New Central Bank Act - Bangko Sentral ng Pilipinas

Capital, corporate powers, and claims settlement

The Bangko Sentral’s capital is P50,000,000,000, fully subscribed by the Government, with P10,000,000,000 fully paid upon effectivity and the balance payable within two (2) years from effectivity as determined by the Government through the Secretary of Finance and the Secretary of Budget and Management under Section 2.
The Bangko Sentral may adopt, alter, and use a corporate seal; enter into contracts; lease or own and sell or dispose of real and personal property; sue and be sued; and do other acts necessary to carry out its purposes under Section 5.
The Bangko Sentral may compromise, condone, or release, in whole or in part, any claim or settled liability to it regardless of amount, under terms set by the Monetary Board to protect Bangko Sentral interests under Section 5.
The Bangko Sentral may acquire and hold assets and incur liabilities connected with its authorized operations under Section 5.

Monetary Board composition, qualifications, removal

The Monetary Board exercises all powers and functions of the Bangko Sentral and is composed of seven (7) members appointed by the President for a term of six (6) years) under Section 6.
The Governor is the Chairman of the Monetary Board and the appointment is subject to confirmation by the Commission on Appointments under Section 6.
When the Governor is unable to attend, he designates a Deputy Governor as alternate, and the Monetary Board designates one member as acting Chairman under Section 6.
A President-designated Cabinet member sits on the Board, with an Undersecretary alternate when the Cabinet member cannot attend under Section 6.
Five (5) members must come from the private sector and serve full-time, with first appointees staggered so that three (3) serve six (6) years and two (2) serve three (3) years under Section 6.
No Monetary Board member may be reappointed more than once under Section 6.
Vacancies from death, resignation, or removal are filled by appointment of a new member to complete the unexpired portion of the term under Section 7.
Members must be natural-born citizens, of good moral character, unquestionable integrity, known probity and patriotism, and with recognized competence in social and economic disciplines; age requirement is at least thirty-five (35) years for members and at least forty (40) years for the Governor under Section 8.
In addition to Republic Act No. 6713, a member is disqualified from being a director, officer, employee, consultant, lawyer, agent, or stockholder of any bank, quasi-bank, or other institution subject to Bangko Sentral supervision/examination, and must resign/divest before assuming office under Section 9.
Private-sector members may not hold any other public office or public employment during tenure under Section 9.
No person may be a Monetary Board member if connected within one (1) year prior to appointment with multilateral banking/financial institutions or if having substantial interest in any private bank in the Philippines; and no employment in such institutions within two (2) years after term expiration, except as official representative of the Philippine Government under Section 9.
The President may remove a Monetary Board member for specified grounds: subsequent disqualification under Section 8, physical or mental incapacity lasting more than six (6) months, fraudulent or illegal acts/operations or acts manifestly opposed to the aims and interests of the Bangko Sentral, or loss of Section 8 qualifications under Section 10.

Meetings, quorum, and Board authority

The Monetary Board shall meet at least once a week, and meetings may be called by the Governor or by two (2) other members under Section 11.
Four (4) members constitute a quorum, and the Governor or duly designated alternate must be among the four (4) under Section 11.
Unless otherwise provided in the Act, Monetary Board decisions require concurrence of at least four (4) members under Section 11.
The Bangko Sentral must maintain complete records of Monetary Board proceedings, including tapes and transcripts of stenographic notes, in original form or in microfilm under Section 11.
Deputy Governors may attend Monetary Board meetings with the right to be heard under Section 12.
Salaries of the Governor and private-sector members are fixed by the President at a sum commensurate with the position’s importance and responsibility under Section 13.
A Monetary Board member with personal or pecuniary interest in an agenda matter must disclose the interest, retire from the meeting during consideration, and the decision must be made public with minutes reflecting disclosure and retirement under Section 14.
In exercising authority, the Monetary Board must (among others): (1) issue rules/regulations for effective discharge of its responsibilities and powers, and report them to the President and Congress within fifteen (15) days from issuance under Section 15(a); (2) direct management and administration, reorganize personnel, and ensure legal units are under exclusive supervision and control under Section 15(b); and (3) establish a human resource management system with professionalism and excellence, with a compensation structure instituted based on job evaluation studies and wage surveys subject to Board approval, and conforming as closely as possible with Republic Act No. 6758, while employees in salary grade 19 and below follow Republic Act No. 6758 rates under Section 15(c).

