Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

SIXTEENTH CONGRESS
First Regular Session

4392

House Bill No.

Introduced by Hon, Nelson “Sonny” P. Collantes

EXPLANATORY NOTE

When a financial crisis cannot be averted and bank failures are imminent, the next
best defense is a framework which allows for the resolution of the failing bank in an efficient
and prompt manner with minimum negative impact on the stability of the banking industry
and to forestall contagion in the banking industry. An effective bank resolution and
liquidation framework ensures the protection of the interests of the bank's depositors and
other creditors in the proper settlement of their respective obligations and claims. The
promptness by which the bank liquidation process is carried out also impacts on the
maximization of recovery and conversion of the bank's assets.

The bill at hand institutes much needed reforms to the charter of the Philippine Deposit
Insurance Corporation (PDIC). It seeks to remedy the problems and address the concerns
that have been identified and which continue to plague the present system. The highlights
of this measure include:

1, Enhanced Liquidation Authorities. - These seek to further strengthen PDIC’s
mandate as liquidator of closed banks for the benefit of depositors with uninsured
balances and other creditors, through additional modes of liquidating a closed bank,
such as, Purchase of Assets and Assumption of Liabilities, and Bridge Bank.

2. Deletion of the 90-day receivership period and introduction of a new Resolution
Framework to deal with problem banks. ~ The framework is based on the principle
that bank rehabilitation should happen while the bank is still open so that it will be
less disruptive to the system and recovery for all creditors is enhanced. Based on
experience, successful rehabilitation is nil after closure in view of the significantly
deteriorated financial position of banks. Under the proposal, banks closed by the
Monetary Board shall be immediately liquidated. On the other hand, upon
declaration of failure of Prompt Corrective Action by the Monetary Board, banks may
be considered for resolution, where PDIC will assist in resolving the bank via


purchase of assets and assumption of liabilities, mergers, consolidations or
acquisition.

3. Deposit Insurance Amendments and Exemption from Bank Secrecy Law. ~Banks
shall be authorized to disclose to PDIC, for deposit insurance purposes only, deposit
information and data. Moreover, to contain moral hazard and enforce market
discipline, PDIC shall be given authority to terminate deposit insurance status of
banks which do not comply with its directives. PDIC shall likewise be given the
authority to charge risk-based premium and impose special assessments under
certain specified conditions in the law.

4, Governance and Institutional Capability Building Measures. — The proposals seek
to strengthen PDIC structurally and operationally to ensure PDIC’s ability to
effectively implement its enhanced authorities under the PDIC Charter.

5. Financial Strengthening Measures. ~ In order to strengthen the Deposit Insurance
Fund, PDIC’s authority to invest, buy and/or sell debt instruments, borrow, and issue
bonds shall be expanded.

6. Additional Sanctions and Increased Penalty. — Increased penalties are imposed for
various offenses, including performing acts inimical to the interest of a bank. New
offenses are likewise penalized, such as filing a fictitious and/or fraudulent claim,
certifying the validity of fictitious deposit liabilities, and bank fraud.

A quick, efficient, and cost-effective resolution framework and bank liquidation process are
the backbones of a resilient financial system that can deal with bank failures during systemic
‘or non-systemic conditions. What we have before us is an opportunity to advance and to
apply the lessons learned, not only from the recent global recession, but also from the
experiences of the past. The power of legislative innovation as well as the benefit of
hindsight permit us to fortify that which proved advantageous and to reform those which
proved deficient in maintaining the stability of our financial system—in times of crisis or not.

LP Clk

Thus, the approval of this bill is earnestly sought.


Republic of the Philippines
House of Representatives
Quezon City

SIXTEENTH CONGRESS
First Regular Session

House'billNo.__ 4892

Introduced by Hon, Nelson “Sonny” P. Collantes

AN ACT AMENDING REPUBLIC ACT NUMBERED THREE THOUSAND FIVE HUNDRED
NINETY-ONE, AS AMENDED, AND OTHER RELATED LAWS, TO ENHANCE THE RESOLUTION
AND LIQUIDATION FRAMEWORK FOR BANKS AND BANKING INSTITUTIONS, AND TO
STRENGTHEN THE INDEPENDENCE, AUTHORITY AND FINANCIAL CAPABILITY OF THE
PHILIPPINE DEPOSIT INSURANCE CORPORATION, AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:

SECTION 1. Section 1 of Republic Act No. 3591, as amended, is hereby amended fo
read as follows:

“THE CREATION OF THE
PHILIPPINE DEPOSIT INSURANCE CORPORATION

SECTION 1.- There is hereby created a Philippine Deposit Insurance
Corporation hereinafter refered to as the “Corporation” which shall
insure as herein provided, the deposits of all banks which are entitled
to the benefits of insurance under this Act, and which shall have the
powers hereinafter granted.

The Corporation shall, as a basic policy, promote and safeguard the
interests of the depositing public by [way of] providing [permanent
and continuing] insurance coverage on all insured deposits AND
HELPING MAINTAIN A SOUND AND STABLE BANKING SYSTEM THROUGH
THE ADOPTION OF BANK RESOLUTION MEASURES.”

SECTION 2. A new section entitled Section 2 of the same Act shall be inserted
between Sections | and 3 which shall read as follows:

“STATE POLICY
SECTION 2. - IT IS HEREBY DECLARED TO BE THE POLICY OF THE STATE TO

STRENGTHEN THE MANDATORY DEPOSIT INSURANCE COVERAGE SYSTEM
TO GENERATE, PRESERVE, MAINTAIN FAITH AND CONFIDENCE IN THE


1 COUNTRY’S BANKING SYSTEM, AND PROTECT IT FROM ILLEGAL SCHEMES
2 AND MACHINATIONS.

3

4 TOWARDS THIS END, THE GOVERNMENT MUST EXTEND ALL MEANS AND
5 MECHANISMS NECESSARY FOR THE CORPORATION TO EFFECTIVELY
6 FULFILL ITS VITAL TASK OF PROMOTING AND SAFEGUARDING THE
7 INTERESTS OF THE DEPOSITING PUBLIC BY WAY OF PROVIDING
8 INSURANCE COVERAGE ON BANK DEPOSITS AND IN HELPING DEVELOP
9 A SOUND AND STABLE BANKING SYSTEM.

10

a IN VIEW OF THE CRUCIAL ROLE AND THE NATURE OF THE FUNCTIONS AND
12 RESPONSIBILITIES OF THE CORPORATION AS DEPOSIT INSURER,
13 STATUTORY RECEIVER, AND CO-REGULATOR OF BANKS, THE
14 CORPORATION, WHILE BEING A GOVERNMENT INSTRUMENTALITY WITH
15 CORPORATE POWERS, SHALL ENJOY FISCAL AND ADMINISTRATIVE
16 AUTONOMY. THE CORPORATION SHALL BE EXEMPT FROM ALL EXISTING
Vv LAWS, RULES AND REGULATIONS ON COMPENSATION, POSITION
18 CLASSIFICATION AND QUALIFICATION STANDARDS INCLUDING, BUT NOT
19 LIMITED TO PRESIDENTIAL DECREE NO. 985, PRESIDENTIAL DECREE NO.
20 1597, REPUBLIC ACT NO. 6758 AS AMENDED, JOINT RESOLUTION NO. 4
21 (2009), AND REPUBLIC ACT NO. 10149."

22

23 SECTION 3. Section 2 of the same Act is accordingly renumbered as Section 3 and is
24 hereby amended to read as follows:

25

26 "BOARD OF DIRECTORS: COMPOSITION AND AUTHORITY

27

28 SECTION 3. (a) The powers and functions of the Corporation shall be
29 vested in and exercised by a Board of Directors which shall be
30 composed of SEVEN (7) [five (5)] members as follows:

31

32 1) The Secretary of Finance who shall be the ex-officio Chairman
33 of the Board without compensation.

34 2) The Governor of the Bangko Sentral ng Pilipinas, who shall be
35 ex-officio member of the Board without compensation.

36 3) The President of the Corporation, who shall be appointed by
37 the President of the Philippines [from either the Government or
38 private sector] to serve on a full-time basis for a term of six (6)
39 years, The President of the Corporation shall also serve as Vice
40 Chairman of the Board

41 4) FOUR (4) [Two (2)] members from the private sector, to be
42 appointed BY THE PRESIDENT OF THE PHILIPPINES for a term of six
43 (6) years SUBJECT TO ONLY ONE [without] reappointment [by
44 the President of the Philippines}: Provided, That of those first
45 appointed, the first TWO appointees shall serve for a period of
46 {two (2)] THREE (3) years.

47

48 ANY VACANCY IN THE BOARD OF DIRECTORS CREATED BY THE DEATH,
49 RESIGNATION, OR REMOVAL OF ANY APPOINTIVE MEMBER SHALL BE
50 FILLED BY THE APPOINTMENT OF A NEW MEMBER TO COMPLETE THE

st UNEXPIRED PERIOD OF THE TERM OF THE MEMBER CONCERNED.
52


No person shall be appointed as member of the Board unless he be of
good moral character, of unquestionable integrity and responsibility,
OF KNOWN PROBITY AND PATRIOTISM, and who is of recognized
competence in economics, banking and finance, law, management
administration or insurance, and shall be at least thirty-five (35) years of
age. For the duration of their tenure or term in office and for a period
of one year thereafter, the appointive members of the Board shall be
disqualified from holding any office, position or employment in any
insured bank.

The Secretary of Finance and the Governor of the Bangko Sentral may
each designate a representative, whose position shall no! be lower
than an undersecretary or deputy governor respectively, to attend
such meetings and to vote on behalf of their respective principals.
Whenever the Chairman of the Board is unable to attend a meeting of
the Board, or in the event of a vacancy in the office of the Secretary
of Finance, the President of the Corporation shall act as Chairman.

THE PRESIDENT OF THE PHILIPPINES MAY REMOVE ANY APPOINTIVE
MEMBER OF THE BOARD OF DIRECTORS FOR ANY OF THE FOLLOWING
REASONS:

1) IF HE IS PHYSICALLY OR MENTALLY INCAPACITATED THAT HE
CANNOT PROPERLY DISCHARGE HIS_—DUTIES._- AND
RESPONSIBILITIES, AND SUCH INCAPACITY HAS LASTED FOR MORE
THAN SIX (6) MONTHS; OR

IF THE MEMBER IS GUILTY OF ACTS OR OPERATIONS WHICH ARE
OF FRAUDULENT OR ILLEGAL CHARACTER OR WHICH ARE
MANIFESTLY OPPOSED TO THE AIMS AND INTERESTS OF THE
CORPORATION; OR

IF THE MEMBER NO LONGER POSSESSES THE QUALIFICATIONS
SPECIFIED IN THIS ACT.

2

3)

The presence of FOUR (4) [three (3)] members shall constitute a
quorum. All decisions of the Board of Directors shall require the
concurrence of at least FOUR (4) [three (3)] members.

The PRESIDENT OF THE PHILIPPINES, UPON THE RECOMMENDATION OF
THE Secretary of Finance, shall fix the rate of per diem for every Board
meeting attended by the members of the Board of Directors from the
private sector, AND THEIR OTHER EMOLUMENTS, INCLUDING
PERFORMANCE INCENTIVES, SUBJECT TO REVIEW EVERY TWO (2) YEARS.
[The President of the Philippines may fix such emoluments that may be
received by the Board of Directors comparable to the emoluments of
members of the Board of Directors of other government financial
institutions}.

IN ADDITION TO THE REQUIREMENTS OF REPUBLIC ACT NO. 6713, ANY
MEMBER OF THE BOARD OF DIRECTORS WITH PERSONAL OR PECUNIARY
INTEREST IN ANY MATTER IN THE AGENDA OF THE BOARD OF DIRECTORS
SHALL DISCLOSE HIS INTEREST TO THE BOARD AND SHALL RETIRE FROM
THE MEETING WHEN THE MATTER IS TAKEN UP. THE MINUTES SHALL


eVausenkr

1
12
13
14
15
16
wv
18
19
20
24
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45,
46
47
43
49
50
51
52

REFLECT THE DISCLOSURE MADE AND THE RETIREMENT OF THE MEMBER
CONCERNED FROM THE MEETING.

(b) The Board of Directors shall have the authority:

1)

To APPROVE [prepare] and issue rules and regulations FOR
BANKS AND THE DEPOSITING PUBLIC as it considers necessary for
the effective discharge of its responsibiliti

To ACT AS THE POLICY-MAKING BODY OF THE CORPORATION
AND CONSTITUTE BOARD COMMITTEES TO OVERSEE [direct] the
management, operations and administration of the
Corporation;

To establish a human resource management system which shall
govern the selection, hiring, appointment, transfer, promotion,
oF dismissal of fall] personnel. Such system shall aim to establish
professionalism and excellence at all levels of the Corporation
in accordance with sound principles of management;[.]

TO APPROVE, [A] a compensation structure[,|AS AN INTEGRAL
COMPONENT OF THE CORPORATION'S HUMAN RESOURCE
DEVELOPMENT PROGRAM based on job evaluation studies and
wage surveys, AND REVISE THE SAME FROM TIME TO TIME AS IT
MAY DEEM NECESSARY [and subject lo the Board's approval,
shall be, instituted as an integral component of the
Corporation's. human resource development program]:
Provided, That all positions in the Corporation shall be governed
by a compensation, position classification system and
qualification standards approved by the Board based on a
comprehensive job analysis and audit of actual duties and
responsibilities. The compensation STRUCTURE [plan] shall be
comparable TO THAT OF THE BANGKO SENTRAL, AND SHALL
PROVIDE FOR YEARLY MERIT REVIEWS OR INCREASES BASED ON
PRODUCTIVITY [with the prevailing compensation plans of other
government financial institutions and shall be subject to review
by the Board no more than once every two (2) years without
prejudice to yearly merit reviews or incteases based on
productivity and profitability]. The Corporation shall therefore
be exempt from existing laws, rules and regulations on
compensation, position classification and qualification
standards, SUCH AS, BUT NOT LIMITED TO, PRESIDENTIAL DECREE
NO. 985, PRESIDENTIAL DECREE NO. 1597, REPUBLIC ACT NO.
6758, AS AMENDED, JOINT RESOLUTION NO. 4 (2009), AND
REPUBLIC ACT NO. 10149. It shall however endeavor to make its
system conform as closely as possible with the principles under
Republic Act No. 6758, as amended.

To appoint, establish the rank, fix the remuneration, BENEFITS,
INCLUDING MEDICAL BENEFITS OTHER THAN THOSE PROVIDED
FOR UNDER REPUBLIC ACT NO. 7875, AS AMENDED, {approve
local and foreign training of] and remove any officer or


1 employee of the Corporation, for cause, subject to pertinent
2 civil service laws: Provided, That the Board of Directors may
3 delegate this authority to the President subject to specific
4 guidelines; PROVIDED, FINALLY, THAT IN NO CASE SHALL THERE BE
5 ANY DIMINUTION OF EXISTING SALARIES, BENEFITS AND OTHER
6 EMOLUMENTS;
7
8 6) TO APPROVE POLICY ON LOCAL AND FOREIGN TRAVEL, AND THE
9 CORRESPONDING EXPENSES, ALLOWANCES AND PER DIEMS, OF
10 OFFICERS, EMPLOYEES, AGENTS OF THE CORPORATION,
ua NOTWITHSTANDING THE PROVISIONS OF PRESIDENTIAL DECREE
2 NO. 1177, EXECUTIVE ORDER NO. 292, EXECUTIVE ORDER NO.
B 248, AS AMENDED, EXECUTIVE ORDER NO. 298, AND SIMILAR
14 LAWS;
1s
16 7) To adopt an annual budget for, and authorize such
v7 expenditures by the Corporation, as are in the interest of the
18 effective adminisiration and operation of the Corporation;
19
20 8) To approve the TARGET LEVEL OF THE DEPOSIT INSURANCE FUND
21 AND THE methodology for determining [the level and amount
22 of] RESERVES [provisioning] for insurance and financial
23 assistance losses[, which shall establish reasonable levels of
24 deposit insurance reserves.];
25
26 9) To review the organizational set-up of the Corporation and
27 adopt a new or revised organizational structure AT ANY TIME as
28 it may deem necessary for the Corporation to undertake its
29 mandate and functions;[.]
30
31 10)TO DESIGN, ADOPT AND REVISE, FROM TIME TO TIME AS IT MAY
32 DEEM NECESSARY, AN EARLY SEPARATION PLAN FOR EMPLOYEES
33 OF THE CORPORATION TO ENSURE AVAILABILITY OF A HUMAN
34 RESOURCE POOL QUALIFIED AND CAPABLE OF IMPLEMENTING
35 THE CORPORATION'S AUTHORITIES UNDER THIS CHARTER IN A
36 MANNER RESPONSIVE AND ATTUNED TO MARKET DEVELOPMENTS,
37 AND TO PROVIDE INCENTIVES FOR ALL THOSE WHO SHALL RETIRE
38 OR BE SEPARATED FROM THE SERVICE. NOTWITHSTANDING ANY
39 LAW TO THE CONTRARY, THESE INCENTIVES SHALL BE IN ADDITION
40 TO ALL GRATUITIES AND BENEFITS THE EMPLOYEE IS ENTITLED TO
a1 UNDER EXISTING LAWS; AND
42
43 11)TO PROMOTE AND SPONSOR THE LOCAL OR FOREIGN TRAINING
44 OR STUDY OF PERSONNEL IN THE FIELDS OF BANKING, FINANCE,
45 MANAGEMENT, INFORMATION TECHNOLOGY AND LAW. TOWARD
46 THIS END, THE CORPORATION IS HEREBY AUTHORIZED TO DEFRAY
47 THE COSTS OF SUCH TRAINING OR STUDY. THE BOARD SHALL
43 PRESCRIBE RULES AND REGULATIONS TO GOVERN THE TRAINING
49 OR STUDY PROGRAMS OF THE CORPORATION.”

