RAs For SCL (A)

REPUBLIC ACT No.
11211
An Act Amending Republic Act Number 7653, Otherwise Known as "The New Central Bank Act", and for Other Purposes
Section 1. Section 2 of Republic Act No. 7653, otherwise known as "The New Central Bank Act", is hereby
amended to read as follows:
"Sec. 2. Creation of the Bangko Sentral.— There is hereby established an independent central monetary
authority, which shall be a body corporate known as the Bangko Sentral ng Pilipinas, hereafter referred to as the
Bangko Sentral.
"The capital of the Bangko Sentral shall be Two hundred billion pesos (₱200,000,000,000), to be fully subscribed
by the Government of the Republic of the Philippines, hereafter referred to as the Government: Provided, That the
increase in capitalization shall be funded solely from the declared dividends of the Bangko Sentral in favor of the
National Government. For this purpose, any and all declared dividends of the Bangko Sentral in favor of the
National Government shall be deposited in a special account in the General Fund, and earmarked for the payment
of Bangko Sentral’s increase in capitalization. Such payment shall be released and disbursed immediately and
shall continue until the increase in capitalization has been fully paid."
Section 2. Section 3 of the same Act is hereby amended to read as follows:
"Sec. 3. Responsibility and Primary Objective. - The Bangko Sentral shall provide policy directions in the areas of
money, banking, and credit. It shall have supervision over the operations of banks and exercise such regulatory
and examination powers as provided in this Act and other pertinent laws over the quasi-banking operations of
non-bank financial institutions. As may be determined by the Monetary Board, it shall likewise exercise regulatory
and examination powers over money service businesses, credit granting businesses, and payment system
operators. The Monetary Board is hereby empowered to authorize entities or persons to engage in money service
businesses.
"The primary objective of the Bangko Sentral is to maintain price stability conducive to a balanced and sustainable
growth of the economy and employment. It shall also promote and maintain monetary stability and the
convertibility of the peso.
"The Bangko Sentral shall promote financial stability and closely work with the National Government, including,
but not limited to, the Department of Finance, Securities and Exchange Commission, the Insurance Commission,
and the Philippine Deposit Insurance Corporation.
"The Bangko Sentral shall oversee the payment and settlement systems in the Philippines, including critical
financial market infrastructures, in order to promote sound and prudent practices consistent with the maintenance
of financial stability.
"In the attainment of its objectives, the Bangko Sentral shall promote broad and convenient access to high quality
financial services and consider the interest of the general public."
"Sec. 11. Meetings.— The Monetary Board shall meet at least once a week. The Board may be called to a
meeting by the Governor of the Bangko Sentral or by two (2) other members of the Board.
"The presence of four (4) members shall constitute a quorum: Provided, That in all cases the Governor or his duly
designated alternate shall be among the four (4) members.
"Unless otherwise provided in this Act, all decisions of the Monetary Board shall require the concurrence of at
least four (4) members.
"The Bangko Sentral shall maintain and preserve a complete record of the proceedings and deliberations of the
Monetary Board, including the tapes and transcripts of the stenographic notes, either in their original form or in
microfilm.
"The meetings of the Monetary Board may be conducted through modern technologies such as, but not limited to,
teleconferencing and videoconferencing."
Section 4. Section 15(e) of the same Act is hereby amended to read as follows:
"Sec. 16. Exercise of Authority.— In the exercise of its authority, the Monetary Board shall:
"x x x
"(e) indemnify its members and other officials of the Bangko Sentral, including personnel of the departments
performing supervision and examination functions against all costs and expenses reasonably incurred by such
persons in connection with any civil or criminal action, suit or proceedings to which he may be, or is, made a party
by reason of the performance of his functions or duties, unless he is finally adjudged in such action or proceeding
to be liable for willful violation of this Act, performed in evident bad faith or with gross negligence.
"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 Bangko Sentral is advised by external counsel that the person
to be indemnified did not commit willful violation of this Act, performed in evident bad faith or with gross
negligence.
"The costs and expenses incurred in defending the aforementioned action, suit or proceeding may be paid by the
Bangko Sentral in advance of the final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of the member, officer, or employee to repay the amount advanced should it ultimately
be determined by the Monetary Board that he is not entitled to be indemnified as provided in this subsection."
"Sec. 16. Responsibility.— The general rule and the exception therefrom on the liability of public officers as
provided in Sections 38 and 39 of Chapter 9, Book 1 of the Revised Administrative Code of 1987 shall apply to the
members of the Monetary Board and other personnel of the Bangko Sentral.
"Similar responsibility shall apply to members of the Monetary Board, and other personnel of the Bangko Sentral
for: (1) the disclosure of any information of a confidential nature, or any information on the discussions or
resolutions of the Monetary Board, or about the confidential operations of the Bangko Sentral, unless the
disclosure is in connection with the performance of official functions with the Bangko Sentral, or is with prior
authorization of the Monetary Board or the Governor; or (2) the use of such information for personal gain or to the
detriment of the Government, the Bangko Sentral or third parties: Provided, however, That any data or information
required to be submitted to the President and/or the Congress, or to be published under the provisions of this Act
shall not be considered confidential.
"Unless the actions or omissions of the Bangko Sentral, members of the Monetary Board and its other personnel
are finally adjudged to be in willful violation of this Act, performed in evident bad faith or with gross negligence,
they 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 exercise of their powers and performance of
their duties and functions."
"Sec. 21. Deputy Governors. - The Governor of the Bangko Sentral, with the approval of the Monetary Board,
shall appoint not more than five (5) Deputy Governors who shall perform duties as may be assigned to them,by
the Governor and the Board.
"In the absence of the Governor, a Deputy Governor designated by the Governor shall act as chief executive of
the Bangko Sentral and shall exercise the powers and perform the duties of the Governor. Whenever the
Governor is unable to attend meetings of government boards or councils in which he is an ex officio member
pursuant to provisions of special laws, a Deputy Governor as may be designated by the Governor shall be vested
with authority to participate and exercise the right to vote in such meetings."
"Sec. 23. Authority to Obtain Data and Information. - The Bangko Sentral shall have the authority to require from
any person or entity, including government offices and instrumentalities, or government-owned or -controlled
corporations, any data, for statistical and policy development purposes in relation to the proper discharge of its
functions and responsibilities: Provided, That disaggregated data gathered are subject to prevailing confidentiality
laws. The Bangko Sentral through the Governor or in his absence, a duly authorized representative shall have the
power to issue a subpoena for the production of the books and records for the aforesaid purpose. Those who
refuse the subpoena without justifiable cause, or who refuse to supply the Bangko Sentral with data required, shall
be subject to punishment for contempt in accordance with the provisions of the Rules of Court.
"The authority of the Bangko Sentral to require data from banks shall continue to be exercised pursuant to its
supervisory powers set forth in this Act and other applicable laws.
"Data on individuals and firms, other than banks, gathered by the Bangko Sentral shall not be made available to
any person or entity outside of the Bangko Sentral whether public or private except under order of the court or
under such conditions as may be prescribed by the Monetary Board: Provided, however, That the collective data
on firms may be released to interested persons or entities: Provided, finally, That in the case of data on banks, the
provisions of Section 27 of this Act shall apply."
"Sec. 23. Supervision and Examination. - The Bangko Sentral shall have supervision over, and conduct regular or
special examinations of banking institutions and quasi-banks, including their subsidiaries and affiliates engaged in
allied activities.
"For purposes of this section, a subsidiary means a corporation more than fifty percent (50%) of the voting stock
of which is directly or indirectly owned, controlled or held with power to vote by a bank or quasi-bank and an
affiliate means a corporation the voting stock of which, to the extent of fifty percent (50%) or less, is owned by a
bank or quasi-bank or which is related or linked directly or indirectly to such institution or intermediary through
common stockholders or such other factors as may be determined by the Monetary Board.
"The Bangko Sentral shall have regulatory authority over, and conduct regular or special examinations of, entities
which under this Act or by special laws are subject to its jurisdiction.
"The Bangko Sentral shall establish a mechanism for issues arising from bank examinations. It shall be
independent and reports directly to the Monetary Board, without prejudice to the authority of the Bangko Sentral
and its Monetary Board to take enforcement and supervisory actions against supervised entities.
"The department heads and the examiners of the supervising and/or examining departments are hereby
authorized to administer oaths to any director, officer, or employee of any institution under their respective
supervision or subject to their examination, and to compel the presentation of all books, documents, papers or
records necessary in their judgment to ascertain the facts relative to the true condition of any institution as well as
the books and records of persons and entities relative to or in connection with the operations, activities or
transactions of the institution under examination, subject to the provision of existing laws protecting or
safeguarding the secrecy or confidentiality of bank deposits as well as investments of private persons, natural or
juridical, in debt instruments issued by the Government.
"No restraining order or injunction shall be issued by the court enjoining the Bangko Sentral from examining any
institution subject to supervision or examination by the Bangko Sentral, unless there is convincing proof that the
action of the Bangko Sentral is plainly arbitrary and made in bad faith and 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. The provisions of Rule 58 of the New Rules of Court insofar as they are
applicable and not inconsistent with the provisions of this section shall govern the issuance and dissolution of the
restraining order or injunction contemplated in this section."
Section 9. A new section entitled Section 25-A is hereby included in the same Act to read as follows:
"Sec. 25-A. Authority to Approve Transfer of Shares.— Transfers or acquisitions, or a series thereof, of at least
ten percent (10%) of the voting shares in banks or quasi-banks shall require the prior approval of the Bangko
Sentral. The selling or conveying stockholder shall submit such transfer or acquisition for approval by the Bangko
Sentral within such period as may be prescribed by the Monetary Board. In approving such transfers or
acquisitions, regard shall be given by the Bangko Sentral to the fitness of the incoming stockholders as may be
indicated in their integrity, reputation and financial capacity. Without Bangko Sentral approval, no such transfer or
acquisition shah have legal effect nor shall the same be recognized in the books of the institution or by any
government agency, and the transferor-stockholders shall remain accountable and responsible therefor. Transfer
of actual control or management of the institution to the new stockholders or their representatives prior to Bangko
Sentral approval shall make the transferor, the transferee and any person responsible therefor liable under
Sections 36 and 37 of this Act. Notwithstanding any provision of law to the contrary, the Bangko Sentral may
share with the Philippine Deposit Insurance Corporation any information that the Bangko Sentral may obtain
pertaining to transfer or acquisition of shares or series of transfers or acquisition of shares in banks and quasi-
banks."
Section 10. Section 27(d) of the same Act is hereby amended to read as follows:
"Sec. 27. Prohibitions. - In addition to the prohibitions found in Republic Act Nos. 3019 and 6713, personnel of the
Bangko Sentral are hereby prohibited from:
"x x x
"(d) borrowing from any institution subject to supervision or examination by the Bangko Sentral unless said
borrowing is transacted on an arm’s length basis, fully disclosed to the Monetary Board, and shall be subject to
such rules and regulations as the Monetary Board may prescribe."
"Sec. 28. Examination and Fees. - The supervising and examining department head, personally or by deputy,
shall examine the operations of every bank and quasi-bank, including their subsidiaries and affiliates engaged in
allied activities, and other entities which under this Act or special laws are subject to Bangko Sentral supervision,
in accordance with the guidelines set by the Monetary Board taking into consideration sound and prudent
practices: Provided, That there shall be an interval of at least twelve (12) months between regular
examinations: Provided, further, That the Monetary Board, by an affirmative vote of at least five (5) members, may
authorize a special examination if the circumstances warrant.
"The institution concerned shall afford to the head of the appropriate supervising and examining departments and
to his authorized deputies full opportunity to examine its books and records, cash and assets and general
condition and review its systems and procedures at any time during business hours when requested to do so by
the Bangko Sentral: Provided, however, That none of the reports and other papers relative to such examinations
shall be open to inspection by the public except insofar as such publicity is incidental to the proceedings
hereinafter authorized or is necessary for the prosecution of violations in connection with the business of such
institutions.
"Supervised institutions shall pay to the Bangko Sentral, no later than May 31 of each year, an annual supervision
fee as may be prescribed by the Monetary Board. In determining the amount of the annual supervision fee, the
Monetary Board shall consider the costs of supervision."
"Sec. 28-A. Bangko Sentral Coordination. - The suspension or revocation of any government license necessary
for the operation of Bangko Sentral-supervised entity must be done only with prior consultation with the Bangko
Sentral ."
"Sec. 30. Proceedings in Receivership and Liquidation. - Whenever, upon report of the head of the supervising or
examining department, the Monetary Board finds that a bank or quasi-bank:
"(a) has notified the Bangko Sentral or publicly announced a unilateral closure, or has been
dormant for at least sixty (60) days or in any manner has suspended the payment of its
deposit/deposit substitute liabilities, or is unable to pay its liabilities as they become due in the
ordinary course of business: Provided, That this shall not include inability to pay caused by
extraordinary demands induced by financial panic in the banking community;
"(b) has insufficient realizable assets, as determined by the Bangko Sentral, to meet its liabilities; or
"(c) cannot continue in business without involving probable losses to its depositors or creditors; or
"(d) has willfully violated a cease and desist order under Section 37 of this Act that has become
final, involving acts or transactions which amount to fraud or a dissipation of the assets of the
institution; in which cases, the Monetary Board may summarily and without need for prior hearing
forbid the institution from doing business in the Philippines and designate the Philippine Deposit
Insurance Corporation (PDIC) as receiver in the case of banks and direct the PDIC to proceed with
the liquidation of the closed bank pursuant to this section and the relevant provisions of Republic
Act No. 3591, as amended. The Monetary Board shall notify in writing, through the receiver, the
board of directors of the closed bank of its decision.
"The actions of the Monetary Board taken under this section or under Section 29 of this Act shall be final and
executory and may not be restrained or set aside by the court except on petition for certiorarion the ground that
the action taken was in excess of jurisdiction or with such grave abuse of discretion as to amount to lack or
excess of jurisdiction. The petition for certiorari may only be filed by the stockholders of record representing the
majority of the capital stock within ten (10) days from receipt by the board of directors of the institution of the order
directing receivership, liquidation or conservatorship. The designation of a conservator under Section 29 of this
Act or the appointment of a receiver under this section shall be vested exclusively with the Monetary Board.
Furthermore, the designation of a conservator is not a precondition to the designation of a receiver.
"The authority of the Monetary Board to summarily and without need for prior hearing forbid the bank or quasi-
bank from doing business in the Philippines as provided above may also be exercised over non-stock savings and
loan associations, based on the same applicable grounds. For quasi-banks and non-stock savings and loan
associations, any person of recognized competence in banking, credit or finance may be designated by the
Bangko Sentral as a receiver."
Section 14. Section 31 of Republic Act No. 7653 is hereby deleted.
Section 15. Section 32 of Republic Act No. 7653 is hereby deleted.
"Sec. 34. Refusal to Make Reports or Permit Examination. - Any officer, owner, agent, manager, director or
officer-in-charge of any institution who, being required in writing by the Monetary Board or by the head of the
supervising and examining department within the purview of this Act and relevant laws willfully refuses to file the
required report or permit any lawful examination into the affairs of such institution shall be punished by a fine of
not less than Fifty thousand pesos (₱50,000) nor more than Two million pesos (₱2,000,000) or by imprisonment
of not less than one (1) year nor more than five (5) years, or both, at the discretion of the court.
"This shall also apply to the officer, owner, agent, manager, director or officer-in-charge of the affiliate
company/ies whose transactions are subject to examination under this Act."
"Sec. 35. False Statement. - The willful making of a false or misleading statement on a material fact to the
Monetary Board or to the examiners of the Bangko Sentral shall be punished by a fine of not less than One
hundred thousand pesos (₱100,000) nor more than Two million pesos (₱2,000,000), or by imprisonment of not
more than five (5) years, or both, at the discretion of the court."
"Sec. 36. Proceedings Upon Violation of This Act and Other Banking Laws, Rules, Regulations, Orders or
Instructions. - Whenever a bank, quasi-bank, including their subsidiaries and affiliates engaged in allied activities
or other entity which under this Act or special laws is subject to Bangko Sentral supervision or whenever any
person or entity willfully violates this Act or other pertinent banking laws being enforced or implemented by the
Bangko Sentral or any order, instruction, rule or regulation issued by the Monetary Board, the person or persons
responsible for such violation shall unless otherwise provided in this Act be punished by a fine of not less than
Fifty thousand pesos (₱50,000) nor more than Two million pesos (₱2,000,000) or by imprisonment of not less
than two (2) years nor more than ten (10) years, or both, at the discretion of the court.
"Whenever an entity under feangko Sentral supervision persists in carrying on its business in an unlawful or
unsafe manner, the Board may, without prejudice to the penalties provided in the preceding paragraph of this
section and the administrative sanctions provided in Section 37 of this Act, take action under Section 30 of this
Act.
"The Bangko Sentral may grant informer’s reward to any person, except an officer or employee of the Bangko
Sentral or of any intelligence or law enforcement agency, including the relatives of such officer or employee within
the fourth degree of consanguinity or affinity, who voluntarily give definite information not yet in the possession of
the Bangko Sentral leading to the: (a) arrest of bank directors or officers and/or BSP personnel for violation of this
Act or any banking and other laws implemented or enforced by the Bangko Sentral, or for violation of other penal
laws committed in connection with their employment or functions; or (b) filing of criminal charges against any
person for violation of Section 50 of this Act.
"The Monetary Board is hereby authorized to promulgate the implementing guidelines for the grant of informer’s
reward, which in no case shall exceed One million pesos (₱1,000,000). Said guidelines may provide for additional
qualifications and disqualifications of informants as well as the form and minimum content of the information
given.
"The cash reward of informers shall be subject to applicable withholding taxes."
"Sec. 37. Administrative Sanctions on Supervised Entities. - The imposition of administrative sanctions shall be
fair, consistent and reasonable. Without prejudice to the criminal sanctions against the culpable persons provided
in Sections 34, 35, and 36 of this Act, the Monetary Board may, at its discretion, impose upon any bank, quasi-
bank, including their subsidiaries and affiliates engaged in allied activities, or other entity which under this Act or
special laws are subject to the Bangko Sentral supervision, and/or their directors, officers or employees, for any
willful violation of its charter or bylaws, willful delay in the submission of reports or publications thereof as required
by law, rules and regulations; any refusal to permit examination into the affairs of the institution; any willful making
of a false or misleading statement to the Board or the appropriate supervising and examining department or its
examiners; any willful failure or refusal to comply with, or violation of, any banking law or any order, instruction or
regulation issued by the Monetary Board, or any order, instruction or ruling by the Governor; or any commission of
irregularities, and/or conducting business in an unsafe or unsound manner as may be determined by the Monetary
Board, the following administrative sanctions, whenever applicable:
"(a) fines in amounts as may be determined by the Monetary Board to be appropriate, but in no
case to exceed One million pesos (₱1,000,000) for each transactional violation or One hundred
thousand pesos (₱100,000) per calendar day for violations of a continuing nature, taking into
consideration the attendant circumstances, such as the nature and gravity of the violation or
irregularity and the size of the institution: Provided, That in case profit is gained or loss is avoided
as a result of the violation, a fine no more than three (3) times the profit gained or loss avoided may
also be imposed;
"(b) suspension of rediscounting privileges or access to Bangko Sentral credit facilities;
"(c) suspension of lending or foreign exchange operations or authority to accept new deposits or
make new investments;
"(d) suspension of interbank clearing privileges; and/or
"(e) suspension or revocation of quasi-banking or other special licenses.
"Resignation or termination from office shall not exempt such director, officer or employee from administrative or
criminal sanctions.
"The Monetary Board may, whenever warranted by circumstances, preventively suspend any director, officer or
employee of the institution pending an investigation: Provided, That should the case be not finally decided by the
Bangko Sentral within a period of one hundred twenty (120) days after the date of suspension, said director,
officer or employee shall be reinstated in his position: Provided, further, That when the delay in the disposition of
the case is due to the fault, negligence or petition of the director or officer, the period of delay shall not be counted
in computing the period of suspension herein provided.
"The above administrative sanctions need not be applied in the order of their severity.
"Whether or not there is an administrative proceeding, if the institution and/or the directors, officers or employees
concerned continue with or otherwise persist in the commission of the indicated practice or violation, the Monetary
Board may issue an order requiring the institution and/or the directors, officers or employees concerned to cease
and desist from the indicated practice or violation, and may further order that immediate action be taken to correct
the conditions resulting from such practice or violation. The cease and desist order shall be immediately effective
upon service on the respondents.
"The respondents shall be afforded an opportunity to defend their action in a hearing before the Monetary Board
or any committee chaired by any Monetary Board member created for the purpose, upon request made by the
respondents within five (5) days from their receipt of the order. If no such hearing is requested within said period,
the order shall be final. If a hearing is conducted, all issues shall be determined on the basis of records, after
which the Monetary Board may either reconsider or make final its order.
"The Governor is hereby authorized, at his discretion, to impose upon banks and quasi-banks, including their
subsidiaries and affiliates engaged in allied activities, and other entities which under this Act or special laws are
subject to Bangko Sentral supervision for any failure to comply with the requirements of law, Monetary Board
regulations and policies, and/or instructions issued by the Monetary Board or by the Governor, fines not in excess
of One hundred thousand pesos (₱100,000) for each transactional violation or Thirty thousand pesos (₱30,000)
per calendar day for violations of a continuing nature, the imposition of which shall be final and executory until
reversed, modified or lifted by the Monetary Board on appeal."
"Sec. 38-A. Issuance of Injunctive Belief Against Bangko Sentral Actions. - No court, other than the Court of
Appeals and the Supreme Court, shall issue any temporary restraining order, preliminary injunction or preliminary
mandatory injunction against the Bangko Sentral for any action under this Act.
"Any restraining order or injunction issued in violation of this section is void and of no force and effect.
"The provisions of the Rules of Court on injunctions insofar as these are applicable and not inconsistent with the
provisions of this Act shall govern the issuance and dissolution of restraining orders or injunctions against the
Bangko Sentral."
Section 21. Section 39 of the same Act is hereby amended as follows:
"Sec. 39. Reports and Publications. - The Bangko Sentral shall publish a general balance sheet showing the
volume and composition of its assets and liabilities as of the last working day of the month within ninety (90) days
after the end of each month, which may be reasonably extended by the Bangko Sentral as warranted.
