New Land Bank of the Philippines Act

TWENTIETH CONGRESS OF THE ) REPUBLIC OF THE PHILIPPINES 25 JUL 14 P4:12 First Regular Session SENATE RECEI S. No. 585 Introduced by SENATOR MARK A. VILLAR AN ACT PROVIDING FOR A NEW CHARTER OF THE LAND BANK OF THE PHILIPPINES, REPEALING FOR THE PURPOSE SECTIONS 74 TO 100 OF REPUBLIC ACT NO. 3844 OR THE "AGRICULTURAL LAND REFORM CODE", AS AMENDED EXPLANATORY NOTE In 1963, Republic Act No. 3844 created the Land Bank of the Philippines (LBP) to play a crucial part in the shift in agrarian reform policies. Since then, its role has evolved to include commercial banking functions, direct credit support for agrarian reform beneficiaries, and more recently, economic recovery efforts from the COVID- 19 pandemic. These reforms were brought about by numerous laws and issuances, including, among others, Presidential Decree No. 251, Executive Order Nos. 816, series of 1982 and 405, series of 1990, and Republic Act Nos. 6657, 7907, and 11494. LBP has consistently promoted countryside development while maintaining financial viability as one of the leading government financial institutions. In the first quarter of 2024, it generated twelve billion pesos (12 billion pesos) in revenue, surpassing its eleven point three billion pesos (11.3 billion pesos) net income target, with assets increasing by five percent (5%) to three point three trillion pesos (3.3 trillion pesos) and deposits growing by four percent (4%) to two point nine trillion pesos (2.9 trillion pesos). By August 2024, LBP dedicated fifty-nine point seventy-nine percent (59.79%) of its total loan portfolio, or seven hundred twenty-seven point eighty-seven billion pesos (727.87 billion pesos), to agriculture, fisheries, and rural development.

Recognizing LBP's significant and expanding role in the economy, it is essential for it to adopt a stand-alone charter that realigns its mandate with its current functions that extends beyond agrarian reform. Particularly, the bill increases its authorized capital stock, streamlines the process of its bond issuances, and allows the possibility of an Initial Public Offering (IPO) of its shares, in order to enhance its access to capital. The bill also aims to diversify its Board by designating the Secretary of the Department of Economy, Planning, and Development (DEPDev) as an ex-officio member and adding three (3) independent directors, broadening its decision-making capabilities to better address challenges and opportunities in the banking industry. Ultimately, this bill seeks to enhance its financial stability, operational agility, and market competitiveness. This ensures that it continues to be a catalyst of sustainable development and meets the financing requirements of small farmers, fishers, and crucial sectors that create employment and propel robust economic growth. In view of the foregoing, the approval of this bill is earnestly sought. MARK A. VILLAR ROC

TWENTIETH CONGRESS OF THE ) REPUBLIC OF THE PHILIPPINES ) JUL 14 P4:13 First Regular Session SENATE RECEN'EU. s. No. 585 Introduced by Senator MARK A. VILLAR AN ACT PROVIDING FOR A NEW CHARTER OF THE LAND BANK OF THE PHILIPPINES, REPEALING FOR THE PURPOSE SECTIONS 74 TO 100 OF REPUBLIC ACT NO. 3844 OR THE "AGRICULTURAL LAND REFORM CODE", AS AMENDED Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

Section 1. Short Title. - This Act shall be known as the "New Land Bank of the

2 Philippines Act

Sec. 2. Declaration of Policy. - It is the policy of the State to support agriculture

4 by providing adequate financial, production, marketing, and other support services, to promote countryside and countrywide development, and to strengthen the powers and functions of its premier government financial institution (GFI) that deliver essential 7 funding and financial services for sustained economic growth. The State recognizes the role of GFIs in advancing meaningful and 9 comprehensive agrarian reform and stimulating economic development by servicing 10 small farmers and fisherfolk, local government units (LGUs), micro, small, and medium enterprises (MSMEs), and other sectors that generate employment and drive economic progress.

