CHAPTER I — ESTABLISHMENT AND ORGANIZATION OF THE BANGKO SENTRAL NG PILIPINAS
ARTICLE I. CREATION, RESPONSIBILITIES AND CORPORATE POWERS OF THE BANGKO SENTRAL
SECTION 1. Declaration of Policy. — The State shall maintain a central monetary authority
that shall function and operate as an independent and accountable body corporate in the discharge of
its mandated responsibilities concerning money, banking and credit. In line with this policy, and
considering its unique functions and responsibilities, the central monetary authority established under
this Act, while being a government-owned corporation, shall enjoy fiscal and administrative autonomy.
SECTION 2. Creation of the Bangko Sentral. — There is hereby established an independent
central monetary authority, which shall be a body corporate known as the Bangko Sentral ng Pilipinas,
hereafter referred to as the Bangko Sentral.
The capital of the Bangko Sentral shall be Fifty billion pesos (P50,000,000,000), to be fully
subscribed by the Government of the Republic, hereafter referred to as the Government, Ten billion
pesos (P10,000,000,000) of which shall be fully paid for by the Government upon the effectivity of this
Act and the balance to be paid for within a period of two (2) years from the effectivity of this Act in such
manner and form as the Government, through the Secretary of Finance and the Secretary of Budget
and Management, may thereafter determine.
SECTION 3. Responsibility and Primary Objective. — The Bangko Sentral shall provide
policy directions in the areas of money, banking, and credit. It shall have supervision over the
operations of banks and exercise such regulatory powers as provided in this Act and other pertinent
laws over the operations of finance companies and non-bank financial institutions performing quasi-
banking functions, hereafter referred to as quasi-banks, and institutions performing similar functions.
The primary objective of the Bangko Sentral is to maintain price stability conducive to a
balanced and sustainable growth of the economy. It shall also promote and maintain monetary stability
and the convertibility of the peso.
SECTION 4. Place of Business. — The Bangko Sentral shall have its principal place of
business in Metro Manila, but may maintain branches, agencies and correspondents in such other
places as the proper conduct of its business may require.
SECTION 5. Corporate Powers. — The Bangko Sentral is hereby authorized to adopt, alter,
and use a corporate seal which shall be judicially noticed; to enter into contracts; to lease or own real
and personal property, and to sell or otherwise dispose of the same; to sue and be sued; and otherwise
to do and perform any and all things that may be necessary or proper to carry out the purposes of this
Act.
The Bangko Sentral may acquire and hold such assets and incur such liabilities in connection
with its operations authorized by the provisions of this Act, or as are essential to the proper conduct of
such operations.
The Bangko Sentral may compromise, condone or release, in whole or in part, any claim of or
settled liability to the Bangko Sentral, regardless of the amount involved, under such terms and
conditions as may be prescribed by the Monetary Board to protect the interests of the Bangko Sentral.
ARTICLE II. THE MONETARY BOARD
SECTION 6. Composition of the Monetary Board. — The powers and functions of the
Bangko Sentral shall be exercised by the Bangko Sentral Monetary Board, hereafter referred to as the
Monetary Board, composed of seven (7) members appointed by the President of the Philippines for a
term of six (6) years.
The seven (7) members are:
(a) the Governor of the Bangko Sentral, who shall be the Chairman of the Monetary Board. The
Governor of the Bangko Sentral shall be head of a department and his appointment shall be
subject to confirmation by the Commission on Appointments. Whenever the Governor is
unable to attend a meeting of the Board, he shall designate a Deputy Governor to act as his
alternate: Provided, That in such event, the Monetary Board shall designate one of its
members as acting Chairman;
(b) a member of the Cabinet to be designated by the President of the Philippines. Whenever the
designated Cabinet Member is unable to attend a meeting of the Board, he shall designate
an Undersecretary in his Department to attend as his alternate; and
(c) five (5) members who shall come from the private sector, all of whom shall serve full-time:
Provided, however, That of the members first appointed under the provisions of this
subsection, three (3) shall have a term of six (6) years, and the other two (2), three (3) years.
No member of the Monetary Board may be reappointed more than once.
SECTION 7. Vacancies. — Any vacancy in the Monetary Board created by the death,
resignation, or removal of any member shall be filled by the appointment of a new member to complete
the unexpired period of the term of the member concerned.
SECTION 8. Qualifications. — The members of the Monetary Board must be natural-born
citizens of the Philippines, at least thirty-five (35) years of age, with the exception of the Governor who
should at least be forty (40) years of age, of good moral character, of unquestionable integrity, of known
probity and patriotism, and with recognized competence in social and economic disciplines.
SECTION 9. Disqualifications. — In addition to the disqualifications imposed by Republic Act
No. 6713, a member of the Monetary Board is disqualified from being a director, officer, employee,
consultant, lawyer, agent or stockholder of any bank, quasi-bank or any other institution which is subject
to supervision or examination by the Bangko Sentral, in which case such member shall resign from, and
divest himself of any and all interests in such institution before assumption of office as member of the
Monetary Board.
The members of the Monetary Board coming from the private sector shall not hold any other
public office or public employment during their tenure.
No person shall be a member of the Monetary Board if he has been connected directly with any
multilateral banking or financial institution or has a substantial interest in any private bank in the
Philippines, within one (1) year prior to his appointment; likewise, no member of the Monetary Board
shall be employed in any such institution within two (2) years after the expiration of his term except
when he serves as an official representative of the Philippine Government to such institution.
SECTION 10. Removal. — The President may remove any member of the Monetary Board for
any of the following reasons:
(a) If the member is subsequently disqualified under the provisions of Section 8 of this Act; or
(b) If he is physically or mentally incapacitated that he cannot properly discharge his duties and
responsibilities and such incapacity has lasted for more than six (6) months; or
(c) If the member is guilty of acts or operations which are of fraudulent or illegal character or
which are manifestly opposed to the aims and interests of the Bangko Sentral; or
(d) If the member no longer possesses the qualifications specified in Section 8 of this
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
(e) the Bangko Sentral in accordance with applicable laws and regulations; and
(f) 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) by the Bangko Sentral, to meet its liabilities; or
(c) cannot continue in business without involving probable losses to its depositors or creditors; or
(d) has willfully violated a cease and desist order under Section 37 that has become final, involving
acts or transactions which amount to fraud or a dissipation of the assets of the institution; in
which cases, the Monetary Board may summarily and without need for prior hearing forbid the
institution from doing business in the Philippines and designate the Philippine Deposit
Insurance Corporation as receiver of the banking institution.
For a quasi-bank, any person of recognized competence in banking or finance may be designed
as receiver.
The receiver shall immediately gather and take charge of all the assets and liabilities of the
institution, administer the same for the benefit of its creditors, and exercise the general powers of a
receiver under the Revised Rules of Court but shall not, with the exception of administrative
expenditures, pay or commit any act that will involve the transfer or disposition of any asset of the
institution: Provided, That the receiver may deposit or place the funds of the institution in non-
speculative investments. The receiver shall determine as soon as possible, but not later than ninety
(90) days from take over, whether the institution may be rehabilitated or otherwise placed in such a
condition so that it may be permitted to resume business with safety to its depositors and creditors and
the general public: Provided, That any determination for the resumption of business of the institution
shall be subject to prior approval of the Monetary Board.
If the receiver determines that the institution cannot be rehabilitated or permitted to resume
business in accordance with the next preceding paragraph, the Monetary Board shall notify in writing
the board of directors of its findings and direct the receiver to proceed with the liquidation of the
institution. The receiver shall:
1. file ex parte with the proper regional trial court, and without requirement of prior notice or any
other action, a petition for assistance in the liquidation of the institution pursuant to a
liquidation plan adopted by the Philippine Deposit Insurance Corporation for general
application to all closed banks. In case of quasi-banks, the liquidation plan shall be adopted
by the Monetary Board. Upon acquiring jurisdiction, the court shall, upon motion by the
receiver after due notice, adjudicate disputed claims against the institution, assist the
enforcement of individual liabilities of the stockholders, directors and officers, and decide on
other issues as may be material to implement the liquidation plan adopted. The receiver shall
pay the cost of the proceedings from the assets of the institution.
2. convert the assets of the institutions to money, dispose of the same to creditors and other
parties, for the purpose of paying the debts of such institution in accordance with the rules on
concurrence and preference of credit under the Civil Code of the Philippines and he may, in
the name of the institution, and with the assistance of counsel as he may retain, institute such
actions as may be necessary to collect and recover accounts and assets of, or defend any
action against, the institution. The assets of an institution under receivership or liquidation
shall be deemed in custodia legis in the hands of the receiver and shall, from the moment the
institution was placed under such receivership or liquidation, be exempt from any order of
garnishment, levy, attachment, or execution.
The actions of the Monetary Board taken under this section or under Section 29 of this Act shall
be final and executory, and may not be restrained or set aside by the court except on petition for
certiorari on the ground that the action taken was in excess of jurisdiction or with such grave abuse of
discretion as to amount to lack or excess of jurisdiction. The petition for certiorari may only be filed by
the stockholders of record representing the majority of the capital stock within ten (10) days from receipt
by the board of directors of the institution of the order directing receivership, liquidation or
conservatorship. The designation of a conservator under Section 29 of this Act or the appointment of a
receiver under this section shall be vested exclusively with the Monetary Board. Furthermore, the
designation of a conservator is not a precondition to the designation of a receiver.
