[ PRESIDENTIAL DECREE NO. 1937, June 27, 1984 ]

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.