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REPUBLIC ACT NO.

8791 May 23, 2000

AN ACT PROVIDING FOR THE REGULATION OF THE ORGANIZATION AND OPERATIONS OF BANKS,
QUASI-BANKS, TRUST ENTITIES AND FOR OTHER PURPOSES

CHAPTER I
TITLE AND CLASSIFICATION OF BANKS

Section 1. Title. The short title of this Act shall be "The General Banking Law of 2000." (1a)

Section 2. Declaration Of Policy. - The State recognizes the vital role of banks providing an environment
conducive to the sustained development of the national economy and the fiduciary nature of banking that
requires high standards of integrity and performance. In furtherance thereof, the State shall promote and
maintain a stable and efficient banking and financial system that is globally competitive, dynamic and
responsive to the demands of a developing economy. (n)

Section 3. Definition and Classification of Banks. -

3.1. "Banks" shall refer to entities engaged in the lending of funds obtained in the form of deposits. (2a)

3.2. Banks shall be classified into:

(a) Universal banks;

(b) Commercial banks;

(c) Thrift banks, composed of: (i) Savings and mortgage banks, (ii) Stock savings and loan
associations, and (iii) Private development banks, as defined in the Republic Act No. 7906 (hereafter
the "Thrift Banks Act");

(d) Rural banks, as defined in Republic Act No. 73S3 (hereafter the "Rural Banks Act");

(e) Cooperative banks, as defined in Republic Act No 6938 (hereafter the "Cooperative Code");

(f) Islamic banks as defined in Republic Act No. 6848, otherwise known as the "Charter of Al Amanah
Islamic Investment Bank of the Philippines"; and

(g) Other classifications of banks as determined by the Monetary Board of the Bangko Sentral ng
Pilipinas. (6-Aa)

CHAPTER II
AUTHORITY OF THE BANGKO SENTRAL

Section 4. Supervisory Powers. The operations and activities of banks shall be subject to supervision of the
Bangko Sentral. "Supervision" shall include the following:

4.1. The issuance of rules of, conduct or the establishment standards of operation for uniform application to
all institutions or functions covered, taking into consideration the distinctive character of the operations of
institutions and the substantive similarities of specific functions to which such rules, modes or standards are
to be applied;

4.2 The conduct of examination to determine compliance with laws and regulations if the circumstances so
warrant as determined by the Monetary Board;

4.3 Overseeing to ascertain that laws and regulations are complied with;

4.4 Regular investigation which shall not be oftener than once a year from the last date of examination to
determine whether an institution is conducting its business on a safe or sound basis: Provided, That the
deficiencies/irregularities found by or discovered by an audit shall be immediately addressed;

4.5 Inquiring into the solvency and liquidity of the institution (2-D); or

4.6 Enforcing prompt corrective action. (n)

The Bangko Sentral shall also have supervision over the operations of and exercise regulatory powers over
quasi-banks, trust entities and other financial institutions which under special laws are subject to Bangko
Sentral supervision. (2-Ca)
For the purposes of this Act, "quasi-banks" shall refer to entities engaged in the borrowing of funds through
the issuance, endorsement or assignment with recourse or acceptance of deposit substitutes as defined in
Section 95 of Republic Act No. 7653 (hereafter the "New Central Bank Act") for purposes of re-lending or
purchasing of receivables and other obligations. (2-Da)

Section 5. Policy Direction; Ratios, Ceilings and Limitations. - The Bangko Sentral shall provide policy
direction in the areas of money, banking and credit. (n)

For this purpose, the Monetary Board may prescribe ratios, ceilings, limitations, or other forms of regulation
on the different types of accounts and practices of banks and quasi-banks which shall, to the extent feasible,
conform to internationally accepted standards, including of the Bank for International Settlements (BIS). The
Monetary Board may exempt particular categories of transactions from such ratios, ceilings. and limitations,
but not limited to exceptional cases or to enable a bank or quasi-bank under rehabilitation or during a merger
or consolidation to continue in business, with safety to its creditors, depositors and the general public. (2-Ca)

Section 6. Authority to Engage in Banking and Quasi-Banking Functions. - No person or entity shall engage in
banking operations or quasi-banking functions without authority from the Bangko Sentral: .Provided, however,
That an entity authorized by the Bangko Sentral to perform universal or commercial banking functions shall
likewise have the authority to engage in quasi-banking functions.

The determination of whether a person or entity is performing banking or quasi-banking functions without
Bangko Sentral authority shall be decided by the Monetary Board. To resolve such issue, the Monetary Board
may; through the appropriate supervising and examining department of the Bangko Sentral, examine, inspect
or investigate the books and records of such person or entity. Upon issuance of this authority, such person or
entity may commence to engage in banking operations or quasi-banking function and shall continue to do so
unless such authority is sooner surrendered, revoked, suspended or annulled by the Bangko Sentral in
accordance with this Act or other special laws.

The department head and the examiners of the appropriate supervising and examining department are
hereby authorized to administer oaths to any such person, employee, officer, or director of any such entity
and to compel the presentation or production of such books, documents, papers or records that are
reasonably necessary to ascertain the facts relative to the true functions and operations of such person or
entity. Failure or refusal to comply with the required presentation or production of such books, documents,
papers or records within a reasonable time shall subject the persons responsible therefore to the penal
sanctions provided under the New Central Bank Act.

Persons or entities found to be performing banking or quasi-banking functions without authority from the
Bangko Sentral shall be subject to appropriate sanctions under the New Central Bank Act and other applicable
laws. (4a)

Section 7. Examination by the Bangko Sentral. - The Bangko Sentral shall, when examining a bank, have the
authority to examine an enterprise which is wholly or majority-owned or controlled by the bank. (2-Ba)

CHAPTER III
ORGANIZATION, MANAGEMENT AND ADMINISTRATION OF BANKS. QUASI-BANKS AND TRUST
ENTITIES

Section 8. Organization. - The Monetary Board may authorize the organization of a bank or quasi-bank
subject to the following conditions:

8.1 That the entity is a stock corporation (7);

8.2 That its funds are obtained from the public, which shall mean twenty (20) or more persons (2-Da); and

8.3 That the minimum capital requirements prescribed by the Monetary Board for each category of banks are
satisfied. (n)

No new commercial bank shall be established within three (3) years from the effectivity of this Act. In the
exercise of the authority granted herein, the Monetary Board shall take into consideration their capability in
terms of their financial resources and technical expertise and integrity. The bank licensing process shall
incorporate an assessment of the bank's ownership structure, directors and senior management, its operating
plan and internal controls as well as its projected financial condition and capital base.

Section 9. Issuance of Stocks. - The Monetary Board may prescribe rules and regulations on the types of
stock a bank may issue, including the terms thereof and rights appurtenant thereto to determine compliance
with laws and regulations governing capital and equity structure of banks; Provided, That banks shall issue
par value stocks only.
Section 10. Treasury Stocks. - No bank shall purchase or acquire shares of its own capital stock or accept its
own shares as a security for a loan, except when authorized by the Monetary Board: Provided, That in every
case the stock so purchased or acquired shall, within six (6) months from the time of its purchase or
acquisition, be sold or disposed of at a public or private sale. (24a)

Section 11. Foreign Stockholdings. - Foreign individuals and non-bank corporations may own or control up to
forty percent (40%) of the voting stock of a domestic bank. This rule shall apply to Filipinos and domestic non-
bank corporations. (12a; 12-Aa) The percentage of foreign-owned voting stocks in a bank shall be determined
by the citizenship of the individual stockholders in that bank. The citizenship of the corporation which is a
stockholder in a bank shall follow the citizenship of the controlling stockholders of the corporation,
irrespective of the place of incorporation. (n)

Section 12. Stockholdings of Family Groups of Related Interests. - Stockholdings of individuals related to
each other within the fourth degree of consanguinity or affinity, legitimate or common-law, shall be
considered family groups or related interests and must be fully disclosed in all transactions by such
corporations or related groups of persons with the bank. (12-Ba)

Section 13. Corporate Stockholdings. - Two or more corporations owned or controlled by the same family
group or same group of persons shall be considered related interests and must be fully disclosed in all
transactions by such corporations or related group of persons with the bank. (12-Ba)

Section 14. Certificate of Authority to Register. - The Securities and Exchange Commission shall no register
the articles of incorporation of any bank, or any amendment thereto, unless accompanied by a certificate of
authority issued by the Monetary Board, under it seal. Such certificate shall not be issued unless the
Monetary Board is satisfied from the evidence submitted to it:

14.1 That all requirements of existing laws and regulations to engage in the business for which the applicant
is proposed to be incorporated have been complied with;

14.2 That the public interest and economic conditions, both general and local, justify the authorization; and

14.3 That the amount of capital, the financing, organization, direction and administration, as well as the
integrity and responsibility of the organizers and administrators reasonably assure the safety of deposits and
the public interest. (9)

The Securities and Exchange Commission shall not register the by-laws of any bank, or any amendment
thereto, unless accompanied by a certificate of authority from the Bangko Sentral. (10)

Section 15. Board of Directors. - The provisions of the Corporation Code to the contrary notwithstanding,
there shall be at least five (5), and a maximum of fifteen (15) members of the board or directors of a bank,
two (2) of whom shall be independent directors. An "independent director" shall mean a person other than an
officer or employee of the bank, its subsidiaries or affiliates or related interests. (n) Non-Filipino citizens may
become members of the board of directors of a bank to the extent of the foreign participation in the equity of
said bank. (Sec. 7, RA 7721) The meetings of the board of directors may be conducted through modern
technologies such as, but not limited to, teleconferencing and video-conferencing. (n)

Section 16. Fit and Proper Rule. - To maintain the quality of bank management and afford better protection
to depositors and the public in general the Monetary Board shall prescribe, pass upon and review the
qualifications and disqualifications of individuals elected or appointed bank directors or officers and disqualify
those found unfit. After due notice to the board of directors of the bank, the Monetary Board may disqualify,
suspend or remove any bank director or officer who commits or omits an act which render him unfit for the
position. In determining whether an individual is fit and proper to hold the position of a director or officer of a
bank, regard shall be given to his integrity, experience, education, training, and competence. (9-Aa)

Section 17. Directors of Merged or Consolidated Banks. - In the case of a bank merger or consolidation, the
number of directors shall not exceed twenty-one (21). (l3a)

Section 18. Compensation and Other Benefits of Directors and Officers. To protect the finds of depositors
and creditors the Monetary Board may regulate the payment by the bark to its directors and officers of
compensation, allowance, fees, bonuses, stock options, profit sharing and fringe benefits only in exceptional
cases and when the circumstances warrant, such as but not limited to the following:

18.1. When a bank is under comptrollership or conservatorship; or

18.2. When a bank is found by the Monetary Board to be conducting business in an unsafe or unsound
manner; or

18.3. When a bank is found by the Monetary Board to be in an unsatisfactory financial condition. (n)
Section 19. Prohibition on Public Officials. - Except as otherwise provided in the Rural Banks Act, no
appointive or elective public official whether full-time or part-time shall at the same time serve as officer of
any private bank, save in cases where such service is incident to financial assistance provided by the
government or a government owned or controlled corporation to the bank or unless otherwise provided under
existing laws. (13)

Section 20. Bank Branches. - Universal or commercial banks may open branches or other offices within or
outside the Philippines upon prior approval of the Bangko Sentral. Branching by all other banks shall be
governed by pertinent laws.

A bank may, subject to prior approval of the Monetary Board, use any or all of its branches as outlets for the
presentation and/or sale of the financial products of its allied undertaking or of its investment house units. A
bank authorized to establish branches or other offices shall be responsible for all business conducted in such
branches and offices to the same extent and in the same manner as though such business had all been
conducted in the head office. A bank and its branches and offices shall be treated as one unit. (6-B; 27)

Section 21. Banking Days and Hours. - Unless otherwise authorized by the Bangko Sentral in the interest of
the banking public, all banks including their branches and offices shall transact business on all working days
for at least six (6) hours a day. In addition, banks or any of their branches or offices may open for business on
Saturdays, Sundays or holidays for at least three (3) hours a day: Provided, That banks which opt to open on
days other than working days shall report to the Bangko Sentral the additional days during which they or their
branches or offices shall transact business. For purposes of this Section, working days shall mean Mondays to
Fridays, except if such days are holidays. (6-Ca)

Section 22. Strikes and Lockouts. - The banking industry is hereby declared as indispensable to the national
interest and, notwithstanding the provisions of any law to the contrary, any strike or lockout involving banks,
if unsettled after seven (7) calendar days shall be reported by the Bangko Sentral to the secretary of Labor
who may assume jurisdiction over the dispute or decide it or certify the sane to the National Labor Relations
Commission for compulsory arbitration. However, the President of the Philippines may at any time intervene
and assume jurisdiction over such labor dispute in order to settle or terminate the same. (6-E)

CHAPTER IV
DEPOSITS. LOANS AND OTHER OPERATIONS

Article I
Operations Of Universal Banks

Section 23. Powers of a Universal Bank - A universal bank shall have the authority to exercise, in addition to
the powers authorized for a commercial bank in Section 29, the powers of an investment house as provided in
existing laws and the power to invest in non-allied enterprises as provided in this Act. (21-B)

Section 24. Equity Investments of a Universal Bank. - A universal bank may, subject to the conditions stated
in the succeeding paragraph, invest in the equities of allied and non-allied enterprises as may be determined
by the Monetary Board. Allied enterprises may either be financial or non-financial. Except as the Monetary
Board may otherwise prescribe:

24.1. The total investment in equities of allied and non-allied enterprises shall not exceed fifty percent (50%)
of the net worth of the bank; and

24.2. The equity investment in any one enterprise, whether allied or non-allied, shall not exceed twenty-five
percent (25%) of the net worth of the bank.

As used in this Act, "net worth" shall mean the total of the unimpaired paid-in capital including paid-in
surplus, retained earnings and undivided profit, net of valuation reserves and other adjustments as may be
required by the Bangko Sentral.

The acquisition of such equity or equities is subject to the prior approval of the Monetary Board which shall
promulgate appropriate guidelines to govern such investments. (21-Ba)

Section 25. Equity Investments of a Universal Bank in Financial Allied Enterprises. - A universal bank can
own up to one hundred percent (100%) of the equity in a thrift bank, a rural bank or a financial allied
enterprise. A publicly-listed universal or commercial bank may own up to one hundred percent (100%) of the
voting stock of only one other universal or commercial bank. (21-B; 21-Ca)

Section 26. Equity Investments of a Universal Bank in Non-Financial Allied Enterprises. - A universal bank
may own up to one hundred percent (100%) of the equity in a non-financial allied enterprise. (21-Ba)
Section 27. Equity Investments of a Universal Bank in Non-Allied Enterprises. - The equity investment of a
universal bank, or of its wholly or majority-owned subsidiaries, in a single non-allied enterprise shall not
exceed thirty-five percent (35%) of the total equity in that enterprise nor shall it exceed thirty-five percent
(35%) of the voting stock in that enterprise. (21-B)

Section 28. Equity Investments in Quasi-Banks. - To promote competitive conditions in financial markets, the
Monetary Board may further limit to forty percent (40%) equity investments of universal banks in quasi-
banks. This rule shall also apply in the case of commercial banks. (12-E) Article II. Operations Of Commercial
Banks

Section 29. Powers of a Commercial Bank. - A commercial bank shall have, in addition to the general powers
incident to corporations, all such powers as may be necessary to carry on the business of commercial banking
such as accepting drafts and issuing letters of credit; discounting and negotiating promissory notes, drafts,
bills of exchange, and other evidences of debt; accepting or creating demand deposits; receiving other types
of deposits and deposit substitutes; buying and selling foreign exchange and gold or silver bullion; acquiring
marketable bonds and other debt securities; and extending credit, subject to such rules as the Monetary
Board may promulgate. These rules may include the determination of bonds and other debt securities eligible
for investment, the maturities and aggregate amount of such investment.

