PDIC Law

PDIC Law while being a government instrumentality with
corporate powers, shall enjoy fiscal and

REPUBLIC ACT No. 10846
administrative autonomy.”
AN ACT ENHANCING THE RESOLUTION AND
SECTION 3. Section 2 of the same Act is
LIQUIDATION FRAMEWORK FOR BANKS,
accordingly renumbered as Section 3 and is hereby
AMENDING FOR THE PURPOSE REPUBLIC
amended to read as follows:
ACT NO. 3591, AS AMENDED, AND OTHER
RELATED LAWS “BOARD OF DIRECTORS: COMPOSITION
AND AUTHORITY”
Be it enacted by the Senate and House of
Representatives of the Philippines in Congress “SEC. 3. (a) The powers and functions of the
assembled: Corporation shall be vested in and exercised by a
Board of Directors which shall be composed of
SECTION 1. Section 1 of Republic Act No. 3591,
seven (7) members as follows:
as amended, is hereby amended to read as follows:
“(1) The Secretary of Finance who shall be the ex
“THE CREATION OF THE PHILIPPINE
officio Chairman of the Board without
DEPOSIT INSURANCE CORPORATION
compensation;
“SECTION 1. — There is hereby created a
“(2) The Governor of the Bangko Sentral ng
Philippine Deposit Insurance Corporation
Pilipinas who shall be ex officio member of the
hereinafter referred to as the ‘Corporation’ which
Board without compensation;
shall insure as herein provided, the deposits of all
banks which are entitled to the benefits of “(3) The President of the Corporation, who shall be
insurance under this Act, and which shall have the appointed by the President of the Philippines from a
powers hereinafter granted. shortlist prepared by the Governance Commission
for Government-Owned or -Controlled Corporations
“The Corporation shall, as a basic policy, promote
pursuant to Republic Act No. 10149 to serve on a
and safeguard the interests of the depositing public
full-time basis for a term of six (6) years. The
by providing insurance coverage on all insured
President of the Corporation shall also serve as
deposits and helping maintain a sound and stable
Vice Chairman of the Board;
banking system.”
“(4) Four (4) members from the private sector to be
SECTION 2. A new section entitled Section 2 of the
appointed by the President of the Philippines from a
same Act shall be inserted between Sections 1 and
shortlist prepared by the Governance Commission
3 which shall read as follows:
for Government-Owned or -Controlled Corporations
“STATE POLICY” pursuant to Republic Act No. 10149. The appointive
directors shall serve for a term of six (6) years
“SEC. 2. — It is hereby declared to be the policy of unless sooner removed for cause and shall be
the State to strengthen the mandatory deposit subject to only one (1) reappointment: Provided,
insurance coverage system to generate, preserve, That of those first appointed, the first two (2)
maintain faith and confidence in the country’s appointees shall serve for a period of three (3)
banking system, and protect it from illegal schemes years: Provided, however, That the appointive
and machinations. director shall continue to hold office until the
“Towards this end, the government must extend all successor is appointed. An appointive director may
means and mechanisms necessary for the be nominated by the Governance Commission for
Corporation to effectively fulfill its vital task of Government-Owned or -Controlled Corporations for
promoting and safeguarding the interests of the reappointment by the President only if one obtains
depositing public by way of providing insurance a performance score of above average or its
coverage on bank deposits and in helping develop equivalent or higher in the immediately preceding
a sound and stable banking system. year of tenure as appointive director based on the
performance criteria for appointive directors of the
“In view of the crucial role and the nature of its Corporation.
functions and responsibilities, the Corporation,
“Appointment to any vacancy shall be only for the “The presence of four (4) members shall constitute
unexpired term of the predecessor pursuant to a quorum. All decisions of the Board of Directors
Republic Act No. 10149. shall require the concurrence of at least four (4)
members.
“No person shall be appointed as member of the
Board unless he or she be of good moral character, “The compensation, per diems, allowances,
of unquestionable integrity and responsibility, of incentives, and other benefits for board members
known probity and patriotism, and who is of shall be determined by the Governance
recognized competence in economics, banking and Commission for Government-Owned or -Controlled
finance, law, management administration or Corporations.
insurance, and shall be at least thirty-five (35) years
“In addition to the requirements of Republic Act No.
of age. For the duration of their tenure or term of
6713, otherwise known as the ‘Code of Conduct
office and for a period of one (1) year thereafter,
and Ethical Standards for Public Officials and
the appointive members of the Board shall be
Employees’, any member of the Board of Directors
disqualified from holding any office, position or
with personal or pecuniary interest in any matter in
employment in any insured bank.
the agenda of the Board of Directors shall disclose
“The Secretary of Finance and the Governor of the his or her interest to the Board and shall recuse
Bangko Sentral ng Pilipinas may each designate an from the meeting when the matter is taken up. The
alternate, who shall be an official with a rank not minutes shall reflect the disclosure made and the
lower than assistant secretary or its equivalent with recusal of the member concerned.
written authority from the Secretary of Finance or
“(b) The Board of Directors shall have the authority:
the Governor of the Bangko Sentral ng Pilipinas to
attend such meetings and to vote on behalf of their “(1) To approve and issue rules and regulations for
respective principals. Whenever the Chairman of banks and the depositing public as it considers
the Board is unable to attend a meeting of the necessary for the effective discharge of its
Board, or in the event of a vacancy in the office of responsibilities;
the Secretary of Finance, and in the absence of the
Vice Chairman, the members of the Board shall “(2) To act as the policy-making body of the
designate from among themselves who shall act as Corporation and constitute Board committees to
Chairman. oversee the management, operations and
administration of the Corporation;
“The President of the Philippines may remove any
appointive member of the Board of Directors for “(3) To establish a human resource management
any of the following reasons: system which shall govern the selection, hiring,
appointment, transfer, promotion, or dismissal of
“(i) If the member is physically or mentally personnel. Such system shall aim to establish
incapacitated that he or she cannot properly professionalism and excellence at all levels of the
discharge his or her duties and responsibilities, and Corporation in accordance with sound principles of
such incapacity has lasted for more than six (6) management;
months; or
“(4) To approve a compensation structure as an
“(ii) If the member is guilty of acts or operations integral component of the Corporation’s human
which are of fraudulent or illegal character or which resource development program based on job
are manifestly opposed to the aims and interests of evaluation studies and wage surveys, and revise
the Corporation; or the same as it may deem necessary: Provided,
That all positions in the Corporation shall be
“(iii) If the member no longer possesses the
governed by a compensation package, position
qualifications specified in this Act; or
classification system and qualification standards
“(iv) If the member does not meet the standards for approved by the Board based on a comprehensive
performance based on the evaluation by the job analysis and audit of actual duties and
Governance Commission for Government-Owned responsibilities. The compensation structure shall
or -Controlled Corporations under Republic Act No. be comparable to that of other financial institutions
10149. based on prevailing market standards, and shall
provide for yearly merit reviews or increases based this Charter in a manner responsive and attuned to
on productivity. The Corporation shall therefore be market developments, and to provide incentives for
exempt from existing laws, rules and regulations on all those who shall be separated from the service.
compensation package, position classification and Notwithstanding any law to the contrary, these
qualification standards. It shall however endeavor incentives shall be in addition to all gratuities and
to make its system conform as closely as possible benefits the employee is entitled to under existing
with the principles under Republic Act No. 6758, as laws; and
amended;
“(11) To promote and sponsor the local or foreign
“(5) To appoint, establish the rank, fix the training or study of personnel in the fields of
remuneration, benefits, including health care banking, finance, management, information
services through a Health Maintenance technology and law. Towards this end, the
Organization (HMO) and medical benefits other Corporation is hereby authorized to defray the
than those provided for under Republic Act No. costs of such training or study. The Board shall
7875, as amended, and remove any officer or prescribe rules and regulations to govern the
employee of the Corporation, for cause, subject to training or study programs of the Corporation.”
pertinent civil service laws: Provided, That the
Board of Directors may delegate this authority to
accordingly renumbered as Section 4.
the President subject to specific guidelines:
Provided, further, That in no case shall there be SECTION 5. The first paragraph of Section 4 of the
any diminution of existing salaries, benefits and same Act, as renumbered, is hereby amended to
other emoluments; read as follows:
“(6) To approve policy on local and foreign travel, “PRESIDENT OF THE CORPORATION
and the corresponding expenses, allowances and COMPENSATION, POWERS AND DUTIES”
per diems, of officers, employees, agents of the
Corporation, which shall be comparable with the “SEC. 4. The President of the Corporation shall be
expenses, allowances and per diems of personnel its Chief Executive Officer and the Vice Chairman
of other financial institutions based on prevailing of its Board of Directors and his or her salary shall
market standards, notwithstanding the provisions of be fixed by the President of the Philippines upon
Presidential Decree No. 1177, Executive Order No. the recommendation of the Governance
292, Executive Order No. 248, as amended, Commission for Government-Owned or -Controlled
Executive Order No. 298, and similar laws; Corporations, at a sum commensurate to the
importance and responsibility attached to the
“(7) To adopt an annual budget for, and authorize position. The sum total of the salary, allowances,
such expenditures by the Corporation, as are in the benefits and other emoluments of the President of
interest of the effective administration and the Corporation shall be higher than the
operation of the Corporation; compensation package of the next highest ranking
executive of the Corporation.”
“(8) To approve the target level of the Deposit
Insurance Fund (DIF) and the methodology for SECTION 6. Section 4, paragraphs (d), (f) and (h)
determining reserves for insurance and financial of the same Act, as renumbered, are hereby
