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Chan Robles Virtual Law Library
PRESIDENTIAL DECREE NO. 72
PRESIDENTIAL DECREE NO. 72 -
AMENDING REPUBLIC ACT NUMBERED TWO HUNDRED AND SIXTY-FIVE, ENTITLED
"THE CENTRAL BANK ACT"
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chanroblesvirtualawlibrary
WHEREAS, there were pending before Congress
prior to the promulgation of Proclamation No. 1081, dated September 21,
1972, urgent banking measures proposing amendments to Republic Act No.
265, entitled "The Central Bank Act", which are vital to the national
development program of the Government;chanroblesvirtualawlibrary
WHEREAS, an extensive survey and study of the banking and credit system
had been undertaken for the purposes of assessing its adequacy in
Philippine economic growth, and of facilitating the savings-investment
process in development;chanroblesvirtualawlibrary
WHEREAS, the result of the survey was an integrated set of
recommendations which were accepted, with modifications by the monetary
authorities, and made the basis for this decree to effect reforms in
the banking system, and to render monetary and credit policies more
responsive to the requirements of economic development;chanroblesvirtualawlibrary
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines,
by virtue of the powers vested in me by the Constitution as
Commander-in-Chief of all the Armed Forces of the Philippines, and
pursuant to Proclamation No. 1081, dated September 21, 1972, and
General Order No. 1, dated September 22, 1972, as amended, and in order
to effect the desired changes and reforms in the social, economic, and
political structure of our society, do hereby order and decree the
amendment of Republic Act No. 265, as follows:cralaw:red
Section 1. Section two of Republic Act Numbered Two
hundred and sixty-five is hereby amended to read as follows:cralaw:red
"Sec. 2. Responsibilities and objectives. — It shall
be the responsibility of the Central Bank of the Philippines to
administer the monetary, banking, and credit system of the Republic.
"It shall be the duty of the Central Bank to use the powers granted to
it under this Act to achieve the following objectives:cralaw:red
"(a) Primarily to maintain internal and external
monetary stability in the Philippines, and to preserve the
international value of the peso and the convertibility of the peso into
other freely convertible currencies; and
"(b) To foster monetary, credit and exchange
conditions conducive to a balanced and sustainable growth of the
economy."
Section 2. Section five of the same Act is hereby
amended to read as follows:cralaw:red
"Sec. 5. Composition of the Monetary Board. — The
powers and functions of the Central Bank shall be exercised by a
Monetary Board, which shall be composed of seven members, as follows:cralaw:red
"(a) The Governor, who shall be the Chairman of the
Monetary Board. The Governor shall appointed for a term of six years by
the President of the Philippines with the consent of the Commission on
Appointments. Whenever the Governor is unable to attend a meeting of
the Board, the Senior Deputy-Governor shall act as Chairman.
"(b) The Secretary of Finance. Whenever the Secretary
of Finance is unable to attend a meeting of the Board, he shall
designate an undersecretary to attend as his alternate; chanroblesvirtualawlibrary
"(c) The Director General of the National Economic
Development Authority. Whenever the Director General is unable to
attend a meeting of the Board, he shall designate a deputy
director-general of the Authority to attend as his alternate;chanroblesvirtualawlibrary
"(d) The Chairman of the Board of Investments.
Whenever the Chairman of the Board of Investments is unable to attend a
meeting of the Board, he shall designate a governor of the Board of
Investments to attend as his alternate;chanroblesvirtualawlibrary
"(e) In lieu of any of the officials named in
subsection "C" or "D" above, such head of any other financial or
economic agency or department of the Government as the President of the
Philippines may determine;chanroblesvirtualawlibrary
"(f) Three part-time members from the private sector,
to be appointed for terms of six years by the President with the
consent of the Commission on Appointments: Provided, however, That the
first members appointed under the provisions of this subsection shall
have terms of office of two, four and six years, respectively.
"In making appointments to the Monetary Board, the President of the
Philippines shall base his selection on the integrity, experience and
expertise of the appointee."
Section 3. Section seven of the same Act is hereby
amended to read as follows:cralaw:red
"Sec. 7. Qualifications. — No person shall be
appointed as a member of the Monetary Board or as a deputy-governor of
the Central Bank unless he be of good moral character and of
unquestionable integrity and responsibility, and who is of recognized
competence in economics, banking, finance, commerce, agriculture or
industry: Provided, however, That the Governor and deputy-governors of
the Central Bank must be of recognized competence in the field of
banking: Provided, further, That the Governor and the members of the
Monetary Board shall be natural-born Filipino citizens."
Section 4. Section eight of the same Act is hereby
amended to read as follows:cralaw:red
"Sec. 8. Disqualifications. — None of the following
may be a member of the Monetary Board or a deputy-governor of the
Central Bank:cralaw:red
"(a) Persons holding any public position or office,
either by election or by appointment, except those holding academic
positions and the ex-officio members and their respective alternates;
and
"(b) Directors, officers, employees, consultants, or
stockholders of other banking or other financial institutions subject
to supervision, regulation or examination by the Central Bank, except
non-stock savings and loan associations and provident funds organized
exclusively for employees of the Central Bank.
Section 5. Section ten of the same Act is hereby
amended to read as follows:cralaw:red
"Sec. 10. Meetings. — The Monetary Board shall
convene as frequently as is necessary to discharge its responsibilities
properly, but shall meet at least once every two weeks. The Board may
be convoked either by the Secretary of Finance or by the Governor of
the Central Bank.
"The presence of four members shall constitute a quorum.
"All decisions of the Monetary Board shall require the concurrence of
at least four members, except in special cases where the provisions of
other sections of this Act demand a greater majority."
Section 6. Section eleven of the same Act is hereby
amended to read as follows:cralaw:red
"Sec. 11. Attendance of the Senior Deputy-Governor
and the Deputy-Governor for Economic Research. — The Senior
Deputy-Governor of the Central Bank and the Deputy-Governor for
Economic Research shall attend the meetings of the Monetary Board with
the right to be heard but not to vote."
Section 7. Section twelve of the same Act is hereby
amended to read as follows:cralaw:red
"Sec. 12. Remuneration of members for attending
meetings of the Board. — The members of the Monetary Board or their
respective substitutes, except the Governor and the Senior
Deputy-Governor, shall receive a per diem for every Board meeting
attended. The amount of per diem shall be set by the President but may
not exceed two hundred fifty (P250) pesos, nor the sum of two hundred
thousand five hundred (P2,500) pesos for any single month."
