REPUBLIC ACT NO.
8791 (f) Islamic banks as defined in Republic Act
AN ACT PROVIDING FOR THE
REGULATION OF THE ORGANIZATION
AND
OPERATIONS OF BANKS, QUASI-BANKS,
TRUST ENTITIES AND FOR OTHER
PURPOSES
CHAPTER I
TITLE AND CLASSIFICATION OF BANKS
SECTION 1. Title. — The short title of this
Act shall be "The General Banking Law of
2000." (1a)
SECTION 2. Declaration of Policy. — The
State recognizes the vital role of banks in
providing an environment conducive to the
sustained development of the national
economy and the fiduciary nature of
banking that requires high standards of
integrity and performance. In furtherance
thereof, the State shall promote and
maintain a stable and efficient banking and
financial system that is globally competitive,
dynamic and responsive to the demands of
a developing economy. (n)
SECTION 3. Definition and Classification
of Banks. —
3.1. "Banks" shall refer to entities engaged
in the lending of funds obtained in the form
of deposits.
(2a)
3.2. Banks shall be classified into:
(a) Universal banks;
(b) Commercial banks;
(c) Thrift banks, composed of: (i) Savings
and mortgage banks, (ii) Stock savings and
loan associations, and (iii) Private
development banks, as defined in Republic
Act No. 7906
(hereafter the "Thrift Banks Act");
(d) Rural banks, as defined in Republic Act
No. 7353 (hereafter the "Rural Banks Act");
(e) Cooperative banks, as defined in
Republic Act No. 6938 (hereafter the
"Cooperative Code");
banks, trust entities and other financial
No. 6848, otherwise known as the "Charter
of Al
Amanah Islamic Investment Bank of the
Philippines"; and
(g) Other classifications of banks as
determined by the Monetary Board of the
Bangko Sentral
ng Pilipinas. (6-Aa)
CHAPTER II
AUTHORITY OF THE BANGKO SENTRAL
SECTION 4. Supervisory Powers. — The
operations and activities of banks shall be
subject to supervision of the Bangko
Sentral. "Supervision" shall include the
following:
4.1. The issuance of rules of conduct or the
establishment of standards of operation for
uniform application to all institutions or
functions covered, taking into consideration
the distinctive character of the operations
of institutions and the substantive
similarities of specific functions to which
such rules, modes or standards are to be
applied;
4.2. The conduct of examination to
determine compliance with laws and
regulations if the circumstances so warrant
as determined by the Monetary Board;
4.3. Overseeing to ascertain that laws and
regulations are complied with;
4.4. Regular investigation which shall not be
oftener than once a year from the last date
of examination to determine whether an
institution is conducting its business on a
safe or sound basis: Provided, That the
deficiencies/irregularities found by or
discovered by an audit shall be immediately
addressed;
4.5. Inquiring into the solvency and liquidity
of the institution (2-D); or
4.6. Enforcing prompt corrective action. (n)
The Bangko Sentral shall also have
supervision over the operations of and
exercise regulatory powers over quasi-
banking functions without Bangko Sentral
institutions which under special laws are
subject to Bangko Sentral supervision. (2-
Ca)
For the purposes of this Act, "quasi-banks"
shall refer to entities engaged in the
borrowing of funds through the issuance,
endorsement or assignment with recourse
or acceptance of deposit substitutes as
defined in Section 95 of Republic Act No.
7653 (hereafter the "New Central Bank
Act") for purposes of relending or
purchasing of receivables and other
obligations. (2-Da)
SECTION 5. Policy Direction; Ratios,
Ceilings and Limitations. — The Bangko
Sentral shall provide policy direction in the
areas of money, banking and credit. (n)
For this purpose, the Monetary Board may
prescribe ratios, ceilings, limitations, or
other forms of regulation on the different
types of accounts and practices of banks
and quasi-banks which shall, to the extent
feasible, conform to internationally
accepted standards, including those of the
Bank for International Settlements (BIS).
The Monetary Board may exempt particular
categories of transactions from such ratios,
ceilings and limitations, but not limited to
exceptional cases or to enable a bank or
quasi-bank under rehabilitation or during a
merger or consolidation to continue in
business with safety to its creditors,
depositors and the general public. (2-Ca)
SECTION 6. Authority to Engage in
Banking and Quasi-Banking Functions.
— No person or entity shall engage in
banking operations or quasi-banking
functions without authority from the
Bangko Sentral: Provided, however, That an
entity authorized by the Bangko Sentral to
perform universal or commercial banking
functions shall likewise have the authority
to engage in quasi-banking functions.
The determination of whether a person or
entity is performing banking or quasi-
authority shall be decided by the Monetary
Board. To resolve such issue, the Monetary
Board may, through the appropriate
supervising and examining department of
the Bangko Sentral, examine, inspect or
investigate the books and records of such
person or entity. Upon issuance of this
authority, such person or entity may
commence to engage in banking operations
or quasi-banking functions and shall
continue to do so unless such authority is
sooner surrendered, revoked, suspended or
annulled by the Bangko Sentral in
accordance with this Act or other special
laws.
The department head and the examiners of
the appropriate supervising and examining
department are hereby authorized to
administer oaths to any such person,
employee, officer, or director of any such
entity and to compel the presentation or
production of such books, documents,
papers or records that are reasonably
necessary to ascertain the facts relative to
the true functions and operations of such
person or entity. Failure or refusal to
comply with the required presentation or
production of such books, documents,
papers or records within a reasonable time
shall subject the persons responsible
therefore to the penal sanctions provided
under the New Central Bank Act.
Persons or entities found to be performing
banking or quasi-banking functions without
authority from the Bangko Sentral shall be
subject to appropriate sanctions under the
New Central Bank Act and other applicable
laws. (4a)
SECTION 7. Examination by the Bangko
Sentral. — The Bangko Sentral shall, when
examining a bank, have the authority to
examine an enterprise which is wholly or
majority-owned or controlled by the bank.
(21-Ba)
CHAPTER III
ORGANIZATION, MANAGEMENT AND
ADMINISTRATION OF BANKS,
QUASI-BANKS AND TRUST ENTITIES
SECTION 8. Organization. — The
Monetary Board may authorize the
organization of a bank or quasi-bank
subject to the following conditions:
8.1. That the entity is a stock corporation
(7);
8.2. That its funds are obtained from the
public, which shall mean twenty (20) or
more persons
(2-Da); and
8.3. That the minimum capital requirements
prescribed by the Monetary Board for each
category of banks are satisfied. (n)
No new commercial bank shall be
established within three (3) years from the
effectivity of this Act. In the exercise of the
authority granted herein, the Monetary
Board shall take into consideration their
capability in terms of their financial
resources and technical expertise and
integrity. The bank licensing process shall
incorporate an assessment of the bank's
ownership structure, directors and senior
management, its operating plan and
internal controls as well as its projected
financial condition and capital base.
SECTION 9. Issuance of Stocks. — The
Monetary Board may prescribe rules and
regulations on the types of stock a bank
may issue, including the terms thereof and
rights appurtenant thereto to determine
compliance with laws and regulations
governing capital and equity structure of
banks: Provided, That banks shall issue par
value stocks only.
SECTION 10. Treasury Stocks. — No bank
shall purchase or acquire shares of its own
capital stock or accept its own shares as a
security for a loan, except when authorized
by the Monetary Board: Provided, That in
every case the stock so purchased or
acquired shall, within six (6) months from
the time of its purchase or acquisition, be
sold or disposed of at a public or private
sale. (24a)
SECTION 11. Foreign Stockholdings. —
Foreign individuals and non-bank
corporations may own or control up to forty
percent (40%) of the voting stock of a
domestic bank. This rule shall apply to
Filipinos and domestic non-bank
corporations. (12a; 12-Aa)
The percentage of foreign-owned voting
stocks in a bank shall be determined by the
citizenship of the individual stockholders in
that bank. The citizenship of the
corporation which is a stockholder in a
bank shall follow the citizenship of the
controlling stockholders of the corporation,
irrespective of the place of incorporation.
(n)
SECTION 12. Stockholdings of Family
Groups or Related Interests. —
Stockholdings of individuals related to each
other within the fourth degree of
consanguinity or affinity, legitimate or
common-law, shall be considered family
groups or related interests and must be
fully disclosed in all transactions by such an
individual with the bank. (12-Da)
SECTION 13. Corporate Stockholdings. —
Two or more corporations owned or
controlled by the same family group or
same group of persons shall be considered
related interests and must be fully disclosed
in all transactions by such corporations or
related groups of persons with the bank.
(12-Ba)
SECTION 14. Certificate of Authority to
Register. — The Securities and Exchange
Commission shall not register the articles of
incorporation of any bank, or any
amendment thereto, unless accompanied by
a certificate of authority issued by the
Monetary Board, under its seal. Such
certificate shall not be issued unless the
Monetary Board is satisfied from the
evidence submitted to it:
14.1 That all requirements of existing laws
and regulations to engage in the business
for which the applicant is proposed to be
incorporated have been complied with;
14.2. That the public interest and economic
conditions, both general and local, justify
the authorization; and
14.3. That the amount of capital, the
financing, organization, direction and
administration, as well as the integrity and
responsibility of the organizers and
administrators reasonably assure the
safety of deposits and the public interest.
(9) The Securities and Exchange
Commission shall not register the by-laws
of any bank, or any amendment thereto,
unless accompanied by a certificate of
authority from the Bangko Sentral. (10)
SECTION 15. Board of Directors. — The
provisions of the Corporation Code to the
contrary notwithstanding, there shall be at
least five (5), and a maximum of fifteen (15)
members of the board of directors of bank,
two (2) of whom shall be independent
directors. An "independent director" shall
mean a person other than an officer or
employee of the bank, its subsidiaries or
affiliates or related interests. (n)
Non-Filipino citizens may become members
of the board of directors of a bank to the
extent of the foreign participation in the
equity of said bank. (Sec. 7, RA 7721)
The meetings of the board of directors may
be conducted through modern technologies
such as, but not limited to, teleconferencing
and video-conferencing. (n)
SECTION 16. Fit and Proper Rule. — To
maintain the quality of bank management
and afford better protection to depositors
and the public in general, the Monetary
Board shall prescribe, pass upon and review
the qualifications and disqualifications of
individuals elected or appointed bank
directors or officers and disqualify those
found unfit.
After due notice to the board of directors of
the bank, the Monetary Board may
disqualify, suspend or remove any bank
director or officer who commits or omits an
act which render him unfit for the position.
In determining whether an individual is fit
and proper to hold the position of a director
or officer of a bank, regard shall be given to
his integrity, experience, education,
training, and competence. (9-Aa)
SECTION 17. Directors of Merged or
Consolidated Banks. — In the case of a
bank merger or consolidation, the number
of directors shall not exceed twenty-one
(21). (13a)
SECTION 18. Compensation and Other
Benefits of Directors and Officers. — To
protect the funds of depositors and
creditors, the Monetary Board may regulate
the payment by the bank to its directors and
officers of compensation, allowance, fees,
bonuses, stock options, profit sharing and
fringe benefits only in exceptional cases and
when the circumstances warrant, such as
but not limited to the following:
18.1. When a bank is under comptrollership
or conservatorship; or
18.2. When a bank is found by the Monetary
Board to be conducting business in an
unsafe or unsound manner; or
18.3. When a bank is found by the Monetary
Board to be in an unsatisfactory financial
condition.
(n)
SECTION 19. Prohibition on Public
Officials. — Except as otherwise provided
in the Rural Banks Act, no appointive or
elective public official, whether full-time or
part-time shall at the same time serve as
officer of any private bank, save in cases
where such service is incident to financial
assistance provided by the government or a
government-owned or controlled
corporation to the bank or unless otherwise
provided under existing laws. (13)
SECTION 20. Bank Branches. — Universal
or commercial banks may open branches or
other offices within or outside the
Philippines upon prior approval of the
Bangko Sentral.
Branching by all other banks shall be
governed by pertinent laws.
A bank may, subject to prior approval of the
Monetary Board, use any or all of its
branches as outlets for the presentation
and/or sale of the financial products of its
allied undertaking or of its investment
house units.
A bank authorized to establish branches or
other offices shall be responsible for all
business conducted in such branches and
offices to the same extent and in the same
manner as though such business had all
been conducted in the head office. A bank
and its branches and offices shall be treated
as one unit. (6-B; 27)
SECTION 21. Banking Days and Hours. —
Unless otherwise authorized by the Bangko
Sentral in the interest of the banking public,
all banks including their branches and
offices shall transact business on all
working days for at least six (6) hours a day.
In addition, banks or any of their branches
or offices may open for business on
Saturdays, Sundays or holidays for at least
three (3) hours a day: Provided, That banks
which opt to open on days other than
working days shall report to the Bangko
Sentral the additional days during which
they or their branches or offices shall
transact business.
For purposes of this Section, working days
shall mean Mondays to Fridays, except if
such days are holidays. (6-Ca)
SECTION 22. Strikes and Lockouts. — The
banking industry is hereby declared as
indispensable to the national interest and,
notwithstanding the provisions of any law
to the contrary, any strike or lockout
involving banks, if unsettled after seven (7)
calendar days shall be reported by the
Bangko Sentral to the Secretary of Labor
who may assume jurisdiction over the
dispute or decide it or certify the same to
the National Labor Relations Commission
for compulsory arbitration. However, the
President of the Philippines may at any time
intervene and assume jurisdiction over such
labor dispute in order to settle or terminate
the same. (6-E)
CHAPTER IV
DEPOSITS, LOANS AND OTHER
OPERATIONS
ARTICLE I - OPERATIONS OF UNIVERSAL
BANKS
SECTION 23. Powers of a Universal Bank.
— A universal bank shall have the authority
to exercise, in addition to the powers
authorized for a commercial bank in Section
29, the powers of an investment house as
provided in existing laws and the power to
invest in non-allied enterprises as provided
in this Act. (21-B)
SECTION 24. Equity Investments of a
Universal Bank. — A universal bank may,
subject to the conditions stated in the
succeeding paragraph, invest in the equities
of allied and non-allied enterprises as may
be determined by the Monetary Board.
Allied enterprises may either be financial or
non-financial. Except as the Monetary Board
may otherwise prescribe:
24.1. The total investment in equities of
allied and non-allied enterprises shall not
exceed fifty percent (50%) of the net worth
of the bank; and
24.2. The equity investment in any one
enterprise, whether allied or non-allied,
shall not exceed twenty-five percent (25%)
of the net worth of the bank.
As used in this Act, "net worth" shall mean
the total of the unimpaired paid-in capital
including paid-in surplus, retained earnings
and undivided profit, net of valuation
reserves and other adjustments as may be
required by the Bangko Sentral.
The acquisition of such equity or equities is
subject to the prior approval of the
Monetary Board which shall promulgate
appropriate guidelines to govern such
investments. (21-Ba)
SECTION 25. Equity Investments of a
Universal Bank in Financial Allied
Enterprises. — A universal bank can own
up to one hundred percent (100%) of the
equity in a thrift bank, a rural bank or a
financial allied enterprise.
A publicly-listed universal or commercial
bank may own up to one hundred percent
(100%) of the voting stock of only one other
universal or commercial bank. (21-B; 21-
Ca)
SECTION 26. Equity Investments of a
Universal Bank in Non-Financial Allied
Enterprises.
— A universal bank may own up to one
hundred percent (100%) of the equity in a
non-financial allied
enterprise. (21-Ba)
SECTION 27. Equity Investments of a
Universal Bank in Non-Allied
Enterprises. — The
equity investment of a universal bank, or of
its wholly or majority-owned subsidiaries,
in a single nonallied enterprise shall not
exceed thirty-five percent (35%) of the total
equity in that enterprise nor shall it exceed
thirty-five percent (35%) of the voting stock
in that enterprise. (21-B)
SECTION 28. Equity Investments in
Quasi-Banks. — To promote competitive
conditions in financial markets, the
Monetary Board may further limit to forty
percent (40%) equity investments of
universal banks in quasi-banks. This rule
shall also apply in the case of commercial
banks. (12-E)
ARTICLE II - OPERATIONS OF
COMMERCIAL BANKS
SECTION 29. Powers of a Commercial
Bank. — A commercial bank shall have, in
addition to the general powers incident to
corporations, all such powers as may be
necessary to carry on the business of
commercial banking, such as accepting
drafts and issuing letters of credit;
discounting and negotiating promissory
notes, drafts, bills of exchange, and other
evidences of debt; accepting or creating
demand deposits; receiving other types of
deposits and deposit substitutes; buying
and selling foreign exchange and gold or
silver bullion; acquiring marketable bonds
and other debt securities; and extending
credit, subject to such rules as the Monetary
Board may promulgate. These rules may
include the determination of bonds and
other debt securities eligible for investment,
the maturities and aggregate amount of
such investment. (21a)
SECTION 30. Equity Investments of a
Commercial Bank. — A commercial bank
may, subject
to the conditions stated in the succeeding
paragraphs, invest only in the equities of
allied enterprises as
may be determined by the Monetary Board.
Allied enterprises may either be financial or
non-financial.
Except as the Monetary Board may
otherwise prescribe:
30.1. The total investment in equities of
allied enterprises shall not exceed thirty-
five percent
(35%) of the net worth of the bank; and
30.2. The equity investment in any one
enterprise shall not exceed twenty-five
percent (25%) of the
net worth of the bank.
The acquisition of such equity or equities is
subject to the prior approval of the
Monetary Board
which shall promulgate appropriate
guidelines to govern such investments.
(21A-a; 21-Ca)
SECTION 31. Equity Investments of a
Commercial Bank in Financial Allied
Enterprises. —
A commercial bank may own up to one
hundred percent (100%) of the equity of a
thrift bank or a rural bank.
Where the equity investment of a
commercial bank is in other financial allied
enterprises, including another commercial
bank, such investment shall remain a
minority holding in that enterprise.
(21-Aa; 21-Ca)
SECTION 32. Equity Investments of a
Commercial Bank in Non-Financial Allied
Enterprises. — A commercial bank may
own up to one hundred percent (100%) of
the equity in a nonfinancial allied
enterprise. (21-Aa)
ARTICLE III - PROVISIONS APPLICABLE
TO ALL BANKS, QUASI-BANKS, AND
TRUST ENTITIES
SECTION 33. Acceptance of Demand
Deposits. — A bank other than a universal
or commercial bank cannot accept or create
demand deposits except upon prior
approval of, and subject to such conditions
and rules as may be prescribed by the
Monetary Board. (72-Aa)
SECTION 34. Risk-Based Capital. — The
Monetary Board shall prescribe the
minimum ratio which the net worth of a
bank must bear to its total risk assets which
may include contingent accounts.
For purposes of this Section, the Monetary
Board may require that such ratio be
determined on the basis of the net worth
and risk assets of a bank and its
subsidiaries, financial or otherwise, as well
as prescribe the composition and the
manner of determining the net worth and
total risk assets of banks and
their subsidiaries: Provided, That in the
exercise of this authority, the Monetary
Board shall, to the extent feasible, conform
to internationally accepted standards,
including those of the Bank for
International
Settlements (BIS), relating to risk-based
capital requirements: Provided, further,
That it may alter or suspend compliance
with such ratio whenever necessary for a
maximum period of one (1) year: Provided,
finally, That such ratio shall be applied
uniformly to banks of the same category.
In case a bank does not comply with the
prescribed minimum ratio, the Monetary
Board may limit or prohibit the distribution
of net profits by such bank and may require
that part or all of the net profits be used to
increase the capital accounts of the bank
until the minimum requirement has been
met. The Monetary Board may, furthermore,
restrict or prohibit the acquisition of major
assets and the making of new investments
by the bank, with the exception of
purchases of readily marketable evidences
of indebtedness of the Republic of the
Philippines and of the Bangko Sentral and
any other evidences of indebtedness or
obligations the servicing and repayment of
which are fully guaranteed by the Republic
of the Philippines, until the minimum
required capital ratio has been restored.
In case of a bank merger or consolidation,
or when a bank is under rehabilitation
under a program approved by the Bangko
Sentral, the Monetary Board may
temporarily relieve the surviving bank,
consolidated bank, or constituent bank or
corporations under rehabilitation from full
compliance with the required capital ratio
under such conditions as it may prescribe.
Before the effectivity of the rules which the
Monetary Board is authorized to prescribe
under this provision, Section 22 of the
General Banking Act, as amended, Section 9
of the Thrift Banks Act, and all pertinent
rules issued pursuant thereto, shall
continue to be in force. (22a)
SECTION 35. Limit on Loans, Credit
Accommodations and Guarantees. —
35.1. Except as the Monetary Board may
otherwise prescribe for reasons of national
interest, the total amount of loans, credit
accommodations and guarantees as may be
defined by the Monetary Board that may be
extended by a bank to any person,
partnership, association, corporation or
other entity shall at no time exceed twenty
percent (20%) of the net worth of such
bank. The basis for determining compliance
with single-borrower limit is the total credit
commitment of the bank to the borrower.
35.2. Unless the Monetary Board prescribes
otherwise, the total amount of loans, credit
accommodations and guarantees prescribed
in the preceding paragraph may be
increased by an additional ten percent
(10%) of the net worth of such bank
provided the additional liabilities of any
borrower are adequately secured by trust
receipts, shipping documents, warehouse
receipts or other similar documents
transferring or securing title covering
readily marketable, non-perishable goods
which must be fully covered by insurance.
35.3. The above prescribed ceilings shall
include: (a) the direct liability of the maker
or acceptor of paper discounted with or
sold to such bank and the liability of a
general indorser, drawer or guarantor who
obtains a loan or other credit
accommodation from or discounts paper
with or sells papers to such bank; (b) in the
case of an individual who owns or controls
a majority
interest in a corporation, partnership,
association or any other entity, the
liabilities of said
entities to such bank; (c) in the case of a
corporation, all liabilities to such bank of all
subsidiaries in which such corporation
owns or controls a majority interest; and
(d) in the
case of a partnership, association or other
entity, the liabilities of the members thereof
to
such bank.
35.4. Even if a parent corporation,
partnership, association, entity or an
individual who owns or
controls a majority interest in such entities
has no liability to the bank, the Monetary
Board
may prescribe the combination of the
liabilities of subsidiary corporations or
members of the
partnership, association, entity or such
individual under certain circumstances,
including but
not limited to any of the following
situations: (a) the parent corporation,
partnership,
association, entity or individual guarantees
the repayment of the liabilities; (b) the
liabilities
were incurred for the accommodation of the
parent corporation or another subsidiary or
of
the partnership or association or entity or
such individual; or (c) the subsidiaries
though
separate entities operate merely as
departments or divisions of a single entity.
35.5. For purposes of this Section, loans,
other credit accommodations and
guarantees shall
exclude:
(a) loans and other credit accommodations
secured by obligations of the Bangko
Sentral or
of the Philippine Government; (b) loans and
other credit accommodations fully
guaranteed by the
government as to the payment of principal
and interest; (c) loans and other credit
accommodations
covered by assignment of deposits
maintained in the lending bank and held in
the Philippines; (d)
loans, credit accommodations and
acceptances under letters of credit to the
extent covered by
margin deposits; and (e) other loans or
credit accommodations which the Monetary
Board may from
time to time, specify as non-risk items.
35.6. Loans and other credit
accommodations, deposits maintained with,
and usual guarantees by
a bank to any other bank or non-bank
entity, whether locally or abroad, shall be
subject to
the limits as herein prescribed.
35.7. Certain types of contingent accounts of
borrowers may be included among those
subject to
these prescribed limits as may be
determined by the Monetary Board. (23a)
SECTION 36. Restriction on Bank
Exposure to Directors, Officers,
Stockholders and Their
Related Interests. — No director or officer
of any bank shall, directly or indirectly, for
himself or as the
representative or agent of others, borrow
from such bank nor shall he become a
guarantor, indorser or
surety for loans from such bank to others,
or in any manner be an obligor or incur any
contractual liability
to the bank except with the written
approval of the majority of all the directors
of the bank, excluding the
director concerned: Provided, That such
written approval shall not be required for
loans, other credit accommodations and
advances granted to officers under a fringe
benefit plan approved by the Bangko
Sentral. The required approval shall be
entered upon the records of the bank and a
copy of such entry shall be transmitted
forthwith to the appropriate supervising
and examining department of the Bangko
Sentral.
Dealings of a bank with any of its directors,
officers or stockholders and their related
interests
shall be upon terms not less favorable to the
bank than those offered to others.
After due notice to the board of directors of
the bank, the office of any bank director or
officer who
violates the provisions of this Section may
be declared vacant and the director or
officer shall be subject
to the penal provisions of the New Central
Bank Act.
The Monetary Board may regulate the
amount of loans, credit accommodations
and guarantees
that may be extended, directly or indirectly,
by a bank to its directors, officers,
stockholders and their
related interests, as well as investments of
such bank in enterprises owned or
controlled by said directors,
officers, stockholders and their related
interests. However, the outstanding loans,
credit accommodations
and guarantees which a bank may extend to
each of its stockholders, directors, or
officers and their
related interests, shall be limited to an
amount equivalent to their respective
unencumbered deposits and
book value of their paid-in capital
contribution in the bank: Provided,
however, That loans, credit
accommodations and guarantees secured
by assets considered as non-risk by the
Monetary Board shall
be excluded from such limit: Provided,
further, That loans, credit accommodations
and advances to
officers in the form of fringe benefits
granted in accordance with rules as may be
prescribed by the
Monetary Board shall not be subject to the
individual limit.
The Monetary Board shall define the term
"related interests."
The limit on loans, credit accommodations
and guarantees prescribed herein shall not
apply to
loans, credit accommodations and
guarantees extended by a cooperative bank
to its cooperative
shareholders. (83a)
SECTION 37. Loans and Other Credit
Accommodations Against Real Estate. —
Except as the Monetary Board may
otherwise prescribe, loans and other credit
accommodations against real estate shall
not exceed seventy-five percent (75%) of
the appraised value of the respective real
estate security, plus sixty percent (60%) of
the appraised value of the insured
improvements, and such loans may be made
to the owner of the real estate or to his
assignees. (78a)
SECTION 38. Loans and Other Credit
Accommodations on Security of Chattels
and
Intangible Properties. — Except as the
Monetary Board may otherwise prescribe,
loans and other credit accommodations on
security of chattels and intangible
properties, such as, but not limited to,
patents, trademarks, trade names, and
copyrights shall not exceed seventy-five
percent (75%) of the appraised value of the
security, and such loans and other credit
accommodations may be made to the title-
holder of the chattels and intangible
properties or his assignees. (78a)
SECTION 39. Grant and Purpose of Loans
and Other Credit Accommodations. — A
bank
shall grant loans and other credit
accommodations only in amounts and for
the periods of time essential
for the effective completion of the
operations to be financed. Such grant of
loans and other credit
accommodations shall be consistent with
safe and sound banking practices. (75a)
The purpose of all loans and other credit
accommodations shall be stated in the
application and
in the contract between the bank and the
borrower. If the bank finds that the
proceeds of the loan or other
credit accommodation have been employed,
without its approval, for purposes other
than those agreed
upon with the bank, it shall have the right to
terminate the loan or other credit
accommodation and
demand immediate repayment of the
obligation. (77)
SECTION 40. Requirement for Grant of
Loans or Other Credit Accommodations.
— Before
granting a loan or other credit
accommodation, a bank must ascertain that
the debtor is capable of
fulfilling his commitments to the bank.
Toward this end, a bank may demand from
its credit applicants a statement of their
assets and
liabilities and of their income and
expenditures and such information as may
be prescribed by law or by
rules and regulations of Monetary Board to
enable the bank to properly evaluate the
credit application
which includes the corresponding financial
statements submitted for taxation purposes
to the Bureau of
Internal Revenue. Should such statements
prove to be false or incorrect in any
material detail, the bank
may terminate any loan or other credit
accommodation granted on the basis of said
statements and shall
have the right to demand immediate
repayment or liquidation of the obligation.
In formulating rules and regulations under
this Section, the Monetary Board shall
recognize the
peculiar characteristics of microfinancing,
such as cash flow-based lending to the basic
sectors that are
not covered by traditional collateral. (76a)
SECTION 41. Unsecured Loans or Other
Credit Accommodations. — The Monetary
Board is
hereby authorized to issue such regulations SECTION 44. Amortization on Loans and SECTION 46. Development Assistance by the petitioner of a bond in an amount
as it may deem necessary with respect to Other Credit Accommodations. — The Incentives. — The Bangko Sentral shall fixed by the court conditioned that he will
unsecured loans or amortization schedule of bank loans and provide pay all the damages
other credit accommodations that may be other credit accommodations shall be incentives to banks which, without which the bank may suffer by the enjoining
granted by banks. (n) adapted to the nature of government guarantee, extend loans to or the restraint of the foreclosure
SECTION 42. Other Security the operations to be financed. finance educational proceeding.
Requirements for Bank Credits. — The In case of loans and other credit institutions, cooperatives, hospitals and Notwithstanding Act 3135, juridical persons
Monetary Board may, accommodations with maturities of more other medical services, socialized or low- whose property is being sold pursuant to an
by regulation, prescribe further security than five (5) years, cost housing, local extrajudicial foreclosure, shall have the
requirements to which the various types of provisions must be made for periodic government units and other activities with right to redeem the property in accordance
bank credits shall be amortization payments, but such payments social content. (n) with this provision
subject, and, in accordance with the must be made at least SECTION 47. Foreclosure of Real Estate until, but not after, the registration of the
authority granted to it in Section 106 of the annually: Provided, however, That when the Mortgage. — In the event of foreclosure, certificate of foreclosure sale with the
New Central Bank Act, borrowed funds are to be used for purposes whether applicable Register of
the Board may by regulation, reduce the which do not judicially or extrajudicially, of any mortgage Deeds which in no case shall be more than
maximum ratios established in Sections 36 initially produce revenues adequate for on real estate which is security for any loan three (3) months after foreclosure,
and 37 of this Act, or, regular amortization payments therefrom, or other credit whichever is earlier.
in special cases, increase the maximum the bank may permit the accommodation granted, the mortgagor or Owners of property that has been sold in a
ratios established therein. (78) initial amortization payment to be deferred debtor whose real property has been sold foreclosure sale prior to the effectivity of
SECTION 43. Authority to Prescribe until such time as said revenues are for the full or partial this Act shall retain
Terms and Conditions of Loans and sufficient for such payment of his obligation shall have the their redemption rights until their
Other Credit purpose, but in no case shall the initial right within one year after the sale of the expiration. (78a)
Accommodations. — The Monetary Board amortization date be later than five (5) real estate, to redeem SECTION 48. Renewal or Extension of
may, similarly, in accordance with the years from the date on the property by paying the amount due Loans and Other Credit
authority granted to it which the loan or other credit under the mortgage deed, with interest Accommodations. — The
in Section 106 of the New Central Bank Act, accommodation is granted. (79a) thereon at the rate Monetary Board may, by regulation,
and taking into account the requirements of In case of loans and other credit specified in the mortgage, and all the costs prescribe the conditions and limitations
the economy for accommodations to microfinance sectors, and expenses incurred by the bank or under which a bank may
the effective utilization of long-term funds, the schedule of loan institution from the sale grant extensions or renewals of its loans
prescribe the maturities, as well as related amortization shall take into consideration and custody of said property less the and other credit accommodations. (81)
terms and the projected cash flow of the borrower and income derived therefrom. However, the SECTION 49. Provisions for Losses and
conditions for various types of bank loans adopt this into the purchaser at the auction Write-Offs. — All debts due to any bank on
and other credit accommodations. Any terms and conditions formulated by banks. sale concerned whether in a judicial or which
change by the Board in (n) extrajudicial foreclosure shall have the right interest is past due and unpaid for such
the maximum maturities shall apply only to SECTION 45. Prepayment of Loans and to enter upon and take period as may be determined by the
loans and other credit accommodations Other Credit Accommodations. — A possession of such property immediately Monetary Board, unless the
made after the date of borrower may after the date of the confirmation of the same are well-secured and in the process of
such action. at any time prior to the agreed maturity auction sale and collection shall be considered bad debts
The Monetary Board shall regulate the date prepay, in whole or in part, the unpaid administer the same in accordance with within the meaning
interest imposed on microfinance balance of any bank law. Any petition in court to enjoin or of this Section.
borrowers by lending loan and other credit accommodation, restrain the conduct of The Monetary Board may fix, by regulation
investors and similar lenders, such as, but subject to such reasonable terms and foreclosure proceedings instituted pursuant or by order in a specific case, the amount of
not limited to, the unconscionable rates of conditions as may be agreed to this provision shall be given due course reserves
interest collected on upon between the bank and its borrower. only upon the filing for bad debts or doubtful accounts or other
salary loans and similar credit (80a) contingencies.
accommodations. (78a)
Writing off of loans, other credit
accommodations, advances and other assets
shall be subject to
regulations issued by the Monetary Board.
(84a)
SECTION 50. Major Investments. — For
the purpose of enhancing bank supervision,
the
Monetary Board shall establish criteria for
reviewing major acquisitions or
investments by a bank including
corporate affiliations or structures that may
expose the bank to undue risks or in any
way hinder effective
supervision.
SECTION 51. Ceiling on Investments in
Certain Assets. — Any bank may acquire
real estate
as shall be necessary for its own use in the
conduct of its business: Provided, however,
That the total
investment in such real estate and
improvements thereof, including bank
equipment, shall not exceed fifty
percent (50%) of combined capital
accounts: Provided, further, That the equity
investment of a bank in
another corporation engaged primarily in
real estate shall be considered as part of the
bank's total
investment in real estate, unless otherwise
provided by the Monetary Board. (25a)
SECTION 52. Acquisition of Real Estate
by Way of Satisfaction of Claims. —
Notwithstanding the limitations of the
preceding Section, a bank may acquire, hold
or convey real
property under the following
circumstances:
52.1. Such as shall be mortgaged to it in
good faith by way of security for debts;
52.2. Such as shall be conveyed to it in
satisfaction of debts previously contracted
in the course of
its dealings; or
52.3. Such as it shall purchase at sales under
judgments, decrees, mortgages, or trust
deeds held
by it and such as it shall purchase to secure
debts due it.