Governor, emergencies, and outside interests

The Governor is the chief executive officer of the Bangko Sentral under Section 17.
The Governor must prepare Monetary Board meeting agendas and submit policies/measures for Board consideration under Section 17(a).
The Governor shall execute and administer Monetary Board-approved policies/measures under Section 17(b).
The Governor shall direct and supervise Bangko Sentral operations and internal administration; the Governor may delegate administrative responsibilities or assign specific tasks to full-time Monetary Board members without additional remuneration/allowance, subject to Monetary Board rules and regulations under Section 17(c).
The Governor appoints, fixes remunerations and emoluments of personnel below department head rank in accordance with approved compensation plans and may impose disciplinary measures; removal of personnel requires Monetary Board approval under Section 17(d).
The Governor must render opinions, decisions, or rulings that are final and executory until reversed or modified by the Monetary Board on matters involving application/enforcement of laws supervised by the Bangko Sentral and on quasi-banks and on Monetary Board regulations, policies, or instructions under Section 17(e).
The Governor is the principal representative of the Monetary Board and Bangko Sentral to represent them in dealings with government offices, agencies, instrumentalities, and all persons/entities public or private, domestic/foreign/international; to sign contracts, notes and securities issued by the Bangko Sentral, reports, financial statements, correspondence, and other Bangko Sentral documents; and may sign by facsimile when appropriate under Section 18.
The Governor represents the Bangko Sentral, personally or through counsel, including private counsel authorized by the Monetary Board, in legal proceedings and specialized legal studies; and may delegate representation power to other officers upon his responsibility under Section 18.
The Governor may choose not to participate in preliminary discussions with any multilateral banking or financial institution on negotiations for the Government within or outside the Philippines, and instead be represented by a permanent negotiator under Section 18.
In emergencies where time is insufficient to call a Monetary Board meeting, the Governor with concurrence of two (2) other members may decide any matter or take any action within the Board’s authority, then submit a report to the President and Congress within seventy-two (72) hours and call the Board meeting for ratification at the earliest possible time under Section 19.
The Governor and full-time members of the Board must limit professional activities to those directly pertaining to their positions with the Bangko Sentral; they may not accept other employment, public or private, remunerated or ad honorem, except in eleemosynary, civic, cultural, or religious organizations, or when designated by the President to represent government interest in matters connected with or affecting the economy or financial system under Section 20.

Bangko Sentral operations, supervision, and data

The Bangko Sentral prepares data and conducts economic research to guide the Monetary Board, including forecasts of balance of payments, statistics on monthly monetary aggregates movements, price statistics, and other economic studies useful for monetary, banking, credit, and exchange policy formulation and analysis under Section 22.
The Bangko Sentral may request required data from government offices and instrumentalities, or government-owned or controlled corporations, for discharge of its functions under Section 23.
The Bangko Sentral may issue a subpoena for production of books and records through the Governor or authorized representative when necessary for requested data under Section 23.
Refusal to comply with the subpoena without justifiable cause, or refusal to supply requested or required data, subjects the refuser to punishment for contempt in accordance with the Rules of Court under Section 23.
Individual-firm data collected by Bangko Sentral departments may not be made available outside the Bangko Sentral except under a court order or under conditions prescribed by the Monetary Board; collective firm data may be released to interested persons/entities; and bank data is governed by Section 27 under Section 23.
The Bangko Sentral promotes and sponsors training of technical personnel in money and banking and may defray costs of study at home or abroad for qualified Bangko Sentral employees, promising university graduates, or other qualified persons determined by competitive examinations, with Monetary Board rules for the program under Section 24.
The Bangko Sentral has supervision and conducts periodic or special examinations of banking institutions and quasi-banks, including subsidiaries and affiliates engaged in allied activities under Section 25.
A subsidiary is a corporation where a bank/quasi-bank owns more than fifty percent (50%) of voting stock; an affiliate is a corporation where voting stock ownership is fifty percent (50%) or less or where linked through common stockholders or other factors determined by the Monetary Board under Section 25.
Supervising/examining department heads and examiners may administer oaths, compel presentation of books/documents/papers/records needed to ascertain an institution’s true condition, and compel presentation of records related to operations/activities/transactions of the institution under examination, subject to existing laws protecting bank deposit secrecy and investments in Government debt instruments under Section 25.
Courts shall not issue restraining orders or injunctions enjoining the Bangko Sentral from examining any institution, unless convincing proof shows the Bangko Sentral action is plainly arbitrary and made in bad faith, and the petitioner files with the court a bond executed in favor of the Bangko Sentral in an amount fixed by the court; Rule 58 of the New Rules of Court applies insofar as applicable under Section 25.
The Bangko Sentral may require deposit secrecy waiver by a director, officer, or stockholder who, together with related interest, contracts a loan or financial accommodation from: (1) his own bank; or (2) specific affiliated banks as described, in excess of five percent (5%) of capital and surplus or the maximum permitted by law, whichever is lower, to waive secrecy of deposits of whatever nature in all banks in the Philippines; examination-obtained information shall be strictly confidential and usable by examiners only for supervisory/examination responsibility or by Bangko Sentral in appropriate legal action under Section 26.