assistance losses; amended to read as follows:
“(9) To review the organizational set-up of the “(d) To represent the Corporation in all dealings
Corporation and adopt a new or revised with other offices, agencies and instrumentalities of
organizational structure as it may deem necessary the government and with all other persons or
for the Corporation to undertake its mandate and entities, public or private, whether domestic, foreign
functions; or international;
“(10) To design, adopt and revise, as it may deem “(f) To represent the Corporation, either personally
necessary, an early separation plan for employees or through counsel, including private counsel, as
of the Corporation to ensure availability of a human may be authorized by the PDIC Board, in any legal
resource pool qualified and capable of proceeding or action;
implementing the Corporation’s authorities under
“(h) x x x. The President shall be assisted by a Vice “(f) The term creditor refers to any individual or
President and other officials whose appointment entity with a valid claim against the assets of the
and removal for cause shall be approved and closed bank.
whose salary shall be fixed by the Board of
“(g) The term deposit means the unpaid balance of
Directors upon recommendation of the President of
money or its equivalent received by a bank in the
the Corporation. During the absence or temporary
usual course of business and for which it has given
incapacity of the President, or in case of vacancy or
or is obliged to give credit to a commercial,
permanent incapacity and pending appointment of
checking, savings, time or thrift account, evidenced
a new President of the Corporation by the
by a passbook, certificate of deposit, or other
President of the Philippines, the Board of Directors
evidence of deposit issued in accordance with
shall designate the officer-in-charge of the
Bangko Sentral ng Pilipinas rules and regulations
Corporation.”
and other applicable laws, together with such other
SECTION 7. Section 4 of the same Act is obligations of a bank, which, consistent with
accordingly renumbered as Section 5, and is banking usage and practices, the Board of
hereby amended to read as follows: Directors shall determine and prescribe by
regulations to be deposit liabilities of the bank:
“DEFINITION OF TERMS”
Provided, That any obligation of a bank which is
“SEC. 5. As used in this Act – payable at the office of the bank located outside of
the Philippines shall not be a deposit for any of the
“(a) The term asset refers to movable, immovable, purposes of this Act or included as part of the total
tangible, or intangible resources or properties over deposits or of insured deposit: Provided, further,
which a bank has an established or equitable That subject to the approval of the Board of
interest, including the proceeds of the sale of its Directors, any insured bank which is incorporated
bank and branch licenses subject to the approval of under the laws of the Philippines which maintains a
the Bangko Sentral ng Pilipinas. branch outside the Philippines may elect to include
“(b) The term asset distribution plan refers to the for insurance its deposit obligations payable only at
plan of distribution of the assets of a closed bank to such branch.
its creditors, based on its estimated realizable value “The Corporation shall not pay deposit insurance
as of a certain cut-off date, prepared in accordance for the following accounts or transactions:
with the Rules on Concurrence and Preference of
Credits under the Civil Code or other laws. “(1) Investment products such as bonds and
securities, trust accounts, and other similar
“An asset distribution plan may be partial when it instruments;
pertains to the distribution of a portion or some of
the assets of the closed bank, or final when it “(2) Deposit accounts or transactions which are
pertains to the distribution of all the assets of the fictitious or fraudulent as determined by the
closed bank. Corporation;
“(c) The term Board of Directors means the Board “(3) Deposit accounts or transactions constituting,
of Directors of the Corporation. and/or emanating from, unsafe and unsound
banking practice/s, as determined by the
“(d) The term bank and banking institution shall Corporation, in consultation with the Bangko
be synonymous and interchangeable and shall Sentral ng Pilipinas, after due notice and hearing,
include banks, commercial banks, savings banks, and publication of a directive to cease and desist
mortgage banks, rural banks, development banks, issued by the Corporation against such deposit
cooperative banks, stock savings and loan accounts, transactions or practices; and
associations and branches and agencies in the
Philippines of foreign banks and all other “(4) Deposits that are determined to be the
corporations authorized to perform banking proceeds of an unlawful activity as defined under
functions in the Philippines. Republic Act No. 9160, as amended.
“(e) The term closed bank refers to a bank placed “The actions of the Corporation taken under
under liquidation by the Monetary Board. Section 5(g) shall be final and executory, and may
only be restrained or set aside by the Court of notwithstanding, no owner/holder of any passbook,
Appeals, upon appropriate petition for certiorari on certificate of deposit, or other evidence of deposit
the ground that the action was taken in excess of shall be recognized as a depositor entitled to the
jurisdiction or with such grave abuse of discretion rights provided in this Act unless the passbook,
as to amount to a lack or excess of jurisdiction. The certificate of deposit, or other evidence of deposit is
petition for certiorari may only be filed within thirty determined by the Corporation to be an authentic
(30) days from notice of denial of claim for deposit document or record of the issuing bank: Provided,
insurance. finally, That in case of a condition that threatens the
monetary and financial stability of the banking
“(h) The term disputed claim refers to a claim or
system that may have systemic consequences, as
suit against the assets of a closed bank, or for
defined in Section 22 hereof, as determined by the
specific performance, or breach of contract, or
Monetary Board, the maximum deposit insurance
damages, of whatever nature or character, whether
cover may be adjusted in such amount, for such a
for money or otherwise, liquidated or unliquidated,
period, and/or for such deposit products, as may be
fixed or contingent, matured or current, denied by
determined by a unanimous vote of the Board of
the receiver.
Directors in a meeting called for the purpose and
“(i) The term insured bank means any bank the chaired by the Secretary of Finance, subject to the
deposits of which are insured in accordance with approval of the President of the Philippines.
the provisions of this Act.
“(k) The term liquidation refers to the proceedings
“(j) The term insured deposit means the amount under Sections 12 to 16 of this Act.
due to any bonafide depositor for legitimate
“(1) The term liquidation court refers to the
deposits in an insured bank as of the date of
Regional Trial Court (RTC) of general jurisdiction
closure but not to exceed Five hundred thousand
where the petition for assistance in the liquidation
pesos (P500,000.00). Such amount shall be
of a closed bank is filed and given due course.
determined according to such regulations as the
Board of Directors may prescribe. In determining “(m) The term payout refers to the payment of
such amount due to any depositor, there shall be insured deposits.
added together all deposits in the bank maintained
“(n) The term petition for assistance in the
in the same right and capacity for his or her benefit
liquidation of a closed bank refers to the petition
either in his or her own name or in the name of
filed by the receiver with the RTC in accordance
others. A joint account regardless of whether the
with Section 16 of this Act.
conjunction ‘and’, ‘or’, ‘and/or’ is used, shall be
insured separately from any individually-owned “(o) The term purchase of assets and
deposit account: Provided, That (1) if the account is assumption of liabilities refers to a transaction
held jointly by two or more natural persons, or by where an insured bank purchases any or all assets
two or more juridical persons or entities, the and assumes any or all liabilities of another bank
maximum insured deposit shall be divided into as under resolution or liquidation, as provided in this
many equal shares as there are individuals, Act.
juridical persons or entities, unless a different
sharing is stipulated in the document of deposit, “(p) The term receiver refers to the Corporation or
and (2) if the account is held by a juridical person or any of its duly authorized agents acting as receiver
entity jointly with one or more natural persons, the of a closed bank.
maximum insured deposit shall be presumed to “(q) The term records include all documents, titles,
belong entirely to such juridical person or entity: papers and electronic data of the closed bank,
Provided, further, That the aggregate of the interest including those pertaining to deposit accounts of
of each co-owner over several joint accounts, and with the closed bank, its assets, transactions
whether owned by the same or different and corporate affairs.
combinations of individuals, juridical persons or
entities, shall likewise be subject to the maximum “(r) The term residual assets refer to assets, in
insured deposit of Five hundred thousand pesos cash or in kind, to be turned over to the closed
(P500,000.00): Provided, furthermore, That the bank’s stockholders of record, in proportion to their
provisions of any law to the contrary interest in the closed bank as of date of closure,
after payment in full of liquidation costs, fees and premises, assets and affairs of a closed bank for
expenses, and the valid claims and surplus the purpose of liquidating the bank.
dividends to all the creditors.
“(x) The term transfer deposit means, a deposit in
“(s) The term resolution refers to the actions an insured bank made available to a depositor by
undertaken by the Corporation under Section 11 of the Corporation as payment of insured deposit of
this Act to: such depositor in a closed bank and assumed by
another insured bank.
“(1) Protect depositors, creditors and the DIF;
“(y) The term trust funds means funds held by an
“(2) Safeguard the continuity of essential banking
insured bank in a fiduciary capacity and includes
services or maintain financial stability; and
without being limited to, funds held as trustee,
“(3) Prevent deterioration or dissipation of bank executor, administrator, guardian or agent.
assets.
“(z) The term valid claim refers to the claim
“(t) The term risk-based assessment system recognized by the receiver or allowed by the
pertains to a method for calculating an insured liquidation court.
bank’s assessment on the probability that the DIF
“(aa) The term winding up period refers to the
will incur a loss with respect to the bank, and the
period provided in Section 16 of this Act.”
likely amount of any such loss, based on its risk
rating that takes into consideration the following: SECTION 8. Section 5 of the same Act is
accordingly renumbered as Section 6, and is
“(1) Quality and concentration of assets;
hereby amended to read as follows:
“(2) Categories and concentration of liabilities, both
“DEPOSIT INSURANCE COVERAGE”
insured and uninsured, contingent and
