RA 3591

SECTION 1. Philippine Deposit Insurance Corporation (PDIC)

 PDIC insures the deposit of all banks entitled to insurance under this
code
 The PDIC shall promote and safeguard the interests of the depositing
public by way of providing permanent and continuing insurance
coverage on all insured deposits.

SECTION 2. Members of the Board (5 members)

a. Secretary of Finance – former member of the Board without

compensation
b. Governor of BSP – same as secretary
c. President – appointed by the President of the PH from either the
Government or a private sector to serve full time for 6 years. He shall
elect the Vice Chairman of the Board.
d. Two members from a private sector – 6 years term
- Appointed by the President of the PH
- One of the two has a 2 year term

Requirements for becoming a board member:

1. Of good moral character

2. Unquestionable integrity and responsibility
3. 35 years of age
4. Competent in economics, banking and finance, law, and
management administration or insurance.

Representatives of Secretary and Governor

 Both secretary and Governor may designate a representative which

shall not have a position lower than an undersecretary or deputy of
governor that may attend meetings to vote on their behalf.
Chairman of the Board

 In the absence of the Chairman of the Board or the Secretary of

Finance in meetings, the President of the PDIC shall act as the
Chairman.

Quorum

 3 members
 All decisions shall require the vote of 3 members

Per Diems (Daily Allowance) of Board Members from Private Sectors

 Fixed by the Finance Secretary

Emoluments (Salary) of Board Members

 Fixed by the President of the PH

 The amount may be comparable to the emoluments of Board members
from other Government financial institutions.

Authority of the Board

1. Prepare and issue necessary rules and regulations for the effective
discharge of their responsibilities.
2. Direct the management, operation, and administration of the PDIC
3. Establish and HRM that governs the selection, hiring, appointment,
transfer, promotion, or dismissal of all personnel. It must aim to
establish professionalism and excellence at all levels of the PDIC with
sound principles of management.
4. Appoint, rank, fix remuneration, approve local and foreign trading, and
remove any officer for cause pertinent to civil service laws. This power
may be delegated to the President.
 5. Adopt an annual budget and authorize expenditures that is for the
effective administration and operation of the PDIC.
6. Approve the methodology for determining the level and amount of
provisioning for insurance and financial assistance losses, which shall
establish reasonable levels of deposit insurance reserves. (as amended
by RA No 6037, PD No 121, EO No 890, s. of 1983, RA No 9302)
7. 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 (as added by RA
No 9576)

SECTION 3. The President of PDIC

Compensation Ceiling

 The President’s salary is fixed by the President of the PH.

 The sum of the salary fixed and other emoluments and allowances
given by the board shall be the ceiling for the salaries of other
personnels in the PDIC.

Powers and Duties of the President

a. Prepare the agenda for meeting and submit policies (to be approved by
the board) which he may deem necessary to carry out the provisions of
this act.
b. Execute and administer the policies approved by the board.
c. Direct and supervise the operations and internal administration of the
PDIC in accordance with the policies by the Board. The President may
delegate certain responsibilities to other officers, subject to the rules
and regulations of the Board.
d. Represent the PDIC, upon board approval, in dealings with other
offices, agencies and instrumentalities of the Government and with all
other persons or entities, public or private, whether domestic, foreign
or international.
 e. Authorize (using his OWN signature which may be in facsimile – an
exact copy – whenever appropriate), upon board approval:
1. Contracts entered by the PDIC
2. Notes and securities issued
3. Annual reports, SFP, P&L statements, and other documents of the
PDIC
f. Represent the PDIC in legal proceedings
g. Delegate (d) and (f), upon board approval, to other officers.
h. Exercise powers vested by the board

Compensation Structure

 Shall be instituted as part of the HR development program of the PDIC.

All positions shall be governed compensation, position classification
system and qualification standards approved by the Board based on a
comprehensive job analysis and audit of actual duties and
responsibilities.
 Shall be comparable to other Government financial institutions and
reviewed every 2 years by the Board.
 PDIC is exempt from existing rules and regulations and laws on
compensation, position classification and qualification standards but it
shall conform to the rules of RA 6758 (salary standardization act) as
close as possible.