50
51 SECTION 4. Section 3 of the same Act is accordingly renumbered as Section 4.
52


SECTION 5. The first paragraph of Section 4 of the same Act, as renumbered, is
hereby amended fo read as follows:

“PRESIDENT OF THE CORPORATION
COMPENSATION, POWERS AND DUTIES

SECTION 4. The President of the Corporation shall be ITS [the] Chief
Executive [thereof] and his salary, ALLOWANCES, BENEFITS AND OTHER
EMOLUMENTS shall be fixed by the President of the Philippines, UPON
THE RECOMMENDATION OF THE SECRETARY OF FINANCE, af a sum
commensurate to the importance and responsibility attached to the
position. [The sum total of the salary of the President and the
allowances and other emoluments which the Board of Directors may
grant him shall be the celling for fixing the salary, allowances and
other emoluments of all other personnel in the Corporation.]

SECTION 6. Section 4, paragraphs (d) and (f), of the same Act, as renumbered, are
hereby amended to read as follows:

“(d) To represent the Corporation{, upon prior authority of the
8oard,] in all dealings with other offices, agencies and instrumentalities
of the government and with all other persons or entities, public or
private, whether domestic, foreign or international;

(f) To represent the Corporation, either personally or through
counsel, INCLUDING PRIVATE COUNSEL, AS MAY BE AUTHORIZED BY THE
PDIC BOARD, in ANY [ail] legal proceeding or action;"

SECTION 7. Section 4 of the same Act is accordingly renumbered as Section 5,
hereby amended to read as follows:

“DEFINITION OF TERMS.
SECTION 5. As used in this Act —

(a) THE TERM “ASSET” SHALL REFER TO MOVABLE, IMMOVABLE,
TANGIBLE, OR INTANGIBLE RESOURCES OR PROPERTIES OVER WHICH A
BANK HAS AN ESTABLISHED OR EQUITABLE INTEREST, INCLUDING ITS
BRANCH LICENSES.

(b) THE TERM “ASSET DISTRIBUTION PLAN” OR “ADP” SHALL REFER TO
THE PLAN OF DISTRIBUTION OF THE ASSETS OF A CLOSED BANK TO ITS
CREDITORS, BASED ON ITS ESTIMATED REALIZABLE VALUE AS OF A
CERTAIN CUT-OFF DATE, PREPARED IN ACCORDANCE WITH THE RULES
ON CONCURRENCE AND PREFERENCE OF CREDITS UNDER THE CIVIL
CODE OR OTHER LAWS.

AN ADP MAY BE PARTIAL (PARTIAL ASSET DISTRIBUTION PLAN OR PADP),
WHEN IT PERTAINS TO THE DISTRIBUTION OF A PORTION OR SOME OF THE
ASSETS OF THE CLOSED BANK, OR FINAL (FINAL ASSET DISTRIBUTION
PLAN OR FADP), WHEN IT PERTAINS TO THE DISTRIBUTION OF ALL THE
ASSETS OF THE CLOSED BANK.

and is


{e) The term “Board of Directors" means the Board of Directors of the
Corporation.

(d) The term “Bank” and “Banking Institution” shall be synonymous
and interchangeable and shall include banks, commercial banks,
savings bank, mortgage banks, rural banks, development banks,
cooperative banks, stock savings and loan associations and branches
and agencies in the Philippines of foreign banks and all other
corporations authorized fo perform banking functions in the Philippines.

(e) THE TERM “BRIDGE BANK" SHALL REFER TO A CORPORATION THAT IS
LICENSED BY THE BANGKO SENTRAL TO OPERATE AS A TEMPORARY
BANK, ESTABLISHED AND OPERATED TO ACQUIRE ASSETS AND ASSUME
THE INSURED DEPOSITS OF A CLOSED BANK.

( THE TERM “CLOSED BANK” SHALL REFER TO A BANK PLACED UNDER
LIQUIDATION BY THE MONETARY BOARD.

(g) THE TERM “CREDITOR” SHALL REFER TO ANY INDIVIDUAL OR ENTITY
WITH A VALID CLAIM AGAINST THE ASSETS OF THE CLOSED BANK.

(h) The term “deposi means the unpaid balance of money or its
equivalent received by a bank in the usual course of business and for
which it has given or is obliged to give credit to a commercial,
checking, savings, time or thrift account, EVIDENCED BY A PASSBOOK,
CHECK AND/OR CERTIFICATE OF DEPOSIT, OR OTHER EVIDENCE OF
DEPOSIT, issued in accordance with Bangko Sentral rules and
regulations and other applicable laws, together with such other
obligations of a bank, which, consistent with banking usage and
practices, the Board of Directors shall determine and prescribe by
regulations to be deposit liablliies of the bank: Provided, That any
obligation of a bank which is payable at the office of the bank
located outside of the Philippines shall not be a deposit for any of the
purposes of this Act or included as part of the total deposits or of
insured deposit: Provided, further, That, subject to the approval of the
Board of Directors, any insured bank which is incorporated under the
laws of the Philippines which maintains a branch outside the
Philippines may elect to include for insurance its deposit obligations
payable only at such branch.

The Corporation shall not pay deposit insurance[] for the following
accounts or transactions [, whether denominated, documented,
recorded or booked as deposit by the bank]:

1) Investment products such as bonds and securities, trust
accounts, and other similar instrumen

2) Deposit accounts or transactions which are [unfunded, or that
are] fictitious or fraudulent;


3) Deposit accounts or transactions constituting, and/or
emanating from, unsafe and unsound banking practice/s, as
determined by the Corporation, in consultation with the
BANGKO SENTRAL [8SP], after due notice and hearing, and
publication of a DIRECTIVE TO cease and desist [order] issued by
the Corporation against such deposit accounts, transactions
OR PRACTICES; and

4) Deposits that are determined to be the proceeds of an unlawful
activity as defined under Republic Act 9160, as amended.

The actions of the Corporation taken under {this} section 5(h) shall be
final and executory, and may not be restrained or set aside by the
[courl] COURT OF APPEALS, except on appropriate petition for
certiorari on the ground that the action was taken in excess of
jurisdiction or with such grave abuse of discretion as to amount to a
lack or excess of jurisdiction. The petition for certiorari may only be filed
within thirly (30) days from notice of denial of claim for deposit
insurance.

(0) THE TERM “DISPUTED CLAIM" SHALL REFER TO A CLAIM OR SUIT
AGAINST THE ASSETS OF A CLOSED BANK, OR FOR SPECIFIC
PERFORMANCE, OR BREACH OF CONTRACT, OR DAMAGES, OF
WHATEVER NATURE OR CHARACTER, WHETHER FOR MONEY OR
OTHERWISE, LIQUIDATED OR UNLIQUIDATED, FIXED OR CONTINGENT,
MATURED OR UNMATURED.

0) THE TERM “DUE DILIGENCE” SHALL REFER TO A PROCESS OF
DETERMINING THE VALUATION OF A BANK THROUGH AN OBJECTIVE
AND THOROUGH REVIEW AND APPRAISAL OF ITS ASSETS AND LIABILITIES,
AND ASSESSMENT OF RISKS OR EVENTS THAT MAY AFFECT ITS
VALUATION.

(kK) THE TERM “INSURED BANK” MEANS ANY BANK THE DEPOSITS OF
WHICH ARE INSURED IN ACCORDANCE WITH THE PROVISIONS OF THIS
ACT.

()) The term “insured deposit" means the amount due to any bona
fide depositor for legitimate deposits in an insured bank EXCLUSIVE
[net] of any obligation of the depositor to the insured bank as of the
date of closure, EXCEPT THOSE COVERED BY HOLD-OUT AGREEMENTS,
but not to exceed Five Hundred Thousand Pesos (P'500,000.00). Such
[net] amount shall be determined according to such regulations as the
Board of Directors may prescribe. In determining such amount due to
any depositor, there shall be added together all deposits in the bank
maintained in the same right and capacity for his benefit either in his
own name or in the name of others. A joint account regardless of
whether the conjunction "and," “or,” and/or’ is used, shall be insured
separately from any individually-owned deposit account: Provided,
That (1) If the account is held jointly by two or more natural persons, or
by two or more juridical persons or entities, the maximum insured
deposit shall be divided into as many equal shares as there are


eavausune

individuals, juridical persons or entities, unless a different sharing is
stipulated in the document of deposit, and (2) if the account is held by
a juridical person or entity jointly with one or more natural persons, the
maximum insured deposit shall be presumed to belong entirely to such
juridical person or entity: Provided, further, That the aggregate of the
interest of each co-owner over several joint accounts, whether owned
by the same or different combinations of individuals, juridical persons
or entities, shall likewise be subject to the maximum insured deposit of
Five Hundred Thousand Pesos (P500,000.00): Provided, furthermore,
That the provisions of any law fo the contrary notwithstanding, no
owner/holder of any PASSBOOK, cerlificate of deposit, OR OTHER
EVIDENCE OF DEPOSIT shall be recognized as a depositor entitled to
the rights provided in this Act unless THE PASSBOOK, CERTIFICATE OF
DEPOSIT OR OTHER EVIDENCE OF DEPOSIT IS DETERMINED TO BE AN
AUTHENTIC DOCUMENT OR RECORD of the issuing bank [his name is
registered as owner/holder thereof in the books]: Provided, finally,
That, in case of a condition that threatens the monetary and financial
stabilily of the banking system that may have systemic consequences,
as defined in section 23 [17] hereof, as determined by the Monetary
Board, the maximum deposit insurance cover may be adjusted in such
amount, for such a period, and/or for such deposit products, as may
be determined by a unanimous vote of the Board of Directors in a
meeting called for the purpose and chaired by the Secretary of
Finance, subject to the approval of the President of the Philippines.

(m) THE TERM “LIQUIDATION” SHALL REFER TO THE PROCEEDINGS UNDER
SECTIONS 12 TO 17 OF THIS ACT.

(n) THE TERM “LIQUIDATION COURT” SHALL REFER TO THE REGIONAL
TRIAL COURT OF GENERAL JURISDICTION WHERE THE PETITION FOR
ASSISTANCE IN THE LIQUIDATION OF A CLOSED BANK IS FILED AND
GIVEN DUE COURSE.

(0) THE TERM “PAYOUT” SHALL REFER TO THE PAYMENT OF INSURED
DEPOSITS.

(Pp) THE TERM “PETITION FOR ASSISTANCE IN THE LIQUIDATION OF A
CLOSED BANK" OR “PAL” SHALL REFER TO THE PETITION FILED BY THE
RECEIVER WITH THE REGIONAL TRIAL COURT (RTC) IN ACCORDANCE
WITH SECTION 17 OF THIS ACT.

(a) THE TERM "PURCHASE OF ASSETS AND ASSUMPTION OF LIABILITIES"
OR “P&A” SHALL REFER TO A 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.

() THE TERM “RECEIVER” SHALL REFER TO THE CORPORATION OR ANY
OF ITS DULY AUTHORIZED AGENTS ACTING AS RECEIVER OF A CLOSED
BANK.


(s) THE TERM “RECORDS” SHALL INCLUDE ALL DOCUMENTS, TITLES,
PAPERS AND ELECTRONIC DATA OF THE CLOSED BANK, INCLUDING
THOSE PERTAINING TO DEPOSIT ACCOUNTS OF AND WITH THE CLOSED
BANK, ITS ASSETS, TRANSACTIONS AND CORPORATE AFFAIRS.

{0} THE TERM “RESIDUAL ASSETS” SHALL REFER TO 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, AFTER PAYMENT IN FULL OF LIQUIDATION COSTS, FEES
AND EXPENSES, AND THE VALID CLAIMS AND SURPLUS DIVIDENDS TO ALL
THE CREDITORS.

(v) THE TERM “RESOLUTION” SHALL REFER TO THE ACTIONS
UNDERTAKEN BY THE CORPORATION UNDER SECTION 11 OF THIS ACT TO:

PROTECT DEPOSITORS, CREDITORS AND THE DEPOSIT INSURANCE
FUND;

SAFEGUARD THE CONTINUITY OF ESSENTIAL BANKING SERVICES
OR MAINTAIN FINANCIAL STABILITY; AND

PREVENT DETERIORATION OR DISSIPATION OF BANK ASSETS.

1

3

3

(vy) THE TERM "RISK-BASED ASSESSMENT SYSTEM" SHALL PERTAIN TO A
SYSTEM FOR CALCULATING AN INSURED BANK'S ASSESSMENT BASED ON
THE FOLLOWING FACTORS:

1) THE PROBABILITY THAT THE DEPOSIT INSURANCE FUND WILL INCUR
A LOSS WITH RESPECT TO THE BANK, BASED ON ITS RISK RATING
THAT TAKES INTO CONSIDERATION THE RISKS ATTRIBUTABLE TO -

|. QUALITY AND CONCENTRATION OF ASSETS

. CATEGORIES AND CONCENTRATION OF LIABILITIES, BOTH
INSURED AND UNINSURED, CONTINGENT AND NON-
CONTINGENT

. CAPITAL POSITION

|. LIQUIDITY POSITION

. MANAGEMENT AND GOVERNANCE
OTHER FACTORS RELEVANT TO ASSESSING SUCH PROBABILITY,
AS MAY BE DETERMINED BY THE CORPORATION.

va

=o 20

2) THE LIKELY AMOUNT OF ANY SUCH LOSS, AND
3) THE TARGET LEVEL OF THE DEPOSIT INSURANCE FUND.

(w) THE TERM “STATEMENT OF AFFAIRS” OR “SOA” SHALL REFER TO A
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.

&) THE TERM “SURPLUS DIVIDENDS” SHALL REFER TO THE REMAINING
ASSETS OF THE CLOSED BANK AFTER SATISFACTION IN FULL OF ALL THE
LIQUIDATION COSTS, FEES AND EXPENSES, AND VALID CLAIMS. THE
SURPLUS DIVIDENDS SHALL BE COMPUTED AT THE LEGAL RATE OF

10


INTEREST FROM THE DATE OF TAKEOVER TO CUT-OFF DATE OF THE
DISTRIBUTION PLAN, AND SHALL BE PAID, IN CASH OR IN KIND, TO
CREDITORS OF THE CLOSED BANK IN ACCORDANCE WITH THE RULES ON
CONCURRENCE AND PREFERENCE OF CREDITS UNDER THE CIVIL CODE
OR OTHER LAWS.

yy) THE TERM “TAKEOVER” SHALL REFER TO THE ACT OF PHYSICALLY
TAKING POSSESSION AND CONTROL OF THE PREMISES, ASSETS AND
AFFAIRS OF A CLOSED BANK FOR THE PURPOSE OF LIQUIDATING THE
BANK.

(@ The term “transfer deposit” means a deposit in an insured bank
made available to a depositor by the Corporation as payment of
insured deposit of such depositor in a closed bank and assumed by
another insured bank.

{aa) The term “trust funds" means funds held by an insured bank in a
fiduciary capacity and includes without being limited to, funds held as
trustee, executor, administrator, guardian or agent.

(bb) THE TERM “VALID CLAIM" REFERS TO THE CLAIM RECOGNIZED BY
THE RECEIVER OR ALLOWED BY THE LIQUIDATION COURT,

(cc) THE TERM “WINDING UP PERIOD" SHALL REFER TO THE PERIOD
PROVIDED IN SECTION 17 OF THIS ACT.”

