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PHILIPPINE LAWS, STATUTES & CODES
A collection of Philippine laws, statutes and codes not included or cited in the main indices of the Chan Robles Virtual Law Library.
Republic Acts :
REPUBLIC ACTS
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REPUBLIC ACT NO. 265 - AN
ACT ESTABLISHING THE CENTRAL BANK OF THE PHILIPPINES, DEFINING ITS
POWERS IN THE ADMINISTRATION OF THE MONETARY AND BANKING SYSTEM,
AMENDING THE PERTINENT PROVISIONS OF THE ADMINISTRATIVE CODE WITH
RESPECT TO THE CURRENCY AND THE BUREAU OF BANKING, AND FOR OTHER
PURPOSES |
CHAPTER I ARTICLE I Section 1. Creation of the Central Bank. — There is hereby created a body corporate to be known as the Central Bank of the Philippines, which shall be governed by the provisions of this Act. The capital of the Central Bank shall be ten million (P10,000,000) pesos, which are hereby appropriated from the assets of the Exchange Standard Fund, as provided in section 134 of this Act. Sec. 2. Responsibilities and objectives. — It
shall be the responsibility of the Central Bank of the Philippines to
administer the monetary and banking system of the Republic. Sec. 3. Place of business. — The Central Bank shall have its principal place of business in the City of Manila, but may have such branches, agencies and correspondents in other places as are necessary for the proper conduct of its business. Sec. 4. Corporate powers. — The Central Bank is
hereby authorized to adopt, alter, and use a corporate seal which shall
be judicially noticed; to make 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. ARTICLE II Sec. 5. Composition of the Monetary Board. — The powers and functions of the Central Bank shall be exercised by a Monetary Board, which shall be composed of seven members, as follows: (a) The Secretary of Finance, who shall preside at the meetings of the Monetary Board. Whenever the Secretary of Finance is unable to attend a meeting of the Board, the Undersecretary of Finance shall act as his alternate, but shall not preside. (b) The Governor of the Central Bank, who shall preside at the meetings of the Board in the absence of the Secretary of Finance. The Governor shall be appointed for a term of six years by the President of the Philippines with the consent of the Commission on Appointments. Whenever the Governor is unable to attend a meeting of the Board, the ranking deputy-governor shall act in his stead. (c) The President of the Philippine National Bank, whose alternate shall be the senior vice-president of said bank. (d) The Chairman of the Board of Governors of the Rehabilitation Finance Corporation, whose alternate shall be the ranking governor of said corporation. (e) Three other members, to be appointed for terms of six years by the President with the consent of the Commission on Appointments: Provided, however, That the first members appointed under the provisions of this subsection shall have terms of office of two, four and six years, respectively. In making appointments to the Monetary Board, the President of the Philippines shall give due regard to affording fair representation of the financial, agricultural, industrial and commercial interests, in the composition of the said Board. Sec. 6. Vacancies. — Any vacancy in the Monetary Board created by the death, resignation, or removal of an appointive member shall be filled by the appointment of a new member to complete the unexpired period of the term of the member concerned. Sec. 7. Qualifications. — No person shall be appointed as a member of the Monetary Board or as a deputy-governor of the Central Bank unless he be of good moral character and of unquestionable integrity and responsibility, and who is of recognized competence in the economics of banking, finance, commerce, agriculture or industry: Provided, however, That the Governor and deputy-governors of the Central Bank must be of recognized competence in the field of banking: Provided, further, That the Governor and the members of the Monetary Board shall be natural-born Filipino citizens. Sec. 8. Disqualifications. — With the exception of
the ex-officio members and their respective alternates, none of the
following may be a member of the Monetary Board or a deputy-governor of
the Central Bank: Sec. 9. Removal. — The President may remove any
member of the Monetary Board for any of the following reasons: Section 10. Meetings. — The Monetary Board shall
convene as frequently as is necessary to discharge its responsibilities
properly, but shall meet at least once every two weeks. The Board may
be convoked either by the Secretary of Finance, in his capacity as
presiding officer of the Board, or by the Governor of the Central Bank. Section 11. Attendance of the ranking deputy-governor and the chief of the Department of Economic Research. — The ranking deputy-governor of the Central Bank and the chief of the Department of Economic Research shall attend the meetings of the Monetary Board with the right to be heard but not to vote. Section 12. Remuneration of members for attending meetings of the Board. — The members of the Monetary Board or their respective substitutes, except the Governor and the ranking deputy-governor, shall receive a per diem for every Board meeting attended. The amount of said per diem shall be set by the President but may not exceed fifty (P50) pesos, nor the sum of five hundred (P500) pesos for any single month. Section 13. Withdrawal of persons having a personal interest. — Whenever any person attending a meeting of the Monetary Board has a personal interest of any sort in the discussion or resolution of any given matter, or any of his business associates or any of his relatives within the fourth degree of consanguinity or second degree of affinity has such an interest, said person may not participate in the discussion or resolution of the matter and must retire from the meeting during the deliberations thereon. The minutes of the meeting shall note the withdrawal of the member concerned. Section 14. Exercise of authority. — In order to
exercise the authority granted to it under this Act, the Monetary Board
shall: Section 15. Responsibility. — Any member of the
Monetary Board or officer or employee of the Central Bank who wilfully
violates this Act or who is guilty of gross negligence in the
performance of his duties shall be held liable for any loss or injury
suffered by the Bank as a result of such violation or negligence.
