
shall be under the exclusive supervision and control of the Monetary Board;
(c) establish a human resource management system which shall govern the
selection, hiring, appointment, transfer, promotion, or dismissal of all personnel.
Such system shall aim to establish professionalism and excellence at all levels of
the Bangko Sentral in accordance with sound principles of management.
            A compensation structure, based on job evaluation studies and wage surveys
and subject to the Board's approval, shall be instituted as an integral component of the
Bangko Sentral's human resource development program: Provided, That the Monetary
Board shall make its own system conform as closely as possible with the principles
provided for under Republic Act No. 6758: Provided, however, That compensation and
wage structure of employees whose positions fall under salary grade 19 and below submitted to the President and/or the Congress, or to be published under the
shall be in accordance with the rates prescribed under Republic Act No. 6758. provisions of this Act shall not be considered confidential.

            On the recommendation of the Governor, appoint, fix the remunerations and ARTICLE III
other emoluments, and remove personnel of the Bangko Sentral, subject to pertinent THE GOVERNOR AND DEPUTY GOVERNORS OF THE BANGKO SENTRAL
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
            Section 17. Powers and Duties of the Governor. - The Governor shall be the
and these personnel actions are deemed made in the interest of the service and not
chief executive officer of the Bangko Sentral. His powers and duties shall be to:
disciplinary: Provided, further, That the Monetary Board may delegate such authority
to the Governor under such guidelines as it may determine.
(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
(d) adopt an annual budget for and authorize such expenditures by the Bangko
necessary to carry out the purposes and provisions of this Act;
Sentral as are in the interest of the effective administration and operations of the
Bangko Sentral in accordance with applicable laws and regulations; and
(b) execute and administer the policies and measures approved by the Monetary
Board;
(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 (c) direct and supervise the operations and internal administration of the Bangko
connection with any civil or criminal action, suit or proceedings to which he may Sentral. The Governor may delegate certain of his administrative responsibilities
be, or is, made a party by reason of the performance of his functions or duties, to other officers or may assign specific tasks or responsibilities to any full-time
unless he is finally adjudged in such action or proceeding to be liable for member of the Monetary Board without additional remuneration or allowance
negligence or misconduct. whenever he may deem fit or subject to such rules and regulations as the
Monetary Board may prescribe;
            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 (d) appoint and fix the remunerations and other emoluments of personnel below
Bangko Sentral is advised by external counsel that the person to be indemnified did the rank of a department head in accordance with the position and compensation
not commit any negligence or misconduct. 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
            The costs and expenses incurred in defending the aforementioned action, suit
approval of the Monetary Board;
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 (e) render opinions, decisions, or rulings, which shall be final and executory until
determined by the Monetary Board that he is not entitled to be indemnified as reversed or modified by the Monetary Board, on matters regarding application or
provided in this subsection. 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
            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 (f) exercise such other powers as may be vested in him by the Monetary Board.
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
            Section 18. Representation of the Monetary Board and the Bangko Sentral. -
result of such violation, negligence, abuse, malfeasance, misfeasance or failure to
The Governor of the Bangko Sentral shall be the principal representative of the
exercise extraordinary diligence.
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:
            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
(a) represent the Monetary Board and the Bangko Sentral in all dealings with
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 other offices, agencies and instrumentalities of the Government and all other
persons or entities, public or private, whether domestic, foreign or international;
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 (b) sign contracts entered into by the Bangko Sentral, notes and securities issued
Sentral or third parties: Provided, however, That any data or information required to be by the Bangko Sentral, all reports, balance sheets, profit and loss statements,
correspondence and other documents of the Bangko Sentral.
             The signature of the Governor may be in facsimile whenever appropriate;
(c) represent the Bangko Sentral, either personally or through counsel, including
private counsel, as may be authorized by the Monetary Board, in any legal
proceedings, action or specialized legal studies; and
(d) delegate his power to represent the Bangko Sentral, as provided in
subsections (a), (b) and (c) of this section, to other officers upon his own
responsibility: Provided, however, That in order to preserve the integrity and the
prestige of his office, the Governor of the Bangko Sentral may choose not to
participate in preliminary discussions with any multilateral banking or financial
institution on any negotiations for the Government within or outside the
Philippines. During the negotiations, he may instead be represented by a
permanent negotiator.
            Section 19. Authority of the Governor in Emergencies. - In case of
emergencies where time is sufficient to call a meeting of the Monetary Board, the
Governor of the Bangko Sentral, with the concurrence of two (2) other members of the
Monetary Board, may decide any matter or take any action within the authority of the
Board.
            The Governor shall submit a report to the President and Congress within
seventy-two (72) hours after the action has been taken.
            At the soonest possible time, the Governor shall call a meeting of the
Monetary Board to submit his action for ratification.
            Section 20. Outside Interests of the Governor and the Full-time Members of
the Board. - The Governor of the Bangko Sentral and the full-time members of the
Board shall limit their professional activities to those pertaining directly to their
positions with the Bangko Sentral. Accordingly, they may not accept any other
employment, whether public or private, remunerated or ad honorem, with the
exception of positions in eleemosynary, civic, cultural or religious organizations or
whenever, by designation of the President, the Governor or the full-time member is
tasked to represent the interest of the Government or other government agencies in
matters connected with or affecting the economy or the financial system of the
country.
            Section 21. Deputy Governors. - The Governor of the Bangko Sentral, with
the approval of the Monetary Board, shall appoint not more than three (3) Deputy
Governors who shall perform duties as may be assigned to them by the Governor and
the Board.
            In the absence of the Governor, a Deputy Governor designated by the
Governor shall act as chief executive of the Bangko Sentral and shall exercise the
powers and perform the duties of the Governor. Whenever the Government is unable
to attend meetings of government boards or councils in which he is an ex officio
member pursuant to provisions of special laws, a Deputy Governor as may be
designated by the Governor shall be vested with authority to participate and exercise
the right to vote in such meetings.
ARTICLE IV
OPERATIONS OF THE BANGKO SENTRAL
            Section 22. Research and Statistics. - The Bangko Sentral shall prepare data
and conduct economic research for the guidance of the Monetary Board in the
formulation and implementation of its policies. Such data shall include, among others,
forecasts of the balance of payments of the Philippines, statistics on the monthly
movement of the monetary aggregates and of prices and other statistical series and
economic studies useful for the formulation and analysis of monetary, banking, credit
and exchange policies.
            Section 23. Authority to Obtain Data and Information. - The Bangko Sentral
shall have the authority to request from government offices and instrumentalities, or
government-owned or controlled corporations, any data which it may require for the
proper discharge of its functions and responsibilities. The Bangko Sentral through the
Governor or in his absence, a duly authorized representative shall have the power to
issue a subpoena for the production of the books and records for the aforesaid
purpose. Those who refuse the subpoena without justifiable cause, or who refuse to
supply the bank with data requested or required, shall be subject to punishment for
contempt in accordance with the provisions of the Rules of Court.
            Data on individual firms, other than banks, gathered by the Department of
Economic Research and other departments or units of the Bangko Sentral shall not be
made available to any person or entity outside of the Bangko Sentral whether public or
private except under order of the court or under such conditions as may be prescribed
by the Monetary Board: Provided, however, That the collective data on firms may be
released to interested persons or entities: Provided, finally, That in the case of data on
banks, the provisions of Section 27 of this Act shall apply.
            Section 24. Training of Technical Personnel. - The Bangko Sentral shall
promote and sponsor the training of technical personnel in the field of money and
banking. Toward this end, the Bangko Sentral is hereby authorized to defray the costs
of study, at home or abroad, of qualified employees of the Bangko Sentral, of
promising university graduates or of any other qualified persons who shall be
determined by proper competitive examinations. The Monetary Board shall prescribe
rules and regulations to govern the training program of the Bangko Sentral.
            Section 25. Supervision and Examination. - The Bangko Sentral shall have
supervision over, and conduct periodic or special examinations of, banking institutions
and quasi-banks, including their subsidiaries and affiliates engaged in allied activities.
            For purposes of this section, a subsidiary means a corporation more than fifty
percent (50%) of the voting stock of which is owned by a bank or quasi-bank and an
affiliate means a corporation the voting stock of which, to the extent of fifty percent
(50%) or less, is owned by a bank or quasi-bank or which is related or linked to such
institution or intermediary through common stockholders or such other factors as may
be determined by the Monetary Board.
            The department heads and the examiners of the supervising and/or examining
departments are hereby authorized to administer oaths to any director, officer, or
employee of any institution under their respective supervision or subject to their
examination and to compel the presentation of all books, documents, papers or
records necessary in their judgment to ascertain the facts relative to the true condition
of any institution as well as the books and records of persons and entities relative to or
in connection with the operations, activities or transactions of the institution under
examination, subject to the provision of existing laws protecting or safeguarding the
secrecy or confidentiality of bank deposits as well as investments of private persons,
natural or juridical, in debt instruments issued by the Government.
            No restraining order or injunction shall be issued by the court enjoining the
Bangko Sentral from examining any institution subject to supervision or examination
by the Bangko Sentral, unless there is convincing proof that the action of the Bangko
Sentral is plainly arbitrary and made in bad faith and the petitioner or plaintiff files with
the clerk or judge of the court in which the action is pending a bond executed in favor
of the Bangko Sentral, in an amount to be fixed by the court. The provisions of Rule
58 of the New Rules of Court insofar as they are applicable and not inconsistent with
the provisions of this section shall govern the issuance and dissolution of the
restraining order or injunction contemplated in this section.
            Section 26. Bank Deposits and Investments. - Any director, officer or
stockholder who, together with his related interest, contracts a loan or any form of
financial accommodation from: (1) his bank; or (2) from a bank (a) which is a
subsidiary of a bank holding company of which both his bank and the lending bank are
subsidiaries or (b) in which a controlling proportion of the shares is owned by the
same interest that owns a controlling proportion of the shares of his bank, in excess of
five percent (5%) of the capital and surplus of the bank, or in the maximum amount
permitted by law, whichever is lower, shall be required by the lending bank to waive
the secrecy of his deposits of whatever nature in all banks in the Philippines. Any
information obtained from an examination of his deposits shall be held strictly
confidential and may be used by the examiners only in connection with their
supervisory and examination responsibility or by the Bangko Sentral in an appropriate
legal action it has initiated involving the deposit account.
            Section 27. Prohibitions. - In addition to the prohibitions found in Republic Act
Nos. 3019 and 6713, personnel of the Bangko Sentral are hereby prohibited from:
(a) being an officer, director, lawyer or agent, employee, consultant or
stockholder, directly or indirectly, of any institution subject to supervision or
examination by the Bangko Sentral, except non-stock savings and loan
associations and provident funds organized exclusively for employees of the
Bangko Sentral, and except as otherwise provided in this Act;
(b) directly or indirectly requesting or receiving any gift, present or pecuniary or
material benefit for himself or another, from any institution subject to supervision
or examination by the Bangko Sentral;
(c) revealing in any manner, except under orders of the court, the Congress or
any government office or agency authorized by law, or under such conditions as
may be prescribed by the Monetary Board, information relating to the condition or
business of any institution. This prohibition shall not be held to apply to the giving
of information to the Monetary Board or the Governor of the Bangko Sentral, or to
any person authorized by either of them, in writing, to receive such information;
and
(d) borrowing from any institution subject to supervision or examination by the
Bangko Sentral shall be prohibited unless said borrowings are adequately
secured, fully disclosed to the Monetary Board, and shall be subject to such
further rules and regulations as the Monetary Board may prescribe: Provided,
however, That personnel of the supervising and examining departments are
prohibited from borrowing from a bank under their supervision or examination.
            Section 28. Examination and Fees. - The supervising and examining
department head, personally or by deputy, shall examine the books of every banking
institution once in every twelve (12) months, and at such other times as the Monetary
Board by an affirmative vote of five (5) members, may deem expedient and to make a
report on the same to the Monetary Board: Provided, That there shall be an interval of
at least twelve (12) months between annual examinations.
            The bank concerned shall afford to the head of the appropriate supervising
and examining departments and to his authorized deputies full opportunity to examine
its books, cash and available assets and general condition at any time during banking
hours when requested to do so by the Bangko Sentral: Provided, however, That none
of the reports and other papers relative to such examinations shall be open to
inspection by the public except insofar as such publicity is incidental to the
proceedings hereinafter authorized or is necessary for the prosecution of violations in
connection with the business of such institutions.
            Banking and quasi-banking institutions which are subject to examination by the
Bangko Sentral shall pay to the Bangko Sentral, within the first thirty (30) days of each
year, an annual fee in an amount equal to a percentage as may be prescribed by the
Monetary Board of its average total assets during the preceding year as shown on its
end-of-month balance sheets, after deducting cash on hand and amounts due from
banks, including the Bangko Sentral and banks abroad.
            Section 29. Appointment of Conservator. - Whenever, on the basis of a report
submitted by the appropriate supervising or examining department, the Monetary
Board finds that a bank or a quasi-bank is in a state of continuing inability or
unwillingness to maintain a condition of liquidity deemed adequate to protect the
interest of depositors and creditors, the Monetary Board may appoint a conservator
with such powers as the Monetary Board shall deem necessary to take charge of the
assets, liabilities, and the management thereof, reorganize the management, collect
all monies and debts due said institution, and exercise all powers necessary to restore
its viability. The conservator shall report and be responsible to the Monetary Board
and shall have the power to overrule or revoke the actions of the previous
management and board of directors of the bank or quasi-bank.
            The conservator should be competent and knowledgeable in bank operations
and management. The conservatorship shall not exceed one (1) year.
            The conservator shall receive remuneration to be fixed by the Monetary Board
in an amount not to exceed two-thirds (2/3) of the salary of the president of the
institution in one (1) year, payable in twelve (12) equal monthly payments: Provided,
That, if at any time within one-year period, the conservatorship is terminated on the
ground that the institution can operate on its own, the conservator shall receive the
balance of the remuneration which he would have received up to the end of the year;
but if the conservatorship is terminated on other grounds, the conservator shall not be
entitled to such remaining balance. The Monetary Board may appoint a conservator
connected with the Bangko Sentral, in which case he shall not be entitled to receive
any remuneration or emolument from the Bangko Sentral during the conservatorship.
The expenses attendant to the conservatorship shall be borne by the bank or quasi-
bank concerned.
            The Monetary Board shall terminate the conservatorship when it is satisfied
that the institution can continue to operate on its own and the conservatorship is no
longer necessary. The conservatorship shall likewise be terminated should the
Monetary Board, on the basis of the report of the conservator or of its own findings,
determine that the continuance in business of the institution would involve probable
loss to its depositors or creditors, in which case the provisions of Section 30 shall
apply.
            Section 30. Proceedings in Receivership and Liquidation. - Whenever, upon
report of the head of the supervising or examining department, the Monetary Board
finds that a bank or quasi-bank:
(a) is unable to pay its liabilities as they become due in the ordinary course of
business: Provided, That this shall not include inability to pay caused by
extraordinary demands induced by financial panic in the banking community;
(b) has insufficient realizable assets, as determined by the Bangko Sentral, to
meet its liabilities; or
(c) cannot continue in business without involving probable losses to its depositors
or creditors; or
(d) has willfully violated a cease and desist order under Section 37 that has
become final, involving acts or transactions which amount to fraud or a
dissipation of the assets of the institution; in which cases, the Monetary Board
may summarily and without need for prior hearing forbid the institution from doing
business in the Philippines and designate the Philippine Deposit Insurance
Corporation as receiver of the banking institution.
            For a quasi-bank, any person of recognized competence in banking or finance
may be designed as receiver.
            The receiver shall immediately gather and take charge of all the assets and
liabilities of the institution, administer the same for the benefit of its creditors, and
exercise the general powers of a receiver under the Revised Rules of Court but shall
not, with the exception of administrative expenditures, pay or commit any act that will
involve the transfer or disposition of any asset of the institution: Provided, That the
receiver may deposit or place the funds of the institution in non-speculative
investments. The receiver shall determine as soon as possible, but not later than
ninety (90) days from take over, whether the institution may be rehabilitated or
otherwise placed in such a condition so that it may be permitted to resume business
with safety to its depositors and creditors and the general public: Provided, That any
determination for the resumption of business of the institution shall be subject to prior
approval of the Monetary Board.
            If the receiver determines that the institution cannot be rehabilitated or
permitted to resume business in accordance with the next preceding paragraph, the
Monetary Board shall notify in writing the board of directors of its findings and direct
the receiver to proceed with the liquidation of the institution. The receiver shall:
(1) file ex parte with the proper regional trial court, and without requirement of
prior notice or any other action, a petition for assistance in the liquidation of the
institution pursuant to a liquidation plan adopted by the Philippine Deposit
Insurance Corporation for general application to all closed banks. In case of
quasi-banks, the liquidation plan shall be adopted by the Monetary Board. Upon
acquiring jurisdiction, the court shall, upon motion by the receiver after due
notice, adjudicate disputed claims against the institution, assist the enforcement
of individual liabilities of the stockholders, directors and officers, and decide on
other issues as may be material to implement the liquidation plan adopted. The
receiver shall pay the cost of the proceedings from the assets of the institution.
(2) convert the assets of the institutions to money, dispose of the same to
creditors and other parties, for the purpose of paying the debts of such institution
in accordance with the rules on concurrence and preference of credit under the
Civil Code of the Philippines and he may, in the name of the institution, and with
the assistance of counsel as he may retain, institute such actions as may be
necessary to collect and recover accounts and assets of, or defend any action
against, the institution. The assets of an institution under receivership or
liquidation shall be deemed in custodia legis in the hands of the receiver and
shall, from the moment the institution was placed under such receivership or
liquidation, be exempt from any order of garnishment, levy, attachment, or
execution.
            The actions of the Monetary Board taken under this section or under Section
29 of this Act shall be final and executory, and may not be restrained or set aside by
the court except on petition for certiorari on the ground that the action taken was in
excess of jurisdiction or with such grave abuse of discretion as to amount to lack or
excess of jurisdiction. The petition for certiorari may only be filed by the stockholders
of record representing the majority of the capital stock within ten (10) days from
receipt by the board of directors of the institution of the order directing receivership,
liquidation or conservatorship.
            The designation of a conservator under Section 29 of this Act or the
appointment of a receiver under this section shall be vested exclusively with the
Monetary Board. Furthermore, the designation of a conservator is not a precondition
to the designation of a receiver.
            Section 31. Distribution of Assets. - In case of liquidation of a bank or quasi-
bank, after payment of the cost of proceedings, including reasonable expenses and
fees of the receiver to be allowed by the court, the receiver shall pay the debts of such
institution, under order of the court, in accordance with the rules on concurrence and
preference of credit as provided in the Civil Code.
            Section 32. Disposition of Revenues and Earnings. - All revenues and
earnings realized by the receiver in winding up the affairs and administering the
assets of any bank or quasi-bank within the purview of this Act shall be used to pay
the costs, fees and expenses mentioned in the preceding section, salaries of such
personnel whose employment is rendered necessary in the discharge of the
liquidation together with other additional expenses caused thereby. The balance of
revenues and earnings, after the payment of all said expenses, shall form part of the
assets available for payment to creditors.
            Section 33. Disposition of Banking Franchise. - The Bangko Sentral may, if
public interest so requires, award to an institution, upon such terms and conditions as
the Monetary Board may approve, the banking franchise of a bank under liquidation to
operate in the area where said bank or its branches were previously operating:
Provided, That whatever proceeds may be realized from such award shall be subject
to the appropriate exclusive disposition of the Monetary Board.
            Section 34. Refusal to Make Reports or Permit Examination. - Any officer,
owner, agent, manager, director or officer-in-charge of any institution subject to the
supervision or examination by the Bangko Sentral within the purview of this Act who,
being required in writing by the Monetary Board or by the head of the supervising and
examining department willfully refuses to file the required report or permit any lawful
examination into the affairs of such institution shall be punished by a fine of not less
than Fifty thousand pesos (P50,000) nor more than One hundred thousand pesos
(P100,000) or by imprisonment of not less than one (1) year nor more than five (5)
years, or both, in the discretion of the court.
            Section 35. False Statement. - The willful making of a false or misleading
statement on a material fact to the Monetary Board or to the examiners of the Bangko
Sentral shall be punished by a fine of not less than One hundred thousand pesos
(P100,000) nor more than Two hundred thousand pesos (P200,000), or by
imprisonment of not more than (5) years, or both, at the discretion of the court.
            Section 36. Proceedings Upon Violation of This Act and Other Banking Laws,
Rules, Regulations, Orders or Instructions. - Whenever a bank or quasi-bank, or
whenever any person or entity willfully violates this Act or other pertinent banking laws
being enforced or implemented by the Bangko Sentral or any order, instruction, rule or
regulation issued by the Monetary Board, the person or persons responsible for such
violation shall unless otherwise provided in this Act be punished by a fine of not less
than Fifty thousand pesos (P50,000) nor more than Two hundred thousand pesos
(P200,000) or by imprisonment of not less than two (2) years nor more than ten (10)
years, or both, at the discretion of the court.
            Whenever a bank or quasi-bank persists in carrying on its business in an
unlawful or unsafe manner, the Board may, without prejudice to the penalties provided
in the preceding paragraph of this section and the administrative sanctions provided in
Section 37 of this Act, take action under Section 30 of this Act.
            Section 37. Administrative Sanctions on Banks and Quasi-banks. - Without
prejudice to the criminal sanctions against the culpable persons provided in Sections
34, 35, and 36 of this Act, the Monetary Board may, at its discretion, impose upon any
bank or quasi-bank, their directors and/or officers, for any willful violation of its charter
or by-laws, willful delay in the submission of reports or publications thereof as required
by law, rules and regulations; any refusal to permit examination into the affairs of the
institution; any willful making of a false or misleading statement to the Board or the
appropriate supervising and examining department or its examiners; any willful failure
or refusal to comply with, or violation of, any banking law or any order, instruction or
regulation issued by the Monetary Board, or any order, instruction or ruling by the
Governor; or any commission of irregularities, and/or conducting business in an
unsafe or unsound manner as may be determined by the Monetary Board, the
following administrative sanctions, whenever applicable:
(a) fines in amounts as may be determined by the Monetary Board to be
appropriate, but in no case to exceed Thirty thousand pesos (P30,000) a day for
each violation, taking into consideration the attendant circumstances, such as the
nature and gravity of the violation or irregularity and the size of the bank or quasi-
bank;
(b) suspension of rediscounting privileges or access to Bangko Sentral credit
facilities;
(c) suspension of lending or foreign exchange operations or authority to accept
new deposits or make new investments;
(d) suspension of interbank clearing privileges; and/or
(e) revocation of quasi-banking license.
            Resignation or termination from office shall not exempt such director or officer
from administrative or criminal sanctions.
            The Monetary Board may, whenever warranted by circumstances, preventively
suspend any director or officer of a bank or quasi-bank pending an investigation:
Provided, That should the case be not finally decided by the Bangko Sentral within a
period of one hundred twenty (120) days after the date of suspension, said director or
officer shall be reinstated in his position: Provided, further, That when the delay in the
disposition of the case is due to the fault, negligence or petition of the director or
officer, the period of delay shall not be counted in computing the period of suspension
herein provided.
            The above administrative sanctions need not be applied in the order of their
severity.
            Whether or not there is an administrative proceeding, if the institution and/or
the directors and/or officers concerned continue with or otherwise persist in the
commission of the indicated practice or violation, the Monetary Board may issue an
order requiring the institution and/or the directors and/or officers concerned to cease
and desist from the indicated practice or violation, and may further order that
immediate action be taken to correct the conditions resulting from such practice or
violation. The cease and desist order shall be immediately effective upon service on
the respondents.
            The respondents shall be afforded an opportunity to defend their action in a
hearing before the Monetary Board or any committee chaired by any Monetary Board
member created for the purpose, upon request made by the respondents within five
(5) days from their receipt of the order. If no such hearing is requested within said
period, the order shall be final. If a hearing is conducted, all issues shall be
determined on the basis of records, after which the Monetary Board may either
reconsider or make final its order.
            The Governor is hereby authorized, at his discretion, to impose upon banking
institutions, for any failure to comply with the requirements of law, Monetary Board
regulations and policies, and/or instructions issued by the Monetary Board or by the
Governor, fines not in excess of Ten thousand pesos (P10,000) a day for each
violation, the imposition of which shall be final and executory until reversed, modified
or lifted by the Monetary Board on appeal.
            Section 38. Operating Departments of the Bangko Sentral. - The Monetary
Board shall, in accordance with its authority under this Act, determine and provide for
such operating departments and other offices, including a public information office, of
the Bangko Sentral as it deems convenient for the proper and efficient conduct of the
operations and the accomplishment of the objectives of the Bangko Sentral. The
functions and duties of such operating departments and other offices shall be
determined by the Monetary Board.
ARTICLE V
REPORTS AND PUBLICATIONS
            Section 39. Reports and Publications. - The Bangko Sentral shall publish a
general balance sheet showing the volume and composition of its assets and liabilities
as of the last working day of the month within sixty (60) days after the end of each
month except for the month of December, which shall be submitted within ninety (90)
days after the end hereof.
            The Monetary Board shall publish and submit the following reports to the
President and to the Congress:
(a) not later than ninety (90) days after the end of each quarter, an analysis of
economic and financial developments, including the condition of net international
reserves and monetary aggregates;
(b) within ninety (90) days after the end of the year, the preceding year's budget
and profit and loss statement of the Bangko Sentral showing in reasonable detail
the result of its operations;
(c) one hundred twenty (120) days after the end of each semester, a review of
the state of the financial system; and
(d) as soon as practicable, abnormal movements in monetary aggregates and
the general price level, and, not later than seventy-two (72) hours after they are
taken, remedial measures in response to such abnormal movements.
            Section 40. Annual Report. - Before the end of March of each year, the
Bangko Sentral shall publish and submit to the President and the Congress an annual
report on the condition of the Bangko Sentral including a review of the policies and
measures adopted by the Monetary Board during the past year and an analysis of the
economic and financial circumstances which gave rise to said policies and measures.
            The annual report shall also include a statement of the financial condition of
the Bangko Sentral and a statistical appendix which shall present, as a minimum, the
following data:
(a) the monthly movement of monetary aggregates and their components;
(b) the monthly movement of purchases and sales of foreign exchange and of the
international reserves of the Bangko Sentral;
(c) the balance of payments of the Philippines;
(d) monthly indices of consumer prices and of import and export prices;
(e) the monthly movement, in summary form, of exports and imports, by volume
and value;
(f) the monthly movement of the accounts of the Bangko Sentral and of other
banks;
(g) the principal data on government receipts and expenditures and on the status
of the public debt, both domestic and foreign; and
(h) the texts of the major legal and administrative measures adopted by the
Government and the Monetary Board during the year which relate to the
functions or operations of the Bangko Sentral or of the financial system.
            The Bangko Sentral shall publish another version of the annual report in terms
understandable to the layman.
            Failure to comply with the reportorial requirements pursuant to this article
without justifiable reason as may be determined by the Monetary Board shall cause
the withholding of the salary of the personnel concerned until the requirements are
complied with.
            Section 41. Signatures on Statements. - The balance sheets and other
financial statements of the Bangko Sentral shall be signed by the officers responsible
for their preparation, by the Governor, and by the auditor of the Bangko Sentral.
ARTICLE VI
PROFITS, LOSSES, AND SPECIAL ACCOUNTS
            Section 42. Fiscal Year. - The fiscal year of the Bangko Sentral shall begin on
January first and end on December thirty-first of each year.
            Section 43. Computation of Profits and Losses. - Within the first thirty (30)
days following the end of each year, the Bangko Sentral shall determine its net profits
or losses. In the calculation of net profits, the Bangko Sentral shall make adequate
allowance or establish adequate reserves for bad and doubtful accounts.
            Section 44. Distribution of Net Profits. - Within the first sixty (60) days
following the end of each fiscal year, the Monetary Board shall determine and carry
out the distribution of the net profits, in accordance with the following rule:
            Fifty percent (50%) of the net profits shall be carried to surplus and the ARTICLE I
remaining fifty percent (50%) shall revert back to the National Treasury, except as THE UNIT OF MONETARY VALUE
otherwise provided in the transitory provisions of this Act.
            Section 48. The Peso. - The unit of monetary value in the Philippines is the
            Section 45. Revaluation Profits and Losses. - Profits or losses arising from "peso," which is represented by the sign "P."
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
            The peso is divided into one hundred (100) equal parts called "centavos,"
of the annual profits and losses of the Bangko Sentral. Any profits or losses arising in
which are represented by the sign "c."
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 ARTICLE II
owed by these institutions to the Philippines. Any remaining profit or loss shall be ISSUE OF MEANS OF PAYMENT
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
            A. CURRENCY
among the assets of the Bangko Sentral, depending on whether the revaluations have
produced net profits or net losses.
            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
            The Revaluation of International Reserve account shall be neither credited nor
in accordance with the provisions of this Act.
debited for any purposes other than those specifically authorized in this section.