Sec. 3. Name and Corporate Existence. - The Land Bank of the Philippines,

hereinafter referred to as the "Bank", created under Republic Act No. 3844 or the "Agricultural Land Reform Code," as amended, shall operate under the provisions of 16 this Act. The Bank shall continue to exist as a body corporate and shall have perpetual

1 existence. The Governance Commission for Government-Owned or -Controlled 2 Corporations (GCG) shall not be precluded from evaluating the performance and 3 determining the relevance of the Bank as a government-owned or -controlled corporation (GOCC) consistent with the principles and policies of Republic Act No. 10149 or the "GOCC Governance Act of 2011".

Sec. 4. Primary Objective of the Bank. - As a GFI, the Bank shall pursue its

social mission of spurring countryside and countrywide development and shall be responsible for broad-based agricultural, rural, and industrial development while promoting financial inclusion by providing banking services to rural financial 10 institutions, small farmers and fisherfolk, agrarian reform beneficiaries, agricultural 11 and industrial enterprises, and MSMEs, and by granting loans to finance agrarian reform and agriculture-related undertakings, infrastructure and sustainable national government development projects: Provided, That these objectives shall be pursued with the utmost consideration for its financial viability, operational agility, and market 15 competitiveness to effectively participate in national development and the attainment 16 of meaningful and inclusive economic growth. The Bank shall also adopt policies on digitalization to improve operational efficiency and governance while promoting financial inclusion.

Sec. 5. Principal Office, Branches, and Other Offices. - The Bank shall have its

principal office and place of business in Metro Manila. The Bank may open and maintain branches and agencies in accordance with applicable regulations of the Bangko Sentral ng Pilipinas (BSP).

Sec. 6. Corporate Powers. - In addition to the general powers of a corporation

under Republic Act No. 11232, or the "Revised Corporation Code of the Philippines", the Bank shall have the power to: (a) Adopt, amend, or change its by-laws; to adopt, alter, and use a seal; to lease or own real and personal property and to sell or otherwise dispose of the same; to enter into contracts; to sue and be sued; and exercise the general powers of a corporation mentioned in Republic Act No. 11232, including the power to acquire or establish subsidiaries registered with the Securities and Exchange Commission with the right to receive dividends from such subsidiaries in accordance with Section 28 hereof;

(b) Hold, purchase, acquire and own real and personal property; introduce necessary improvements thereon to enhance and develop their social and economic value; and sell, mortgage, or otherwise dispose of the same; (c) Make contracts, negotiate and secure loans from both local and foreign sources: Provided, That before undertaking such credit operations, the Bank, through the Secretary of Finance, shall request the opinion of the Monetary Board of the BSP on the monetary implications of the contemplated action. All loans from foreign sources shall be subject to approval by the President of the Philippines and shall be fully guaranteed by the Philippine Government; (d) Grant short-, medium-, and long-term loans and advances against the security of real estate or other acceptable assets for the establishment, development or expansion of agricultural, agrarian reform, industrial, home building or home financing projects, and other productive enterprises; (e) Grant loans to farmers' cooperatives and associations to facilitate farm production, marketing of crops, and acquisition of essential commodities; (f) Establish a Directors' and Officers' Liability Fund, or obtain Directors' and Officers' Liability Insurance from the Government Service Insurance System or other reputable insurance companies duly accredited by the appropriate regulatory body, without prejudice to the right of the Bank to put up its own legal insurance fund, as may be determined by its Board of Directors; (g) Borrow from, or rediscount notes, bills of exchange and other credit instruments with the BSP subject to the provisions of Republic Act No. 7653 or "The New Central Bank Act", as amended, and relevant BSP rules and regulations; (h) Accept and manage trust funds and properties and carry on the business of a trust corporation; (i) Provide continuing assistance through credit and capacity building to farmers and fishers cooperatives, associations, and organizations nationwide; (i) Act as official government depository bank with authority to maintain deposits and deposit substitutes of the National Government, its agencies, bureaus, instrumentalities, GOCCs, LGUs, and autonomous regions, as well as

