An Act to Provide for the Establishment of a Reserve
Bank in the Philippines
9 June 1939
Be it enacted by the National Assembly of the
Philippines:
Chapter I
Definitions of Terms
Section 1. (a) The term “Reserve System” shall be held
to mean that banking system herein created under which the Reserve Bank of
the Philippines and the member banks shall operate to accomplish the
purposes of this Act.
(b) The term “Reserve Bank” shall be held to mean the
Reserve Bank of the Philippines.
(c) The term “Member Bank” shall be held to me an any
bank, banking association, trust company, savings bank, or other banking
corporation, or any branch of the same, which is a member of the Reserve
System herein established.
(d) The term “Bank” shall be held to mean any bank,
banking association, trust company, savings bank, or other banking
corporation, or any branch of the same, which is engaged in banking business
in the Philippines.
(e) The term “Board” shall be held to mean the Board of
Governors of the Reserve Bank.
(f) The term “lawful money of the Philippines” shall
include Treasury certificates and silver pesos legally is sued under
authority of the Government of the Philippines.
(g) The term “lawful money of the United States” shall
include gold coins, gold certificates, silver dollars and United States
notes.
(h) The term “Government” shall mean the Government of
the Philippines.
Chapter II
Establishment and Functions
NAME, DOMICILE, AND DURATION
Section 2. In order to afford means of centralizing the
reserves of member banks, to regulate credit and credit facilities, and to
coordinate effectively bank resources, there is created a bank to be known
as the “Reserve Bank of the Philippines.”
Section 3. The Reserve Bank shall have its principal
place of business in the City of Manila and shall exist for a period of
fifty years.
CAPITAL STOCK
Section 4. The Reserve Bank shall have a capital stock
of five million pesos, divided into five thousand shares having a par value
of one thousand pesos each.
Section 5. The President of the Philippines, in behalf
of the Government, shall subscribe to and pay for two thousand shares of the
capital stock of the Reserve Bank; the remainder of the capital shall be
subscribed from time to time by the President of the Philippines, in behalf
of the Government, in such amounts as he may determine as soon as sufficient
funds may be available for that purpose and the needs of the business of the
Reserve Bank should require it.
Section 6. There is appropriated from the proceeds of
the excise tax on coconut oil the sum of two million pesos for the payment
of two thousand shares of stock subscribed by the Government provided in the
next preceding section.
CORPORATE POWERS
Section 7. The Reserve Bank shall have the following
powers:
(a) Upon the indorsement of any member bank, which
shall be deemed a waiver of demand, notice and protest by such bank as to
its own indorsement exclusively, the Reserve Bank may discount notes,
drafts, and bills of exchange arising out of actual commercial transactions;
that is, notes, drafts, and bills of exchange issued or drawn for
agricultural, industrial, or commercial purposes, or the proceeds of which
have been used, or are to be used, for such purposes, the Board of Governors
of the Reserve Bank to have the right to determine or define the character
of the paper thus eligible for discount, within the meaning of this Act.
Notes, drafts, and bills of exchange of factors issued as such making
advances exclusively to producer of staple agricultural products in their
raw state shall also be eligible for such discount, but notes, drafts, or
bills covering merely investments or issued or drawn for the purpose of
carrying or trading in stocks, bonds, or other investment securities, except
bonds and notes of the Government of the Philippines shall not be eligible
for discount. Notes, drafts, and bills admitted to discount under the terms
of this paragraph must have a maturity at the time of discount of not more
than ninety days.
(b) Upon the indorsement of any member bank, which
shall be deemed a waiver of demand, notice, and protest by such bank as to
its own indorsement exclusively, the Reserve Bank may, subject to
regulations and limitations to be prescribed by the Board of Governors of
the Reserve Bank, discount notes, drafts, and bills of exchange issued or
drawn for an agricultural purpose, or based upon livestock, and having a
maturity, at the time of discount, not exceeding nine months, and such
notes, drafts, and bills of exchange maybe offered as a collateral security
for the issuance of Reserve Bank notes under the provisions of section 22 of
this Act: Provided, That notes, drafts, and bills of exchange with
maturities in excess of six months shall not be eligible as a basis for the
issuance of Reserve Bank notes unless secured by warehouse receipts or other
such negotiable documents conveying or securing title be readily marketable
staple agricultural products or by chattel mortgage upon livestock which is
being fattened for market.