"The Monetary Board shall publish and submit the following reports to the President and to the Congress:
"(a) not later than ninety (90) days after the end of each quarter, an analysis of economic and
financial developments, including the condition of net international reserves and monetary
aggregates;
"(b) within ninety (90) days after the end of the year, which may be reasonably extended by the
Bangko Sentral as warranted, the preceding year’s budget and profit and loss statement of the
Bangko Sentral showing in reasonable detail the result of its operations;
"(c) one hundred twenty (120) days after the end of each semester, a review of the state of the
financial system; and
"(d) as soon as practicable, abnormal movements in monetary aggregates and the general price
level, and, not later than seventy-two (72) hours after they are taken, remedial measures in
response to such abnormal movements."
"Sec. 40. Annual Report. - Before the end of June of each year, the Bangko Sentral shall publish and submit to
the President and the Congress an annual report on the condition of the Bangko Sentral including a review of the
policies and measures adopted by the Monetary Board during the past year and an analysis of the economic and
financial circumstances which gave rise to said policies and measures.
"The annual report shall also include a statement of the financial condition of the Bangko Sentral and a statistical
appendix which shall present, as a minimum, the following data:
"(a) the monthly movement of monetary aggregates and their components;
"(b) the monthly movement of purchases and sales of foreign exchange and of the international
reserves of the Bangko Sentral ;
"(c) the balance of payments of the Philippines;
"(d) monthly indices of consumer prices and of import and export prices;
"(e) the monthly movement, in summary form, of exports and imports, by volume and value;
"(f) the monthly movement of the accounts of the Bangko Sentral and of other banks;
"(g) the principal data on government receipts and expenditures and on the status of the public
debt, both domestic and foreign; and
"(h) the texts of the major legal and administrative measures adopted by the Government and the
Monetary Board during the year which relate to the functions or operations of the Bangko Sentral or
of the financial system.
"The Bangko Sentral shall publish another version of the annual report in terms understandable to the layman."
"Sec. 43. Computation of Profits and Losses. - Within the first sixty (60) days following the end of each year, the
Bangko Sentral shall determine its net profits or losses. Notwithstanding any provision of law to the contrary, the
net profit of the Bangko Sentral shall be determined after allowing for expenses of operation, adequate allowances
and provisions for bad and doubtful debts, depreciation in assets, and such allowances and provisions for
contingencies or other purposes as the Monetary Board may determine in accordance with prudent financial
management and effective central banking operations."
"Sec. 43-A. Bangko Sentral Reserve Fund. - The Bangko Sentral shall establish a reserve fund, whenever it has
income or positive surplus, to mitigate future risks such as, but not limited to, the impacts of foreign exchange and
price fluctuations, and to address other contingencies inherent in carrying out the Bangko Sentral-mandated
functions as central monetary authority. The reserve fund shall consist of fluctuation reserve, contingency reserve
and such other reserves as the Monetary Board deems prudent or necessary."
"Sec. 45. Revaluation Profits and Losses. - Unrealized profits or losses arising from any revaluation of the Bangko
Sentral’s assets, liabilities or derivative instruments denominated in foreign currencies with respect to the
movements of prices and exchange rates from third currencies to Philippine peso shall not be included in the
computation of the annual profits and losses of the Bangko Sentral. Any profits or losses arising in this manner
shall be offset by any amounts which, as a consequence of such revaluations, are owed by the Philippines to any
international or regional intergovernmental financial institution of which the Philippines is a member or are owed
by these institutions to the Philippines. Any remaining unrealized profit or loss shall be carried in an account which
shall be named ‘Revaluation of International Reserve (RIRY, and the net balance of which shall appear either
among the liabilities or among the assets of the Bangko Sentral, depending on whether the revaluations have
produced net profits or net losses.
"The RIR account shall be credited or debited for the periodic revaluation as authorized in this section and to
reflect the corresponding adjustment resulting to reduction in the Bangko Sentral’s net foreign assets, liabilities
and foreign currency-denominated derivative instruments. The RIR shall be adjusted and recognized in the
income statement upon sale of gold and foreign securities, or when the foreign currency is repatriated to local
currency or is used to pay foreign obligations, or upon maturity of a foreign currency-denominated forward or
option contract involving the Philippine peso."
"Sec. 61. Guiding Principle.- The Monetary Board shall regularly assess price developments and outlook and,
based on its analysis and evaluation of inflationary pressures, use its policy instruments to attain and maintain
price stability."
"Sec. 63. Action When Abnormal Movements Occur in the Price Level. - Whenever abnormal movements in the
prices endanger the stability of the Philippine economy or important sectors thereof, the Monetary Board shall:
"(a) take such remedial measures as are appropriate and within the powers granted to the
Monetary Board and the Bangko Sentral under the provisions of this Act; and
"(b) submit to the President of the Philippines and the Congress, and make public, a detailed report
which shall include, as a minimum, a description and analysis of:
"(1) the causes of the rise or fall of prices;
"(2) the extent to which the changes in prices have been reflected in changes in the level of
domestic output, employment, wages and economic activity in general, and the nature and
significance of any such changes; and
"(3) the measures which the Monetary Board has taken and the other monetary, fiscal or
administrative measures which it recommends to be adopted.1âwphi1
"Whenever the cost of living index increases by more than ten percent (10%), in relation to the level existing at the
end of the corresponding month of the preceding year, or even though this quantitative guideline has not been
reached when in its judgment the circumstances so warrant, the Monetary Board shall submit the reports
mentioned in this section, and shall state therein whether, in the opinion of the Board, said changes in the cost of
living represent a threat to the stability of the Philippine economy or of important sectors thereof.
"The Monetary Board shall continue to submit periodic reports to the President of the Philippines and to Congress
until it considers that the price disturbances have disappeared or have been adequately controlled."
"Sec. 66. Composition of the International Reserves. - The international reserves of the Bangko Sentral may
include, but shall not be limited to, the following assets:
"(a) gold; and
"(b) assets in foreign currencies in the form of: documents and instruments customarily employed
for the international transfer of funds; demand and time deposits in central banks, treasuries and
commercial banks abroad; foreign government securities; and foreign notes and coins.
"The Monetary Board shall endeavor to hold the foreign exchange resources of the Bangko Sentral in freely
convertible currencies. The Monetary Board shall issue regulations determining the other qualifications which
foreign exchange assets must meet in order to be included in the international reserves of the Bangko Sentral.
"The Bangko Sentral shall be free to convert any of the assets in its international reserves into other assets as
described in subsections (a) and (b) of this section."
"Sec. 81. Guiding Principles. - The rediscounts, discounts, loans and advances which the Bangko Sentral is
authorized to extend to banking institutions, under the provisions of the present article of this Act shall be used to
influence the volume of credit consistent with the objective of price stability and maintenance of financial stability."
"Sec. 84. Emergency Loans and Advances. - In periods of national and/or local emergency or of imminent
financial panic which directly threaten monetary and financial stability, the Monetary Board may, by a vote of at
least five (5) of its members, authorize the Bangko Sentral to grant extraordinary loans or advances to banking
institutions, secured by assets as defined hereunder: Provided, That while such loans or advances are
outstanding, the debtor institution shall not, except upon prior authorization by the Monetary Board, expand the
total volume of its loans or investments.
"The Monetary Board may, at its discretion, likewise authorize the Bangko Sentral to grant emergency loans or
advances to banking institutions, even during normal periods, for the purpose of assisting a bank in a precarious
financial condition or under serious financial pressures brought by unforeseen events, or events which, though
foreseeable, could not be prevented by the bank concerned: Provided, however, That the Monetary Board has
ascertained that the bank is not insolvent and has the assets defined hereunder to secure the
advances: Provided, further, That a concurrent vote of at least five (5) members of the Monetary Board is
obtained.
"The amount of any emergency loan or advance shall not exceed the sum of fifty percent (50%) of total deposits
and deposit substitutes of the banking institution, and shall be disbursed in two (2) or more tranches. The amount
of the first tranche shall be limited to twenty-five percent (25%) of the total deposit and deposit substitutes of the
institution and shall be secured by (a) government securities; (b) acceptable guarantees backed up by the national
government or its securities; (c) other unencumbered first class collaterals; and (d) other kinds of collaterals as
may be authorized by the Monetary Board in accordance with sound risk management principles: Provided, That if
as determined by the Monetary Board, the circumstances surrounding the emergency warrant a loan or advance
greater than the amount provided hereinabove, the amount of the first tranche may exceed twenty-five percent
(25%) of the bank’s total deposit and deposit substitutes if the same is adequately secured by any of the
collaterals set forth above as approved by the Monetary Board, and the principal stockholders of the institution
furnish an acceptable undertaking to indemnify and hold harmless from suit a conservator whose appointment the
Monetary Board may find necessary at any time."Prior to the release of the first tranche, the banking institution
shall submit to the Bangko Sentral a resolution of its board of directors authorizing the Bangko Sentral to evaluate
other assets of the banking institution certified by its external auditor to be good and available for collateral
purposes should the release of the subsequent tranche be thereafter applied for.
"The Monetary Board may, by a vote of at least five (5) of its members, authorize the release of a subsequent
tranche on condition that the principal stockholders of the institution:
"(a) furnish an acceptable undertaking to indemnify and hold harmless from suit a conservator
whose appointment the Monetary Board may find necessary at any time; and
"(b) provide acceptable security which, in the judgment of the Monetary Board, would be adequate
to supplement, where necessary, the assets tendered by the banking institution to collateralize the
subsequent tranche.
"In connection with the exercise of these powers, the prohibitions in Section 128 of this Act shall not apply insofar
as it refers to acceptance as collateral of shares and their acquisition as a result of foreclosure proceedings,
including the exercise of voting rights pertaining to said shares: Provided, however, That should the Bangko
Sentral acquire any of the shares it has accepted as collateral as a result of foreclosure proceedings, the Bangko
Sentral shall dispose of said shares by public bidding within one (1) year from the date of consolidation of title by
the Bangko Sentral.
"Whenever a financial institution incurs an overdraft in its account with the Bangko Sentral, the same shall be
eliminated within the period prescribed in Section 102 of this Act."
"Sec. 88-A. Exemption of Collaterals from Attachments, Executions and Other Restrictions. - Collaterals on loans
and advances granted by the Bangko Sentral, whether or not the interest of the Bangko Sentral is registered, shall
not be subject to attachment, execution or any other court process or administrative restrictions on land use, nor
shall they be included in the property of insolvent persons or institutions."
Section 32. A new section entitled Section 88-B is hereby included in the same Act to read as follows:
"Sec. 88-B. Deputization of Legal Staff in Case of Foreclosures. - In case of an extrajudicial foreclosure of
mortgage in connection with loans and advances under this article, the Bangko Sentral may deputize any of its
lawyers to conduct the public auction pursuant to Act No. 3135, as amended.
"Likewise, in case of a judicial foreclosure in connection with loans and advances under this article, the Bangko
Sentral may, with the approval of the court, deputize any of its lawyers to act as special sheriff in the sale of a
debtor’s properties and in the enforcement of court writs and processes related thereto. The special sheriff of the
Bangko Sentral shall make a report to the proper court after any action has been taken by him, which court shall
treat such action as if it were an act of its own sheriff in all respects.
"No restraining order or injunction shall be issued by the court enjoining the Bangko Sentral from proceeding with
the foreclosure of the mortgage unless a bond is posted in favor of the Bangko Sentral in an amount equivalent to
the total claim of the Bangko Sentral. The restraining order or injunction shall be refused or, if granted, shall be
dissolved upon filing by the Bangko Sentral of a bond, which shall be in the form of a Bangko Sentral check, in an
amount twice the amount of the original bond posted conditioned that the Bangko Sentral will pay the damages
which the party may suffer by the refusal or dissolution of the injunction. The provisions of the Rules of Court on
injunctions insofar as they are applicable and not inconsistent with the provisions of this section shall govern the
issuance and dissolution of the restraining order or injunction contemplated in this section."
Section 33. A new section entitled Section 88-C is hereby included in the same Act to read as follows:
"Sec. 88-C. Right of Redemption of Foreclosed Real Property; Right of Possession During Redemption Period. -
In the event of foreclosure, whether judicially or extrajudicially, the mortgagor, who is a natural person, shall have
the right to redeem the property within one (1) year from the date of foreclosure sale. In case the mortgagor is a
juridical person, the mortgagor shall have the right to redeem the property sold in a judicial foreclosure sale within
one (1) year from the date of foreclosure sale: Provided, That in case of an extrajudicial foreclosure,
notwithstanding Act No. 3135, the mortgagor shall have the right to redeem the property sold within ninety (90)
days from the foreclosure sale but not later than the registration of the certificate of foreclosure sale. Redemption
shall be effected by paying the principal, interests, charges, commissions and all claims of whatever nature of the
Bangko Sentral outstanding and due as of the date of foreclosure sale, including all costs and other expenses
incurred by reason of the foreclosure sale and custody of the property.
"The Bangko Sentral, as purchaser in the foreclosure sale and without need of posting a bond, may take
possession of the foreclosed property during the redemption period. The Bangko Sentral shall be entitled to the
fruits of the property, the same to be applied against the redemption price."
Section 34. A new section entitled Section 88-D is hereby included in the same Act to read as follows:
"Sec. 88-D. Unsecured Bangko Sentral Claims. - All unsecured claims of the Bangko Sentral shall be considered
preferred credits similar to taxes due to the National Government in the order of preference under Article 2244 of
the new Civil Code."
"Sec. 89-A. Financial Facilities for Islamic Banks. - The Bangko Sentral may, taking into consideration the peculiar
characteristics of islamic banking, formulate rules and regulations for the extension of financial facilities to islamic
banks: Provided, That such exposures shall be properly secured."
Section 36. A new section entitled Section 89-B is hereby included in the same Act to read as follows:
"Sec. 89-B. Loans to the Philippine Deposit Insurance Corporation (PDIC). - The Bangko Sentral, pursuant to its
mandate of maintaining financial stability, may lend funds to the PDIC for insurance purposes and in cases of
financial assistance that the latter is authorized to extend under Section 22(e) of Republic Act No. 3591, as
amended. Notwithstanding Section 23 of Republic Act No. 3591, as amended, the Monetary Board shall prescribe
interest rates and such other terms and conditions of the loan."
"Sec. 92. Issue and Negotiation of Bangko Sentral Obligations. - In order to provide the Bangko Sentral with
effective instruments for open market operations, the Bangko Sentral may, subject to such rules and regulations
as the Monetary Board may prescribe and in accordance with the principles stated in Section 90 of this Act, issue,
place, buy and sell freely negotiable evidences of indebtedness of the Bangko Sentral. Said evidences of
indebtedness may be issued directly against the international reserve of the Bangko Sentral or against the
securities which it has acquired under the provisions of Section 91 of this Act, or may be issued without relation to
specific types of assets of the Bangko Sentral.
"The Monetary Board shall determine the interest rates, maturities and other characteristics of said obligations of
the Bangko Sentral, and may, if it deems it advisable, denominate the obligations in gold or foreign currencies.
"Subject to the principles stated in Section 90 of this Act, the evidences of indebtedness of the Bangko Sentral to
which this section refers may be acquired by the Bangko Sentral before their maturity, either through purchases in
the open market or through redemptions at par and by lot if the Bangko Sentral has reserved the right to make
such redemptions. The evidences of indebtedness acquired or redeemed by the Bangko Sentral shall not be
included among its assets, and shall be immediately retired and cancelled."
"Sec. 95. Definition of Deposit Substitutes. - The term ‘deposit substitutes’ is defined as an alternative form of
obtaining funds from the public, other than deposits, through the issuance, endorsement, or acceptance of debt
instruments for the borrower’s own account, for the purpose of relending or purchasing of receivables and other
obligations. These instruments may include, but need not be limited to, bankers acceptances, promissory notes,
participations, certificates of assignment and similar instruments with recourse, and repurchase agreements. The
phrase obtaining funds from the public’ shall mean borrowing from twenty (20) or more lenders at any one time,
and, for this purpose, Tenders’ shall refer to individuals and corporate entities that are not acting as financial
intermediaries, subject to the safeguards and regulations issued by the Monetary Board. The Monetary Board
shall determine what specific instruments shall be considered as deposit substitutes for the purposes of Section
94 of this Act: Provided, however, That deposit substitutes of commercial, industrial and other nonfinancial
companies for the limited purpose of financing their own needs or the needs of their agents or dealers shall not be
covered by the provisions of Section 94 of this Act."
"Sec. 101. Reserve Deficiencies. - Whenever the reserve position of any bank or quasi-bank, computed in the
manner specified in the preceding section of this Act, is below the required minimum, the bank or quasi-bank shall
pay the Bangko Sentral monetary penalty as may be prescribed by the Monetary Board: Provided, however, That
banks and quasi-banks shall ordinarily be permitted to offset any reserve deficiency occurring on one or more
days of the week with any excess reserves which they may hold on other days of the same week and shall be
required to pay the penalty in accordance with the mechanism approved by the Monetary Board. In cases of
abuse, the Monetary Board may deny any bank or quasi-bank the privilege of offsetting reserve deficiencies in the
aforesaid manner.
"If a bank or quasi-bank chronically has a reserve deficiency, the Monetary Board may limit or prohibit the making
of new loans or investments by the institution and may require that part or all of the net profits of the institution be
assigned to surplus.
"The Monetary Board may modify or set aside the reserve deficiency penalties provided in this section, for part or
the entire period of a strike or lockout affecting a bank or a quasi-bank as defined in the Labor Code, or of a
national emergency affecting operations of banks or quasi-banks, or in such other instances where the grant of
waiver of penalties is determined by the Monetary Board to be justifiable. The Monetary Board may also modify or
set aside reserve deficiency penalties for rehabilitation program of a bank."
"Sec. 104. Guiding Principle. - The Monetary Board shall use the powers granted to it under this Act to ensure that
the supply, availability and cost of money are in accord with the needs of the Philippine economy and that bank
credit is not granted for speculative purposes prejudicial to the national interests. Regulations on bank operations
shall be applied to all banks of the same category, as may be defined by the Monetary Board, uniformly and
without discrimination."
"Sec. 108. Minimum Capital Ratios. - The Monetary Board may prescribe minimum risk-based capital adequacy
ratios based on internationally accepted standards and may alter said ratios whenever it deems necessary. In the
exercise of its authority under this section, the Monetary Board may require banks to hold capital beyond the
minimum requirements commensurate to then risk profile."
"Sec. 113. Official Deposits. - The Bangko Sentral shall be the official depository of the Government, its political
subdivisions and instrumentalities as well as of government-owned or -controlled corporations. As a general
policy, their cash balances should be deposited with the Bangko Sentral, with only minimum working balances to
be held by government-owned banks and such other banks licensed to operate in the Philippines as the Monetary
Board may authorize.
"The Bangko Sentral may accept deposits and pay interest on such deposits and other similar placements of the
Government or of its political subdivisions and instrumentalities, banks and other Bangko Sentral-supervised
institutions."
"Sec. 123. Financial Advice on Official Credit Operations. - Before undertaking any credit operation abroad, the
Government, through the Secretary of Finance, shall request the opinion, in writing, of the Monetary Board on the
monetary implications of the contemplated action. Such opinions must similarly be requested by all political
subdivisions and instrumentalities of the Government before any credit operation abroad is undertaken by them.
"The opinion of the Monetary Board shall be based on the gold and foreign exchange resources and obligations of
the nation and on the effects of the proposed operation on the balance of payments and on monetary
aggregates.1âwphi1
"Whenever the Government, or any of its political subdivisions or instrumentalities, contemplates borrowing within
the Philippines, the prior opinion of the Monetary Board shall likewise be requested in order that the Board may
render an opinion on the probable effects of the proposed operation on monetary aggregates, the price level, and
the balance of payments.
"A credit operation or borrowing as provided herein may take the form of different credit facilities such as, but not
limited to, a single loan, series of loans under a borrowing program, or credit lines. No prior Monetary Board
opinion shall be required for individual drawdowns or borrowings within approved credit lines or borrowing
programs."
"Sec. 125. Tax Exemptions. - The Bangko Sentral shall be exempt from all national, provincial, municipal and city
taxes on income derived from its governmental functions, specifically:
"(a) income from its activities or transactions in the exercise of its supervision over the operations of banks and its
regulatory and examination powers over non-bank financial institutions performing quasi-banking functions,
money service businesses, credit granting businesses and payment system operators; and
"(b) income in pursuit of its primary objective to maintain price stability conducive to a balanced and sustainable
growth of the economy, and the promotion and maintenance of monetary and financial stability and the
convertibility of the peso.
"All other incomes not included in the above enumeration shall be considered as proprietary income and shall be
subject to all taxes, charges, fees and assessments."
"Sec. 128. Prohibitions. - The Bangko Sentral shall not acquire shares of any kind or accept them as collateral,
and shall not participate in the ownership or management of any enterprise, either directly or
indirectly: Provided, That this prohibition shall not apply whenever the Monetary Board, by a vote of at least five
(5) of its members, (1) deems an acquisition or investment to be necessary to qualify or as required for
membership in international and regional organizations; or (2) determines that investing in and/or operating an
enterprise will be consistent with the effective fulfillment of its mandate and will not constitute any conflict of
interest.
"The Bangko Sentral shall not engage in development banking or financing: Provided, however, That outstanding
loans obtained or extended for development financing shall not be affected by the prohibition of this section."
"Sec. 132. Transfer of Assets and Liabilities. - x x x.
"x x x.
"(b) the Bangko Sentral shall remit seventy-five percent (75%) of its net profits as computed in this Act to a special
deposit account (sinking fund) or to the National Treasury as dividends, until such time as the net liabilities of the
Central Bank shall have been liquidated through generally accepted finance mechanisms such as, but not limited
to, write-offs, set-offs, condonation, collections, reappraisal, revaluation and bond issuance by the National
Government. Thereafter, it shall remit fifty percent (50%) of its said net profits to the National Treasury;
Section 47. Repealing Clause. - All provisions of existing laws, orders, rules and regulations, or parts thereof
which are in conflict or inconsistent with the provisions of this Act are hereby repealed, amended or modified
accordingly.
Section 48. Separability Clause. - If any provision or section of this Act is held to be unconstitutional or invalid, the
other provisions or sections hereof, which are not affected thereby shall continue to be in full force and effect.
Section 49. Effectivity. - This Act shall take effect fifteen (15) days following its publication in the Official Gazette
or in a newspaper of general circulation.
Republic Act 8791
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. 10846
AN ACT ENHANCING THE RESOLUTION AND LIQUIDATION FRAMEWORK FOR BANKS, AMENDING FOR THE
PURPOSE REPUBLIC ACT NO. 3591, AS AMENDED, AND OTHER RELATED LAWS
SECTION 1. Section 1 of Republic Act No. 3591, as amended, is hereby amended to read as follows:
“THE CREATION OF THE PHILIPPINE

