SIXTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES )
Second Regular Session )

HOUSE OF REPRESENTATIVES

Introduced by Representative Rufus B. Rodriguez and
Representative Maximo B. Rodriguez, Jr.

House Bill No. 4894
EXPLANATORY NOTE

The trust and confidence of the public in the banking industry is of paramount
importance. Thus, to be responsive and thorough, the regulation of banks must ensure the
least disruption to the financial system, the preservation of the public’s confidence in the
banking industry, and the protection of the bank's creditors, most especially its depositors.

The proposed bill introduces much needed reforms to the charter of the Philippine
Deposit Insurance Corporation (PDIC) by enabling PDIC to institutionalize reform measures
in bank resolution and liquidation, give depositors quicker or immediate access to their
insured deposits, and have enhanced governance and institutional framework. The salient
points of the proposed bill are as follows:

1. Deposit Insurance Amendments and Limited Access to Deposits - To further
enhance its ability to protect depositors and immediately pay-out insured deposit, PDIC is
seeking authority to terminate the deposit insurance status of banks which do not comply
with PDIC's Cease and Desist Order and to have limited access to deposit information for
insurance purposes. The authority to charge risk-based premium and impose special
assessments under certain specified conditions in the law is likewise sought

2. New Resolution Framework to deal with problem banks and removal of the
90-day receivership period- This will enable PDIC to take a more pro-active role in
resolving problem banks even before they are closed. Under the proposal, the resolution
authorities of PDIC will be triggered upon failure of Prompt Corrective Action (PCA) or upon
request of the problem bank to be placed under resolution. Having exhausted all efforts to
resolve a problem bank, should the bank still fail, PDIC proposes a seamless transition from
closure to liquidation by removing the 90-day receivership period in order to facilitate the
distribution of the remaining assets of the failed bank to its creditors

3. Enhanced Liquidation Authorities - In the event that a bank still closes despite
all resolution efforts exerted, the remaining challenge is to be able to preserve critical
banking functions and enhance the recovery of creditor claims against the assets of the
closed bank. Towards this end, PDIC’s mandate as bank liquidator needs to be
strengthened by making available other modes of liquidating @ closed bank, such as,
Purchase of Assets and/or Assumption of Liabilities, and Bridge Bank.

4, Governance and Institutional Capability Building Measures- This will address
the need for PDIC to have fiscal and administrative autonomy to enable it to more effectively
and independently discharge its existing and proposed new authorities, and maintain a
highly competent, professional, dedicated and justly compensated workforce

5. Financial Strengthening Measures- This will improve PDIC’s ability to protect
and accelerate the growth of the Deposit insurance Fund to the target levels through
enhanced authorities to invest, buy and/or sell debt instruments, borrow, and issue bonds.


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

The recent bank closures have offered an opportunity to initiate the review of the
existing financial and regulatory landscape. Identifying the gaps and weaknesses in the
financial system and strengthening the will and ability of the regulatory agencies to perform
their functions have resulted in regulatory reforms through legislative action. The bill is
another crucial step in this direction. By providing additional authorities and means to
TesoNve distressed banks, we will contribute greatly to the security and stability of our
banking system.

Hence, the passage of this bills earnestly recommended,

RUFUS B. RODRIGUEZ

hile
MAXIMO B. Mie coi JR.


SIXTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES }
Second Regular Session

HOUSE OF REPRESENTATIVES

~ Introduced by Representative Rufus B. Rodriguez and
Representative Maximo B. Rodriquez, Jr.

House Bill No, __ 489.4

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 to read
as follows:

“THE CREATION OF THE
PHILIPPINE DEPOSIT INSURANCE CORPORATION

SECTION 1. - There Is hereby created a Philippine Deposit Insurance
Corporation hereinafter referred 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 1 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 COUNTRY’S BANKING SYSTEM, AND
PROTECT IT FROM ILLEGAL SCHEMES AND MACHINATIONS.