SECTION 31. Distribution of Assets. — In case of liquidation of a bank or quasi-bank, after
payment of the cost of proceedings, including reasonable expenses and fees of the receiver to be
allowed by the court, the receiver shall pay the debts of such institution, under order of the court, in
accordance with the rules on concurrence and preference of credit as provided in the Civil Code.
SECTION 32. Disposition of Revenues and Earnings. — All revenues and earnings realized
by the receiver in winding up the affairs and administering the assets of any bank or quasi-bank within
the purview of this Act shall be used to pay the costs, fees and expenses mentioned in the preceding
section, salaries of such personnel whose employment is rendered necessary in the discharge of the
liquidation together with other additional expenses caused thereby. The balance of revenues and
earnings, after the payment of all said expenses, shall form part of the assets available for payment to
creditors.
SECTION 33. Disposition of Banking Franchise. — The Bangko Sentral may, if public
interest so requires, award to an institution, upon such terms and conditions as the Monetary Board may
approve, the banking franchise of a bank under liquidation to operate in the area where said bank or its
branches were previously operating: Provided, That whatever proceeds may be realized from such
award shall be subject to the appropriate exclusive disposition of the Monetary Board.
SECTION 34. Refusal to Make Reports or Permit Examination. — Any officer, owner, agent,
manager, director or officer-in-charge of any institution subject to the supervision or examination by the
Bangko Sentral within the purview of this Act who, being required in writing by the Monetary Board or by
the head of the supervising and examining department willfully refuses to file the required report or
permit any lawful examination into the affairs of such institution shall be punished by a fine of not less
than Fifty thousand pesos (P50,000) nor more than One hundred thousand pesos (P100,000) or by
imprisonment of not less than one (1) year nor more than five (5) years, or both, in the discretion of the
court.
SECTION 35. False Statement. — The willful making of a false or misleading statement on a
material fact to the Monetary Board or to the examiners of the Bangko Sentral shall be punished by a
fine of not less than One hundred thousand pesos (P100,000) nor more than Two hundred thousand
pesos (P200,000), or by imprisonment of not more than (5) years, or both, at the discretion of the court.
SECTION 36. Proceedings Upon Violation of This Act and Other Banking Laws, Rules,
Regulations, Orders or Instructions. — Whenever a bank or quasi-bank, or whenever any person or
entity willfully violates this Act or other pertinent banking laws being enforced or implemented by the
Bangko Sentral or any order, instruction, rule or regulation issued by the Monetary Board, the person or
persons responsible for such violation shall unless otherwise provided in this Act be punished by a fine
of not less than Fifty thousand pesos (P50,000) nor more than Two hundred thousand pesos
(P200,000) or by imprisonment of not less than two (2) years nor more than ten (10) years, or both, at
the discretion of the court.
Whenever a bank or quasi-bank persists in carrying on its business in an unlawful or unsafe
manner, the Board may, without prejudice to the penalties provided in the preceding paragraph of this
section and the administrative sanctions provided in Section 37 of this Act, take action under Section 30
of this Act.
SECTION 37. Administrative Sanctions on Banks and Quasi-banks. — Without prejudice to
the criminal sanctions against the culpable persons provided in Sections 34, 35, and 36 of this Act, the
Monetary Board may, at its discretion, impose upon any bank or quasi-bank, their directors and/or
officers, for any willful violation of its charter or by-laws, willful delay in the submission of reports or
publications thereof as required by law, rules and regulations; any refusal to permit examination into the
affairs of the institution; any willful making of a false or misleading statement to the Board or the
appropriate supervising and examining department or its examiners; any willful failure or refusal to
comply with, or violation of, any banking law or any order, instruction or regulation issued by the
Monetary Board, or any order, instruction or ruling by the Governor; or any commission of irregularities,
and/or conducting business in an unsafe or unsound manner as may be determined by the Monetary
Board, the following administrative sanctions, whenever applicable:
(a) fines in amounts as may be determined by the Monetary Board to be appropriate, but in no
case to exceed Thirty thousand pesos (P30,000) a day for each violation, taking into
consideration the attendant circumstances, such as the nature and gravity of the violation or
irregularity and the size of the bank or quasi-bank;
(b) suspension of rediscounting privileges or access to Bangko Sentral credit facilities;
(c) suspension of lending or foreign exchange operations or authority to accept new deposits or
make new investments;
(d) suspension of interbank clearing privileges; and/or
(e) revocation of quasi-banking license.
Resignation or termination from office shall not exempt such director or officer from
administrative or criminal sanctions.
The Monetary Board may, whenever warranted by circumstances, preventively suspend any
director or officer of a bank or quasi-bank pending an investigation: Provided, That should the case be
not finally decided by the Bangko Sentral within a period of one hundred twenty (120) days after the
date of suspension, said director or officer shall be reinstated in his position: Provided, further, That
when the delay in the disposition of the case is due to the fault, negligence or petition of the director or
officer, the period of delay shall not be counted in computing the period of suspension herein provided.
The above administrative sanctions need not be applied in the order of their severity.
Whether or not there is an administrative proceeding, if the institution and/or the directors and/or
officers concerned continue with or otherwise persist in the commission of the indicated practice or
violation, the Monetary Board may issue an order requiring the institution and/or the directors and/or
officers concerned to cease and desist from the indicated practice or violation, and may further order
that immediate action be taken to correct the conditions resulting from such practice or violation. The
cease and desist order shall be immediately effective upon service on the respondents.
The respondents shall be afforded an opportunity to defend their action in a hearing before the
Monetary Board or any committee chaired by any Monetary Board member created for the purpose,
upon request made by the respondents within five (5) days from their receipt of the order. If no such
hearing is requested within said period, the order shall be final. If a hearing is conducted, all issues
shall be determined on the basis of records, after which the Monetary Board may either reconsider or
make final its order.
The Governor is hereby authorized, at his discretion, to impose upon banking institutions, for
any failure to comply with the requirements of law, Monetary Board regulations and policies, and/or
instructions issued by the Monetary Board or by the Governor, fines not in excess of Ten thousand
pesos (P10,000) a day for each violation, the imposition of which shall be final and executory until
reversed, modified or lifted by the Monetary Board on appeal.
SECTION 38. Operating Departments of the Bangko Sentral. — The Monetary Board shall,
in accordance with its authority under this Act, determine and provide for such operating departments
and other offices, including a public information office, of the Bangko Sentral as it deems convenient for
the proper and efficient conduct of the operations and the accomplishment of the objectives of the
Bangko Sentral. The functions and duties of such operating departments and other offices shall be
determined by the Monetary Board.
ARTICLE V. REPORTS AND PUBLICATIONS
SECTION 39. Reports and Publications. — The Bangko Sentral shall publish a general
balance sheet showing the volume and composition of its assets and liabilities as of the last working day
of the month within sixty (60) days after the end of each month except for the month of December,
which shall be submitted within ninety (90) days after the end hereof.
The Monetary Board shall publish and submit the following reports to the President and to the
Congress:
(a) not later than ninety (90) days after the end of each quarter, an analysis of economic and
financial developments, including the condition of net international reserves and monetary
aggregates;
(b) within ninety (90) days after the end of the year, the preceding year's budget and profit and
loss statement of the Bangko Sentral showing in reasonable detail the result of its operations;
(c) one hundred twenty (120) days after the end of each semester, a review of the state of the
financial system; and
(d) as soon as practicable, abnormal movements in monetary aggregates and the general price
level, and, not later than seventy-two (72) hours after they are taken, remedial measures in
response to such abnormal movements.
SECTION 40. Annual Report. — Before the end of March of each year, the Bangko Sentral
shall publish and submit to the President and the Congress an annual report on the condition of the
Bangko Sentral including a review of the policies and measures adopted by the Monetary Board during
the past year and an analysis of the economic and financial circumstances which gave rise to said
policies and measures.
The annual report shall also include a statement of the financial condition of the Bangko Sentral
and a statistical appendix which shall present, as a minimum, the following data:
(a) the monthly movement of monetary aggregates and their components;
(b) the monthly movement of purchases and sales of foreign exchange and of the international
reserves of the Bangko Sentral;
(c) the balance of payments of the Philippines;
(d) monthly indices of consumer prices and of import and export prices;
(e) the monthly movement, in summary form, of exports and imports, by volume and value;
(f) the monthly movement of the accounts of the Bangko Sentral and of other banks;
(g) the principal data on government receipts and expenditures and on the status of the public
debt, both domestic and foreign; and
(h) the texts of the major legal and administrative measures adopted by the Government and the
Monetary Board during the year which relate to the functions or operations of the Bangko
Sentral or of the financial system.
The Bangko Sentral shall publish another version of the annual report in terms understandable
to the layman.