Banking supervision fees and enforcement

Supervising and examining department heads must examine the books of every banking institution once every twelve (12) months, and additionally at other times the Monetary Board by affirmative vote of five (5) members deems expedient, with an interval of at least twelve (12) months between annual examinations under Section 28.
Banks must afford department heads and authorized deputies full opportunity to examine books, cash, available assets, and general condition at any time during banking hours when requested under Section 28.
Examination reports and related papers are not open to public inspection except publicity incidental to authorized proceedings or necessary for prosecuting violations under Section 28.
Banking and quasi-banking institutions must pay the Bangko Sentral an annual fee within the first thirty (30) days of each year equal to a percentage prescribed by the Monetary Board of average total assets in the preceding year as shown on end-of-month balance sheets after deducting cash on hand and amounts due from banks, including Bangko Sentral and banks abroad under Section 28.
Administrative sanctions and criminal provisions govern failures and violations under Sections 34 to 37.
Personnel prohibitions include restrictions on holding positions in supervised/examined institutions (with specified exceptions), solicitation/receipt of gifts or benefits, unauthorized disclosure of information (with specified exceptions), and borrowing rules requiring adequate security, full disclosure to the Monetary Board, and compliance with further Monetary Board rules; supervising/examining department personnel are prohibited from borrowing from banks under their supervision/examination under Section 27.