Section 30. Equity Investments of a Commercial Bank. - A commercial bank may, subject to the conditions
stated in the succeeding paragraphs, invest only in the equities of allied enterprises as may be determined by
the Monetary Board. Allied enterprises may either be financial or non-financial. Except as the Monetary Board
may otherwise prescribe:

30.1. The total investment in equities of allied enterprises shall not exceed thirty-five percent (35%) of the net
worth of the bark; and

30.2. The equity investment in any one enterprise shall not exceed twenty-five percent (25%) of tile net worth
of the bank. The acquisition of such equity or equities is subject to the prior approval of the Monetary Board
which shall promulgate appropriate guidelines to govern such investment.(2lA-a; 21-Ca)

Section 31. Equity Investments of a Commercial Bank in Financial Allied Enterprises. - A commercial bank
may own up to one hundred percent (100%) of the equity of a thrift bank or a rural bank. Where the equity
investment of a commercial bank is in other financial allied enterprises, including another commercial bank,
such investment shall remain a minority holding in that enterprise. (21-Aa; 21-Ca)

Section 32. Equity Investments of a Commercial Bank in Non-Financial Allied Enterprises. A commercial bank
may own up to one hundred percent (100%) of the equity in a non-financial allied enterprise. (21-Aa) Article
III. Provisions Applicable To All Banks, Quasi-Banks, And Trust Entities

Section 33. Acceptance of Demand Deposits. - A bank other than a universal or commercial bank cannot
accept or create demand deposits except upon prior approval of, and subject to such conditions and rules as
may be prescribed by the Monetary Board. (72-Aa)

Section 34. Risk-Based Capital. - The Monetary Board shall prescribe the minimum ratio which the net worth
of a bank must bear to its total risk assets which may include contingent accounts. For purposes of this
Section, the Monetary Board may require such ratio be determined on the basis of the net worth and risk
assets of a bank and its subsidiaries, financial or otherwise, as well as prescribe the composition and the
manner of determining the net worth and total risk assets of banks and their subsidiaries: Provided, That in
the exercise of this authority, the Monetary Board shall, to the extent feasible conform to internationally
accepted standards, including those of the Bank for International Settlements(BIS), relating to risk-based
capital requirements: Provided further, That it may alter or suspend compliance with such ratio whenever
necessary for a maximum period of one (1) year: Provided, finally, That such ratio shall be applied uniformly
to banks of the same category. In case a bank does not comply with the prescribed minimum ratio, the
Monetary Board may limit or prohibit the distribution of net profits by such bank and may require that part or
all of the net profits be used to increase the capital accounts of the bank until the minimum requirement has
been met The Monetary Board may, furthermore, restrict or prohibit the acquisition of major assets and the
making of new investments by the bank, with the exception of purchases of readily marketable evidences of
indebtedness of the Republic of the Philippines and of the Bangko Sentral and any other evidences of
indebtedness or obligations the servicing and repayment of which are fully guaranteed by the Republic of the
Philippines, until the minimum required capital ratio has been restored. In case of a bank merger or
consolidation, or when a bank is under rehabilitation under a program approved by the Bangko Sentral,
Monetary Board may temporarily relieve the surviving bank, consolidated bank, or constituent bank or
corporations under rehabilitation from full compliance with the required capital ratio under such conditions as
it may prescribe. Before the effectivity of rules which the Monetary Board is authorized to prescribe under this
provision, Section 22 of the General Banking Act, as amended, Section 9 of the Thrift Banks Act, and all
pertinent rules issued pursuant thereto, shall continue to be in force. (22a)

Section 35. Limit on Loans, Credit Accommodations and Guarantees


35.1 Except as the Monetary Board may otherwise prescribe for reasons of national interest, the total amount
of loans, credit accommodations and guarantees as may be defined by the Monetary Board that may be
extended by a bank to any person, partnership, association, corporation or other entity shall at no time
exceed twenty percent (20%) of the net worth of such bank. The basis for determining compliance with single
borrower limit is the total credit commitment of the bank to the borrower.

35.2. Unless the Monetary Board prescribes otherwise, the total amount of loans, credit accommodations and
guarantees prescribed in the preceding paragraph may be increased by an additional ten percent (10%) of
the net worth of such bank provided the additional liabilities of any borrower are adequately secured by trust
receipts, shipping documents, warehouse receipts or other similar documents transferring or securing title
covering readily marketable, non-perishable goods which must be fully covered by insurance.

35.3 The above prescribed ceilings shall include (a) the direct liability of the maker or acceptor of paper
discounted with or sold to such bank and the liability of a general endorser, drawer or guarantor who obtains
a loan or other credit accommodation from or discounts paper with or sells papers to such bank; (b) in the
case of an individual who owns or controls a majority interest in a corporation, partnership, association or any
other entity, the liabilities of said entities to such bank; (c) in the case of a corporation, all liabilities to such
bank of all subsidiaries in which such corporation owns or controls a majority interest; and (d) in the case of a
partnership, association or other entity, the liabilities of the members thereof to such bank.

35.4. Even if a parent corporation, partnership, association, entity or an individual who owns or controls a
majority interest in such entities has no liability to the bank, the Monetary Board may prescribe the
combination of the liabilities of subsidiary corporations or members of the partnership, association, entity or
such individual under certain circumstances, including but not limited to any of the following situations: (a)
the parent corporation, partnership, association, entity or individual guarantees the repayment of the
liabilities; (b) the liabilities were incurred for the accommodation of the parent corporation or another
subsidiary or of the partnership or association or entity or such individual; or (c) the subsidiaries though
separate entities operate merely as departments or divisions of a single entity.

35.5. For purposes of this Section, loans, other credit accommodations and guarantees shall exclude: (a)
loans and other credit accommodations secured by obligations of the Bangko Sentral or of the Philippine
Government: (b) loans and other credit accommodations fully guaranteed by the government as to the
payment of principal and interest; (c) loans and other credit accommodations covered by assignment of
deposits maintained in the lending bank and held in the Philippines; (d) loans, credit accommodations and
acceptances under letters of credit to the extent covered by margin deposits; and (e) other loans or credit
accommodations which the Monetary Board may from time to time, specify as non-risk items.

35.6. Loans and other credit accommodations, deposits maintained with, and usual guarantees by a bank to
any other bank or non-bank entity, whether locally or abroad, shall be subject to the limits as herein
prescribed.

35.7. Certain types of contingent accounts of borrowers may be included among those subject to these
prescribed limits as may be determined by the Monetary Board.(23a)

Section 36. Restriction on Bank Exposure to Directors, Officers, Stockholders and Their Related Interests. -
No director or officer of any bank shall, directly or indirectly, for himself or as the representative or agent of
others, borrow from such bank nor shall he become a guarantor, endorser or surety for loans from such bank
to others, or in any manner be an obligor or incur any contractual liability to the bank except with the written
approval of the majority of all the directors of the bank, excluding the director concerned: Provided, That such
written approval shall not be required for loans, other credit accommodations and advances granted to
officers under a fringe benefit plan approved by the Bangko Sentral. The required approval shall be entered
upon the records of the bank and a copy of such entry shall be transmitted forthwith to the appropriate
supervising and examining department of the Bangko Sentral. Dealings of a bank with any of its directors,
officers or stockholders and their related interests shall be upon terms not less favorable to the bank than
those offered to others. After due notice to the board of directors of the bank, the office of any bank director
or officer who violates the provisions of this Section may be declared vacant and the director or officer shall
be subject to the penal provisions of the New Central Bank Act. The Monetary Board may regulate the amount
of loans, credit accommodations and guarantees that may be extended, directly or indirectly, by a bank to its
directors, officers, stockholders and their related interests, as well as investments of such bank in enterprises
owned or controlled by said directors, officers, stockholders and their related interests. However, the
outstanding loans, credit accommodations and guarantees which a bank may extend to each of its
stockholders, directors, or officers and their related interests, shall be limited to an amount equivalent to their
respective unencumbered deposits and book value of their paid-in capital contribution in the bank: Provided,
however, That loans, credit accommodations and guarantees secured by assets considered as non-risk by the
Monetary Board shall be excluded from such limit: Provided, further, That loans, credit accommodations and
advances to officers in the form of fringe benefits granted in accordance with rules as may be prescribed by
the Monetary Board shall not be subject to the individual limit. The Monetary Board shall define the term
"related interests." The limit on loans, credit accommodations and guarantees prescribed herein shall not
apply to loans, credit accommodations and guarantees extended by a cooperative bank to its cooperative
shareholders. (83a)

Section 37. Loans and Other Credit Accommodations Against Real Estate. - Except as the Monetary Board
may otherwise prescribe, loans and other credit accommodations against real estate shall not exceed
seventy-five percent (75%) of the appraised value of the respective real estate security, plus sixty percent
(60%) of the appraised value of the insured improvements, and such loans may be made to the owner of the
real estate or to his assignees. (78a)

Section 38. Loans And Other Credit Accommodations on Security of Chattels and Intangible Properties. -
Except as the Monetary Board may otherwise prescribe, loans and other credit accommodations on security
of chattels and intangible properties such as, but not limited to, patents, trademarks, trade names, and
copyrights shall not exceed seventy-five percent (75%) of the appraised value of the security, an such loans
and other credit accommodation may be made to the title-holder of the chattels and intangible properties or
his assignees. (78a)

Section 39. Grant and Purpose of Loans and Other Credit Accommodations. - A bank shall grant loans and
other credit accommodations only in amounts and for the periods of time essential for the effective
completion of the operations to be financed. Such grant of loans and other credit accommodations shall be
consistent with safe and sound banking practices. (75a) The purpose of all loans and other credit
accommodations shall be stated in the application and in the contract between the bank and the borrower. If
the bank finds that the proceeds of the loan or other credit accommodation have been employed, without its
approval, for purposes other than those agreed upon with the bank, it shall have the right to terminate the
loan or other credit accommodation and demand immediate repayment of the obligation. (77)

Section 40. Requirement for Grant Of Loans or 0ther Credit Accommodations. - Before granting a loan or
other credit accommodation, a bank must ascertain that the debtor is capable of fulfilling his commitments to
the bank. Toward this end, a bank may demand from its credit applicants a statement of their assets and
liabilities and of their income and expenditures and such information as may be prescribed by law or by rules
and regulations of the Monetary Board to enable the bank to properly evaluate the credit application which
includes the corresponding financial statements submitted for taxation purposes to the Bureau of Internal
Revenue. Should such statements prove to be false or incorrect in any material detail, the bank may
terminate any loan or other credit accommodation granted on the basis of said statements and shall have the
right to demand immediate repayment or liquidation of the obligation. In formulating rules and regulations
under this Section, the Monetary Board shall recognize the peculiar characteristics of micro financing, such as
cash flow-based lending to the basic sectors that are not covered by traditional collateral. (76a)

Section 41. Unsecured Loans or Other Credit Accommodations. - The Monetary Board is hereby authorized to
issue such regulations as it may deem necessary with respect to unsecured loans or other credit
accommodations that may be granted by banks. (n)

Section 42. Other Security Requirements for Bank Credits. - The Monetary Board may, by regulation,
prescribe further security requirements to which the various types of bank credits shall be subject, and, in
accordance with the authority granted to it in Section 106 of the New Central Bank Act, the Board may by
regulation, reduce the maximum ratios established in Sections 36 and 37 of this Act, or, in special cases,
increase the maximum ratios established therein. (78)

Section 43. Authority to Prescribe Terms and Conditions of Loans and Other Credit Accommodations. - The
Monetary Board, may, similarly in accordance with the authority granted to it in Section 106 of the New
Central Bank Act, and taking into account the requirements of the economy for the effective utilization of
long-term funds, prescribe the maturities, as well as related terms and conditions for various types of bank
loans and other credit accommodations. Any change by the Board in the maximum maturities, as well as
related terms and conditions for various types of bank loans and other credit accommodations. Any change
by the Board in the maximum maturities shall apply only to loans and other credit accommodations made
after the date of such action. The Monetary Board shall regulate the interest imposed on micro finance
borrowers by lending investors and similar lenders such as, but not limited to, the unconscionable rates of
interest collected on salary loans and similar credit accommodations. (78a)

Section 44. Amortization on Loans and Other Credit Accommodations. - The amortization schedule of bank
loans and other credit accommodations shall be adapted to the nature of the operations to be financed. In
case of loans and other credit accommodations with maturities of more than five (5) years, provisions must
be made for periodic amortization payments, but such payments must be made at least annually: Provided,
however, That when the borrowed funds are to be used for purposes which do not initially produce revenues
adequate for regular amortization payments therefrom, the bank may permit the initial amortization payment
to be deferred until such time as said revenues are sufficient for such purpose, but in no case shall the initial
amortization date be later than five (5) years from the date on which the loan or other credit accommodation
is granted. (79a) In case of loans and other credit accommodations to micro finance sectors, the schedule of
loan amortization shall take into consideration the projected cash flow of the borrower and adopt this into the
terms and conditions formulated by banks. (n)
Section 45. Prepayment of Loans and Other Credit Accommodations. - A borrower may at any time prior to
the agreed maturity date prepay, in whole or in part, the unpaid balance of any bank loan and other credit
accommodation, subject to such reasonable terms and conditions as may be agreed upon between the bank
and its borrower. (80a)

Section 46. Development Assistance Incentives. - The Bangko Sentral shall provide incentives to banks
which, without government guarantee, extend loans to finance educational institutions cooperatives,
hospitals and other medical services, socialized or low-cost housing, local government units and other
activities with social content. (n)

Section 47. Foreclosure of Real Estate Mortgage. - In the event of foreclosure, whether judicially or extra-
judicially, of any mortgage on real estate which is security for any loan or other credit accommodation
granted, the mortgagor or debtor whose real property has been sold for the full or partial payment of his
obligation shall have the right within one year after the sale of the real estate, to redeem the property by
paying the amount due under the mortgage deed, with interest thereon at rate specified in the mortgage,
and all the costs and expenses incurred by the bank or institution from the sale and custody of said property
less the income derived therefrom. However, the purchaser at the auction sale concerned whether in a
judicial or extra-judicial foreclosure shall have the right to enter upon and take possession of such property
immediately after the date of the confirmation of the auction sale and administer the same in accordance
with law. Any petition in court to enjoin or restrain the conduct of foreclosure proceedings instituted pursuant
to this provision shall be given due course only upon the filing by the petitioner of a bond in an amount fixed
by the court conditioned that he will pay all the damages which the bank may suffer by the enjoining or the
restraint of the foreclosure proceeding. Notwithstanding Act 3135, juridical persons whose property is being
sold pursuant to an extrajudicial foreclosure, shall have the right to redeem the property in accordance with
this provision until, but not after, the registration of the certificate of foreclosure sale with the applicable
Register of Deeds which in no case shall be more than three (3) months after foreclosure, whichever is earlier.
Owners of property that has been sold in a foreclosure sale prior to the effectivity of this Act shall retain their
redemption rights until their expiration. (78a)

Section 48. Renewal or Extension of Loans and Other Credit Accommodations. - The Monetary Board may,
by regulation, prescribe the conditions and limitations under which a bank may grant extensions or renewals
of its loans and other credit accommodations. (81)

Section 49. Provisions for Losses and Write-Offs. - All debts due to any bank on which interest is past due
and unpaid for such period as may be determined by the Monetary Board, unless the same are welt-secured
and in the process of collection shall be considered bad debts within the meaning of this Section. The
Monetary Board may fix, by regulation or by order in a specific case, the amount of reserves for bad debts or
doubtful accounts or other contingencies. Writing off of loans, other credit accommodations, advances and
other assets shall be subject to regulations issued by the Monetary Board. (84a)

Section 50. Major Investments. - For the purpose or enhancing bank supervision, the Monetary Board shall
establish criteria for reviewing major acquisitions of investments by a bank including corporate affiliations or
structures that may expose the bank to undue risks or in any way hinder effective supervision.

Section 51. Ceiling on Investments in Certain Assets. - Any bank may acquire real estate as shall be
necessary for its own use in the conduct of its business: Provided, however, That the total investment in such
real estate and improvements thereof including bank equipment, shall not exceed fifty percent (50%) of
combined capital accounts: Provided, further, That the equity investment of a bank in another corporation
engaged primarily in real estate shall be considered as part of the bank's total investment in real estate,
unless otherwise provided by the Monetary Board. (25a)

Section 52. Acquisition of Real Estate by Way of Satisfaction of Claims. - Notwithstanding the limitations of
the preceding Section, a bank may acquire, hold or convey real property under the following circumstances:

52.1. Such as shall be mortgaged to it in good faith by way of security for debts;

52.2. Such as shall be conveyed to it in satisfaction of debts previously contracted in the course of its
dealings, or

52.3. Such as it shall purchase at sales under judgments, decrees, mortgages, or trust deeds held by it and
such as it shall purchase to secure debts due it.