Section 8. Section thirteen of the same Act is hereby
amended to read as follows:cralaw:red
"Sec. 13. Withdrawal of persons having a personal
interest. — Whenever any member attending a meeting of the Monetary
Board has a personal interest of any sort in the discussion or
resolution of any given matter, or any of his business associates or
any of his relatives within the fourth degree of consanguinity or
second degree of affinity has such an interest, said member shall not
participate in the discussion or resolution of the matter and must
retire from the meeting during the deliberations thereon. The subject
matter, when resolved, and the fact that a member had a personal
interest in it, shall be made available to the public. The minutes of
the meeting shall note the withdrawal of the member concerned."
Section 9. Section fourteen of the same Act is hereby
amended to read as follows:cralaw:red
"Sec. 14. Exercise of authority. — In order to
exercise the authority granted to it under this Act, the Monetary Board
shall: chanroblesvirtualawlibrary
"(a) Prepare and issue rules and regulations as it
considers necessary for the effective discharge of the responsibilities
and exercise of the powers assigned to the Monetary Board and to the
Central Bank under this Act;chanroblesvirtualawlibrary
"(b) Direct the management, operations and
administration of the Central Bank and prepare such rules and
regulations as it may deem necessary or convenient for this purpose;chanroblesvirtualawlibrary
"(c) On the recommendation of the Governor, appoint,
fix the remunerations and other emoluments, and remove personnel of the
Central Bank, with the exception of the Governor: Provided, That the
Monetary Board shall have exclusive and final authority to promote,
transfer, assign, or reassign personnel of the Central Bank and these
personnel actions are deemed made in the interest of the service and
not disciplinary, any provisions of existing law to the contrary
notwithstanding; and
"(d) Authorize such expenditures by the Central Bank
as are in the interest of the effective administration and operations
of the Bank."
Section 10. Section fifteen of the same Act is hereby
amended to read as follows:cralaw:red
"Sec. 15. Responsibility. — Any member of the
Monetary Board or officer or employee of the Central Bank who wilfully
violates this Act or who is guilty of gross negligence in the
performance of his duties shall be held liable for any loss or injury
suffered by the Bank as a result of such violation or negligence.
Similar responsibility shall apply to the disclosure of any information
of a confidential nature about the discussions or resolutions of the
Monetary Board, except as required in Section 13 of this Act, or about
the operations of the Bank, and to the use of such information for
personal gain or to the detriment of the Government, the Bank or third
parties." chanroblesvirtualawlibrary
Section 11. Section twenty of the same Act is hereby
amended to read as follows:cralaw:red
"Sec. 20. Remuneration of the Governor. — The salary
of the Governor of the Central Bank shall be fixed by the Monetary
Board with the approval of the President of the Philippines at a sum
commensurate to the importance and the responsibility attached to the
position. The salary and allowances and other emoluments which the
Monetary Board may grant the Governor shall be the ceiling for fixing
the salary, allowances and other emoluments of all other personnel in
the Central Bank."
Section 12. Section twenty-one of the same Act is
hereby amended to read as follows:cralaw:red
"Sec. 21. Deputy-Governors. — The Governor of the
Central Bank, with the approval of the Monetary Board, shall appoint
one senior deputy-governor and not more than five deputy-governors.
They shall perform duties as may be assigned to them by the Governor
and the Board.
"In the absence of the Governor of the Central Bank, the Senior
Deputy-Governor shall act as chief executive of the Central Bank and
shall exercise the powers and perform the duties of the Governor.
Whenever the Governor is unable to attend meetings of government boards
or councils in which he is an ex-officio member pursuant to provisions
of special laws, the Senior Deputy-Governor shall be vested with
authority to participate and exercise the right to vote in such
meetings. He shall have supervisory authority over the other
deputy-governor and such other line authority as may be delegated by
the Governor and the Monetary Board.
"The other deputy-governors shall be assigned specific areas of
responsibility such as, but not necessarily limited to, bank
supervision, economic research, operations and administration:
Provided, however, That the Deputy-Governor for Supervision shall be in
charge of all bank supervision and examination."
Section 13. Section twenty-three of the same Act is
hereby amended to read as follows:cralaw:red
"Sec. 23. Authority to obtain information. — The
Department of Economic Research shall have the authority to request
from any person or entity, including Government offices and
instrumentalities, any data which the Central Bank may require for the
proper discharge of its functions and responsibilities. The Central
Bank shall have the power to issue a subpoena for the production of the
books and records of all such persons and entities for the aforesaid
purpose. Those who refuse without justifiable cause the subpoena to
supply the Bank with data requested or required, shall be subject to
the penalties provided in Section 32.
"Data on individual firms, other than banks, gathered for statistical
purposes by the Department of Economic Research and other departments
or units of the Central Bank shall not be made available to any person
or entity outside of the Central Bank whether public or private:
Provided, however, That this prohibition shall not refer to the
collective data on firms: Provided, further, That in the case of data
on banks, the provisions of Section 27 of this Act shall
apply." chanroblesvirtualawlibrary
Section 14. Section twenty-four of the same Act is
hereby amended to read as follows:cralaw:red
"Sec. 24. Training of technical personnel. — The
Central Bank shall promote and sponsor the training of technical
personnel in the field of money and banking. Toward this end, the
Central Bank is hereby authorized to defray the costs of study, at home
or abroad, of outstanding employees of the Bank, 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
Bank."
Section 15. Title B, Article IV, of Chapter I of the
same Act is hereby changed to read as follows:cralaw:red
"Art IV. — Department of the Central Bank
"A. .
"B. SUPERVISION AND EXAMINATION DEPARTMENTS."
Section 16. Section twenty-five of the same Act is
hereby amended to read as follows:cralaw:red
"Sec. 25. Creation of the appropriate departments. —
In order to assure the observance of this Act and of other pertinent
laws, and of the rules and regulations of the Monetary Board, the
Central Bank shall have appropriate supervising and examining
departments which shall be charged with the supervision and periodic
examination of specific categories of banking institutions operating in
the Philippines, including all Government credit institutions. The
supervising and examining departments shall discharge their
responsibilities in accordance with the instructions of the Monetary
Board. The supervising and examining departments shall be directly
supervised and coordinated by the Deputy-Governor for Supervision.
"The department heads and the examiners of the supervising and
examining departments are hereby authorized to administer oaths to any
director, officer, or employee of any institution under their
respective supervision 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."