(c) The Reserve Bank may make advances for periods not
exceeding fifteen days to member banks on their promissory notes secured by
the deposit or pledge of bonds, notes, certificates of indebtedness, or
treasury bills of the Government of the Philippines or of the United States,
or by the deposit or pledge of debentures or other obligations of the
Agricultural and Industrial Bank of the Philippines which are eligible for
purchase by the Reserve Bank, and the Reserve Bank may make advances for
periods not exceeding ninety days to member banks on their promissory notes
secured by such notes, drafts, bills of exchange, or bankers’ acceptances as
are eligible for rediscount or for purchase by the Reserve Bank. All such
advances shall be made at rates to be established by the Board of Governors.
If any member bank to which any such advance has been made shall during the
life or continuance of such advance, and despite an official warning of the
Board of Governors to the contrary, increase its outstanding loans secured
by collateral in the form of stocks, bonds, debentures, or other such
obligations, or loans made to members of any organized stock exchange,
investment house, or dealer in securities, upon any obligation, note, or
bill, secured or unsecured, for the purpose of purchasing and/or carrying
stocks, bonds, or other investment securities, except obligations of the
Government of the Philippines or of the United States, such advance shall be
deemed immediately due and payable, and such member bank shall be ineligible
as a borrower at the Reserve Bank under the provisions of this paragraph for
such period as the Board of Governors of the Reserve Bank shall determine:
Provided, That no temporary carrying or clearance loans made solely for the
purpose of facilitating the purchase or delivery of securities offered for
public subscription shall be included in the loans referred to in this
paragraph.
(d) To buy from and sell to remember banks cable
transfers, bills of exchange eligible for rediscount and treasury bills
having a maturity of not exceeding ninety days.
(e) To buy and sell securities issued or guaranteed
both as to principal and interest by the Government of the United States.
However, the aggregate of the securities held at any one time by the Reserve
Bank with maturities exceeding nine months shall not be more than its
paid-up capital and surplus.
(f) To accept money on time deposits or current
accounts from the Government, and its political subdivisions and from banks.
(g) To hold the reserves of the member banks.
(h) To issue bank notes.
(i) To maintain accounts with central banks in other
countries and to: establish agency or correspondent relations with such
central banks.
(j) To buy and sell gold and silver, in coin or
bullion.
(k) To designate the branches and agencies of the
Philippine National Bank in the Philippines as its correspondents, or agents
under such terms as may be agreed upon with the Philippine National Bank.
(1) To make, provisional advances to the Government and
its political subdivisions for the expenses authorized in their annual
appropriations. Said advances shall be payable within three months and shall
not, in their aggregate, exceed one-sixth of the estimated income of the
borrower for the year. In no event shall the total of such advances exceed
the total capital and surplus of the Reserve Bank. In cases of emergency and
with the approval of the Secretary of Finance, the maturity of loans granted
to the Government may be extended for a period not to exceed one year.
(m) To act as the agent for the Government, in the
purchase and sale of gold or silver bullion; in the purchase, sale, transfer
and custody of bills of exchange, securities, or shares in any company; in
the collection of the proceeds, whether principal, interest or dividends, of
any securities or shares and in the remittance of such proceeds, at the risk
of the Government, by bills of exchange payable either in the Philippines or
elsewhere.
(n) To make by-laws; to adopt and use a corporate seal;
to buy, hold, transfer, sell, let, lease, mortgage, encumber and otherwise
trade in personal or real properties, shares of stock, securities, or other
instruments of credit of any domestic or foreign corporation, as its aims
and the transactions of its business may reasonably and necessarily require;
to enter into contracts essential to the proper management of its corporate
affairs and to carry out its aims and purposes; to appoint and dismiss its
officers and employees, unless otherwise provided for by this Act and to fix
the amount of compensation for said officers and employees; to sue and be
sued; to have the power of succession, and to exercise such powers as may be
reasonably necessary to carry on the business for which it has been created
or authorized.