SECTION 8. Section 5 of the same Act is accordingly renumbered as Section 6, and is

hereby amended fo read as follows:
DEPOSIT INSURANCE COVERAGE

SECTION 6. The deposit liabilities of any bank or banking institution,
which is engaged in the business of receiving deposits as herein
defined on the effective date of this Act, or which thereafter may
engage in the business of receiving deposits, shall be insured with the
Corporation.

THE CORPORATION MAY CONDUCT A PERIODIC INSURANCE RISK
EVALUATION ON BANKS TO ENABLE IT TO ASSESS THE RISKS TO THE
DEPOSIT INSURANCE FUND. SUCH EVALUATION MAY INCLUDE THE
DETERMINATION OF THE (i) THE FAIR MARKET VALUE OF THE ASSETS AND
LIABILITIES OF A BANK, OR (ii) THE RISK CLASSIFICATION OF A BANK, OR
(iii) POSSIBLE RESOLUTION MODES, SUBJECT TO SUCH TERMS AND
CONDITIONS AS THE PDIC BOARD MAY PRESCRIBE.

BANKS OR BANKING INSTITUTIONS, THEIR OFFICERS AND EMPLOYEES ARE
HEREBY MANDATED TO DISCLOSE AND REPORT TO THE CORPORATION,
OR ITS DULY AUTHORIZED OFFICERS OR EMPLOYEES, THE BALANCES IN
ALL DEPOSIT ACCOUNTS OF EACH DEPOSITOR TO ENABLE THE
CORPORATION TO DETERMINE THE INSURED AND UNINSURED DEPOSITS.

oe


THE CORPORATION, ITS DULY AUTHORIZED OFFICERS OR EMPLOYEES,
SHALL HAVE THE AUTHORITY TO EXAMINE, INQUIRE OR LOOK INTO THE
DEPOSIT RECORDS PERTAINING TO THE INFORMATION DISCLOSED AND
REPORTED UNDER THIS SECTION AND ALL INFORMATION RELATED
THERETO.

THE CORPORATION, ITS DULY AUTHORIZED OFFICERS OR EMPLOYEES,
SHALL BE PROHIBITED FROM DISCLOSING INFORMATION OBTAINED
UNDER THIS SECTION TO ANY PERSON, GOVERNMENT OFFICIAL, BUREAU
‘OR OFFICE, EXCEPT UPON WRITTEN PERMISSION OF THE DEPOSITOR, OR
IN CASES OF IMPEACHMENT, OR UPON ORDER OF A COMPETENT COURT
IN CASES OF BRIBERY OR DERELICTION OF DUTY OF PUBLIC OFFICIALS,
OR IN CASES WHERE THE MONEY DEPOSITED OR INVESTED IS THE SUBJECT
MATTER OF THE LITIGATION, OR WHEN THE DISCLOSURE OF THE
INFORMATION OBTAINED UNDER THIS SECTION IS NECESSARY FOR
EXPEDITIOUS PAYMENT OF DEPOSIT INSURANCE OR THE PROTECTION OF
THE DEPOSIT INSURANCE SYSTEM, OR TO CARRY OUT THE MANDATE OF
THE CORPORATION AS A RESOLUTION AUTHORITY.

ANY ACT DONE PURSUANT TO THIS SECTION SHALL NOT BE DEEMED TO
HAVE VIOLATED REPUBLIC ACT NO. 1405, AS AMENDED, REPUBLIC ACT
NO. 6426, AS AMENDED, REPUBLIC ACT NO. 8791, AND OTHER SIMILAR
LAWS PROTECTING OR SAFEGUARDING THE SECRECY OR
CONFIDENTIALITY OF BANK DEPOSITS.

SECTION 9. Section 6 of the same Act is accordingly renumbered as Section 7.

“ASSESSMENT OF MEMBER BANKS

SECTION 7. (a) The assessment rate shall be determined by the Board
of Directors: Provided, That the assessment rate shall not exceed one-
fifth (1/5) of one per centum (1%) per annum. The semi-annual
assessment for each insured bank shall be in the amount of the
product of one-half (1/2) the assessment rate multiplied by the
assessment base but in no case shall it be less than Five thousand
pesos (P5,000.00). The assessment base shall be the amount of the
liability of the bank for deposits as defined under subsection (h) {(f)] of
Section § [4] without any deduction for indebtedness of depositors:
PROVIDED, THAT, THE BOARD OF DIRECTORS MAY ESTABLISH AND
IMPOSE A RISK-BASED ASSESSMENT SYSTEM FOR INSURED BANKS:
PROVIDED, FURTHER, THAT THE RISK-BASED ASSESSMENT RATE SHALL NOT
EXCEED TWO-FIFTH (2/5) OF ONE PER CENTUM (1%) PER ANNUM
‘MULTIPLIED BY THE ASSESSMENT BASE.

The semi-annual assessment base for one semi-annual period shall be
the average of the assessment base of the bank as of the close of
business on March thirty-one and June thirty and the semi-annual
assessment base for the other semi-annual period shall be the average
of the assessment base of the bank as of the close of business on

SECTION 10. Section 7 paragraph (a) of the same Act, as renumbered, is hereby
amended to read as follows:


1 September thirly and December thirty-one: Provided, That when any
2 ‘of said days is a non-business day or legal holiday, either national or
3 provincial, the preceding business day shall be used. The certified
4 statements required to be filed with the Corporation under subsections
5 (b) and (c) of this Section shall be in such form and set forth such
6 supporting information as the Board of Directors shall prescribe. The
7 assessment payments required from the insured banks under
8 subsections (b) and (c} of this Section shall be made in such manner
9 and ai such time or times as the Board of Directors shall prescribe|,
10 provided the time or times so prescribed shall not be later than sixty
a (60) days after filing the cerlified statement setting forth the amount of
2 assessment."

13

14 SECTION 11. Section 7, paragraphs (d) and (h}, of the same Act, as renumbered, is
15 hereby amended to read as follows:

16

v7 "(d) All assessment collections and income from operations after
18 expenses and charges shall be added to the Deposit Insurance Fund
19 under Section 18 [13] hereof. Such expenses and charges are: (1) the
20 operating costs and expenses of the Corporation for the calendar
2 year; (2) additions to reserve to provide for insurance and financial
22 assistance losses, net of recoverable amounts from applicable assets
23 and collaterals, during the calendar year; and (3) the net insurance
24 and financial assistance losses sustained in said calendar year,

25

26 (h) (the Corporation shall not terminate the insured status of any bank
27 which continues to operate or receive deposits.] Should any insured
28 bank fail or refuse to pay any assessment required to be paid by such
29 bank under any provision of this Act, and should the bank not correct
30 such failure or refusal within thirly (30) days after written notice has
31 been given by the Corporation to an officer of the bank citing this
32 subsection, and stating that the bank has failed or refused to pay as
33 required by the law, the Corporation may, al is discretion, file a case
34 for collection before the appropriate court without prejudice to the
35 imposition of administrative sanctions allowed under the provisions of
36 this Law on the bank officials responsible for the non-payment of
37 assessment fees."

38

39 SECTION 12. An additional paragraph to Section 7 of the same Act, as renumbered,
40 _ is hereby inserted after paragraph (h) which shall read as follows:
41

42 “(I) THE CORPORATION SHALL HAVE THE AUTHORITY TO COLLECT A
43 SPECIAL ASSESSMENT FROM ANY MEMBER BANK AND PRESCRIBE THE
44 TERMS AND CONDITIONS THEREOF TO MAINTAIN THE TARGET LEVEL OF
45 THE DEPOSIT INSURANCE FUND SET BY THE BOARD OF DIRECTORS IN
46 ACCORDANCE WITH THIS ACT: PROVIDED, THAT, THE COLLECTION OF A
47 SPECIAL ASSESSMENT MAY LIKEWISE BE MADE FOR THE PURPOSE OF
48, REIMBURSING THE NATIONAL GOVERNMENT FOR ANY FINANCIAL
49 ASSISTANCE IT MAY HAVE EXTENDED TO AFFECTED INSTITUTIONS OR
50 ORGANIZATIONS DURING A SYSTEMIC SCENARIO.”

51

23


"SANCTIONS AGAINST UNSAFE AND
UNSOUND BANKING PRACTICES

SECTION 8. (a) Whenever upon examination by the Corporation into
the condition of any insured bank, it shall be disclosed that an insured
bank or ils directors or agents have committed, are committing or
about to commit unsafe or unsound practices in conducting the
business of the bank, or have violated, are violating or about to violate
any provisions of any law or regulation to which the insured bank is
subject, the Board of Directors shall submit the report of the
examination to the Monetary Board to secure comective action
thereon. If no such corrective action is taken by the Monetary Board
within forty-five (45) days from the submission of the report, the Board
of Directors shall, motu proprio, institute corrective action which it
deems necessary. The Board of Directors may thereatter issue a cease
and desist order, and require the bank or its directors or agents
concerned to comect the practices or violations within forty-five (45)
days. However, if the practice or violation is likely to cause insolvency
or substantial dissipation of assets or earnings of the bank, or is likely to
seriously weaken the condition of the bank or otherwise seriously
prejudice the interests of its depositors and the Corporation, the period
to take corrective action shall not be more than fifteen (15) days. The
order may also include the imposition of fines provided in Section 27
(g) [21(f)] hereof. The Board of Directors shall duly inform the Monetary
Board of the Bangko Sentral ng Pilipinas of action it has taken under
this subsection with respect to such practices or violations.

(b) The actions and proceedings provided in the preceding
subsections may be undertaken by the Corporation if, in its opinion, an
insured bank or its directors or agents have violated, are violating or
about to violate any provision of this Act or any order, rule or
instruction issued by the Corporation or any written condition imposed
by the Corporation in connection with any transaction with or grant by
the Corporation.

(c) THE CORPORATION MAY TERMINATE THE INSURED STATUS OF ANY
BANK THAT FAILS OR REFUSES TO COMPLY, WITHIN THIRTY (30) DAYS
FROM NOTICE, WITH ANY CEASE-AND-DESIST ORDER ISSUED BY THE
CORPORATION, OR WITH ANY CORRECTIVE ACTION IMPOSED BY THE
MONETARY BOARD, UNDER THIS SECTION PERTAINING TO A DEPOSIT-
RELATED UNSAFE AND/OR UNSOUND BANKING PRACTICE.

SUCH TERMINATION SHALL BE FINAL AND EXECUTORY, AND SHALL BE
EFFECTIVE UPON PUBLICATION OF THE NOTICE OF TERMINATION IN A
NEWSPAPER OF GENERAL CIRCULATION.

THE DEPOSITS OF EACH DEPOSITOR IN THE BANK ON THE EFFECTIVE DATE
OF THE TERMINATION OF INSURANCE COVERAGE, LESS ALL SUBSEQUENT
WITHDRAWALS, SHALL CONTINUE TO BE INSURED UP TO THE MAXIMUM

SECTION 13. Section 7 of the same Act is accordingly renumbered as Section 8, and
is hereby amended to read as follows:

14


DEPOSIT INSURANCE COVERAGE FOR A PERIOD OF ONE HUNDRED
EIGHTY (180) DAYS. ADDITIONS TO, OR RENEWAL OF, EXISTING DEPOSITS
AND NEW DEPOSITS IN SUCH BANK AFTER THE EFFECTIVE DATE OF
TERMINATION OF INSURED STATUS OF THE BANK SHALL NOT BE INSURED
BY THE CORPORATION.

THE BANK SHALL IMMEDIATELY GIVE WRITTEN NOTICE OF SUCH
TERMINATION AND THE INTERIM DEPOSIT INSURANCE COVERAGE TO
EACH OF ITS DEPOSITORS AT THEIR ADDRESS AS RECORDED IN THE
BOOKS OF THE BANK.

THE BANK SHALL NOT ADVERTISE OR REPRESENT THAT ADDITIONS TO, OR
RENEWAL OF, EXISTING DEPOSITS AND NEW DEPOSITS MADE AFTER THE
EFFECTIVE DATE OF TERMINATION ARE COVERED BY DEPOSIT
INSURANCE.”

SECTION 14. Section 8 of the same Act Is accordingly renumbered as Section 9.

"Twelfth - THE PROVISIONS OF PRESIDENTIAL DECREE NO. 1445, AS
AMENDED, EXECUTIVE ORDER NO. 292, AND OTHER SIMILAR LAWS
NOTWITHSTANDING, [T]fo compromise, condone or release, in whole or
in part, any claim or settled liability to the Corporation, regardless of
the amount involved, under such terms and conditions as may be
imposed by the Board of Directors to protect the interest of the
Corporation, AND TO WRITE OFF THE CORPORATION'S RECEIVABLES AND
ASSETS WHICH ARE NO LONGER RECOVERABLE OR REALIZABLE;”

“THIRTEENTH - TO DETERMINE QUALIFIED INTERESTED ACQUIRERS
OR INVESTORS FOR ANY OF THE MODES OF RESOLUTION OR
LIQUIDATION OF BANKS;

FOURTEENTH - TO DETERMINE THE APPROPRIATE RESOLUTION
METHOD AND TO IMPLEMENT THE SAME FOR A BANK SUBJECT OF
RESOLUTION;

FIFTEENTH - TO DETERMINE THE APPROPRIATE MODE OF
LIQUIDATION OF A CLOSED BANK AND TO IMPLEMENT THE SAME;

SIXTEENTH - TO ESTABLISH A BRIDGE BANK FOR THE PURPOSE OF
FACILITATING THE LIQUIDATION OF A CLOSED BANK AND FOR THIS
PURPOSE, MAKE ADVANCES TO THE BRIDGE BANK FOR PAYMENT OF
INSURED DEPOSITS ASSUMED BY THE BRIDGE BANK AND FOR THE
OPERATIONS OF THE BRIDGE BANK, UPON SUCH TERMS AND
CONDITIONS AND IN SUCH FORM AND AMOUNTS AS THE PDIC BOARD
MAY PRESCRIBE: PROVIDED, THAT, SUCH ADVANCES FOR INSURED
DEPOSITS SHALL TAKE THE NATURE OF A SUBROGATED CLAIM AS

SECTION 15. Section 9, paragraph Twelfth of the same Act, as renumbered , is
hereby amended to read as follows:

SECTION 16, Section 9 of the same Act, as renumbered, is further amended by
inserting additional paragraphs after paragraph Twelve, which shall read as follows:

15


1 PROVIDED UNDER SECTION 21 OF THIS ACT: PROVIDED, FURTHER, THAT,
2 ADVANCES FOR OPERATIONS SHALL BE PAID IMMEDIATELY BY THE
3 BRIDGE BANK AS SOON AS IT IS ABLE TO GENERATE SUFFICIENT FUNDS:
4 PROVIDED, FINALLY, THAT, IN THE EVENT THAT THE BRIDGE BANK IS
5 TERMINATED PURSUANT TO PARAGRAPHS (i)(4) AND (1)(5) OF SECTION 16
6 OF THIS ACT, THE ADVANCES FOR OPERATIONS SHALL PARTAKE OF THE
7 NATURE OF LIQUIDATION EXPENSES."

8
9

SECTION 17. Section 9 of the same Act is accordingly renumbered as Section 10.

11 SECTION 18. Section 10 paragraph (b-1) of the same Act, as renumbered, is hereby
12. amended to read as follows:

13

4 “\(b-1) The investigators appointed by the Board of Directors shalll have
a5 the power on behalf of the Corporation to conduct investigations on
16 frauds, imegularities and anomalies committed in banks, based on
v7 reporls of examination conducted by the Corporation and Bangko
18 Sentral ng Pilipinas or complaints from depositors or from other
19 government agency. Each such investigator shall have the power to
20 administer oaths, and to examine and take and preserve the
21 testimony of any person relating fo the subject of investigation. FOR
22 THIS PURPOSE, THE CORPORATION MAY APPOINT OR HIRE PERSONS OR
23 ENTITIES OF RECOGNIZED COMPETENCE IN FORENSIC AND FRAUD
24 INVESTIGATIONS AS ITS AGENTS."

25

26 SECTION 19. Section 10 paragraph (c) of the same Act, as renumbered, is hereby
27 amended to read as follows:

28

29 “(c} Each insured bank shall make to the Corporation reports of
30 condition in such form and at such times as the Board of Directors may
31 require such reports to be published in such manner, not inconsistent
32 with any applicable law, as it may direct. Every such bank which fails
33 to make or publish any such report within such time, as the Board of
34 Directors may require, shall be subject to a penalty of not more than
35 P10,000 [P100] for each day of such failure recoverable by the
36 Corporation for its use."