TOWARDS THIS END, THE GOVERNMENT MUST EXTEND ALL MEANS
AND MECHANISMS NECESSARY FOR THE CORPORATION TO

w


EFFECTIVELY FULFILL ITS VITAL TASK OF PROMOTING AND
SAFEGUARDING THE INTERESTS OF THE DEPOSITING PUBLIC BY
WAY OF PROVIDING INSURANCE COVERAGE ON BANK DEPOSITS
AND IN HELPING DEVELOP A SOUND AND STABLE BANKING
SYSTEM.

IN VIEW OF THE CRUCIAL ROLE AND THE NATURE OF THE
FUNCTIONS AND RESPONSIBILITIES OF THE CORPORATION AS
DEPOSIT INSURER, STATUTORY RECEIVER, AND CO-REGULATOR OF
BANKS, THE CORPORATION, WHILE BEING A GOVERNMENT
INSTRUMENTALITY WITH CORPORATE POWERS, SHALL ENJOY
FISCAL AND ADMINISTRATIVE AUTONOMY. THE CORPORATION
SHALL BE EXEMPT FROM ALL EXISTING LAWS, RULES AND
REGULATIONS ON COMPENSATION, POSITION CLASSIFICATION AND
QUALIFICATION STANDARDS INCLUDING, 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,”

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

“BOARD OF DIRECTORS: COMPOSITION AND AUTHORITY

SECTION 3. (A) The powers and functions of the Corporation shall be vested
in and exercised by a Board of Directors which shall be composed of SEVEN
(7) ffive (5)] members as follows

[(a)] 1) The Secretary of Finance who shall be the ex-officio Chairman of the
Board without compensation.

[(b)] 2) The Governor of the Bangko Sentral ng Pilipinas, who shall be ex-
officio member of the Board without compensation.

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

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

ANY VACANCY IN THE BOARD OF DIRECTORS CREATED BY THE
DEATH, RESIGNATION, OR REMOVAL OF ANY APPOINTIVE MEMBER
SHALL BE FILLED BY THE APPOINTMENT OF A NEW MEMBER TO
COMPLETE THE UNEXPIRED PERIOD OF THE TERM OF THE MEMBER
CONCERNED.

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 Govemor of the Bangko Sentral may each
designate a representative, whose position shall not be lower than an
undersecretary or deputy govemor 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

2) 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

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

‘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 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 REFLECT THE DISCLOSURE
MADE AND THE RETIREMENT OF THE MEMBER CONCERNED.

(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 responsibilities;


2. 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;

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

4, TO APPROVE, [A] a compensation structure[ JAS 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 to 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 increases 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.

[4] 5. To appoint, establish the rank, fix the remuneration, BENEFITS,
INCLUDING HEALTH CARE SERVICES THROUGH A HEALTH
MAINTENANCE ORGANIZATION (HMO) AND 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 employee of the
Corporation, for cause, subject to pertinent civil service laws:
Provided, That the Board of Directors may delegate this authority to
the President subject to specific guidelines; PROVIDED, FURTHER,
THAT IN NO CASE SHALL THERE BE ANY DIMINUTION OF
EXISTING SALARIES, BENEFITS AND OTHER EMOLUMENTS;

6. TO APPROVE POLICY ON LOCAL AND FOREIGN TRAVEL, AND
THE CORRESPONDING EXPENSES, ALLOWANCES AND PER
DIEMS, OF OFFICERS, EMPLOYEES, AGENTS OF THE
CORPORATION, WHICH SHALL BE COMPARABLE WITH THE
EXPENSES, ALLOWANCES AND PER DIEMS OF PERSONNEL
OF THE BANGKO SENTRAL, NOTWITHSTANDING THE


PROVISIONS OF PRESIDENTIAL DECREE NO. 1177, EXECUTIVE
ORDER NO. 292, EXECUTIVE ORDER NO. 248, AS AMENDED,
EXECUTIVE ORDER NO. 298, AND SIMILAR LAWS;

[5] 7. To adopt an annual budget for, and authorize such expenditures by
the Corporation, as are in the interest of the effective administration
and operation of the Corporation;

[6] 8. To approve the TARGET LEVEL OF THE DEPOSIT INSURANCE
FUND AND THE methodology for determining [the level and amount
of] RESERVES [provisioning] for insurance and financial assistance
losses [which shall establish reasonable levels of deposit insurance
reserves ];

[7] 9, To review the organizational set-up of the Corporation and adopt a
new or revised organizational structure AT ANY TIME as it may deem
necessary for the Corporation to undertake its mandate and
functions;.]

