Enhancing the Liquidation Framework for Banks and Banking Institutions

Sentate Office of tie Sortetary TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES First Regular Session 26 JAN 14 P2:34 SENATE RECEIVED BY: S.B. No. 1667 INTRODUCED BY SENATOR VICENTE C. SOTTO III AN ACT AMENDING REPUBLIC ACT NUMBERED THREE THOUSAND FIVE HUNDRED NINETY-ONE, AS AMENDED, AND OTHER RELATED LAWS, TO ENHANCE THE LIQUIDATION FRAMEWORK FOR BANKS AND BANKING INSTITUTIONS, AND TO STRENGTHEN THE INDEPENDENCE, AUTHORITY AND FINANCIAL CAPABILITY OF THE PHILIPPINE DEPOSIT INSURANCE CORPORATION, AND FOR OTHER PURPOSES EXPLANATORY NOTE The proposed amendments in the charter of the Philippine Deposit Insurance Corporation (PDIC) will enable a more effective and responsive Philippine deposit insurance system. These amendments will empower the PDIC to respond decisively to emerging risks and crises and minimize disruption in the financial system. The bill will enhance the deposit protection thru expansion of scope of coverage and implementation of differential coverage. This will include the expansion of insurance coverage to products of Non-Bank Financial Institutions (NBFIs) and cooperatives deemed as deposits by the Bangko Sentral ng Pilipinas (BSP) and Cooperative Development Authority (CDA). The proposed amendments will also establish the prompt payment of deposit insurance claims for immediate access to savings. It is also proposed to temporarily allow full deposit insurance coverage (Temporary Blanket Coverage) when there is threat to the stability of the financial system upon determination by the Monetary Board. In this bill, an enhanced liquidation process for immediate recovery of closed bank creditors will be in place as well as provisions to further strengthen the institution. In view thereof, immediate approval of this bill is requested. Шти VICENTE C. SOTTO III

Senate Office of the Sectetatp TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES First Regular Session 26 JAN 14 P2:34 SENATE S.B. No. 1667 RECEIVED BY: INTRODUCED BY SENATOR VICENTE C. SOTTO III AN ACT AMENDING REPUBLIC ACT NUMBERED THREE THOUSAND FIVE HUNDRED NINETY-ONE, AS AMENDED, AND OTHER RELATED LAWS, TO ENHANCE THE LIQUIDATION FRAMEWORK FOR BANKS AND BANKING INSTITUTIONS, AND TO STRENGTHEN THE INDEPENDENCE, *, AUTHORITY AND FINANCIAL CAPABILITY OF THE PHILIPPINE •DEPOSIT INSURANCE CORPORATION, AND FOR OTHER PURPOSES Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

SECTION 1. Section 1 of Republic Act No. 3591, as amended, is hereby

amended to read as follows: "THE CREATION OF THE PHILIPPINE DEPOSIT INSURANCE CORPORATION

SECTION 1. - There is hereby created a Philippine Deposit

Insurance Corporation hereinafter referred to as the "Corporation" which shall insure as herein provided, [the] deposits [of all banks] AS DEFINED IN THIS ACT 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] PROMOTE THE STABILITY OF THE FINANCIAL SYSTEM. The Corporation shall be attached to the Bangko Sentral ng Pilipinas for policy and program coordination."

SECTION 2. Section 2 of the same Act is hereby amended to 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] FINANCIAL system, and protect it from illegal schemes and machinations. (Towards this end, the] AS SUCH, THE CORPORATION IS BACKED BY THE FULL FAITH AND CREDIT OF THE REPUBLIC OF THE PHILIPPINES, AND 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] FINANCIAL 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 3 of the same Act is hereby amended to read as follows:

"BOARD OF DIRECTORS: COMPOSITION AND AUTHORITY

SEC. 3.

(a) xxx XXX XXX The Secretary of Finance and the Governor of the Bangko Sentral ng Pilipinas may each designate an alternate, who shall be an official with a rank not lower than assistant secretary of the Department of Finance or Deputy Governor of the Bangko Sentral ng Pilipinas with written authority from the Secretary of Finance or the Governor of the Bangko Sentral ng Pilipinas, to attend such meetings and to vote on behalf of their respective principals. Whenever the Chairperson of the Board is unable to attend a meeting of the Board, or in the event of a vacancy in the office of the Governor of the Bangko Sentral ng Pilipinas, his or her designated alternate shall preside: PROVIDED, IN THE EVENT THE SECRETARY OF FINANCE IS PRESENT, THE LATTER SHALL PRESIDE. In the absence of the Chairperson AND THE SECRETARY OF FINANCE, AS WELL AS THEIR [and his or her] designated ALTERNATES, THE REMAINING BOARD MEMBERS PRESENT, THERE BEING A QUORUM, SHALL DESIGNATE FROM AMONG THEMSELVES WHO SHALL PRESIDE OVER THE MEETING alternate, the Secretary of Finance or his or her representative shall preside].

XXX XXX XXX (b) The Board of Directors shall have the authority: xXX XXX XXX (12) TO SET THE MAXIMUM DEPOSIT INSURANCE COVERAGE FOR PRODUCTS DEEMED AS DEPOSITS BY THE BANGKO SENTRAL NG PILIPINAS AND/OR COOPERATIVE DEVELOPMENT AUTHORITY OFFERED BY COVERED INSTITUTIONS OTHER THAN BANKS TO AN AMOUNT INDEXED TO INFLATION OR IN CONSIDERATION OF OTHER ECONOMIC INDICATORS AS MAY BE DEEMED APPROPRIATE BY THE BOARD, AND APPROVE ADJUSTMENT THEREOF IN ACCORDANCE WITH SECTION 5(K) HEREOF; (13) TO DETERMINE THE ASSESSMENT RATE AND THE ASSESSMENT BASE AS WELL AS ADOPTION OF A SYSTEM FOR PURPOSES OF ASSESSMENTS ON COVERED INSTITUTIONS OTHER THAN BANKS. THE DETERMINATION BY THE BOARD OF THE ASSESSMENT RATE AND ASSESSMENT BASE AS WELL AS THE ASSESSMENT PREMIUM SYSTEM SHALL BE IN ACCORDANCE WITH SECTION 7 HEREOF; (14) TO ADMINISTER AND MANAGE THE INSURANCE FUND ESTABLISHED FOR EACH TYPE OF COVERED INSTITUTION OTHER THAN BANKS; (15) TO APPROVE THE ADJUSTMENT OF THE MAXIMUM DEPOSIT INSURANCE COVERAGE UP TO FULL COVERAGE OF DEPOSITS IN A BANK UPON DETERMINATION BY THE MONETARY BOARD OF SYSTEMIC CONSEQUENCES AS PROVIDED UNDER SECTION 5 HEREOF; (16) TO PROVIDE A DIFFERENTIATED INSURANCE COVERAGE FOR DEPOSITS TAKING INTO CONSIDERATION ITS SOCIAL VALUE AND ECONOMIC IMPACT, SUBJECT TO RULES AND REGULATIONS THAT SHALL BE ISSUED BY THE CORPORATION; (17) TO ISSUE RULES AND REGULATIONS THAT SHALL GOVERN THE INSURANCE COVERAGE OF PRODUCTS DEEMED AS DEPOSITS OFFERED BY COVERED INSTITUTIONS OTHER THAN BANKS. SUCH RULES AND REGULATIONS SHALL INCLUDE, AMONG OTHERS, THE ASSESSMENT RATE AND THE ASSESSEMENT BASE AND

