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
IITHE
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. chan
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The
seven (7) members are:
(a)
the Governor of the Bangko Sentral, who shall be the Chairman of the
Monetary
Board. The Governor of the Bangko Sentral shall be head of a department
and his appointment shall be subject to confirmation by the Commission
on Appointments. Whenever the Governor is unable to attend a meeting of
the Board, he shall designate a Deputy Governor to act as his
alternate: Provided, That in such event, the Monetary Board
shall
designate
one of its members as acting Chairman;
(b)
a member of the Cabinet to be designated by the President of the
Philippines.
Whenever the designated Cabinet Member is unable to attend a meeting of
the Board, he shall designate an Undersecretary in his Department to
attend
as his alternate; and
(c)
five (5) members who shall come from the private sector, all of whom
shall
serve full-time: Provided, however, That of the members first appointed
under the provisions of this subsection, three (3) shall have a term of
six (6) years, and the other two (2), three (3) years.
No
member of the Monetary Board may be reappointed more than once.
Section
7. Vacancies. — Any vacancy in the Monetary Board created
by the death, resignation, or removal of any member shall be filled by
the appointment of a new member to complete the unexpired period of the
term of the member concerned.
Section
8. Qualifications. — The members of the Monetary Board
must
be natural-born citizens of the Philippines, at least thirty-five (35)
years of age, with the exception of the Governor who should at least be
forty (40) years of age, of good moral character, of unquestionable
integrity,
of known probity and patriotism, and with recognized competence in
social
and economic disciplines.
Section
9. Disqualifications. — In addition to the
disqualifications
imposed by Republic Act No. 6713, a member of the Monetary Board is
disqualified
from being a director, officer, employee, consultant, lawyer, agent or
stockholder of any bank, quasi-bank or any other institution which is
subject
to supervision or examination by the Bangko Sentral, in which case such
member shall resign from, and divest himself of any and all interests
in
such institution before assumption of office as member of the Monetary
Board.
The
members of the Monetary Board coming from the private sector shall not
hold any other public office or public employment during their tenure.
No
person shall be a member of the Monetary Board if he has been connected
directly with any multilateral banking or financial institution or has
a substantial interest in any private bank in the Philippines, within
one
(1) year prior to his appointment; likewise, no member of the Monetary
Board shall be employed in any such institution within two (2) years
after
the expiration of his term except when he serves as an official
representative
of the Philippine Government to such institution.
Section
10. Removal. — The President may remove any member of the
Monetary Board for any of the following reasons:
(a)
If the member is subsequently disqualified under the provisions of
Section
8 of this Act; or
(b)
If he is physically or mentally incapacitated that he cannot properly
discharge
his duties and responsibilities and such incapacity has lasted for more
than six (6) months; or
(c)
If the member is guilty of acts or operations which are of fraudulent
or
illegal character or which are manifestly opposed to the aims and
interests
of the Bangko Sentral; or
(d)
If the member no longer possesses the qualifications specified in
Section
8 of this Act.
Section
11. Meetings. — The Monetary Board shall meet at least
once
a week. The Board may be called to a meeting by the Governor of the
Bangko
Sentral or by two (2) other members of the Board.
The
presence of four (4) members shall constitute a quorum: Provided, That
in all cases the Governor or his duly designated alternate shall be
among
the four (4).
Unless
otherwise provided in this Act, all decisions of the Monetary Board
shall
require the concurrence of at least four (4) members.
The
Bangko Sentral shall maintain and preserve a complete record of the
proceedings
and deliberations of the Monetary Board, including the tapes and
transcripts
of the stenographic notes, either in their original form or in
microfilm.
Section
12. Attendance of the Deputy Governors. — The Deputy
Governors
may attend the meetings of the Monetary Board with the right to be
heard.
Section
13. Salary. — The salary of the Governor and the members
of
the Monetary Board from the private sector shall be fixed by the
President
of the Philippines at a sum commensurate to the importance and
responsibility
attached to the position.
Section
14. Withdrawal of Persons Having a Personal Interest. —
In
addition to the requirements of Republic Act No. 6713, any member of
the
Monetary Board with personal or pecuniary interest in any matter in the
agenda of the Monetary Board shall disclose his interest to the Board
and
shall retire from the meeting when the matter is taken up. The decision
taken on the matter shall be made public. The minutes shall reflect the
disclosure made and the retirement of the member concerned from the
meeting.
Section
15. Exercise of Authority. — In the exercise of its
authority,
the Monetary Board shall:
(a)
issue rules and regulations it considers necessary for the effective
discharge
of the responsibilities and exercise of the powers vested upon the
Monetary
Board and the Bangko Sentral. The rules and regulations issued shall be
reported to the President and the Congress within fifteen (15) days
from
the date of their issuance;
(b)
direct the management, operations, and administration of the Bangko
Sentral,
reorganize its personnel, and issue such rules and regulations as it
may
deem necessary or convenient for this purpose. The legal units of the
Bangko
Sentral shall be under the exclusive supervision and control of the
Monetary
Board;
(c)
establish a human resource management system which shall govern the
selection,
hiring, appointment, transfer, promotion, or dismissal of all
personnel.