37

38 SECTION 20. Section 10 paragraph (4-1) of the same Act, as renumbered herein, is
39 hereby amended fo read as follows:

40

41 “(d-1) Each insured bank shall keep and maintain a true and accurate
42 record or statement of its daily deposit transactions consistent with the
43 standards set by the Bangko Sentral ng Pilipinas and the Corporation.
44 Compliance with such standards shall be duly certified by the
45, presicient of the bank [or] AND the compliance officer: Provided, That
46 refusal or willful failure to issue the required certification shall constitute
47 @ violation of this Section and shall subject such officers of the bank to
48 the sanctions provided for under Section 27 [21] (f) of this Act.”

49

50 SECTION 21. Section 10 paragraph (f) of the same Act, as renumbered, is hereby
51 amended to read as follows:
52

16


23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
a
42
43
44
45
46
47
43
49
50
51
52

“(f) The Corporation shall underwrite or advance ALL LEGAL [litigation]
costs and expenses, including legal fees and other expenses of
external counsel, or provide legal assistance to, directors, officers,
employees or agents of the Corporation in connection with any civil,
criminal, administrative or any other action or proceeding, to which
such director, officer, employee or agent is made a party by reason
of, or in connection with, the exercise of authority or performance of
functions and duties under this Act: Provided, That such legal
protection shall not apply to any civil, criminal, administrative or any
action or proceeding that may be initialed by the Corporation, in
whatever capacity, against such director, officer, employee or agent:
Provided, Further, Thal directors, officers, employees or agents who
shall resign, retire, transfer to another agency or be separated from the
service, shall continue to be provided with such legal protection in
connection with any act done or omitted to be done by them in good
faith during their tenure or employment with the Corporation:
Provided, finally, Thal in the event of a setllement 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 thal the persons to be indemnified did not commit any
negligence or misconduct."

(i) Notwithstanding the provisions of this Section and Section 3 (2),
members of the Board of Directors and personnel of the Corporation
may become directors and officers of any bank and banking
institution and of any entity related to such institution in connection
with financial assistance extended by the Corporation to such
institution and when, in the opinion of the Board, it is appropriate to
make such designation fo protect the interest of the Corporation.”

“BANK RESOLUTION

SECTION 11. (a) THE CORPORATION, IN COORDINATION WITH THE
BANGKO SENTRAL, MAY COMMENCE THE RESOLUTION OF A BANK
UNDER THIS SECTION UPON:

1) FAILURE OF PROMPT CORRECTIVE ACTION AS DECLARED BY THE
MONETARY BOARD; OR
2) REQUEST BY A BANK TO BE PLACED UNDER RESOLUTION.

THE CORPORATION SHALL INFORM THE BANK OF ITS ELIGIBILITY FOR
ENTRY INTO RESOLUTION.

(b) THE BANGKO SENTRAL SHALL INFORM THE CORPORATION OF THE
INITIATION OF PROMPT CORRECTIVE ACTION ON ANY BANK AND SHALL
BE AUTHORIZED TO SHARE WITH THE CORPORATION ALL INFORMATION,

SECTION 22. The second paragraph of Section 10 paragraph [i) of the same Act, as
renumbered, is hereby amended to read as follows:

SECTION 23. A new section entitled Section 11 of the same Act is hereby inserted
between Sections 10 and 12 which shall read as follows:

vy


AGREEMENTS OR DOCUMENTS, INCLUDING ANY ORDER OF THE
MONETARY BOARD, IN RELATION TO THE PROMPT CORRECTIVE ACTION.
THE CORPORATION SHALL HAVE THE AUTHORITY TO INQUIRE AND
MONITOR THE STATUS OF BANKS UNDER PROMPT CORRECTIVE ACTION.

(c) THE STOCKHOLDERS, DIRECTORS, OFFICERS OR EMPLOYEES OF THE
BANK SHALL HAVE THE FOLLOWING OBLIGATIONS:

1) ENSURE BANK COMPLIANCE WITH TERMS AND CONDITIONS
PRESCRIBED BY THE CORPORATION FOR THE RESOLUTION OF THE
BANK;

2) CAUSE THE ENGAGEMENT, WITH THE CONSENT OF THE

CORPORATION, OF AN INDEPENDENT APPRAISER OR AUDITOR

FOR THE PURPOSE OF DETERMINING THE VALUATION OF THE BANK

CONSISTENT WITH GENERALLY ACCEPTED VALUATION

STANDARDS;

ENSURE PRUDENT MANAGEMENT AND ADMINISTRATION OF THE

BANK'S ASSETS, LIABILITIES AND RECORDS;

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.

3

(d) WITHIN A PERIOD OF ONE HUNDRED EIGHTY (180) DAYS FROM A
BANK'S ENTRY INTO RESOLUTION, THE CORPORATION, THROUGH THE
AFFIRMATIVE VOTE OF AT LEAST FIVE MEMBERS OF THE PDIC BOARD,
SHALL DETERMINE WHETHER THE BANK MAY BE RESOLVED THROUGH THE
PURCHASE OF ALL ITS ASSETS AND ASSUMPTION OF ALL ITS LIABILITIES,
OR MERGER OR CONSOLIDATION WITH, OR ITS ACQUISITION, BY A
QUALIFIED INVESTOR.

FOR THIS PURPOSE, THE CORPORATION MAY:

1) DETERMINE A RESOLUTION PACKAGE FOR THE BANK;

2) IDENTIFY AND, WITH THE APPROVAL OF THE MONETARY BOARD,
PRE-QUALIFY POSSIBLE ACQUIRERS OR INVESTORS;

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.

(e) IN DETERMINING THE APPROPRIATE RESOLUTION METHOD FOR A
BANK, THE CORPORATION SHALL CONSIDER THE:

1) FAIR MARKET VALUE OF THE ASSETS OF THE BANK, ITS FRANCHISE,
AS WELL AS THE AMOUNT OF ITS LIABILITIES;

2) AVAILABILITY OF A QUALIFIED INVESTOR;

3) LEAST COST TO THE DEPOSIT INSURANCE FUND;

4) INTEREST OF THE DEPOSITING PUBLIC.



(f) THE CORPORATION MAY APPOINT OR HIRE PERSONS OR ENTITIES OF
RECOGNIZED COMPETENCE IN BANKING, FINANCE, ASSET
MANAGEMENT OR REMEDIAL MANAGEMENT, AS ITS AGENTS, TO
PERFORM SUCH POWERS AND FUNCTIONS OF THE CORPORATION IN THE
RESOLUTION OF A BANK, OR ASSIST IN THE PERFORMANCE THEREOF.

(g) THE PDIC BOARD SHALL PRESCRIBE THE GUIDELINES OR CRITERIA FOR
A BANK TO BE PLACED UNDER RESOLUTION.

(h) UPON A DETERMINATION BY THE CORPORATION THAT THE BANK MAY
NOT BE RESOLVED, THE MONETARY BOARD MAY ACT IN ACCORDANCE
WITH SECTION 30 OF REPUBLIC ACT NO. 7653, AS AMENDED.

(i) BANK RESOLUTION INVOLVING THE PURCHASE OF ALL ASSETS AND
ASSUMPTION OF ALL LIABILITIES OF A BANK SHALL BE EXEMPT FROM THE
PROVISIONS OF ACT NO. 3952, OTHERWISE KNOWN AS THE BULK SALES
LAW.

(J) THE PROVISIONS OF THIS SECTION ARE WITHOUT PREJUDICE TO ANY
ACTION THAT THE MONETARY BOARD MAY TAKE UNDER EXISTING
LAWS."

SECTION 24, Sections 10, 11 and 12 of the same Act are hereby deleted.

SECTION 25. A new section entitled Section 12 of the same Act is hereby inserted

between Sections 11 and 13 which shall read as follows:
“LIQUIDATION OF A CLOSED BANK

SECTION 12. (a) WHENEVER A BANK IS ORDERED CLOSED BY THE
MONETARY BOARD, THE CORPORATION SHALL BE DESIGNATED AS
RECEIVER AND IT SHALL PROCEED WITH THE TAKEOVER AND
LIQUIDATION OF THE CLOSED BANK. FOR THIS PURPOSE, THE FOLLOWING
CLAUSE IN SECTION 30 OF REPUBLIC ACT NO. 7653, AS AMENDED, SHALL
NOT BE APPLICABLE TO BANKS:

“THE RECEIVER SHALL DETERMINE, AS SOON AS POSSIBLE,
BUT NOT LATER THAN NINETY (90) DAYS FROM TAKE-OVER,
WHETHER THE INSTITUTION MAY BE REHABILITATED OR
OTHERWISE PLACED IN SUCH A CONDITION SO THAT IT
MAY BE PERMITTED TO RESUME BUSINESS WITH SAFETY TO
ITS DEPOSITORS AND CREDITORS AND THE GENERAL
PUBLIC: PROVIDED, THAT ANY DETERMINATION FOR THE
RESUMPTION OF BUSINESS OF THE INSTITUTION SHALL BE
SUBJECT TO PRIOR APPROVAL OF THE MONETARY
BOARD.”

SECTION 26. A new section entitled Section 13 of the same Act is hereby inserted

between Sections 12 and 14 which shall read as follows:

“ AUTHORITIES OF A RECEIVER AND EFFECTS OF PLACEMENT OF A BANK
UNDER LIQUIDATION

19


SECTION 13. (a) THE RECEIVER IS AUTHORIZED TO ADOPT AND
IMPLEMENT, WITHOUT NEED OF CONSENT OF THE STOCKHOLDERS,
BOARD OF DIRECTORS, CREDITORS OR DEPOSITORS OF THE CLOSED
BANK, ANY OR A COMBINATION OF THE FOLLOWING MODES OF
LIQUIDATION:

1) CONVENTIONAL LIQUIDATION
2) PURCHASE OF ASSETS AND/OR ASSUMPTION OF LIABILITIES
3) BRIDGE BANK

(b) IN ADDITION TO THE POWERS OF A RECEIVER PROVIDED UNDER
EXISTING LAWS, THE CORPORATION, AS RECEIVER OF A CLOSED BANK,
1S EMPOWERED TO:

1) REPRESENT AND ACT FOR AND IN BEHALF OF THE CLOSED BANK;

2) GATHER AND TAKE CHARGE OF ALL THE ASSETS, RECORDS AND
AFFAIRS OF THE CLOSED BANK, AND ADMINISTER THE SAME FOR
THE BENEFIT OF ITS CREDITORS;

3) CONVERT THE ASSETS OF THE CLOSED BANK TO CASH OR OTHER
FORMS OF LIQUID ASSETS, AS FAR AS PRACTICABLE;

4) BRING SUITS TO ENFORCE LIABILITIES OF THE DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS OF THE CLOSED BANK AND
OTHER ENTITIES RELATED OR CONNECTED TO THE CLOSED BANK
OR TO COLLECT, RECOVER, AND PRESERVE ALL ASSETS,
INCLUDING ASSETS OVER WHICH THE BANK HAS EQUITABLE
INTEREST;

5) APPOINT OR HIRE PERSONS OR ENTITIES OF 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 THEREOF;

6) PAY ACCRUED UTILITIES, RENTALS AND SALARIES OF PERSONNEL

OF THE CLOSED BANK FOR A PERIOD NOT EXCEEDING THREE (3)

MONTHS, FROM AVAILABLE FUNDS OF THE CLOSED BANK;

7) COLLECT LOANS AND OTHER CLAIMS OF THE CLOSED BANK AND
FOR THIS PURPOSE, MODIFY, COMPROMISE OR RESTRUCTURE THE
TERMS AND CONDITIONS OF SUCH LOANS OR CLAIMS AS MAY BE
DEEMED ADVANTAGEOUS TO THE INTERESTS OF THE CREDITORS

OF THE CLOSED BANK;

8) HIRE OR RETAIN PRIVATE COUNSEL AS MAY BE NECESSARY;

9) BORROW OR OBTAIN A LOAN, OR MORTGAGE, PLEDGE OR

ENCUMBER ANY ASSET OF THE CLOSED BANK, WHEN NECESSARY

20


TO PRESERVE OR PREVENT DISSIPATION OF THE ASSETS, OR TO
REDEEM FORECLOSED ASSETS OF THE CLOSED BANK, OR TO
MINIMIZE LOSSES TO ITS DEPOSITORS AND CREDITORS;

10)IF THE STIPULATED INTEREST RATE ON DEPOSITS IS UNUSUALLY HIGH
COMPARED WITH PREVAILING APPLICABLE INTEREST RATES, THE
CORPORATION AS RECEIVER, MAY EXERCISE SUCH POWERS
WHICH MAY INCLUDE A REDUCTION OF THE INTEREST RATE TO A
REASONABLE RATE: PROVIDED, THAT ANY MODIFICATIONS OR
REDUCTIONS SHALL APPLY ONLY TO EARNED AND UNPAID
INTEREST;

TI)UTILIZE AVAILABLE FUNDS OF THE BANK, INCLUDING FUNDS
GENERATED BY THE RECEIVER FROM THE CONVERSION OF ASSETS
TO PAY FOR REASONABLE COSTS AND EXPENSES INCURRED FOR
THE PRESERVATION OF THE ASSETS, AND LIQUIDATION OF, THE
CLOSED BANK, WITHOUT NEED FOR APPROVAL OF THE
LIQUIDATION COURT;

FOR BANKS WITH INSUFFICIENT FUNDS, THE CORPORATION IS
AUTHORIZED TO ADVANCE THE FOREGOING COSTS AND
EXPENSES, AND COLLECT PAYMENT, AS AND WHEN FUNDS
BECOME AVAILABLE.

12) CHARGE REASONABLE FEES FOR THE LIQUIDATION OF THE BANK
FROM THE ASSETS OF THE BANK: PROVIDED THAT, PAYMENT OF
THESE FEES, INCLUDING ANY UNPAID ADVANCES UNDER THE
IMMEDIATELY PRECEDING PARAGRAPH, SHALL BE SUBJECT TO
APPROVAL BY THE LIQUIDATION COURT;

13) DISTRIBUTE THE AVAILABLE ASSETS OF THE CLOSED BANK, IN CASH
OR IN KIND, TO ITS CREDITORS IN ACCORDANCE WITH THE RULES
ON CONCURRENCE AND PREFERENCE OF CREDITS UNDER THE
CIVIL CODE OR OTHER LAWS;

14) DISPOSE RECORDS OF THE CLOSED BANK THAT ARE NO LONGER
NEEDED IN THE LIQUIDATION, NOTWITHSTANDING THE LAWS ON
ARCHIVAL PERIOD AND DISPOSAL OF RECORDS;

15)EXERCISE SUCH OTHER POWERS AS ARE INHERENT AND
NECESSARY FOR THE EFFECTIVE DISCHARGE OF THE DUTIES OF THE
CORPORATION AS RECEIVER.

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) AFTER THE PAYMENT OF ALL LIABILITIES AND CLAIMS AGAINST THE
CLOSED BANK OF ALL ITS CREDITORS, THE CORPORATION SHALL PAY
ANY SURPLUS DIVIDENDS AT THE LEGAL RATE OF INTEREST FROM DATE OF
TAKEOVER TO DATE OF DISTRIBUTION TO CREDITORS AND CLAIMANTS OF

a


THE CLOSED BANK IN ACCORDANCE WITH THE RULES ON
CONCURRENCE AND PREFERENCE OF CREDITS UNDER THE CIVIL CODE
OR OTHER LAWS BEFORE DISTRIBUTION TO THE SHAREHOLDERS OF THE
CLOSED BANK.

(d) THE OFFICERS, EMPLOYEES, DEPUTIES, ASSISTANTS AND AGENTS OF
THE RECEIVER SHALL HAVE NO LIABILITY AND SHALL NOT BE SUBJECT TO
ANY ACTION, CLAIM OR DEMAND IN CONNECTION WITH ANY ACT
DONE OR OMITTED TO BE DONE BY THEM IN GOOD FAITH IN
CONNECTION WITH THE EXERCISE OF THEIR POWERS AND FUNCTIONS
UNDER THIS ACT AND OTHER APPLICABLE LAWS, OR OTHER ACTIONS
DULY APPROVED BY THE COURT.