Any real property acquired or held under
the circumstances enumerated in the above
paragraph
shall be disposed of by the bank within a
period of five (5) years or as may be
prescribed by the
Monetary Board: Provided, however, That
the bank may, after said period, continue to
hold the property
for its own use, subject to the limitations of
the preceding Section. (25a)
SECTION 53. Other Banking Services. —
In addition to the operations specifically
authorized in this Act, a bank may perform
the following services:
53.1. Receive in custody funds, documents
and valuable objects;
53.2. Act as financial agent and buy and sell,
by order of and for the account of their
customers, shares, evidences of
indebtedness and all types of securities;
53.3. Make collections and payments for the
account of others and perform such other
services for their customers as are not
incompatible with banking business;
53.4. Upon prior approval of the Monetary
Board, act as managing agent, adviser,
consultant or
administrator of investment
management/advisory/consultancy
accounts; and
53.5. Rent out safety deposit boxes.
The bank shall perform the services
permitted under Subsections 53.1, 53.2,
53.3 and 53.4 as depositary or as an agent.
Accordingly, it shall keep the funds,
securities and other effects which it
receives duly separate from the bank's own
assets and liabilities.
The Monetary Board may regulate the
operations authorized by this Section in
order to ensure that such operations do not
endanger the interests of the depositors and
other creditors of the bank.
In case a bank or quasi-bank notifies the
Bangko Sentral or publicly announces a
bank holiday, or
in any manner suspends the payment of its
deposit liabilities continuously for more
than thirty (30) days,
the Monetary Board may summarily and
without need for prior hearing close such
banking institution and
place it under receivership of the Philippine
Deposit Insurance Corporation. (72a)
SECTION 54. Prohibition to Act as
Insurer. — A bank shall not directly engage
in insurance
business as the insurer. (73)
SECTION 55. Prohibited Transactions. —
55.1. No director, officer, employee, or
agent of any bank shall —
(a) Make false entries in any bank report or
statement or participate in any fraudulent
transaction, thereby affecting the financial
interest of, or causing damage to, the bank
or
any person;
(b) Without order of a court of competent
jurisdiction, disclose to any unauthorized
person
any information relative to the funds or
properties in the custody of the bank
belonging to
private individuals, corporations, or any
other entity: Provided, That with respect to
bank
deposits, the provisions of existing laws
shall prevail;
(c) Accept gifts, fees or commissions or any
other form of remuneration in connection
with
the approval of a loan or other credit
accommodation from said bank;
(d) Overvalue or aid in overvaluing any
security for the purpose of influencing in
any way the
actions of the bank or any bank; or
(e) Outsource inherent banking functions.
55.2. No borrower of a bank shall —
(a) Fraudulently overvalue property offered
as security for a loan or other credit
accommodation from the bank;
(b) Furnish false or make misrepresentation
or suppression of material facts for the
purpose
of obtaining, renewing, or increasing a loan
or other credit accommodation or
extending
the period thereof;
(c) Attempt to defraud the said bank in the
event of a court action to recover a loan or
other
credit accommodation; or
(d) Offer any director, officer, employee or
agent of a bank any gift, fee, commission, or
any
other form of compensation in order to
influence such persons into approving a
loan or
other credit accommodation application.
55.3. No examiner, officer or employee of
the Bangko Sentral or of any department,
bureau, office,
branch or agency of the Government that is
assigned to supervise, examine, assist or
render
technical assistance to any bank shall
commit any of the acts enumerated in this
Section or
aid in the commission of the same. (87-Aa)
The making of false reports or
misrepresentation or suppression of
material facts by personnel of
the Bangko Sentral ng Pilipinas shall
constitute fraud and shall be subject to the
administrative and
criminal sanctions provided under the New
Central Bank Act.
55.4. Consistent with the provisions of
Republic Act No. 1405, otherwise known as
the Banks
Secrecy Law, no bank shall employ casual or
nonregular personnel or too lengthy
probationary personnel in the conduct of its
business involving bank deposits.
SECTION 56. Conducting Business in an
Unsafe or Unsound Manner. — In
determining
whether a particular act or omission, which
is not otherwise prohibited by any law, rule
or regulation
affecting banks, quasi-banks or trust
entities, may be deemed as conducting
business in an unsafe or
unsound manner for purposes of this
Section, the Monetary Board shall consider
any of the following
circumstances:
56.1. The act or omission has resulted or
may result in material loss or damage, or
abnormal risk
or danger to the safety, stability, liquidity or
solvency of the institution;
56.2. The act or omission has resulted or
may result in material loss or damage or
abnormal risk
to the institution's depositors, creditors,
investors, stockholders or to the Bangko
Sentral or
to the public in general;
56.3. The act or omission has caused any
undue injury, or has given any unwarranted
benefits,
advantage or preference to the bank or any
party in the discharge by the director or
officer of
his duties and responsibilities through
manifest partiality, evident bad faith or
gross
inexcusable negligence; or
56.4. The act or omission involves entering
into any contract or transaction manifestly
and grossly disadvantageous to the bank,
quasi-bank or trust entity, whether or not
the director or officer
profited or will profit thereby.
Whenever a bank, quasi-bank or trust entity
persists in conducting its business in an
unsafe o runsound manner, the Monetary
Board may, without prejudice to the
administrative sanctions provided in
Section 37 of the New Central Bank Act,
take action under Section 30 of the same Act
and/or immediately exclude the erring
bank from clearing, the provisions of law to
the contrary notwithstanding. (n)
SECTION 57. Prohibition on Dividend
Declaration. — No bank or quasi-bank
shall declare
dividends greater than its accumulated net
profits then on hand, deducting therefrom
its losses and bad
debts. Neither shall the bank nor quasi-bank
declare dividends, if at the time of
declaration:
57.1 Its clearing account with the Bangko
Sentral is overdrawn; or
57.2 It is deficient in the required liquidity
floor for government deposits for five (5) or
more
consecutive days; or
57.3 It does not comply with the liquidity
standards/ratios prescribed by the Bangko
Sentral for
purposes of determining funds available for
dividend declaration; or
57.4 It has committed a major violation as
may be determined by the Bangko Sentral.
(84a)
SECTION 58. Independent Auditor. — The
Monetary Board may require a bank, quasi-
bank or
trust entity to engage the services of an
independent auditor to be chosen by the
bank, quasi-bank or
trust entity concerned from a list of certified
public accountants acceptable to the
Monetary Board. The
term of the engagement shall be as
prescribed by the Monetary Board which
may either be on a
continuing basis where the auditor shall act
as resident examiner, or on the basis of
special
engagements, but in any case, the
independent auditor shall be responsible to
the bank's, quasi-bank's or
trust entity's board of directors. A copy of
the report shall be furnished to the
Monetary Board. The
Monetary Board may also direct the board
of directors of a bank, quasi-bank, trusty
entity and/or the
individual members thereof, to conduct,
either personally or by a committee created
by the board, an
annual balance sheet audit of the bank,
quasi-bank or trust entity to review the
internal audit and control
system of the bank, quasi-bank or trust
entity and to submit a report of such audit.
(6-Da)
SECTION 59. Authority to Regulate
Electronic Transactions. — The Bangko
Sentral shall
have full authority to regulate the use of
electronic devices, such as computers, and
processes for
recording, storing and transmitting
information or data in connection with the
operations of a bank, quasibank
or trust entity, including the delivery of
services and products to customers by such
entity. (n)
SECTION 60. Financial Statements. —
Every bank, quasi-bank or trust entity shall
submit to
the appropriate supervising and examining
department of the Bangko Sentral financial
statements in such
form and frequency as may be prescribed
by the Bangko Sentral. Such statements,
which shall be as of a
specific date designated by the Bangko
Sentral, shall show the actual financial
condition of the institution
submitting the statement, and of its
branches, offices, subsidiaries and affiliates,
including the results of
its operations, and shall contain such
information as may be required in Bangko
Sentral regulations. (n)
SECTION 61. Publication of Financial
Statements. — Every bank, quasi-bank or
trust entity,
shall publish a statement of its financial
condition, including those of its subsidiaries
and affiliates, in such
terms understandable to the layman and in
such frequency as may be prescribed by the
Bangko Sentral,
in English or Filipino, at least once every
quarter in a newspaper of general
circulation in the city or
province where the principal office, in the
case of a domestic institution, or the
principal branch or office in
the case of a foreign bank, is located, but if
no newspaper is published in the same
province, then in a
newspaper published in Metro Manila or in
the nearest city or province.
The Bangko Sentral may by regulation
prescribe the newspaper where the
statements prescribed
herein shall be published.
The Monetary Board may allow the posting
of the financial statements of a bank, quasi-
bank or
trust entity in public places it may
determine, in lieu of the publication
required in the preceding
paragraph, when warranted by the
circumstances.
Additionally, banks shall make available to
the public in such form and manner as the
Bangko
Sentral may prescribe the complete set of
its audited financial statements as well as
such other relevant
information including those on enterprises
majority-owned or controlled by the bank,
that will inform the
public of the true financial condition of a
bank as of any given time.
In periods of national and/or local
emergency or of imminent panic which
directly threaten
monetary and banking stability, the
Monetary Board, by a vote of at least five (5)
of its members, in
special cases and upon application of the
bank, quasi-bank or trust entity, may allow
such bank, quasibank
or trust entity to defer for a stated period of
time the publication of the statement of
financial
condition required herein. (n)
SECTION 62. Publication of Capital Stock.
— A bank, quasi-bank or trust entity
incorporated
under the laws of the Philippines shall not
publish the amount of its authorized or
subscribed capital stock
without indicating at the same time and
with equal prominence, the amount of its
capital actually paid up.
No branch of any foreign bank doing
business in the Philippines shall in any way
announce the
amount of the capital and surplus of its
head office, or of the bank in its entirety
without indicating at the
same time and with equal prominence the
amount of the capital, if any, definitely
assigned to such
branch. In case no capital has been
definitely assigned to such branch, such fact
shall be stated in, and
shall form part of the publication. (82)
SECTION 63. Settlement of Disputes. —
The provisions of any law to the contrary
notwithstanding, the Bangko Sentral shall
be consulted by other government agencies
or instrumentalities
in actions or proceedings initiated by or
brought before them involving
controversies in banks, quasibanks
or trust entities arising out of and involving
relations between and among their
directors, officers or
stockholders, as well as disputes between
any or all of them and the bank, quasi-bank
or trust entity of
which they are directors, officers or
stockholders. (n)
SECTION 64. Unauthorized
Advertisement or Business
Representation. — No person,
association, or corporation unless duly
authorized to engage in the business of a
bank, quasi-bank, trust
entity, or savings and loan association as
defined in this Act, or other banking laws,
shall advertise or hold
itself out as being engaged in the business of
such bank, quasi-bank, trust entity, or
association, or use in
connection with its business title, the word
or words "bank", "banking", "banker",
"quasi-bank", "quasibanking",
"quasi-banker", "savings and loan
association", "trust corporation", "trust
company" or words of
similar import or transact in any manner
the business of any such bank, corporation
or association. (6)
SECTION 65. Service Fees. — The Bangko
Sentral may charge equitable rates,
commissions
or fees, as may be prescribed by the
Monetary Board for supervision,
examination and other services
which it renders under this Act. (n)
SECTION 66. Penalty for Violation of this
Act. — Unless otherwise herein provided,
the
violation of any of the provisions of this Act
shall be subject to Sections 34, 35, 36 and
37 of the New
Central Bank Act. If the offender is a
director or officer of a bank, quasi-bank or
trust entity, the Monetary
Board may also suspend or remove such
director or officer. If the violation is
committed by a corporation,
such corporation may be dissolved by quo
warranto proceedings instituted by the
Solicitor General. (87)
CHAPTER V
PLACEMENT UNDER CONSERVATORSHIP
SECTION 67. Conservatorship. — The
grounds and procedures for placing a bank
under conservatorship, as well as, the
powers and duties of the conservator
appointed for the bank shall be governed by
the provisions of Section 29 and the last two
paragraphs of Section 30 of the New Central
Bank Act: Provided, That this Section shall
also apply to conservatorship proceedings
of quasi-banks. (n)
CHAPTER VI
CESSATION OF BANKING BUSINESS
SECTION 68. Voluntary Liquidation. — In
case of the voluntary liquidation of any
bank
organized under the laws of the Philippines,
or of any branch or office in the Philippines
of a foreign bank,
written notice of such liquidation shall be
sent to the Monetary Board before such
liquidation is
undertaken, and the Monetary Board shall
have the right to intervene and take such
steps as may be
necessary to protect the interests of
creditors. (86)
SECTION 69. Receivership and
Involuntary Liquidation. — The grounds
and procedures for placing a bank under
receivership or liquidation, as well as the
powers and duties of the receiver or
liquidator appointed for the bank shall be
governed by the provisions of Sections 30,
31, 32, and 33 of the New Central Bank Act:
Provided, That the petitioner or plaintiff
files with the clerk or judge of the court in
which the action is pending a bond,
executed in favor of the Bangko Sentral, in
an amount to be fixed by the court. This
Section shall also apply to the extent
possible to the receivership and liquidation
proceedings of quasi-banks. (n)
SECTION 70. Penalty for Transactions
After a Bank Becomes Insolvent. — Any
director or officer of any bank declared
insolvent or placed under receivership by
the Monetary Board who refuses to turn
over the bank's records and assets to the
designated receivers, or who tampers with
banks records, or who appropriates for
himself or another party or destroys or
causes the misappropriation and
destruction of the bank's assets, or who
receives or permits or causes to be received
in said bank any deposit, collection of loans
and/or receivables, or who pays out or
permits or causes to be paid out any funds
of said bank, or who transfers or permits or
causes to be transferred any securities or
property of said bank shall be subject to the
penal provisions of the New Central Bank
Act. (85a)
CHAPTER VII
LAWS GOVERNING OTHER TYPES OF
BANKS
SECTION 71. Other Banking Laws. — The
organization, ownership and capital
requirements,
powers, supervision and general conduct of
business of thrift banks, rural banks and
cooperative banks
shall be governed by the provisions of the
Thrift Banks Act, the Rural Banks Act, and
the Cooperative
Code, respectively.
The organization, ownership and capital
requirements, powers, supervision and
general conduct
of business of Islamic banks shall be
governed by special laws.
The provisions of this Act, however, insofar
as they are not in conflict with the
provisions of the
Thrift Banks Act, the Rural Banks Act, and
the Cooperative Code shall likewise apply to
thrift banks, rural
banks, and cooperative banks, respectively.
However, for purposes of prescribing the
minimum ratio
which the net worth of a thrift bank must
bear to its total risk assets, the provisions of
Section 33 of this
Act shall govern. (n)
CHAPTER VIII
FOREIGN BANKS
SECTION 72. Transacting Business in the
Philippines. — The entry of foreign banks
in the
Philippines through the establishment of
branches shall be governed by the
provisions of the Foreign
Banks Liberalization Act.
The conduct of offshore banking business in
the Philippines shall be governed by the
provisions
of the Presidential Decree No. 1034,
otherwise known as the "Offshore Banking
System Decree." (14a)
SECTION 73. Acquisition of Voting Stock
in a Domestic Bank. — Within seven (7)
years
from the effectivity of this Act and subject to
guidelines issued pursuant to the Foreign
Banks
Liberalization Act, the Monetary Board may
authorize a foreign bank to acquire up to
one hundred
percent (100%) of the voting stock of only
one (1) bank organized under the laws of
the Republic of the
Philippines.
Within the same period, the Monetary
Board may authorize any foreign bank,
which prior to the
effectivity of this Act availed itself of the
privilege to acquire up to sixty percent
(60%) of the voting stock
of a bank under the Foreign Banks
Liberalization Act and the Thrift Banks Act,
to further acquire voting
shares of such bank to the extent necessary
for it to own one hundred percent (100%)
of the voting stock
thereof.
In the exercise of this authority, the
Monetary Board shall adopt measures as
may be necessary
to ensure that at all times the control of
seventy percent (70%) of the resources or
assets of the entire
banking system is held by banks which are
at least majority-owned by Filipinos.
Any right, privilege or incentive granted to a
foreign bank under this Section shall be
equally
enjoyed by and extended under the same
conditions to banks organized under the
laws of the Republic of
the Philippines. (Secs. 2 and 3, RA 7721)
SECTION 74. Local Branches of Foreign
Banks. — In the case of a foreign bank
which has
more than one (1) branch in the Philippines,
all such branches shall be treated as one (1)
unit for the
purpose of this Act, and all references to the
Philippine branches of foreign banks shall
be held to refer to
such units. (68)
SECTION 75. Head Office Guarantee. — In
order to provide effective protection of the
interests
of the depositors and other creditors of
Philippine branches of a foreign bank, the
head office of such
branches shall fully guarantee the prompt
payment of all liabilities of its Philippine
branch. (69)
Residents and citizens of the Philippines
who are creditors of a branch in the
Philippines of a
foreign bank shall have preferential rights
to the assets of such branch in accordance
with existing laws.
(19)
SECTION 76. Summons and Legal
Process. — Summons and legal process
served upon the
Philippine agent or head of any foreign bank
designated to accept service thereof shall
give jurisdiction to
the courts over such bank, and service of
notices on such agent or head shall be as
binding upon the
bank which he represents as if made upon
the bank itself.
Should the authority of such agent or head
to accept service of summons and legal
processes for
the bank or notice to it be revoked, or
should such agent or head become mentally
incompetent or
otherwise unable to accept service while
exercising such authority, it shall be the
duty of the bank to
name and designate promptly another
agent or head upon whom service of
summons and processes in
legal proceedings against the bank and of
notices affecting the bank may be made, and
to file with the
Securities and Exchange Commission a duly
authenticated nomination of such agent.
In the absence of the agent or head or
should there be no person authorized by the
bank upon
whom service of summons, processes and
all legal notices may be made, service of
summons,
processes and legal notices may be made
upon the Bangko Sentral Deputy Governor
In-Charge of the
supervising and examining departments
and such service shall be as effective as if
made upon the bank
or its duly authorized agent or head.
In case of service for the bank upon the
Bangko Sentral Deputy Governor In-Charge
of the
supervising and examining departments,
the said Deputy Governor shall register and
transmit by mail to
the president or the secretary of the bank at
its head or principal office a copy, duly
certified by him, of the
summons, process, or notice. The sending of
such copy of the summons, process, or
notice shall be a
necessary part of the services and shall
complete the service. The registry receipt of
mailing shall be
prima facie evidence of the transmission of
the summons, process or notice. All costs
necessarily
incurred by the said Deputy Governor for
the making and mailing and sending of a
copy of the summons,
process, or notice to the president or the
secretary of the bank at its head or principal
office shall be paid
in advance by the party at whose instance
the service is made. (17)
SECTION 77. Laws Applicable. — In all
matters not specifically covered by special
provisions
applicable only to a foreign bank or its
branches and other offices in the
Philippines, any foreign bank
licensed to do business in the Philippines
shall be bound by the provisions of this Act,
all other laws, rules
and regulations applicable to banks
organized under the laws of the Philippines
of the same class, except
those that provide for the creation,
formation, organization or dissolution of
corporations or for the fixing of
the relations, liabilities, responsibilities, or
duties of stockholders, members, directors
or officers of
corporations to each other or to the
corporation. (18)
SECTION 78. Revocation of License of a
Foreign Bank. — The Monetary Board may
revoke
the license to transact business in the
Philippines of any foreign bank, if it finds
that the foreign bank is
insolvent or in imminent danger thereof or
that its continuance in business will involve
probable loss to
those transacting business with it. After the
revocation of its license, it shall be unlawful
for any such
foreign bank to transact business in the
Philippines unless its license is renewed or
reissued. After the
revocation of such license, the Bangko
Sentral shall take the necessary action to
protect the creditors of
such foreign bank and the public. The
provisions of the New Central Bank Act on
sanctions and penalties
shall likewise be applicable. (16)
CHAPTER IX
TRUST OPERATIONS
SECTION 79. Authority to Engage in Trust
Business. — Only a stock corporation or a
person duly authorized by the Monetary
Board to engage in trust business shall act
as a trustee or administer any trust or hold
property in trust or on deposit for the use,
benefit, or behoof of others. For purposes of
this Act, such a corporation shall be referred
to as a trust entity. (56a; 57a)
SECTION 80. Conduct of Trust Business.
— A trust entity shall administer the funds
or property under its custody with the
diligence that a prudent man would
exercise in the conduct of an enterprise of a
like character and with similar aims.
No trust entity shall, for the account of the
trustor or the beneficiary of the trust,
purchase or acquire property from, or sell,
transfer, assign or lend money or property
to, or purchase debt instruments of, any of
the departments, directors, officers,
stockholders, or employees of the trust
entity, relatives within the first degree of
consanguinity or affinity, or the related
interests, of such directors, officers and
stockholders, unless the transaction is
specifically authorized by the trustor and
the relationship of the trustee and the other
party involved in the transaction is fully
disclosed to the trustor or beneficiary of the
trust prior to the transaction.
The Monetary Board shall promulgate such
rules and regulations as may be necessary
to prevent circumvention of this prohibition
or the evasion of the responsibility herein
imposed on a trust entity. (56)
SECTION 81. Registration of Articles of
Incorporation and By-Laws of a Trust
Entity. —
The Securities and Exchange Commission
shall not register the articles of
incorporation and by-laws or any
amendment thereto, of any trust entity,
unless accompanied by a certificate of
authority issued by the
Bangko Sentral. (n)
SECTION 82. Minimum Capitalization. —
A trust entity, before it can engage in trust
or other fiduciary business, shall comply
with the minimum paid-in capital
requirement which will be determined by
the Monetary Board. (n)
SECTION 83. Powers of a Trust Entity. —
A trust entity, in addition to the general
powers incident to corporations, shall have
the power to:
83.1. Act as trustee on any mortgage or
bond issued by any municipality,
corporation, or any body politic and to
accept and execute any trust consistent
with law;
83.2. Act under the order or appointment of
any court as guardian, receiver, trustee, or
depositary of the estate of any minor or
other incompetent person, and as receiver
and depositary of any moneys paid into
court by parties to any legal proceedings
and of property of any kind which may be
brought under the jurisdiction of the court;
83.3. Act as the executor of any will when it
is named the executor thereof;
83.4. Act as administrator of the estate of
any deceased person, with the will annexed,
or as administrator of the estate of any
deceased person when there is no will;
83.5. Accept and execute any trust for the
holding, management, and administration of
any estate, real or personal, and the rents,
issues and profits thereof; and
83.6. Establish and manage common trust
funds, subject to such rules and regulations
as may be prescribed by the Monetary
Board. (58)
SECTION 84. Deposit for the Faithful
Performance of Trust Duties. — Before
transacting trust business, every trust entity
shall deposit with the Bangko Sentral as
security for the faithful performance of its
trust duties, cash or securities approved by
the Monetary Board in an amount equal to
not less than Five hundred thousand pesos
(P500,000.00) or such higher amount as
may be fixed by the Monetary Board:
Provided, however, That the Monetary
Board shall require every trust entity to
increase the amount of its cash or securities
on deposit with the Bangko Sentral
whenever in its judgment such increase is
necessary by reason of the trust business of
such entity: Provided, further, That the
paid-in capital and surplus of such entity
must be at least equal to the amount
required to be deposited with the Bangko
Sentral in accordance with the provisions of
this paragraph. Should the capital and
surplus fall below said amount, the
Monetary Board shall have the same
authority as that granted to it under the
provisions of the fifth paragraph of Section
34 of this Act.
A trust entity so long as it shall continue to
be solvent and comply with laws or
regulations shall have the right to collect
the interest earned on such securities
deposited with the Bangko Sentral and,
from time to time, with the approval of the
Bangko Sentral, to exchange the securities
for others. If the trust entity fails to comply
with any law or regulation, the Bangko
Sentral shall retain such interest on the
securities deposited with it for the benefit
of rightful claimants. All claims arising out
of the trust business of a trust entity shall
have priority over all other claims as
regards the cash or securities deposited as
above provided. The Monetary Board may
not permit the cash or securities deposited
in accordance with the provisions of this
Section to be reduced below the prescribed
minimum amount until the depositing
entity shall discontinue its trust business
and shall satisfy the Monetary Board that it
has complied with all its obligations in
connection with such business. (65a)
SECTION 85. Bond of Certain Persons for
the Faithful Performance of Duties. —
Before an executor, administrator, guardian,
trustee, receiver or depositary appointed by
the court enters upon the execution of his
duties, he shall, upon order of the court, file
a bond in such sum, as the court may direct.
Upon the application of any executor,
administrator, guardian, trustee, receiver,
depositary or any other person in interest,
the court may, after notice and hearing,
order that the subject matter of the trust or
any part thereof be deposited with a trust
entity. Upon presentation of proof to the
court that the subject matter of the trust has
been deposited with a trust entity, the court
may order that the bond given by such
persons for the faithful performance of their
duties be reduced to such sums as it may
deem proper:
Provided, however, That the reduced bond
shall be sufficient to secure adequately the
proper administration and care of any
property remaining under the control of
such persons and the proper accounting for
such property.
Property deposited with any trust entity in
conformity with this Section shall be held
by such entity under the orders and
direction of the court. (59)
SECTION 86. Exemption of Trust Entity
from Bond Requirement. — No bond or
other security shall be required by the court
from a trust entity for the faithful
performance of its duties as court appointed
trustee, executor, administrator, guardian,
receiver, or depositary. However, the court
may, upon proper application with it
showing special cause therefor, require the
trust entity to post a bond or other security
for the protection of funds or property
confided to such entity. (59)
SECTION 87. Separation of Trust
Business from General Business. — The
trust business and all funds, properties or
securities received by any trust entity as
executor, administrator, guardian, trustee,
receiver, or depositary shall be kept
separate and distinct from the general
business including all other funds,
properties, and assets of such trust entity.
The accounts of all such funds, properties,
or securities shall likewise be kept separate
and distinct from the accounts of the
general business of the
trust entity. (61)
SECTION 88. Investment Limitations of a
Trust Entity. — Unless otherwise directed
by the instrument creating the trust, the
lending and investment of funds and other
assets acquired by a trust entity as executor,
administrator, guardian, trustee, receiver or
depositary of the estate of any minor or
other incompetent person shall be limited
to loans or investments as may be
prescribed by law, the Monetary Board or
any court of competent jurisdiction. (63a)
SECTION 89. Real Estate Acquired by a
Trust Entity. — Unless otherwise
specifically directed by the trustor or the
nature of the trust, real estate acquired by a
trust entity in whatever manner and for
whatever purpose, shall likewise be
governed by the relevant provisions of
Section 52 of this Act. (64a)
SECTION 90. Investment of Non-Trust
Funds. — The investment of funds other
than trust funds of a trust entity which is a
bank, financing company or an investment
house shall be governed by the relevant
provisions of this Act and other applicable
laws. (64)
SECTION 91. Sanctions and Penalties. —
A trust entity or any of its officers and
directors found to have willfully violated
any pertinent provisions of this Act, shall be
subject to the sanctions and penalties
provided under Section 66 of this Act as
well as Sections 36 and 37 of the New
Central Bank
Act. (63)
SECTION 92. Exemption of Trust Assets
from Claims. — No assets held by a trust
entity in
its capacity as trustee shall be subject to any
claims other than those of the parties
interested in the
specific trusts. (65)
SECTION 93. Establishment of Branches
of a Trust Entity. — The ordinary business
of a trust entity shall be transacted at the
place of business specified in its articles of
incorporation. Such trust entity may, with
prior approval of the Monetary Board,
establish branches in the Philippines, and
the said entity shall be responsible for all
business conducted in such branches to the
same extent and in the same manner as
though such business had all been
conducted in the head office.
For the purpose of this Act, the trust entity
and its branches shall be treated as one
unit. (67)
CHAPTER X
FINAL PROVISIONS
SECTION 94. Phase Out of Bangko Sentral
Powers Over Building and Loan
Associations.
— Within a period of three (3) years from
the effectivity of this Act, the Bangko Sentral
shall phase out
and transfer its supervising and regulatory
powers over building and loan associations
to the Home
Insurance and Guaranty Corporation which
shall assume the same. Until otherwise
provided by law,
building and loan associations shall
continue to be governed by Sections 39 to
55, Chapter VI of the
General Banking Act, as amended, including
such rules and regulations issued pursuant
thereto. Upon
assumption by the Home Insurance and
Guaranty Corporation of supervising and
regulatory powers over
building and loan associations, all
references in Sections 39 to 55 of the
General Banking Act, as
amended, to the Bangko Sentral and the
Monetary Board shall be deemed to refer to
the Home
Insurance and Guaranty Corporation and its
board of directors, respectively. (n)
SECTION 95. Repealing Clause. — Except
as may be provided for in Sections 34 and
94 of this
Act, the General Banking Act, as amended,
and the provisions of any other law, special
charters, rule or
regulation issued pursuant to said General
Banking Act, as amended, or parts thereof,
which may be
inconsistent with the provisions of this Act
are hereby repealed. The provisions of
paragraph 8, Section 8,
Republic Act No. 3591, as amended by
Republic Act No. 7400, are likewise
repealed. (90a)
SECTION 96. Separability Clause. — If any
provision or section of this Act or the
application
thereof to any person or circumstance is
held invalid, the other provisions or
sections of this Act, and the
application of such provision or section to
other persons or circumstances, shall not be
affected thereby.
(n)
SECTION 97. Effectivity Clause. — This
Act shall take effect fifteen (15) days
following its
publication in the Official Gazette or in two
(2) national newspapers of general
circulation. (91)
Approved,
MANUEL B. VILLAR JR. FRANKLIN M.
DRILON
Speaker of the House President of the Senate
of Representatives
This Act, which is a consolidation of Senate
Bill No. 1519 and House Bill No. 6814, was
finally
passed by the Senate and the House of
Representatives on April 12, 2000.
ROBERTO P. NAZARENO OSCAR G. YABES
Secretary General Secretary of the Senate
House of Representatives
Approved:
JOSEPH EJERCITO ESTRADA
Approved: May 23, 2000
REPUBLIC ACT No. 7653 supervision over the operations of banks
THE NEW CENTRAL BANK ACT and exercise such regulatory powers as
CHAPTER I — ESTABLISHMENT AND provided in this Act and other pertinent
ORGANIZATION OF THE BANGKO laws over the operations of finance
SENTRAL NG PILIPINAS companies and non-bank financial
ARTICLE I institutions performing quasi-banking
CREATION, RESPONSIBILITIES AND functions, hereafter referred to as quasi-
CORPORATE POWERS OF THE BANGKO banks, and institutions performing similar
SENTRAL functions.
Section 1. Declaration of Policy. - The The primary objective of the Bangko
State shall maintain a central monetary Sentral is to maintain price stability
authority that shall function and operate as conducive to a balanced and sustainable
an independent and accountable body growth of the economy. It shall also
corporate in the discharge of its mandated promote and maintain monetary stability
responsibilities concerning money, banking and the convertibility of the peso.
and credit. In line with this policy, and Section 4. Place of Business. - The
considering its unique functions and Bangko Sentral shall have its principal place
responsibilities, the central monetary of business in Metro Manila, but may
authority established under this Act, while maintain branches, agencies and
being a government-owned corporation, correspondents in such other places as the
shall enjoy fiscal and administrative proper conduct of its business may require.
autonomy. Section 5. Corporate Powers. - The
Section 2. Creation of the Bangko Bangko Sentral is hereby authorized to
Sentral. - There is hereby established an adopt, alter, and use a corporate seal which
independent central monetary authority, shall be judicially noticed; to enter into
which shall be a body corporate known as contracts; to lease or own real and personal
the Bangko Sentral ng Pilipinas, hereafter property, and to sell or otherwise dispose of
referred to as the Bangko Sentral. the same; to sue and be sued; and otherwise
The capital of the Bangko Sentral to do and perform any and all things that
shall be Fifty billion pesos may be necessary or proper to carry out the
(P50,000,000,000), to be fully subscribed by purposes of this Act.
the Government of the Republic, hereafter The Bangko Sentral may acquire and
referred to as the Government, Ten billion hold such assets and incur such liabilities in
pesos (P10,000,000,000) of which shall be connection with its operations authorized
fully paid for by the Government upon the by the provisions of this Act, or as are
effectivity of this Act and the balance to be essential to the proper conduct of such
paid for within a period of two (2) years operations.
from the effectivity of this Act in such The Bangko Sentral may compromise,
manner and form as the Government, condone or release, in whole or in part, any
through the Secretary of Finance and the claim of or settled liability to the Bangko
Secretary of Budget and Management, may Sentral, regardless of the amount involved,
thereafter determine. under such terms and conditions as may be
Section 3. Responsibility and Primary prescribed by the Monetary Board to
Objective. - The Bangko Sentral shall protect the interests of the Bangko Sentral.
provide policy directions in the areas of ARTICLE II
money, banking, and credit. It shall have THE MONETARY BOARD
Section 6. Composition of the
Monetary Board. - The powers and functions
of the Bangko Sentral shall be exercised by
the Bangko Sentral Monetary Board,
hereafter referred to as the Monetary
Board, composed of seven (7) members
appointed by the President of the
Philippines for a term of six (6) years.
The seven (7) members are:
(a) the Governor of the Bangko
Sentral, who shall be the Chairman
of the Monetary Board. The
Governor of the Bangko Sentral
shall be head of a department and
his appointment shall be subject to
confirmation by the Commission on
Appointments. Whenever the
Governor is unable to attend a
meeting of the Board, he shall
designate a Deputy Governor to act
as his alternate: Provided, That in
such event, the Monetary Board
shall designate one of its members
as acting Chairman;
(b) a member of the Cabinet to be
designated by the President of the
Philippines. Whenever the
designated Cabinet Member is
unable to attend a meeting of the
Board, he shall designate an
Undersecretary in his Department
to attend as his alternate; and
(c) five (5) members who shall
come from the private sector, all of
whom shall serve full-time:
Provided, however, That of the
members first appointed under the
provisions of this subsection, three
(3) shall have a term of six (6)
years, and the other two (2), three
(3) years.
No member of the Monetary Board
may be reappointed more than once.
Section 7. Vacancies. - Any vacancy in
the Monetary Board created by the death,
resignation, or removal of any member shall
be filled by the appointment of a new
member to complete the unexpired period
of the term of the member concerned.
Section 8. Qualifications. - The
members of the Monetary Board must be
natural-born citizens of the Philippines, at
least thirty-five (35) years of age, with the
exception of the Governor who should at
least be forty (40) years of age, of good
moral character, of unquestionable
integrity, of known probity and patriotism,
and with recognized competence in social
and economic disciplines.
Section 9. Disqualifications. - In
addition to the disqualifications imposed by
Republic Act No. 6713, a member of the
Monetary Board is disqualified from being a
director, officer, employee, consultant,
lawyer, agent or stockholder of any bank,
quasi-bank or any other institution which is
subject to supervision or examination by
the Bangko Sentral, in which case such
member shall resign from, and divest
himself of any and all interests in such
institution before assumption of office as
member of the Monetary Board.