10. TO DESIGN, ADOPT AND REVISE, FROM TIME TO TIME AS IT
MAY DEEM NECESSARY, AN EARLY SEPARATION PLAN FOR
EMPLOYEES OF THE CORPORATION TO ENSURE
AVAILABILITY OF A HUMAN RESOURCE POOL QUALIFIED AND
CAPABLE OF IMPLEMENTING THE CORPORATION'S
AUTHORITIES UNDER THIS CHARTER IN A MANNER
RESPONSIVE AND ATTUNED TO MARKET DEVELOPMENTS,
AND TO PROVIDE INCENTIVES FOR ALL THOSE WHO SHALL
RETIRE OR BE SEPARATED FROM THE SERVICE.
NOTWITHSTANDING ANY LAW TO THE CONTRARY, THESE
INCENTIVES SHALL BE IN ADDITION TO ALL GRATUITIES AND
BENEFITS THE EMPLOYEE IS ENTITLED TO UNDER EXISTING
LAWS; AND

11,.TO PROMOTE AND SPONSOR THE LOCAL OR FOREIGN
TRAINING OR STUDY OF PERSONNEL IN THE FIELDS OF
BANKING, FINANCE, MANAGEMENT, INFORMATION
TECHNOLOGY AND LAW. TOWARD THIS END, THE
CORPORATION IS HEREBY AUTHORIZED TO DEFRAY THE
COSTS OF SUCH TRAINING OR STUDY. THE BOARD SHALL
PRESCRIBE RULES AND REGULATIONS TO GOVERN THE
TRAINING OR STUDY PROGRAMS OF THE CORPORATION.”

SECTION 4. Section 3 of the same Actis accordingly renumbered as Section 4.

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

“PRESIDENT OF THE CORPORATION
COMPENSATION, POWERS AND DUTIES

SECTION [3] 4. The President of the Corporation shall be ITS [the] Chief
Executive [thereof]. THE PRESIDENT OF THE PHILIPPINES, UPON THE
RECOMMENDATION OF THE SECRETARY OF FINANCE, SHALL FIX
THE [and his] salary, ALLOWANCES, BENEFITS AND OTHER
EMOLUMENTS OF THE PRESIDENT OF THE CORPORATION [shall be

hereby


fixed by the President of the Philippines] at a sum commensurate to the
importance and responsibility attached to the position, AND SHALL REVIEW
AND ADJUST SUCH SALARY, ALLOWANCES, BENEFITS AND OTHER
EMOLUMENTS EVERY TWO (2) YEARS. The sum total of the salary,
ALLOWANCES, BENEFITS [of the President and the allowances] and other
emoluments OF THE PRESIDENT OF THE CORPORATION [which the
Board of Directors may grant him] shall be the ceiling 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 Board]
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 [all] legal proceeding or action;”

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

“DEFINITION OF TERMS
SECTION [4] 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 THE PROCEEDS OF THE SALE OF ITS BANK AND
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 WHEN IT PERTAINS TO THE
DISTRIBUTION OF A PORTION OR SOME OF THE ASSETS OF THE
CLOSED BANK, OR FINAL WHEN IT PERTAINS TO THE
DISTRIBUTION OF ALL THE ASSETS OF THE CLOSED BANK.

(C) [(a)] The term “Board of Directors” means the Board of Directors of
the Corporation

(D) [(b)] 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 to
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.

(F) 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.