Section 17. Section twenty-six of the same Act is
hereby amended to read as follows:cralaw:red
"Sec. 26. Qualifications. — The Deputy-Governor for
Supervision, in addition to the qualifications required in Section 7 of
this Act, and the heads of the supervising and examining department,
must be persons of recognized integrity and competence in accounting,
auditing and banking practice."
Section 18. Section twenty-seven of the same Act is
hereby amended to read as follows:cralaw:red
"Sec. 27. Prohibitions. — Personnel of the Central
Bank are hereby prohibited from:cralaw:red
"(a) Being an officer, director, employee, or
stockholder, directly or indirectly, of any institution subject to
supervision or examination by the Central Bank, except non-stock
savings and loan associations and provident funds organized exclusively
for employees of the Central Bank; chanroblesvirtualawlibrary
"(b) Receiving any gift or thing of value from any
officer, director, or employee thereof;chanroblesvirtualawlibrary
"(c) Revealing in any manner, except under order of
the court, information relating to the condition or business of any
such institution. This prohibition shall not be held to apply to the
giving of information to the Monetary Board or the Governor of the
Central Bank, or to any person authorized by either of them, in
writing, to receive such information.
"Borrowing from a banking institution by examiners and other personnel
of the supervising and examining departments of the Central Bank shall
be prohibited only with respect to the particular bank in which they
are assigned, or are conducting an examination. Personnel of other
departments, offices, or units of the Central Bank shall likewise be
prohibited from borrowing from any banking institution during the
period of time that an application with the Central Bank of such
institution is being evaluated, processed, or acted upon by such
personnel: Provided, however, That the Monetary Board may, at its
discretion, indicate the position levels or functional groups to which
the prohibition is applicable.
"Borrowing by all full-time Central Bank personnel from banks shall be
fully secured, fully disclosed to the Monetary Board, and shall be
subject to such further rules and regulations as the Monetary Board may
prescribe."
Section 19. Section twenty-eight of the same Act is
hereby amended to read as follows: chanroblesvirtualawlibrary
"Sec. 28. Examination and fees. — It shall be the
duty of the head of the appropriate supervising and examining
departments, personally or by deputy, at least once in every twelve
months, and at such other times as either he or the Monetary Board may
deem expedient, to make an examination of the books of every banking
institution within the purview of this Act and to make a report on the
same to the Monetary Board.
"Every such institution 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 when requested so to do by the Central
Bank: Provided, however, That none of the reports and other papers
relative to such examination shall be open to inspection by the public
except insofar as such publicity in incidental to the proceeding
hereinafter authorized or is necessary for the prosecution of
violations in connection with the business of such institutions.
"The institutions which are subject to examination by the Central Bank
shall reimburse the Central Bank for the cost of maintaining the
corresponding supervising and examining department and, for this
purpose, shall pay to the Central Bank, within the first thirty days of
each year, an annual fee in an amount to be determined by the Monetary
Board in the manner provided in the next paragraph of this section.
"The fee to be paid by each institution shall be an amount equal to a
prescribed percentage of its average total assets during the preceding
year, as shown on its end-of-month balance sheets, after deducting its
cash on hand and amounts due from banks, including the Central Bank and
the banks abroad: Provided, however, That said percentage may not
exceed one twentieth of one percent (1/20 of 1%). If the total of the
maximum fees authorized under this paragraph should be insufficient to
defray the entire costs of the department, the difference shall be
borne by the Central Bank."
Section 20. A new section is hereby added after
section twenty-eight of the same Act to read as follows:cralaw:red
"Sec. 28-A. Appointment of conservator. — Whenever,
on the basis of a report submitted by the appropriate supervising and
examining department, the Monetary Board finds that a bank is in a
state of continuing inability or unwillingness to maintain a condition
of solvency and liquidity deemed adequate to protect the interest of
depositors and creditors, the Monetary Board may appoint a conservator
to take charge of the assets, liabilities, and the management of that
banking institution, collect all monies and debts due said bank and
exercise all powers necessary to preserve the assets of the bank,
reorganize the management thereof and restore its viability. He shall
have the power to overrule or revoke the actions of the previous
management and board of directors of the bank, any provision of law to
the contrary notwithstanding, and such other powers as the Monetary
Board shall deem necessary.
"As much as practicable, the conservator should not be connected with
the Central Bank but should be competent and knowledgeable in bank
operations and management. The remuneration of the conservator and
other expenses attendant to the conservatorship shall be borne by the
bank concerned. He shall report and be responsible to the Monetary
Board until such time as the Monetary Board is satisfied that the
banking 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 banking institution would involve
probable loss to its depositors or creditors, in which case the
provision of Section 29 shall apply." chanroblesvirtualawlibrary
Section 21. Section twenty-nine of the same Act is
hereby amended to read as follows:cralaw:red
"Sec. 29. Proceedings upon insolvency. — Whenever,
upon examination by the head of the appropriate supervising and
examining department or his examiners or agents into the condition of
any banking institution, it shall be disclosed that the condition of
the same is one of insolvency, or that its continuance in business
would involve probable loss to its depositors or creditors, it shall be
the duty of the department head concerned forthwith, in writing, to
inform the Monetary Board of the facts, and the Board, upon finding the
statements of the department head to be true, shall forthwith forbid
the institution to do business in the Philippines and shall designate
an official of the Central Bank as receiver to immediately take charge
of its assets and liabilities, as expeditiously as possible collect and
gather all the assets and administer the same for the benefit of its
creditors, and exercising all the powers necessary for these purposes
including, but not limited to, bringing suits and foreclosing mortgages
in the name of the banking institution.
"The Monetary Board shall thereupon determine within thirty days
whether the institution may be reorganized or otherwise placed in such
a condition so that it may be permitted to resume business with safety
to its creditors and shall prescribe the conditions under which such
resumption of business shall take place as well as the time for
fulfillment of such conditions. In such case, the expenses and fees in
the collection and administration of the assets of the institution
shall be determined by the Board and shall be paid to the Central Bank
out of the assets of such banking institution.
"At any time within ten days after the Monetary Board has taken charge
of the assets of any banking institution, such institution may apply to
the Court of First Instance for an order requiring the Monetary Board
to show cause why its designated official should not be enjoined from
continuing such charge of its assets, and the court may direct the
Board to refrain from further proceedings and to surrender charge of
its assets.