            Section 50. Exclusive Issue Power. - The Bangko Sentral shall have the sole
            Section 46. Suspense Accounts. - Sections 43 and 43-A of Republic Act No.
power and authority to issue currency, within the territory of the Philippines. No other
265, as amended, creating the Monetary Adjustment Account (MAA) and the
person or entity, public or private, may put into circulation notes, coins or any other
Exchange Stabilization Adjustment Account (ESAA), respectively, are hereby
object or document which, in the opinion of the Monetary Board, might circulate as
repealed. Amounts outstanding as of the effective date of this Act based on these
currency, nor reproduce or imitate the facsimiles of Bangko Sentral notes without prior
accounts shall continue to be for the account of the Central Bank and shall be
authority from the Bangko Sentral.
governed by the transitory provisions of this Act.

            The Monetary Board may issue such regulations as it may deem advisable in
            The Revaluation of International Reserve (RIR) account as of the effective
order to prevent the circulation of foreign currency or of currency substitutes as well as
date of this Act of the Central Bank shall continue to be for the account of the same
to prevent the reproduction of facsimiles of Bangko Sentral notes.
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.             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.
ARTICLE VII
THE AUDITOR
            Violation of this provision or any regulation issued by the Bangko Sentral
pursuant thereto shall constitute an offense punishable by imprisonment of not less
            Section 47. Appointment and Personnel. - The Chairman of the Commission
than five (5) years but not more than ten (10) years. In case the Revised Penal Code
on Audit shall act as the ex officio auditor of the Bangko Sentral and, as such, he is
provides for a greater penalty, then that penalty shall be imposed.
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             Section 51. Liability for Notes and Coins. - Notes and coins issued by the
salaries and other emoluments shall be paid by the Commission. The auditor of the Bangko Sentral shall be liabilities of the Bangko Sentral and may be issued only
Bangko Sentral and personnel under him may be removed only by the Chairman of against, and in amounts not exceeding, the assets of the Bangko Sentral. Said notes
the Commission. and coins shall be a first and paramount lien on all assets of the Bangko Sentral.

            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
            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: period, they shall cease to be legal tender but during the following year, or for such
Provided, however, That, unless otherwise fixed by the Monetary Board, coins shall be longer period as the Monetary Board may determine, they may be exchanged at par
legal tender in amounts not exceeding Fifty pesos (P50.00) for denominations of and without charge in the Bangko Sentral and by agents duly authorized by the
Twenty-five centavos and above, and in amounts not exceeding Twenty pesos Bangko Sentral for this purpose. After the expiration of this latter period, the notes and
(P20.00) for denominations of Ten centavos or less. 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.
            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             B. DEMAND DEPOSITS
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
            Section 58. Definition. - For purposes of this Act, the term "demand deposits"
the Philippines. Said notes shall bear the signatures, in facsimile, of the President of
means all those liabilities of the Bangko Sentral and of other banks which are
the Philippines and of the Governor of the Bangko Sentral.
denominated in Philippine currency and are subject to payment in legal tender upon
demand by the presentation of checks.
            Similarly, the Monetary Board, with the approval of the President of the
Philippines, shall prescribe the weight, fineness, designs, denominations and other
            Section 59. Issue of Demand Deposits. - Only banks duly authorized to do so
characteristics of the coins issued by the Bangko Sentral. In the minting of coins, the
may accept funds or create liabilities payable in pesos upon demand by the
Monetary Board shall give full consideration to the availability of suitable metals and to
presentation of checks, and such operations shall be subject to the control of the
their relative prices and cost of minting.
Monetary Board in accordance with the powers granted it with respect thereto under
this Act.
            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
            Section 60. Legal Character. - Checks representing demand deposits do not
the conditions to which the printing of notes and the minting of coins shall be subject.
have legal tender power and their acceptance in the payment of debts, both public
The Monetary Board shall have the authority to contract institutions, mints or firms for
and private, is at the option of the creditor: Provided, however, That a check which
such operations.
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
            All expenses incurred in the printing of notes and the minting of coins shall be account.
for the account of the Bangko Sentral.
CHAPTER III — GUIDING PRINCIPLES OF MONETARY ADMINISTRATION BY
            Section 55. Interconvertibility of Currency. - The Bangko Sentral shall THE BANGKO SENTRAL
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
ARTICLE I
the Bangko Sentral is temporarily unable to provide notes or coins of the
DOMESTIC MONETARY STABILIZATION
denominations requested, it shall meet its obligations by delivering notes and coins of
the denominations which most nearly approximate those requested.
            Section 61. Guiding Principle. - The Monetary Board shall endeavor to control
any expansion or contraction in monetary aggregates which is prejudicial to the
            Section 56. Replacement of Currency Unfit for Circulation. - The Bangko
attainment or maintenance of price stability.
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             Section 62. Power to Define Terms. - For purposes of this article and of this
and coins the identification of which is impossible, coins which show signs of filing, Act, the Monetary Board shall formulate definitions of monetary aggregates, credit and
clipping or perforation, and notes which have lost more than two-fifths (2/5) of their prices and shall make public such definitions and any changes thereof.
surface or all of the signatures inscribed thereon. Notes and coins in such mutilated
conditions shall be withdrawn from circulation and demonetized without compensation
            Section 63. Action When Abnormal Movements Occur in the Monetary
to the bearer.
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
            Section 57. Retirement of Old Notes and Coins. - The Bangko Sentral may important sectors thereof, the Monetary Board shall:
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.
(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
            Notes and coins called in for replacement in accordance with this provision this Act; and
shall remain legal tender for a period of one (1) year from the date of call. After this
 (b) submit to the President of the Philippines and the Congress, and make public,
a detailed report which shall include, as a minimum, a description and analysis
of:
(1) the causes of the rise or fall of the monetary aggregates, of credit or of prices;
(2) the extent to which the changes in the monetary aggregates, in credit, or in
prices have been reflected in changes in the level of domestic output,
employment, wages and economic activity in general, and the nature and
significance of any such changes; and
(3) the measures which the Monetary Board has taken and the other monetary,
fiscal or administrative measures which it recommends to be adopted.
            Whenever the monetary aggregates, or the level of credit, increases or
decreases by more than fifteen percent (15%), or the cost of living index increases by
more than ten percent (10%), in relation to the level existing at the end of the
corresponding month of the preceding year, or even though any of these quantitative
guidelines have not been reached when in its judgment the circumstances so warrant,
the Monetary Board shall submit the reports mentioned in this section, and shall state
therein whether, in the opinion of the Board, said changes in the monetary
aggregates, credit or cost of living represent a threat to the stability of the Philippine
economy or of important sectors thereof.
            The Monetary Board shall continue to submit periodic reports to the President
of the Philippines and to Congress until it considers that the monetary, credit or price
disturbances have disappeared or have been adequately controlled.
ARTICLE II
INTERNATIONAL MONETARY STABILIZATION
            Section 64. International Monetary Stabilization. - The Bangko Sentral shall
exercise its powers under this Act to preserve the international value of the peso and
to maintain its convertibility into other freely convertible currencies primarily for,
although not necessarily limited to, current payments for foreign trade and invisibles.
            Section 65. International Reserves. - In order to maintain the international
stability and convertibility of the Philippine peso, the Bangko Sentral shall maintain
international reserves adequate to meet any foreseeable net demands on the Bangko
Sentral for foreign currencies.
            In judging the adequacy of the international reserves, the Monetary Board
shall be guided by the prospective receipts and payments of foreign exchange by the
Philippines. The Board shall give special attention to the volume and maturity of the
Bangko Sentral's own liabilities in foreign currencies, to the volume and maturity of the
foreign exchange assets and liabilities of other banks operating in the Philippines and,
insofar as they are known or can be estimated, the volume and maturity of the foreign
exchange assets and liabilities of all other persons and entities in the Philippines.
            Section 66. Composition of the International Reserves. - The international
reserves of the Bangko Sentral may include but shall not be limited to the following
assets:
(a) gold; and
(b) assets in foreign currencies in the form of: documents and instruments
customarily employed for the international transfer of funds; demand and time
deposits in central banks, treasuries and commercial banks abroad; foreign
government securities; and foreign notes and coins.
            The Monetary Board shall endeavor to hold the foreign exchange resources of
the Bangko Sentral in freely convertible currencies; moreover, the Board shall give
particular consideration to the prospects of continued strength and convertibility of the
currencies in which the reserve is maintained, as well as to the anticipated demands
for such currencies. The Monetary Board shall issue regulations determining the other
qualifications which foreign exchange assets must meet in order to be included in the
international reserves of the Bangko Sentral.
The Bangko Sentral shall be free to convert any of the assets in its
international reserves into other assets as described in subsections (a) and (b) of this
section.
            Section 67. Action When the International Stability of the Peso Is
Threatened. - Whenever the international reserve of the Bangko Sentral falls to a level
which the Monetary Board considers inadequate to meet prospective net demands on
the Bangko Sentral for foreign currencies, or whenever the international reserve
appears to be in imminent danger of falling to such a level, or whenever the
international reserve is falling as a result of payments or remittances abroad which, in
the opinion of the Monetary Board, are contrary to the national welfare, the Monetary
Board shall:
(a) take such remedial measures as are appropriate and within the powers
granted to the Monetary Board and the Bangko Sentral under the provisions of
this Act; and
(b) submit to the President of the Philippines and to Congress a detailed report
which shall include, as a minimum, a description and analysis of:
(1) the nature and causes of the existing or imminent decline;
(2) the remedial measures already taken or to be taken by the Monetary
Board;
(3) the monetary, fiscal or administrative measures further proposed; and
(4) the character and extent of the cooperation required from other
government agencies for the successful execution of the policies of the
Monetary Board.
            If the resultant actions fail to check the deterioration of the reserve position of
the Bangko Sentral, or if the deterioration cannot be checked except by chronic
restrictions on exchange and trade transactions or by sacrifice of the domestic
objectives of a balanced and sustainable growth of the economy, the Monetary Board
shall propose to the President, with appropriate notice of the Congress, such
additional action as it deems necessary to restore equilibrium in the international
balance of payments of the Philippines.
            The Monetary Board shall submit periodic reports to the President and to
Congress until the threat to the international monetary stability of the Philippines has
disappeared.
CHAPTER IV — INSTRUMENTS OF BANGKO SENTRAL ACTION
ARTICLE I
GENERAL CRITERION
            Section 68. Means of Action. - In order to achieve the primary objective of
price stability, the Monetary Board shall rely on its moral influence and the powers
granted to it under this Act for the management of monetary aggregates.
ARTICLE II
OPERATIONS IN GOLD AND FOREIGN EXCHANGE
            Section 69. Purchases and Sales of Gold. - The Bangko Sentral may buy and
sell gold in any form, subject to such regulations as the Monetary Board may issue.
            The purchases and sales of gold authorized by this section shall be made in
the national currency at the prevailing international market price as determined by the
Monetary Board.
            Section 70. Purchases and Sales of Foreign Exchange. - The Bangko Sentral
may buy and sell foreign notes and coins, and documents and instruments of types
customarily employed for the international transfer of funds. The Bangko Sentral may
engage in future exchange operations.
            The Bangko Sentral may engage in foreign exchange transactions with the
following entities or persons only:
(a) banking institutions operating in the Philippines;
(b) the Government, its political subdivisions and instrumentalities;
(c) foreign or international financial institutions;
(d) foreign governments and their instrumentalities; and
(e) other entities or persons which the Monetary Board is hereby empowered to
authorize as foreign exchange dealers, subject to such rules and regulations as
the Monetary Board shall prescribe.
            In order to maintain the convertibility of the peso, the Bangko Sentral may, at
the request of any banking institution operating in the Philippines, buy any quantity of
foreign exchange offered, and sell any quantity of foreign exchange demanded, by
such institution, provided that the foreign currencies so offered or demanded are freely
convertible into gold or United States dollars. This requirement shall not apply to
demands for foreign notes and coins.
            The Bangko Sentral shall effect its exchange transactions between foreign
currencies and the Philippine peso at the rates determined in accordance with the
provisions of Section 74 of this Act.
            Section 71. Foreign Asset Position of the Bangko Sentral. - The Bangko
Sentral shall endeavor to maintain at all times a net positive foreign asset position so
that its gross foreign exchange assets will always exceed its gross foreign liabilities. In
the event that the equivalent amount in pesos of the foreign exchange liabilities of the
Bangko Sentral exceed twice the equivalent amount in pesos of the foreign exchange
assets of the bank, the Bangko Sentral shall, within sixty (60) days from the date the
limit is exceeded, submit a report to the Congress stating the origin of these liabilities,
and the manner in which they will be paid.
            Section 72. Emergency Restrictions on Exchange Operations. - In order to
achieve the primary objective of the Bangko Sentral as set forth in Section 3 of this
Act, or protect the international reserves of the Bangko Sentral in the imminence of, or
during an exchange crisis, or in time of national emergency and to give the Monetary
Board and the Government time in which to take constructive measures to forestall,
combat, or overcome such a crisis or emergency, the Monetary Board, with the
concurrence of at least five (5) of its members and with the approval of the President
of the Philippines, may temporarily suspend or restrict sales of exchange by the
Bangko Sentral, and may subject all transactions in gold and foreign exchange to
license by the Bangko Sentral, and may require that any foreign exchange thereafter
obtained by any person residing or entity operating in the Philippines be delivered to
the Bangko Sentral or to any bank or agent designated by the Bangko Sentral for the
purpose, at the effective exchange rate or rates: Provided, however, That foreign
currency deposits made under Republic Act No. 6426 shall be exempt from these
requirements.
            Section 73. Acquisition of Inconvertible Currencies. - The Bangko Sentral
shall avoid the acquisition and holding of currencies which are not freely convertible,
and may acquire such currencies in an amount exceeding the minimum balance
necessary to cover current demands for said currencies only when, and to the extent
that, such acquisition is considered by the Monetary Board to be in the national
interest. The Monetary Board shall determine the procedures which shall apply to the
acquisition and disposition by the Bangko Sentral of foreign exchange which is not
freely utilizable in the international market.
            Section 74. Exchange Rates. - The Monetary Board shall determine the
exchange rate policy of the country.
            The Monetary Board shall determine the rates at which the Bangko Sentral
shall buy and sell spot exchange, and shall establish deviation limits from the effective
exchange rate or rates as it may deem proper. The Bangko Sentral shall not collect
any additional commissions or charges of any sort, other than actual telegraphic or
cable costs incurred by it.
            The Monetary Board shall similarly determine the rates for other types of
foreign exchange transactions by the Bangko Sentral, including purchases and sales
of foreign notes and coins, but the margins between the effective exchange rates and
the rates thus established may not exceed the corresponding margins for spot
exchange transactions by more than the additional costs or expenses involved in each
type of transactions.
            Section 75. Operations with Foreign Entities. - The Monetary Board may
authorize the Bangko Sentral to grant loans to and receive loans from foreign banks
and other foreign or international entities, both public and private, and may engage in
such other operations with these entities as are in the national interest and are
appropriate to its character as a central bank. The Bangko Sentral may also act as
agent or correspondent for such entities.
            Upon authority of the Monetary Board, the Bangko Sentral may pledge any
gold or other assets which it possesses as security against loans which it receives
from foreign or international entities.
ARTICLE III
REGULATION OF FOREIGN EXCHANGE OPERATIONS OF THE BANKS
            Section 76. Foreign Exchange Holdings of the Banks. - In order that the
Bangko Sentral may at all times have foreign exchange resources sufficient to enable
it to maintain the international stability and convertibility of the peso, or in order to
promote the domestic investment of bank resources, the Monetary Board may require
the banks to sell to the Bangko Sentral or to other banks all or part of their surplus
holdings of foreign exchange. Such transfers may be required for all foreign
currencies or for only certain of such currencies, according to the decision of the
Monetary Board. The transfers shall be made at the rates established under the
provisions of Section 74 of this Act.
            The Monetary Board may, whenever warranted, determine the net assets and
net liabilities of banks and shall, in making such a determination, take into account the
bank's networth, outstanding liabilities, actual and contingent, or such other financial
or performance ratios as may be appropriate under the circumstances. Any such
determination of net assets and net liabilities shall be applied in all banks uniformly
and without discrimination.
            Section 77. Requirement of Balanced Currency Position. - The Monetary
Board may require the banks to maintain a balanced position between their assets
and liabilities in Philippine pesos or in any other currency or currencies in which they
operate. The banks shall be granted a reasonable period of time in which to adjust
their currency positions to any such requirement.
            The powers granted under this section shall be exercised only when special
circumstances make such action necessary, in the opinion of the Monetary Board, and
shall be applied to all banks alike and without discrimination.
            Section 78. Regulation of Non-spot Exchange Transactions. - In order to
restrain the banks from taking speculative positions with respect to future fluctuations
in foreign exchange rates, the Monetary Board may issue such regulations governing
bank purchases and sales of non-spot exchange as it may consider necessary for
said purpose.
            Section 79. Other Exchange Profits and Losses. - The banks shall bear the
risks of non-compliance with the terms of the foreign exchange documents and
instruments which they buy and sell, and shall also bear any other typically
commercial or banking risks, including exchange risks not assumed by the Bangko
Sentral under the provisions of the preceding section.
            Section 80. Information on Exchange Operations. - The banks shall report to
the Bangko Sentral the volume and composition of their purchases and sales of gold
and foreign exchange each day, and must furnish such additional information as the
Bangko Sentral may request with reference to the movements in their accounts in
foreign currencies.
            The Monetary Board may also require other persons and entities to report to it
currently all transactions or operations in gold, in any shape or form, and in foreign
exchange whether entered into or undertaken by them directly or through agents, or to
submit such data as may be required on operations or activities giving rise to or in
connection with or relating to a gold or foreign exchange transaction. The Monetary
Board shall prescribe the forms on which such declarations must be made. The
accuracy of the declarations may be verified by the Bangko Sentral by whatever
inspection it may deem necessary.
ARTICLE IV
LOANS TO BANKING AND OTHER FINANCIAL INSTITUTIONS
            A. CREDIT POLICY
            Section 81. Guiding Principles. - The rediscounts, discounts, loans and
advances which the Bangko Sentral is authorized to extend to banking institutions
under the provisions of the present article of this Act shall be used to influence the
volume of credit consistent with the objective of price stability.
            B. NORMAL CREDIT OPERATIONS
            Section 82. Authorized Types of Operations. - Subject to the principle stated
in the preceding section of this Act, the Bangko Sentral may normally and regularly
carry on the following credit operations with banking institutions operating in the
Philippines:
(a) Commercial credits. - The Bangko Sentral may rediscount, discount, buy and
sell bills, acceptances, promissory notes and other credit instruments with
maturities of not more than one hundred eighty (180) days from the date of their
rediscount, discount or acquisition by the Bangko Sentral and resulting from
transactions related to:
(1) the importation, exportation, purchase or sale of readily saleable goods
and products, or their transportation within the Philippines; or
(2) the storing of non-perishable goods and products which are duly insured
and deposited, under conditions assuring their preservation, in authorized
bonded warehouses or in other places approved by the Monetary Board.
(b) Production credits. - The Bangko Sentral may rediscount, discount, buy and
sell bills, acceptances, promissory notes and other credit instruments having
maturities of not more than three hundred sixty (360) days from the date of their
rediscount, discount or acquisition by the Bangko Sentral and resulting from
transactions related to the production or processing of agricultural, animal,
mineral, or industrial products. Documents or instruments acquired in accordance
with this subsection shall be secured by a pledge of the respective crops or
products: Provided, however, That the crops or products need not be pledged to
secure the documents if the original loan granted by the Bangko Sentral is
secured by a lien or mortgage on real estate property seventy percent (70%) of
the appraised value of which equals or exceeds the amount of the loan granted.
(c) Other credits. - Special credit instruments not otherwise rediscountable under
the immediately preceding subsections (a) and (b) may be eligible for
rediscounting in accordance with rules and regulations which the Bangko Sentral
shall prescribe. Whenever necessary, the Bangko Sentral shall provide funds
from non-inflationary sources: Provided, however, That the Monetary Board shall
prescribe additional safeguards for disbursing these funds.
(d) Advances. - The Bangko Sentral may grant advances against the following
kinds of collaterals for fixed periods which, with the exception of advances
against collateral named in clause (4) of the present subsection, shall not exceed
one hundred eighty (180) days:
(1) gold coins or bullion;
(2) securities representing obligations of the Bangko Sentral or of other
domestic institutions of recognized solvency;
(3) the credit instruments to which reference is made in subsection (a) of
this section;
(4) the credit instruments to which reference is made in subsection (b) of
this section, for periods which shall not exceed three hundred sixty (360)
days;
(5) utilized portions of advances in current amount covered by regular
overdraft agreements related to operations included under subsections (a)
and (b) of this section, and certified as to amount and liquidity by the
institution soliciting the advance;
(6) negotiable treasury bills, certificates of indebtedness, notes and other
negotiable obligations of the Government maturing within three (3) years
from the date of the advance; and
(7) negotiable bonds issued by the Government of the Philippines, by
Philippine provincial, city or municipal governments, or by any Philippine
Government instrumentality, and having maturities of not more than ten (10)
years from the date of advance.
The rediscounts, discounts, loans and advances made in accordance with the
provisions of this section may not be renewed or extended unless extraordinary
circumstances fully justify such renewal or extension.
            Advances made against the collateral named in clauses (6) and (7) of
subsection (d) of this section may not exceed eighty percent (80%) of the current
market value of the collateral.
            C. SPECIAL CREDIT OPERATION
            Section 83. Loans for Liquidity Purposes. - The Bangko Sentral may extend
loans and advances to banking institutions for a period of not more than seven (7)
days without any collateral for the purpose of providing liquidity to the banking system
in times of need.
            D. EMERGENCY CREDIT OPERATION
            Section 84. Emergency Loans and Advances. - In periods of national and/or
local emergency or of imminent financial panic which directly threaten monetary and
banking stability, the Monetary Board may, by a vote of at least five (5) of its
members, authorize the Bangko Sentral to grant extraordinary loans or advances to
banking institutions secured by assets as defined hereunder: Provided, That while
such loans or advances are outstanding, the debtor institution shall not, except upon
prior authorization by the Monetary Board, expand the total volume of its loans or
investments.
            The Monetary Board may, at its discretion, likewise authorize the Bangko
Sentral to grant emergency loans or advances to banking institutions, even during
normal periods, for the purpose of assisting a bank in a precarious financial condition
or under serious financial pressures brought by unforeseen events, or events which,
though foreseeable, could not be prevented by the bank concerned: Provided,
however, That the Monetary Board has ascertained that the bank is not insolvent and
has the assets defined hereunder to secure the advances: Provided, further, That a
concurrent vote of at least five (5) members of the Monetary Board is obtained.
            The amount of any emergency loan or advance shall not exceed the sum of
fifty percent (50%) of total deposits and deposit substitutes of the banking institution
and shall be disbursed in two (2) or more tranches. The amount of the first tranche
shall be limited to twenty-five percent (25%) of the total deposit and deposit
substitutes of the institution and shall be secured by government securities to the
extent of their applicable loan values and other unencumbered first class collaterals
which the Monetary Board may approve: Provided, That if as determined by the
Monetary Board, the circumstances surrounding the emergency warrant a loan or requirements of the national monetary policy. Interest and rediscount rates shall be
advance greater than the amount provided hereinabove, the amount of the first applied to all banks of the same category uniformly and without discrimination.
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
            Section 86. Endorsement. - The documents rediscounted, discounted, bought
securities and unencumbered first class collaterals approved by the Monetary Board,
or accepted as collateral by the Bangko Sentral in the course of the credit operations
and the principal stockholders of the institution furnish an acceptable undertaking to
authorized in this article shall bear the endorsement of the institution from which they
indemnify and hold harmless from suit a conservator whose appointment the
are received.
Monetary Board may find necessary at any time.