Such system shall aim to establish professionalism and excellence at
all
levels of the Bangko Sentral in accordance with sound principles of
management.
A
compensation structure, based on job evaluation studies and wage
surveys
and subject to the Board's approval, shall be instituted as an integral
component of the Bangko Sentral's human resource development program: Provided,
That the Monetary Board shall make its own system conform as closely as
possible with the principles provided for under Republic Act No. 6758: Provided,
however, That compensation and wage structure of
employees
whose positions fall under salary grade 19 and below shall be in
accordance
with the rates prescribed under Republic Act No. 6758.
On
the recommendation of the Governor, appoint, fix the remunerations and
other emoluments, and remove personnel of the Bangko Sentral, subject
to
pertinent civil service laws: Provided, That the Monetary
Board
shall have exclusive and final authority to promote, transfer, assign,
or reassign personnel of the Bangko Sentral and these personnel actions
are deemed made in the interest of the service and not disciplinary: Provided,
further, That the Monetary Board may delegate such authority to the
Governor under such guidelines as it may determine.
(d)
adopt an annual budget for and authorize such expenditures by the
Bangko
Sentral as are in the interest of the effective administration and
operations
of the Bangko Sentral in accordance with applicable laws and
regulations;
and
(e)
indemnify its members and other officials of the Bangko Sentral,
including
personnel of the departments performing supervision and examination
functions
against all costs and expenses reasonably incurred by such persons in
connection
with any civil or criminal action, suit or proceedings to which he may
be, or is, made a party by reason of the performance of his functions
or
duties, unless he is finally adjudged in such action or proceeding to
be
liable for negligence or misconduct.
In
the event of a settlement or compromise, indemnification shall be
provided
only in connection with such matters covered by the settlement as to
which
the Bangko Sentral is advised by external counsel that the person to be
indemnified did not commit any negligence or misconduct.
chan
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The
costs and expenses incurred in defending the aforementioned action,
suit
or proceeding may be paid by the Bangko Sentral in advance of the final
disposition of such action, suit or proceeding upon receipt of an
undertaking
by or on behalf of the member, officer, or employee to repay the amount
advanced should it ultimately be determined by the Monetary Board that
he is not entitled to be indemnified as provided in this subsection.
Section
16. Responsibility. — Members of the Monetary Board,
officials,
examiners, and employees of the Bangko Sentral who willfully violate
this
Act or who are guilty of negligence, abuses or acts of malfeasance or
misfeasance
or fail to exercise extraordinary diligence in the performance of his
duties
shall be held liable for any loss or injury suffered by the Bangko
Sentral
or other banking institutions as a result of such violation,
negligence,
abuse, malfeasance, misfeasance or failure to exercise extraordinary
diligence.
Similar
responsibility shall apply to members, officers, and employees of the
Bangko
Sentral for: (1) the disclosure of any information of a confidential
nature,
or any information on the discussions or resolutions of the Monetary
Board,
or about the confidential operations of the Bangko Sentral, unless the
disclosure is in connection with the performance of official functions
with the Bangko Sentral, or is with prior authorization of the Monetary
Board or the Governor; or (2) the use of such information for personal
gain or to the detriment of the Government, the Bangko Sentral or third
parties: Provided, however, That any data or information
required
to be submitted to the President and/or the Congress, or to be
published
under the provisions of this Act shall not be considered confidential.
ARTICLE
IIITHE
GOVERNOR
AND DEPUTY GOVERNORS OF THE BANGKO SENTRAL
Section
17. Powers and Duties of the Governor. — The Governor
shall
be the chief executive officer of the Bangko Sentral. His powers and
duties
shall be to:
(a)
prepare the agenda for the meetings of the Monetary Board and to submit
for the consideration of the Board the policies and measures which he
believes
to be necessary to carry out the purposes and provisions of this Act;
(b)
execute and administer the policies and measures approved by the
Monetary
Board;
(c)
direct and supervise the operations and internal administration of the
Bangko Sentral. The Governor may delegate certain of his administrative
responsibilities to other officers or may assign specific tasks or
responsibilities
to any full-time member of the Monetary Board without additional
remuneration
or allowance whenever he may deem fit or subject to such rules and
regulations
as the Monetary Board may prescribe;
(d)
appoint and fix the remunerations and other emoluments of personnel
below
the rank of a department head in accordance with the position and
compensation
plans approved by the Monetary Board, as well as to impose disciplinary
measures upon personnel of the Bangko Sentral, subject to the
provisions
of Section 15(c) of this Act: Provided, That removal of personnel shall
be with the approval of the Monetary Board;
(e)
render opinions, decisions, or rulings, which shall be final and
executory
until reversed or modified by the Monetary Board, on matters regarding
application or enforcement of laws pertaining to institutions
supervised
by the Bangko Sentral and laws pertaining to quasi-banks, as well as
regulations,
policies or instructions issued by the Monetary Board, and the
implementation
thereof; and
(f)
exercise such other powers as may be vested in him by the Monetary
Board.