"If the Monetary Board shall determine that the banking institution
cannot resume business with safety to its creditors, it shall by the
Solicitor General, file a petition in the Court of First Instance
reciting the proceedings which have been taken and praying the
assistance and supervision of the court in the liquidation of the
affairs of the same. The Monetary Board shall designate an official of
the Central Bank as liquidator who shall, under the supervision of the
court and with all convenient speed, convert the assets of the banking
institution to money or sell, assign or otherwise dispose of the same
to creditors and other parties for the purpose of paying the debts of
such institution."
Section 22. Section thirty-two of the same Act is
hereby amended to read as follows:cralaw:red
"Sec. 32. Refusal to make reports or permit
examination. — Any owner, agent, manager, or other officer-in-charge of
any banking institution within the purview of this Act who, being
thereunto required in writing by the Monetary Board or by the head of
the appropriate supervising and examining department, shall wilfully
refuse to file the required report or permit any lawful examination
into the affairs of such institution shall be punished by a fine of not
more than ten thousand pesos or by imprisonment for not more than one
year, or both, in the discretion of the court."
Section 23. Section thirty-three of the same Act is
hereby amended to read as follows:cralaw:red
"Sec. 33. False statement. — The willful making of a
false statement to the Monetary Board or to be the head of the
appropriate supervising and examining department or to his examiners
shall be punished by a fine not to exceed fifteen thousand pesos, or by
imprisonment for a term not to exceed two years, or both, in the
discretion of the court."
Section 24. Section thirty-four of the same Act is
hereby amended to read as follows:cralaw:red
"Sec. 34. Proceedings upon violation of laws and
regulations. — Whenever any person or entity wilfully violates this Act
or any order, instruction, rule or regulations issued by the Monetary
Board, the person or persons responsible for such violation shall be
punished by a fine of not more than twenty thousand pesos and by
imprisonment of not more than five years.
"Whenever a banking institution persists in violating its charter or
by-laws or any law, or orders, instructions, rules or regulations
issued by the Monetary Board, or whenever a banking institution
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 34-A of this Act, file a petition in the Court of
First Instance praying the assistance of the court to compel the
banking institution to discontinue the violations or practices objected
to in the petition of the Board. The Monetary Board may, with the
approval of the court, take such action as the court may deem necessary
to compel the banking institution complained against to discontinue the
violations or practices set forth in the Board's petition, and, if
necessary, the Board may, under order of the court, direct an official
of the Central Bank to liquidate the business of the
institution." chanroblesvirtualawlibrary
Section 25. A new section is hereby added after
section thirty-four of the same Act to read as follows:cralaw:red
"Sec. 34-A. Administrative sanctions. — The Monetary
Board is hereby authorized, at its discretion, to impose upon banking
institutions, their directors and/or officers, for any willful delay in
the submission of reports; any refusal to permit examination into the
affairs of the institution; any willful making of a false statement to
the Board or to 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:cralaw:red
"(a) Fines not in excess of five hundred pesos a day;chanroblesvirtualawlibrary
"(b) Suspension, or after due hearing, removal of
directors and/or officers;chanroblesvirtualawlibrary
"(c) Suspension of rediscounting privileges;chanroblesvirtualawlibrary
"(d) Suspension of lending or foreign exchange
operations or authority to accept new deposits or make investments;chanroblesvirtualawlibrary
"(e) Suspension of inter-bank clearing privileges;
and/or
"(f) Suspension of authority to operate. chanroblesvirtualawlibrary
"The above administrative sanctions need not be applied in the order of
increasing severity.
"Except in the appointment of a conservator and proceedings upon
insolvency as provided for under Sections 28-A and 29 of this Act, the
Governor is authorized to render opinions, decisions, or rulings which
shall be final and executory until reversed or modified by the Monetary
Board, on matters regarding application or enforcement of banking laws,
implementation of Monetary Board regulations, policies or instructions
pertaining to institutions supervised by the Central Bank, including
their method of accounting or manner of keeping the accounts, books and
financial records, and their submission of reports.
"The Governor is likewise hereby authorized, at his discretion, to
impose upon banking institution, for any failure to comply with the
requirements of law, Monetary regulations and policies, and/or
instructions issued by the Monetary Board or by the Governor, fines not
in excess of five hundred pesos a day, the imposition of which shall be
final and executory until reversed, modified or lifted by the Monetary
Board on appeal.
"Administrative sanctions shall be applied to all banks of the same
category uniformly and without discrimination."
Section 26. Section thirty-seven of the same Act is
hereby amended to read as follows:cralaw:red
"Sec. 37. Annual report. — Before the end of March of
each year, the Central Bank shall submit to the President of the
Philippines, to the Senate through its President, to the House of
Representatives through its Speaker, and shall publish an annual report
on the condition of the Bank and 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 Central Bank and a statistical appendix which shall
present, as a minimum, the following data:cralaw:red
"(a) The monthly movement of the money supply,
distinguishing between currency and deposit money;chanroblesvirtualawlibrary
"(b) The monthly movement of purchases and sales of
exchange and of the international reserve of the Bank;chanroblesvirtualawlibrary
"(c) The balance of payments of the Philippines;chanroblesvirtualawlibrary
"(d) Monthly indices of wages, of the cost of living
and of imports and export prices;chanroblesvirtualawlibrary
"(e) The monthly movement, in summary form, of
exports and imports, by volume and value;chanroblesvirtualawlibrary
"(f) The monthly movement of the accounts of the
Central Bank and of other banks, by groupings and classifications to be
determined by the head of the Department of Economic Research in
agreement with the heads of the appropriate supervising and examining
departments;chanroblesvirtualawlibrary
"(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 Monetary Board during the year
which relate to the functions or operations of the Central Bank or of
banking institutions operating in the Philippines."
Section 27. Section forty-four of the same Act is
hereby amended to read as follows:cralaw:red
"Sec. 44. Revaluation profits and losses. — The
revaluation and other profits or losses made or assumed by the Central
Bank in accordance with the provisions of Sections 77 and 83 of this
Act shall not be included in the computation of the annual profits and
losses of the Central Bank.
"Any profits or losses arising in this manner shall be offset by any
amounts which, as a consequence of such revaluations are owed by the
Philippines to any international or regional inter-governmental
financial institution of which the Philippines is a member or are owed
by these institutions to the Philippines. Any remaining profit or loss
shall be carried in a special frozen account which shall be named
"Revaluation of International Reserve" and the net balance of which
shall appear either among the liabilities or among the assets of the
Central Bank, depending on whether the revaluations have produced net
profits or net losses.