Similar responsibility shall apply to the disclosure of any information
of a confidential nature about the discussions or resolutions of the
Monetary Board or about the operations of the Bank, and to the use of
such information for personal gain or to the detriment of the
Government, the Bank or third parties. ARTICLE III Section 16. Powers and duties of the Governor. — The Governor shall be the chief executive of the Central Bank. His powers and duties shall be: (a) To 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) To execute and administer the policies and measures approved by the Monetary Board; (c) To direct and supervise the operations and internal administration of the Central Bank. The Governor may delegate certain of his administrative responsibilities to other officers of the Bank, subject to the rules and regulations of the Monetary Board; and (d) To exercise such other powers as may be vested in him by the Monetary Board. Section 17. Representation of the Monetary Board and
the Central Bank. — The Governor of the Central Bank shall be the
principal representative of the Monetary Board and of the Bank, and in
his capacity and in accordance with the instructions of the Monetary
Board he shall be empowered: Section 18. Authority of the Governor in emergencies.
— In the event of war or other emergencies which require immediate
action and in which there is insufficient time to call a meeting of the
Monetary Board, the Governor of the Central Bank, with the concurrence
of the Secretary of Finance or, in his absence, with the concurrence of
any two other members of the Monetary Board, may decide any matter or
take any action within the authority of the Board itself and may
suspend any resolution or decision of the Board. Section 19. Outside interests of the Governor. — The Governor of the Central Bank shall be required to limit his professional activities to those pertaining directly to his position with the Central Bank; accordingly, the Governor of the Bank may not accept any other employment, whether public or private, remunerated or ad honorem, with the exception of academic positions and of public commissions related to the formation, direction or implementation of monetary, banking or general economic policies which concern the national interest of the Philippines. Sec. 20. Remuneration of the Governor. — The salary of the Governor of the Central Bank shall be fixed by the Monetary Board with the approval of the President of the Philippines, but in no case shall it exceed thirty thousand pesos per annum. Sec. 21. Deputy-Governor. — The Governor of the
Central Bank, with the approval of the Monetary Board, shall appoint
one deputy-governor who shall perform such duties as may be assigned to
him by the Governor and the Board. ARTICLE IV A. DEPARTMENT OF ECONOMIC RESEARCH Sec. 22. Responsibilities of the Department. — The
Central Bank shall establish and maintain a Department of Economic
Research which shall prepare data and conduct economic research for the
guidance of the Monetary Board in the formulation and implementation of
its policies. Sec. 23. Authority to obtain information. — The Department of Economic Research shall have the authority to request from any person or entity, including Government offices and instrumentalities, any data which the Central Bank may require for the proper discharge of its functions and responsibilities. The Central Bank shall have the power to issue a subpoena for the production of the books and records of all such persons and entities for the aforesaid purpose. Those who refuse without justifiable cause the subpoena, shall be subject to the penalties provided in to supply the Bank with the data requested, or required by section 32. Sec. 24. Training of technical personnel. — The
Central Bank shall promote and sponsor the training of technical
personnel in the field of money and banking. Toward this end, the
Central Bank is hereby authorized to defray the costs of study, at home
or abroad, of outstanding employees of the Bank, of promising
university graduates or of any other qualified persons which shall be
determined by proper competitive examinations to be conducted by the
Commissioner of Civil Service as in other cases. The chief of the
Department of Economic Research shall prepare and supervise the
training program of the Bank, subject to the rules and regulations of
the Monetary Board on the matter. Sec. 25. Creation of the Department. — In order to
assure the observance of this Act and of other pertinent laws, and of
the rules and regulations of the Monetary Board, the Central Bank shall
have a Department of Supervision and Examination which shall be charged
with the supervision and periodic examination of all banking
institutions operating in the Philippines, including all Government
credit institutions. The Department of Supervision and Examination
shall discharge its responsibilities in accordance with the
instructions of the Monetary Board. The chief of the department shall
be known as the Superintendent of Banks. Sec. 26. Qualifications. — The Superintendent of Banks must be a person of recognized probity and competence in accounting, auditing and banking practice. Sec. 27. Prohibitions. — The Superintendent and
all employees of the Department of Supervision and Examination are
hereby prohibited from: Sec. 28. Examination and fees. — It shall be the
duty of the Superintendent, personally or by deputy, at least once in
every twelve months, and at such other times as either he or the
Monetary Board may deem expedient, to make an examination of the books
of every banking institution within the purview of this Act and to make
a report on the same to the Monetary Board. Sec. 29. Proceedings upon insolvency. — Whenever,
upon examination by the Superintendent or his examiners or agents into
the condition of any banking institution, it shall be disclosed that
the condition of the same is one of insolvency, or that its continuance
in business would involve probable loss to its depositors or creditors,
it shall be the duty of the Superintendent forthwith, in writing, to
inform the Monetary Board of the facts, and the Board, upon finding the
statements of the Superintendent to be true, shall forthwith forbid the
institution to do business in the Philippines and shall take charge of
