THE CREATION OF THE PHILIPPINE DEPOSIT INSURANCE CORPORATION

SECTION 1
 the Corporation which shall insure as herein
provided, the deposits of all banks which are
PHILIPPINE DEPOSIT entitled to the benefits of insurance under this Act
INSURANCE  shall promote and safeguard the interests of the
CORPORATION depositing public by providing insurance
coverage on all insured deposits and helping
maintain a sound and stable banking system

Corporate Profile
 STATE POLICY
SECTION 2
 strengthen the mandatory deposit insurance
coverage system;
 the Government must extend all means necessary for
POLICIES the Corporation to effectively fulfill its vital task; and
 the Corporation shall enjoy fiscal and administrative
autonomy

BOARD OF DIRECTORS: COMPOSITION AND AUTHORITY

SECTION 3
 primarily responsible for the governance of the
BOARD OF Corporation
DIRECTORS  government’s agent in pursuing economic growth
and development within the ambit of the Corporation

A. COMPOSITION: The Board of Directors shall be composed of seven (7)

members such as follows:
Rules on Appointment

The appointive directors shall serve for a term of six (6)

TERM OF OFFICE years unless sooner removed for cause and shall be subject
to only one (1) reappointment.

An appointive director may be nominated by the

Governance Commission for Government Owned-or
REAPPOINTMENT
Controlled Corporations for reappointment by the President
only.

 he or she be of good moral character, of

unquestionable integrity and responsibility, of known
probity and patriotism; and
QUALIFICATIONS  who is of recognized competence in economics,
banking and finance, law, management
administration or insurance; and
 at least 35 years of age

For the duration of their tenure or term of office and for a

period of one year thereafter, the appointive members of the
DISQUALIFICATION
Board shall be disqualified from holding any office, position,
or employment in any insured bank.

The Secretary of Finance and the Governor of BSP may

each designate an alternate, who shall be an official with a
DESIGNATION OF AN
rank not lower than assistant secretary or its equivalent with
ALTERNATE
written authority to attend such meetings and to vote on
behalf of their respective principals.

Removal of Directors
 the member is physically or mentally incapacitated
that he or she cannot properly discharge his or her
duties and responsibilities, and such incapacity
lasted for more than six (6) months; or
REASONS FOR  the member is guilty of acts or operations which are
REMOVAL of fraudulent or illegal character or which are
manifestly opposed to the aims and interests of the
Corporation; or
 the member no longer possesses the qualifications
specified in this Act; or
  the member does not meet the standards for
performance based on the evaluation by
Governance Commission for Government-owned
and Controlled Corporations under RA 10149.

Other General Rules

The presence of four members shall constitute a quorum. All

QUORUM decisions of the Board of Directors shall require the
concurrence of at least four members.

The Governance Commission for Government-owned and

Controlled Corporations shall determine the compensation,
COMPENSATION
per diems, allowances, incentives and other benefits of the
Board of Directors.

 Republic Act No.6713 or known as the Code of

Conduct and Ethical Standards for Public Officials
and Employees
 Any member of the Board with personal or pecuniary
ETHICAL STANDARDS
interest in any matter in the agenda of the Board of
Directors shall disclose his or her interest to the
Board and shall recuse from the meeting when the
matter is taken up.

B. AUTHORITY: The Board of Directors shall have the authority

RULES AND To approve and issue rules and regulations for the
REGULATIONS banks and the depositing public.

To act as the policy-making body of the Corporation

POLICY-MAKING and constitute Board committees to oversee the
management, operations, and administration.

HUMAN RESOURCE To establish a human resource management system

MANAGEMENT which shall govern the selection, hiring, appointment,
SYSTEM transfer, promotion, or dismissal of personnel.
 To approve a compensation structure as an integral
COMPENSATION component of the Corporation’s human resource
STRUCTURE development program based on job evaluation studies
and wage surveys, and shall be governed by
compensation package, position classification system
and qualification standards.

To appoint, establish the rank, fix the remuneration,

APPOINTMENT AND
benefits, including health care services and other
REMOVAL OF
medical benefits, and even remove any officer or
EMPLOYEES
employee of the Corporation.

LOCAL AND To approve policy on local and foreign travel, and the
FOREIGN TRAVEL corresponding expenses, allowances and per diems,
POLICY of officers, employees, and agents of the Corporation.

ANNUAL BUDGET To adopt an annual budget for and authorize such

expenditures by the Corporation.

DEPOSIT INSURANCE To approve the target level of the Deposit Insurance

FUND TARGET LEVEL fund (DIF) and the methodology for determining
reserves for insurance and financial assistance losses.

ORGANIZATIONAL To review the organizational set-up of the Corporation

SET-UP and adopt a new or revised organizational structure.

To design, adopt and revise, as it may deem

EARLY SEPARATION necessary, an early separation plan for employees of
PLAN the Corporation to ensure availability of human
resource pool.

LOCAL AND FOREIGN To promote and sponsor the local and foreign training
TRAINING AND STUDY or study of personnel in the fields of banking, finance,
management, information technology, and law.
 PRESIDENT OF THE CORPORATION
COMPENSATION, POWERS, AND DUTIES
SECTION 4
 President of the corporation shall be Chief Executive Officer and Vice
Chairman of its Board of Directors
 Salary shall be fixed by the President of the Philippines upon recommendation of
Governance Commission for GOCC.
 Powers and duties:
o To prepare agenda and submit for the consideration of necessary policies
and measures
o To execute and administer the policies and measures
o To direct and supervise the operations and internal administration in
accordance with the policies
o To represent the corporation in all dealings, whether public or private,
domestic or international
o To authorize, with his signature, contracts, notes and securities, annual
reports and other documents of the Corporation.
o To represent the corporation in any legal proceeding or action
o To delegate his power to represent the Corporation
o To exercise such other power vested in him by the Board