DEPOSIT INSURANCE CORPORATION
“SECTION 1. — There is hereby created a Philippine Deposit Insurance Corporation hereinafter referred to as the
‘Corporation’ which shall insure as herein provided, the deposits of all banks which are entitled to the benefits of
insurance under this Act, and which shall have the powers hereinafter granted.
“The Corporation shall, as a basic policy, promote and safeguard the interests of the depositing public by
providing insurance coverage on all insured deposits and helping maintain a sound and stable banking system.”
SECTION 2. A new section entitled Section 2 of the same Act shall be inserted between Sections 1 and 3 which
shall read as follows:
“STATE POLICY
“SEC. 2. — It is hereby declared to be the policy of the State to strengthen the mandatory deposit insurance
coverage system to generate, preserve, maintain faith and confidence in the country’s banking system, and
protect it from illegal schemes and machinations.
“Towards this end, the government must extend all means and mechanisms necessary for the Corporation to
effectively fulfill its vital task of promoting and safeguarding the interests of the depositing public by way of
providing insurance coverage on bank deposits and in helping develop a sound and stable banking system.
“In view of the crucial role and the nature of its functions and responsibilities, the Corporation, while being a
government instrumentality with corporate powers, shall enjoy fiscal and administrative autonomy.”
SECTION 3. Section 2 of the same Act is accordingly renumbered as Section 3 and is hereby amended to read as
follows:
“BOARD OF DIRECTORS: COMPOSITION