[(c) The term “recelver" includes a receiver, commission, person or other
agency charged by law with the duty to take charge of the assets and
liabilities of a bank which has been forbidden from doing business in the
Philippines, as well as the duty to gather, preserve and administer such
assets and liabilities for the benefit of the depositors and creditors of said
bank, and to continue into liquidation whenever authorized under this Act or
other laws, and to dispose of the assets and to wind up the affairs of such
bank]

[(d) The term “insured bank” means any bank the deposits of which are
insured in accordance with the provisions of this Act ]

{[(e)] The term “non-insured bank” means any bank the deposits of which ere
not insured.

[(f)] (H) The term “deposit” 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 liabilities 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 instruments;


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

fictitious or fraudulent AS DETERMINED BY THE CORPORATION;
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 [BSP],
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

Ba

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 ONLY [not] be restrained or set aside by the [court]
COURT OF APPEALS, [except] UPON [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 thirty (30) days from notice of
denial of claim for deposit insurance.

(l) 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
CURRENT, DENIED BY THE RECEIVER.

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

(K) [(g)]The term “insured deposit’ means the amount due to any
bona fide depositor for legitimate deposits in an insured bank
EXCLUSIVE [nef] of any obligation of the depositor to the insured
bank as of the date of closure, EXCEPT FOR DEPOSITS WHICH
ARE USED AS SECURITY FOR LOANS OR OTHER
OBLIGATIONS, but not to exceed Five Hundred Thousand Pesos
(P500,000.00). 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 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 to the contrary
notwithstanding, no ownerholder of any PASSBOOK, certificate 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 BY THE CORPORATION TO BE AN
AUTHENTIC DOCUMENT OR RECORD of the issuing bank [his
name is registered as owner/older thereof in the books]: Provided,
finally, That, in case of a condition that threatens the monetary and
financial stability 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.

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

(M) 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.

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

(O) 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.

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.

(P)

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

(R

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.


(S) 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.

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

4) PROTECT DEPOSITORS, CREDITORS AND THE DEPOSIT
INSURANCE FUND;

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

3) PREVENT DETERIORATION OR DISSIPATION OF BANK
ASSETS,

(U) THE TERM "RISK-BASED ASSESSMENT SYSTEM" SHALL
PERTAIN TO A METHOD FOR CALCULATING AN INSURED
BANK’S ASSESSMENT ON THE PROBABILITY THAT THE
DEPOSIT INSURANCE FUND WILL INCUR A LOSS WITH
RESPECT TO THE BANK, AND THE LIKELY AMOUNT OF ANY
SUCH LOSS, BASED ON ITS RISK RATING THAT TAKES INTO.
CONSIDERATION THE FOLLOWING-

1) QUALITY AND CONCENTRATION OF ASSETS

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

3) CAPITAL POSITION

4) LIQUIDITY POSITION

5) MANAGEMENT AND GOVERNANCE

6) OTHER FACTORS RELEVANT TO ASSESSING SUCH
PROBABILITY, AS MAY BE DETERMINED BY THE
CORPORATION.

(V) 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;
CLASSIFICATION OF CREDITS; AND 3) ESTIMATED LIABILITIES
TO BE SETTLED.

(W)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
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.

(X) 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.

(Y) [(h)] 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

(2) [fi] 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

(AA) THE TERM “VALID CLAIM” REFERS TO THE CLAIM
RECOGNIZED BY THE RECEIVER OR ALLOWED BY THE
LIQUIDATION COURT.

(BB) 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 to read as follows:

“DEPOSIT INSURANCE COVERAGE

SECTION 6. The deposit liabilities of any bank for 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, 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 SOLELY TO ENABLE THE
CORPORATION TO DETERMINE THE INSURED AND UNINSURED
DEPOSITS.

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, ARE 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: PROVIDED,
THAT ANY UNAUTHORIZED DISCLOSURE OF THE INFORMATION
UNDER THIS SECTION SHALL BE SUBJECT TO THE SAME PENALTY
UNDER THE FOREGOING LAWS PROTECTING THE SECRECY OR
CONFIDENTIALITY OF BANK DEPOSITS.”

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

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

to read as follows:

“ASSESSMENT OF MEMBER BANKS.