DEFINITION OF TERMS
SECTION 5
 Asset – tangible or intangible resources or properties over which a bank has an
established or equitable interests.
 Asset Distribution Plan – plan of distribution of assets of a closed bank to its
creditor.
 Bank and Banking Institutions – include banks, commercial banks, saving banks,
mortgage banks, stock savings and loan associations, and branches and
agencies in the Philippines.
 Closed Bank – bank placed under liquidation by the Monetary Board
 Creditor – any individual or entity with a valid claim against the assets of closed
banks.
 Deposits – unpaid balance of money or its equivalent received by a bank in the
usual course of business for which it has given of obliged to give credit to an
account, evidenced by certificate of deposit or passbook in accordance with BSP
rules and regulations.
o Shall not pay deposit insurance for the ff:
 Investment products
 Deposit accounts or transactions which are fictitious or fraudulent
  Deposit accounts or transaction constituting, and/or emanating from
unsafe and unsound banking practice
 Deposits that are determined to be the proceeds of an unlawful
activity as defined under Republic Act No. 9160.
 Disputed Claim – claim or suit against the assets of closed bank or breach of
contract, or damages of whatever nature of character.
 Insured Bank – any bank of deposits which are insured in accordance with the
provision of this Act.
 Insured Deposits – the amount due to any bonafide depositor for legitimate
deposits in an insured bank but not exceed P500,000
 Liquidation – the proceedings under Section 12-16 of this Act.
 Liquidation Court – Regional Trial Court (RTC) of general jurisdiction where the
petition for assistance in the liquidation of a closed bank is filed and given due
course.
 Payout - payment of insured deposits.
 Petition for assistance in the liquidation of a closed bank - receiver with the RTC
in accordance with Section 16
 Purchase of assets and assumptions of liabilities - transaction where an insured
bank purchases any or all assets and assumes any or all liabilities of another
bank under resolution or liquidation, as provided in this Act
 Receiver - refers to the Corporation or any of its duly authorized agents acting as
receiver of a closed bank.
 Records - all documents, titles, papers, and electronic data of the closed bank.
 Residual assets - assets, in cash or in kind, to be turned over to the closed
bank's stockholders of record, in proportion to their interest in the closed bank as
of date of closure.
 Resolution - actions undertaken by the Corporation under Section 11
 Risk-based assessment system - method for calculating an insured bank's
assessment on the probability that the DIF will incur a loss with respect to the
bank, and the likely amount of any such loss, based on its risk rating.
 Statement of affairs - report of financial condition of the closed bank at a given
date, showing the: (1) estimated realizable value of assets; (2) classification of
credits; and (3) estimated liabilities to be settled.
 Surplus dividends - remaining assets of the closed bank after satisfaction in full
of all the liquidation costs, fees and expenses, and valid claims
 Takeover - act of physically taking possession and control of the premises,
assets and affairs of a closed bank for the purpose of liquidating the bank.
 Transfer deposit – deposit in an insured bank made available to a depositor by
the Corporation as payment of insured deposit in a closed bank and assumed by
another insured bank.
 Trust funds – funds held by an insured bank in a fiduciary capacity and include
without being limited to, funds held as trustee, executor, administrator, guardian,
or agent.
 Valid claim – claim recognized by the receiver / allowed by the liquidation court.
  Winding up – period provided in Sec 16.

DEPOSIT INSURANCE COVERAGE

SECTION 6
Deposit insurance coverage includes deposit liabilities of any bank which is engaged
in the business of receiving deposits.
Insurance Risk Evaluation
- Enables the BSP to assess the risks to the Deposit Insurance Fund (DIF)
- Conducted whenever a bank is determined by the BSP to be capital deficient.
- Includes the determination of the ff:
(1) FMV of the assets and liabilities of a bank
(2) The risk classification of a bank
(3) Possible resolution modes (under sec11)

ASSESSMENT OF MEMBER BANKS

SECTION 7

Semi Annual Assessment = ½ assessment rate x assessment base or 5,000

(whichever is higher)

 Assessment rate shall not exceed 1/5 of 1% per annum (determined by Board of
directors)
 Assessment base - Amount of the liability of the bank for deposits without any
deduction for indebtedness of depositors
 Semi-annual assessment base
- Average of the assessment base of the bank as of the close of business in March
31 and June 30 (or Sept 30 and Dec 31)
- Provided that, when any said days is nonbusiness/legal holiday
(national/provincial) use preceding business day.

Risk Based Assessment System

- Risk-based assessment rate shall not exceed 2/5 of 1% per annum.
Sec 7(b). Filing of Certified Statement
- On or before the 31st of July of each year (and January 31st), a certified
statement showing the ff should be filed with the Corporation:
(1) six-month assessment base (ending preceding June 30/Dec 31)
 (2) amount of semi-annual assessment due for the period ending on the following
Dec 31/June 30
*verified by a written declaration that it is made under the penalties of perjury.

Sec 7(c).
- each bank which becomes an insured bank shall not be required to file any
certified statement or pay any assessment for the semi-annual period in which it
becomes an insured bank.
- after expiration of this period, the bank should comply with the provisions of
subsection (b)
- if bank has assumed liabilities for another bank’s deposits, in shall include such
liabilities in its assessment base.
Sec 7(d)
- all assessment collections and income from operations (after expenses and
charges) shall be added to the DIF.
- Expenses and charges:
(1) Operating costs and expenses of the Corporation for the calendar year
(2) Additions to reserve to provide for insurance and financial assistance losses
(net of recoverable from assets and collaterals) during the calendar year.
(3) Net insurance and financial assistance losses sustained in the calendar year.

Sec 7(e)
- Any payment of assessment in excess of the amount due may be refunded
- May be credited to next assessment and upon succeeding assessments until
credit is exhausted

Sec 7(f)
- Failure to file certified statement may be compelled to file by (1) mandatory
injunction or (2) other remedy in a suit brought in any court of competent
jurisdiction.

Sec 7 (g)
- The corporation shall be entitled to recover any unpaid assessment lawfully
payable whether or not certified statement has been filed.
- Such recovery shall pertain to actions/proceedings brought within 5 years after
accrual of right to the claim.
- if false/fraudulent certified statement is filed with the intent to evade payment, the
claim will be deemed to have accrued at the date of discovery of the fraud by the
Corporation.
Sec 7 (h)
- failure/refusal to pay any assessment required, and should the bank not correct
such failure or refusal within 30 days after written notice has been given by the
Corporation to an officer of the bank, the Corporation may file a case for
collection before the appropriate court.
Sec 7 (i)
- The Corporation shall have the authority to collect a special assessment from
any member bank and prescribe the terms and conditions thereof.
- Purpose: to maintain the target level of the DIF
SANCTIONS AGAINST UNSAFE AND UNSOUND BANKING PRACTICES
SEC. 8