Any real property acquired or held under the circumstances enumerated in the above paragraph shall be
disposed of by the bank within a period of five (5) years or as may be prescribed by the Monetary Board:
Provided, however, That the bank may, after said period, continue to hold the property for its own use,
subject to the limitations of the preceding Section. (25a)

Section 53. Other Banking Services. - In addition to the operations specifically authorized in this Act, a bank
may perform the following services:
53.1. Receive in custody funds, documents and valuable objects;

53.2. Act as financial agent and buy and sell, by order of and for the account of their customers, shares,
evidences of indebtedness and all types of securities;

53.3. Make collections and payments for the account of others and perform such other services for their
customers as are not incompatible with banking business;

53.4 Upon prior approval of the Monetary Board, act as managing agent, adviser, consultant or administrator
of investment management/advisory/consultancy accounts; and

53.5. Rent out safety deposit boxes.

The bank shall perform the services permitted under Subsections 53.1, 53.2,53.3 and 53.4 as depositary or as
an agent. Accordingly, it shall keep the funds, securities and other effects which it receives duly separate
from the bank's own assets and liabilities: The Monetary Board may regulate the operations authorized by
this Section in order to ensure that such operations do not endanger the interests of the depositors and other
creditors of the bank. In case a bank or quasi-bark notifies the Bangko Sentral or publicly announces a bank
holiday, or in any manner suspends the payment of its deposit liabilities continuously for more than thirty
(30) days, the Monetary Board may summarily and without need for prior hearing close such banking
institution and place it under receivership of the Philippine Deposit Insurance Corporation. (72a)

Section 54. Prohibition to Act as Insurer. - A bank shall not directly engage in insurance business as the
insurer. (73)

Section 55. Prohibited Transactions.

55.1. No director, officer, employee, or agent of any bank shall -

(a) Make false entries in any bank report or statement or participate in any fraudulent transaction,
thereby affecting the financial interest of, or causing damage to, the bank or any person;

(b) Without order of a court of competent jurisdiction, disclose to any unauthorized person any
information relative to the funds or properties in the custody of the bank belonging to private
individuals, corporations, or any other entity: Provided, That with respect to bank deposits, the
provisions of existing laws shall prevail;

(c) Accept gifts, fees, or commissions or any other form of remuneration in connection with the
approval of a loan or other credit accommodation from said bank;

(d) Overvalue or aid in overvaluing any security for the purpose of influencing in any way the actions
of the bank or any bank; or

(e) Outsource inherent banking functions.

55.2. No borrower of a bank shall -

(a) Fraudulently overvalue property offered as security for a loan or other credit accommodation from
the bank;

(b) Furnish false or make misrepresentation or suppression of material facts for the purpose of
obtaining, renewing, or increasing a loan or other credit accommodation or extending the period
thereof;

(c) Attempt to defraud the said bank in the event of a court action to recover a loan or other credit
accommodation; or

(d) Offer any director, officer, employee or agent of a bank any gift, fee, commission, or any other
form of compensation in order to influence such persons into approving a loan or other credit
accommodation application.

55.3 No examiner, officer or employee of the Bangko Sentral or of any department, bureau, office, branch or
agency of the Government that is assigned to supervise, examine, assist or render technical assistance to any
bank shall commit any of the acts enumerated in this Section or aid in the commission of the same. (87-Aa)

The making of false reports or misrepresentation or suppression of material facts by personnel of the Bangko
Sental ng Pilipinas shall be subject to the administrative and criminal sanctions provided under the New
Central Bank Act.
55.4. Consistent with the provisions of Republic Act No. 1405, otherwise known as the Banks Secrecy Law, no
bank shall employ casual or non regular personnel or too lengthy probationary personnel in the conduct of its
business involving bank deposits.

Section 56. Conducting Business in an Unsafe or Unsound Manner - In determining whether a particular act
or omission, which is not otherwise prohibited by any law, rule or regulation affecting banks, quasi-banks or
trust entities, may be deemed as conducting business in an unsafe or unsound manner for purposes of this
Section, the Monetary Board shall consider any of the following circumstances:

56.1 The act or omission has resulted or may result in material loss or damage, or abnormal risk or danger to
the safety, stability, liquidity or solvency of the institution;

56.2 The act or omission has resulted or may result in material loss or damage or abnormal risk to the
institution's depositors, creditors, investors, stockholders or to the Bangko Sentral or to the public in general;

56.3 The act or omission has caused any undue injury, or has given any unwarranted benefits, advantage or
preference to the bank or any party in the discharge by the director or officer of his duties and responsibilities
through manifest partiality, evident bad faith or gross inexcusable negligence; or

56.4 The act or omission involves entering into any contract or transaction manifestly and grossly
disadvantageous to the bank, quasi-bank or trust entity, whether or not the director or officer profited or will
profit thereby.

Whenever a bank, quasi-bank or trust entity persists in conducting its business in an unsafe or unsound
manner, the Monetary Board may, without prejudice to the administrative sanctions provided in Section 37 of
the New Central Bank Act, take action under Section 30 of the same Act and/or immediately exclude the
erring bank from clearing, the provisions of law to the contrary notwithstanding. (n)

Section 57. Prohibition on Dividend Declaration. - No bank or quasi-bank shall declare dividends, if at the
time of declaration:

57.1 Its clearing account with the Bangko Sentral is overdrawn; or

57.2 It is deficient in the required liquidity floor for government deposits for five (5) or more consecutive days,
or

57.3 It does not comply with the liquidity standards/ratios prescribed by the Bangko Sentral for purposes of
determining funds available for dividend declaration; or

57.4 It has committed a major violation as may be determined by the Bangko Sentral (84a)

Section 58. Independent Auditor. - The Monetary Board may require a bank, quasi-bank or trust entity to
engage the services of an independent auditor to be chosen by the bank, quasi-bank or trust entity
concerned from a list of certified public accountants acceptable to the Monetary Board. The term of the
engagement shall be as prescribed by the Monetary Board which may either be on a continuing basis where
the auditor shall act as resident examiner, or on the basis of special engagements; but in any case, the
independent auditor shall be responsible to the bank's, quasi-bank's or trust entity's board of directors. A
copy of the report shall be furnished to the Monetary Board. The Monetary Board may also direct the board of
directors of a bank, quasi-bank, trusty entity and/or the individual members thereof; to conduct, either
personally or by a committee created by the board, an annual balance sheet audit of the bank, quasi-bank or
trust entity to review the internal audit and control system of the bank, quasi-bank or trust entity and to
submit a report of such audit. (6-Da)

Section 59. Authority to Regulate Electronic Transactions. - The Bangko Sentral shall have full authority to
regulate the use of electronic devices, such as computers, and processes for recording, storing and
transmitting information or data in connection with the operations of a bank; quasi-bank or trust entity,
including the delivery of services and products to customers by such entity. (n)

Section 60. Financial Statements. - Every bank, quasi-bank or trust entity shall submit to the appropriate
supervising and examining department of the Bangko Sentral financial statements in such form and
frequency as may be prescribed by the Bangko Sentral. Such statements, which shall be as of a specific date
designated by the Bangko Sentral, shall show thee actual financial condition of the institution submitting the
statement, and of its branches, offices, subsidiaries and affiliates, including the results of its operations, and
shall contain such information as may be required in Bangko Sentral regulations. (n)

Section 61. Publication of Financial Statements. - Every bank, quasi-bank or trust entity, shall publish a
statement of its financial condition, including those of its subsidiaries and affiliates, in such terms
understandable to the layman and in such frequency as may be prescribed Bangko Sentral, in English or
Filipino, at least once every quarter in a newspaper of general circulation in the city or province where the
principal office, in the case of a domestic institution or the principal branch or office in the case of a foreign
bank, is located, but if no newspaper is published in the same province, then in a newspaper published in
Metro Manila or in the nearest city or province. The Bangko Sentral may by regulation prescribe the
newspaper where the statements prescribed herein shall be published. The Monetary Board may allow the
posting of the financial statements of a bank, quasi-bank or trust entity in public places it may determine, lieu
of the publication required in the preceding paragraph, when warranted by the circumstances. Additionally,
banks shall make available to the public in such form and manner as the Bangko Sentral may prescribe the
complete set of its audited financial statements as well as such other relevant information including those on
enterprises majority-owned or controlled by the bank, that will inform the public of the true financial condition
of a bank as of any given time. In periods of national and/or local emergency or of imminent panic which
directly threaten monetary and banking stability, the Monetary Board, by a vote of at least five (5) of its
members, in special cases and upon application of the bank, quasi-bank or trust entity, may allow such bank,
quasi-bank or trust entity to defer for a stated period of time the publication of the statement of financial
condition required herein. (n)

Section 62. Publication of Capital Stock. - A bank, quasi-bank or trust entity incorporated under the laws of
the Philippines shall not publish the amount of its authorized or subscribed capital stock without indicating at
the same time and with equal prominence, the amount of its capital actually paid up. No branch of any
foreign bank doing business in the Philippines shall in any way announce the amount of the capital and
surplus of its head office, or of the bank in its entirety without indicating at the same time and with equal
prominence the amount of the capital, if any, definitely assigned to such branch, such fact shall be stated in,
and shall form part of the publication. (82)

Section 63. Settlement of Disputes. - The provisions of any law to the contrary notwithstanding, the Bangko
Sentral shall be consulted by other government agencies or instrumentalities in actions or proceedings
initiated by or brought before them involving controversies in banks, quasi-banks or trust entities arising out
of and involving relations between and among their directors, officers or stockholders, as well as disputes
between any or all of them and the bank, quasi-bank or trust entity of which they are directors, officers or
stockholders. (n)

Section 64. Unauthorized Advertisement or Business Representation. - No person, association, or


corporation unless duly authorized to engage in the business of a bank, quasi-bank, trust entity, or savings
and loan association as defined in this Act, or other banking laws, shall advertise or hold itself out as being
engaged in the business of such bank, quasi-bank, trust entity, or association, or use in connection with its
business title, the word or words "bank", "banking", "banker", "quasi-bank", "quasi-banking", "quasi-banker",
"savings and loan association", "trust corporation", "trust company" or words of similar import or transact in
any manner the business of any such bank, corporation or association. (6)

Section 65. Service Fees. - The Bangko Sentral may charge equitable rates, commissions or fees, as may be
prescribed by the Monetary Board for supervision, examination and other services which it renders under this
Act. (n)

Section 66. Penalty for Violation of this Act. - Unless otherwise herein provided, the violation of any of the
provisions of this Act shall be subject to Sections 34, 35, 36 and 37 of the New Central Bank Act. If the
offender is a director or officer of a bank, quasi-bank or trust entity, the Monetary Board may also suspend or
remove such director or officer. If the violation is committed by a corporation, such corporation may be
dissolved by quo warranto proceedings instituted by the Solicitor General. (87)

CHAPTER V
PLACEMENT UNDER CONSERVATORSHIP

Section 67. Conservatorship. - The grounds and procedures for placing a bank under conservatorship, as
well as, the powers and duties of the conservator appointed for the bank shall be governed by the provisions
of Section 29 and the last two paragraphs of Section 30 of the New Central Bank Act: Provided, That this
Section shall also apply to conservatorship proceedings of quasi-banks. (n)

CHAPTER VI
CESSATION OF BANKING BUSINESS

Section 68. Voluntary Liquidation. - In case of voluntary liquidation of any bank organized under the laws of
the Philippines, or of any branch or office in the Philippines of a foreign bank, written notice of such
liquidation shall be sent to the Monetary Board before such liquidation shall be sent to the Monetary Board
before such liquidation is undertaken, and the Monetary Board shall have the right to intervene and take such
steps as may be necessary to protect the interests of creditors. (86)

Section 69. Receivership and Involuntary Liquidation. - The grounds and procedures for placing a bank under
receivership or liquidation, as well as the powers and duties of the receiver or liquidator appointed for the
bank shall be governed by the provisions of Sections 30, 31, 32, and 33 of the New Central Bank Act:
Provided, That the petitioner or plaintiff files with the clerk or judge of the court in which the action is pending
a bond, executed in favor of the Bangko Sentral, in an amount to be fixed by the court. This Section shall also
apply to the extent possible to the receivership and liquidation proceedings of quasi-banks. (n)

Section 70. Penalty for Transactions After a Bank Becomes Insolvent. - Any director or officer of any bank
declared insolvent or placed under receivership by the Monetary Board who refuses to turn over the bank's
records and assets to the designated receivers, or who tampers with banks records, or who appropriates for
himself for another party or destroys or causes the misappropriation and destruction of the bank's assets, or
who receives or permits or causes to be received in said bank any deposit, collection of loans and/or
receivables, or who pays out or permits or causes to be transferred any securities or property of said bank
shall be subject to the penal provisions of the New Central Bank Act. (85a)

CHAPTER VII
LAWS GOVERNING OTHER TYPES OF BANKS

Section 71. Other Banking Laws. - The organization, the ownership and capital requirements, powers,
supervision and general conduct of business of thrift banks, rural banks and cooperative banks shall be
governed by the provisions of the Thrift Banks Act, the Rural Banks Act, and the Cooperative Code,
respectively. The organization, ownership and capital requirements, powers, supervision and general conduct
of business of Islamic banks shall be governed by special laws. The provisions of this Act, however, insofar as
they are not in conflict with the provisions of the Thrift Banks Act, the Rural Banks Act, and the Cooperative
Code shall likewise apply to thrift banks, rural banks, and cooperative banks, respectively. However, for
purposes of prescribing the minimum ratio which the net worth of a thrift bank must bear to its total risk
assets, the provisions of Section 33 of this Act shall govern. (n)

CHAPTER VIII
FOREIGN BANKS

Section 72. Transacting Business in the Philippines. - The entry of foreign banks in the Philippines through
the establishment of branches shall be governed by the provisions of the Foreign Banks Liberalization Act.
The conduct of offshore banking business in the Philippines shall be governed by the provisions of the
Presidential Decree No. 1034, otherwise known as the "Offshore Banking System Decree." (14a)

Section 73. Acquisition of Voting Stock in a Domestic Bank. - Within seven (7) years from the effectivity of
this act and subject to guidelines issued pursuant to the Foreign Banks Liberalization Act, the Monetary Board
may authorize a foreign bank to acquire up to one hundred percent (100%) of the voting stock of only one (1)
bank organized under the laws of the Republic of the Philippines. Within the same period, the Monetary Board
may authorize any foreign bank, which prior to the effectivity of this Act availed itself of the privilege to
acquire up to sixty percent (60%) of the voting stock of a bank under the Foreign Banks Liberalization Act and
the Thrift Banks Act, to further acquire voting shares such bank to the extent necessary for it to own one
hundred percent (100%) of the voting stock thereof. In the exercise of the authority, the Monetary Board shall
adopt measures as may be necessary to ensure that at all times the control of seventy percent (70%) of the
resources or assets of the entire banking system is held by banks which are at least majority-owned by
Filipinos. Any right, privilege or incentive granted to a foreign bank under this Section shall be equally
enjoyed by and extended under the same conditions to banks organized under the laws of the Republic of the
Philippines. (Secs. 2 and 3, RA 7721

Section 74. Local Branches of Foreign Banks. - In the case of a foreign bank which has more than one (1)
branch in the Philippines, all such branches shall be treated as one (1) unit for the purpose of this Act, and all
references to the Philippine branches of foreign banks shall be held to refer to such units. (68)

Section 75. Head Office Guarantee. - In order to provide effective protection of the interests of the
depositors and other creditors of Philippine branches of a foreign bank, the head office of such branches shall
fully guarantee the prompt payment of all liabilities of its Philippine branch. (69) Residents and citizens of the
Philippines who are creditors of a branch in the Philippines of a foreign bank shall have preferential rights to
the assets of such branch in accordance with the existing laws. (19)