"The Revaluations of International Reserve account shall be neither
credited nor debited for any purposes other than those specifically
authorized in the present section or in Section 45 of this Act."
Section 28. Section forty-six of the same Act is
hereby amended to read as follows:cralaw:red
"Sec. 46. Appointment and personnel. — The
Auditor-General shall act as the ex-officio Auditor of the Central Bank
and, as such he is empowered and authorized to appoint a representative
who shall be the Auditor of the Central Bank and, in accordance with
law, fix his salary, and to appoint and fix the salaries and number of
the personnel to assist said representative in his work, but in all
cases subject to the approval of the Monetary Board. The salaries and
all other expenses of the maintaining the Auditor's office shall be
paid by the Central Bank. The Auditor of the Central Bank and personnel
under him may be removed only by the Auditor-General.
"The representative of the Auditor-General must be a certified public
accountant with at least ten years experience as certified public
accountant or a person who has had training and experience in
commercial or central banking. No relative of any member of the
Monetary Board or the Auditor-General within the sixth degree of
consanguinity or affinity shall be appointed such representative."
Section 29. Section forty-nine of the same Act is
hereby amended to read as follows:cralaw:red
"Sec. 49. Changes in par value; deviations therefrom.
— The par value of the peso shall not be altered except when such
action is made necessary by the following circumstances:cralaw:red
"(a) When the existing par value would make
impossible the achievement and maintenance of a balanced and
sustainable growth of the economy without:cralaw:red
"(1) The depletion of the international reserve of
the Central Bank; or
"(2) The chronic use of restrictions on a
convertibility of the peso into foreign currencies or on the
transferability abroad of funds from the Philippines; or
"(3) Undue Government intervention in, or restriction
of, the international flow of goods and services; or
"(b) When uniform proportionate changes in par values
made by countries which are members of the International Monetary Fund;
or
"(c) When the operation of any executive or
international agreement to which the Republic of the Philippines is a
party requires an alteration in the gold value of the peso.
"Any modification in the gold or dollar value of the peso must be in
conformity with the provisions of all executive and international
agreements subscribed to and ratified by the Republic of the
Philippines, and such modification shall be made only by the President
of the Republic upon the proposal of the Monetary Board and with the
approval of Congress. The proposal of the Monetary Board shall require
the concurrence of at least five of the members of the Board.
"Notwithstanding the provisions of the preceding paragraph with respect
to the approval of Congress, if there should be an emergency which, in
the opinion of the President, is so grave and so urgent as to require
immediate action, the President may modify the par value of the peso
without the prior approval of Congress: Provided, however, That he
shall report to the Congress on his action at the earliest opportunity.
"In order to permit the exchange rate system to be more responsive to
domestic and external developments, whenever indicated and not
necessarily under emergency conditions alone, the Monetary Board, with
the concurrence of at least five of its members, and with the approval
of the President of the Philippines, is authorized to set or change the
exchange rate or rates for the peso, which may differ from its par
value."
Section 30. Section fifty-two of the same Act is
hereby amended to read as follows:cralaw:red
"Sec. 52. Issue power. — The Central Bank shall have
the sole right and authority to issue currency, within the territory of
the Philippines. No other person or entity, public or private, may put
into circulation notes, coins or any other object or document which, in
the opinion of the Monetary Board, might circulate as currency, nor
reproduce or imitate the facsimiles of Central Bank notes without prior
authority from the Bank.
"The Monetary Board may issue such regulations as it may deem advisable
in order to prevent the circulation of foreign currency or of currency
substitutes as well as to prevent the reproduction of facsimiles of
Central Bank notes. chanroblesvirtualawlibrary
"The Central Bank 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."
Section 31. Section fifty-four of the same Act is
hereby amended to read as follows:cralaw:red
"Sec. 54. Legal tender power. — All notes and coins
issued by the Central Bank shall fully guaranteed by the Government of
the Republic of the Philippines and shall be legal tender in the
Philippines for all debts, both public and private: Provided, however,
That coins shall be legal tender in amounts not exceeding fifty pesos
for denominations from ten centavos to one peso, and in amounts not
exceeding twenty pesos for denominations of five centavos or less."
Section 32. Section sixty-three of the same Act is
hereby amended to read as follows:cralaw:red
"Sec. 63. Legal character. — Checks representing
deposit money do not have legal tender power and their acceptance in
the payment of debts, both public and private, is at the option of the
creditor: Provided, however, That a check which has been cleared and
credited to the account of the creditor shall be equivalent to a
delivery to the creditor of cash in an amount equal to the amount
credited to his account."
Section 33. Section sixty-four of the same Act is
hereby amended to read as follows: chanroblesvirtualawlibrary
"Sec. 64. Guiding principle. — The Monetary Board
shall endeavor to control any expansion or contraction in the money
supply, in the level of credit, or any rise or fall in prices, which,
in the opinion of the Board, is prejudicial to the attainment or
maintenance of a balanced and sustainable growth of the economy. In
adopting policies and measures in accordance with this principle, the
Monetary Board shall have due regard for their effects on the
availability and cost of money and credit to particular sectors of the
economy as well as to the economy as a whole, and their effect on the
relationship of domestic prices and costs to world prices and costs."
Section 34. Section sixty-five of the same Act is
hereby amended to read as follows:cralaw:red
"Sec. 65. Power to define terms. — For the purposes
of this article and of this Act, the Monetary Board shall formulate
definitions of money supply, credit and prices; and whenever the need
arises, change these definitions but not oftener than once every twelve
months and such definitions as well as any changes thereof shall be
made public. The statistics prepared by the Central Bank on money
supply, credit and prices shall be based on these definitions to the
extent that available data permit."
Section 35. Section sixty-six of the same Act is
hereby amended to read as follows:cralaw:red
"Sec. 66. Action when abnormal movements occur in the
money supply, credit, or price level. — Whenever abnormal movements in
the money supply, in credit, or in prices endanger the stability of the
Philippine economy or important sectors thereof, the Monetary Board
shall:cralaw:red
"(a) Take such remedial measures as are appropriate
and within the powers granted to the Monetary Board and the Central
Bank under the provisions of this Act; and chanroblesvirtualawlibrary
"(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:cralaw:red
"(1) The causes of the rise and fall of the
money supply, of credit or of price;chanroblesvirtualawlibrary
"(2) The extent to which the changes in the money
supply, 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
recommendations be adopted.