The members of the Monetary Board
coming from the private sector shall not
hold any other public office or public
employment during their tenure.
No person shall be a member of the
Monetary Board if he has been connected
directly with any multilateral banking or
financial institution or has a substantial
interest in any private bank in the
Philippines, within one (1) year prior to his
appointment; likewise, no member of the
Monetary Board shall be employed in any
such institution within two (2) years after
the expiration of his term except when he
serves as an official representative of the
Philippine Government to such institution.
Section 10. Removal. - The President
may remove any member of the Monetary
Board for any of the following reasons:
 (a) If the member is subsequently
disqualified under the provisions of
Section 8 of this Act; or
(b) If he is physically or mentally
incapacitated that he cannot
properly discharge his duties and
responsibilities and such incapacity
has lasted for more than six (6)
months; or
(c) If the member is guilty of acts or
operations which are of fraudulent
or illegal character or which are
manifestly opposed to the aims and
interests of the Bangko Sentral; or
(d) If the member no longer
possesses the qualifications
specified in Section 8 of this Act.
Section 11. Meetings. - The Monetary
Board shall meet at least once a week. The
Board may be called to a meeting by the
Governor of the Bangko Sentral or by two
(2) other members of the Board.
The presence of four (4) members
shall constitute a quorum: Provided, That in
all cases the Governor or his duly
designated alternate shall be among the
four (4).
Unless otherwise provided in this Act,
all decisions of the Monetary Board shall
require the concurrence of at least four (4)
members.
The Bangko Sentral shall maintain
and preserve a complete record of the
proceedings and deliberations of the
Monetary Board, including the tapes and
transcripts of the stenographic notes, either
in their original form or in microfilm.
Section 12. Attendance of the Deputy
Governors. - The Deputy Governors may
attend the meetings of the Monetary Board
with the right to be heard.
Section 13. Salary. - The salary of the
Governor and the members of the Monetary
Board from the private sector shall be fixed
by the President of the Philippines at a sum
commensurate to the importance and
responsibility attached to the position.
Section 14. Withdrawal of Persons
Having a Personal Interest. - In addition to
the requirements of Republic Act No. 6713,
any member of the Monetary Board with
personal or pecuniary interest in any matter
in the agenda of the Monetary Board shall
disclose his interest to the Board and shall
retire from the meeting when the matter is
taken up. The decision taken on the matter
shall be made public. The minutes shall
reflect the disclosure made and the
retirement of the member concerned from
the meeting.
Section 15. Exercise of Authority. - In
the exercise of its authority, the Monetary
Board shall:
(a) issue rules and regulations it
considers necessary for the
effective discharge of the
responsibilities and exercise of the
powers vested upon the Monetary
Board and the Bangko Sentral. The
rules and regulations issued shall
be reported to the President and
the Congress within fifteen (15)
days from the date of their
issuance;
(b) direct the management,
operations, and administration of
the Bangko Sentral, reorganize its
personnel, and issue such rules and
regulations as it may deem
necessary or convenient for this
purpose. The legal units of the
Bangko Sentral shall be under the
exclusive supervision and control
of the Monetary Board;
(c) establish a human resource
management system which shall
govern the selection, hiring,
appointment, transfer, promotion,
or dismissal of all personnel. Such
system shall aim to establish
professionalism and excellence at
all levels of the Bangko Sentral in
accordance with sound principles
of management.
A compensation structure, based on
job evaluation studies and wage surveys
and subject to the Board's approval, shall be
instituted as an integral component of the
Bangko Sentral's human resource
development program: Provided, That the
Monetary Board shall make its own system
conform as closely as possible with the
principles provided for under Republic Act
No. 6758: Provided, however, That
compensation and wage structure of
employees whose positions fall under salary
grade 19 and below shall be in accordance
with the rates prescribed under Republic
Act No. 6758.
On the recommendation of the
Governor, appoint, fix the remunerations
and other emoluments, and remove
personnel of the Bangko Sentral, subject to
pertinent civil service laws: Provided, That
the Monetary Board shall have exclusive
and final authority to promote, transfer,
assign, or reassign personnel of the Bangko
Sentral and these personnel actions are
deemed made in the interest of the service
and not disciplinary: Provided, further, That
the Monetary Board may delegate such
authority to the Governor under such
guidelines as it may determine.
(d) adopt an annual budget for and
authorize such expenditures by the
Bangko Sentral as are in the
interest of the effective
administration and operations of
the Bangko Sentral in accordance
with applicable laws and
regulations; and
(e) indemnify its members and
other officials of the Bangko
Sentral, including personnel of the
departments performing
supervision and examination
functions against all costs and
expenses reasonably incurred by
such persons in connection with
any civil or criminal action, suit or
proceedings to which he may be, or
is, made a party by reason of the
performance of his functions or
duties, unless he is finally adjudged
in such action or proceeding to be
liable for negligence or misconduct.
In the event of a settlement or
compromise, indemnification shall be
provided only in connection with such
matters covered by the settlement as to
which the Bangko Sentral is advised by
external counsel that the person to be
indemnified did not commit any negligence
or misconduct.
The costs and expenses incurred in
defending the aforementioned action, suit
or proceeding may be paid by the Bangko
Sentral in advance of the final disposition of
such action, suit or proceeding upon receipt
of an undertaking by or on behalf of the
member, officer, or employee to repay the
amount advanced should it ultimately be
determined by the Monetary Board that he
is not entitled to be indemnified as provided
in this subsection.
Section 16. Responsibility. - Members
of the Monetary Board, officials, examiners,
and employees of the Bangko Sentral who
willfully violate this Act or who are guilty of
negligence, abuses or acts of malfeasance or
misfeasance or fail to exercise
extraordinary diligence in the performance
of his duties shall be held liable for any loss
or injury suffered by the Bangko Sentral or
other banking institutions as a result of
such violation, negligence, abuse,
malfeasance, misfeasance or failure to
exercise extraordinary diligence.
Similar responsibility shall apply to
members, officers, and employees of the
Bangko Sentral for: (1) the disclosure of any
information of a confidential nature, or any
information on the discussions or
resolutions of the Monetary Board, or about
the confidential operations of the Bangko
Sentral, unless the disclosure is in
connection with the performance of official
functions with the Bangko Sentral, or is
with prior authorization of the Monetary
Board or the Governor; or (2) the use of
such information for personal gain or to the
detriment of the Government, the Bangko
Sentral or third parties: Provided, however,
That any data or information required to be
submitted to the President and/or the
Congress, or to be published under the
provisions of this Act shall not be
considered confidential.
ARTICLE III
THE GOVERNOR AND DEPUTY
GOVERNORS OF THE BANGKO SENTRAL
Section 17. Powers and Duties of the
Governor. - The Governor shall be the chief
executive officer of the Bangko Sentral. His
powers and duties shall be to:
(a) prepare the agenda for the
meetings of the Monetary Board
and to submit for the consideration
of the Board the policies and
measures which he believes to be
necessary to carry out the purposes
and provisions of this Act;
(b) execute and administer the
policies and measures approved by
the Monetary Board;
(c) direct and supervise the
operations and internal
administration of the Bangko
Sentral. The Governor may delegate
certain of his administrative
responsibilities to other officers or
may assign specific tasks or
responsibilities to any full-time
member of the Monetary Board
without additional remuneration or
allowance whenever he may deem
fit or subject to such rules and
regulations as the Monetary Board
may prescribe;
(d) appoint and fix the
remunerations and other
emoluments of personnel below
the rank of a department head in
accordance with the position and
compensation plans approved by
the Monetary Board, as well as to
impose disciplinary measures upon
personnel of the Bangko Sentral,
subject to the provisions of Section
15(c) of this Act: Provided, That
removal of personnel shall be with
the approval of the Monetary
Board;
(e) render opinions, decisions, or
rulings, which shall be final and
executory until reversed or
modified by the Monetary Board,
on matters regarding application or
enforcement of laws pertaining to
institutions supervised by the
Bangko Sentral and laws pertaining
to quasi-banks, as well as
regulations, policies or instructions
issued by the Monetary Board, and
the implementation thereof; and
(f) exercise such other powers as
may be vested in him by the
Monetary Board.
Section 18. Representation of the
Monetary Board and the Bangko Sentral. -
The Governor of the Bangko Sentral shall be
the principal representative of the
Monetary Board and of the Bangko Sentral
and, in such capacity and in accordance
with the instructions of the Monetary
Board, he shall be empowered to:
(a) represent the Monetary Board
and the Bangko Sentral in all
dealings with other offices,
agencies and instrumentalities of
the Government and all other
persons or entities, public or
private, whether domestic, foreign
or international;
(b) sign contracts entered into by
the Bangko Sentral, notes and
securities issued by the Bangko
Sentral, all reports, balance sheets,
profit and loss statements,
correspondence and other
documents of the Bangko Sentral.
The signature of the
Governor may be in facsimile
whenever appropriate;
(c) represent the Bangko Sentral,
either personally or through
counsel, including private counsel,
as may be authorized by the
Monetary Board, in any legal
proceedings, action or specialized
legal studies; and
(d) delegate his power to represent
the Bangko Sentral, as provided in
subsections (a), (b) and (c) of this
section, to other officers upon his
own responsibility: Provided,
however, That in order to preserve
the integrity and the prestige of his
office, the Governor of the Bangko
Sentral may choose not to
participate in preliminary
discussions with any multilateral
banking or financial institution on
any negotiations for the
Government within or outside the
Philippines. During the
negotiations, he may instead be
represented by a permanent
negotiator.
Section 19. Authority of the Governor
in Emergencies. - In case of emergencies
where time is sufficient to call a meeting of
the Monetary Board, the Governor of the
Bangko Sentral, with the concurrence of
two (2) other members of the Monetary
Board, may decide any matter or take any
action within the authority of the Board.
The Governor shall submit a report to
the President and Congress within seventy-
two (72) hours after the action has been
taken.
At the soonest possible time, the
Governor shall call a meeting of the
Monetary Board to submit his action for
ratification.
Section 20. Outside Interests of the
Governor and the Full-time Members of the
Board. - The Governor of the Bangko Sentral
and the full-time members of the Board
shall limit their professional activities to
those pertaining directly to their positions
with the Bangko Sentral. Accordingly, they
may not accept any other employment,
whether public or private, remunerated or
ad honorem, with the exception of positions
in eleemosynary, civic, cultural or religious
organizations or whenever, by designation
of the President, the Governor or the full-
time member is tasked to represent the
interest of the Government or other
government agencies in matters connected
with or affecting the economy or the
financial system of the country.
Section 21. Deputy Governors. - The
Governor of the Bangko Sentral, with the
approval of the Monetary Board, shall
appoint not more than three (3) Deputy
Governors who shall perform duties as may
be assigned to them by the Governor and
the Board.
In the absence of the Governor, a
Deputy Governor designated by the
Governor shall act as chief executive of the
Bangko Sentral and shall exercise the
powers and perform the duties of the
Governor. Whenever the Government is
unable to attend meetings of government
boards or councils in which he is an ex
officio member pursuant to provisions of
special laws, a Deputy Governor as may be
designated by the Governor shall be vested
with authority to participate and exercise
the right to vote in such meetings.
ARTICLE IV
OPERATIONS OF THE BANGKO SENTRAL
 Section 22. Research and Statistics. -
The Bangko Sentral shall prepare data and
conduct economic research for the guidance
of the Monetary Board in the formulation
and implementation of its policies. Such
data shall include, among others, forecasts
of the balance of payments of the
Philippines, statistics on the monthly
movement of the monetary aggregates and
of prices and other statistical series and
economic studies useful for the formulation
and analysis of monetary, banking, credit
and exchange policies.
Section 23. Authority to Obtain Data
and Information. - The Bangko Sentral shall
have the authority to request from
government offices and instrumentalities,
or government-owned or controlled
corporations, any data which it may require
for the proper discharge of its functions and
responsibilities. The Bangko Sentral
through the Governor or in his absence, a
duly authorized representative shall have
the power to issue a subpoena for the
production of the books and records for the
aforesaid purpose. Those who refuse the
subpoena without justifiable cause, or who
refuse to supply the bank with data
requested or required, shall be subject to
punishment for contempt in accordance
with the provisions of the Rules of Court.
Data on individual firms, other than
banks, gathered by the Department of
Economic Research and other departments
or units of the Bangko Sentral shall not be
made available to any person or entity
outside of the Bangko Sentral whether
public or private except under order of the
court or under such conditions as may be
prescribed by the Monetary Board:
Provided, however, That the collective data
on firms may be released to interested
persons or entities: Provided, finally, That
in the case of data on banks, the provisions
of Section 27 of this Act shall apply.
Section 24. Training of Technical
Personnel. - The Bangko Sentral shall
promote and sponsor the training of
technical personnel in the field of money
and banking. Toward this end, the Bangko
Sentral is hereby authorized to defray the
costs of study, at home or abroad, of
qualified employees of the Bangko Sentral,
of promising university graduates or of any
other qualified persons who shall be
determined by proper competitive
examinations. The Monetary Board shall
prescribe rules and regulations to govern
the training program of the Bangko Sentral.
Section 25. Supervision and
Examination. - The Bangko Sentral shall
have supervision over, and conduct periodic
or special examinations of, banking
institutions and quasi-banks, including their
subsidiaries and affiliates engaged in allied
activities.
For purposes of this section, a
subsidiary means a corporation more than
fifty percent (50%) of the voting stock of
which is owned by a bank or quasi-bank
and an affiliate means a corporation the
voting stock of which, to the extent of fifty
percent (50%) or less, is owned by a bank
or quasi-bank or which is related or linked
to such institution or intermediary through
common stockholders or such other factors
as may be determined by the Monetary
Board.
The department heads and the
examiners of the supervising and/or
examining departments are hereby
authorized to administer oaths to any
director, officer, or employee of any
institution under their respective
supervision or subject to their examination
and to compel the presentation of all books,
documents, papers or records necessary in
their judgment to ascertain the facts
relative to the true condition of any
institution as well as the books and records
of persons and entities relative to or in
connection with the operations, activities or
transactions of the institution under
examination, subject to the provision of
existing laws protecting or safeguarding the
secrecy or confidentiality of bank deposits
as well as investments of private persons,
natural or juridical, in debt instruments
issued by the Government.
No restraining order or injunction
shall be issued by the court enjoining the
Bangko Sentral from examining any
institution subject to supervision or
examination by the Bangko Sentral, unless
there is convincing proof that the action of
the Bangko Sentral is plainly arbitrary and
made in bad faith and the petitioner or
plaintiff files with the clerk or judge of the
court in which the action is pending a bond
executed in favor of the Bangko Sentral, in
an amount to be fixed by the court. The
provisions of Rule 58 of the New Rules of
Court insofar as they are applicable and not
inconsistent with the provisions of this
section shall govern the issuance and
dissolution of the restraining order or
injunction contemplated in this section.
Section 26. Bank Deposits and
Investments. - Any director, officer or
stockholder who, together with his related
interest, contracts a loan or any form of
financial accommodation from: (1) his
bank; or (2) from a bank (a) which is a
subsidiary of a bank holding company of
which both his bank and the lending bank
are subsidiaries or (b) in which a
controlling proportion of the shares is
owned by the same interest that owns a
controlling proportion of the shares of his
bank, in excess of five percent (5%) of the
capital and surplus of the bank, or in the
maximum amount permitted by law,
whichever is lower, shall be required by the
lending bank to waive the secrecy of his
deposits of whatever nature in all banks in
the Philippines. Any information obtained
from an examination of his deposits shall be
held strictly confidential and may be used
by the examiners only in connection with
their supervisory and examination
responsibility or by the Bangko Sentral in
an appropriate legal action it has initiated
involving the deposit account.
Section 27. Prohibitions. - In addition
to the prohibitions found in Republic Act
Nos. 3019 and 6713, personnel of the
Bangko Sentral are hereby prohibited from:
(a) being an officer, director,
lawyer or agent, employee,
consultant or stockholder, directly
or indirectly, of any institution
subject to supervision or
examination by the Bangko Sentral,
except non-stock savings and loan
associations and provident funds
organized exclusively for
employees of the Bangko Sentral,
and except as otherwise provided
in this Act;
(b) directly or indirectly requesting
or receiving any gift, present or
pecuniary or material benefit for
himself or another, from any
institution subject to supervision or
examination by the Bangko Sentral;
(c) revealing in any manner, except
under orders of the court, the
Congress or any government office
or agency authorized by law, or
under such conditions as may be
prescribed by the Monetary Board,
information relating to the
condition or business of any
institution. This prohibition shall
not be held to apply to the giving of
information to the Monetary Board
or the Governor of the Bangko
Sentral, or to any person
authorized by either of them, in
writing, to receive such
information; and
(d) borrowing from any institution
subject to supervision or
 examination by the Bangko Sentral
shall be prohibited unless said
borrowings are adequately
secured, fully disclosed to the
Monetary Board, and shall be
subject to such further rules and
regulations as the Monetary Board
may prescribe: Provided, however,
That personnel of the supervising
and examining departments are
prohibited from borrowing from a
bank under their supervision or
examination.
Section 28. Examination and Fees. -
The supervising and examining department
head, personally or by deputy, shall
examine the books of every banking
institution once in every twelve (12)
months, and at such other times as the
Monetary Board by an affirmative vote of
five (5) members, may deem expedient and
to make a report on the same to the
Monetary Board: Provided, That there shall
be an interval of at least twelve (12) months
between annual examinations.
The bank concerned shall afford to
the head of the appropriate supervising and
examining departments and to his
authorized deputies full opportunity to
examine its books, cash and available assets
and general condition at any time during
banking hours when requested to do so by
the Bangko Sentral: Provided, however,
That none of the reports and other papers
relative to such examinations shall be open
to inspection by the public except insofar as
such publicity is incidental to the
proceedings hereinafter authorized or is
necessary for the prosecution of violations
in connection with the business of such
institutions.
Banking and quasi-banking
institutions which are subject to
examination by the Bangko Sentral shall pay
to the Bangko Sentral, within the first thirty
(30) days of each year, an annual fee in an
amount equal to a percentage as may be
prescribed by the Monetary Board of its
average total assets during the preceding
year as shown on its end-of-month balance
sheets, after deducting cash on hand and
amounts due from banks, including the
Bangko Sentral and banks abroad.
Section 29. Appointment of
Conservator. - Whenever, on the basis of a
report submitted by the appropriate
supervising or examining department, the
Monetary Board finds that a bank or a
quasi-bank is in a state of continuing
inability or unwillingness to maintain a
condition of liquidity deemed adequate to
protect the interest of depositors and
creditors, the Monetary Board may appoint
a conservator with such powers as the
Monetary Board shall deem necessary to
take charge of the assets, liabilities, and the
management thereof, reorganize the
management, collect all monies and debts
due said institution, and exercise all powers
necessary to restore its viability. The
conservator shall report and be responsible
to the Monetary Board and shall have the
power to overrule or revoke the actions of
the previous management and board of
directors of the bank or quasi-bank.
The conservator should be competent
and knowledgeable in bank operations and
management. The conservatorship shall not
exceed one (1) year.
The conservator shall receive
remuneration to be fixed by the Monetary
Board in an amount not to exceed two-
thirds (2/3) of the salary of the president of
the institution in one (1) year, payable in
twelve (12) equal monthly payments:
Provided, That, if at any time within one-
year period, the conservatorship is
terminated on the ground that the
institution can operate on its own, the
conservator shall receive the balance of the
remuneration which he would have
received up to the end of the year; but if the
conservatorship is terminated on other
grounds, the conservator shall not be
entitled to such remaining balance. The
Monetary Board may appoint a conservator
connected with the Bangko Sentral, in
which case he shall not be entitled to
receive any remuneration or emolument
from the Bangko Sentral during the
conservatorship. The expenses attendant to
the conservatorship shall be borne by the
bank or quasi-bank concerned.
The Monetary Board shall terminate
the conservatorship when it is satisfied that
the institution can continue to operate on
its own and the conservatorship is no
longer necessary. The conservatorship shall
likewise be terminated should the Monetary
Board, on the basis of the report of the
conservator or of its own findings,
determine that the continuance in business
of the institution would involve probable
loss to its depositors or creditors, in which
case the provisions of Section 30 shall
apply.
Section 30. Proceedings in
Receivership and Liquidation. - Whenever,
upon report of the head of the supervising
or examining department, the Monetary
Board finds that a bank or quasi-bank:
(a) is unable to pay its liabilities as
they become due in the ordinary
course of business: Provided, That
this shall not include inability to
pay caused by extraordinary
demands induced by financial panic
in the banking community;
(b) has insufficient realizable
assets, as determined by the
Bangko Sentral, to meet its
liabilities; or
(c) cannot continue in business
without involving probable losses
to its depositors or creditors; or
(d) has willfully violated a cease
and desist order under Section 37
that has become final, involving
acts or transactions which amount
to fraud or a dissipation of the
assets of the institution; in which
cases, the Monetary Board may
summarily and without need for
prior hearing forbid the institution
from doing business in the
Philippines and designate the
Philippine Deposit Insurance
Corporation as receiver of the
banking institution.
For a quasi-bank, any person of
recognized competence in banking or
finance may be designed as receiver.
The receiver shall immediately gather
and take charge of all the assets and
liabilities of the institution, administer the
same for the benefit of its creditors, and
exercise the general powers of a receiver
under the Revised Rules of Court but shall
not, with the exception of administrative
expenditures, pay or commit any act that
will involve the transfer or disposition of
any asset of the institution: Provided, That
the receiver may deposit or place the funds
of the institution in non-speculative
investments. The receiver shall determine
as soon as possible, but not later than
ninety (90) days from take over, whether
the institution may be rehabilitated or
otherwise placed in such a condition so that
it may be permitted to resume business
with safety to its depositors and creditors
and the general public: Provided, That any
determination for the resumption of
business of the institution shall be subject
to prior approval of the Monetary Board.
If the receiver determines that the
institution cannot be rehabilitated or
permitted to resume business in accordance
with the next preceding paragraph, the
Monetary Board shall notify in writing the
board of directors of its findings and direct
the receiver to proceed with the liquidation
of the institution. The receiver shall:
(1) file ex parte with the proper
regional trial court, and without
requirement of prior notice or any
other action, a petition for
assistance in the liquidation of the
institution pursuant to a liquidation
plan adopted by the Philippine
Deposit Insurance Corporation for
general application to all closed
banks. In case of quasi-banks, the
liquidation plan shall be adopted by
the Monetary Board. Upon
acquiring jurisdiction, the court
shall, upon motion by the receiver
after due notice, adjudicate
disputed claims against the
institution, assist the enforcement
of individual liabilities of the
stockholders, directors and officers,
and decide on other issues as may
be material to implement the
liquidation plan adopted. The
receiver shall pay the cost of the
proceedings from the assets of the
institution.
(2) convert the assets of the
institutions to money, dispose of
the same to creditors and other
parties, for the purpose of paying
the debts of such institution in
accordance with the rules on
concurrence and preference of
credit under the Civil Code of the
Philippines and he may, in the
name of the institution, and with
the assistance of counsel as he may
retain, institute such actions as may
be necessary to collect and recover
accounts and assets of, or defend
any action against, the institution.
The assets of an institution under
receivership or liquidation shall be
deemed in custodia legis in the
hands of the receiver and shall,
from the moment the institution
was placed under such receivership
or liquidation, be exempt from any
order of garnishment, levy,
attachment, or execution.
The actions of the Monetary Board
taken under this section or under Section
29 of this Act shall be final and executory,
and may not be restrained or set aside by
the court except on petition for certiorari on
the ground that the action taken was in
excess of jurisdiction or with such grave
abuse of discretion as to amount to lack or
excess of jurisdiction. The petition for
certiorari may only be filed by the
stockholders of record representing the
majority of the capital stock within ten (10)
days from receipt by the board of directors
of the institution of the order directing
receivership, liquidation or
conservatorship.
The designation of a conservator
under Section 29 of this Act or the
appointment of a receiver under this
section shall be vested exclusively with the
Monetary Board. Furthermore, the
designation of a conservator is not a
precondition to the designation of a
receiver.
Section 31. Distribution of Assets. - In
case of liquidation of a bank or quasi-bank,
after payment of the cost of proceedings,
including reasonable expenses and fees of
the receiver to be allowed by the court, the
receiver shall pay the debts of such
institution, under order of the court, in
accordance with the rules on concurrence
and preference of credit as provided in the
Civil Code.
Section 32. Disposition of Revenues
and Earnings. - All revenues and earnings
realized by the receiver in winding up the
affairs and administering the assets of any
bank or quasi-bank within the purview of
this Act shall be used to pay the costs, fees
and expenses mentioned in the preceding
section, salaries of such personnel whose
employment is rendered necessary in the
discharge of the liquidation together with
other additional expenses caused thereby.
The balance of revenues and earnings, after
the payment of all said expenses, shall form
part of the assets available for payment to
creditors.
Section 33. Disposition of Banking
Franchise. - The Bangko Sentral may, if
public interest so requires, award to an
institution, upon such terms and conditions
as the Monetary Board may approve, the
banking franchise of a bank under
liquidation to operate in the area where
said bank or its branches were previously
operating: Provided, That whatever
proceeds may be realized from such award
shall be subject to the appropriate exclusive
disposition of the Monetary Board.
Section 34. Refusal to Make Reports
or Permit Examination. - Any officer, owner,
agent, manager, director or officer-in-
charge of any institution subject to the
supervision or examination by the Bangko
Sentral within the purview of this Act who,
being required in writing by the Monetary
Board or by the head of the supervising and
examining department willfully refuses to
file the required report or permit any lawful
examination into the affairs of such
institution shall be punished by a fine of not
less than Fifty thousand pesos (P50,000)
nor more than One hundred thousand pesos
(P100,000) or by imprisonment of not less
than one (1) year nor more than five (5)
years, or both, in the discretion of the court.
Section 35. False Statement. - The
willful making of a false or misleading
statement on a material fact to the
Monetary Board or to the examiners of the
Bangko Sentral shall be punished by a fine
of not less than One hundred thousand
pesos (P100,000) nor more than Two
hundred thousand pesos (P200,000), or by
imprisonment of not more than (5) years, or
both, at the discretion of the court.
Section 36. Proceedings Upon
Violation of This Act and Other Banking
Laws, Rules, Regulations, Orders or
Instructions. - Whenever a bank or quasi-
bank, or whenever any person or entity
willfully violates this Act or other pertinent
banking laws being enforced or
implemented by the Bangko Sentral or any
order, instruction, rule or regulation issued
by the Monetary Board, the person or
persons responsible for such violation shall
unless otherwise provided in this Act be
punished by a fine of not less than Fifty
thousand pesos (P50,000) nor more than
Two hundred thousand pesos (P200,000)
or by imprisonment of not less than two (2)
years nor more than ten (10) years, or both,
at the discretion of the court.
Whenever a bank or quasi-bank
persists in carrying on its business in an
unlawful or unsafe manner, the Board may,
without prejudice to the penalties provided
in the preceding paragraph of this section
and the administrative sanctions provided
in Section 37 of this Act, take action under
Section 30 of this Act.
Section 37. Administrative Sanctions
on Banks and Quasi-banks. - Without
prejudice to the criminal sanctions against
the culpable persons provided in Sections
34, 35, and 36 of this Act, the Monetary
Board may, at its discretion, impose upon
any bank or quasi-bank, their directors
and/or officers, for any willful violation of
its charter or by-laws, willful delay in the
submission of reports or publications
thereof as required by law, rules and
regulations; any refusal to permit
examination into the affairs of the
institution; any willful making of a false or
misleading statement to the Board or the
appropriate supervising and examining
department or its examiners; any willful
failure or refusal to comply with, or
violation of, any banking law or any order,
instruction or regulation issued by the
Monetary Board, or any order, instruction
or ruling by the Governor; or any
commission of irregularities, and/or
conducting business in an unsafe or
unsound manner as may be determined by
the Monetary Board, the following
administrative sanctions, whenever
applicable:
(a) fines in amounts as may be
determined by the Monetary Board
to be appropriate, but in no case to
exceed Thirty thousand pesos
(P30,000) a day for each violation,
taking into consideration the
attendant circumstances, such as
the nature and gravity of the
violation or irregularity and the
size of the bank or quasi-bank;
(b) suspension of rediscounting
privileges or access to Bangko
Sentral credit facilities;
(c) suspension of lending or foreign
exchange operations or authority to
accept new deposits or make new
investments;
(d) suspension of interbank
clearing privileges; and/or
(e) revocation of quasi-banking
license.
Resignation or termination from
office shall not exempt such director or
officer from administrative or criminal
sanctions.
The Monetary Board may, whenever
warranted by circumstances, preventively
suspend any director or officer of a bank or
quasi-bank pending an investigation:
Provided, That should the case be not finally
decided by the Bangko Sentral within a
period of one hundred twenty (120) days
after the date of suspension, said director or
officer shall be reinstated in his position:
Provided, further, That when the delay in
the disposition of the case is due to the fault,
negligence or petition of the director or
officer, the period of delay shall not be
counted in computing the period of
suspension herein provided.
The above administrative sanctions
need not be applied in the order of their
severity.
Whether or not there is an
administrative proceeding, if the institution
and/or the directors and/or officers
concerned continue with or otherwise
persist in the commission of the indicated
practice or violation, the Monetary Board
may issue an order requiring the institution
and/or the directors and/or officers
concerned to cease and desist from the
indicated practice or violation, and may
further order that immediate action be
taken to correct the conditions resulting
from such practice or violation. The cease
and desist order shall be immediately
effective upon service on the respondents.
The respondents shall be afforded an
opportunity to defend their action in a
hearing before the Monetary Board or any
committee chaired by any Monetary Board
member created for the purpose, upon
request made by the respondents within
five (5) days from their receipt of the order.
If no such hearing is requested within said
period, the order shall be final. If a hearing
is conducted, all issues shall be determined
on the basis of records, after which the
Monetary Board may either reconsider or
make final its order.
The Governor is hereby authorized, at
his discretion, to impose upon banking
institutions, for any failure to comply with
the requirements of law, Monetary Board
regulations and policies, and/or
instructions issued by the Monetary Board
or by the Governor, fines not in excess of
Ten thousand pesos (P10,000) a day for
each violation, the imposition of which shall
be final and executory until reversed,
modified or lifted by the Monetary Board on
appeal.
Section 38. Operating Departments of
the Bangko Sentral. - The Monetary Board
shall, in accordance with its authority under
this Act, determine and provide for such
operating departments and other offices,
including a public information office, of the
Bangko Sentral as it deems convenient for
the proper and efficient conduct of the
operations and the accomplishment of the
objectives of the Bangko Sentral. The
functions and duties of such operating
departments and other offices shall be
determined by the Monetary Board.
ARTICLE V which gave rise to said policies and
REPORTS AND PUBLICATIONS
Section 39. Reports and
Publications. - The Bangko Sentral shall
publish a general balance sheet showing the
volume and composition of its assets and
liabilities as of the last working day of the
month within sixty (60) days after the end
of each month except for the month of
December, which shall be submitted within
ninety (90) days after the end hereof.
The Monetary Board shall publish
and submit the following reports to the
President and to the Congress:
(a) not later than ninety (90) days
after the end of each quarter, an
analysis of economic and financial
developments, including the
condition of net international
reserves and monetary aggregates;
(b) within ninety (90) days after
the end of the year, the preceding
year's budget and profit and loss
statement of the Bangko Sentral
showing in reasonable detail the
result of its operations;
(c) one hundred twenty (120) days
after the end of each semester, a
review of the state of the financial
system; and
(d) as soon as practicable,
abnormal movements in monetary
aggregates and the general price
level, and, not later than seventy-
two (72) hours after they are taken,
remedial measures in response to
such abnormal movements.
Section 40. Annual Report. - Before
the end of March of each year, the Bangko
Sentral shall publish and submit to the
President and the Congress an annual
report on the condition of the Bangko
Sentral including a review of the policies
and measures adopted by the Monetary
Board during the past year and an analysis
of the economic and financial circumstances
measures.
The annual report shall also include a
statement of the financial condition of the
Bangko Sentral and a statistical appendix
which shall present, as a minimum, the
following data:
(a) the monthly movement of
monetary aggregates and their
components;
(b) the monthly movement of
purchases and sales of foreign
exchange and of the international
reserves of the Bangko Sentral;
(c) the balance of payments of the
Philippines;
(d) monthly indices of consumer
prices and of import and export
prices;
(e) the monthly movement, in
summary form, of exports and
imports, by volume and value;
(f) the monthly movement of the
accounts of the Bangko Sentral and
of other banks;
(g) the principal data on
government receipts and
expenditures and on the status of
the public debt, both domestic and
foreign; and
(h) the texts of the major legal and
administrative measures adopted
by the Government and the
 Monetary Board during the year
which relate to the functions or
operations of the Bangko Sentral or
of the financial system.
The Bangko Sentral shall publish
another version of the annual report in
terms understandable to the layman.
Failure to comply with the reportorial
requirements pursuant to this article
without justifiable reason as may be
determined by the Monetary Board shall
cause the withholding of the salary of the
personnel concerned until the requirements
are complied with.
Section 41. Signatures on
Statements. - The balance sheets and other
financial statements of the Bangko Sentral
shall be signed by the officers responsible
for their preparation, by the Governor, and
by the auditor of the Bangko Sentral.
ARTICLE VI
PROFITS, LOSSES, AND SPECIAL
ACCOUNTS
Section 42. Fiscal Year. - The fiscal
year of the Bangko Sentral shall begin on
January first and end on December thirty-
first of each year.
Section 43. Computation of Profits
and Losses. - Within the first thirty (30) days
following the end of each year, the Bangko
Sentral shall determine its net profits or
losses. In the calculation of net profits, the
Bangko Sentral shall make adequate
allowance or establish adequate reserves
for bad and doubtful accounts.
Section 44. Distribution of Net
Profits. - Within the first sixty (60) days
following the end of each fiscal year, the
Monetary Board shall determine and carry
out the distribution of the net profits, in
accordance with the following rule:
Fifty percent (50%) of the net profits
shall be carried to surplus and the
remaining fifty percent (50%) shall revert
back to the National Treasury, except as
otherwise provided in the transitory
provisions of this Act.