Vice President and Other Officials

 The President shall be assisted by a VP and Other Officials

 The appointment and removal of these officials shall be approved and
their salary fixed by the Board upon the President’s recommendation.
 VP shall act as the President under certain circumstances.

SECTION 4. Definition of Terms

a. Board of Directors – Board of the PDIC

b. The term 'Bank' and 'Banking Institution' shall be synonymous and
interchangeable and shall include banks, commercial banks, savings
bank, mortgage banks, rural banks, development banks, cooperative
banks, stock savings and loan associations and branches and agencies
in the Philippines of foreign banks and all other corporations authorized
to perform banking functions in the Philippines
c. The term 'receiver' includes a receiver, commission, person or other
agency charged by law with the duty to take charge of the assets and
liabilities of a bank which has been forbidden from doing business in
the Philippines, as well as the duty to gather, preserve and administer
such assets and liabilities for the benefit of the depositors and
creditors of said bank, and to continue into liquidation whenever
authorized under this Act or other laws, and to dispose of the assets
and to wind up the affairs of such bank.
d. Insured bank – any bank with insured deposits in accordance with the
provisions
e. Non-insured – any bank with uninsured deposits
f. Deposit – money received by the bank in its usual operations which is
credited to certain accounts or issued as per the rules of BSP. Deposits
outside the country are not considered deposits or insured by the PDIC.
Domestic banks with foreign branches may elect to insure deposit
obligations payable at those branches upon the approval of the board.
g. Insured deposit – any legitimate deposits in an insured bank as the
date of closure by a depositor in good faith not exceeding 500k.
- A joint account regardless of the conjunctions used shall be insured
separately from any individually owned deposit accounts. (Meaning
both persons will separately get 500k limit)
- 1. Two or more natural or juridical persons --- divided equally unless
otherwise stipulated.
2. By a juridical person jointly with natural persons --- all to juridical
person
 - Aggregate amounts of an individual’s separate account and his
separate joint accounts shall still be subject to the 500k limit in
insured deposits.
- Holders of negotiable deposit certificates shall not be entitled to the
insurance under this Act unless he is recorded as the owner of such
in the issuing bank.
h. Transfer deposit – deposit of a depositor in an insured bank made
available by the PDIC as payment of insured deposit in a closed bank
that is assumed by another insured bank.
i. Trust fund – funds held in fiduciary capacity by an insured bank.

The PDIC shall not pay deposit insurance in the following:

1. Investment products (bonds etc)

2. Unfunded, fictitious, or fraudulent deposit accounts or transactions.
3. Deposit transactions that are from unsound practices
4. Deposits from unlawful activities (AMLA)
 The actions of the PDIC from this section is conclusive except on
petition for certiorari on the ground that the action is in excess of
jurisdiction and power was abused. This petition may only be filed
within 30 days from notice of denial.
In addition:
1. Deposits from foreign banks
2. Deposits from foreign branches of domestic banks

SECTION 5.

 Deposit liabilities of any banks engaged in the business of receiving

deposits shall be insured by the PDIC

SECTION 6. Assessments

a. Determined by the board. Shall not exceed 1/5 of 1% per annum.

 - Semiannual assessment is ½ assessment rate * assessment base
and must not be less than 5k.
- Assessment base is the deposit liability of banks without deductions
for indebtedness of depositors.
- Semi-annual assessment base is the average of the bank’s
assessment base on: First – 3/30 and 6/30; Second – 9/30 and 12/31
- Certified statements are required to be filled
- Payment must be within 60 days
b. On or before 7/31, insured banks must file with the PDIC a certified
statement containing the amount of assessment base for 6/30 and
amount of semiannual assessment due for 12/31 with written
declaration that it is made under the penalties of perjury.
- On or before 1/31, the banks must do the same semiannual filing
with 6mo from preceding 12/31 and pay the amount due for the
following 6/30 it is required to certify.
c. Insured banks are not required to pay any assessment for any
semiannual period in which it becomes an insured bank. Upon
expiration of term, follow (b) except the semiannual base is the base
as of 6/30 or 12/31, whichever is applicable. If a bank assumes the
deposit liability of another bank, then such liabilities must be included
in the base. The first certified assessment = ½ of annual rate * base.
d. All assessment collections and income from operations after expenses
and charges shall be added to the DIF. Such expenses and charges are:
(1) opex for calendar year.
(2) additions to reserve to provide for insurance and financial
assistance losses, net of recoverable amounts from applicable assets
and collaterals
(3) the net insurance and financial assistance losses sustained
e. PDIC may refund the excess payment by insured bank due amount or
credit in next assessment payments.
 f. Failure to file the statements required may be compelled to file such
statements in a suit or by mandatory injunction in court where bank is
located.
g. The PDIC can recover unpaid assessments in court regardless of
whether the bank has submitted the required certificates or legal
action have been filed to compel the bank to file such statement.
Action for recovery of due assessments or excess payments must be
made within 5 years unless the insured bank files a fraudulent
statement with the intent to evade payment.
h. Any banks that continues to operate and receive deposits are still
insured. In any case of failure and refusal to pay, the PDIC shall give a
notice to the bank stating this subsection which states that payment is
required and the bank must correct their failure or refusal within 30
days. In case of non-compliance, the PDIC may file a collection case or
impose administrative sanctions on the officials responsible.

