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

EIGHTEENTH CONGRESS
Second Regular Session

House Bill No. 8445

Introduced by Representative Junie E. Cua
Lone District, Quirino

AN ACT
AMENDING SECTIONS 1, 3, 4, 5, 6, 8, 9, 10, 11, 18, 22, 24, 26 and 28
OF REPUBLIC ACT NO. 3591, AS AMENDED, OTHERWISE KNOWN AS THE
PHILIPPINE DEPOSIT INSURANCE CORPORATION CHARTER
AND FOR OTHER PURPOSES

EXPLANATORY NOTE

With the rapidly changing times and financial landscape, the Philippine
Deposit Insurance Corporation (PDIC) prepares itself to providing depositor
protection effectively. Amendments to its legal and operational framework as
provided in Republic Act No. 3591, or the PDIC Charter, as amended, become
necessary.

In the exercise of its core mandates as deposit insurer and liquidator of
banks, certain powers of PDIC are modified to enable PDIC to effectively and
efficiently fulfill its mandate. The proposed amendments would prevent an
overlap in the functions of the PDIC with the primary regulator of banks, the
Bangko Sentral ng Pilipinas (BSP). The powers of the PDIC on bank
resolution including granting consent to mergers and acquisitions, and the
issuance of cease-and-desist orders pertaining to deposit-related unsafe and/or
unsound banking would be centralized with the BSP. Instances for the exercise
of the powers on bank examination are limited in order to prevent duplication of
bank examination powers of the BSP and the PDIC.

To adapt to the changing times, the Board of Directors will be given the
authority to increase the maximum deposit insurance coverage when financial


stability is threatened, which shall be in consideration of empirical and actuarial
studies, inflation or other economic indicators.

To ensure alignment of PDIC with other GOCCs and government
financial institutions in terms of compensation, the exemption of PDIC from the
salary standardization laws is proposed to be removed. The bill clarifies the
applicability of Republic Act No. 7656 or the Dividend Law, subject to certain
conditions on the determination of the dividend base and the flexibility clause.

The authority for PDIC to setup deposit insurance schemes for the
protection of users of new financial products, and depositors in Islamic banks
are provided in the proposed amendments. This would address the increasing
number of issuers of new financial products, and the potential to expand Islamic
banking in the country.

Finally, to ensure better policy and program coordination between the
agencies, the PDIC is likewise proposed to be attached to the BSP (from the
Department of Finance).

Considering the foregoing, the immediate passage of this bill is requested.

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7
Republic of the Philippines
HOUSE OF REPRESENTATIVES
‘Quezon City, Metro Manila

EIGHTEENTH CONGRESS
Second Regular Session
8445

House Bill No.

Introduced by Representative Junie E. Cua
Lone District, Quirino

AN ACT
AMENDING SECTIONS 1, 3, 4, 5, 6, 8, 9, 10, 11, 18, 22, 24, 26 and 28
OF REPUBLIC ACT NO. 3591, AS AMENDED, OTHERWISE KNOWN AS THE
PHILIPPINE DEPOSIT INSURANCE CORPORATION CHARTER
AND FOR OTHER PURPOSES

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

SEC. 1. Section 1 of Republic Act No. 3591, as amended (PDIC Charter) is hereby amended to read
as follows:

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 providing insurance coverage on all insured deposits and helping
maintain a sound and stable banking system.

THE CORPORATION SHALL BE AN AGENCY ATTACHED TO THE
BANGKO SENTRAL NG PILIPINAS FOR POLICY AND PROGRAM
COORDINATION.

SEC. 2, Section 3 of the PDIC Charter is hereby amended to read as follows:
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) members as

follows:

(1) The Secretary of Finance who shall be the ex officio [Chairman}
CHAIRPERSON of the Board without compensation;

(2) The Governor of the Bangko Sentral ng Pilipinas who shall be ex
officio member of the Board without compensation;


(3) The President of the Corporation, who shall be appointed by the President of
the Philippines from a shortlist prepared by the Governance Commission for
Government-Owned or ~Controlled Corporations pursuant to Republic Act No. 10149 to
serve on a full-time basis for a term of six (6) years, [Fhe President of the Corporation
shall-also-serve-as- Vice Chairman of the Board};