Section
18. Representation of the Monetary Board and the Bangko
Sentral.
— The Governor of the Bangko Sentral shall be the principal
representative
of the Monetary Board and of the Bangko Sentral and, in such capacity
and
in accordance with the instructions of the Monetary Board, he shall be
empowered to:
(a)
represent the Monetary Board and the Bangko Sentral in all dealings
with
other offices, agencies and instrumentalities of the Government and all
other persons or entities, public or private, whether domestic, foreign
or international;
(b)
sign contracts entered into by the Bangko Sentral, notes and securities
issued by the Bangko Sentral, all reports, balance sheets, profit and
loss
statements, correspondence and other documents of the Bangko Sentral.
The
signature
of
the Governor may be in facsimile whenever appropriate;
(c)
represent the Bangko Sentral, either personally or through counsel,
including
private counsel, as may be authorized by the Monetary Board, in any
legal
proceedings, action or specialized legal studies; and
(d)
delegate his power to represent the Bangko Sentral, as provided in
subsections
(a), (b) and (c) of this section, to other officers upon his own
responsibility: Provided, however, That in order to preserve
the integrity and
the
prestige of his office, the Governor of the Bangko Sentral may choose
not
to participate in preliminary discussions with any multilateral banking
or financial institution on any negotiations for the Government within
or outside the Philippines. During the negotiations, he may
instead
be represented by a permanent negotiator.
Section
19. Authority of the Governor in Emergencies. — In case
of
emergencies where time is sufficient to call a meeting of the Monetary
Board, the Governor of the Bangko Sentral, with the concurrence of two
(2) other members of the Monetary Board, may decide any matter or take
any action within the authority of the Board.
The
Governor shall submit a report to the President and Congress within
seventy-two
(72) hours after the action has been taken. chan
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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
IVOPERATIONS
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 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.chan
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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.chan
robles virtual law library
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;chan
robles virtual law library
(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
VREPORTS
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
VIPROFITS,
LOSSES, AND SPECIAL ACCOUNTS
Section
42. Fiscal Year. — The fiscal year of the Bangko Sentral shall
begin
on January first and end on December thirty-first of each year.
Section
43. Computation of Profits and Losses. — Within the first
thirty
(30) days following the end of each year, the Bangko Sentral shall
determine
its net profits or losses. In the calculation of net profits, the
Bangko
Sentral shall make adequate allowance or establish adequate reserves
for
bad and doubtful accounts.
Section
44. Distribution of Net Profits. — Within the first sixty (60)
days
following the end of each fiscal year, the Monetary Board shall
determine
and carry out the distribution of the net profits, in accordance with
the
following rule:
Fifty
percent (50%) of the net profits shall be carried to surplus and the
remaining
fifty percent (50%) shall revert back to the National Treasury, except
as otherwise provided in the transitory provisions of this Act.
Section
45. Revaluation Profits and Losses. — Profits or losses
arising
from any revaluation of the Bangko Sentral's net assets or liabilities
in gold or foreign currencies with respect to the Philippine peso shall
not be included in the computation of the annual profits and losses of
the Bangko Sentral. Any profits or losses arising in this manner shall
be offset by any amounts which, as a consequence of such revaluations,
are owed by the Philippines to any international or regional
intergovernmental
financial institution of which the Philippines is a member or are owed
by these institutions to the Philippines. Any remaining profit or loss
shall be carried in a special frozen account which shall be named
"Revaluation
of International Reserve" and the net balance of which shall appear
either
among the liabilities or among the assets of the Bangko Sentral,
depending
on whether the revaluations have produced net profits or net losses.
The
Revaluation of International Reserve account shall be neither credited
nor debited for any purposes other than those specifically authorized
in
this section.
Section
46. Suspense Accounts. — Sections 43 and 43-A of Republic Act
No.
265, as amended, creating the Monetary Adjustment Account (MAA) and the
Exchange Stabilization Adjustment Account (ESAA), respectively, are
hereby
repealed. Amounts outstanding as of the effective date of this Act
based
on these accounts shall continue to be for the account of the Central
Bank
and shall be governed by the transitory provisions of this Act.
The
Revaluation of International Reserve (RIR) account as of the effective
date of this Act of the Central Bank shall continue to be for the
account
of the same entity and shall be governed by the provisions of Section
44
of Republic Act No. 265, as amended, until otherwise provided for in
accordance
with the transitory provisions of this Act.