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

            Prior to the release of the first tranche, the banking institution shall submit to
accepted as collateral by the Bangko Sentral must be withdrawn by the borrowing
the Bangko Sentral a resolution of its board of directors authorizing the Bangko
institution on the dates of their maturities, or upon liquidation of the obligations which
Sentral to evaluate other assets of the banking institution certified by its external
they represent or to which they relate whenever said obligations have been liquidated
auditor to be good and available for collateral purposes should the release of the
prior to their dates of maturity.
subsequent tranche be thereafter applied for.

            Banks shall have the right at any time to withdraw any documents which they
            The Monetary Board may, by a vote of at least five (5) of its members,
have presented to the Bangko Sentral as collateral, upon payment in full of the
authorize the release of a subsequent tranche on condition that the principal
corresponding debt to the Bangko Sentral, including interest charges.
stockholders of the institution:

            Section 88. Other requirements. - The Monetary Board may prescribe, within

(a) furnish an acceptable undertaking to indemnify and hold harmless from suit a
conservator whose appointment the Monetary Board may find necessary at any
time; and
(b) provide acceptable security which, in the judgment of the Monetary Board,
would be adequate to supplement, where necessary, the assets tendered by the
banking institution to collateralize the subsequent tranche.
            In connection with the exercise of these powers, the prohibitions in Section
128 of this Act shall not apply insofar as it refers to acceptance as collateral of shares
and their acquisition as a result of foreclosure proceedings, including the exercise of
voting rights pertaining to said shares: Provided, however, That should the Bangko
Sentral acquire any of the shares it has accepted as collateral as a result of
foreclosure proceedings, the Bangko Sentral shall dispose of said shares by public
bidding within one (1) year from the date of consolidation of title by the Bangko
Sentral.
            Whenever a financial institution incurs an overdraft in its account with the
Bangko Sentral, the same shall be eliminated within the period prescribed in Section
102 of this Act.
            E. CREDIT TERMS
            Section 85. Interest and Rediscount. - The Bangko Sentral shall collect
interest and other appropriate charges on all loans and advances it extends, the
closure, receivership or liquidations of the debtor-institution notwithstanding. This
provision shall apply prospectively.
the 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:

            The Monetary Board shall fix the interest and rediscount rates to be charged (a) evidences of indebtedness issued directly by the Government of the
by the Bangko Sentral on its credit operations in accordance with the character and Philippines or by its political subdivisions; 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
 (b) evidences of indebtedness issued by government instrumentalities and fully
guaranteed by the Government.
            The evidences of indebtedness acquired under the provisions of this section
must be freely negotiable and regularly serviced and must be available to the general
public through banking institutions and local government treasuries in denominations
of a thousand pesos or more.
            Section 92. Issue and Negotiation of Bangko Sentral Obligations. - In order to
provide the Bangko Sentral with effective instruments for open market operations, the
Bangko Sentral may, subject to such rules and regulations as the Monetary Board
may prescribe and in accordance with the principles stated in Section 90 of this Act,
issue, place, buy and sell freely negotiable evidences of indebtedness of the Bangko
Sentral: Provided, That issuance of such certificates of indebtedness shall be made
only in cases of extraordinary movement in price levels. Said evidences of
indebtedness may be issued directly against the international reserve of the Bangko
Sentral or against the securities which it has acquired under the provisions of Section
91 of this Act, or may be issued without relation to specific types of assets of the
Bangko Sentral.
            The Monetary Board shall determine the interest rates, maturities and other
characteristics of said obligations of the Bangko Sentral, and may, if it deems it
advisable, denominate the obligations in gold or foreign currencies.
            Subject to the principles stated in Section 90 of this Act, the evidences of
indebtedness of the Bangko Sentral to which this section refers may be acquired by
the Bangko Sentral before their maturity, either through purchases in the open market
or through redemptions at par and by lot if the Bangko Sentral has reserved the right
to make such redemptions. The evidences of indebtedness acquired or redeemed by
the Bangko Sentral shall not be included among its assets, and shall be immediately
retired and cancelled.
ARTICLE VI
COMPOSITION OF BANGKO SENTRAL'S PORTFOLIO
            Section 93. Review of the Bangko Sentral's Portfolio. - At least once every
month the Monetary Board shall review the portfolio of the Bangko Sentral in relation
to its future credit policy.
            In reviewing the Bangko Sentral's portfolio, the Monetary Board shall
especially consider whether a sufficiently large part of the portfolio consists of assets
with early maturities, in order that a contraction in Bangko Sentral credit may be
effected promptly whenever the national monetary policy so requires.
ARTICLE VII
BANK RESERVES
            Section 94. Reserve Requirements. - In order to control the volume of money
created by the credit operations of the banking system, all banks operating in the
Philippines shall be required to maintain reserves against their deposit liabilities:
Provided, That the Monetary Board may, at its discretion, also require all banks and/or
quasi-banks to maintain reserves against funds held in trust and liabilities for deposit
substitutes as defined in this Act. The required reserves of each bank shall be
proportional to the volume of its deposit liabilities and shall ordinarily take the form of a
deposit in the Bangko Sentral. Reserve requirements shall be applied to all banks of
the same category uniformly and without discrimination.
            Reserves against deposit substitutes, if imposed, shall be determined in the
same manner as provided for reserve requirements against regular bank deposits,
with respect to the imposition, increase, and computation of reserves.
            The Monetary Board may exempt from reserve requirements deposits and
deposit substitutes with remaining maturities of two (2) years or more, as well as
interbank borrowings.
            Since the requirement to maintain bank reserves is imposed primarily to
control the volume of money, the Bangko Sentral shall not pay interest on the
reserves maintained with it unless the Monetary Board decides otherwise as
warranted by circumstances.
            Section 95. Definition of Deposit Substitutes. - The term "deposit substitutes"
is defined as an alternative form of obtaining funds from the public, other than
deposits, through the issuance, endorsement, or acceptance of debt instruments for
the borrower's own account, for the purpose of relending or purchasing of receivables
and other obligations. These instruments may include, but need not be limited to,
bankers acceptances, promissory notes, participations, certificates of assignment and
similar instruments with recourse, and repurchase agreements. The Monetary Board
shall determine what specific instruments shall be considered as deposit substitutes
for the purposes of Section 94 of this Act: Provided, however, That deposit substitutes
of commercial, industrial and other non-financial companies for the limited purpose of
financing their own needs or the needs of their agents or dealers shall not be covered
by the provisions of Section 94 of this Act.
            Section 96. Required Reserves Against Peso Deposits. - The Monetary Board
may fix and, when it deems necessary, alter the minimum reserve ratios to peso
deposits, as well as to deposit substitutes, which each bank and/or quasi-bank may
maintain, and such ratio shall be applied uniformly to all banks of the same category
as well as to quasi-banks.
            Section 97. Required Reserves Against Foreign Currency Deposits. - The
Monetary Board is similarly authorized to prescribe and modify the minimum reserve
ratios applicable to deposits denominated in foreign currencies.
            Section 98. Reserves Against Unused Balances of Overdraft Lines. - In order
to facilitate Bangko Sentral control over the volume of bank credit, the Monetary Board
may establish minimum reserve requirements for unused balances of overdraft lines.
            The powers of the Monetary Board to prescribe and modify reserve
requirements against unused balances of overdraft lines shall be the same as its
powers with respect to reserve requirements against demand deposits.
            Section 99. Increase in Reserve Requirements. - Whenever in the opinion of
the Monetary Board it becomes necessary to increase reserve requirements against
existing liabilities, the increase shall be made in a gradual manner and shall not
exceed four percentage points in any thirty-day period. Banks and other affected
financial institutions shall be notified reasonably in advance of the date on which such
increase is to become effective.
            Section 100. Computation on Reserves. - The reserve position of each bank
or quasi-bank shall be calculated daily on the basis of the amount, at the close of
business for the day, of the institution's reserves and the amount of its liability
accounts against which reserves are required to be maintained: Provided, That with
reference to holidays or non-banking days, the reserve position as calculated at the
close of the business day immediately preceding such holidays and non-banking days
shall apply on such days.
            For the purpose of computing the reserve position of each bank or quasi-bank,
its principal office in the Philippines and all its branches and agencies located therein
shall be considered as a single unit.
            Section 101. Reserve Deficiencies. - Whenever the reserve position of any
bank or quasi-bank, computed in the manner specified in the preceding section of this
Act, is below the required minimum, the bank or quasi-bank shall pay the Bangko
Sentral one-tenth of one percent (1/10 of 1%) per day on the amount of the deficiency
or the prevailing ninety-one-day treasury bill rate plus three percentage points,
whichever is higher: Provided, however, That banks and quasi-banks shall ordinarily
be permitted to offset any reserve deficiency occurring on one or more days of the
week with any excess reserves which they may hold on other days of the same week
and shall be required to pay the penalty only on the average daily deficiency during
the week. In cases of abuse, the Monetary Board may deny any bank or quasi-bank
the privilege of offsetting reserve deficiencies in the aforesaid manner.
            If a bank or quasi-bank chronically has a reserve deficiency, the Monetary
Board may limit or prohibit the making of new loans or investments by the institution
and may require that part or all of the net profits of the institution be assigned to
surplus.
            The Monetary Board may modify or set aside the reserve deficiency penalties
provided in this section, for part or the entire period of a strike or lockout affecting a
bank or a quasi-bank as defined in the Labor Code, or of a national emergency
affecting operations of banks or quasi-banks. The Monetary Board may also modify or
set aside reserved deficiency penalties for rehabilitation program of a bank.
            Section 102. Interbank Settlement. - The Bangko Sentral shall establish
facilities for interbank clearing under such rules and regulations as the Monetary
Board may prescribe: Provided, That the Bangko Sentral may charge administrative
and other fees for the maintenance of such facilities.
            The deposit reserves maintained by the banks in the Bangko Sentral in
accordance with the provisions of Section 94 of this Act shall serve as basis for the
clearing of checks and the settlement of interbank balances, subject to such rules and
regulations as the Monetary Board may issue with respect to such operations:
Provided, That any bank which incurs on overdrawing in its deposit account with the
Bangko Sentral shall fully cover said overdraft, including interest thereon at a rate
equivalent to one-tenth of one percent (1/10 of 1%) per day or the prevailing ninety-
one-day treasury bill rate plus three percentage points, whichever is higher, not later
than the next clearing day: Provided, further, That settlement of clearing balances
shall not be effected for any account which continues to be overdrawn for five (5)
consecutive banking days until such time as the overdrawing is fully covered or
otherwise converted into an emergency loan or advance pursuant to the provisions of
Section 84 of this Act: Provided, finally, That the appropriate clearing office shall be
officially notified of banks with overdrawn balances. Banks with existing overdrafts with
the Bangko Sentral as of the effectivity of this Act shall, within such period as may be
prescribed by the Monetary Board, either convert the overdraft into an emergency
loan or advance with a plan of payment, or settle such overdrafts, and that, upon
failure to so comply herewith, the Bangko Sentral shall take such action against the
bank as may be warranted under this Act.
            Section 103. Exemption from Attachment and Other Purposes. - Deposits
maintained by banks with the Bangko Sentral as part of their reserve requirements
shall be exempt from attachment, garnishments, or any other order or process of any
court, government agency or any other administrative body issued to satisfy the claim
of a party other than the Government, or its political subdivisions or instrumentalities.
ARTICLE VIII
SELECTIVE REGULATION OF BANK OPERATIONS
            Section 104. Guiding Principle. - The Monetary Board shall use the powers
granted to it under this Act to ensure that the supply, availability and cost of money
are in accord with the needs of the Philippine economy and that bank credit is not
granted for speculative purposes prejudicial to the national interests. Regulations on
bank operations shall be applied to all banks of the same category uniformly and
without discrimination.
            Section 105. Margin Requirements Against Letters of Credit. - The Monetary
Board may at any time prescribe minimum cash margins for the opening of letters of
credit, and may relate the size of the required margin to the nature of the transaction
to be financed.
            Section 106. Required Security Against Bank Loans. - In order to promote
liquidity and solvency of the banking system, the Monetary Board may issue such
regulations as it may deem necessary with respect to the maximum permissible
maturities of the loans and investments which the banks may make, and the kind and
amount of security to be required against the various types of credit operations of the
banks.
            Section 107. Portfolio Ceilings. - Whenever the Monetary Board considers it
advisable to prevent or check an expansion of bank credit, the Board may place an
upper limit on the amount of loans and investments which the banks may hold, or may
place a limit on the rate of increase of such assets within specified periods of time.
The Monetary Board may apply such limits to the loans and investments of each bank
or to specific categories thereof.
            In no case shall the Monetary Board establish limits which are below the value
of the loans or investments of the banks on the date on which they are notified of such
restrictions. The restrictions shall be applied to all banks uniformly and without
discrimination.
            Section 108. Minimum Capital Ratios. - The Monetary Board may prescribe
minimum ratios which the capital and surplus of the banks must bear to the volume of
their assets, or to specific categories thereof, and may alter said ratios whenever it
deems necessary.
ARTICLE IX
COORDINATION OF CREDIT POLICIES BY GOVERNMENT INSTITUTIONS
            Section 109. Coordination of Credit Policies. - Government-owned
corporations which perform banking or credit functions shall coordinate their general
credit policies with those of the Monetary Board.
            Toward this end, the Monetary Board may, whenever it deems it expedient,
make suggestions or recommendations to such corporations for the more effective
coordination of their policies with those of the Bangko Sentral.
CHAPTER V — FUNCTIONS AS BANKER AND FINANCIAL ADVISOR OF THE
GOVERNMENT
ARTICLE I
FUNCTIONS AS BANKER OF THE GOVERNMENT
            Section 110. Designation of Bangko Sentral as Banker of the Government. -
The Bangko Sentral shall act as a banker of the Government, its political subdivisions
and instrumentalities.
            Section 111. Representation with the International Monetary Fund. - The
Bangko Sentral shall represent the Government in all dealings, negotiations and
transactions with the International Monetary Fund and shall carry such accounts as
may result from Philippine membership in, or operations with, said Fund.
            Section 112. Representation with Other Financial Institutions. - The Bangko
Sentral may be authorized by the Government to represent it in dealings, negotiations
or transactions with the International Bank for Reconstruction and Development and
with other foreign or international financial institutions or agencies. The President may,
however, designate any of his other financial advisors to jointly represent the
Government in such dealings, negotiations or transactions.
            Section 113. Official Deposits. - The Bangko Sentral shall be the official
depository of the Government, its political subdivisions and instrumentalities as well as
of government-owned or controlled corporations and, as a general policy, their cash
balances should be deposited with the Bangko Sentral, with only minimum working
balances to be held by government-owned banks and such other banks incorporated
in the Philippines as the Monetary Board may designate, subject to such rules and
regulations as the Board may prescribe: Provided, That such banks may hold deposits
of the political subdivisions and instrumentalities of the Government beyond their
minimum working balances whenever such subdivisions or instrumentalities have
outstanding loans with said banks.
            The Bangko Sentral may pay interest on deposits of the Government or of its
political subdivisions and instrumentalities, as well as on deposits of banks with the
Bangko Sentral.
            Section 114. Fiscal Operations. - The Bangko Sentral shall open a general
cash account for the Treasurer of the Philippines, in which the liquid funds of the
Government shall be deposited.
            Transfers of funds from this account to other accounts shall be made only
upon order of the Treasurer of the Philippines.
            Section 115. Other Banks as Agents of the Bangko Sentral. - In the
performance of its functions as fiscal agent, the Bangko Sentral may engage the
services of other government-owned and controlled banks and of other domestic
banks for operations in localities at home or abroad in which the Bangko Sentral does
not have offices or agencies adequately equipped to perform said operations:
Provided, however, That for fiscal operations in foreign countries, the Bangko Sentral
may engage the services of foreign banking and financial institutions.
            Section 116. Remuneration for Services. - The Bangko Sentral may charge
equitable rates, commissions or fees for services which it renders to the Government,
its political subdivisions and instrumentalities.
ARTICLE II
THE MARKETING AND STABILIZATION OF SECURITIES FOR THE ACCOUNT OF
THE GOVERNMENT
            A. THE ISSUE AND PLACING OF GOVERNMENT SECURITIES
            Section 117. Issue of Government Obligations. - The issue of securities
representing obligations of the Government, its political subdivisions or
instrumentalities, may be made through the Bangko Sentral, which may act as agent
of, and for the account of, the Government or its respective subdivisions or
instrumentality, as the case may be: Provided, however, That the Bangko Sentral shall
not guarantee the placement of said securities, and shall not subscribe to their issue
except to replace its maturing holdings of securities with the same type as the
maturing securities.
            Section 118. Methods of Placing Government Securities. - The Bangko
Sentral may place the securities to which the preceding section refers through direct
sale to financial institutions and the public.
            The Bangko Sentral shall not be a member of any stock exchange or
syndicate, but may intervene therein for the sole purpose of regulating their operations
in the placing of government securities.
            The Government, or its political subdivisions or instrumentalities, shall
reimburse the Bangko Sentral for the expenses incurred in the placing of the aforesaid
securities.
            Section 119. Servicing and Redemption of the Public Debt. - The servicing
and redemption of the public debt shall also be effected through the Bangko Sentral.
            B. BANGKO SENTRAL SUPPORT OF THE GOVERNMENT SECURITIES
MARKET
            Section 120. The Securities Stabilization Fund. - There shall be established a
"Securities Stabilization Fund" which shall be administered by the Bangko Sentral for
the account of the Government.
            The operations of the Securities Stabilization Fund shall consist of purchases
and sales, in the open market, of bonds and other evidences of indebtedness issued
or fully guaranteed by the Government. The purpose of these operations shall be to
increase the liquidity and stabilize the value of said securities in order thereby to
promote investment in government obligations.
            The Monetary Board shall use the resources of the Fund to prevent, or
moderate, sharp fluctuations in the quotations of said government obligations, but
shall not endeavor to alter movements of the market resulting from basic changes in
the pattern or level of interest rates.
            The Monetary Board shall issue such regulations as may be necessary to
implement the provisions of this section.
            Section 121. Resources of the Securities Stabilization Fund. - Subject to
Section 132 of this Act, the resources of the Securities Stabilization Fund shall come
from the balance of the fund as held by the Central Bank under Republic Act No. 265
as of the effective date of this Act.
            Section 122. Profits and Losses of the Fund. - The Securities Stabilization
Fund shall retain net profits which it may make on its operations, regardless of
whether said profits arise from capital gains or from interest earnings. The Fund shall
correspondingly bear any net losses which it may incur.
ARTICLE III
FUNCTIONS AS FINANCIAL ADVISOR OF THE GOVERNMENT
            Section 123. Financial Advice on Official Credit Operations. - Before
undertaking any credit operation abroad, the Government, through the Secretary of
Finance, shall request the opinion, in writing, of the Monetary Board on the monetary
implications of the contemplated action. Such opinions must similarly be requested by
all political subdivisions and instrumentalities of the Government before any credit
operation abroad is undertaken by them.
            The opinion of the Monetary Board shall be based on the gold and foreign
exchange resources and obligations of the nation and on the effects of the proposed
operation on the balance of payments and on monetary aggregates.
            Whenever the Government, or any of its political subdivisions or
instrumentalities, contemplates borrowing within the Philippines, the prior opinion of
the Monetary Board shall likewise be requested in order that the Board may render an
opinion on the probable effects of the proposed operation on monetary aggregates,
the price level, and the balance of payments.
            Section 124. Representation on the National Economic and Development
Authority. - In order to assure effective coordination between the economic, financial
and fiscal policies of the Government and the monetary, credit and exchange policies
of the Bangko Sentral, the Deputy Governor designated by the Governor of the
Bangko Sentral shall be an ex officio member of the National Economic and
Development Authority Board.
CHAPTER VI — PRIVILEGES AND PROHIBITIONS
ARTICLE I
PRIVILEGES
            Section 125. Tax Exemptions. - The Bangko Sentral shall be exempt for a
period of five (5) years from the approval of this Act from all national, provincial,
municipal and city taxes, fees, charges and assessments.
            The exemption authorized in the preceding paragraph of this section shall
apply to all property of the Bangko Sentral, to the resources, receipts, expenditures,
profits and income of the Bangko Sentral, as well as to all contracts, deeds,
documents and transactions related to the conduct of the business of the Bangko
Sentral: Provided, however, That said exemptions shall apply only to such taxes, fees,
charges and assessments for which the Bangko Sentral itself would otherwise be
liable, and shall not apply to taxes, fees, charges, or assessments payable by persons
or other entities doing business with the Bangko Sentral: Provided, further, That
foreign loans and other obligations of the Bangko Sentral shall be exempt, both as to
principal and interest, from any and all taxes if the payment of such taxes has been
assumed by the Bangko Sentral.
            Section 126. Exemption from Customs Duties. - The provision of any general
or special law to the contrary notwithstanding, the importation and exportation by the
Bangko Sentral of notes and coins, and of gold and other metals to be used for
purposes authorized under this Act, and the importation of all equipment needed for
bank note production, minting of coins, metal refining and other security printing
operations shall be fully exempt from all customs duties and consular fees and from all
other taxes, assessments and charges related to such importation or exportation.
            Section 127. Applicability of the Civil Service Law. - Appointments in the
Bangko Sentral, except as to those which are policy-determining, primarily confidential
or highly technical in nature, shall be made only according to the Civil Service Law
and regulations: Provided, That no qualification requirements for positions in the
Bangko Sentral shall be imposed other than those set by the Monetary Board:
Provided, further, That, the Monetary Board or Governor, in accordance with Sections
15(c) and 17(d) of this Act, respectively, may without need of obtaining prior approval
from any other government agency, appoint personnel in the Bangko Sentral whose
services are deemed necessary in order not to unduly disrupt the operations of the
Bangko Sentral.
            Officers and employees of the Bangko Sentral, including all members of the
Monetary Board, shall not engage directly or indirectly in partisan activities or take part
in any election except to vote.
ARTICLE II
PROHIBITIONS
            Section 128. Prohibitions. - The Bangko Sentral shall not acquire shares of
any kind or accept them as collateral, and shall not participate in the ownership or
management of any enterprise, either directly or indirectly.
            The Bangko Sentral shall not engage in development banking or financing:
Provided, however, That outstanding loans obtained or extended for development
financing shall not be affected by the prohibition of this section.
CHAPTER VII — TRANSITORY PROVISIONS
            Section 129. Phase-out of Fiscal Agency Functions. - Unless circumstances
warrant otherwise and approved by the Congress Oversight Committee, the Bangko
Sentral shall, within a period of three (3) years but in no case longer than five (5)
years from the approval of this Act, phase out all fiscal agency functions provided for
in Sections 117, 118, 119, and 120 as well as in other pertinent provisions of this Act
and transfer the same to the Department of Finance.
            Section 130. Phase-out of Regulatory Powers Over the Operations of Finance
Corporations and Other Institutions Performing Similar Functions. - The Bangko
Sentral shall, within a period of five (5) years from the effectivity of this Act, phase out
its regulatory powers over finance companies without quasi-banking functions and
other institutions performing similar functions as provided in existing laws, the same to
be assumed by the Securities and Exchange Commission.
            Section 131. Implementing Details. - The Bangko Sentral shall be made
operational by the performance of the following acts:
(a) the President shall constitute the Monetary Board by appointing the members
thereof within sixty (60) days from the effectivity of this Act; and
(b) the transfer of such assets and liabilities from the Central Bank to the Bangko
Sentral as provided in Section 132 shall be completed within ninety (90) days
from the constitution of the Monetary Board.
            All incumbent personnel in the Central Bank as of the date of the approval of
this Act shall continue to exercise their duties and functions as personnel of the
Bangko Sentral subject to the provisions of Section 133: Provided, That such
personnel in the Central Bank as may be necessary for the purpose of implementing
Section 132 may be assigned by the Bangko Sentral Monetary Board to the Central
Bank.
            Section 132. Transfer of Assets and Liabilities. - Upon the effectivity of this
Act, three (3) members of the Monetary Board, which may include the Governor, in
representation of the Bangko Sentral, the Secretary of Finance and the Secretary of
Budget and Management in representation of the National Government, and the
Chairmen of the Committees on Banks of the Senate and the House of
Representatives shall determine the assets and liabilities of the Central Bank which
may be transferred to or assumed by the Bangko Sentral. The Committee shall
complete its work within ninety (90) days from the constitution of the Monetary Board
submitting a comprehensive report with all its findings and justification.
            The following guidelines shall be strictly observed in the determination of
which assets and liabilities shall be transferred to the Bangko Sentral:
(a) the Monetary Board and the Secretary of Finance shall have primary
responsibility for working out creative monetary and financial solutions to
retire the Central Bank liabilities and losses at the least cost to the
Government;
(b) the Bangko Sentral shall remit seventy-five percent (75%) of its net
profits to a special deposit account (sinking fund) until such time as the net
liabilities of the Central Bank shall have been liquidated through generally
accepted finance mechanisms such as, but not limited to, write-offs, set-
offs, condonation, collections, reappraisal, revaluation and bond issuance
by the National Government, or to the National Government as dividends;
(c) the assets and liabilities to be transferred shall be limited to an amount
that will enable the Bangko Sentral to perform its responsibilities adequately
and operate on a viable basis: Provided, That the assets shall exceed the
liabilities as certified by the Commission on Audit (COA), by an initial
amount of Ten billion pesos (P10,000,000,000);
(d) liabilities to be assumed by the Bangko Sentral shall include liability for
notes and coins in circulation as of the effective date of this Act; and
(e) any asset or liability of the Central Bank not transferred to the Bangko
Sentral shall be retained and administered, disposed of and liquidated by
the Central Bank itself which shall continue to exist as the CB Board of
Liquidators only for the purposes provided in this paragraph but not later
than twenty-five (25) years or until such time that liabilities have been
liquidated: Provided, That the Bangko Sentral may financially assist the
Central Bank of Liquidators in the liquidation of CB liabilities: Provided,
finally, That upon disposition of said retained assets and liquidation of said
retained liabilities, the Central Bank shall be deemed abolished.
            All actions taken by the Bangko Sentral Monetary Board under this section
shall be reported to Congress and the President within thirty (30) days.
            Section 133. Mandate to Organize. - The Bangko Sentral shall be organized
by the Monetary Board without being subject to the provisions of Republic Act No.
7430, by adopting if it so desires, an entirely new staffing pattern on organizational
structure to suit the operations of the Bangko Sentral under this Act. No preferential or
priority right shall be given to or enjoyed by any personnel for appointment to any
position in the new staffing pattern, nor shall any personnel be considered as having
prior or vested rights with respect to retention in the Bangko Sentral or in any position
which may be created in the new staffing pattern, even if he should be the incumbent
of a similar position prior to organization. The formulation of the program of
organization shall be completed within six (6) months after the effectivity of this Act,
and shall be fully implemented within a period of six (6) months thereafter. Personnel
who may not be retained are deemed separated from the service.