Section 76. Summons and Legal Process. - Summons and legal process served upon the Philippine agent or
head of any foreign bank designated to accept service thereof shall give jurisdiction to the courts over such
bank, and service of notices on such agent or head shall be as binding upon the bank which he represents as
if made upon the bank itself. Should the authority of such agent or head to accept service of summons and
legal processes for the bank or notice to it be revoked, or should such agent or head become mentally
incompetent or otherwise unable to accept service while exercising such authority, it shall be the duty of the
bank to name and designate promptly another agent or head upon whom service of summons and processes
in legal proceedings against the bank and of notices affecting the bank may be made, and to file with the
Securities and Exchange Commission a duly authenticated nomination of such agent. In the absence of the
agent or head or should there be no person authorized by the bank upon whom service of summons,
processes and all legal notices may be made, service of summons, processes and legal notices may be made
upon the Bangko Sentral Deputy Governor In-Charge of the supervising and examining departments and such
service shall be as effective as if made upon the bank or its duly authorized agent or head. In case of service
for the bank upon the Bangko Sentral Deputy Governor In-charge of the supervising and examining
departments, the said deputy Governor shill register and transmit by mail to the president or the secretary of
the bank at its head or principal office a copy, duly certified by him, of the summons, process, or notice. The
sending of such copy of the summons, process, or notice shall be a necessary part of the services and shall
complete the service. The registry receipt of mailing shall be prima facie evidence of the transmission of the
summons, process or notice. All costs necessarily incurred by the said Deputy Governor for the making and
mailing and sending of a copy of the summons, process, or notice to the president or the secretary of the
bank at its head or principal office shall be paid in advance by the party at whose instance the service is
made. (17)

Section 77. Laws Applicable. - In all matters not specifically covered by special provisions applicable only to
a foreign bank or its branches and other offices in the Philippines any foreign bank licensed to do business in
the Philippines shall be bound by the provisions of this Act, all other laws, rules and regulations applicable to
banks organized under the laws of the Philippines of the same class, except those that provide for the
creation, formation, organization or dissolution of corporations or for the fixing of the relations, liabilities,
responsibilities, or duties of stockholders, members, directors or officers of corporations to each other or to
the corporation. (18)

Section 78. Revocation of License of a Foreign Bank - The Monetary Board may revoke the license to
transact business in the Philippines of, any foreign bank, if it finds that the foreign bank is insolvent or in
imminent danger thereof or that its continuance in business will involve probable loss to those transacting
business with it. After the revocation of its license, it shall be unlawful for any such foreign banks to transact
business in the Philippines unless its license is renewed or reissued. After the revocation of such license, the
Bangko Sentral shall take the necessary action to protect the creditors of such foreign bank and the public.
The provisions of the New Central Bank Act on sanctions and penalties shall likewise be applicable. (16)

CHAPTER IX
TRUST OPERATIONS

Section 79. Authority to Engage in Trust Business. - Only a stock corporation or a person duly authorized by
the Monetary Board to engage in trust business shall act as a trustee or administer any trust or hold property
in trust or on deposit for the use, benefit, or behoof of others. For purposes of this Act, such a corporation
shall be referred to as a trust entity. (56a; 57a)

Section 80. Conduct of Trust Business. - A trust entity shall administer the funds or property under its
custody with the diligence that a prudent man would exercise in the conduct of an enterprise of a like
character and with similar aims. No trust entity shall, for the account of the trustor or the beneficiary of the
trust, purchase or acquire property from, or sell, transfer, assign, or lend money or property to, or purchase
debt instruments of, any of the departments, directors, officers, stockholders, or employees of the trust
entity, relatives within the first degree of consanguinity or affinity, or the related interests, of such directors,
officers and stockholders, unless the transaction is specifically authorized by the trustor and the relationship
of the trustee and the other party involved in the transaction is fully disclosed to the trustor of beneficiary of
the trust prior to the transaction. The Monetary Board shall promulgate such rules and regulations as may be
necessary to prevent circumvention of this prohibition or the evasion of the responsibility herein imposed on a
trust entity. (56)

Section 81. Registration of Articles of Incorporation and By-Laws of a Trust Entity. - The Securities and
Exchange Commission shall not register the articles of incorporation and by-laws or any amendment thereto,
of any trust entity, unless accompanied by a certificate of authority issued by the Bangko Sentral. (n)

Section 82. Minimum Capitalization. - A trust entity, before it can engage in trust or other fiduciary business,
shall comply with the minimum paid-in capital requirement which will be determined by the Monetary Board.
(n)

Section 83. Powers of a Trust Entity. - A trust entity, in addition to the general powers incident to
corporations, shall have the power to:

83.1 Act as trustee on any mortgage or bond issued by any municipality, corporation, or any body politic and
to accept and execute any trust consistent with law;

83.2 Act under the order or appointment of any court as guardian, receiver, trustee, or depositary of the
estate of any minor or other incompetent person, and as receiver and depositary of any moneys paid into
court by parties to any legal proceedings and of property of any kind which may be brought under the
jurisdiction of the court;

83.3. Act as the executor of any will when it is named the executor thereof;
83.4 Act as administrator of the estate of any deceased person, with the will annexed, or as administrator of
the estate of any deceased person when there is no will;

83.5. Accept and execute any trust for the holding, management, and administration of any estate, real or
personal, and the rents, issues and profits thereof; and

83.6. Establish and manage common trust funds, subject to such rules and regulations as may be prescribed
by the Monetary Board.

Section 84. Deposit for the Faithful Performance of Trust Duties. - Before transacting trust business, every
trust entity shall deposit with the Bangko Sentral, as security for the faithful performance of its trust duties,
cash or securities approved by the Monetary Board in an amount equal to or not less than Five hundred
thousand pesos (P500,000.00) or such higher amount as may fixed by the Monetary Board: Provided,
however, That the Monetary Board shall require every trust entity to increase the amount of its cash or
securities on deposit with the Bangko Sentral in accordance with the provisions of this paragraph. Should the
capital and surplus fall below said amount, the Monetary Board shall have the same authority as that granted
to it under the provisions of the fifth paragraph of Section 34 of this Act. A trust entity so long as it shall
continue to be solvent and comply with laws or regulations shall have the right to collect the interest earned
on such securities deposited with the Bangko Sentral and, from time to time, with the approval of the Bangko
Sentral, to exchange the securities for others. If the trust entity fails to comply with any law or regulation, the
Bangko Sentral shall retain such interest on the securities deposited with it for the benefit of rightful
claimants. Al claims rising out of the trust business of a trust entity shall have priority over all other claims as
regards the cash or securities deposited as above provided. The Monetary Board may not permit the cash or
securities deposited in accordance with the provisions of this Section to be reduced below the prescribed
minimum amount until the depositing entity shall discontinue its trust business and shall satisfy the Monetary
Board that it has complied with all its obligations in connection with such business. (65a)

Section 85. Bond of Certain Persons for the Faithful Performance of Duties. - Before an executor,
administrator, guardian, trustee, receiver or depositary appointed by the court enters upon the execution of
his duties, he shall, upon order of the court, file a bond in such sum as the court may direct. Upon the
application of any executor, administrator, guardian, trustee, receiver, depositary or any other person in
interest, the court may, after notice and hearing, order that the subject matter of the trust or any part,
thereof be deposited with a trust entity. Upon presentation of proof to the court that the subject matter of the
trust has been deposited with a trust entity. Upon presentation of proof to the court that the subject matter of
the trust has been deposited with a trust entity, the court may order that the bond given by such persons for
the faithful performance of their duties be reduced to such sums as it may deem proper: Provided, however,
That the reduced bond shall be sufficient to secure adequately the proper administration and care of any
property remaining under the control of such persons and the proper accounting for such property. Property
deposited with any trust entity in conformity with this Section shall be held by such entity under the orders
and direction of the court. (59)

Section 86. Exemption of Trust Entity from Bond Requirement. - No bond or other security shall be required
by the court from a trust entry for the faithful performance of its duties as court-appointed trustee, executor,
administrator, guardian, receiver, or depositary. However, the court may, upon proper application with it
showing special cause therefore, require the trust entity to post a bond or other security for the protection of
funds or property confided to such entity. (59)

Section 87. Separation of Trust Business from General Business. - The trust business and all funds,
properties or securities received by any trust entity as executor, administrator, guardian, trustee, receiver, or
depositary shall be kept separate and distinct from the general business including all other funds, properties,
and assets of such trust entity. The accounts of all such funds, properties, or securities shall likewise be kept
separate and distinct from the accounts of the general business of the trust entity. (61)

Section 88. Investment Limitations of a Trust Entity. - Unless otherwise directed by the instrument creating
the trust, the lending and investment of funds and other assets acquired by a trust entity as executor,
administrator, guardian, trustee, receiver or depositary of the estate of any minor or other incompetent
person shall be limited to loans or investments as may be prescribed by law, the Monetary Board or any court
of competent jurisdiction. (63a)

Section 89. Real Estate Acquired by a Trust Entity. - Unless otherwise specifically directed by the trustor or
the nature of the trust, real estate acquired by a trust entity in whatever manner and for whatever purposes,
shall likewise be governed by the relevant provisions of Section 52 of this Act. (64a)

Section 90. Investment of Non-Trust Funds. - The investment of funds other than trust funds of a trust entity
which is a bank, financing company or an investment house shall be governed by the relevant provisions of
this Act and other applicable laws. (64)
Section 91. Sanctions and Penalties. - A trust entity or any of its officers and directors found to have willfully
violated any pertinent provisions of this Act, shall be subject to the sanctions and penalties provided tinder
Section 66 of this Act as well as Sections 36 and 37 of the New Central Bank Act.

Section 92. Exemption of Trust Assets from Claims. - No assets held by a trust entity in its capacity as
trustee shall be subject to any claims other than those of the parties interested in the specific trusts. (65)

Section 93. Establishment of Branches of a Trust Entity. - The ordinary business of a trust entity shall be
transacted at the place of business specified in its articles of incorporation. Such trust entity may, with prior
approval of the Monetary Board, establish branches in the Philippines and the said entity shall be responsible
for all business conducted in such branches to the same extent and in the same manner as though such
business had all been conducted in the head office. For the purpose of this Act, the trust entity and its
branches shall be treated as one unit. (67)

CHAPTER X
FINAL PROVISIONS

Section 94. Phase Out of Bangko Sentral Powers Over Building and Loan Associations. - Within a period of
three (3) years from the effectivity of this Act, the Bangko Sentral shall phase out and transfer its supervising
and regulatory powers over building and loan associations to the Home Insurance and Guaranty Corporation
which shall assume the same. Until otherwise provided bylaw1 building and loan associations shall continue
to be governed by Sections 39 to 55, Chapter VI of the General Banking Act, as amended, including such rules
and regulations issued pursuant thereto. Upon assumption by the Home Insurance and Guaranty Corporation
of supervising and regulatory powers over building and loan associations, a references in Sections 39 to 55 of
the General Banking Act, as amended, to the Bangko Sentral and the Monetary Board shall be deemed to
refer to the Home Insurance and Guaranty Corporation and its board of directors, respectively. (n)

Section 95. Repealing Clause. - Except as may be provided for in Sections 34 and 94 of this Act, the General
Banking Act, as amended, and the provisions of any other law, special charters, rule or regulation issued
pursuant to said General Banking Act, as amended, or parts thereof, which may be inconsistent with the
provisions of this Act are hereby repealed. The provisions of paragraph 8, Section 8, Republic Act No. 3591, as
amended by republic Act No. 7400, are likewise repealed. (90a)

Section 96. Separability Clause. - If any provision or section of this Act or the application thereof to any
person or circumstance is held invalid, the other provisions or sections of this Act, and the application of such
provision or section to other persons or circumstances shall not be affected thereby. (n)

Section 97. Effectivity Clause - This Act shall take effect fifteen (15) days following its publication in the
Official Gazette or in two (2) national newspapers of general circulation. (91)

REPUBLIC ACT No. 1405

AN ACT PROHIBITING DISCLOSURE OF OR INQUIRY INTO, DEPOSITS WITH ANY BANKING


INSTITUTION AND PROVIDING PENALTY THEREFOR.

Section 1. It is hereby declared to be the policy of the Government to give encouragement to the people to deposit
their money in banking institutions and to discourage private hoarding so that the same may be properly utilized by
banks in authorized loans to assist in the economic development of the country.

Section 2. 1 All deposits of whatever nature with banks or banking institutions in the Philippines including
investments in bonds issued by the Government of the Philippines, its political subdivisions and its
instrumentalities, are hereby considered as of an absolutely confidential nature and may not be examined, inquired
or looked into by 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.

Section 3. It shall be unlawful for any official or employee of a banking institution to disclose to any person other
than those mentioned in Section two hereof any information concerning said deposits.

Section 4. All Acts or parts of Acts, Special Charters, Executive Orders, Rules and Regulations which are
inconsistent with the provisions of this Act are hereby repealed.

Section 5. Any violation of this law will subject offender upon conviction, to an imprisonment of not more than
five years or a fine of not more than twenty thousand pesos or both, in the discretion of the court.
Section 6. This Act shall take effect upon its approval.

Republic Act No. 9194 March 7, 2003

AN ACT AMENDING REPUBLIC ACT NO. 9160, OTHERWISE KNOWN AS THE "ANTI-MONEY
LAUNDERING ACT OF 2001"

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

SECTION 1. Section 3, paragraph (b) of Republic Act No. 9160 is hereby amended as follows:

"(b) 'Covered transaction' is a transaction in cash or other equivalent monetary instrument involving a total
amount in excess of Five hundred thousand pesos (PhP 500,000.00) within one (1) banking day.

SECTION 2. Section 3 of the same Act is further amended by inserting between paragraphs (b) and (c) a new
paragraph designated as (b-1) to read as follows:

"(b-1) 'Suspicious transaction' are transactions with covered institutions, regardless of the amounts
involved, where any of the following circumstances exist:

1. there is no underlying legal or trade obligation, purpose or economic justification;

2. the client is not properly identified;

3. the amount involved is not commensurate with the business or financial capacity of the client;

4. taking into account all known circumstances, it may be perceived that the client's transaction is
structured in order to avoid being the subject of reporting requirements under the Act;

5. any circumstances relating to the transaction which is observed to deviate from the profile of the client
and/or the client's past transactions with the covered institution;

6. the transactions is in a way related to an unlawful activity or offense under this Act that is about to be, is
being or has been committed; or

7. any transactions that is similar or analogous to any of the foregoing."

SECTION 3. Section 3(i) of the same Act is further amended to read as follows:

"(i) 'Unlawful activity' refers to any act or omission or series or combination thereof involving or having
direct relation to following:

"(1) Kidnapping for ransom under Article 267 of Act No. 3815, otherwise known as the Revised Penal
Code, as amended;

"(2) Sections 4, 5, 6, 8, 9, 10, 12, 13, 14, 15, and 16 of Republic Act No. 9165, otherwise known as the
Comprehensive Dangerous Act of 2002;

"(3) Section 3 paragraphs B, C, E, G, H and I of republic Act No. 3019, as amended, otherwise known as
the Anti-Graft and Corrupt Practices Act;

"(4) Plunder under Republic Act No. 7080, as amended;

"(5) Robbery and extortion under Articles 294, 295, 296, 299, 300, 301 and 302 of the Revised Penal Code,
as amended;

"(6) Jueteng and Masiao punished as illegal gambling under Presidential Decree No. 1602;

"(7) Piracy on the high seas under the Revised Penal Code, as amended and Presidential under the Revised
Penal Code, as amended and Presidential Decree No. 532;
"(8) Qualified theft under Article 310 of the Revised penal Code, as amended;

"(9) Swindling under Article 315 of the Revised Penal Code, as amended;

"(10) Smuggling under Republic Act Nos. 455 and 1937;

"(11) Violations under Republic Act No. 8792, otherwise known as the Electrinic Commerce Act of 2000;

"(12) Hijacking and other violations under Republic Act No. 6235; destructive arson and murder, as defined
under the Revised Penal Code, as amended, including those perpetrated by terrorists against non-combatant
persons and similar targets;

"(13) Fraudulent practices and other violations under Republic Act No. 8799, otherwise known as the
Securities Regulation Code of 2000;

"(14) Felonies or offenses of a similar nature that are punishable under the penal laws of other countries."

SECTION 4. Section 4 of the same Act is hereby amended to read as follows:

"SEC. 4. Money Laundering Offense. -- Money laundering is a crime whereby the proceeds of an unlawful
activity as herein defined are transacted, theeby making them appear to have originated from legitimate
sources. It is committed by the following:

(a) Any person knowing that any monetary instrument or property represents, involves, or relates to, the
proceeds of any unlawful activity, transacts or attempts to transacts said monetary instrument or property.