noncontingent; “SEC. 6. The deposit liabilities of any bank which is
engaged in the business of receiving deposits as
“(3) Capital position;
herein defined on the effective date of this Act, or
“(4) Liquidity position; which thereafter may engage in the business of
receiving deposits, shall be insured with the
“(5) Management and governance; and Corporation.
“(6) Other factors relevant to assessing such “Whenever a bank is determined by the Bangko
probability, as may be determined by the Sentral ng Pilipinas to be capital deficient, the
Corporation: Corporation may conduct an insurance risk
“(u) The term statement of affairs refers to a evaluation on the bank to enable it to assess the
report of financial condition of the closed bank at a risks to the DIF. Such evaluation may include the
given date, showing the: (1) estimated realizable determination of: (i) the fair market value of the
value of assets; (2) classification of credits; and (3) assets and liabilities of a bank; or (ii) the risk
estimated liabilities to be settled. classification of a bank; or (iii) possible resolution
modes under Section 11 of this Act, subject to such
“(v) The term surplus dividends refers to the terms and conditions as the PDIC Board may
remaining assets of the closed bank after prescribe.”
satisfaction in full of all the liquidation costs, fees
and expenses, and valid claims. The surplus SECTION 9. Section 6 of the same Act is
dividends shall be computed at the legal rate of accordingly renumbered as Section 7.
interest from the date of takeover to cut-off date of SECTION 10. Section 7 paragraph (a) of the same
the distribution plan, and shall be paid, in cash or in Act, as renumbered, is hereby amended to read as
kind, to creditors of the closed bank in accordance follows:
with the Rules on Concurrence and Preference of
Credits under the Civil Code or other laws. “ASSESSMENT OF MEMBER BANKS”
“(w) The term takeover refers to the act of “SEC. 7. (a) The assessment rate shall be
physically taking possession and control of the determined by the Board of Directors: Provided,
That the assessment rate shall not exceed one-fifth “(h) Should any insured bank fail or refuse to pay
(1/5) of one per centum (1%) per annum. The semi- any assessment required to be paid by such bank
annual assessment for each insured bank shall be under any provision of this Act, and should the
in the amount of the product of one-half (1/2) the bank not correct such failure or refusal within thirty
assessment rate multiplied by the assessment base (30) days after written notice has been given by the
but in no case shall it be less than Five thousand Corporation to an officer of the bank citing this
pesos (P5,000.00). The assessment base shall be subsection, and stating that the bank has failed or
the amount of the liability of the bank for deposits refused to pay as required by the law, the
as defined under subsection (g) of Section 5 Corporation may, at its discretion, file a case for
without any deduction for indebtedness of collection before the appropriate court without
depositors. prejudice to the imposition of administrative
sanctions allowed under the provisions of this law
“In addition, the Board of Directors may establish a
on the bank officials responsible for the
risk-based assessment system and impose a risk-
nonpayment of assessment fees.”
based assessment rate which shall not exceed two-
fifth (2/5) of one per centum (1%) per annum SECTION 12. An additional paragraph to Section 7
multiplied by the assessment base. of the same Act, as renumbered, is hereby inserted
after paragraph (h) which shall read as follows:
“The semi-annual assessment base for one semi-
annual period shall be the average of the “(i) The Corporation shall have the authority to
assessment base of the bank as of the close of collect a special assessment from any member
business on March thirty-one and June thirty and bank and prescribe the terms and conditions
the semi-annual assessment base for the other thereof to maintain the target level of the DIF set by
semi-annual period shall be the average of the the Board of Directors in accordance with this Act.”
assessment base of the bank as of the close of
business on September thirty and December thirty-
accordingly renumbered as Section 8, and is
one: Provided, That when any of said days is a
nonbusiness day or legal holiday, either national or
provincial, the preceding business day shall be “SANCTIONS AGAINST UNSAFE AND
used. The certified statements required to be filed UNSOUND BANKING PRACTICES”
with the Corporation under subsections (b) and (c)
of this section shall be in such form and set forth “SEC. 8. (a) Whenever upon examination by the
such supporting information as the Board of Corporation into the condition of any insured bank,
Directors shall prescribe. The assessment it shall be disclosed that an insured bank or its
payments required from the insured banks under directors or agents have committed, are committing
subsections (b) and (c) of this section shall be or about to commit unsafe or unsound practices in
made in such manner and at such time or times as conducting the business of the bank, or have
the Board of Directors shall prescribe.” violated, are violating or about to violate any
provisions of any law or regulation to which the
SECTION 11. Section 7, paragraphs (d) and (h), of insured bank is subject, the Board of Directors shall
the same Act, as renumbered, are hereby amended submit the report of the examination to the
to read as follows: Monetary Board to secure corrective action
thereon. If no such corrective action is taken by the
“(d) All assessment collections and income from
Monetary Board within forty-five (45) days from the
operations after expenses and charges shall be
submission of the report, the Board of Directors
added to the DIF under Section 17 hereof. Such
shall, motu proprio, institute corrective action which
expenses and charges are: (1) the operating costs
it deems necessary. The Board of Directors may
and expenses of the Corporation for the calendar
thereafter issue a cease and desist order, and
year; (2) additions to reserve to provide for
require the bank or its directors or agents
insurance and financial assistance losses, net of
concerned to correct the practices or violations
recoverable amounts from applicable assets and
within forty-five (45) days. However, if the practice
collaterals, during the calendar year; and (3) the net
or violation is likely to cause insolvency or
insurance and financial assistance losses sustained
substantial dissipation of assets or earnings of the
in said calendar year.
bank, or is likely to seriously weaken the condition “Twelfth – The provisions of Presidential Decree
of the bank or otherwise seriously prejudice the No. 1445, as amended, Executive Order No. 292,
interests of its depositors and the Corporation, the and other similar laws notwithstanding, to
period to take corrective action shall not be more compromise, condone or release, in whole or in
than fifteen (15) days. The order may also include part, any claim or settled liability to the Corporation,
the imposition of fines provided in Section 26(g) regardless of the amount involved, under such
hereof. The Board of Directors shall duly inform the terms and conditions as may be imposed by the
Monetary Board of the Bangko Sentral ng Pilipinas Board of Directors to protect the interest of the
of action it has taken under this subsection with Corporation, and to write off the Corporation’s
respect to such practices or violations. receivables and assets which are no longer
recoverable or realizable;”
“(b) The actions and proceedings provided in the
preceding subsections may be undertaken by the SECTION 16. Section 9 of the same Act, as
Corporation if, in its opinion, an insured bank or its renumbered, is further amended by inserting
directors or agents have violated, are violating or additional paragraphs after paragraph Twelfth,
about to violate any provision of this Act or any which shall read as follows:
order, rule or instruction issued by the Corporation
“Thirteenth – To determine qualified interested
or any written condition imposed by the Corporation
acquirers or investors for any of the modes of
in connection with any transaction with or grant by
resolution or liquidation of banks;
the Corporation.
“Fourteenth – To determine the appropriate
“(c) The Corporation may terminate the insured
resolution method and to implement the same for a
status of any bank that fails or refuses to comply,
bank subject of resolution; and
within thirty (30) days from notice, with any cease-
and-desist order issued by the Corporation, or with “Fifteenth – To determine the appropriate mode of
any corrective action imposed by the Monetary liquidation of a closed bank and to implement the
Board, under this section pertaining to a deposit- same.”
related unsafe and/or unsound banking practice.
“Such termination shall be final and executory, and accordingly renumbered as Section 10.
shall be effective upon publication of the notice of
termination in a newspaper of general circulation. SECTION 18. Section 10 paragraph (b-1) of the
same Act, as renumbered, is hereby amended to
“The deposits of each depositor in the bank on the read as follows:
effective date of the termination of insurance
coverage, less all subsequent withdrawals, shall “(b-1) The investigators appointed by the Board of
continue to be insured up to the maximum deposit Directors shall have the power on behalf of the
insurance coverage for a period of one hundred Corporation to conduct investigations on frauds,
eighty (180) days. Additions to, or renewal of, irregularities and anomalies committed in banks,
existing deposits and new deposits in such bank based on reports of examination conducted by the
after the effective date of termination of insured Corporation and Bangko Sentral ng Pilipinas or
status of the bank shall not be insured by the complaints from depositors or from other
Corporation. government agency. Each such investigator shall
have the power to administer oaths, and to
“The bank shall not advertise or represent that examine and take and preserve the testimony of
additions to, or renewal of, existing deposits and any person relating to the subject of investigation.
new deposits made after the effective date of For this purpose, the Corporation may appoint or
termination aye covered by deposit insurance.” hire persons or entities of recognized competence
in forensic and fraud investigations as its agents.”
accordingly renumbered as Section 9. SECTION 19. Section 10 paragraph (c) of the same
Act, as renumbered, is hereby amended to read as
SECTION 15. Section 9, paragraph Twelfth of the
follows:
read as follows:
“(c) Each insured bank shall make to the That in the event of a settlement or compromise,
Corporation reports of condition in such form and at indemnification shall be provided only in connection
such times as the Board of Directors may require with such matters covered by the settlement as to
such reports to be published in such manner, not which the Corporation is advised by counsel that
inconsistent with any applicable law, as it may the persons to be indemnified did not commit any
direct. Every such bank which fails to make or negligence or misconduct.”
publish any such report within such time, as the
SECTION 22. The second paragraph of Section 10
Board of Directors may require, shall be subject to