other territorial and political subdivisions, subject to such rules and regulations as the Monetary Board of the BSP may prescribe; (k) Engage in financial leasing of movable and immovable properties in connection with government projects; (I) Dispose of its acquired assets; (m) Offer and issue common and preferred shares of stocks in such manner and in such quantities as approved by the Secretary of Finance, upon the recommendation of the Board and in accordance with applicable laws, rules, and regulations. The preferred shares shall be non-voting. Other features of preferred shares shall be determined by the Board in accordance with applicable laws and regulations; (n) Engage internationally recognized auditing firms as the Bank's external auditor to audit its financial statements, in case the Bank issues shares to the public; and (o) Exercise all such powers and services as may be necessary to carry out the business of a bank under Republic Act No. 8791 or "The General Banking Law of 2000," subject to the existing rules and regulations of the Monetary Board of the BSP, in order to perform its mandate under this Act. Unless otherwise provided for in this Act, the exercise of the above-mentioned powers shall be subject to applicable laws, rules and regulations and regulations promulgated by the BSP.

Sec. 7. Authorized Capital Stock; Par Value. - The capital stock of the Bank

shall be One trillion pesos (Php1,000,000,000,000.00) with a par value of One hundred pesos (Php100.00) per share. The Board shall determine the classification of shares, their corresponding rights, privileges, or restrictions, if any: Provided, That the National Government shall own, at all times, at least seventy percent (70%) of the total outstanding capital stock of the Bank. Two hundred billion pesos (Php200,000,000,000.00) or twenty percent (20%) 29 of the authorized shares of the Bank shall be subscribed and One hundred sixty-three 30 billion seven hundred eighty-seven million seven hundred eleven thousand three hundred eight pesos (Php163,787,711,308.00) or at least eighty-one and 89/100 percent (81.89%) of the total subscription shall be paid up by the National

1 Government; Provided, further, That the Bank may allocate part or all of its 2 unrestricted retained earnings toward paying for the capitalization of the Bank. When dividends are declared for stockholders, the dividend due to the National 4 Government shall at all times be in proportion to its ownership of the Bank.

Sec. 8. Investment by Government-Owned or Controlled Corporations. - Unless

otherwise provided in their respective charters, GOCCs, including GFIs, are authorized to invest in shares of stock of the Bank. These investments shall form part of the National Government's ownership in the Bank.

Sec. 9. Voting of Shares. - The voting power of all the common shares of stock

of the Bank owned and controlled by the government shall be vested in the President 11 of the Philippines or in any ex-officio member of the Board.

Sec. 10. Issuance by the Bank of Bonds, Eligible Capital Instruments, and other

13 Securities. - The Bank may issue all kinds of bonds, notes, debentures, other evidence 14 of indebtedness, derivatives, commodities, negotiable instruments, eligible capital instruments, and other securities, and the renewal or refunding thereof within and/or 16 outside the Philippines, at such terms, rates, and conditions as the Board of Directors may determine. Such issuance shall be subject to compliance with the provisions of 18 applicable laws, and rules and regulations promulgated by the Monetary Board of the 19 BSP. The Bank shall acquire, assign, or otherwise dispose of marketable securities 21 and other debt instruments that are essential to the effective conduct of its general banking activities. The Bank shall provide for appropriate reserves, as necessary, for the redemption or retirement of the foregoing. These bonds and other obligations shall be redeemable at the option of the Bank at or before maturity and in such manner as may be stipulated therein, and shall bear such rate of interest as may be fixed by the Bank. Such obligations shall be secured by the assets of the Bank, including stocks, bonds, debentures, and other securities purchased or held by it under the provisions of this Act, as necessary to ensure the successful issuance of such obligations. These bonds and other obligations may be long-, medium-, or short-term, with a fixed or floating interest rate.

Sec. 11. Applicability of the New Government Procurement Reform Act. - All

procurement activities of the Bank shall adhere to the provisions of Republic Act No. 3 9184 or the "Government Procurement Reform Act", as amended by Republic Act No. 4 12009, their implementing rules and regulations, and any amendments thereto, 5 whichever may be applicable, except for the engagement of professional or technical services necessary for issuance of securities, including debt instruments, and selecting investments. These services include issue and deal management, fund management, investment analysis, advisory, arrangement, underwriting, securities brokerage and 9 dealership, and capital market and equity research analysis: Provided, That the 10 selection process for engaging these professional and technical services shall be open, competitive, and approved by the Board.

