Capitalization and core objectives
- Republic Act No. 11211 amends Section 2 of Republic Act No. 7653 to set the Bangko Sentral ng Pilipinas (the Bangko Sentral) capital at Two hundred billion pesos (P200,000,000,000).
- The capital is fully subscribed by the Government of the Republic of the Philippines.
- Any increase in Bangko Sentral capitalization is funded solely from the declared dividends of the Bangko Sentral in favor of the National Government, deposited in a special account in the General Fund and earmarked for capitalization payments (Section 2).
- The Bangko Sentral’s capitalization increase payment is released and disbursed immediately and continues until fully paid (Section 2).
- Section 3 sets the Bangko Sentral’s policy directions in money, banking, and credit, with supervision over banks and regulatory/examination powers under the Act and other laws over quasi-banking operations of non-bank financial institutions.
- The Monetary Board is empowered to exercise regulatory/examination powers over money service businesses, credit granting businesses, and payment system operators, as determined by the Monetary Board (Section 3).
- The Bangko Sentral’s primary objective is to maintain price stability conducive to balanced and sustainable growth and employment, while promoting monetary stability and the convertibility of the peso (Section 3).
- The Bangko Sentral must promote financial stability and work closely with the National Government, including the Department of Finance, Securities and Exchange Commission, Insurance Commission, and Philippine Deposit Insurance Corporation (Section 3).
- The Bangko Sentral must oversee payment and settlement systems in the Philippines, including critical financial market infrastructures, to promote sound and prudent practices consistent with financial stability (Section 3).
- The Bangko Sentral must promote broad and convenient access to high quality financial services and consider the interest of the general public (Section 3).
Monetary Board meetings and recordkeeping
- The Monetary Board must meet at least once a week; it may be called by the Governor or by two (2) other members (Section 11).
- A quorum requires the presence of four (4) members, and in all cases the Governor or his duly designated alternate must be among the four (Section 11).
- Unless otherwise provided in the Act, Monetary Board decisions require the concurrence of at least four (4) members (Section 11).
- The Bangko Sentral must maintain and preserve complete records of Monetary Board proceedings and deliberations, including tapes and transcripts of stenographic notes, in original form or microfilm (Section 11).
- Monetary Board meetings may be conducted through modern technologies, including teleconferencing and videoconferencing (Section 11).
Appointments, authority, and data powers
- The Governor, with Monetary Board approval, appoints not more than five (5) Deputy Governors whose duties are assigned by the Governor and the Board (Section 21).
- In the Governor’s absence, a Deputy Governor designated by the Governor acts as chief executive and exercises the Governor’s powers and duties (Section 21).
- When the Governor is unable to attend meetings of government boards or councils where he is an ex officio member under special laws, a Deputy Governor designated by the Governor is vested with authority to participate and vote (Section 21).
- The Bangko Sentral may require any person or entity, including government offices and instrumentalities and GOCCs, to provide data for statistical and policy development purposes in relation to its functions (Section 23).
- Disaggregated data gathered are subject to prevailing confidentiality laws (Section 23).
- Through the Governor’s Deputy or a duly authorized representative (in the Deputy’s absence), the Bangko Sentral may issue a subpoena to compel production of books and records for the stated purposes (Section 23).
- Refusal to comply with the subpoena without justifiable cause, or refusal to supply required data, subjects the person to punishment for contempt under the Rules of Court (Section 23).
- The authority to require data from banks continues under the Bangko Sentral’s supervisory powers under the Act and other applicable laws (Section 23).
- Data on individuals and firms other than banks must not be made available outside the Bangko Sentral (public or private) except under an order of the court or under conditions prescribed by the Monetary Board (Section 23).
- Collective data on firms may be released to interested persons or entities (Section 23).
- For data on banks, Section 27 of the Act governs (Section 23).
Supervision, examinations, and injunction restrictions
- The Bangko Sentral supervises, and conducts regular or special examinations of, banking institutions and quasi-banks, including their subsidiaries and affiliates engaged in allied activities (Section 25).
- “Subsidiary” means a corporation with more than fifty percent (50%) of the voting stock directly or indirectly owned/controlled/held with power to vote by a bank or quasi-bank (Section 25).
- “Affiliate” means a corporation with fifty percent (50%) or less voting stock owned by a bank/quasi-bank, or one related/linked through common stockholders or other factors determined by the Monetary Board (Section 25).