ADOPTION OF THE FLAT-RATE OR DIFFERENTIAL PREMIUM SYSTEM, THE MAXIMUM DEPOSIT INSURANCE COVERAGE THEREFOR. THE BOARD OF DIRECTORS SHALL LIKEWISE ISSUE GUIDELINES FOR THE PRUDENT MANAGEMENT OF THE INSURANCE FUND/S FOR PRODUCTS DEEMED AS DEPOSIT BY THE BANGKO SENTRAL NG PILIPINAS AND/OR COOPERATIVE DEVELOPMENT AUTHORITY; (18) TO CREATE AND ESTABLISH A SUBSIDIARY WITH THE POWERS AND FUNCTIONS AS PRESCRIBED UNDER THIS ACT; (19) TO ASSIGN ASSETS OF THE CORPORATION TO THE SUBSIDIARY AT BOOK VALUE; (20) TO ISSUE THE RULES AND REGULATIONS FOR THE IMPLEMENTATION OF ALL PROVISIONS PERTAINING TO THE CREATION AND OPERATIONS OF THE SUBSIDIARY; (21) TO APPROVE THE INVESTMENT FRAMEWORK OF THE CORPORATION AND THE CORRESPONDING GUIDELINES IN ACCORDANCE WITH THIS ACT; (22) 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 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 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 (23) 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"

SECTION 4. Section 4 of the same Act 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 whose salary shall be [based on the Compensation and Position Classification System established by the Governance Commission for Government-Owned or - Controlled Corporations and as approved] FIXED by the President of the Philippines UPON THE RECOMMENDATION OF THE GOVERNOR OF THE BANGKO SENTRAL NG PILIPINAS. PROVIDED, THAT THE AUTHORITY TO FIX ALL OTHER ALLOWANCES, BENEFITS AND OTHER EMOLUMENTS OF THE PRESIDENT OF THE CORPORATION IS HEREBY DELEGATED TO THE GOVERNOR OF THE BANGKO SENTRAL NG PILIPINAS. PROVIDED FURTHER, THAT THE SALARY and ALL OTHER ALLOWANCES, BENEFITS AND OTHER EMOLUMENTS OF THE PRESIDENT OF THE CORPORATION SHALL BE COMMENSURATE TO THE IMPORTANCE AND RESPONSIBILITY ATTACHED TO THE POSITION. PROVIDED FINALLY THAT [T|The sum total of the salary, allowances, benefits and other emoluments of the President of the Corporation shall be THE CEILING FOR FIXING THE SALARY, ALLOWANCES, BENEFITS AND OTHER EMOLUMENTS OF ALL THE OTHER PERSONNEL OF THE CORPORATION AND SHALL BE higher than the compensation package of the next highest-ranking executive of the Corporation. IT IS UNDERSTOOD THAT FOR PURPOSES OF GIVING EFFECT TO THIS PROVISION AND TO REMOVE ANY DOUBT, THE AUTHORITY GIVEN TO THE PRESIDENT OF THE PHILIPPINES TO FIX THE SALARY OF THE PRESIDENT OF THE CORPORATION IS THE APPROVAL REQUIRED UNDER SECTION 6 OF PRESIDENTIAL DECREE NO. 1597 AND SECTION 9 OF CONGRESS JOINT RESOLUTION NO. 4

AND SUCH OTHER SIMILAR LAWS THAT MAY HEREAFTER ISSUE. XXX XXX XXX The President shall be assisted by [a Vice President and other] officials whose appointment and removal for cause shall be approved by the Board of Directors upon recommendation o the President of the Corporation. The salary, ALLOWANCES. BENEFITS AND OTHER EMOLUMENTS of the Vice President and other officials AND EMPLOYEES OF THE CORPORATION shall be FIXED BY THE BOARD OF DIRECTORS IN ACCORDANCE WITH THIS SECTION. [based on the Compensation and Position Classification System established by the Governance Commission for Government-Owned or - Controlled Corporations and as approved by the President of the Philippines]"

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

"DEFINITION OF TERMS

SEC. 5. As used in this Act -

XXX XXX XXX (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. FOR PURPOSES OF THIS ACT, THIS SHALL ALSO REFER TO ASSETS OF THE CORPORATION ACQUIRED FROM CLOSED BANKS OR FINANCIALLY-ASSISTED BANKS. XXX XXX XXX XXX XXX XXX (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 insurance in deposit bigain a o such branch. Certain products or arrangements of Islamic banks shall be deemed as deposit by the Bangko Sentral ng Pilipinas for purposes of this Act. CERTAIN PRODUCTS OFFERED BY NON-BANK FINANCIAL INSTITUTIONS SUPERVISED BY THE BANGKO SENTRAL NG PILIPINAS AND/OR COOPERATIVE DEVELOPMENT AUTHORITY SHALL LIKEWISE BE DEEMED AS DEPOSIT BY THE SAID AGENCIES NOT OTHERWISE EXPRESSLY EXCLUDED HEREUNDER. XXX XXX XXX (i) The term insured deposit REFERS TO (means the amount due to any bonafide depositor for legitimate deposits in an] COVERED INSTITUTION [insured bank], GROSS OF ANY LOAN, CLAIM OR ANY RECEIVABLE OF THE DEPOSITOR, MATURED OR OTHERWISE, as of the date of closure but not to exceed THE AMOUNT SET BY BOARD OF DIRECTORS OR THE PRESIDENT OF THE PHILIPPINES, AS THE CASE MAY BE. [Five Hundred Thousand Pesos (P500,000.00).] Such amount shall be determined according to such regulations as the Board of Directors may prescribe. XXX XXX XXX 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 and] as determined by the Monetary Board, the maximum deposit insurance cover may be adjusted TEMPORARILY in such amount UP TO THE EXTENT OF FULL COVERAGE, for such a period, FOR SUCH DEPOSIT PRODUCTS, AND/OR FOR SUCH BANKS [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 Governor of the Bangko Sentral ng Pilipinas or the designated alternate, subject to the