Sec. 12. Board of Directors, Composition, Tenure, and Per Diems. - The powers

and functions of the Bank shall be vested in and exercised by a Board of Directors, which shall be composed of nine (9) members as follows: (a) The Secretary of Finance as the ex-officio Chairperson of the Board; (b) The President of the Bank as Vice Chairperson; (c) The Secretary of Agriculture as an ex-officio member; (d) The Secretary of Agrarian Reform as an ex-officio member; (e) The Secretary of Labor and Employment as ex-officio member; (f) The Secretary of the Economy, Planning, and Development as an ex-officio member; and (g) Three (3) independent directors to be appointed by the President of the Philippines in accordance with the appointment process and the Fit and Proper Rule under Republic Act No. 10149, wherein one (1) shall represent the agricultural sector and two (2) shall represent the private sector, preferably with expertise in finance, economics, and banking. In the event that private persons acquire shares of stock of the Bank, there shall be two (2) additional members of the Board of Directors who shall be qualified and elected in accordance with Republic Act No. 11232 and the rules and guidelines to be issued under Section 34 of this Act. The ex-officio members of the Board may each designate an alternate, who shall be an official with a rank not lower than Assistant Secretary.

The Chairperson shall preside over the meetings of the Board. In case the 2 Chairperson is absent or incapacitated, the Vice Chairperson shall preside over 3 meetings of the Board. In case of incapacity or absence of both the Chairperson and the Vice Chairperson, the Board shall designate a temporary chairperson from among its members. No person shall be elected or appointed as director of the Bank unless such person is a Filipino citizen, of good moral character, and has attained proficiency, expertise and recognized competence in one (1) or more of the following: banking, finance, economics, law, agriculture, agrarian reform, business management, 10 governance, sustainability, digital transformation, rural economy, cooperation, small- 11 scale industry, information technology, and information security. Except for the President, no incumbent officer or employee of the Bank may be 13 appointed as a member of the Board; nor shall any incumbent officer of any other 14 bank be eligible as a member of the Board. The term of office for the independent directors shall be for a period of one (1) 16 year or until such time that their successors are appointed and have qualified. 17 Appointment to any vacancy shall be only for the unexpired term of the predecessor, 18 pursuant to Republic Act No. 10149. The compensation, per diems, allowances, incentives, and other benefits, for 20 the members of the Board shall be consistent with the principles and policies of Republic Act No. 10149.

Sec. 13. Powers and Duties of the Board of Directors. - The Board shall have

the following duties, powers, and authority: (a) Formulate policies necessary to carry out the provisions of this Act and to prescribe, amend, and repeal by-laws, rules, and regulations for the effective operation of the Bank, the conduct of its general business and the exercise of powers granted to it by law; (b) Decide on matters concerning loans, other credit accommodations, guarantees issued or obtained by the Bank, prescribe the terms and conditions to govern the grant of the foregoing, and engage in such other financial activities under such terms and conditions consistent with the provisions of this Act, banking laws, and regulations promulgated by the Monetary Board of the

BSP, as it may deem necessary: Provided, That the Board may delegate the authority to approve loans, other credit accommodations, and guarantees to such officers as it may deem necessary; (c) Upon the recommendation of the President, adopt an annual budget for the effective operation and administration of the Bank; (d) Compromise or release, in whole or in part, any claim or settled liability to the Bank regardless of the amount involved, under such terms and conditions as it may impose to protect the interests of the Bank. The authority to compromise shall extend to claims against the Bank: Provided, That the Board may delegate the authority to compromise or release any claim or settled liability to the President or such other officers of the Bank as it may deem necessary; (e) Establish such branches, agencies and other offices deemed necessary and convenient in accordance with applicable rules and regulations of the BSP; (f) Notwithstanding any law to the contrary, adopt an organizational structure, staffing pattern and personnel qualification standards for the Bank and reorganize, rationalize and restructure the same, or realign the various functions in the Bank to ensure effective accomplishment of its mandates and strategic goals, align its organizational structure and staffing pattern with industry standards, and guarantee its responsiveness to regulatory requirements, consistent with the principles and policies of Republic Act No. 10149, to meet the demands, maintain service quality, and support the expansion of the developmental mandate of the Bank; (g) Design, adopt, and revise, as it may deem necessary, an early separation plan for employees of the Bank to ensure the availability of a qualified human resource pool capable of implementing the Bank's authorities under this Charter in a manner responsive and attuned to market developments, and provide incentives for those who shall be separated from the service, consistent with the principles and policies of Republic Act No. 10149; (h) Maintain, manage, and operate the existing "Provident Fund" of the Bank, which shall consist of contributions made both by the Bank and its officers or employees as a common fund for the payment of benefits to such officers and