ARTICLE
VIITHE
AUDITOR
Section
47. Appointment and Personnel. — The Chairman of the Commission
on Audit shall act as the ex officio auditor of the Bangko Sentral and,
as such, he is empowered and authorized to appoint a representative who
shall be the auditor of the Bangko Sentral and, in accordance with law,
fix his salary, and to appoint and fix salaries and number of personnel
to assist said representative in his work. The salaries and other
emoluments
shall be paid by the Commission. The auditor of the Bangko Sentral and
personnel under him may be removed only by the Chairman of the
Commission.
The
representative of the Chairman of the Commission must be a certified
public
accountant with at least ten (10) years experience as such. No relative
of any member of the Monetary Board or the Chairman of the Commission
within
the sixth degree of consanguinity or affinity shall be appointed such
representative.
CHAPTER
II THE
BANGKO SENTRAL AND THE MEANS OF PAYMENT ARTICLE
ITHE
UNIT
OF MONETARY VALUE
Section
48. The Peso. — The unit of monetary value in the Philippines
is
the "peso," which is represented by the sign "P."
The
peso is divided into one hundred (100) equal parts called "centavos,"
which are represented by the sign "c."
ARTICLE
IIISSUE
OF
MEANS OF PAYMENT
A.
CURRENCY
Section
49. Definition of Currency. — The word "currency" is
hereby
defined, for purposes of this Act, as meaning all Philippine notes and
coins issued or circulating in accordance with the provisions of this
Act.
Section
50. Exclusive Issue Power. — The Bangko Sentral shall have the
sole
power and authority to issue currency, within the territory of the
Philippines.
No other person or entity, public or private, may put into circulation
notes, coins or any other object or document which, in the opinion of
the
Monetary Board, might circulate as currency, nor reproduce or imitate
the
facsimiles of Bangko Sentral notes without prior authority from the
Bangko
Sentral.
The
Monetary Board may issue such regulations as it may deem advisable in
order
to prevent the circulation of foreign currency or of currency
substitutes
as well as to prevent the reproduction of facsimiles of Bangko Sentral
notes.
The
Bangko Sentral shall have the authority to investigate, make arrests,
conduct
searches and seizures in accordance with law, for the purpose of
maintaining
the integrity of the currency.
Violation
of this provision or any regulation issued by the Bangko Sentral
pursuant
thereto shall constitute an offense punishable by imprisonment of not
less
than five (5) years but not more than ten (10) years. In case the
Revised
Penal Code provides for a greater penalty, then that penalty shall be
imposed.
Section
51. Liability for Notes and Coins. — Notes and coins issued by
the
Bangko Sentral shall be liabilities of the Bangko Sentral and may be
issued
only against, and in amounts not exceeding, the assets of the Bangko
Sentral.
Said notes and coins shall be a first and paramount lien on all assets
of the Bangko Sentral.
The
Bangko Sentral's holdings of its own notes and coins shall not be
considered
as part of its currency issue and, accordingly, shall not form part of
the assets or liabilities of the Bangko Sentral.
Section
52. Legal Tender Power. — All notes and coins issued by the
Bangko
Sentral shall be fully guaranteed by the Government of the Republic of
the Philippines and shall be legal tender in the Philippines for all
debts,
both public and private: Provided, however, That, unless
otherwise
fixed by the Monetary Board, coins shall be legal tender in amounts not
exceeding Fifty pesos (P50.00) for denominations of Twenty-five
centavos
and above, and in amounts not exceeding Twenty pesos (P20.00) for
denominations
of Ten centavos or less.
Section
53. Characteristics of the Currency. — The Monetary Board, with
the approval of the President of the Philippines, shall prescribe the
denominations,
dimensions, designs, inscriptions and other characteristics of notes
issued
by the Bangko Sentral: Provided, however, That said notes shall
state that they are liabilities of the Bangko Sentral and are fully
guaranteed
by the Government of the Republic of the Philippines. Said notes shall
bear the signatures, in facsimile, of the President of the Philippines
and of the Governor of the Bangko Sentral.
Similarly,
the Monetary Board, with the approval of the President of the
Philippines,
shall prescribe the weight, fineness, designs, denominations and other
characteristics of the coins issued by the Bangko Sentral. In the
minting
of coins, the Monetary Board shall give full consideration to the
availability
of suitable metals and to their relative prices and cost of minting.
Section
54. Printing of Notes and Mining of Coins. — The Monetary Board
shall prescribe the amounts of notes and coins to be printed and
minted,
respectively, and the conditions to which the printing of notes and the
minting of coins shall be subject. The Monetary Board shall have the
authority
to contract institutions, mints or firms for such operations.
All
expenses incurred in the printing of notes and the minting of coins
shall
be for the account of the Bangko Sentral.
Section
55. Interconvertibility of Currency. — The Bangko Sentral
shall exchange, on demand and without charge, Philippine currency of
any
denomination for Philippine notes and coins of any other denomination
requested.
If for any reason the Bangko Sentral is temporarily unable to provide
notes
or coins of the denominations requested, it shall meet its obligations
by delivering notes and coins of the denominations which most nearly
approximate
those requested.