(e) THE PLACEMENT OF A BANK UNDER LIQUIDATION SHALL HAVE THE
FOLLOWING EFFECTS:

1) ON THE CORPORATE FRANCHISE OR EXISTENCE

UPON PLACEMENT BY THE MONETARY BOARD OF A BANK UNDER
LIQUIDATION, IT SHALL CONTINUE AS A BODY CORPORATE UNTIL
THE TERMINATION OF THE WINDING UP PERIOD UNDER SECTION
17 OF THIS ACT. SUCH CONTINUATION AS A BODY CORPORATE
SHALL ONLY BE FOR THE PURPOSE OF LIQUIDATING, SETTLING AND
CLOSING ITS AFFAIRS AND FOR THE DISPOSAL, CONVEYANCE OR
DISTRIBUTION OF ITS ASSETS PURSUANT TO THIS ACT. THE RECEIVER
SHALL REPRESENT THE CLOSED BANK IN ALL CASES BY OR
AGAINST THE CLOSED BANK AND PROSECUTE AND DEFEND SUITS
BY OR AGAINST IT. IN NO CASE SHALL THE BANK BE REOPENED
AND PERMITTED TO RESUME BANKING BUSINESS AFTER BEING
PLACED UNDER LIQUIDATION.

2) ON THE POWERS AND FUNCTIONS OF ITS DIRECTORS,
OFFICERS AND STOCKHOLDERS

THE POWERS, VOTING RIGHTS, FUNCTIONS AND DUTIES, AS WELL
AS THE ALLOWANCES, REMUNERATION AND PERQUISITES OF THE
DIRECTORS, OFFICERS, AND STOCKHOLDERS OF SUCH BANK ARE
TERMINATED UPON ITS CLOSURE. | ACCORDINGLY, THE
DIRECTORS, OFFICERS, AND STOCKHOLDERS SHALL BE BARRED
FROM INTERFERING IN ANY WAY WITH THE ASSETS, RECORDS, AND
AFFAIRS OF THE BANK.

THE RECEIVER SHALL EXERCISE ALL AUTHORITIES AS MAY BE
REQUIRED TO FACILITATE THE LIQUIDATION OF THE CLOSED BANK
FOR THE BENEFIT OF ALL ITS CREDITORS.

3) ON THE ASSETS

UPON SERVICE OF NOTICE OF CLOSURE AS PROVIDED IN SECTION
14 OF THIS ACT, ALL THE ASSETS OF THE CLOSED BANK SHALL BE
DEEMED IN CUSTODIA LEGIS IN THE HANDS OF THE RECEIVER AND
AS SUCH THESE ASSETS MAY NOT BE SUBJECT TO ATTACHMENT,


eavausunk

1
2
13
4
15
16
v7
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
a
42
43

45
46
47
48
49
50
51
52

GARNISHMENT, EXECUTION, LEVY OR ANY OTHER COURT
PROCESSES. A JUDGE, OFFICER OF THE COURT OR ANY PERSON
WHO SHALL ISSUE, ORDER, PROCESS OR CAUSE THE ISSUANCE OR
IMPLEMENTATION OF THE WRIT OF GARNISHMENT, LEVY,
ATTACHMENT OR EXECUTION, SHALL BE LIABLE UNDER SECTION 28
OF THIS ACT.

ANY PRELIMINARY ATTACHMENT OR GARNISHMENT ON ANY OF
THE ASSETS OF THE CLOSED BANK EXISTING AT THE TIME OF
CLOSURE SHALL NOT GIVE ANY PREFERENCE TO THE ATTACHING
OR GARNISHING PARTY. UPON MOTION OF THE RECEIVER, THE
PRELIMINARY ATTACHMENT OR GARNISHMENT SHALL BE LIFTED
AND/OR DISCHARGED.

4) ON LABOR RELATIONS

NOTWITHSTANDING THE PROVISIONS OF THE LABOR CODE, THE
EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN THE CLOSED BANK
AND ITS EMPLOYEES SHALL BE DEEMED TERMINATED UPON
SERVICE OF THE NOTICE OF CLOSURE OF THE BANK IN
ACCORDANCE WITH THIS ACT. PAYMENT OF SEPARATION PAY OR
BENEFITS PROVIDED FOR BY LAW SHALL BE MADE FROM
AVAILABLE ASSETS OF THE BANK[,] IN ACCORDANCE WITH THE
RULES ON CONCURRENCE AND PREFERENCE OF CREDITS UNDER
THE CIVIL CODE OR OTHER LAWS.

5) CONTRACTUAL OBLIGATIONS

THE RECEIVER MAY CANCEL, TERMINATE, RESCIND OR REPUDIATE
ANY CONTRACT OF THE CLOSED BANK THAT IS NOT NECESSARY
FOR THE ORDERLY LIQUIDATION OF THE BANK, OR IS GROSSLY
DISADVANTAGEOUS TO THE CLOSED BANK, OR FOR ANY
GROUND PROVIDED BY LAW.

6) ON INTEREST PAYMENTS

THE LIABILITY OF A BANK TO PAY INTEREST ON DEPOSITS AND ALL
OTHER OBLIGATIONS AS OF CLOSURE SHALL CEASE UPON ITS.
CLOSURE BY THE MONETARY BOARD: PROVIDED, THAT, THE
RECEIVER SHALL HAVE THE AUTHORITY, WITHOUT NEED FOR
APPROVAL OF THE LIQUIDATION COURT, TO ASSIGN, AS PAYMENT
TO SECURED CREDITORS, THE BANK ASSETS SERVING AS
COLLATERALS TO THEIR RESPECTIVE LOANS UP TO THE EXTENT OF
THE OUTSTANDING OBLIGATIONS, INCLUDING INTEREST AS OF
DATE OF CLOSURE OF THE BANK, AS VALIDATED BY THE RECEIVER.
THE VALUATION OF THE ASSET SHALL BE BASED ON THE
PREVAILING MARKET VALUE OF THE COLLATERALS AS APPRAISED
BY AN INDEPENDENT APPRAISER ON AN “AS IS WHERE IS" BASIS.

7) UABILITY FOR PENALTIES AND SURCHARGES FOR LATE
PAYMENT AND NON-PAYMENT OF TAXES

23


8)

9)

FROM THE TIME OF CLOSURE, THE CLOSED BANK SHALL NOT BE
LIABLE FOR THE PAYMENT OF PENALTIES AND SURCHARGES
ARISING FROM THE LATE PAYMENT OR NONPAYMENT OF REAL
PROPERTY TAX, CAPITAL GAINS TAX, TRANSFER TAX AND SIMILAR
CHARGES.

BANK CHARGES AND FEES ON SERVICES

THE RECEIVER MAY IMPOSE, ON BEHALF OF THE CLOSED BANK,
CHARGES AND FEES FOR SERVICES RENDERED AFTER BANK
CLOSURE, SUCH AS, BUT NOT LIMITED TO, THE EXECUTION OF
PERTINENT DEEDS AND CERTIFICATIONS.

ACTIONS PENDING FOR OR AGAINST THE CLOSED BANK

EXCEPT FOR ACTIONS PENDING BEFORE THE SUPREME COURT,
ACTIONS PENDING FOR OR AGAINST THE CLOSED BANK IN ANY
COURT OR QUASI-JUDICIAL BODY SHALL, UPON MOTION OF THE
RECEIVER, BE SUSPENDED FOR A PERIOD NOT EXCEEDING ONE
HUNDRED EIGHTY (180) DAYS AND REFERRED TO MANDATORY
MEDIATION. UPON TERMINATION OF THE MEDIATION, THE CASE
SHALL BE REFERRED BACK TO THE COURT OR QUASI-JUDICIAL
BODY FOR FURTHER PROCEEDINGS.

10) FINAL DECISIONS AGAINST THE CLOSED BANK

THE EXECUTION AND ENFORCEMENT OF A FINAL DECISION OF A
COURT OTHER THAN THE LIQUIDATION COURT AGAINST THE
ASSETS OF A CLOSED BANK SHALL BE STAYED. THE PREVAILING
PARTY SHALL FILE THE FINAL DECISION AS A CLAIM WITH THE
LIQUIDATION COURT AND SETTLED IN ACCORDANCE WITH THE
RULES ON CONCURRENCE AND PREFERENCE OF CREDITS UNDER
THE CIVIL CODE OR OTHER LAWS.

11) DOCKET AND OTHER COURT FEES

PAYMENT OF DOCKET AND OTHER COURT FEES RELATING TO ALL
CASES OR ACTIONS FILED BY THE RECEIVER WITH ANY JUDICIAL
OR QUASI-JUDICIAL BODIES SHALL BE DEFERRED UNTIL THE
ACTION IS TERMINATED WITH FINALITY. ANY SUCH FEES SHALL
CONSTITUTE AS A FIRST LIEN ON ANY JUDGMENT IN FAVOR OF
THE CLOSED BANK OR IN CASE OF UNFAVORABLE JUDGMENT,
SUCH FEES SHALL BE PAID AS LIQUIDATION COSTS AND EXPENSES
DURING THE DISTRIBUTION OF THE ASSETS OF THE CLOSED BANK.

12) ALL ASSETS, RECORDS, AND DOCUMENTS IN THE POSSESSION OF

THE CLOSED BANK AT THE TIME OF ITS CLOSURE ARE PRESUMED
HELD BY THE BANK IN THE CONCEPT OF AN OWNER.

13) THE EXERCISE OF AUTHORITY, FUNCTIONS, AND DUTIES BY THE

RECEIVER UNDER THIS ACT SHALL BE PRESUMED TO HAVE BEEN
PERFORMED IN THE REGULAR COURSE OF BUSINESS.

24


14) ASSETS AND DOCUMENTS OF THE CLOSED BANK SHALL RETAIN
THEIR PRIVATE NATURE EVEN IF ADMINISTERED BY THE RECEIVER.
MATTERS RELATING TO THE EXERCISE BY THE RECEIVER OF THE
FUNCTIONS UNDER THIS ACT SHALL BE SUBJECT TO VISITORIAL
AUDIT ONLY BY THE COMMISSION ON AUDIT.

“NOTICE OF CLOSURE AND TAKEOVER ACTIVITIES

SECTION 14. (a) UPON THE DESIGNATION OF THE CORPORATION AS
RECEIVER OF A CLOSED BANK, IT SHALL SERVE A NOTICE OF CLOSURE TO
THE HIGHEST-RANKING OFFICER OF THE BANK PRESENT IN THE BANK
PREMISES, OR IN THE ABSENCE OF SUCH OFFICER, POST THE NOTICE OF
CLOSURE IN THE BANK PREMISES OR ON ITS MAIN ENTRANCE. THE
CLOSURE OF THE BANK SHALL BE DEEMED EFFECTIVE UPON THE SERVICE
OF THE NOTICE OF CLOSURE. THEREAFTER, THE RECEIVER SHALL
TAKEOVER THE BANK AND EXERCISE THE POWERS OF THE RECEIVER AS
PROVIDED IN THIS ACT.

(b) THE RECEIVER SHALL HAVE AUTHORITY TO USE 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 SERVICE OF
THE NOTICE OF CLOSURE.

(c) DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS OF A BANK HOLD
MONEY AND OTHER ASSETS OF THE BANK IN TRUST OR UNDER
ADMINISTRATION OR MANAGEMENT BY THEM FOR THE BANK IN THEIR
FIDUCIARY CAPACITY. UPON SERVICE OF THE NOTICE OF CLOSURE TO
THE BANK, ALL DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS OF THE
CLOSED BANK SHALL HAVE THE DUTY TO IMMEDIATELY ACCOUNT FOR,
SURRENDER AND TURN OVER TO THE RECEIVER, AND PROVIDE
INFORMATION RELATIVE TO, THE ASSETS, RECORDS, AND AFFAIRS OF THE
CLOSED BANK IN THEIR POSSESSION, CUSTODY, ADMINISTRATION OR
MANAGEMENT.

(d) WHEN THE CIRCUMSTANCES SO WARRANT, THE LOCAL GOVERNMENT
UNIT AND LAW ENFORCEMENT AGENCIES CONCERNED SHALL, UPON
REQUEST, IMMEDIATELY PROVIDE ASSISTANCE TO THE RECEIVER DURING
THE SERVICE OF NOTICE OF CLOSURE AND ACTUAL TAKEOVER
OPERATIONS TO ENSURE THE ORDERLY CONDUCT THEREOF AND THE
SECURITY AND SAFETY OF THE PERSONNEL OF THE RECEIVER AND THE
EMPLOYEES OF THE CLOSED BANK.”

“PURCHASE OF ASSETS AND ASSUMPTION OF LIABILITIES (P&A)

SECTION 27. A new section entitled Section 14 of the same Act is hereby inserted
between Sections 13 and 15 which shall read as follows:

SECTION 28. A new section entitled Section 15 of the same Act is hereby inserted
between Sections 14 and 16 which shall read as follows:

25


SECTION 15, (a) THE RECEIVER SHALL HAVE THE AUTHORITY TO
FACILITATE AND IMPLEMENT THE PURCHASE OF THE ASSETS OF THE
CLOSED BANK AND THE ASSUMPTION OF ITS LIABILITIES BY ANOTHER
INSURED BANK[,] IN ACCORDANCE WITH THE RULES ON CONCURRENCE
AND PREFERENCE OF CREDITS UNDER THE CIVIL CODE OR OTHER LAWS,
SUBJECT TO SUCH TERMS AND CONDITIONS AS THE CORPORATION MAY
PRESCRIBE, WITHOUT NEED FOR PRIOR APPROVAL OF THE LIQUIDATION
COURT.

(b) SUCH ACTION OF THE RECEIVER TO DETERMINE WHETHER A BANK
MAY BE THE SUBJECT OF A PURCHASE OF ASSETS AND ASSUMPTION OF
LIABILITIES TRANSACTION SHALL BE FINAL AND EXECUTORY, AND MAY
NOT BE SET ASIDE BY ANY COURT."

SECTION 29. A new section entitled Section 16 of the same Act is hereby inserted
between Sections 15 and 17 which shall read as follows:

“BRIDGE BANK

SECTION 16. (a) THE CORPORATION MAY FORM, ESTABLISH, ORGANIZE,
OPERATE, AND/OR CONTRACT TO OPERATE CORPORATIONS WHOSE
PRIMARY PURPOSE IS TO OPERATE AS A BRIDGE BANK. THE SECURITIES
AND EXCHANGE COMMISSION AND THE BANGKO SENTRAL SHALL
PRESCRIBE THE REQUIREMENTS FOR THE ESTABLISHMENT, LICENSING AND
SUPERVISION OF A BRIDGE BANK. A BRIDGE BANK SHALL NOT BE
SUBJECT TO THE MINIMUM CAPITALIZATION REQUIREMENTS FOR
CORPORATIONS AND BANKS.

(b) A BRIDGE BANK MODE OF LIQUIDATION MAY BE ADOPTED ONLY IF
THE CORPORATION DETERMINES THAT:

1) THE PRESERVATION OF CRITICAL BANKING FUNCTIONS IS IN THE

BEST INTEREST OF THE DEPOSITORS AND THE PUBLIC;

2) IT IS LESS COSTLY COMPARED TO PAYOUT, AND WILL AID IN THE
EXPEDITIOUS DISPOSITION OF THE ASSETS AND PROMPT
SETTLEMENT OF THE CLAIMS OF THE CREDITORS OF THE CLOSED

BANK;

3) THE CONTINUED OPERATION OF A BANK IS ESSENTIAL TO PROVIDE

ADEQUATE BANKING SERVICES IN THE COMMUNITY;

4) THERE ARE QUALIFIED INVESTORS INTERESTED IN ACQUIRING THE
BANK; AND

5) THERE ARE ENOUGH ASSETS RETAINED IN THE CLOSED BANK TO
COVER PREFERRED CREDITS.

SUCH DETERMINATION OF THE CORPORATION SHALL BE FINAL AND
EXECUTORY, AND MAY NOT BE SET ASIDE BY ANY COURT.

26


(c) THE BRIDGE BANK SHALL HAVE THE AUTHORITY TO:

1) PURCHASE ASSETS, ASSUME INSURED DEPOSITS AND OTHER
LIABILITIES OF THE CLOSED BANK WHICH THE RECEIVER MAY
DETERMINE TO BE APPROPRIATE;

2) PERFORM BANKING FUNCTIONS AS MAY BE AUTHORIZED BY THE
MONETARY BOARD.

(d) UPON MOTION BY THE BRIDGE BANK, ALL ACTIONS PENDING BEFORE
ANY COURT WHERE THE BRIDGE BANK IS A PARTY BY VIRTUE OF ITS
ACQUISITION OF ASSETS OR ASSUMPTION OF ANY LIABILITIES OF A
CLOSED BANK SHALL BE STAYED FOR A PERIOD OF UP TO ONE HUNDRED
(180) DAYS.