employees, or their heirs, under such terms and conditions consistent with the principles and policies of Republic Act No. 10149; and (i) Perform other functions, duties and responsibilities necessary, related, and incidental to the above-mentioned powers and functions. The Board shall exercise its powers in a manner consistent with the principles of transparency, fairness, and accountability: Provided, That the Board may delegate its powers to the President as it may deem necessary.

Sec. 14. President and Chief Executive Officer. - The President of the Bank shall

be the Chief Executive Officer (CEO) who shall be elected annually by the members of the Board from among its ranks. The President and CEO shall be subject to the disciplinary powers of the Board. No person shall be appointed President of the Bank 12 unless the person is of good moral character and reputation, with at least ten (10) years of previous experience in banking, and has a reputed proficiency, expertise, and recognized competence in banking or financial management. The President shall carry out and administer the policies, measures, orders, and resolutions approved by the Board; direct and supervise the operation and administration of the Bank; and exercise such other powers and perform such other functions or duties as may be directed or assigned by law, regulations, and executive issuances. The President shall be assisted by Vice Presidents and other officials. The salary of the President, Vice President, and other officials shall be consistent with the policies and principles of Republic Act No. 10149. During the absence or temporary incapacity 23 of the President, or in case of vacancy or permanent incapacity and pending appointment of a new President of the Bank, the Board shall designate the Officer-in- Charge of the Bank. The President shall have the following powers and duties: (a) Sign and execute all contracts concluded by the Bank; enter into all necessary obligations required or permitted by this Act; and sign all notes, securities certificates, and other major documents of the Bank; (b) Exercise, as CEO of the Bank, the powers of control and supervision over the decisions and actions of subordinate officers, and all other powers that may be granted by the Board;

(c) Report to the Board the main facts concerning the operations of the Bank and to recommend changes in policies that are deemed advisable; (d) Appoint, promote, or remove employees and officers of the Bank: Provided, That promotions, transfers, assignments, or reassignments of officers and personnel of the Bank are personnel actions deemed made in the interest of the service, any provision of civil service laws to the contrary notwithstanding; (e) Determine the rates of allowances, honoraria, and such other additional compensation of the Bank's technical staff and consultants, consistent with the principles and policies of Republic Act No. 10149 and other relevant laws; (f) Submit an annual report to the President of the Philippines and Congress on the result of the operations of the Bank; and (g) As required by circumstances, delegate any of the powers, duties or functions to any officer or director of the Bank.

Sec. 15. Qualifications of Executive Officers. - No person shall be appointed to

any executive position in the Bank mentioned in the preceding section unless qualified 16 by the Fit and Proper Rule, in accordance with Republic Act No. 10149, civil service 17 laws, rules, and regulations: Provided, That in determining whether a person is fit and proper for a particular position, the following shall be considered: integrity or probity, physical and mental fitness, relevant education, training, and competencies for the job, such as knowledge and expertise, skills, and diligence to fully carry out responsibilities.

Sec. 16. Legal Department. - Any provision of law to the contrary

notwithstanding, the Bank shall have its own Legal Department which shall have the power to represent the Bank in cases filed before courts, tribunals, and quasi-judicial bodies; render opinions; and prepare and review contracts and agreements. The Head 26 of the Legal Department shall be appointed by the President. In appropriate cases, the Bank may also avail of the legal services of external counsel, subject to the approval of the Board and the Office of the Government Corporate Counsel (OGCC). The present Legal Services Group of the Bank shall serve as its in-house legal counsel and principal law office under the control and supervision of the OGCC.

