FURTHER AMENDING REPUBLIC ACT NO. 265, AS AMENDED, OTHERWISE KNOWN AS “THE CENTRAL BANK ACT”

WHEREAS, monetary, banking and credit policies
should be more responsive and more attuned to the needs of economic
development;

WHEREAS, the Central Bank of the Philippines
should be given greater flexibility in administering the monetary, banking and
credit system of the Republic and in providing policy direction in the areas of
money, banking and credit;

NOW, THEREFORE, I, FERDINAND E. MARCOS,
President of the Philippines, by virtue of the power vested in me by the
Constitution, do hereby order and detiree the amendment of Republic Act No. 265,
as amended, as follows:

SECTION 1. The second paragraph of Section 23
of the same Act is hereby amended to read as follows:

“Data on individual firms, other than banks, gathered by the
Department of Economic Research and other departments or units of the Central
Bank shall not be made available to any person or entity outside of the Central
Bank whether public or private 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.”

SEC. 2. The first paragraph of Section 28-A of
the same Act is hereby amended to read as follows:

“SEC. 28-A. 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 non-bank financial intermediary performing quasi-banking functions 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 to take charge of the assets,
liabilities, and the management of that institution, collect all monies and
debts due said institution and exercise all powers necessary to preserve the
assets of the institution, reorganize the management thereof, and restore its
viability. He shall have the power to overrule or revoke the actions of the
previous management and board of directors of the bank or non-bank financial
intermediary in performing quasi-banking functions, any provision of law to the
contrary notwithstanding, and such other powers as the Monetary Board shall deem
necessary.”

SEC. 3. The fourth paragraph of Section 29 of
the same Act is hereby amended to read as follows:

“The provisions of any law to the contrary notwithstanding, the
actions of the Monetary Board under this Section, Section 28-A, and the second
paragraph of Section 34 of this Act shall be final and executory, and can be set
aside by the court only if there is convincing proof that the action is plainly
arbitrary and made in bad faith: Provided, That the same is raised in an
appropriate pleading filed before the proper court within a period of ten (10)
days from the date the conservator or receiver takes charge of the assets and
liabilities of the bank or non-bank financial intermediary performing
quasi-banking functions or, in case of liquidation, within ten (10) days from
receipt of notice by the said bank or non-bank financial intermediary of the
order of its liquidation. No restraining order or injunction shall be issued by
the court enjoining the Central Bank from implementing its actions under this
Section and the second paragraph of Section 34 of this Act, unless there is
convincing proof that the action of the Monetary Board 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
Central Bank, in an amount to be fixed by the court. The restraining order or
injunction shall be refused or, if granted, shall be dissolved upon filing by
the Central Bank of a bond, which shall be in the form of cash or Central Bank
cashier’s check, in an amount twice the amount of the bond of the petitioner or
plaintiff conditioned that it will pay the damages which the petitioner or
plaintiff may suffer by the refusal or the dissolution of the injunction. 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.”

SEC. 4. The fifth paragraph of Section 29 of
the same Act is hereby amended to read as follows:

“Insolvency, under this Act shall be understood to mean that
the realizable assets of a bank or a non-bank financial intermediary performing
quasi-banking functions as determined by the Central Bank are insufficient to
meet its liabilities.”

SEC. 5. Subparagraph (a) of the first
paragraph of Section 34-A of the same Act is hereby amended to read as
follows:

“(a) Fines in amounts as may be determined by the Monetary
Board to be appropriate, but in no case to exceed five thousand pesos a day for
each type of violation, taking into consideration the attendant circumstances,
such as the nature and gravity of the violation or irregularity and the size of
the bank;”

SEC. 6. Section 34-A of the same Act is hereby
amended by adding the following paragraph after the second paragraph
thereof:

“Any director or officer who shall resign from or cease to be
connected with the bank after having been found to have been involved in, and
required to explain, any of the acts hereinabove mentioned and before formal
administrative proceedings are taken against him, or who shall resign from or
cease to be connected with said institution during the pendency of
administrative proceedings, may be declared by the Monetary Board as
disqualified to become a director or officer, or to hold any position, whether
elective, appointive or on consultancy basis, in any financial institution
subject to supervision or regulation by the Central Bank until such time, after
appropriate proceedings, that said director or officer is declared by the
Monetary Board to be qualified to hold any of said positions.”

SEC. 7. Subparagraph (a) of the first
paragraph of Section 34-B of the same Act is hereby amended to read as
follows:

“(a) Fines in amounts as may be determined by the Monetary
Board to be appropriate, but in no case to exceed five thousand pesos a day for
each type of violation, taking into consideration the attendant circumstances,
such as the nature and gravity of the violation or irregularity and the size of
the financial intermediary;”.

SEC. 8. Section 34-B of the same Act is hereby
amended by adding the following paragraph after the second paragraph
thereof:

“Any director or officer who shall resign from or cease to be
connected with the non-bank financial intermediary performing quasi-banking
functions after having been found to have been involved in, and required to
explain, any of the acts hereinabove mentioned and before formal administrative
proceedings are taken against him, or who shall resign from or cease to be
connected with said intermediary during the pendency of administrative
proceedings, may be declared by the Monetary Board as disqualified to become a
director or officer, or to hold any position, whether elective, appointive or on
consultancy basis, in any financial institution subject to supervision or
regulation by the Central Bank until such time, after appropriate proceedings,
that said director or officer is declared by the Monetary Board to be qualified
to hold any of said positions.”