Conservatorship, receivership, and liquidation

When a bank or quasi-bank is in a state of continuing inability or unwillingness to maintain adequate liquidity to protect depositors and creditors, the Monetary Board may appoint a conservator with powers necessary to take charge of assets, liabilities, and management, reorganize management, collect debts and monies, and exercise powers necessary to restore viability under Section 29.
The conservator must report and is responsible to the Monetary Board and may overrule or revoke actions of the previous management and board of directors under Section 29.
The conservator must be competent and knowledgeable in bank operations and management, and conservatorship must not exceed one (1) year under Section 29.
Conservator remuneration is fixed by the Monetary Board up to two-thirds (2/3) of the salary of the president of the institution in one (1) year, payable in twelve (12) equal monthly payments, with rules on entitlement to the remaining balance depending on the ground for termination under Section 29.
If the conservator is connected with the Bangko Sentral, he receives no remuneration or emolument from the Bangko Sentral during the conservatorship, and conservatorship expenses are borne by the bank or quasi-bank under Section 29.
The Monetary Board must terminate conservatorship when satisfied the institution can operate on its own and it is no longer necessary; conservatorship is also terminated if continuance involves probable loss to depositors or creditors in which case Section 30 applies under Section 29.
When the Monetary Board finds a bank or quasi-bank: (1) is unable to pay liabilities as they become due in ordinary course (excluding inability caused by extraordinary demands induced by financial panic); (2) has insufficient realizable assets to meet liabilities; (3) cannot continue in business without involving probable losses to depositors/creditors; or (4) has willfully violated a final cease and desist order under Section 37 involving acts/transactions amounting to fraud or dissipation, the Monetary Board may summarily and without prior hearing forbid doing business in the Philippines and designate the Philippine Deposit Insurance Corporation as receiver under Section 30.
For quasi-banks, any person of recognized competence in banking or finance may be designated receiver under Section 30.
The receiver must immediately gather and take charge of all assets and liabilities, administer for creditors’ benefit, and exercise general receiver powers under the Revised Rules of Court, but cannot—except administrative expenditures—pay or commit acts involving transfer or disposition of assets; the receiver may deposit/place funds in nonspeculative investments under Section 30.
The receiver must determine within not later than ninety (90) days from take-over whether the institution may be rehabilitated or placed in condition to resume business safely for depositors/creditors and the general public, and resumption determination requires prior Monetary Board approval under Section 30.
If not rehabilitable, the Monetary Board directs liquidation; the receiver files ex parte a petition in the proper regional trial court for assistance in liquidation pursuant to a liquidation plan for closed banks adopted for general application by the Philippine Deposit Insurance Corporation, while for quasi-banks the liquidation plan is adopted by the Monetary Board under Section 30.
Upon court jurisdiction, upon receiver motion after due notice, the court adjudicates disputed claims, assists enforcement of individual liabilities of stockholders/directors/officers, and decides issues material to implement the liquidation plan; receiver pays proceeding costs from institution assets under Section 30.
Liquidation requires the receiver to convert assets to money, dispose to creditors/other parties to pay debts under Civil Code concurrence and preference rules, and to sue/defend as necessary to collect/recover accounts/assets or defend actions under Section 30.
Assets under receivership/liquidation are deemed in custodia legis in the receiver’s hands and become exempt from garnishment, levy, attachment, or execution from the moment receivership/liquidation begins under Section 30.
Monetary Board actions under Section 30 or Section 29 are final and executory and cannot be restrained or set aside by the court except via petition for certiorari on ground of excess of jurisdiction or grave abuse of discretion amounting to lack or excess of jurisdiction under Section 30.
A petition for certiorari may be filed only by stockholders of record representing the majority of capital stock within ten (10) days from receipt by the board of directors of the order directing receivership, liquidation or conservatorship under Section 30.
The Monetary Board exclusively designates conservatorship/receiver, and designation of a conservator is not a precondition to designation of a receiver under Section 30.
In liquidation, after payment of the cost of proceedings including reasonable expenses and fees of the receiver allowed by court, the receiver pays debts of the institution under court order in accordance with Civil Code concurrence and preference rules under Section 31.
Revenues and earnings realized by the receiver are used to pay costs/fees/expenses mentioned in Section 31, salaries of personnel necessary for liquidation, and other additional expenses; remaining balance forms part of assets available to pay creditors under Section 32.

Administration of profits, fiscal year, and special accounts

The Bangko Sentral fiscal year begins on January 1 and ends on December 31 each year under Section 42.
Within the first thirty (30) days following each year-end, the Bangko Sentral determines net profits or losses and makes adequate allowances or establishes adequate reserves for bad and doubtful accounts under Section 43.
Within the first sixty (60) days after each fiscal year-end, the Monetary Board determines and carries out distribution of net profits so that 50% is carried to surplus and 50% reverts to the National Treasury, except as otherwise provided in transitory provisions under Section 44.
Profits or losses from revaluation of Bangko Sentral net assets or liabilities in gold or foreign currencies relative to the peso are excluded from computation of annual profits/losses; such profits/losses offset amounts owed by or to the Philippines for international or regional intergovernmental financial institutions; remaining balance goes to a special frozen account titled "Revaluation of International Reserve" appearing among liabilities or assets depending on net result under Section 45.
The Revaluation of International Reserve account may not be credited or debited for any purpose other than those specifically authorized under Section 45.
Sections 43 and 43-A of Republic Act No. 265, which created the Monetary Adjustment Account (MAA) and Exchange Stabilization Adjustment Account (ESAA), are repealed; outstanding amounts as of Act effective date continue to be for the account of the Central Bank governed by transitory provisions under Section 46.
The Revaluation of International Reserve (RIR) account as of the effective date of the Central Bank continues for the same entity and is governed by the provisions of Section 44 of Republic Act No. 265, as amended, until otherwise provided under transitory provisions under Section 46.