            Section 134. Separation Benefits. - Pursuant to Section 15 of this Act, the

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

            Section 135. Repealing Clause. - Except as may be provided for in Section 46

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

            Section 136. Transfer of Powers. - All powers, duties and functions vested by
law in the Central Bank of the Philippines not inconsistent with the provisions of this
Act shall be deemed transferred to the Bangko Sentral ng Pilipinas. All references to
the Central Bank of the Philippines in any law or special charters shall be deemed to
refer to the Bangko Sentral.
REPUBLIC ACT No. 1405
AN ACT PROHIBITING DISCLOSURE OF OR INQUIRY INTO, DEPOSITS WITH
ANY BANKING INSTITUTION AND PROVIDING PENALTY THEREFOR.

            Section 137. Separability Clause. - If any provision or section of this Act or the Section 1. It is hereby declared to be the policy of the Government to give
application thereof to any person or circumstance is held invalid, the other provisions encouragement to the people to deposit their money in banking institutions and to
or sections of this Act, and the application of such provision or section to other discourage private hoarding so that the same may be properly utilized by banks in
persons or circumstances, shall not be affected thereby. authorized loans to assist in the economic development of the country.

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

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

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

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

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

Approved: September 9, 1955

Footnote

1 
This Section and Section 3 were both amended by PD No. 1792 issued
January 16, 1981, PD 1792 was expressly repealed by Sec 135 of R.A. No.
7653, approved June 14, 1993. The original sections 2 and 3 of R.A.
No.1405 are hereby reproduced for reference, as follows; "Sec 2 All
deposits of whatever nature with banks or banking institutions in the
Philippines including investments in bonds issued by the Government of the
Philippines, its political subdivisions and its instrumentalities, are hereby
considered as of an absolutely confidential nature and may not be
Congress of the Philippines
examined, inquired or looked into by any person, government official,
Twelfth Congress
bureau or office, except upon written per-mission of the depositor, or in
cases of impeachment, or upon order of a competent court in cases of
bribery or dereliction of duty of public officials. or in cases where the money REPUBLIC ACT NO. 9160       September 29, 2001
deposited or invested is the subject matter of the litigation," "Sec. 3. It shall
be unlawful for any official or employee of a banking institution to disclose to
AN ACT DEFINING THE CRIME OF MONEY LAUNDERING, PROVIDING
any person other than those mentioned in Section two hereof any
PENALTIES THEREFOR AND FOR OTHER PURPOSES
information concerning said deposits."

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

Congress assembled:

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

Section 2. Declaration of Policy. – It is hereby declared the policy of the State to

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

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

(a) "Covered Institution" refers to:

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

(2) Insurance companies and all other institutions supervised or regulated

by the Insurance Commission; and
 (3) (i) securities dealers, brokers, salesmen, investment houses and other
similar entities managing securities or rendering services as investment
agent, advisor, or consultant, (ii) mutual funds, close and investment
companies, common trust funds, pre-need companies and other similar
entities, (iii) foreign exchange corporations, money changers, money
payment, remittance, and transfer companies and other similar entities, and
(iv) other entities administering or otherwise dealing in currency,
commodities or financial derivatives based thereon, valuable objects, cash
substitutes and other similar monetary instruments or property supervised or
regulated by Securities and Exchange Commission.
(b) "Covered transaction" is a single, series, or combination of transactions
involving a total amount in excess of Four million Philippine pesos
(Php4,000,000.00) or an equivalent amount in foreign currency based on the
prevailing exchange rate within five (5) consecutive banking days except those
between a covered institution and a person who, at the time of the transaction
was a properly identified client and the amount is commensurate with the
business or financial capacity of the client; or those with an underlying legal or
trade obligation, purpose, origin or economic justification.
It likewise refers to a single, series or combination or pattern of unusually large
and complex transactions in excess of Four million Philippine pesos
(Php4,000,000.00) especially cash deposits and investments having no credible
purpose or origin, underlying trade obligation or contract.
(c) "Monetary Instrument" refers to:
(1) coins or currency of legal tender of the Philippines, or of any other
country;
(2) drafts, checks and notes;
(3) securities or negotiable instruments, bonds, commercial papers, deposit
certificates, trust certificates, custodial receipts or deposit substitute
instruments, trading orders, transaction tickets and confirmations of sale or
investments and money marked instruments; and
(4) other similar instruments where title thereto passes to another by
endorsement, assignment or delivery.
(d) "Offender" refers to any person who commits a money laundering offense.
(e) "Person" refers to any natural or juridical person.
(f) "Proceeds" refers to an amount derived or realized from an unlawful activity.
(g) "Supervising Authority" refers to the appropriate supervisory or regulatory
agency, department or office supervising or regulating the covered institutions
enumerated in Section 3(a).
(h) "Transaction" refers to any act establishing any right or obligation or giving
rise to any contractual or legal relationship between the parties thereto. It also
includes any movement of funds by any means with a covered institution.
(l) "Unlawful activity" refers to any act or omission or series or combination
thereof involving or having relation to the following:
(1) Kidnapping for ransom under Article 267 of Act No. 3815, otherwise
known as the Revised Penal Code, as amended;
(2) Sections 3, 4, 5, 7, 8 and 9 of Article Two of Republic Act No. 6425, as
amended, otherwise known as the Dangerous Drugs Act of 1972;
(3) Section 3 paragraphs B, C, E, G, H and I of Republic Act No. 3019, as
amended; otherwise known as the Anti-Graft and Corrupt Practices Act;
(4) Plunder under Republic Act No. 7080, as amended;
(5) Robbery and extortion under Articles 294, 295, 296, 299, 300, 301 and
302 of the Revised Penal Code, as amended;
(6) Jueteng and Masiao punished as illegal gambling under Presidential
Decree No. 1602;
(7) Piracy on the high seas under the Revised Penal Code, as amended
and Presidential Decree No. 532;
(8) Qualified theft under, Article 310 of the Revised Penal Code, as
amended;
(9) Swindling under Article 315 of the Revised Penal Code, as amended;
(10) Smuggling under Republic Act Nos. 455 and 1937;
(11) Violations under Republic Act No. 8792, otherwise known as the
Electronic Commerce Act of 2000;
(12) Hijacking and other violations under Republic Act No. 6235; destructive
arson and murder, as defined under the Revised Penal Code, as amended,
including those perpetrated by terrorists against non-combatant persons
and similar targets;
(13) Fraudulent practices and other violations under Republic Act No. 8799,
otherwise known as the Securities Regulation Code of 2000;
(14) Felonies or offenses of a similar nature that are punishable under the
penal laws of other countries.
Section 4. Money Laundering Offense. – Money laundering is a crime whereby the (4) to cause the filing of complaints with the Department of Justice or the
proceeds of an unlawful activity are transacted, thereby making them appear to have Ombudsman for the prosecution of money laundering offenses;
originated from legitimate sources. It is committed by the following:
(5) to initiate investigations of covered transactions, money laundering activities
(a) Any person knowing that any monetary instrument or property represents, and other violations of this Act;
involves, or relates to the proceeds of any unlawful activity, transacts or attempts
to transact said monetary instrument or property.
(6) to freeze any monetary instrument or property alleged to be proceed of any
unlawful activity;
(b) Any person knowing that any monetary instrument or property involves the
proceeds of any unlawful activity, performs or fails to perform any act as a result
(7) to implement such measures as may be necessary and justified under this
of which he facilitates the offense of money laundering referred to in paragraph
Act to counteract money laundering;
(a) above.

(c) Any person knowing that any monetary instrument or property is required
under this Act to be disclosed and filed with the Anti-Money Laundering Council
(AMLC), fails to do so.
Section 5. Jurisdiction of Money Laundering Cases. – The regional trial courts shall
have jurisdiction to try all cases on money laundering. Those committed by public
officers and private persons who are in conspiracy with such public officers shall be
under the jurisdiction of the Sandiganbayan.
Section 6. Prosecution of Money Laundering. –
(a) Any person may be charged with and convicted of both the offense of money
laundering and the unlawful activity as herein defined.
(8) to receive and take action in respect of, any request from foreign states for
assistance in their own anti-money laundering operations provided in this Act;
(9) to develop educational programs on the pernicious effects of money
laundering, the methods and techniques used in money laundering, the viable
means of preventing money laundering and the effective ways of prosecuting and
punishing offenders; and
(10) to enlist the assistance of any branch, department, bureau, office, agency or
instrumentality of the government, including government-owned and –controlled
corporations, in undertaking any and all anti-money laundering operations, which
may include the use of its personnel, facilities and resources for the more
resolute prevention, detection and investigation of money laundering offenses
and prosecution of offenders.