Failure to comply with the reportorial requirements pursuant to this article without justifiable
reason as may be determined by the Monetary Board shall cause the withholding of the salary of the
personnel concerned until the requirements are complied with.
SECTION 41. Signatures on Statements. — The balance sheets and other financial
statements of the Bangko Sentral shall be signed by the officers responsible for their preparation, by the
Governor, and by the auditor of the Bangko Sentral.
ARTICLE VI. PROFITS, LOSSES, AND SPECIAL ACCOUNTS
SECTION 42. Fiscal Year. — The fiscal year of the Bangko Sentral shall begin on January first
and end on December thirty-first of each year.
SECTION 43. Computation of Profits and Losses. — Within the first thirty (30) days following
the end of each year, the Bangko Sentral shall determine its net profits or losses. In the calculation of
net profits, the Bangko Sentral shall make adequate allowance or establish adequate reserves for bad
and doubtful accounts.
SECTION 44. Distribution of Net Profits. — Within the first sixty (60) days following the end of
each fiscal year, the Monetary Board shall determine and carry out the distribution of the net profits, in
accordance with the following rule:
Fifty percent (50%) of the net profits shall be carried to surplus and the 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. THE UNIT OF MONETARY VALUE
SECTION 48. The Peso. — The unit of monetary value in the Philippines is the "peso," which is
represented by the sign "P."
The peso is divided into one hundred (100) equal parts called "centavos," which are
represented by the sign "c."
ARTICLE II. ISSUE OF MEANS OF PAYMENT
A. CURRENCY
SECTION 49. Definition of Currency. — The word "currency" is hereby defined, for purposes
of this Act, as meaning all Philippine notes and coins issued or circulating in accordance with the
provisions of this Act.
SECTION 50. Exclusive Issue Power. — The Bangko Sentral shall have the sole power and
authority to issue currency, within the territory of the Philippines. No other person or entity, public or
private, may put into circulation notes, coins or any other object or document which, in the opinion of the
Monetary Board, might circulate as currency, nor reproduce or imitate the facsimiles of Bangko Sentral
notes without prior authority from the Bangko Sentral.
The Monetary Board may issue such regulations as it may deem advisable in order to prevent
the circulation of foreign currency or of currency substitutes as well as to prevent the reproduction of
facsimiles of Bangko Sentral notes.
The Bangko Sentral shall have the authority to investigate, make arrests, conduct searches and
seizures in accordance with law, for the purpose of maintaining the integrity of the currency.
Violation of this provision or any regulation issued by the Bangko Sentral pursuant thereto shall
constitute an offense punishable by imprisonment of not less than five (5) years but not more than ten
(10) years. In case the Revised Penal Code provides for a greater penalty, then that penalty shall be
imposed.
SECTION 51. Liability for Notes and Coins. — Notes and coins issued by the Bangko Sentral
shall be liabilities of the Bangko Sentral and may be issued only against, and in amounts not exceeding,
the assets of the Bangko Sentral. Said notes and coins shall be a first and paramount lien on all assets
of the Bangko Sentral.
The Bangko Sentral's holdings of its own notes and coins shall not be considered as part of its
currency issue and, accordingly, shall not form part of the assets or liabilities of the Bangko Sentral.
SECTION 52. Legal Tender Power. — All notes and coins issued by the Bangko Sentral shall
be fully guaranteed by the Government of the Republic of the Philippines and shall be legal tender in the
Philippines for all debts, both public and private: Provided, however, That, unless otherwise fixed by the
Monetary Board, coins shall be legal tender in amounts not exceeding Fifty pesos (P50.00) for
denominations of Twenty-five centavos and above, and in amounts not exceeding Twenty pesos
(P20.00) for denominations of Ten centavos or less.
SECTION 53. Characteristics of the Currency. — The Monetary Board, with the approval of
the President of the Philippines, shall prescribe the denominations, dimensions, designs, inscriptions
and other characteristics of notes issued by the Bangko Sentral: Provided, however, That said notes
shall state that they are liabilities of the Bangko Sentral and are fully guaranteed by the Government of
the Republic of the Philippines. Said notes shall bear the signatures, in facsimile, of the President of the
Philippines and of the Governor of the Bangko Sentral.
Similarly, the Monetary Board, with the approval of the President of the Philippines, shall
prescribe the weight, fineness, designs, denominations and other characteristics of the coins issued by
the Bangko Sentral. In the minting of coins, the Monetary Board shall give full consideration to the
availability of suitable metals and to their relative prices and cost of minting.
SECTION 54. Printing of Notes and Mining of Coins. — The Monetary Board shall prescribe
the amounts of notes and coins to be printed and minted, respectively, and the conditions to which the
printing of notes and the minting of coins shall be subject. The Monetary Board shall have the authority
to contract institutions, mints or firms for such operations.
All expenses incurred in the printing of notes and the minting of coins shall be for the account of
the Bangko Sentral.
SECTION 55. Interconvertibility of Currency. — The Bangko Sentral shall exchange, on
demand and without charge, Philippine currency of any denomination for Philippine notes and coins of
any other denomination requested. If for any reason the Bangko Sentral is temporarily unable to
provide notes or coins of the denominations requested, it shall meet its obligations by delivering notes
and coins of the denominations which most nearly approximate those requested.
SECTION 56. Replacement of Currency Unfit for Circulation. — The Bangko Sentral shall
withdraw from circulation and shall demonetize all notes and coins which for any reason whatsoever are
unfit for circulation and shall replace them by adequate notes and coins: Provided, however, That the
Bangko Sentral shall not replace notes and coins the identification of which is impossible, coins which
show signs of filing, clipping or perforation, and notes which have lost more than two-fifths (2/5) of their
surface or all of the signatures inscribed thereon. Notes and coins in such mutilated conditions shall be
withdrawn from circulation and demonetized without compensation to the bearer.
SECTION 57. Retirement of Old Notes and Coins. — The Bangko Sentral may call in for
replacement notes of any series or denomination which are more than five (5) years old and coins which
are more than (10) years old.
Notes and coins called in for replacement in accordance with this provision shall remain legal
tender for a period of one (1) year from the date of call. After this period, they shall cease to be legal
tender but during the following year, or for such longer period as the Monetary Board may determine,
they may be exchanged at par and without charge in the Bangko Sentral and by agents duly authorized
by the Bangko Sentral for this purpose. After the expiration of this latter period, the notes and coins
which have not been exchanged shall cease to be a liability of the Bangko Sentral and shall be
demonetized. The Bangko Sentral shall also demonetize all notes and coins which have been called in
and replaced.
B. DEMAND DEPOSITS
SECTION 58. Definition. — For purposes of this Act, the term "demand deposits" means all
those liabilities of the Bangko Sentral and of other banks which are denominated in Philippine currency
and are subject to payment in legal tender upon demand by the presentation of checks.
SECTION 59. Issue of Demand Deposits. — Only banks duly authorized to do so may accept
funds or create liabilities payable in pesos upon demand by the presentation of checks, and such
operations shall be subject to the control of the Monetary Board in accordance with the powers granted
it with respect thereto under this Act.
SECTION 60. Legal Character. — Checks representing demand deposits do not have legal
tender power and their acceptance in the payment of debts, both public and private, is at the option of
the creditor: Provided, however, That a check which has been cleared and credited to the account of the
creditor shall be equivalent to a delivery to the creditor of cash in an amount equal to the amount
credited to his account.
CHAPTER III — GUIDING PRINCIPLES OF MONETARY
ADMINISTRATION BY THE BANGKO SENTRAL
ARTICLE I. DOMESTIC MONETARY STABILIZATION
SECTION 61. Guiding Principle. — The Monetary Board shall endeavor to control any
expansion or contraction in monetary aggregates which is prejudicial to the attainment or maintenance
of price stability.
SECTION 62. Power to Define Terms. — For purposes of this article and of this Act, the
Monetary Board shall formulate definitions of monetary aggregates, credit and prices and shall make
public such definitions and any changes thereof.
SECTION 63. Action When Abnormal Movements Occur in the Monetary Aggregates,
Credit, or Price Level. — Whenever abnormal movements in the monetary aggregates, in credit, or in
prices endanger the stability of the Philippine economy or important sectors thereof, the Monetary Board
shall:
(a) take such remedial measures as are appropriate and within the powers granted to the
Monetary Board and the Bangko Sentral under the provisions of this Act; and
(b) submit to the President of the Philippines and the Congress, and make public, a detailed
report which shall include, as a minimum, a description and analysis of:
(1) the causes of the rise or fall of the monetary aggregates, of credit or of prices;
(2) the extent to which the changes in the monetary aggregates, in credit, or in prices
have been reflected in changes in the level of domestic output, employment, wages
and economic activity in general, and the nature and significance of any such
changes; and
(3) the measures which the Monetary Board has taken and the other monetary, fiscal or
administrative measures which it recommends to be adopted.