(4) Four (4) members from the private sector to be appointed by the President of
the Philippines from a shortlist prepared by the Governance Commission for
Government-Owned or Controlled Corporations pursuant to Republic Act No. 10149.
The appointive directors shall serve for a term of six (6) years unless sooner removed for
cause and shall be subject to only one (1) reappointment: Provided, That of those first
appointed, the first two (2) appointees shall serve for a period of three (3) years;
Provided, however, That the appointive director shall continue to hold office until the
successor is appointed. An appointive director may be nominated by the Governance
Commission for Government-Owned or ~Controlled Corporations for reappointment by
the President only if one obtains a performance score of above average or its equivalent
or higher in the immediately preceding year as tenure as appointive director based on the
performance criteria for appointive directors of the Corporation,

coed

‘The Secretary of Finance and the Governor of the Bangko Sentral ng Pilipinas may each
designate an alternate, who shall be an official with a rank not lower than assistant
secretary OF THE DEPARTMENT OF FINANCE or [its-equivalent}DEPUTY
GOVERNOR OF THE BANGKO SENTRAL NG PILIPINAS with written authority
from the Secretary of Finance or the Governor of the Bangko Sentral ng Pilipinas to
attend such meetings and to vote on behalf of their respective principals. Whenever the
[Chairman} CHAIRPERSON 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, [and-in-the-absenee-of

who} HIS OR HER DESIGNATED ALTERNATE shall [eet-as-Chairman} PRESID)
IN THE ABSENCE OF THE CHAIRPERSON AND HIS OR HER DESIGNATED
ALTERNATE, THE REPRESENTATIVE OF THE BANGKO SENTRAL NG
PILIPINAS SHALL PRESIDE.

2x
(b) The Board of Directors shall have the authority:

(1) To approve and issue rules and regulations for banks, [and} the depositing public,
AND OTHER INSTITUTIONS SUPERVISED BY BANGKO SENTRAL NG
PILIPINAS as it considers necessary for the effective discharge of its responsibilities IN
THIS ACT INCLUDING, BUT NOT LIMITED TO, THE ESTABLISHMENT OF
SEPARATE INSURANCE FUNDS, AND INSURANCE ARRANGEMENTS OR
STRUCTURES OR TAKAFUL, TAKING INTO CONSIDERATION THE
PECULIAR CHARACTERISTICS OF ISLAMIC BANKING AND/OR OTHER
DEPOSIT PRODUCTS, AS MAY BE DEFINED BY BANGKO SENTRAL NG
PILIPINAS, OFFERED BY INSTITUTIONS SUPERVISED BY BANGKO
SENTRAL NG PILIPINAS. THIS AUTHORITY INCLUDES, BUT NOT
LIMITED TO, SETTING OF THE INSURANCE COVERAGE, ELIGIBILITY OF
THE INSTITUTIONS, ASSESSMENT PREMIUM RATE, AND OTHER
IMPLEMENTATION RULES AND REGULATIONS;

XXX


[€)] (4) To appoint, [establish-the-rank,-fix-the-remuneration-benefits,_inchiding
health care-servicesthrough-aHealth Mai soe HMO) dival

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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)] (5) 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
other financial institutions based on prevailing market standards, 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;

[] © 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;

[¢8)] (7) To approve the target level of the Deposit Insurance Fund (DIF) and the
methodology for determining reserves for insurance and financial assistance losses;

[©)] (8) To review the organizational set-up of the Corporation and adopt a new or
revised organizational structure as it may deem necessary for the Corporation to
undertake its mandate and functions;

[49)] (9) To design, adopt and revise, 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 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

1449] (10) To promote and sponsor the local or foreign training or study of
personnel in the fields of banking, finance, management, information technology and law.
Towards 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

‘SEC. 3. Section 4 of the PDIC Charter is hereby amended to read as follows:


Section 4. The President of the Corporation shall be its Chief Executive Officer [and-the
Viee-Chairman-of its-Board-of Direetors} and his or her salary shall be [fixed-by-the
President—ofthe—Philippines the. endation—of] BASED ON THE
COMPENSATION AND POSITION CLASSIFICATION SYSTEM DEVELOPED
BY the Governance Commission for Government-Owned or -Controlled Corporations [at
e-sum-commensurate to-the-importance-and responsibility attached to-the position:| AND
AS APPROVED BY THE PRESIDENT OF THE PHILIPPINES. The sum total of
the salary, allowances, benefits and other emoluments of the President of the Corporation
shall be higher than the compensation package of the next highest ranking executive of
the Corporation.