MEMBER BANKS
Section 8. All banks which have been organized or which
may hereafter be organized under the laws of the Philippines, whether by
special charter or otherwise (including established banks organized under
the laws or Royal Decrees of Spain) shall: be members of the Reserve System.
Banks organized under the laws of the United States and having license to do
business in the Philippines and those which up to July fourth, nineteen
hundred and forty-six, shall have secured such license may likewise, by
members of the Reserve System of the Philippines, if they apply for
membership within ninety days from the date of effectivity of this Act, or
in the case of those securing said license after the date of effectivity of
this Act, within ninety days from the date of the issuance of the license.
Section 9. All reserves of member banks required by
existing laws to be maintained shall be deposited with the Reserve Bank.
Section 10. In order to prevent injurious credit
expansion or contraction, the Board of Governors, subject to the approval of
the Secretary of Finance, may from time to time by regulation change the
requirements as to the amount of reserves to be maintained against demand or
time deposits or both by member banks; but the amount of the reserves
required maintained by member banks shall not be less than, nor more than
twice the amount of the minimum reserves provided by existing laws.
Section 11. Any member bank which, after due demand has
failed to deposit in the Reserve Bank the reserves to which the two next
preceding sections refer, shall be subject to suspension as a member bank
and shall thereby lose all its rights and privileges as such, besides being
subject to the penalties provided by law for failure to maintain the
required legal reserves.
Section 12. A weekly return showing the financial
condition made up to the close of business every Saturday, and signed by the
Manager and the Accountant of the member bank, or signed by other principal
officers of the member bank acting on their behalf for the time being, shall
be filed with the Reserve Bank every Monday in such form as may be
prescribed by rules and regulations issued by the Board of Governors.
Section 13. If the Reserve Bank has any reason to
believe that a return of a member bank is incorrect in any material
particular, or if any member bank fails to make a return when required to do
so either by this Act or by the Reserve Bank acting under the authority of
this Act, or if for any reason it is the opinion of the Board of Governors
of the Reserve Bank that for the public interest an examination should be
made, the Board of Governors shall with the cooperation of the Bank
Commissioner examine the books and accounts of that member bank. The
expenses of such examinations shall be borne by the member bank examined.
A member bank which fails or defaults in submitting the
weekly return required by this Act shall be administratively fined by the
Board in the amount of one hundred pesos for every day during which such
failure or default continues.
Section 14. Any member bank may accept drafts or bills
of exchange drawn upon it having not more than six months sight to run,
which grow out of transactions involving the importation or exportation of
goods; or which grow out of transactions involving the domestic shipment of
goods cm condition that shipping documents conveying or securing title-be
attached at the time of acceptance; or which are secured at the time of
acceptance by a warehouse receipt or other such document conveying or
securing title covering readily marketable staples. No member bank shall
accept, whether in a foreign or domestic transaction, for any one person,
company, firm, or corporation, an amount equal at any time in the aggregate
to more than fifteen per centum of its paid-up and unimpaired capital stock
and surplus, unless the bank is secured either by attached documents or by
some other actual security growing out of the same transaction as the
acceptance.
AGGREGATE LIABILITIES OF MEMBER BANKS
Section 15. No member bank shall at any time be
indebted, or in any way liable, to an amount exceeding that of its capital
stock at such time actually paid in and remaining undiminished by losses or
otherwise, except on account of demands of the following nature:
(a) Notes in circulation.
(b) Moneys deposited with or collected by the member
bank.
(c) Bills of exchange or drafts drawn against money
actually on deposit to the credit of the member bank or due thereto.
(d) Liabilities to the stockholders of the member banks
for dividends and reserve profits.
(e) Liabilities incurred under the provisions of this
Act.
(f) Liabilities created by the indorsement of accepted
bills of exchange payable abroad actually owned by the indorsing member bank
and discounted at home or abroad.
DEPOSIT OF CHECKS AT PAR
Section 16. The Reverse Bank shall receive on deposit
at par from member banks checks and drafts drawn by any depositor in other
member banks upon funds to the credit of said depositor in said member
banks. Nothing herein contained shall be construed as prohibiting a member
bank from charging its actual expense incurred in collecting and remitting
funds, or for exchange sold to its patrons. The Board shall, by rule, fix
the charges to be collected by the member banks from their patrons whose
checks are cleared through the Reserve Bank and the charge which may be
imposed for the service of clearing or collection rendered by the Reserve
Bank.