Whenever the monetary aggregates, or the level of credit, increases or decreases by more than
fifteen percent (15%), or the cost of living index increases by more than ten percent (10%), in relation to
the level existing at the end of the corresponding month of the preceding year, or even though any of
these quantitative guidelines have not been reached when in its judgment the circumstances so
warrant, the Monetary Board shall submit the reports mentioned in this section, and shall state therein
whether, in the opinion of the Board, said changes in the monetary aggregates, credit or cost of living
represent a threat to the stability of the Philippine economy or of important sectors thereof.
The Monetary Board shall continue to submit periodic reports to the President of the Philippines
and to Congress until it considers that the monetary, credit or price disturbances have disappeared or
have been adequately controlled.
ARTICLE II. INTERNATIONAL MONETARY STABILIZATION
SECTION 64. International Monetary Stabilization. — The Bangko Sentral shall exercise its
powers under this Act to preserve the international value of the peso and to maintain its convertibility
into other freely convertible currencies primarily for, although not necessarily limited to, current
payments for foreign trade and invisibles.
SECTION 65. International Reserves. — In order to maintain the international stability and
convertibility of the Philippine peso, the Bangko Sentral shall maintain international reserves adequate
to meet any foreseeable net demands on the Bangko Sentral for foreign currencies.
In judging the adequacy of the international reserves, the Monetary Board shall be guided by
the prospective receipts and payments of foreign exchange by the Philippines. The Board shall give
special attention to the volume and maturity of the Bangko Sentral's own liabilities in foreign currencies,
to the volume and maturity of the foreign exchange assets and liabilities of other banks operating in the
Philippines and, insofar as they are known or can be estimated, the volume and maturity of the foreign
exchange assets and liabilities of all other persons and entities in the Philippines.
SECTION 66. Composition of the International Reserves. — The international reserves of
the Bangko Sentral may include but shall not be limited to the following assets:
(a) gold; and
(b) assets in foreign currencies in the form of: documents and instruments customarily employed
for the international transfer of funds; demand and time deposits in central banks, treasuries
and commercial banks abroad; foreign government securities; and foreign notes and coins.
The Monetary Board shall endeavor to hold the foreign exchange resources of the Bangko
Sentral in freely convertible currencies; moreover, the Board shall give particular consideration to the
prospects of continued strength and convertibility of the currencies in which the reserve is maintained,
as well as to the anticipated demands for such currencies. The Monetary Board shall issue regulations
determining the other qualifications which foreign exchange assets must meet in order to be included in
the international reserves of the Bangko Sentral.
The Bangko Sentral shall be free to convert any of the assets in its international reserves into
other assets as described in subsections (a) and (b) of this section.
SECTION 67. Action When the International Stability of the Peso Is Threatened. —
Whenever the international reserve of the Bangko Sentral falls to a level which the Monetary Board
considers inadequate to meet prospective net demands on the Bangko Sentral for foreign currencies, or
whenever the international reserve appears to be in imminent danger of falling to such a level, or
whenever the international reserve is falling as a result of payments or remittances abroad which, in the
opinion of the Monetary Board, are contrary to the national welfare, the Monetary Board shall:
(a) take such remedial measures as are appropriate and within the powers granted to the
Monetary Board and the Bangko Sentral under the provisions of this Act; and
(b) submit to the President of the Philippines and to Congress a detailed report which shall
include, as a minimum, a description and analysis of:
(1) the nature and causes of the existing or imminent decline;
(2) the remedial measures already taken or to be taken by the Monetary Board;
(3) the monetary, fiscal or administrative measures further proposed; and
(4) the character and extent of the cooperation required from other government agencies
for the successful execution of the policies of the Monetary Board.
If the resultant actions fail to check the deterioration of the reserve position of the Bangko
Sentral, or if the deterioration cannot be checked except by chronic restrictions on exchange and trade
transactions or by sacrifice of the domestic objectives of a balanced and sustainable growth of the
economy, the Monetary Board shall propose to the President, with appropriate notice of the Congress,
such additional action as it deems necessary to restore equilibrium in the international balance of
payments of the Philippines.
The Monetary Board shall submit periodic reports to the President and to Congress until the
threat to the international monetary stability of the Philippines has disappeared.
CHAPTER IV — INSTRUMENTS OF BANGKO SENTRAL ACTION
ARTICLE I. GENERAL CRITERION
SECTION 68. Means of Action. — In order to achieve the primary objective of price stability,
the Monetary Board shall rely on its moral influence and the powers granted to it under this Act for the
management of monetary aggregates.
ARTICLE II. OPERATIONS IN GOLD AND FOREIGN EXCHANGE
SECTION 69. Purchases and Sales of Gold. — The Bangko Sentral may buy and sell gold in
any form, subject to such regulations as the Monetary Board may issue.
The purchases and sales of gold authorized by this section shall be made in the national
currency at the prevailing international market price as determined by the Monetary Board.
SECTION 70. Purchases and Sales of Foreign Exchange. — The Bangko Sentral may buy
and sell foreign notes and coins, and documents and instruments of types customarily employed for the
international transfer of funds. The Bangko Sentral may engage in future exchange operations.
The Bangko Sentral may engage in foreign exchange transactions with the following entities or
persons only:
(a) banking institutions operating in the Philippines;
(b) the Government, its political subdivisions and instrumentalities;
(c) foreign or international financial institutions;
(d) foreign governments and their instrumentalities; and
(e) other entities or persons which the Monetary Board is hereby empowered to authorize as
foreign exchange dealers, subject to such rules and regulations as the Monetary Board shall
prescribe.
In order to maintain the convertibility of the peso, the Bangko Sentral may, at the request of any
banking institution operating in the Philippines, buy any quantity of foreign exchange offered, and sell
any quantity of foreign exchange demanded, by such institution, provided that the foreign currencies so
offered or demanded are freely convertible into gold or United States dollars. This requirement shall not
apply to demands for foreign notes and coins.
The Bangko Sentral shall effect its exchange transactions between foreign currencies and the
Philippine peso at the rates determined in accordance with the provisions of Section 74 of this Act.
SECTION 71. Foreign Asset Position of the Bangko Sentral. — The Bangko Sentral shall
endeavor to maintain at all times a net positive foreign asset position so that its gross foreign exchange
assets will always exceed its gross foreign liabilities. In the event that the equivalent amount in pesos of
the foreign exchange liabilities of the Bangko Sentral exceed twice the equivalent amount in pesos of
the foreign exchange assets of the bank, the Bangko Sentral shall, within sixty (60) days from the date
the limit is exceeded, submit a report to the Congress stating the origin of these liabilities, and the
manner in which they will be paid.
SECTION 72. Emergency Restrictions on Exchange Operations. — In order to achieve the
primary objective of the Bangko Sentral as set forth in Section 3 of this Act, or protect the international
reserves of the Bangko Sentral in the imminence of, or during an exchange crisis, or in time of national
emergency and to give the Monetary Board and the Government time in which to take constructive
measures to forestall, combat, or overcome such a crisis or emergency, the Monetary Board, with the
concurrence of at least five (5) of its members and with the approval of the President of the Philippines,
may temporarily suspend or restrict sales of exchange by the Bangko Sentral, and may subject all
transactions in gold and foreign exchange to license by the Bangko Sentral, and may require that any
foreign exchange thereafter obtained by any person residing or entity operating in the Philippines be
delivered to the Bangko Sentral or to any bank or agent designated by the Bangko Sentral for the
purpose, at the effective exchange rate or rates: Provided, however, That foreign currency deposits
made under Republic Act No. 6426 shall be exempt from these requirements.
SECTION 73. Acquisition of Inconvertible Currencies. — The Bangko Sentral shall avoid
the acquisition and holding of currencies which are not freely convertible, and may acquire such
currencies in an amount exceeding the minimum balance necessary to cover current demands for said
currencies only when, and to the extent that, such acquisition is considered by the Monetary Board to
be in the national interest. The Monetary Board shall determine the procedures which shall apply to the
acquisition and disposition by the Bangko Sentral of foreign exchange which is not freely utilizable in the
international market.
SECTION 74. Exchange Rates. — The Monetary Board shall determine the exchange rate
policy of the country.
The Monetary Board shall determine the rates at which the Bangko Sentral shall buy and sell
spot exchange, and shall establish deviation limits from the effective exchange rate or rates as it may
deem proper. The Bangko Sentral shall not collect any additional commissions or charges of any sort,
other than actual telegraphic or cable costs incurred by it.
The Monetary Board shall similarly determine the rates for other types of foreign exchange
transactions by the Bangko Sentral, including purchases and sales of foreign notes and coins, but the
margins between the effective exchange rates and the rates thus established may not exceed the
corresponding margins for spot exchange transactions by more than the additional costs or expenses
involved in each type of transactions.
SECTION 75. Operations with Foreign Entities. — The Monetary Board may authorize the
Bangko Sentral to grant loans to and receive loans from foreign banks and other foreign or international
entities, both public and private, and may engage in such other operations with these entities as are in
the national interest and are appropriate to its character as a central bank. The Bangko Sentral may
also act as agent or correspondent for such entities.
Upon authority of the Monetary Board, the Bangko Sentral may pledge any gold or other assets
which it possesses as security against loans which it receives from foreign or international entities.