Section
56. Replacement of Currency Unfit for Circulation. — The Bangko
Sentral shall withdraw from circulation and shall demonetize all notes
and coins which for any reason whatsoever are unfit for circulation and
shall replace them by adequate notes and coins: Provided, however, That
the Bangko Sentral shall not replace notes and coins the identification
of which is impossible, coins which show signs of filing, clipping or
perforation,
and notes which have lost more than two-fifths (2/5) of their surface
or
all of the signatures inscribed thereon. Notes and coins in such
mutilated
conditions shall be withdrawn from circulation and demonetized without
compensation to the bearer.
Section
57. Retirement of Old Notes and Coins. — The Bangko Sentral may
call in for replacement notes of any series or denomination which are
more
than five (5) years old and coins which are more than (10) years old.
Notes
and coins called in for replacement in accordance with this provision
shall
remain legal tender for a period of one (1) year from the date of call.
After this period, they shall cease to be legal tender but during the
following
year, or for such longer period as the Monetary Board may determine,
they
may be exchanged at par and without charge in the Bangko Sentral and by
agents duly authorized by the Bangko Sentral for this purpose. After
the
expiration of this latter period, the notes and coins which have not
been
exchanged shall cease to be a liability of the Bangko Sentral and shall
be demonetized. The Bangko Sentral shall also demonetize all notes and
coins which have been called in and replaced.
B.
DEMAND DEPOSITS
Section
58. Definition. — For purposes of this Act, the term "demand
deposits" means all those liabilities of the Bangko Sentral and of
other banks which are denominated in Philippine currency and are
subject
to payment in legal tender upon demand by the presentation of checks.
Section
59. Issue of Demand Deposits. — Only banks duly
authorized
to do so may accept funds or create liabilities payable in pesos upon
demand
by the presentation of checks, and such operations shall be subject to
the control of the Monetary Board in accordance with the powers granted
it with respect thereto under this Act.
Section
60. Legal Character. — Checks representing demand
deposits
do not have legal tender power and their acceptance in the payment of
debts,
both public and private, is at the option of the creditor: Provided,
however, That a check which has been cleared and credited to the
account
of the creditor shall be equivalent to a delivery to the creditor of
cash
in an amount equal to the amount credited to his account.
CHAPTER
III GUIDING
PRINCIPLES OF MONETARY ADMINISTRATIONBY
THE
BANGKO SENTRAL ARTICLE
I - DOMESTIC MONETARY STABILIZATION
Section
61. Guiding Principle. — The Monetary Board shall endeavor to
control
any expansion or contraction in monetary aggregates which is
prejudicial
to the attainment or maintenance of price stability.chan
robles
virtual law library
Section
62. Power to Define Terms. — For purposes of this article and
of
this Act, the Monetary Board shall formulate definitions of monetary
aggregates,
credit and prices and shall make public such definitions and any
changes
thereof.
Section
63. Action When Abnormal Movements Occur in the Monetary
Aggregates,
Credit, or Price Level. — Whenever abnormal movements in the
monetary
aggregates, in credit, or in prices endanger the stability of the
Philippine
economy or important sectors thereof, the Monetary Board shall:
(a)
take such remedial measures as are appropriate and within the powers
granted
to the Monetary Board and the Bangko Sentral under the provisions of
this
Act; and
(b)
submit to the President of the Philippines and the Congress, and make
public,
a detailed report which shall include, as a minimum, a description and
analysis of:
(1)
the causes of the rise or fall of the monetary aggregates, of credit or
of prices;
(2)
the extent to which the changes in the monetary aggregates, in credit,
or in prices have been reflected in changes in the level of domestic
output,
employment, wages and economic activity in general, and the nature and
significance of any such changes; and
(3
the measures which the Monetary Board has taken and the other monetary,
fiscal or administrative measures which it recommends to be adopted.
Whenever
the monetary aggregates, or the level of credit, increases or decreases
by more than fifteen percent (15%), or the cost of living index
increases
by more than ten percent (10%), in relation to the level existing at
the
end of the corresponding month of the preceding year, or even though
any
of these quantitative guidelines have not been reached when in its
judgment
the circumstances so warrant, the Monetary Board shall submit the
reports
mentioned in this section, and shall state therein whether, in the
opinion
of the Board, said changes in the monetary aggregates, credit or cost
of
living represent a threat to the stability of the Philippine economy or
of important sectors thereof.
The
Monetary Board shall continue to submit periodic reports to the
President
of the Philippines and to Congress until it considers that the
monetary,
credit or price disturbances have disappeared or have been adequately
controlled.
ARTICLE
IIINTERNATIONAL
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
IIOPERATIONS
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
IIIREGULATIONS
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
IVLOANS
TO
BANKING AND OTHER FINANCIAL INSTITUTIONS
A.
CREDIT POLICY
Section
81. Guiding Principles. — The rediscounts, discounts,
loans
and advances which the Bangko Sentral is authorized to extend to
banking
institutions under the provisions of the present article of this Act
shall
be used to influence the volume of credit consistent with the objective
of price stability.