its assets and proceeds according to law. Sec. 30. Distribution of assets. — In case of liquidation of a banking institution, after payment of the costs of the proceedings, including reasonable expenses and fees of the Central Bank to be allowed by the court, the Central Bank shall pay the debts of such institution, under order of the court, in accordance with their legal priority. Sec. 31. Disposition of fees and commissions. — All costs and fees earned by the Central Bank in winding up the affairs and administering the assets of any banking institution within the purview of this Act shall be used to pay the salaries of the clerks and other employees whose employment is rendered necessary in the discharge of the trust, together with other additional expenses caused thereby. The balance of fees and costs earned, after the payment of all expenses, shall be for the account of the Central Bank. Sec. 32. Refusal to make reports or permit examination. — Any owner, agent, manager, or other officer in charge of any banking institution within the purview of this Act who, being thereunto required in writing by the Monetary Board or by the Superintendent, shall wilfully refuse to file the required report or permit any lawful examination into the affairs of such institution shall be punished by a fine of not more than ten thousand pesos or by imprisonment for not more than one year, or by both, in the discretion of the court. Sec. 33. False statement. — The willful making of a false statement to the Monetary Board or to the Superintendent of Banks or to his examiners shall be punished by a fine not to exceed fifteen thousand pesos, or by imprisonment for a term not to exceed two years, or by both, in the discretion of the court. Sec. 34. Proceedings upon violation of laws and
regulations. — Whenever any person or entity wilfully violates this Act
or any order, instruction, rule or regulation legally issued by the
Monetary Board, the person or persons responsible for such violation
shall be punished by a fine of not more than twenty thousand pesos and
by imprisonment of not more than five years. Sec. 35. Organization of other departments. — The
Monetary Board shall organize a foreign exchange department, a credit
department, and such other departments as it deems convenient for the
proper and efficient conduct of the business of the Central Bank. The
powers and duties of the departments shall be determined by the
Monetary Board, within the authority granted to the Board and the
Central Bank under this Act. ARTICLE V Sec. 36. Reports and publications. — Within the first eight days of each month the Central Bank shall publish a general balance sheet showing the volume and composition of its assets and liabilities as of the last working day of the preceding month. Sec. 37. Annual report. — Before the end of March
of each year the Central Bank shall submit to the President of the
Philippines, to the Senate through its President, to the House of
Representatives through its Speaker, and shall publish an annual report
on the condition of the Bank and 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. Sec. 38. Signatures on statements. — The balance
sheets and other financial statements of the Central Bank shall be
signed by the officers responsible for their preparation, by the
Governor, and by the auditor of the Bank. ARTICLE VI Sec. 39. Fiscal year. — The fiscal year of the Bank shall begin on January first and end on December thirty-first of each year. Sec. 40. Computation of profits and losses. — Within the first thirty days following the end of each fiscal year, the Central Bank shall determine its net profits or losses. In the calculation of net profits, the Bank shall make adequate allowance or establish adequate reserves for bad and doubtful accounts. Sec. 41. Distribution of net profits. — Within the
first sixty 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 rules: Sec. 42. Distribution of net losses. — Should the Central Bank incur net losses during any fiscal year, such losses shall be debited to surplus, and if surplus be inadequate the balance shall be debited to the capital of the Bank. Sec. 43. Extraordinary expenses of currency issue
and monetary stabilization. — The Monetary Board may, whenever it deems
it advisable, 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: Sec. 44. Revaluation profits and losses. — The
revaluation profits or losses made or assumed by the Central Bank in
accordance with the provisions of sections 77 and 83 of this Act shall
not be included in the computation of the annual profits and losses of
the Central Bank. Sec. 45. Profits from recoinage or from reductions
in the Bank's currency liabilities. — Any profits arising from a
reminting of coins or from reduction in the currency liabilities of the
Central Bank as a consequence of the loss, destruction or
demonetization of notes and coins shall not be included in the
computation of the annual profits of the Central Bank. ARTICLE VII Sec. 46. Appointment and personnel. — The Auditor-General shall appoint a representative who shall be the auditor of the Central Bank. The Auditor-General shall appoint the necessary personnel to assist said representative in the performance of his duties. The salaries of the auditor and his staff shall be determined by the Auditor-General with the advice of the Monetary Board. Said salaries and all other expenses of maintaining the auditor's office shall be paid by the Central Bank. The auditor of the Central Bank and personnel under him may be removed only by the Auditor-General. The representative of the Auditor-General must be a certified public accountant with at least ten years experience as certified public accountant or a person who has had training and experience in commercial or central banking. No relative of any member of the Monetary Board or the Auditor-General within the sixth degree of consanguinity or affinity shall be appointed such representative. CHAPTER II Sec. 47. 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 equal parts called "centavos," which are represented by the sign "c." ARTICLE II Sec. 48. Par value. — The gold value of the peso is seven and thirteen-twenty firsts (7-13/21) grains of gold, ninetenths (0.900) fine, which is equivalent to the United States dollar parity of the peso as provided in section 6 of Commonwealth Act No. 699. Sec. 49. Changes in par value. — The par value of
the peso shall not be altered except when such action is made necessary
by the following circumstances: Sec. 50. Parities of foreign currencies with
respect to the peso. — The legal parities of foreign currencies with