OPEN MARKET OPERATIONS
Section 17. When, in the opinion of the Board of
Governors, an unusual and exigent occasion has arisen making it necessary or
expedient that action shall be taken for the purpose of regulating credit in
the interest of Philippine trade, commerce, industry and agriculture, the
Reserve Bank, may, under rules and regulations prescribed by the Board,
purchase and sell in the open market, at home or abroad, either from or to
domestic or foreign banks, firms, corporations, or individuals, cable
transfers, bank acceptances and bills of exchange of the kinds and
maturities eligible for rediscount or purchase, with or without the
endorsement of a member bank.
Section 18. During such occasion, the Board shall
establish every fourteen days, or oftener if it should deem necessary, rates
of discount to be charged for each class of paper, and said rates shall
immediately be communicated to all banks doing business in the Philippines.
Section 19. In connection with its open market
operations, the Reserve Bank shall also have the power:
(a) To deal in gold coin and bullion, at home or
abroad, to make loans thereon, exchange its notes for gold or gold coin, and
to contract for loans of gold coin or bullion giving therefor when
necessary, acceptable security, including the hypothecation of Philippine
and United States Government bonds or other securities which the Reserve
Bank is authorized to hold;
(b) To buy and sell, at home or abroad, bonds of the
Government, its political subdivisions and instrumentalities;
(c) To purchase from member banks and to sell, with or
without their indorsement, bills of exchange, promissory notes and
negotiable instruments specified in subsections (a), (b) and (d) of section
seven.
RELATION OF THE RESERVE BANK WITH THE GOVERNMENT
Section 20. In addition to the Philippine National
Bank, the Reserve Bank may act as official depository of the Government and
its political subdivisions, and any moneys held in the Treasury of the
Philippines, except the Treasury Certificate Fund, Exchange Standard Fund,
and the fund provided in this Act for the redemption of the notes of the
Reserve Bank, may, upon the authority and direction of the President of the
Philippines, be deposited in the Reserve Bank.
Section 21. The Bank Commissioner shall exercise
supervisory powers over the Reserve Bank in accordance with the pertinent
provisions of Chapter 41-A and Article XIII-A of Chapter Sixty-six of the
Administrative Code, as amended.
ISSUE OF NOTES
Section 22. The Reserve Bank shall have the right to
issue bank notes in the Philippines. The Reserve Bank may make application
to the Treasurer of the Philippines for such amount of notes as it may
require. After the Reserve Bank shall have issued bank notes in the
aggregate amount of its capital and surplus, any further application shall
be accompanied with a tender to the Treasurer of the Philippines of
collateral security in amount equal to the sum of the notes thus applied for
the issued pursuant, to such application. The collateral security thus
offered shall be notes, drafts, bills of exchange or other negotiable
instruments acquired under the provisions of section seven of this Act, or
bills of exchange indorsed by a member bank and purchased under the
provisions of section seventeen of this Act, or treasury certificates. In no
event shall such collateral security be less than the amount of the notes
applied for. All the notes issued or to be issued shall become a first and
paramount lien on all assets of the Reserve Bank and shall be exempt from
taxation.
Notes of the Reserve Bank shall be prepared and
delivered to, and safeguarded, issue, withdrawn, and cancelled or destroyed
by the Treasurer of the Philippines in the manner prescribed by law for
treasury certificates, and the Treasurer of the Philippines shall deliver to
the Reserve Bank only such amount of said notes as applied for in the manner
hereinabove provided.
Section 23. The notes issued by the Reverse Bank shall
be receivable by the Government in payment of all taxes, dues, or other
claims due or owing to said Government shall on demand be redeemed in lawful
money by the Reverse Bank at its central office or by the Treasury of the
Philippines out of the redemption fun its possession.
Section 24. The Treasurer of the Philippines is
authorized at any time to exchange new notes for an equivalent amount of
mutilated note or notes otherwise unfit for circulation or to exchange notes
of one denomination for an equivalent amount of notes of another
denomination.