Section 45. Revaluation Profits and
Losses. - Profits or losses arising from any
revaluation of the Bangko Sentral's net
assets or liabilities in gold or foreign
currencies with respect to the Philippine
peso shall not be included in the
computation of the annual profits and
losses of the Bangko Sentral. Any profits or
losses arising in this manner shall be offset
by any amounts which, as a consequence of
such revaluations, are owed by the
Philippines to any international or regional
intergovernmental financial institution of
which the Philippines is a member or are
owed by these institutions to the
Philippines. Any remaining profit or loss
shall be carried in a special frozen account
which shall be named "Revaluation of
International Reserve" and the net balance
of which shall appear either among the
liabilities or among the assets of the Bangko
Sentral, depending on whether the
revaluations have produced net profits or
net losses.
The Revaluation of International
Reserve account shall be neither credited
nor debited for any purposes other than
those specifically authorized in this section.
Section 46. Suspense Accounts. -
Sections 43 and 43-A of Republic Act No.
265, as amended, creating the Monetary
Adjustment Account (MAA) and the
Exchange Stabilization Adjustment Account
(ESAA), respectively, are hereby repealed.
Amounts outstanding as of the effective
date of this Act based on these accounts
shall continue to be for the account of the
Central Bank and shall be governed by the
transitory provisions of this Act.
The Revaluation of International
Reserve (RIR) account as of the effective
date of this Act of the Central Bank shall
continue to be for the account of the same
entity and shall be governed by the
provisions of Section 44 of Republic Act No.
265, as amended, until otherwise provided
for in accordance with the transitory
provisions of this Act.
ARTICLE VII
THE AUDITOR
Section 47. Appointment and
Personnel. - The Chairman of the
Commission on Audit shall act as the ex
officio auditor of the Bangko Sentral and, as
such, he is empowered and authorized to
appoint a representative who shall be the
auditor of the Bangko Sentral and, in
accordance with law, fix his salary, and to
appoint and fix salaries and number of
personnel to assist said representative in
his work. The salaries and other
emoluments shall be paid by the
Commission. The auditor of the Bangko
Sentral and personnel under him may be
removed only by the Chairman of the
Commission.
The representative of the Chairman of
the Commission must be a certified public
accountant with at least ten (10) years
experience as such. No relative of any
member of the Monetary Board or the
Chairman of the Commission within the
sixth degree of consanguinity or affinity
shall be appointed such representative.
CHAPTER II — THE BANGKO SENTRAL
AND THE MEANS OF PAYMENT
ARTICLE I provides for a greater penalty, then that
THE UNIT OF MONETARY VALUE
Section 48. The Peso. - The unit of
monetary value in the Philippines is the
"peso," which is represented by the sign "P."
The peso is divided into one hundred
(100) equal parts called "centavos," which
are represented by the sign "c."
ARTICLE II
ISSUE OF MEANS OF PAYMENT
A. CURRENCY
Section 49. Definition of Currency. -
The word "currency" is hereby defined, for
purposes of this Act, as meaning all
Philippine notes and coins issued or
circulating in accordance with the
provisions of this Act.
Section 50. Exclusive Issue Power. -
The Bangko Sentral shall have the sole
power and authority to issue currency,
within the territory of the Philippines. No
other person or entity, public or private,
may put into circulation notes, coins or any
other object or document which, in the
opinion of the Monetary Board, might
circulate as currency, nor reproduce or
imitate the facsimiles of Bangko Sentral
notes without prior authority from the
Bangko Sentral.
The Monetary Board may issue such
regulations as it may deem advisable in
order to prevent the circulation of foreign
currency or of currency substitutes as well
as to prevent the reproduction of facsimiles
of Bangko Sentral notes.
The Bangko Sentral shall have the
authority to investigate, make arrests,
conduct searches and seizures in
accordance with law, for the purpose of
maintaining the integrity of the currency.
Violation of this provision or any
regulation issued by the Bangko Sentral
pursuant thereto shall constitute an offense
punishable by imprisonment of not less
than five (5) years but not more than ten
(10) years. In case the Revised Penal Code
penalty shall be imposed.
Section 51. Liability for Notes and
Coins. - Notes and coins issued by the
Bangko Sentral shall be liabilities of the
Bangko Sentral and may be issued only
against, and in amounts not exceeding, the
assets of the Bangko Sentral. Said notes and
coins shall be a first and paramount lien on
all assets of the Bangko Sentral.
The Bangko Sentral's holdings of its
own notes and coins shall not be considered
as part of its currency issue and,
accordingly, shall not form part of the assets
or liabilities of the Bangko Sentral.
Section 52. Legal Tender Power. - All
notes and coins issued by the Bangko
Sentral shall be fully guaranteed by the
Government of the Republic of the
Philippines and shall be legal tender in the
Philippines for all debts, both public and
private: Provided, however, That, unless
otherwise fixed by the Monetary Board,
coins shall be legal tender in amounts not
exceeding Fifty pesos (P50.00) for
denominations of Twenty-five centavos and
above, and in amounts not exceeding
Twenty pesos (P20.00) for denominations
of Ten centavos or less.
Section 53. Characteristics of the
Currency. - The Monetary Board, with the
approval of the President of the Philippines,
shall prescribe the denominations,
dimensions, designs, inscriptions and other
characteristics of notes issued by the
Bangko Sentral: Provided, however, That
said notes shall state that they are liabilities
of the Bangko Sentral and are fully
guaranteed by the Government of the
Republic of the Philippines. Said notes shall
bear the signatures, in facsimile, of the
President of the Philippines and of the
Governor of the Bangko Sentral.
Similarly, the Monetary Board, with
the approval of the President of the
Philippines, shall prescribe the weight,
fineness, designs, denominations and other
characteristics of the coins issued by the
Bangko Sentral. In the minting of coins, the
Monetary Board shall give full consideration
to the availability of suitable metals and to
their relative prices and cost of minting.
Section 54. Printing of Notes and
Mining of Coins. - The Monetary Board shall
prescribe the amounts of notes and coins to
be printed and minted, respectively, and the
conditions to which the printing of notes
and the minting of coins shall be subject.
The Monetary Board shall have the
authority to contract institutions, mints or
firms for such operations.
All expenses incurred in the printing
of notes and the minting of coins shall be for
the account of the Bangko Sentral.
Section 55. Interconvertibility of
Currency. - The Bangko Sentral shall
exchange, on demand and without charge,
Philippine currency of any denomination
for Philippine notes and coins of any other
denomination requested. If for any reason
the Bangko Sentral is temporarily unable to
provide notes or coins of the denominations
requested, it shall meet its obligations by
delivering notes and coins of the
denominations which most nearly
approximate those requested.
Section 56. Replacement of Currency
Unfit for Circulation. - The Bangko Sentral
shall withdraw from circulation and shall
demonetize all notes and coins which for
any reason whatsoever are unfit for
circulation and shall replace them by
adequate notes and coins: Provided,
however, That the Bangko Sentral shall not
replace notes and coins the identification of
which is impossible, coins which show signs
of filing, clipping or perforation, and notes
which have lost more than two-fifths (2/5)
of their surface or all of the signatures
inscribed thereon. Notes and coins in such
mutilated conditions shall be withdrawn
from circulation and demonetized without
compensation to the bearer.
Section 57. Retirement of Old Notes
and Coins. - The Bangko Sentral may call in
for replacement notes of any series or
denomination which are more than five (5)
years old and coins which are more than
(10) years old.
Notes and coins called in for
replacement in accordance with this
provision shall remain legal tender for a
period of one (1) year from the date of call.
After this period, they shall cease to be legal
tender but during the following year, or for
such longer period as the Monetary Board
may determine, they may be exchanged at
par and without charge in the Bangko
Sentral and by agents duly authorized by
the Bangko Sentral for this purpose. After
the expiration of this latter period, the notes
and coins which have not been exchanged
shall cease to be a liability of the Bangko
Sentral and shall be demonetized. The
Bangko Sentral shall also demonetize all
notes and coins which have been called in
and replaced.
B. DEMAND DEPOSITS
Section 58. Definition. - For purposes
of this Act, the term "demand deposits"
means all those liabilities of the Bangko
Sentral and of other banks which are
denominated in Philippine currency and are
subject to payment in legal tender upon
demand by the presentation of checks.
Section 59. Issue of Demand
Deposits. - Only banks duly authorized to do
so may accept funds or create liabilities
payable in pesos upon demand by the
presentation of checks, and such operations
shall be subject to the control of the
Monetary Board in accordance with the
powers granted it with respect thereto
under this Act.
Section 60. Legal Character. - Checks
representing demand deposits do not have
legal tender power and their acceptance in
the payment of debts, both public and
private, is at the option of the creditor:
Provided, however, That a check which has
been cleared and credited to the account of
the creditor shall be equivalent to a delivery
to the creditor of cash in an amount equal to
the amount credited to his account.
CHAPTER III — GUIDING PRINCIPLES OF
MONETARY ADMINISTRATION BY THE
BANGKO SENTRAL
ARTICLE I and significance of any
DOMESTIC MONETARY STABILIZATION
Section 61. Guiding Principle. - The
Monetary Board shall endeavor to control
any expansion or contraction in monetary
aggregates which is prejudicial to the
attainment or maintenance of price
stability.
Section 62. Power to Define Terms. -
For purposes of this article and of this Act,
the Monetary Board shall formulate
definitions of monetary aggregates, credit
and prices and shall make public such
definitions and any changes thereof.
Section 63. Action When Abnormal
Movements Occur in the Monetary
Aggregates, Credit, or Price Level. -
Whenever abnormal movements in the
monetary aggregates, in credit, or in prices
endanger the stability of the Philippine
economy or important sectors thereof, the
Monetary Board shall:
(a) take such remedial measures as
are appropriate and within the
powers granted to the Monetary
Board and the Bangko Sentral
under the provisions of this Act;
and
(b) submit to the President of the
Philippines and the Congress, and
make public, a detailed report
which shall include, as a minimum,
a description and analysis of:
(1) the causes of the rise or
fall of the monetary
aggregates, of credit or of
prices;
(2) the extent to which the
changes in the monetary
aggregates, in credit, or in
prices have been reflected
in changes in the level of
domestic output,
employment, wages and
economic activity in
general, and the nature
such changes; and
(3) the measures which the
Monetary Board has taken
 and the other monetary,
fiscal or administrative
measures which it
recommends to be
adopted.
Whenever the monetary aggregates,
or the level of credit, increases or decreases
by more than fifteen percent (15%), or the
cost of living index increases by more than
ten percent (10%), in relation to the level
existing at the end of the corresponding
month of the preceding year, or even
though any of these quantitative guidelines
have not been reached when in its judgment
the circumstances so warrant, the Monetary
Board shall submit the reports mentioned
in this section, and shall state therein
whether, in the opinion of the Board, said
changes in the monetary aggregates, credit
or cost of living represent a threat to the
stability of the Philippine economy or of
important sectors thereof.
The Monetary Board shall continue to
submit periodic reports to the President of
the Philippines and to Congress until it
considers that the monetary, credit or price
disturbances have disappeared or have
been adequately controlled.
ARTICLE II
INTERNATIONAL MONETARY
STABILIZATION
Section 64. International Monetary
Stabilization. - The Bangko Sentral shall
exercise its powers under this Act to
preserve the international value of the peso
and to maintain its convertibility into other
freely convertible currencies primarily for,
although not necessarily limited to, current
payments for foreign trade and invisibles.
Section 65. International Reserves. -
In order to maintain the international
stability and convertibility of the Philippine
peso, the Bangko Sentral shall maintain
international reserves adequate to meet any
foreseeable net demands on the Bangko
Sentral for foreign currencies.
In judging the adequacy of the
international reserves, the Monetary Board
shall be guided by the prospective receipts
and payments of foreign exchange by the
Philippines. The Board shall give special
attention to the volume and maturity of the
Bangko Sentral's own liabilities in foreign
currencies, to the volume and maturity of
the foreign exchange assets and liabilities of
other banks operating in the Philippines
and, insofar as they are known or can be
estimated, the volume and maturity of the
foreign exchange assets and liabilities of all
other persons and entities in the
Philippines.
Section 66. Composition of the
International Reserves. - The international
reserves of the Bangko Sentral may include
but shall not be limited to the following
assets:
(a) gold; and
(b) assets in foreign currencies in
the form of: documents and
instruments customarily employed
for the international transfer of
funds; demand and time deposits in
central banks, treasuries and
commercial banks abroad; foreign
government securities; and foreign
notes and coins.
The Monetary Board shall endeavor
to hold the foreign exchange resources of
the Bangko Sentral in freely convertible
currencies; moreover, the Board shall give
particular consideration to the prospects of
continued strength and convertibility of the
currencies in which the reserve is
maintained, as well as to the anticipated
demands for such currencies. The Monetary
Board shall issue regulations determining
the other qualifications which foreign
exchange assets must meet in order to be
included in the international reserves of the
Bangko Sentral.
The Bangko Sentral shall be free to
convert any of the assets in its international
reserves into other assets as described in
subsections (a) and (b) of this section.
Section 67. Action When the
International Stability of the Peso Is
Threatened. - Whenever the international
reserve of the Bangko Sentral falls to a level
which the Monetary Board considers
inadequate to meet prospective net
demands on the Bangko Sentral for foreign
currencies, or whenever the international
reserve appears to be in imminent danger
of falling to such a level, or whenever the
international reserve is falling as a result of
payments or remittances abroad which, in
the opinion of the Monetary Board, are
contrary to the national welfare, the
Monetary Board shall:
(a) take such remedial measures as
are appropriate and within the
powers granted to the Monetary
Board and the Bangko Sentral
under the provisions of this Act;
and
(b) submit to the President of the
Philippines and to Congress a
detailed report which shall include,
as a minimum, a description and
analysis of:
(1) the nature and causes
of the existing or imminent
decline;
(2) the remedial measures
already taken or to be
taken by the Monetary
Board;
(3) the monetary, fiscal or
administrative measures
further proposed; and
(4) the character and
extent of the cooperation
required from other
government agencies for
the successful execution of
the policies of the
Monetary Board.
If the resultant actions fail to check
the deterioration of the reserve position of
the Bangko Sentral, or if the deterioration
cannot be checked except by chronic
restrictions on exchange and trade
transactions or by sacrifice of the domestic
objectives of a balanced and sustainable
growth of the economy, the Monetary Board
shall propose to the President, with
appropriate notice of the Congress, such
additional action as it deems necessary to
restore equilibrium in the international
balance of payments of the Philippines.
The Monetary Board shall submit
periodic reports to the President and to
Congress until the threat to the
international monetary stability of the
Philippines has disappeared.
CHAPTER IV — INSTRUMENTS OF
BANGKO SENTRAL ACTION
ARTICLE I
GENERAL CRITERION
Section 68. Means of Action. - In
order to achieve the primary objective of
price stability, the Monetary Board shall
rely on its moral influence and the powers
granted to it under this Act for the
management of monetary aggregates.
ARTICLE II
OPERATIONS IN GOLD AND FOREIGN
EXCHANGE
Section 69. Purchases and Sales of
Gold. - The Bangko Sentral may buy and sell
gold in any form, subject to such regulations
as the Monetary Board may issue.
The purchases and sales of gold
authorized by this section shall be made in
the national currency at the prevailing
international market price as determined
by the Monetary Board.
Section 70. Purchases and Sales of
Foreign Exchange. - The Bangko Sentral may
buy and sell foreign notes and coins, and
documents and instruments of types
customarily employed for the international
transfer of funds. The Bangko Sentral may
engage in future exchange operations.
The Bangko Sentral may engage in
foreign exchange transactions with the
following entities or persons only:
(a) banking institutions operating
in the Philippines;
(b) the Government, its political
subdivisions and instrumentalities;
(c) foreign or international
financial institutions;
(d) foreign governments and their
instrumentalities; and
(e) other entities or persons which
the Monetary Board is hereby
empowered to authorize as foreign
exchange dealers, subject to such
rules and regulations as the
Monetary Board shall prescribe.
In order to maintain the convertibility
of the peso, the Bangko Sentral may, at the
request of any banking institution operating
in the Philippines, buy any quantity of
foreign exchange offered, and sell any
quantity of foreign exchange demanded, by
such institution, provided that the foreign
currencies so offered or demanded are
freely convertible into gold or United States
dollars. This requirement shall not apply to
demands for foreign notes and coins.
The Bangko Sentral shall effect its
exchange transactions between foreign
currencies and the Philippine peso at the
rates determined in accordance with the
provisions of Section 74 of this Act.
Section 71. Foreign Asset Position of
the Bangko Sentral. - The Bangko Sentral
shall endeavor to maintain at all times a net
positive foreign asset position so that its
gross foreign exchange assets will always
exceed its gross foreign liabilities. In the
event that the equivalent amount in pesos
of the foreign exchange liabilities of the
Bangko Sentral exceed twice the equivalent
amount in pesos of the foreign exchange
assets of the bank, the Bangko Sentral shall,
within sixty (60) days from the date the
limit is exceeded, submit a report to the
Congress stating the origin of these
liabilities, and the manner in which they
will be paid.
Section 72. Emergency Restrictions
on Exchange Operations. - In order to
achieve the primary objective of the Bangko
Sentral as set forth in Section 3 of this Act,
or protect the international reserves of the
Bangko Sentral in the imminence of, or
during an exchange crisis, or in time of
national emergency and to give the
Monetary Board and the Government time
in which to take constructive measures to
forestall, combat, or overcome such a crisis
or emergency, the Monetary Board, with the
concurrence of at least five (5) of its
members and with the approval of the
President of the Philippines, may
temporarily suspend or restrict sales of
exchange by the Bangko Sentral, and may
subject all transactions in gold and foreign
exchange to license by the Bangko Sentral,
and may require that any foreign exchange
thereafter obtained by any person residing
or entity operating in the Philippines be
delivered to the Bangko Sentral or to any
bank or agent designated by the Bangko
Sentral for the purpose, at the effective
exchange rate or rates: Provided, however,
That foreign currency deposits made under
Republic Act No. 6426 shall be exempt from
these requirements.
Section 73. Acquisition of
Inconvertible Currencies. - The Bangko
Sentral shall avoid the acquisition and
holding of currencies which are not freely
convertible, and may acquire such
currencies in an amount exceeding the
minimum balance necessary to cover
current demands for said currencies only
when, and to the extent that, such
acquisition is considered by the Monetary
Board to be in the national interest. The
Monetary Board shall determine the
procedures which shall apply to the
acquisition and disposition by the Bangko
Sentral of foreign exchange which is not
freely utilizable in the international market.
Section 74. Exchange Rates. - The
Monetary Board shall determine the
exchange rate policy of the country.
The Monetary Board shall determine
the rates at which the Bangko Sentral shall
buy and sell spot exchange, and shall
establish deviation limits from the effective
exchange rate or rates as it may deem
proper. The Bangko Sentral shall not collect
any additional commissions or charges of
any sort, other than actual telegraphic or
cable costs incurred by it.
The Monetary Board shall similarly
determine the rates for other types of
foreign exchange transactions by the
Bangko Sentral, including purchases and
sales of foreign notes and coins, but the
margins between the effective exchange
rates and the rates thus established may not
exceed the corresponding margins for spot
exchange transactions by more than the
additional costs or expenses involved in
each type of transactions.
Section 75. Operations with Foreign
Entities. - The Monetary Board may
authorize the Bangko Sentral to grant loans
to and receive loans from foreign banks and
other foreign or international entities, both
public and private, and may engage in such
other operations with these entities as are
in the national interest and are appropriate
to its character as a central bank. The
Bangko Sentral may also act as agent or
correspondent for such entities.
Upon authority of the Monetary
Board, the Bangko Sentral may pledge any
gold or other assets which it possesses as
security against loans which it receives
from foreign or international entities.
ARTICLE III
REGULATION OF FOREIGN EXCHANGE
OPERATIONS OF THE BANKS
Section 76. Foreign Exchange
Holdings of the Banks. - In order that the
Bangko Sentral may at all times have
foreign exchange resources sufficient to
enable it to maintain the international
stability and convertibility of the peso, or in
order to promote the domestic investment
of bank resources, the Monetary Board may
require the banks to sell to the Bangko
Sentral or to other banks all or part of their
surplus holdings of foreign exchange. Such
transfers may be required for all foreign
currencies or for only certain of such
currencies, according to the decision of the
Monetary Board. The transfers shall be
made at the rates established under the
provisions of Section 74 of this Act.
The Monetary Board may, whenever
warranted, determine the net assets and net
liabilities of banks and shall, in making such
a determination, take into account the
bank's networth, outstanding liabilities,
actual and contingent, or such other
financial or performance ratios as may be
appropriate under the circumstances. Any
such determination of net assets and net
liabilities shall be applied in all banks
uniformly and without discrimination.
Section 77. Requirement of Balanced
Currency Position. - The Monetary Board
may require the banks to maintain a
balanced position between their assets and
liabilities in Philippine pesos or in any other
currency or currencies in which they
operate. The banks shall be granted a
reasonable period of time in which to adjust
their currency positions to any such
requirement.
The powers granted under this
section shall be exercised only when special
circumstances make such action necessary,
in the opinion of the Monetary Board, and
shall be applied to all banks alike and
without discrimination.
Section 78. Regulation of Non-spot
Exchange Transactions. - In order to restrain
the banks from taking speculative positions
with respect to future fluctuations in
foreign exchange rates, the Monetary Board
may issue such regulations governing bank
purchases and sales of non-spot exchange
as it may consider necessary for said
purpose.
Section 79. Other Exchange Profits
and Losses. - The banks shall bear the risks
of non-compliance with the terms of the
foreign exchange documents and
instruments which they buy and sell, and
shall also bear any other typically
commercial or banking risks, including
exchange risks not assumed by the Bangko
Sentral under the provisions of the
preceding section.
Section 80. Information on Exchange
Operations. - The banks shall report to the
Bangko Sentral the volume and composition
of their purchases and sales of gold and
foreign exchange each day, and must
furnish such additional information as the
Bangko Sentral may request with reference
to the movements in their accounts in
foreign currencies.
The Monetary Board may also require
other persons and entities to report to it
currently all transactions or operations in
gold, in any shape or form, and in foreign
exchange whether entered into or
undertaken by them directly or through
agents, or to submit such data as may be
required on operations or activities giving
rise to or in connection with or relating to a
gold or foreign exchange transaction. The
Monetary Board shall prescribe the forms
on which such declarations must be made.
The accuracy of the declarations may be
verified by the Bangko Sentral by whatever
inspection it may deem necessary.
ARTICLE IV
LOANS TO BANKING AND OTHER
FINANCIAL INSTITUTIONS
A. CREDIT POLICY
Section 81. Guiding Principles. - The
rediscounts, discounts, loans and advances
which the Bangko Sentral is authorized to
extend to banking institutions under the
provisions of the present article of this Act
shall be used to influence the volume of
credit consistent with the objective of price
stability.
B. NORMAL CREDIT OPERATIONS
Section 82. Authorized Types of
Operations. - Subject to the principle stated
in the preceding section of this Act, the
Bangko Sentral may normally and regularly
carry on the following credit operations
with banking institutions operating in the
Philippines:
(a) Commercial credits. - The
Bangko Sentral may rediscount,
discount, buy and sell bills,
acceptances, promissory notes and
other credit instruments with
maturities of not more than one
hundred eighty (180) days from the
date of their rediscount, discount or
acquisition by the Bangko Sentral
and resulting from transactions
related to:
(1) the importation,
exportation, purchase or
sale of readily saleable
goods and products, or
their transportation within
the Philippines; or
(2) the storing of non-
perishable goods and
products which are duly
insured and deposited,
under conditions assuring
their preservation, in
authorized bonded
warehouses or in other
places approved by the
Monetary Board.
(b) Production credits. - The
Bangko Sentral may rediscount,
discount, buy and sell bills,
acceptances, promissory notes and exceed one hundred eighty (180)
other credit instruments having days:
maturities of not more than three (1) gold coins or bullion;
hundred sixty (360) days from the (2) securities representing
date of their rediscount, discount or obligations of the Bangko
acquisition by the Bangko Sentral Sentral or of other
and resulting from transactions domestic institutions of
related to the production or recognized solvency;
processing of agricultural, animal, (3) the credit instruments
mineral, or industrial products. to which reference is made
Documents or instruments in subsection (a) of this
acquired in accordance with this section;
subsection shall be secured by a (4) the credit instruments
pledge of the respective crops or to which reference is made
products: Provided, however, That in subsection (b) of this
the crops or products need not be section, for periods which
pledged to secure the documents if shall not exceed three
the original loan granted by the hundred sixty (360) days;
Bangko Sentral is secured by a lien (5) utilized portions of
or mortgage on real estate property advances in current
seventy percent (70%) of the amount covered by regular
appraised value of which equals or overdraft agreements
exceeds the amount of the loan related to operations
granted. included under
(c) Other credits. - Special credit subsections (a) and (b) of
instruments not otherwise this section, and certified
rediscountable under the as to amount and liquidity
immediately preceding subsections by the institution soliciting
(a) and (b) may be eligible for the advance;
rediscounting in accordance with (6) negotiable treasury
rules and regulations which the bills, certificates of
Bangko Sentral shall prescribe. indebtedness, notes and
Whenever necessary, the Bangko other negotiable
Sentral shall provide funds from obligations of the
non-inflationary sources: Provided, Government maturing
however, That the Monetary Board within three (3) years from
shall prescribe additional the date of the advance;
safeguards for disbursing these and
funds. (7) negotiable bonds
(d) Advances. - The Bangko Sentral issued by the Government
may grant advances against the of the Philippines, by
following kinds of collaterals for Philippine provincial, city
fixed periods which, with the or municipal governments,
exception of advances against or by any Philippine
collateral named in clause (4) of the Government
present subsection, shall not instrumentality, and
 having maturities of not
more than ten (10) years
from the date of advance.
The rediscounts, discounts, loans and
advances made in accordance with the
provisions of this section may not be
renewed or extended unless extraordinary
circumstances fully justify such renewal or
extension.
Advances made against the collateral
named in clauses (6) and (7) of subsection
(d) of this section may not exceed eighty
percent (80%) of the current market value
of the collateral.
C. SPECIAL CREDIT OPERATION
Section 83. Loans for Liquidity
Purposes. - The Bangko Sentral may extend
loans and advances to banking institutions
for a period of not more than seven (7) days
without any collateral for the purpose of
providing liquidity to the banking system in
times of need.
D. EMERGENCY CREDIT
OPERATION
Section 84. Emergency Loans and
Advances. - In periods of national and/or
local emergency or of imminent financial
panic which directly threaten monetary and
banking stability, the Monetary Board may,
by a vote of at least five (5) of its members,
authorize the Bangko Sentral to grant
extraordinary loans or advances to banking
institutions secured by assets as defined
hereunder: Provided, That while such loans
or advances are outstanding, the debtor
institution shall not, except upon prior
authorization by the Monetary Board,
expand the total volume of its loans or
investments.
The Monetary Board may, at its
discretion, likewise authorize the Bangko
Sentral to grant emergency loans or
advances to banking institutions, even
during normal periods, for the purpose of
assisting a bank in a precarious financial
condition or under serious financial
pressures brought by unforeseen events, or
events which, though foreseeable, could not
be prevented by the bank concerned:
Provided, however, That the Monetary
Board has ascertained that the bank is not
insolvent and has the assets defined
hereunder to secure the advances:
Provided, further, That a concurrent vote of
at least five (5) members of the Monetary
Board is obtained.
The amount of any emergency loan or
advance shall not exceed the sum of fifty
percent (50%) of total deposits and deposit
substitutes of the banking institution and
shall be disbursed in two (2) or more
tranches. The amount of the first tranche
shall be limited to twenty-five percent
(25%) of the total deposit and deposit
substitutes of the institution and shall be
secured by government securities to the
extent of their applicable loan values and
other unencumbered first class collaterals
which the Monetary Board may approve:
Provided, That if as determined by the
Monetary Board, the circumstances
surrounding the emergency warrant a loan
or advance greater than the amount
provided hereinabove, the amount of the
first tranche may exceed twenty-five
percent (25%) of the bank's total deposit
and deposit substitutes if the same is
adequately secured by applicable loan
values of government securities and
unencumbered first class collaterals
approved by the Monetary Board, and the
principal stockholders of the institution
furnish an acceptable undertaking to
indemnify and hold harmless from suit a
conservator whose appointment the
Monetary Board may find necessary at any
time.
Prior to the release of the first
tranche, the banking institution shall submit
to the Bangko Sentral a resolution of its
board of directors authorizing the Bangko
Sentral to evaluate other assets of the
banking institution certified by its external
auditor to be good and available for
collateral purposes should the release of the
subsequent tranche be thereafter applied
for.
The Monetary Board may, by a vote of
at least five (5) of its members, authorize
the release of a subsequent tranche on
condition that the principal stockholders of
the institution:
(a) furnish an acceptable
undertaking to indemnify and hold
harmless from suit a conservator
whose appointment the Monetary
Board may find necessary at any
time; and
(b) provide acceptable security
which, in the judgment of the
Monetary Board, would be
adequate to supplement, where
necessary, the assets tendered by
the banking institution to
collateralize the subsequent
tranche.
In connection with the exercise of
these powers, the prohibitions in Section
128 of this Act shall not apply insofar as it
refers to acceptance as collateral of shares
and their acquisition as a result of
foreclosure proceedings, including the
exercise of voting rights pertaining to said
shares: Provided, however, That should the
Bangko Sentral acquire any of the shares it
has accepted as collateral as a result of
foreclosure proceedings, the Bangko Sentral
shall dispose of said shares by public
bidding within one (1) year from the date of
consolidation of title by the Bangko Sentral.
Whenever a financial institution
incurs an overdraft in its account with the
Bangko Sentral, the same shall be
eliminated within the period prescribed in
Section 102 of this Act.
E. CREDIT TERMS
Section 85. Interest and Rediscount. -
The Bangko Sentral shall collect interest
and other appropriate charges on all loans
and advances it extends, the closure,
receivership or liquidations of the debtor-
institution notwithstanding. This provision
shall apply prospectively.
The Monetary Board shall fix the
interest and rediscount rates to be charged
by the Bangko Sentral on its credit
operations in accordance with the character
and term of the operation, but after due
consideration has been given to the credit
needs of the market, the composition of the
Bangko Sentral's portfolio, and the general
requirements of the national monetary
policy. Interest and rediscount rates shall be
applied to all banks of the same category
uniformly and without discrimination.
Section 86. Endorsement. - The
documents rediscounted, discounted,
bought or accepted as collateral by the
Bangko Sentral in the course of the credit
operations authorized in this article shall
bear the endorsement of the institution
from which they are received.
Section 87. Repayment of Credits. -
Documents rediscounted, discounted or
accepted as collateral by the Bangko Sentral
must be withdrawn by the borrowing
institution on the dates of their maturities,
or upon liquidation of the obligations which
they represent or to which they relate
whenever said obligations have been
liquidated prior to their dates of maturity.
Banks shall have the right at any time
to withdraw any documents which they
have presented to the Bangko Sentral as
collateral, upon payment in full of the
corresponding debt to the Bangko Sentral,
including interest charges.
Section 88. Other requirements. - The
Monetary Board may prescribe, within the
general powers granted to it under this Act,
additional conditions which borrowing
institutions must satisfy in order to have
access to the credit of the Bangko Sentral.
These conditions may refer to the rates of
interest charged by the banks, to the instrumentalities and fully
purposes for which their loans in general guaranteed by the Government.
are destined, and to any other clearly The evidences of indebtedness
definable aspect of the credit policy of the acquired under the provisions of this
bank. section must be freely negotiable and
Section 89. Provisional Advances to regularly serviced and must be available to
the National Government. - The Bangko the general public through banking
Sentral may make direct provisional institutions and local government
advances with or without interest to the treasuries in denominations of a thousand
National Government to finance pesos or more.
expenditures authorized in its annual Section 92. Issue and Negotiation of
appropriation: Provided, That said advances Bangko Sentral Obligations. - In order to
shall be repaid before the end of three (3) provide the Bangko Sentral with effective
months extendible by another three (3) instruments for open market operations,
months as the Monetary Board may allow the Bangko Sentral may, subject to such
following the date the National Government rules and regulations as the Monetary
received such provisional advances and Board may prescribe and in accordance
shall not, in their aggregate, exceed twenty with the principles stated in Section 90 of
percent (20%) of the average annual this Act, issue, place, buy and sell freely
income of the borrower for the last three negotiable evidences of indebtedness of the
(3) preceding fiscal years. Bangko Sentral: Provided, That issuance of
ARTICLE V such certificates of indebtedness shall be
OPEN MARKET OPERATIONS FOR THE made only in cases of extraordinary
ACCOUNT OF THE BANGKO SENTRAL movement in price levels. Said evidences of
Section 90. Principles of Open Market indebtedness may be issued directly against
Operations. - The open market purchases the international reserve of the Bangko
and sales of securities by the Bangko Sentral or against the securities which it has
Sentral shall be made exclusively in acquired under the provisions of Section 91
accordance with its primary objective of of this Act, or may be issued without
achieving price stability. relation to specific types of assets of the
Section 91. Purchases and Sales of Bangko Sentral.
Government Securities. - In order to achieve The Monetary Board shall determine
the objectives of the national monetary the interest rates, maturities and other
policy, the Bangko Sentral may, in characteristics of said obligations of the
accordance with the principle stated in Bangko Sentral, and may, if it deems it
Section 90 of this Act and with such rules advisable, denominate the obligations in
and regulations as may be prescribed by the gold or foreign currencies.
Monetary Board, buy and sell in the open Subject to the principles stated in
market for its own account: Section 90 of this Act, the evidences of
(a) evidences of indebtedness indebtedness of the Bangko Sentral to
issued directly by the Government which this section refers may be acquired
of the Philippines or by its political by the Bangko Sentral before their maturity,
subdivisions; and either through purchases in the open
(b) evidences of indebtedness market or through redemptions at par and
issued by government by lot if the Bangko Sentral has reserved the
right to make such redemptions. The
evidences of indebtedness acquired or
redeemed by the Bangko Sentral shall not
be included among its assets, and shall be
immediately retired and cancelled.
ARTICLE VI
COMPOSITION OF BANGKO SENTRAL'S
PORTFOLIO
Section 93. Review of the Bangko
Sentral's Portfolio. - At least once every
month the Monetary Board shall review the
portfolio of the Bangko Sentral in relation to
its future credit policy.
In reviewing the Bangko Sentral's
portfolio, the Monetary Board shall
especially consider whether a sufficiently
large part of the portfolio consists of assets
with early maturities, in order that a
contraction in Bangko Sentral credit may be
effected promptly whenever the national
monetary policy so requires.