approval of the President of the Philippines. THE ADJUSTMENT IN THE MAXIMUM DEPOSIT INSURANCE COVERAGE UNDER THIS PARAGRAPH SHALL BE EFFECTIVE IMMEDIATELY UPON PUBLICATION IN A NEWSPAPER OF GENERAL CIRCULATION. The Board of Directors may increase the amount of the maximum deposit insurance coverage to an amount indexed to inflation or in consideration of other economic indicators as may be deemed appropriate by the Board. The Board of Directors shall review the amount of the maximum deposit insurance coverage every three (3) years and increase the maximum deposit insurance coverage as may be warranted. In the exercise of this authority, the Board may consider economic indicators other than inflation. For this purpose, the Board may hire the services of independent actuarial consultants and other experts to determine the feasibility and advisability of increasing the maximum deposit insurance coverage. ANY ADJUSTMENT IN THE MAXIMUM DEPOSIT INSURANCE COVERAGE UNDER THIS PARAGRAPH SHALL BE EFFECTIVE FIFTEEN (15) DAYS AFTER ITS PUBLICATION IN A NEWSPAPER OF GENERAL CIRCULATION. (k) The term liquidation refers to the proceedings under Sections 12 to 16 of this Act. (m) The term payout refers to the payment of INSURANCE ON BANK [insured] deposits AND OTHER COVERED PRODUCTS INSURED BY THE CORPORATION. (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. XXX XXX XXX (bb) THE TERM COVERED INSTITUTIONS REFERS TO BANKS AND OTHER NON-BANK FINANCIAL INSTITUTIONS SUPERVISED BY THE BANGKO SENTRAL NG PILIPINAS AND/OR THE COOPERATIVE DEVELOPMENT AUTHORITY THAT OFFER PRODUCTS THAT ARE INSURED OR SHALL BE INSURED BY THE CORPORATION. (cc) THE TERM DEPOSIT ACCOUNT INFORMATION REFERS TO SUCH INFORMATION AS THE CORPORATION MAY REQUIRE FROM COVERED INSTITUTIONS, SUCH AS, BUT NOT LIMITED TO THE ACCOUNT NAME, ACCOUNT NUMBER, ACCOUNT TYPE, CURRENCY, OUTSTANDING

BALANCE, ACCRUED INTEREST, AND UNIQUE IDENTIFIER ASSIGNED BY THE COVERED INSTITUTION FOR EACH ACCOUNT HOLDER. (dd) THE TERM SINGLE CUSTOMER VIEW REFERS TO A COMPREHENSIVE AND ACCURATE ELECTRONIC RECORD OF CONSOLIDATED INFORMATION ON ALL DEPOSIT ACCOUNTS OF A DEPOSITOR IN A BANK, GENERATED IN A STANDARDIZED FORMAT PRESCRIBED BY AND SUBMITTED TO THE CORPORATION TO ENSURE CONSISTENCY, ACCURACY, AND COMPLETENESS OF DEPOSIT ACCOUNT INFORMATION. THE ACCESS OF THE CORPORATION TO THE SINGLE CUSTOMER VIEW 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. ANY UNAUTHORIZED DISCLOSURE OF THE INFORMATION UNDER THIS ACT SECTION SHALL BE SUBJECT TO THE SAME PENALTY UNDER THE LAWS PROTECTING THE SECRECY OR CONFIDENTIALITY OF BANK DEPOSITS. (EE) THE TERM TRUE SALE REFERS TO A SALE WHEREIN THE CORPORATION TRANSFERS OR SELLS THE ASSETS TO THE SUBSIDIARY, WITHOUT RECOURSE TO CASH OR PROPERTY IN EXCHANGE FOR THE TRANSFER OR SALE. THE SUBSIDIARY SHALL ACQUIRE FULL LEGAL AND BENEFICIAL TITLE OVER THE TRANSFERRED ASSETS.

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

"DEPOSIT INSURANCE COVERAGE

SEC. 6. The deposit liabilities of any [bank] COVERED

INSTITUTION which is engaged in the business of receiving deposits as herein defined on the effective date of this Act, or which thereafter may engage in the business of receiving deposits, shall be insured with the Corporation. The Corporation may establish separate insurance funds and insurance arrangements or structures or takaful that take into consideration the peculiar characteristics of Islamic banking. [Whenever a bank is determined by the Bangko Sentral ng Pilipinas to be capital deficient,] TIt|he Corporation may conduct an insurance risk evaluation on the [bank] COVERED

INSTITUTION to enable it to assess the risks to the DIF. FOR THIS PURPOSE, THE CORPORATION SHALL BE EXEMPT FROM 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. THE CORPORATION, ITS DIRECTORS, DULY AUTHORIZED OFFICERS OR EMPLOYEES ARE PROHIBITED FROM DISCLOSING INFORMATION OBTAINED UNDER THIS SECTION TO ANY PERSON, GOVERNMENT OFFICIAL, BUREAU OR OFFICE. ANY UNAUTHORIZED DISCLOSURE OF THE INFORMATION UNDER THIS SECTION SHALL BE SUBJECT TO THE SAME PENALTY UNDER THE LAWS PROTECTING THE SECRECY OR CONFIDENTIALITY OF BANK DEPOSITS. [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.] IN CONDUCTING AN INSURANCE RISK EVALUATION, THE CORPORATION SHALL DETERMINE THE LEVEL AND NATURE OF POTENTIAL RISK TO THE DIF BY ASSESSING THE DEPOSIT CONCENTRATION LEVELS AND COMPLIANCE WITH THE SINGLE CUSTOMER VIEW, AMONG OTHERS. FOR THIS PURPOSE, THE CORPORATION SHALL HAVE ACCESS TO DEPOSIT ACCOUNT INFORMATION."