- The Bangko Sentral has regulatory authority and conducts regular or special examinations of entities under its jurisdiction under the Act or special laws (Section 25).
- The Bangko Sentral must establish an independent mechanism for issues arising from bank examinations that reports directly to the Monetary Board, without prejudice to enforcement and supervisory actions by the Bangko Sentral and its Monetary Board (Section 25).
- Department heads and examiners of supervising/examining departments may administer oaths to directors, officers, and employees and may compel presentation of books, documents, papers, or records necessary to ascertain the institution’s true condition and the books and records of persons/entities relative to or connected with the institution’s operations, subject to existing laws on secrecy/confidentiality of bank deposits and investments of private persons in government debt instruments (Section 25).
- Courts are prohibited from issuing a restraining order or injunction enjoining the Bangko Sentral from examining an institution subject to its supervision/examination unless there is convincing proof the Bangko Sentral action is plainly arbitrary and made in bad faith, and the petitioner/plaintiff files a bond in an amount fixed by the court in favor of the Bangko Sentral (Section 25).
- The issuance/dissolution of the restraining order or injunction is governed by Rule 58 of the New Rules of Court insofar as applicable and not inconsistent (Section 25).
- The Bangko Sentral examination process includes a rule that regular examinations are separated by an interval of at least twelve (12) months, and the Monetary Board may authorize special examinations by an affirmative vote of at least five (5) members (Section 28).
- The institution must afford full opportunity to examine books/records, cash/assets, and general condition, and to review systems and procedures at any time during business hours when requested (Section 28).
- Examination reports and papers are not open to public inspection except as publicity is incidental to authorized proceedings or necessary to prosecute violations involving the business of the supervised institutions (Section 28).
- Supervised institutions must pay an annual supervision fee no later than May 31 of each year, in an amount prescribed by the Monetary Board, taking into account the costs of supervision (Section 28).
- Suspension or revocation of any government license necessary for the operation of a Bangko Sentral-supervised entity may be done only with prior consultation with the Bangko Sentral (Section 28-A).
- No court, other than the Court of Appeals and the Supreme Court, shall issue any temporary restraining order, preliminary injunction, or preliminary mandatory injunction against the Bangko Sentral for actions under the Act (Section 38-A).
- Any restraining order or injunction issued in violation of this restriction is void and of no force and effect (Section 38-A).
- Injunction issuance/dissolution against the Bangko Sentral follows the Rules of Court insofar as applicable and not inconsistent (Section 38-A).
Share transfer approval and legal effect
- Transfers or acquisitions, or a series thereof, of at least ten percent (10%) of the voting shares in banks or quasi-banks require prior approval of the Bangko Sentral (Section 25-A).
- The selling or conveying stockholder must submit the transfer/acquisition for approval within a period prescribed by the Monetary Board (Section 25-A).
- In approving transfers/acquisitions, the Bangko Sentral must consider the fitness of incoming stockholders as indicated by their integrity, reputation, and financial capacity (Section 25-A).
- Without Bangko Sentral approval, the transfer/acquisition has no legal effect, is not recognized in the institution’s books or by any government agency, and the transferor and transfer stockholders remain accountable and responsible (Section 25-A).
- Transfer of actual control or management of the institution to new stockholders or their representatives before Bangko Sentral approval makes the transfer, transferee, and any person responsible liable under Sections 36 and 37 of the Act (Section 25-A).
- The Bangko Sentral may share with the Philippine Deposit Insurance Corporation any information it obtains pertaining to transfer or acquisition of shares in banks and quasi-banks (Section 25-A).
Prohibitions affecting Bangko Sentral personnel
- Bangko Sentral personnel are prohibited from borrowing from any institution subject to supervision or examination by the Bangko Sentral unless the borrowing is transacted on an arm’s length basis, fully disclosed to the Monetary Board, and subject to rules and regulations the Monetary Board prescribes (Section 27(d)).
- This personnel borrowing prohibition operates in addition to the prohibitions found in Republic Act Nos. 3019 and 6713 (Section 27(d)).
Receivership, liquidation, and finality
- The Monetary Board may summarily, without prior hearing, forbid a bank or quasi-bank from doing business in the Philippines and designate the PDIC as receiver for banks, and direct PDIC to liquidate the closed bank pursuant to the Act and Republic Act No. 3591, as amended, when grounds are present after a report from the supervising/examining department head (Section 30).