ARTICLE VII
BANK RESERVES
Section 94. Reserve Requirements. -
In order to control the volume of money
created by the credit operations of the
banking system, all banks operating in the
Philippines shall be required to maintain
reserves against their deposit liabilities:
Provided, That the Monetary Board may, at
its discretion, also require all banks and/or
quasi-banks to maintain reserves against
funds held in trust and liabilities for deposit
substitutes as defined in this Act. The
required reserves of each bank shall be
proportional to the volume of its deposit
liabilities and shall ordinarily take the form
of a deposit in the Bangko Sentral. Reserve
requirements shall be applied to all banks of
the same category uniformly and without
discrimination.
Reserves against deposit substitutes,
if imposed, shall be determined in the same
manner as provided for reserve
requirements against regular bank deposits,
with respect to the imposition, increase, and
computation of reserves.
The Monetary Board may exempt
from reserve requirements deposits and
deposit substitutes with remaining
maturities of two (2) years or more, as well
as interbank borrowings.
Since the requirement to maintain
bank reserves is imposed primarily to
control the volume of money, the Bangko
Sentral shall not pay interest on the
reserves maintained with it unless the
Monetary Board decides otherwise as
warranted by circumstances.
Section 95. Definition of Deposit
Substitutes. - The term "deposit substitutes"
is defined as an alternative form of
obtaining funds from the public, other than
deposits, through the issuance,
endorsement, or acceptance of debt
instruments for the borrower's own
account, for the purpose of relending or
purchasing of receivables and other
obligations. These instruments may include,
but need not be limited to, bankers
acceptances, promissory notes,
participations, certificates of assignment
and similar instruments with recourse, and
repurchase agreements. The Monetary
Board shall determine what specific
instruments shall be considered as deposit
substitutes for the purposes of Section 94 of
this Act: Provided, however, That deposit
substitutes of commercial, industrial and
other non-financial companies for the
limited purpose of financing their own
needs or the needs of their agents or dealers
shall not be covered by the provisions of
Section 94 of this Act.
Section 96. Required Reserves Against
Peso Deposits. - The Monetary Board may fix
and, when it deems necessary, alter the
minimum reserve ratios to peso deposits, as
well as to deposit substitutes, which each
bank and/or quasi-bank may maintain, and
such ratio shall be applied uniformly to all
banks of the same category as well as to
quasi-banks.
 Section 97. Required Reserves Against
Foreign Currency Deposits. - The Monetary
Board is similarly authorized to prescribe
and modify the minimum reserve ratios
applicable to deposits denominated in
foreign currencies.
Section 98. Reserves Against Unused
Balances of Overdraft Lines. - In order to
facilitate Bangko Sentral control over the
volume of bank credit, the Monetary Board
may establish minimum reserve
requirements for unused balances of
overdraft lines.
The powers of the Monetary Board to
prescribe and modify reserve requirements
against unused balances of overdraft lines
shall be the same as its powers with respect
to reserve requirements against demand
deposits.
Section 99. Increase in Reserve
Requirements. - Whenever in the opinion of
the Monetary Board it becomes necessary
to increase reserve requirements against
existing liabilities, the increase shall be
made in a gradual manner and shall not
exceed four percentage points in any thirty-
day period. Banks and other affected
financial institutions shall be notified
reasonably in advance of the date on which
such increase is to become effective.
Section 100. Computation on
Reserves. - The reserve position of each
bank or quasi-bank shall be calculated daily
on the basis of the amount, at the close of
business for the day, of the institution's
reserves and the amount of its liability
accounts against which reserves are
required to be maintained: Provided, That
with reference to holidays or non-banking
days, the reserve position as calculated at
the close of the business day immediately
preceding such holidays and non-banking
days shall apply on such days.
For the purpose of computing the
reserve position of each bank or quasi-bank,
its principal office in the Philippines and all
its branches and agencies located therein
shall be considered as a single unit.
Section 101. Reserve Deficiencies. -
Whenever the reserve position of any bank
or quasi-bank, computed in the manner
specified in the preceding section of this
Act, is below the required minimum, the
bank or quasi-bank shall pay the Bangko
Sentral one-tenth of one percent (1/10 of
1%) per day on the amount of the
deficiency or the prevailing ninety-one-day
treasury bill rate plus three percentage
points, whichever is higher: Provided,
however, That banks and quasi-banks shall
ordinarily be permitted to offset any
reserve deficiency occurring on one or more
days of the week with any excess reserves
which they may hold on other days of the
same week and shall be required to pay the
penalty only on the average daily deficiency
during the week. In cases of abuse, the
Monetary Board may deny any bank or
quasi-bank the privilege of offsetting
reserve deficiencies in the aforesaid
manner.
If a bank or quasi-bank chronically
has a reserve deficiency, the Monetary
Board may limit or prohibit the making of
new loans or investments by the institution
and may require that part or all of the net
profits of the institution be assigned to
surplus.
The Monetary Board may modify or
set aside the reserve deficiency penalties
provided in this section, for part or the
entire period of a strike or lockout affecting
a bank or a quasi-bank as defined in the
Labor Code, or of a national emergency
affecting operations of banks or quasi-
banks. The Monetary Board may also
modify or set aside reserved deficiency
penalties for rehabilitation program of a
bank.
Section 102. Interbank Settlement. -
The Bangko Sentral shall establish facilities
for interbank clearing under such rules and
regulations as the Monetary Board may
prescribe: Provided, That the Bangko
Sentral may charge administrative and
other fees for the maintenance of such
facilities.
The deposit reserves maintained by
the banks in the Bangko Sentral in
accordance with the provisions of Section
94 of this Act shall serve as basis for the
clearing of checks and the settlement of
interbank balances, subject to such rules
and regulations as the Monetary Board may
issue with respect to such operations:
Provided, That any bank which incurs on
overdrawing in its deposit account with the
Bangko Sentral shall fully cover said
overdraft, including interest thereon at a
rate equivalent to one-tenth of one percent
(1/10 of 1%) per day or the prevailing
ninety-one-day treasury bill rate plus three
percentage points, whichever is higher, not
later than the next clearing day: Provided,
further, That settlement of clearing balances
shall not be effected for any account which
continues to be overdrawn for five (5)
consecutive banking days until such time as
the overdrawing is fully covered or
otherwise converted into an emergency
loan or advance pursuant to the provisions
of Section 84 of this Act: Provided, finally,
That the appropriate clearing office shall be
officially notified of banks with overdrawn
balances. Banks with existing overdrafts
with the Bangko Sentral as of the effectivity
of this Act shall, within such period as may
be prescribed by the Monetary Board, either
convert the overdraft into an emergency
loan or advance with a plan of payment, or
settle such overdrafts, and that, upon failure
to so comply herewith, the Bangko Sentral
shall take such action against the bank as
may be warranted under this Act.
Section 103. Exemption from
Attachment and Other Purposes. - Deposits
maintained by banks with the Bangko
Sentral as part of their reserve
requirements shall be exempt from
attachment, garnishments, or any other
order or process of any court, government
agency or any other administrative body
issued to satisfy the claim of a party other
than the Government, or its political
subdivisions or instrumentalities.
ARTICLE VIII
SELECTIVE REGULATION OF BANK
OPERATIONS
Section 104. Guiding Principle. - The
Monetary Board shall use the powers
granted to it under this Act to ensure that
the supply, availability and cost of money
are in accord with the needs of the
Philippine economy and that bank credit is
not granted for speculative purposes
prejudicial to the national interests.
Regulations on bank operations shall be
applied to all banks of the same category
uniformly and without discrimination.
Section 105. Margin Requirements
Against Letters of Credit. - The Monetary
Board may at any time prescribe minimum
cash margins for the opening of letters of
credit, and may relate the size of the
required margin to the nature of the
transaction to be financed.
Section 106. Required Security
Against Bank Loans. - In order to promote
liquidity and solvency of the banking
system, the Monetary Board may issue such
regulations as it may deem necessary with
respect to the maximum permissible
maturities of the loans and investments
which the banks may make, and the kind
and amount of security to be required
against the various types of credit
operations of the banks.
Section 107. Portfolio Ceilings. -
Whenever the Monetary Board considers it
advisable to prevent or check an expansion
of bank credit, the Board may place an
upper limit on the amount of loans and
investments which the banks may hold, or
may place a limit on the rate of increase of
such assets within specified periods of time.
The Monetary Board may apply such limits
to the loans and investments of each bank
or to specific categories thereof.
In no case shall the Monetary Board
establish limits which are below the value
of the loans or investments of the banks on
the date on which they are notified of such
restrictions. The restrictions shall be
applied to all banks uniformly and without
discrimination.
Section 108. Minimum Capital
Ratios. - The Monetary Board may prescribe
minimum ratios which the capital and
surplus of the banks must bear to the
volume of their assets, or to specific
categories thereof, and may alter said ratios
whenever it deems necessary.
ARTICLE IX
COORDINATION OF CREDIT POLICIES BY
GOVERNMENT INSTITUTIONS
Section 109. Coordination of Credit
Policies. - Government-owned corporations
which perform banking or credit functions
shall coordinate their general credit policies
with those of the Monetary Board.
Toward this end, the Monetary Board
may, whenever it deems it expedient, make
suggestions or recommendations to such
corporations for the more effective
coordination of their policies with those of
the Bangko Sentral.
CHAPTER V — FUNCTIONS AS BANKER
AND FINANCIAL ADVISOR OF THE
GOVERNMENT
ARTICLE I
FUNCTIONS AS BANKER OF THE
GOVERNMENT
Section 110. Designation of Bangko
Sentral as Banker of the Government. - The
Bangko Sentral shall act as a banker of the
Government, its political subdivisions and
instrumentalities.
Section 111. Representation with the
International Monetary Fund. - The Bangko
Sentral shall represent the Government in
all dealings, negotiations and transactions
with the International Monetary Fund and
shall carry such accounts as may result from
Philippine membership in, or operations
with, said Fund.
Section 112. Representation with
Other Financial Institutions. - The Bangko
Sentral may be authorized by the
Government to represent it in dealings,
negotiations or transactions with the
International Bank for Reconstruction and
Development and with other foreign or
international financial institutions or
agencies. The President may, however,
designate any of his other financial advisors
to jointly represent the Government in such
dealings, negotiations or transactions.
Section 113. Official Deposits. - The
Bangko Sentral shall be the official
depository of the Government, its political
subdivisions and instrumentalities as well
as of government-owned or controlled
corporations and, as a general policy, their
cash balances should be deposited with the
Bangko Sentral, with only minimum
working balances to be held by
government-owned banks and such other
banks incorporated in the Philippines as the
Monetary Board may designate, subject to
such rules and regulations as the Board may
prescribe: Provided, That such banks may
hold deposits of the political subdivisions
and instrumentalities of the Government
beyond their minimum working balances
whenever such subdivisions or
instrumentalities have outstanding loans
with said banks.
The Bangko Sentral may pay interest
on deposits of the Government or of its
political subdivisions and instrumentalities,
as well as on deposits of banks with the
Bangko Sentral.
Section 114. Fiscal Operations. - The
Bangko Sentral shall open a general cash
account for the Treasurer of the Philippines,
in which the liquid funds of the Government
shall be deposited.
Transfers of funds from this account
to other accounts shall be made only upon
order of the Treasurer of the Philippines.
Section 115. Other Banks as Agents of
the Bangko Sentral. - In the performance of
its functions as fiscal agent, the Bangko
Sentral may engage the services of other
government-owned and controlled banks
and of other domestic banks for operations
in localities at home or abroad in which the
Bangko Sentral does not have offices or
agencies adequately equipped to perform
said operations: Provided, however, That
for fiscal operations in foreign countries,
the Bangko Sentral may engage the services
of foreign banking and financial institutions.
Section 116. Remuneration for
Services. - The Bangko Sentral may charge
equitable rates, commissions or fees for
services which it renders to the
Government, its political subdivisions and
instrumentalities.
ARTICLE II
THE MARKETING AND STABILIZATION
OF SECURITIES FOR THE ACCOUNT OF
THE GOVERNMENT
A. THE ISSUE AND PLACING OF
GOVERNMENT SECURITIES
Section 117. Issue of Government
Obligations. - The issue of securities
representing obligations of the Government,
its political subdivisions or
instrumentalities, may be made through the
Bangko Sentral, which may act as agent of,
and for the account of, the Government or
its respective subdivisions or
instrumentality, as the case may be:
Provided, however, That the Bangko Sentral
shall not guarantee the placement of said
securities, and shall not subscribe to their
issue except to replace its maturing
holdings of securities with the same type as
the maturing securities.
Section 118. Methods of Placing
Government Securities. - The Bangko Sentral
may place the securities to which the
preceding section refers through direct sale
to financial institutions and the public.
The Bangko Sentral shall not be a
member of any stock exchange or syndicate,
but may intervene therein for the sole
purpose of regulating their operations in
the placing of government securities.
The Government, or its political
subdivisions or instrumentalities, shall
reimburse the Bangko Sentral for the
expenses incurred in the placing of the
aforesaid securities.
Section 119. Servicing and
Redemption of the Public Debt. - The
servicing and redemption of the public debt
shall also be effected through the Bangko
Sentral.
B. BANGKO SENTRAL SUPPORT OF
THE GOVERNMENT SECURITIES MARKET
Section 120. The Securities
Stabilization Fund. - There shall be
established a "Securities Stabilization Fund"
which shall be administered by the Bangko
Sentral for the account of the Government.
The operations of the Securities
Stabilization Fund shall consist of purchases
and sales, in the open market, of bonds and
other evidences of indebtedness issued or
fully guaranteed by the Government. The
purpose of these operations shall be to
increase the liquidity and stabilize the value
of said securities in order thereby to
promote investment in government
obligations.
The Monetary Board shall use the
resources of the Fund to prevent, or
moderate, sharp fluctuations in the
quotations of said government obligations,
but shall not endeavor to alter movements
of the market resulting from basic changes
in the pattern or level of interest rates.
 The Monetary Board shall issue such
regulations as may be necessary to
implement the provisions of this section.
Section 121. Resources of the
Securities Stabilization Fund. - Subject to
Section 132 of this Act, the resources of the
Securities Stabilization Fund shall come
from the balance of the fund as held by the
Central Bank under Republic Act No. 265 as
of the effective date of this Act.
Section 122. Profits and Losses of the
Fund. - The Securities Stabilization Fund
shall retain net profits which it may make
on its operations, regardless of whether
said profits arise from capital gains or from
interest earnings. The Fund shall
correspondingly bear any net losses which
it may incur.
ARTICLE III
FUNCTIONS AS FINANCIAL ADVISOR OF
THE GOVERNMENT
Section 123. Financial Advice on
Official Credit Operations. - Before
undertaking any credit operation abroad,
the Government, through the Secretary of
Finance, shall request the opinion, in
writing, of the Monetary Board on the
monetary implications of the contemplated
action. Such opinions must similarly be
requested by all political subdivisions and
instrumentalities of the Government before
any credit operation abroad is undertaken
by them.
The opinion of the Monetary Board
shall be based on the gold and foreign
exchange resources and obligations of the
nation and on the effects of the proposed
operation on the balance of payments and
on monetary aggregates.
Whenever the Government, or any of
its political subdivisions or
instrumentalities, contemplates borrowing
within the Philippines, the prior opinion of
the Monetary Board shall likewise be
requested in order that the Board may
render an opinion on the probable effects of
the proposed operation on monetary
aggregates, the price level, and the balance
of payments.
Section 124. Representation on the
National Economic and Development
Authority. - In order to assure effective
coordination between the economic,
financial and fiscal policies of the
Government and the monetary, credit and
exchange policies of the Bangko Sentral, the
Deputy Governor designated by the
Governor of the Bangko Sentral shall be an
ex officio member of the National Economic
and Development Authority Board.
CHAPTER VI — PRIVILEGES AND
PROHIBITIONS
ARTICLE I Sentral, except as to those which are policy-
PRIVILEGES
Section 125. Tax Exemptions. - The
Bangko Sentral shall be exempt for a period
of five (5) years from the approval of this
Act from all national, provincial, municipal
and city taxes, fees, charges and
assessments.
The exemption authorized in the
preceding paragraph of this section shall
apply to all property of the Bangko Sentral,
to the resources, receipts, expenditures,
profits and income of the Bangko Sentral, as
well as to all contracts, deeds, documents
and transactions related to the conduct of
the business of the Bangko Sentral:
Provided, however, That said exemptions
shall apply only to such taxes, fees, charges
and assessments for which the Bangko
Sentral itself would otherwise be liable, and
shall not apply to taxes, fees, charges, or
assessments payable by persons or other
entities doing business with the Bangko
Sentral: Provided, further, That foreign
loans and other obligations of the Bangko
Sentral shall be exempt, both as to principal
and interest, from any and all taxes if the
payment of such taxes has been assumed by
the Bangko Sentral.
Section 126. Exemption from Customs
Duties. - The provision of any general or
special law to the contrary notwithstanding,
the importation and exportation by the
Bangko Sentral of notes and coins, and of
gold and other metals to be used for
purposes authorized under this Act, and the
importation of all equipment needed for
bank note production, minting of coins,
metal refining and other security printing
operations shall be fully exempt from all
customs duties and consular fees and from
all other taxes, assessments and charges
related to such importation or exportation.
Section 127. Applicability of the Civil
Service Law. - Appointments in the Bangko
determining, primarily confidential or
highly technical in nature, shall be made
only according to the Civil Service Law and
regulations: Provided, That no qualification
requirements for positions in the Bangko
Sentral shall be imposed other than those
set by the Monetary Board: Provided,
further, That, the Monetary Board or
Governor, in accordance with Sections 15(c)
and 17(d) of this Act, respectively, may
without need of obtaining prior approval
from any other government agency, appoint
personnel in the Bangko Sentral whose
services are deemed necessary in order not
to unduly disrupt the operations of the
Bangko Sentral.
Officers and employees of the Bangko
Sentral, including all members of the
Monetary Board, shall not engage directly
or indirectly in partisan activities or take
part in any election except to vote.
ARTICLE II
PROHIBITIONS
Section 128. Prohibitions. - The
Bangko Sentral shall not acquire shares of
any kind or accept them as collateral, and
shall not participate in the ownership or
management of any enterprise, either
directly or indirectly.
The Bangko Sentral shall not engage
in development banking or financing:
Provided, however, That outstanding loans
obtained or extended for development
financing shall not be affected by the
prohibition of this section.
CHAPTER VII — TRANSITORY
PROVISIONS
Section 129. Phase-out of Fiscal
Agency Functions. - Unless circumstances
warrant otherwise and approved by the
Congress Oversight Committee, the Bangko
Sentral shall, within a period of three (3)
years but in no case longer than five (5)
years from the approval of this Act, phase
out all fiscal agency functions provided for
in Sections 117, 118, 119, and 120 as well as
in other pertinent provisions of this Act and
transfer the same to the Department of
Finance.
Section 130. Phase-out of Regulatory
Powers Over the Operations of Finance
Corporations and Other Institutions
Performing Similar Functions. - The Bangko
Sentral shall, within a period of five (5)
years from the effectivity of this Act, phase
out its regulatory powers over finance
companies without quasi-banking functions
and other institutions performing similar
functions as provided in existing laws, the
same to be assumed by the Securities and
Exchange Commission.
Section 131. Implementing Details. -
The Bangko Sentral shall be made
operational by the performance of the
following acts:
(a) the President shall constitute
the Monetary Board by appointing
the members thereof within sixty
(60) days from the effectivity of
this Act; and
(b) the transfer of such assets and
liabilities from the Central Bank to
the Bangko Sentral as provided in
Section 132 shall be completed
 within ninety (90) days from the
constitution of the Monetary Board.
All incumbent personnel in the
Central Bank as of the date of the approval
of this Act shall continue to exercise their
duties and functions as personnel of the
Bangko Sentral subject to the provisions of
Section 133: Provided, That such personnel
in the Central Bank as may be necessary for
the purpose of implementing Section 132
may be assigned by the Bangko Sentral
Monetary Board to the Central Bank.
Section 132. Transfer of Assets and
Liabilities. - Upon the effectivity of this Act,
three (3) members of the Monetary Board,
which may include the Governor, in
representation of the Bangko Sentral, the
Secretary of Finance and the Secretary of
Budget and Management in representation
of the National Government, and the
Chairmen of the Committees on Banks of
the Senate and the House of
Representatives shall determine the assets
and liabilities of the Central Bank which
may be transferred to or assumed by the
Bangko Sentral. The Committee shall
complete its work within ninety (90) days
from the constitution of the Monetary Board
submitting a comprehensive report with all
its findings and justification.
The following guidelines shall be
strictly observed in the determination of
which assets and liabilities shall be
transferred to the Bangko Sentral:
(a) the Monetary Board and the
Secretary of Finance shall have
primary responsibility for working
out creative monetary and financial
solutions to retire the Central Bank
liabilities and losses at the least
cost to the Government;
(b) the Bangko Sentral shall remit
seventy-five percent (75%) of its
net profits to a special deposit
account (sinking fund) until such
time as the net liabilities of the
Central Bank shall have been
liquidated through generally
accepted finance mechanisms such
as, but not limited to, write-offs,
set-offs, condonation, collections,
reappraisal, revaluation and bond
issuance by the National
Government, or to the National
Government as dividends;
(c) the assets and liabilities to be
transferred shall be limited to an
amount that will enable the Bangko
Sentral to perform its
responsibilities adequately and
operate on a viable basis: Provided,
That the assets shall exceed the
liabilities as certified by the
Commission on Audit (COA), by an
initial amount of Ten billion pesos
(P10,000,000,000);
(d) liabilities to be assumed by the
Bangko Sentral shall include
liability for notes and coins in
circulation as of the effective date
of this Act; and
(e) any asset or liability of the
Central Bank not transferred to the
Bangko Sentral shall be retained
and administered, disposed of and
liquidated by the Central Bank itself
which shall continue to exist as the
CB Board of Liquidators only for
the purposes provided in this
paragraph but not later than
twenty-five (25) years or until such
time that liabilities have been
liquidated: Provided, That the
Bangko Sentral may financially
assist the Central Bank of
Liquidators in the liquidation of CB
liabilities: Provided, finally, That
upon disposition of said retained
assets and liquidation of said
retained liabilities, the Central
Bank shall be deemed abolished.
All actions taken by the Bangko are hereby repealed. Presidential Decree
Sentral Monetary Board under this section No. 1792 is likewise repealed.
shall be reported to Congress and the Section 136. Transfer of Powers. - All
President within thirty (30) days. powers, duties and functions vested by law
Section 133. Mandate to Organize. - in the Central Bank of the Philippines not
The Bangko Sentral shall be organized by inconsistent with the provisions of this Act
the Monetary Board without being subject shall be deemed transferred to the Bangko
to the provisions of Republic Act No. 7430, Sentral ng Pilipinas. All references to the
by adopting if it so desires, an entirely new Central Bank of the Philippines in any law
staffing pattern on organizational structure or special charters shall be deemed to refer
to suit the operations of the Bangko Sentral to the Bangko Sentral.
under this Act. No preferential or priority Section 137. Separability Clause. - If
right shall be given to or enjoyed by any any provision or section of this Act or the
personnel for appointment to any position application thereof to any person or
in the new staffing pattern, nor shall any circumstance is held invalid, the other
personnel be considered as having prior or provisions or sections of this Act, and the
vested rights with respect to retention in application of such provision or section to
the Bangko Sentral or in any position which other persons or circumstances, shall not be
may be created in the new staffing pattern, affected thereby.
even if he should be the incumbent of a Section 138. Effectivity Clause. - This
similar position prior to organization. The Act shall take effect fifteen (15) days
formulation of the program of organization following its publication in the Official
shall be completed within six (6) months Gazette or in two (2) national newspapers
after the effectivity of this Act, and shall be of general circulation.
fully implemented within a period of six (6) Approved: June 14, 1993
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
REPUBLIC ACT NO. 3591
AN ACT ESTABLISHING THE PHILIPPINE
DEPOSIT INSURANCE CORPORATION,
DEFINING ITS POWERS AND DUTIES AND
FOR OTHER PURPOSES
SECTION 1. There is hereby created a
Philippine Deposit Insurance Corporation
hereinafter referred to as the “Corporation”
which shall insure, as herein provided, the
deposits of all banks which are entitled to
the benefits of insurance under this Act, and
which shall have the powers hereinafter
granted.
SECTION 2. The powers and functions of the
Corporation shall be vested in a board of
directors consisting of three (3) members
one of whom shall be the Governor of the
Central Bank of the Philippines and two of
whom shall be citizens of the Republic of
the Philippines to be appointed by the
President of the Philippines with the advice
and consent of the Commission on
Appointments. One of the appointive
members shall be the Chairman of the
Board of Directors of the Corporation who
shall be appointed on a full time basis for a
term of six (6) years at an annual salary of
twenty-four thousand pesos (P24,000.00).
The other appointive member, who shall be
appointed for a term of four (4) years and
the Governor of the Central Bank shall each
receive a per diem of not exceeding fifty
pesos (P50.00) for each day of meeting
actually attended by them but in no case
shall each of them receive more than five
hundred pesos (P500.00) a month. In the
event of a vacancy in the Office of the
Governor of the Central Bank of the
Philippines, and pending the appointment
of his successor or during the absence of the
Governor, the Acting Governor of the
Central Bank of the Philippines shall act as
member of the Board of Directors. In the
event of a vacancy in the Office of the
Chairman of the Board of Directors and
pending the appointment of his successor,
the Governor of the Central Bank of the
Philippines shall act as Chairman. The
members of the Board of Directors shall be
ineligible during the time they are in office
and for a period of two years thereafter to
hold any office, position or employment in
any insured bank, except that this
restriction shall not apply to any member
who has served the full term for which he
was appointed. No member of the Board of
Directors shall be an officer or director of
any insured bank; and before entering upon
his duties as member of the Board of
Directors he shall certify under oath that he
has complied with this requirement and
such certification shall be filed with the
Secretary of the Board of Directors. Any
vacancy in the Board created by the death,
resignation, or removal of an appointive
member shall be filled by the appointment
of new member to complete the unexpired
period of the term of the member
concerned.{{1}}
The Board of Directors shall have the
authority:
1. To prepare and issue rules and
regulations as it considers necessary for the
effective discharge of its responsibilities;
2. To direct the management, operations
and administration of the Corporation;
3. To appoint, fix the remunerations and
remove all officers and employees of the
Corporation, subject to the Civil Service
Law; and{{2}}
4. To authorize such expenditures by the
Corporation as are in the interest of the
effective administration and operation of
the Corporation.{{3}}
[See additions as per RA 9302{{4}} and
RA 9576{{5}}]
SECTION 3. As used in this Act —
(a) The term “Board of Directors” means the
Board of Directors of the Corporation.
(b) The term “Bank” and “Banking
Institution” shall be synonymous and
interchangeable and shall include banks,
commercial banks, savings banks, mortgage
banks, rural banks, development banks,
cooperative banks, trust companies,
branches and agencies in the Philippines of
foreign banks and all other companies,
corporations, partnership performing
banking functions in the Philippines.
(c) The term “receiver” includes a receiver,
liquidating agent, conservator, commission,
person, or other agency charged by law
with the duty of winding up the affairs of a
bank.
(d) The term “insured bank” means any
bank the deposit of which are insured in
accordance with the provision of this Act;
(e) The term “non-insured bank” means any
bank the deposit of which are not insured.
(f) The term “deposit” means the unpaid
balance of money or its equivalent received
by a bank in the usual course of business
and for which it has given or is obliged to
give credit to a commercial, checking,
savings, time or thrift account or which is
evidenced by its certificate of deposit, and
trust funds held by such bank whether
retained or deposited in any department of
such bank or deposited in another bank,
together with such other obligations of a
bank as the Board of Directors shall find
and shall prescribe by regulations to be
deposit liabilities of the Bank: Provided,
That any obligation of a bank which is
payable at the office of the bank located
outside of the Philippines shall not be a
deposit for any of the purposes of this Act or
included as part of the total deposits or of
the insured deposit: Provided, further, That
any insured bank which is incorporated
under the laws of the Philippines which
maintains a branch outside the Philippines
may elect to include for insurance its
deposit obligation payable only at such
branch.
(g) The term “insured deposit” means the
net amount due to any depositor for
deposits in an insured bank (after deducting
offsets) less any part thereof which is in
excess of P10,000. Such net amount shall be
determined according to such regulations as
the Board of Directors may prescribe and in
determining the amount due to any
depositor there shall be added together all
deposits in the bank maintained in the same
capacity and the same right for his benefit
or in his own name or in the names of
others.
(h) The term “transfer deposit” means a
deposit in an insured bank made available
to a depositor by the Corporation as
payment of insured deposit of such
depositor in a closed bank and assumed by
another insured bank.
(i) The term “trust funds” means funds held
by an insured bank in a fiduciary capacity
and includes without being limited to, funds
held as trustee, executor, administrator,
guardian, or agent.{{6}}
SECTION 4. Any bank or banking institution
which is engaged in the business of
receiving deposits as herein defined on the
effective date of this Act, or which
thereafter may engage in the business of
receiving deposits, may insure its deposit
liabilities with the Corporation. Before
approving the application of such bank to
become an insured bank, the Board of
Directors shall give consideration to the
factors enumerated in Section 5 and shall
determine upon the basis of a thorough
examination of such bank, that its assets in
excess of its capital requirements are
adequate to enable it to meet all its
liabilities to depositors and other creditors
as shown by the books of the bank.{{7}}
SECTION 5. The factors to be considered by
the Board of Directors under the preceding
section shall be the following: the financial
history and condition of the Bank, the
adequacy of its capital structure, its future
earning prospects, the general character of
its management, the convenience and needs
of the community to be served by the Bank
and whether or not its corporate powers
are consistent with the purposes of this
Act.{{8}}
SECTION 6. (a) The assessment rate shall be
determined by the Board of Directors:
Provided, That the assessment rate shall not
exceed one-twelfth of one per centum per
annum. The semiannual assessment for
each insured bank shall be in the amount of
the product of one-half (1/2) the
assessment rate multiplied by the
assessment base. The assessment base shall
be the amount of the liability of the bank for
deposits, according to the definition of the
term “deposit” in and pursuant to
subsection (f) of Section 3 without any
deduction for indebtedness of depositors:
Provided, further, That the bank —
(1) may deduct (i) from the deposit balance
due to an insured bank the deposit balance
due from such insured bank (other than
trust funds deposited by it in such bank)
which is subject to an immediate
withdrawal; and (ii) cash items as
determined by either of the following
methods, at the option of the bank: (aa) by
multiplying by 2 the total of the cash items
forwarded for collection on the assessment
base days (being the days on which the
average deposits are computed) and cash
items held for clearings at the close of
business on said days, which are in the
process of collection and which the bank
has paid in the regular course of business or
credited to deposit accounts; or (bb) by
deducting the total of cash items forwarded
for collection on the assessment base days
and cash items held for clearings at the
close of business on said days, which are in
the process of collection and which the bank
has paid in the regular course of business or
credited to deposit accounts, plus such
uncollected items paid or credited on
preceding days which are in the process of
collection: Provided, That the Board of
Directors may define the terms “cash
items”, “process of collection”, and
“uncollected items” and shall fix the
maximum period for which any such item
may be deducted; and
(2) may exclude from its assessment base
(i) drafts drawn by it on deposit accounts in
other banks which are issued in the regular
course of business; and the amount of
devices or authorizations issued by it for
cash letters received, directing that its
deposit account in the sending bank be
charged with the amount thereof; and (ii)
cash funds which are received and held
solely for the purpose of securing a liability
to the bank but not in an amount in excess
of such liability, and which are not subject
to withdrawal by the obligor and are
carried in a special non-interest bearing
account designated to properly show their
purpose.
Each insured bank, as a condition to the
right to make any such deduction or
exclusion in determining its assessment
base, shall maintain such records as will
readily permit verification of the
correctness thereof. The semiannual
assessment base for one semi-annual period
shall be the average of the assessment base
of the bank as of the close of business on
March thirty-one and June thirty, and the
semi-annual assessment base for the other
semi-annual period shall be the average of
the assessment base of the bank as of the
close of business on September thirty and
December thirty-one: Provided, That when
any of said days is a nonbusiness day or a
legal holiday, either National or Provincial,
the preceding business day shall be used.
The certified statements required to be filed
with the Corporation under subsections (b)
and (c) of this section shall be in such form
and set forth such supporting information
as the Board of Directors shall prescribe.
The assessment payments required from
insured banks under subsections (b) and (c)
of this section shall be made in such manner
and at such time or times as the Board of
Directors shall prescribe, provided the time
or times so prescribed shall not be later
than sixty days after filing the certified
statement setting forth the amount of
assessment.{{9}}{{10}}
(b) On or before the 15th of July of each
year, each insured bank shall file with the
Corporation a certified statement showing
for the six months ending on the preceding
June thirty the amount of the assessment
base and the amount of the semi-annual
assessment due to the Corporation for the
period ending on the following December
thirty-one, determined in accordance with
subsection (a) of this section, which shall
contain or be verified by a written
declaration that it is made under the
penalties of perjury. Each insured bank
shall pay to the Corporation the amount of
the semi-annual assessment it is required to
certify. On or before the 15th day of January
of each year, each insured bank shall file
with the Corporation a similar certified
statement for the six months ending on the
preceding December thirty-one and shall
pay to the Corporation the amount of the
semi-annual assessment for the period
ending on the following June thirty which it
is required to certify.{{11}}
(c) Each bank which becomes an insured
bank shall not be required to file any
certified statement or pay any assessment
for the semi-annual period in which it
becomes an insured bank. On the expiration
of such period, each such bank shall comply
with the provisions of subsection (b) of this
section except that the semi-annual
assessment base for its first certified
statement shall be the assessment base of
the bank as of the close of business on the
preceding June thirty or December thirty-
one, whichever is applicable, determined in
accordance with subsection (a) of this
section. If such bank has assumed the
liabilities for deposits of another bank or
banks, it shall include such liabilities in its
assessment base. The first certified
statement shall show as the amount of the
first semi-annual assessment due to the
Corporation, an amount equal to the
product of one-half of the annual
assessment rate multiplied by such
assessment base.