(b) Any proceeding relating to the unlawful activity shall be given precedence Section 8. Creation of a Secretariat. – The AMLC is hereby authorized to establish a
over the prosecution of any offense or violation under this Act without prejudice secretariat to be headed by an Executive Director who shall be appointed by the
to the freezing and other remedies provided. Council for a term of five (5) years. He must be a member of the Philippine Bar, at
least thirty-five (35) years of age and of good moral character, unquestionable integrity
and known probity. All members of the Secretariat must have served for at least five
Section 7. Creation of Anti-Money Laundering Council (AMLC). – The Anti-Money
(5) years either in the Insurance Commission, the Securities and Exchange
Laundering Council is hereby created and shall be composed of the Governor of the
Commission or the Bangko Sentral ng Pilipinas (BSP) and shall hold full-time
Bangko Sentral ng Pilipinas as chairman, the Commissioner of the Insurance
permanent positions within the BSP.
Commission and the Chairman of the Securities and Exchange Commission as
members. The AMLC shall act unanimously in the discharge of its functions as defined
hereunder: Section 9. Prevention of Money Laundering; Customer Identification Requirements
and Record Keeping. –
(1) to require and receive covered transaction reports from covered institutions;
(a) Customer Identification, - Covered institutions shall establish and record the
true identity of its clients based on official documents. They shall maintain a
(2) to issue orders addressed to the appropriate Supervising Authority or the
system of verifying the true identity of their clients and, in case of corporate
covered institution to determine the true identity of the owner of any monetary
clients, require a system of verifying their legal existence and organizational
instrument or property subject of a covered transaction report or request for
structure, as well as the authority and identification of all persons purporting to
assistance from a foreign State, or believed by the Council, on the basis of
act on their behalf.
substantial evidence to be in whole or in part, whenever located, representing,
involving, or related to, directly or indirectly, in any manner or by any means, the
proceeds of an unlawful activity; The provisions of existing laws to the contrary notwithstanding, anonymous
accounts, accounts under fictitious names, and all other similar accounts shall be
absolutely prohibited. Peso and foreign currency non-checking numbered
(3) to institute civil forfeiture proceedings and all other remedial proceedings
accounts shall be allowed. The BSP may conduct annual testing solely limited to
through the Office of the Solicitor General;
 the determination of the existence and true identity of the owners of such
accounts.
(b) Record Keeping – All records of all transactions of covered institutions shall
be maintained and safely stored for five (5) years from the date of transactions.
With respect to closed accounts, the records on customer identification, account
files and business correspondence, shall be preserved and safety stored for at
least five (5) years from the dates when they were closed.
(c) Reporting of Covered Transactions. – Covered institutions shall report to
the AMLC all covered transactions within five (5) working days from occurrence
thereof, unless the Supervising Authority concerned prescribes a longer period
not exceeding ten (10) working days.
When reporting covered transactions to the AMLC, covered institutions and their
officers, employees, representatives, agents, advisors, consultants or associates shall
not be deemed to have violated Republic Act No. 1405, as amended; Republic Act
No. 6426, as amended; Republic Act No. 8791 and other similar laws, but are
prohibited from communicating, directly or indirectly, in any manner or by any means,
to any person the fact that a covered transaction report was made, the contents
thereof, or any other information in relation thereto. In case of violation thereof, the
concerned officer, employee, representative, agent, advisor, consultant or associate of
the covered institution, shall be criminally liable. However, no administrative, criminal
or civil proceedings, shall lie against any person for having made a covered
transaction report in the regular performance of his duties and in good faith, whether
or not such reporting results in any criminal prosecution under this Act or any other
Philippine law.
When reporting covered transactions to the AMLC, covered institutions and their
officers, employees, representatives, agents, advisors, consultants or associates are
prohibited from communicating, directly or indirectly, in any manner or by any means,
to any person, entity, the media, the fact that a covered transaction report was made,
the contents thereof, or any other information in relation thereto. Neither may such
reporting be published or aired in any manner or form by the mass media, electronic
mail, or other similar devices. In case of violation thereof, the concerned officer,
employee, representative, agent, advisor, consultant or associate of the covered
institution, or media shall be held criminally liable.
Section 10. Authority to Freeze. – Upon determination that probable cause exists that
any deposit or similar account is in any way related to an unlawful activity, the AMLC
may issue a freeze order, which shall be effective immediately, on the account for a
period not exceeding fifteen (15) days. Notice to the depositor that his account has
been frozen shall be issued simultaneously with the issuance of the freeze order. The
depositor shall have seventy-two (72) hours upon receipt of the notice to explain why
the freeze order should be lifted. The AMLC has seventy-two (72) hours to dispose of
the depositor's explanation. If it falls to act within seventy-two (72) hours from receipt
of the depositor's explanation, the freeze order shall automatically be dissolved. The
fifteen (15)-day freeze order of the AMLC may be extended upon order of the court,
provided that the fifteen (15)-day period shall be tolled pending the court's decision to
extend the period.
No court shall issue a temporary restraining order or writ of injunction against any
freeze order issued by the AMLC except the Court of Appeals or the Supreme Court.
Section 11. Authority to inquire into Bank Deposits. – Notwithstanding the provisions
of Republic Act No. 1405, as amended; Republic Act No. 6426, as amended; Republic
Act No. 8791, and other laws, the AMLC may inquire into or examine any particular
deposit or investment with any banking institution or non-bank financial institution
upon order of any competent court in cases of violation of this Act when it has been
established that there is probable cause that the deposits or investments involved are
in any way related to a money laundering offense: Provided, That this provision shall
not apply to deposits and investments made prior to the effectivity of this Act.
Section 12. Forfeiture Provisions. –
(a) Civil Forfeiture. – When there is a covered transaction report made, and the
court has, in a petition filed for the purpose ordered seizure of any monetary
instrument or property, in whole or in part, directly or indirectly, related to said
report, the Revised Rules of Court on civil forfeiture shall apply.
(b) Claim on Forfeited Assets. – Where the court has issued an order of
forfeiture of the monetary instrument or property in a criminal prosecution for any
money laundering offense defined under Section 4 of this Act, the offender or any
other person claiming an interest therein may apply, by verified petition, for a
declaration that the same legitimately belongs to him and for segregation or
exclusion of the monetary instrument or property corresponding thereto. The
verified petition shall be filed with the court which rendered the judgment of
conviction and order of forfeiture, within fifteen (15) days from the date of the
order or forfeiture, in default of which the said order shall become final and
executory. This provision shall apply in both civil and criminal forfeiture.
(c) Payment in Lieu of Forfeiture. – Where the court has issued an order of
forfeiture of the monetary instrument or property subject of a money laundering
offense defined under Section 4, and said order cannot be enforced because any
particular monetary instrument or property cannot, with due diligence, be located,
or it has been substantially altered, destroyed, diminished in value or otherwise
rendered worthless by any act or omission, directly or indirectly, attributable to
the offender, or it has been concealed, removed, converted or otherwise
transferred to prevent the same from being found or to avoid forfeiture thereof, or
it is located outside the Philippines or has been placed or brought outside the
jurisdiction of the court, or it has been commingled with other monetary
instruments or property belonging to either the offender himself or a third person
or entity, thereby rendering the same difficult to identify or be segregated for
purposes of forfeiture, the court may, instead of enforcing the order of forfeiture
of the monetary instrument or property or part thereof or interest therein,
accordingly order the convicted offender to pay an amount equal to the value of
said monetary instrument or property. This provision shall apply in both civil and
criminal forfeiture.
Section 13. Mutual Assistance among States. –
(a) Request for Assistance from a Foreign State. – Where a foreign State
makes a request for assistance in the investigation or prosecution of a money
laundering offense, the AMLC may execute the request or refuse to execute the
same and inform the foreign State of any valid reason for not executing the
request or for delaying the execution thereof. The principles of mutuality and
reciprocity shall, for this purpose, be at all times recognized.
(b) Power of the AMLC to Act on a Request for Assistance from a Foreign or processes needed by the requesting State; and (8) contain such other
State. – The AMLC may execute a request for assistance from a foreign State information as may assist in the execution of the request.
by: (1) tracking down, freezing, restraining and seizing assets alleged to be
proceeds of any unlawful activity under the procedures laid down in this Act; (2)
(f) Authentication of Documents. – For purposes of this Section, a document is
giving information needed by the foreign State within the procedures laid down in
authenticated if the same is signed or certified by a judge, magistrate or
this Act; and (3) applying for an order of forfeiture of any monetary instrument or
equivalent officer in or of, the requesting State, and authenticated by the oath or
property in the court: Provided, That the court shall not issue such an order
affirmation of a witness or sealed with an official or public seal of a minister,
unless the application is accompanied by an authenticated copy of the order of a
secretary of State, or officer in or of, the government of the requesting State, or
court in the requesting State ordering the forfeiture of said monetary instrument
of the person administering the government or a department of the requesting
or properly of a person who has been convicted of a money laundering offense in
territory, protectorate or colony. The certificate of authentication may also be
the requesting State, and a certification of an affidavit of a competent officer of
made by a secretary of the embassy or legation, consul general, consul, vice
the requesting State stating that the conviction and the order of forfeiture are final
consul, consular agent or any officer in the foreign service of the Philippines
and then no further appeal lies in respect or either.
stationed in the foreign State in which the record is kept, and authenticated by
the seal of his office.
(c) Obtaining Assistance from Foreign States. – The AMLC may make a
request to any foreign State for assistance in (1) tracking down, freezing,
(g) Extradition. – The Philippines shall negotiate for the inclusion of money
restraining and seizing assets alleged to be proceeds of any unlawful activity; (2)
laundering offenses as herein defined among extraditable offenses in all future
obtaining information that it needs relating to any covered transaction, money
treaties.
laundering offense or any other matter directly or indirectly, related thereto; (3) to
the extent allowed by the law of the Foreign State, applying with the proper court
therein for an order to enter any premises belonging to or in the possession or Section 14. Penal Provisions. –
control of, any or all of the persons named in said request, and/or search any or
all such persons named therein and/or remove any document, material or object
(a) Penalties for the Crime of Money Laundering. The penalty of imprisonment
named in said request: Provided, That the documents accompanying the request
ranging from seven (7) to fourteen (14) years and a fine of not less than Three
in support of the application have been duly authenticated in accordance with the
million Philippine pesos (Php 3,000,000.00) but not more than twice the value of
applicable law or regulation of the foreign State; and (4) applying for an order of
the monetary instrument or property involved in the offense, shall be imposed
forfeiture of any monetary instrument or property in the proper court in the foreign
upon a person convicted under Section 4(a) of this Act.
State: Provided, That the request is accompanied by an authenticated copy of
the order of the regional trial court ordering the forfeiture of said monetary
instrument or property of a convicted offender and an affidavit of the clerk of The penalty of imprisonment from four (4) to seven (7) years and a fine of not
court stating that the conviction and the order of forfeiture are final and that no less than One million five hundred thousand Philippine pesos (Php 1,500,000.00)
further appeal lies in respect of either. but not more than Three million Philippine pesos (Php 3,000,000.00), shall be
imposed upon a person convicted under Section 4(b) of this Act.
(d) Limitations on Request for Mutual Assistance. – The AMLC may refuse to
comply with any request for assistance where the action sought by the request The penalty of imprisonment from six (6) months to four (4) years or a fine of not
contravenes any provision of the Constitution or the execution of a request is less than One hundred thousand Philippine pesos (Php 100,000.00) but not more
likely to prejudice the national interest of the Philippines unless there is a treaty than Five hundred thousand Philippine pesos (Php 500,000.00), or both, shall be
between the Philippines and the requesting State relating to the provision of imposed on a person convicted under Section 4(c) of this Act.
assistance in relation to money laundering offenses.
(b) Penalties for Failure to Keep Records. The penalty of imprisonment from
(e) Requirements for Requests for Mutual Assistance from Foreign State. – six (6) months to one (1) year or a fine of not less than One hundred thousand
A request for mutual assistance from a foreign State must (1) confirm that an Philippine pesos (Php 100,000.00) but not more than Five hundred thousand
investigation or prosecution is being conducted in respect of a money launderer Philippine pesos (Php 500,000.00), or both, shall be imposed on a person
named therein or that he has been convicted of any money laundering offense; convicted under Section 9(b) of this Act.
(2) state the grounds on which any person is being investigated or prosecuted for
money laundering or the details of his conviction; (3) gives sufficient particulars
as to the identity of said person; (4) give particulars sufficient to identity any (c) Malicious Reporting. Any person who, with malice, or in bad faith, report or
covered institution believed to have any information, document, material or object files a completely unwarranted or false information relative to money laundering
which may be of assistance to the investigation or prosecution; (5) ask from the transaction against any person shall be subject to a penalty of six (6) months to
covered institution concerned any information, document, material or object four (4) years imprisonment and a fine of not less than One hundred thousand
which may be of assistance to the investigation or prosecution; (6) specify the Philippine pesos (Php 100,000.00) but not more than Five hundred thousand
manner in which and to whom said information, document, material or object Philippine pesos (Php 500,000.00), at the discretion of the court: Provided, That
detained pursuant to said request, is to be produced; (7) give all the particulars the offender is not entitled to avail the benefits of the Probation Law.
necessary for the issuance by the court in the requested State of the writs, orders
 If the offender is a corporation, association, partnership or any juridical person, Senate and seven (7) members from the House of Representatives. The members
the penalty shall be imposed upon the responsible officers, as the case may be, from the Senate shall be appointed by the Senate President based on the proportional
who participated in the commission of the crime or who shall have knowingly representation of the parties or coalitions therein with at least two (2) Senators
permitted or failed to prevent its commission. If the offender is a juridical person, representing the minority. The members from the House of Representatives shall be
the court may suspend or revoke its license. If the offender is an alien, he shall, appointed by the Speaker also based on proportional representation of the parties or
in addition to the penalties herein prescribed, be deported without further coalitions therein with at least two (2) members representing the minority.
proceedings after serving the penalties herein prescribed. If the offender is a
public official or employee, he shall, in addition to the penalties prescribed herein,
The Oversight Committee shall have the power to promulgate its own rules, to
suffer perpetual or temporary absolute disqualification from office, as the case
oversee the implementation of this Act, and to review or revise the implementing rules
may be;
issued by the Anti-Money Laundering Council within thirty (30) days from the
promulgation of the said rules.
Any public official or employee who is called upon to testify and refuses to do the
same or purposely fails to testify shall suffer the same penalties prescribed
Section 20. Appropriations Clause. – The AMLC shall be provided with an initial
herein.
appropriation of Twenty-five million Philippine pesos (Php 25,000,000.00) to be drawn
from the national government. Appropriations for the succeeding years shall be
(d) Breach of Confidentiality. The punishment of imprisonment ranging from included in the General Appropriations Act.
three (3) to eight (8) years and a fine of not less than Five hundred thousand
Philippine pesos (Php 500,000.00) but not more than One million Philippine
Section 21. Separability Clause. – If any provision or section of this Act or the
pesos (Php 1,000,000.00), shall be imposed on a person convicted for a violation
application thereof to any person or circumstance is held to be invalid, the other
under Section 9(c).
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 15. System of Incentives and Rewards. – A system of special incentives and
rewards is hereby established to be given to the appropriate government agency and
Section 22. Repealing Clause. – All laws, decrees, executive orders, rules and
its personnel that led and initiated an investigation, prosecution and conviction of
regulations or parts thereof, including the relevant provisions of Republic Act No.
persons involved in the offense penalized in Section 4 of this Act.
1405, as amended; Republic Act No. 6426, as amended; Republic Act No. 8791, as
amended and other similar laws, as are inconsistent with this Act, are hereby
Section 16. Prohibitions Against Political Harassment. – This Act shall not be used for repealed, amended or modified accordingly.
political prosecution or harassment or as an instrument to hamper competition in trade
and commerce.
Section 23. Effectivity. – This Act shall take effect fifteen (15) days after its complete
publication in the Official Gazette or in at least two (2) national newspapers of general
No case for money laundering may be filed against and no assets shall be frozen, circulation.
attached or forfeited to the prejudice of a candidate for an electoral office during an
election period.
The provisions of this Act shall not apply to deposits and investments made prior to its
effectivity.
Section 17. Restitution. – Restitution for any aggrieved party shall be governed by the
provisions of the New Civil Code.
Approved,

Section 18. Implementing Rules and Regulations. – Within thirty (30) days from the
(Sgd)
effectivity of this Act, the Bangko Sentral ng Pilipinas, the Insurance Commission and
the Securities and Exchange Commission shall promulgate the rules and regulations
to implement effectivity the provisions of this Act. Said rules and regulations shall be
submitted to the Congressional Oversight Committee for approval. FRANKLIN M. DRILON
President of the Senate
Covered institutions shall formulate their respective money laundering prevention
programs in accordance with this Act including, but not limited to, information
dissemination on money laundering activities and its prevention, detection and (Sgd)
reporting, and the training of responsible officers and personnel of covered
institutions.
JOSE DE VENECIA, JR.
Section 19. Congressional Oversight Committee. – There is hereby created a Speaker of the House of Representatives
Congressional Oversight Committee composed of seven (7) members from the
This Act which is a consolidation of House Bill No. 3083 and Senate Bill No. 1745 was
finally passed by the House of Representatives and the Senate on September 29,
2001.

(Sgd)

OSCAR G. YARES
Secretary of the Senate

(Sgd)

ROBERTO P. NAZARENO
Secretary General
House of Representatives

Approved: September 29, 2001

(Sgd)

GLORIA MACAPAGAL-ARROYO
President of the Philippines Sixteenth Congress
Third Regular Session

Begun and held in Metro Manila, on Monday, the twenty-seventh day of July, two
thousand fifteen.

REPUBLIC ACT No. 10846

AN ACT ENHANCING THE RESOLUTION AND LIQUIDATION FRAMEWORK FOR

BANKS, AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 3591, AS
AMENDED, AND OTHER RELATED LAWS

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

Congress assembled:

SECTION 1. Section 1 of Republic Act No. 3591, as amended, is hereby amended to

read as follows:

“THE CREATION OF THE PHILIPPINE

DEPOSIT INSURANCE CORPORATION
“SECTION 1. — There is hereby created a Philippine Deposit Insurance Corporation
hereinafter referred to as the ‘Corporation’ which shall insure as herein provided, the
deposits of all banks which are entitled to the benefits of insurance under this Act, and
which shall have the powers hereinafter granted.
“The Corporation shall, as a basic policy, promote and safeguard the interests of the
depositing public by providing insurance coverage on all insured deposits and helping
maintain a sound and stable banking system.”
SECTION 2. A new section entitled Section 2 of the same Act shall be inserted
between Sections 1 and 3 which shall read as follows:
“STATE POLICY
“SEC. 2. — It is hereby declared to be the policy of the State to strengthen the
mandatory deposit insurance coverage system to generate, preserve, maintain faith
and confidence in the country’s banking system, and protect it from illegal schemes
and machinations.
“Towards this end, the government must extend all means and mechanisms
necessary for the Corporation to effectively fulfill its vital task of promoting and
safeguarding the interests of the depositing public by way of providing insurance
coverage on bank deposits and in helping develop a sound and stable banking
system.
“In view of the crucial role and the nature of its functions and responsibilities, the
Corporation, while being a government instrumentality with corporate powers, shall
enjoy fiscal and administrative autonomy.”
SECTION 3. Section 2 of the same Act is accordingly renumbered as Section 3 and is
hereby amended to read as follows:
“BOARD OF DIRECTORS: COMPOSITION
AND AUTHORITY
“SEC. 3. (a) The powers and functions of the Corporation shall be vested in and
exercised by a Board of Directors which shall be composed of seven (7) members as
follows:
“(1) The Secretary of Finance who shall be the ex officio
Chairman of the Board without compensation;
“(2) The Governor of the Bangko Sentral ng Pilipinas who shall be
ex officio member of the Board without compensation;
“(3) The President of the Corporation, who shall be appointed by
the President of the Philippines from a shortlist prepared by the
Governance Commission for Government-Owned or -Controlled
Corporations pursuant to Republic Act No. 10149 to serve on a
full-time basis for a term of six (6) years. The President of the
Corporation shall also serve as Vice Chairman of the Board;
“(4) Four (4) members from the private sector to be appointed by
the President of the Philippines from a shortlist prepared by the
Governance Commission for Government-Owned or -Controlled
Corporations pursuant to Republic Act No. 10149. The appointive
directors shall serve for a term of six (6) years unless sooner
removed for cause and shall be subject to only one (1)
reappointment: Provided, That of those first appointed, the first
two (2) appointees shall serve for a period of three (3) years:
Provided, however, That the appointive director shall continue to
hold office until the successor is appointed. An appointive director
may be nominated by the Governance Commission for
Government-Owned or -Controlled Corporations for
reappointment by the President only if one obtains a performance
score of above average or its equivalent or higher in the
immediately preceding year of tenure as appointive director based
on the performance criteria for appointive directors of the
Corporation.
“Appointment to any vacancy shall be only for the unexpired term of the
predecessor pursuant to Republic Act No. 10149.
“No person shall be appointed as member of the Board unless he or she be
of good moral character, of unquestionable integrity and responsibility, of
known probity and patriotism, and who is of recognized competence in
economics, banking and finance, law, management administration or
insurance, and shall be at least thirty-five (35) years of age. For the duration
of their tenure or term of office and for a period of one (1) year thereafter,
the appointive members of the Board shall be disqualified from holding any
office, position or employment in any insured bank.
“The Secretary of Finance and the Governor of the Bangko Sentral ng
Pilipinas may each designate an alternate, who shall be an official with a
rank not lower than assistant secretary or its equivalent with written
authority from the Secretary of Finance or the Governor of the Bangko
Sentral ng Pilipinas to attend such meetings and to vote on behalf of their
respective principals. Whenever the Chairman of the Board is unable to
attend a meeting of the Board, or in the event of a vacancy in the office of
the Secretary of Finance, and in the absence of the Vice Chairman, the
members of the Board shall designate from among themselves who shall
act as Chairman.
“The President of the Philippines may remove any appointive member of the
Board of Directors for any of the following reasons:
“(i) If the member is physically or mentally incapacitated that he or
she cannot properly discharge his or her duties and
responsibilities, and such incapacity has lasted for more than six
(6) months; or
 “(ii) 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 Corporation; or
“(iii) If the member no longer possesses the qualifications
specified in this Act; or
“(iv) If the member does not meet the standards for performance
based on the evaluation by the Governance Commission for
Government-Owned or -Controlled Corporations under Republic
Act No. 10149.
“The presence of four (4) members shall constitute a quorum. All decisions
of the Board of Directors shall require the concurrence of at least four (4)
members.
“The compensation, per diems, allowances, incentives, and other benefits
for board members shall be determined by the Governance Commission for
Government-Owned or -Controlled Corporations.
“In addition to the requirements of Republic Act No. 6713, otherwise known
as the ‘Code of Conduct and Ethical Standards for Public Officials and
Employees’, any member of the Board of Directors with personal or
pecuniary interest in any matter in the agenda of the Board of Directors shall
disclose his or her interest to the Board and shall recuse from the meeting
when the matter is taken up. The minutes shall reflect the disclosure made
and the recusal of the member concerned.
“(b) The Board of Directors shall have the authority:
“(1) To approve and issue rules and regulations for banks and the
depositing public as it considers necessary for the effective
discharge of its responsibilities;
“(2) To act as the policy-making body of the Corporation and
constitute Board committees to oversee the management,
operations and administration of the Corporation;
“(3) To establish a human resource management system which
shall govern the selection, hiring, appointment, transfer,
promotion, or dismissal of personnel. Such system shall aim to
establish professionalism and excellence at all levels of the
Corporation in accordance with sound principles of management;
“(4) To approve a compensation structure as an integral
component of the Corporation’s human resource development
program based on job evaluation studies and wage surveys, and
revise the same as it may deem necessary: Provided, That all
positions in the Corporation shall be governed by a compensation
package, position classification system and qualification
standards approved by the Board based on a comprehensive job
analysis and audit of actual duties and responsibilities. The
compensation structure shall be comparable to that of other
financial institutions based on prevailing market standards, and
shall provide for yearly merit reviews or increases based on
productivity. The Corporation shall therefore be exempt from
existing laws, rules and regulations on compensation package,
position classification and qualification standards. It shall however
endeavor to make its system conform as closely as possible with
the principles under Republic Act No. 6758, as amended;
“(5) To appoint, establish the rank, fix the remuneration, benefits,
including health care services through a Health Maintenance
Organization (HMO) and medical benefits other than those
provided for under Republic Act No. 7875, as amended, and
remove any officer or employee of the Corporation, for cause,
subject to pertinent civil service laws: Provided, That the Board of
Directors may delegate this authority to the President subject to
specific guidelines: Provided, further, That in no case shall there
be any diminution of existing salaries, benefits and other
emoluments;
“(6) To approve policy on local and foreign travel, and the
corresponding expenses, allowances and per diems, of officers,
employees, agents of the Corporation, which shall be comparable
with the expenses, allowances and per diems of personnel of
other financial institutions based on prevailing market standards,
notwithstanding the provisions of Presidential Decree No. 1177,
Executive Order No. 292, Executive Order No. 248, as amended,
Executive Order No. 298, and similar laws;
“(7) To adopt an annual budget for, and authorize such
expenditures by the Corporation, as are in the interest of the
effective administration and operation of the Corporation;
“(8) To approve the target level of the Deposit Insurance Fund
(DIF) and the methodology for determining reserves for insurance
and financial assistance losses;
“(9) To review the organizational set-up of the Corporation and
adopt a new or revised organizational structure as it may deem
necessary for the Corporation to undertake its mandate and
functions;
“(10) To design, adopt and revise, as it may deem necessary, an
early separation plan for employees of the Corporation to ensure
availability of a human resource pool qualified and capable of
implementing the Corporation’s authorities under this Charter in a
manner responsive and attuned to market developments, and to
provide incentives for all those who shall be separated from the
service. Notwithstanding any law to the contrary, these incentives
shall be in addition to all gratuities and benefits the employee is
entitled to under existing laws; and
 “(11) To promote and sponsor the local or foreign training or study
of personnel in the fields of banking, finance, management,
information technology and law. Towards this end, the
Corporation is hereby authorized to defray the costs of such
training or study. The Board shall prescribe rules and regulations
to govern the training or study programs of the Corporation.”
SECTION 4. Section 3 of the same Act is accordingly renumbered as Section 4.
SECTION 5. The first paragraph of Section 4 of the same Act, as renumbered, is
hereby amended to read as follows:
“PRESIDENT OF THE CORPORATION
COMPENSATION, POWERS AND DUTIES
“SEC. 4. The President of the Corporation shall be its Chief Executive Officer and the
Vice Chairman of its Board of Directors and his or her salary shall be fixed by the
President of the Philippines upon the recommendation of the Governance
Commission for Government-Owned or -Controlled Corporations, at a sum
commensurate to the importance and responsibility attached to the position. The sum
total of the salary, allowances, benefits and other emoluments of the President of the
Corporation shall be higher than the compensation package of the next highest
ranking executive of the Corporation.”
SECTION 6. Section 4, paragraphs (d), (f) and (h) of the same Act, as renumbered,
are hereby amended to read as follows:
“(d) To represent the Corporation in all dealings with other offices, agencies and
instrumentalities of the government and with all other persons or entities, public or
private, whether domestic, foreign or international;
“(f) To represent the Corporation, either personally or through counsel, including
private counsel, as may be authorized by the PDIC Board, in any legal proceeding or
action;
“(h) x x x. The President shall be assisted by a Vice President and other officials
whose appointment and removal for cause shall be approved and whose salary shall
be fixed by the Board of Directors upon recommendation of the President of the
Corporation. During the absence or temporary incapacity of the President, or in case
of vacancy or permanent incapacity and pending appointment of a new President of
the Corporation by the President of the Philippines, the Board of Directors shall
designate the officer-in-charge of the Corporation.”
SECTION 7. Section 4 of the same Act is accordingly renumbered as Section 5, and
is hereby amended to read as follows:
“DEFINITION OF TERMS
“SEC. 5. As used in this Act –
“(a) The term asset refers to movable, immovable, tangible, or intangible
resources or properties over which a bank has an established or equitable
interest, including the proceeds of the sale of its bank and branch licenses
subject to the approval of the Bangko Sentral ng Pilipinas.
“(b) The term asset distribution plan refers to the plan of distribution of the
assets of a closed bank to its creditors, based on its estimated realizable
value as of a certain cut-off date, prepared in accordance with the Rules on
Concurrence and Preference of Credits under the Civil Code or other laws.
“An asset distribution plan may be partial when it pertains to the distribution
of a portion or some of the assets of the closed bank, or final when it
pertains to the distribution of all the assets of the closed bank.
“(c) The term Board of Directors means the Board of Directors of the
Corporation.
“(d) The term bank and banking institution shall be synonymous and
interchangeable and shall include banks, commercial banks, savings banks,
mortgage banks, rural banks, development banks, cooperative banks, stock
savings and loan associations and branches and agencies in the Philippines
of foreign banks and all other corporations authorized to perform banking
functions in the Philippines.
“(e) The term closed bank refers to a bank placed under liquidation by the
Monetary Board.
“(f) The term creditor refers to any individual or entity with a valid claim
against the assets of the closed bank.
“(g) The term deposit means the unpaid balance of money or its equivalent
received by a bank in the usual course of business and for which it has
given or is obliged to give credit to a commercial, checking, savings, time or
thrift account, evidenced by a passbook, certificate of deposit, or other
evidence of deposit issued in accordance with Bangko Sentral ng Pilipinas
rules and regulations and other applicable laws, together with such other
obligations of a bank, which, consistent with banking usage and practices,
the Board of Directors shall determine and prescribe by regulations to be
deposit liabilities of the bank: Provided, That any obligation of a bank which
is payable at the office of the bank located outside of the Philippines shall
not be a deposit for any of the purposes of this Act or included as part of the
total deposits or of insured deposit: Provided, further, That subject to the
approval of the Board of Directors, any insured bank which is incorporated
under the laws of the Philippines which maintains a branch outside the
Philippines may elect to include for insurance its deposit obligations payable
only at such branch.
“The Corporation shall not pay deposit insurance for the following accounts
or transactions:
 “(1) Investment products such as bonds and securities, trust
accounts, and other similar instruments;
“(2) Deposit accounts or transactions which are fictitious or
fraudulent as determined by the Corporation;
“(3) Deposit accounts or transactions constituting, and/or
emanating from, unsafe and unsound banking practice/s, as
determined by the Corporation, in consultation with the Bangko
Sentral ng Pilipinas, after due notice and hearing, and publication
of a directive to cease and desist issued by the Corporation
against such deposit accounts, transactions or practices; and
“(4) Deposits that are determined to be the proceeds of an
unlawful activity as defined under Republic Act No. 9160, as
amended.
“The actions of the Corporation taken under Section 5(g) shall be final and
executory, and may only be restrained or set aside by the Court of Appeals,
upon appropriate petition for certiorari on the ground that the action was
taken in excess of jurisdiction or with such grave abuse of discretion as to
amount to a lack or excess of jurisdiction. The petition for certiorari may only
be filed within thirty (30) days from notice of denial of claim for deposit
insurance.
the same or different combinations of individuals, juridical persons or
entities, shall likewise be subject to the maximum insured deposit of Five
hundred thousand pesos (P500,000.00): Provided, furthermore, That the
provisions of any law to the contrary notwithstanding, no owner/holder of
any passbook, certificate of deposit, or other evidence of deposit shall be
recognized as a depositor entitled to the rights provided in this Act unless
the passbook, certificate of deposit, or other evidence of deposit is
determined by the Corporation to be an authentic document or record of the
issuing bank: Provided, finally, That in case of a condition that threatens the
monetary and financial stability of the banking system that may have
systemic consequences, as defined in Section 22 hereof, as determined by
the Monetary Board, the maximum deposit insurance cover may be
adjusted in such amount, for such a period, and/or for such deposit
products, as may be determined by a unanimous vote of the Board of
Directors in a meeting called for the purpose and chaired by the Secretary
of Finance, subject to the approval of the President of the Philippines.
“(k) The term liquidation refers to the proceedings under Sections 12 to 16
of this Act.
“(1) The term liquidation court refers to the Regional Trial Court (RTC) of
general jurisdiction where the petition for assistance in the liquidation of a
closed bank is filed and given due course.
“(m) The term payout refers to the payment of insured deposits.