Unsafe and unsound banking practices - can result from either action or lack of action
by management of the Bank. Unsound banking practice can include conducting business
in an unauthorized manner, failure to keep accurate books of account, engaging in
hazardous and speculative investment policies and the like.
1. Upon examination, it shall be disclosed that an insured bank (or its directors or
agents) have committed (or committing, or about to commit) unsafe or unsound
practices in conducting the business of the bank, or have violated (or violating, or
about to violate) any provisions of any law or regulation.
2. The Board of Directors (BOD) shall submit the report of the examination to the
Monetary Board to secure corrective action.
3. If there is no corrective action within 45 days from the submission of report, the
BOD shall institute corrective action.
4. The BOD will issue a cease-and-desist order, and require the bank to correct the
practices within 45 days. However, if the violation is likely to cause serious effect
(like insolvency), the period to take corrective action shall not be more than 15
days. The order may also include imposition of fines.
5. The PDIC may terminate the insured status of any bank (within 30 days from
notice) that fails or refuses to comply with the corrective action of the Monetary
Board or the cease-and-desist order of the BOD.
a. The termination shall be final and executory
b. Effective upon publication of the notice of termination in a newspaper or
general circulation.
c. Deposits of each depositor on the date of termination are still insured for a
period of 180 days. Deposits after the date of termination are no longer
insured.
d. The bank shall not advertise that succeeding deposits are covered by
deposit insurance.
 POWER AS A CORPORATE BODY
SEC. 9
The Corporation as a corporate body shall have the power:
1. To adopt and use a corporate seal
2. To have succession until dissolved by an Act of Congress
3. To make contracts
4. To sue and be sued, complain and defend, in any court of law in the Philippines
5. To appoint by its BOD officers and employees, and define their duties and
compensation, and to dismiss such officers and employees for cause
6. To prescribe by-laws not inconsistent with law, regulate general business
operations, and exercise and enjoy the privileges granted to it by law
7. To exercise all powers specifically granted by the provision of this Act and such
incidental powers necessary
8. To conduct examination of banks with prior approval of the Monetary Board.
Provided:
a. No examination can be conducted within 12 months from last examination,
however a special examination can be done if there is a threatened or
impending closure of a bank
b. The Corporation and/or the BSP may examine deposit accounts and all
information related thereto in case there is a finding of unsafe or unsound
banking practice.
c. Relevant reports, information, and findings of the BSP shall make available
to the Corporation to avoid overlapping of efforts
9. To act as receiver
10. To prescribe rules and regulations to carry out the provisions of this Act
11. To establish its own provident common fund for the payment of benefits to officers
and employees or their heirs
12. To compromise, condone or release, in whole or in part, any claim or settled liability
to the Corporation and to write off unrecoverable receivables and assets
13. To determine qualified interested acquirers or investors for any of the modes of
resolution or liquidation of banks
14. To determine the appropriate resolution method and to implement the same for a
bank subject of resolution
15. To determine appropriate mode of liquidation of a closed bank and to implement
the same
 POWER AND RESPONSIBILITIES AND PROHIBITIONS
SEC. 10

POWERS (a) The BoD shall administer the affairs of the Corporation
fairly, impartially and without discrimination. The
Corporation shall be entitled to the free use of Philippine
mails in the same manner as the other offices of the
national government.

(b) The BoD shall appoint examiners with the powers to:
- Examine any insured bank on behalf of the
Corporation
- Examine all the affairs of the bank
- Administer oats, to examine, take, and preserve the
testimony of any of the officers and agents of the
bank
- Compel the presentation of books, documents,
papers, or records necessary in his judgement to
ascertain the condition of the bank
Examiners shall make a full and detailed report to the
Corporation.

The BoD shall appoint claim agents with the powers to:
- Investigate and examine all claims for insured
deposits and transferred deposits
- Administer oaths, examine under oath, and take and
preserve testimony of any person relating to such
claim

The investigators appointed by the BoD on behalf of the

Corporation shall have the powers to:
- Conduct investigations on frauds, irregularities and
anomalies committed in banks
- Administer oaths, and to examine and take and
preserve the testimony of any person relating to the
subject of investigation.
For this purpose, the Corporation may appoint or hire
persons or entities of recognized competence in forensic
and fraud investigations as its agents.

(c) Each insured bank shall make to the Corporation reports

of condition. Every bank which fails to make or publish
any such report as the BoD may require, shall be subject
to a penalty of not more than Php 10,000 for each day of
such failure.
 (d) The Corporation shall have access to reports of
examination made by and reports of condition made to
the BSP or its appropriate supervising departments and
vice versa. Provided:
- The Corporation shall have access to reports,
findings, and any other information derived from any
special or general examination conducted by the
BSP in respect fraud or serious irregularity
- The Corporation shall use reports and findings under
similar terms and conditions prescribed by applicable
laws on BSP

Each insured bank shall keep and maintain a true and

accurate record or statement of its daily deposit
transactions consistent with the standards of BSP and the
Corporation.

Compliance with such standard shall be duly certified by

the president of the bank and the compliance officer.
Refusal or willful failure to do so shall constitute a
violation and subject such officers to the sanctions
provided for under Section 26.

RESPONSIBILITIES (a) The Corporation shall underwrite or advance all legal

costs and expenses or provide legal assistance to
directors, officers, employees or agents of the
Corporations in connection with any action or proceeding
to which they are made a party of by reason of, or in
connection with, the exercise of authority or performance
of functions and duties under this Act. Provided:
- Such legal protection is not applicable in cases
where the action or proceeding is initiated by the
Corporation against the personnel
- Personnel who shall resign, retire, transfer, or be
separated from the service shall continue to be
protected in connection with any act done or omitted
to be done in good faith during their employment with
the Corporation
- In the event of settlement or compromise,
indemnification shall be provided only in connection
with such matters covered by the settlement as to
which the Corporation is advised by counsel that the
persons to be indemnified did not commit any
negligence or misconduct.

(b) The costs and expenses incurred in defending the action,

suit or proceeding may be paid by the Corporation in
advance upon receipt of an undertaking by or on behalf of
 the personnel to repay the amount advanced should it
ultimately be determined by the BoD that he is not entitled
to be indemnified.

(c) Unless the actions of the Corporation or any of its officers

and employees are found to be in willful violation, in bad
faith, with malice or gross negligence, they are held free
and harmless to the fullest extent permitted by law from
any liability and shall be indemnified for any and all
liabilities, losses, claims, demands, damages,
deficiencies, costs and expenses that may arise in
connection with the performance of their functions.

(d) Legal assistance shall include the grant or advances of

reasonable legal fees as determined by the BoD to enable
the concerned personnel to engage counsel of his choice,
subject to the approval of the Board.

PROHIBITIONS (a) Personnel of the Corporation are prohibited from:

- Being an officer, director, consultant, employee, or
stockholder, directly or indirectly, of any bank or
banking institution
- Receiving any gift or thing of value from any officer,
director, or employee thereof
- Revealing in any manner, except as provided in this
Act or under order of the court, information relating to
the condition or business of any such institution

Members of the BoD and personnel of the Corporation

may become directors and officers of any bank and
banking institution:
- In connection with financial assistance extended by
the Corporation to such institution
- When, in the opinion of the BoD, it is appropriate to
make such designation to protect the interest of the
Corporation

(b) Examiners and other personnel of the examination

departments of the Corporation shall be prohibited from
borrowing from particular bank or banking institution in
which they are assigned, or are conducting an
examination.

Personnel of other departments, offices or units of the

Corporation shall be prohibited from borrowing from any
bank or banking institution that which a transaction of
 such institution with the Corporation is being evaluated.
The BoD may, however, indicate the prohibited position
levels or functional groups.

Borrowing by all full-time personnel of the Corporation

from any bank or banking institution shall be secured and
disclosed to the Board.