- The statutory grounds include when a bank/quasi-bank:
- has notified the Bangko Sentral or publicly announced a unilateral closure, or has been dormant for at least sixty (60) days, or in any manner has suspended payment of deposit/deposit substitute liabilities, or is unable to pay liabilities as they become due in the ordinary course of business (excluding inability due to extraordinary demands induced by financial panic in the banking community) (Section 30(a));
- has insufficient realizable assets, as determined by the Bangko Sentral, to meet liabilities (Section 30(b));
- cannot continue in business without involving probable losses to depositors or creditors (Section 30(c)); or
- has willfully violated a cease and desist order under Section 37 that has become final, involving acts/transactions amounting to fraud or dissipation of assets (Section 30(d)).
- The Monetary Board must notify in writing through the receiver the board of directors of the closed bank of its decision (Section 30).
- Actions by the Monetary Board under Section 30 or Section 29 are final and executory, and courts may not restrain or set aside them except on petition for certiorari for action in excess of jurisdiction or with grave abuse of discretion amounting to lack/excess of jurisdiction (Section 30).
- A certiorari petition may be filed only by stockholders of record representing the majority of the capital stock within ten (10) days from receipt by the institution’s board of directors of the order directing receivership, liquidation, or conservatorship (Section 30).
- The Monetary Board exclusively designates a conservator under Section 29 or a receiver under Section 30, and conservatorship is not a precondition to a receiver (Section 30).
- The Monetary Board’s summary authority to forbid doing business may also apply to non-stock savings and loan associations based on the same grounds (Section 30).
- For quasi-banks and non-stock savings and loan associations, any person of recognized competence in banking, credit, or finance may be designated by the Bangko Sentral as receiver (Section 30).
Refusal to submit reports or permit examinations
- Any officer, owner, agent, manager, director, or officer-in-charge who willfully refuses (after written requirement by the Monetary Board or supervising/examining department head) to file required reports or permit lawful examinations is punished by:
- a fine of not less than Fifty thousand pesos (P50,000) nor more than Two million pesos (P2,000,000), or
- imprisonment of not less than one (1) year nor more than five (5) years, or both (Section 34).
- The same penalty applies to the officer, owner, agent, manager, director, or officer-in-charge of the affiliate company/ies whose transactions are subject to examination under the Act (Section 34).
False statements and criminal penalties
- The willful making of a false or misleading statement on a material fact to the Monetary Board or to Bangko Sentral examiners is punished by:
- a fine of not less than One hundred thousand pesos (P100,000) nor more than Two million pesos (P2,000,000), or
- imprisonment of not more than five (5) years, or both, at the court’s discretion (Section 35).
Criminal penalties for violations of banking laws
- Whenever a bank, quasi-bank (including subsidiaries and affiliates engaged in allied activities) or any other entity under Bangko Sentral supervision violates the Act or other applicable banking laws enforced or implemented by the Bangko Sentral, or violates any Monetary Board order/instruction/rule/regulation, the persons responsible are punished (unless otherwise provided in the Act) by:
- a fine of not less than Fifty thousand pesos (P50,000) nor more than Two million pesos (P2,000,000), or
- imprisonment of not less than two (2) years nor more than ten (10) years, or both, at the court’s discretion (Section 36).
- If an entity under supervision persists in carrying on its business in an unlawful or unsafe manner, the Monetary Board may take action under Section 30 without prejudice to penalties and administrative sanctions under Section 37 (Section 36).
- The Bangko Sentral may grant an informer’s reward to any person (except an officer or employee of the Bangko Sentral or any intelligence or law enforcement agency, including relatives within the fourth degree of consanguinity or affinity) who voluntarily gives definite information not yet in possession of the Bangko Sentral leading to:
- arrest of bank directors/officers and/or Bangko Sentral personnel for violation of the Act or banking/other laws implemented or enforced by the Bangko Sentral, or for violation of other penal laws committed in connection with their employment or functions; or
- filing of criminal charges against any person for violation of Section 50 (Section 36).
- The Monetary Board must promulgate implementing guidelines for the informer’s reward.
- Informer’s reward guidelines must not exceed One million pesos (P1,000,000) (Section 36).
- Informer’s reward is subject to applicable withholding taxes (Section 36).
Administrative sanctions on supervised entities
- Administrative sanctions must be fair, consistent, and reasonable and apply without prejudice to criminal sanctions under Sections 34, 35, and 36 (Section 37).