B.
NORMAL CREDIT OPERATIONS
Section
82. Authorized Types of Operations. — Subject to the
principle
stated in the preceding section of this Act, the Bangko Sentral may
normally
and regularly carry on the following credit operations with banking
institutions
operating in the Philippines:
(a) Commercial
credits. — The Bangko Sentral may rediscount,
discount,
buy and sell bills, acceptances, promissory notes and other credit
instruments
with maturities of not more than one hundred eighty (180) days from the
date of their rediscount, discount or acquisition by the Bangko Sentral
and resulting from transactions related to:
(1)
the importation, exportation, purchase or sale of readily saleable
goods
and products, or their transportation within the Philippines; or
(2)
the storing of non-perishable goods and products which are duly insured
and deposited, under conditions assuring their preservation, in
authorized
bonded warehouses or in other places approved by the Monetary Board.
(b) Production
credits. — The Bangko Sentral may rediscount,
discount,
buy and sell bills, acceptances, promissory notes and other credit
instruments
having maturities of not more than three hundred sixty (360) days from
the date of their rediscount, discount or acquisition by the Bangko
Sentral
and resulting from transactions related to the production or processing
of agricultural, animal, mineral, or industrial products. Documents or
instruments acquired in accordance with this subsection shall be
secured
by a pledge of the respective crops or products: Provided, however,
That the crops or products need not be pledged to secure
the
documents
if the original loan granted by the Bangko Sentral is secured by a lien
or mortgage on real estate property seventy percent (70%) of the
appraised
value of which equals or exceeds the amount of the loan granted.
(c) Other
credits. — Special credit instruments not otherwise
rediscountable
under the immediately preceding subsections (a) and (b) may be eligible
for rediscounting in accordance with rules and regulations which the
Bangko
Sentral shall prescribe. Whenever necessary, the Bangko Sentral shall
provide
funds from non-inflationary sources: Provided, however, That
the
Monetary Board shall prescribe additional safeguards for disbursing
these
funds.
(d) Advances.
— The Bangko Sentral may grant advances against the
following
kinds of collaterals for fixed periods which, with the exception of
advances
against collateral named in clause (4) of the present subsection, shall
not exceed one hundred eighty (180) days:
(1)
gold coins or bullion;
(2)
securities representing obligations of the Bangko Sentral or of other
domestic
institutions of recognized solvency;
(3)
the credit instruments to which reference is made in subsection (a) of
this section;
(4)
the credit instruments to which reference is made in subsection (b) of
this section, for periods which shall not exceed three hundred sixty
(360)
days;
(5)
utilized portions of advances in current amount covered by regular
overdraft
agreements related to operations included under subsections (a) and (b)
of this section, and certified as to amount and liquidity by the
institution
soliciting the advance;
(6)
negotiable treasury bills, certificates of indebtedness, notes and
other
negotiable obligations of the Government maturing within three (3)
years
from the date of the advance; and
(7)
negotiable bonds issued by the Government of the Philippines, by
Philippine
provincial, city or municipal governments, or by any Philippine
Government
instrumentality, and having maturities of not more than ten (10) years
from the date of advance.
The
rediscounts, discounts, loans and advances made in accordance with the
provisions of this section may not be renewed or extended unless
extraordinary
circumstances fully justify such renewal or extension.
Advances
made against the collateral named in clauses (6) and (7) of subsection
(d) of this section may not exceed eighty percent (80%) of the current
market value of the collateral.
C.
SPECIAL CREDIT OPERATION
Section
83. Loans for Liquidity Purposes. — The Bangko Sentral may
extend
loans and advances to banking institutions for a period of not more
than
seven (7) days without any collateral for the purpose of providing
liquidity
to the banking system in times of need.
D.
EMERGENCY CREDIT OPERATION
Section
84. Emergency Loans and Advances. — In periods of national
and/or
local emergency or of imminent financial panic which directly threaten
monetary and banking stability, the Monetary Board may, by a vote of at
least five (5) of its members, authorize the Bangko Sentral to grant
extraordinary
loans or advances to banking institutions secured by assets as defined
hereunder: Provided, That while such loans or advances are
outstanding,
the debtor institution shall not, except upon prior authorization by
the
Monetary Board, expand the total volume of its loans or investments.
The
Monetary Board may, at its discretion, likewise authorize the Bangko
Sentral
to grant emergency loans or advances to banking institutions, even
during
normal periods, for the purpose of assisting a bank in a precarious
financial
condition or under serious financial pressures brought by unforeseen
events,
or events which, though foreseeable, could not be prevented by the bank
concerned: Provided, however, That the Monetary Board has
ascertained
that the bank is not insolvent and has the assets defined hereunder to
secure the advances: Provided, further, That a concurrent vote
of
at least five (5) members of the Monetary Board is obtained.