"Whenever the money supply, or the level of credit, increases or
decreases by more than fifteen per cent (15%), or the cost of living
index increases by more than ten per cent (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 its judgment the circumstances so warrant, the Monetary
Board shall submit the report to which reference is made in subsection
(b) of this section, and shall state therein whether, in the opinion of
the Board, said changes in the money supply, 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 until it considers that the monetary,
credit or price disturbances have disappeared or have been adequately
controlled."
Section 36. Section sixty-seven of the same Act is
hereby amended to read as follows:cralaw:red
"Sec. 67. Guiding principle. — The Central Bank of
the Philippines shall exercise its powers under this Act to maintain
the par value of the peso and the convertibility of the peso into other
freely convertible currencies primarily for, although not necessarily
limited to, current payments for foreign trade and invisibles."
Section 37. Section seventy of the same Act is hereby
amended to read as follows:cralaw:red
"Sec. 70. Action when the international stability of
the peso is threatened. — Whenever the international reserve of the
Central Bank falls to an amount which the Monetary Board considers
inadequate to meet the prospective net demands on the Central Bank 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 result of payments or remittances
abroad which, in the option of the Monetary Board, are contrary to the
national welfare, the Monetary Board shall:cralaw:red
"(a) Take such remedial measures as are appropriate
and within the powers granted to the Monetary Board and the Central
Bank under the provisions of this Act; and
"(b) Submit to the President of the Philippines a
detailed report which shall include, as a minimum, a description and
analysis of: chanroblesvirtualawlibrary
"(1) The nature and causes of the existing or
imminent decline;chanroblesvirtualawlibrary
"(2) The remedial measures already taken or to be
taken by the Monetary Board;chanroblesvirtualawlibrary
"(3) The further monetary, fiscal or administrative
measures 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 Central Bank, 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 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
until the threat to the international monetary stability of the
Philippines has disappeared."
Section 38. Section seventy-two of the same Act is
hereby amended to read as follows:cralaw:red
"Sec. 72. Purchases and sales of gold. — The Central
Bank may buy and sell gold in any form, subject to such regulations as
the Monetary Board may issue.
"The Monetary Board may at any time require that any gold held by any
person or entity under the jurisdiction of the Philippines be delivered
to the Central Bank or to any banks or other agents contracted or
engaged by the Central Bank for the purpose. The Monetary Board may
also impose conditions under which gold in any shape or form may be
acquired and held, transported, melted, or treated, imported, exported,
earmarked or held in custody for foreign or domestic account.
"The purchases and sales of gold authorized by this section shall be
made in the national currency at the effective exchange rate or rates
and at the prevailing international market price as determined by the
Monetary Board."
Section 39. Section seventy-three of the same Act is
hereby amended to read as follows:cralaw:red
"Sec. 73. Purchases and sales of foreign exchange. —
The Central Bank may buy and sell foreign notes and coins, and
documents and instruments of types customarily employed for the
international transfer of funds. The Bank may engage in future exchange
operations.
"The Central Bank may engage in foreign exchange transactions with the
following entities or persons only:cralaw:red
"(a) Banking institutions operating in the
Philippines;chanroblesvirtualawlibrary
"(b) The Government, its political subdivisions and
instrumentalities;chanroblesvirtualawlibrary
"(c) Foreign or international financial institutions;chanroblesvirtualawlibrary
"(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 Central Bank
shall, 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 Central Bank shall effect its exchange transactions between
foreign currencies and the Philippine peso at the rates determined in
accordance with the provisions of Section 76."
Section 40. Section seventy-four of the same Act is
hereby amended to read as follows: chanroblesvirtualawlibrary
"Sec. 74. Emergency restrictions on exchange
operations. — Notwithstanding the provisions of the third paragraph of
the preceding section, in order to achieve the objectives of the
Central Bank as set forth in Section 2 of this Act, or protect the
international reserve of the Central Bank 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
of its members and with the approval of the President of the
Philippines, may temporarily suspend or restrict sales and exchange by
the Central Bank, may subject all transactions in gold and foreign
exchange to license by the Central Bank, and may require that any
foreign exchange thereafter obtained by any person residing or entity
operating in the Philippines be delivered to the Central Bank or to any
bank or agent designated by the Central Bank for the purpose, at the
effective exchange rate or rates: Provided, however, That foreign
currency deposits made under Republic Act Numbered Sixty-four hundred
and twenty-six shall be exempt from these requirements. The adoption of
the emergency measures authorized in this section shall be subject to
any executive and international agreements to which the Republic of the
Philippines is a party."
Section 41. Section seventy-six of the same Act is
hereby amended to read as follows:cralaw:red
"Sec. 76. Exchange rates. — The Monetary Board shall
determine the rates at which the Central Bank shall buy and sell spot
exchange, and shall establish deviation limits from the effective
exchange rate or rates as it may deem proper. The Central Bank 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 Central Bank, 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." chanroblesvirtualawlibrary
Section 42. Section seventy-seven of the same Act is
hereby amended to read as follows:cralaw:red
"Sec. 77. Revaluation and other profits and losses on
Central Bank's international assets. — The profits or losses arising
from any revaluation of the Central Bank's net assets or liabilities in
gold or foreign currencies as a result of changes in the gold value of
the peso, or of changes in the parties or exchange rates of foreign
currencies with respect to the Philippine Peso, and those arising from
any other transactions of the Central Bank in gold or foreign exchange,
shall be distributed in the manner provided in Section 44 of this Act."
Section 43. Section seventy-nine of the same Act is
hereby amended to read as follows:cralaw:red
"Sec. 79. Rates applicable to purchases and sales of
exchange by the banks. — The Monetary Board shall determine the minimum
and maximum rates at which the banks may buy spot exchange, and the
maximum and minimum rates at which they may sell spot exchange, and
shall establish deviation limits from the effective exchange rate or
rates as it may deem proper. The banks shall not collect any additional
commissions or charges other than actual telegraphic or cable costs
incurred by them.
"The rates to be used by the banks for other types of exchange
transactions shall be based on their spot exchange rates and shall not
differ from such rates by margins greater than those considered
reasonable by the Monetary Board: Provided, however, That the Board may
at any time specifically fix such margins. The Monetary Board shall
issue such rules and regulations as may be necessary to implement the
provisions of this paragraph.
"The rates established in accordance with the provisions of this
section shall not apply to exchange transactions with the Central Bank.
Such transactions shall be made at the rates established in accordance
with the provisions of Section 76 of this Act."