AND AUTHORITY
“SEC. 3. (a) The powers and functions of the Corporation shall be vested in and exercised by a Board of Directors
which shall be composed of seven (7) members as follows:
“(1) The Secretary of Finance who shall be the ex officio Chairman of the Board without
compensation;
“(2) The Governor of the Bangko Sentral ng Pilipinas who shall be ex officio member of the Board
without compensation;
“(3) The President of the Corporation, who shall be appointed by the President of the Philippines
from a shortlist prepared by the Governance Commission for Government-Owned or -Controlled
Corporations pursuant to Republic Act No. 10149 to serve on a full-time basis for a term of six (6)
years. The President of the Corporation shall also serve as Vice Chairman of the Board;
“(4) Four (4) members from the private sector to be appointed by the President of the Philippines
from a shortlist prepared by the Governance Commission for Government-Owned or -Controlled
Corporations pursuant to Republic Act No. 10149. The appointive directors shall serve for a term of
six (6) years unless sooner removed for cause and shall be subject to only one (1) reappointment:
Provided, That of those first appointed, the first two (2) appointees shall serve for a period of three
(3) years: Provided, however, That the appointive director shall continue to hold office until the
successor is appointed. An appointive director may be nominated by the Governance Commission
for Government-Owned or -Controlled Corporations for reappointment by the President only if one
obtains a performance score of above average or its equivalent or higher in the immediately
preceding year of tenure as appointive director based on the performance criteria for appointive
directors of the Corporation.
“Appointment to any vacancy shall be only for the unexpired term of the predecessor pursuant to Republic
Act No. 10149.
“No person shall be appointed as member of the Board unless he or she be of good moral character, of
unquestionable integrity and responsibility, of known probity and patriotism, and who is of recognized
competence in economics, banking and finance, law, management administration or insurance, and shall
be at least thirty-five (35) years of age. For the duration of their tenure or term of office and for a period of
one (1) 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 ng Pilipinas may each designate an
alternate, who shall be an official with a rank not lower than assistant secretary or its equivalent with
written authority from the Secretary of Finance or the Governor of the Bangko Sentral ng Pilipinas to
attend such meetings and to vote on behalf of their respective principals. Whenever the Chairman of the
Board is unable to attend a meeting of the Board, or in the event of a vacancy in the office of the Secretary
of Finance, and in the absence of the Vice Chairman, the members of the Board shall designate from
among themselves who shall act as Chairman.
“The President of the Philippines may remove any appointive member of the Board of Directors for any of
the following reasons:
“(i) If the member is physically or mentally incapacitated that he or she cannot properly discharge
his or her duties and responsibilities, and such incapacity has lasted for more than six (6) months;
or
“(ii) If the member is guilty of acts or operations which are of fraudulent or illegal character or which
are manifestly opposed to the aims and interests of the Corporation; or
“(iii) If the member no longer possesses the qualifications specified in this Act; or
“(iv) If the member does not meet the standards for performance based on the evaluation by the
Governance Commission for Government-Owned or -Controlled Corporations under Republic Act
No. 10149.
“The presence of four (4) members shall constitute a quorum. All decisions of the Board of Directors shall
require the concurrence of at least four (4) members.
“The compensation, per diems, allowances, incentives, and other benefits for board members shall be
determined by the Governance Commission for Government-Owned or -Controlled Corporations.
“In addition to the requirements of Republic Act No. 6713, otherwise known as the ‘Code of Conduct and
Ethical Standards for Public Officials and Employees’, any member of the Board of Directors with personal
or pecuniary interest in any matter in the agenda of the Board of Directors shall disclose his or her interest
to the Board and shall recuse from the meeting when the matter is taken up. The minutes shall reflect the
disclosure made and the recusal of the member concerned.
“(b) The Board of Directors shall have the authority:

“(1) To approve and issue rules and regulations for banks and the depositing public as it considers
necessary for the effective discharge of its responsibilities;
“(2) To act as the policy-making body of the Corporation and constitute Board committees to
oversee the management, operations and administration of the Corporation;
“(3) To establish a human resource management system which shall govern the selection, hiring,
appointment, transfer, promotion, or dismissal of personnel. Such system shall aim to establish
professionalism and excellence at all levels of the Corporation in accordance with sound principles
of management;
“(4) To approve a compensation structure as an integral component of the Corporation’s human

resource development program based on job evaluation studies and wage surveys, and revise the
same as it may deem necessary: Provided, That all positions in the Corporation shall be governed
by a compensation package, position classification system and qualification standards approved by
the Board based on a comprehensive job analysis and audit of actual duties and responsibilities.
The compensation structure shall be comparable to that of other financial institutions based on
prevailing market standards, and shall provide for yearly merit reviews or increases based on
productivity. The Corporation shall therefore be exempt from existing laws, rules and regulations on
compensation package, 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;
“(5) To appoint, establish the rank, fix the remuneration, benefits, including health care services
through a Health Maintenance Organization (HMO) and medical benefits other than those provided
for under Republic Act No. 7875, as amended, and remove any officer or employee of the
Corporation, for cause, subject to pertinent civil service laws: Provided, That the Board of Directors
may delegate this authority to the President subject to specific guidelines: Provided, further, That in
no case shall there be any diminution of existing salaries, benefits and other emoluments;
“(6) To approve policy on local and foreign travel, and the corresponding expenses, allowances
and per diems, of officers, employees, agents of the Corporation, which shall be comparable with
the expenses, allowances and per diems of personnel of other financial institutions based on
prevailing market standards, notwithstanding the provisions of Presidential Decree No. 1177,
Executive Order No. 292, Executive Order No. 248, as amended, Executive Order No. 298, and
similar laws;
“(7) To adopt an annual budget for, and authorize such expenditures by the Corporation, as are in
the interest of the effective administration and operation of the Corporation;
“(8) To approve the target level of the Deposit Insurance Fund (DIF) and the methodology for
determining reserves for insurance and financial assistance losses;
“(9) To review the organizational set-up of the Corporation and adopt a new or revised
organizational structure as it may deem necessary for the Corporation to undertake its mandate
and functions;
“(10) To design, adopt and revise, as it may deem necessary, an early separation plan for
employees of the Corporation to ensure availability of a human resource pool qualified and capable
of implementing the Corporation’s authorities under this Charter in a manner responsive and
attuned to market developments, and to provide incentives for all those who shall be separated
from the service. Notwithstanding any law to the contrary, these incentives shall be in addition to all
gratuities and benefits the employee is entitled to under existing laws; and
“(11) To promote and sponsor the local or foreign training or study of personnel in the fields of
banking, finance, management, information technology and law. Towards this end, the Corporation
is hereby authorized to defray the costs of such training or study. The Board shall prescribe rules
and regulations to govern the training or study programs of the Corporation.”
SECTION 4. Section 3 of the same Act is accordingly renumbered as Section 4.
SECTION 5. The first paragraph of Section 4 of the same Act, as renumbered, is hereby amended to read as
follows:
“PRESIDENT OF THE CORPORATION