BANK RESOLUTION
SEC. 11
The Corporation, with BSP, may commence the resolution of a bank upon:
a. Failure of prompt corrective action as declared by Monetary Board
b. Request by a bank to be placed under resolution
The Corporation shall inform the bank of its eligibility for entry into resolution.

If promt corrective
The BSP shall inform action failed due to
the Corporation of the capital deficiency, the
initiation of promt Corporation may
corrective action on examine the deposit
any bank.
records of the bank.

- BSP shall be authorized to - Such authority is not

share all information applicable when the failure is
agreements of documents due to grounds other than
- The Corporation shall have capital deficiency.
the authority to inquire and - Banks are mandated to
monitor the status of banks disclose and report to the
under prompt corrective Corporation the deposit
action. account information.

Any act done pursuant to this section shall not be deemed as a violation of RA
1405, RA 6426, RA 8791, and other similar laws protecting or safeguarding the secrecy
or confidentiality of bank deposits. Provided, that any unauthorized disclosure of the
information shall be subject to the same penalty under the foregoing laws.
 Within 180 days from a bank’s entry into resolution, the Corporation, through the
vote of at least 5 member of the Board, shall determine whether the bank may be resolved
through purchase of all its assets and assumption of all its liabilities, or merger or
consolidation with, or its acquisition by a qualified investor.

(1) Ensure bank compliance with the terms and conditions

prescribed by the Corporation
Obligations of
(2) Cause the engagement, with the consent of the
stockholders, Corporation of an independent appraiser or auditor to
directors, determine the valuation of the bank
officers or (3) Ensure prudent management and administration of the
employees of bank’s assets, liabilities and records
the bank (4) Cooperate with the Corporation in the conduct or exercise
of any or all of its authorities under this Act and honor in
good faith its commitment or undertaking with the
Corporation on the resolution of the bank.

(1) Determine a resolution package for the bank

(2) Identify and, with approval of the Monetary Board, pre-
Authority of the
qualify possible acquirers or investors
Corporation (3) Authorize pre-qualified acquirers or investors to conduct
due diligence on the bank
(4) Conduct a bidding to determine the acquirer of the bank

Considerations (1) Fair market value of the assets of the bank, its franchise,
as well as the amount of its liabilities
in determining
(2) Availability of a qualified investor
the resolution (3) Least cost to the DIF
method (4) Interest of the depositing public

The Corporation may appoint or hire persons or entities of recognized competence

in banking, finance, asset management or remedial management, as its agents in the
resolution of a bank.
PDIC Board shall prescribe the guidelines or criteria for a bank to be placed under
resolution.
Upon determination by the Corporation that the bank may not be resolved, the
Monetary Board may act in accordance with Section 30 of RA 7653 (New Central Bank
Act).
Bank resolution involving purchase of all assets and assumption of all liabilities of
a bank shall be exempt from the provisions of Act No. 3952 (Bulk Sales Law).
Section 12 – Liquidation of a closed bank
 When bank is ordered closed by the Monetary board:

Corporation

proceed with the takeover and

designated as receiver
liquidation

Note: Banks closed by the Monetary Board shall no longer be rehabilitated.

Section 13 – Authorities of a receiver and effects of placement of a bank under

liquidation
A. The receiver is authorized to adopt and implement any or a combination of the
following modes of liquidation:

 Conventional liquidation and

 Purchase of assets and/or assumption of liabilities
Note: Without the need of consent of the following:
 Stockholders
 Board of Directors
 Creditors or
 Depositors of the closed bank
B. Corporation as a receiver are empowered to perform the following for the closed
bank:
CHARGED-CRAB-BUDPC

C Convert the assets to cash or other liquid assets, as far as practicable

H Hire or retain private counsel as may be necessary

Appoint or hire persons or entities of recognized competence in
A banking, finance, asset management or remedial management

R Represent and act for and on behalf

Gather and take charge of all the assets, records and affairs and
G administer the same for the benefit of creditors
Exercise other powers as are inherent and necessary for the effective
E discharge of the duties of the Corporation as receiver
Distribute the available assets, in cash or in kind, to creditors in
D accordance with the Rules on Concurrence and Preference of Credits
under the Civil Code or other laws
 Collect loans and other claims and modify, compromised or
C restructure the terms and conditions of such loans or claims as may
be deemed advantageous to the interests of the creditors
Reduction of the interest rate to a reasonable rate, in case stipulated
interest rate on deposits is unusually high compared with prevailing
R applicable interest rates. Provided that any modifications or
reductions shall apply only to earned and unpaid interest
Appoint or hire persons or entities of recognized competence in
A forensic and fraud investigations
Bring suits to enforce liabilities of the directors, officers, employees,
agents of the closed bank and other entities related or connected to
B the closed bank or to collect, recover, and preserve all assets,
including assets over which the bank has equitable interest
Borrow or obtain a loan, or mortgage, pledge or encumber any asset
when necessary to preserve or prevent dissipation of the assets, or to
B redeem foreclosed assets or to minimize losses to its depositors and
creditors
Utilize available funds of the bank to pay for reasonable costs and
expenses incurred for the preservation of the assets, and liquidation
without need for approval of the liquidation court; For banks with
U insufficient funds, the Corporation is authorized to advance the
foregoing costs and expenses, and collect payment, as and when
funds become available
Dispose records that are no longer needed in the liquidation in
D accordance with guidelines set by the PDIC Board of Directors,
notwithstanding the laws on archival period and disposal or records
Pay accrued utilities, rentals and salaries of personnel of the closed
P bank for a period not exceeding three (3) months, from available
funds of the closed bank
Charge reasonable fees for the liquidation from the assets of the
bank; Provided, that the payment of these fees, including any unpaid
C advances under the immediately preceding paragraph, shall be
subject to approval by the liquidation court
Note: The Board of Directors shall adopt such policies and guidelines as may be
necessary for the performance of the above powers by personnel, deputies, assistants
and agents of the Corporation.
C. If there are surplus (an amount available after the payment of all liabilities and
claims), the Corporation shall pay dividends at the legal interest rate from the date
of takeover to date of distribution to creditors and claimants of the closed bank in
accordance with rules and other laws applicable.

D. Officers, employees, deputies, assistants and agents of receiver shall:

 Have no liability and;

 Not be subject to any action, claim or demand in connection with the
exercise of their powers and functions
 Provided, that act done or omitted to be done by them are in good faith.
E. The placement of a bank under liquidation shall have the following effects:

On the corporate franchise or existence

 The closed bank shall continue as a body corporate until the
termination of the winding-up period (refer to Section 16)
 Such continuation is only for the purpose of:
o liquidating, settling and closing its affairs and
o Disposal, conveyance or distribution of its assets
Note: In no case shall the bank be reopened and permitted to resume
banking business after being placed under liquidation.