Sec. 17. Foreclosure of Collaterals and Disposal of Bank Acquired Properties. -

2 The foreclosure of collaterals and disposal of bank acquired properties shall be governed by the following: (a) Foreclosure of Mortgage Collaterals - The foreclosure of mortgage collaterals for loans may be made either judicially or extrajudicially; (b) Deputization of Legal Staff - In case of an extrajudicial foreclosure of mortgage in connection with loans and advances, the Bank may, upon the recommendation of its Legal Department, designate any member of its legal staff to conduct the public auction pursuant to Act No. 3135 or "An Act to Regulate the Sale of Property under Special Powers Inserting In or Annexed to Real Estate Mortgage," as amended. In case of a judicial foreclosure in connection with loans and advances under this Section, the Bank may, with the approval of the court, deputize any of its legal staff to act as special sheriff in the sale of the debtor's properties and in the enforcement of court writs and related processes. After an action is taken, the special sheriff of the Bank shall make a report to the proper court, which shall treat such action as if it were an act of its own sheriffs in all respects. The sale of mortgaged properties under existing laws or this Act shall be conducted under the direction of the sheriff of the province or any special sheriff of the Bank, or of a municipal judge or notary public of the city or municipality where the sale is to be made, who shall be entitled to collect fees provided for in the Rules of Court with respect to the sale of properties under execution; (c) Disposal of Real Estate and Other Properties in the Collection of Debt - Real estate and other properties acquired by the Bank in the collection of debts or investment by way of foreclosure or other means shall be sold or disposed of in accordance with law within five (5) years after their respective dates of acquisition. For this purpose, the Board of Directors shall be the appropriate regulatory authority to promulgate the necessary implementing rules and regulations;

(d) Exemption from Attachment - The provisions of any law to the contrary notwithstanding, collaterals, securities on loans, or other credit accommodations and guarantees granted by the Bank or its predecessors-in- interest shall not be subject to attachment, execution, stay order, or any other court process, nor shall they be included in the property of insolvent persons or institutions unless all debts and obligations of the debtors to the Bank and its predecessors-in-interest have been paid, including accrued interest, penalties, collection expenses, and other charges; and (e) Right of Redemption of Foreclosed Property, Right of Possession During Redemption Period - Any individual or juridical mortgagor of the Bank whose real property has been judicially sold at public auction, or any individual mortgagor of the Bank whose real property has been extrajudicially sold at public auction shall, within one (1) year counted from the date of registration of the Certificate of Foreclosure Sale with the applicable Register of Deeds, have the right to redeem the real property by paying to the Bank all of the latter's claims as determined by the Bank. Notwithstanding the provisions of Act No. 3135, as amended, juridical mortgagors whose real property have been extrajudicially sold at public auction shall have the right to redeem the property until, but not after, the registration of the Certificate of Foreclosure Sale with the applicable Register of Deeds, which registration shall in no case be more than three (3) months from the date of foreclosure, whichever is earlier. The Bank may take possession of the foreclosed property during the redemption period and during such period, it shall be entitled to the fruits of the property with no obligation to account for them, the same being considered compensation for the interest that would otherwise accrue on the account. Neither shall the Bank be obliged to post a bond for the purpose of such possession.

Sec. 18. Human Resource. - The Board, upon the recommendation of the

President and CEO, shall provide for an organizational structure and staffing pattern 31 of officers and employees of the Bank.

All positions in the Bank shall be consistent with the principles and policies of Republic Act No. 10149: Provided, That the Board shall determine the positions that are considered highly-technical, including their compensation and other emoluments: Provided, further, That such compensation and emoluments shall be comparable with the prevailing rates in the private sector. The Bank officers and employees, including all members of the Board, shall not engage directly or indirectly in partisan political activities or take part in any election 8 activity except to vote. No officer or employee of the Bank shall be dismissed except as provided by 10 law.

Sec. 19. Environmental, Social, and Governance Principles. - As an integral part

12 of the National Government, the Bank is inherently mandated to be socially responsible 13 and to act and operate as a good corporate citizen. The Governing Board of the Bank 14 shall recognize and perform the obligations that the Bank has towards the National Government-its majority stockholder, as well as the minority stockholders when 16 existing, together with the employees, suppliers, customers, and other stakeholders, 17 and the communities in which it operates.