Section 25. An equivalent amount of notes shall be
redeemed upon the sale of the corresponding securities delivered to the
Treasurer of the Philippines, except when such securities are substituted by
new ones of equal value. For the purposes of this section, it shall be
sufficient for the Reserve Bank to deposit with the Treasurer of the
Philippines lawful money in an amount equal to that of the outstanding
notes, in substitution for the securities deposited as original guarantee.
SECURITIES FOR LOANS NOT SUBJECT TO ATTACHMENT
Section 20. Securities for loans, discount or
rediscount deposited with the Reserve Bank shall not be subject to
attachment nor can they be included in the property of insolvent persons or
institutions, unless all debts and obligations of the debtor to the Reserve
Bank have been previously paid, including accrued interest, collection
expenses and other charges.
LIMITATION OF LIABILITIES TO THE RESERVE BANK
Section 27. The total liabilities to the Reserve Bank
of any person, or of any member bank, company, corporation, or firm, for
money borrowed, including in the liabilities of the company or firm, the
liabilities of the several members thereof, shall at no time exceed fifteen
per centum of the unimpaired capital and surplus of the Reserve Bank. But
the discount of bills of exchange drawn in good faith against actually
existing values, and the discount of commercial or business paper actually
owned by the person negotiating the same, shall not be considered as money
borrowed; and in addition to the fifteen per centum of die unimpaired
capital and surplus of the Reserve Bank herein before provided for, the
total liabilities of any borrower may amount to a further fifteen per centum
of the unimpaired capital and surplus of the Reserve Bank if such additional
liabilities are secured by shipping documents, warehouse receipts or other
similar documents transferring or securing title covering readily
marketable, nonperishable staples, when such staples are fully covered by
insurance and have a market value equal to at least one hundred and
twenty-five per centum of such additional liabilities.
RESERVES OF THE RESERVE BANK
Section 28. The Reserve Bank shall maintain a reserve
for its deposit liabilities and its notes in actual circulation and tor this
purpose it shall at all times keep on hand in its vaults, or with the
Treasury of the Philippines, or in the form of deposits with Federal Reserve
Banks in the United States, in gold coins or bullion at its legal value or
in lawful money either of the Philippines or of the United states, a sum
sufficient to cover the following requirements:
(a) Thirty-five per centum against its deposits.
(b) Forty per centum of its notes in actual
circulation.
A portion of this reserve at least equal to fifteen per
centum of the notes in actual circulation shall be kept on deposit in the
Treasury of the Philippines for the redemption of such.
Section 29. Whenever the reserves provided for in the
preceding section shall fall below the required amounts, the Reserve Bank
shall not further diminish the amount of such reserves by making any new
loans or discounts, or declare any dividends unless and until the total
reserves required by law are restored.
Section 30. If, from any cause whatsoever, any of the
securities specified for the loans provided for in this Act, or accepted by
the Reserve Bank as security for loans or discount or rediscount, decline or
depreciate in market value as a whole or in part, the said Reserve Bank
shall demand additional securities. Upon the failure of the debtor to give
such additional securities the Reserve Bank may forthwith declare any such
obligation due and payable and demand payment thereof and upon three days’
notice, or without such notice if necessary, sell, assign, transfer, and
deliver the whole of said securities or any part thereof, or any addition
thereto, or any other securities or property given unto or left in the
possession of, or hereafter given unto or left in the possession of the said
Reserve Bank, for safekeeping or otherwise, or in any bank or corporation
controlled by the Government, or in any of its branches, agencies and
instrumentalities, at any broker’s board, or at public or private sale, at
the option of said Reserve Bank, and at such sale, if public, the said
Reserve Bank may itself purchase the whole or any part of the property sold,
free from any right of redemption on the part of the obligor.
Section 31. In case of sale of securities for any cause
and after deducting all costs or expenses of any kind for collection, sale
or delivery, the Reserve Bank shall apply the residue of the proceeds of the
sale so made, to pay one or more or any or all of the obligations to the
said Reserve Bank as the Board of Governors shall deem proper, whether then
due or not due, making proper rebate for interest on liabilities not then
due. If the proceeds of the sale do not cover the full amount of the loan,
together with the interest and other charges thereon, the Reserve Bank may
proceed against the debtor for the difference, but any amount exceeding the
full indebtedness to the Bank shall be paid to the debtor.