SECTION [6] 7. (a) The assessment rate shall be determined by the Board of
Directors: Provided, That the assessment rate shall not exceed one-fifth (1/6)
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 5 [4] without any deduction for indebtedness of
depositors.

IN ADDITION, THE BOARD OF DIRECTORS MAY ESTABLISH A RISK-
BASED ASSESSMENT SYSTEM AND IMPOSE A _RISK-BASED
ASSESSMENT RATE WHICH 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 September thirty and December
thirty-one: Provided, That when any of said days is a non-business day or
legal holiday, either national or provincial, the preceding business day shall


be used. The certified statements required to be filed with the Corporation
under subsections (b) and (c) of this Section shall be in such form and set
forth such supporting information as the Board of Directors shall prescribe.
The assessment payments required from the insured banks under
subsections (b) and (c) of this Section shall be made in such manner and at
such time or times as the Board of Directors shall prescribe[, provided the
time or times so prescribed shall not be later than sixty (60) days after filing
the certified statement setting forth the amount of assessment].”

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

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

(h) [The Corporation shall not terminate the insured status of any bank which
continues to operate or receive deposits] Should any insured bank fail or
refuse to pay any assessment required to be paid by such bank under any
provision of this Act, and should the bank not correct such failure or refusal
within thirty (0) days after written notice has been given by the Corporation
to an officer of the bank citing this subsection, and stating that the bank has
failed or refused to pay as required by the law, the Corporation may, at its
discretion, file a case for collection before the appropriate court without
prejudice to the imposition of administrative sanctions allowed under the
provisions of this Law on the bank officials responsible for the non-payment
of assessment fees.”

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

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

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

“SANCTIONS AGAINST UNSAFE AND.
UNSOUND BANKING PRACTICES

SECTION [7] 8. (a) Whenever upon examination by the Corporation into the
condition of any insured bank, it shall be disclosed that an insured bank or its


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
corrective 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 thereafter issue a cease and
desist order, and require the bank or its directors or agents concemed to
correct 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 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.

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

“Twelfth - THE PROVISIONS OF PRESIDENTIAL DECREE NO.
1445, AS AMENDED, EXECUTIVE ORDER NO. 292, AND OTHER
SIMILAR LAWS NOTWITHSTANDING, [T] to 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;”

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:

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

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

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


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

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

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

“(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 initiated by the Corporation, in
whatever capacity, against such director, officer, employee or agent
Provided, Further, That 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, That in the event of a
settlement or compromise, indemnification shall be provided only in
connection with such matters covered by the settlement as to which the
Corporation is advised by counsel that the persons to be indemnified did not
commit any negligence or misconduct.”

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

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

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


SECTION 22. The second paragraph of Section 10 paragraph (i) of the same Act, as
renumbered, is hereby amended to read as follows:
“(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 to protect the interest of
the Corporation.”

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:

“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, 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;

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;
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.

2)

3)

4)


(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;
AUTHORIZE PRE-QUALIFIED ACQUIRERS OR INVESTORS TO
CONDUCT DUE DILIGENCE ON THE BANK, FOR PURPOSES 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;

4) CONDUCT A BIDDING TO DETERMINE THE ACQUIRER OF THE

BANK.

3)

(E) IN DETERMINING THE APPROPRIATE RESOLUTION METHOD FOR
ABANK, THE CORPORATION SHALL CONSIDER THE:

4) 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

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:

41) 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, IS EMPOWERED TO:

4) REPRESENT AND ACT FOR AND IN BEHALF OF THE CLOSED

IK;

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;

2


3)

4)

5)

8)

7)

8
9)

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

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;

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;

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;

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;

HIRE OR RETAIN PRIVATE COUNSEL AS MAY BE NECESSARY;

BORROW OR OBTAIN A LOAN, OR MORTGAGE, PLEDGE OR
ENCUMBER ANY ASSET OF THE CLOSED BANK, WHEN
NECESSARY 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;

11) 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 IN ACCORDANCE WITH
GUIDELINES SET BY THE PDIC BOARD OF DIRECTORS,
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, 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 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 SECTION17 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, 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
1S WHERE IS” BASIS.