XXX

The President shall be assisted by a Vice President and other officials whose appointment
and removal for cause shall be approved [and-whese-salary shall-be-fixed] by the Board
of Directors upon recommendation of the President of the Corporation, THE SALARY
OF THE VICE PRESIDENT AND OTHER OFFICIALS SHALL BE BASED ON
THE COMPENSATION AND POSITION CLASSIFICATION SYSTEM
DEVELOPED BY THE GOVERNANCE COMMISSION FOR GOVERNMENT-
OWNED OR -CONTROLLED CORPORATIONS AND AS APPROVED BY THE
PRESIDENT OF THE PHILIPPINES. During the absence or temporary incapacity of
the President, or in case of vacancy or permanent incapacity and pending appointment of
a new President of the Corporation by the President of the Philippines, the Board of
Directors shall designate the officer-in-charge of the Corporation.

SEC. 4, Section 5 of the PDIC Charter is hereby amended to read as follows:

DEFINITION OF TERMS
SECTION 5. Asused in this Act. —

(g) xx

(3) Deposit accounts or transactions constituting, and/or emanating from, unsafe
and unsound banking {preetice/s], as determined by the Corporation, in
consultation with the Bangko Sentral ng Pilipinas, after due notice and hearing, and
publication of a directive to cease and desist issued by the {Corporation}
BANGKO SENTRAL NG PILIPINAS against such deposit accounts,
transactions or [practices] UNSAFE AND UNSOUND BANKING; and

Xxx

() THE TERM INCOME FROM OTHER SOURCES MEANS INCOME
ACTUALLY REALIZED BY THE CORPORATION FROM SOURCES OTHER
THAN ASSESSMENT COLLECTIONS, AS DEFINED BY RELEVANT AND
PREVAILING ACCOUNTING STANDARDS.

{9} @) The term insured bank means any bank the deposits of which are insured in
accordance with the provisions of this Act.

{9} (1) The term insured deposit means the amount due to any bonafide depositor for
legitimate deposits in an insured bank as of the date of closure but not to exceed Five
hundred thousand pesos (P500,000.00). Such 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 or her benefit either in his or her 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-hundsed
thousand-peses-(P500,000.00)}: Provided, furthermore, That the provisions of any law to
the contrary notwithstanding, no owner/holder 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.

{Provided finally, Thad 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 22 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 OR HIS/HER
DESIGNATED ALTERNATE, subject to the approval of the President of the
Philippines.

THE BOARD OF DIRECTORS CAN INCREASE THE AMOUNT OF THE
MAXIMUM DEPOSIT INSURANCE COVERAGE TO AN AMOUNT INDEXED
TO INFLATION OR IN CONSIDERATION OF OTHER ECONOMIC
INDICATORS AS MAY BE DEEMED APPROPRIATE BY THE BOARD. THE
BOARD OF DIRECTORS SHALL REVIEW THE AMOUNT OF THE
MAXIMUM DEPOSIT INSURANCE COVERAGE EVERY THREE (3) YEARS
AND ADJUST THE MAXIMUM DEPOSIT INSURANCE COVERAGE AS MAY
BE WARRANTED. IN THE EXERCISE OF THIS AUTHORITY, THE BOARD
MAY CONSIDER ECONOMIC INDICATORS OTHER THAN INFLATION. FOR
THIS PURPOSE, THE BOARD MAY HIRE THE SERVICES OF ACTUARIAL
CONSULTANTS AND OTHER EXPERTS TO DETERMINE THE FEASIBILITY
AND ADVISABILITY OF ADJUSTING THE MAXIMUM DEPOSIT
INSURANCE COVERAGE

{49} () The term liquidation refers to the proceedings under Sections 12 to 16 of this
Act.