SEC. 9. Paragraph (c) of Section 41 of the
same Act is hereby amended to read as follows:

“(c) Any net profits remaining after fulfilling the conditions
of subsections (a) and (b) of this section shall be used to reduce the Account
to secure the Coinage or the Monetary Adjustment Account of the Exchange
Stabilization Adjustment Account until said accounts shall have been liquidated.
The Monetary Board shall determine the distribution among these three
accounts;”

SEC. 10. Section 43 of the same Act is hereby
amended to read as follows;

“SECTION 43. Extraordinary expenses of
currency issue and monetary stabilization.—The Monetary Board may, whenever it
deems it adviseable, exclude from the computation of the annual profits and
losses of any given fiscal year all or part of the following extraordinary
expenses incurred during that year:

“(a) Extraordinary costs of printing notes or of minting
coins;

“(b) Extraordinary expenditures arising from the issue and
service of the evidences of indebtedness to which reference is made in Section
98;

“(c) Interests paid on bank reserves which exceed fifty percent
(50%) of bank deposits, in conformity with the provisions of Section 101, last
paragraph, of this Act, and interests paid on deposits maintained with the
Central Bank in accordance with the provisions of the second paragraph of
Section 121 of this Act; and

“(d) Other expenses which the Monetary Board may specify or
declare as extraordinary.”

“The amounts which are excluded from the computation of profits
and losses in accordance with the provisions of the first paragraph of this
section shall be entered in a suspense account which shall be called the
‘Monetary Adjustment Account’.

“The Monetary Board shall in every case amortize such expenses
over a period at a rate which shall be based on the adequacy of the Bank’s
profit.”

SEC. 11. The same Act is hereby amended by
adding a new section after Section 43 thereof to read as follows:

“Sec. 43-A. Exchange ‘Stabilization
Adjustment Account.—There shall be created an Exchange Stabilization
Adjustment Account where the following expenses, incurred or yet to be incurred,
shall be lodged:

” (a) Interest expenses and commitment fees on foreign loans
and other foreign obligations; and

” (b) Documentation and other expenses incurred in connection
with the negotiations, securing and servicing of foreign obligations.

“The above enumerated expenses are excluded from the
computation of the annual profits and losses of any given fiscal year of the
Bank.

“The Monetary Board shall in every case amortize such expenses
over a period at a rate which shall be based on the adequacy of the Bank’s
profit.”

SEC. 12. A new section is hereby added after
Section 73 of the same Act, to be known as Section 73-A, to read as follows:

“Sec. 73-A. The Central Bank may establish a
wholly-owned corporation for the purpose of providing foreign exchange cover for
foreign or external debt. The corporation shall have the power to obtain foreign
borrowings and such other powers as may be necessary to accomplish its
objective. The establishment of the corporation shall not preclude the Central
Bank from extending foreign exchange cover directly.”

SEC. 13. Section 83 of the same Act is hereby
amended to read as follows:

“Sec. 83. Revaluation profits and losses
on banks’ holdings of gold and foreign exchange.—

Consistent with monetary policy and international agreements,
the Monetary Board may at any time declare what revaluation profits realized or
losses suffered by the banks on their net assets or liabilities in gold or
freely convertible foreign currencies as a result of changes in the par value of
the peso, in the legal parities between the Philippine peso and such foreign
currencies or in the Central Bank’s exchange rates for such currencies or as a
result of ether causes shall be for the account of the Central Bank until such
time as the Bank gives notice to the contrary. Said notice shall be communicated
to the banks at least eight days before the date on which the revaluation risks
cease to be for the account of the Central Bank, and shall apply only to
acquisitions of the specified foreign currency subsequent to said date. The
Board shall issue appropriate regulations to restrain the banks from increasing
their holdings of the specified currency during the period from the date of the
notice to the date on which it becomes effective.”

“This Monetary Beard shall issue rules and regulations as may
be necessary to administer the provisions of this section.”

SEC. 14. The third paragraph of Section 90 of
the same Act is hereby amended to read as follows:

“The Monetary Board may, with the concurrent vote of at least
five of its members, waive the collateral requirement under this Section and
subsections A and B of Section S3 for loans to banking institutions, all or
majority of the capital stock of which are owned by the Government or by a
government financial institution : Provided, however, That the loans and
advances to such banking institutions shall be guaranteed by the Government in
the case of banking institutions owned or controlled by the Government, or, by
the governments financial institution, in the case of a banking institution
owned by such government financial institution.”

and by adding the following paragraph after the last paragraph
of the same Section:

“Whenever a financial institution or the Government incurs an
overdraft in its account with the Central Bank, the same shall be eliminated
within the period prescribed by Central Bank regulations. At the discretion of
the Monetary Board, the overdraft may be converted into an emergency loan or
advance and shall .be governed by the provisions of Section 90 of. this Act in
the ease of the Government.”

SEC. 15. A new section is hereby added after
Section 167 of the same Act, to be known as Section 167-A, to read as follows
:

“Sec. 167-A. Deposits maintained by banks with
the Central Bank as part of their reserve requirements shall be exempt from
attachment, garnishment, 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.”

SEC. 16. The second paragraph of Section 121
of the same Act is hereby amended to read as follows:

“The Bank may pay interest on deposits of the Government or of
its political subdivisions and instrumentalities, as well as on deposits of
banks with the Central Bank.”

SEC. 17. All laws, acts, decrees, orders,
instructions and rules and regulations or parts thereof which are inconsistent
herewith are hereby revoked or modified accordingly.

SEC. 18. This Decree shall take effect
immediately.

Done in the City of Manila this 27th day of June, in the year
of our Lord nineteen hundred and eighty-four.