COMPENSATION, POWERS AND DUTIES
“SEC. 4. The President of the Corporation shall be its Chief Executive Officer and the Vice Chairman of its Board
of Directors and his or her salary shall be fixed by the President of the Philippines upon the recommendation of
the Governance Commission for Government-Owned or -Controlled Corporations, at a sum commensurate to the
importance and responsibility attached to the position. The sum total of the salary, allowances, benefits and other
emoluments of the President of the Corporation shall be higher than the compensation package of the next
highest ranking executive of the Corporation.”
SECTION 6. Section 4, paragraphs (d), (f) and (h) of the same Act, as renumbered, are hereby amended to read
as follows:
“(d) To represent the Corporation in all dealings with other offices, agencies and instrumentalities of the
government and with all other persons or entities, public or private, whether domestic, foreign or international;
“(f) To represent the Corporation, either personally or through counsel, including private counsel, as may be
authorized by the PDIC Board, in any legal proceeding or action;
“(h) x x x. 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 appointment of a new President of the Corporation by the
President of the Philippines, the Board of Directors shall designate the officer-in-charge of the Corporation.”
SECTION 7. Section 4 of the same Act is accordingly renumbered as Section 5, and is hereby amended to read
as follows:
“DEFINITION OF TERMS
“SEC. 5. As used in this Act –
“(a) The term asset refers to movable, immovable, tangible, or intangible resources or properties over
which a bank has an established or equitable interest, including the proceeds of the sale of its bank and
branch licenses subject to the approval of the Bangko Sentral ng Pilipinas.
“(b) The term asset distribution plan refers to the plan of distribution of the assets of a closed bank to its
creditors, based on its estimated realizable value as of a certain cut-off date, prepared in accordance with
the Rules on Concurrence and Preference of Credits under the Civil Code or other laws.
“An asset distribution plan may be partial when it pertains to the distribution of a portion or some of the
assets of the closed bank, or final when it pertains to the distribution of all the assets of the closed bank.
“(c) The term Board of Directors means the Board of Directors of the Corporation.
“(d) The term bank and banking institution shall be synonymous and interchangeable and shall include
banks, commercial banks, savings banks, mortgage banks, rural banks, development banks, cooperative
banks, stock savings and loan associations and branches and agencies in the Philippines of foreign banks
and all other corporations authorized to perform banking functions in the Philippines.
“(e) The term closed bank refers to a bank placed under liquidation by the Monetary Board.
“(f) The term creditor refers to any individual or entity with a valid claim against the assets of the closed
bank.
“(g) The term deposit means the unpaid balance of money or its equivalent received by a bank in the usual
course of business and for which it has given or is obliged to give credit to a commercial, checking,
savings, time or thrift account, evidenced by a passbook, certificate of deposit, or other evidence of deposit
issued in accordance with Bangko Sentral ng Pilipinas 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:
“(1) Investment products such as bonds and securities, trust accounts, and other similar
instruments;
“(2) Deposit accounts or transactions which are fictitious or fraudulent as determined by the
Corporation;
“(3) Deposit accounts or transactions constituting, and/or emanating from, unsafe and unsound
banking practice/s, as determined by the Corporation, in consultation with the Bangko Sentral ng
Pilipinas, after due notice and hearing, and publication of a directive to cease and desist issued by
the Corporation against such deposit accounts, transactions or practices; and
“(4) Deposits that are determined to be the proceeds of an unlawful activity as defined under
Republic Act No. 9160, as amended.
“The actions of the Corporation taken under Section 5(g) shall be final and executory, and may only be
restrained or set aside by the Court of Appeals, upon 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.
“(h) The term disputed claim refers to a claim or suit against the assets of a closed bank, or for specific
performance, or breach of contract, or damages, of whatever nature or character, whether for money or
otherwise, liquidated or unliquidated, fixed or contingent, matured or current, denied by the receiver.
“(i) The term insured bank means any bank the deposits of which are insured in accordance with the
provisions of this Act.
“(j) The term insured deposit means the amount due to any bonafide depositor for legitimate deposits in an
insured bank as of the date of closure but not to exceed Five hundred thousand pesos (P500,000.00).
Such amount shall be determined according to such regulations as the Board of Directors may prescribe.
In determining such amount due to any depositor, there shall be added together all deposits in the bank
maintained in the same right and capacity for his or her benefit either in his or her own name or in the
name of others. A joint account regardless of whether the conjunction ‘and’, ‘or’, ‘and/or’ is used, shall be
insured separately from any individually-owned deposit account: Provided, That (1) if the account is held
jointly by two or more natural persons, or by two or more juridical persons or entities, the maximum insured
deposit shall be divided into as many equal shares as there are individuals, juridical persons or entities,
unless a different sharing is stipulated in the document of deposit, and (2) if the account is held by a
juridical person or entity jointly with one or more natural persons, the maximum insured deposit shall be
presumed to belong entirely to such juridical person or entity: Provided, further, That the aggregate of the
interest of each co-owner over several joint accounts, whether owned by the same or different
combinations of individuals, juridical persons or entities, shall likewise be subject to the maximum insured
deposit of Five hundred thousand pesos (P500,000.00): Provided, furthermore, That the provisions of any
law to the contrary notwithstanding, no owner/holder of any passbook, certificate of deposit, or other
evidence of deposit shall be recognized as a depositor entitled to the rights provided in this Act unless the
passbook, certificate of deposit, or other evidence of deposit is determined by the Corporation to be an
authentic document or record of the issuing bank: Provided, finally, 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 22 hereof, as determined by the Monetary Board, the maximum
deposit insurance cover may be adjusted in such amount, for such a period, and/or for such deposit
products, as may be determined by a unanimous vote of the Board of Directors in a meeting called for the
purpose and chaired by the Secretary of Finance, subject to the approval of the President of the
Philippines.
“(k) The term liquidation refers to the proceedings under Sections 12 to 16 of this Act.
“(1) The term liquidation court refers to the Regional Trial Court (RTC) of general jurisdiction where the
petition for assistance in the liquidation of a closed bank is filed and given due course.
“(m) The term payout refers to the payment of insured deposits.
“(n) The term petition for assistance in the liquidation of a closed bank refers to the petition filed by the
receiver with the RTC in accordance with Section 16 of this Act.
“(o) The term purchase of assets and assumption of liabilities refers to a transaction where an insured
bank purchases any or all assets and assumes any or all liabilities of another bank under resolution or
liquidation, as provided in this Act.
“(p) The term receiver refers to the Corporation or any of its duly authorized agents acting as receiver of a
closed bank.
“(q) The term records include all documents, titles, papers and electronic data of the closed bank, including
those pertaining to deposit accounts of and with the closed bank, its assets, transactions and corporate
affairs.
“(r) The term residual assets refer to assets, in cash or in kind, to be turned over to the closed bank’s
stockholders of record, in proportion to their interest in the closed bank as of date of closure, after payment
in full of liquidation costs, fees and expenses, and the valid claims and surplus dividends to all the
creditors.
“(s) The term resolution refers to the actions undertaken by the Corporation under Section 11 of this Act to:
“(1) Protect depositors, creditors and the DIF;
“(2) Safeguard the continuity of essential banking services or maintain financial stability; and
“(3) Prevent deterioration or dissipation of bank assets.
“(t) The term risk-based assessment system pertains to a method for calculating an insured bank’s
assessment on the probability that the DIF will incur a loss with respect to the bank, and the likely amount
of any such loss, based on its risk rating that takes into consideration the following:
“(1) Quality and concentration of assets;
“(2) Categories and concentration of liabilities, both insured and uninsured, contingent and
noncontingent;
“(3) Capital position;
“(4) Liquidity position;
“(5) Management and governance; and
“(6) Other factors relevant to assessing such probability, as may be determined by the Corporation:
“(u) The term statement of affairs refers to a report of financial condition of the closed bank at a given date,
showing the: (1) estimated realizable value of assets; (2) classification of credits; and (3) estimated
liabilities to be settled.
“(v) The term surplus dividends refers to the remaining assets of the closed bank after satisfaction in full of
all the liquidation costs, fees and expenses, and valid claims. The surplus dividends shall be computed at
the legal rate of interest from the date of takeover to cut-off date of the distribution plan, and shall be paid,
in cash or in kind, to creditors of the closed bank in accordance with the Rules on Concurrence and
Preference of Credits under the Civil Code or other laws.
“(w) The term takeover refers to the act of physically taking possession and control of the premises, assets
and affairs of a closed bank for the purpose of liquidating the bank.
“(x) 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.
“(y) 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.
“(z) The term valid claim refers to the claim recognized by the receiver or allowed by the liquidation court.
“(aa) The term winding up period refers to the period provided in Section 16 of this Act.”
as follows:
“DEPOSIT INSURANCE COVERAGE
“SEC. 6. The deposit liabilities of any bank which is engaged in the business of receiving deposits as herein
defined on the effective date of this Act, or which thereafter may engage in the business of receiving deposits,
shall be insured with the Corporation.
“Whenever a bank is determined by the Bangko Sentral ng Pilipinas to be capital deficient, the Corporation may
conduct an insurance risk evaluation on the bank to enable it to assess the risks to the DIF. Such evaluation may
include the determination of: (i) the fair market value of the assets and liabilities of a bank; or (ii) the risk
classification of a bank; or (iii) possible resolution modes under Section 11 of this Act, subject to such terms and
conditions as the PDIC Board may prescribe.”
SECTION 10. Section 7 paragraph (a) of the same Act, as renumbered, is hereby amended to read as follows:
“ASSESSMENT OF MEMBER BANKS
“SEC. 7. (a) The assessment rate shall be determined by the Board of Directors: Provided, That the assessment
rate shall not exceed one-fifth (1/5) of one per centum (1%) per annum. The semi-annual assessment for each
insured bank shall be in the amount of the product of one-half (1/2) the assessment rate multiplied by the
assessment base but in no case shall it be less than Five thousand pesos (P5,000.00). The assessment base
shall be the amount of the liability of the bank for deposits as defined under subsection (g) of Section 5 without
any deduction for indebtedness of depositors.
“In addition, the Board of Directors may establish a risk-based assessment system and impose a risk-based
assessment rate which shall not exceed two-fifth (2/5) of one per centum (1%) per annum multiplied by the
assessment base.
“The semi-annual assessment base for one semi-annual period shall be the average of the assessment base of
the bank as of the close of business on March thirty-one and June thirty and the semi-annual assessment base for
the other semi-annual period shall be the average of the assessment base of the bank as of the close of business
on September thirty and December thirty-one: Provided, That when any of said days is a nonbusiness 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.”
SECTION 11. Section 7, paragraphs (d) and (h), of the same Act, as renumbered, are hereby amended to read as
follows:
“(d) All assessment collections and income from operations after expenses and charges shall be added to the DIF
under Section 17 hereof. Such expenses and charges are: (1) the operating costs and expenses of the
Corporation for the calendar year; (2) additions to reserve to provide for insurance and financial assistance losses,
net of recoverable amounts from applicable assets and collaterals, during the calendar year; and (3) the net
insurance and financial assistance losses sustained in said calendar year.
“(h) 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 nonpayment of assessment fees.”
SECTION 12. An additional paragraph to Section 7 of the same Act, as renumbered, is hereby inserted after
paragraph (h) which shall read as follows:
“(i) The Corporation shall have the authority to collect a special assessment from any member bank and prescribe
the terms and conditions thereof to maintain the target level of the DIF set by the Board of Directors in accordance
with this Act.”
as follows:
“SANCTIONS AGAINST UNSAFE AND

UNSOUND BANKING PRACTICES
“SEC. 8. (a) Whenever upon examination by the Corporation into the condition of any insured bank, it shall be
disclosed that an insured bank or its directors or agents have committed, are committing or about to commit
unsafe or unsound practices in conducting the business of the bank, or have violated, are violating or about to
violate any provisions of any law or regulation to which the insured bank is subject, the Board of Directors shall
submit the report of the examination to the Monetary Board to secure corrective action thereon. If no such
corrective action is taken by the Monetary Board within forty-five (45) days from the submission of the report, the
Board of Directors shall, motu proprio, institute corrective action which it deems necessary. The Board of Directors
may thereafter issue a cease and desist order, and require the bank or its directors or agents 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 26(g) hereof. The Board of Directors shall duly inform the Monetary Board of the
Bangko Sentral ng Pilipinas of action it has taken under this subsection with respect to such practices or
violations.
“(b) The actions and proceedings provided in the preceding subsections may be undertaken by the Corporation if,
in its opinion, an insured bank or its directors or agents have violated, are violating or about to violate any
provision of this Act or any order, rule or instruction issued by the Corporation or any written condition imposed by
the Corporation in connection with any transaction with or grant by the Corporation.
“(c) The Corporation may terminate the insured status of any bank that fails or refuses to comply, within thirty (30)
days from notice, with any cease-and-desist order issued by the Corporation, or with any corrective action
imposed by the Monetary Board, under this section pertaining to a deposit-related unsafe and/or unsound banking
practice.
“Such termination shall be final and executory, and shall be effective upon publication of the notice of termination
in a newspaper of general circulation.
“The deposits of each depositor in the bank on the effective date of the termination of insurance coverage, less all
subsequent withdrawals, shall continue to be insured up to the maximum deposit insurance coverage for a period
of one hundred eighty (180) days. Additions to, or renewal of, existing deposits and new deposits in such bank
after the effective date of termination of insured status of the bank shall not be insured by the Corporation.
“The bank shall not advertise or represent that additions to, or renewal of, existing deposits and new deposits
made after the effective date of termination aye covered by deposit insurance.”
SECTION 15. Section 9, paragraph Twelfth of the same Act, as renumbered, is hereby amended to read as
follows:
“Twelfth – The provisions of Presidential Decree No. 1445, as amended, Executive Order No. 292, and other
similar laws notwithstanding, to compromise, condone or release, in whole or in part, any claim or settled liability
to the Corporation, regardless of the amount involved, under such terms and conditions as may be imposed by
the Board of Directors to protect the interest of the Corporation, and to write off the Corporation’s receivables and
assets which are no longer recoverable or realizable;”
SECTION 16. Section 9 of the same Act, as renumbered, is further amended by inserting additional paragraphs
after paragraph Twelfth, which shall read as follows:
“Thirteenth – To determine qualified interested acquirers or investors for any of the modes of resolution or
liquidation of banks;
“Fourteenth – To determine the appropriate resolution method and to implement the same for a bank subject of
resolution; and
“Fifteenth – To determine the appropriate mode of liquidation of a closed bank and to implement the same.”
SECTION 18. Section 10 paragraph (b-1) of the same Act, as renumbered, is hereby amended to read as follows:
“(b-1) The investigators appointed by the Board of Directors shall have the power on behalf of the Corporation to
conduct investigations on frauds, irregularities and anomalies committed in banks, based on reports of
examination conducted by the Corporation and Bangko Sentral ng Pilipinas or complaints from depositors or from
other government agency. Each such investigator shall have the power to administer oaths, and to examine and
take and preserve the testimony of any person relating to the subject of investigation. For this purpose, the
Corporation may appoint or hire persons or entities of recognized competence in forensic and fraud investigations
as its agents.”
SECTION 19. Section 10 paragraph (c) of the same Act, as renumbered, is hereby amended to read as follows:
“(c) Each insured bank shall make to the Corporation reports of condition in such form and at such times as the
Board of Directors may require such reports to be published in such manner, not inconsistent with any applicable
law, as it may direct. Every such bank which fails to make or publish any such report within such time, as the
Board of Directors may require, shall be subject to a penalty of not more than Ten thousand pesos (P10,000.00)
for each day of such failure recoverable by the Corporation for its use.”
SECTION 20. Section 10 paragraph (d-1) of the same Act, as renumbered, is hereby amended to read as follows:
“(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 and the compliance officer:
Provided, That refusal or willful failure to issue the required certification shall constitute a violation of this section
and shall subject such officers of the bank to the sanctions provided for under Section 26(f) of this Act.”
SECTION 21. Section 10 paragraph (f) of the same Act, as renumbered, is hereby amended to read as follows:
“(f) The Corporation shall underwrite or advance all legal costs and expenses, including legal fees and other
expenses of external counsel, or provide legal assistance to, directors, officers, employees or agents of the
Corporation in connection with any civil, criminal, administrative or any other action or proceeding, to which such
director, officer, employee or agent is made a party by reason of, or in connection with, the exercise of authority or
performance of functions and duties under this Act: Provided, That such legal protection shall not apply to any
civil, criminal, administrative or any action or proceeding that may be initiated by the Corporation, in whatever
capacity, against such director, officer, employee or agent: Provided, further, That directors, officers, employees
or agents who shall resign, retire, transfer to another agency or be separated from the service, shall continue to
be provided with such legal protection in connection with any act done or omitted to be done by them in good faith
during their tenure or employment with the Corporation: Provided, finally, That in the event of a settlement or
compromise, indemnification shall be provided only in connection with such matters covered by the settlement as
to which the Corporation is advised by counsel that the persons to be indemnified did not commit any negligence
or misconduct.”
SECTION 22. The second paragraph of Section 10 paragraph (i) of the same Act, as renumbered, is hereby
amended to read as follows:
“(i) Notwithstanding the provisions of this section and Section 3 of this Act, members of the Board of Directors and
personnel of the Corporation may become directors and officers of any bank and banking institution and of any
entity related to such institution in connection with financial assistance extended by the Corporation to such
institution and when, in the opinion of the Board, it is appropriate to make such designation to protect the interest
of the Corporation.”
SECTION 23. A new section entitled Section 11 of the same Act is hereby inserted between Sections 10 and 12
which shall read as follows:
“BANK RESOLUTION
“SEC. 11. (a) The Corporation, in coordination with the Bangko Sentral ng Pilipinas, may commence the
resolution of a bank under this section upon:
“(1) Failure of prompt corrective action as declared by the Monetary Board; or
“(2) Request by a bank to be placed under resolution.
“The Corporation shall inform the hank of its eligibility for entry into resolution.
“(b) The Bangko Sentral ng Pilipinas shall inform the Corporation of the initiation of prompt corrective action on
any bank and shall be authorized to share with the Corporation all information, agreements or documents,
including any order of the Monetary Board, in relation to the prompt corrective action. The Corporation shall have
the authority to inquire and monitor the status of banks under prompt corrective action.
“(c) When there is a failure of prompt corrective action as declared by the Monetary Board due to capital
deficiency, the Corporation, its duly authorized officers or employees, may examine, inquire or look into the
deposit records of a bank: Provided, That such authority may not be exercised when the failure of prompt
corrective action is due to grounds other than capital deficiency. For this purpose, banks, their officers and
employees are hereby mandated to disclose and report to the Corporation or its duly authorized officers and
employees, deposit account information in said bank.
“The Corporation, its duly authorized officers or employees are prohibited from disclosing information obtained
under this section to any person, government official, bureau or office. Any act done pursuant to this section shall
not be deemed as a violation of Republic Act No. 1405, as amended, Republic Act No. 6426, as amended,
Republic Act No. 8791, and other similar laws protecting or safeguarding the secrecy or confidentiality of bank
deposits: Provided, That any unauthorized disclosure of the information under this section shall be subject to the
same penalty under the foregoing laws protecting the secrecy or confidentiality of bank deposits.
“(d) The stockholders, directors, officers or employees of the bank shall have the following obligations:
“(1) Ensure bank compliance with the terms and conditions prescribed by the Corporation for the resolution
of the bank;
“(2) Cause the engagement, with the consent of the Corporation, of an independent appraiser or auditor
for the purpose of determining the valuation of the bank consistent with generally accepted valuation
standards;
“(3) Ensure prudent management and administration of the bank’s assets, liabilities and records; and
“(4) Cooperate with the Corporation in the conduct or exercise of any or all of its authorities under this Act
and honor in good faith its commitment or undertaking with the Corporation on the resolution of the bank.
“(e) Within a period of one hundred eighty (180) days from a bank’s entry into resolution, the Corporation, through
the affirmative vote of at least five (5) members of the PDIC Board, shall determine whether the bank may be
resolved through the purchase of all its assets and assumption of all its liabilities, or merger or consolidation with,
or its acquisition, by a qualified investor.
“For this purpose, the Corporation may:
“(1) Determine a resolution package for the bank;
“(2) Identify and, with the approval of the Monetary Board, pre-qualify possible acquirers or investors;
“(3) Authorize pre-qualified acquirers or investors to conduct due diligence on the bank, for purposes of
determining the valuation of a bank through an objective and thorough review and appraisal of its assets
and liabilities, and assessment of risks or events that may affect its valuation; and
“(4) Conduct a bidding to determine the acquirer of the bank.
“(f) In determining the appropriate resolution method for a bank, the Corporation shall consider the:
“(1) Fair market value of the assets of the bank, its franchise, as well as the amount of its liabilities;
“(2) Availability of a qualified investor;
“(3) Least cost to the DIF; and
“(4) Interest of the depositing public.
“(g) The Corporation may appoint or hire persons or entities of recognized competence in banking, finance, asset
management or remedial management, as its agents, to perform such powers and functions of the Corporation in
the resolution of a bank, or assist in the performance thereof.
“(h) The PDIC Board shall prescribe the guidelines or criteria for a bank to be placed under resolution.
“(i) Upon a determination by the Corporation that the bank may not be resolved, the Monetary Board may act in
accordance with Section 30 of Republic Act No. 7653 or the New Central Bank Act.
“(j) Bank resolution involving the purchase of all assets and assumption of all liabilities of a bank shall be exempt
from the provisions of Act No. 3952, otherwise known as ‘The Bulk Sales Law’.
“(k) The provisions of this section are without prejudice to any action that the Monetary Board may take under
existing laws.”
SECTION 24. Sections 10, 11 and 12 of the same Act are hereby deleted.
“LIQUIDATION OF A CLOSED BANK
“SEC. 12. (a) Whenever a bank is ordered closed by the Monetary Board, the Corporation shall be designated as
receiver and it shall proceed with the takeover and liquidation of the closed bank in accordance with this Act. For
this purpose, banks closed by the Monetary Board shall no longer be rehabilitated.”
“AUTHORITIES OF A RECEIVER AND EFFECTS OF