{9} (m) The term liquidation court refers to the Regional Trial Court (RTC) of general
jurisdiction where the petition for assistance in the liquidation of a closed bank is filed
and given due course.

{€2n}} (n) The term payout refers to the payment of insured deposits.

9} (0) The term petition for assistance in the liquidation of a closed bank refers to the
petition filed by the receiver with the RTC in accordance with Section 16 of this Act.

{0} (p) The term purchase of assets and assumption of liabilities refers 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.


{49}} (q) The term receiver refers to the Corporation or any of its duly authorized agents
acting as receiver of a closed bank.

{443} (x) The term records 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.

[€} () The term residual assets 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.

(2) THE TERM UNSAFE AND UNSOUND BANKING MAY REFER TO THE
CONDUCT OF BUSINESS IN AN UNLAWFUL, UNSAFE OR UNSOUND
MANNER AS MAY BE DEFINED BY THE BANGKO SENTRAL NG PILIPINAS
UNDER REPUBLIC ACT NO. 7653, AS AMENDED BY REPUBLIC ACT NO.
11211, AND REPUBLIC ACT NO. 8791.

{€2)} (aa) The term valid claim refers to the claim recognized by the receiver or allowed
by the liquidation court,

{(aa)} (bb) The term winding up period refers to the period provided in Section 16 of this
Act.

SEC. 5. Section 6 of the PDIC Charter is hereby amended to read as follows:

DEPOSIT INSURANCE COVERAGE

SECTION 6. The deposit liabilities of any bank 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.

FURTHER, THE CORPORATION MAY ESTABLISH SEPARATE INSURANCE
FUNDS, AND INSURANCE ARRANGEMENTS OR STRUCTURES OR
TAKAFUL, THAT TAKE INTO CONSIDERATION THE PECULIAR
CHARACTERISTICS OF ISLAMIC BANKING, AND/OR OTHER DEPOSIT
PRODUCTS, AS MAY BE DEFINED BY BANGKO SENTRAL NG PILIPINAS,
OFFERED BY INSTITUTIONS SUPERVISED BY BANGKO SENTRAL NG
PILIPINAS,

WHENEVER AN INSTITUTION OTHER THAN BANKS THAT IS
SUPERVISED BY THE BANGKO SENTRAL NG PILIPINAS IS ORDERED
CLOSED BY THE MONETARY BOARD AND SUCH INSTITUTION HAS
DEPOSITS OR PRODUCTS COVERED BY AN INSURANCE OF THE
CORPORATION, THE CORPORATION SHALL BE DESIGNATED AS
RECEIVER OF SUCH INSTITUTION AND THE COPORATION SHALL


SEC.

SEC.

PROCEED WITH ITS TAKEOVER AND LIQUIDATION IN ACCORDANCE
WITH THIS ACT.

Whenever a bank is determined by the Bangko Sentral ng Pilipinas to be capital deficient,
the Corporation may conduct an insurance risk evaluation on the bank to enable it to
assess the risks to the DIF. Such evaluation may include the determination of (i) the fair

market value of the assets and liabilities of a bank; or (ii) the risk classification of a bank
fF possible-resol aastanaie Soe Gew :bject-to-such-terms
sa Linraasrnicuamememcery

6. Section 8 of the PDIC Charter is hereby amended to read as follows:

SANCTIONS AGAINST UNSAFE AND UNSOUND BANKING [PRACFICES]
SECTION 8. (a) Whenever upon examination by the Corporation into the condition of
any insured bank, it shall be disclosed that an insured bank or its directors or agents have
committed, are committing or about to commit unsafe or unsound [prastiees] BANKING
[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 [te-seeure

Xxx

{()] (b) 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] BANGKO SENTRAL NG PILIPINAS, ee

depositrelatod unsafe and/or msound banking [proctoc),

2x
7. Section 9 of the PDIC Charter is hereby amended to read as follows:
SECTION 9. The Corporation as a corporate body shall have the powers:

2x


SEC.