(b) Any person knowing that any monetary instrument or property involves the proceeds of any unlawful
activity, performs or fails to perform any act as a result of which he falicitates the offense of money
laundering referred to in paragraph (a) above.

(c) Any person knowing that any monetary instrument or property is required under this Act to be disclosed
and filed with the Anti-Money Laundering Council (AMLC), fails to do so."

SECTION 5. Section 7 of the same Act is hereby amended as follows:

"SEC.7. Creation of Anti-Money Laundering Council (AMLC). -- The Anti-Money Laundering Council is
hereby created and shall be composed of the Governor of the Bangko Sentral ng Pilipinas as chairman, the
Commissioner of the Insurance Commission and the Chairman of the Securities and Exchange Commission
as member. The AMLC shall shall act unanimously in the discharge of its functions as defined hereunder:

"(1) to require and receive covered or suspicious transaction reports from covered institutions;

"(2) to issue orders addressed to the appropriate Supervising Authority or the covered institutions to
determine the true identity of the owner of any monetary instrument or preperty subject of a covered
transaction or suspicious transaction report or request for assistance from a foreign State, or believed by the
Council, on the basis fo substantial evidence, to be, in whole or in part, wherever located, representing,
involving, or related to directly or indirectly, in any manner or by any means, the proceeds of an unlawful
activitity.

"(3) to institute civil forfeiture proceedings and all other remedial proceedings through the Office of th
Solicitor General;

"(4) to cause the filing of complaints with the Department of Justice or the Ombudsman for the prosecution
of money laundering offenses;

"(5) to investigate suspicious transactions and covered transactions deemed suspicious after an
investigation by AMLC, money laundering activities and other violations of this Act;

"(6) to apply before the Court of Appeals, ex parte, for the freezing of any monetary instrument or property
alleged to be the proceeds of any unlawful activity as defined in Section 3(i) hereof;
"(7) to implement such measures as may be necessary and justified under this Act to counteract money
laundering;

"(8) to receive and take action in respect of, any request from foreign states for assistance in their own anti-
money laundering operations provided in this Act;

"(9) to develop educational programs on the pernicious effects of money laundering, the methods and
techniques used in the money laundering, the viable means of preventing money laundering and the
effective ways of prosecuting and punishing offenders;

"(10) to enlist the assistance of any branch, department, bureau, office, agency, or instrumentality of the
government, including government-owned and -controlled corporations, in undertaking any and all anti-
money laundering operations, which may include the use of its personnel, facilities and resources for the
more resolute prevention, detection, and investigation of money laundering offenses and prosecution of
offenders; and

"(11) to impose administrative sanctions for the violation of laws, rules, regulations, and orders and
resolutions issued pursuant thereto."

SECTION 6. Section 9(c) of the same Act is hereby amended to read as follows:

"(c) Reporting of Covered and Suspicious Transactions. -- Covered institutions shall report to the AMLC all
covered transactions and suspicious transactions within five(5) working days from occurrences thereof,
unless the Supervising Authority prescribes a longer period not exceeding ten (10) working days.

"Should a transaction be determined to be both a covered transaction and a suspicious transaction, the
covered institution shall be required to report the same as a suspicious transaction.

"When reporting covered or suspicious transactions to the AMLC, covered institutions and their officers
and employees 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, but are prohibited from communicating,
directly or indirectly, in any manner or by an means, to any person, the fact that a covered or suspicious
transaction report was made, the contents thereof, or any other information in relation thereto. In case of
violation thereof, the concerned officer and employee of the covered institution shall be criminally liable.
However, no administrative, criminal or civil proceedings, shall lie against any person for having made a
covered or suspicious transaction report in the regular performance of his duties in good faith, whether or
not such reporting results in any criminal prosecution under this Act of any other law.

"When reporting covered or suspicious transactions to the AMLC, covered instituting and their officers and
employees are prohibited from communicating directly or indirectly, in any manner or by any means, to any
person or entity, the media, the fact that a covered or suspicious transaction report was made, the contents
thereof, or any other information in relation thereto. Neither may such reporting be published or aired in
any manner or form by the mass media, electronic mail, or other similar devices. In case of violation
thereof, the concerned officer and employee of the covered institution and media shall be held criminally
liable.

SECTION 7. Section 10 of the same Act is hereby amended to read as follows:

"Sec 10. Freezing of Monetary Instrument or Property. -- The Court of Appeals, upon application ex parte
by the AMLC and after determination that probable cause exists that any monetary instrument or property
is in any way related to an unlawful activity as defined in Section 3(i) hereof, may issue a freeze order
which shall be effective immediately. The freeze order shall be for a period of twenty (20) days unless
extended by the court.

SECTION 8. Section 11 of the same Act is hereby amended to read as follows:

"Sec. 11. Authority to Inquire into Bank Deposits. -- Notwithstanding the provisions of Republic Act No.
1405, as amended, Republic Act No. 6426, as amended, Republic Act No. 8791, and other laws, the AMLC
may inquire into or examine any particular deposit or investment with any banking institution or non-bank
financial institution upon order of any competent court in cases of violation of this Act, when it has been
established that there is probable cause that the deposits or investments are related to an unlawful activities
as defined in Section 3(I) hereof or a money laundering offense under Section 4 hereof, except that no court
order shall be required in cases involving unlawful activities defined in Sections 3(I)1, (2) and (12).

"To ensure compliance with this Act, the Bangko Sentral ng Pilipinas (BSP) may inquire into or examine
any deposit of investment with any banking institution or non-bank financial institution when the
examination is made in the course of a periodic or special examination, in accordance with the rules of
examination of the BSP.

SECTION 9. Section 14, paragraphs (c) and (d) of the same Act is hereby amended to read as follows:

"(c) Malicious Reporting. Any person who, with malice, or in bad faith, reports or files a completely
unwarranted or false information relative to money laundering transaction against any person shall be
subject to a penalty to six (6) months to four (4) years imprisonment and a fine of not less than One
hundred thousand Philippine pesos (Php100,000.00) but not more than Five hundred thousand Philippine
pesos (Php500,000.00), at the discretion of the court: Provided, That the offender is not entitled to avail the
benefits of the Probation Law.

"If the offender is a corporation, association, partnership or any juridical person, the penalty shall be
imposed upon the responsible officers, as the case may be, who participated in, or allowed by their gross
negligence, the commission of the crime. If the offender is a juridical person, the court may suspend or
revoke its license. If the offer is an alien, he shall, in addition to the penalties herein prescribed, be deported
without further proceedings after serving the penalties herein prescribed. If the offender is a public official
or employee, he shall, in addition to the penalties prescribed herein, suffer perpetual or temporary absolute
disqualification from office, as the case may be.

"Any public official or employee who is called upon to testify and refuses to do the same or purposely fails
to testify shall suffer the same penalties prescribed herein.

"(d) Breach of Confidentiality. The punishment of imprisonment ranging from three (3) to eight (8) years
and a fine of not less than Five hundred thousand Philippine pesos (Php500,000.00) but not more than One
million Philippine pesos (Php1,000,000.00) shall be imposed on a person convicted for a violation under
Section 9(c). In the case of a breach of confidentiality that is published or reported by media, the
responsible reporter, writer, president, publisher, manager and editor-in-chief shall be liable under this Act.

SECTION 10. Section 15 of Republic Act No. 9160 is hereby deleted.

SECTION 11. Section 23 of the same Act is hereby amended to read as follows:

"SEC. 23. Effectivity. -- This Act shall take effect fifteen (15) days after its complete publication in the
Official Gazette or in at least two (2) national newspapers of general circulation.

SECTION 12. Transitory Provision. -- Existing freeze orders issued by the AMLC shall remain in force for a
period of thirty (30) days after the effectivity of this Act, unless extended by the Court of Appeals.

SECTION 13. Effectivity. -- This Act shall take effect fifteen (15) days after its complete publication in the
Official Gazette or in at least two (2) national newspapers of general circulation.

REPUBLIC ACT NO. 3591

AN ACT ESTABLISHING THE PHILIPPINE DEPOSIT INSURANCE CORPORATION, DEFINING ITS


POWERS AND DUTIES AND FOR OTHER PURPOSES

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.

SECTION 2. The powers and functions of the Corporation shall be vested in a board of directors consisting of
three (3) members one of whom shall be the Governor of the Central Bank of the Philippines and two of whom
shall be citizens of the Republic of the Philippines to be appointed by the President of the Philippines with the
advice and consent of the Commission on Appointments. One of the appointive members shall be the Chairman of
the Board of Directors of the Corporation who shall be appointed on a full time basis for a term of six (6) years at
an annual salary of twenty-four thousand pesos (P24,000.00). The other appointive member, who shall be
appointed for a term of four (4) years and the Governor of the Central Bank shall each receive a per diem of not
exceeding fifty pesos (P50.00) for each day of meeting actually attended by them but in no case shall each of them
receive more than five hundred pesos (P500.00) a month. In the event of a vacancy in the Office of the Governor
of the Central Bank of the Philippines, and pending the appointment of his successor or during the absence of the
Governor, the Acting Governor of the Central Bank of the Philippines shall act as member of the Board of
Directors. In the event of a vacancy in the Office of the Chairman of the Board of Directors and pending the
appointment of his successor, the Governor of the Central Bank of the Philippines shall act as Chairman. The
members of the Board of Directors shall be ineligible during the time they are in office and for a period of two
years thereafter to hold any office, position or employment in any insured bank, except that this restriction shall not
apply to any member who has served the full term for which he was appointed. No member of the Board of
Directors shall be an officer or director of any insured bank; and before entering upon his duties as member of the
Board of Directors he shall certify under oath that he has complied with this requirement and such certification
shall be filed with the Secretary of the Board of Directors. Any vacancy in the Board created by the death,
resignation, or removal of an appointive member shall be filled by the appointment of new member to complete the
unexpired period of the term of the member concerned.{{1}}

The Board of Directors shall have the authority:

1. To prepare and issue rules and regulations as it considers necessary for the effective discharge of its
responsibilities;

2. To direct the management, operations and administration of the Corporation;

3. To appoint, fix the remunerations and remove all officers and employees of the Corporation, subject to the Civil
Service Law; and{{2}}

4. To authorize such expenditures by the Corporation as are in the interest of the effective administration and
operation of the Corporation.{{3}}

[See additions as per RA 9302{{4}} and RA 9576{{5}}]

SECTION 3. As used in this Act

(a) The term Board of Directors means the Board of Directors of the Corporation.

(b) The term Bank and Banking Institution shall be synonymous and interchangeable and shall include banks,
commercial banks, savings banks, mortgage banks, rural banks, development banks, cooperative banks, trust
companies, branches and agencies in the Philippines of foreign banks and all other companies, corporations,
partnership performing banking functions in the Philippines.

(c) The term receiver includes a receiver, liquidating agent, conservator, commission, person, or other agency
charged by law with the duty of winding up the affairs of a bank.

(d) The term insured bank means any bank the deposit of which are insured in accordance with the provision of
this Act;

(e) The term non-insured bank means any bank the deposit of which are not insured.

(f) 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 or which is evidenced by its certificate of deposit, and trust funds held by such bank whether retained or
deposited in any department of such bank or deposited in another bank, together with such other obligations of a
bank as the Board of Directors shall find and shall 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 the insured
deposit: Provided, further, That 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 obligation payable only at
such branch.
(g) The term insured deposit means the net amount due to any depositor for deposits in an insured bank (after
deducting offsets) less any part thereof which is in excess of P10,000. Such net amount shall be determined
according to such regulations as the Board of Directors may prescribe and in determining the amount due to any
depositor there shall be added together all deposits in the bank maintained in the same capacity and the same right
for his benefit or in his own name or in the names of others.

(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.

(i) 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.{{6}}

SECTION 4. Any bank or banking institution which is engaged in the business of receiving deposits as herein
defined on the effective date of this Act, or which thereafter may engage in the business of receiving deposits, may
insure its deposit liabilities with the Corporation. Before approving the application of such bank to become an
insured bank, the Board of Directors shall give consideration to the factors enumerated in Section 5 and shall
determine upon the basis of a thorough examination of such bank, that its assets in excess of its capital
requirements are adequate to enable it to meet all its liabilities to depositors and other creditors as shown by the
books of the bank.{{7}}

SECTION 5. The factors to be considered by the Board of Directors under the preceding section shall be the
following: the financial history and condition of the Bank, the adequacy of its capital structure, its future earning
prospects, the general character of its management, the convenience and needs of the community to be served by
the Bank and whether or not its corporate powers are consistent with the purposes of this Act.{{8}}

SECTION 6. (a) The assessment rate shall be determined by the Board of Directors: Provided, That the assessment
rate shall not exceed one-twelfth of one per centum per annum. The semiannual 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. The
assessment base shall be the amount of the liability of the bank for deposits, according to the definition of the term
deposit in and pursuant to subsection (f) of Section 3 without any deduction for indebtedness of depositors:
Provided, further, That the bank

(1) may deduct (i) from the deposit balance due to an insured bank the deposit balance due from such insured bank
(other than trust funds deposited by it in such bank) which is subject to an immediate withdrawal; and (ii) cash
items as determined by either of the following methods, at the option of the bank: (aa) by multiplying by 2 the total
of the cash items forwarded for collection on the assessment base days (being the days on which the average
deposits are computed) and cash items held for clearings at the close of business on said days, which are in the
process of collection and which the bank has paid in the regular course of business or credited to deposit accounts;
or (bb) by deducting the total of cash items forwarded for collection on the assessment base days and cash items
held for clearings at the close of business on said days, which are in the process of collection and which the bank
has paid in the regular course of business or credited to deposit accounts, plus such uncollected items paid or
credited on preceding days which are in the process of collection: Provided, That the Board of Directors may
define the terms cash items, process of collection, and uncollected items and shall fix the maximum period
for which any such item may be deducted; and

(2) may exclude from its assessment base (i) drafts drawn by it on deposit accounts in other banks which are issued
in the regular course of business; and the amount of devices or authorizations issued by it for cash letters received,
directing that its deposit account in the sending bank be charged with the amount thereof; and (ii) cash funds which
are received and held solely for the purpose of securing a liability to the bank but not in an amount in excess of
such liability, and which are not subject to withdrawal by the obligor and are carried in a special non-interest
bearing account designated to properly show their purpose.

Each insured bank, as a condition to the right to make any such deduction or exclusion in determining its
assessment base, shall maintain such records as will readily permit verification of the correctness thereof. The
semiannual 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 nonbusiness day or a 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
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 days
after filing the certified statement setting forth the amount of assessment.{{9}}{{10}}

(b) On or before the 15th of July of each year, each insured bank shall file with the Corporation a certified
statement showing for the six months ending on the preceding June thirty the amount of the assessment base and
the amount of the semi-annual assessment due to the Corporation for the period ending on the following December
thirty-one, determined in accordance with subsection (a) of this section, which shall contain or be verified by a
written declaration that it is made under the penalties of perjury. Each insured bank shall pay to the Corporation the
amount of the semi-annual assessment it is required to certify. On or before the 15th day of January of each year,
each insured bank shall file with the Corporation a similar certified statement for the six months ending on the
preceding December thirty-one and shall pay to the Corporation the amount of the semi-annual assessment for the
period ending on the following June thirty which it is required to certify.{{11}}

(c) Each bank which becomes an insured bank shall not be required to file any certified statement or pay any
assessment for the semi-annual period in which it becomes an insured bank. On the expiration of such period, each
such bank shall comply with the provisions of subsection (b) of this section except that the semi-annual assessment
base for its first certified statement shall be the assessment base of the bank as of the close of business on the
preceding June thirty or December thirty-one, whichever is applicable, determined in accordance with subsection
(a) of this section. If such bank has assumed the liabilities for deposits of another bank or banks, it shall include
such liabilities in its assessment base. The first certified statement shall show as the amount of the first semi-annual
assessment due to the Corporation, an amount equal to the product of one-half of the annual assessment rate
multiplied by such assessment base.