paragraph (i) of the same Act, as renumbered, is
a penalty of not more than Ten thousand pesos
(P10,000.00) for each day of such failure
recoverable by the Corporation for its use.” “(i) Notwithstanding the provisions of this section
and Section 3 of this Act, members of the Board of
SECTION 20. Section 10 paragraph (d-1) of the
Directors and personnel of the Corporation may
become directors and officers of any bank and
read as follows:
banking institution and of any entity related to such
“(d-1) Each insured bank shall keep and maintain a institution in connection with financial assistance
true and accurate record or statement of its daily extended by the Corporation to such institution and
deposit transactions consistent with the standards when, in the opinion of the Board, it is appropriate
set by the Bangko Sentral ng Pilipinas and the to make such designation to protect the interest of
Corporation. Compliance with such standards shall the Corporation.”
be duly certified by the president of the bank and
SECTION 23. A new section entitled Section 11 of
the compliance officer: Provided, That refusal or
the same Act is hereby inserted between Sections
willful failure to issue the required certification shall
10 and 12 which shall read as follows:
constitute a violation of this section and shall
subject such officers of the bank to the sanctions “BANK RESOLUTION”
provided for under Section 26(f) of this Act.”
“SEC. 11. (a) The Corporation, in coordination with
SECTION 21. Section 10 paragraph (f) of the same the Bangko Sentral ng Pilipinas, may commence
Act, as renumbered, is hereby amended to read as the resolution of a bank under this section upon:
follows:
“(1) Failure of prompt corrective action as declared
“(f) The Corporation shall underwrite or advance all by the Monetary Board; or
legal costs and expenses, including legal fees and
other expenses of external counsel, or provide legal “(2) Request by a bank to be placed under
assistance to, directors, officers, employees or resolution.
agents of the Corporation in connection with any “The Corporation shall inform the hank of its
civil, criminal, administrative or any other action or eligibility for entry into resolution.
proceeding, to which such director, officer,
employee or agent is made a party by reason of, or “(b) The Bangko Sentral ng Pilipinas shall inform
in connection with, the exercise of authority or the Corporation of the initiation of prompt corrective
performance of functions and duties under this Act: action on any bank and shall be authorized to share
Provided, That such legal protection shall not apply with the Corporation all information, agreements or
to any civil, criminal, administrative or any action or documents, including any order of the Monetary
proceeding that may be initiated by the Board, in relation to the prompt corrective action.
Corporation, in whatever capacity, against such The Corporation shall have the authority to inquire
director, officer, employee or agent: Provided, and monitor the status of banks under prompt
further, That directors, officers, employees or corrective action.
agents who shall resign, retire, transfer to another
“(c) When there is a failure of prompt corrective
agency or be separated from the service, shall
action as declared by the Monetary Board due to
continue to be provided with such legal protection
capital deficiency, the Corporation, its duly
in connection with any act done or omitted to be
authorized officers or employees, may examine,
done by them in good faith during their tenure or
inquire or look into the deposit records of a bank:
employment with the Corporation: Provided, finally,
Provided, That such authority may not be exercised consolidation with, or its acquisition, by a qualified
when the failure of prompt corrective action is due investor.
to grounds other than capital deficiency. For this
“For this purpose, the Corporation may:
purpose, banks, their officers and employees are
hereby mandated to disclose and report to the “(1) Determine a resolution package for the bank;
Corporation or its duly authorized officers and
employees, deposit account information in said “(2) Identify and, with the approval of the Monetary
bank. Board, pre-qualify possible acquirers or investors;
“The Corporation, its duly authorized officers or “(3) Authorize pre-qualified acquirers or investors to
employees are prohibited from disclosing conduct due diligence on the bank, for purposes of
information obtained under this section to any determining the valuation of a bank through an
person, government official, bureau or office. Any objective and thorough review and appraisal of its
act done pursuant to this section shall not be assets and liabilities, and assessment of risks or
deemed as a violation of Republic Act No. 1405, as events that may affect its valuation; and
amended, Republic Act No. 6426, as amended, “(4) Conduct a bidding to determine the acquirer of
Republic Act No. 8791, and other similar laws the bank.
protecting or safeguarding the secrecy or
confidentiality of bank deposits: Provided, That any “(f) In determining the appropriate resolution
unauthorized disclosure of the information under method for a bank, the Corporation shall consider
this section shall be subject to the same penalty the:
under the foregoing laws protecting the secrecy or
“(1) Fair market value of the assets of the bank, its
confidentiality of bank deposits.
franchise, as well as the amount of its liabilities;
“(d) The stockholders, directors, officers or
“(2) Availability of a qualified investor;
employees of the bank shall have the following
obligations: “(3) Least cost to the DIF; and
“(1) Ensure bank compliance with the terms and “(4) Interest of the depositing public.
conditions prescribed by the Corporation for the
resolution of the bank; “(g) The Corporation may appoint or hire persons or
entities of recognized competence in banking,
“(2) Cause the engagement, with the consent of the finance, asset management or remedial
Corporation, of an independent appraiser or auditor management, as its agents, to perform such
for the purpose of determining the valuation of the powers and functions of the Corporation in the
bank consistent with generally accepted valuation resolution of a bank, or assist in the performance
standards; thereof.
“(3) Ensure prudent management and “(h) The PDIC Board shall prescribe the guidelines
administration of the bank’s assets, liabilities and or criteria for a bank to be placed under resolution.
records; and
“(i) Upon a determination by the Corporation that
“(4) Cooperate with the Corporation in the conduct the bank may not be resolved, the Monetary Board
or exercise of any or all of its authorities under this may act in accordance with Section 30 of Republic
Act and honor in good faith its commitment or Act No. 7653 or the New Central Bank Act.
undertaking with the Corporation on the resolution
of the bank. “(j) Bank resolution involving the purchase of all
assets and assumption of all liabilities of a bank
“(e) Within a period of one hundred eighty (180) shall be exempt from the provisions of Act No.
days from a bank’s entry into resolution, the 3952, otherwise known as ‘The Bulk Sales Law’.
Corporation, through the affirmative vote of at least
five (5) members of the PDIC Board, shall “(k) The provisions of this section are without
determine whether the bank may be resolved prejudice to any action that the Monetary Board
through the purchase of all its assets and may take under existing laws.”
assumption of all its liabilities, or merger or
SECTION 24. Sections 10, 11 and 12 of the same “(5) Appoint or hire persons or entities of
Act are hereby deleted. recognized competence in banking, finance, asset
management or remedial management, as its
deputies, assistants or agents, to perform such
powers and functions of the Corporation as receiver
of the closed bank, or assist in the performance
“LIQUIDATION OF A CLOSED BANK” thereof;
“SEC. 12. (a) Whenever a bank is ordered closed “(6) Appoint or hire persons or entities of
by the Monetary Board, the Corporation shall be recognized competence in forensic and fraud
designated as receiver and it shall proceed with the investigations;
takeover and liquidation of the closed bank in
“(7) Pay accrued utilities, rentals and salaries of
accordance with this Act. For this purpose, banks
personnel of the closed bank for a period not
closed by the Monetary Board shall no longer be
exceeding three (3) months, from available funds of
rehabilitated.”
the closed bank;
“(8) Collect loans and other claims of the closed
bank and for this purpose, modify, compromise or
restructure the terms and conditions of such loans
“AUTHORITIES OF A RECEIVER AND EFFECTS or claims as may be deemed advantageous to the
OF interests of the creditors of the closed bank;
PLACEMENT OF A BANK UNDER
“(9) Hire or retain private counsel as may be
LIQUIDATION”
necessary;
“SEC. 13. (a) The receiver is authorized to adopt
“(10) Borrow or obtain a loan, or mortgage, pledge
and implement, without need of consent of the
or encumber any asset of the closed bank, when
stockholders, board of directors, creditors or
necessary to preserve or prevent dissipation of the
depositors of the closed bank, any or a combination
assets, or to redeem foreclosed assets of the
of the following modes of liquidation:
closed bank, or to minimize losses to its depositors
“(1) Conventional liquidation; and and creditors;
“(2) Purchase of assets and/or assumption of “(11) If the stipulated interest rate on deposits is
liabilities. unusually high compared with prevailing applicable
interest rates, the Corporation as receiver, may
“(b) In addition to the powers of a receiver provided exercise such powers which may include a
under existing laws, the Corporation, as receiver of reduction of the interest rate to a reasonable rate:
a closed bank, is empowered to: Provided, That any modifications or reductions shall
“(1) Represent and act for and on behalf of the apply only to earned and unpaid interest;
closed bank; “(12) Utilize available funds of the bank, including
“(2) Gather and take charge of all the assets, funds generated by the receiver from the
records and affairs of the closed bank, and conversion of assets to pay for reasonable costs
administer the same for the benefit of its creditors; and expenses incurred for the preservation of the
assets, and liquidation of, the closed bank, without
“(3) Convert the assets of the closed bank to cash need for approval of the liquidation court;
or other forms of liquid assets, as far as practicable;
“For banks with insufficient funds, the Corporation
“(4) Bring suits to enforce liabilities of the directors, is authorized to advance the foregoing costs and
officers, employees, agents of the closed bank and expenses, and collect payment, as and when funds
other entities related or connected to the closed become available.
bank or to collect, recover, and preserve all assets,
including assets over which the bank has equitable “(13) Charge reasonable fees for the liquidation of
interest; the bank from the assets of the bank: Provided,
That payment of these fees, including any unpaid
advances under the immediately preceding distribution of its assets pursuant to this Act. The
paragraph, shall be subject to approval by the receiver shall represent the closed bank in all cases
liquidation court; by or against the closed bank and prosecute and