Currency, currency issue, and legal tender

The unit of monetary value in the Philippines is the peso represented by sign "P", divided into 100 equal parts called centavos represented by sign "c" under Section 48.
"Currency" means all Philippine notes and coins issued or circulating under the Act under Section 49.
The Bangko Sentral has sole power and authority to issue currency within the territory of the Philippines; no other person or entity may put into circulation notes, coins, or any other object/document that might circulate as currency in the Monetary Board’s opinion, and no one may reproduce or imitate facsimiles of Bangko Sentral notes without prior authority under Section 50.
The Monetary Board may issue regulations to prevent circulation of foreign currency or currency substitutes and to prevent reproduction of facsimiles under Section 50.
The Bangko Sentral may investigate, make arrests, and conduct searches and seizures in accordance with law to maintain currency integrity under Section 50.
Violation of currency issue provisions or regulations is punishable by imprisonment of not less than five (5) years and not more than ten (10) years; if the Revised Penal Code provides a greater penalty, that greater penalty applies under Section 50.
Notes and coins issued by the Bangko Sentral are its liabilities and may be issued only against, and in amounts not exceeding, its assets, and are a first and paramount lien on all assets under Section 51.
Holdings of the Bangko Sentral’s own notes and coins do not count as part of its currency issue and do not form part of assets or liabilities under Section 51.
All Bangko Sentral notes and coins are fully guaranteed by the Government and are legal tender in the Philippines for all debts, public and private, under Section 52.
Coins are legal tender only up to P50 for denominations of twenty-five centavos and above and only up to P20 for denominations of ten centavos or less, unless otherwise fixed by the Monetary Board under Section 52.
The Monetary Board, with Presidential approval, prescribes denominations, dimensions, designs, inscriptions, and other characteristics of notes; notes must state they are liabilities of the Bangko Sentral and fully guaranteed by the Government; and notes bear facsimile signatures of the President and Governor under Section 53.
The Monetary Board, with Presidential approval, prescribes coins’ weight, fineness, designs, denominations, and other characteristics; it must give full consideration to availability of suitable metals and relative prices/cost of minting under Section 53.
The Monetary Board prescribes quantities of notes to be printed and coins to be minted and the conditions of printing/minting, and may contract institutions, mints, or firms; printing and minting expenses are for the account of the Bangko Sentral under Section 54.
The Bangko Sentral must exchange on demand and without charge Philippine currency of any denomination for other Philippine notes and coins; if temporarily unable to provide exact denominations, it meets obligations by delivering denominations that most nearly approximate requested ones under Section 55.
The Bangko Sentral must withdraw and demonetize notes and coins unfit for circulation and replace them by adequate notes and coins, except it shall not replace identification-impossible notes, coins showing signs of filing/clipping/perforation, and notes that lost more than two-fifths (2/5) of their surface or all signatures; these mutilated notes/coins are withdrawn and demonetized without compensation under Section 56.
The Bangko Sentral may call in replacement notes of any series or denomination more than five (5) years old and coins more than ten (10) years old under Section 57.
Called-in notes/coins remain legal tender for one (1) year from call; after that, they cease to be legal tender, and during the following year (or longer period determined by the Monetary Board) they may be exchanged at par and without charge with the Bangko Sentral and duly authorized agents; after expiration, unexchanged notes/coins cease to be a liability and are demonetized, and the Bangko Sentral also demonetizes all called-in and replaced notes/coins under Section 57.

Demand deposits and check effects

For purposes of the Act, demand deposits are liabilities of the Bangko Sentral and other banks denominated in Philippine currency payable in legal tender upon demand by presentation of checks under Section 58.
Only duly authorized banks may accept funds or create liabilities payable in pesos upon demand by presentation of checks, and such operations are subject to Monetary Board control under the Act under Section 59.
Checks representing demand deposits do not have legal tender power, and their acceptance in payment of debts (public and private) is at the option of the creditor; however, a check cleared and credited to the creditor’s account is equivalent to delivery of cash in the amount credited under Section 60.

Monetary administration: stabilization and reporting triggers

The Monetary Board shall endeavor to control any expansion or contraction in monetary aggregates that is prejudicial to attaining or maintaining price stability under Section 61.
The Monetary Board shall formulate definitions of monetary aggregates, credit and prices for the article and make public such definitions and changes under Section 62.
When abnormal movements in monetary aggregates, credit, or prices endanger stability of the Philippine economy or important sectors, the Monetary Board must (1) take appropriate remedial measures within its powers, and (2) submit to the President and Congress and make public a detailed report including causes, extent of reflection in domestic output/employment/wages/economic activity and significance, and measures taken and other monetary/fiscal/administrative measures it recommends under Section 63.

Criminal and administrative penalties for violations

Refusal to make reports or permit examination: officers, owners, agents, managers, directors, or officers-in-charge of a supervised/examined institution who willfully refuse to file required reports or permit lawful examination after written requirement from the Monetary Board or head of the supervising/examining department are punished by a fine of **not less than