SECTION 7. Violations

a. Upon examination of PDIC to any insured bank, it must be disclosed

that such bank have committed, is committing, or about to commit an
unsafe practice or if they violated, is violating, or about to violate any
law it is subject to. The Board shall report this examination to the
Monetary Board, if no action is taken within 45 days, the Board may
take corrective action as they may deem necessary. The Board may
order a cease and desist to correct the practices within 45 days, unless
it is likely to cause insolvency or weaken the condition of the bank,
then the order will be for at most 15 days. This order may also include
fines and the Board shall inform the Monetary board of the action it has
taken.
b. The actions from (a) may be undertaken by the PDIC if an insured bank
have violated, about to violate, or violating any provisions of this act or
any order, rule, or instruction imposed by the PDIC.
SECTION 8. Powers of PDIC

a. Corporate seal
b. Succession until dissolved by congress
c. Make contracts
d. Sue and be sued, complain and defend, in any court in the country. No
attachment or execution may be made against the PDIC before final
judgement.
e. Appoint officers and employees (by the Board) not included in this act,
define their duties, fix compensation, require bonds and fix penalty and
dismiss such employees.
f. Prescribe bylaws not inconsistent with the law.
g. To have the board or duly authorized officers to exercise all the powers
granted by this act incidental powers.
h. To examine banks with prior approval of monetary board. Examinations
must not be made within 12mo from the last examination. A special
exam may be made in coordination with the BSP and by majority vote
of all the Board members if there is a threat or impending closure of a
bank. The PDIC may also examine deposit accounts in case of findings
of unsafe and unsound banking practices. The examination shall use all
the information that are already available to the BSP to maximize
efficiency.
i. Be a receiver
j. For the Board to create rules and regulations necessary for this act.
k. To have a fund with contributions made by the PDIC and its officers or
employees for the payment of benefits along with rules and regulations
made by the Board.
l. To compromise, condone or release, in whole or in part, any of claim or
settled liability to the Corporation, regardless of the amount involved,
under such terms and conditions as may be imposed by the Board of
Directors to protect the interest of Corporation.
SECTION 9.

a. The Board shall administer the affairs of the Corporation fairly and
impartially and without discrimination. The Corporation shall be
entitled to the free use of Philippine mail in the same manner as the
other offices of the national government.
b. Examiners appointed by the board of directors – The Board shall
appoint examiners that may examine insured banks on behalf of the
PDIC. Each such examiner shall have the power to:
1. make a thorough examination of all the affairs of the bank
2. administer oaths
3. examine and take and preserve the testimony of the officers and
agents
4. to compel the presentation of books, documents, papers or records
necessary in his judgment to ascertain the facts relative to the
condition of the bank; and shall make a full and detailed report of
the condition of the bank to the Corporation.

Claim agents - The Board shall appoint claim agents who shall have the
power to:

1. investigate and examine all claims for insured deposits and

transferred deposits.
2. Administer oaths and examine under oath and take and preserve
testimony of any person relating to such claims.