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

"ASSESSMENT OF MEMBER BANKS AND OTHER COVERED INSTITUTIONS XXX XXX

SEC. 7. (a) xxx

In addition, the Board of Directors shall conduct a study on the need to establish a risk-based assessment system within five (5) years from passage of this Act the results of which shall be reported to the Joint Congressional Oversight Committee to ensure compliance with the intent of the law: PROVIDED, THAT, THEREAFTER, THE BOARD OF DIRECTORS MAY IMPLEMENT THE RISK-BASED ASSESSMENT. For which purpose, the Board of Directors shall consider the viability of a mechanism that adjusts the assessment rate depending on the creditworthiness or risk profile of the bank, [consistent with the national development goals] and impose a commensurate risk- based [adjusted] assessment rate per annum per bank BEYOND THE FLAT RATE OF ONE-FIFTH (1/5) OF ONE PER CENTUM (1%) PER ANNUM. The risk-based assessment rate and assessment base shall be determined to ensure the adequacy

and sustainability of the DIF while at the same time rationalizing the financial burden on banks and stability of the financial system. The assessment of each insured bank shall be determined by multiplying the risk-based assessment rate with the assessment base. XXX XXX XXX (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. XXX XXX XXX (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 OR RECOVER LOSS TO THE DIF WHENEVER A SYSTEMIC RISK IS INVOKED PURSUANT TO SECTION 22 OF THIS ACT. ANY ACTION TAKEN OR ASSISTANCE PROVIDED TO AVOID OR MITIGATE SYSTEMIC RISKS AS DEFINED UNDER THIS ACT SHALL AUTHORIZE THE CORPORATION TO RECOVER THE RESULTANT LOSS TO THE DIF THROUGH THE COLLECTION OF A SPECIAL ASSESSMENT ON THE INSURED BANKS THAT BENEFITTED FROM THE SAID ACTION OR ASSISTANCE, AS THE CORPORATION DETERMINES TO BE APPROPRIATE; PROVIDED, THAT THE SPECIAL ASSESSMENT MUST BE APPROVED BY A VOTE OF AT LEAST TWO-THIRDS OF THE MEMBERS OF THE BOARD OF DIRECTORS, INCLUDING THE GOVERNOR OF THE BANGKO SENTRAL NG PILIPINAS AND THE SECRETARY OF FINANCE OR THEIR ALTERNATES. THE CORPORATION SHALL PRESCRIBE SUCH REGULATIONS AS IT DEEMS NECESSARY TO IMPLEMENT THIS CLAUSE. IN PRESCRIBING SUCH REGULATIONS, DEFINING TERMS, AND SETTING THE APPROPRIATE SPECIAL ASSESSMENT RATE OR RATES, THE CORPORATION SHALL CONSIDER THE INSURED BANKS THAT BENEFITTED FROM THE ACTION TAKEN OR ASSISTANCE PROVIDED, ECONOMIC CONDITIONS, THE EFFECTS ON THE INDUSTRY, AND SUCH OTHER FACTORS AS THE CORPORATION DEEMS

APPROPRIATE AND RELEVANT TO THE ACTION TAKEN OR THE ASSISTANCE PROVIDED. THE SPECIAL ASSESSMENT SHALL FORM PART OF THE DIF." (J) THE CORPORATION IS AUTHORIZED TO COLLECT ASSESSMENT FROM COVERED INSTITUTIONS OTHER THAN BANKS PURSUANT TO THE PROVISIONS OF THIS ACT. THE PROVISIONS OF THIS SECTION, INCLUDING THE AUTHORITY TO DETERMINE THE ASSESSMENT RATE AND THE ASSESSEMENT BASE AND ADOPTION OF THE ASSESSMENT PREMIUM SYSTEM SHALL APPLY TO COVERED INSTITUTIONS OTHER THAN BANKS."

SECTION 8. Section 9 of the same Act is hereby amended to read as follows:

"POWERS AS CORPORATE BODY

SEC. 9. The Corporation as a corporate body shall have the

powers: XXX XXX XXX SIXTEENTH - TO ACCESS DEPOSIT ACCOUNT HEREOF, INFORMATION, AS DEFINED UNDER SEC. - FROM A COVERED INSTITUTION IN PURSUANCE OF ITS MANDATE AS INSURER. SUCH ACCESS MAY BE EXERCISED IN THE COURSE OF THE JOINT EXAMINATION OF BANKS TOGETHER WITH THE BANGKO SENTRAL NG PILIPINAS OR DURING THE CONDUCT BY THE CORPORATION OF INSURANCE RISK EVALUATION ON COVERED INSTITUTIONS; SEVENTEENTH - TO REQUIRE COVERED INSTITUTIONS TO SUBMIT A SINGLE CUSTOMER VIEW REPORT CONTAINING DEPOSIT ACCOUNT INFORMATION, AS DEFINED UNDER SEC. _ -HEREOF, IN A FORMAT PRESCRIBED BY THE CORPORATION, AND ISSUE RULES AND REGULATIONS RELATIVE THERETO; EIGHTEEN - TO INVEST IN OTHER DEBT INSTRUMENTS OR EQUITIES OTHER THAN GOVERNMENT SECURITIES, PURSUANT TO A BOARD-APPROVED INVESTMENT FRAMEWORK IN ACCORDANCE WITH THIS ACT."

SECTION 9. Section 10 of the same Act is hereby amended to read as

follows: "POWERS, RESPONSIBILITY, AND PROHIBITIONS

SEC. 10.

XXX XXX XXX (c) Each [insured bank] COVERED INSTITUTION 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] COVERED INSTITUTION 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 (₽10,000.00) for each day of such failure recoverable by the Corporation for its use. (d) The Bangko Sentral ng Pilipinas AND/OR THE COOPERATIVE DEVELOPMENT AUTHORITY shall have access to examination reports AND/OR INSURANCE RISK EVALUATION REPORTS made by the Corporation, and to such other reports or information as may be agreed upon by the Corporation and the Bangko Sentral ng Pilipinas AND/OR THE COOPERATIVE DEVELOPMENT AUTHORITY. The Bangko Sentral ng Pilipinas AND/OR THE COOPERATIVE DEVELOPMENT AUTHORITY shall share to the Corporation its reports of examination on COVERED INSTITUTIONS, and such other reports or information as may be agreed upon by them: Provided, That the use of such reports or information are in accordance with terms and conditions agreed upon by the Corporation and the Bangko Sentral ng Pilipinas AND/OR THE COOPERATIVE DEVELOPMENT AUTHORITY, and prescribed by applicable laws and regulations. (d-1) Each [insured bank] COVERED INSTITUTION 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 THE COOPERATIVE ng Pilipinas, DEVELOPMENT AUTHORITY 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. (D-2) COVERED INSTITUTIONS WHOSE PRODUCTS ARE INSURED BY THE CORPORATION SHALL PROVIDE THE CORPORATION A SINGLE CUSTOMER VIEW REPORT WITHIN TWENTY-FOUR (24) HOURS FROM REQUEST IN

RELATION TO THE EXERCISE BY THE CORPORATION OF ITS AUTHORITIES UNDER ITS CHARTER. XXX xxx xxX (J) IN CASE OF NUISANCE OR HARASSMENT SUITS AGAINST ANY DIRECTOR, OFFICER, EMPLOYEE, OR AGENT OF THE CORPORATION, THE COURT MAY, MOTO PROPRIO OR UPON MOTION, FORTHWITH DISMISS THE CASE. xXX XXX xXX THE PROHIBITION OF THE PERSONNEL OF THE CORPORATION AS PROVIDED UNDER THIS SECTION SHALL APPLY AGAINST TRANSACTIONS WITH COVERED INSTITIUTIONS OTHER THAN BANKS."