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

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.

8) 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.

9) 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

25


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.

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.

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:
“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

26


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.”

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:

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

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.

(C) ALL BRANCH LICENSES AND OTHER BANK LICENSES OF THE CLOSED
BANK SHALL BE TRANSFERRED TO THE BRIDGE BANK. IN THE EVENT OF
THE SALE OF THE BRIDGE BANK UNDER (j)(1) and (j)(2), THESE LICENSES

SHALL BE TRANSFERRED TO THE ACQUIRER.
(D) THE BRIDGE BANK SHALL HAVE THE AUTHORITY TO:

4) 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.
(E) 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.


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

4) 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,
DOCUMENTARY STAMP TAX, TRANSFER TAX, AND OTHER
NATIONAL AND LOCAL TAXES, AS MAY BE APPLICABLE;

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

3) APPOINT, INSTALL, DESIGNATE, ANDIOR 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 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.

(G) 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.

8


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

() 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.

(J) 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

2) THE SALE OF THE BRIDGE BANK TO A QUALIFIED BUYER, AS

MAY BE DETERMINED BY THE RECEIVER; OR

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

THE EXPIRATION OF THE PERIOD PROVIDED IN PARAGRAPH

(h) OF THIS SECTION; OR

4)

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.

(K) EFFECTS OF TERMINATION EVENTS. —

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

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

(M) 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:

1) REPRESENT THE CLOSED BANK BEFORE THE LAND
REGISTRATION 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;

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


3)

(D)

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

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

F, PERFORMING OTHER RELATED ACTIVITIES;

2) 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;

4) 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

5) ENGAGE THIRD PARTIES TO ASSIST IN THE LIQUIDATION,
MANAGE AND/OR DISPOSE THE ASSETS, HANDLE CASES
FILED AGAINST OR BY THE CLOSED BANK, SUBJECT TO SUCH
GUIDELINES AS DETERMINED BY THE RECEIVER.

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:

2)

1) UPON NOTIFICATION OF THE CLOSURE OF A BANK, THE LAND
REGISTRATION AUTHORITY, BUREAU OF LANDS, REGISTER
OF DEEDS, LAND TRANSPORTATION OFFICE, ASSESSOR'S
OFFICE OR OTHER APPROPRIATE OFFICE OF THE LOCAL
GOVERNMENT UNIT, OR SUCH OTHER SIMILAR GOVERNMENT
AGENCIES SHALL NOT ALLOW ANY _ TRANSACTION
AFFECTING THE ASSETS OF THE CLOSED BANK WITHOUT THE
CONSENT OF THE RECEIVER.

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, THE CLOSED BANK’S 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. SUCH OBLIGATION SHALL
NOT COVER EVIDENCES OF DEPOSIT SUCH AS PASSBOOKS


OR CERTIFICATES OF DEPOSIT ISSUED BY THE BANK TO ITS
DEPOSITORS. 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
DEBT 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 JN 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, 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.

() 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.

(L) 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.

(©) 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.

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

34


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-MONTH 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. Anew section entitled Section 19 of the same Act is hereby inserted between

Sections 18 and 20 which shall read as follows:

“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

35


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.”

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

“PAYMENT OF INSURED DEPOSITS

SECTION 20. Whenever an insured bank shall have been closed by the
Monetary Board pursuant to Section 30 of RA. 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 to the [Viability] VALIDITY of a claim for an insured deposit, it
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
fallure 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 34, Section 1 of the same Act is accordingly renumbered as Section 24 and is
hereby amended to read as follows:

"SECTION 21. The Corporation, upon payment of any depositor as provided
for in [subsection (c) of this] Section 20 OF THIS ACT, shall be subrogated to
all rights of the depositor against the closed bank to the extent of such
payment. Such subrogation shall include the right on the part of the
Corporation to receive the same dividends and payments from the proceeds
of the assets of such closed bank and recoveries on account of stockholders’
liability as would have been payable to the depositor on a claim for the
insured deposits: [but,] PROVIDED, THAT such depositor shall retain his
claim for any uninsured portion of his deposit, WHICH LEGAL
PREFERENCE SHALL BE IMMEDIATELY BELOW THAT OF THE
SUBROGATED CLAIM OF THE CORPORATION FOR ITS PAYMENT OF
INSURED DEPOSITS. All payments by the Corporation of insured deposits
in closed banks partake of the nature of public funds, and as such, must be
considered a preferred credit similar to taxes due to the National Government
in the order of preference under Article 2244 of the New Civil Code,
Provided, further, That this preference shall be likewise effective upon
liquidation proceedings already commenced and pending as of the approval
of this Act, where no distribution of assets has been made.]”

36


SECTION 35. Section 16 of the same Act is accordingly renumbered as Section 22 and

paragraph (c) thereof is hereby amended to read as follows:
“(c) Except as otherwise prescribed by the Board of Directors, neither the
Corporation nor such other insured bank shall be required to recognize as the
‘owner of any portion of a deposit [appearing on the records] EVIDENCED BY
(A PASSBOOK, CERTIFICATE OF DEPOSIT OR OTHER EVIDENCE OF
DEPOSIT DETERMINED BY THE CORPORATION TO BE AN AUTHENTIC
DOCUMENT OR RECORD of the closed bank under a name other than that
of the claimant, any person whose name or interest as such owner is not
disclosed on the PASSBOOK, CERTIFICATE OF DEPOSIT OR OTHER
EVIDENCE OF DEPOSIT [records] of such closed bank as part owner of said
deposit, if such recognition would increase the aggregate amount of the
insured deposits in such closed bank.”

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

SECTION 37. Section 23 paragraph (a) of the same Act, as renumbered, is hereby amended
to read as follows:
“CORPORATE FUNDS AND ASSETS

SECTION 28, (a) SUBJECT TO GUIDELINES AND LIMITS AS APPROVED
BY THE BOARD OF DIRECTORS, [Mjmoney of the Corporation
denominated in the local currency, not otherwise employed, shall be invested
in obligations of the Republic of the Philippines or in obligations guaranteed
as to principal and interest by the Republic of the Philippines

THE CORPORATION MAY ALSO INVEST IN DEBT INSTRUMENTS
DENOMINATED IN FOREIGN CURRENCIES ISSUED OR GUARANTEED
BY THE REPUBLIC OF THE PHILIPPINES, OR DEBT INSTRUMENTS
DENOMINATED IN FREELY CONVERTIBLE FOREIGN CURRENCIES
ISSUED BY SUPRANATIONALS, MULTILATERAL AGENCIES, OR
FOREIGN GOVERNMENTS WITH AT LEAST AN INVESTMENT GRADE
CREDIT RATING.

THE CORPORATION SHALL LIKEWISE BE AUTHORIZED TO BUY
AND/IOR 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 or with
any other bank designated as depository or fiscal agent of the Philippine
government.”

SECTION 39. An additional paragraph to Section 23 of the same Act, as renumbered, is
hereby inserted after paragraph (c) which shalll 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.”

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 assets of, or assume liabilities of, or make deposits inf, 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 conditionS 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
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 its 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 to the Deposit Insurance Fund.

A systemic risk 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:
“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 [ill] rate CORRESPONDING TO THE MATURITY OF SUCH
LOAN.

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 short-term duration, PROVIDED,
FURTHER, THAT SECTION 123 OF THE NEW CENTRAL BANK ACT, AS
AMENDED, SHALL NOT APPLY.”

SECTION 42. Section 19 of the same Act is accordingly renumbered as Section 25 and is
hereby amended to read as follows:
“ISSUANCE OF BONDS, DEBENTURES AND OTHER
OBLIGATIONS

SECTION [19] 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 settiement of insured deposits in closed banks, TO FACILITATE THE
IMPLEMENTATION OF BANK RESOLUTION UNDER SECTION 11 OF

39


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.