(d) As of December thirty-one nineteen
hundred sixty-four and as of December
thirty-one of each calendar year thereafter,
the Corporation shall transfer 40 per
centum of its net assessment income to its
capital account and the balance of the net
assessment income shall be credited pro
rata to the insured banks based upon the
assessment of each bank becoming due
during the said calendar year. Each year
such credit shall be applied by the
Corporation toward the payment of the
total assessment becoming due for the
semi-annual assessment period beginning
the next ensuing July 1 and any excess
credit shall be applied upon the assessment
next becoming due. The term “net
assessment income” as used therein means
the total assessments which become due
during the calendar year less (1) the
operating costs and expenses of the
Corporation for the calendar year; (2)
additions to reserve to provide for
insurance losses during the calendar year,
except that any adjustment to reserve
which result in a reduction of such reserve
shall be added; and (3) the insurance losses
sustained in said calendar year plus losses
from any preceding years in excess of such
reserves. If the above deductions exceed in
amount the total assessments which
become due during the calendar year, the
amount of such excess shall be restored by
deduction from total assessments becoming
due in subsequent years.{{12}}
(e) The Corporation (1) may refund to an
insured bank any payment of assessment in
excess of the amount due to the Corporation
or (2) may credit such excess toward the
payment of the assessment next becoming
due from such bank and upon succeeding
assessments until the credit is exhausted.
(f) Any insured bank which fails to file any
certified statement required to be filed by it
in connection with determining the amount
of any assessment payable by the bank to
the Corporation may be compelled to file
such statement by mandatory injunction or
other appropriate remedy in a suit brought
for such purpose by the Corporation against
the bank and any officer or officers thereof
in any court of the Philippines of competent
jurisdiction in which such bank is located.
(g) The Corporation, in a suit brought in any
court of competent jurisdiction, shall be
entitled to recover from any insured bank
the amount of any unpaid assessment
lawfully payable by such insured bank to
the Corporation, whether or not such bank
shall have filed any such certified statement
and whether or not suit shall have been
brought to compel the bank to file any such
statement. No action or proceeding shall be
brought for recovery of any assessment due
to the Corporation or for the recovering of
any amount paid to the Corporation in
excess of the amount due to it, unless such
action or proceeding shall have been
brought within five years after the right
accrued for which the claim is made, except
where the insured bank has made or filed
with the Corporation a false or fraudulent
certified statement with the intent to evade,
in whole or in part, the payment of
assessment, in which case the claim shall
not have been deemed to have accrued until
the discovery by the Corporation that the
certified statement is false or fraudulent.
(h) Should any insured bank fail or refuse to
pay any assessment required to be paid by
such bank under any provision of this Act,
and should the bank not correct such failure
or refusal within thirty days after written
notice has been given by the Corporation to
an officer of the bank, citing this subsection,
and stating that the bank has failed or
refused to pay as required by law the
insured status of such bank shall be
terminated by the Board of Directors. The
remedies provided in this subsection and in
the two preceding subsections shall not be
construed as limiting any other remedies
against an insured bank but shall be in
addition thereto.{{13}}
(i) Trust funds held by an insured bank in a
fiduciary capacity whether held in trust or
deposited in any other department or in
another bank shall be insured like other
forms of deposits, in an amount not to
exceed P10,000 for each trust estate, and
when deposited by the fiduciary bank in
another insured bank, such trust funds shall
be similarly insured to the fiduciary bank
according to the trust estates represented.
Notwithstanding any other provision of this
Act, such insurance shall be separate from
and additional to that covering other
deposits of the owners of such trust funds
or the beneficiaries of such trust estates:
Provided, That where the fiduciary bank
deposits any of such trust funds in other
insured banks, the amount so held by other
insured banks on deposit shall not for the
purpose of any certified statement required
under subsections (b) and (c) of this section
be considered to be a deposit liability of the
fiduciary bank, but shall be considered to be
a deposit liability of the bank in which such
funds are so deposited by such fiduciary
bank. The Board of Directors shall have the
power by regulation to prescribe the
manner of reporting and of depositing such
trust funds.
SECTION 7. (a) Any insured bank may, upon
not less than ninety days, written notice to
the Corporation, and to the Development
Bank of the Philippines if it owns or holds as
pledges any preferred stock, capital notes,
or debentures of such bank, terminate its
status as an insured bank. Whenever the
Board of Directors shall find that an insured
bank or its directors or trustees have
continued unsafe or unsound practices in
conducting the business of the bank or
which have knowingly or negligently
permitted any of its officers or agents to
violate any provisions of any law or
regulation to which the insured bank is
subject, the Board of Directors shall first
give to the Central Bank of the Philippines a
statement with respect to such practices or
violations for the purpose of securing the
correction thereof and shall give a copy
thereof to the bank. Unless such correction
shall be made within one hundred twenty
days or such shorter period of time as the
Central Bank of the Philippines shall
require, the Board of Directors, if it shall
determine to proceed further, shall give to
the bank not less than thirty days’ written
notice of intention to determine the status
of the bank as an insured bank, and shall fix
a time and place for a hearing before the
Board of Directors or before a person
designated by it to conduct such hearing, at
which evidence may be produced, and upon
such evidence the Board of Directors shall
make written findings which shall be
conclusive. Unless the bank shall appear at
the hearing by a duly authorized
representative, it shall be deemed to have
consented to the termination of its status as
an insured bank. If the Board of Directors
shall find that any unsafe or unsound
practice or violation specified in such notice
has been established and has not been
corrected within the time above prescribed
in which to make such correction, the Board
of Directors may order that the insured
status of the bank be terminated on a date
subsequent to such finding and to the
expiration of the time specified in such
notice of intention. The Corporation may
publish notice of such termination and the
bank shall give notice of such termination to
each of the depositors at his last address of
record on the books of the bank, in such a
manner and at such a time as the Board of
Directors may find to be necessary and may
order for the protection of the depositors.
After the termination of the insured status
of any bank under the provisions of this
subsection, the insured deposits of each
depositor in the bank on the date of such
termination, less all subsequent
withdrawals from any deposits of such
depositor, shall continue for a period of two
years to be insured, and the bank shall
continue to pay to the Corporation
assessments as in the case of an insured
bank during such period. No additions to
any such deposits and no new deposits in
such bank made after the date of such
termination shall be insured by the
Corporation, and the bank shall not
advertise or hold itself out as having
insured deposits unless in the same
connection it shall also state equal
prominence that such additions to deposits
and new deposits made after such date are
not so insured. Such bank shall, in all other
respects, be subject to the duties and
obligations of an insured bank for the
period of two years from the date of such
termination, and in the event that such bank
shall be closed on account of insolvency
within such period of two years, the
Corporation shall have the same powers
and rights with respect to such bank as in
case of an insured bank.{{14}}
(b) Notwithstanding any other provision of
law, whenever the Board of Directors shall
determine that an insured banking
institution is not engaged in the business of
receiving deposits, the Corporation shall
notify the banking institution that its
insured status will terminate at the
expiration of the first full semi-annual
assessment period following such notice. A
finding by the Board of Directors that a
banking institution is not engaged in the
business of receiving deposits shall be
conclusive. The Board of Directors shall
prescribe the notice to be given by the
banking institution of such termination and
the Corporation may publish notice thereof.
Upon the termination of the insured status
of any such banking institution, its deposits
shall thereupon cease to be insured and the
banking institution shall thereafter be
relieved of all future obligations to the
Corporation, including the obligation to pay
future assessments.{{15}}
(c) Whenever the liabilities of an insured
bank for deposits shall have been assumed
by another insured bank or banks, the
insured status of the bank whose liabilities
are so assumed shall terminate on the date
of receipt by the Corporation of satisfactory
evidence of such assumption with like effect
as if its insured status had been terminated
on said date by the Board of Directors after
proceedings under subsection (a) of this
section: Provided, That if the bank whose
liabilities are so assumed gives to its
depositors notice of such assumption within
thirty days after such assumption takes
effect, by publication or by any reasonable
means, in accordance with regulations to be
prescribed by the Board of Directors, the
insurance of its deposits shall terminate at
the end of six months from the date such
assumption takes effect. Such bank shall be
subject to the duties and obligations of an
insured bank for the period its deposits are
insured: Provided, further, That if the
deposits are assumed by a newly insured
bank, the bank whose deposits are assumed
shall not be required to pay any assessment
upon the deposits which have been so
assumed after the semi-annual period in
which the assumption takes effect.
SECTION 8. The Corporation as a corporate
body shall have the power —
First. — To adopt and use a corporate seal.
Second. — To have succession until
dissolved by an Act of Congress.
Third. — To make contracts.
Fourth. — To sue and be sued, complain
and defend, in any court of law in the
Philippines. All suits of a civil nature to
which the corporation shall be a part shall
be deemed to arise under the laws of the
Philippines. No attachment or execution
shall be issued against the Corporation or
its property before final judgment in any
suit, action, or proceeding in any court. The
Board of Directors shall designate an agent
upon whom service of process may be made
in any province or city or jurisdiction in
which any insured bank is located.
Fifth. — To appoint by its Board of
Directors such officers and employees as
are not otherwise provided for in this Act to
define their duties, fix their compensation,
require bonds of them and fix penalty
thereof and to dismiss such officers and
employees for cause.
Sixth. — To prescribe, by its Board of
Directors, by-laws not inconsistent with
law, regulating the manner in which its
general business may be conducted, and the
privileges granted to it by law may be
exercised and enjoyed.
Seventh. — To exercise by its Board of
Directors, or duly authorized officers or
agents, all powers specifically granted by
the provisions of this Act, and such
incidental powers as shall be necessary to
carry on the powers so granted.
Eighth. — To make examinations of and to
require information and reports from
banks, as provided in this Act.{{16}}
Ninth. — To act as receiver.
Tenth. — To prescribe by its Board of
Directors such rules and regulations as it
may deem necessary to carry out the
provisions of this Act.{{17}}
[See additions as per PD 1940{{18}} and
RA 7400{{19}}]
SECTION 9. (a) The Board of Directors shall
administer the affairs of the Corporation
fairly and impartially and without
discrimination. The Corporation shall be
entitled to the free use of Philippine mail in
the same manner as the other offices of the
national government.
(b) The Board of Directors shall appoint
examiners who shall have power, on behalf
of the Corporation to examine any insured
bank or any bank making application to
become an insured bank, whenever in the
judgment of the Board of Directors an
examination of the bank is necessary. Each
such examiner shall have power to make a
thorough examination of all the affairs of
the bank and in doing so he shall have
power to administer oaths and to examine
and take and preserve the testimony of any
of the officers and agents thereof, and shall
make a full and detailed report of the
condition of the bank to the Corporation.
The Board of Directors in like manner shall
appoint claim agents who shall have power
to investigate and examine all claims for
insured deposits and transferred deposits.
Each claim agent shall have power to
administer oaths and to examine under oath
and take and preserve the testimony of any
person relating to such claims.{{20}}{{21}}
(c) Each insured bank shall make to the
Corporation reports of condition in such
form and at such times as the Board of
Directors may require such reports to be
published in such manner, not inconsistent
with any applicable law, as it may direct.
Every such bank which fails to make or
publish any such report within such time,
not less than five days, as the Board of
Directors may require, shall be subject to a
penalty of not more than P100 for each day
of such failure recoverable by the
Corporation for its use.
(d) The Corporation shall have access to
reports of examination made by, and
reports of condition made to the
Superintendent of Banks or the Governor of
the Central Bank of the Philippines, and the
Superintendent of Banks or the Governor of
the Central Bank of the Philippines shall
also have access to reports of examination
made on behalf of, and reports of condition
made to the Corporation.{{22}}{{23}}
(e) The members of the Board of Directors
and the officers and employees of the
Corporation are prohibited from revealing
any information relating to the condition or
business of any insured bank and any
member of the Board of Directors, officer or
employee of the Corporation violating this
provision shall be held liable for any loss or
injury suffered by the Corporation.{{24}}
[See additions as per RA 9302, RA 9576,
and RA 7400{{25}}]
SECTION 10. (a) A permanent insurance
fund in the amount of P5,000,000 to be
appropriated from the General Fund is
hereby created to be used by the
Corporation to carry out the purposes of
this Act; Provided, That the maximum
amount of the insured deposit of any
depositor shall be P10,000.{{26}}
(b) For the purposes of this Act an insured
bank shall be deemed to have been closed
on account of insolvency in any case in
which it has been closed for the purpose of
liquidation without adequate provision
being made for payment of its
depositors.{{27}}
(c) Whenever an insured bank shall have
been closed on account of insolvency,
payment of the insured deposits in such
bank shall be made by the Corporation as
soon as possible either (1) by cash or (2) by
making available to each depositor a
transferred deposit in another insured bank
in an amount equal to the insured deposit of
such depositor: Provided, That the
Corporation, in its discretion, may require
proof of claims to be filed before paying the
insured deposits, and that in any case where
the Corporation is not satisfied as to the
validity of a claim for an insured deposit, it
may require the final determination of a
court of competent jurisdiction before
paying such claim.{{28}}
(d) The Corporation, upon the payment of
any depositor as provided for in subsection
(c) of this section shall be subrogated to all
rights of the depositor against the closed
bank to the extent of such payment. Such
subrogation shall include the right on the
part of the Corporation to receive the same
dividends from the proceeds of the assets of
such closed bank and recoveries on account
of stockholders’ liability as would have been
payable to the depositor on a claim for the
insured deposits, but such depositor shall
retain his claim for any uninsured portion of
his deposit.
SECTION 11. (a) Payment of an insured
deposit to any person by the Corporation
shall discharge the Corporation, and
payment of a transferred deposit to any
person by the new bank or by an insured
bank in which a transferred deposit has
been made available shall discharge the
Corporation and such new bank or other
insured bank, to the same extent that
payment to such person by the closed bank
would have discharged it from liability for
the insured deposit.
(b) Except as otherwise prescribed by the
Board of Directors, neither the Corporation
nor such other insured bank shall be
required to recognize as the owner of any
portion of a deposit appearing on the
records of the closed bank under a name
other than that of the claimant, any person
whose name or interest as such owner is
not disclosed on the records of such closed
bank as part owner of said deposit, if such
recognition would increase the aggregate
amount of the insured deposits in such
closed bank.
(c) The Corporation may withhold payment
of such portion of the insured deposit of any
depositor in a closed bank as may be
required to provide for the payment of any
liability of such depositor as a stockholder
of the closed bank, or of any liability of such
depositor to the closed bank or its receiver,
which is not offset against a claim due from
such bank, pending the determination and
payment of such liability by such depositor
or any other person liable therefor.
(d) If, after the Corporation shall have given
at least three months notice to the
depositor by mailing a copy thereof to his
last-known address appearing on the
records of the closed bank, any depositor in
the closed bank shall fail to claim his
insured deposit from the Corporation
within eighteen months after the Monetary
Board of the Central Bank of the Philippines
or the proper court shall have ordered the
conversion of the assets of such closed bank
into money, all rights of the depositor
against the Corporation with respect to the
insured deposit shall be barred, and all
rights of the depositor against the closed
bank and its shareholders or the
receivership estate to which the
Corporation may have become subrogated,
shall thereupon revert to the
depositor.{{29}}
SECTION 12. (a) Money of the Corporation
not otherwise employed shall be invested in
obligations of the Republic of the
Philippines or in obligations guaranteed as
to principal and interest by the Republic of
the Philippines: Provided, That the
Corporation shall not sell or purchase any
such obligations for its own account and in
its own right and interest, at any one time
aggregating in excess of P100,000, without
the approval of the Insurance
Commissioner: And Provided, further, That
the Insurance Commissioner may waive the
requirement of his approval with respect to
any transaction or classes of transactions
subject to the provisions of this subsection
for such period of time and under such
conditions as he may determine.
(b) The banking or checking accounts of the
Corporation shall be kept with the Central
Bank of the Philippines, with the Philippine
National Bank, or with any other bank
designated as depository or fiscal agent of
the Philippine Government.
(c) When the Corporation has determined
that an insured bank is in danger of closing,
in order to prevent such closing, the
Corporation, in the discretion of its Board of
Directors, is authorized to make loans to, or
purchase the assets of, or make deposits in,
such insured bank, upon such terms and
conditions as the Board of Directors may
prescribe, when in the opinion of the Board
of Directors, the continued operation of
such bank is essential to provide adequate
banking service in the community. Such
loans and deposits may be in subordination
to the rights of depositors and other
creditors.{{30}}{{31}}
SECTION 13. The corporation is authorized
to borrow from the Central Bank of the
Philippines and the Central Bank is
authorized and directed to loan the
Corporation on such terms as may be fixed
by the Corporation and the Central Bank,
such funds as in the judgment of the Board
of Directors of the Corporation are from
time to time required for insurance
purposes not exceeding in the aggregate of
one hundred million pesos outstanding at
any one time: Provided, That the rate of
interest to be charged in connection with
any loan made pursuant to this section shall
not be less than the current average rate on
outstanding marketable and nonmarketable
obligations of the Republic of the
Philippines as of the last day of the month
preceding the making of such loan. Any such
loan shall be used by the Corporation solely
in carrying out its functions with respect to
such insurance.{{32}}
SECTION 14. All notes, debentures, bonds or
such obligations issued by the Corporation
shall be exempt from taxation.{{33}}
SECTION 15. (a) The Corporation shall
annually make a report of its operations to
the Congress as soon as practicable after the
1st day of January in each year.
(b) The financial transactions of the
Corporation shall be audited by the General
Auditing Office in accordance with the
principles and procedures applicable to
commercial corporate transactions and
under such rules and regulations as may be
prescribed by the Auditor General. The
audit shall be conducted at the place or
places where accounts of the Corporation
are normally kept. The representatives of
the General Auditing Office shall have
access to all books, accounts, records,
reports, files, and all other papers, things, or
property belonging to or in use by the
Corporation pertaining to its financial
transactions and necessary to facilitate the
audit, and they shall be afforded full
facilities for verifying transactions with the
balances or securities held by depositaries,
fiscal agents, and custodians. All such books,
accounts, records, reports, files, papers, and
property of the Corporation shall remain in
possession and custody of the Corporation.
(c) A report of the Audit for each fiscal year
ending on June 30 shall be made by the
Auditor General to the Congress not later
than January 15 following the close of such
fiscal year. On or before December 15
following such fiscal year the Auditor
General shall furnish the Corporation a
short form report showing the financial
position of the Corporation at the close of
fiscal year. The report to the Congress shall
set forth the scope of the audit and shall
include a statement of assets and liabilities
and surplus or deficit; a statement of
surplus or deficit analysis; a statement of
income and expenses; a statement of
sources and application of funds and such
comments and information as may be
deemed necessary to inform Congress of the
financial operations and condition of the
Corporation, together with such
recommendations with respect thereto as
the Auditor General may deem advisable.
The report shall also show specifically any
program, expenditure, or other financial
transactions or undertaking observed in the
course of the audit, which in the opinion of
the Auditor General, has been carried on or
made without authority of law. A copy of
each report shall be furnished to the
President of the Philippines, to the
Governor of the Central Bank of the
Philippines, and to the Corporation at the
time submitted to the Congress.{{34}}
SECTION 16. (a) Every insured bank shall
display at each place of business maintained
by it a sign or signs, and shall include a
statement to the effect that its deposits are
insured by the Corporation in all of its
advertisements: Provided, That the Board of
Directors may exempt from this
requirement advertisements which do not
relate to deposits or when it is impractical
to include such statement therein. The
Board of Directors shall prescribe by
regulation the forms of such signs and the
manner of display and the substance of such
statements and the manner of use. For each
day an insured bank continues to violate
any provisions of this subsection or any
lawful provisions of said regulations, it shall
be subject to a penalty of not more than
P100, which the Corporation may recover
for its use.{{35}}
(b) No insured bank shall pay any dividend
on its capital stock or interest on its capital
notes or debentures (if such interest is
required to be paid only out of net profits)
or distribute any of its capital assets while it
remains in default in the payment of any
assessment due to the Corporation; and any
director or officer of any insured bank who
participates in the declaration or payment
of any such dividend or interest or in any
such distribution shall, upon conviction, be
fined not more than P1,000 or imprisoned
not more than one year, or both: Provided,
That if such default is due to a dispute
between the insured bank and the
Corporation over the amount of such
assessment, this subsection shall not apply,
if such bank shall deposit security
satisfactory to the Corporation of payment
upon final determination of the issue.{{36}}
(c) Without prior written consent by the
Corporation, no insured bank shall (1)
merge or consolidate with any noninsured
bank or institution or convert into a
noninsured bank or institution or (2)
assume liability to pay any deposits made
in, or similar liabilities of, any noninsured
bank or institution or (3) transfer assets to
any noninsured bank or institution in
consideration of the assumption of
liabilities for any portion of the deposits
made in such insured bank.{{37}}
(d) The Corporation may require any
insured bank to provide protection and
indemnity against burglary, defalcation, and
other similar insurable losses. Whenever
any insured bank refuses to comply with
any such requirement the Corporation may
contract for such protection and indemnity
and add the cost thereof to the assessment
otherwise payable by such bank.{{38}}
(e) Any insured bank which willfully fails or
refuses to file any certified statement or pay
any assessment required under this Act
shall be subject to a penalty of not more
than P100 for each day that such violations
continue, which penalty the Corporation
may recover for its use: Provided, That this
subsection shall not be applicable under the
circumstances stated in the provisions of
subsection (b) of this section.{{39}}
SECTION 17. Except with the written
consent of the Corporation, no person shall
serve as a director, officer, or employee of
an insured bank who has been convicted, or
who is hereafter convicted, of any criminal
offense involving dishonesty or a breach of
trust. For each willful violation of this
prohibition, the bank involved shall be
subject to a penalty of not more than P100
for each day this prohibition is violated,
which the Corporation may recover for its
use.{{40}}{{41}}{{42}}{{43}}{{44}}
SECTION 18. If any provision or section of
this Act or the application thereof to any
person or circumstances is held invalid, the
other provisions or sections of this Act, in
the application of such provision or section
to other persons or circumstances, shall not
be affected thereby.{{45}}{{46}}
SECTION 19. All Acts or parts of Acts and
executive orders, administrative orders, or
parts thereof which are inconsistent with
the provisions of this Act are hereby
repealed.{{47}}
SECTION 20. This Act shall take effect upon
approval. The Philippine Deposit Insurance
Corporation shall commence business upon
organization of the Board of Directors and
certification by the Treasurer of the
Philippines that the Permanent Insurance
Fund has been appropriated.{{48}}
[Section 21{{49}}]
[Section 22{{50}}]
[Section 23{{51}}]
[Section 24{{52}}]
[Section 25{{53}}]
[Section 26{{54}}]
[Section 27{{55}}]
[Section 28{{56}}]]
Approved: June 22, 1963
Published in the Official Gazette, Vol. 59, No.
36, p. 6003 on September 9, 1963.
Source: CD Asia
[[1]] As amended by Republic Act No.
9302, August 12, 2004:
SECTION 2. The powers and functions of the
Corporation shall be vested in and exercised
by a Board of Directors which shall be
composed of five (5) members as follows:
a. The Secretary of Finance who shall be
the ex-officio Chairman of the Board without
compensation.
b. The Governor of the Bangko Sentral ng
Pilipinas, who shall be ex-officio member of
the Board without compensation.
c. The President of the Corporation, who
shall be appointed by the President of the
Philippines from either the Government or
private sector to serve on a full-time basis
for a term of six (6) years. The President of
the Corporation shall also serve as Vice
Chairman of the Board.
d. Two (2) members from the private
sector, to be appointed for a term of six (6)
years without reappointment by the
President of the Philippines: Provided, That
of those first appointed, the first appointee
shall serve for a period of two (2) years.
No person shall be appointed as member of
the Board unless he be of good moral
character and of unquestionable integrity
and responsibility, and who is of recognized
competence in economics, banking and
finance, law, management administration or
insurance, and shall be at least thirty-five
(35) years of age. For the duration of their
tenure or term in office and for a period of
one year thereafter, the appointive
members of the Board shall be disqualified
from holding any office, position or
employment in any insured bank.
The Secretary of Finance and the Governor
of the Bangko Sentral may each designate a
representative, whose position shall not be
lower than an undersecretary or deputy
governor respectively, to attend such
meetings and to vote on behalf of their
respective principals. Whenever the
Chairman of the Board is unable to attend a
meeting of the Board, or in the event of a
vacancy in the office of the Secretary of
Finance, the President of the Corporation
shall act as Chairman.
The presence of three (3) members shall
constitute a quorum. All decisions of the
Board of Directors shall require the
concurrence of at least three (3) members.
The Secretary of Finance shall fix the rate
of per diem for every Board meeting
attended by the members of the Board of
Directors from the private sector. The
President of the Philippines may fix such
emoluments that may be received by the
Board of Directors comparable to the
emoluments of members of the Board of
Directors of other government financial
institutions.[[1]]
[[2]] As amended by RA 9302:
3. To 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 Corporation 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
Corporation’s human resource development
program: Provided, That all positions in the
Corporation shall be governed by a
compensation, position classification
system and qualification standards
approved by the Board based on a
comprehensive job analysis and audit of
actual duties and responsibilities. The
compensation plan shall be comparable
with the prevailing compensation plans of
other government financial institutions and
shall be subject to review by the Board no
more than once every two (2) years without
prejudice to yearly merit reviews or
increases based on productivity and
profitability. The Corporation shall
therefore be exempt from existing laws,
rules and regulations on compensation,
position classification and qualification
standards. It shall however endeavor to
make its system conform as closely as
possible with the principles under Republic
Act No. 6758, as amended.[[2]]
[[3]]As amended by RA 9302:
4. To appoint, establish the rank, fix the
remuneration, approve local and foreign
training of, and remove any officer or
employee of the Corporation, for cause,
subject to pertinent civil service
laws: Provided, That the Board of Directors
may delegate this authority to the President
subject to specific guidelines;[[3]]
[[4]] As added by RA 9302:
5. To adopt an annual budget for, and
authorize such expenditures by the
Corporation as are in the interest of the
effective administration and operation of
the Corporation; and
6. To approve the methodology for
determining the level and amount of
provisioning for insurance and financial
assistance losses, which shall establish
reasonable levels of deposit insurance
reserves.[[4]]
[[5]] As added by RA 9576:
7. To review the organizational set-up of the
Corporation and adopt a new or revised
rganizational structure as it may deem
necessary for the Corporation to undertake
its mandate and functions.[[5]]
[[6]] Renumbered from Sec. 2 by RA 9302:
SECTION 3. The President of the
Corporation shall be the Chief Executive
thereof and his salary shall be fixed by the
President of the Philippines at a sum
commensurate to the importance and
responsibility attached to the position. The
sum total of the salary of the President and
the allowances and other emoluments
which the Board of Directors may grant him
shall be the ceiling for fixing the salary,
allowances and other emoluments of all
other personnel in the Corporation.
The powers and duties of the President of
the Corporation are:
a. To prepare the agenda for the meeting of
the 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. To execute and administer the policies
and measures approved by the Board;
c. To direct and supervise the operations
and internal administration of the
Corporation in accordance with the policies
established by the Board. The President
may delegate certain of his administrative
responsibilities to other officers of the
Corporation, subject to the rules and
regulations of the Board;
d. To represent the Corporation, upon prior
authority of the Board, in all dealings with
other offices, agencies and instrumentalities
of the government and with all other
persons or entities, public or private,
whether domestic, foreign or international;
e. To authorize, with his signature, upon
prior authority of the Board, contracts
entered into by the Corporation, notes and
securities issued by the Corporation, and
the annual reports, balance sheets, profits
and loss statements, correspondence and
other documents of the Corporation. The
signature of the President may be in
facsimile wherever appropriate;
f. To represent the Corporation, either
personally or through counsel, in all legal
proceedings or actions;
g. To delegate, with the prior approval of
the Board of Directors, his power to
represent the Corporation, as provided in
subsections (d) and (f) of this Section, to
other officers of the Corporation; and
h. To exercise such other powers as may be
vested in him by the Board.
The President shall be assisted by a Vice
President and other officials whose
appointment and removal for cause shall be
approved and whose salary shall be fixed by
the Board of Directors upon
recommendation of the President of the
Corporation. During the absence or
temporary incapacity of the President, or in
case of vacancy or permanent incapacity
and pending the appointment of a new
President of the Corporation by the
President of the Philippines, the Vice
President shall act as President and
discharge the duties and responsibilities
thereof (as amended by Executive Order No.
890, April 8, 1983; RA 7400, April 13,
1992).[[6]]
[[7]] Renumbered from Sec. 3 by RA 9302:
SECTION 4. As used in this Act –
a. The term “Board of Directors” means the
Board of Directors of the Corporation.
b. The term “Bank” and “Banking
Institution” shall be synonymous and
interchangeable and shall include banks,
commercial banks, savings bank, mortgage
banks, rural banks, development banks,
cooperative banks, stock savings and loan
associations and branches and agencies in
the Philippines of foreign banks and all
other corporations authorized to perform
banking functions in the Philippines (as
amended by RA 7400).
c. The term “receiver” includes a receiver,
commission, person or other agency
charged by law with the duty to take charge
of the assets and liabilities of a bank which
has been forbidden from doing business in
the Philippines, as well as the duty to
gather, preserve and administer such assets
and liabilities for the benefit of the
depositors and creditors of said bank, and
to continue into liquidation whenever
authorized under this Act or other laws, and
to dispose of the assets and to wind up the
affairs of such bank (as amended by RA
7400).
d. The term “insured bank” means any bank
the deposits of which are insured in
accordance with the provisions of this Act.
e. The term “non-insured bank” means any
bank the deposits of which are not insured.
f. The term “deposit” means the unpaid
balance of money or its equivalent received
by a bank in the usual course of business
and for which it has given or is obliged to
give credit to a commercial, checking,
savings, time or thrift account, or issued in
accordance with Bangko Sentral rules and
regulations and other applicable laws,
together with such other obligations of a
bank, which, consistent with banking usage
and practices, the Board of Directors shall
determine and prescribe by regulations to
be deposit liabilities of the bank: Provided,
That any obligation of a bank which is
payable at the office of the bank located
outside of the Philippines shall not be a
deposit for any of the purposes of this Act or
included as part of the total deposits or of
insured deposit: Provided, further, That,
subject to the approval of the Board of
Directors, any insured bank which is
incorporated under the laws of the
Philippines which maintains a branch
outside the Philippines may elect to include
for insurance its deposit obligations payable
only at such branch.
The Corporation shall not pay deposit
insurance for the following accounts or
transactions, whether denominated,
documented, recorded or booked as deposit
by the bank:
1. Investment products such as bonds
and securities, trust accounts, and
other similar instruments;
2. Deposit accounts or transactions
which are unfunded, or that are
fictitious or fraudulent;
3. Deposit accounts or transactions
constituting, and/or emanating
from, unsafe and unsound banking
practice/s, as determined by the
Corporation, in consultation with
the BSP, after due notice and
hearing, and publication of a cease
and desist order issued by the
Corporation against such deposit
accounts or transactions; and
4. Deposits that are determined to be
the proceeds of an unlawful activity
as defined under Republic Act
9160, as amended.
The actions of the Corporation taken under
this section shall be final and executory, and
may not be restrained or set aside by the
court, except on appropriate petition for
certiorari on the ground that the action was
taken in excess of jurisdiction or with such
grave abuse of discretion as to amount to a
lack or excess of jurisdiction. The petition
for certiorari may only be filed within thirty
(30) days from notice of denial of claim for
deposit insurance (as amended
by Presidential Decree 1940, June 27,
1984; RA 7400; RA 9302; RA 9576).
g. The term “insured deposit” means the
amount due to any bona fide depositor for
legitimate deposits in an insured bank net
of any obligation of the depositor to the
insured bank as of the date of closure, but
not to exceed Five Hundred Thousand Pesos
(P500,000.00). Such net amount shall be
determined according to such regulations as
the Board of Directors may prescribe. In
determining such amount due to any
depositor, there shall be added together all
deposits in the bank maintained in the same
right and capacity for his benefit either in
his own name or in the name of others. A
joint account regardless of whether the
conjunction “and,” “or,” “and/or” is used,
shall be insured separately from any
individually-owned deposit
account: Provided, That (1) If the account is
held jointly by two or more natural persons,
or by two or more juridical persons or
entities, the maximum insured deposit shall
be divided into as many equal shares as
there are individuals, juridical persons or
entities, unless a different sharing is
stipulated in the document of deposit, and
(2) if the account is held by a juridical
person or entity jointly with one or more
natural persons, the maximum insured
deposit shall be presumed to belong
entirely to such juridical person or
entity: Provided, further, That the aggregate
of the interest of each co-owner over
several joint accounts, whether owned by
the same or different combinations of
individuals, juridical persons or entities,
shall likewise be subject to the maximum
insured deposit of Five Hundred Thousand
Pesos (P500,000.00): Provided, furthermore,
That the provisions of any law to the
contrary notwithstanding, no owner/holder
of any negotiable certificate of deposit shall
be recognized as a depositor entitled to the
rights provided in this Act unless his name
is registered as owner/holder thereof in the
books of the issuing bank: Provided, finally,
That, in case of a condition that threatens
the monetary and financial stability of the
banking system that may have systemic
consequences, as defined in section 17
hereof, as determined by the Monetary
Board, the maximum deposit insurance
cover may be adjusted in such amount, for
such a period, and/or for such deposit
products, as may be determined by a
unanimous vote of the Board of Directors in
a meeting called for the purpose and
chaired by the Secretary of Finance, subject
to the approval of the President of the
Philippines (as amended by RA 9302; RA
9576).
h. The term “transfer deposit” means a
deposit in an insured bank made available
to a depositor by the Corporation as
payment of insured deposit of such
depositor in a closed bank and assumed by
another insured bank.
i. The term “trust funds” means funds held
by an insured bank in a fiduciary capacity
and includes without being limited to, funds
held as trustee, executor, administrator,
guardian or agent.[[7]]
[[8]] As amended by RA 6037, August 4,
1969; renumbered from Sec. 4 by RA 9302:
SECTION 5. The deposit liabilities of any
bank or banking institution, which is
engaged in the business of receiving
deposits as herein defined on the effective
date of this Act, or which thereafter may
engage in the business of receiving deposits,
shall be insured with the Corporation.[[8]]
[[9]] As amended by RA 9302:
SECTION 6.
a. The assessment rate shall be determined
by the Board of Directors: Provided, That
the assessment rate shall not exceed one-
fifth (1/5) of one per centum (1%) per
annum. The semiannual assessment for
each insured bank shall be in the amount of
the product of one-half (1/2) the
assessment rate multiplied by the
assessment base but in no case shall it be
less than Five thousand pesos (P5,000.00).