On the powers and functions of its directors, officers

and stockholders

TERMINATED
Powers
Voting rights
Functions
Duties
Allowances
Remuneration
Perquisites

Note: The receiver shall exercise ALL authorities as may be required to

facilitate the liquidation for the benefit of ALL creditors of the closed bank.

On the assets
 ALL assets of the closed bank shall be deemed in custodia legis (in
the custody of law) in the hands of the receiver and these may not
be subject to the following:
o Attachment
o Garnishment
o Execution
o Levy or
o Any other court processes
 A judge, officer of the court or any person shall be liable under Sec.
27 for the:
o Issue
o Order
o Process
o Or cause the issuance or implementation of the court
processes mentioned above.

 Exception: Collaterals securing the loans and advances granted by

the BSP not included in the assets for distribution to other creditors.

Note: Proceeds in excess of the secured amount shall be returned

by the BSP to the receiver

On labor relations

 Upon service of the notice of closure, employer- employee

relationship between the bank and its employees – deemed
terminated
 Payment of separation pay or benefits – made from the available
assets

Contractual obligations
 The receiver may do the following actions to any contract that is not
necessary for the liquidation or is grossly disadvantageous to the
closed bank:
o Cancel
o Terminate
o Rescind or
o Repudiate (to refuse or reject)

On interest payments

 Liability to pay interest on deposits and all other obligations – shall

cease upon closure of the bank by the Monetary Board without
prejudice to the first paragraph of Section 85 of R.A. 7653.
 Section 85. Interest and Rediscount. - The Bangko Sentral shall
collect interest and other appropriate charges on all loans and
advances it extends, the closure, receivership or liquidations of the
debtor-institution notwithstanding.

 The receiver shall have the authority (without the need for approval
of the liquidation court) to assign the bank assets serving as
collaterals up to the extent of secured obligations including the
interest as of the date of closure.
Note: Valuation of collaterals – based on the prevailing market value as
appraised by an independent appraiser on an “as is where is” basis.

Liability for penalties and surcharges for later

payment and nonpayment of taxes
 From the time of closure, the bank shall not be liable for the payment
of penalties and surcharges arising from the late payment or
nonpayment of the following:
o Real property tax
o Capital gains tax
o Transfer tax and
o Similar chargers

Bank charges and fees on

services
 Receiver may impose charges and fees for services rendered after
bank closure (e.g. pertinent deeds and certifications)

Actions pending for or against the closed

bank
 General rule: actions pending for or against the closed bank in any
court or quasi-judicial body, upon motion of the receiver – suspended
for a period not exceeding 180 days and referred to mandatory
mediation.
Exception: Actions pending before the Supreme Court
 Upon termination of mediation – the case be referred back to the
court or quasi-judicial body for further proceedings
 Final decisions against the closed bank
 Execution and enforcement of a final decision of a court (other than
liquidation court) against the assets of a closed bank – shall be
stayed (stay - a ruling by a court to stop or suspend a proceeding or
trial temporarily or indefinitely)
 Prevailing party shall file the final decision as a claim with the
liquidation court and settled in accordance with the rules and other
laws.

Docket and other court fees

 Payment of docket and other court fees to all cases or actions filed
by the receiver – shall be deferred (to postpone or delay) until the
action is terminated with finality
 Favorable judgement – any fees shall constitute as a first lien (first
to be paid)
 Unfavorable judgement – any fees shall be paid as liquidation costs
and expense during the distribution of assets

ALL assets, record and documents in the

possession of the banks at the time of its closure
– presumed held by the bank as an owner

Exercise of authority, functions and duties by the

receiver
– presumed to have been performed in the regular course
of business

Assets and documents of the closed bank

– shall retain their private nature

Note: Matters relating to the exercise by the receiver of the functions under this
Act – shall be subject to visitorial audit ONLY by the COA.
 NOTICE OF CLOSURE AND TAKEOVER ACTIVITIES
Section 14

serve to or

b. The receiver Highest ranking officer

(PDIC) shall have the of the bank present in
Upon
authority to: service a. Closure of the bank is the premises, or in the
of the deemed effective. absence of such officer,
 Use reasonable notice the notice of closure will
force, including of be posted in the bank
closure Receiver shall takeover the premises or its main
the authority to
: bank and exercise its powers as
force open the a receiver. entrance.
premises of the
\
bank, and
 Exercise such
c. All directors, officers,
acts necessary to
employees or agents of the
take the actual closed bank shall have the duty
physical to immediately account for,
possession and surrender and turnover to the
custody of the receiver, and provide information
relative to the assets, records
bank and all its
and affairs of the closed bank in
assets, records, their posession, custody,
documents, and administration or management.
take charge of its
affairs upon the
service of notice d. When circumstances so
of closure. warrant, the LGU and law
enforcement agencies
concerned, upon request, shall
immediately provide assistance
to the receiver during the service
of notice of closure and actual
takeover to ensure orderly
conduct thereof, security, and
safety of the personnel receiver
and employees of the closed
bank.
 PURCHASE OF ASSETS AND ASSUMPTION OF LIABILITIES
Section 15

a. Shall have the authority to facilitate

and implement the purchase of the
RECEIVER assets of the closed bank and the
assumption of its liabilities by another
insured bank, without need for
approval of the liquidation court.

The exercise of this authority shall be

in accordance with the Rules on
Concurrence and Preference of
b. The action of the receiver Credits under the Civil Code and other
to determine whether a bank laws, subject to such terms and
may be the subject of a conditions as the PDIC may prescribe.
purchase of assets and
assumption of liabilities
transaction shall be final and The disposition of the branch licenses
executory, and may not be and other bank licenses of the closed
set aside by any court.
bank shall be subject to the approval
of the Bangko Sentral ng Pilipinas
(BSP).

CONVENTIONAL LIQUIDATION
Section 16

A.
ASSET a. Assets gathered by the receiver shall be evaluated and verified as to
MANAGEMENT their existence, ownership, condition, and other factors to determine
AND CONVERSION their realizable value.
• The receiver shall be guided by cost-benefit considerations,
resources of the closed bank, and potential asset recovery in the
management, preservation, and disposition of assets.

b. Conversion of the assets shall be carried out in a fair and transparent

manner in accordance with rules and procedures determined by the
receiver.
c. The receiver shall have the following authority in the
management/conversion of assets:

1) Represent closed bank before government agencies or private

entities like the Land Registration Authority (LRA), the Bureau of
 Lands, the Register of Deeds, the Land Transportation Office
(LTO), the Assessor’s Office/ other appropriate office of the LGU,
the Securities and Exchange Commission (SEC), in:
i. Verifying the authenticity of ownership documents
ii. Registering interest of the closed bank on specific property
iii. Consolidating ownership over an asset of the closed bank
iv. Securing certified true copies of documents held by foregoing
agencies/entities relating to assets of the closed bank
v. Securing the appropriate certification from the foregoing
agencies/entities in relation to an asset of the closed bank
vi. Performing other related activities;
2) Conduct physical or ocular inspection to determine their
existence and present condition;
3) Determine disposal price according to generally accepted
valuation principles, standards and practices;
4) Dispose real or personal properties through bidding, negotiated
sale, lease with option to purchase, and other mode reasonably
determined by the receiver based on cost-benefit
considerations; and
5) Engage third parties to assist in the liquidation, manage or
dispose the assets, or handle cases filed by/against the bank.