Sec. 20. Disclosure and Inhibition from Board Meeting of Member with Personal

19 or Pecuniary Interest. - Whenever any member attending a Board meeting or any of 20 such member's relative within the second civil degree of consanguinity or affinity, has a personal or pecuniary interest, directly or indirectly, in any matter in the agenda or in its discussion or resolution, the said member shall disclose said interest to the Board 23 and shall inhibit oneself in the discussion or resolution of the matter and must retire from the meeting during the deliberation thereon. The Board members present in the meeting shall still constitute a quorum despite the inhibition of the subject member in 26 any matter, discussion or resolution in the same meeting The minutes of the meeting, which shall note the subject matter, the fact that 28 a member had a personal interest in it, and the withdrawal of the member concerned, may be made available to the public. For this purpose, the members of the Board shall, at the beginning of their respective terms, disclose to the Board any and all interests they may have in any

1 corporation, partnership, or association and shall disclose to the Board, any change thereto.

Sec. 21. Prohibition on Persons with Personal or Pecuniary Interest. - No

member of the Board, officer, attorney, agent, or employee of the Bank shall in any manner, directly or indirectly participate in the deliberation upon determination of any 6 question affecting their direct personal interest or that of relatives within the second 7 civil degree of consanguinity or affinity, or of any corporation, partnership, or association in which the member, officer, attorney, agent, or employee has a direct interest. Any person violating the provision of this section shall be removed from office and shall upon conviction be penalized with a fine of not less than Fifty thousand pesos 11 (Php50,000.00) but not more than Two million pesos (Php2,000,000.00), or 12 imprisonment of not less than two (2) years but not more than ten (10) years, or both, at the discretion of the court.

Sec. 22. Prohibition on Owning Stock in or Incurring Indebtedness to the Bank.

- The Governor of the BSP, all other members of the Monetary Board, and the head of the auditing department of the Bank are prohibited from owning stock in the Bank, 17 or from becoming indebted to the Bank, directly or indirectly.

Sec. 23. Borrowing by Directors, Officers and Employees; Restrictions and

19 Limitations. - No (1) director, officer, or employee of the Bank; or (2) any corporation, partnership, or company wherein any member of the Bank's Board, officer or employee, or their relatives within the first civil degree of consanguinity or affinity is 22 a director, officer or controlling shareholder either directly or indirectly, for one's self or a representative or agent of others, shall borrow any of the deposits of funds from the Bank, become a guarantor, or in any manner be an obligor for money borrowed from the Bank or loaned by it: Provided, That this prohibition on loans to directors, officers and employees shall not include loans allowed in the form of fringe benefits granted in accordance with rules and regulations as may be prescribed by the Monetary Board: Provided, further, That this prohibition shall not apply to loans to corporations wherein the director, officer or employee of the Bank sits on the board of the borrower corporation to represent the interest of the Bank.

Sec. 24. Rules and Regulations on Conflict of Interest. - The Board is hereby

authorized to issue rules and regulations to determine and resolve conflict of interest

1 questions, which shall, in particular, include the requirement for all officers and 2 employees of the Bank to disclose any shareholdings they, or their relatives within the 3 second civil degree of consanguinity or affinity, may have in any corporation, partnership, or company in excess of two percent (2%) of the equity of said corporation, partnership, or company or in any related party transactions defined by the Monetary Board of the BSP and the Board of the Bank.

Sec. 25. Prohibition on Officers and Employees of the Bank to Disclose Client

8 Account Records. - Except as required by law, or upon order of a court of competent 9 jurisdiction, or the express order of the President of the Philippines, or written 10 permission of the client, no officer or employee of the Bank shall reveal or allow to be 11 examined, inquired about, or looked into by any third person, government official, bureau, or office any information relative to details of individual accounts or specific banking transactions, condition, or businesses of any of its clients, or funds or properties in the custody of the Bank belonging to private individuals: Provided, That 15 with respect to deposits or whatever nature, the provisions of existing law shall apply. This prohibition shall not apply to the exchange of confidential credit 17 information among GFIs or banks, in accordance with established banking practices 18 or as may be allowed by law.

Sec. 26. Exaction of Fee, Commission, Gift or Charge. - No unauthorized fee,

20 commission, gift, or charge of any kind shall be exacted, demanded, or paid, for obtaining loans from the Bank. An officer, employee, or agent of the Bank found guilty shall be penalized by a fine of not less than Fifty thousand pesos (Php50,000.00) but not more than Two million pesos (Php2,000,000.00), imprisonment of not less than six (6) years and one (1) month but not more than fifteen (15) years, perpetual disqualification from public office, and confiscation or forfeiture in favor of the government of any prohibited interest and unexplained wealth.