(e) TO CARRY OUT ITS AUTHORITY UNDER THIS SECTION, THE RECEIVER, IN
ADDITION TO THE AUTHORITIES ENUMERATED UNDER THIS ACT, SHALL
HAVE THE POWER TO:

1) SELL, ASSIGN, TRANSFER, OR CONVEY ITS SHAREHOLDINGS IN THE
BRIDGE CORPORATION TO THE CLOSED BANK;

2) TRANSFER SUCH ASSETS AND INSURED DEPOSITS OF A CLOSED
BANK TO THE BRIDGE BANK IN ACCORDANCE WITH THE RULES ON
CONCURRENCE AND PREFERENCE OF CREDITS UNDER THE CIVIL
CODE OR OTHER LAWS, AS THE RECEIVER MAY DEEM
APPROPRIATE: PROVIDED, THAT, WITHIN ONE HUNDRED (180)
DAYS FROM ESTABLISHMENT OF THE BRIDGE BANK, THE RECEIVER
MAY REPLACE OR SUBSTITUTE ANY ASSET PURCHASED OR LIABILITY
ASSUMED FROM THE CLOSED BANK SUBJECT TO SUCH TERMS AND
CONDITIONS AS THE PDIC BOARD MAY PRESCRIBE. ALL
TRANSFERS OF ASSETS UNDER THIS SUBSECTION SHALL:

a. NOT BE SUBJECT TO ANY TAXES, SUCH AS CAPITAL GAINS TAX,
INCOME TAX, VALUE ADDED TAX AND DOCUMENTARY STAMP
TAX, AND OTHER TAXES, AS MAY BE APPLICABLE;

b. BE EFFECTIVE WITHOUT NEED OF CONSENT FROM THE
STOCKHOLDERS AND CREDITORS OF THE CLOSED BANK,
NOTWITHSTANDING ANY PROVISION OF LAW TO THE
CONTRARY.

3

APPOINT, INSTALL, DESIGNATE, AND/OR REMOVE THE DIRECTORS,
OFFICERS AND OTHER PERSONNEL OF A BRIDGE BANK, AND FIX
THEIR COMPENSATION.

THE PROVISIONS OF EXISTING LAWS NOTWITHSTANDING, THE
APPOINTIVE MEMBERS OF THE BOARD, OFFICERS AND EMPLOYEES
OF THE CORPORATION MAY BE ASSIGNED AND/OR SECONDED
AS DIRECTORS, OFFICERS OR OTHER PERSONNEL OF A BRIDGE
BANK UNDER SUCH TERMS AND CONDITIONS AS THE PDIC BOARD
OF DIRECTORS MAY PRESCRIBE: PROVIDED, THAT, IF ASSIGNED OR

7


SECONDED ON FULL TIME BASIS AS OFFICERS OR EMPLOYEES OF
THE BRIDGE BANK, THEY SHALL NOT, SOLELY BY VIRTUE OF SUCH
ASSIGNMENT AND/OR SECONDMENT, LOSE ANY EXISTING STATUS
AS AN OFFICER OR EMPLOYEE OF THE CORPORATION.

SECTION 10 OF THIS ACT SHALL LIKEWISE APPLY TO ALL
DIRECTORS, OFFICERS AND OTHER EMPLOYEES OF A BRIDGE
BANK WHO ARE APPOINTED, INSTALLED OR DESIGNATED BY THE
CORPORATION.

(f) THE BRIDGE BANK IS NOT AN AGENCY, CORPORATION, OR
INSTRUMENTALITY OF THE GOVERNMENT OF THE REPUBLIC OF THE
PHILIPPINES. THE BRIDGE BANK IS AN ENTITY SEPARATE AND DISTINCT
FROM THE CLOSED BANK.

(g) THE BRIDGE BANK SHALL BE EXEMPT FROM THE PAYMENT OF
ASSESSMENT UNDER SECTION 7 OF THIS ACT.

(h) THE BRIDGE BANK LICENSE SHALL BE EFFECTIVE FOR TWO (2) YEARS
FOLLOWING THE DATE IT WAS GRANTED A BANKING LICENSE: PROVIDED,
THAT, THE RECEIVER, WITH THE CONSENT OF THE BANGKO SENTRAL, MAY
EXTEND THE STATUS OF THE BRIDGE BANK IF DEEMED NECESSARY TO
CONCLUDE PENDING NEGOTIATIONS FOR THE MERGER OR
CONSOLIDATION, SALE, OR ACQUISITION OF THE BRIDGE BANK BY AN
ACQUIRER: PROVIDED, FURTHER, THAT THE MAXIMUM EXTENSION SHALL
BE FOR ANOTHER YEAR.

(i) THE BRIDGE BANK SHALL TERMINATE UPON THE EARLIEST OF ANY OF
THE FOLLOWING OCCURRENCES:

1) THE MERGER OR CONSOLIDATION OF THE BRIDGE BANK WITH
ANOTHER BANK THAT IS NOT A BRIDGE BANK; OR

THE SALE OF THE BRIDGE BANK TO A QUALIFIED BUYER, AS MAY BE
DETERMINED BY THE RECEIVER; OR

2

3) THE PURCHASE OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS AND
ASSUMPTION OF ALL OR SUBSTANTIALLY ALL OF THE DEPOSITS
AND OTHER LIABILITIES OF THE BRIDGE BANK BY A QUALIFIED

THIRD PARTY; OR

4) THE EXPIRATION OF THE PERIOD PROVIDED IN PARAGRAPH (h) OF

THIS SECTION; OR

5) THE DETERMINATION BY THE RECEIVER THAT THE OPERATION OF
THE BRIDGE BANK IS NO LONGER VIABLE, NOTWITHSTANDING

ANY OTHER PROVISION OF LAW TO THE CONTRARY.

(j) EFFECTS OF TERMINATION EVENTS. ~

1) FOLLOWING THE TERMINATION OF A BRIDGE BANK UNDER
PARAGRAPHS (i)(1), (1)(2) and (i)(3), THE NET PROCEEDS FROM

28


SUCH TRANSACTION SHALL FORM PART OF THE ASSETS OF THE
CLOSED BANK AVAILABLE FOR DISTRIBUTION TO THE CREDITORS
OF THE CLOSED BANK IN ACCORDANCE WITH THE RULES ON
CONCURRENCE AND PREFERENCE OF CREDITS UNDER THE CIVIL
CODE OR OTHER LAWS.

2) ONCE THE TERM OF A BRIDGE BANK HAS EXPIRED AS PROVIDED
IN PARAGRAPH (h) OR IS TERMINATED OR DISSOLVED EARLIER BY
THE RECEIVER PURSUANT TO PARAGRAPH (i)(5) OF THIS SECTION,
THE CORPORATION SHALL PAY DEPOSIT INSURANCE, SUBJECT TO
ITS RIGHT TO SUBROGATION UNDER SECTION 21 OF THIS ACT. FOR
THIS PURPOSE, ALL OUTSTANDING DEPOSITS OF THE BRIDGE BANK
AS OF THE TIME OF EXPIRATION OF ITS TERM UNDER PARAGRAPH
(h) OR EARLY TERMINATION UNDER PARAGRAPH (i)(5) ARE
DEEMED INSURED WITH THE CORPORATION. THE BRIDGE BANK
SHALL PAY ALL LIABILITIES AND THE REMAINING ASSETS, IF ANY,
SHALL BE TURNED OVER TO THE RECEIVERSHIP ESTATE.

(kk) MATTERS RELATING TO THE EXERCISE BY THE PDIC OF THE FUNCTIONS
UNDER THIS SECTION SHALL BE SUBJECT TO VISITORIAL AUDIT ONLY.

(I) THE CORPORATION SHALL PROMULGATE RULES AND REGULATIONS TO
IMPLEMENT THE PROVISIONS OF THIS SECTION. IN ALL THE FOREGOING
CASES, THE RECEIVER SHALL HAVE ALL THE RIGHTS, POWERS, AND
PRIVILEGES, AND SHALL PERFORM THE DUTIES RELATED TO THE EXERCISE
OF SUCH RIGHTS, POWERS, OR PRIVILEGES, GRANTED BY THIS ACT TO THE
RECEIVER OF A CLOSED BANK.”

SECTION 30. A new section entitled Section 17 of the same Act is hereby inserted
between Sections 16 and 18 which shall read as follows:

“CONVENTIONAL LIQUIDATION
A. ASSET MANAGEMENT AND CONVERSION

SECTION 17. (a) THE ASSETS GATHERED BY THE RECEIVER SHALL BE
EVALUATED AND VERIFIED AS TO THEIR EXISTENCE, OWNERSHIP,
CONDITION, AND OTHER FACTORS TO DETERMINE THEIR REALIZABLE
VALUE. IN THE MANAGEMENT, PRESERVATION AND DISPOSITION OF
ASSETS, THE RECEIVER SHALL BE GUIDED BY COST-BENEFIT
CONSIDERATIONS, RESOURCES OF THE CLOSED BANK, AND POTENTIAL
ASSET RECOVERY.

(b) THE CONVERSION OF THE ASSETS OF THE CLOSED BANK SHALL BE
CARRIED OUT IN A FAIR AND TRANSPARENT MANNER IN ACCORDANCE
WITH THE RULES AND PROCEDURES AS MAY BE DETERMINED BY THE
RECEIVER.

(c) IN THE MANAGEMENT AND/OR CONVERSION OF THE ASSETS OF THE
CLOSED BANK, THE RECEIVER SHALL HAVE THE AUTHORITY TO:

29


1) REPRESENT THE CLOSED BANK BEFORE THE LAND REGISTRATION

2

3

4)

5

)

)

AUTHORITY (LRA), BUREAU OF LANDS, REGISTER OF DEEDS, THE

LAND TRANSPORTATION OFFICE (LTO), THE ASSESSOR'S OFFICE

OR OTHER APPROPRIATE OFFICE OF THE LOCAL GOVERNMENT

UNIT, THE SECURITIES AND EXCHANGE COMMISSION (SEC), OR

SUCH OTHER SIMILAR GOVERNMENT AGENCIES OR PRIVATE

ENTITIES IN ---

a. VERIFYING THE AUTHENTICITY OF OWNERSHIP DOCUMENTS;

b, REGISTERING THE INTEREST OF THE CLOSED BANK ON A
SPECIFIC PROPERTY;

¢. CONSOLIDATING OWNERSHIP OVER AN ASSET OF THE CLOSED
BANK;

d. SECURING CERTIFIED TRUE COPIES OF DOCUMENTS HELD BY
THE FOREGOING AGENCIES/ENTITIES IN RELATION TO AN
ASSET OF THE CLOSED BANK;

e. SECURING THE APPROPRIATE CERTIFICATION FROM THE
FOREGOING AGENCIES/ENTITIES IN RELATION TO AN ASSET OF
THE CLOSED BANK; AND

f. PERFORMING OTHER RELATED ACTIVITIES;

CONDUCT A PHYSICAL OR OCULAR INSPECTION OF THE
PROPERTIES OWNED BY, OR MORTGAGED TO, THE CLOSED BANK,
TO DETERMINE THEIR EXISTENCE AND PRESENT CONDITION;

DETERMINE THE DISPOSAL PRICE OF ASSETS IN ACCORDANCE
WITH GENERALLY ACCEPTED VALUATION PRINCIPLES, STANDARDS
AND PRACTICES, SUBJECT TO SUCH GUIDELINES AS THE RECEIVER
MAY DETERMINE;

DISPOSE REAL OR PERSONAL PROPERTIES OF THE CLOSED BANK
THROUGH BIDDING, NEGOTIATED SALE OR ANY OTHER MODE
INCLUDING LEASE WITH OPTION TO PURCHASE, WHETHER BY
PIECE OR BY LOT, AS MAY BE REASONABLY DETERMINED BY THE
RECEIVER BASED ON COST BENEFIT CONSIDERATIONS AND TO
ALLOW EFFICIENT DISTRIBUTION OF ASSETS TO CREDITORS; AND

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
GUIDELINES AS DETERMINED BY THE RECEIVER.

(d) NOTWITHSTANDING ANY PROVISION OF LAW TO THE CONTRARY, THE
FOLLOWING RULES SHALL APPLY TO THE MANAGEMENT AND/OR
CONVERSION BY THE RECEIVER OF THE ASSETS OF THE CLOSED BANK:

1) UPON NOTIFICATION OF THE CLOSURE OF A BANK, THE LAND

REGISTRATION AUTHORITY, BUREAU OF LANDS, REGISTER OF
DEEDS, THE LAND TRANSPORTATION OFFICE, THE ASSESSOR'S
OFFICE OR OTHER APPROPRIATE OFFICE OF THE LOCAL
GOVERNMENT UNIT, THE SECURITIES AND EXCHANGE
COMMISSION OR SUCH OTHER SIMILAR GOVERNMENT AGENCIES
OR PRIVATE ENTITIES SHALL NOT ALLOW ANY TRANSACTION

30


eVanaune

a
12
3
14
15
16
7
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41

43
44
45
46
a7
48
49
50
51
52

AFFECTING THE ASSETS OF THE CLOSED BANK WITHOUT THE
CONSENT OF THE RECEIVER.

2) UPON ISSUANCE BY THE MONETARY BOARD OF THE RESOLUTION
ORDERING THE CLOSURE OF A BANK, ANY PERSON OR ENTITY IN
CUSTODY OR POSSESSION OF ASSETS OR RECORDS OF THE
CLOSED BANK, INCLUDING, BUT NOT LIMITED TO, DEPOSIT
ACCOUNTS, TITLES TO REAL PROPERTY, COLLATERALS,
PROMISSORY NOTES, EVIDENCE OF INDEBTEDNESS OR
INVESTMENTS SHALL IMMEDIATELY TURN OVER CUSTODY OF SAID
ASSETS AND RECORDS TO THE RECEIVER. PENDING TURNOVER,
ALL PERSONS OR ENTITIES IN CUSTODY OR POSSESSION OF ANY
ASSET OR RECORD OF THE CLOSED BANK SHALL HOLD THE SAID
ASSETS OR RECORDS IN TRUST FOR THE RECEIVER.

3) THE PERSONS OR ENTITIES IN CUSTODY OR POSSESSION OF SUCH
ASSET SHALL NOT ALLOW, AUTHORIZE OR CAUSE THE
WITHDRAWAL, TRANSFER, DISPOSITION, REMOVAL, CONVERSION,
CONCEALMENT, OR OTHER TRANSACTION INVOLVING OR
RELATING TO THE SUBJECT ASSET, UNLESS OTHERWISE DIRECTED BY
THE RECEIVER.

(e) THE RECEIVER SHALL HAVE THE AUTHORITY TO INVEST FUNDS
RECEIVED FROM THE CONVERSION OF THE ASSETS OF THE CLOSED BANK
IN GOVERNMENT SECURITIES, OTHER GOVERNMENT-GUARANTEED
MARKETABLE SECURITIES OR INVESTMENT GRADE BONDS AND OTHER
DEBT AND EQUITY INSTRUMENTS.

(f) THE PROCEEDS OF THE SALE OF THE BANKING FRANCHISE SHALL BE
FOR THE BENEFIT OF THE CREDITORS OF THE CLOSED BANK WHICH SHALL
BE DISTRIBUTED IN ACCORDANCE WITH THIS ACT AND THE RULES ON
CONCURRENCE AND PREFERENCE OF CREDITS UNDER THE CIVIL CODE
OR OTHER LAWS.

B. PETITION FOR ASSISTANCE
IN THE LIQUIDATION (PAL) OF A CLOSED BANK

(g) A PETITION FOR ASSISTANCE IN THE LIQUIDATION (PAL) IS A SPECIAL
PROCEEDING FOR THE LIQUIDATION OF A CLOSED BANK, AND INCLUDES
THE DECLARATION OF THE CONCOMITANT RIGHT OF ITS CREDITORS AND
THE ORDER OF PAYMENT OF THEIR VALID CLAIMS IN THE DISPOSITION OF
ITS ASSETS.

ANY PROCEEDING INITIATED UNDER THIS SECTION SHALL BE
CONSIDERED IN REM. JURISDICTION OVER ALL PERSONS AFFECTED BY
THE PROCEEDING SHALL BE CONSIDERED AS ACQUIRED UPON
PUBLICATION OF THE ORDER SETTING THE CASE FOR INITIAL HEARING IN
ANY NEWSPAPER OF GENERAL CIRCULATION IN THE PHILIPPINES.

(h) THE LIQUIDATION COURT SHALL HAVE EXCLUSIVE JURISDICTION TO
ADJUDICATE DISPUTED CLAIMS AGAINST THE CLOSED BANKS, ASSIST IN
THE ENFORCEMENT OF INDIVIDUAL LIABILITIES OF THE STOCKHOLDERS,

a1


DIRECTORS AND OFFICERS AND DECIDE ON ALL OTHER ISSUES AS MAY
BE MATERIAL TO IMPLEMENT THE DISTRIBUTION PLAN ADOPTED BY THE
‘CORPORATION FOR GENERAL APPLICATION TO ALL CLOSED BANKS.