d. Rules in the management and/or conversion by the receiver of the

assets of the closed bank:
1) Upon notification of closure of the bank, the LRA, Bureau of
Lands, the Register of Deeds, the LTO, Assessor’s Office/ other
appropriate office of the LGU, or similar government agencies
shall NOT allow any transactions affecting the assets of the
closed bank without the receiver’s consent.
2) Upon issuance of the Monetary Board of the resolution ordering
the closure of the bank, any person or entity in
custody/possession of assets or records of the closed bank shall
immediately turnover custody of said assets and records to the
receiver. Pending turnover, such person/entity shall hold the
assets or records in trust for the receiver.
3) Unless directed by the receiver, the persons or entities in
custody or possession of assets shall NOT allow, authorize, or
cause the withdrawal, transfer, disposition, removal, conversion,
concealment, or other transactions relating to the asset.

e. The receiver shall have the authority to invest funds received from
the conversion of assets in government securities, other government-
guaranteed marketable securities, or investment-grade debt
instruments.
f. The proceeds of the sale of bank and branch licenses shall be for the
benefit of the creditors of the closed bank, distributed according to this
Act and the Rules on Concurrence and Preference of Credits under the
Civil Code and other laws.
 B.
PETITION FOR g. Petition for assistance in the liquidation
ASSISTANCE IN  a special proceeding for the liquidation of a closed bank
THE LIQUIDATION  includes declaration of the concomitant right of creditors and the
OF A CLOSED order of payment of their valid claims in the disposition of assets
BANK
Proceedings initiated under this section shall be considered in rem.
Upon publication of the order setting the case for initial hearing in any
newspaper of general circulation in the Philippines, jurisdiction over all
persons affected by the proceeding shall be considered acquired.

in rem – Latin, “against a thing”

– made against or affecting a thing, and therefore other people
generally; imposing a general liability

h. Liquidation court
 shall have the exclusive jurisdiction to adjudicate disputed
claims against the closed banks
 assist in the enforcement of individual liabilities of the
stockholders, directors, and officers
 decide on all other issues as may be material to implement the
distribution plan adopted by the PDIC for general application to
all closed banks
i. Provisions of R.A. 8799 “The Securities Regulation Code”, and
Supreme Court Administrative Matter No. 00-8-10-SC “The Rules of
Procedure on Corporate Rehabilitation” shall NOT be applicable to the
petition for assistance in the liquidation of the closed bank.
j. The petition shall be filed in the RTC having jurisdiction over the
principal office of closed bank or principal office of the receiver, at the
receiver’s option.
k. The petition shall be filed ex parte within a reasonable period form
receipt of Monetary Board Resolution placing the bank under
liquidation.

ex parte – on or from one side or party only

– from a one-sided or partisan point of view

l. Persons or entities with claims against the assets of the closed banks
shall file their claims with the receiver within 60 days from date of
publication of the notice of closure – claims outside this period shall be
disallowed.
m. A claim whose validity has not yet been determined with finality at
the time of the submission of the final asset distribution plan (by reason
of pending lawsuit/for whatever reason) shall be considered contingent
claim and shall not be paid under the proposed final asset distribution
plan.
 n. The petition for assistance in the liquidation of the closed bank shall
be considered closed and terminated upon finality of the order
approving the final asset distribution plan.
 The receiver, its officers, employees, or agents are forever
discharged from any and all claims and/or liability in connection
with liquidation of closed bank.
o. Receiver shall submit a final report on the implementation of the
approved final asset distribution plan to the Monetary Board and the
SEC after expiration of the winding-up period.

p. The Supreme Court shall promulgate the appropriate procedural

rules to implement this section.

C. q. Creditors
WINDING-UP  have a period of 6 months from the date of publication of notice
of the approval by the court of the final asset distribution plan to
claim payment of the principal obligations and surplus dividends
 during this period, the receiver shall hold as trustee the assets
allocated for said creditors
 failure to comply with documentary requirements within the
period and/or refusal to accept the asset as payment shall be
deemed as abandonment or waiver of right to payment
r. Individual stockholders of record or their duly-authorized
representative or the court-appointed stockholder’s
representative
 have a period of 6 months from the date of publication of notice
of the approval by the court of the final asset distribution plan to
claim the residual assets
 during this period, the receiver shall hold as trustee the assets
allocated for said stockholders of record
 failure to comply with documentary requirements within the
period and/or refusal to accept the residual assets in kind shall
be deemed as abandonment or waiver of right to receive the
residual assets
s. All assets which remain unclaimed by the creditors and/or
stockholders of record after the lapse of the 6-month period shall be
turned over to the Bureau of Treasury
t. The Receiver
 shall keep all pertinent records of the closed bank for 6 months
from the date of publication of the approval of the final asset
distribution plan
 after the lapse of the period, the receiver is authorized to
dispose such records in accordance with the rules and
regulations to be prescribed by the receiver
 Permanent Insurance Fund
Section 17.

Deposit Insurance Fund

“Capital account of Philippine Deposit Insurance
Corporation”

Assessment Retained earnings

collections

Reserves for
Permanent Insurance insurance and
Fund financial assistance
losses
Subject to charges
enumerated in Section Shall be maintained at reasonable
6 level to ensure capital adequacy

Shall be Three billion pesos

(Php 3,000,000,000.00)

Within 2 years, after the passage

9 of this Act and every
5 years thereafter the Corporation may conduct a
study of the need to adjust the amount of Permanent
Insurance Fund, insurance cover, assessment rates,
assessment base and make necessary
recommendation to Congress.

The Corporation may hire actuarial consultants to

determine the affordability of assessment rates,
analysis and evaluation of insurance risks,
advisability of imposing varying assessment rates
or insurance cover of different bank categories.
 Dividend Declaration
Section 18. Consistent with the policy of the State to generate, preserve, maintain faith
and confidence in the country’s banking system, the Corporation shall build up and
maintain the Deposit Insurance Fund at the target level set by PDIC Board of Directors
which shall be subject to periodic review and may be adjusted as necessary.

 Exempted from Republic Act No.

7656 (An act requiring government-
owned or -controlled corporations
to declare dividends under certain
Dividend conditions to the national
government, and for other
Declaration purposes.)
 Shall remit dividends to the national
government only when the target
level of DIF for the applicable year
has been reached.
 In computing the dividends that
needs to be declared and remitted,
all assessment collections shall not
be considered as income.
 Dividend rate shall be at least 50%
of the income from other sources
only.