THE CORPORATION MAY ISSUE NOTES, DEBENTURES, BONDS, OR
OTHER DEBT INSTRUMENTS WITHOUT THE APPROVAL OF THE
PRESIDENT OF THE PHILIPPINES, PROVIDED THAT THESE SHALL
NOT BE GUARANTEED BY THE NATIONAL GOVERNMENT.

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

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

“(f) The penalty of IMPRISONMENT OF NOT LESS THAN SIX YEARS BUT

NOT MORE THAN TWELVE YEARS [prision mayor] or a fine of not less

than Fifty thousand pesos (P50,000.00) but not more than TEN [Two] million

pesos (P10,000,000.00), [(P2,000,000.00)] or both, at the discretion of the

court, shall be imposed upon [any director, officer, employee or agent of a

bank}

1) ANY DIRECTOR, OFFICER, EMPLOYEE OR AGENT OF A BANK
FOR:
a. [for] any willful refusal to submit reports as required by law, rules
and regulations;

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

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

d. submission of false material information in connection with or in
relation to any financial assistance of the Corporation extended to
‘the bank;

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

40


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

{, REFUSAL TO RECEIVE THE NOTICE OF CLOSURE AS
PROVIDED UNDER SECTION 14 OF THIS ACT;

g. refusal to allow the Corporation to take over a closed bank [placed
under its receivership] or obstructing such action of the
Corporation;

h. refusal to tum over or destroying or tampering bank records;

i, 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;

k. any wilfful 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 THE
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

2) ANY PERSON FOR:

a. REFUSAL TO DISCLOSE INFORMATION, RECORDS OR
DATA PERTAINING TO THE BANK ACCOUNTS OF A CLOSED
BANK TO THE RECEIVER;

4\


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;

. REFUSAL OR DELAYING THE:

i, VERIFICATION OF AUTHENTICITY OF THE OWNERSHIP
DOCUMENTS;

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

CONSOLIDATION OF OWNERSHIP OVER AN ASSET OF
THE CLOSED BANK;

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 ACT IN RELATION TO AN ASSET OF THE
CLOSED BANK;

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

vii. OTHER RELATED ACTIVITIES OF THE RECEIVER; OR

|. ALLOWING THE WITHDRAWAL FROM DEPOSITS OR

DISPOSITION OF ANY ASSET OF THE CLOSED BANK OTHER
THAN BY THE RECEIVER,

@. WILLFULLY VIOLATING ANY PROVISION OF THIS ACT;

3) ANY LAW ENFORCEMENT OFFICER OR LOCAL GOVERNMENT
OFFICIAL 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 renumbered, are

hereby inserted after paragraph (q) 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:

4) ANY DEPOSITOR WHO FILES A_ FICTITIOUS AND/OR
FRAUDULENT CLAIM FOR DEPOSIT INSURANCE; AND

42


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.

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

“SECTION 29, THE CORPORATION MAY BE REORGANIZED BY THE
BOARD OF DIRECTORS BY ADOPTING IF IT 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 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 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 52. Anew section entitled Section 33 of the same Act is hereby inserted between
Sections 32 and 34 which shall read as follows:
“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.

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

SECTION 53, Section 26 of the same Actis accordingly renumbered as Section 34
SECTION 54, Section 27 of the same Actis accordingly renumbered as Section 35.
SECTION 55. Section 28 of the same Actis accordingly renumbered as Section 36
SECTION 56. Separability Clause. - If any provision or section of this Act or the application
thereof to any person or circumstances is held invalid, the other provisions or sections of this,
Act, in the application of such provision or section to other persons or circumstances, shall
not be affected thereby

SECTION 57. Repealing Clause. - All acts or parts of acts and executive orders,
administrative orders, or parts thereof which are inconsistent with the provisions of this Act
are hereby repealed.

SECTION 58. Effectivity Clause. - This Act shall take effect fifteen (15) days following the
completion of its publication in the Official Gazette or in two (2) newspapers of general
circulation

Approved,

44