respect to the Philippine peso shall be determined as follows: ARTICLE III A. CURRENCY Sec. 51. Definition of currency. — The word "currency" is hereby defined, for the purposes of this Act, as meaning all Philippine notes and coins issued or circulating in accordance with the provisions of this Act. Sec. 52. Issue power. — The Central Bank shall
have the sole right 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. Sec. 53. Liability for notes and coins. — Notes
and coins issued by the Central Bank shall be liabilities of the Bank
and may be issued only against, and in amounts not exceeding, the
assets of the Bank. Said notes and coins shall be a first and paramount
lien on all assets of the Central Bank. Sec. 54. Legal tender power. — All notes and coins issued by the Central Bank 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. Sec. 55. 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 Central Bank:
Provided, however, That said notes shall state that they are
liabilities of the Central Bank 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 Central Bank. Sec. 56. Printing of notes and minting 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. Sec. 57. Interconvertibility of currency. — The Central Bank 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 Central Bank should temporarily be unable to provide notes or coins of the denominations requested it shall meet its obligation by delivering notes and coins of the denominations which most nearly approximate those requested. Sec. 58. Replacement of currency unfit for circulation. — The Central Bank 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 Central Bank 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 of their surface or all of the signatures inscribed thereon. Notes and coins in such mutilated condition shall be withdrawn from circulation and demonetized without compensation to the bearer, unless it is proved to the satisfaction of the Central Bank that the currency became unfit for circulation as a result of accidental causes or forces beyond control, in which case replacement shall be made. Sec. 59. Retirement of old notes and coins. — The
Central Bank may call in for replacement notes of any series or
denomination which are more than five years old and coins which are
more than ten years old. Sec. 60. Profits from recoinage or from reductions
in the Bank's currency liabilities. — Any profits resulting from
recoinage or from a reduction in the liabilities of the Central Bank
through loss, destruction or demonetization of currency shall be used
for the purposes mentioned in section 45 of this Act. Sec. 61. Definition. — For the purposes of this Act, the term "deposit money" means all those liabilities of the Central Bank 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. Sec. 62. Issue of deposit money. — Only banks duly authorized so to do 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. Sec. 63. Legal character. — Checks representing
deposit money 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. CHAPTER III Sec. 64. Guiding principle. — The Monetary Board shall endeavor to control any expansion or contraction in the money supply, or any rise or fall in prices, which, in the opinion of the Board, is prejudicial to the attainment or maintenance of a high level of production, employment, and real income. In adopting policies and measures in accordance with this principle the Monetary Board shall have due regard for their effects on the availability and cost of money to particular sectors of the economy as well as to the economy as a whole, and their effects on the relationship of domestic prices and costs to world prices and costs. Sec. 65. Definition of the money supply. — For the purposes of this section, and of this Act, the money supply is defined as consisting of all holdings of domestic currency and deposit money with the exception of such holdings by the Government and by banks having checking deposit liabilities in domestic currency. The statistics prepared by the Central Bank on the volume of the money supply shall be based on this definition to the extent that available data permit. Sec. 66. Action when abnormal movements occur in
the money supply or price level. — Whenever abnormal movements in the
money supply or in prices endanger the stability of the Philippine
economy or important sectors thereof, the Monetary Board shall: ARTICLE II Sec. 67. Guiding principle. — The Central Bank of the Philippines shall exercise its powers under this Act to maintain the par value of the peso and the convertibility of the peso into other freely convertible currencies. Sec. 68. International reserve. — In order to
maintain the international stability and convertibility of the
Philippine peso, the Central Bank shall maintain an international
reserve adequate to meet any foreseeable net demands on the Bank for
foreign currencies. Sec. 69. Composition of the international reserve.
— The international reserve of the Central Bank of the Philippines may
include the following assets: Sec. 70. Action when the international stability
of the peso is threatened. — Whenever the international reserve of the
Central Bank falls to an amount which the Monetary Board considers
inadequate to meet the prospective net demands on the Central Bank 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: CHAPTER IV Sec. 71. Means of action. — In order to achieve the international and domestic objectives of the national monetary policy, the Monetary Board shall rely on its moral influence, the powers granted to it under this Act for the regulation of money, credit and exchange, and the support and cooperation of the Government and all its agencies. ARTICLE II Sec. 72. Purchases and sales of gold. — The Central Bank may buy and sell gold in any form, subject to such regulations as the Monetary Board may issue. The Monetary Board may at any time require that any gold held by any person or entity under the jurisdiction of the Philippines be delivered to the Central Bank or to any banks or other agents contracted or engaged by the Central Bank for the purpose. The Monetary Board may also impose conditions under which gold in any shape or form may be acquired and held, transported, melted or treated, imported, exported, earmarked or held in custody for foreign or domestic account. The purchases and sales of gold authorized by this section shall be made in national currency and at rates which do not differ from the par value of the peso by more than the margins established by the International Monetary Fund. Sec. 73. Purchases and sales of foreign exchange.