SECTION 10. Section 13 of the same Act is hereby amended to read as

follows: "AUTHORITIES OF A RECEIVER AND EFFECTS OF PLACEMENT OF A BANK UNDER LIQUIDATION

SEC. 13.

XXX XXX xXX (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 i termin, its all co wine a pray underate cio 16 of this Act. XXX XXX xXX"

SECTION 11. Section 14 of the same Act is hereby amended to read as

follows: "NOTICE OF CLOSURE AND TAKEOVER ACTIVITIES

SEC. 14.

XXX XXX xXX

(b) The receiver AND ITS DESIGNATED AGENTS 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. xXX XXX xxX"

SECTION 12. A new section entitled Section 31 is hereby included in the

same Act to read as follows: "SUBSIDIARY: CREATION, COMPOSITION, AND POWERS

SEC. 31. (A) THE BOARD OF DIRECTORS SHALL HAVE THE

AUTHORITY TO ESTABLISH A SUBSIDIARY THAT SHALL ACQUIRE THE ASSETS OF THE CORPORATION AND MANAGE, ADMINISTER AND RESOLVE ASSETS OF CLOSED BANKS. (B) THE SUBSIDIARY SHALL BE PROVIDED WITH CAPITAL TO BE DRAWN FROM THE RETAINED EARNINGS OF THE DEPOSIT INSURANCE FUND OF THE CORPORATION AFTER DIVIDENDS. THE SUBSIDIARY SHALL BE ALLOWED TO CHARGE THE COSTS AND EXPENSES FOR THE MANAGEMENT AND RESOLUTION OF THE ASSETS OF CLOSED BANKS IN ITS CUSTODY AGAINST THE PROCEEDS OF THE SALE OR COLLECTION OF THESE ASSETS. (C) THE POWERS AND FUNCTIONS OF THE SUBSIDIARY SHALL BE VESTED IN AND EXERCISED BY ITS BOARD OF DIRECTORS WHICH SHALL BE COMPOSED OF FIVE MEMBERS AS FOLLOWS: (1) THE EXECUTIVE VICE PRESIDENT OF THE CORPORATION WHO SHALL BE THE EX OFFICIO CHAIRPERSON OF THE BOARD; (2) AN OFFICER OF THE CORPORATION WHO SHALL BE THE EX OFFICIO VICE CHAIRPERSON AND DESIGNATED PRESIDENT OF THE SUBSIDIARY; AND (3) THREE (3) MEMBERS FROM THE PRIVATE SECTOR TO BE APPOINTED BY THE PRESIDENT OF THE PHILIPPINES TO BE SELECTED 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 IN ACCORDANCE WITH REPUBLIC ACT NO. 10149 UNLESS SOONER REMOVED FOR CAUSE. APPOINTMENT TO ANY VACANCY SHALL LIKEWISE BE 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, OR ASSET MANAGEMENT AND ADMINISTRATION 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. (D) THE BOARD OF THE SUBSIDIARY SHALL HAVE THE FOLLOWING AUTHORITIES: (1) ADOPT AN ANNUAL BUDGET FOR, AND AUTHORIZE SUCH EXPENDITURES AS ARE IN THE INTEREST OF THE EFFECTIVE ADMINISTRATION AND OPERATION OF THE SUBSIDIARY; (2) 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 SUBSIDIARY IN ACCORDANCE WITH SOUND PRINCIPLES OF MANAGEMENT; (3) ADOPT AN ORGANIZATIONAL STRUCTURE AS IT MAY DEEM NECESSARY FOR THE SUBSIDIARY TO UNDERTAKE ITS FUNCTIONS; AND AND SUCH OTHER AUTHORITIES AS MAY BE (4) REASONABLY EXERCISED TO ENSURE THAT THE

MANDATES AND OBJECTIVES OF THE SUBSIDIARY ARE MET. (E) THE SUBSIDIARY SHALL HAVE THE FOLLOWING POWERS TO ACCOMPLISH THE PURPOSES FOR WHICH IT WAS ESTABLISHED: (1) ACQUIRE, MANAGE AND DISPOSE ALL ASSETS ASSIGNED BY THE CORPORATION; (2) MANAGE, DISPOSE, AND/OR COLLECT THE ASSETS OF CLOSED BANKS: PROVIDED, THAT, THE SUBSIDIARY IS AUTHORIZED TO MANAGEMENT FEES FROM THE AVAILABLE FUNDS OF THE CLOSED BANK, INCLUDING FUNDS GENERATED FROM THE MANAGEMENT, DISPOSAL AND/OR COLLECTION OF THE ASSETS, AT AN AMOUNT AS MAY BE AGREED UPON WITH THE CORPORATION AND SUCH OTHER REASONABLE EXPENSES THAT THE SUBSIDIARY SHALL INCUR IN THE MANAGEMENT, DISPOSAL AND/OR COLLECTION OF THE ASSETS WHILE IN ITS CUSTODY; PROVIDED, FURTHER, THAT THE SUBSIDIARY SHALL ONLY HOLD THE ASSETS OF THE CLOSED BANKS FOR A PERIOD NO LONGER THAN THREE YEARS FROM ITS RECEIPT FROM THE CORPORATION; PROVIDED, FINALLY, THAT, AT THE END OF THE THREE-YEAR PERIOD OR EARLIER, THE SUBSIDIARY SHALL SUBMIT A REPORT OF LIQUIDATION TO THE CORPORATION AND RENDER A FULL ACCOUNTING OF COLLECTIONS AND SALE PROCEEDS RECEIVED, AS WELL AS EXPENSES CHARGED, AND SURRENDER TO THE CORPORATION ALL REMAINING ASSETS AND FUNDS OF THE CLOSED BANK. (3) OFFER FOR PUBLIC BIDDING ALL ASSETS, IN BULK OR OTHERWISE, AT BOOK VALUE WITHOUT NEED OF APPRAISAL. IN CASE OF A FAILED BIDDING, THE ASSETS MAY BE DISPOSED THROUGH NEGOTIATED SALE WHERE IT MAY BE AWARDED TO THE BUYER THAT SHALL OFFER THE LOWEST DISCOUNT ON THE BOOK VALUE. (4) SELL, OFFER FOR LEASE, DONATE, WRITE- OFF, MORTGAGE, EXCHANGE, USUFRUCT, SECURE, SECURITIZE THE ASSETS ACQUIRED FROM THE CORPORATION OR ENTRUSTED BY CLOSED BANKS;