PLACEMENT OF A BANK UNDER LIQUIDATION
“SEC. 13. (a) The receiver is authorized to adopt and implement, without need of consent of the stockholders,
board of directors, creditors or depositors of the closed bank, any or a combination of the following modes of
liquidation:
“(1) Conventional liquidation; and
“(2) Purchase of assets and/or assumption of liabilities.
“(b) In addition to the powers of a receiver provided under existing laws, the Corporation, as receiver of a closed
bank, is empowered to:
“(1) Represent and act for and on behalf of the closed bank;
“(2) Gather and take charge of all the assets, records and affairs of the closed bank, and administer the
same for the benefit of its creditors;
“(3) Convert the assets of the closed bank to cash or other forms of liquid assets, as far as practicable;
“(4) Bring suits to enforce liabilities of the directors, officers, employees, agents of the closed bank and
other entities related or connected to the closed bank or to collect, recover, and preserve all assets,
including assets over which the bank has equitable interest;
“(5) Appoint or hire persons or entities of recognized competence in banking, finance, asset management
or remedial management, as its deputies, assistants or agents, to perform such powers and functions of
the Corporation as receiver of the closed bank, or assist in the performance thereof;
“(6) Appoint or hire persons or entities of recognized competence in forensic and fraud investigations;
“(7) 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;
“(8) Collect loans and other claims of the closed bank and for this purpose, modify, compromise or
restructure the terms and conditions of such loans or claims as may be deemed advantageous to the
interests of the creditors of the closed bank;
“(9) Hire or retain private counsel as may be necessary;
“(10) Borrow or obtain a loan, or mortgage, pledge or encumber any asset of the closed bank, when
necessary to preserve or prevent dissipation of the assets, or to redeem foreclosed assets of the closed
bank, or to minimize losses to its depositors and creditors;
“(11) If the stipulated interest rate on deposits is unusually high compared with prevailing applicable
interest rates, the Corporation as receiver, may exercise such powers which may include a reduction of the
interest rate to a reasonable rate: Provided, That any modifications or reductions shall apply only to earned
and unpaid interest;
“(12) Utilize available funds of the bank, including funds generated by the receiver from the conversion of
assets to pay for reasonable costs and expenses incurred for the preservation of the assets, and
liquidation of, the closed bank, without need for approval of the liquidation court;
“For banks with insufficient funds, the Corporation is authorized to advance the foregoing costs and
expenses, and collect payment, as and when funds become available.
“(13) Charge reasonable fees for the liquidation of the bank from the assets of the bank: Provided, That
payment of these fees, including any unpaid advances under the immediately preceding paragraph, shall
be subject to approval by the liquidation court;
“(14) Distribute the available assets of the closed bank, in cash or in kind, to its creditors in accordance
with the Rules on Concurrence and Preference of Credits under the Civil Code or other laws;
“(15) Dispose records of the closed bank that are no longer needed in the liquidation in accordance with
guidelines set by the PDIC Board of Directors, notwithstanding the laws on archival period and disposal of
records; and
“(16) Exercise such other powers as are inherent and necessary for the effective discharge of the duties of
the Corporation as receiver.
“The Board of Directors shall adopt such policies and guidelines as may be necessary for the performance of the
above powers by personnel, deputies, assistants and agents of the Corporation.
“(c) After the payment of all liabilities and claims against the closed bank, the Corporation shall pay surplus, if any,
dividends at the legal rate of interest from date of takeover to date of distribution to creditors and claimants of the
closed bank in accordance with the Rules on Concurrence and Preference of Credits under the Civil Code or
other laws before distribution to the shareholders of the closed bank.
“(d) The officers, employees, deputies, assistants and agents of the receiver shall have no liability and shall not be
subject to any action, claim or demand in connection with any act done or omitted to be done by them in good
faith in connection with the exercise of their powers and functions under this Act and other applicable laws, or
other actions duly approved by the court.
“(e) The placement of a bank under liquidation shall have the following effects:
“(1) On the corporate franchise or existence
“Upon placement by the Monetary Board of a bank under liquidation, it shall continue as a body corporate
until the termination of the winding-up period under Section 16 of this Act. Such continuation as a body
corporate shall only be for the purpose of liquidating, settling and closing its affairs and for the disposal,
conveyance or distribution of its assets pursuant to this Act. The receiver shall represent the closed bank
in all cases by or against the closed bank and prosecute and defend suits by or against it. In no case shall
the bank be reopened and permitted to resume banking business after being placed under liquidation.
“(2) On the powers and functions of its directors, officers and stockholders
“The powers, voting rights, functions and duties, as well as the allowances, remuneration and perquisites
of the directors, officers, and stockholders of such bank are terminated upon its closure. Accordingly, the
directors, officers, and stockholders shall be barred from interfering in any way with the assets, records,
and affairs of the bank.
“The receiver shall exercise all authorities as may be required to facilitate the liquidation of the closed bank
for the benefit of all its creditors.
“(3) On the assets
“Upon service of notice of closure as provided in Section 14 of this Act, all the assets of the closed bank
shall he deemed in custodia legis in the hands of the receiver, and as such, these assets may not be
subject to attachment, garnishment, execution, levy or any other court processes. A’ judge, officer of the
court or any person who shall issue, order, process or cause the issuance or implementation of the
garnishment order, levy, attachment or execution, shall be liable under Section 27 of this Act: Provided,
however, That collaterals securing the loans and advances granted by the Bangko Sentral ng Pilipinas
shall not be included in the assets of the closed bank for distribution to other creditors: Provided, further,
That the proceeds in excess of the amount secured shall be returned by the Bangko Sentral ng Pilipinas to
the receiver.
“Any preliminary attachment or garnishment on any of the assets of the closed bank existing at the time of
closure shall not give any preference to the attaching or garnishing party. Upon motion of the receiver, the
preliminary attachment or garnishment shall be lifted and/or discharged.
“(4) On labor relations
“Notwithstanding the provisions of the Labor Code, the employer-employee relationship between the
closed bank and its employees shall be deemed terminated upon service of the notice of closure of the
bank in accordance with this Act. Payment of separation pay or benefits provided for by law shall be made
from available assets of the bank in accordance with the Rules on Concurrence and Preference of Credits
under the Civil Code or other laws.
‘(5) Contractual obligations
“The receiver may cancel, terminate, rescind or repudiate any contract of the closed bank that is not
necessary for the orderly liquidation of the bank, or is grossly disadvantageous to the closed bank, or for
any ground provided by law.
“(6) On interest payments
“The liability of a bank to pay interest on deposits and all other obligations as of closure shall cease upon
its closure by the Monetary Board without prejudice to the first paragraph of Section 85 of Republic Act No.
7653 (the New Central Bank Act): Provided, That the receiver shall have the authority, without need for
approval of the liquidation court, to assign, as payment to secured creditors, the bank assets serving as
collaterals to their respective loans up to the extent of the outstanding obligations, including interest as of
date of closure of the hank, as validated by the receiver. The valuation of the asset shall be based on the
prevailing market value of the collaterals as appraised by an independent appraiser on an ‘as is where is’
basis.
“(7) Liability for penalties and surcharges for late payment and nonpayment of taxes
“From the time of closure, the closed bank shall not be liable for the payment of penalties and surcharges
arising from the late payment or nonpayment of real property tax, capital gains tax, transfer tax and similar
charges.
“(8) Bank charges and fees on services
“The receiver may impose, on behalf of the closed bank, charges and fees for services rendered after
bank closure, such as, but not limited to, the execution of pertinent deeds and certifications.
“(9) Actions pending for or against the closed bank
“Except for actions pending before the Supreme Court, actions pending for or against the closed bank in
any court or quasi-judicial body shall, upon motion of the receiver, be suspended for a period not
exceeding one hundred eighty (180) days and referred to mandatory mediation. Upon termination of the
mediation, the case shall be referred back to the court or quasi-judicial body for further proceedings.
“(10) Final decisions against the closed bank
“The execution and enforcement of a final decision of a court other than the liquidation court against the
assets of a closed bank shall be stayed. The prevailing parly shall file the final decision as a claim with the
liquidation court and settled in accordance with the Rules on Concurrence and Preference of Credits under
the Civil Code or other laws.
“(11) Docket and other court fees
“Payment of docket and other court fees relating to all cases or actions filed by the receiver with any
judicial or quasi-judicial bodies shall be deferred until the action is terminated with finality. Any such fees
shall constitute as a first Hen on any judgment in favor of the closed bank or in case of unfavorable
judgment, such fees shall be paid as liquidation costs and expenses during the distribution of the assets of
the closed bank.
“(12) All assets, records, and documents in the possession of the closed bank at the time of its closure are
presumed held by the bank in the concept of an owner.
“(13) The exercise of authority, functions, and duties by the receiver under this Act shall be presumed to
have been performed in the regular course of business.
“(14) Assets and documents of the closed bank shall retain their private nature even if administered by the
receiver. Matters relating to the exercise by the receiver of the functions under this Act shall be subject to
visitorial audit only by the Commission on Audit.”
“NOTICE OF CLOSURE AND