defend suits by or against it. In no case shall the
“(14) Distribute the available assets of the closed
bank be reopened and permitted to resume
bank, in cash or in kind, to its creditors in
banking business after being placed under
accordance with the Rules on Concurrence and
liquidation.
Preference of Credits under the Civil Code or other
laws; “(2) On the powers and functions of its directors,
officers and stockholders
“(15) Dispose records of the closed bank that are
no longer needed in the liquidation in accordance “The powers, voting rights, functions and duties, as
with guidelines set by the PDIC Board of Directors, well as the allowances, remuneration and
notwithstanding the laws on archival period and perquisites of the directors, officers, and
disposal of records; and stockholders of such bank are terminated upon its
closure. Accordingly, the directors, officers, and
“(16) Exercise such other powers as are inherent
stockholders shall be barred from interfering in any
and necessary for the effective discharge of the
way with the assets, records, and affairs of the
duties of the Corporation as receiver.
bank.
“The Board of Directors shall adopt such policies
“The receiver shall exercise all authorities as may
and guidelines as may be necessary for the
be required to facilitate the liquidation of the closed
performance of the above powers by personnel,
bank for the benefit of all its creditors.
deputies, assistants and agents of the Corporation.
“(3) On the assets
“(c) After the payment of all liabilities and claims
against the closed bank, the Corporation shall pay “Upon service of notice of closure as provided in
surplus, if any, dividends at the legal rate of interest Section 14 of this Act, all the assets of the closed
from date of takeover to date of distribution to bank shall he deemed in custodia legis in the hands
creditors and claimants of the closed bank in of the receiver, and as such, these assets may not
accordance with the Rules on Concurrence and be subject to attachment, garnishment, execution,
Preference of Credits under the Civil Code or other levy or any other court processes. A’ judge, officer
laws before distribution to the shareholders of the of the court or any person who shall issue, order,
closed bank. process or cause the issuance or implementation of
the garnishment order, levy, attachment or
“(d) The officers, employees, deputies, assistants
execution, shall be liable under Section 27 of this
and agents of the receiver shall have no liability
Act: Provided, however, That collaterals securing
and shall not be subject to any action, claim or
the loans and advances granted by the Bangko
demand in connection with any act done or omitted
Sentral ng Pilipinas shall not be included in the
to be done by them in good faith in connection with
assets of the closed bank for distribution to other
the exercise of their powers and functions under
creditors: Provided, further, That the proceeds in
this Act and other applicable laws, or other actions
excess of the amount secured shall be returned by
duly approved by the court.
the Bangko Sentral ng Pilipinas to the receiver.
“(e) The placement of a bank under liquidation shall
“Any preliminary attachment or garnishment on any
have the following effects:
of the assets of the closed bank existing at the time
“(1) On the corporate franchise or existence of closure shall not give any preference to the
attaching or garnishing party. Upon motion of the
“Upon placement by the Monetary Board of a bank receiver, the preliminary attachment or garnishment
under liquidation, it shall continue as a body shall be lifted and/or discharged.
corporate until the termination of the winding-up
period under Section 16 of this Act. Such “(4) On labor relations
continuation as a body corporate shall only be for
“Notwithstanding the provisions of the Labor Code,
the purpose of liquidating, settling and closing its
the employer-employee relationship between the
affairs and for the disposal, conveyance or
closed bank and its employees shall be deemed
terminated upon service of the notice of closure of motion of the receiver, be suspended for a period
the bank in accordance with this Act. Payment of not exceeding one hundred eighty (180) days and
separation pay or benefits provided for by law shall referred to mandatory mediation. Upon termination
be made from available assets of the bank in of the mediation, the case shall be referred back to
accordance with the Rules on Concurrence and the court or quasi-judicial body for further
Preference of Credits under the Civil Code or other proceedings.
laws.
“(10) Final decisions against the closed bank
‘(5) Contractual obligations
“The execution and enforcement of a final decision
“The receiver may cancel, terminate, rescind or of a court other than the liquidation court against
repudiate any contract of the closed bank that is not the assets of a closed bank shall be stayed. The
necessary for the orderly liquidation of the bank, or prevailing parly shall file the final decision as a
is grossly disadvantageous to the closed bank, or claim with the liquidation court and settled in
for any ground provided by law. accordance with the Rules on Concurrence and
Preference of Credits under the Civil Code or other
“(6) On interest payments
laws.
“The liability of a bank to pay interest on deposits
“(11) Docket and other court fees
and all other obligations as of closure shall cease
upon its closure by the Monetary Board without “Payment of docket and other court fees relating to
prejudice to the first paragraph of Section 85 of all cases or actions filed by the receiver with any
Republic Act No. 7653 (the New Central Bank Act): judicial or quasi-judicial bodies shall be deferred
Provided, That the receiver shall have the authority, until the action is terminated with finality. Any such
without need for approval of the liquidation court, to fees shall constitute as a first Hen on any judgment
assign, as payment to secured creditors, the bank in favor of the closed bank or in case of unfavorable
assets serving as collaterals to their respective judgment, such fees shall be paid as liquidation
loans up to the extent of the outstanding costs and expenses during the distribution of the
obligations, including interest as of date of closure assets of the closed bank.
of the hank, as validated by the receiver. The
“(12) All assets, records, and documents in the
valuation of the asset shall be based on the
possession of the closed bank at the time of its
prevailing market value of the collaterals as
closure are presumed held by the bank in the
appraised by an independent appraiser on an ‘as is
concept of an owner.
where is’ basis.
“(13) The exercise of authority, functions, and
“(7) Liability for penalties and surcharges for late
duties by the receiver under this Act shall be
payment and nonpayment of taxes
presumed to have been performed in the regular
“From the time of closure, the closed bank shall not course of business.
be liable for the payment of penalties and
“(14) Assets and documents of the closed bank
surcharges arising from the late payment or
shall retain their private nature even if administered
nonpayment of real property tax, capital gains tax,
by the receiver. Matters relating to the exercise by
transfer tax and similar charges.
the receiver of the functions under this Act shall be
“(8) Bank charges and fees on services subject to visitorial audit only by the Commission on
Audit.”
“The receiver may impose, on behalf of the closed
bank, charges and fees for services rendered after SECTION 27. A new section entitled Section 14 of
bank closure, such as, but not limited to, the the same Act is hereby inserted between Sections
execution of pertinent deeds and certifications. 13 and 15 which shall read as follows:
“(9) Actions pending for or against the closed bank “NOTICE OF CLOSURE AND
TAKEOVER ACTIVITIES”
“Except for actions pending before the Supreme
Court, actions pending for or against the closed “SEC. 14. (a) Upon the designation of the
bank in any court or quasi-judicial body shall, upon Corporation as receiver of a closed bank, it shall
serve a notice of closure to the highest-ranking the Civil Code or other laws, subject to such terms
officer of the bank present in the bank premises, or and conditions as the Corporation may prescribe.
in the absence of such officer, post the notice of The disposition of the branch licenses and other
closure in the bank premises or on its main bank licenses of the closed bank shall be subject to
entrance. The closure of the bank shall be deemed the approval of the Bangko Sentral ng Pilipinas.
effective upon the service of the notice of closure.
“(b) Such action of the receiver to determine
Thereafter, the receiver shall takeover the bank and
whether a bank may be the subject of a purchase
exercise the powers of the receiver as provided in
of assets and assumption of liabilities transaction
this Act.
shall be final and executory, and may not be set
“(b) The receiver shall have authority to use aside by any court.”
reasonable force, including the authority to force
open the premises of the bank, and exercise such
acts necessary to take actual physical possession
and custody of the bank and all its assets, records,
documents, and take charge of its affairs upon the “CONVENTIONAL LIQUIDATION”
service of the notice of closure.
“(c) Directors, officers, employees or agents of a “A. ASSET MANAGEMENT AND CONVERSION”
bank hold money and other assets of the bank in
trust or under administration or management by “SEC. 16. (a) The assets gathered by the receiver
them for the bank in their fiduciary capacity. shall be evaluated and verified as to their
existence, ownership, condition, and other factors
Upon service of the notice of closure to the bank, to determine their realizable value. In the
all directors, officers, employees or agents of the management, preservation and disposition of
closed bank shall have the duty to immediately assets, the receiver shall be guided by cost-benefit
account for, surrender and turn over to the receiver, considerations, resources of the closed bank, and
and provide information relative to, the assets, potential asset recovery.
records, and affairs of the closed bank in their
possession, custody, administration or “(b) The conversion of the assets of the closed
management. bank shall be carried out in a fair and transparent
manner in accordance with the rules and
“(d) When the circumstances so warrant, the local procedures as may be determined by the receiver.
government unit and law enforcement agencies
concerned shall, upon request, immediately provide “(c) In the management and/or conversion of the
assistance to the receiver during the service of assets of the closed bank, the receiver shall have
notice of closure and actual takeover operations to the authority to:
ensure the orderly conduct thereof and the security “(1) Represent the closed bank before the Land
and safety of the personnel of the receiver and the Registration Authority (LRA), the Bureau of Lands,
employees of the closed bank.” the Register of Deeds, the Land Transportation
SECTION 28. A new section entitled Section 15 of Office (LTO), the Assessor’s Office or other
the same Act is hereby inserted between Sections appropriate office of the local government unit, the
14 and 16 which shall read as follows: Securities and Exchange Commission (SEC), or