Section 44. The subtitle of section eighty-four of
the same Act is hereby amended to read as follows:cralaw:red
"Sec. 84. Other exchange profits and losses."
Section 45. Section eighty-seven of the same Act is
hereby amended to read as follows:cralaw:red
"Sec. 87. Authorized types of operations. — Subject
to the principles stated in the preceding section of this Act, the
Central Bank may normally and regularly carry on the following credit
operations with banking institutions operating in the Philippines:cralaw:red
"(a) Commercial credits. — The Central Bank may
rediscount, buy and sell bills, acceptances, promissory notes and other
credit instruments with maturities of not more than 180 days from the
date of their rediscount, discount or acquisition by the Central Bank
and resulting from transactions related to;chanroblesvirtualawlibrary
"(1) The importation, exportation, purchase or sale
of readily saleable goods and products, or their transportation within
the Philippines; or
"(2) The storing of nonperishable 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 Central Bank may
rediscount, discount, buy and sell bills, acceptances, promissory notes
and other credit instruments having maturities of not more than 360
days from the date of their rediscount, discount or acquisition by the
Central Bank 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 Bank 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.
"(b-1) 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 Central Bank shall
prescribe. Whenever necessary, the Central Bank shall provide funds
from non-inflationary sources: Provided, however, That the Monetary
Board shall prescribe additional safeguards for disbursing these funds.
"(c) Advances. — The Central Bank may grant advances
against the following kinds of collaterals for fixed periods which,
with the exception of advances against the collateral named in clause
(4) of the present subsection, shall not exceed 180 days:cralaw:red
"(1) Gold coins or bullion;chanroblesvirtualawlibrary
"(2) Securities representing obligations of the
Central Bank or of other domestic credit institutions of recognized
solvency;chanroblesvirtualawlibrary
"(3) The credit instruments to which reference is
made in subsection (a) of this section;chanroblesvirtualawlibrary
"(4) The credit instruments to which reference is
made in subsection (b) of this section, for periods which shall not
exceed 360 days;chanroblesvirtualawlibrary
"(5) Utilized portions of advances in current account
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;chanroblesvirtualawlibrary
"(6) Negotiable treasury bills, certificates of
indebtedness, notes and other negotiable obligations of the Government
maturing within three 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 years from the date of the 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 (c) of this section may not exceed 80 per cent of the
current market value of the collateral."
Section 46. Title C, Article IV, of Chapter IV of the
same Act is hereby amended to read as follows:cralaw:red
"C. SPECIAL CREDIT OPERATIONS"
Section 47. Section eighty-eight of the same Act is
hereby amended as follows:cralaw:red
"Sec. 88. Loans to long-term lending institutions. —
A. Under special circumstances in which the Monetary Board considers it
advisable to promote or facilitate the lending operations, or certain
classes thereof, of banking institutions engaged in long-term
financing, the Central Bank may grant loans or advances to said
institutions against pledge or assignment of payments, installments or
amortizations of their borrowers and in an amount not exceeding forty
per cent (40%) of the payments, installments or amortizations pledged
or assigned: Provided, however, That the Central Bank shall finance
said loans from non-inflationary sources and shall establish additional
safeguards as it may deem proper. chanroblesvirtualawlibrary
"In granting loans and advances under this subsection, the Central Bank
shall first ascertain that the payments, installments and amortizations
to be pledged or assigned to it are in no case currently in arrears and
that said payments, installments and amortizations are related to
credit operations which in every case are adequately secured by
mortgages. Said mortgages shall be assigned to the Central Bank."
"B. Under special circumstances, such as the
encouragement of bank mergers and consolidations, in which the Monetary
Board considers it advisable to properly and effectively achieve the
objectives mentioned in Section 2 of this Act and to discharge its
responsibility of administering the banking system, the Central Bank
may grant loans or advances to the Development Bank of the Philippines
or to any appropriate Government financial institution under such terms
and conditions as may be prescribed by the Monetary Board which loans
or advances shall be used by the Development Bank of the Philippines or
such Government financial institution to purchase shares of stock of a
banking institution in the Philippines for resale to the general
public: Provided, however, That the amounts of such loans and advances
which may be released at any given period of time shall be compatible
with the requirements of stability: And Provided, further, That such
loans and advances are secured by assets which are defined as
acceptable security by a concurrent vote of at least five members of
the Monetary Board.
"For the purpose of this subsection, the Development Bank of the
Philippines shall be authorized to underwrite, purchase, sell, pledge,
mortgage or otherwise dispose of shares of stock of a banking
institution in the Philippines."
Section 48. Section ninety of the same Act is hereby
amended to read as follows: chanroblesvirtualawlibrary
"Sec. 90. Emergency loans and advances. — In periods
of emergency or of imminent financial panic which directly threaten
monetary and banking stability, the Central Bank may grant banking
institutions extraordinary advances secured by any assets which are
defined as acceptable security by a concurrent vote of at least five
members of the Monetary Board. While such advances are outstanding, the
debtor institution may not expand the total volume of its loans or
investments without the prior authorization of the Monetary Board.
"The Central Bank may, at its discretion, likewise grant advances to
banking institutions, even during normal periods, for the purpose if
assisting a bank in a precarious financial condition or under serious
financial pressures brought about 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 clearly realizable assets to
secure the advances: Provided, further, That a concurrent vote of at
least five members of the Monetary Board is obtained.
"In connection with the exercise of these powers, the prohibitions in
Section 133 of this Act shall not apply insofar as it refers to
acceptance as collateral of shares issued by commercial, industrial and
non-financial enterprises, but not shares issued by banking
institutions: Provided, however, That should the Central Bank acquire
any of these shares it has accepted as collateral as a result of
foreclosure proceedings, the Central Bank shall dispose of said shares
to the public within one year from the date of consolidation of title
by the Central Bank."
Section 49. Section ninety-one of the same Act is
hereby amended to read as follows:cralaw:red
"Sec. 91. Interest and rediscount rates. — The
Monetary Board shall fix the interest and rediscount rates to be
charged by the Central Bank on its credit operations in accordance with
the character and term of the operation, but after due consideration
has been given to the credit needs of the market, the composition of
the Central Bank's portfolio, and the general requirements of the
national monetary policy. Interest and rediscount rates shall be
applied to all banks of the same category uniformly and without
discrimination."