DIVIDENDS AND DISPOSAL OF PROFITS
Section 32. The Reserve Bank shall not, during the time
it shall continue its banking operation, withdraw or permit to be withdrawn,
either in the form of dividends or otherwise, any portion of its capital. If
losses have been sustained by the Reserve Bank equal to or exceeding the
undivided profits on hand, no dividend shall be declared; and no dividend
shall ever be declared by the Reserve Bank to any amount greater than its
net profits on hand, deducting therefrom its losses and bad debts. All debts
due to the Reserve Bank on which interest is past due and unpaid for a
period of six months, unless the same are well secured, and in process of
collection, shall be considered bad debts within the meaning of this
section.
Section 33. After deducting expenses and after making
such provisions as the Board thinks proper for bad and doubtful debts,
depreciation in assets, retiring allowance for the staff, and all such other
deduction as are usually provided for by banks, the net profits resulting
from the operation of the Reverse Bank shall be apportioned semi-annually as
follows:
(a) Fifty per centum to a surplus fund until the latter
shall equal fifty per centum of the capital stock of the Reserve Bank, and
thereafter twenty-five per centum of said net profits until said surplus
fund shall equal the capital stock.
(b) The remaining net profits may be paid in the form
of dividends to the Government of the Philippines as the Board may
determine; but dividends shall never be declared or paid out of the surplus
fund.
Section 34. Whenever the surplus fund shall have been
reduced by losses, fifty per centum of the net profits shall be set aside
for said fund until the same shall once more equal fifty per centum of the
capital stock, and thereafter twenty-five per centum of the net profits
until the aforesaid fund shall again equal the capital stock.
HOLDING OF REAL ESTATE
Section 35. The reverse Bank is authorized to purchase
and own such real estate as may be necessary for the purpose of carrying on
its business. The total investment in such real estate and improvements
thereon shall not exceed twenty-fie per centum of the paid-up capital stock
and surplus of the Reverse Bank.
Section 36. Then affairs and business of the Reverse
Bank shall be directed and its property managed and preserved, unless
otherwise provided in this Act, by a Board of Governors consisting of five
members appointed by the President of the Philippines with the consent of
the Commission on Appointments of the National Assembly. Of the persons thus
appointed, one shall be designated by the President of the Philippines as
Chairman and one as Vice-Chairman of the Board. The governors shall be
appointed and shall hold office for a term of five years, except four of the
members of the board first appointed, who shall hold office for one, two,
three, and four years, respectively. The Governors may be removed by the
President of the Philippines and the vacancies shall be filled for the
unexpired portion of the term in the same manner as in the case of an
original appointment. The Governors shall be paid by the Reserve Bank such
compensation as may be determined by the President of the Philippines.
Section 37. The members of the Board cannot be
directors, employees, stockholders or otherwise interest in any bank doing
business in the Philippines except the Agricultural and Industrial Bank of
the Philippines while holding their office, nor can they be such directors,
officers or employees of any such bank except the Agricultural and
Industrial Bank for a period of one year after they have vacated their
office.
POWERS OF THE BOARD OF GOVERNORS
Section 38. The Board shall have, among others,
specific authority on the following matters:
(a) Internal organization of the Reserve Bank;
(b) Appointment or removal of the officers and
employees of the Reserve bank not otherwise provided in this Act;
(c) Provisions for the general supervision and control
of the business of the Reserve Bank;
(d) Instructions and regulations relative to the
clearing functions of the Reserve Bank;
(e) Eligibility of persons, associations and
corporations whose checks, drafts or other negotiable instruments can be
accepted for discount, rediscount or advances, and fixing the limits of such
discounts or advances;
(f) Fixing of rates of discounts, rediscounts and
interests on advances for each class of papers;
(g) Purchase and acquisition of real property required
for the business of the Reverse Bank.
(h) Sale, lease, mortgage, pledge and other form of
disposition of properties of the Reverse Bank;
(i) Matters concerning the form, text and denominations
of the notes of the Reverse Bank, and the issuance, withdrawal and
cancellation of said notes;
(j) Perform such other acts as may be necessary and
convenient to carry out the purposes of this Act.