(d) As of December thirty-one nineteen hundred sixty-four and as of December thirty-one of each calendar year
thereafter, the Corporation shall transfer 40 per centum of its net assessment income to its capital account and the
balance of the net assessment income shall be credited pro rata to the insured banks based upon the assessment of
each bank becoming due during the said calendar year. Each year such credit shall be applied by the Corporation
toward the payment of the total assessment becoming due for the semi-annual assessment period beginning the
next ensuing July 1 and any excess credit shall be applied upon the assessment next becoming due. The term net
assessment income as used therein means the total assessments which become due during the calendar year less
(1) the operating costs and expenses of the Corporation for the calendar year; (2) additions to reserve to provide for
insurance losses during the calendar year, except that any adjustment to reserve which result in a reduction of such
reserve shall be added; and (3) the insurance losses sustained in said calendar year plus losses from any preceding
years in excess of such reserves. If the above deductions exceed in amount the total assessments which become due
during the calendar year, the amount of such excess shall be restored by deduction from total assessments
becoming due in subsequent years.{{12}}

(e) The Corporation (1) may refund to an insured bank any payment of assessment in excess of the amount due to
the Corporation or (2) may credit such excess toward the payment of the assessment next becoming due from such
bank and upon succeeding assessments until the credit is exhausted.

(f) Any insured bank which fails to file any certified statement required to be filed by it in connection with
determining the amount of any assessment payable by the bank to the Corporation may be compelled to file such
statement by mandatory injunction or other appropriate remedy in a suit brought for such purpose by the
Corporation against the bank and any officer or officers thereof in any court of the Philippines of competent
jurisdiction in which such bank is located.

(g) The Corporation, in a suit brought in any court of competent jurisdiction, shall be entitled to recover from any
insured bank the amount of any unpaid assessment lawfully payable by such insured bank to the Corporation,
whether or not such bank shall have filed any such certified statement and whether or not suit shall have been
brought to compel the bank to file any such statement. No action or proceeding shall be brought for recovery of
any assessment due to the Corporation or for the recovering of any amount paid to the Corporation in excess of the
amount due to it, unless such action or proceeding shall have been brought within five years after the right accrued
for which the claim is made, except where the insured bank has made or filed with the Corporation a false or
fraudulent certified statement with the intent to evade, in whole or in part, the payment of assessment, in which
case the claim shall not have been deemed to have accrued until the discovery by the Corporation that the certified
statement is false or fraudulent.

(h) 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 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 law the insured status of such bank shall be terminated by the Board of
Directors. The remedies provided in this subsection and in the two preceding subsections shall not be construed as
limiting any other remedies against an insured bank but shall be in addition thereto.{{13}}

(i) Trust funds held by an insured bank in a fiduciary capacity whether held in trust or deposited in any other
department or in another bank shall be insured like other forms of deposits, in an amount not to exceed P10,000 for
each trust estate, and when deposited by the fiduciary bank in another insured bank, such trust funds shall be
similarly insured to the fiduciary bank according to the trust estates represented. Notwithstanding any other
provision of this Act, such insurance shall be separate from and additional to that covering other deposits of the
owners of such trust funds or the beneficiaries of such trust estates: Provided, That where the fiduciary bank
deposits any of such trust funds in other insured banks, the amount so held by other insured banks on deposit shall
not for the purpose of any certified statement required under subsections (b) and (c) of this section be considered to
be a deposit liability of the fiduciary bank, but shall be considered to be a deposit liability of the bank in which
such funds are so deposited by such fiduciary bank. The Board of Directors shall have the power by regulation to
prescribe the manner of reporting and of depositing such trust funds.

SECTION 7. (a) Any insured bank may, upon not less than ninety days, written notice to the Corporation, and to
the Development Bank of the Philippines if it owns or holds as pledges any preferred stock, capital notes, or
debentures of such bank, terminate its status as an insured bank. Whenever the Board of Directors shall find that an
insured bank or its directors or trustees have continued unsafe or unsound practices in conducting the business of
the bank or which have knowingly or negligently permitted any of its officers or agents to violate any provisions of
any law or regulation to which the insured bank is subject, the Board of Directors shall first give to the Central
Bank of the Philippines a statement with respect to such practices or violations for the purpose of securing the
correction thereof and shall give a copy thereof to the bank. Unless such correction shall be made within one
hundred twenty days or such shorter period of time as the Central Bank of the Philippines shall require, the Board
of Directors, if it shall determine to proceed further, shall give to the bank not less than thirty days written notice
of intention to determine the status of the bank as an insured bank, and shall fix a time and place for a hearing
before the Board of Directors or before a person designated by it to conduct such hearing, at which evidence may
be produced, and upon such evidence the Board of Directors shall make written findings which shall be conclusive.
Unless the bank shall appear at the hearing by a duly authorized representative, it shall be deemed to have
consented to the termination of its status as an insured bank. If the Board of Directors shall find that any unsafe or
unsound practice or violation specified in such notice has been established and has not been corrected within the
time above prescribed in which to make such correction, the Board of Directors may order that the insured status
of the bank be terminated on a date subsequent to such finding and to the expiration of the time specified in such
notice of intention. The Corporation may publish notice of such termination and the bank shall give notice of such
termination to each of the depositors at his last address of record on the books of the bank, in such a manner and at
such a time as the Board of Directors may find to be necessary and may order for the protection of the depositors.
After the termination of the insured status of any bank under the provisions of this subsection, the insured deposits
of each depositor in the bank on the date of such termination, less all subsequent withdrawals from any deposits of
such depositor, shall continue for a period of two years to be insured, and the bank shall continue to pay to the
Corporation assessments as in the case of an insured bank during such period. No additions to any such deposits
and no new deposits in such bank made after the date of such termination shall be insured by the Corporation, and
the bank shall not advertise or hold itself out as having insured deposits unless in the same connection it shall also
state equal prominence that such additions to deposits and new deposits made after such date are not so insured.
Such bank shall, in all other respects, be subject to the duties and obligations of an insured bank for the period of
two years from the date of such termination, and in the event that such bank shall be closed on account of
insolvency within such period of two years, the Corporation shall have the same powers and rights with respect to
such bank as in case of an insured bank.{{14}}

(b) Notwithstanding any other provision of law, whenever the Board of Directors shall determine that an insured
banking institution is not engaged in the business of receiving deposits, the Corporation shall notify the banking
institution that its insured status will terminate at the expiration of the first full semi-annual assessment period
following such notice. A finding by the Board of Directors that a banking institution is not engaged in the business
of receiving deposits shall be conclusive. The Board of Directors shall prescribe the notice to be given by the
banking institution of such termination and the Corporation may publish notice thereof. Upon the termination of
the insured status of any such banking institution, its deposits shall thereupon cease to be insured and the banking
institution shall thereafter be relieved of all future obligations to the Corporation, including the obligation to pay
future assessments.{{15}}

(c) Whenever the liabilities of an insured bank for deposits shall have been assumed by another insured bank or
banks, the insured status of the bank whose liabilities are so assumed shall terminate on the date of receipt by the
Corporation of satisfactory evidence of such assumption with like effect as if its insured status had been terminated
on said date by the Board of Directors after proceedings under subsection (a) of this section: Provided, That if the
bank whose liabilities are so assumed gives to its depositors notice of such assumption within thirty days after such
assumption takes effect, by publication or by any reasonable means, in accordance with regulations to be
prescribed by the Board of Directors, the insurance of its deposits shall terminate at the end of six months from the
date such assumption takes effect. Such bank shall be subject to the duties and obligations of an insured bank for
the period its deposits are insured: Provided, further, That if the deposits are assumed by a newly insured bank, the
bank whose deposits are assumed shall not be required to pay any assessment upon the deposits which have been
so assumed after the semi-annual period in which the assumption takes effect.

SECTION 8. The Corporation as a corporate body shall have the power

First. To adopt and use a corporate seal.

Second. To have succession until dissolved by an Act of Congress.

Third. To make contracts.

Fourth. To sue and be sued, complain and defend, in any court of law in the Philippines. All suits of a civil
nature to which the corporation shall be a part shall be deemed to arise under the laws of the Philippines. No
attachment or execution shall be issued against the Corporation or its property before final judgment in any suit,
action, or proceeding in any court. The Board of Directors shall designate an agent upon whom service of process
may be made in any province or city or jurisdiction in which any insured bank is located.

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, fix their compensation, require bonds of them and fix penalty thereof and to dismiss such
officers and employees for cause.

Sixth. To prescribe, by its Board of Directors, by-laws not inconsistent with law, regulating the manner in which
its general business may be conducted, and the privileges granted to it by law may be exercised and enjoyed.

Seventh. To exercise by its Board of Directors, or duly authorized officers or agents, all powers specifically
granted by the provisions of this Act, and such incidental powers as shall be necessary to carry on the powers so
granted.

Eighth. To make examinations of and to require information and reports from banks, as provided in this Act.
{{16}}

Ninth. To act as receiver.

Tenth. To prescribe by its Board of Directors such rules and regulations as it may deem necessary to carry out
the provisions of this Act.{{17}}

[See additions as per PD 1940{{18}} and RA 7400{{19}}]

SECTION 9. (a) The Board of Directors shall administer the affairs of the Corporation fairly and impartially and
without discrimination. The Corporation shall be entitled to the free use of Philippine mail in the same manner as
the other offices of the national government.

(b) The Board of Directors shall appoint examiners who shall have power, on behalf of the Corporation to examine
any insured bank or any bank making application to become an insured bank, whenever in the judgment of the
Board of Directors an examination of the bank is necessary. Each such examiner shall have power to make a
thorough examination of all the affairs of the bank and in doing so he shall have power to administer oaths and to
examine and take and preserve the testimony of any of the officers and agents thereof, 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 power to investigate and examine all claims for insured deposits and transferred
deposits. Each claim agent shall have power to administer oaths and to examine under oath and take and preserve
the testimony of any person relating to such claims.{{20}}{{21}}

(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, not less
than five days, as the Board of Directors may require, shall be subject to a penalty of not more than P100 for each
day of such failure recoverable by the Corporation for its use.
(d) The Corporation shall have access to reports of examination made by, and reports of condition made to the
Superintendent of Banks or the Governor of the Central Bank of the Philippines, and the Superintendent of Banks
or the Governor of the Central Bank of the Philippines shall also have access to reports of examination made on
behalf of, and reports of condition made to the Corporation.{{22}}{{23}}

(e) The members of the Board of Directors and the officers and employees of the Corporation are prohibited from
revealing any information relating to the condition or business of any insured bank and any member of the Board
of Directors, officer or employee of the Corporation violating this provision shall be held liable for any loss or
injury suffered by the Corporation.{{24}}

[See additions as per RA 9302, RA 9576, and RA 7400{{25}}]

SECTION 10. (a) A permanent insurance fund in the amount of P5,000,000 to be appropriated from the General
Fund is hereby created to be used by the Corporation to carry out the purposes of this Act; Provided, That the
maximum amount of the insured deposit of any depositor shall be P10,000.{{26}}

(b) For the purposes of this Act an insured bank shall be deemed to have been closed on account of insolvency in
any case in which it has been closed for the purpose of liquidation without adequate provision being made for
payment of its depositors.{{27}}

(c) Whenever an insured bank shall have been closed on account of insolvency, payment of the insured deposits in
such 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 the insured deposit of such
depositor: Provided, 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 validity of a claim for an
insured deposit, it may require the final determination of a court of competent jurisdiction before paying such
claim.{{28}}

(d) The Corporation, upon the payment of any depositor as provided for in subsection (c) of this section 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 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 such depositor shall retain his claim for any uninsured portion of
his deposit.

SECTION 11. (a) Payment of an insured deposit to any person by the Corporation shall discharge the Corporation,
and payment of a transferred deposit to any person by the new bank or by an insured bank in which a transferred
deposit has been made available shall discharge the Corporation and such new bank or other insured bank, to the
same extent that payment to such person by the closed bank would have discharged it from liability for the insured
deposit.

(b) 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 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 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.

(c) The Corporation may withhold payment of such portion of the insured deposit of any depositor in a closed bank
as may be required to provide for the payment of any liability of such depositor as a stockholder of the closed
bank, or of any liability of such depositor to the closed bank or its receiver, which is not offset against a claim due
from such bank, pending the determination and payment of such liability by such depositor or any other person
liable therefor.

(d) If, after the Corporation shall have given at least three months notice to the depositor by mailing a copy thereof
to his last-known address appearing on the records of the closed bank, any depositor in the closed bank shall fail to
claim his insured deposit from the Corporation within eighteen months after the Monetary Board of the Central
Bank of the Philippines or the proper court shall have ordered the conversion of the assets of such closed bank into
money, all rights of the depositor against the Corporation with respect to the insured deposit shall be barred, and all
rights of the depositor against the closed bank and its shareholders or the receivership estate to which the
Corporation may have become subrogated, shall thereupon revert to the depositor.{{29}}

SECTION 12. (a) Money of the Corporation 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: Provided, That the Corporation shall not sell or purchase any such obligations for its own account and
in its own right and interest, at any one time aggregating in excess of P100,000, without the approval of the
Insurance Commissioner: And Provided, further, That the Insurance Commissioner may waive the requirement of
his approval with respect to any transaction or classes of transactions subject to the provisions of this subsection
for such period of time and under such conditions as he may determine.

(b) The banking or checking accounts of the Corporation shall be kept with the Central Bank of the Philippines,
with the Philippine National Bank, or with any other bank designated as depository or fiscal agent of the Philippine
Government.

(c) When the Corporation has determined that an insured bank is in danger of closing, in order to prevent such
closing, the Corporation, in the discretion of its Board of Directors, is authorized to make loans to, or purchase the
assets of, or make deposits in, such insured bank, 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 is essential to
provide adequate banking service in the community. Such loans and deposits may be in subordination to the rights
of depositors and other creditors.{{30}}{{31}}

SECTION 13. The corporation is authorized to borrow from the Central Bank of the Philippines and the Central
Bank is authorized and directed to loan the Corporation on such terms as may be fixed by the Corporation and the
Central Bank, such funds as in the judgment of the Board of Directors of the Corporation are from time to time
required for insurance purposes not exceeding in the aggregate of one hundred million pesos outstanding at any
one time: Provided, That the rate of interest to be charged in connection with any loan made pursuant to this
section shall not be less than the current average rate on outstanding marketable and nonmarketable obligations of
the Republic of the Philippines as of the last day of the month preceding the making of such loan. Any such loan
shall be used by the Corporation solely in carrying out its functions with respect to such insurance.{{32}}

SECTION 14. All notes, debentures, bonds or such obligations issued by the Corporation shall be exempt from
taxation.{{33}}

SECTION 15. (a) The Corporation shall annually make a report of its operations to the Congress as soon as
practicable after the 1st day of January in each year.

(b) The financial transactions of the Corporation shall be audited by the General Auditing Office in accordance
with the principles and procedures applicable to commercial corporate transactions and under such rules and
regulations as may be prescribed by the Auditor General. The audit shall be conducted at the place or places where
accounts of the Corporation are normally kept. The representatives of the General Auditing Office shall have
access to all books, accounts, records, reports, files, and all other papers, things, or property belonging to or in use
by the Corporation pertaining to its financial transactions and necessary to facilitate the audit, and they shall be
afforded full facilities for verifying transactions with the balances or securities held by depositaries, fiscal agents,
and custodians. All such books, accounts, records, reports, files, papers, and property of the Corporation shall
remain in possession and custody of the Corporation.