— The Central Bank may buy and sell foreign notes and coins, and
documents and instruments of types customarily employed for the
international transfer of funds. The Bank may engage in future exchange
operations. Sec. 74. Emergency restrictions on exchange operations. — Notwithstanding the provisions of the third paragraph of the preceding section, in order to protect the international reserve of the Central Bank during an exchange crisis and to give the Monetary Board and the Government time in which to take constructive measures to combat such a crisis, the Monetary Board, with the concurrence of at least five of its members, and with the approval of the President of the Philippines, may temporarily suspend or restrict sales of exchange by the Central Bank and may subject all transactions in gold and foreign exchange to license by the Central Bank. The adoption of the emergency measures authorized in this section shall be subject to any executive and international agreements to which the Republic of the Philippines is a party. Sec. 75. Acquisition of inconvertible currencies. — The Central Bank 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 Central Bank of foreign exchange which is not freely utilizable in the international market. Sec. 76. Exchange rates. — The Monetary Board
shall determine the rates at which the Central Bank shall buy and sell
spot exchange, but said rates shall not differ by more than one-half of
one per cent from the legal parities established in section 50, unless
in any given case a greater divergence from the legal parity exists in
foreign markets. The Central Bank shall not collect any additional
commissions or charges of any sort, other than actual telegraphic or
cable costs incurred by it. Sec. 77. Revaluation profits and losses on Central Bank's international assets. — The profits or losses arising from any revaluation of the Central Bank's net assets or liabilities in gold or foreign currencies as a result of changes in the gold value of the peso, or of changes in the parities or exchange rates of foreign currencies with respect to the Philippine peso, shall be distributed in the manner provided in section 44 of this Act. Sec. 78. Operations with foreign entities. — The
Central Bank of the Philippines may 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 Central Bank may also act as agent or
correspondent for such entities. ARTICLE III Sec. 79. Rates applicable to purchases and sales of exchange by the banks. — The Monetary Board shall determine the minimum and maximum rates at which the banks may buy spot exchange, and the maximum and minimum rates at which they may sell spot exchange, but the rates thus established for each currency shall not differ from the respective legal parity by more than one per cent, unless in any given case a greater divergence from parity exists in foreign markets. The banks shall not collect any additional commissions or charges other than actual telegraphic or cable costs incurred by them. The rates to be used by the banks for other types of exchange transactions shall be based on their spot exchange rates and shall not differ from such rates by margins greater than those considered reasonable by the Monetary Board: Provided, however, That the Board may at any time specifically fix such margins. The Monetary Board shall issue such rules and regulations as may be necessary to implement the provisions of this paragraph. The rates established in accordance with the provisions of this section shall not apply to exchange transactions with the Central Bank. Such transactions shall be made at the rates established in accordance with the provisions of section 76 of this Act. Sec. 80. Foreign exchange holdings of the banks. —
In order that the Central Bank 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 Central Bank 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 76 of this Act. Sec. 81. 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. Sec. 82. 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. Sec. 83. Revaluation profits and losses on bank's
holdings of gold and foreign exchange. — Any 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, shall be for the
account of the Central Bank in their entity. Sec. 84. Other exchange losses. — The banks shall bear the risks of non-compliance with the terms of the foreign exchange documents and instruments which they buy or sell, and shall also bear any other typically commercial or banking risks, including exchange risks not assumed by the Central Bank under the provisions of the preceding section. Sec. 85. Information on exchange operations. — The
banks shall report to the Central Bank of the Philippines the volume
and composition of their purchases and sales of gold and foreign
exchange each day, and must furnish such additional information as the
Central Bank may request with reference to the movements in their
accounts in foreign currencies. ARTICLE IV A. THE CREDIT POLICY OF THE CENTRAL BANK Sec. 86. Guiding principle. — The rediscounts,
discounts, loans and advances which the Central Bank is authorized to
extend to banking institutions under the provisions of the present
article of this Act shall be used to regulate the volume, costs,
availability and character of bank credit and to provide the banking
system with liquid funds in times of need. Sec. 87. Authorized types of operations. — Subject
to the principles stated in the preceding section of this Act, the
Central Bank may normally and regularly carry on the following credit
operations with banking institutions operating in the Philippines: Sec. 88. Loans to mortgage institutions. — Under
special circumstances in which the Monetary Board considers it
advisable to promote or facilitate the lending operations, or certain
classes thereof, of savings bank, building and loan associations, or of
the Rehabilitation Finance Corporation, the Central Bank may grant
loans or advances with maturities of not more than one year to said
institutions against pledge or assignment of payments, installments or
amortizations of their borrowers coming due within the twelve months
from the date of the granting of such loans or advances, and in an
amount not exceeding forty per cent of the payments, installments or
amortizations pledged or assigned: Provided, however, That the Central
Bank shall not make such loans or advances whenever such action would
aggravate or contribute to inflationary tendencies existing in the
economy. Sec. 89. Extension of maturities. — Whenever, in
the opinion of the Monetary Board, a deflationary situation exists
which requires special expansionary credit measures, the Central Bank
may extend the maximum maturities of new credit operations granted
under the provisions of subsections (a), (b) and (c) of section 87 to
periods not exceeding one year. Sec. 90. Emergency loans and advances. — In
periods of emergency or of imminent financial panic which directly
threaten monetary and banking stability, the Central Bank may grant
banking institutions extraordinary advances secured by any assets which
are defined as acceptable security by a concurrent vote of at least
five members of the Monetary Board. While such advances are
outstanding, the debtor institution may not expand the total volume of
its loans or investments without the prior authorization of the