“(h) The term disputed claim refers to a claim or suit against the assets of a
“(n) The term petition for assistance in the liquidation of a closed bank refers
closed bank, or for specific performance, or breach of contract, or damages,
to the petition filed by the receiver with the RTC in accordance with Section
of whatever nature or character, whether for money or otherwise, liquidated
16 of this Act.
or unliquidated, fixed or contingent, matured or current, denied by the
receiver.
“(o) The term purchase of assets and assumption of liabilities refers to a
transaction where an insured bank purchases any or all assets and
“(i) The term insured bank means any bank the deposits of which are
assumes any or all liabilities of another bank under resolution or liquidation,
insured in accordance with the provisions of this Act.
as provided in this Act.

“(j) The term insured deposit means the amount due to any bonafide
“(p) The term receiver refers to the Corporation or any of its duly authorized
depositor for legitimate deposits in an insured bank as of the date of closure
agents acting as receiver of a closed bank.
but not to exceed Five hundred thousand pesos (P500,000.00). Such
amount shall be determined according to such regulations as the Board of
Directors may prescribe. In determining such amount due to any depositor, “(q) The term records include all documents, titles, papers and electronic
there shall be added together all deposits in the bank maintained in the data of the closed bank, including those pertaining to deposit accounts of
same right and capacity for his or her benefit either in his or her own name and with the closed bank, its assets, transactions and corporate affairs.
or in the name of others. A joint account regardless of whether the
conjunction ‘and’, ‘or’, ‘and/or’ is used, shall be insured separately from any
“(r) The term residual assets refer to assets, in cash or in kind, to be turned
individually-owned deposit account: Provided, That (1) if the account is held
over to the closed bank’s stockholders of record, in proportion to their
jointly by two or more natural persons, or by two or more juridical persons or
interest in the closed bank as of date of closure, after payment in full of
entities, the maximum insured deposit shall be divided into as many equal
liquidation costs, fees and expenses, and the valid claims and surplus
shares as there are individuals, juridical persons or entities, unless a
dividends to all the creditors.
different sharing is stipulated in the document of deposit, and (2) if the
account is held by a juridical person or entity jointly with one or more natural
persons, the maximum insured deposit shall be presumed to belong entirely “(s) The term resolution refers to the actions undertaken by the Corporation
to such juridical person or entity: Provided, further, That the aggregate of under Section 11 of this Act to:
the interest of each co-owner over several joint accounts, whether owned by
 “(1) Protect depositors, creditors and the DIF;
“(2) Safeguard the continuity of essential banking services or
maintain financial stability; and
“(3) Prevent deterioration or dissipation of bank assets.
“(t) The term risk-based assessment system pertains to a method for
calculating an insured bank’s assessment on the probability that the DIF will
incur a loss with respect to the bank, and the likely amount of any such loss,
based on its risk rating that takes into consideration the following:
“(1) Quality and concentration of assets;
“(2) Categories and concentration of liabilities, both insured and
uninsured, contingent and noncontingent;
“(3) Capital position;
“(4) Liquidity position;
“(5) Management and governance; and
“(6) Other factors relevant to assessing such probability, as may
be determined by the Corporation:
“(u) The term statement of affairs refers to a report of financial condition of
the closed bank at a given date, showing the: (1) estimated realizable value
of assets; (2) classification of credits; and (3) estimated liabilities to be
settled.
“(v) The term surplus dividends refers to the remaining assets of the closed
bank after satisfaction in full of all the liquidation costs, fees and expenses,
and valid claims. The surplus dividends shall be computed at the legal rate
of interest from the date of takeover to cut-off date of the distribution plan,
and shall be paid, in cash or in kind, to creditors of the closed bank in
accordance with the Rules on Concurrence and Preference of Credits under
the Civil Code or other laws.
“(w) The term takeover refers to the act of physically taking possession and
control of the premises, assets and affairs of a closed bank for the purpose
of liquidating the bank.
“(x) The term transfer deposit means, a deposit in an insured bank made
available to a depositor by the Corporation as payment of insured deposit of
such depositor in a closed bank and assumed by another insured bank.
“(y) The term trust funds means funds held by an insured bank in a fiduciary
capacity and includes without being limited to, funds held as trustee,
executor, administrator, guardian or agent.
“(z) The term valid claim refers to the claim recognized by the receiver or
allowed by the liquidation court.
“(aa) The term winding up period refers to the period provided in Section 16
of this Act.”
SECTION 8. Section 5 of the same Act is accordingly renumbered as Section 6, and
is hereby amended to read as follows:
“DEPOSIT INSURANCE COVERAGE
“SEC. 6. The deposit liabilities of any bank which is engaged in the business of
receiving deposits as herein defined on the effective date of this Act, or which
thereafter may engage in the business of receiving deposits, shall be insured with the
Corporation.
“Whenever a bank is determined by the Bangko Sentral ng Pilipinas to be capital
deficient, the Corporation may conduct an insurance risk evaluation on the bank to
enable it to assess the risks to the DIF. Such evaluation may include the
determination of: (i) the fair market value of the assets and liabilities of a bank; or (ii)
the risk classification of a bank; or (iii) possible resolution modes under Section 11 of
this Act, subject to such terms and conditions as the PDIC Board may prescribe.”
SECTION 9. Section 6 of the same Act is accordingly renumbered as Section 7.
SECTION 10. Section 7 paragraph (a) of the same Act, as renumbered, is hereby
amended to read as follows:
“ASSESSMENT OF MEMBER BANKS
“SEC. 7. (a) The assessment rate shall be determined by the Board of Directors:
Provided, That the assessment rate shall not exceed one-fifth (1/5) of one per centum
(1%) per annum. The semi-annual assessment for each insured bank shall be in the
amount of the product of one-half (1/2) the assessment rate multiplied by the
assessment base but in no case shall it be less than Five thousand pesos
(P5,000.00). The assessment base shall be the amount of the liability of the bank for
deposits as defined under subsection (g) of Section 5 without any deduction for
indebtedness of depositors.
“In addition, the Board of Directors may establish a risk-based assessment system
and impose a risk-based assessment rate which shall not exceed two-fifth (2/5) of one
per centum (1%) per annum multiplied by the assessment base.
“The semi-annual assessment base for one semi-annual period shall be the average
of the assessment base of the bank as of the close of business on March thirty-one
and June thirty and the semi-annual assessment base for the other semi-annual
period shall be the average of the assessment base of the bank as of the close of
business on September thirty and December thirty-one: Provided, That when any of
said days is a nonbusiness day or legal holiday, either national or provincial, the
preceding business day shall be used. The certified statements required to be filed
with the Corporation under subsections (b) and (c) of this section shall be in such form
and set forth such supporting information as the Board of Directors shall prescribe.
The assessment payments required from the insured banks under subsections (b) and
(c) of this section shall be made in such manner and at such time or times as the
Board of Directors shall prescribe.”
SECTION 11. Section 7, paragraphs (d) and (h), of the same Act, as renumbered, are
hereby amended to read as follows:
“(d) All assessment collections and income from operations after expenses and
charges shall be added to the DIF under Section 17 hereof. Such expenses and
charges are: (1) the operating costs and expenses of the Corporation for the calendar
year; (2) additions to reserve to provide for insurance and financial assistance losses,
net of recoverable amounts from applicable assets and collaterals, during the calendar
year; and (3) the net insurance and financial assistance losses sustained in said
calendar year.
“(h) Should any insured bank fail or refuse to pay any assessment required to be paid
by such bank under any provision of this Act, and should the bank not correct such
failure or refusal within thirty (30) days after written notice has been given by the
Corporation to an officer of the bank citing this subsection, and stating that the bank
has failed or refused to pay as required by the law, the Corporation may, at its
discretion, file a case for collection before the appropriate court without prejudice to
the imposition of administrative sanctions allowed under the provisions of this law on
the bank officials responsible for the nonpayment of assessment fees.”
SECTION 12. An additional paragraph to Section 7 of the same Act, as renumbered,
is hereby inserted after paragraph (h) which shall read as follows:
“(i) The Corporation shall have the authority to collect a special assessment from any
member bank and prescribe the terms and conditions thereof to maintain the target
level of the DIF set by the Board of Directors in accordance with this Act.”
SECTION 13. Section 7 of the same Act is accordingly renumbered as Section 8, and
is hereby amended to read as follows:
“SANCTIONS AGAINST UNSAFE AND
UNSOUND BANKING PRACTICES
“SEC. 8. (a) Whenever upon examination by the Corporation into the condition of any
insured bank, it shall be disclosed that an insured bank or its directors or agents have
committed, are committing or about to commit unsafe or unsound practices in
conducting the business of the bank, or have violated, are violating or about to violate
any provisions of any law or regulation to which the insured bank is subject, the Board
of Directors shall submit the report of the examination to the Monetary Board to
secure corrective action thereon. If no such corrective action is taken by the Monetary
Board within forty-five (45) days from the submission of the report, the Board of
Directors shall, motu proprio, institute corrective action which it deems necessary. The
Board of Directors may thereafter issue a cease and desist order, and require the
bank or its directors or agents concerned to correct the practices or violations within
forty-five (45) days. However, if the practice or violation is likely to cause insolvency or
substantial dissipation of assets or earnings of the bank, or is likely to seriously
weaken the condition of the bank or otherwise seriously prejudice the interests of its
depositors and the Corporation, the period to take corrective action shall not be more
than fifteen (15) days. The order may also include the imposition of fines provided in
Section 26(g) hereof. The Board of Directors shall duly inform the Monetary Board of
the Bangko Sentral ng Pilipinas of action it has taken under this subsection with
respect to such practices or violations.
“(b) The actions and proceedings provided in the preceding subsections may be
undertaken by the Corporation if, in its opinion, an insured bank or its directors or
agents have violated, are violating or about to violate any provision of this Act or any
order, rule or instruction issued by the Corporation or any written condition imposed by
the Corporation in connection with any transaction with or grant by the Corporation.
“(c) The Corporation may terminate the insured status of any bank that fails or refuses
to comply, within thirty (30) days from notice, with any cease-and-desist order issued
by the Corporation, or with any corrective action imposed by the Monetary Board,
under this section pertaining to a deposit-related unsafe and/or unsound banking
practice.
“Such termination shall be final and executory, and shall be effective upon publication
of the notice of termination in a newspaper of general circulation.
“The deposits of each depositor in the bank on the effective date of the termination of
insurance coverage, less all subsequent withdrawals, shall continue to be insured up
to the maximum deposit insurance coverage for a period of one hundred eighty (180)
days. Additions to, or renewal of, existing deposits and new deposits in such bank
after the effective date of termination of insured status of the bank shall not be insured
by the Corporation.
“The bank shall not advertise or represent that additions to, or renewal of, existing
deposits and new deposits made after the effective date of termination aye covered by
deposit insurance.”
SECTION 14. Section 8 of the same Act is accordingly renumbered as Section 9.
SECTION 15. Section 9, paragraph Twelfth of the same Act, as renumbered, is
hereby amended to read as follows:
“Twelfth – The provisions of Presidential Decree No. 1445, as amended, Executive
Order No. 292, and other similar laws notwithstanding, to compromise, condone or
release, in whole or in part, any claim or settled liability to the Corporation, regardless
of the amount involved, under such terms and conditions as may be imposed by the
Board of Directors to protect the interest of the Corporation, and to write off the
Corporation’s receivables and assets which are no longer recoverable or realizable;”
SECTION 16. Section 9 of the same Act, as renumbered, is further amended by
inserting additional paragraphs after paragraph Twelfth, which shall read as follows:
“Thirteenth – To determine qualified interested acquirers or investors for any of the
modes of resolution or liquidation of banks;
“Fourteenth – To determine the appropriate resolution method and to implement the
same for a bank subject of resolution; and
“Fifteenth – To determine the appropriate mode of liquidation of a closed bank and to
implement the same.”
SECTION 17. Section 9 of the same Act is accordingly renumbered as Section 10.
SECTION 18. Section 10 paragraph (b-1) of the same Act, as renumbered, is hereby
amended to read as follows:
“(b-1) The investigators appointed by the Board of Directors shall have the power on
behalf of the Corporation to conduct investigations on frauds, irregularities and
anomalies committed in banks, based on reports of examination conducted by the
Corporation and Bangko Sentral ng Pilipinas or complaints from depositors or from
other government agency. Each such investigator shall have the power to administer
oaths, and to examine and take and preserve the testimony of any person relating to
the subject of investigation. For this purpose, the Corporation may appoint or hire
persons or entities of recognized competence in forensic and fraud investigations as
its agents.”
SECTION 19. Section 10 paragraph (c) of the same Act, as renumbered, is hereby
amended to read as follows:
“(c) Each insured bank shall make to the Corporation reports of condition in such form
and at such times as the Board of Directors may require such reports to be published
in such manner, not inconsistent with any applicable law, as it may direct. Every such
bank which fails to make or publish any such report within such time, as the Board of
Directors may require, shall be subject to a penalty of not more than Ten thousand
pesos (P10,000.00) for each day of such failure recoverable by the Corporation for its
use.”
SECTION 20. Section 10 paragraph (d-1) of the same Act, as renumbered, is hereby
amended to read as follows:
“(d-1) Each insured bank shall keep and maintain a true and accurate record or
statement of its daily deposit transactions consistent with the standards set by the
Bangko Sentral ng Pilipinas and the Corporation. Compliance with such standards
shall be duly certified by the president of the bank and the compliance officer:
Provided, That refusal or willful failure to issue the required certification shall constitute
a violation of this section and shall subject such officers of the bank to the sanctions
provided for under Section 26(f) of this Act.”
SECTION 21. Section 10 paragraph (f) of the same Act, as renumbered, is hereby
amended to read as follows:
“(f) The Corporation shall underwrite or advance all legal costs and expenses,
including legal fees and other expenses of external counsel, or provide legal
assistance to, directors, officers, employees or agents of the Corporation in
connection with any civil, criminal, administrative or any other action or proceeding, to
which such director, officer, employee or agent is made a party by reason of, or in
connection with, the exercise of authority or performance of functions and duties
under this Act: Provided, That such legal protection shall not apply to any civil,
criminal, administrative or any action or proceeding that may be initiated by the
Corporation, in whatever capacity, against such director, officer, employee or agent:
Provided, further, That directors, officers, employees or agents who shall resign, retire,
transfer to another agency or be separated from the service, shall continue to be
provided with such legal protection in connection with any act done or omitted to be
done by them in good faith during their tenure or employment with the Corporation:
Provided, finally, That 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 Corporation is advised by counsel that the persons to be indemnified did not
commit any negligence or misconduct.”
SECTION 22. The second paragraph of Section 10 paragraph (i) of the same Act, as
renumbered, is hereby amended to read as follows:
“(i) Notwithstanding the provisions of this section and Section 3 of this Act, members
of the Board of Directors and personnel of the Corporation may become directors and
officers of any bank and banking institution and of any entity related to such institution
in connection with financial assistance extended by the Corporation to such institution
and when, in the opinion of the Board, it is appropriate to make such designation to
protect the interest of the Corporation.”
SECTION 23. A new section entitled Section 11 of the same Act is hereby inserted
between Sections 10 and 12 which shall read as follows:
“BANK RESOLUTION
“SEC. 11. (a) The Corporation, in coordination with the Bangko Sentral ng Pilipinas,
may commence the resolution of a bank under this section upon:
“(1) Failure of prompt corrective action as declared by the Monetary Board;
or
“(2) Request by a bank to be placed under resolution.
“The Corporation shall inform the hank of its eligibility for entry into resolution.
“(b) The Bangko Sentral ng Pilipinas shall inform the Corporation of the initiation of
prompt corrective action on any bank and shall be authorized to share with the
Corporation all information, agreements or documents, including any order of the
Monetary Board, in relation to the prompt corrective action. The Corporation shall
have the authority to inquire and monitor the status of banks under prompt corrective “(3) Authorize pre-qualified acquirers or investors to conduct due diligence
action. on the bank, for purposes of determining the valuation of a bank through an
objective and thorough review and appraisal of its assets and liabilities, and
assessment of risks or events that may affect its valuation; and
“(c) When there is a failure of prompt corrective action as declared by the Monetary
Board due to capital deficiency, the Corporation, its duly authorized officers or
employees, may examine, inquire or look into the deposit records of a bank: Provided, “(4) Conduct a bidding to determine the acquirer of the bank.
That such authority may not be exercised when the failure of prompt corrective action
is due to grounds other than capital deficiency. For this purpose, banks, their officers
“(f) In determining the appropriate resolution method for a bank, the Corporation shall
and employees are hereby mandated to disclose and report to the Corporation or its
consider the:
duly authorized officers and employees, deposit account information in said bank.