(b-1) Power of investigators appointed by the Board:

1. Conduct investigations on frauds, irregularities and anomalies

committed in banks, based on reports of examination conducted by
the PDIC and BSP or complaints from depositors or from other
government agency.
2. Administer oaths, and to examine and take and preserve the
testimony of any person relating to the subject of investigation.
c. Insured banks shall file reports of condition when the PDIC requires.
Failure to report within the required period, not less than 5 days, as the
Board requires, shall subject the bank to a penalty of P100 each day of
failure.
d. The PDIC shall have access to the reports of examinations, and reports
of conditions made to the BSP, and the same goes for the BSP to the
PDIC: The PDIC may use such reports, including information from
special or general examinations by the BSP, for its purposes but it must
follow the T&C set by laws governing the BSP regarding sharing
information.
(d-1) Each insured bank shall keep and maintain a true and accurate
record or statement of its daily deposit transactions consistent with the
standards set by the Bangko Sentral ng Pilipinas and the Corporation.
Compliance with such standards shall be duly certified by the president
of the bank or the compliance officer. Willful refusal is a violation of this
section and will subject the officers to sanctions.
e. Prohibitions for personnels of the PDIC:
1. Be an officer, director, consultant, employee, or stockholder of any
bank unless provided in this act.
2. Receive gift or anything of value from any officer, director, or
employee.
3. Reveal information relating to the condition or business of any
institution. This does not apply to giving of information to the Board,
the President, Congress, any government agency, or any authorized
persons.
f. The PDIC shall pay for litigation costs and expenses or provide legal
existence to directors, officers, employees, or agents of the PDIC in
connection to any action against them in connection with the exercise
of their authority or performance of functions and duties under this act.
Such legal protection does not apply to any proceedings initiated by
the corporation against them. Even if they resign, retire, or transfer to
 another agency, they shall still be protected with any act done in good
faith during their employment. In cases of compromise or settlement,
only the amount advised by counsel is covered by the PDIC provided
that the indemnified individual did not commit any negligence or
misconduct.
g. Costs and expenses may be paid by the PDIC in advance before any
final judgement IF the defended person agrees to repay the advanced
amount if the PDIC finds out that he is not entitled to be indemnified.
h. Unless the actions of the PDIC or its personnel are found to be in willful
violation of this Act, in bad faith, with malice and/or gross negligence,
such people are protected from liability.
i. Legal assistance shall include the grant or advance of reasonable legal
fees as determined by the Board of Directors to enable the concerned
director, officer, employee or agent to engage counsel of his choice,
subject to approval by the Board of Directors.

Board Members Becoming a Board Member or Officer of Other Banks

 Board members and personnel of the PDIC may be directors and

officers of any bank if the PDIC provides financial assistance to that
entity and when the Board decides that it is appropriate for the
protection of the PDIC’s interests.

Borrowing from any banks by examiners

General Rule: Personnel from examination department and other

departments, offices, or units of the PDIC are not allowed to borrow from any
bank that is being evaluated by such personnels.

Exception: The Board may indicate the position levels or groups to which
the prohibition is applicable.
  Borrowing by all full-time personnel of the PDIC from any bank shall be
secured and disclosed to the Board, and shall be subject to such
further rules and regulations as the Board may prescribe.

SECTION 10

a. The Monetary Board shall notify and appoint the PDIC as the receiver
of banking institutions whenever it is necessary for the BSP to appoint
one.
b. The PDIC as the receiver
1. Shall control, manage and administer the affairs of the closed bank
2. Upon being a receiver, the powers, functions and duties, as well as
all allowances, remunerations and perquisites of the directors,
officers, and stockholders of such bank are suspended, the relevant
provisions its articles of incorporation and bylaws are likewise
suspended.
3. The assets of closed bank will be held by the PDIC. From when it is
under receivership, its assets shall not be subject to attachment,
garnishment, execution, levy or any other court processes. Any
officer of the court who orders such act will be liable.
c. In addition to the powers of a receiver pursuant to existing laws, the
Corporation is empowered to:
1. Bring suits to enforce liabilities to or recoveries of the closed bank
2. Appoint persons competent in banking or finance to perform the
powers of the PDIC as receiver or liquidator of the closed bank.
3. Suspend or terminate the employment of officers and employees of
the closed bank. Separation pay or benefits are only made after the
closed bank is under liquidation and that such payment are from the
available funds of the bank after deducting expenses for
receivership and liquidation.
4. Pay accrued utilities, rentals and salaries of personnel of the closed
bank, for a period not exceeding 3mo, from its available funds
 5. Collect loans and other claims as well as modify its terms as may be
deemed advantageous to the interest of the creditors and claimants
of the closed bank.
6. hire or retain private counsels as may be necessary
7. borrow or obtain a loan, or mortgage, pledge or encumber any asset
of the closed bank, for preserving and redeeming foreclosed assets
or to minimize losses to depositors and creditors.
8. If the interest is unusually high than the market rate, the PDIC may
reduce such rate and it shall only apply to unpaid interests.
9. Exercise necessary and inherent power as the receiver.