Monetary Board. Sec. 91. Interest and rediscount rates. — The Monetary Board shall fix the interest and rediscount rates to be charged by the Central Bank 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 Central Bank's portfolio, and the general requirements of the national monetary policy. Sec. 92. Endorsement. — The documents rediscounted, discounted, bought or accepted as collateral by the Central Bank in the course of the credit operations authorized in this article must bear the endorsement of the institution for which they are received. Sec. 93. Repayment of credits. — Documents
rediscounted, discounted or accepted as collateral by the Central Bank
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. Sec. 94. 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 Central Bank. 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. ARTICLE V Sec. 95. Provisional advances to the Government. — The Central Bank may make direct provisional advances to the Government or to any of its political subdivisions to finance expenditures authorized in the annual appropriations of the borrowing entity: Provided, That said advances must be repaid before the end of the first quarter following the end of the fiscal year of the Government or political subdivision and shall not, in their aggregate, exceed fifteen per cent of the average annual income of the borrower for the last three preceding years. ARTICLE VI Sec. 96. Principles of open market operations. — The open market purchases and sales of securities by the Central Bank shall be made exclusively for the purpose of achieving the objectives of the national monetary policy and shall be limited to the operations authorized in sections 97 and 98 of this Act. Accordingly in periods of inflation or as long as inflationary dangers exist, the Central Bank shall refrain from open market purchases and at such times shall endeavor to reduce its security holdings and/or to sell the evidences of indebtedness which it is permitted to issue under the provisions of section 98 of this Act. Conversely, whenever the national monetary policy requires an expansion of the money supply, the Central Bank may repurchase its own evidences of indebtedness prior to their date of maturity, as authorized in section 98, and may acquire the securities to which reference is made in section 97. In purchasing said securities, the Central Bank shall give preference to short-term obligations, in order that the Bank may be in a better position to reduce the money supply should conditions in the future so require. Whenever securities meeting the conditions established in section 97 of this Act represent obligations in foreign currencies, the decisions of the Monetary Board to purchase and sell such securities shall be governed by the adequacy of the international reserve of the Central Bank and by the effect which such operations would have on the balance of payments and the volume of the money supply. Sec. 97. Purchases and sales of Government
securities. — In order to achieve the objectives of the national
monetary policy, the Central Bank may, in accordance with the
principles stated in section 96 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: Sec. 98. Issue and negotiation of Central Bank
obligations. — In order to provide the Central Bank with effective
instruments for open market operations, the Bank may, subject to such
rules and regulations as the Monetary Board may prescribe and in
accordance with the principles stated in section 96 of this Act, issue,
place, buy and sell freely negotiable evidences of indebtedness of the
Bank. Said evidences of indebtedness may be issued directly against the
international reserve of the Bank or against the securities which it
has acquired under the provisions of section 97 of this Act, or may be
issued without relation to specific types of assets of the Bank. ARTICLE VII Sec. 99. Review of the Central Bank's portfolio. — At least once every month the Monetary Board shall review the portfolio of the Central Bank in relation to the Bank's future credit policy. In reviewing the Central Bank'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 Central Bank credit may be effected promptly whenever the national monetary policy so requires. ARTICLE VIII Section 100. Reserve requirements. — In order to control the volume of money created by the credit operations of the banking system, banks operating in the Philippines shall be required to maintain reserves against their deposit liabilities. 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 Central Bank of the Philippines; nevertheless, the Monetary Board may, whenever circumstances warrant, permit the maintenance of part of the required reserves in the form of assets other than peso deposits with the Central Bank. Reserve requirements shall be applied to all banks uniformly and without discrimination. Section 101. Required reserves against peso deposits.
— The Monetary Board is authorized to prescribe and modify the minimum
reserve ratios applicable to each class of peso deposits: Provided,
however, That such ratios shall not be less than five per cent (5%) or
more than twenty-five per cent (25%) for time and saving deposits, and
shall not be less than ten per cent (10%) or more than fifty per cent
(50%) for demand deposits. Section 102. 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: Provided, however, That such ratios
may not be set below ten per cent (10%) or above one hundred per cent
(100%), with respect to deposit liabilities in each foreign currency. Section 103. Reserves against unused balances of
overdraft lines. — In order to facilitate Central Bank control over the
volume of bank credit, the Monetary Board may establish minimum reserve
requirements for unused balances of overdraft lines. Section 104. Increase in reserve requirements. — Whenever it becomes necessary, in the opinion of the Monetary Board, 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. The banks shall be notified reasonably in advance of the date on which such increase is to become effective. Section 105. Computation on reserves. — The reserve
position of each bank shall be calculated daily on the basis of the
amount, at the close of business for the day, of the bank's reserves
and the amount of its liability accounts against which reserves are
required to be maintained. Section 106. Reserve deficiencies. — Whenever the
reserve position of any bank, computed in the manner specified in the
preceding section of this Act, is below the required minimum, the bank
shall pay the Central Bank one-tenth of one per cent (1/10 of 1%) per
day on the amount of the deficiency: Provided, however, That 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 the
privilege of offsetting reserve deficiencies in the aforesaid manner. Section 107. Interbank settlements. — The Central
Bank shall provide facilities for interbank clearing. ARTICLE IX Section 108. Guiding principle. — The Monetary Board shall use the powers granted to it under the present article and elsewhere in this Act to ensure that the supply, availability and cost of money are in accord with the needs of the Philippine economy and that the bank credit is not granted for speculative purposes prejudicial to the national interests. Section 109. Interest rates, commissions and charges.