TAKEOVER ACTIVITIES
“SEC. 14. (a) Upon the designation of the Corporation as receiver of a closed bank, it shall serve a notice of
closure to the highest-ranking officer of the bank present in the bank premises, or in the absence of such officer,
post the notice of closure in the bank premises or on its main entrance. The closure of the bank shall be deemed
effective upon the service of the notice of closure. Thereafter, the receiver shall takeover the bank and exercise
the powers of the receiver as provided in this Act.
“(b) The receiver shall have authority to use reasonable force, including the authority to force open the premises
of the bank, and exercise such acts necessary to take actual physical possession and custody of the bank and all
its assets, records, documents, and take charge of its affairs upon the service of the notice of closure.
“(c) Directors, officers, employees or agents of a bank hold money and other assets of the bank in trust or under
administration or management by them for the bank in their fiduciary capacity.
Upon service of the notice of closure to the bank, all directors, officers, employees or agents of the closed bank
shall have the duty to immediately account for, surrender and turn over to the receiver, and provide information
relative to, the assets, records, and affairs of the closed bank in their possession, custody, administration or
management.
“(d) When the circumstances so warrant, the local government unit and law enforcement agencies concerned
shall, upon request, immediately provide assistance to the receiver during the service of notice of closure and
actual takeover operations to ensure the orderly conduct thereof and the security and safety of the personnel of
the receiver and the employees of the closed bank.”
“PURCHASE OF ASSETS AND

ASSUMPTION OF LIABILITIES
“SEC. 15. (a) The receiver shall have the authority to facilitate and implement the purchase of the assets of the
closed bank and the assumption of its liabilities by another insured bank, without need for approval of the
liquidation court. The exercise of this authority shall be in accordance with the Rules on Concurrence and
Preference of Credits under the Civil Code or other laws, subject to such terms and conditions as the Corporation
may prescribe. The disposition of the branch licenses and other bank licenses of the closed bank shall be subject
to the approval of the Bangko Sentral ng Pilipinas.
“(b) Such action of the receiver to determine whether a bank may be the subject of a purchase of assets and
assumption of liabilities transaction shall be final and executory, and may not be set aside by any court.”
“CONVENTIONAL LIQUIDATION
“A. ASSET MANAGEMENT AND CONVERSION
“SEC. 16. (a) The assets gathered by the receiver shall be evaluated and verified as to their existence, ownership,
condition, and other factors to determine their realizable value. In the management, preservation and disposition
of assets, the receiver shall be guided by cost-benefit considerations, resources of the closed bank, and potential
asset recovery.
“(b) The conversion of the assets of the closed bank shall be carried out in a fair and transparent manner in
accordance with the rules and procedures as may be determined by the receiver.
“(c) In the management and/or conversion of the assets of the closed bank, the receiver shall have the authority
to:
“(1) Represent the closed bank before the Land Registration Authority (LRA), the Bureau of Lands, the
Register of Deeds, the Land Transportation Office (LTO), the Assessor’s Office or other appropriate office
of the local government unit, the Securities and Exchange Commission (SEC), or such other similar
government agencies or private entities in:
“(i) Verifying the authenticity of ownership documents;
“(ii) Registering the interest of the closed bank on a specific property;
“(iii) Consolidating ownership over an asset of the closed bank;
“(iv) Securing certified true copies of documents held by the foregoing agencies/entities in relation
to an asset of the closed bank;
“(v) Securing the appropriate certification from the foregoing agencies/entities in relation to an
asset of the closed bank; and
“(vi) Performing other related activities;
“(2) Conduct a physical or ocular inspection of the properties owned by, or mortgaged to, the closed bank,
to determine their existence and present condition;
“(3) Determine the disposal price of assets in accordance with generally accepted valuation principles,
standards and practices, subject to such guidelines as the receiver may determine;
“(4) Dispose real or personal properties of the closed bank through bidding, negotiated sale or any other
mode including lease with option to purchase, whether by piece or by lot, as may be reasonably
determined by the receiver based on cost-benefit considerations and to allow efficient distribution of assets
to creditors; and
“(5) Engage third parties to assist in the liquidation, manage and/or dispose the assets, handle cases filed
against or by the closed bank, subject to such guidelines as determined by the receiver.
“(d) Notwithstanding any provision of law to the contrary, the following rules shall apply to the management and/or
conversion by the receiver of the assets of the closed bank:
“(1) Upon notification of the closure of a bank, the LRA, the Bureau of Lands, the Register of Deeds, the
LTO, the assessor’s office or other appropriate office of the local government unit, or such other similar
government agencies shall not allow any transaction affecting the assets of the closed bank without the
consent of the receiver.
“(2) Upon issuance by the Monetary Board of the resolution ordering the closure of a bank, any person or
entity in custody or possession of assets or records of the closed bank, including, but not limited to, the
closed bank’s deposit accounts, titles to real property, collaterals, promissory notes, evidence of
indebtedness or investments shall immediately turn over custody of said assets and records to the
receiver. Such obligation shall cover evidences of deposit such as passbooks or certificates of deposit
issued by the bank to its depositors. Pending turnover, all persons or entities in custody or possession of
any asset or record of the closed bank shall hold the said assets or records in trust for the receiver.
“(3) The persons or entities in custody or possession of such asset shall not allow, authorize or cause the
withdrawal, transfer, disposition, removal, conversion, concealment, or other transaction involving or
relating to the subject asset, unless otherwise directed by the receiver.
“(e) The receiver shall have the authority to invest funds received from the conversion of the assets of the closed
bank in government securities, other government-guaranteed marketable securities or investment-grade debt
instruments.
“(f) The proceeds of the sale of the bank and branch licenses shall be for the benefit of the creditors of the closed
bank which shall be distributed in accordance with this Act and the Rules on Concurrence and Preference of
Credits under the Civil Code or other laws.
“B. PETITION FOR ASSISTANCE IN THE

LIQUIDATION OF A CLOSED BANK
“(g) A petition for assistance in the liquidation is a special proceeding for the liquidation of a closed bank, and
includes the declaration of the concomitant right of its creditors and the order of payment of their valid claims in
the disposition of its assets.
“Any proceeding initiated under this section shall be considered in rem. Jurisdiction over all persons affected by
the proceeding shall be considered as acquired upon publication of the order setting the case for initial hearing in
any newspaper of general circulation in the Philippines.
“(h) The liquidation court shall have exclusive jurisdiction to adjudicate disputed claims against the closed banks,
assist in the enforcement of individual liabilities of the stockholders, directors and officers and decide on all other
issues as may be material to implement the distribution plan adopted by the Corporation for general application to
all closed banks.
“(i) The provisions of Republic Act No. 8799, otherwise known as ‘The Securities Regulation Code’, and Supreme
Court Administrative Matter No. 00-8-10-SC, entitled, ‘The Rules of Procedure on Corporate Rehabilitation’, shall
not be applicable to the petition for assistance in the liquidation of the closed bank.
“(j) The petition shall be filed in the RTC which has jurisdiction over the principal office of the closed bank or the
principal office of the receiver, at the option of the latter.
“(k) The petition shall be filed ex parte within a reasonable period from receipt of the Monetary Board Resolution
placing the bank under liquidation.
“(1) All persons or entities with claims against the assets of the closed bank shall file their claims with the
receiver within sixty (60) days from the date of publication of the notice of closure. Claims filed outside the
foregoing prescribed period shall be disallowed.
“Claims denied by the receiver shall be filed with the liquidation court within sixty (60) days from receipt of the final
notice of denial of claim.
“(m) A claim whose validity has not yet been determined with finality at the time of the submission of the final
asset distribution plan, either by reason of a pending suit or for whatever reason, shall be considered as
contingent claim and shall not be paid under the proposed final asset distribution plan.
“(n) Upon finality of the order approving the final asset distribution plan, the petition for assistance in the
liquidation of a closed bank shall henceforth be, for all intents and purposes, considered closed and terminated
and the receiver, its officers, employees or agents, are forever discharged from any and all claims and/or liability
arising from or in connection with the liquidation of the closed bank.
“(o) The receiver shall submit a final report on the implementation of the approved final asset distribution plan to
the Monetary Board and the SEC after the expiration of the winding-up period provided in this Act.
“(p) The Supreme Court shall promulgate the appropriate procedural rules to implement this section.
“C. WINDING-UP
“(q) The creditors shall have a period of six (6) months from the date of publication of notice of the approval by the
court of the final asset distribution plan of the closed bank within which to claim payment of the principal
obligations and surplus dividends. During this six-month period, the receiver shall hold as trustee the assets
allocated in the final asset distribution plan for said creditors.
“Failure by the creditor to comply with the documentary requirements within the prescribed period and/or refusal to
accept the asset as payment shall be deemed as abandonment or waiver of his or her right to payment.
“(r) The individual stockholders of record or their duly-authorized representative or the court-appointed
stockholders’ representative shall have a period of six (6) months from publication of notice of the approval by the
court of the final asset distribution plan of the closed bank within which to claim the residual assets. During this
six-month period, the receiver shall hold as trustee the assets allocated in the final asset distribution plan for said
stockholders of record.
“Failure by the individual stockholders of record or their duly-authorized representative or the court-appointed
stockholders’ representative to comply with the documentary requirements within the prescribed period and/or
refusal to accept the residual assets in kind shall be deemed as abandonment or waiver of right to receive the
residual assets.
“(s) After the lapse of the six-month period provided in paragraphs (q) and (r) of this section, all assets which
remain unclaimed by the creditors and/or stockholders of record shall be turned over to the Bureau of Treasury.
“(t) The receiver shall continue to keep all the pertinent records of the closed bank for a period of six (6) months
from the date of publication of the approval of the final asset distribution plan.
After the lapse of this period, the receiver is authorized to dispose of the same in accordance with the rules and
regulations to be prescribed by the receiver.”
SECTION 30. Section 13 of the same Act is hereby renumbered as Section 17.
“DIVIDEND DECLARATION
“SEC. 18. Consistent with the policy of the State to generate, preserve, maintain faith and confidence in the
country’s banking system, the Corporation shall build up and maintain the DIF at the target level set by the PDIC
Board of Directors. Such target level shall be subject to periodic review and may be adjusted as necessary.
“The Corporation is exempt from Republic Act No. 7656; instead, the Corporation shall remit dividends to the
national government only if the target DIF level for the applicable year has been reached. For purposes of
computing the amount of dividends to be declared and remitted to the national government, all assessment
collections shall not be considered as income. The dividend rate shall be at least fifty percent (50%) of the income
from other sources only.”
SECTION 32. Section 14 of the same Act is accordingly renumbered as Section 19 and is hereby amended to
read as follows:
“PAYMENT OF INSURED DEPOSITS
“SEC. 19. Whenever an insured bank shall have been closed by the Monetary Board pursuant to Section 30 of
Republic Act No. 7653, or upon expiration or revocation of a bank’s corporate term, payment of the insured
deposits on such closed bank shall be made by the Corporation as soon as possible either (1) by cash or (2) by
making available to each depositor a transferred deposit in another insured bank in an amount equal to insured
deposit of such depositor: Provided, however, That the Corporation, in its discretion, may require proof of claims
to be filed before paying the insured deposits, and that in any case where the Corporation is not satisfied as to the
validity of a claim for an insured deposit, it may require final determination of a court of competent jurisdiction
before paying such claim: Provided, further, That failure to settle the claim, within six (6) months from the date of
filing of claim for insured deposit, where such 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.”
read as follows:
“SEC. 20. The Corporation, upon payment of any depositor as provided for in Section 19 of this Act, shall be
subrogated to all rights of the depositor against the closed bank to the extent of such payment. Such subrogation
shall include the right on the part of the Corporation to receive the same dividends and payments from the
proceeds of the assets of such closed bank and recoveries on account of stockholders’ liability as would have
been payable to the depositor on a claim for the insured deposits: Provided, That such depositor shall retain his or
her claim for any uninsured portion of his or her deposit, which legal preference shall be the same as that of the
subrogated claim of the Corporation for its payment of insured deposits. All payments by the Corporation of
insured deposits in closed banks partake of the nature of public funds, and as such, must be considered a
preferred credit in the order of preference under Article 2244 (9) of the New Civil Code.”
SECTION 34. Section 16 of the same Act is accordingly renumbered as Section 21 and paragraph (c) thereof is
hereby amended to read as follows:
“(c) Except as otherwise prescribed by the Board of Directors, neither the Corporation nor such other insured bank
shall be required to recognize as the owner of any portion of a deposit evidenced by a passbook, certificate of
deposit or other evidence of deposit determined by the Corporation to be an authentic document or record of the
closed bank under a name other than that of the claimant, any person whose name or interest as such owner is
not disclosed on the passbook, certificate of deposit or other evidence of deposit of such closed bank as part
owner of said deposit, if such recognition would increase the aggregate amount of the insured deposits in such
closed bank.”
SECTION 36. Section 22 paragraph (a) of the same Act, as renumbered, is hereby amended to read as follows:
“CORPORATE FUNDS AND ASSETS
“SEC. 22. (a) Subject to guidelines and limits as approved by the Board of Directors, money of the Corporation
denominated in the local currency, not otherwise employed, shall be invested in obligations of the Republic of the
Philippines or in obligations guaranteed as to principal and interest by the Republic of the Philippines.
“The Corporation may also invest in debt instruments denominated in foreign currencies issued or guaranteed by
the Republic of the Philippines, or debt instruments denominated in freely convertible foreign currencies issued by
supranationals, multilateral agencies, or foreign governments with at least an investment grade credit rating.
“The Corporation shall likewise be authorized to buy and/or sell debt instruments and foreign currencies from any
government securities eligible dealers or any counterparties or brokers, accredited by the PDIC Board.
“For this purpose, the Corporation shall be authorized to open securities custodianship and settlement accounts.”
SECTION 37. Section 22 paragraph (b) of the same Act, as renumbered, is hereby amended to read as follows:
“(b) The banking or checking accounts of the Corporation shall be kept with the Bangko Sentral ng Pilipinas, or
with any other bank designated as depository or fiscal agent of the Philippine government.”
SECTION 38. An additional paragraph to Section 22 of the same Act, as renumbered, is hereby inserted after
paragraph (c) which shall read as follows:
“(d) Assets of the Corporation shall be exempt from attachment, garnishment or any other order or process of any
court, agency or any other administrative body.”
SECTION 39. Section 17 paragraph (d) of the same Act is accordingly renumbered as Section 22 paragraph (e)
and is hereby amended to read as follows:
“FINANCIAL ASSISTANCE
“(e) In the exercise of its authorities under Section 11 of this Act, the Corporation is authorized to make loans to,
or purchase the assets of, or assume liabilities of, or make deposits in:
“(1) A bank in danger of closing, upon its acquisition by a qualified investor; or
“(2) A qualified investor, upon its purchase of all assets and assumption of all liabilities of a bank in danger
of closing; or
“(3) A surviving or consolidated institution that has merged or consolidated with a bank in danger of
closing; upon such terms and conditions as the Board of Directors may prescribe, when in the opinion of
the Board of Directors, such acquisition, purchase of assets, assumption of liabilities, merger or
consolidation, is essential to provide adequate banking service in the community or maintain financial
stability in the economy.
“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 DIF.
“A systemic risk refers to the possibility that failure of one bank to settle net transactions with other banks will
trigger a chain reaction, depriving other banks of funds leading to a general shutdown of normal clearing and
settlement activity. Systemic risk also means the likelihood of a sudden, unexpected collapse of confidence in a
significant portion of the banking or financial system with potentially large real economic effects. Finally, the
Corporation may not use its authority under this subsection to purchase the voting or common stock of an insured
bank but it can enter into and enforce agreements that it determines to be necessary to protect its financial
interests: Provided, That the financial assistance may take the form of equity or quasi-equity of the insured bank
as may be deemed necessary by the Board of Directors with concurrence by the Monetary Board: Provided,
further, That the Corporation shall dispose of such equity as soon as practicable.”
read as follows:
“AUTHORITY TO BORROW
“SEC. 23. The Corporation is authorized to borrow from the Bangko Sentral ng Pilipinas and the Bangko Sentral
ng Pilipinas is authorized to lend to the Corporation on such terms as may be agreed upon by the Corporation and
the Bangko Sentral ng Pilipinas, 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 22(e) of this
Act: Provided, That any such loan as may be granted by the Bangko Sentral ng Pilipinas shall be consistent with
monetary policy: Provided, further, That the rate of interest thereon shall be fixed by the Monetary Board.
“When in the judgment of the Board of Directors the funds of the Corporation are not sufficient to provide for an
emergency or urgent need to attain the purposes of this Act, the Corporation is likewise authorized to borrow
money, obtain loans or arrange credit lines or other credit accommodations from any bank: Provided, That such
loan shall be of short-term duration: Provided, further, That no prior Monetary Board opinion shall be required for
the Corporation and its counterparties on individual drawdowns or borrowings within an approved borrowing
program where prior Monetary Board opinion has already been obtained, pursuant to Section 123 of Republic Act
No. 7653.”
read as follows:
“ISSUANCE OF BONDS, DEBENTURES