“(1) Fair market value of the assets of the bank, its franchise, as well as the
“The Corporation, its duly authorized officers or employees are prohibited from
amount of its liabilities;
disclosing information obtained under this section to any person, government official,
bureau or office. Any act done pursuant to this section shall not be deemed as a
violation of Republic Act No. 1405, as amended, Republic Act No. 6426, as amended, “(2) Availability of a qualified investor;
Republic Act No. 8791, and other similar laws protecting or safeguarding the secrecy
or confidentiality of bank deposits: Provided, That any unauthorized disclosure of the
“(3) Least cost to the DIF; and
information under this section shall be subject to the same penalty under the foregoing
laws protecting the secrecy or confidentiality of bank deposits.
“(4) Interest of the depositing public.
“(d) The stockholders, directors, officers or employees of the bank shall have the
following obligations: “(g) The Corporation may appoint or hire persons or entities of recognized
competence in banking, finance, asset management or remedial management, as its
agents, to perform such powers and functions of the Corporation in the resolution of a
“(1) Ensure bank compliance with the terms and conditions prescribed by
bank, or assist in the performance thereof.
the Corporation for the resolution of the bank;

“(h) The PDIC Board shall prescribe the guidelines or criteria for a bank to be placed
“(2) Cause the engagement, with the consent of the Corporation, of an
under resolution.
independent appraiser or auditor for the purpose of determining the
valuation of the bank consistent with generally accepted valuation
standards; “(i) Upon a determination by the Corporation that the bank may not be resolved, the
Monetary Board may act in accordance with Section 30 of Republic Act No. 7653 or
the New Central Bank Act.
“(3) Ensure prudent management and administration of the bank’s assets,
liabilities and records; and
“(j) Bank resolution involving the purchase of all assets and assumption of all liabilities
of a bank shall be exempt from the provisions of Act No. 3952, otherwise known as
“(4) Cooperate with the Corporation in the conduct or exercise of any or all
‘The Bulk Sales Law’.
of its authorities under this Act and honor in good faith its commitment or
undertaking with the Corporation on the resolution of the bank.
“(k) The provisions of this section are without prejudice to any action that the Monetary
Board may take under existing laws.”
“(e) Within a period of one hundred eighty (180) days from a bank’s entry into
resolution, the Corporation, through the affirmative vote of at least five (5) members of
the PDIC Board, shall determine whether the bank may be resolved through the SECTION 24. Sections 10, 11 and 12 of the same Act are hereby deleted.
purchase of all its assets and assumption of all its liabilities, or merger or consolidation
with, or its acquisition, by a qualified investor.
SECTION 25. A new section entitled Section 12 of the same Act is hereby inserted
between Sections 11 and 13 which shall read as follows:
“For this purpose, the Corporation may:
“LIQUIDATION OF A CLOSED BANK
“(1) Determine a resolution package for the bank;
“SEC. 12. (a) Whenever a bank is ordered closed by the Monetary Board, the
“(2) Identify and, with the approval of the Monetary Board, pre-qualify Corporation shall be designated as receiver and it shall proceed with the takeover and
possible acquirers or investors;
liquidation of the closed bank in accordance with this Act. For this purpose, banks
closed by the Monetary Board shall no longer be rehabilitated.”
SECTION 26. A new section entitled Section 13 of the same Act is hereby inserted
between Sections 12 and 14 which shall read as follows:
“AUTHORITIES OF A RECEIVER AND EFFECTS OF
PLACEMENT OF A BANK UNDER LIQUIDATION
“SEC. 13. (a) The receiver is authorized to adopt and implement, without need of
consent of the stockholders, board of directors, creditors or depositors of the closed
bank, any or a combination of the following modes of liquidation:
“(1) Conventional liquidation; and
“(2) Purchase of assets and/or assumption of liabilities.
“(b) In addition to the powers of a receiver provided under existing laws, the
Corporation, as receiver of a closed bank, is empowered to:
“(1) Represent and act for and on behalf of the closed bank;
“(2) Gather and take charge of all the assets, records and affairs of the
closed bank, and administer the same for the benefit of its creditors;
“(3) Convert the assets of the closed bank to cash or other forms of liquid
assets, as far as practicable;
“(4) Bring suits to enforce liabilities of the directors, officers, employees,
agents of the closed bank and other entities related or connected to the
closed bank or to collect, recover, and preserve all assets, including assets
over which the bank has equitable interest;
“(5) Appoint or hire persons or entities of recognized competence in
banking, finance, asset management or remedial management, as its
deputies, assistants or agents, to perform such powers and functions of the
Corporation as receiver of the closed bank, or assist in the performance
thereof;
“(6) Appoint or hire persons or entities of recognized competence in forensic
and fraud investigations;
“(7) Pay accrued utilities, rentals and salaries of personnel of the closed
bank for a period not exceeding three (3) months, from available funds of
the closed bank;
“(8) Collect loans and other claims of the closed bank and for this purpose,
modify, compromise or restructure the terms and conditions of such loans or
claims as may be deemed advantageous to the interests of the creditors of
the closed bank;
“(9) Hire or retain private counsel as may be necessary;
“(10) Borrow or obtain a loan, or mortgage, pledge or encumber any asset
of the closed bank, when necessary to preserve or prevent dissipation of
the assets, or to redeem foreclosed assets of the closed bank, or to
minimize losses to its depositors and creditors;
“(11) If the stipulated interest rate on deposits is unusually high compared
with prevailing applicable interest rates, the Corporation as receiver, may
exercise such powers which may include a reduction of the interest rate to a
reasonable rate: Provided, That any modifications or reductions shall apply
only to earned and unpaid interest;
“(12) Utilize available funds of the bank, including funds generated by the
receiver from the conversion of assets to pay for reasonable costs and
expenses incurred for the preservation of the assets, and liquidation of, the
closed bank, without need for approval of the liquidation court;
“For banks with insufficient funds, the Corporation is authorized to advance
the foregoing costs and expenses, and collect payment, as and when funds
become available.
“(13) Charge reasonable fees for the liquidation of the bank from the assets
of the bank: Provided, That payment of these fees, including any unpaid
advances under the immediately preceding paragraph, shall be subject to
approval by the liquidation court;
“(14) Distribute the available assets of the closed bank, in cash or in kind, to
its creditors in accordance with the Rules on Concurrence and Preference
of Credits under the Civil Code or other laws;
“(15) Dispose records of the closed bank that are no longer needed in the
liquidation in accordance with guidelines set by the PDIC Board of Directors,
notwithstanding the laws on archival period and disposal of records; and
“(16) Exercise such other powers as are inherent and necessary for the
effective discharge of the duties of the Corporation as receiver.
“The Board of Directors shall adopt such policies and guidelines as may be necessary
for the performance of the above powers by personnel, deputies, assistants and
agents of the Corporation.
“(c) After the payment of all liabilities and claims against the closed bank, the
Corporation shall pay surplus, if any, dividends at the legal rate of interest from date of
takeover to date of distribution to creditors and claimants of the closed bank in
accordance with the Rules on Concurrence and Preference of Credits under the Civil
Code or other laws before distribution to the shareholders of the closed bank.
“(d) The officers, employees, deputies, assistants and agents of the receiver shall “(4) On labor relations
have no liability and shall not be subject to any action, claim or demand in connection
with any act done or omitted to be done by them in good faith in connection with the
“Notwithstanding the provisions of the Labor Code, the employer-employee
exercise of their powers and functions under this Act and other applicable laws, or
relationship between the closed bank and its employees shall be deemed
other actions duly approved by the court.
terminated upon service of the notice of closure of the bank in accordance
with this Act. Payment of separation pay or benefits provided for by law shall
“(e) The placement of a bank under liquidation shall have the following effects: be made from available assets of the bank in accordance with the Rules on
Concurrence and Preference of Credits under the Civil Code or other laws.
“(1) On the corporate franchise or existence
‘(5) Contractual obligations
“Upon placement by the Monetary Board of a bank under liquidation, it shall
continue as a body corporate until the termination of the winding-up period “The receiver may cancel, terminate, rescind or repudiate any contract of
under Section 16 of this Act. Such continuation as a body corporate shall the closed bank that is not necessary for the orderly liquidation of the bank,
only be for the purpose of liquidating, settling and closing its affairs and for or is grossly disadvantageous to the closed bank, or for any ground
the disposal, conveyance or distribution of its assets pursuant to this Act. provided by law.
The receiver shall represent the closed bank in all cases by or against the
closed bank and prosecute and defend suits by or against it. In no case
“(6) On interest payments
shall the bank be reopened and permitted to resume banking business after
being placed under liquidation.
“The liability of a bank to pay interest on deposits and all other obligations
as of closure shall cease upon its closure by the Monetary Board without
“(2) On the powers and functions of its directors, officers and stockholders
prejudice to the first paragraph of Section 85 of Republic Act No. 7653 (the
New Central Bank Act): Provided, That the receiver shall have the authority,
“The powers, voting rights, functions and duties, as well as the allowances, without need for approval of the liquidation court, to assign, as payment to
remuneration and perquisites of the directors, officers, and stockholders of secured creditors, the bank assets serving as collaterals to their respective
such bank are terminated upon its closure. Accordingly, the directors, loans up to the extent of the outstanding obligations, including interest as of
officers, and stockholders shall be barred from interfering in any way with date of closure of the hank, as validated by the receiver. The valuation of
the assets, records, and affairs of the bank. the asset shall be based on the prevailing market value of the collaterals as
appraised by an independent appraiser on an ‘as is where is’ basis.
“The receiver shall exercise all authorities as may be required to facilitate
the liquidation of the closed bank for the benefit of all its creditors. “(7) Liability for penalties and surcharges for late payment and nonpayment
of taxes
“(3) On the assets
“From the time of closure, the closed bank shall not be liable for the
payment of penalties and surcharges arising from the late payment or
“Upon service of notice of closure as provided in Section 14 of this Act, all
nonpayment of real property tax, capital gains tax, transfer tax and similar
the assets of the closed bank shall he deemed in custodia legis in the hands
charges.
of the receiver, and as such, these assets may not be subject to
attachment, garnishment, execution, levy or any other court processes. A’
judge, officer of the court or any person who shall issue, order, process or “(8) Bank charges and fees on services
cause the issuance or implementation of the garnishment order, levy,
attachment or execution, shall be liable under Section 27 of this Act:
“The receiver may impose, on behalf of the closed bank, charges and fees
Provided, however, That collaterals securing the loans and advances
for services rendered after bank closure, such as, but not limited to, the
granted by the Bangko Sentral ng Pilipinas shall not be included in the
execution of pertinent deeds and certifications.
assets of the closed bank for distribution to other creditors: Provided,
further, That the proceeds in excess of the amount secured shall be
returned by the Bangko Sentral ng Pilipinas to the receiver. “(9) Actions pending for or against the closed bank

“Any preliminary attachment or garnishment on any of the assets of the “Except for actions pending before the Supreme Court, actions pending for
closed bank existing at the time of closure shall not give any preference to or against the closed bank in any court or quasi-judicial body shall, upon
the attaching or garnishing party. Upon motion of the receiver, the motion of the receiver, be suspended for a period not exceeding one
preliminary attachment or garnishment shall be lifted and/or discharged. hundred eighty (180) days and referred to mandatory mediation. Upon
 termination of the mediation, the case shall be referred back to the court or “(c) Directors, officers, employees or agents of a bank hold money and other assets of
quasi-judicial body for further proceedings. the bank in trust or under administration or management by them for the bank in their
fiduciary capacity.
“(10) Final decisions against the closed bank
Upon service of the notice of closure to the bank, all directors, officers, employees or
agents of the closed bank shall have the duty to immediately account for, surrender
“The execution and enforcement of a final decision of a court other than the
and turn over to the receiver, and provide information relative to, the assets, records,
liquidation court against the assets of a closed bank shall be stayed. The
and affairs of the closed bank in their possession, custody, administration or
prevailing parly shall file the final decision as a claim with the liquidation
management.
court and settled in accordance with the Rules on Concurrence and
Preference of Credits under the Civil Code or other laws.
“(d) When the circumstances so warrant, the local government unit and law
enforcement agencies concerned shall, upon request, immediately provide assistance
“(11) Docket and other court fees
to the receiver during the service of notice of closure and actual takeover operations
to ensure the orderly conduct thereof and the security and safety of the personnel of
“Payment of docket and other court fees relating to all cases or actions filed the receiver and the employees of the closed bank.”
by the receiver with any judicial or quasi-judicial bodies shall be deferred
until the action is terminated with finality. Any such fees shall constitute as a
SECTION 28. A new section entitled Section 15 of the same Act is hereby inserted
first Hen on any judgment in favor of the closed bank or in case of
between Sections 14 and 16 which shall read as follows:
unfavorable judgment, such fees shall be paid as liquidation costs and
expenses during the distribution of the assets of the closed bank.
“PURCHASE OF ASSETS AND
ASSUMPTION OF LIABILITIES
“(12) All assets, records, and documents in the possession of the closed
bank at the time of its closure are presumed held by the bank in the concept
of an owner. “SEC. 15. (a) The receiver shall have the authority to facilitate and implement the
purchase of the assets of the closed bank and the assumption of its liabilities by
another insured bank, without need for approval of the liquidation court. The exercise
“(13) The exercise of authority, functions, and duties by the receiver under
of this authority shall be in accordance with the Rules on Concurrence and Preference
this Act shall be presumed to have been performed in the regular course of
of Credits under the Civil Code or other laws, subject to such terms and conditions as
business.
the Corporation may prescribe. The disposition of the branch licenses and other bank
licenses of the closed bank shall be subject to the approval of the Bangko Sentral ng
“(14) Assets and documents of the closed bank shall retain their private Pilipinas.
nature even if administered by the receiver. Matters relating to the exercise
by the receiver of the functions under this Act shall be subject to visitorial
“(b) Such action of the receiver to determine whether a bank may be the subject of a
audit only by the Commission on Audit.”
purchase of assets and assumption of liabilities transaction shall be final and
executory, and may not be set aside by any court.”
SECTION 27. A new section entitled Section 14 of the same Act is hereby inserted
between Sections 13 and 15 which shall read as follows:
SECTION 29. A new section entitled Section 16 of the same Act is hereby inserted
between Sections 15 and 17 which shall read as follows:
“NOTICE OF CLOSURE AND
TAKEOVER ACTIVITIES
“CONVENTIONAL LIQUIDATION
“A. ASSET MANAGEMENT AND CONVERSION
“SEC. 14. (a) Upon the designation of the Corporation as receiver of a closed bank, it
shall serve a notice of closure to the highest-ranking officer of the bank present in the
“SEC. 16. (a) The assets gathered by the receiver shall be evaluated and verified as
bank premises, or in the absence of such officer, post the notice of closure in the bank
to their existence, ownership, condition, and other factors to determine their realizable
premises or on its main entrance. The closure of the bank shall be deemed effective
value. In the management, preservation and disposition of assets, the receiver shall
upon the service of the notice of closure. Thereafter, the receiver shall takeover the
be guided by cost-benefit considerations, resources of the closed bank, and potential
bank and exercise the powers of the receiver as provided in this Act.
asset recovery.