- The Monetary Board may impose, at its discretion, administrative sanctions on supervised entities and/or their directors, officers, or employees for willful violation of the charter or by-laws; willful delay in submitting reports/publications required by law; refusal to permit examination; willful false/misleading statements; willful failure/refusal to comply with or violation of banking laws or Monetary Board/Governor orders/instructions/regulations; and irregularities or conducting business in an unsafe/unsound manner as determined by the Monetary Board (Section 37).
- Administrative sanctions include, whenever applicable:
- fines determined by the Monetary Board but not exceeding One million pesos (P1,000,000) for each transactional violation or One hundred thousand pesos (P100,000) per calendar day for continuing violations, considering the attendant circumstances including nature/gravity and size of the institution (Section 37(a));
- if profit is gained or loss avoided, a fine up to three (3) times the profit gained or loss avoided may be imposed (Section 37(a));
- suspension of rediscounting privileges or access to Bangko Sentral credit facilities (Section 37(b));
- suspension of lending or foreign exchange operations or authority to accept new deposits or make new investments (Section 37(c));
- suspension of interbank clearing privileges (Section 37(d));
- suspension or revocation of quasi-banking or other special licenses (Section 37(e)).
- Resignation or termination from office does not exempt directors, officers, or employees from administrative or criminal sanctions (Section 37).
- The Monetary Board may preventively suspend any director/officer/employee pending investigation.
- If the case is not finally decided within one hundred twenty (120) days from suspension, the director/officer/employee must be reinstated, except that delay attributable to the director/officer’s fault, negligence, or petition is excluded from the period (Section 37).
- Cease and desist powers: without requiring an administrative proceeding, if the institution or concerned persons persist in the indicated practice/violation, the Monetary Board may order the institution and/or the concerned persons to cease and desist and order immediate correction of conditions; the cease and desist order takes immediate effect upon service (Section 37).
- Hearing right: respondents may request a hearing before the Monetary Board or a committee chaired by a Monetary Board member created for the purpose within five (5) days from receipt of the order.
- If no hearing is requested within the five (5) days, the order becomes final.
- If a hearing is conducted, issues are determined based on records, and the Monetary Board may reconsider or finalize the order (Section 37).
- The Governor may impose (at discretion) fines for failure to comply with legal requirements, Monetary Board regulations/policies, and/or instructions issued by the Monetary Board or the Governor:
- fines not exceeding One hundred thousand pesos (P100,000) for each transactional violation or Thirty thousand pesos (P30,000) per calendar day for continuing violations.
- Governor-imposed fines are final and executory until reversed, modified, or lifted by the Monetary Board on appeal (Section 37).
Bangko Sentral immunities and liability rules
- The Monetary Board must indemnify its members and other Bangko Sentral officials, including personnel performing supervision and examination functions, against all costs and expenses reasonably incurred in civil or criminal actions/proceedings where they are made parties by reason of performing functions, unless finally adjudged liable for willful violation, evident bad faith, or gross negligence (Section 15(e)).
- In settlement/compromise, indemnification is provided only for matters covered by the settlement where the Bangko Sentral is advised by external counsel that the person did not commit willful violation, evident bad faith, or gross negligence (Section 15(e)).
- Defense costs may be paid in advance based on an undertaking to repay the amount advanced if ultimately determined the person is not entitled to indemnification as provided (Section 15(e)).
- Section 16 applies public officer liability rules under Sections 38 and 39 of Chapter 9, Book 1 of the Revised Administrative Code of 1987 to Monetary Board members and other Bangko Sentral personnel (Section 16).
- Section 16 also imposes similar responsibility for:
- disclosure of confidential information; disclosure of Monetary Board discussions/resolutions; or disclosure of confidential operations of the Bangko Sentral, unless disclosure is connected with official functions with the Bangko Sentral or made with prior authorization of the Monetary Board or Governor; or
- use of such information for personal gain or to the detriment of the Government, the Bangko Sentral, or third parties (Section 16).
- Data/information required to be submitted to the President and/or Congress, or to be published under the Act, is not treated as confidential (Section 16).
- If actions/omissions are not finally adjudged as willful violation, evident bad faith, or gross negligence, the Monetary Board members and personnel are held free and harmless to the fullest extent permitted by law and must be indemnified for liabilities, losses, claims, demands, damages, deficiencies, costs, and expenses arising from the exercise of powers/performance of duties (Section 16).
Administrative coordination on licenses
- Suspension or revocation of any government license necessary for the operation of a Bangko Sentral-supervised entity requires prior consultation with the Bangko Sentral (Section 28-A).