— The Monetary Board may fix the maximum rates of interest which banks
may pay on deposits and on any other obligations. Section 110. Margin requirements against letters of
credit. — In order to restrict the granting of bank credit for purposes
which are contrary to the general welfare of the Philippines, 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 111. Required security against bank loans. — In order to promote the liquidity and solvency of the banking system, or to influence the availability of bank credit for specific purposes, the Monetary Board may issue such regulations as it may deem necessary from time to time 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 112. 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. Section 113. Minimum capital ratios. — In order to
regulate the volume and distribution of bank credit, and to ensure the
maintenance of bank capital and surplus at levels adequate to protect
the depositors against risk of loss, 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 it convenient so to do. ARTICLE X Section 114. Coordination of credit policies. — Government- owned corporations which perform banking or credit functions are hereby declared to be instruments of the national monetary policy and, accordingly, 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 Central Bank. CHAPTER V Section 115. Designation of Central Bank as fiscal agent and banker of the Government. — The Central Bank of the Philippines shall act as the fiscal agent and banker of the Government, its political subdivisions and instrumentalities. Section 116. Representation with the International Monetary Fund. — The Central Bank of the Philippines shall represent the Government of the Philippines 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 117. Representation with other financial institutions. — The Central Bank 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. Section 118. Official deposits. — The Central Bank shall be the official depository of the Government and its political subdivisions and instrumentalities: Provided, however, That the Monetary Board may designate Government-owned banks and other banks incorporated in the Philippines to accept deposits from said entities, subject to such rules and regulations as the Board may prescribe. Section 119. Fiscal operations. — The Central Bank
shall open a general cash account for the Treasurer of the Philippines,
in which the liquid funds of the Government shall be deposited. Section 120. Other banks as agents of the Central Bank. — In the performance of its functions as fiscal agent, the Central Bank may engage the services of the Philippine National Bank and of other domestic banks for operations in localities at home or abroad in which the Central Bank does not have offices or agencies adequately equipped to perform said operations: Provided, however, That for fiscal operations in foreign countries, the Central Bank may engage the services of foreign banking and financial institutions. Section 121. Remuneration for services. — The Central
Bank shall not charge for services which it renders to the Government
and to its political subdivisions and instrumentalities any rates,
commissions or fees. ARTICLE II A. THE ISSUE AND PLACING OF GOVERNMENT SECURITIES Section 122. Issue of Government obligations. — The issue of securities representing obligations of the Government, its political subdivisions or instrumentalities, shall be made through the Central Bank, which shall act as agent of, and for the account of, the Government or its respective subdivision or instrumentality, as the case may be: Provided, however, That the Bank shall not subscribe to the issue of said securities and shall not guarantee their placement. Section 123. Methods of placing Government
securities. — The Central Bank may place the securities to which the
preceding section refers through direct sale to financial institutions
and the public, through outright sale to syndicates, brokers or dealers
for purposes of resale to the public for their own account, or through
brokers or banks contracted to place the securities with the public for
the account of the Central Bank. Section 124. Servicing and redemption of the public
debt. — The servicing and redemption of the public debt shall also be
effected through the Central Bank. Section 125. The Securities Stabilization Fund. —
There shall be established a "Securities Stabilization Fund" which
shall be administered by the Central Bank for the account of the
Government. Section 126. Resources of the Securities
Stabilization Fund. — The resources of the Securities Stabilization
Fund shall come from the following sources: Section 127. Profits and losses of the Fund. — The
Securities Stabilization Fund shall retain any 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 Section 128. 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 on the nation and on the effects of the proposed operation on the balance of payments and on the volume of the money supply. 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 the money supply, the price level, and the balance of payments. Section 129. Representation on the National Economic
Council. — 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 Central Bank, the
Governor of the Central Bank shall be an ex-officio member of the
National Economic Council. CHAPTER VI Section 130. Tax exemptions. — The Central Bank of the Philippines shall be exempt from all national, provincial, municipal and city taxes and assessments now in force or hereafter established. The exemptions authorized in the preceding paragraph of this section shall apply to all property of the Central Bank, to the resources, receipts, expenditures, profits and income of the Bank, as well as to all contracts, deeds, documents and transactions related to the conduct of the business of the Bank: Provided, however, That said exemptions shall apply only to such taxes and assessments for which the Central Bank itself would otherwise be liable, and shall not apply to taxes or assessments payable by persons or other entities doing business with the Central Bank. Section 131. Exemption from customs duties. — The importation and exportation by the Central Bank 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 furnishing, equipping and operating the offices of the Bank, 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 132. Applicability of the Civil Service Law.