The
amount of any emergency loan or advance shall not exceed the sum of
fifty
percent (50%) of total deposits and deposit substitutes of the banking
institution and shall be disbursed in two (2) or more tranches. The
amount
of the first tranche shall be limited to twenty-five percent (25%) of
the
total deposit and deposit substitutes of the institution and shall be
secured
by government securities to the extent of their applicable loan values
and other unencumbered first class collaterals which the Monetary Board
may approve: Provided, That if as determined by the Monetary
Board,
the circumstances surrounding the emergency warrant a loan or advance
greater
than the amount provided hereinabove, the amount of the first tranche
may
exceed twenty-five percent (25%) of the bank's total deposit and
deposit
substitutes if the same is adequately secured by applicable loan values
of government securities and unencumbered first class collaterals
approved
by the Monetary Board, and the principal stockholders of the
institution
furnish an acceptable undertaking to indemnify and hold harmless from
suit
a conservator whose appointment the Monetary Board may find necessary
at
any time.
Prior
to the release of the first tranche, the banking institution shall
submit
to the Bangko Sentral a resolution of its board of directors
authorizing
the Bangko Sentral to evaluate other assets of the banking institution
certified by its external auditor to be good and available for
collateral
purposes should the release of the subsequent tranche be thereafter
applied
for.
The
Monetary Board may, by a vote of at least five (5) of its members,
authorize
the release of a subsequent tranche on condition that the principal
stockholders
of the institution:
(a)
furnish an acceptable undertaking to indemnify and hold harmless from
suit
a conservator whose appointment the Monetary Board may find necessary
at
any time; and
(b)
provide acceptable security which, in the judgment of the Monetary
Board,
would be adequate to supplement, where necessary, the assets tendered
by
the banking institution to collateralize the subsequent tranche.
In
connection with the exercise of these powers, the prohibitions in
Section
128 of this Act shall not apply insofar as it refers to acceptance as
collateral
of shares and their acquisition as a result of foreclosure proceedings,
including the exercise of voting rights pertaining to said shares: Provided,
however, That should the Bangko Sentral acquire any of the shares
it
has accepted as collateral as a result of foreclosure proceedings, the
Bangko Sentral shall dispose of said shares by public bidding within
one
(1) year from the date of consolidation of title by the Bangko Sentral.chan
robles
virtual law library
Whenever
a financial institution incurs an overdraft in its account with the
Bangko
Sentral, the same shall be eliminated within the period prescribed in
Section
102 of this Act.
E.
CREDIT TERMS
Section
85. Interest and Rediscount. — The Bangko Sentral shall collect
interest and other appropriate charges on all loans and advances it
extends,
the closure, receivership or liquidations of the debtor-institution
notwithstanding.
This provision shall apply prospectively.
The
Monetary Board shall fix the interest and rediscount rates to be
charged
by the Bangko Sentral on its credit operations in accordance with the
character
and term of the operation, but after due consideration has been given
to
the credit needs of the market, the composition of the Bangko Sentral's
portfolio, and the general requirements of the national monetary
policy.
Interest and rediscount rates shall be applied to all banks of the same
category uniformly and without discrimination.
Section
86. Endorsement. — The documents rediscounted, discounted,
bought
or accepted as collateral by the Bangko Sentral in the course of the
credit
operations authorized in this article shall bear the endorsement of the
institution from which they are received.
Section
87. Repayment of Credits. — Documents rediscounted, discounted
or
accepted as collateral by the Bangko Sentral must be withdrawn by the
borrowing
institution on the dates of their maturities, or upon liquidation of
the
obligations which they represent or to which they relate whenever said
obligations have been liquidated prior to their dates of maturity.
Banks
shall have the right at any time to withdraw any documents which they
have
presented to the Bangko Sentral as collateral, upon payment in full of
the corresponding debt to the Bangko Sentral, including interest
charges.
Section
88. Other requirements. — The Monetary Board may prescribe,
within
the general powers granted to it under this Act, additional conditions
which borrowing institutions must satisfy in order to have access to
the
credit of the Bangko Sentral. These conditions may refer to the rates
of
interest charged by the banks, to the purposes for which their loans in
general are destined, and to any other clearly definable aspect of the
credit policy of the bank.
Section
89. Provisional Advances to the National Government. — The
Bangko
Sentral may make direct provisional advances with or without interest
to
the National Government to finance expenditures authorized in its
annual
appropriation: Provided, That said advances shall be repaid
before
the end of three (3) months extendible by another three (3) months as
the
Monetary Board may allow following the date the National Government
received
such provisional advances and shall not, in their aggregate, exceed
twenty
percent (20%) of the average annual income of the borrower for the last
three (3) preceding fiscal years.
ARTICLE
VOPEN
MARKET
OPERATIONS FOR THE ACCOUNT OF THE BANGKO SENTRAL Section
90. Principles of Open Market Operations. — The open market
purchases
and sales of securities by the Bangko Sentral shall be made exclusively
in accordance with its primary objective of achieving price stability.