ARTICLE III. REGULATION OF FOREIGN EXCHANGE OPERATIONS OF THE
BANKS
SECTION 76. Foreign Exchange Holdings of the Banks. — In order that the Bangko Sentral
may at all times have foreign exchange resources sufficient to enable it to maintain the international
stability and convertibility of the peso, or in order to promote the domestic investment of bank resources,
the Monetary Board may require the banks to sell to the Bangko Sentral or to other banks all or part of
their surplus holdings of foreign exchange. Such transfers may be required for all foreign currencies or
for only certain of such currencies, according to the decision of the Monetary Board. The transfers shall
be made at the rates established under the provisions of Section 74 of this Act.
The Monetary Board may, whenever warranted, determine the net assets and net liabilities of
banks and shall, in making such a determination, take into account the bank's networth, outstanding
liabilities, actual and contingent, or such other financial or performance ratios as may be appropriate
under the circumstances. Any such determination of net assets and net liabilities shall be applied in all
banks uniformly and without discrimination.
SECTION 77. Requirement of Balanced Currency Position. — The Monetary Board may
require the banks to maintain a balanced position between their assets and liabilities in Philippine pesos
or in any other currency or currencies in which they operate. The banks shall be granted a reasonable
period of time in which to adjust their currency positions to any such requirement.
The powers granted under this section shall be exercised only when special circumstances
make such action necessary, in the opinion of the Monetary Board, and shall be applied to all banks
alike and without discrimination.
SECTION 78. Regulation of Non-spot Exchange Transactions. — In order to restrain the
banks from taking speculative positions with respect to future fluctuations in foreign exchange rates, the
Monetary Board may issue such regulations governing bank purchases and sales of non-spot exchange
as it may consider necessary for said purpose.
SECTION 79. Other Exchange Profits and Losses. — The banks shall bear the risks of non-
compliance with the terms of the foreign exchange documents and instruments which they buy and sell,
and shall also bear any other typically commercial or banking risks, including exchange risks not
assumed by the Bangko Sentral under the provisions of the preceding section.
SECTION 80. Information on Exchange Operations. — The banks shall report to the Bangko
Sentral the volume and composition of their purchases and sales of gold and foreign exchange each
day, and must furnish such additional information as the Bangko Sentral may request with reference to
the movements in their accounts in foreign currencies.
The Monetary Board may also require other persons and entities to report to it currently all
transactions or operations in gold, in any shape or form, and in foreign exchange whether entered into
or undertaken by them directly or through agents, or to submit such data as may be required on
operations or activities giving rise to or in connection with or relating to a gold or foreign exchange
transaction. The Monetary Board shall prescribe the forms on which such declarations must be made.
The accuracy of the declarations may be verified by the Bangko Sentral by whatever inspection it may
deem necessary.
ARTICLE IV. LOANS TO BANKING AND OTHER FINANCIAL INSTITUTIONS
A. CREDIT POLICY
SECTION 81. Guiding Principles. — The rediscounts, discounts, loans and advances which
the Bangko Sentral is authorized to extend to banking institutions under the provisions of the present
article of this Act shall be used to influence the volume of credit consistent with the objective of price
stability.
B. NORMAL CREDIT OPERATIONS
SECTION 82. Authorized Types of Operations. — Subject to the principle stated in the
preceding section of this Act, the Bangko Sentral may normally and regularly carry on the following
credit operations with banking institutions operating in the Philippines:
(a) Commercial credits. — The Bangko Sentral may rediscount, discount, buy and sell bills,
acceptances, promissory notes and other credit instruments with maturities of not more than
one hundred eighty (180) days from the date of their rediscount, discount or acquisition by
the Bangko Sentral and resulting from transactions related to:
(1) the importation, exportation, purchase or sale of readily saleable goods and products,
or their transportation within the Philippines; or
(2) the storing of non-perishable goods and products which are duly insured and
deposited, under conditions assuring their preservation, in authorized bonded
warehouses or in other places approved by the Monetary Board.
(b) Production credits. — The Bangko Sentral may rediscount, discount, buy and sell bills,
acceptances, promissory notes and other credit instruments having maturities of not more
than three hundred sixty (360) days from the date of their rediscount, discount or acquisition
by the Bangko Sentral and resulting from transactions related to the production or processing
of agricultural, animal, mineral, or industrial products. Documents or instruments acquired in
accordance with this subsection shall be secured by a pledge of the respective crops or
products: Provided, however, That the crops or products need not be pledged to secure the
documents if the original loan granted by the Bangko Sentral is secured by a lien or mortgage
on real estate property seventy percent (70%) of the appraised value of which equals or
exceeds the amount of the loan granted.
(c) Other credits. — Special credit instruments not otherwise rediscountable under the
immediately preceding subsections (a) and (b) may be eligible for rediscounting in
accordance with rules and regulations which the Bangko Sentral shall prescribe. Whenever
necessary, the Bangko Sentral shall provide funds from non-inflationary sources: Provided,
however, That the Monetary Board shall prescribe additional safeguards for disbursing these
funds.
(d) Advances. — The Bangko Sentral may grant advances against the following kinds of
collaterals for fixed periods which, with the exception of advances against collateral named in
clause (4) of the present subsection, shall not exceed one hundred eighty (180) days:
(1) gold coins or bullion;
(2) securities representing obligations of the Bangko Sentral or of other domestic
institutions of recognized solvency;
(3) the credit instruments to which reference is made in subsection (a) of this section;
(4) the credit instruments to which reference is made in subsection (b) of this section, for
periods which shall not exceed three hundred sixty (360) days;
(5) utilized portions of advances in current amount covered by regular overdraft
agreements related to operations included under subsections (a) and (b) of this
section, and certified as to amount and liquidity by the institution soliciting the
advance;
(6) negotiable treasury bills, certificates of indebtedness, notes and other negotiable
obligations of the Government maturing within three (3) years from the date of the
advance; and
(7) negotiable bonds issued by the Government of the Philippines, by Philippine
provincial, city or municipal governments, or by any Philippine Government
instrumentality, and having maturities of not more than ten (10) years from the date of
advance.
The rediscounts, discounts, loans and advances made in accordance with the provisions of this
section may not be renewed or extended unless extraordinary circumstances fully justify such renewal
or extension.
Advances made against the collateral named in clauses (6) and (7) of subsection (d) of this
section may not exceed eighty percent (80%) of the current market value of the collateral.
C. SPECIAL CREDIT OPERATION
SECTION 83. Loans for Liquidity Purposes. — The Bangko Sentral may extend loans and advances
to banking institutions for a period of not more than seven (7) days without any collateral for the purpose
of providing liquidity to the banking system in times of need.
D. EMERGENCY CREDIT OPERATION
SECTION 84. Emergency Loans and Advances. — In periods of national and/or local
emergency or of imminent financial panic which directly threaten monetary and banking stability, the
Monetary Board may, by a vote of at least five (5) of its members, authorize the Bangko Sentral to grant
extraordinary loans or advances to banking institutions secured by assets as defined hereunder:
Provided, That while such loans or advances are outstanding, the debtor institution shall not, except
upon prior authorization by the Monetary Board, expand the total volume of its loans or investments.
The Monetary Board may, at its discretion, likewise authorize the Bangko Sentral to grant
emergency loans or advances to banking institutions, even during normal periods, for the purpose of
assisting a bank in a precarious financial condition or under serious financial pressures brought by
unforeseen events, or events which, though foreseeable, could not be prevented by the bank
concerned: Provided, however, That the Monetary Board has ascertained that the bank is not insolvent
and has the assets defined hereunder to secure the advances: Provided, further, That a concurrent vote
of at least five (5) members of the Monetary Board is obtained.
The amount of any emergency loan or advance shall not exceed the sum of fifty percent (50%)
of total deposits and deposit substitutes of the banking institution and shall be disbursed in two (2) or
more tranches. The amount of the first tranche shall be limited to twenty-five percent (25%) of the total
deposit and deposit substitutes of the institution and shall be secured by government securities to the
extent of their applicable loan values and other unencumbered first class collaterals which the Monetary
Board may approve: Provided, That if as determined by the Monetary Board, the circumstances
surrounding the emergency warrant a loan or 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 purposes for which their loans in general are destined, and to any
other clearly definable aspect of the credit policy of the bank.
SECTION 89. Provisional Advances to the National Government. — The Bangko Sentral
may make direct provisional advances with or without interest to the National Government to finance
expenditures authorized in its annual appropriation: Provided, That said advances shall be repaid before
the end of three (3) months extendible by another three (3) months as the Monetary Board may allow
following the date the National Government received such provisional advances and shall not, in their
aggregate, exceed twenty percent (20%) of the average annual income of the borrower for the last three
(3) preceding fiscal years.
ARTICLE V. OPEN MARKET OPERATIONS FOR THE ACCOUNT OF THE
BANGKO SENTRAL
SECTION 90. Principles of Open Market Operations. — The open market purchases and
sales of securities by the Bangko Sentral shall be made exclusively in accordance with its primary
objective of achieving price stability.