AND OTHER OBLIGATIONS
“SEC. 24. With the approval of the President of the Philippines, upon the recommendation of the Department of
Finance, the Corporation is authorized to issue bonds, debentures, and other obligations, both local or foreign, as
may be necessary for purposes of providing liquidity for settlement of insured deposits in closed banks, to
facilitate the implementation of bank resolution under Section 11 of this Act, as well as for financial assistance as
provided herein: Provided, That the Board of Directors shall determine the interest rates, maturity and other
requirements of said obligations: Provided, further, That the Corporation may 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 DIF as of date of the debt issuance, shall be expressed
on the face thereof.
“The Corporation may issue notes, debentures, bonds, or other debt instruments without the approval of the
President of the Philippines, as long as these shall not be guaranteed by the national government.
“The Board of Directors shall have the power to prescribe the terms and conditions, rules and regulations for the
issuance, reissuance, servicing, placement and redemption of the bonds herein authorized to be issued as well as
the registration of such bonds at the request of the holders thereof.”
SECTION 44. Section 26 paragraph (f) of the same Act, as renumbered, is hereby amended to read as follows:
“(f) The penalty of imprisonment of not less than six (6) years but not more than twelve (12) years or a fine of not
less than Fifty thousand pesos (P50,000.00) but not more than Ten million pesos (P10,000,000.00), or both, at the
discretion of the court, shall be imposed upon:
“(1) Any director, officer, employee or agent of a bank for:
“(a) Any willful refusal to submit reports as required by law, rules and regulations;
“(b) Any unjustified refusal to permit examination and audit of the deposit records or the affairs of the
institution;
“(c) Any willful making of a false statement or entry in any bank report or document required by the
Corporation;
“(d) Submission of false material information in connection with or in relation to any financial assistance of
the Corporation extended to the bank;
“(e) Splitting of deposits or creation of fictitious or fraudulent loans or deposit accounts.
“Splitting of deposits occurs whenever a deposit account with an outstanding balance of more than the
statutory maximum amount of insured deposit maintained under the name of natural or juridical persons is
broken down and transferred into two (2) or more accounts in the name/s of natural or juridical persons or
entities who have no beneficial ownership on transferred deposits in their names within one hundred
twenty (120) days immediately preceding or during a bank-declared bank holiday, or immediately
preceding a closure order issued by the Monetary Board of the Bangko Sentral ng Pilipinas for the purpose
of availing of the maximum deposit insurance coverage;
“(f) Refusal to receive the notice of closure as provided under Section 14 of this Act;
“(g) Refusal to allow the Corporation to take over a closed bank or obstructing such action of the
Corporation;
“(h) Refusal to turn over or destroying or tampering bank records;
“(i) Fraudulent disposal, transfer or concealment of any asset, property or liability of the closed bank;
“(j) 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;
“(k) Any willful failure or refusal to comply with, or violation of any provision of this Act, or commission of
any other irregularities, and/or conducting business in an unsafe or unsound manner as may be
determined by the Board of Directors in relation to Section 56 of Republic Act No. 8791, or ‘The General
Banking Law of 2000’.
“Notwithstanding any law to the contrary, the foregoing acts of directors, officers, employees or agents of the bank
shall be considered as additional grounds for disqualification under the fit and proper rules of the Bangko Sentral
ng Pilipinas.
“(1) Other acts inimical to the interest of the bank or the Corporation, such as, but not limited to, conflict of interest,
disloyalty, authorizing related party transactions with terms detrimental to the bank and its stakeholders, and
unauthorized disclosure of confidential information, as may be determined by the Corporation.
“(2) Any person for:
“(a) Refusal to disclose information, records or data pertaining to the bank accounts of a closed bank to
the receiver;
“(b) Refusal to turn over possession or custody of the asset and record of the closed bank to the receiver,
notwithstanding any agreement to the contrary;
“(c) Refusal or delaying the:
“(i) Verification of authenticity of the ownership documents;
“(ii) Registration of interest of the closed bank on a specific property;
“(iii) Consolidation of ownership over an asset of the closed bank;
“(iv) Act of securing certified true copies of documents in relation to an asset of the closed bank;
“(v) Act of securing the appropriate certification from the agencies or entities stated in Section 16 of
this Act in relation to an asset of the closed bank;
“(vi) Conduct of a physical or ocular inspection of the properties owned by, or mortgaged to, the
closed bank, to determine their existence and present condition; or
“(vii) Other related activities of the receiver; or
“(d) Allowing the withdrawal from deposits or disposition of any asset of the closed bank other than by the
receiver;
“(e) Willfully violating any provision of this Act;
“(f) Conspiring or willfully participating in any of the offenses enumerated in Paragraph 1 of this section;
“(3) Any law enforcement officer or local government official who refuses or fails to assist the receiver in the
service of the notice of closure, as provided under Section 14 of this Act.”
SECTION 45. Additional paragraphs to Section 26 of the same Act, as renumbered, are hereby inserted after
paragraph (g) which shall read as follows:
“(h) The penalty of imprisonment of not less than ten (10) years but not more than twelve (12) years, or a fine of
not less than Five hundred thousand pesos (P500,000.00) but not more than Ten million pesos (P 10,000,000.00),
or both, at the discretion of the court, shall be imposed upon:
“(1) Any depositor who files a fictitious and/or fraudulent claim for deposit insurance; and
“(2) Any bank officer who certifies to the validity of the deposit liabilities which is subsequently verified to
be fictitious and/or fraudulent.
“(i) The penalty of imprisonment of not less than twelve (12) years but not more than fourteen (14) years shall be
imposed upon any person who participates, or attempts to participate, in a scheme to defraud a bank.
“If the offense shall have been committed by a director or officer of the bank, the penalty of imprisonment of not
less than fifteen (15) years, but not more than seventeen (17) years shall be imposed.
“If the offense shall have resulted in systemic consequences, as determined by the Bangko Sentral ng Pilipinas,
the penalty of imprisonment of not less than eighteen (18) years but not more than twenty (20) years shall be
imposed.”
SECTION 47. Section 23 of the same Act is hereby renumbered as Section 28 and amended to read as follows:
“SEC. 28. Exempting Clause. – The Corporation shall be exempt from Presidential Decree No. 985, Presidential
Decree No. 1597, Republic Act No. 6758, as amended, Joint Resolution No. 4 (2009) and other laws on salary
standardization, Presidential Decree No. 1177, Executive Order No. 248, as amended, Executive Order No. 298
and the provisions of Republic Act No. 10149 with regard to position classification, qualification standards, and the
compensation package of the employees of the Corporation: Provided, That the PDIC shall be subject to all other
policies under Republic Act No. 10149, including, but not limited to, performance evaluation by the Governance
Commission for Government-Owned or -Controlled Corporations, selection and nomination of appointive
directors, and limitations on the creation of subsidiaries and the acquisition of affiliates except in the case of
acquisition of shares in the grant of financial assistance under this Act.”
SECTION 48. Section 24 of the same Act is deleted and a new Section 29 is added to read as follows:
“SEC. 29. Transitory Provisions. — (a) The incumbent President of the Corporation and private sector members of
the Board of Directors shall continue to exercise their respective duties and functions until replaced by the
President of the Philippines: Provided, That such new appointees shall be subject to the term of office provided
under Section 3 of this Act, as amended.
“(b) Payment of surplus dividends under Section 13(c) of this Act, as amended, shall be applicable to banks
without a court-approved final asset distribution plan at the time of the effectivity of this Act.
“(c) The preference indicated under Section 15 of this Act, as amended, shall be likewise effective upon liquidation
proceedings already commenced and pending as of the effectivity of this Act, where no distribution of assets has
been made.1âwphi1
“(d) The provisions in Section 10 of this Act, as amended, on legal assistance, protection and indemnification shall
apply to all cases pending before the effectivity of this Act.”
SECTION 50. The Corporation may be reorganized by its 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 shah any personnel be considered as having prior or vested rights with respect to
retention in the Corporation or in any position which may be created in the new staffing pattern, even if he or she
should be the incumbent of a similar position prior to reorganization. The reorganization shall be completed within
six (6) months after the effectivity of this Act. Personnel who are not retained are deemed separated horn the
service.
SECTION 51. The Board of Directors is hereby authorized to provide separation incentives, and all those who
shall retire or be separated from the service on account of reorganization under the preceding section shall be
entitled to such incentives which may be in addition to all gratuities and benefits to which they may be entitled
under existing laws.
SECTION 52. Separability Clause. – If any provision or section of this Act or the application thereof to any person
or circumstances is held invalid, the other provisions or sections of this Act, in the application of such provision or
section to other persons or circumstances, shall not be affected thereby.
SECTION 53. Repealing Clause. – All acts or parts of acts and executive orders, administrative orders, or parts
thereof which are inconsistent with the provisions of this Act are hereby repealed.
SECTION 54. Effectivity Clause. – This Act shall take effect fifteen (15) days following the completion of its
publication in the Official Gazette or in two (2) newspapers of general circulation.

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REPUBLIC ACT No.

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

Section 3. Section 11 of the same Act is hereby amended to read as follows:

Section 5. Section 16 of the same Act is hereby amended to read as follows:

Section 7. Section 23 of the same Act is hereby amended to read as follows:

Section 8. Section 25 of the same Act is hereby amended to read as follows:

Section 14. Section 31 of Republic Act No. 7653 is hereby deleted.

Section 15. Section 32 of Republic Act No. 7653 is hereby deleted.

"The cash reward of informers shall be subject to applicable withholding taxes."

"(b) suspension of rediscounting privileges or access to Bangko Sentral credit facilities;

"(d) suspension of interbank clearing privileges; and/or

"(e) suspension or revocation of quasi-banking or other special licenses.

Section 21. Section 39 of the same Act is hereby amended as follows:

Section 22. Section 40 of the same Act is hereby amended as follows:

"(a) the monthly movement of monetary aggregates and their components;

"(c) the balance of payments of the Philippines;

Section 23. Section 43 of the same Act is hereby amended as follows:

"(1) the causes of the rise or fall of prices;

"(a) gold; and

"Sec. 132. Transfer of Assets and Liabilities. - x x x.

Section 3. Definition and Classification of Banks. -

3.2. Banks shall be classified into:

(a) Universal banks;

(b) Commercial banks;

4.6 Enforcing prompt corrective action. (n)

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

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

53.1. Receive in custody funds, documents and valuable objects;

53.5. Rent out safety deposit boxes.

Section 55. Prohibited Transactions.

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

(e) Outsource inherent banking functions.

55.2. No borrower of a bank shall -

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

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

“THE CREATION OF THE PHILIPPINE

“BOARD OF DIRECTORS: COMPOSITION

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

“(4) To approve a compensation structure as an integral component of the Corporation’s human

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

“PRESIDENT OF THE CORPORATION

“SEC. 5. As used in this Act –

“(m) The term payout refers to the payment of insured deposits.

“(1) Protect depositors, creditors and the DIF;

“(3) Prevent deterioration or dissipation of bank assets.

“(3) Capital position;

“(4) Liquidity position;

“(5) Management and governance; and

“DEPOSIT INSURANCE COVERAGE

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

“SANCTIONS AGAINST UNSAFE AND

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

“(1) Failure of prompt corrective action as declared by the Monetary Board; or

“(2) Request by a bank to be placed under resolution.

“For this purpose, the Corporation may:

“(1) Determine a resolution package for the bank;

“(2) Availability of a qualified investor;

“(3) Least cost to the DIF; and

“(4) Interest of the depositing public.

“LIQUIDATION OF A CLOSED BANK

“AUTHORITIES OF A RECEIVER AND EFFECTS OF

“(1) Conventional liquidation; and

“(2) Purchase of assets and/or assumption of liabilities.