The assessment base shall be the amount of
the liability of the bank for deposits as
defined under subsection (f) of Section 4
without any deduction for indebtedness of
depositors.[[9]]
[[10]] As amended by RA 7400:
The semi-annual assessment base for one
semi-annual period shall be the average of
the assessment base of the bank as of the
close of business on March thirty-one and
June thirty and the semi-annual assessment
base for the other semi-annual period shall
be the average of the assessment base of the
bank as of the close of business on
September thirty and December thirty-
one: Provided, That when any of said days is
a non-business day or legal holiday, either
national or provincial, the preceding
business day shall be used. The certified
statements required to be filed with the
Corporation under subsections (b) and (c)
of this Section shall be in such form and set
forth such supporting information as the
Board of Directors shall prescribe. The
assessment payments required from the
insured banks under subsections (b) and (c)
of this Section shall be made in such manner
and at such time or times as the Board of
Directors shall prescribe, provided the time
or times so prescribed shall not be later
than sixty (60) days after filing the certified
statement setting forth the amount of
assessment.[[10]]
[[11]]As amended by PD 1940:
b. On or before the 31st of July of each year,
each insured bank shall file with the
Corporation a certified statement showing
for the six months ending on the preceding
June thirty the amount of the assessment
base and the amount of the semi-annual
assessment due to the Corporation for the
period ending on the following December
thirty-one, determined in accordance with
subsection (a) of this Section, which shall
contain or be verified by a written
declaration that it is made under the
penalties of perjury. Each insured bank
shall pay to the Corporation the amount of
the semi-annual assessment it is required to
certify. On or before the 31st day of January
of each year, each insured bank shall file
with the Corporation a similar certified
statement for the six months ending on the
preceding December thirtyone and shall pay
to the Corporation the amount of the semi-
annual assessment for the period ending on
the following June thirty which it is
required to certify.[[11]]
[[12]] As amended by RA 9302:
d. All assessment collections and income
from operations after expenses and charges
shall be added to the Deposit Insurance
Fund under Section 13 hereof. Such
expenses and charges are: (1) the operating
costs and expenses of the Corporation for
the calendar year; (2) additions to reserve
to provide for insurance and financial
assistance losses, net of recoverable
amounts from applicable assets and
collaterals, during the calendar year; and
(3) the net insurance and financial
assistance losses sustained in said calendar
year.[[12]]
[[13]] As amended by RA 9302:
h. The Corporation shall not terminate the
insured status of any bank which continues
to operate or receive deposits. Should any
insured bank fail or refuse to pay any
assessment required to be paid by such
bank under any provision of this Act, and
should the bank not correct such failure or
refusal within thirty (30) days after written
notice has been given by the Corporation to
an officer of the bank citing this subsection,
and stating that the bank has failed or
refused to pay as required by the law, the
Corporation may, at its discretion, file a case
for collection before the appropriate court
without prejudice to the imposition of
administrative sanctions allowed under the
provisions of this Law on the bank officials
responsible for the non-payment of
assessment fees.[[13]]
[[14]] As amended by RA 7400; RA 9302:
a. Whenever upon examination by the
Corporation into the condition of any
insured bank, it shall be disclosed that an
insured bank or its directors or agents have
committed, are committing or about to
commit unsafe or unsound practices in
conducting the business of the bank, or have
violated, are violating or about to violate
any provisions of any law or regulation to
which the insured bank is subject, the Board
of Directors shall submit the report of the
examination to the Monetary Board to
secure corrective action thereon. If no such
corrective action is taken by the Monetary
Board within forty-five (45) days from the
submission of the report, the Board of
Directors shall, motu proprio, institute
corrective action which it deems necessary.
The Board of Directors may thereafter issue
a cease and desist order, and require the
bank or its directors or agents concerned to
correct the practices or violations within
forty-five (45) days. However, if the practice
or violation is likely to cause insolvency or
substantial dissipation of assets or earnings
of the bank, or is likely to seriously weaken
the condition of the bank or otherwise
seriously prejudice the interests of its
depositors and the Corporation, the period
to take corrective action shall not be more
than fifteen (15) days. The order may also
include the imposition of fines provided in
Section 21 (f) hereof. The Board of Directors
shall duly inform the Monetary Board of
the Bangko Sentral ng Pilipinas of action it
has taken under this subsection with
respect to such practices or violations.[[14]]
[[15]] As amended by EO 890; RA 7400:
b. The actions and proceedings provided in
the preceding subsection may be
undertaken by the Corporation if, in its
opinion, an insured bank or its directors or
agents have violated, are violating or about
to violate any provision of this Act or any
order, rule or instruction issued by the
Corporation or any written condition
imposed by the Corporation in connection
with any transaction with or grant by the
Corporation. [[15]]
[[16]] As amended by RA 9302; RA 9576:
Eighth – To conduct examination of banks
with prior approval of the Monetary
Board: Provided, That no examination can
be conducted within twelve (12) months
from the last examination date: Provided,
however, That the Corporation may, in
coordination with the Bangko Sentral,
conduct a special examination as the Board
of Directors, by an affirmative vote of a
majority of all of its members, if there is a
threatened or impending closure of a
bank; Provided, further, That,
notwithstanding the provisions of Republic
Act No. 1405, as amended, Republic Act
No. 6426, as amended, Republic Act No.
8791, and other laws, the Corporation
and/or the Bangko Sentral, may inquire into
or examine deposit accounts and all
information related thereto in case there is
a finding of unsafe or unsound banking
practice; Provided, finally, That to avoid
overlapping of efforts, the examination shall
maximize the efficient use of the relevant
reports, information, and findings of the
Bangko Sentral, which it shall make
available to the Corporation;[[16]]
[[17]] As amended by RA 6037:
Tenth – To prescribe by its Board of
Directors such rules and regulations as it
may deem necessary to carry out the
provisions of this Act;[[17]]
[[18]] As amended by PD 1940:
Eleventh – The Corporation may establish
its own provident fund which shall consist
of contributions made both by the
Corporation and by its officers and
employees to a common fund for the
payment of benefits to such officers or
employees or their heirs. The Board of
Directors shall prepare and issue rules and
regulations as it may deem necessary to
make effective the establishment and
operation of the fund;[[18]]
[[19]] As added by RA 7400:
Twelfth – To compromise, condone or
release, in whole or in part, any of claim or
settled liability to the Corporation,
regardless of the amount involved, under
such terms and conditions as may be
imposed by the Board of Directors to
protect the interest of the
Corporation.[[19]]
[[20]] As amended by EO 890; RA 7400:
b. The Board of Directors shall appoint
examiners who shall have power, on behalf
of the Corporation to examine any insured
bank. Each such examiner shall have the
power to make a thorough examination of
all the affairs of the bank and in doing so, he
shall have the power to administer oaths, to
examine and take and preserve the
testimony of any of the officers and agents
thereof, and, to compel the presentation of
books, documents, papers, or records
necessary in his judgment to ascertain the
facts relative to the condition of the bank;
and shall make a full and detailed report of
the condition of the bank to the
Corporation. The Board of Directors in like
manner shall appoint claim agents who
shall have the power to investigate and
examine all claims for insured deposits and
transferred deposits. Each claim agent shall
have the power to administer oaths and to
examine under oath and take and preserve
testimony of any person relating to such
claim.[[20]]
[[21]] As added by RA 9302:
(b-1) The investigators appointed by the
Board of Directors shall have the power on
behalf of the Corporation to conduct
investigations on frauds, irregularities and
anomalies committed in banks, based on
reports of examination conducted by the
Corporation and Bangko Sentral ng
Pilipinas or complaints from depositors or
from other government agency. Each such
investigator shall have the power to
administer oaths, and to examine and take
and preserve the testimony of any person
relating to the subject of investigation.[[21]]
[[22]] As amended by EO 890; RA 7400; RA
9302:
d. The Corporation shall have access to
reports of examination made by, and
reports of condition made to the Bangko
Sentral ng Pilipinas or its appropriate
supervising departments, and the Bangko
Sentral ng Pilipinas shall also have access to
reports of examination made by, and
reports of condition made to the
Corporation:Provided, That the provisions
of any law to the contrary notwithstanding,
the Corporation shall likewise have access
to reports, findings and any other
information derived from any special or
general examination or inquiry conducted
by the Bangko Sentral in respect to bank
fraud or serious irregularity in an insured
bank: Provided, That the Corporation shall
use reports and findings under similar
terms and conditions prescribed by
applicable laws on the Bangko Sentral.[[22]]
[[23]] As added by RA 9302:
(d-1) Each insured bank shall keep and
maintain a true and accurate record or
statement of its daily deposit transactions
consistent with the standards set by
the Bangko Sentral ng Pilipinas and the
Corporation. Compliance with such
standards shall be duly certified by the
president of the bank or the compliance
officer:Provided, That refusal or willful
failure to issue the required certification
shall constitute a violation of this Section
and shall subject such officers of the bank to
the sanctions provided for under Section 21
(f) of this Act.[[23]]
[[24]] As added by RA 7400:
e. Personnel of the Corporation are hereby
prohibited from:
1. being an officer, director,
consultant, employee or
stockholder, directly or indirectly,
of any bank or banking institution
except as otherwise provided in
this Act;
2. receiving any gift or thing of value
from any officer, director or
employee thereof;
3. revealing in any manner, except as
provided in this Act or under order
of the court, information relating to
the condition or business of any
such institution. This prohibition
shall not apply to the giving of
information to the Board of
Directors, the President of the
Corporation, Congress, any agency
of government authorized by law,
or to any person authorized by
either of them in writing to receive
such information (as amended by
RA 9302).[[24]]
[[25]] f. The Corporation shall underwrite
or advance litigation costs and expenses,
including legal fees and other expenses of
external counsel, or provide legal assistance
to, directors, officers, employees or agents
of the Corporation in connection with any
civil, criminal, administrative or any other
action or proceeding, to which such
director, officer, employee or agent is made
a party by reason of, or in connection with,
the exercise of authority or performance of
functions and duties under this
Act: Provided, That such legal protection
shall not apply to any civil, criminal,
administrative or any action or proceeding
that may be initiated by the Corporation, in
whatever capacity, against such director,
officer, employee or agent: Provided,
further, That directors, officers, employees
or agents who shall resign, retire, transfer
to another agency or be separated from the
service, shall continue to be provided with
such legal protection in connection with any
act done or omitted to be done by them in
good faith during their tenure or
employment with the
Corporation: Provided, finally, That in the
event of a settlement or compromise,
indemnification shall be provided only in
connection with such matters covered by
the settlement as to which the Corporation
is advised by counsel that the persons to be
indemnified did not commit any negligence
or misconduct (as added by RA 9302).
g. The costs and expenses incurred in
defending the aforementioned action, suit
or proceeding may be paid by the
Corporation in advance of the final
disposition of such action, suit or
proceeding upon receipt of an undertaking
by or on behalf of the director, officer,
employee or agent to repay the amount
advanced should it ultimately be
determined by the Board of Directors that
he is not entitled to be indemnified as
provided in this subsection (as added by RA
9302).
h. Unless the actions of the Corporation or
any of its officers and employees are found
to be in willful violation of this Act,
performed in bad faith, with malice and/or
gross negligence, the Corporation, its
directors, officers, employees and agents
are held free and harmless to the fullest
extent permitted by law from any liability,
and they shall be indemnified for any and all
liabilities, losses, claims, demands, damages,
deficiencies, costs and expenses of
whatsoever kind and nature that may arise
in connection with the performance of their
functions, without prejudice to any criminal
liability under existing laws (as added by
RA 9576).
i. Legal assistance shall include the grant or
advance of reasonable legal fees as
determined by the Board of Directors to
enable the concerned director, officer,
employee or agent to engage counsel of his
choice, subject to approval by the Board of
Directors.
Notwithstanding the provisions of this
Section and Section 2, members of the
Board of Directors and personnel of the
Corporation may become directors and
officers of any bank and banking institution
and of any entity related to such institution
in connection with financial assistance
extended by the Corporation to such
institution and when, in the opinion of the
Board, it is appropriate to make such
designation to protect the interest of the
Corporation (as amended by RA 9302).
Borrowing from any bank or banking
institution by examiners and other
personnel of the examination departments
of the Corporation shall be prohibited only
with respect to the particular institution in
which they are assigned, or are conducting
an examination. Personnel of other
departments, offices or units of the
Corporation shall likewise be prohibited
from borrowing from any bank or banking
institution during the period of time that a
transaction of such institution with the
Corporation is being evaluated, processed
or acted upon by such personnel: Provided,
however, That the Board may, at its
discretion, indicate the position levels or
functional groups to which the prohibition
is applicable (as amended by RA 7400).
Borrowing by all full-time personnel of the
Corporation from any bank or banking
institution shall be secured and disclosed to
the Board, and shall be subject to such
further rules and regulations as the Board
may prescribe (as amended by RA
7400).[[25]]
[[26]] As amended/renumbered from Sec.
9-A by RA 9302:
SECTION 10. a. The provisions of other laws,
general or special, to the contrary
otwithstanding, whenever it shall be
appropriate for the Monetary Board of
the Bangko Sentral ng Pilipinas to appoint a
receiver of any banking institution pursuant
to existing laws, the Monetary Board shall
give prior notice and appoint the
Corporation as receiver.[[26]]
[[27]] As added by RA 9302:
b. The Corporation as receiver shall control,
manage and administer the affairs of the
closed bank. Effective immediately upon
takeover as receiver of such bank, the
powers, functions and duties, as well as all
allowances, remunerations and perquisites
of the directors, officers, and stockholders
of such bank are suspended, and the
relevant provisions of the Articles of
Incorporation and By-laws of the closed
bank are likewise deemed suspended.
The assets of the closed bank under
receivership shall be deemed in custodia
legis in the hands of the receiver. From the
time the closed bank is placed under such
receivership, its assets shall not be subject
to attachment, garnishment, execution, levy
or any other court processes. Therefore, a
judge, officer of the court or any person who
shall issue, order, process or cause the
issuance or implementation of the writ of
garnishment, levy, attachment or execution
shall be liable under Section 21
hereof.[[27]]
[[28]] As amended and added by RA 9302:
c. In addition to the powers of a receiver
pursuant to existing laws, the Corporation is
empowered to:
1. bring suits to enforce liabilities to
or recoveries of the closed bank;
2. appoint and hire persons or entities
of recognized competence in
banking or finance as its deputies
and assistants, to perform such
powers and functions of the
Corporation as receiver or
liquidator of the closed bank;
3. suspend or terminate the
employment of officers and
employees of the closed
bank: Provided, That payment of
separation pay or benefits shall be
made only after the closed bank has
been placed under liquidation
pursuant to the order of the
Monetary Board under Section 30
of R.A. 7653, and that such payment
shall be made from available funds
of the bank after deducting
reasonable expenses for
receivership and liquidation;
4. pay accrued utilities, rentals and
salaries of personnel of the closed
bank, for a period not exceeding
three (3) months, from available
funds of the closed bank;
5. collect loans and other claims of the
closed bank, and for the purpose,
modify, compromise or restructure
the terms and conditions of such
loans or claims as may be deemed
advantageous to the interest of the
creditors and claimants of the
closed bank;
6. hire or retain private counsels as
may be necessary;
7. borrow or obtain a loan, or
mortgage, pledge or encumber any
asset of the closed bank, when
necessary to preserve or prevent
dissipation of the assets, or to
redeem foreclosed assets of the
closed bank, or to minimize losses
to the depositors and creditors;
8. if the stipulated interest on
deposits is unusually high
compared with the prevailing
applicable interest rate, the
Corporation as receiver may
exercise such powers which may
include a reduction of the interest
rate to a reasonable rate: Provided,
That any modification or reduction
shall apply only to unpaid
interest; and and
9. exercise such other powers as are
inherent and necessary for the
effective discharge of the duties of
the Corporation as a receiver.
The Board of Directors shall adopt such
policies and guidelines as may be necessary
for the performance of the above powers by
personnel, deputies and agents of the
Corporation.[[28]]
[[29]] As added by RA 9302:
SECTION 11. In all cases or actions filed by
the Corporation as receiver for the recovery
of, or involving any asset of the closed bank,
payment of all docket and other court fees
shall be deferred until the action is
terminated with finality. Any such fees shall
constitute as a first lien on any judgment in
favor of the closed bank or in case of
unfavorable judgment, such fees shall be
paid as administrative expenses during the
distribution of the assets of the closed
bank.[[29]]
[[30]] As added by RA 7400; renumbered
from Sec. 9-B by RA 9302:
Before any distribution of the assets of the
closed bank in accordance with the
preference established by law, the
Corporation shall periodically charge
against said assets reasonable receivership
expenses and subject to approval by the
proper court, reasonable liquidation
expenses, it has incurred as part of the cost
of receivership/liquidation proceedings and
collect payment therefore from available
assets.[[30]]
[[31]] As added by RA 9302:
After the payment of all liabilities and
claims against the closed bank, the
Corporation shall pay any surplus dividends
at the legal rate of interest from date of
takeover to date of distribution, to creditors
and claimants of the closed bank in
accordance with legal priority before
distribution to the shareholders of the
closed bank.[[31]]
[[32]] As amended and added by RA 9302:
SECTION 13. To carry out the purposes of
this Act, the permanent insurance fund shall
be Three billion pesos (P3,000,000,000.00).
The Deposit Insurance Fund shall be the
capital account of the Corporation and shall
principally consist of the following: (i) the
Permanent Insurance Fund; (ii) assessment
collections, subject to the charges
enumerated in Section 6 (d); (iii) reserves
for insurance and financial assistance
losses; and (iv) retained earnings: Provided,
That the reserves for insurance and
financial assistance losses and retained
earnings shall be maintained at a
reasonable level to ensure capital
adequacy: Provided, further, That the
Corporation may, within two (2) years from
the passage of this Act, and every five (5)
years thereafter, conduct a study on the
need to adjust the amount of the Permanent
Insurance Fund, insurance cover,
assessment rate and assessment base, and
thereafter make the necessary
recommendation to Congress. For this
purpose, the Corporation may hire the
services of actuarial consultants to
determine, among others, the affordability
of assessment rates, analysis and evaluation
of insurance risk, and advisability of
imposing varying assessment rates or
insurance cover of different bank
categories.[[32]]
[[33]] As amended by RA 9302:
SECTION 14. Whenever an insured bank
shall have been closed by the Monetary
Board pursuant to Section 30 of R.A. 7653,
payment of the insured deposits on such
closed bank shall be made by the
Corporation as soon as possible either (1)
by cash or (2) by making available to each
depositor a transferred deposit in another
insured bank in an amount equal to insured
deposit of such depositor: Provided,
however, That the Corporation, in its
discretion, may require proof of claims to be
filed before paying the insured deposits,
and that in any case where the Corporation
is not satisfied as to the viability of a claim
for an insured deposit, it may require final
determination of a court of competent
jurisdiction before paying such
claim: Provided, further, That failure to
settle the claim, within six (6) months from
the date of filing of claim for insured
deposit, where such failure was due to
grave abuse of discretion, gross negligence,
bad faith, or malice, shall, upon conviction,
subject the directors, officers or employees
of the Corporation responsible for the delay,
to imprisonment from six (6) months to one
(1) year: Provided, furthermore, That the
period shall not apply if the validity of the
claim requires the resolution of issues of
facts and or law by another office, body or
agency including the case mentioned in the
first proviso or by the Corporation together
with such other office, body or agency.[[33]]
[[34]] As amended by PD 1940; RA 7400;
renumbered from Sec. 10(d) by RA 9302:
SECTION 15. The Corporation, upon
payment of any depositor as provided for in
subsection (c) of this Section, shall be
subrogated to all rights of the depositor
against the closed bank to the extent of such
payment. Such subrogation shall include the
right on the part of the Corporation to
receive the same dividends and payments
from the proceeds of the assets of such
closed bank and recoveries on account of
stockholders’ liability as would have been
payable to the depositor on a claim for the
insured deposits but, such depositor shall
retain his claim for any uninsured portion of
his deposit. All payments by the
Corporation of insured deposits in closed
banks partake of the nature of public funds,
and as such, must be considered a preferred
credit similar to taxes due to the National
Government in the order of preference
under Article 2244 of the New Civil
Code: Provided, further, That this preference
shall be likewise effective upon liquidation
proceedings already commenced and
pending as of the approval of this Act,
where no distribution of assets has been
made.[[34]]
[[35]] As added by RA 9302:
a. The Corporation shall commence the
determination of insured deposits due the
depositors of a closed bank upon its actual
takeover of the closed bank. The
Corporation shall give notice to the
depositors of the closed bank of the insured
deposits due them by whatever means
deemed appropriate by the Board of
Directors: Provided, That the Corporation
shall publish the notice once a week for at
least three (3) consecutive weeks in a
newspaper of general circulation or, when
appropriate, in a newspaper circulated in
the community or communities where the
closed bank or its branches are
located.[[35]]
[[36]] Renumbered from Sec. 11 (a) by RA
9302:
b. Payment of an insured deposit to any
person by the Corporation shall discharge
the Corporation, and payment of
transferred deposit to any person by the
new bank or by an insured bank in which a
transferred deposit has been made
available shall discharge the Corporation
and such new bank or other insured bank,
to the same extent that payment to such
person by the closed bank would have
discharged it from liability for the insured
deposit.[[36]]
[[37]] Renumbered from Sec. 11 (b) by RA
9302:
c. Except as otherwise prescribed by the
Board of Directors, neither the Corporation
nor such other insured bank shall be
required to recognize as the owner of any
portion of a deposit appearing on the
records of the closed bank under a name
other than that of the claimant, any person
whose name or interest as such owner is
not disclosed on the records of such closed
bank as part owner of said deposit, if such
recognition would increase the aggregate
amount of the insured deposits in such
closed bank.[[37]]
[[38]] Renumbered from Sec. 11 (c) by RA
9302:
d. The Corporation may withhold payment
of such portion of the insured deposit of any
depositor in a closed bank as may be
required to provide for the payment of any
liability of such depositor as a stockholder
of the closed bank, or of any liability of such
depositor to the closed bank or its receiver,
which is not offset against a claim due from
such bank, pending the determination and
payment of such liability by such depositor
or any other liable therefor.[[38]]
[[39]] As amended by RA 9302:
e. Unless otherwise waived by the
Corporation, if the depositor in the closed
bank shall fail to claim his insured deposits
with the Corporation within two (2) years
from actual takeover of the closed bank by
the receiver, or does not enforce his claim
filed with the corporation within two (2)
years after the two-year period to file a
claim as mentioned hereinabove, all rights
of the depositor against the Corporation
with respect to the insured deposit shall be
barred; however, all rights of the depositor
against the closed bank and its shareholders
or the receivership estate to which the
Corporation may have become subrogated,
shall thereupon revert to the depositor.
Thereafter, the Corporation shall be
discharged from any liability on the insured
deposit.[[39]]
[[40]] As amended by RA 6037;
renumbered from Sec. 12 by RA 9302:
SECTION 17. a. Money of the Corporation
not otherwise employed shall be invested in
obligations of the Republic of the
Philippines or in obligations guaranteed as
to principal and interest by the Republic of
the Philippines.[[40]]
[[41]] As amended by RA 9302:
b. The banking or checking accounts of the
Corporation shall be kept with the Bangko
Sentral ng Pilipinas, with the Philippine
National Bank, or with any other bank
designated as depository or fiscal agent of
the Philippine government.[[41]]
[[42]] As amended by RA 9576:
c. It is hereby declared to be the policy of
the State that the Deposit Insurance Fund of
the Corporation shall be preserved and
maintained at all times. Accordingly, all tax
obligations of the Corporation for a period
of five (5) years reckoned from the date of
effectivity of this Act shall be chargeable to
the Tax Expenditure Fund (TEF) in the
annual General Appropriations Act
pursuant to the provisions of Executive
Order No. 93, series of 1986; Provided,
That, on the 6th year and thereafter, the
Corporation shall be exempt from income
tax, final withholding tax, value-added tax
on assessments collected from member
banks, and local taxes (as added by RA
9576).
d. When the Corporation has determined
that an insured bank is in danger of closing,
in order to prevent such closing, the
Corporation, in the discretion of its Board of
Directors, is authorized to make loans to, or
purchase the assets of, or assume liabilities
of, or make deposits in, such insured bank,
upon such terms and condition as the Board
of Directors may prescribe, when in the
opinion of the Board of Directors, the
continued operation of such bank is
essential to provide adequate banking
service in the community or maintain
financial stability in the
economy (renumbered from Sec. 17 (c) by
RA 9576).[[42]]
[[43]] As amended by RA 7400:
The authority of the Corporation under the
foregoing paragraph to extend financial
assistance to, assume liabilities of, purchase
the assets of an insured bank may also be
exercised in the case of a closed insured
bank if the Corporation finds that the
resumption of operations of such bank is
vital to the interests of the community, or a
severe financial climate exists which
threatens the stability of a number of banks
possessing significant resources: Provided,
That the reopening and resumption of
operations of the closed bank shall be
subject to the prior approval of the
Monetary Board.
The Corporation may provide any
corporation acquiring control of, merging or
consolidating with or acquiring the assets of
an insured bank in danger of closing in
order to prevent such closing or of a closed
insured bank in order to restore to normal
operations, with such financial assistance as
it could provide an insured bank under this
subsection: Provided, That, within sixty
(60) days from date of assistance the
Corporation shall submit a report thereof to
the Monetary Board.[[43]]
[[44]] As amended by RA 9302:
The Corporation, prior to the exercise of the
powers under this Section, shall determine
that actual payoff and liquidation thereof
will be more expensive than the exercise of
this power: Provided, That when the
Monetary Board has determined that there
are systemic consequences of a probable
failure or closure of an insured bank, the
Corporation may grant financial assistance
to such insured bank in such amount as may
be necessary to prevent its failure or
closure and/or restore the insured bank to
viable operations, under such terms and
conditions as may be deemed necessary by
the Board of Directors, subject to
concurrence by the Monetary Board and
without additional cost to the Deposit
Insurance Fund.
A systemic risk refers to the possibility that
failure of one bank to settle net transactions
with other banks will trigger a chain
reaction, depriving other banks of funds
leading to a general shutdown of normal
clearing and settlement activity. Systemic
risk also means the likelihood of a sudden,
unexpected collapse of confidence in a
significant portion of the banking or
financial system with potentially large real
economic effects. Finally, the Corporation
may not use its authority under this
subsection to purchase the voting or
common stock of an insured bank but it can
enter into and enforce agreements that it
determines to be necessary to protect its
financial interests: Provided, That the
financial assistance may take the form of
equity or quasiequity of the insured bank as
may be deemed necessary by the Board of
Directors with concurrence by the
Monetary Board: Provided, further, That the
Corporation shall dispose of such equity as
soon as practicable.[[44]]
[[45]] As amended/renumbered from Sec.
13 by RA 9302:
SECTION 18. The Corporation is authorized
to borrow from the Bangko Sentral ng
Pilipinas and theBangko Sentral is
authorized to lend the Corporation on such
terms as may be agreed upon by the
Corporation and the Bangko Sentral, such
funds as in the judgment of the Board of
Directors of the Corporation are from time
to time required for insurance purposes and
financial assistance provided for in Section
17(d) of this Act: Provided, That any such
loan as may be granted by the Bangko
Sentral shall be consistent with monetary
policy; Provided, further, That the rate of
interest thereon shall be fixed by the
Monetary Board but shall not exceed the
treasury bill rate.[[45]]
[[46]] As amended by RA 6037; PD 653,
February 1, 1975; PD 1940; RA 7400:
When in the judgment of the Board of
Directors the funds of the Corporation are
not sufficient to provide for an emergency
or urgent need to attain the purposes of this
Act, the Corporation is likewise authorized
to borrow money, obtain loans or arrange
credit lines or other credit accommodations
from any bank designated as depository or
fiscal agent of the Philippine Government:
Provided, That such loan shall be of short-
term duration.[[46]]
[[47]] As amended by RA 9576:
SECTION 19. With the approval of the
President of the Philippines, the
Corporation is authorized to issue bonds,
debentures, and other obligations, both
local or foreign, as may be necessary for
purposes of providing liquidity for
settlement of insured deposits in closed
banks as well as for financial assistance as
provided herein: Provided, That the Board
of Directors shall determine the interest
rates, maturity and other requirements of
said obligations: Provided, further, That the
Corporation shall provide for appropriate
reserves for the redemption or retirement
of said obligation.
All notes, debentures, bonds, or such
obligations issued by the Corporation shall
be exempt from taxation both as to
principal and interest, and shall be fully
guaranteed by the Government of the
Republic of the Philippines. Such guarantee,
which in no case shall exceed two times the
Deposit Insurance Fund as of date of the
debt issuance, shall be expressed on the
face thereof.
The Board of Directors shall have the power
to prescribe rules and regulations for the
issuance, reissuance, servicing, placement
and redemption of the bonds herein
authorized to be issued as well as the
registration of such bonds at the request of
the holders thereof.[[47]]
[[48]] As amended by RA 9302:
SECTION 20. a. The Corporation shall
annually make a report of its operations to
the Congress as soon as practicable after the
1st day of January in each
year (renumbered from Sec. 15 (a) by RA
9302).
b. The financial transactions of the
Corporation shall be audited by the
Commission on Audit in accordance with
the principles and procedures applicable to
commercial corporate transactions and
under such rules and regulations as may be
prescribed by the Commission on Audit. The
audit shall be conducted at the place or
places where accounts of the Corporation
are normally kept. Except as to matters
relating to the function of the Corporation
as receiver which shall be subject to
visitorial audit only, the representatives of
the Commission on Audit shall have access
to all books, accounts, records, reports, files
and all other papers, things, or property
belonging to or in use by the Corporation
pertaining to its financial transactions and
necessary to facilitate the audit, and they
shall be afforded full facilities for verifying
transactions with the balances or securities
held by depositories, fiscal agents, and
custodians. All such books, accounts,
records, reports, files, papers, and property
of the Corporation shall remain in
possession and custody of the
Corporation (as amended/renumbered
from Sec. 15 (b) by RA 9302).
c. A report of the Audit for each fiscal year
ending on June 30 shall be made by the
Auditor General to the Congress not later
than January 15 following the close of such
fiscal year. On or before December 15
following such fiscal year, the Auditor
General shall furnish the Corporation a
short form report showing the financial
position of the Corporation at the close of
fiscal year. The report to the Congress shall
set forth the scope of the audit and shall
include a statement of assets and liabilities
and surplus or deficit; a statement of
surplus or deficit analysis; a statement of
income and expenses; a statement of
sources and application of funds and such
comments and information as may be
deemed necessary to inform Congress of the
financial operations and condition of the
Corporation, together with such
recommendations with respect thereto as
the Auditor General may deem advisable.
The report shall also show specifically any
program, expenditure, or other financial
transactions or undertaking observed in the
course of the audit, which in the opinion of
the Auditor General, has been carried on or
made without authority of law. A copy of
each report shall be furnished to the
President of the Philippines, to the
Governor of the Bangko Sentral ng Pilipinas,
and to the Corporation at the time
submitted to the Congress (as
amended/renumbered from Sec. 15 (c) by
RA 9302).[[48]]
[[49]]SECTION 21.
a. Every insured bank shall display at each
place of business maintained by it a sign or
signs, and shall include a statement in all its
advertisements to the effect that its
deposits are insured by the
Corporation: Provided, That the Board of
Directors may exempt from this
requirement advertisements which do not
relate to deposits or when it is impractical
to include such statement therein. The
Board of Directors shall prescribe by
regulations the forms of such signs and the
manner of use (as amended/renumbered
from Sec. 16 (a) by RA 9302).
b. No insured bank shall pay any dividend
on its capital stock or interest on its capital
notes or debentures (if such interest is
required to be paid only out of net profits)
or distribute any of its capital assets while it
remains in default in the payment of any
assessment due to the
Corporation: Provided, That if such default
is due to a dispute between the insured
bank and the Corporation over the amount
of such assessment, this subsection shall not
apply if such bank shall deposit security
satisfactory to the Corporation for payment
upon final determination of the issue (as
amended/renumbered from Sec. 16 (b) by
RA 9302).
c. Without prior written consent by the
Corporation, no insured bank shall (1)
merge or consolidate with any bank or
institution or (2) assume liability to pay any
deposits made in, or similar liabilities of,
any bank or institution or (3) transfer
assets to any bank or institution in
consideration of the assumption of
liabilities for any portion of the deposits
made in such insured bank (as amended by
EO 890; renumbered from Sec. 16 (c) by RA
9302).
d. The Corporation may require an insured
bank to provide protection and indemnity
against burglary, defalcation, losses arising
from discharge of duties by, or particular
acts of defaults of its directors, officers, or
employees, and other similar insurable
losses. The Board of Directors in
consultation with the Bangko Sentral, shall
determine the bonding requirement as it
refers to directors, officers and employers
of the insured bank as well as the form and
amount of the bond. Whenever any insured
bank refuses to comply with any such
requirement the Corporation may contract
for such protection and add the cost thereof
to the assessment otherwise payable by
such bank (as amended by RA 7400; RA
9302).
e. Any assessment payable by an insured
bank under this Act shall be subject to
payment of interest computed from the date
such assessment became due and payable
and at the legal rate for loans as prescribed
by law or appropriate authority and in case
of willful failure or refusal to pay such
assessment and interest thereon, there shall
be added a penalty equivalent to twice the
amount of interest payable as computed
herein for each day such violations
continue, which the interest and penalty the
Corporation may recover for its
use: Provided, That the penalty shall not be
applicable under the circumstances stated
in the provisions of subsection (b) of this
Section (as amended by EO 890; RA 7400).
f. The penalty of prision mayor or a fine of
not less than Fifty thousand pesos
(P50,000.00) but not more than Two
million pesos (P2,000,000.00), or both, at
the discretion of the court, shall be imposed
upon any director, officer, employee or
agent of a bank (as amended by RA 9302):
1. for any willful refusal to submit
reports as required by law, rules
and regulations
(as amended by RA 9302);
2. any unjustified refusal to permit
examination and audit of the
deposit records or the affairs of the
institution (as amended by RA
9302);
3. any willful making of a false
statement or entry in any bank
report or document required by the
Corporation (as amended by RA
9302);
4. submission of false material
information in connection with or
in relation to any financial
assistance of the Corporation
extended to the bank (as added by
RA 9302);
5. splitting of deposits or creation of
fictitious loans or deposit accounts
(as added by RA 9302).