SECTION 91. Purchases and Sales of Government Securities. — In order to achieve the
objectives of the national monetary policy, the Bangko Sentral may, in accordance with the principle
stated in Section 90 of this Act and with such rules and regulations as may be prescribed by the
Monetary Board, buy and sell in the open market for its own account:
(a) evidences of indebtedness issued directly by the Government of the Philippines or by its
political subdivisions; and
(b) evidences of indebtedness issued by government instrumentalities and fully guaranteed by
the Government.
The evidences of indebtedness acquired under the provisions of this section must be freely
negotiable and regularly serviced and must be available to the general public through banking
institutions and local government treasuries in denominations of a thousand pesos or more.
SECTION 92. Issue and Negotiation of Bangko Sentral Obligations. — In order to provide
the Bangko Sentral with effective instruments for open market operations, the Bangko Sentral may,
subject to such rules and regulations as the Monetary Board may prescribe and in accordance with the
principles stated in Section 90 of this Act, issue, place, buy and sell freely negotiable evidences of
indebtedness of the Bangko Sentral: Provided, That issuance of such certificates of indebtedness shall
be made only in cases of extraordinary movement in price levels. Said evidences of indebtedness may
be issued directly against the international reserve of the Bangko Sentral or against the securities which
it has acquired under the provisions of Section 91 of this Act, or may be issued without relation to
specific types of assets of the Bangko Sentral.
The Monetary Board shall determine the interest rates, maturities and other characteristics of
said obligations of the Bangko Sentral, and may, if it deems it advisable, denominate the obligations in
gold or foreign currencies.
Subject to the principles stated in Section 90 of this Act, the evidences of indebtedness of the
Bangko Sentral to which this section refers may be acquired by the Bangko Sentral before their
maturity, either through purchases in the open market or through redemptions at par and by lot if the
Bangko Sentral has reserved the right to make such redemptions. The evidences of indebtedness
acquired or redeemed by the Bangko Sentral shall not be included among its assets, and shall be
immediately retired and cancelled.
ARTICLE VI. COMPOSITION OF BANGKO SENTRAL'S PORTFOLIO
SECTION 93. Review of the Bangko Sentral's Portfolio. — At least once every month the
Monetary Board shall review the portfolio of the Bangko Sentral in relation to its future credit policy.
In reviewing the Bangko Sentral's portfolio, the Monetary Board shall especially consider whether a
sufficiently large part of the portfolio consists of assets with early maturities, in order that a contraction in
Bangko Sentral credit may be effected promptly whenever the national monetary policy so requires.
ARTICLE VII. BANK RESERVES
SECTION 94. Reserve Requirements. — In order to control the volume of money created by
the credit operations of the banking system, all banks operating in the Philippines shall be required to
maintain reserves against their deposit liabilities: Provided, That the Monetary Board may, at its
discretion, also require all banks and/or quasi-banks to maintain reserves against funds held in trust and
liabilities for deposit substitutes as defined in this Act. The required reserves of each bank shall be
proportional to the volume of its deposit liabilities and shall ordinarily take the form of a deposit in the
Bangko Sentral. Reserve requirements shall be applied to all banks of the same category uniformly and
without discrimination.
Reserves against deposit substitutes, if imposed, shall be determined in the same manner as
provided for reserve requirements against regular bank deposits, with respect to the imposition,
increase, and computation of reserves.
The Monetary Board may exempt from reserve requirements deposits and deposit substitutes
with remaining maturities of two (2) years or more, as well as interbank borrowings.
Since the requirement to maintain bank reserves is imposed primarily to control the volume of
money, the Bangko Sentral shall not pay interest on the reserves maintained with it unless the Monetary
Board decides otherwise as warranted by circumstances.
SECTION 95. Definition of Deposit Substitutes. — The term "deposit substitutes" is defined
as an alternative form of obtaining funds from the public, other than deposits, through the issuance,
endorsement, or acceptance of debt instruments for the borrower's own account, for the purpose of
relending or purchasing of receivables and other obligations. These instruments may include, but need
not be limited to, bankers acceptances, promissory notes, participations, certificates of assignment and
similar instruments with recourse, and repurchase agreements. The Monetary Board shall determine
what specific instruments shall be considered as deposit substitutes for the purposes of Section 94 of
this Act: Provided, however, That deposit substitutes of commercial, industrial and other non-financial
companies for the limited purpose of financing their own needs or the needs of their agents or dealers
shall not be covered by the provisions of Section 94 of this Act.
SECTION 96. Required Reserves Against Peso Deposits. — The Monetary Board may fix
and, when it deems necessary, alter the minimum reserve ratios to peso deposits, as well as to deposit
substitutes, which each bank and/or quasi-bank may maintain, and such ratio shall be applied uniformly
to all banks of the same category as well as to quasi-banks.
SECTION 97. Required Reserves Against Foreign Currency Deposits. — The Monetary
Board is similarly authorized to prescribe and modify the minimum reserve ratios applicable to deposits
denominated in foreign currencies.
SECTION 98. Reserves Against Unused Balances of Overdraft Lines. — In order to
facilitate Bangko Sentral control over the volume of bank credit, the Monetary Board may establish
minimum reserve requirements for unused balances of overdraft lines.
The powers of the Monetary Board to prescribe and modify reserve requirements against
unused balances of overdraft lines shall be the same as its powers with respect to reserve requirements
against demand deposits.
SECTION 99. Increase in Reserve Requirements. — Whenever in the opinion of the
Monetary Board it becomes necessary to increase reserve requirements against existing liabilities, the
increase shall be made in a gradual manner and shall not exceed four percentage points in any thirty-
day period. Banks and other affected financial institutions shall be notified reasonably in advance of the
date on which such increase is to become effective.
SECTION 100. Computation on Reserves. — The reserve position of each bank or quasi-
bank shall be calculated daily on the basis of the amount, at the close of business for the day, of the
institution's reserves and the amount of its liability accounts against which reserves are required to be
maintained: Provided, That with reference to holidays or non-banking days, the reserve position as
calculated at the close of the business day immediately preceding such holidays and non-banking days
shall apply on such days.
For the purpose of computing the reserve position of each bank or quasi-bank, its principal
office in the Philippines and all its branches and agencies located therein shall be considered as a
single unit.
SECTION 101. Reserve Deficiencies. — Whenever the reserve position of any bank or quasi-
bank, computed in the manner specified in the preceding section of this Act, is below the required
minimum, the bank or quasi-bank shall pay the Bangko Sentral one-tenth of one percent (1/10 of 1%)
per day on the amount of the deficiency or the prevailing ninety-one-day treasury bill rate plus three
percentage points, whichever is higher: Provided, however, That banks and quasi-banks shall ordinarily
be permitted to offset any reserve deficiency occurring on one or more days of the week with any
excess reserves which they may hold on other days of the same week and shall be required to pay the
penalty only on the average daily deficiency during the week. In cases of abuse, the Monetary Board
may deny any bank or quasi-bank the privilege of offsetting reserve deficiencies in the aforesaid
manner.
If a bank or quasi-bank chronically has a reserve deficiency, the Monetary Board may limit or
prohibit the making of new loans or investments by the institution and may require that part or all of the
net profits of the institution be assigned to surplus.
The Monetary Board may modify or set aside the reserve deficiency penalties provided in this
section, for part or the entire period of a strike or lockout affecting a bank or a quasi-bank as defined in
the Labor Code, or of a national emergency affecting operations of banks or quasi-banks. The
Monetary Board may also modify or set aside reserved deficiency penalties for rehabilitation program of
a bank.
SECTION 102. Interbank Settlement. — The Bangko Sentral shall establish facilities for
interbank clearing under such rules and regulations as the Monetary Board may prescribe: Provided,
That the Bangko Sentral may charge administrative and other fees for the maintenance of such
facilities.
The deposit reserves maintained by the banks in the Bangko Sentral in accordance with the
provisions of Section 94 of this Act shall serve as basis for the clearing of checks and the settlement of
interbank balances, subject to such rules and regulations as the Monetary Board may issue with respect
to such operations: Provided, That any bank which incurs on overdrawing in its deposit account with the
Bangko Sentral shall fully cover said overdraft, including interest thereon at a rate equivalent to one-
tenth of one percent (1/10 of 1%) per day or the prevailing ninety-one-day treasury bill rate plus three
percentage points, whichever is higher, not later than the next clearing day: Provided, further, That
settlement of clearing balances shall not be effected for any account which continues to be overdrawn
for five (5) consecutive banking days until such time as the overdrawing is fully covered or otherwise
converted into an emergency loan or advance pursuant to the provisions of Section 84 of this Act:
Provided, finally, That the appropriate clearing office shall be officially notified of banks with overdrawn
balances. Banks with existing overdrafts with the Bangko Sentral as of the effectivity of this Act shall,
within such period as may be prescribed by the Monetary Board, either convert the overdraft into an
emergency loan or advance with a plan of payment, or settle such overdrafts, and that, upon failure to
so comply herewith, the Bangko Sentral shall take such action against the bank as may be warranted
under this Act.