Reports, publications, and annual reporting
- The Bangko Sentral must publish a general balance sheet showing the volume and composition of its assets and liabilities as of the last working day of each month within ninety (90) days after the end of each month, extendable reasonably by the Bangko Sentral (Section 39).
- The Monetary Board must publish and submit to the President and Congress:
- within ninety (90) days after the end of each quarter, an analysis of economic/financial developments including the condition of net international reserves and monetary aggregates (Section 39(a));
- within ninety (90) days after the end of the year (extendable reasonably), the preceding year’s budget and profit and loss statement showing in reasonable detail results of operations (Section 39(b));
- one hundred twenty (120) days after the end of each semester, a review of the state of the financial system (Section 39(c));
- as soon as practicable, abnormal movements in monetary aggregates and the general price level, and not later than seventy-two (72) hours after taken, remedial measures responding to abnormal movements (Section 39(d)).
- The Bangko Sentral must, before the end of June of each year, publish and submit an annual report on its condition to the President and Congress, including a review of Monetary Board policies/measures adopted during the past year and an analysis of economic and financial circumstances causing those policies/measures (Section 40).
- The annual report must include a statement of the Bangko Sentral’s financial condition and a statistical appendix presenting, as a minimum:
- monthly movement of monetary aggregates and components;
- monthly movement of purchases and sales of foreign exchange and international reserves;
- balance of payments of the Philippines;
- monthly indices of consumer prices and import/export prices;
- monthly movement of exports and imports by volume and value;
- monthly movement of accounts of the Bangko Sentral and other banks;
- principal data on government receipts and expenditures and status of public debt (domestic and foreign);
- texts of major legal and administrative measures adopted by the Government and the Monetary Board during the year relating to the functions or operations of the Bangko Sentral or the financial system (Section 40).
- The Bangko Sentral must publish another version of the annual report understandable to the layman (Section 40).
Profit computation and reserve fund
- Within the first sixty (60) days following the end of each year, the Bangko Sentral determines net profits or losses (Section 43).
- Net profit is determined after allowing for operating expenses, adequate allowances and provisions for bad and doubtful debts, depreciation in assets, and allowances/provisions for contingencies or other purposes as the Monetary Board determines in accordance with prudent financial management and effective central banking operations (Section 43).
- When the Bangko Sentral has income or positive surplus, it must establish a reserve fund to mitigate future risks (including impacts of foreign exchange and price fluctuations) and address other contingencies inherent in central banking functions (Section 43-A).
- The reserve fund consists of fluctuation reserve, contingency reserve, and other reserves the Monetary Board deems prudent or necessary (Section 43-A).
Revaluation profits and losses framework
- Unrealized profits or losses from revaluation of Bangko Sentral assets, liabilities, or foreign-currency derivative instruments due to price and exchange-rate movements from third currencies to Philippine peso are excluded from annual profit/loss computation (Section 45).
- Profits/losses from such revaluations are offset against amounts owed by the Philippines to any international or regional intergovernmental financial institution of which the Philippines is a member, or owed to the Philippines by those institutions (Section 45).
- Any remaining unrealized profit or loss is carried in an account named “Revaluation of International Reserve (RIR)”, shown in assets or liabilities depending on whether revaluations produce net profit or net loss (Section 45).
- The RIR account is credited/debited for periodic revaluation authorized in the section and to reflect adjustments from reduction of net foreign assets, liabilities, and foreign-currency denominated derivative instruments (Section 45).
- The RIR is adjusted/recognized in the income statement upon:
- sale of gold and foreign securities;
- repatriation of foreign currency to local currency or use to pay foreign obligations;
- maturity of a foreign-currency denominated forward or option contract involving the Philippine peso (Section 45).
Monetary policy monitoring and price actions
- The Monetary Board must regularly assess price developments and outlook and, based on analysis of inflationary pressures, use policy instruments to attain and maintain price stability (Section 61).
- When abnormal movements in prices endanger stability of the Philippine economy or important sectors:
- the Monetary Board must take remedial measures appropriate and within its powers; and
- must submit to the President and Congress and make public a detailed report including: causes of price rise/fall; extent of reflection of price changes in domestic output/employment/wages/economic activity and nature/significance of such changes; and measures taken and other monetary/fiscal/administrative measures it recommends (Section 63(a)-(b)).
- The Monetary Board must submit the required reports whenever the cost of living index increases by more than ten percent (10%) compared to the level