Splitting of deposits occurs
whenever a deposit account with
an outstanding balance of more
than the statutory maximum
amount of insured deposit
maintained under the name of
natural or juridical persons is
broken down and transferred into
two (2) or more accounts in the
name/s of natural or juridical
persons or entities who have no
beneficial ownership on
transferred deposits in their names
within one hundred twenty (120)
days immediately preceding or
during a bankdeclared bank
holiday, or immediately preceding
a closure order issued by the
Monetary Board of the Bangko
Sentral ng Pilipinas for the purpose
of availing of the maximum deposit
insurance coverage (as added by
RA 9302; as amended by RA 9576);
6. refusal to allow the Corporation to
take over a closed bank placed
under its receivership or
obstructing such action of the
Corporation (as added by RA
9302);
7. refusal to turn over or destroying
or tampering bank records (as
added by RA 9302);
8. fraudulent disposal, transfer or
concealment of any asset, property
or liability of the closed bank under
the receivership of the Corporation
(as added by RA 9302);
9. violation of, or causing any person
to violate, the exemption from
garnishment, levy, attachment or
execution provided under this Act
and the New Central Bank Act (as
added by RA 9302);
10. any willful failure or refusal to
comply with, or violation of any
provision of this Act, or
commission of any other
irregularities, and/or conducting
business in an unsafe or unsound
manner as may be determined by
the Board of Directors (as amended
by RA 9302).
g. The Board of Directors is hereby
authorized to impose administrative fines
for any act or omission enumerated in the
preceding subsection, and for violation of
any order, instruction, rule or regulation
issued by the Corporation, against a bank
and/or any of its directors, officers or
agents responsible for such act, omission, or
violation, in amounts as it may be
determined to be appropriate, but in no
case to exceed three times the amount of
the damages or costs caused by the
transaction for each day that the violation
subsists, taking into consideration the
attendant circumstances, such as the nature
and gravity of the violation or irregularity
and the size of the bank (as amended by RA
9302).[[49]]
[[50]] SECTION 22. No court, except the
Court of Appeals, shall issue any temporary
restraining order, preliminary injunction or
preliminary mandatory injunction against
the Corporation for any action under this
Act (as added by RA 9302).
This prohibition shall apply in all cases,
disputes or controversies instituted by a
private party, the insured bank, or any
shareholder of the insured bank (as added
by RA 9302).
The Supreme Court may issue a restraining
order or injunction when the matter is of
extreme urgency involving a constitutional
issue, such that unless a temporary
restraining order is issued, grave injustice
and irreparable injury will arise. The party
applying for the issuance of a restraining
order or injunction shall file a bond in an
amount to be fixed by the Supreme Court,
which bond shall accrue in favor of the
Corporation if the court should finally
decide that the applicant was not entitled to
the relief sought (as added by RA 9302).
Any restraining order or injunction issued
in violation of this Section is void and of no
force and effect and any judge who has
issued the same shall suffer the penalty of
suspension of at least sixty (60) days
without pay (as added by RA 9302).[[50]]
[[51]] SECTION 23. The Corporation may
be reorganized by the Board of Directors by
adopting if it so desires, an entirely new
staffing pattern or organizational structure
to suit the operations of the Corporation
under this Act. No preferential or priority
right shall be given to or enjoyed by any
personnel for appointment to any position
in the new staffing pattern nor shall any
personnel be considered as having prior or
vested rights with respect to retention in
the Corporation or in any position which
may be created in the new staffing pattern,
even if he should be the incumbent of a
similar position prior to reorganization. The
reorganization shall be completed within
six (6) months after the effectivity of this
Act. Personnel who are not retained are
deemed separated from the service (as
added by RA 9302).[[51]]
application of such provision or section to
other persons or circumstances, shall not be
affected thereby (as added by RA
9302).[[54]]
[[55]] SECTION 27. Repealing Clause. – All
acts or parts of acts and executive orders,
administrative orders, or parts thereof
which are inconsistent with the provisions
of this Act are hereby repealed (as added by
RA 9302).[[55]]
[[56]] SECTION 28. Effectivity Clause. –
This Act shall take effect fifteen (15) days
following the completion of its publication
in the Official Gazette or in two (2)
newspapers of general circulation (as added
by RA 9302).[[56]]

[[52]] SECTION 24. The Board of Directors

is hereby authorized to provide separation
incentives, and all those who shall retire or
be separated from the service on account of
reorganization under the preceding section
shall be entitled to such incentives which
shall be in addition to all gratuities and
benefits to which they may be entitled
under existing laws (as added by RA
9302).[[52]]

[[53]] SECTION 25. The words “Central

Bank” and the “Central Bank of the
Philippines” wherever they appear in
Republic Act No. 3591, as amended, is
hereby replaced with Bangko Sentral
and/or Bangko Sentral ng Pilipinas,
respectively (as added by RA 9302).[[53]]

[[54]] SECTION 26. Separability Clause. – If

any provision or section of this Act or the
application thereof to any person or
circumstances is held invalid, the other
provisions or sections of this Act, in the
REPUBLIC ACT No. 1405
AN ACT PROHIBITING DISCLOSURE OF
OR INQUIRY INTO, DEPOSITS WITH ANY
BANKING INSTITUTION AND PROVIDING
PENALTY THEREFOR.
Section 1. It is hereby declared to be the
policy of the Government to give
encouragement to the people to deposit
their money in banking institutions and to
discourage private hoarding so that the
same may be properly utilized by banks in
authorized loans to assist in the economic
development of the country.
Section 2. 1 All deposits of whatever nature
with banks or banking institutions in the
Philippines including investments in bonds
issued by the Government of the
Philippines, its political subdivisions and its
instrumentalities, are hereby considered as
of an absolutely confidential nature and
may not be examined, inquired or looked
into by any person, government official,
bureau or office, except upon written
permission of the depositor, or in cases of
impeachment, or upon order of a competent
court in cases of bribery or dereliction of
duty of public officials, or in cases where the
money deposited or invested is the subject
matter of the litigation.
Section 3. It shall be unlawful for any
official or employee of a banking institution
to disclose to any person other than those
mentioned in Section two hereof any
information concerning said deposits.
Section 4. All Acts or parts of Acts, Special
Charters, Executive Orders, Rules and
Regulations which are inconsistent with the
provisions of this Act are hereby repealed.
Section 5. Any violation of this law will "Sec. 3. It shall be unlawful for any
subject offender upon conviction, to an official or employee of a banking
imprisonment of not more than five years institution to disclose to any person
or a fine of not more than twenty thousand other than those mentioned in
pesos or both, in the discretion of the court. Section two hereof any information
concerning said deposits."
Section 6. This Act shall take effect upon its
approval.
Approved: September 9, 1955
Footnote
1 This Section and Section 3 were
both amended by PD No.
1792 issued January 16, 1981, PD
1792 was expressly repealed by Sec
135 of R.A. No. 7653, approved
June 14, 1993. The original sections
2 and 3 of R.A. No.1405 are hereby
reproduced for reference, as
follows; "Sec 2 All deposits of
whatever nature with banks or
banking institutions in the
Philippines including investments
in bonds issued by the Government
of the Philippines, its political
subdivisions and its
instrumentalities, are hereby
considered as of an absolutely
confidential nature and may not be
examined, inquired or looked into
by any person, government official,
bureau or office, except upon
written per-mission of the
depositor, or in cases of
impeachment, or upon order of a
competent court in cases of bribery
or dereliction of duty of public
officials. or in cases where the
money deposited or invested is the
subject matter of the litigation,"
MALACAÑANG
Manila
PRESIDENTIAL DECREE No. 1792
AMENDING REPUBLIC ACT NO. 1405
WHEREAS, under existing legal framework,
the Central Bank has the authority to
examine all records of banks in the
discharge of its responsibilities under the
Central Bank Charter;
WHEREAS, the prohibition against inquiry
into bank deposits adversely delimits the
examining authority of the Central Bank.
WHEREAS, limited examination powers
operate against effective supervision of
banks and endangers the safety of deposits
which may affect the public's faith in the
banking system.
NOW, THEREFORE, I, FERDINAND E.
MARCOS, President of the Philippines, by
virtue of the powers in me vested by the
Constitution, do hereby decree and make
the following part of the law of the land;
Section 1. Section 2 of Republic Act No.
1405 is hereby amended to read as follows:
Section 2. All deposits of whatever nature
with banks or banking institutions in the
Philippines including investments in bonds
issued by the Government of the
Philippines, its political subdivisions and its
instrumentalities, are hereby considered as
of an absolutely confidential nature and
may not be examined, inquired or looked
into by any person, government official,
bureau or office, except when the
examination is made in the course of a
special or general examination of a bank
and is specifically authorized by the
Monetary Board after being satisfied that
there is reasonable ground to believe that a
bank fraud or serious irregularity has been
or is being committed and that it is
necessary to look into the deposit to
establish such fraud or irregularity, or when
the examination is made by an independent
auditor hired by the bank to conduct its
regular audit provided that the examination
is for audit purposes only and the results
thereof shall be for the exclusive use of the
bank, or upon written permission of the
depositor, or in cases of impeachment, or
upon order of a competent court in cases of
bribery or dereliction of duty of public
officials, or in cases where the money
deposited or invested is the subject matter
of the litigation.
Section 2. Section 3 of the same Act is
hereby amended to read as follows:
Section 3. It shall be unlawful for any
official or employee of a bank to disclose to
any person other than those mentioned in
Section Two hereof, or for an independent
auditor hired by a bank to conduct its
regular audit to disclose to any person other
than a bank director, official or employee
authorized by the bank, any information
concerning said deposits.
Section 3. This Decree shall take effect
immediately.
Done in the City of Manila, this 16th day of
January, in the year of Our Lord, nineteen
hundred and eighty-one.
Congress of the Philippines (2) Insurance companies
Twelfth Congress and all other institutions
supervised or regulated by
REPUBLIC ACT NO. 9160 September the Insurance Commission;
29, 2001 and
AN ACT DEFINING THE CRIME OF MONEY (3) (i) securities dealers,
LAUNDERING, PROVIDING PENALTIES brokers, salesmen,
THEREFOR AND FOR OTHER PURPOSES investment houses and
other similar entities
managing securities or
Be it enacted by the Senate and House of
Representatives of the Philippines in rendering services as
Congress assembled: investment agent, advisor,
or consultant, (ii) mutual
funds, close and
Section 1. Short Title. – This Act shall be investment companies,
known as the "Anti-Money Laundering Act common trust funds, pre-
of 2001." need companies and other
similar entities, (iii)
Section 2. Declaration of Policy. – It is foreign exchange
hereby declared the policy of the State to corporations, money
protect and preserve the integrity and changers, money payment,
confidentiality of bank accounts and to remittance, and transfer
ensure that the Philippines shall not be used companies and other
as a money laundering site for the proceeds similar entities, and (iv)
of any unlawful activity. Consistent with its other entities
foreign policy, the State shall extend administering or otherwise
cooperation in transnational investigations
dealing in currency,
and prosecutions of persons involved in commodities or financial
money laundering activities whenever
derivatives based thereon,
committed. valuable objects, cash
substitutes and other
Section 3. Definitions. For purposes of this similar monetary
Act, the following terms are hereby defined instruments or property
as follows: supervised or regulated by
Securities and Exchange
(a) "Covered Institution" refers to: Commission.
(b) "Covered transaction" is a
(1) banks, non-banks,
quasi-banks, trust entities, single, series, or combination of
transactions involving a total
and all other institutions
and their subsidiaries and amount in excess of Four million
Philippine pesos (Php4,000,000.00)
affiliates supervised or
regulated by the Bangko or an equivalent amount in foreign
currency based on the prevailing
Sentral ng Pilipinas (BSP);
exchange rate within five (5) money marked
consecutive banking days except instruments; and
those between a covered institution
and a person who, at the time of the (4) other similar
transaction was a properly instruments where title
identified client and the amount is thereto passes to another
commensurate with the business or by endorsement,
financial capacity of the client; or assignment or delivery.
those with an underlying legal or
trade obligation, purpose, origin or (d) "Offender" refers to any person
economic justification. who commits a money laundering
offense.
It likewise refers to a single, series
or combination or pattern of (e) "Person" refers to any natural
unusually large and complex or juridical person.
transactions in excess of Four
million Philippine pesos
(Php4,000,000.00) especially cash (f) "Proceeds" refers to an amount
deposits and investments having no derived or realized from an
credible purpose or origin, unlawful activity.
underlying trade obligation or
contract. (g) "Supervising Authority" refers
to the appropriate supervisory or
(c) "Monetary Instrument" refers regulatory agency, department or
to: office supervising or regulating the
covered institutions enumerated in
Section 3(a).
(1) coins or currency of
legal tender of the
(h) "Transaction" refers to any act
Philippines, or of any other
country; establishing any right or obligation
or giving rise to any contractual or
legal relationship between the
(2) drafts, checks and parties thereto. It also includes any
notes; movement of funds by any means
with a covered institution.
(3) securities or negotiable
instruments, bonds, (l) "Unlawful activity" refers to
commercial papers, any act or omission or series or
deposit certificates, trust combination thereof involving or
certificates, custodial
having relation to the following:
receipts or deposit
substitute instruments,
(1) Kidnapping for ransom
trading orders, transaction
tickets and confirmations under Article 267 of Act
No. 3815, otherwise
of sale or investments and
known as the Revised
Penal Code, as amended;
(2) Sections 3, 4, 5, 7, 8 and
9 of Article Two of
Republic Act No. 6425, as
amended, otherwise
known as the Dangerous
Drugs Act of 1972;
(3) Section 3 paragraphs B,
C, E, G, H and I of Republic
Act No. 3019, as amended;
otherwise known as the
Anti-Graft and Corrupt
Practices Act;
(4) Plunder under
Republic Act No. 7080, as
amended;
(5) Robbery and extortion
under Articles 294, 295,
296, 299, 300, 301 and 302
of the Revised Penal Code,
as amended;
(6) Jueteng and Masiao
punished as illegal
gambling under
Presidential Decree No.
1602;
(7) Piracy on the high seas
under the Revised Penal
Code, as amended and
Presidential Decree No.
532;
(8) Qualified theft under,
Article 310 of the Revised
Penal Code, as amended;
(9) Swindling under Article
315 of the Revised Penal
Code, as amended;
(10) Smuggling under
Republic Act Nos. 455 and
1937;
(11) Violations under
Republic Act No. 8792,
otherwise known as the
Electronic Commerce Act
of 2000;
(12) Hijacking and other
violations under Republic
Act No. 6235; destructive
arson and murder, as
defined under the Revised
Penal Code, as amended,
including those
perpetrated by terrorists
against non-combatant
persons and similar
targets;
(13) Fraudulent practices
and other violations under
Republic Act No. 8799,
otherwise known as the
Securities Regulation Code
of 2000;
(14) Felonies or offenses of
a similar nature that are
punishable under the penal
laws of other countries.
Section 4. Money Laundering Offense. –
Money laundering is a crime whereby the
proceeds of an unlawful activity are
transacted, thereby making them appear to
have originated from legitimate sources. It
is committed by the following:
(a) Any person knowing that any
monetary instrument or property
represents, involves, or relates to
the proceeds of any unlawful
activity, transacts or attempts to
transact said monetary instrument
or property.
(b) Any person knowing that any
monetary instrument or property
involves the proceeds of any
unlawful activity, performs or fails
to perform any act as a result of
which he facilitates the offense of
money laundering referred to in
paragraph (a) above.
(c) Any person knowing that any
monetary instrument or property is
required under this Act to be
disclosed and filed with the Anti-
Money Laundering Council (AMLC),
fails to do so.
Section 5. Jurisdiction of Money Laundering
Cases. – The regional trial courts shall have
jurisdiction to try all cases on money
laundering. Those committed by public
officers and private persons who are in
conspiracy with such public officers shall be
under the jurisdiction of the Sandiganbayan.
Section 6. Prosecution of Money
Laundering. –
(a) Any person may be charged
with and convicted of both the
offense of money laundering and
the unlawful activity as herein
defined.
(b) Any proceeding relating to the
unlawful activity shall be given
precedence over the prosecution of
any offense or violation under this
Act without prejudice to the
freezing and other remedies
provided.
Section 7. Creation of Anti-Money
Laundering Council (AMLC). – The Anti-
Money Laundering Council is hereby
created and shall be composed of the
Governor of the Bangko Sentral ng Pilipinas
as chairman, the Commissioner of the
Insurance Commission and the Chairman of
the Securities and Exchange Commission as
members. The AMLC shall act unanimously
in the discharge of its functions as defined
hereunder:
(1) to require and receive covered
transaction reports from covered
institutions;
(2) to issue orders addressed to the
appropriate Supervising Authority
or the covered institution to
determine the true identity of the
owner of any monetary instrument
or property subject of a covered
transaction report or request for
assistance from a foreign State, or
believed by the Council, on the
basis of substantial evidence to be
in whole or in part, whenever
located, representing, involving, or
related to, directly or indirectly, in
any manner or by any means, the
proceeds of an unlawful activity;
(3) to institute civil forfeiture
proceedings and all other remedial
proceedings through the Office of
the Solicitor General;
(4) to cause the filing of complaints
with the Department of Justice or
the Ombudsman for the
prosecution of money laundering
offenses;
(5) to initiate investigations of
covered transactions, money
laundering activities and other
violations of this Act;
(6) to freeze any monetary
instrument or property alleged to
be proceed of any unlawful activity;
(7) to implement such measures as
may be necessary and justified
under this Act to counteract money
laundering;
(8) to receive and take action in
respect of, any request from foreign
states for assistance in their own
anti-money laundering operations
provided in this Act;
(9) to develop educational
programs on the pernicious effects
of money laundering, the methods
and techniques used in money
laundering, the viable means of
preventing money laundering and
the effective ways of prosecuting
and punishing offenders; and
(10) to enlist the assistance of any
branch, department, bureau, office,
agency or instrumentality of the
government, including
government-owned and – from communicating, directly or indirectly,
controlled corporations, in
undertaking any and all anti-money
laundering operations, which may
include the use of its personnel,
facilities and resources for the
more resolute prevention,
detection and investigation of
money laundering offenses and
prosecution of offenders.
Section 8. Creation of a Secretariat. – The
AMLC is hereby authorized to establish a
secretariat to be headed by an Executive
Director who shall be appointed by the
Council for a term of five (5) years. He must
be a member of the Philippine Bar, at least
thirty-five (35) years of age and of good
moral character, unquestionable integrity
and known probity. All members of the
Secretariat must have served for at least
five (5) years either in the Insurance
Commission, the Securities and Exchange
Commission or the Bangko Sentral ng
Pilipinas (BSP) and shall hold full-time
permanent positions within the BSP.
Section 9. Prevention of Money Laundering;
Customer Identification Requirements and
Record Keeping. –
(a) Customer Identification, -
Covered institutions shall establish
and record the true identity of its
clients based on official documents.
They shall maintain a system of
verifying the true identity of their
clients and, in case of corporate
clients, require a system of
verifying their legal existence and
organizational structure, as well as
the authority and identification of
all persons purporting to act on
their behalf.
The provisions of existing laws to
the contrary notwithstanding,
anonymous accounts, accounts
under fictitious names, and all
other similar accounts shall be
absolutely prohibited. Peso and
foreign currency non-checking
numbered accounts shall be
allowed. The BSP may conduct
annual testing solely limited to the
determination of the existence and
true identity of the owners of such
accounts.
(b) Record Keeping – All records
of all transactions of covered
institutions shall be maintained and
safely stored for five (5) years from
the date of transactions. With
respect to closed accounts, the
records on customer identification,
account files and business
correspondence, shall be preserved
and safety stored for at least five
(5) years from the dates when they
were closed.
(c) Reporting of Covered
Transactions. – Covered
institutions shall report to the
AMLC all covered transactions
within five (5) working days from
occurrence thereof, unless the
Supervising Authority concerned
prescribes a longer period not
exceeding ten (10) working days.
When reporting covered transactions to the
AMLC, covered institutions and their
officers, employees, representatives, agents,
advisors, consultants or associates shall not
be deemed to have violated Republic Act
No. 1405, as amended; Republic Act No.
6426, as amended; Republic Act No. 8791
and other similar laws, but are prohibited
in any manner or by any means, to any
person the fact that a covered transaction
report was made, the contents thereof, or
any other information in relation thereto. In
case of violation thereof, the concerned
officer, employee, representative, agent,
advisor, consultant or associate of the
covered institution, shall be criminally
liable. However, no administrative, criminal
or civil proceedings, shall lie against any
person for having made a covered
transaction report in the regular
performance of his duties and in good faith,
whether or not such reporting results in any
criminal prosecution under this Act or any
other Philippine law.
When reporting covered transactions to the
AMLC, covered institutions and their
officers, employees, representatives, agents,
advisors, consultants or associates are
prohibited from communicating, directly or
indirectly, in any manner or by any means,
to any person, entity, the media, the fact
that a covered transaction report was made,
the contents thereof, or any other
information in relation thereto. Neither may
such reporting be published or aired in any
manner or form by the mass media,
electronic mail, or other similar devices. In
case of violation thereof, the concerned
officer, employee, representative, agent,
advisor, consultant or associate of the
covered institution, or media shall be held
criminally liable.
Section 10. Authority to Freeze. – Upon
determination that probable cause exists
that any deposit or similar account is in any
way related to an unlawful activity, the
AMLC may issue a freeze order, which shall
be effective immediately, on the account for
a period not exceeding fifteen (15) days.
Notice to the depositor that his account has
been frozen shall be issued simultaneously
with the issuance of the freeze order. The
depositor shall have seventy-two (72) hours
upon receipt of the notice to explain why
the freeze order should be lifted. The AMLC
has seventy-two (72) hours to dispose of
the depositor's explanation. If it falls to act
within seventy-two (72) hours from receipt
of the depositor's explanation, the freeze
order shall automatically be dissolved. The
fifteen (15)-day freeze order of the AMLC
may be extended upon order of the court,
provided that the fifteen (15)-day period
shall be tolled pending the court's decision
to extend the period.
No court shall issue a temporary restraining
order or writ of injunction against any
freeze order issued by the AMLC except the
Court of Appeals or the Supreme Court.
Section 11. Authority to inquire into Bank
Deposits. – Notwithstanding the provisions
of Republic Act No. 1405, as amended;
Republic Act No. 6426, as amended;
Republic Act No. 8791, and other laws, the
AMLC may inquire into or examine any
particular deposit or investment with any
banking institution or non-bank financial
institution upon order of any competent
court in cases of violation of this Act when it
has been established that there is probable
cause that the deposits or investments
involved are in any way related to a money
laundering offense: Provided, That this
provision shall not apply to deposits and
investments made prior to the effectivity of
this Act.
Section 12. Forfeiture Provisions. –
(a) Civil Forfeiture. – When there
is a covered transaction report
made, and the court has, in a
petition filed for the purpose
ordered seizure of any monetary
instrument or property, in whole or
in part, directly or indirectly,
related to said report, the Revised
Rules of Court on civil forfeiture
shall apply.
(b) Claim on Forfeited Assets. –
Where the court has issued an
order of forfeiture of the monetary
instrument or property in a
criminal prosecution for any money
laundering offense defined under
Section 4 of this Act, the offender or
any other person claiming an
interest therein may apply, by
verified petition, for a declaration
that the same legitimately belongs
to him and for segregation or
exclusion of the monetary
instrument or property
corresponding thereto. The verified
petition shall be filed with the court
which rendered the judgment of
conviction and order of forfeiture,
within fifteen (15) days from the
date of the order or forfeiture, in
default of which the said order shall
become final and executory. This
provision shall apply in both civil
and criminal forfeiture.
(c) Payment in Lieu of Forfeiture.
– Where the court has issued an
order of forfeiture of the monetary
instrument or property subject of a
money laundering offense defined
under Section 4, and said order
cannot be enforced because any
particular monetary instrument or
property cannot, with due
diligence, be located, or it has been
substantially altered, destroyed,
diminished in value or otherwise
rendered worthless by any act or
omission, directly or indirectly,
attributable to the offender, or it
has been concealed, removed,
converted or otherwise transferred
to prevent the same from being
found or to avoid forfeiture thereof,
or it is located outside the
Philippines or has been placed or
brought outside the jurisdiction of
the court, or it has been
commingled with other monetary
instruments or property belonging
to either the offender himself or a
third person or entity, thereby
rendering the same difficult to
identify or be segregated for
purposes of forfeiture, the court
may, instead of enforcing the order
of forfeiture of the monetary
instrument or property or part
thereof or interest therein,
accordingly order the convicted
offender to pay an amount equal to
the value of said monetary
instrument or property. This
provision shall apply in both civil
and criminal forfeiture.
Section 13. Mutual Assistance among
States. –
(a) Request for Assistance from a
Foreign State. – Where a foreign
State makes a request for
assistance in the investigation or
prosecution of a money laundering
offense, the AMLC may execute the
request or refuse to execute the
same and inform the foreign State
of any valid reason for not
executing the request or for
delaying the execution thereof. The
principles of mutuality and
reciprocity shall, for this purpose,
be at all times recognized.
(b) Power of the AMLC to Act on a
Request for Assistance from a
Foreign State. – The AMLC may
execute a request for assistance
from a foreign State by: (1) tracking
down, freezing, restraining and
seizing assets alleged to be
proceeds of any unlawful activity
under the procedures laid down in
this Act; (2) giving information
needed by the foreign State within
the procedures laid down in this
Act; and (3) applying for an order
of forfeiture of any monetary
instrument or property in the
court: Provided, That the court shall
not issue such an order unless the
application is accompanied by an
authenticated copy of the order of a
court in the requesting State
ordering the forfeiture of said
monetary instrument or properly
of a person who has been convicted
of a money laundering offense in
the requesting State, and a
certification of an affidavit of a
competent officer of the requesting
State stating that the conviction
and the order of forfeiture are final
and then no further appeal lies in
respect or either.
(c) Obtaining Assistance from
Foreign States. – The AMLC may
make a request to any foreign State
for assistance in (1) tracking down,
freezing, restraining and seizing
assets alleged to be proceeds of any
unlawful activity; (2) obtaining
information that it needs relating to
any covered transaction, money
laundering offense or any other
matter directly or indirectly,
related thereto; (3) to the extent
allowed by the law of the Foreign
State, applying with the proper
court therein for an order to enter
any premises belonging to or in the
possession or control of, any or all
of the persons named in said
request, and/or search any or all
such persons named therein
and/or remove any document,
material or object named in said
request: Provided, That the
documents accompanying the
request in support of the
application have been duly
authenticated in accordance with
the applicable law or regulation of
the foreign State; and (4) applying
for an order of forfeiture of any
monetary instrument or property
in the proper court in the foreign
State: Provided, That the request is
accompanied by an authenticated
copy of the order of the regional
trial court ordering the forfeiture of
said monetary instrument or
property of a convicted offender
and an affidavit of the clerk of court
stating that the conviction and the
order of forfeiture are final and that
no further appeal lies in respect of
either.
(d) Limitations on Request for
Mutual Assistance. – The AMLC
may refuse to comply with any
request for assistance where the
action sought by the request
contravenes any provision of the
Constitution or the execution of a
request is likely to prejudice the
national interest of the Philippines
unless there is a treaty between the
Philippines and the requesting
State relating to the provision of
assistance in relation to money
laundering offenses.
(e) Requirements for Requests
for Mutual Assistance from
Foreign State. – A request for
mutual assistance from a foreign
State must (1) confirm that an
investigation or prosecution is
being conducted in respect of a
money launderer named therein or
that he has been convicted of any
money laundering offense; (2) state
the grounds on which any person is
being investigated or prosecuted
for money laundering or the details
of his conviction; (3) gives
sufficient particulars as to the
identity of said person; (4) give
particulars sufficient to identity any
covered institution believed to have
any information, document,
material or object which may be of
assistance to the investigation or
prosecution; (5) ask from the
covered institution concerned any
information, document, material or
object which may be of assistance
to the investigation or prosecution;
(6) specify the manner in which
and to whom said information,
document, material or object
detained pursuant to said request,
is to be produced; (7) give all the
particulars necessary for the
issuance by the court in the
requested State of the writs, orders
or processes needed by the
requesting State; and (8) contain
such other information as may
assist in the execution of the
request.
(f) Authentication of Documents.
– For purposes of this Section, a
document is authenticated if the
same is signed or certified by a
judge, magistrate or equivalent
officer in or of, the requesting State,
and authenticated by the oath or
affirmation of a witness or sealed
with an official or public seal of a
minister, secretary of State, or
officer in or of, the government of
the requesting State, or of the
person administering the
government or a department of the
requesting territory, protectorate
or colony. The certificate of
authentication may also be made
by a secretary of the embassy or
legation, consul general, consul,
vice consul, consular agent or any
officer in the foreign service of the
Philippines stationed in the foreign
State in which the record is kept,
and authenticated by the seal of his
office.
(g) Extradition. – The Philippines
shall negotiate for the inclusion of
money laundering offenses as
herein defined among extraditable
offenses in all future treaties.
Section 14. Penal Provisions. –
(a) Penalties for the Crime of
Money Laundering. The penalty of
imprisonment ranging from seven
(7) to fourteen (14) years and a
fine of not less than Three million
Philippine pesos (Php
3,000,000.00) but not more than
twice the value of the monetary
instrument or property involved in
the offense, shall be imposed upon
a person convicted under Section
4(a) of this Act.
The penalty of imprisonment from
four (4) to seven (7) years and a
fine of not less than One million five
hundred thousand Philippine pesos
(Php 1,500,000.00) but not more
than Three million Philippine pesos
(Php 3,000,000.00), shall be
imposed upon a person convicted
under Section 4(b) of this Act.
The penalty of imprisonment from
six (6) months to four (4) years or a
fine of not less than One hundred
thousand Philippine pesos (Php
100,000.00) but not more than Five
hundred thousand Philippine pesos
(Php 500,000.00), or both, shall be
imposed on a person convicted
under Section 4(c) of this Act.
(b) Penalties for Failure to Keep
Records. The penalty of
imprisonment from six (6) months
to one (1) year or a fine of not less
than One hundred thousand
Philippine pesos (Php 100,000.00)
but not more than Five hundred
thousand Philippine pesos (Php
500,000.00), or both, shall be
imposed on a person convicted
under Section 9(b) of this Act.
(c) Malicious Reporting. Any
person who, with malice, or in bad
faith, report or files a completely
unwarranted or false information
relative to money laundering
transaction against any person
shall be subject to a penalty of six
(6) months to four (4) years
imprisonment and a fine of not less
than One hundred thousand
Philippine pesos (Php 100,000.00)
but not more than Five hundred
thousand Philippine pesos (Php
500,000.00), at the discretion of the
court: Provided, That the offender is
not entitled to avail the benefits of
the Probation Law.
If the offender is a corporation,
association, partnership or any
 juridical person, the penalty shall
be imposed upon the responsible
officers, as the case may be, who
participated in the commission of
the crime or who shall have
knowingly permitted or failed to
prevent its commission. If the
offender is a juridical person, the
court may suspend or revoke its
license. If the offender is an alien,
he shall, in addition to the penalties
herein prescribed, be deported
without further proceedings after
serving the penalties herein
prescribed. If the offender is a
public official or employee, he shall,
in addition to the penalties
prescribed herein, suffer perpetual
or temporary absolute
disqualification from office, as the
case may be;
Any public official or employee who
is called upon to testify and refuses
to do the same or purposely fails to
testify shall suffer the same
penalties prescribed herein.
(d) Breach of Confidentiality. The
punishment of imprisonment
ranging from three (3) to eight (8)
years and a fine of not less than
Five hundred thousand Philippine
pesos (Php 500,000.00) but not
more than One million Philippine
pesos (Php 1,000,000.00), shall be
imposed on a person convicted for
a violation under Section 9(c).
Section 15. System of Incentives and
Rewards. – A system of special incentives
and rewards is hereby established to be
given to the appropriate government
agency and its personnel that led and
initiated an investigation, prosecution and
conviction of persons involved in the
offense penalized in Section 4 of this Act.
Section 16. Prohibitions Against Political
Harassment. – This Act shall not be used for
political prosecution or harassment or as an
instrument to hamper competition in trade
and commerce.
No case for money laundering may be filed
against and no assets shall be frozen,
attached or forfeited to the prejudice of a
candidate for an electoral office during an
election period.
Section 17. Restitution. – Restitution for
any aggrieved party shall be governed by
the provisions of the New Civil Code.
Section 18. Implementing Rules and
Regulations. – Within thirty (30) days from
the effectivity of this Act, the Bangko Sentral
ng Pilipinas, the Insurance Commission and
the Securities and Exchange Commission
shall promulgate the rules and regulations
to implement effectivity the provisions of
this Act. Said rules and regulations shall be
submitted to the Congressional Oversight
Committee for approval.
Covered institutions shall formulate their
respective money laundering prevention
programs in accordance with this Act
including, but not limited to, information
dissemination on money laundering
activities and its prevention, detection and
reporting, and the training of responsible
officers and personnel of covered
institutions.
Section 19. Congressional Oversight
Committee. – There is hereby created a
Congressional Oversight Committee
composed of seven (7) members from the
Senate and seven (7) members from the amended and other similar laws, as are
House of Representatives. The members inconsistent with this Act, are hereby
from the Senate shall be appointed by the repealed, amended or modified accordingly.
Senate President based on the proportional
representation of the parties or coalitions Section 23. Effectivity. – This Act shall take
therein with at least two (2) Senators effect fifteen (15) days after its complete
representing the minority. The members publication in the Official Gazette or in at
from the House of Representatives shall be least two (2) national newspapers of
appointed by the Speaker also based on general circulation.
proportional representation of the parties
or coalitions therein with at least two (2) The provisions of this Act shall not apply to
members representing the minority. deposits and investments made prior to its
effectivity.
The Oversight Committee shall have the
power to promulgate its own rules, to
oversee the implementation of this Act, and
to review or revise the implementing rules
issued by the Anti-Money Laundering
Council within thirty (30) days from the
promulgation of the said rules.
Section 20. Appropriations Clause. – The
AMLC shall be provided with an initial
appropriation of Twenty-five million
Philippine pesos (Php 25,000,000.00) to be
drawn from the national government.
Appropriations for the succeeding years
shall be included in the General
Appropriations Act.
Section 21. Separability Clause. – If any
provision or section of this Act or the
application thereof to any person or
circumstance is held to be invalid, the other
provisions or sections of this Act, and the
application of such provision or section to
other persons or circumstances, shall not be
affected thereby.
Section 22. Repealing Clause. – All laws,
decrees, executive orders, rules and
regulations or parts thereof, including the
relevant provisions of Republic Act No.
1405, as amended; Republic Act No. 6426,
as amended; Republic Act No. 8791, as