“(b) The receiver shall have authority to use reasonable force, including the authority
“(b) The conversion of the assets of the closed bank shall be carried out in a fair and
to force open the premises of the bank, and exercise such acts necessary to take
transparent manner in accordance with the rules and procedures as may be
actual physical possession and custody of the bank and all its assets, records,
determined by the receiver.
documents, and take charge of its affairs upon the service of the notice of closure.
“(c) In the management and/or conversion of the assets of the closed bank, the
receiver shall have the authority to:
“(1) Represent the closed bank before the Land Registration Authority
(LRA), the Bureau of Lands, the Register of Deeds, the Land Transportation
Office (LTO), the Assessor’s Office or other appropriate office of the local
government unit, the Securities and Exchange Commission (SEC), or such
other similar government agencies or private entities in:
“(i) Verifying the authenticity of ownership documents;
“(ii) Registering the interest of the closed bank on a specific
property;
“(iii) Consolidating ownership over an asset of the closed bank;
“(iv) Securing certified true copies of documents held by the
foregoing agencies/entities in relation to an asset of the closed
bank;
“(v) Securing the appropriate certification from the foregoing
agencies/entities in relation to an asset of the closed bank; and
“(vi) Performing other related activities;
“(2) Conduct a physical or ocular inspection of the properties owned by, or
mortgaged to, the closed bank, to determine their existence and present
condition;
“(3) Determine the disposal price of assets in accordance with generally
accepted valuation principles, standards and practices, subject to such
guidelines as the receiver may determine;
“(4) Dispose real or personal properties of the closed bank through bidding,
negotiated sale or any other mode including lease with option to purchase,
whether by piece or by lot, as may be reasonably determined by the
receiver based on cost-benefit considerations and to allow efficient
distribution of assets to creditors; and
“(5) Engage third parties to assist in the liquidation, manage and/or dispose
the assets, handle cases filed against or by the closed bank, subject to such
guidelines as determined by the receiver.
“(d) Notwithstanding any provision of law to the contrary, the following rules shall apply
to the management and/or conversion by the receiver of the assets of the closed
bank:
“(1) Upon notification of the closure of a bank, the LRA, the Bureau of
Lands, the Register of Deeds, the LTO, the assessor’s office or other
appropriate office of the local government unit, or such other similar
government agencies shall not allow any transaction affecting the assets of
the closed bank without the consent of the receiver.
“(2) Upon issuance by the Monetary Board of the resolution ordering the
closure of a bank, any person or entity in custody or possession of assets or
records of the closed bank, including, but not limited to, the closed bank’s
deposit accounts, titles to real property, collaterals, promissory notes,
evidence of indebtedness or investments shall immediately turn over
custody of said assets and records to the receiver. Such obligation shall
cover evidences of deposit such as passbooks or certificates of deposit
issued by the bank to its depositors. Pending turnover, all persons or
entities in custody or possession of any asset or record of the closed bank
shall hold the said assets or records in trust for the receiver.
“(3) The persons or entities in custody or possession of such asset shall not
allow, authorize or cause the withdrawal, transfer, disposition, removal,
conversion, concealment, or other transaction involving or relating to the
subject asset, unless otherwise directed by the receiver.
“(e) The receiver shall have the authority to invest funds received from the conversion
of the assets of the closed bank in government securities, other government-
guaranteed marketable securities or investment-grade debt instruments.
“(f) The proceeds of the sale of the bank and branch licenses shall be for the benefit of
the creditors of the closed bank which shall be distributed in accordance with this Act
and the Rules on Concurrence and Preference of Credits under the Civil Code or
other laws.
“B. PETITION FOR ASSISTANCE IN THE
LIQUIDATION OF A CLOSED BANK
“(g) A petition for assistance in the liquidation is a special proceeding for the
liquidation of a closed bank, and includes the declaration of the concomitant right of its
creditors and the order of payment of their valid claims in the disposition of its assets.
“Any proceeding initiated under this section shall be considered in rem. Jurisdiction
over all persons affected by the proceeding shall be considered as acquired upon
publication of the order setting the case for initial hearing in any newspaper of general
circulation in the Philippines.
“(h) The liquidation court shall have exclusive jurisdiction to adjudicate disputed claims
against the closed banks, assist in the enforcement of individual liabilities of the
stockholders, directors and officers and decide on all other issues as may be material
to implement the distribution plan adopted by the Corporation for general application
to all closed banks.
“(i) The provisions of Republic Act No. 8799, otherwise known as ‘The Securities
Regulation Code’, and Supreme Court Administrative Matter No. 00-8-10-SC, entitled,
‘The Rules of Procedure on Corporate Rehabilitation’, shall not be applicable to the
petition for assistance in the liquidation of the closed bank.
“(j) The petition shall be filed in the RTC which has jurisdiction over the principal office
of the closed bank or the principal office of the receiver, at the option of the latter.
“(k) The petition shall be filed ex parte within a reasonable period from receipt of the
Monetary Board Resolution placing the bank under liquidation.
“(1) All persons or entities with claims against the assets of the closed bank
shall file their claims with the receiver within sixty (60) days from the date of
publication of the notice of closure. Claims filed outside the foregoing
prescribed period shall be disallowed.
“Claims denied by the receiver shall be filed with the liquidation court within sixty (60)
days from receipt of the final notice of denial of claim.
“(m) A claim whose validity has not yet been determined with finality at the time of the
submission of the final asset distribution plan, either by reason of a pending suit or for
whatever reason, shall be considered as contingent claim and shall not be paid under
the proposed final asset distribution plan.
“(n) Upon finality of the order approving the final asset distribution plan, the petition for
assistance in the liquidation of a closed bank shall henceforth be, for all intents and
purposes, considered closed and terminated and the receiver, its officers, employees
or agents, are forever discharged from any and all claims and/or liability arising from
or in connection with the liquidation of the closed bank.
“(o) The receiver shall submit a final report on the implementation of the approved
final asset distribution plan to the Monetary Board and the SEC after the expiration of
the winding-up period provided in this Act.
“(p) The Supreme Court shall promulgate the appropriate procedural rules to
implement this section.
“C. WINDING-UP
“(q) The creditors shall have a period of six (6) months from the date of publication of
notice of the approval by the court of the final asset distribution plan of the closed
bank within which to claim payment of the principal obligations and surplus dividends.
During this six-month period, the receiver shall hold as trustee the assets allocated in
the final asset distribution plan for said creditors.
“Failure by the creditor to comply with the documentary requirements within the
prescribed period and/or refusal to accept the asset as payment shall be deemed as
abandonment or waiver of his or her right to payment.
“(r) The individual stockholders of record or their duly-authorized representative or the
court-appointed stockholders’ representative shall have a period of six (6) months
from publication of notice of the approval by the court of the final asset distribution
plan of the closed bank within which to claim the residual assets. During this six-month
period, the receiver shall hold as trustee the assets allocated in the final asset
distribution plan for said stockholders of record.
“Failure by the individual stockholders of record or their duly-authorized representative
or the court-appointed stockholders’ representative to comply with the documentary
requirements within the prescribed period and/or refusal to accept the residual assets
in kind shall be deemed as abandonment or waiver of right to receive the residual
assets.
“(s) After the lapse of the six-month period provided in paragraphs (q) and (r) of this
section, all assets which remain unclaimed by the creditors and/or stockholders of
record shall be turned over to the Bureau of Treasury.
“(t) The receiver shall continue to keep all the pertinent records of the closed bank for
a period of six (6) months from the date of publication of the approval of the final asset
distribution plan.
After the lapse of this period, the receiver is authorized to dispose of the same in
accordance with the rules and regulations to be prescribed by the receiver.”
SECTION 30. Section 13 of the same Act is hereby renumbered as Section 17.
SECTION 31. A new section entitled Section 18 of the same Act is hereby inserted
between Sections 17 and 19 which shall read as follows:
“DIVIDEND DECLARATION
“SEC. 18. Consistent with the policy of the State to generate, preserve, maintain faith
and confidence in the country’s banking system, the Corporation shall build up and
maintain the DIF at the target level set by the PDIC Board of Directors. Such target
level shall be subject to periodic review and may be adjusted as necessary.
“The Corporation is exempt from Republic Act No. 7656; instead, the Corporation shall
remit dividends to the national government only if the target DIF level for the
applicable year has been reached. For purposes of computing the amount of
dividends to be declared and remitted to the national government, all assessment
collections shall not be considered as income. The dividend rate shall be at least fifty
percent (50%) of the income from other sources only.”
SECTION 32. Section 14 of the same Act is accordingly renumbered as Section 19
and is hereby amended to read as follows:
“PAYMENT OF INSURED DEPOSITS
“SEC. 19. Whenever an insured bank shall have been closed by the Monetary Board
pursuant to Section 30 of Republic Act No. 7653, or upon expiration or revocation of a
bank’s corporate term, payment of the insured deposits on such closed bank shall be
made by the Corporation as soon as possible either (1) by cash or (2) by making
available to each depositor a transferred deposit in another insured bank in an amount
equal to insured deposit of such depositor: Provided, however, That the Corporation,
in its discretion, may require proof of claims to be filed before paying the insured
deposits, and that in any case where the Corporation is not satisfied as to the validity
of a claim for an insured deposit, it may require final determination of a court of
competent jurisdiction before paying such claim: Provided, further, That failure to
settle the claim, within six (6) months from the date of filing of claim for insured
deposit, where such failure was due to grave abuse of discretion, gross negligence,
bad faith, or malice, shall, upon conviction, subject the directors, officers or employees
of the Corporation responsible for the delay, to imprisonment from six (6) months to
one (1) year: Provided, furthermore, That the period shall not apply if the validity of the
claim requires the resolution of issues of facts and or law by another office, body or
agency including the case mentioned in the first proviso or by the Corporation together
with such other office, body or agency.”
SECTION 33. Section 15 of the same Act is accordingly renumbered as Section 20
and is hereby amended to read as follows:
“SEC. 20. The Corporation, upon payment of any depositor as provided for in Section
19 of this Act, shall be subrogated to all rights of the depositor against the closed bank
to the extent of such payment. Such subrogation shall include the right on the part of
the Corporation to receive the same dividends and payments from the proceeds of the
assets of such closed bank and recoveries on account of stockholders’ liability as
would have been payable to the depositor on a claim for the insured deposits:
Provided, That such depositor shall retain his or her claim for any uninsured portion of
his or her deposit, which legal preference shall be the same as that of the subrogated
claim of the Corporation for its payment of insured deposits. All payments by the
Corporation of insured deposits in closed banks partake of the nature of public funds,
and as such, must be considered a preferred credit in the order of preference under
Article 2244 (9) of the New Civil Code.”
SECTION 34. Section 16 of the same Act is accordingly renumbered as Section 21
and paragraph (c) thereof is hereby amended to read as follows:
“(c) Except as otherwise prescribed by the Board of Directors, neither the Corporation
nor such other insured bank shall be required to recognize as the owner of any portion
of a deposit evidenced by a passbook, certificate of deposit or other evidence of
deposit determined by the Corporation to be an authentic document or record of the
closed bank under a name other than that of the claimant, any person whose name or
interest as such owner is not disclosed on the passbook, certificate of deposit or other
evidence of deposit of such closed bank as part owner of said deposit, if such
recognition would increase the aggregate amount of the insured deposits in such
closed bank.”
SECTION 35. Section 17 of the same Act is accordingly renumbered as Section 22.
SECTION 36. Section 22 paragraph (a) of the same Act, as renumbered, is hereby
amended to read as follows:
“CORPORATE FUNDS AND ASSETS
“SEC. 22. (a) Subject to guidelines and limits as approved by the Board of Directors,
money of the Corporation denominated in the local currency, not otherwise employed,
shall be invested in obligations of the Republic of the Philippines or in obligations
guaranteed as to principal and interest by the Republic of the Philippines.
“The Corporation may also invest in debt instruments denominated in foreign
currencies issued or guaranteed by the Republic of the Philippines, or debt
instruments denominated in freely convertible foreign currencies issued by
supranationals, multilateral agencies, or foreign governments with at least an
investment grade credit rating.
“The Corporation shall likewise be authorized to buy and/or sell debt instruments and
foreign currencies from any government securities eligible dealers or any
counterparties or brokers, accredited by the PDIC Board.
“For this purpose, the Corporation shall be authorized to open securities custodianship
and settlement accounts.”
SECTION 37. Section 22 paragraph (b) of the same Act, as renumbered, is hereby
amended to read as follows:
“(b) The banking or checking accounts of the Corporation shall be kept with the
Bangko Sentral ng Pilipinas, or with any other bank designated as depository or fiscal
agent of the Philippine government.”
SECTION 38. An additional paragraph to Section 22 of the same Act, as renumbered,
is hereby inserted after paragraph (c) which shall read as follows:
“(d) Assets of the Corporation shall be exempt from attachment, garnishment or any
other order or process of any court, agency or any other administrative body.”
SECTION 39. Section 17 paragraph (d) of the same Act is accordingly renumbered as
Section 22 paragraph (e) and is hereby amended to read as follows:
“FINANCIAL ASSISTANCE
“(e) In the exercise of its authorities under Section 11 of this Act, the Corporation is
authorized to make loans to, or purchase the assets of, or assume liabilities of, or
make deposits in:
“(1) A bank in danger of closing, upon its acquisition by a qualified investor;
or
“(2) A qualified investor, upon its purchase of all assets and assumption of
all liabilities of a bank in danger of closing; or
“(3) A surviving or consolidated institution that has merged or consolidated
with a bank in danger of closing; upon such terms and conditions as the
Board of Directors may prescribe, when in the opinion of the Board of
Directors, such acquisition, purchase of assets, assumption of liabilities,
merger or consolidation, is essential to provide adequate banking service in
the community or maintain financial stability in the economy.
“The Corporation, prior to the exercise of the powers under this section, shall “ISSUANCE OF BONDS, DEBENTURES
determine that actual payoff and liquidation thereof will be more expensive than the AND OTHER OBLIGATIONS
exercise of this power: Provided, That when the Monetary Board has determined that
there are systemic consequences of a probable failure or closure of an insured bank,
“SEC. 24. With the approval of the President of the Philippines, upon the
the Corporation may grant financial assistance to such insured bank in such amount
recommendation of the Department of Finance, the Corporation is authorized to issue
as may be necessary to prevent its failure or closure and/or restore the insured bank
bonds, debentures, and other obligations, both local or foreign, as may be necessary
to viable operations, under such terms and conditions as may be deemed necessary
for purposes of providing liquidity for settlement of insured deposits in closed banks, to
by the Board of Directors, subject to concurrence by the Monetary Board and without
facilitate the implementation of bank resolution under Section 11 of this Act, as well as
additional cost to the DIF.
for financial assistance as provided herein: Provided, That the Board of Directors shall
determine the interest rates, maturity and other requirements of said obligations:
“A systemic risk refers to the possibility that failure of one bank to settle net Provided, further, That the Corporation may provide for appropriate reserves for the
transactions with other banks will trigger a chain reaction, depriving other banks of redemption or retirement of said obligation.
funds leading to a general shutdown of normal clearing and settlement activity.
Systemic risk also means the likelihood of a sudden, unexpected collapse of
“All notes, debentures, bonds, or such obligations issued by the Corporation shall be
confidence in a significant portion of the banking or financial system with potentially
exempt from taxation both as to principal and interest, and shall be fully guaranteed by
large real economic effects. Finally, the Corporation may not use its authority under
the Government of the Republic of the Philippines. Such guarantee, which in no case
this subsection to purchase the voting or common stock of an insured bank but it can
shall exceed two times the DIF as of date of the debt issuance, shall be expressed on
enter into and enforce agreements that it determines to be necessary to protect its
the face thereof.
financial interests: Provided, That the financial assistance may take the form of equity
or quasi-equity of the insured bank as may be deemed necessary by the Board of
Directors with concurrence by the Monetary Board: Provided, further, That the “The Corporation may issue notes, debentures, bonds, or other debt instruments
Corporation shall dispose of such equity as soon as practicable.” without the approval of the President of the Philippines, as long as these shall not be
guaranteed by the national government.
SECTION 40. Section 18 of the same Act is accordingly renumbered as Section 23
and is hereby amended to read as follows: “The Board of Directors shall have the power to prescribe the terms and conditions,
rules and regulations for the issuance, reissuance, servicing, placement and
redemption of the bonds herein authorized to be issued as well as the registration of
“AUTHORITY TO BORROW
such bonds at the request of the holders thereof.”

“SEC. 23. The Corporation is authorized to borrow from the Bangko Sentral ng
SECTION 42. Section 20 of the same Act is accordingly renumbered as Section 25.
Pilipinas and the Bangko Sentral ng Pilipinas is authorized to lend to the Corporation
on such terms as may be agreed upon by the Corporation and the Bangko Sentral ng
Pilipinas, such funds as in the judgment of the Board of Directors of the Corporation SECTION 43. Section 21 of the same Act is accordingly renumbered as Section 26.
are from time to time required for insurance purposes and financial assistance
provided for in Section 22(e) of this Act: Provided, That any such loan as may be
SECTION 44. Section 26 paragraph (f) of the same Act, as renumbered, is hereby
granted by the Bangko Sentral ng Pilipinas shall be consistent with monetary policy:
amended to read as follows:
Provided, further, That the rate of interest thereon shall be fixed by the Monetary
Board.
“(f) The penalty of imprisonment of not less than six (6) years but not more than twelve
(12) years or a fine of not less than Fifty thousand pesos (P50,000.00) but not more
“When in the judgment of the Board of Directors the funds of the Corporation are not
than Ten million pesos (P10,000,000.00), or both, at the discretion of the court, shall
sufficient to provide for an emergency or urgent need to attain the purposes of this
be imposed upon:
Act, the Corporation is likewise authorized to borrow money, obtain loans or arrange
credit lines or other credit accommodations from any bank: Provided, That such loan
shall be of short-term duration: Provided, further, That no prior Monetary Board “(1) Any director, officer, employee or agent of a bank for:
opinion shall be required for the Corporation and its counterparties on individual
drawdowns or borrowings within an approved borrowing program where prior
Monetary Board opinion has already been obtained, pursuant to Section 123 of “(a) Any willful refusal to submit reports as required by law, rules and
Republic Act No. 7653.” regulations;

SECTION 41. Section 19 of the same Act is accordingly renumbered as Section 24 “(b) Any unjustified refusal to permit examination and audit of the deposit
and is hereby amended to read as follows: records or the affairs of the institution;
 “(c) Any willful making of a false statement or entry in any bank report or
document required by the Corporation;
“(d) Submission of false material information in connection with or in relation
to any financial assistance of the Corporation extended to the bank;
“(e) Splitting of deposits or creation of fictitious or fraudulent loans or deposit
accounts.
“(2) Any person for:
“(a) Refusal to disclose information, records or data pertaining to the bank
accounts of a closed bank to the receiver;
“(b) Refusal to turn over possession or custody of the asset and record of
the closed bank to the receiver, notwithstanding any agreement to the
contrary;

“Splitting of deposits occurs whenever a deposit account with an “(c) Refusal or delaying the:
outstanding balance of more than the statutory maximum amount of insured
deposit maintained under the name of natural or juridical persons is broken
“(i) Verification of authenticity of the ownership documents;
down and transferred into two (2) or more accounts in the name/s of natural
or juridical persons or entities who have no beneficial ownership on
transferred deposits in their names within one hundred twenty (120) days “(ii) Registration of interest of the closed bank on a specific
immediately preceding or during a bank-declared bank holiday, or property;
immediately preceding a closure order issued by the Monetary Board of the
Bangko Sentral ng Pilipinas for the purpose of availing of the maximum
“(iii) Consolidation of ownership over an asset of the closed bank;
deposit insurance coverage;

“(iv) Act of securing certified true copies of documents in relation

“(f) Refusal to receive the notice of closure as provided under Section 14 of
to an asset of the closed bank;
this Act;

“(v) Act of securing the appropriate certification from the agencies

“(g) Refusal to allow the Corporation to take over a closed bank or
or entities stated in Section 16 of this Act in relation to an asset of
obstructing such action of the Corporation;
the closed bank;

“(h) Refusal to turn over or destroying or tampering bank records;

“(vi) Conduct of a physical or ocular inspection of the properties
owned by, or mortgaged to, the closed bank, to determine their
“(i) Fraudulent disposal, transfer or concealment of any asset, property or existence and present condition; or
liability of the closed bank;
“(vii) Other related activities of the receiver; or
“(j) Violation of, or causing any person to violate, the exemption from
garnishment, levy, attachment or execution provided under this Act and the
“(d) Allowing the withdrawal from deposits or disposition of any asset of the
New Central Bank Act;
closed bank other than by the receiver;

“(k) Any willful failure or refusal to comply with, or violation of any provision
“(e) Willfully violating any provision of this Act;
of this Act, or commission of any other irregularities, and/or conducting
business in an unsafe or unsound manner as may be determined by the
Board of Directors in relation to Section 56 of Republic Act No. 8791, or “(f) Conspiring or willfully participating in any of the offenses enumerated in
‘The General Banking Law of 2000’. Paragraph 1 of this section;

“Notwithstanding any law to the contrary, the foregoing acts of directors, officers, “(3) Any law enforcement officer or local government official who refuses or fails to
employees or agents of the bank shall be considered as additional grounds for assist the receiver in the service of the notice of closure, as provided under Section 14
disqualification under the fit and proper rules of the Bangko Sentral ng Pilipinas. of this Act.”

“(1) Other acts inimical to the interest of the bank or the Corporation, such as, but not SECTION 45. Additional paragraphs to Section 26 of the same Act, as renumbered,
limited to, conflict of interest, disloyalty, authorizing related party transactions with are hereby inserted after paragraph (g) which shall read as follows:
terms detrimental to the bank and its stakeholders, and unauthorized disclosure of
confidential information, as may be determined by the Corporation.
“(h) The penalty of imprisonment of not less than ten (10) years but not more than
twelve (12) years, or a fine of not less than Five hundred thousand pesos
(P500,000.00) but not more than Ten million pesos (P 10,000,000.00), or both, at the
discretion of the court, shall be imposed upon:
“(1) Any depositor who files a fictitious and/or fraudulent claim for deposit
insurance; and
“(2) Any bank officer who certifies to the validity of the deposit liabilities
which is subsequently verified to be fictitious and/or fraudulent.
“(i) The penalty of imprisonment of not less than twelve (12) years but not more than
fourteen (14) years shall be imposed upon any person who participates, or attempts to
participate, in a scheme to defraud a bank.
“If the offense shall have been committed by a director or officer of the bank, the
penalty of imprisonment of not less than fifteen (15) years, but not more than
seventeen (17) years shall be imposed.
“If the offense shall have resulted in systemic consequences, as determined by the
Bangko Sentral ng Pilipinas, the penalty of imprisonment of not less than eighteen
(18) years but not more than twenty (20) years shall be imposed.”
SECTION 46. Section 22 of the same Act is accordingly renumbered as Section 27.
SECTION 47. Section 23 of the same Act is hereby renumbered as Section 28 and
amended to read as follows:
“SEC. 28. Exempting Clause. – The Corporation shall be exempt from Presidential
Decree No. 985, Presidential Decree No. 1597, Republic Act No. 6758, as amended,
Joint Resolution No. 4 (2009) and other laws on salary standardization, Presidential
Decree No. 1177, Executive Order No. 248, as amended, Executive Order No. 298
and the provisions of Republic Act No. 10149 with regard to position classification,
qualification standards, and the compensation package of the employees of the
Corporation: Provided, That the PDIC shall be subject to all other policies under
Republic Act No. 10149, including, but not limited to, performance evaluation by the
Governance Commission for Government-Owned or -Controlled Corporations,
selection and nomination of appointive directors, and limitations on the creation of
subsidiaries and the acquisition of affiliates except in the case of acquisition of shares
in the grant of financial assistance under this Act.”
SECTION 48. Section 24 of the same Act is deleted and a new Section 29 is added to
read as follows:
“SEC. 29. Transitory Provisions. — (a) The incumbent President of the Corporation
and private sector members of the Board of Directors shall continue to exercise their
respective duties and functions until replaced by the President of the Philippines:
Provided, That such new appointees shall be subject to the term of office provided
under Section 3 of this Act, as amended.
“(b) Payment of surplus dividends under Section 13(c) of this Act, as amended, shall
be applicable to banks without a court-approved final asset distribution plan at the
time of the effectivity of this Act.
“(c) The preference indicated under Section 15 of this Act, as amended, shall be
likewise effective upon liquidation proceedings already commenced and pending as of
the effectivity of this Act, where no distribution of assets has been made.1âwphi1
“(d) The provisions in Section 10 of this Act, as amended, on legal assistance,
protection and indemnification shall apply to all cases pending before the effectivity of
this Act.”
SECTION 49. Section 25 of the same Act is accordingly renumbered as Section 30.
SECTION 50. The Corporation may be reorganized by its Board of Directors by
adopting if it so desires, an entirely new staffing pattern or organizational structure to
suit the operations of the Corporation 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 shah any personnel be considered as having prior or vested
rights with respect to retention in the Corporation or in any position which may be
created in the new staffing pattern, even if he or she should be the incumbent of a
similar position prior to reorganization. The reorganization shall be completed within
six (6) months after the effectivity of this Act. Personnel who are not retained are
deemed separated horn the service.
SECTION 51. The Board of Directors is hereby 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 may be in addition to all gratuities and benefits to which they may be entitled
under existing laws.
SECTION 52. Separability Clause. – If any provision or section of this Act or the
application thereof to any person or circumstances is held invalid, the other provisions
or sections of this Act, in the application of such provision or section to other persons
or circumstances, shall not be affected thereby.
SECTION 53. Repealing Clause. – All acts or parts of acts and executive orders,
administrative orders, or parts thereof which are inconsistent with the provisions of this
Act are hereby repealed.
SECTION 54. Effectivity Clause. – This Act shall take effect fifteen (15) days following
the completion of its publication in the Official Gazette or in two (2) newspapers of
general circulation.
Approved,
(Sgd.) FELICIANO BELMONTE JR. (Sgd.) FRANKLIN M. DRILON
Speaker of the House President of the Senate
of Representatives
Senate Bill No. 2976, which was approved by the Senate on December 14, 2015, was
adopted as an amendment to House Bill No. 6020 by the House of Representatives
on January 19, 2016.

(Sgd.) MARILYN B. BARUA-YAP (Sgd.) OSCAR G. YABES

Secretary General Secretary of the Senate
House of Representatives

Approved: MAY 23 2016

(Sgd.) BENIGNO S. AQUINO III

President of the Philippines

REPUBLIC ACT No. 3765
AN ACT TO REQUIRE THE DISCLOSURE OF FINANCE CHARGES IN
CONNECTION WITH EXTENSIONS OF CREDIT.
Section 1. This Act shall be known as the "Truth in Lending Act."
Section 2. Declaration of Policy. It is hereby declared to be the policy of the State to
protect its citizens from a lack of awareness of the true cost of credit to the user by
assuring a full disclosure of such cost with a view of preventing the uninformed use of
credit to the detriment of the national economy.
Section 3. As used in this Act, the term
(1) "Board" means the Monetary Board of the Central Bank of the Philippines.
(2) "Credit" means any loan, mortgage, deed of trust, advance, or discount; any
conditional sales contract; any contract to sell, or sale or contract of sale of
property or services, either for present or future delivery, under which part or all
of the price is payable subsequent to the making of such sale or contract; any
rental-purchase contract; any contract or arrangement for the hire, bailment, or
leasing of property; any option, demand, lien, pledge, or other claim against, or
for the delivery of, property or money; any purchase, or other acquisition of, or
any credit upon the security of, any obligation of claim arising out of any of the
foregoing; and any transaction or series of transactions having a similar purpose
or effect.
(3) "Finance charge" includes interest, fees, service charges, discounts, and
such other charges incident to the extension of credit as the Board may be
regulation prescribe.
(4) "Creditor" means any person engaged in the business of extending credit
(including any person who as a regular business practice make loans or sells or
rents property or services on a time, credit, or installment basis, either as
principal or as agent) who requires as an incident to the extension of credit, the
payment of a finance charge.
(5) "Person" means any individual, corporation, partnership, association, or other
organized group of persons, or the legal successor or representative of the
foregoing, and includes the Philippine Government or any agency thereof, or any
other government, or of any of its political subdivisions, or any agency of the
foregoing.
Section 4. Any creditor shall furnish to each person to whom credit is extended, prior
to the consummation of the transaction, a clear statement in writing setting forth, to
the extent applicable and in accordance with rules and regulations prescribed by the
Board, the following information:
(1) the cash price or delivered price of the property or service to be acquired;
(2) the amounts, if any, to be credited as down payment and/or trade-in;
(3) the difference between the amounts set forth under clauses (1) and (2);
(4) the charges, individually itemized, which are paid or to be paid by such
person in connection with the transaction but which are not incident to the
extension of credit;
(5) the total amount to be financed;
(6) the finance charge expressed in terms of pesos and centavos; and
(7) the percentage that the finance bears to the total amount to be financed
expressed as a simple annual rate on the outstanding unpaid balance of the
obligation.
Section 5. The Board shall prescribe such rules and regulations as may be necessary
or proper in carrying out the provisions of this Act. Any rule or regulation prescribed
hereunder may contain such classifications and differentiations as in the judgment of
the Board are necessary or proper to effectuate the purposes of this Act or to prevent
circumvention or evasion, or to facilitate the enforcement of this Act, or any rule or
regulation issued thereunder.
Section 6. (a) Any creditor who in connection with any credit transaction fails to
disclose to any person any information in violation of this Act or any regulation issued
thereunder shall be liable to such person in the amount of P100 or in an amount equal
to twice the finance charged required by such creditor in connection with such
transaction, whichever is the greater, except that such liability shall not exceed P2,000
on any credit transaction. Action to recover such penalty may be brought by such
person within one year from the date of the occurrence of the violation, in any court of
competent jurisdiction. In any action under this subsection in which any person is
entitled to a recovery, the creditor shall be liable for reasonable attorney's fees and
court costs as determined by the court.
(b) Except as specified in subsection (a) of this section, nothing contained in this
Act or any regulation contained in this Act or any regulation thereunder shall
affect the validity or enforceability of any contract or transactions.
(c) Any person who willfully violates any provision of this Act or any regulation
issued thereunder shall be fined by not less than P1,00 or more than P5,000 or
imprisonment for not less than 6 months, nor more than one year or both.
 (d) No punishment or penalty provided by this Act shall apply to the Philippine
Government or any agency or any political subdivision thereof.

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

Section 7. This Act shall become effective upon approval.

Approved: June 22, 1963