(c) A report of the Audit for each fiscal year ending on June 30 shall be made by the Auditor General to the
Congress not later than January 15 following the close of such fiscal year. On or before December 15 following
such fiscal year the Auditor General shall furnish the Corporation a short form report showing the financial
position of the Corporation at the close of fiscal year. The report to the Congress shall set forth the scope of the
audit and shall include a statement of assets and liabilities and surplus or deficit; a statement of surplus or deficit
analysis; a statement of income and expenses; a statement of sources and application of funds and such comments
and information as may be deemed necessary to inform Congress of the financial operations and condition of the
Corporation, together with such recommendations with respect thereto as the Auditor General may deem advisable.
The report shall also show specifically any program, expenditure, or other financial transactions or undertaking
observed in the course of the audit, which in the opinion of the Auditor General, has been carried on or made
without authority of law. A copy of each report shall be furnished to the President of the Philippines, to the
Governor of the Central Bank of the Philippines, and to the Corporation at the time submitted to the Congress.
{{34}}

SECTION 16. (a) Every insured bank shall display at each place of business maintained by it a sign or signs, and
shall include a statement to the effect that its deposits are insured by the Corporation in all of its advertisements:
Provided, That the Board of Directors may exempt from this requirement advertisements which do not relate to
deposits or when it is impractical to include such statement therein. The Board of Directors shall prescribe by
regulation the forms of such signs and the manner of display and the substance of such statements and the manner
of use. For each day an insured bank continues to violate any provisions of this subsection or any lawful provisions
of said regulations, it shall be subject to a penalty of not more than P100, which the Corporation may recover for
its use.{{35}}

(b) No insured bank shall pay any dividend on its capital stock or interest on its capital notes or debentures (if such
interest is required to be paid only out of net profits) or distribute any of its capital assets while it remains in
default in the payment of any assessment due to the Corporation; and any director or officer of any insured bank
who participates in the declaration or payment of any such dividend or interest or in any such distribution shall,
upon conviction, be fined not more than P1,000 or imprisoned not more than one year, or both: Provided, That if
such default is due to a dispute between the insured bank and the Corporation over the amount of such assessment,
this subsection shall not apply, if such bank shall deposit security satisfactory to the Corporation of payment upon
final determination of the issue.{{36}}

(c) Without prior written consent by the Corporation, no insured bank shall (1) merge or consolidate with any
noninsured bank or institution or convert into a noninsured bank or institution or (2) assume liability to pay any
deposits made in, or similar liabilities of, any noninsured bank or institution or (3) transfer assets to any noninsured
bank or institution in consideration of the assumption of liabilities for any portion of the deposits made in such
insured bank.{{37}}

(d) The Corporation may require any insured bank to provide protection and indemnity against burglary,
defalcation, and other similar insurable losses. Whenever any insured bank refuses to comply with any such
requirement the Corporation may contract for such protection and indemnity and add the cost thereof to the
assessment otherwise payable by such bank.{{38}}

(e) Any insured bank which willfully fails or refuses to file any certified statement or pay any assessment required
under this Act shall be subject to a penalty of not more than P100 for each day that such violations continue, which
penalty the Corporation may recover for its use: Provided, That this subsection shall not be applicable under the
circumstances stated in the provisions of subsection (b) of this section.{{39}}

SECTION 17. Except with the written consent of the Corporation, no person shall serve as a director, officer, or
employee of an insured bank who has been convicted, or who is hereafter convicted, of any criminal offense
involving dishonesty or a breach of trust. For each willful violation of this prohibition, the bank involved shall be
subject to a penalty of not more than P100 for each day this prohibition is violated, which the Corporation may
recover for its use.{{40}}{{41}}{{42}}{{43}}{{44}}

SECTION 18. 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.{{45}}{{46}}

SECTION 19. 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.{{47}}

SECTION 20. This Act shall take effect upon approval. The Philippine Deposit Insurance Corporation shall
commence business upon organization of the Board of Directors and certification by the Treasurer of the
Philippines that the Permanent Insurance Fund has been appropriated.{{48}}

[Section 21{{49}}]

[Section 22{{50}}]

[Section 23{{51}}]

[Section 24{{52}}]

[Section 25{{53}}]

[Section 26{{54}}]

[Section 27{{55}}]

[Section 28{{56}}]]

Approved: June 22, 1963


Published in the Official Gazette, Vol. 59, No. 36, p. 6003 on September 9, 1963.

Source: CD Asia

[[1]] As amended by Republic Act No. 9302, August 12, 2004:

SECTION 2. The powers and functions of the Corporation shall be vested in and exercised by a Board of Directors
which shall be composed of five (5) members as follows:

a. The Secretary of Finance who shall be the ex-officio Chairman of the Board without compensation.

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

c. 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. Two (2) members from the private sector, to be appointed for a term of six (6) years without reappointment by
the President of the Philippines: Provided, That of those first appointed, the first appointee shall serve for a period
of two (2) years.

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

The Secretary of Finance and the Governor of the Bangko Sentral may each designate a representative, whose
position shall not be lower than an undersecretary or deputy governor respectively, to attend such meetings and to
vote on behalf of their respective principals. Whenever the Chairman of the Board is unable to attend a meeting of
the Board, or in the event of a vacancy in the office of the Secretary of Finance, the President of the Corporation
shall act as Chairman.

The presence of three (3) members shall constitute a quorum. All decisions of the Board of Directors shall require
the concurrence of at least 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. 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.[[1]]

[[2]] As amended by RA 9302:

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.

A compensation structure, based on job evaluation studies and wage surveys and subject to the Boards approval,
shall be instituted as an integral component of the Corporations 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 plan shall be comparable 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. It shall however endeavor to make its system conform as closely as
possible with the principles under Republic Act No. 6758, as amended.[[2]]

[[3]]As amended by RA 9302:


4. To appoint, establish the rank, fix the remuneration, 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;[[3]]

[[4]] As added by RA 9302:

5. 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; and

6. To approve the methodology for determining the level and amount of provisioning for insurance and financial
assistance losses, which shall establish reasonable levels of deposit insurance reserves.[[4]]

[[5]] As added by RA 9576:

7. To review the organizational set-up of the Corporation and adopt a new or revised rganizational structure as it
may deem necessary for the Corporation to undertake its mandate and functions.[[5]]

[[6]] Renumbered from Sec. 2 by RA 9302:

SECTION 3. The President of the Corporation shall be the Chief Executive thereof and his salary shall be fixed by
the President of the Philippines at a sum commensurate to the importance and responsibility attached to the
position. The sum total of the salary of the President and the allowances and other emoluments which the Board of
Directors may grant him shall be the ceiling for fixing the salary, allowances and other emoluments of all other
personnel in the Corporation.

The powers and duties of the President of the Corporation are:

a. To prepare the agenda for the meeting of the Board and to submit for the consideration of the Board the policies
and measures which he believes to be necessary to carry out the purposes and provisions of this Act;

b. To execute and administer the policies and measures approved by the Board;

c. To direct and supervise the operations and internal administration of the Corporation in accordance with the
policies established by the Board. The President may delegate certain of his administrative responsibilities to other
officers of the Corporation, subject to the rules and regulations of the Board;

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;

e. To authorize, with his signature, upon prior authority of the Board, contracts entered into by the Corporation,
notes and securities issued by the Corporation, and the annual reports, balance sheets, profits and loss statements,
correspondence and other documents of the Corporation. The signature of the President may be in facsimile
wherever appropriate;

f. To represent the Corporation, either personally or through counsel, in all legal proceedings or actions;

g. To delegate, with the prior approval of the Board of Directors, his power to represent the Corporation, as
provided in subsections (d) and (f) of this Section, to other officers of the Corporation; and

h. To exercise such other powers as may be vested in him by the Board.

The President shall be assisted by a Vice President and other officials whose appointment and removal for cause
shall be approved and whose salary shall be fixed by the Board of Directors upon recommendation of the President
of the Corporation. During the absence or temporary incapacity of the President, or in case of vacancy or
permanent incapacity and pending the appointment of a new President of the Corporation by the President of the
Philippines, the Vice President shall act as President and discharge the duties and responsibilities thereof (as
amended by Executive Order No. 890, April 8, 1983; RA 7400, April 13, 1992).[[6]]

[[7]] Renumbered from Sec. 3 by RA 9302:

SECTION 4. As used in this Act


a. The term Board of Directors means the Board of Directors of the Corporation.

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 (as amended by RA 7400).

c. The term receiver 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 (as amended by RA 7400).

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 are not insured.

f. 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, or 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;

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 BSP, after due notice and hearing, and
publication of a cease and desist order issued by the Corporation against such deposit accounts or
transactions; and

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

The actions of the Corporation taken under this section shall be final and executory, and may not be restrained or
set aside by the court, except on appropriate petition for certiorari on the ground that the action was taken in excess
of jurisdiction or with such grave abuse of discretion as to amount to a lack or excess of jurisdiction. The petition
for certiorari may only be filed within thirty (30) days from notice of denial of claim for deposit insurance (as
amended by Presidential Decree 1940, June 27, 1984; RA 7400; RA 9302; RA 9576).

g. The term insured deposit means the amount due to any bona fide depositor for legitimate deposits in an
insured bank net of any obligation of the depositor to the insured bank as of the date of closure, 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 owner/holder of any negotiable certificate of
deposit shall be recognized as a depositor entitled to the rights provided in this Act unless his name is registered as
owner/holder thereof in the books of the issuing bank: 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 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 (as amended by RA 9302; RA 9576).

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.

i. 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.[[7]]

[[8]] As amended by RA 6037, August 4, 1969; renumbered from Sec. 4 by RA 9302:

SECTION 5. The deposit liabilities of any bank or banking institution, which is engaged in the business of
receiving deposits as herein defined on the effective date of this Act, or which thereafter may engage in the
business of receiving deposits, shall be insured with the Corporation.[[8]]

[[9]] As amended by RA 9302:

SECTION 6.

a. The assessment rate shall be determined by the Board of Directors: Provided, That the assessment rate shall not
exceed one-fifth (1/5) of one per centum (1%) per annum. The semiannual 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 (f) of Section 4 without any deduction for indebtedness of
depositors.[[9]]

[[10]] As amended by RA 7400:

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.[[10]]

[[11]]As amended by PD 1940:

b. On or before the 31st of July of each year, each insured bank shall file with the Corporation a certified statement
showing for the six months ending on the preceding June thirty the amount of the assessment base and the amount
of the semi-annual assessment due to the Corporation for the period ending on the following December thirty-one,
determined in accordance with subsection (a) of this Section, which shall contain or be verified by a written
declaration that it is made under the penalties of perjury. Each insured bank shall pay to the Corporation the
amount of the semi-annual assessment it is required to certify. On or before the 31st day of January of each year,
each insured bank shall file with the Corporation a similar certified statement for the six months ending on the
preceding December thirtyone and shall pay to the Corporation the amount of the semi-annual assessment for the
period ending on the following June thirty which it is required to certify.[[11]]

[[12]] As amended by RA 9302:

d. All assessment collections and income from operations after expenses and charges shall be added to the Deposit
Insurance Fund under Section 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.[[12]]

[[13]] As amended by RA 9302:

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 (30) 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.[[13]]

[[14]] As amended by RA 7400; RA 9302:

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 concerned 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 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.[[14]]

[[15]] As amended by EO 890; RA 7400:

b. The actions and proceedings provided in the preceding subsection 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. [[15]]

[[16]] As amended by RA 9302; RA 9576:

Eighth To conduct examination of banks with prior approval of the Monetary Board: Provided, That no
examination can be conducted within twelve (12) months from the last examination date: Provided, however, That
the Corporation may, in coordination with the Bangko Sentral, conduct a special examination as the Board of
Directors, by an affirmative vote of a majority of all of its members, if there is a threatened or impending closure
of a bank; 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 in case there is a
finding of unsafe or unsound banking practice; Provided, finally, That to avoid overlapping 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;[[16]]

[[17]] As amended by RA 6037:

Tenth To prescribe by its Board of Directors such rules and regulations as it may deem necessary to carry out the
provisions of this Act;[[17]]

[[18]] As amended by PD 1940:

Eleventh The Corporation may establish its own provident fund which shall consist of contributions made both
by the Corporation and by its officers and employees to a common fund for the payment of benefits to such
officers or employees or their heirs. The Board of Directors shall prepare and issue rules and regulations as it may
deem necessary to make effective the establishment and operation of the fund;[[18]]

[[19]] As added by RA 7400:


Twelfth To compromise, condone or release, in whole or in part, any of 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.[[19]]

[[20]] As amended by EO 890; RA 7400:

b. 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 of 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 to examine under oath and take
and preserve testimony of any person relating to such claim.[[20]]

[[21]] As added by RA 9302:

(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.[[21]]

[[22]] As amended by EO 890; RA 7400; RA 9302:

d. The Corporation shall have access to reports of examination made by, and reports of condition made to
the Bangko Sentral ng Pilipinas or its appropriate supervising departments, and the Bangko Sentral ng
Pilipinas shall also have access to reports of examination made by, and reports of condition made to the
Corporation:Provided, That the provisions of any law to the contrary notwithstanding, the Corporation shall
likewise have access to reports, findings and any other information derived from any special or general
examination or inquiry conducted by the Bangko Sentral in respect to bank fraud or serious irregularity in an
insured bank: Provided, That the Corporation shall use reports and findings under similar terms and conditions
prescribed by applicable laws on the Bangko Sentral.[[22]]

[[23]] As added by RA 9302:

(d-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 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 21 (f) of this Act.[[23]]

[[24]] As added by RA 7400:

e. Personnel of the Corporation are hereby prohibited from:

1. being an officer, director, consultant, employee or stockholder, directly or indirectly, of any bank or
banking institution except as otherwise provided in this Act;

2. receiving any gift or thing of value from any officer, director or employee thereof;

3. revealing in any manner, except as provided in this Act or under order of the court, information relating to
the condition or business of any such institution. This prohibition shall not apply to the giving of
information to the Board of Directors, the President of the Corporation, Congress, any agency of
government authorized by law, or to any person authorized by either of them in writing to receive such
information (as amended by RA 9302).[[24]]

[[25]] f. The Corporation shall underwrite or advance 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 (as added by RA 9302).

g. The costs and expenses incurred in defending the aforementioned action, suit or proceeding may be paid by the
Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of the director, officer, employee or agent to repay the amount advanced should it ultimately be
determined by the Board of Directors that he is not entitled to be indemnified as provided in this subsection (as
added by RA 9302).

h. Unless the actions of the Corporation or any of its officers and employees are found to be in willful violation of
this Act, performed in bad faith, with malice and/or gross negligence, the Corporation, its directors, officers,
employees and agents are held free and harmless to the fullest extent permitted by law from any liability, and they
shall be indemnified for any and all liabilities, losses, claims, demands, damages, deficiencies, costs and expenses
of whatsoever kind and nature that may arise in connection with the performance of their functions, without
prejudice to any criminal liability under existing laws (as added by RA 9576).

i. Legal assistance shall include the grant or advance of reasonable legal fees as determined by the Board of
Directors to enable the concerned director, officer, employee or agent to engage counsel of his choice, subject to
approval by the Board of Directors.

Notwithstanding the provisions of this Section and Section 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 (as
amended by RA 9302).

Borrowing from any bank or banking institution by examiners and other personnel of the examination departments
of the Corporation shall be prohibited only with respect to the particular institution in which they are assigned, or
are conducting an examination. Personnel of other departments, offices or units of the Corporation shall likewise
be prohibited from borrowing from any bank or banking institution during the period of time that a transaction of
such institution with the Corporation is being evaluated, processed or acted upon by such personnel: Provided,
however, That the Board may, at its discretion, indicate the position levels or functional groups to which the
prohibition is applicable (as amended by RA 7400).

Borrowing by all full-time personnel of the Corporation from any bank or banking institution shall be secured and
disclosed to the Board, and shall be subject to such further rules and regulations as the Board may prescribe (as
amended by RA 7400).[[25]]

[[26]] As amended/renumbered from Sec. 9-A by RA 9302:

SECTION 10. a. The provisions of other laws, general or special, to the contrary otwithstanding, whenever it shall
be appropriate for the Monetary Board of the Bangko Sentral ng Pilipinas to appoint a receiver of any banking
institution pursuant to existing laws, the Monetary Board shall give prior notice and appoint the Corporation as
receiver.[[26]]

[[27]] As added by RA 9302:

b. The Corporation as receiver shall control, manage and administer the affairs of the closed bank. Effective
immediately upon takeover as receiver of such bank, the powers, functions and duties, as well as all allowances,
remunerations and perquisites of the directors, officers, and stockholders of such bank are suspended, and the
relevant provisions of the Articles of Incorporation and By-laws of the closed bank are likewise deemed
suspended.