SECTION 103. Exemption from Attachment and Other Purposes. — Deposits maintained
by banks with the Bangko Sentral as part of their reserve requirements shall be exempt from
attachment, garnishments, or any other order or process of any court, government agency or any other
administrative body issued to satisfy the claim of a party other than the Government, or its political
subdivisions or instrumentalities.
ARTICLE VIII. SELECTIVE REGULATION OF BANK OPERATIONS
SECTION 104. Guiding Principle. — The Monetary Board shall use the powers granted to it
under this Act to ensure that the supply, availability and cost of money are in accord with the needs of
the Philippine economy and that bank credit is not granted for speculative purposes prejudicial to the
national interests. Regulations on bank operations shall be applied to all banks of the same category
uniformly and without discrimination.
SECTION 105. Margin Requirements Against Letters of Credit. — The Monetary Board
may at any time prescribe minimum cash margins for the opening of letters of credit, and may relate the
size of the required margin to the nature of the transaction to be financed.
SECTION 106. Required Security Against Bank Loans. — In order to promote liquidity and
solvency of the banking system, the Monetary Board may issue such regulations as it may deem
necessary with respect to the maximum permissible maturities of the loans and investments which the
banks may make, and the kind and amount of security to be required against the various types of credit
operations of the banks.
SECTION 107. Portfolio Ceilings. — Whenever the Monetary Board considers it advisable to
prevent or check an expansion of bank credit, the Board may place an upper limit on the amount of
loans and investments which the banks may hold, or may place a limit on the rate of increase of such
assets within specified periods of time. The Monetary Board may apply such limits to the loans and
investments of each bank or to specific categories thereof.
In no case shall the Monetary Board establish limits which are below the value of the loans or
investments of the banks on the date on which they are notified of such restrictions. The restrictions
shall be applied to all banks uniformly and without discrimination.
SECTION 108. Minimum Capital Ratios. — The Monetary Board may prescribe minimum
ratios which the capital and surplus of the banks must bear to the volume of their assets, or to specific
categories thereof, and may alter said ratios whenever it deems necessary.
ARTICLE IX. COORDINATION OF CREDIT POLICIES BY GOVERNMENT
INSTITUTIONS
SECTION 109. Coordination of Credit Policies. — Government-owned corporations which
perform banking or credit functions shall coordinate their general credit policies with those of the
Monetary Board.
Toward this end, the Monetary Board may, whenever it deems it expedient, make suggestions
or recommendations to such corporations for the more effective coordination of their policies with those
of the Bangko Sentral.
CHAPTER V — FUNCTIONS AS BANKER AND FINANCIAL ADVISOR
OF THE GOVERNMENT
ARTICLE I. FUNCTIONS AS BANKER OF THE GOVERNMENT
SECTION 110. Designation of Bangko Sentral as Banker of the Government. — The
Bangko Sentral shall act as a banker of the Government, its political subdivisions and instrumentalities.
SECTION 111. Representation with the International Monetary Fund. — The Bangko
Sentral shall represent the Government in all dealings, negotiations and transactions with the
International Monetary Fund and shall carry such accounts as may result from Philippine membership
in, or operations with, said Fund.
SECTION 112. Representation with Other Financial Institutions. — The Bangko Sentral
may be authorized by the Government to represent it in dealings, negotiations or transactions with the
International Bank for Reconstruction and Development and with other foreign or international financial
institutions or agencies. The President may, however, designate any of his other financial advisors to
jointly represent the Government in such dealings, negotiations or transactions.
SECTION 113. Official Deposits. — The Bangko Sentral shall be the official depository of the
Government, its political subdivisions and instrumentalities as well as of government-owned or
controlled corporations and, as a general policy, their cash balances should be deposited with the
Bangko Sentral, with only minimum working balances to be held by government-owned banks and such
other banks incorporated in the Philippines as the Monetary Board may designate, subject to such rules
and regulations as the Board may prescribe: Provided, That such banks may hold deposits of the
political subdivisions and instrumentalities of the Government beyond their minimum working balances
whenever such subdivisions or instrumentalities have outstanding loans with said banks.
The Bangko Sentral may pay interest on deposits of the Government or of its political
subdivisions and instrumentalities, as well as on deposits of banks with the Bangko Sentral.
SECTION 114. Fiscal Operations. — The Bangko Sentral shall open a general cash account
for the Treasurer of the Philippines, in which the liquid funds of the Government shall be deposited.
Transfers of funds from this account to other accounts shall be made only upon order of the
Treasurer of the Philippines.
SECTION 115. Other Banks as Agents of the Bangko Sentral. — In the performance of its
functions as fiscal agent, the Bangko Sentral may engage the services of other government-owned and
controlled banks and of other domestic banks for operations in localities at home or abroad in which the
Bangko Sentral does not have offices or agencies adequately equipped to perform said operations:
Provided, however, That for fiscal operations in foreign countries, the Bangko Sentral may engage the
services of foreign banking and financial institutions.
SECTION 116. Remuneration for Services. — The Bangko Sentral may charge equitable
rates, commissions or fees for services which it renders to the Government, its political subdivisions and
instrumentalities.
ARTICLE II. THE MARKETING AND STABILIZATION OF SECURITIES FOR THE
ACCOUNT OF THE GOVERNMENT
A. THE ISSUE AND PLACING OF GOVERNMENT SECURITIES
SECTION 117. Issue of Government Obligations. — The issue of securities representing
obligations of the Government, its political subdivisions or instrumentalities, may be made through the
Bangko Sentral, which may act as agent of, and for the account of, the Government or its respective
subdivisions or instrumentality, as the case may be: Provided, however, That the Bangko Sentral shall
not guarantee the placement of said securities, and shall not subscribe to their issue except to replace
its maturing holdings of securities with the same type as the maturing securities.
SECTION 118. Methods of Placing Government Securities. — The Bangko Sentral may
place the securities to which the preceding section refers through direct sale to financial institutions and
the public.
The Bangko Sentral shall not be a member of any stock exchange or syndicate, but may
intervene therein for the sole purpose of regulating their operations in the placing of government
securities.
The Government, or its political subdivisions or instrumentalities, shall reimburse the Bangko
Sentral for the expenses incurred in the placing of the aforesaid securities.
SECTION 119. Servicing and Redemption of the Public Debt. — The servicing and
redemption of the public debt shall also be effected through the Bangko Sentral.
B. BANGKO SENTRAL SUPPORT OF THE GOVERNMENT SECURITIES MARKET
SECTION 120. The Securities Stabilization Fund. — There shall be established a
"Securities Stabilization Fund" which shall be administered by the Bangko Sentral for the account of the
Government.
The operations of the Securities Stabilization Fund shall consist of purchases and sales, in the
open market, of bonds and other evidences of indebtedness issued or fully guaranteed by the
Government. The purpose of these operations shall be to increase the liquidity and stabilize the value
of said securities in order thereby to promote investment in government obligations.
The Monetary Board shall use the resources of the Fund to prevent, or moderate, sharp
fluctuations in the quotations of said government obligations, but shall not endeavor to alter movements
of the market resulting from basic changes in the pattern or level of interest rates.
The Monetary Board shall issue such regulations as may be necessary to implement the
provisions of this section.
SECTION 121. Resources of the Securities Stabilization Fund. — Subject to Section 132
of this Act, the resources of the Securities Stabilization Fund shall come from the balance of the fund as
held by the Central Bank under Republic Act No. 265 as of the effective date of this Act.
SECTION 122. Profits and Losses of the Fund. — The Securities Stabilization Fund shall
retain net profits which it may make on its operations, regardless of whether said profits arise from
capital gains or from interest earnings. The Fund shall correspondingly bear any net losses which it
may incur.
ARTICLE III. FUNCTIONS AS FINANCIAL ADVISOR OF THE GOVERNMENT
SECTION 123. Financial Advice on Official Credit Operations. — Before undertaking any
credit operation abroad, the Government, through the Secretary of Finance, shall request the opinion, in
writing, of the Monetary Board on the monetary implications of the contemplated action. Such opinions
must similarly be requested by all political subdivisions and instrumentalities of the Government before
any credit operation abroad is undertaken by them.
The opinion of the Monetary Board shall be based on the gold and foreign exchange resources
and obligations of the nation and on the effects of the proposed operation on the balance of payments
and on monetary aggregates.
Whenever the Government, or any of its political subdivisions or instrumentalities, contemplates
borrowing within the Philippines, the prior opinion of the Monetary Board shall likewise be requested in
order that the Board may render an opinion on the probable effects of the proposed operation on
monetary aggregates, the price level, and the balance of payments.
SECTION 124. Representation on the National Economic and Development Authority. —
In order to assure effective coordination between the economic, financial and fiscal policies of the
Government and the monetary, credit and exchange policies of the Bangko Sentral, the Deputy
Governor designated by the Governor of the Bangko Sentral shall be an ex officio member of the
National Economic and Development Authority Board.
CHAPTER VI — PRIVILEGES AND PROHIBITIONS
ARTICLE I. PRIVILEGES
SECTION 125. Tax Exemptions. — The Bangko Sentral shall be exempt for a period of five
(5) years from the approval of this Act from all national, provincial, municipal and city taxes, fees,
charges and assessments.