Section 50. Section ninety-five of the same Act is
hereby amended to read as follows:cralaw:red
"Sec. 95. Provisional advances to the Government. —
The Central Bank may make direct provisional advances to the Government
or to any of its political subdivisions to finance expenditures
authorized in the annual appropriations of the borrowing entity:
Provided: That said advances must be repaid before the end of the first
quarter following the end of the fiscal year of the Government or
political subdivision and shall not, in their aggregate, exceed twenty
percent (20%) of the average annual income of the borrower for the last
three preceding fiscal years."
Section 51. Section one hundred of the same Act is
hereby amended to read as follows:cralaw:red
"Sec. 100. Reserve requirements. — In order to
control the volume of money created by the credit operations of the
banking system, banks operating in the Philippines shall be required to
maintain reserves against their deposit liabilities. 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 Central Bank of the Philippines; nevertheless, the Monetary Board
may, whenever circumstances warrant, permit the maintenance of part of
the required reserves in the form of assets other than peso deposits
with the Central Bank. Reserve requirements shall be applied to all
banks of the same category uniformly and without discrimination.
"The Monetary Board may, at its discretion, require banks and/or other
financial institutions to maintain reserves against their liabilities
for deposit substitutes as defined in this Act and as determined by the
Monetary Board for this purpose. 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,
in appropriate cases, deposit substitutes, with remaining maturities of
two years or more."
Section 52. A new section is hereby added after
section one hundred of the same Act to read as follows:cralaw:red
"Sec. 100-A. 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, trust
certificates and repurchase agreements. The Monetary Board shall
determine what specific instruments shall be considered as deposit
substitutes for the purpose of Sections 100 and 109; Provided, however,
That deposit substitutes of commercial, industrial and other
non-financial companies issued for the limited purpose of financing
their own needs or the needs of their agents or dealers shall not be
covered by the provisions of Section 100 and 109."
Section 53. Section one hundred six of the same Act
is hereby amended to read as follows:cralaw:red
"Sec. 106. Reserve deficiencies. — Whenever the
reserve position of any bank, computed in the manner specified in the
preceding section of this Act, is below the required minimum, the bank
shall pay the Central bank one-tenth of one per cent (1/10 of 1%) per
day on the amount of the deficiency: Provided, however, That 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 the
privilege of offsetting reserve deficiencies in the aforesaid manner.
"If a bank chronically has a reserve deficiency, the Monetary Board may
limit or prohibit the making of new loans or investments by the bank
and may require that part or all of the net profits of the bank 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
bank strike or lockout as defined in the Industrial Peace Act, or of a
national emergency affecting bank operation."
Section 54. Section one hundred seven of the same Act
is hereby amended to read as follows:cralaw:red
"Sec. 107. Inter-bank settlements. — The Central Bank
shall establish nationwide facilities to provide inter-bank clearing at
no cost to the banks.
"The deposit reserves maintained by the banks in the Central Bank, in
accordance with the provisions of Section 100, shall serve as a basis
for the clearing of checks and the settlement of inter-bank balances,
subject to such rules and regulations as the Monetary Board may issue
with respect to such operations." chanroblesvirtualawlibrary
Section 55. Section one hundred eight of the same Act
is hereby amended to read as follows:cralaw:red
"Sec. 108. Guiding principle. — The Monetary Board
shall use the powers granted to it under the present article and
elsewhere in 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 56. Section one hundred nine of the same Act
is hereby amended to read as follows:cralaw:red
"Sec. 109. Interest rates, commissions and charges. —
The Monetary Board may fix the maximum rates of interest, expressed as
simple annual rates, which banks may pay on deposits, on deposit
substitutes and on other obligations. The Monetary Board may provide
interest rate differentials on the basis of maturity and size of
deposits, deposit substitutes and other obligations of banks. The
Monetary Board may eliminate interest rate ceilings for deposits,
deposit substitutes, and other obligations of banks above a specified
amount or exempt from interest rate ceilings deposits, deposit
substitutes, and other obligations with remaining maturities of two
years or more.
"The Monetary Board may, at its discretion, fix the maximum rates of
interest, expressed as simple annual rates, which other financial
institutions may pay on deposit substitutes; and/or may provide
interest rate differential on the basis of maturity and size of deposit
substitutes; and/or eliminate rate ceilings for deposit substitutes
above a specified amount; and/or exempt from interest rate ceilings
deposit substitutes with remaining maturities of two years or
more. chanroblesvirtualawlibrary
"The Monetary Board may, within the limits prescribed in the Usury Law
(Act No. 2655, as amended), fix the maximum rates of interest which
banks may charge for different types of loans and for any other credit
operations, or may fix the maximum differences which may exist between
the interest or rediscount rates of the Central Bank and the rates
which the banks may charge their customers if the respective credit
documents are not to lose their eligibility for rediscount or advances
in the Central Bank.
"Any modifications in the maximum interest rates permitted for the
borrowing or lending operations of the banks shall apply only to future
operations and not to those made prior to the date on which the
modification becomes effective.
"In order to avoid possible evasion of maximum interest rates set by
the Monetary Board, the Board may also fix the maximum rates that banks
may pay to or collect from their customers in the form of commissions,
discounts, charges, fees or payments of any sort."
Section 57. Section one hundred eighteen of the same
Act is hereby amended to read as follows:cralaw:red
"Sec. 118. Official deposits. — The Central Bank
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 Central Bank, 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." chanroblesvirtualawlibrary
Section 58. Section one hundred twenty-one of the
same Act is hereby amended to read as follows:cralaw:red
"Sec. 121. Remuneration for services. — The Central
Bank shall not charge for services which it renders to the Government
and to its political subdivisions and instrumentalities any rates,
commissions or fees.
"The Bank may pay interest on deposits of the Government or of its
political subdivisions and instrumentalities, as well as on deposits
maintained by banks as part of their reserve requirements."
Section 59. Section one hundred thirty-two of the
same Act is hereby amended to read as follows:cralaw:red
"Sec. 132. Applicability of the Civil Service Law. —
Appointment in the Central Bank, 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, however, That promotions, transfers, assignments, or
reassignments by the Monetary Board are deemed made in the interest of
the service and not disciplinary, any provision of existing law to the
contrary notwithstanding.
"Officers and employees of the Central Bank, 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.
"No officer or employee of the Central Bank subject to the Civil
Service Law and Regulations shall be removed or suspended except for
cause as provided by law."
Section 60. This Decree shall take effect
immediately.
Done in the City of Manila,
this 29th day of November, in the year of Our Lord, nineteen hundred
and seventy-two.
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