The assets of the closed bank under receivership shall be deemed in custodia legis in the hands of the receiver.
From the time the closed bank is placed under such receivership, its assets shall not be subject to attachment,
garnishment, execution, levy or any other court processes. Therefore, 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 21 hereof.[[27]]

[[28]] As amended and added by RA 9302:

c. In addition to the powers of a receiver pursuant to existing laws, the Corporation is empowered to:

1. bring suits to enforce liabilities to or recoveries of the closed bank;

2. appoint and hire persons or entities of recognized competence in banking or finance as its deputies and
assistants, to perform such powers and functions of the Corporation as receiver or liquidator of the closed
bank;

3. suspend or terminate the employment of officers and employees of the closed bank: Provided, That
payment of separation pay or benefits shall be made only after the closed bank has been placed under
liquidation pursuant to the order of the Monetary Board under Section 30 of R.A. 7653, and that such
payment shall be made from available funds of the bank after deducting reasonable expenses for
receivership and liquidation;

4. 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;

5. collect loans and other claims of the closed bank, and for the purpose, modify, compromise or restructure
the terms and conditions of such loans or claims as may be deemed advantageous to the interest of the
creditors and claimants of the closed bank;

6. hire or retain private counsels as may be necessary;

7. 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 the depositors and creditors;

8. if the stipulated interest on deposits is unusually high compared with the prevailing applicable interest rate,
the Corporation as receiver may exercise such powers which may include a reduction of the interest rate to
a reasonable rate: Provided, That any modification or reduction shall apply only to unpaid interest; and and

9. exercise such other powers as are inherent and necessary for the effective discharge of the duties of the
Corporation as a 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 and agents of the Corporation.[[28]]

[[29]] As added by RA 9302:

SECTION 11. In all cases or actions filed by the Corporation as receiver for the recovery of, or involving any asset
of the closed bank, payment of all docket and other court fees 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 administrative expenses during the distribution of the assets of the
closed bank.[[29]]

[[30]] As added by RA 7400; renumbered from Sec. 9-B by RA 9302:

Before any distribution of the assets of the closed bank in accordance with the preference established by law, the
Corporation shall periodically charge against said assets reasonable receivership expenses and subject to approval
by the proper court, reasonable liquidation expenses, it has incurred as part of the cost of receivership/liquidation
proceedings and collect payment therefore from available assets.[[30]]

[[31]] As added by RA 9302:

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 legal priority before distribution to the shareholders of the closed bank.[[31]]
[[32]] As amended and added by RA 9302:

SECTION 13. To carry out the purposes of this Act, the permanent insurance fund shall be Three billion pesos
(P3,000,000,000.00).

The Deposit Insurance Fund shall be the capital account of the Corporation and shall principally consist of the
following: (i) the Permanent Insurance Fund; (ii) assessment collections, subject to the charges enumerated in
Section 6 (d); (iii) reserves for insurance and financial assistance losses; and (iv) retained earnings: Provided, That
the reserves for insurance and financial assistance losses and retained earnings shall be maintained at a reasonable
level to ensure capital adequacy: Provided, further, That the Corporation may, within two (2) years from the
passage of this Act, and every five (5) years thereafter, conduct a study on the need to adjust the amount of the
Permanent Insurance Fund, insurance cover, assessment rate and assessment base, and thereafter make the
necessary recommendation to Congress. For this purpose, the Corporation may hire the services of actuarial
consultants to determine, among others, the affordability of assessment rates, analysis and evaluation of insurance
risk, and advisability of imposing varying assessment rates or insurance cover of different bank categories.[[32]]

[[33]] As amended by RA 9302:

SECTION 14. Whenever an insured bank shall have been closed by the Monetary Board pursuant to Section 30 of
R.A. 7653, 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 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 failure was
due to grave abuse of discretion, gross negligence, bad faith, or malice, shall, upon conviction, subject the
directors, officers or employees of the Corporation responsible for the delay, to imprisonment from six (6) months
to one (1) year: Provided, furthermore, That the period shall not apply if the validity of the claim requires the
resolution of issues of facts and or law by another office, body or agency including the case mentioned in the first
proviso or by the Corporation together with such other office, body or agency.[[33]]

[[34]] As amended by PD 1940; RA 7400; renumbered from Sec. 10(d) by RA 9302:

SECTION 15. The Corporation, upon payment of any depositor as provided for in subsection (c) of this Section,
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, such depositor shall retain his claim for any
uninsured portion of his deposit. 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.[[34]]

[[35]] As added by RA 9302:

a. The Corporation shall commence the determination of insured deposits due the depositors of a closed bank upon
its actual takeover of the closed bank. The Corporation shall give notice to the depositors of the closed bank of the
insured deposits due them by whatever means deemed appropriate by the Board of Directors: Provided, That the
Corporation shall publish the notice once a week for at least three (3) consecutive weeks in a newspaper of general
circulation or, when appropriate, in a newspaper circulated in the community or communities where the closed
bank or its branches are located.[[35]]

[[36]] Renumbered from Sec. 11 (a) by RA 9302:

b. Payment of an insured deposit to any person by the Corporation shall discharge the Corporation, and payment of
transferred deposit to any person by the new bank or by an insured bank in which a transferred deposit has been
made available shall discharge the Corporation and such new bank or other insured bank, to the same extent that
payment to such person by the closed bank would have discharged it from liability for the insured deposit.[[36]]

[[37]] Renumbered from Sec. 11 (b) by RA 9302:


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 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 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.[[37]]

[[38]] Renumbered from Sec. 11 (c) by RA 9302:

d. The Corporation may withhold payment of such portion of the insured deposit of any depositor in a closed bank
as may be required to provide for the payment of any liability of such depositor as a stockholder of the closed
bank, or of any liability of such depositor to the closed bank or its receiver, which is not offset against a claim due
from such bank, pending the determination and payment of such liability by such depositor or any other liable
therefor.[[38]]

[[39]] As amended by RA 9302:

e. Unless otherwise waived by the Corporation, if the depositor in the closed bank shall fail to claim his insured
deposits with the Corporation within two (2) years from actual takeover of the closed bank by the receiver, or does
not enforce his claim filed with the corporation within two (2) years after the two-year period to file a claim as
mentioned hereinabove, all rights of the depositor against the Corporation with respect to the insured deposit shall
be barred; however, all rights of the depositor against the closed bank and its shareholders or the receivership estate
to which the Corporation may have become subrogated, shall thereupon revert to the depositor. Thereafter, the
Corporation shall be discharged from any liability on the insured deposit.[[39]]

[[40]] As amended by RA 6037; renumbered from Sec. 12 by RA 9302:

SECTION 17. a. Money of the Corporation 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.[[40]]

[[41]] As amended by RA 9302:

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.[[41]]

[[42]] As amended by RA 9576:

c. It is hereby declared to be the policy of the State that the Deposit Insurance Fund of the Corporation shall be
preserved and maintained at all times. Accordingly, all tax obligations of the Corporation for a period of five (5)
years reckoned from the date of effectivity of this Act shall be chargeable to the Tax Expenditure Fund (TEF) in the
annual General Appropriations Act pursuant to the provisions of Executive Order No. 93, series of 1986; Provided,
That, on the 6th year and thereafter, the Corporation shall be exempt from income tax, final withholding tax, value-
added tax on assessments collected from member banks, and local taxes (as added by RA 9576).

d. When the Corporation has determined that an insured bank is in danger of closing, in order to prevent such
closing, 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 in, such insured bank, upon such terms and condition as the
Board of Directors may prescribe, when in the opinion of the Board of Directors, the continued operation of such
bank is essential to provide adequate banking service in the community or maintain financial stability in the
economy (renumbered from Sec. 17 (c) by RA 9576).[[42]]

[[43]] As amended by RA 7400:

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.[[43]]

[[44]] As amended by RA 9302:

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 quasiequity 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.[[44]]

[[45]] As amended/renumbered from Sec. 13 by RA 9302:

SECTION 18. The Corporation is authorized to borrow from the Bangko Sentral ng Pilipinas and theBangko
Sentral is authorized to lend 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(d) of this Act: Provided,
That any such loan as may be granted by the Bangko Sentral shall be consistent with monetary policy; Provided,
further, That the rate of interest thereon shall be fixed by the Monetary Board but shall not exceed the treasury bill
rate.[[45]]

[[46]] As amended by RA 6037; PD 653, February 1, 1975; PD 1940; RA 7400:

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.[[46]]

[[47]] As amended by RA 9576:

SECTION 19. With the approval of the President of the Philippines, the Corporation is authorized to issue bonds,
debentures, and other obligations, both local or foreign, as may be necessary for purposes of providing liquidity for
settlement of insured deposits in closed banks 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 Board of Directors shall have the power to prescribe 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.[[47]]

[[48]] As amended by RA 9302:

SECTION 20. a. The Corporation shall annually make a report of its operations to the Congress as soon as
practicable after the 1st day of January in each year (renumbered from Sec. 15 (a) by RA 9302).
b. The financial transactions of the Corporation shall be audited by the Commission on Audit in accordance with
the principles and procedures applicable to commercial corporate transactions and under such rules and regulations
as may be prescribed by the Commission on Audit. The audit shall be conducted at the place or places where
accounts of the Corporation are normally kept. Except as to matters relating to the function of the Corporation as
receiver which shall be subject to visitorial audit only, the representatives of the Commission on Audit shall have
access to all books, accounts, records, reports, files and all other papers, things, or property belonging to or in use
by the Corporation pertaining to its financial transactions and necessary to facilitate the audit, and they shall be
afforded full facilities for verifying transactions with the balances or securities held by depositories, fiscal agents,
and custodians. All such books, accounts, records, reports, files, papers, and property of the Corporation shall
remain in possession and custody of the Corporation (as amended/renumbered from Sec. 15 (b) by RA 9302).

c. A report of the Audit for each fiscal year ending on June 30 shall be made by the Auditor General to the
Congress not later than January 15 following the close of such fiscal year. On or before December 15 following
such fiscal year, the Auditor General shall furnish the Corporation a short form report showing the financial
position of the Corporation at the close of fiscal year. The report to the Congress shall set forth the scope of the
audit and shall include a statement of assets and liabilities and surplus or deficit; a statement of surplus or deficit
analysis; a statement of income and expenses; a statement of sources and application of funds and such comments
and information as may be deemed necessary to inform Congress of the financial operations and condition of the
Corporation, together with such recommendations with respect thereto as the Auditor General may deem advisable.
The report shall also show specifically any program, expenditure, or other financial transactions or undertaking
observed in the course of the audit, which in the opinion of the Auditor General, has been carried on or made
without authority of law. A copy of each report shall be furnished to the President of the Philippines, to the
Governor of the Bangko Sentral ng Pilipinas, and to the Corporation at the time submitted to the Congress (as
amended/renumbered from Sec. 15 (c) by RA 9302).[[48]]

[[49]]SECTION 21.

a. Every insured bank shall display at each place of business maintained by it a sign or signs, and shall include a
statement in all its advertisements to the effect that its deposits are insured by the Corporation: Provided, That the
Board of Directors may exempt from this requirement advertisements which do not relate to deposits or when it is
impractical to include such statement therein. The Board of Directors shall prescribe by regulations the forms of
such signs and the manner of use (as amended/renumbered from Sec. 16 (a) by RA 9302).

b. No insured bank shall pay any dividend on its capital stock or interest on its capital notes or debentures (if such
interest is required to be paid only out of net profits) or distribute any of its capital assets while it remains in
default in the payment of any assessment due to the Corporation: Provided, That if such default is due to a dispute
between the insured bank and the Corporation over the amount of such assessment, this subsection shall not apply
if such bank shall deposit security satisfactory to the Corporation for payment upon final determination of the issue
(as amended/renumbered from Sec. 16 (b) by RA 9302).

c. Without prior written consent by the Corporation, no insured bank shall (1) merge or consolidate with any bank
or institution or (2) assume liability to pay any deposits made in, or similar liabilities of, any bank or institution or
(3) transfer assets to any bank or institution in consideration of the assumption of liabilities for any portion of the
deposits made in such insured bank (as amended by EO 890; renumbered from Sec. 16 (c) by RA 9302).

d. The Corporation may require an insured bank to provide protection and indemnity against burglary, defalcation,
losses arising from discharge of duties by, or particular acts of defaults of its directors, officers, or employees, and
other similar insurable losses. The Board of Directors in consultation with the Bangko Sentral, shall determine the
bonding requirement as it refers to directors, officers and employers of the insured bank as well as the form and
amount of the bond. Whenever any insured bank refuses to comply with any such requirement the Corporation
may contract for such protection and add the cost thereof to the assessment otherwise payable by such bank (as
amended by RA 7400; RA 9302).

e. Any assessment payable by an insured bank under this Act shall be subject to payment of interest computed from
the date such assessment became due and payable and at the legal rate for loans as prescribed by law or appropriate
authority and in case of willful failure or refusal to pay such assessment and interest thereon, there shall be added a
penalty equivalent to twice the amount of interest payable as computed herein for each day such violations
continue, which the interest and penalty the Corporation may recover for its use: Provided, That the penalty shall
not be applicable under the circumstances stated in the provisions of subsection (b) of this Section (as amended by
EO 890; RA 7400).
f. The penalty of prision mayor or a fine of not less than Fifty thousand pesos (P50,000.00) but not more than Two
million pesos (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 (as amended by RA 9302):

1. for any willful refusal to submit reports as required by law, rules and regulations
(as amended by RA 9302);

2. any unjustified refusal to permit examination and audit of the deposit records or the affairs of the institution
(as amended by RA 9302);

3. any willful making of a false statement or entry in any bank report or document required by the
Corporation (as amended by RA 9302);

4. submission of false material information in connection with or in relation to any financial assistance of the
Corporation extended to the bank (as added by RA 9302);

5. splitting of deposits or creation of fictitious loans or deposit accounts (as added by RA 9302).

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 bankdeclared 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 (as added by RA 9302; as amended by RA 9576);

6. refusal to allow the Corporation to take over a closed bank placed under its receivership or obstructing such
action of the Corporation (as added by RA 9302);

7. refusal to turn over or destroying or tampering bank records (as added by RA 9302);

8. fraudulent disposal, transfer or concealment of any asset, property or liability of the closed bank under the
receivership of the Corporation (as added by RA 9302);

9. violation of, or causing any person to violate, the exemption from garnishment, levy, attachment or
execution provided under this Act and the New Central Bank Act (as added by RA 9302);

10. any willful failure or refusal to comply with, or violation of any provision of this Act, or commission of any
other irregularities, and/or conducting business in an unsafe or unsound manner as may be determined by
the Board of Directors (as amended by RA 9302).

g. The Board of Directors is hereby authorized to impose administrative fines for any act or omission enumerated
in the preceding subsection, and for violation of any order, instruction, rule or regulation issued by the Corporation,
against a bank and/or any of its directors, officers or agents responsible for such act, omission, or violation, in
amounts as it may be determined to be appropriate, but in no case to exceed three times the amount of the damages
or costs caused by the transaction for each day that the violation subsists, taking into consideration the attendant
circumstances, such as the nature and gravity of the violation or irregularity and the size of the bank (as amended
by RA 9302).[[49]]

[[50]] SECTION 22. No court, except the Court of Appeals, shall issue any temporary restraining order,
preliminary injunction or preliminary mandatory injunction against the Corporation for any action under this Act
(as added by RA 9302).

This prohibition shall apply in all cases, disputes or controversies instituted by a private party, the insured bank, or
any shareholder of the insured bank (as added by RA 9302).

The Supreme Court may issue a restraining order or injunction when the matter is of extreme urgency involving a
constitutional issue, such that unless a temporary restraining order is issued, grave injustice and irreparable injury
will arise. The party applying for the issuance of a restraining order or injunction shall file a bond in an amount to
be fixed by the Supreme Court, which bond shall accrue in favor of the Corporation if the court should finally
decide that the applicant was not entitled to the relief sought (as added by RA 9302).
Any restraining order or injunction issued in violation of this Section is void and of no force and effect and any
judge who has issued the same shall suffer the penalty of suspension of at least sixty (60) days without pay (as
added by RA 9302).[[50]]

[[51]] SECTION 23. 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 (as
added by RA 9302).[[51]]

[[52]] SECTION 24. The Board of Directors is hereby authorized to provide separation incentives, and all those
who shall retire or be separated from the service on account of reorganization under the preceding section shall be
entitled to such incentives which shall be in addition to all gratuities and benefits to which they may be entitled
under existing laws (as added by RA 9302).[[52]]

[[53]] SECTION 25. The words Central Bank and the Central Bank of the Philippines wherever they appear
in Republic Act No. 3591, as amended, is hereby replaced with Bangko Sentral and/or Bangko Sentral ng Pilipinas,
respectively (as added by RA 9302).[[53]]

[[54]] SECTION 26. 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 (as added by RA 9302).[[54]]

[[55]] SECTION 27. 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 (as added by RA 9302).
[[55]]

[[56]] SECTION 28. 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 (as added by RA 9302).[[56]]