The exemption authorized in the preceding paragraph of this section shall apply to all property
of the Bangko Sentral, to the resources, receipts, expenditures, profits and income of the Bangko
Sentral, as well as to all contracts, deeds, documents and transactions related to the conduct of the
business of the Bangko Sentral: Provided, however, That said exemptions shall apply only to such
taxes, fees, charges and assessments for which the Bangko Sentral itself would otherwise be liable,
and shall not apply to taxes, fees, charges, or assessments payable by persons or other entities doing
business with the Bangko Sentral: Provided, further, That foreign loans and other obligations of the
Bangko Sentral shall be exempt, both as to principal and interest, from any and all taxes if the payment
of such taxes has been assumed by the Bangko Sentral.
SECTION 126. Exemption from Customs Duties. — The provision of any general or special
law to the contrary notwithstanding, the importation and exportation by the Bangko Sentral of notes and
coins, and of gold and other metals to be used for purposes authorized under this Act, and the
importation of all equipment needed for bank note production, minting of coins, metal refining and other
security printing operations shall be fully exempt from all customs duties and consular fees and from all
other taxes, assessments and charges related to such importation or exportation.
SECTION 127. Applicability of the Civil Service Law. — Appointments in the Bangko
Sentral, except as to those which are policy-determining, primarily confidential or highly technical in
nature, shall be made only according to the Civil Service Law and regulations: Provided, That no
qualification requirements for positions in the Bangko Sentral shall be imposed other than those set by
the Monetary Board: Provided, further, That, the Monetary Board or Governor, in accordance with
Sections 15(c) and 17(d) of this Act, respectively, may without need of obtaining prior approval from any
other government agency, appoint personnel in the Bangko Sentral whose services are deemed
necessary in order not to unduly disrupt the operations of the Bangko Sentral.
Officers and employees of the Bangko Sentral, including all members of the Monetary Board,
shall not engage directly or indirectly in partisan activities or take part in any election except to vote.
ARTICLE II. PROHIBITIONS
SECTION 128. Prohibitions. — The Bangko Sentral shall not acquire shares of any kind or
accept them as collateral, and shall not participate in the ownership or management of any enterprise,
either directly or indirectly.
The Bangko Sentral shall not engage in development banking or financing: Provided, however,
That outstanding loans obtained or extended for development financing shall not be affected by the
prohibition of this section.
CHAPTER VII — TRANSITORY PROVISIONS
SECTION 129. Phase-out of Fiscal Agency Functions. — Unless circumstances warrant
otherwise and approved by the Congress Oversight Committee, the Bangko Sentral shall, within a
period of three (3) years but in no case longer than five (5) years from the approval of this Act, phase
out all fiscal agency functions provided for in Sections 117, 118, 119, and 120 as well as in other
pertinent provisions of this Act and transfer the same to the Department of Finance.
SECTION 130. Phase-out of Regulatory Powers Over the Operations of Finance
Corporations and Other Institutions Performing Similar Functions. — The Bangko Sentral shall,
within a period of five (5) years from the effectivity of this Act, phase out its regulatory powers over
finance companies without quasi-banking functions and other institutions performing similar functions as
provided in existing laws, the same to be assumed by the Securities and Exchange Commission.
SECTION 131. Implementing Details. — The Bangko Sentral shall be made operational by
the performance of the following acts:
(a) the President shall constitute the Monetary Board by appointing the members thereof within
sixty (60) days from the effectivity of this Act; and
(b) the transfer of such assets and liabilities from the Central Bank to the Bangko Sentral as
provided in Section 132 shall be completed within ninety (90) days from the constitution of the
Monetary Board.
All incumbent personnel in the Central Bank as of the date of the approval of this Act shall
continue to exercise their duties and functions as personnel of the Bangko Sentral subject to the
provisions of Section 133: Provided, That such personnel in the Central Bank as may be necessary for
the purpose of implementing Section 132 may be assigned by the Bangko Sentral Monetary Board to
the Central Bank.
SECTION 132. Transfer of Assets and Liabilities. — Upon the effectivity of this Act, three (3)
members of the Monetary Board, which may include the Governor, in representation of the Bangko
Sentral, the Secretary of Finance and the Secretary of Budget and Management in representation of the
National Government, and the Chairmen of the Committees on Banks of the Senate and the House of
Representatives shall determine the assets and liabilities of the Central Bank which may be transferred
to or assumed by the Bangko Sentral. The Committee shall complete its work within ninety (90) days
from the constitution of the Monetary Board submitting a comprehensive report with all its findings and
justification.
The following guidelines shall be strictly observed in the determination of which assets and
liabilities shall be transferred to the Bangko Sentral:
(a) the Monetary Board and the Secretary of Finance shall have primary responsibility for
working out creative monetary and financial solutions to retire the Central Bank liabilities and
losses at the least cost to the Government;
(b) the Bangko Sentral shall remit seventy-five percent (75%) of its net profits to a special
deposit account (sinking fund) until such time as the net liabilities of the Central Bank shall
have been liquidated through generally accepted finance mechanisms such as, but not
limited to, write-offs, set-offs, condonation, collections, reappraisal, revaluation and bond
issuance by the National Government, or to the National Government as dividends;
(c) the assets and liabilities to be transferred shall be limited to an amount that will enable the
Bangko Sentral to perform its responsibilities adequately and operate on a viable basis:
Provided, That the assets shall exceed the liabilities as certified by the Commission on Audit
(COA), by an initial amount of Ten billion pesos (P10,000,000,000);
(d) liabilities to be assumed by the Bangko Sentral shall include liability for notes and coins in
circulation as of the effective date of this Act; and
(e) any asset or liability of the Central Bank not transferred to the Bangko Sentral shall be
retained and administered, disposed of and liquidated by the Central Bank itself which shall
continue to exist as the CB Board of Liquidators only for the purposes provided in this
paragraph but not later than twenty-five (25) years or until such time that liabilities have been
liquidated: Provided, That the Bangko Sentral may financially assist the Central Bank of
Liquidators in the liquidation of CB liabilities: Provided, finally, That upon disposition of said
retained assets and liquidation of said retained liabilities, the Central Bank shall be deemed
abolished.
All actions taken by the Bangko Sentral Monetary Board under this section shall be reported to
Congress and the President within thirty (30) days.
SECTION 133. Mandate to Organize. — The Bangko Sentral shall be organized by the
Monetary Board without being subject to the provisions of Republic Act No. 7430, by adopting if it so
desires, an entirely new staffing pattern on organizational structure to suit the operations of the Bangko
Sentral under this Act. No preferential or priority right shall be given to or enjoyed by any personnel for
appointment to any position in the new staffing pattern, nor shall any personnel be considered as having
prior or vested rights with respect to retention in the Bangko Sentral or in any position which may be
created in the new staffing pattern, even if he should be the incumbent of a similar position prior to
organization. The formulation of the program of organization shall be completed within six (6) months
after the effectivity of this Act, and shall be fully implemented within a period of six (6) months thereafter.
Personnel who may not be retained are deemed separated from the service.
SECTION 134. Separation Benefits. — Pursuant to Section 15 of this Act, the Monetary
Board is authorized to provide separation incentives, and all those who shall retire or be separated from
the service on account of reorganization under the preceding section shall be entitled to such
incentives, which shall be in addition to all gratuities and benefits to which they may be entitled under
existing laws.
SECTION 135. Repealing Clause. — Except as may be provided for in Section 46 and 132 of
this Act, Republic Act No. 265, as amended, the provisions of any other law, special charters, rule or
regulation issued pursuant to said Republic Act No. 265, as amended, or parts thereof, which may be
inconsistent with the provisions of this Act are hereby repealed. Presidential Decree No. 1792 is
likewise repealed.
SECTION 136. Transfer of Powers. — All powers, duties and functions vested by law in the
Central Bank of the Philippines not inconsistent with the provisions of this Act shall be deemed
transferred to the Bangko Sentral ng Pilipinas. All references to the Central Bank of the Philippines in
any law or special charters shall be deemed to refer to the Bangko Sentral.
SECTION 137. Separability Clause. — If any provision or section of this Act or the application
thereof to any person or circumstance is held invalid, the other provisions or sections of this Act, and the
application of such provision or section to other persons or circumstances, shall not be affected thereby.
SECTION 138. Effectivity Clause. — This Act shall take effect fifteen (15) days following its
publication in the Official Gazette or in two (2) national newspapers of general circulation.
Approved,
(Sgd.) EDGARDO J. ANGARA (Sgd.) JOSE DE VENECIA, JR.
President of the Senate Speaker of the House
of Representatives
This Act which is a consolidation of House Bill No. 7037 and Senate Bill No. 1235 was finally
passed by the House of Representatives and the Senate on June 10, 1993.
(Sgd.) EDGARDO E. TUMANGAN (Sgd.) JOSE DE VENECIA, JR.
Secretary of the Senate Secretary General
House of Representatives
Approved:
(Sgd.) FIDEL V. RAMOS
President of the Philippines
Republic Act No. 7653- THE NEW CENTRAL BANK ACT
- Details
- Category: Mercantile Laws