DUTIES OF THE CHAIRMAN
Section 39. The Chairman of the Board shall be the
chief executive officer of the Reserve Bank. He shall, on behalf of the
Board, have the direction and control of the business of the Reverse Bank,
with authority to act in connection with the conduct of the business of the
Reverse Bank in all matters which are not by this Act or by the by-laws of
the Reserve bank specifically reserved to be done by the Board. In case of
absence of the Chairman or in his incapacity to act, the Vice-Chairman shall
act in his place.
The Chairman shall have the following duties among
others:
(a) To carry out the orders and resolutions of the
Board;
(b) To report weekly to the Board the main facts
concerning the operations of the Reserve Bank during the preceding week and
to suggest changes in rates of discount rediscount, exchange, or of policy
which may to him seem best;
(c) To furnish, upon request, to the President of the
Philippines or the Secretary of Finance, any information in his possession
regarding the operations of the Reverse Bank.
Section 40. There is hereby created an Advisory Council
of the Reverse Bank which shall consist of ten members to be selected by the
member banks, subject to rules and regulations prescribed by the Board.
Section 41. The meetings of the Advisory Council shall
be held at Manila at least four times each year, or oftener if called by the
Board.
Section 42. The Advisory Council shall select its own
officers and adopt its own methods of procedure, and a majority of its
members shall constitute a quorum for the transaction of business. Vacancies
in the Advisory Council shall be filled by the member banks.
Section 43. The Advisory Council shall have power by
itself, or through its officer:
(1) To confer directly with the Board on general
business conditions;
(2) To make oral or written representations concerning
matters within the jurisdiction of said Board;
(3) To call for information and to make recommendation
with regard to discount rates, rediscount business, note issue, reserve of
member banks, the purchase and-sale of gold or securities by the Reserve
Bank, open market operations of the Reserve Bank, and the general affairs of
the banking system.
AUDITOR
Section 44. The Auditor-General shall be ex officio
auditor of the Reserve Bank and shall appoint and fix the salary of a
representative who shall be the auditor in charge of the auditing of the
Reserve Bank. The Auditor-General shall, upon the recommendation of the
Auditor of the Reserve Bank, appoint and fix the salaries of or remove the
personnel of the auditing department. The operating expenses of the
department and the salaries and traveling expenses of the officers and
employees thereof shall be payable by the Reserve Bank, and the Board shall
make the necessary appropriation therefor.
The Auditor of the Reserve Bank shall make a quarterly
report on the condition of affairs of the Reserve Bank to the President of
the Philippines, through the Secretary of Finance, to the Speaker of the
National Assembly, to the Auditor-General, and to the Board.
OTHER OFFICERS AND EMPLOYEES
Section 45. The duties and compensation of all the
other officers and employees of the Reserve Bank shall be determined by the
Board and they shall be appointed or removed by the said Board on the
recommendation of its Chairman.
Section 46. The officers and employees of the Reserve
Bank shall not be subject to the Civil Service Law.
FIDELITY INSURANCE OF OFFICERS AND EMPLOYEES
Section 47. The officers and employees of the Reserve
Bank and its branches and agencies, whose duties require the custody of
funds or property for which they are accountable shall be bounded and their
fidelity insured in accordance with the provisions of the Public Bonding
Law.
LIFE INSURANCE OF OFFICERS AND EMPLOYEES
Section 48. The regular and permanent officers and
employees of the Reserve Bank and of its branches and agencies in the
Philippines shall be regular members of the Government Service Insurance
System.
CONFIDENTIAL INFORMATION
Section 49. The Auditor-General and the other officers
designated by him, or by the President of the Philippines, to inspect or
investigate the condition of the Reserve Bank, shall not reveal to any
person other than the President of the Philippines, the Secretary of
Finance, and the Board or any member thereof or to any person duly
authorized by any one of them to receive the same the details of the
inspection or investigation, nor shall they give any information or
investigation, nor shall they give any information relative to the affairs
of the Reserve Bank except by order of a court of competent jurisdiction.