(5) SELL, COMPROMISE, COLLECT, RESTRUCTURE, WRITE-OFF LOANS, FORECLOSE REAL ESTATE MORTGAGES JUDICIALLY OR EXTRAJUDICIALLY, ACCEPT DATION IN PAYMENT AND OTHER FORMS OF SETTLEMENT OF LOAN OR ANY RECEIVABLE; (6) ENGAGE THIRD PARTIES TO ADMINISTER, COLLECT AND/OR DISPOSE OF ASSETS IN ITS CUSTODY, AS WELL AS TO COLLECT AND RECEIVE LOAN PAYMENTS; AND (7) EXERCISE THE GENERAL POWERS OF A CORPORATION UNDER THE REVISED CORPORATION CODE AND SUCH POWERS NECESSARY TO PERFORM ITS MANDATES AND FUNCTIONS. WITHIN TEN (10) DAYS FROM THE END OF EACH YEAR, THE SUBSIDIARY SHALL SUBMIT A REPORT TO THE CORPORATION AND RENDER A FULL ACCOUNTING OF ITS ASSET MANAGEMENT, DISPOSAL, AND COLLECTION ACTIVITIES. (F) THE SUBSIDIARY SHALL ANNUALLY DECLARE AND REMIT TO THE CORPORATION ITS ANNUAL NET EARNINGS AS CASH, PROPERTY, OR STOCK DIVIDENDS. THE DIVIDENDS AT A RATE TO BE DETERMINED BY THE BOARD OF DIRECTORS OF THE CORPORATION. THE DIVIDENDS SHALL BE DECLARED OUT OF THE SUBSIDIARY'S UNRESTRICTED RETAINED EARNINGS. (G) ALL SALES OR TRANSFERS OF ASSETS FROM THE CORPORATION TO THE SUBSIDIARY SHALL BE IN A NATURE OF TRUE SALE AS DEFINED UNDER SEC. 5. NO TRANSFER TO THE SUBSIDIARY SHALL TAKE EFFECT UNLESS THE CORPORATION SHALL HAVE GIVEN PRIOR NOTICE TO THE BORROWERS OR THE REGISTERED OWNERS, AS THE CASE MAY BE. SUCH NOTICE SHALL BE IN WRITING AND SHALL BE SENT TO THEIR LAST KNOWN ADDRESS. AFTER THE SALE OR TRANSFER OF THE ASSETS TO THE SUBSIDIARY, THE CORPORATION SHALL SEND A NOTICE TO THE BORROWERS OR THE REGISTERED OWNERS IN WRITING AT THEIR LAST KNOWN ADDRESS. ANY EXISTING LAW TO THE CONTRARY (H) NOTWITHSTANDING, THE TRANSFER OF THE ASSETS

FROM THE CORPORATION TO THE SUBSIDIARY SHALL BE EXEMPT FROM THE FOLLOWING TAXES: (1) DOCUMENTARY STAMP TAX ON THE ABOVEMENTIONED TRANSFER OF ASSETS AND DATION IN PAYMENT AS MAY BE IMPOSED UNDER TITLE VII OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED BY REPUBLIC ACT NO. 10968, OTHERWISE KNOWN AS THE "TAX REFORM FOR ACCELERATION AND INCLUSION (TRAIN)' ACT"; (2) CAPITAL GAINS TAX IMPOSED ON THE TRANSFER OF LANDS AND/OR OTHER ASSETS TREATED AS CAPITAL ASSETS AS DEFINED UNDER

SECTION 39(A)(L) OF THE NATIONAL INTERNAL

REVENUE CODE OF 1997, AS AMENDED; (3) CREDITABLE WITHHOLDING INCOME TAXES IMPOSED ON THE TRANSFER OF LAND AND/OR BUILDINGS TREATED AS ORDINARY ASSETS PURSUANT TO BUREAU OF INTERNAL REVENUE (BIR) REVENUE REGULATION NO. 2-98, AS AMENDED; (4) VALUE-ADDED TAX ON THE TRANSFER OF ASSETS AS MAY BE IMPOSED UNDER TITLE IV OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, OR GROSS RECEIPTS TAX UNDER TITLE V OF THE SAME CODE, WHICHEVER IS APPLICABLE PURSUANT TO REGULATIONS OF THE BIR; (5) LOCAL TAXES, FEES AND CHARGES THAT MAY BE IMPOSED BY A PROVINCE, CITY, OR MUNICIPALITY ON THE TRANSFER OF ASSETS. (I) THE DISPOSAL BY THE SUBSIDIARY OF THE ASSETS OF THE CORPORATION IS EXCLUDED FROM THE COVERAGE OF THE GUIDELINES ISSUED BY THE COMMISSION ON AUDIT FOR DISPOSAL OF ASSETS AND ANY OTHER SIMILAR ISSUANCE."

SECTION 13. Section 16 of the same Act is hereby amended to read as

follows: "CONVENTIONAL LIQUIDATION

SEC. 16. xxx

xXX XXX

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. WITHIN THE PERIOD PRESCRIBED IN THE RULES ON LIQUIDATION OF CLOSED BANKS, THE RECEIVER SHALL CAUSE THE FILING WITH THE LIQUIDATION COURT OF A MOTION FOR APPROVAL OF THE FINAL ASSET DISTRIBUTION PLAN AND TERMINATION OF LIQUIDATION OF THE CLOSED BANK. (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, PROVIDED, HOWEVER, THAT THE RECEIVER HAS THE AUTHORITY TO ASSIGN ENCUMBERED ASSETS BASED ON DACION VALUE SET BY THE CORPORATION AS RECEIVER WITHOUT NEED OF APPROVAL OF THE LIQUIDATION COURT. XXX XXX XXX (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, OR WITHIN THE PERIOD AS PROVIDED IN THE RULES ON LIQUIDATION OF CLOSED BANKS, WHICHEVER IS LATER. XXX XXX XXX