(i) THE PROVISIONS OF REPUBLIC ACT NO. 8799, OTHERWISE KNOWN AS
“THE SECURITIES REGULATION CODE,” AND SUPREME COURT
ADMINISTRATIVE MATTER NO. 00-8-10-SC, ENTITLED, “THE RULES OF
PROCEDURE ON CORPORATE REHABILITATION,” SHALL NOT BE
APPLICABLE TO THE PAL OF THE CLOSED BANK.

(j) THE PETITION SHALL BE FILED IN THE REGIONAL TRIAL COURT WHICH
HAS JURISDICTION OVER THE PRINCIPAL OFFICE OF THE CLOSED BANK
OR THE PRINCIPAL OFFICE OF THE RECEIVER, AT THE OPTION OF THE
LATTER.

(k) THE PETITION SHALL BE FILED EX PARTE WITHIN A REASONABLE PERIOD
FROM RECEIPT OF THE MONETARY BOARD RESOLUTION PLACING THE
BANK UNDER LIQUIDATION.

(I) ALL PERSONS OR ENTITIES WITH CLAIMS AGAINST THE ASSETS OF THE
CLOSED BANK SHALL FILE THEIR CLAIMS WITH THE RECEIVER WITHIN SIXTY
(60) DAYS FROM DATE OF PUBLICATION OF THE NOTICE OF CLOSURE.
CLAIMS FILED OUTSIDE THE FOREGOING PRESCRIBED PERIOD SHALL BE
DISALLOWED.

CLAIMS DENIED BY THE RECEIVER SHALL BE FILED WITH THE LIQUIDATION
‘COURT WITHIN SIXTY (60) DAYS FROM RECEIPT OF THE FINAL NOTICE OF
DENIAL OF CLAIM.

(m) A CLAIM WHOSE VALIDITY HAS NOT YET BEEN DETERMINED WITH
FINALITY AT THE TIME OF THE SUBMISSION OF THE FINAL ASSET
DISTRIBUTION PLAN (FADP), EITHER BY REASON OF A PENDING SUIT OR
FOR WHATEVER REASON, SHALL BE CONSIDERED AS CONTINGENT CLAIM
AND SHALL NOT BE PAID UNDER THE PROPOSED FINAL ASSET
DISTRIBUTION PLAN (FADP).

(n) UPON FINALITY OF THE ORDER APPROVING THE FINAL ASSET
DISTRIBUTION PLAN (FADP), THE PETITION FOR ASSISTANCE IN THE
LIQUIDATION OF A CLOSED BANK SHALL HENCEFORTH BE, FOR ALL
INTENTS AND PURPOSES, CONSIDERED CLOSED AND TERMINATED AND
THE RECEIVER, ITS OFFICERS, EMPLOYEES OR AGENTS, ARE FOREVER
DISCHARGED FROM ANY AND ALL CLAIMS AND/OR LIABILITY ARISING
FROM OR IN CONNECTION WITH THE LIQUIDATION OF THE CLOSED
BANK.

(0) THE RECEIVER SHALL SUBMIT A FINAL REPORT ON THE
IMPLEMENTATION OF THE APPROVED FINAL ASSET DISTRIBUTION PLAN
(FADP) TO THE MONETARY BOARD AND THE SECURITIES AND EXCHANGE
COMMISSION (SEC) AFTER THE EXPIRATION OF THE WINDING UP PERIOD
PROVIDED IN SECTION 17 OF THIS ACT.

32


eavaunune

9
10
1
12
13
14
15
16
a7
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45,
46
a7
48
49
50
51
52

(p) THE SUPREME COURT SHALL PROMULGATE THE APPROPRIATE
PROCEDURAL RULES TO IMPLEMENT THIS SECTION.

C. WINDING UP

(q) THE CREDITORS SHALL HAVE A PERIOD OF SIX (6) MONTHS FROM
DATE OF PUBLICATION OF NOTICE OF THE APPROVAL BY THE COURT OF
THE FINAL ASSET DISTRIBUTION PLAN (FADP) OF THE CLOSED BANK
WITHIN WHICH TO CLAIM PAYMENT OF THE PRINCIPAL OBLIGATIONS
AND SURPLUS DIVIDENDS. DURING THIS SIX MONTH PERIOD, THE
RECEIVER SHALL HOLD AS TRUSTEE THE ASSETS ALLOCATED IN THE FINAL
ASSET DISTRIBUTION PLAN (FADP) FOR SAID CREDITORS.

FAILURE BY THE CREDITOR TO COMPLY WITH THE DOCUMENTARY
REQUIREMENTS WITHIN THE PRESCRIBED PERIOD AND/OR REFUSAL TO
ACCEPT THE ASSET AS PAYMENT SHALL BE DEEMED AS ABANDONMENT
OR WAIVER OF HIS RIGHT TO PAYMENT.

(r) THE INDIVIDUAL STOCKHOLDERS OF RECORD OR THEIR DULY-
AUTHORIZED REPRESENTATIVE OR THE COURT-APPOINTED
STOCKHOLDERS’ REPRESENTATIVE SHALL HAVE A PERIOD OF SIX (6)
MONTHS FROM PUBLICATION OF NOTICE OF THE APPROVAL BY THE
COURT OF THE FINAL ASSET DISTRIBUTION PLAN (FADP) OF THE CLOSED
BANK WITHIN WHICH TO CLAIM THE RESIDUAL ASSETS. DURING THIS SIX
MONTH PERIOD, THE RECEIVER SHALL HOLD AS TRUSTEE THE ASSETS
ALLOCATED IN THE FINAL ASSET DISTRIBUTION PLAN (FADP) FOR SAID
STOCKHOLDERS OF RECORD.

FAILURE BY THE INDIVIDUAL STOCKHOLDERS OF RECORD OR THEIR DULY-
AUTHORIZED REPRESENTATIVE OR THE COURT-APPOINTED
STOCKHOLDERS’ REPRESENTATIVE TO COMPLY WITH THE DOCUMENTARY
REQUIREMENTS WITHIN THE PRESCRIBED 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) AFTER THE LAPSE OF THE SIX MONTHS PERIOD PROVIDED IN
PARAGRAPHS (q) AND (r) OF THIS SECTION, ALL ASSETS WHICH REMAIN
UNCLAIMED BY THE CREDITORS AND/OR STOCKHOLDERS OF RECORD
SHALL BE TURNED OVER TO THE BUREAU OF TREASURY.

(t) THE RECEIVER SHALL CONTINUE TO KEEP ALL THE PERTINENT RECORDS
OF THE CLOSED BANK FOR A PERIOD OF SIX (6) MONTHS FROM DATE OF
PUBLICATION OF THE APPROVAL OF THE FINAL ASSET DISTRIBUTION PLAN
(FADP). AFTER THE LAPSE OF THIS PERIOD, THE RECEIVER IS AUTHORIZED
TO DISPOSE OF THE SAME IN ACCORDANCE RULES AND REGULATIONS
TO BE PRESCRIBED BY THE RECEIVER.”

SECTION 31. Section 13 of the same Act is hereby renumbered as Section 18.

SECTION 32. A new section entitled Section 19 of the same Act is hereby inserted
between Sections 18 and 20 which shall read as follows:

33


“DIVIDEND DECLARATION

SECTION 19. 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 (DIF) AT THE TARGET LEVEL SET BY THE
PDIC BOARD OF DIRECTORS. SUCH TARGET LEVEL SHALL BE SUBJECT TO
PERIODIC REVIEW AND MAY BE ADJUSTED AS NECESSARY.

THE CORPORATION SHALL REMIT DIVIDENDS TO THE NATIONAL
GOVERNMENT ONLY IF THE TARGET DIF LEVEL FOR THE APPLICABLE YEAR
HAS BEEN REACHED. THE DIVIDEND RATE SHALL BE AT LEAST FIFTY
PERCENT (50%) OF THE NET INCOME OF THE CORPORATION AFTER
DEDUCTING ANY ADDITION TO RESERVES FOR INSURANCE AND
FINANCIAL ASSISTANCE LOSSES, AND OTHER PROVISIONS FOR LOSSES.

THE PROVISIONS OF REPUBLIC ACT NO. 7656 SHALL NOT APPLY TO THE
CORPORATION.”

“PAYMENT OF INSURED DEPOSITS

SECTION 20. Whenever an insured bank shall have been closed by the
Monetary Board pursuant to Section 30 of R.A. 7653, OR UPON
EXPIRATION OR REVOCATION OF A BANK'S CORPORATE TERM, payment
of the insured deposits on such closed bank shall be made by the
Corporation as soon as possible either (1) by cash or (2) by making
available to each depositor a transferred deposit in another insured
bank in an amount equal to insured deposit of such depositor:
Provided, however, That the Corporation, in its discretion, may require
proof of claims to be filed before paying the insured deposits, and that
in any case where the Corporation is not satisfied as fo the [viability]
VALIDITY of a claim for an insured deposit, if may require final
determination of a court of competent jurisdiction before paying such
Claim: Provided, further, That failure to settle the claim, within six (6)
months from the date of filing of claim for insured deposit, where such
failure was due to grave abuse of discretion, gross negligence, bad
faith, or malice, shall, upon conviction, subject the directors, officers or
employees of the Corporation responsible for the delay, to
imprisonment from six (6) months to one (1) year: Provided,
furthermore, That the period shall not apply if the validity of the claim
requires the resolution of issues of facts and or law by another office,
body or agency including the case mentioned in the first proviso or by
the Corporation together with such other office, body or agency."

“SECTION 21. The Corporation, upon payment of any depositor as
provided for in [subsection (c) of this]Section 20 OF THIS ACT, shall be

SECTION 33. Section 14 of the same Act is accordingly renumbered as Section 20
and is hereby amended to read as follows:

SECTION 34. Section 15 of the same Act is accordingly renumbered as Section 21
and is hereby amended fo read as follows:

34


1 subrogated to all rights of the depositor against the closed bank to the
2 extent of such payment. Such subrogation shall include the right on
3 the part of the Corporation lo receive the same dividends and
4 payments from the proceeds of the assets of such closed bank and
5 recoveries on account of stockholders’ liability as would have been
6 payable to the depositor on a claim for the insured deposits: (but.
7 PROVIDED, THAT such depositor shall retain his claim for any uninsured
8 portion of his deposit, WHICH LEGAL PREFERENCE SHALL BE IMMEDIATELY
9 BELOW THAT OF THE SUBROGATED CLAIM OF THE CORPORATION FOR ITS

10 PAYMENT OF INSURED DEPOSITS. All payments by the Corporation of
a insured deposits in closed banks partake of the nature of public funds,
2 and as such, must be considered a preferred credit similar to taxes
B due to the National Government in the order of preference under
4 Article 2244 of the New Civil Code.{: Provided, further, That this
15 preference shall be likewise effective upon liquidation proceedings
16 already commenced and pending as of the approval of this Act,
v where no distribution of assets has been made.]"

18

19 SECTION 35. Section 16 of the same Act is accordingly renumbered as Section 22
20 and paragraph (c) thereof is hereby amended to read as follows:

22 “(c) Except as otherwise prescribed by the Board of Directors, neither
23 the Corporation nor such other insured bank shall be required to
24 recognize as the owner of any portion of a deposit [appearing on the
25 records]EVIDENCED BY A PASSBOOK, CERTIFICATE OF DEPOSIT OR
26 OTHER EVIDENCE OF DEPOSIT DETERMINED TO BE AN AUTHENTIC
27 DOCUMENT OR RECORD of the closed bank under a name other than
28 that of the claimant, any person whose name or interest as such
29 ‘owner Is not disclosed on the PASSBOOK, CERTIFICATE OF DEPOSIT OR
30 OTHER EVIDENCE OF DEPOSIT [records] of such closed bank as part
31 owner of said deposit, if such recognition would increase the
32 aggregate amount of the insured deposits in such closed bank."

33

34 SECTION 36. Section 17 of the same Act is accordingly renumbered as Section 23.

36 SECTION 37. Section 23 paragraph (a) of the same Act, as renumbered, is hereby
37 amended to read as follows:

38

39 “CORPORATE FUNDS AND ASSETS

40

41 SECTION 23. (a) SUBJECT TO GUIDELINES AND LIMITS AS APPROVED BY
42 THE BOARD OF DIRECTORS, {M]money of the Corporation denominated
43 in the local currency, not otherwise employed, shall be invested in
44 obligations of the Republic of the Philippines or in obligations
45 guaranteed as to principal and interest by the Republic of the
46 Philippines.

a7

48 THE CORPORATION MAY ALSO INVEST IN DEBT INSTRUMENTS
49 DENOMINATED IN FOREIGN CURRENCIES ISSUED OR GUARANTEED BY
50 THE REPUBLIC OF THE PHILIPPINES, OR DEBT INSTRUMENTS DENOMINATED
51 IN FREELY CONVERTIBLE FOREIGN CURRENCIES ISSUED BY

35


SUPRANATIONALS OR FOREIGN GOVERNMENTS WITH AT LEAST AN
INVESTMENT GRADE CREDIT RATING.

THE CORPORATION SHALL LIKEWISE BE AUTHORIZED TO BUY AND/OR SELL
DEBT INSTRUMENTS AND FOREIGN CURRENCIES FROM ANY
GOVERNMENT SECURITIES ELIGIBLE DEALERS (GSEDs), OR ANY
COUNTERPARTIES OR BROKERS, ACCREDITED BY THE PDIC BOARD.

FOR THIS PURPOSE, THE CORPORATION SHALL BE AUTHORIZED TO OPEN
SECURITIES CUSTODIANSHIP AND SETTLEMENT ACCOUNTS.”

SECTION 38. Section 23 paragraph (b} of the same Act, as renumbered, is hereby
amended to read as follows:

“(b) The banking or checking accounts of the Corporation shall be
kept with the Bangko Sentral ng Pilipinas, [with the Philippine National
Bank,] of with any other bank designated as depository or fiscal agent
of the Philippine goverment.”

SECTION 39. An additional paragraph to Section 23 of the same Act, as
renumbered, is hereby inserted after paragraph (c} which shall read as follows:

“(d) ASSETS OF THE CORPORATION SHALL BE EXEMPT FROM
ATTACHMENT, GARNISHMENT OR ANY OTHER ORDER OR PROCESS OF
ANY COURT, AGENCY OR ANY OTHER ADMINISTRATIVE BODY ISSUED TO
SATISFY THE CLAIM OF A PARTY.”

SECTION 40. Section 17 paragraph (d) of the same Act is accordingly renumbered
as Section 23 paragraph (e) and is hereby amended to read as follows:

“FINANCIAL ASSISTANCE

(e) [When the Corporation has determined that an insured bank is in
danger of closing, in order to prevent such closing,] IN THE EXERCISE OF
ITS AUTHORITIES UNDER SECTION 11 OF THIS ACT, the Corporation [, in
the discretion of its Board of Directors,] is authorized to make loans to,
or purchase the assels of, or assume liabilities of, or make deposits in[,
such insured bank,]:

1) A BANK IN DANGER OF CLOSING, UPON ITS ACQUISITION BY A
QUALIFIED INVESTOR; OR

2) A QUALIFIED INVESTOR, UPON ITS PURCHASE OF ALL ASSETS AND
ASSUMPTION OF ALL LIABILITIES OF A BANK IN DANGER OF
CLOSING; OR

3) A SURVIVING OR CONSOLIDATED INSTITUTION THAT HAS MERGED
OR CONSOLIDATED WITH A BANK IN DANGER OF CLOSING;

upon such terms and condition$ as the Board of Directors may
prescribe, when in the opinion of the Board of Directors, [the
continued operation of such bank] SUCH ACQUISITION, PURCHASE OF
ASSETS, ASSUMPTION OF LIABILITIES, MERGER OR CONSOLIDATION, is

36


51

essential to provide adequate banking service in the community or
maintain financial stability in the economy.

[The authority of the Corporation under the foregoing paragraph to
extend financial assistance to, assume liabilities of, purchase the assets
of an insured bank may also be exercised in the case of a closed
insured bank if the Corporation finds that the resumption of operations
of such bank is vital to the interests of the community, or a severe
financial climate exists which threatens the stability of a number of
banks possessing significant resources: Provided, That the reopening
and resumption of operations of the closed bank shall be subject to
the prior approval of the Monetary Board.

The Corporation may provide any corporation acquiring control of,
merging or consolidating with or acquiring the assets of an insured
bank in danger of closing in order to prevent such closing or of a
closed insured bank in order to restore to normal operations, with such
financial assistance as it could provide an insured bank under this
subsection: Provided, That, within sixty (60) days from date of
assistance the Corporation shall submit a report thereof to the
Monetary Board.)