such other similar government agencies or private
“PURCHASE OF ASSETS AND entities in:
ASSUMPTION OF LIABILITIES”
“(i) Verifying the authenticity of ownership
“SEC. 15. (a) The receiver shall have the authority documents;
to facilitate and implement the purchase of the
assets of the closed bank and the assumption of its “(ii) Registering the interest of the closed bank on a
liabilities by another insured bank, without need for specific property;
approval of the liquidation court. The exercise of “(iii) Consolidating ownership over an asset of the
this authority shall be in accordance with the Rules closed bank;
on Concurrence and Preference of Credits under
“(iv) Securing certified true copies of documents certificates of deposit issued by the bank to its
held by the foregoing agencies/entities in relation to depositors. Pending turnover, all persons or entities
an asset of the closed bank; in custody or possession of any asset or record of
the closed bank shall hold the said assets or
“(v) Securing the appropriate certification from the
records in trust for the receiver.
foregoing agencies/entities in relation to an asset of
the closed bank; and “(3) The persons or entities in custody or
possession of such asset shall not allow, authorize
“(vi) Performing other related activities;
or cause the withdrawal, transfer, disposition,
“(2) Conduct a physical or ocular inspection of the removal, conversion, concealment, or other
properties owned by, or mortgaged to, the closed transaction involving or relating to the subject
bank, to determine their existence and present asset, unless otherwise directed by the receiver.
condition;
“(e) The receiver shall have the authority to invest
“(3) Determine the disposal price of assets in funds received from the conversion of the assets of
accordance with generally accepted valuation the closed bank in government securities, other
principles, standards and practices, subject to such government-guaranteed marketable securities or
guidelines as the receiver may determine; investment-grade debt instruments.
“(4) Dispose real or personal properties of the “(f) The proceeds of the sale of the bank and
closed bank through bidding, negotiated sale or any branch licenses shall be for the benefit of the
other mode including lease with option to purchase, creditors of the closed bank which shall be
whether by piece or by lot, as may be reasonably distributed in accordance with this Act and the
determined by the receiver based on cost-benefit Rules on Concurrence and Preference of Credits
considerations and to allow efficient distribution of under the Civil Code or other laws.
assets to creditors; and
“(5) Engage third parties to assist in the liquidation,
manage and/or dispose the assets, handle cases
filed against or by the closed bank, subject to such “B. PETITION FOR ASSISTANCE IN THE
guidelines as determined by the receiver. LIQUIDATION OF A CLOSED BANK”
“(d) Notwithstanding any provision of law to the “(g) A petition for assistance in the liquidation is a
contrary, the following rules shall apply to the special proceeding for the liquidation of a closed
management and/or conversion by the receiver of bank, and includes the declaration of the
the assets of the closed bank: concomitant right of its creditors and the order of
payment of their valid claims in the disposition of its
“(1) Upon notification of the closure of a bank, the
assets.
LRA, the Bureau of Lands, the Register of Deeds,
the LTO, the assessor’s office or other appropriate “Any proceeding initiated under this section shall be
office of the local government unit, or such other considered in rem. Jurisdiction over all persons
similar government agencies shall not allow any affected by the proceeding shall be considered as
transaction affecting the assets of the closed bank acquired upon publication of the order setting the
without the consent of the receiver. case for initial hearing in any newspaper of general
circulation in the Philippines.
“(2) Upon issuance by the Monetary Board of the
resolution ordering the closure of a bank, any “(h) The liquidation court shall have exclusive
person or entity in custody or possession of assets jurisdiction to adjudicate disputed claims against
or records of the closed bank, including, but not the closed banks, assist in the enforcement of
limited to, the closed bank’s deposit accounts, titles individual liabilities of the stockholders, directors
to real property, collaterals, promissory notes, and officers and decide on all other issues as may
evidence of indebtedness or investments shall be material to implement the distribution plan
immediately turn over custody of said assets and adopted by the Corporation for general application
records to the receiver. Such obligation shall cover to all closed banks.
evidences of deposit such as passbooks or
“(i) The provisions of Republic Act No. 8799, “C. WINDING-UP”
otherwise known as ‘The Securities Regulation
“(q) The creditors shall have a period of six (6)
Code’, and Supreme Court Administrative Matter
months from the date of publication of notice of the
No. 00-8-10-SC, entitled, ‘The Rules of Procedure
approval by the court of the final asset distribution
on Corporate Rehabilitation’, shall not be applicable
plan of the closed bank within which to claim
to the petition for assistance in the liquidation of the
payment of the principal obligations and surplus
closed bank.
dividends. During this six-month period, the
“(j) The petition shall be filed in the RTC which has receiver shall hold as trustee the assets allocated in
jurisdiction over the principal office of the closed the final asset distribution plan for said creditors.
bank or the principal office of the receiver, at the
“Failure by the creditor to comply with the
option of the latter.
documentary requirements within the prescribed
“(k) The petition shall be filed ex parte within a period and/or refusal to accept the asset as
reasonable period from receipt of the Monetary payment shall be deemed as abandonment or
Board Resolution placing the bank under waiver of his or her right to payment.
liquidation.
“(r) The individual stockholders of record or their
“(1) All persons or entities with claims against the duly-authorized representative or the court-
assets of the closed bank shall file their claims with appointed stockholders’ representative shall have a
the receiver within sixty (60) days from the date of period of six (6) months from publication of notice
publication of the notice of closure. Claims filed of the approval by the court of the final asset
outside the foregoing prescribed period shall be distribution plan of the closed bank within which to
disallowed. claim the residual assets. During this six-month
period, the receiver shall hold as trustee the assets
“Claims denied by the receiver shall be filed with
allocated in the final asset distribution plan for said
the liquidation court within sixty (60) days from
stockholders of record.
receipt of the final notice of denial of claim.
“Failure by the individual stockholders of record or
“(m) A claim whose validity has not yet been
their duly-authorized representative or the court-
determined with finality at the time of the
appointed stockholders’ representative to comply
submission of the final asset distribution plan, either
with the documentary requirements within the
by reason of a pending suit or for whatever reason,
prescribed period and/or refusal to accept the
shall be considered as contingent claim and shall
residual assets in kind shall be deemed as
not be paid under the proposed final asset
abandonment or waiver of right to receive the
distribution plan.
residual assets.
“(n) Upon finality of the order approving the final
“(s) After the lapse of the six-month period provided
asset distribution plan, the petition for assistance in
in paragraphs (q) and (r) of this section, all assets
the liquidation of a closed bank shall henceforth be,
which remain unclaimed by the creditors and/or
for all intents and purposes, considered closed and
stockholders of record shall be turned over to the
terminated and the receiver, its officers, employees
Bureau of Treasury.
or agents, are forever discharged from any and all
claims and/or liability arising from or in connection “(t) The receiver shall continue to keep all the
with the liquidation of the closed bank. pertinent records of the closed bank for a period of
six (6) months from the date of publication of the
“(o) The receiver shall submit a final report on the
approval of the final asset distribution plan.
implementation of the approved final asset
distribution plan to the Monetary Board and the After the lapse of this period, the receiver is
SEC after the expiration of the winding-up period authorized to dispose of the same in accordance
provided in this Act. with the rules and regulations to be prescribed by
the receiver.”
“(p) The Supreme Court shall promulgate the
appropriate procedural rules to implement this SECTION 30. Section 13 of the same Act is hereby
section. renumbered as Section 17.
SECTION 31. A new section entitled Section 18 of (1) year: Provided, furthermore, That the period
the same Act is hereby inserted between Sections shall not apply if the validity of the claim requires
17 and 19 which shall read as follows: the resolution of issues of facts and or law by
another office, body or agency including the case
“DIVIDEND DECLARATION”
mentioned in the first proviso or by the Corporation
“SEC. 18. Consistent with the policy of the State to together with such other office, body or agency.”
generate, preserve, maintain faith and confidence
in the country’s banking system, the Corporation
accordingly renumbered as Section 20 and is
shall build up and maintain the DIF at the target
level set by the PDIC Board of Directors. Such
target level shall be subject to periodic review and “SEC. 20. The Corporation, upon payment of any
may be adjusted as necessary. depositor as provided for in Section 19 of this Act,
shall be subrogated to all rights of the depositor
“The Corporation is exempt from Republic Act No.
against the closed bank to the extent of such
7656; instead, the Corporation shall remit dividends
payment. Such subrogation shall include the right
to the national government only if the target DIF
on the part of the Corporation to receive the same
level for the applicable year has been reached. For
dividends and payments from the proceeds of the
purposes of computing the amount of dividends to
assets of such closed bank and recoveries on
be declared and remitted to the national
account of stockholders’ liability as would have
government, all assessment collections shall not be
been payable to the depositor on a claim for the
considered as income. The dividend rate shall be at
insured deposits: Provided, That such depositor
least fifty percent (50%) of the income from other
shall retain his or her claim for any uninsured
sources only.”
portion of his or her deposit, which legal preference
SECTION 32. Section 14 of the same Act is shall be the same as that of the subrogated claim of
accordingly renumbered as Section 19 and is the Corporation for its payment of insured deposits.
hereby amended to read as follows: All payments by the Corporation of insured deposits
in closed banks partake of the nature of public
“PAYMENT OF INSURED DEPOSITS” funds, and as such, must be considered a preferred