Section
91. Purchases and Sales of Government Securities. — In order
to
achieve the objectives of the national monetary policy, the Bangko
Sentral
may, in accordance with the principle stated in Section 90 of this Act
and with such rules and regulations as may be prescribed by the
Monetary
Board, buy and sell in the open market for its own account:
(a)
evidences of indebtedness issued directly by the Government of the
Philippines
or by its political subdivisions; and
(b)
evidences of indebtedness issued by government instrumentalities and
fully
guaranteed by the Government.
The
evidences of indebtedness acquired under the provisions of this section
must be freely negotiable and regularly serviced and must be available
to the general public through banking institutions and local government
treasuries in denominations of a thousand pesos or more.
Section
92. Issue and Negotiation of Bangko Sentral Obligations. — In
order
to provide the Bangko Sentral with effective instruments for open
market
operations, the Bangko Sentral may, subject to such rules and
regulations
as the Monetary Board may prescribe and in accordance with the
principles
stated in Section 90 of this Act, issue, place, buy and sell freely
negotiable
evidences of indebtedness of the Bangko Sentral: Provided, That
issuance of such certificates of indebtedness shall be made only in
cases
of extraordinary movement in price levels. Said evidences of
indebtedness
may be issued directly against the international reserve of the Bangko
Sentral or against the securities which it has acquired under the
provisions
of Section 91 of this Act, or may be issued without relation to
specific
types of assets of the Bangko Sentral.
The
Monetary Board shall determine the interest rates, maturities and other
characteristics of said obligations of the Bangko Sentral, and may, if
it deems it advisable, denominate the obligations in gold or foreign
currencies.
Subject
to the principles stated in Section 90 of this Act, the evidences of
indebtedness
of the Bangko Sentral to which this section refers may be acquired by
the
Bangko Sentral before their maturity, either through purchases in the
open
market or through redemptions at par and by lot if the Bangko Sentral
has
reserved the right to make such redemptions. The evidences of
indebtedness
acquired or redeemed by the Bangko Sentral shall not be included among
its assets, and shall be immediately retired and cancelled.
ARTICLE
VICOMPOSITION
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
VIIBANK
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.chan
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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
VIIISELECTIVE
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
IXCOORDINATION
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 ADVISOROF
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
IITHE
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.chan
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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
IIIFUNCTIONS
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
IPRIVILEGES
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
IIPROHIBITIONS
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
VIITRANSITORY
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.chan
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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.chan
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virtual law library
Section
133. Mandate to Organize. — The Bangko Sentral shall be
organized
by the Monetary Board without being subject to the provisions of
Republic
Act No. 7430, by adopting if it so desires, an entirely new staffing
pattern
on organizational structure to suit the operations of the Bangko
Sentral
under this Act. No preferential or priority right shall be given to or
enjoyed by any personnel for appointment to any position in the new
staffing
pattern, nor shall any personnel be considered as having prior or
vested
rights with respect to retention in the Bangko Sentral or in any
position
which may be created in the new staffing pattern, even if he should be
the incumbent of a similar position prior to organization. The
formulation
of the program of organization shall be completed within six (6) months
after the effectivity of this Act, and shall be fully implemented
within
a period of six (6) months thereafter. Personnel who may not be
retained
are deemed separated from the service.
Section
134. Separation Benefits. — Pursuant to Section 15 of this Act,
the Monetary Board is authorized to provide separation incentives, and
all those who shall retire or be separated from the service on account
of reorganization under the preceding section shall be entitled to such
incentives, which shall be in addition to all gratuities and benefits
to
which they may be entitled under existing laws.
Section
135. Repealing Clause. — Except as may be provided for in
Section
46 and 132 of this Act, Republic Act No. 265, as amended, the
provisions
of any other law, special charters, rule or regulation issued pursuant
to said Republic Act No. 265, as amended, or parts thereof, which may
be
inconsistent with the provisions of this Act are hereby
repealed.
Presidential Decree No. 1792 is likewise repealed.
Section
136. Transfer of Powers. — All powers, duties and functions
vested
by law in the Central Bank of the Philippines not inconsistent with the
provisions of this Act shall be deemed transferred to the Bangko
Sentral
ng Pilipinas. All references to the Central Bank of the Philippines in
any law or special charters shall be deemed to refer to the Bangko
Sentral.
Section
137. Separability Clause. — If any provision or section of this
Act or the application thereof to any person or circumstance is held
invalid,
the other provisions or sections of this Act, and the application of
such
provision or section to other persons or circumstances, shall not be
affected
thereby.
Section
138. Effectivity Clause. — This Act shall take effect fifteen
(15)
days following its publication in the Official Gazette or in two (2)
national
newspapers of general circulation.
Approved:
(Sgd.)
FIDEL V. RAMOSPresident
of the Philippines
This
Act which is a consolidation of House Bill No. 7037 and Senate Bill No.
1235 was finally passed by the House of Representatives and the Senate
on June 10, 1993.
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