A. WINDING-UP XXX XXX XXX (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. THE OWNERSHIP, TITLES, RIGHTS, AND INTERESTS OF THE CLOSED BANK, ITS CREDITORS AND STOCKHOLDERS OF RECORD OVER ALL UNCLAIMED ASSETS OF THE CLOSED BANK SHALL BE TRANSFERRED BY THE CORPORATION AS RECEIVER TO THE NATIONAL GOVERNMENT, THROUGH THE BUREAU OF TREASURY WITHOUT PREJUDICE TO THE REQUEST SUBMITTED BY THE CONCERNED CREDITOR OR STOCKHOLDER OF RECORD TO THE BUREAU OF TREASURY FOR REACTIVATION OF UNCLAIMED ASSETS SUBMITTED WITHIN SIX (6) MONTHS FROM THE EXPIRATION OF THE WINDING-UP PERIOD; PROVIDED FURTHER, THAT AFTER THE LAPSE OF SIX (6) MONTHS FROM THE EXPIRATION OF THE WINDING-UP PERIOD, THE REACTIVATION OF SUCH UNCLAIMED ASSETS SHALL FOREVER BE BARRED, AND ABSOLUTE TITLE, OWNERSHIP, OR WHATEVER RIGHTS AND INTERESTS OVER SUCH UNCLAIMED ASSETS SHALL VEST IN FAVOR OF THE REPUBLIC OF THE PHILIPPINES, WITHOUT NEED FOR FURTHER ESCHEAT PROCEEDINGS. XXX XXX XXX"

SECTION 14. Section 17 of the same Act is hereby amended to read as

follows: "PERMANENT INSURANCE FUND

SEC. 17. To carry out the purposes of this Act, the permanent

insurance fund shall be Three Billion Pesos (₽3,000,000,000.00). The Deposit Insurance Fund (DIF) shall be the capital account of the Corporation and shall principally consist of the following: (i) the Permanent Insurance Fund; (ii) assessment collections, subject to the charges enumerated in Section 7(d); (iji) reserves for insurance and financial assistance losses; and (iv) retained the reserves for insurance and earnings. Provided, That financial assistance losses and retained earnings shall be maintained at a reasonable level to ensure capital adequacy:] THE DIF SHALL HAVE THE FOLLOWING COMPONENTS:

(A) EQUITY CAPITAL COMPOSED OF THE PIF, ASSESSMENT COLLECTIONS SUBJECT TO THE CHARGES ENUMERATED IN SECTION 7 AND RESERVES FOR INSURANCE AND FINAL ANCIAL ASSISTANCE LOSSES ACCUMULATED OVER TIME: PROVIDED, THAT, NO PORTION OF THE EQUITY CAPITAL SHALL ACCRUE TO THE GENERAL FUND OF THE NATIONAL GOVERNMENT OR TO ANY OF ITS AGENCIES OR INSTRUMENTALITIES, INCLUDING GOVERNMENT-OWNED OR -CONTROLLED NO CORPORATIONS: PROVIDED, further, ThAt PORTION OF THE EQUITY CAPITAL SHALL BE INVESTED FOR ANY PURPOSE OR ANY INSTRUMENT, INSTITUTION OR INDUSTRY EXCEPT AS PROVIDED UNDER SECTION. HEREOF. RESERVES FOR INSURANCE LOSSES SHALL REFER TO PROBABLE LOSS/RESERVES FOR FUTURE LOSSES ON BANKS NOT YET CLOSED BUT IDENTIFIED THROUGH A MONITORING PROCESS AS LIKELY TO FAIL IN THE FUTURE UNLESS INTERVENTION FROM THIRD PARTY IS MADE. (B) RETAINED EARNINGS COMPOSED OF ACCUMULATED INCOME OVER THE YEARS NET OF DIVIDENDS DECLARED TO THE ADJUSTMENTS: PROVIDED, THAT, ANY AMOUNT AFTER DIVIDENDS MAY BE USED BY THE CORPORATION THAT WILL OTHERWISE PROVIDE PROGRAMS FOR THE BANKING SYSTEM TO ENHANCE COMPLIANCE WITH THE REQUIREMENTS OF THE CORPORATION AND TO PROMOTE FINANCIAL STABILITY IN ACCORDANCE WITH THE RULES AND REGULATIONS THAT SHALL BE ISSUED FOR THIS PURPOSE: PROVIDED FINALLY, THAT ANY REMAINING BALANCE OF THE RETAINED EARNINGS SHALL BE APPROPRIATED TO FORM PART OF THE RESERVES FOR INSURANCE LOSSES AT THE START OF EACH CALENDAR YEAR. Provided, further, That the Corporation may, within two (2) years from the passage of this Act, and every five (5) years thereafter, conduct a study on the need to adjust the amount of the Permanent Insurance Fund, insurance cover, assessment rate and assessment base, and thereafter make the necessary recommendation to For this purpose, the Congress. Corporation may hire the services of actuarial consultants to determine, among others, the affordability of assessment rates, analysis and evaluation of insurance risk, and advisability of

imposing varying assessment rates or insurance cover of different bank categories." THE DIF SHALL BE USED ONLY FOR THE PURPOSES AND IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT. AS CAPITAL OF THE CORPORATION, THE FUND SHALL, AT ALL TIMES, BE MAINTAINED AT A REASONABLE LEVEL TO ENSURE CAPITAL ADEQUACY BY DESIGNATING THE DIF TARGET LEVEL BEFORE THE BEGINNING OF EACH YEAR BASED ON RULES AND REGULATIONS ISSUED BY THE BOARD OF DIRECTORS."

SECTION 15. Section 18 of the same Act is hereby amended to read as

follows: "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. ONLY WHEN THE TARGET DIF LEVEL FOR THE APPLICABLE YEAR HAS BEEN REACHED WILL T|T|he Corporation [shall] declare and remit [cash] dividends to the National Government in accordance with Republic Act No. 7656: Provided, That Section 2(d) on the determination of the dividend base and Section 3 with respect to dividend base land the manner of payment] shall not apply. In lieu thereof, the succeeding paragraphs shall be applicable. For purposes of computing the amount of dividends to be declared and remitted to the National Government, the dividend base shall be the sum of all NET income ACTUALLY REALIZED but excluding all assessment income AND INCOME GENERATED FROM INVESTMENTS THEREOF. No other deductions from the dividend base shall be allowed. Such [cash] dividends accruing to the National Government shall be received by the National Treasury and recorded as income of the General Fund."