“SEC. 19. Whenever an insured bank shall have credit in the order of preference under Article 2244
been closed by the Monetary Board pursuant to (9) of the New Civil Code.”
Section 30 of Republic Act No. 7653, or upon SECTION 34. Section 16 of the same Act is
expiration or revocation of a bank’s corporate term, accordingly renumbered as Section 21 and
payment of the insured deposits on such closed paragraph (c) thereof is hereby amended to read as
bank shall be made by the Corporation as soon as follows:
possible either (1) by cash or (2) by making
available to each depositor a transferred deposit in “(c) Except as otherwise prescribed by the Board of
another insured bank in an amount equal to insured Directors, neither the Corporation nor such other
deposit of such depositor: Provided, however, That insured bank shall be required to recognize as the
the Corporation, in its discretion, may require proof owner of any portion of a deposit evidenced by a
of claims to be filed before paying the insured passbook, certificate of deposit or other evidence of
deposits, and that in any case where the deposit determined by the Corporation to be an
Corporation is not satisfied as to the validity of a authentic document or record of the closed bank
claim for an insured deposit, it may require final under a name other than that of the claimant, any
determination of a court of competent jurisdiction person whose name or interest as such owner is
before paying such claim: Provided, further, That not disclosed on the passbook, certificate of deposit
failure to settle the claim, within six (6) months from or other evidence of deposit of such closed bank as
the date of filing of claim for insured deposit, where part owner of said deposit, if such recognition
such failure was due to grave abuse of discretion, would increase the aggregate amount of the
gross negligence, bad faith, or malice, shall, upon insured deposits in such closed bank.”
conviction, subject the directors, officers or
employees of the Corporation responsible for the
delay, to imprisonment from six (6) months to one
SECTION 36. Section 22 paragraph (a) of the paragraph (e) and is hereby amended to read as
same Act, as renumbered, is hereby amended to follows:
read as follows:
“FINANCIAL ASSISTANCE”
“CORPORATE FUNDS AND ASSETS”
“(e) In the exercise of its authorities under Section
“SEC. 22. (a) Subject to guidelines and limits as 11 of this Act, the Corporation is authorized to
approved by the Board of Directors, money of the make loans to, or purchase the assets of, or
Corporation denominated in the local currency, not assume liabilities of, or make deposits in:
otherwise employed, shall be invested in
“(1) A bank in danger of closing, upon its
obligations of the Republic of the Philippines or in
acquisition by a qualified investor; or
obligations guaranteed as to principal and interest
by the Republic of the Philippines. “(2) A qualified investor, upon its purchase of all
assets and assumption of all liabilities of a bank in
“The Corporation may also invest in debt
danger of closing; or
instruments denominated in foreign currencies
issued or guaranteed by the Republic of the “(3) A surviving or consolidated institution that has
Philippines, or debt instruments denominated in merged or consolidated with a bank in danger of
freely convertible foreign currencies issued by closing; upon such terms and conditions as the
supranationals, multilateral agencies, or foreign Board of Directors may prescribe, when in the
governments with at least an investment grade opinion of the Board of Directors, such acquisition,
credit rating. purchase of assets, assumption of liabilities,
merger or consolidation, is essential to provide
“The Corporation shall likewise be authorized to
adequate banking service in the community or
buy and/or sell debt instruments and foreign
maintain financial stability in the economy.
currencies from any government securities eligible
dealers or any counterparties or brokers, accredited “The Corporation, prior to the exercise of the
by the PDIC Board. powers under this section, shall determine that
actual payoff and liquidation thereof will be more
“For this purpose, the Corporation shall be
expensive than the exercise of this power:
authorized to open securities custodianship and
Provided, That when the Monetary Board has
settlement accounts.”
determined that there are systemic consequences
SECTION 37. Section 22 paragraph (b) of the of a probable failure or closure of an insured bank,
same Act, as renumbered, is hereby amended to the Corporation may grant financial assistance to
read as follows: such insured bank in such amount as may be
necessary to prevent its failure or closure and/or
“(b) The banking or checking accounts of the
restore the insured bank to viable operations, under
Corporation shall be kept with the Bangko Sentral
such terms and conditions as may be deemed
ng Pilipinas, or with any other bank designated as
necessary by the Board of Directors, subject to
depository or fiscal agent of the Philippine
concurrence by the Monetary Board and without
government.”
additional cost to the DIF.
SECTION 38. An additional paragraph to Section
“A systemic risk refers to the possibility that failure
22 of the same Act, as renumbered, is hereby
of one bank to settle net transactions with other
inserted after paragraph (c) which shall read as
banks will trigger a chain reaction, depriving other
follows:
banks of funds leading to a general shutdown of
“(d) Assets of the Corporation shall be exempt from normal clearing and settlement activity. Systemic
attachment, garnishment or any other order or risk also means the likelihood of a sudden,
process of any court, agency or any other unexpected collapse of confidence in a significant
administrative body.” portion of the banking or financial system with
potentially large real economic effects. Finally, the
SECTION 39. Section 17 paragraph (d) of the Corporation may not use its authority under this
same Act is accordingly renumbered as Section 22 subsection to purchase the voting or common stock
of an insured bank but it can enter into and enforce
agreements that it determines to be necessary to authorized to issue bonds, debentures, and other
protect its financial interests: Provided, That the obligations, both local or foreign, as may be
financial assistance may take the form of equity or necessary for purposes of providing liquidity for
quasi-equity of the insured bank as may be settlement of insured deposits in closed banks, to
deemed necessary by the Board of Directors with facilitate the implementation of bank resolution
concurrence by the Monetary Board: Provided, under Section 11 of this Act, as well as for financial
further, That the Corporation shall dispose of such assistance as provided herein: Provided, That the
equity as soon as practicable.” Board of Directors shall determine the interest
rates, maturity and other requirements of said
obligations: Provided, further, That the Corporation
accordingly renumbered as Section 23 and is
may provide for appropriate reserves for the
redemption or retirement of said obligation.
“AUTHORITY TO BORROW”
“All notes, debentures, bonds, or such obligations
“SEC. 23. The Corporation is authorized to borrow issued by the Corporation shall be exempt from
from the Bangko Sentral ng Pilipinas and the taxation both as to principal and interest, and shall
Bangko Sentral ng Pilipinas is authorized to lend to be fully guaranteed by the Government of the
the Corporation on such terms as may be agreed Republic of the Philippines. Such guarantee, which
upon by the Corporation and the Bangko Sentral ng in no case shall exceed two times the DIF as of
Pilipinas, such funds as in the judgment of the date of the debt issuance, shall be expressed on
Board of Directors of the Corporation are from time the face thereof.
to time required for insurance purposes and
“The Corporation may issue notes, debentures,
financial assistance provided for in Section 22(e) of
bonds, or other debt instruments without the
this Act: Provided, That any such loan as may be
approval of the President of the Philippines, as long
granted by the Bangko Sentral ng Pilipinas shall be
as these shall not be guaranteed by the national
consistent with monetary policy: Provided, further,
government.
That the rate of interest thereon shall be fixed by
the Monetary Board. “The Board of Directors shall have the power to
prescribe the terms and conditions, rules and
“When in the judgment of the Board of Directors the
regulations for the issuance, reissuance, servicing,
funds of the Corporation are not sufficient to
placement and redemption of the bonds herein
provide for an emergency or urgent need to attain
authorized to be issued as well as the registration
the purposes of this Act, the Corporation is likewise
of such bonds at the request of the holders
authorized to borrow money, obtain loans or
thereof.”
arrange credit lines or other credit accommodations
from any bank: Provided, That such loan shall be of SECTION 42. Section 20 of the same Act is
short-term duration: Provided, further, That no prior accordingly renumbered as Section 25.
Monetary Board opinion shall be required for the
Corporation and its counterparties on individual
drawdowns or borrowings within an approved
borrowing program where prior Monetary Board SECTION 44. Section 26 paragraph (f) of the same
opinion has already been obtained, pursuant to Act, as renumbered, is hereby amended to read as
Section 123 of Republic Act No. 7653.” follows:
SECTION 41. Section 19 of the same Act is “(f) The penalty of imprisonment of not less than six
accordingly renumbered as Section 24 and is (6) years but not more than twelve (12) years or a
hereby amended to read as follows: fine of not less than Fifty thousand pesos
(P50,000.00) but not more than Ten million pesos
“ISSUANCE OF BONDS, DEBENTURES
(P10,000,000.00), or both, at the discretion of the
AND OTHER OBLIGATIONS”
court, shall be imposed upon:
“SEC. 24. With the approval of the President of the
“(1) Any director, officer, employee or agent of a
Philippines, upon the recommendation of the
bank for:
Department of Finance, the Corporation is
“(a) Any willful refusal to submit reports as required to Section 56 of Republic Act No. 8791, or ‘The
by law, rules and regulations; General Banking Law of 2000’.
“(b) Any unjustified refusal to permit examination “Notwithstanding any law to the contrary, the
and audit of the deposit records or the affairs of the foregoing acts of directors, officers, employees or
institution; agents of the bank shall be considered as
additional grounds for disqualification under the fit
“(c) Any willful making of a false statement or entry
and proper rules of the Bangko Sentral ng Pilipinas.
in any bank report or document required by the
Corporation; “(1) Other acts inimical to the interest of the bank or
the Corporation, such as, but not limited to, conflict
“(d) Submission of false material information in
of interest, disloyalty, authorizing related party
connection with or in relation to any financial
transactions with terms detrimental to the bank and
assistance of the Corporation extended to the bank;
its stakeholders, and unauthorized disclosure of
“(e) Splitting of deposits or creation of fictitious or confidential information, as may be determined by
fraudulent loans or deposit accounts. the Corporation.
“Splitting of deposits occurs whenever a deposit “(2) Any person for:

account with an outstanding balance of more than
“(a) Refusal to disclose information, records or data
the statutory maximum amount of insured deposit
pertaining to the bank accounts of a closed bank to
maintained under the name of natural or juridical
the receiver;
persons is broken down and transferred into two (2)
or more accounts in the name/s of natural or “(b) Refusal to turn over possession or custody of
juridical persons or entities who have no beneficial the asset and record of the closed bank to the
ownership on transferred deposits in their names receiver, notwithstanding any agreement to the
within one hundred twenty (120) days immediately contrary;
preceding or during a bank-declared bank holiday,
“(c) Refusal or delaying the:
or immediately preceding a closure order issued by
the Monetary Board of the Bangko Sentral ng “(i) Verification of authenticity of the ownership
Pilipinas for the purpose of availing of the maximum documents;
deposit insurance coverage;
“(ii) Registration of interest of the closed bank on a
“(f) Refusal to receive the notice of closure as specific property;
provided under Section 14 of this Act;
“(iii) Consolidation of ownership over an asset of
“(g) Refusal to allow the Corporation to take over a the closed bank;
closed bank or obstructing such action of the
Corporation; “(iv) Act of securing certified true copies of
documents in relation to an asset of the closed
“(h) Refusal to turn over or destroying or tampering bank;
bank records;
“(v) Act of securing the appropriate certification
“(i) Fraudulent disposal, transfer or concealment of from the agencies or entities stated in Section 16 of
any asset, property or liability of the closed bank; this Act in relation to an asset of the closed bank;
“(j) Violation of, or causing any person to violate, “(vi) Conduct of a physical or ocular inspection of
the exemption from garnishment, levy, attachment the properties owned by, or mortgaged to, the
or execution provided under this Act and the New closed bank, to determine their existence and
Central Bank Act; present condition; or
“(k) Any willful failure or refusal to comply with, or “(vii) Other related activities of the receiver; or
violation of any provision of this Act, or commission
of any other irregularities, and/or conducting “(d) Allowing the withdrawal from deposits or
business in an unsafe or unsound manner as may disposition of any asset of the closed bank other
be determined by the Board of Directors in relation than by the receiver;
“(e) Willfully violating any provision of this Act;
“(f) Conspiring or willfully participating in any of the Presidential Decree No. 1177, Executive Order No.
offenses enumerated in Paragraph 1 of this section; 248, as amended, Executive Order No. 298 and the
provisions of Republic Act No. 10149 with regard to
“(3) Any law enforcement officer or local
position classification, qualification standards, and
government official who refuses or fails to assist the
the compensation package of the employees of the
receiver in the service of the notice of closure, as
Corporation: Provided, That the PDIC shall be
provided under Section 14 of this Act.”
subject to all other policies under Republic Act No.
SECTION 45. Additional paragraphs to Section 26 10149, including, but not limited to, performance
of the same Act, as renumbered, are hereby evaluation by the Governance Commission for
inserted after paragraph (g) which shall read as Government-Owned or -Controlled Corporations,
follows: selection and nomination of appointive directors,
and limitations on the creation of subsidiaries and
“(h) The penalty of imprisonment of not less than the acquisition of affiliates except in the case of
ten (10) years but not more than twelve (12) years, acquisition of shares in the grant of financial
or a fine of not less than Five hundred thousand assistance under this Act.”
pesos (P500,000.00) but not more than Ten million
pesos (P 10,000,000.00), or both, at the discretion SECTION 48. Section 24 of the same Act is deleted
of the court, shall be imposed upon: and a new Section 29 is added to read as follows:
“(1) Any depositor who files a fictitious and/or “SEC. 29. Transitory Provisions. — (a) The
fraudulent claim for deposit insurance; and incumbent President of the Corporation and private
sector members of the Board of Directors shall
“(2) Any bank officer who certifies to the validity of continue to exercise their respective duties and
the deposit liabilities which is subsequently verified functions until replaced by the President of the
to be fictitious and/or fraudulent. Philippines: Provided, That such new appointees
“(i) The penalty of imprisonment of not less than shall be subject to the term of office provided under
twelve (12) years but not more than fourteen (14) Section 3 of this Act, as amended.
years shall be imposed upon any person who “(b) Payment of surplus dividends under Section
participates, or attempts to participate, in a scheme 13(c) of this Act, as amended, shall be applicable to
to defraud a bank. banks without a court-approved final asset
“If the offense shall have been committed by a distribution plan at the time of the effectivity of this
director or officer of the bank, the penalty of Act.
imprisonment of not less than fifteen (15) years, but “(c) The preference indicated under Section 15 of
not more than seventeen (17) years shall be this Act, as amended, shall be likewise effective
imposed. upon liquidation proceedings already commenced
“If the offense shall have resulted in systemic and pending as of the effectivity of this Act, where
consequences, as determined by the Bangko no distribution of assets has been made.1âwphi1
Sentral ng Pilipinas, the penalty of imprisonment of “(d) The provisions in Section 10 of this Act, as
not less than eighteen (18) years but not more than amended, on legal assistance, protection and
twenty (20) years shall be imposed.” indemnification shall apply to all cases pending
SECTION 46. Section 22 of the same Act is before the effectivity of this Act.”
accordingly renumbered as Section 27. SECTION 49. Section 25 of the same Act is
SECTION 47. Section 23 of the same Act is hereby accordingly renumbered as Section 30.
renumbered as Section 28 and amended to read as SECTION 50. The Corporation may be reorganized
follows: by its Board of Directors by adopting if it so desires,
“SEC. 28. Exempting Clause. – The Corporation an entirely new staffing pattern or organizational
shall be exempt from Presidential Decree No. 985, structure to suit the operations of the Corporation
Presidential Decree No. 1597, Republic Act No. under this Act. No preferential or priority right shall
6758, as amended, Joint Resolution No. 4 (2009) be given to or enjoyed by any personnel for
and other laws on salary standardization, appointment to any position in the new staffing
pattern nor shah any personnel be considered as
having prior or vested rights with respect to
retention in the Corporation or in any position which
may be created in the new staffing pattern, even if
he or she should be the incumbent of a similar
position prior to reorganization. The reorganization
shall be completed within six (6) months after the
effectivity of this Act. Personnel who are not
retained are deemed separated horn the service.
SECTION 51. The Board of Directors is hereby
authorized to provide separation incentives, and all
those who shall retire or be separated from the
service on account of reorganization under the
preceding section shall be entitled to such
incentives which may be in addition to all gratuities
and benefits to which they may be entitled under
existing laws.
SECTION 52. Separability Clause. – If any
provision or section of this Act or the application
thereof to any person or circumstances is held
invalid, the other provisions or sections of this Act,
in the application of such provision or section to
other persons or circumstances, shall not be
affected thereby.
SECTION 53. Repealing Clause. – All acts or parts
of acts and executive orders, administrative orders,
or parts thereof which are inconsistent with the
provisions of this Act are hereby repealed.
SECTION 54. Effectivity Clause. – This Act shall
take effect fifteen (15) days following the
completion of its publication in the Official Gazette
or in two (2) newspapers of general circulation.

PDIC Law

Uploaded by

Copyright:

Available Formats

PDIC Law

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

PDIC Law

Uploaded by

Copyright:

Available Formats

PDIC Law while being a government instrumentality with

corporate powers, shall enjoy fiscal and

“Splitting of deposits occurs whenever a deposit “(2) Any person for:

You might also like