Fifth — To appoint by its Board of Directors such officers and employees as are not
otherwise provided for in this Act, to define their duties, [Sx their compensation,] require
bonds of them and fix penalty thereof and to dismiss such officers and employees for
cause;

20x
Eighth — To conduct examination of banks Recep cer eecte reer eee

Provided, That ne examination can-be-conduoted within-twelve-

closure—of-a-bank:] WHENEVER THE BSP DEEMS IT APPROPRIATE AND
NECESSARY SUCH AS WHEN THERE IS A FINDING OF FRAUD OR UNSAFE
OR UNSOUND BANKING RELATED TO DEPOSIT-TAKING, Provided, [further,]
That, notwithstanding the provisions of Republic Act No, 1405, as amended, Republic
Act No. 6426, as amended, Republic Act No. 8791, and other laws, the Corporation
and/or the Bangko Sentral, may inquire into or examine deposit accounts and all

information related thereto [inca 2
practice]: Provided, finally, That to avoid aehahsy of efforts, the examination shall
maximize the efficient use of the relevant reports, information, and findings of the
Bangko Sentral, which it shall make available to the Corporation.

xXx

[Fourteenth —Fo-determine the appropriate resolution method _and_to- implement th
same-for-a-bank-subject of resolution; and]

[Fifteenth] FOURTEENTH — To determine the appropriate mode of liquidation of a
closed bank and to implement the same.

8. Section 10 of the PDIC Charter is hereby amended to read as follows:
SECTION 10. xxx

(b) WHENEVER THE BANGKO SENTRAL DEEMS IT APPROPRIATE AND
NECESSARY FOR PDIC TO JOIN THE CONDUCT OF EXAMINATION, [4]
‘The Board of Directors shall appoint examiners who shall have power, on behalf of the
Corporation to examine any insured bank. Each such examiner shall have the power to
make a thorough examination of all the affairs of the bank and in doing so, he shall have
the power to administer oaths, to examine and take and preserve the testimony of any the
officers and agents thereof, and to compel the presentation of books, documents, papers
or records necessary in his judgment to ascertain the facts relative to the condition of the
bank: and shall make a full and detailed report of the condition of the bank to the
Corporation. The Board of Directors in like manner shall appoint claim agents who shall
have the power to investigate and examine all claims for insured deposits and transferred
deposits. Each claim agent shall have the power to administer oaths and examine under
oath and take and preserve testimony of any person relating to such claim.

XXX

@ The [Corporation] BANGKO SENTRAL NG PILIPINAS shall have access
to [reperts—of-exemination] BANK EXAMINATION REPORTS made by THE
CORPORATION, [and-reports-of condi le totheLiasake



ake] AND TO

SUCH OTHER REPORTS OR INFORMATION AS MAY BE AGREED UPON BY
THE CORPORATION AND THE BANGKO SENTRAL NG PILIPINAS. THE
BANGKO SENTRAL SHALL SHARE TO THE CORPORATION ITS REPORTS
OF EXAMINATION ON BANKS, AND SUCH OTHER REPORTS OR
INFORMATION AS MAY BE AGREED UPON BY THEM. Provided, that, [the

@ ° "THE USE OF SUCH REPORTS
OR INFORMATION ARE IN ACCORDANCE WITH THE TERMS AND
CONDITIONS AGREED UPON BY THE CORPORATION AND BANGKO
SENTRAL AND PRESCRIBED BY APPLICABLE LAWS AND REGULATIONS.

Xxx
SEC. 9, Section 11 of the PDIC Charter is hereby amended to read as follows:

[BANKRESOLUHON] AUTHORITY TO EXAMINE DEPOSIT RECORDS
SECTION 11. [¢@ tra

Monetary-Board-in-rek he prompt-corre ion Fx hall- have
the authority 1o-inguire and-menitor the status of banks under prompt-corrective-action:]

[©] __ When there is a failure of prompt corrective action as declared by the Monetary

Board [due-to-capital_deficieney}, the Corporation [,-its-duly_authorized-officers-or
employees, AND THE BANGKO SENTRAL NG PILIPINAS may examine, inquire

or look into the deposi records of a bank: Lesa greece occa aoe

deficieney-] For this purpose, banks, their officers and employees are hereby mandated to
disclose and report to the Corporation AND BANGKO SENTRAL NG PILIPINAS or
[its] THEIR duly authorized officers and employees, THE REQUIRED deposit account
information [in-said-bene]

[Fhe_Cerporeion_tedaly_euthriood_offeere_or_enployoee_ero_probibied_rom

bbureau-oF offiee-Any act done pursuant to this section shall not be deemed as a violation
of 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-a] 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.