SECTION 16. Section 19 of the same Act is hereby amended to read as

follows: "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) available to each depositor a by cash or (2) by making 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. NO ACTION OR SUIT SHALL BE BROUGHT, INSTITUTED OR MAINTAINED IN ANY COURT OR TRIBUNAL EXCEPT THE SUPREME COURT, OR BEFORE ANY OTHER AUTHORITY AGAINST THE CORPORATION, OR ANY OF ITS DIRECTORS, AGENTS ACTING UNDER THE OFFICERS, CORPORATION'S DIRECTION TO RESTRAIN OR PROHIBIT THE PAYMENT OF INSURANCE CLAIMS."

SECTION 17. Section 21 of the same Act is hereby amended to read as

follows: "SEC. 21. XXX XXX XXX (e) Unless otherwise waived by the Corporation, lif the depositor in the closed bank shall fail to claim his insured deposits with the Corporation within two (2) years from actual takeover of the closed bank by the receiver, or does not enforce his claim filed with the Corporation within two (2) years after the two-year period to file a claim as mentioned hereinabove, all rights of the against the closed bank and its shareholders or the receivership estate to which the Corporation may have become subrogated, shall thereupon revert to the depositor. Thereafter, the Corporation shall be discharged from any liability on the insured deposit.] CLAIMS AGAINST INSURED DEPOSITS

SHALL BE FILED AND ENFORCED WITHIN ONE (1) YEAR FROM ACTUAL TAKEOVER OF THE CLOSED BANK BY THE RECEIVER. AFTER THIS PERIOD, THE CORPORATION SHALL BE DISCHARGED FROM ANY LIABILITY ON THE INSURED DEPOSIT WITHOUT FURTHER NOTICE TO THE DEPOSITOR."

SECTION 18. Section 22 of the same Act 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, OR IN LOW-RISK DEBT INSTRUMENTS OF NON- BANK CORPORATIONS ORGANIZED UNDER PHILIPPINE LAW AND RATED "AAA" BY RECOGNIZED CREDIT-RATING AGENCIES. in debt instruments The Corporation may also invest denominated in foreign currencies issued or guaranteed by the Republic of the Philippines, or debt instruments denominated in currencies issued freely convertible foreign 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. XXX XXX XXX (c) It is hereby declared to be the policy of the State that the Deposit Insurance Fund of the Corporation shall be preserved and maintained at all times. Accordingly, all tax obligations of the Corporation for a period of five (5) years reckoned from the date of effectivity of this Act shall be chargeable to the Tax Expenditure Fund (TEF) in the annual General Appropriations Act pursuant to the provisions of Executive Order No. 93, series of 1986: Provided, That, on the 6th year and thereafter, the Corporation shall be exempt from income tax, final withholding

tax, [value-added tax on assessments collected from member banks,] and local taxes. XXX XXX XXX"

SECTION 19. Section 23 of the same Act is hereby amended to 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. xXX XXX xXX"

SECTION 20. Section 26 of the same Act is hereby amended to read as

follows: "SANCTIONS AND PENALTIES

SEC. 26.

XXX XXX xXX (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; XXX XXX XXX"

SECTION 21. Section 27 of the same Act is hereby amended to read as

follows: "SEC. 27. No court, except the Court of Appeals, shall issue any temporary restraining order, preliminary injunction or preliminary mandatory injunction against the Corporation for any action under this Act.

This prohibition shall apply in all cases, disputes or controversies instituted by a private party, the [insured bank] COVERED INSTITUTION, or any shareholder of the [insured bank] COVERED INSTITUTION. The Supreme Court may issue a restraining order or injunction the matter is of extreme urgency involving constitutional issue, such that unless a temporary restraining order is issued, grave injustice and irreparable injury will arise. The party applying for the issuance of a restraining order or injunction shall file a bond in an amount to be fixed by the Supreme Court, which bond shall accrue in favor of the Corporation if the court should finally decide that the applicant was not entitled to the relief sought. Any restraining order or injunction issued in violation of this Section is void and of no force and effect and any judge who has issued the same shall suffer the penalty of suspension of at least sixty (60) days without pay. THIS SECTION IS WITHOUT PREJUDICE TO SECTION 19 OF THIS ACT ON THE PAYMENT OF INSURANCE CLAIMS."

SECTION 22. A new section entitled Section 32 is hereby included in the

same Act, to read as follows: "SEC. 32. PERIOD TO ESTABLISH INSURANCE SYSTEM FOR EXPANDED COVERAGE. - THE BOARD OF DIRECTORS SHALL HAVE A PERIOD OF THREE (3) YEARS FROM EFFECTIVITY DATE OF THIS ACT TO ESTABLISH THE INSURANCE SYSTEM FOR COVERED PRODUCTS OF NON- BANK FINANCIAL INSTITUTIONS AND COOPERATIVES DEEMED AS DEPOSITS BY THE BANGKO SENTRAL NG PILIPINAS AND/OR COOPERATIVE DEVELOPMENT AUTHORITY UNDER SECTION 5, AND ISSUE THE RULES AND REGULATIONS PERTAINING TO THE PERMANENT INSURANCE FUND FOR EACH TYPE OF COVERED INSTITUTION OTHER THAN BANKS, INSURANCE COVER, ASSESSMENT RATE AND ASSESSMENT BASE, AND ASSESSMENT PREMIUM SYSTEM, INSURANCE RISK EVALUATION, AND SUCH OTHER REQUIREMENTS NECESSARY TO ESTABLISH THE SEPARATE INSURANCE FUNDS AND INSURANCE ARRANGEMENTS: PROVIDED THAT, THE LAPSE OF THE 3-YEAR TRANSITION PERIOD NOTWITHSTANDING, THE EXPANDED COVERAGE SHALL COMMENCE ONLY AFTER THE PERMANENT INSURANCE FUND FOR EACH TYPE OF COVERED INSTITUTION OTHER THAN BANKS UNDER SEC. 5 HEREOF SHALL HAVE BEEN

APPROPRIATED AND RECEIVED FROM THE NATIONAL GOVERNMENT."

SECTION 23. A new section entitled Section 33 is hereby included in the

same Act, to read as follows: "SEC. 33. 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 CORPORATION 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 24. Application to Other Covered Institutions. - Except for

Section 11 on the authority of the Corporation to examine banks under

certain conditions and Section 12 on its authority as receiver of banks ordered closed by the Monetary Board, all other authorities of the Corporation under Republic Act No. 3591, as amended, shall apply to other covered institutions.

SECTION 25. 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 26. 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 27. Effectivity Clause. - This Act shall take effect fifteen (15)

days following the completion of its publication in the Official Gazette or in two (2) newspapers of general circulation. Approved,