— Appointment in the Central Bank, 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. ARTICLE II Section 133. Prohibitions. — The Central Bank 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. CHAPTER VII Section 134. Liquidation of the Exchange Standard Fund. — Prior to the date on which the Central Bank commences business, the Exchange Standard Fund shall be liquidated. The net assets of the Fund remaining after outstanding liabilities have been met shall be used for the following purposes and in the following priority: (a) Ten million (P10,000,000) pesos shall be used to subscribe to the capital stock of the Central Bank; (b) Two million (P2,000,000) pesos shall be transferred to the Securities Stabilization Fund; and (c) The remainder shall be transferred to the Bank in accordance with the provisions of section 135. ARTICLE II Section 135. Assumption by the Central Bank of the liability for treasury certificates. — On the date on which the Central Bank commences business, it shall assume the liability of the Treasury Certificate Fund for all outstanding treasury certificates. The amount of the liability shall be determined by the Secretary of Finance and certified by the Auditor-General. In consideration for assuming this liability the Treasurer of the Philippines shall transfer to the Bank all of the available assets of the Treasury Certificate Fund and that portion of the assets of the Exchange Standard Fund which may remain after deducting the amounts required to provide the capital of the Bank and the contribution to the Securities Stabilization Fund, as provided in the preceding section. If the total assets thus transferred exceed the liability assumed, the difference shall be used to establish a reserve on the books of the Central Bank against the contingency that the actual amount of treasury certificates which the Central Bank may be called upon to exchange for its own notes may prove to be larger than the liability originally assumed. If the total assets transferred should be less than the liability assumed, the Secretary of Finance shall deliver to the Bank a non-interest bearing, non-negotiable note without fixed maturity in the amount of the difference. The Central Bank shall, as soon as practicable, exchange outstanding treasury certificates for its own notes in accordance with the procedure described in section 59 of this Act. During the period of such exchange any treasury certificates exchanged by the Bank in excess of the liability originally assumed for such certificates shall be charged, first, to the reserve mentioned in the preceding paragraph, if there be such reserve, and, second, to the deposit of the Government. At the expiration of the exchange period any remaining balance of the liability account for outstanding treasury certificates shall be applied, first, to reduce the face value of the note delivered by the Secretary of Finance in accordance with the preceding paragraph, if such a note has been issued, and, second, to reduce the Account to Secure the Coinage, the creation of which is provided for in the following section. Any remaining balance of the abovementioned reserve shall be applied solely to reduce the Account to Secure the Coinage. Section 136. Assumption by the Central Bank of the
liability for treasury coins. — On the date on which the Central Bank
commences business, the total Philippine treasury coin issue, including
coins dumped in Manila Bay but not yet salvaged, shall become a
liability of the Bank. As a contra item against the liability thereby
assumed there shall be set up on the books of the Central Bank an asset
account in an amount equal to the face value of the total Philippine
treasury coin issue. This account shall be called the "Account to
Secure the Coinage." ARTICLE III Section 137. Extraordinary advances to the Government. — Notwithstanding any provisions in the present Act to the contrary, the Central Bank may, until June 30, 1951, make direct advances to the Government when, in the opinion of the Monetary Board, the international reserve is adequate to meet all foreseeable demands upon it and when such advances are consistent with the achievement of the Board's objective of domestic monetary stability. The total advances made under the authority of this section shall not exceed two hundred million (P200,000,000) pesos. The Bank shall make the above advances only against an equivalent amount of negotiable government securities having maturities which, insofar as possible, are appropriate to the uses to which the advances will be put, but which in no case shall exceed 15 years. In order to permit their resale by the Central Bank, the securities shall be in denominations and bear interest rates which will make them attractive to the banks and to the public. Advances shall be made only for certain purposes specifically authorized by law, and shall be made only for productive and income-producing projects, or for the repayment or servicing of external obligations of the Government. ARTICLE IV Section 138. Transfer of powers and functions of the Bureau of the Treasury to the Central Bank. — All powers, duties, and functions vested in the Bureau of the Treasury and the Treasurer of the Philippines which by the provisions of this Act shall be exercised by the Bank are hereby transferred to the Central Bank. Section 139. Transfer of authority, powers, and functions of the Bank Commissioner and the Bureau of Banking to the Central Bank. — All authority now vested in the Bank Commissioner and the Bureau of Banking with respect to the establishment, operation or liquidation of banking and credit institutions, and branches or agencies thereof, and all other powers, duties and functions vested in the Bureau of Banking and Bank Commissioner which by the provisions of this Act shall be exercised by the Bank, are hereby transferred to the Central Bank. Section 140. Repeal of inconsistent laws. — All laws, parts of laws, and any special charters, or parts thereof, of banking and financial institutions inconsistent herewith are hereby repealed. Section 141. Exemption from restrictions on bank borrowing. — The restrictions on bank borrowing which are contained in sections 6 and 7 of Act 3610 shall not apply to bank borrowings from the Central Bank. Section 142. Effectivity of this Act. — This Act
shall take effect upon approval. The Central Bank of the Philippines
shall commence business upon organization of the Monetary Board and
certification by the Secretary of Finance that the authorized capital
of the Bank has been fully paid-in and that the Bank is ready for
operation. Approved: June 15, 1948 |
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