Payment of Insured Deposits

Section 19.
A. General Rule
When an insured bank was closed by either;
1. Monetary Board in pursuant to Section 30 of Republic Act No. 7653
2. Upon expiration or revocation of the bank’s corporate term
The Philippine Deposit Insurance Corporation shall make the payment on the
insured deposits of such closed bank as soon as possible by either;
1. Cash
2. Availability to the depositor of a transferred deposit in another insured
bank in an amount equal to the insured deposit.
B. Conditional Statement
1. The Corporation, in its discretion may require proof of claims to be filed
before paying the insured deposits, and when in doubt in the validity of the
claim, it may require a final determination of a court of a competent
jurisdiction before paying such claim.
 2. Failure to settle the claim within 6 months from the date of filing the claim
for insured deposit where such failure was due to grave abuse of
discretion, gross negligence, bad faith or malice shall subject the directors,
officers, employees of the Corporation be responsible for the delay, to
imprisonment from 6 months to 1 year.
3. The period of 6 months shall not apply if the validity of the claim requires
the resolution of issues and facts and or law by another office, body or
agency including the first proviso(conditional statement) mentioned or by
the Corporation together with such other office, body or agency.

Section 20.
A. General Rule
 To all of the rights of the
depositor against the closed
Philippine Deposit bank, upon payment of any
Insurance Corporation Subrogated depositor as provided in
Section 19 of this Act.
 It includes the right on the part
of the Corporation to receive
the same dividends and
payments from the proceeds
of the assets of such closed
bank and recoveries on
account of stockholders’
liability as would have been
payable to the depositor on a
claim for the insured deposits.

B. Conditional Statement
1. Depositor shall retain his/her claim for any uninsured portion of his/her deposit
which legal preference shall be the same as that of the subrogated claim of the
Corporation for its payment of insured deposits.
2. Payments by the Corporation of insured deposits in close banks has the nature
of public funds and must be considered a preferred credit in the order of
preference under Article 2244 of the New Civil Code.

Section 21.
 Upon actual takeover of the closed
bank
 A notice will be given by the
Corporation to the depositors of the
closed bank by the means deemed
appropriate by the Board of
Commencement of the determination of Directors.
the insured deposits
  The Corporation shall publish the
notice once a week for at least three
(3) consecutive week in the
newspaper of a general circulation
or the newspaper in the community
where the closed bank and or its
branches are located.
 Payment of insured deposit by
Corporation to any person shall
discharge the Corporation.
 Payment of transferred deposit to
any person by the new bank or by
an insured bank in which a
Dismissal from Liability for the Insured transferred deposit has been made
Deposit available shall discharge the
Corporation and such new bank or
other insured bank, to the same
extent that payment to such person
by the closed bank would have
discharged it from liability for the
insured deposit.
 Neither the Corporation nor such
other insured bank shall be
required to recognize as the owner
of any portion of a deposit
evidenced by a passbook,
certificate of deposit or other
evidence of deposit determined as
Ownership of any Portion of Deposit authentic record by the
Corporation, under a name other
than a claimant where any person
whose name or interest is not
disclosed as part owner in the said
authentic records and if such
recognition would increase the
aggregate amount of the insured
deposits in such closed bank.
EXCEPT when the Board of
Directors.
 Which may be required to provide
for the payment of any liability of
such depositor as a stockholder of
Withholding Payment of Any Portion of an the closed bank, or of any liability of
Insured Deposit in a Closed Bank such depositor to the closed bank
or its receiver, which is not offset
against a claim due from such
bank, pending the determination
and payment of such liability by
 such depositor or any other liable
therefor.
 If the depositor in the closed bank
failed to claim his insured deposits
with the Corporation within two (2)
years from actual takeover of the
Failure to Claim the Insured Deposits closed bank by the receiver, or
does not enforce his claim filed with
the corporation within two (2) years
after the two-year period to file a
claim, all rights of the depositor
against the Corporation with
respect to the insured deposit shall
be barred, unless otherwise
waived by the Corporation.
 All rights of the depositor against
the closed bank and its
shareholders or the receivership
estate to which the Corporation
may have become subrogated,
shall thereupon revert to the
depositor, and the Corporation shall
be discharged from any liability on
the insured deposit.

Corporate Funds and Assets

Section 22.

 Money denominated in local

currency not otherwise employed
shall be invested in obligations of
the Republic of the Philippines or
in obligations guaranteed as to
principal and interest by the
Republic of the Philippines, subject
to guidelines and limits as
approved by the Board of
Directors.
 Investment in debt instrument
denominated in foreign currencies
Investing the Money of the Corporation issued or guaranteed by the
Republic of the Philippines, or debt
instrument denominated in freely
convertible foreign currencies
issued by supranationals,
multilateral agencies or foreign
 governments with at least an
investment grade credit rating.
 Authorized to buy and/or sell debt
instruments and foreign currencies
from any government securities
eligible dealers or any
counterparties or brokers,
accredited by the PDIC Board, and
shall be authorized to open
securities custodianship and
settlement accounts.
 It shall be kept with the Bangko
Banking and Checking Accounts of the Sentral ng Pilipinas, or with any
Corporation other bank designated as
depository or fiscal agent of the
Philippine government.
 Accordingly, all tax obligations of
the Corporation for a period of five
(5) years reckoned from the date
of effectivity of this Act shall be
chargeable to the Tax Expenditure
Fund (TEF) in the annual General
Appropriations Act pursuant to the
provisions of Executive Order No.
Tax Expenditure Fund 93, series of 1986.
On the 6th year and thereafter, the
Corporation shall be exempt from
income tax, final withholding tax,
value-added tax on assessments
collected from member banks, and
local taxes.
Assets of the Corporation  Exempt from attachment,
government or any other order or
process of any court. Agency or
any other administrative body.

Financial Assistance
Section 22.

 Make loans, purchase the assets

of, assume liabilities, or make
deposits in;
1. A bank in danger of
closing, upon its
acquisition by a qualified
Exercise of Authorities of the Corporation investor.
 2. A qualified investor,
upon its purchase of all
assets and assumption
of all liabilities, of a bank
in danger of closing.
3. A surviving or
consolidated institution
that has merged or
consolidated with a bank
in danger of closing;
*upon such terms and
conditions as the Board of
Directors may prescribe.

The Corporation shall determine that actual pay-off and liquidation will be more
expensive than the exercise of the power under this section. Provided, that when the
Monetary Board determined that there are systemic consequences of probable failure or
closure of an insured bank, then the Corporation may provide financial assistance in an
amount that may be necessary to prevent the failure or even restore the bank in its viable
operations under such terms that may be deemed necessary by the Board of Directors
and subject to the concurrence by the Monetary Board without additional cost to DIF.