£-the-banleshall ty

’

10


SEC.

SEC.

[49] The provisions of this section are without prejudice to any action that the
Monetary Board may take under existing laws.

10. Section 18 of the PDIC Charter is hereby amended to read as follows:

DIVIDEND DECLARATION
SECTION 18. Consistent with the policy of the State to generate, preserve, maintain
faith and confidence in the country’s banking system, the Corporation shall build up and
maintain the 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 [is-exer i Sinsies a}
SHALL DECLARE AND remit dividends tothe {al National [e] Government [only-if
the-target-DIF_level_for-the-applicable-year-has-been-reached:] IN ACCORDANCE
WITH REPUBLIC ACT NO. 7656, PROVIDED THAT SECTION 2.D ON THE
DETERMINATION OF THE DIVIDEND BASE AND SECTION 5 FLEXIBLE
CLAUSE THEREOF SHALL NOT APPLY. IN LIEU OF SECTION 2.D AND
SECTION 5 OF REPUBLIC ACT NO. 7656, THE SUCCEEDING PARAGRAPHS
SHALL GOVERN.

For purposes of computing the amount of dividends to be declared and remitted to the [2]
National [g] Government, all assessment collections shall not be considered as income
AND THE DIVIDEND BASE SHALL BE THE SUM OF ALL INCOME FROM
OTHER SOURCES ONLY. UNREALIZED INCOME SUCH AS, BUT NOT
LIMITED TO, REVERSALS OF ALLOWANCES AND RESERVES, AND
UNREALIZED EXCHANGE GAINS, SHALL NOT BE PART OF INCOME
FROM OTHER SOURCES. NO DEDUCTIONS SHALL BE ALLOWED FROM
‘THE INCOME FROM OTHER SOURCES.

The dividend rate shall be at least fifty percent (50%) of the SUM OF ALL THE income
from other sources only. IN CONSIDERATION OF MAINTAINING THE DIF AT A
REASONABLE LEVEL, THE DIVIDEND RATE MAY BE ADJUSTED BY THE
PRESIDENT OF THE PHILIPPINES UPON RECOMMENDATION BY THE
SECRETARY OF FINANCE; OR THE CORPORATION MAY BE ALLOWED
TO DEFER THE PAYMENT OF THE FIFTY PERCENT (50%) DIVIDEND DUE
AS MAY BE DETERMINED BY THE SECRETARY OF FINANCE.

11. Section 22 of the PDIC Charter is hereby amended to read as follows:

CORPORATE FUNDS AND ASSETS
SECTION 22. xxx

1


(©) —_[Iar-the-exereise-of-itsauthoritios-under-Seotion Hof thisAct4] The
Corporation is authorized to make loans to, or purchase the assets of, or assume liabilities
of, or make deposits in

(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, 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.

2x
‘SEC. 12. Section 24 of the PDIC Charter is hereby amended to read as follows:

ISSUANCE OF BONDS, DEBENTURES AND OTHER OBLIGATIONS
SECTION 24. With the approval of the President of the Philippines, upon the
recommendation of the Department of Finance, the Corporation is authorized to issue
bonds, debentures, and other obligations, both local or foreign, as may be necessary for
purposes of providing liquidity for settlement of insured deposits in closed banks|;] OR
to facilitate the implementation of [bank-resolution-under- Section-1-of this-Act,-as-well
‘¢s-fer] 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 may provide for appropriate reserves for the
redemption or retirement of said obligation.

20x

SEC. 13. Section 26 (c) of the PDIC Charter is hereby deleted and renumbered accordingly:

2x



[@] SECTION 28. EXEMPTION FROM THE BULK SALES LAW. - BANK
LIQUIDATION 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'.

SEC. 15. Separability Clause. — If any provision if this Act is subsequently declared invalid or

unconstitutional, the other provisions hereof which are not affected thereby shall remain in fall force
and effect.

SEC. 16. Effectivity Clause. — This Act shall take effect fifteen (15) days after its publication in the
Official Gazette or in a newspaper of general circulation,

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