The Corporation, prior to the exercise of the powers under this Section,
shall determine that actual payoff and liquidation thereof will be more
expensive than the exercise of this power: Provided, That when the
Monetary Board has determined that there are — systemic
consequences of a probable failure or closure of an insured bank, the
Corporation may grant financial assistance to such insured bank in
such amount as may be necessary to prevent ils failure or closure
and/or restore the insured bank to viable operations, under such terms
and conditions as may be deemed necessary by the Board of
Directors, subject to concurrence by the Monetary Board and without
additional cost fo the Deposit Insurance Fund

A systemic tisk refers to the possibility that failure of one bank to settle
net transactions with other banks will trigger a chain reaction,
depriving other banks of funds leading to a general shutdown of
normal clearing and settlement activity. Systemic risk also means the
likelihood of a sudden, unexpected collapse of confidence in a
significant portion of the banking or financial system with potentially
large real economic effects. Finally, the Corporation may not use its
authority under this 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 protect its financial interests:
Provided, That the financial assistance may take the form of equity or
quasi-equity of the insured bank as may be deemed necessary by the
Board of Directors with concurrence by the Monetary Board: Provided,
further, That the Corporation shall dispose of such equity as soon as
practicable.”

SECTION 41. Section 18 of the same Act is accordingly renumbered as Section 24
and is hereby amended to read as follows:

37


26
27
28
29
30
a1
32
33
34
35
36
37
38
39
40
41
42
43

45,
46
47
48
49
50
51
52

“AUTHORITY TO BORROW

SECTION 24. The Corporation is authorized to borrow from the Bangko
Sentral ng Pilipinas and the Bangko Sentral is authorized to lend TO the
Corporation on such terms as may be agreed upon by the
Corporation and the Bangko Sentral, such funds as in the judgment of
the Board of Directors of the Corporation are from time to time
required for insurance purposes and financial assistance provided for
in Section [17] 23(e) of this Act: Provided, That any such loan as may
be granted by the Bangko Sentral shall be consistent with monetary
policy; Provided, further, That the rate of interest thereon shall be fixed
by the Monetary Board but shall not exceed the treasury bill rate AT
THE TIME OF APPROVAL OF THE LOAN BY THE MONETARY BOARD.

When in the Judgment of the Board of Directors the funds of the
Corporation are not sufficient to provide for an emergency or urgent
need to attain the purposes of this Act, the Corporation is likewise
authorized to borrow money, obtain loans or arrange credit lines or
other credit accommodations from any bank [designated as
depository or fiscal agent of the Philippine Government]: Provided,
That such loan shall be of shori-term duration, PROVIDED, FURTHER,
THAT SECTION 123 OF THE NEW CENTRAL BANK ACT, AS AMENDED,
SHALL NOT APPLY.”

"ISSUANCE OF BONDS, DEBENTURES AND OTHER:
OBLIGATIONS

SECTION 25. With the approval of the President of the Philippines, the
Corporation Is authorized to issue bonds, debentures, and other
obligations, both local or foreign, as may be necessary for purposes of
providing liquidity for settlement of insured deposits in closed banks, TO
FACILITATE THE IMPLEMENTATION OF BANK RESOLUTION UNDER SECTION
11 OF THIS ACT, as well as for financial assistance as provided herein,
Provided, That the Board of Directors shall determine the interest rates,
maturity and other requirements of said obligations: Provided, further,
That the Corporation shall provide for appropriate reserves for the
redemption or retirement of said obligation.

All notes, debentures, bonds, or such obligations issued by the
Corporation shall be exempt from taxation both as to principal and
interest, and shall be fully guaranteed by the Government of the
Republic of the Philippines. Such guarantee, which in no case shall
exceed two times the Deposit Insurance Fund as of date of the debt
issuance, shall be expressed on the face thereof: PROVIDED, THAT, THE
CORPORATION MAY ISSUE NOTES, DEBENTURES, BONDS, OR OTHER DEBT
INSTRUMENTS WITHOUT GUARANTEE OF THE NATIONAL GOVERNMENT
AND/OR APPROVAL BY THE PRESIDENT OF THE PHILIPPINES.

SECTION 42. Section 19 of the same Act is accordingly renumbered as Section 25
and is hereby amended to read as follows:

38


The Board of Directors shall have the power to prescribe THE TERMS
AND CONDITIONS, rules and regulations for the issuance, reissuance,
servicing, placement and redemption of the bonds herein authorized
to be issued as well as the registration of such bonds at the request of
the holders thereof.”

SECTION 43. Section 20 of the same Act is accordingly renumbered as Section 26.

9 SECTION 44, Section 21 of the same Act is accordingly renumbered as Section 27.

11 SECTION 45. Section 27 paragraph (f) of the same Act, as renumbered, is hereby
12 amended to read as follows:

3

14 “(f) The penalty of IMPRISONMENT OF NOT LESS THAN SIX YEARS BUT
15 NOT MORE THAN TWELVE YEARS {prision mayor] or @ fine of not less
16 than Fifty thousand pesos (P50,000.00) but not more than TEN [Two]
Vv million pesos {P10,000,000.00}, {(P2,000,000.00),] or both, at the
18 discretion of the court, shall be Imposed upon [any director, officer,
19 employee or agent of a bank]:

20

2 1) ANY DIRECTOR, OFFICER, EMPLOYEE OR AGENT OF A BANK FOR:
22

2B a. [for] any wiliful refusal to submit reports as required by law,
24 rules and regulations;

25

26 b. any unjustified refusal to permit examination and audit of
7 the deposit records or the affairs of the institution:

28

29 cc. any willful making of a false statement or entry in any bank
30 report or document required by the Corporation;

31 7

32 d. submission of false material information in connection with or
33 in relation to any financial assistance of the Corporation
34 extended to the bank:

35

36 e. splitting of deposits or creation of fictitious OR FRAUDULENT
37 loans or deposit accounts.

38

39 Splitting of deposits occurs whenever a deposit account
40 wilh an outstanding balance of more than the statutory
a maximum amount of insured deposit maintained under the
42 name of natural or juridical persons is broken down and
4B transferred into two (2) or more accounts in the name/s of
44 natural or juridical persons or entities who have no beneficial
45 ownership on transferred deposits in their names within one
46 hundred twenty (120) days immediately preceding or during
a7 a bank-declared bank holiday, or immediately preceding a
48 closure order issued by the Monelary Board of the Bangko
49 Sentral ng Pilipinas for the purpose of availing of the
50 maximum deposit insurance coverage:

SL

52 f. REFUSAL TO RECEIVE THE NOTICE OF CLOSURE;

39


g. refusal to allow the Corporation to take over a closed bank

[placed under its receivership] or obstructing such action of
the Corporation;

. refusal fo turn over or destroying or tampering bank records;

fraudulent disposal, transfer or concealment of any asset
property or liability of the closed bank [under the
receivership of the Corporation];

violation of, or causing any person to violate, the exemption
from gamishment, levy, attachment or execution provided
under this Act and the New Central Bank Act:

any willful failure or refusal to comply with, or violation of any
provision of this Act, or commission of any other irregularities,
and/or conducting business in an unsafe or unsound manner
as may be determined by the Board of Directors|[,] IN
RELATION TO SECTION 56 OF REPUBLIC ACT NO. 8791, OR THE
GENERAL BANKING LAW OF 2000.

NOTWITHSTANDING ANY LAW TO THE CONTRARY, THE
FOREGOING ACTS OF DIRECTORS, OFFICERS, EMPLOYEES OR
AGENTS OF THE BANK SHALL BE CONSIDERED AS ADDITIONAL
GROUNDS FOR NON- COMPLIANCE WITH FIT AND PROPER
RULES OF THE BANGKO SENTRAL.

OTHER ACTS INIMICAL TO THE INTEREST OF THE BANK OR THE
CORPORATION, SUCH AS, BUT NOT LIMITED TO, CONFLICT OF
INTEREST, DISLOYALTY, AND DISCLOSURE OF CONFIDENTIAL
INFORMATION, AS MAY BE DETERMINED BY THE
CORPORATION.

ANY PERSON FOR:

a. REFUSAL TO DISCLOSE INFORMATION, RECORDS OR DATA

PERTAINING TO THE BANK ACCOUNTS OF A CLOSED BANK TO
THE RECEIVER;

b, 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;

c. REFUSAL OR DELAYING THE:

i, VERIFICATION OF AUTHENTICITY OF THE OWNERSHIP
DOCUMENTS;

li, REGISTRATION OF INTEREST OF THE CLOSED BANK ON A
SPECIFIC PROPERTY;

40


CONSOLIDATION OF OWNERSHIP OVER AN ASSET OF THE
CLOSED BANK;

iii.

iv. ACT OF SECURING CERTIFIED TRUE COPIES OF DOCUMENTS
IN RELATION TO AN ASSET OF THE CLOSED BANK;

vy. ACT OF SECURING THE APPROPRIATE CERTIFICATION FROM
THE AGENCIES OR ENTITIES STATED IN SECTION 17 OF THIS
ACTIN RELATION TO AN ASSET OF THE CLOSED BANK;

CONDUCT OF A PHYSICAL OR OCULAR INSPECTION OF
THE PROPERTIES OWNED BY, OR MORTGAGED IO, THE
CLOSED BANK, TO DETERMINE THEIR EXISTENCE AND
PRESENT CONDITION; OR

vi.

vii. OTHER RELATED ACTIVITIES OF THE RECEIVER; OR

d. ALLOWING THE WITHDRAWAL FROM DEPOSITS OR
DISPOSITION OF ANY ASSET OF THE CLOSED BANK OTHER
THAN BY THE RECEIVER,

fe. WILLFULLY VIOLATING ANY PROVISION OF THIS ACT;
3) ANY LAW ENFORCEMENT OFFICER WHO REFUSES OR FAILS TO

ASSIST THE RECEIVER IN THE SERVICE OF THE NOTICE OF CLOSURE,
AS PROVIDED UNDER SECTION 14 OF THIS ACT.”

SECTION 46. Additional paragraphs to Section 27 of the same Act, as renum
are hereby inserted after paragraph (g} which shall read as follows:

“(h) THE PENALTY OF IMPRISONMENT OF NOT LESS THAN TEN (10) YEARS
BUT NOT MORE THAN TWELVE (12) YEARS, OR A FINE OF NOT LESS THAN
FIVE HUNDRED THOUSAND PESOS (P500,000.00) BUT NOT MORE THAN
TEN MILLION PESOS (P10,000,000.00), OR BOTH, AT THE DISCRETION OF
THE COURT, SHALL BE IMPOSED UPON:

1) ANY DEPOSITOR WHO FILES A FICTITIOUS AND/OR FRAUDULENT
CLAIM FOR DEPOSIT INSURANCE; AND

2) ANY BANK OFFICER WHO CERTIFIES TO THE VALIDITY OF THE
DEPOSIT LIABILITIES WHICH IS SUBSEQUENTLY VERIFIED TO BE
FICTITIOUS AND/OR FRAUDULENT.

(i) THE PENALTY OF IMPRISONMENT OF NOT LESS THAN TWELVE (12)
YEARS BUT NOT MORE THAN FOURTEEN (14) YEARS SHALL BE IMPOSED
UPON ANY PERSON WHO PARTICIPATES, OR ATTEMPTS TO PARTICIPATE,
IN A SCHEME TO DEFRAUD A BANK.

IF THE OFFENSE SHALL HAVE BEEN COMMITTED BY A DIRECTOR OR
OFFICER OF THE BANK, THE PENALTY OF IMPRISONMENT OF NOT LESS
THAN FIFTEEN (15) YEARS BUT NOT MORE THAN SEVENTEEN (17) YEARS
SHALL BE IMPOSED.

bered,

al


IF THE OFFENSE SHALL HAVE RESULTED IN SYSTEMIC CONSEQUENCES, AS
DETERMINED BY THE BANGKO SENTRAL, THE PENALTY OF IMPRISONMENT
OF NOT LESS THAN EIGHTEEN (18) YEAR BUT NOT MORE THAN TWENTY
(20) YEARS SHALL BE IMPOSED.”

SECTION 47. Section 22 of the same Act is accordingly renumbered as Section 28.

“SECTION 29. THE CORPORATION MAY BE REORGANIZED BY THE BOARD
OF DIRECTORS BY ADOPTING IF !T SO DESIRES, AN ENTIRELY NEW
STAFFING PATTERN OR ORGANIZATIONAL STRUCTURE TO SUIT THE
OPERATIONS OF THE CORPORATION UNDER THIS ACT. NO PREFERENTIAL
OR PRIORITY RIGHT SHALL BE GIVEN TO OR ENJOYED BY ANY PERSONNEL
FOR APPOINTMENT TO ANY POSITION IN THE NEW STAFFING PATTERN
NOR SHALL 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 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 FROM THE SERVICE."

SECTION 49. Section 24 of the same Act is accordingly renumbered as Section 30.

SECTION 50. Section 25 of the same Act is accordingly renumbered as Section 31,

"SECTION 32. EXEMPTING CLAUSE. - THE CORPORATION SHALL BE
EXEMPT FROM SECTION 30 OF REPUBLIC ACT NO. 7653, AS AMENDED,
PRESIDENTIAL DECREE NO. 985, PRESIDENTIAL DECREE NO. 1597,
REPUBLIC ACT NO. 6758, AS AMENDED, JOINT RESOLUTION NO. 4 (2009),
REPUBLIC ACT NO. 10149, PRESIDENTIAL DECREE NO. 1177, EXECUTIVE
ORDER NO. 248, AS AMENDED, AND EXECUTIVE ORDER NO. 298.

“SECTION 33. TRANSITORY PROVISIONS. — (a) THE INCUMBENT PRESIDENT
OF THE CORPORATION AND PRIVATE SECTOR MEMBERS OF THE BOARD
OF DIRECTORS SHALL CONTINUE TO EXERCISE THEIR RESPECTIVE DUTIES
AND FUNCTIONS UNTIL REPLACED BY THE PRESIDENT OF THE PHILIPPINES:
PROVIDED, THAT, SUCH NEW APPOINTEES SHALL BE SUBJECT TO THE TERM
OF OFFICE PROVIDED UNDER SECTION 3 OF THIS ACT, AS AMENDED.

(b) PAYMENT OF SURPLUS DIVIDENDS UNDER SECTION 13(C) OF THIS
ACT, AS AMENDED, SHALL BE APPLICABLE TO BANKS WITHOUT A COURT-
APPROVED FINAL ASSET DISTRIBUTION PLAN AT THE TIME OF THE
EFFECTIVITY OF THIS ACT.

SECTION 48. Section 23 of the same Act is hereby renumbered as Section 29 and
reinstated as follows:

SECTION 51. A new section entitled Section 32 of the same Act is hereby inserted
between Sections 31 and 33 which shall read as follows:

SECTION 52. A new section entitled Section 33 of the same Act is hereby inserted
between Sections 32 and 34 which shall read as follows:

42


Nausune

BRES ee

u
15
16
v
18
19
20
24
22
23
24
25
26
27
28
29
30
ah

(c) THE PREFERENCE INDICATED UNDER SECTION 21 OF THIS ACT, AS

4 AMENDED, SHALL BE LIKEWISE EFFECTIVE UPON LIQUIDATION
PROCEEDINGS ALREADY COMMENCED AND PENDING AS OF THE
EFFECTIVITY OF THIS ACT, WHERE NO DISTRIBUTION OF ASSETS HAS BEEN
MADE.

(d) THE PROVISIONS IN SECTION 10 OF THIS ACT, AS AMENDED, ON
LEGAL ASSISTANCE, PROTECTION AND INDEMNIFICATION SHALL APPLY
TO ALL CASES PENDING BEFORE THE EFFECTIVITY OF THIS ACT.”

SECIION 53. Section 26 of Ihe same Acl is accordingly renumbered as Section 34,

SECHON 54, Section 27 of the same Acl is accordingly renumbered as Section 35,

SECIION 55. Section 28 of the same Act is accordingly renumbered as Seclion 36.

SECTION 56, Separabilily Clause. - If any provision or seclion of this Act or the
application thereof to any person or circumstances is held invalid, the olher
provisions or se in the application of such provision or section lo
other persons or shall nol be affected thereby.

SECTION 57. Repealing Clause. - All acts or parls of acls and executive orders,
administrative orders, or paris thereof which are inconsistent wilh the provisions of
Ihis Act are hereby repealed.

SECTION 58. Effectivily Clause. - this Act shall take effect fifleen (15) days following
the completion of its publication in the Official Gazetfe or in lwo (2) newspapers of
general circulation,

Approved,

43