Systemic Risk – the possibility that failure of one bank to settle net transactions with other
bank will result to a chain reaction, depriving other banks of funds leading
to a shutdown of normal clearing and settlement of activity.
- Likelihood of a sudden, unexpected collapse of confidence in a
significant portion of the banking or financial system with potentially large
economic effects.
The Corporation may not use its authority to purchase common stock but it can
enter in an enforce agreements that will be necessary to protect its financial interest, as
long as the financial assistance is in the form of equity or quasi-equity as may be deemed
necessary by the Board of Directors with concurrence by the Monetary Board, and this
equity must be dispose if practicable.
 Sec. 23 Authority to Borrow
The PDIC is authorized to
borrow from the BSP for insurance
purposes and financial assistance
and the BSP is authorized to lend
to the PDIC. This loan granted by
the BSP shall be consistent with
monetary policy and the interest
thereon shall be fixed by the
Monetary Board. The corporation
is likewise authorized to borrow
money from any bank provided
that such loan shall be of short-term
duration.

Sec. 24 Issuance of Bonds, Debentures and other Obligations

With the approval of the President of the
Philippines, upon the recommendation of the
Department of Finance, the PDIC is
authorized to issue bonds, debentures,
and other obligations, both local and
foreign for
 purposes of providing liquidity
for settlement of insured
deposits in closed banks,
 to facilitate the implementation
of bank resolution,
 financial assistance
All issued notes, debentures, bonds,
or such obligations shall be exempt from
taxation and shall be fully guaranteed by the
national government. However, when the
corporation issued notes, debentures, bonds, and other debt
instruments without the approval of the Philippine president, these shall not be
guaranteed by the national government.
Sec. 25 Reports
The PDIC shall annually make a
report of its operations to the Congress
as soon as practicable after the 1st
day of January in each year.
The financial transactions of the
corporation shall be audited by
the Commission on Audit.
 The audit shall be
conducted at the place or
places where accounts of
the corporation are
normally kept.
 The representatives of COA
shall have access to all
books, accounts, records, reports, files,
and all other papers, things, or property belonging to or in
use by the corporation pertaining to its financial transactions and necessary to
facilitate the audit
 The representatives of COA shall be afforded full facilities for verifying transactions
with balances or securities held by depositories, fiscal agents, and custodians.

On or before December
15 following such fiscal
year, the Auditor
General shall furnish
the PDIC a short form
report sshowing the
financial position of the
corportiona at the close
of fiscal year

The audit report for the

fiscal year ending on
June 30 shall be made
by the Auditor General
to the Congress not
later than January 15
following such fiscal
year

A copy of each report

shall be furnished to the
President of the
Philippines, to the
Governor of the BSP,
and to the PDIC at the
time submitted to the
Congress
Sec. 26 & 27 Sanctions and Penalties
 Every insured bank shall display at each
place of business maintained by it a
sign or signs, and shall include a
statement in all its advertisementsto
the effect that its deposits are
insured by the PDIC.
 No insured bank shall pay any
o dividend on its capital stock, or
o interest on its capital notes or
debentures, or
o distribute any of its capital assets
while it remains in default of payment of
any assessment due to the PDIC.

 Without prior written consent by the

PDIC, no insured bank shall
o merge or consolidate with any
bank or institution, or
o assume liability to pay any deposits
made in, or similar liabilities of any bank or
institution, or
o transfer assets to any bank or institution in
consideration of the assumption of liabitiles for any
portion of the deposits may in such insured bank.

 Some of the acts under RA 3591 which are

punsihable by imprisonment of not less than
six years but not more than twelve years or
a fine of not less than fifty thousand
pesos but not more than ten million
persos, or both, are the following:
o Any director, officer, employee or
agent of a bank for:
 Willful refusal to submit
reports as required by law,
rules and regulations;
 Unjustified refusal to permit
examination and audit of the
deposit records or the affairs of the
institution;
  Willful making of a false statement or entry in any bank report or
document required by the PDIC;
 Submission of false material information in connection with or relation to
any financial assistance of the PDIC extended to the bank;
 Splitting of deposits or creation of fictitious or fraudulent loans or deposit
accounts;
 Refusal to receive the notice of closure;
o Any person for:
 Refusal to disclose information, records or data pertaining to the bank
accounts of a closed bank to the receiver;
 Refusal to turn over possession or custody of the asset and record of
the closed bank to the receiver, notwithstanding any agreement to the
contrary;
 Refusal or delaying the verification of authenticity of the ownership
documents, registration of interest of the closed bank on a specific
property; consolidation of ownership over an asset of the closed bank,
act of securing certified true copies of documents in relation to an asset
of the closed bank
 Allowiing the withdrawal from deposits or disposition of any asset of the
closed bank other than by the receiver
o Any law enforcement officer or local government official who refuses or fails to
assist the receiver in the service of the notice of closure.
 The penalty of imprisonment of not less than 10 years but not more than 12 years, or
a fine of not less than P500,00 but not more than P10,000,000, or both, shall be
imposed upon
o Any depositor who files a fictitious and/or fraudulent claim for deposit
insurance; and
o Any bank officer who certifies to the validity of the deposit liabilities which is
subsequently verified to be fictitious and/or fraudulent.
 The penalty of imprisonment of not less than 12 years but not more than 14 years
shall be imposed upon any person who participates, or attempts to participate, in a
scheme to defraud a bank.
o If the offese shall have been committed by a director or officer of the bank, the
penalty of imprisonment of not less than 15 years but not more than 17 years
shall be imposed
o If the offense shall have resulted in a systemic consequences, as determined
by the BSP, the penalty of imprisonment of not less than 18 years but not more
than 20 years shall be imposed.
 No court, except the Court of
Appeals, shall issue any
temporary restraining order,
preliminary injunction or
preliminary manadatory
injunction against the PDIC for
any action under RA 3591.
However, the Supreme Court
may issue a restraining order or
injunction when the matter is of
extreme urgency involving a
constitutional issue, such that
unless a temporary restraining
order is issued, grave injustice and
irreparable injury will arise.

The PDIC shall be exempt from PD no.

985, PD no. 1597, RA no, 6758, and
other laws on salary standardization.

The words "Central Bank" and the "Central

Bank of the Philippines" wherever they
appear in RA no. 3591, as amended, is
hereby replaced with Bangko Sentral and/or
Bangko Sentral ng Pilipinas, respectively

RA no. 3591, as amended, shall take

effect fifteen days following the
completion of its publication in the Official
Gazzette or in two newspapers of general
circulation.
BSA 3-1 GROUP 5
Andoy, Rizza Mae Q.
Cabuyao, Stewart D.
Dela Cruz, Paul Vincent L.
Gamo, Krishia Hanna R.
Molina, Dan Lloyd M.
Pascual, Shiena Rae T.
Pevidal, Elyssa Marie P.
Sales, Katherine Shaey M.
Siarot, Erica G.