Chapter IV
Prohibitions and Penalties
Section 50. It shall be prohibited for the Reserve
Bank:
(a) To issue notes of a denomination below one peso or
over one thousand pesos;
(b) To engage in trade, or otherwise have a direct
interest in any commercial, industrial or agricultural under taking;
(c) To own real property except as authorized in this
Act;
(d) To pay interest on money deposited on current
accounts;
(e) To grant renewals of promissory notes of member
banks, matured bills of exchange, promissory notes and other similar
documents discounted or rediscounted by the Reserve Bank, provided that
under exceptional circumstances, the Board may by resolution, authorize, in
accordance with this Act, not more than one renewal of any such bill,
promissory notes or documents as aforesaid;
(f) To make advances to the Government or its political
subdivisions, either directly or indirectly, except in the manner and in the
amount provided for in this Act;
(g) To grant loans or advances without security;
(h) To deal directly with any person, company, firm or
corporation except in connection with its open market operations.
Any Governor, officer, or employee of the Reserve Bank
who knowingly violates or knowingly permits any of the officers, or
employees of the Reserve Bank to violate the provisions of this section
shall be punished by a fine of not to exceed five thousand pesos or by
imprisonment net to exceed five years or by both such fine and imprisonment.
Section 51. Any Governor, officer, agent or employee of
the Reserve Bank or its branches, or any member bank, who shall willfully
violate any provisions of this Act not specifically punished in this Act, or
permits its violation, or shall resort to any device, or receive any
fictitious obligation, directly or collaterally, in order to evade the
provisions thereof, or who shall certify a check before the amount thereof
shall have been regularly deposited in the bank by the drawer, and any
person aiding and abetting the commission of any of the said acts, shall be
punished by a fine not to exceed five thousand pesos or by an imprisonment
for a term not to exceed five years or by both such fine and imprisonment.
Section 52. The Secretary of Finance, the Auditor
General, and the Governors, officers and employees of the Reserve Bank,
shall not either directly or indirectly, for himself or as the
representative or agent of others, borrow money from die Reserve Bank, nor
shall become a guarantor, endorser, or surety for loans, discounts or
rediscounts from the Reserve Bank to member banks or other persons,
corporations or associations, or in any manner be an obligor for moneys
borrowed of the Reserve Bank or loaned by it. The office of those who
violate the provisions of this section shall immediately be declared vacant
and the guilty shall be punished by imprisonment not exceeding five years
and by a fine of not more than five thousand pesos.
Section 53. No fee, commission, gift, or charge of any
kind shall be exacted, demanded or paid for obtaining loans, discount or
rediscount from the Reserve Bank, and any officer, employee, or agent of the
said Reserve Bank exacting, demanding, or receiving any fee, commission,
gift or charge of any kind said services to obtain a loan discount or
rediscount, shall be punished by a fine of not more than five thousand pesos
or imprisonment for not more than five years, or both, at the direction of
the Court.
Section 54. Whoever, for the purpose of obtaining any
loan from the Reserve Bank, or any extension or renewal therefor, or the
acceptance, release, or substitution of security therefor, or for the
purpose of including the Reverse Bank to purchase any assets, or from the
purpose of obtaining the payment of any deposit or transferred deposit or
the allowance, approval, or payment of any claim, or for the purpose of
influencing in any way the action of the Reserve Bank, makes any statement,
knowing it to be false, or willfully overvalues any security, shall be
punished by a fine of not more than five thousand pesos or by imprisonment
of not more than years, or both.
Section 55. Any Governor who accept a position or
employment of any kind in any bank except the Agricultural and Industrial
Bank of the Philippines, while holding office or within the one year
subsequent to vacating his office, shall be punished by imprisonment of not
more than one year or a fine of one thousand pesos.
Section 56. Any person who, without lawful
justification or excuse, hinders, obstructs, or delays any person authorized
by the Reserve Bank to make an inspection of the books and accounts of a
member bank for the purpose of ascertaining the correctness in any material
particular of, any return submitted by such member bank, or for any other
reason which, in the opinion of the Board, is desirable for the public
interest, shall be punished by a fine of not more than five thousand pesos
or by imprisonment of not more than five years, or both.
EFFECTIVE DATE OF THIS ACT
Section 57. This Act shall take effect on January
first, nineteen hundred and forty, but the president of the Philippines may
advance the date of said effectivity by a proclamation.