Sec. 27. Examination of the Bank by the Bangko Sentral ng Pilipinas (BSP). -

28 The Bank shall be subject to supervision and examination by the appropriate 29 department of the BSP: Provided, That in conducting the said examination, the BSP shall duly consider the Bank's risk-taking activities in furtherance of its mandate.

Sec. 28. Control Over Subsidiaries and Dividends from Subsidiaries. - The Bank,

through its President and CEO, may temporarily appoint directors in cases where

1 urgent action is needed from the subsidiaries, but the present number of directors 2 does not constitute a quorum.

Sec. 29. General Penal Provisions. - Any director, officer or employee of the

Bank who violates, or permits any of its officers, employees or agents or any other person to violate, any of the provision of this Act not specifically punished in the preceding sections and any person violating or aiding and abetting the violation of this 7 Act shall be penalized with a fine not less than Fifty thousand pesos (Php50,000.00) 8 but not more than Two million pesos (Php2,000,000.00), or imprisonment for a period 9 of not less than two (2) years but not more than ten (10) years, or both, at the 10 discretion of the court.

Sec. 30. Other Liability of Guilty Board Member, Officer, or Employee. - A

12 member of the Board, officer or employee of the Bank who willfully violates any of the provisions of this Act shall, in addition to the criminal and administrative liability resulting from such act, be held liable for any loss or injury suffered by the Bank as a result of such violation.

Sec. 31. Liability of Directors, Officers, or Partners of the Offending Corporation

or Partnership. - If the violation of the provisions of this Act is committed by a 18 corporation or partnership, its directors, officers, or partners who participated in the 19 violation shall be criminally liable.

Sec. 32. Applicability of Banking Laws. - The provisions of Republic Act No.

7653, as amended, Republic Act No. 8791, and other applicable banking laws, insofar as they are not in conflict with any provision of this Act, shall apply to the Bank. The penal provisions of Section 66 of Republic Act No. 8791, in relation to Sections 34, 35, 36 and 37 of Republic Act No. 7653, as amended, shall be applicable to directors, officers, employees and borrowers of the Bank.

Sec. 33. Interpretation. - Nothing in this Act shall operate to abolish the Bank

27 and affect the validity or legality of any right, duty, or obligation created by or in respect of the Bank prior to the effectivity this Act.

Sec. 34. Implementing Rules and Regulations. - The Bank, upon consultation

with and approval of the Department of Finance, shall formulate and prepare the necessary rules and regulations to implement the provisions of this Act within ninety 32 (90) days from its effectivity.

Sec. 35. Transitory Provision. - Within one hundred eighty (180) days after the

2 effectivity of this Act, the Bank is authorized to reorganize and/or rationalize the Bank's organizational structure to attract fresh and critical talents to join the Bank's workforce in response to dynamic industry trends, incentivize early separation of tenured employees and those with medical conditions who will be considered for retirement before the optional retirement age of sixty (60) years old, and improve headcount management and succession planning, consistent with the principles and policies of Republic Act No. 10149. Employees who shall retire from the service or are separated therefrom on account of the reorganization of the Bank under the provisions of this Charter shall be 11 entitled to all gratuities and benefits provided for under existing laws and/or supplementary retirement plans adopted by and effective in the Bank, consistent with the principles and policies of Republic Act No. 10149.

Sec. 36. Separability Clause. - If any provision of this Act is declared

unconstitutional, the remainder thereof not otherwise affected shall remain in full force and effect.

Sec. 37. Repealing Clause. - Sections 74 to 100 of Republic Act No. 3844 or

the "Agricultural Land Reform Code" ", as amended, are hereby repealed. All other laws, presidential decrees, executive orders, letters of construction, proclamations or administrative regulations that are inconsistent with any provision hereof are hereby repealed, amended or modified accordingly.

Sec. 38. Effectivity. - This Act shall take effect after fifteen days (15) following

its publication in the Official Gazette or in a newspaper of general circulation. Approved,