The Board shall make policies that is necessary for the performance of the
above powers.

SECTION 11. Cases filed by the PDIC as the receiver

 Court fees in cases filed by the PDIC for recovery of assets shall be
deferred until final judgement.
 Favorable judgement = such fees are paid first before other claims.
 Unfavorable judgement = admin expense of the closed bank during
asset distribution.

SECTION 12 [9-B]. Distribution of Assets

 Before asset distribution, the PDIC shall charge receivership and

liquidation expenses that it has incurred and collect such cost from the
closed bank’s available assets upon court approval.
 After the payment of all liabilities and claims against the closed bank,
the PDIC shall pay any surplus dividends at the legal rate of interest
from date of takeover to date of distribution, to creditors and claimants
of the closed bank in accordance with legal priority before distribution
to the shareholders of the closed bank.

SECTION 13 [10]. The Deposit Insurance Fund (DIF)

  Permanent IF is 3B.

DIF

 It shall be the capital account of the PDIC and shall consist of:
(i) the Permanent Insurance Fund.
(ii) assessment collections
(iii) reserves for insurance and financial assistance losses
(iv) retained earnings
 The reserves for insurance and financial assistance losses and retained
earnings shall be maintained at a reasonable level to ensure capital
adequacy.
 Within 2 years from the passage of this act and every 5 years, the PDIC
may conduct a study to adjust the amount of the PIF, insurance cover,
and assessment rate and base with the help of an actuary.

SECTION 14 [10(c)]. Payment by the PDIC

Upon closure:

1. Pay by cash
2. Transfer in another insured bank the same amount
 Proof may be required by the PDIC, if they’re not satisfied, the help of
the court may be necessary. Failure to settle such claim within 6mo
from date of filing and such failure was due to grave abuse of
discretion, gross negligence, bad faith, or malice, shall, upon
conviction, subject the personnels of the Corporation responsible to
imprisonment of 6mo to 1y. The 6mo period shall not apply if the
validity of the claim requires the resolution of issues of facts by
another office, body, or agency.

SECTION 15 [10(d)].
  Upon payment to insured depositors, the PDIC becomes the creditor (in
place of the depositor) of the closed bank. This subrogation entitles the
PDIC to receive the shares that the depositor would have received from
the distribution of the closed bank’s assets. The depositor shall retain
his claim for any uninsured portion of his deposit. All insurance
payments by the PDIC are considered as public funds so it is preferred
in asset distribution very much like taxes under the civil code. This is
effective upon liquidation proceedings of liquidating banks as long as
no asset distribution has been made.

SECTION 16 [11].

a. Dapat alamin ng PDIC yung mga insured depositors upon takeover.

They should notify the insured depositors. This notice shall be
published once a week for 3w in newspaper of general circulation or
communities where the closed bank and its branches are located.
b. Upon payment of insured deposit and payment of transferred deposit
by the new or other insured bank shall discharge them from the
liability on such deposit.
c. General Rule: The PDIC or other insured banks are not recognized as
the owner of any portion of insured deposits unless they are the ones
recorded in the bank records. (Hindi owner kung hindi nakalagay yung
pangalan sa records, especially if tataas ung insurance claim sa closed
bank)
Exception: When the Board prescribe otherwise (if they have other
instructions)
d. The PDIC may withhold insurance from a depositor if he has
outstanding claims to the bank as a stockholder or to the receiver of
the bank. This withheld amount will be used as payment for these
obligations and he will receive the remaining amount upon satisfaction
of such claims.
 e. If the depositor does not file a claim within 2y from takeover or fails to
claim upon 2y from filing, his right will be barred, and the PDIC shall be
discharged from any liability on the insured deposit. However, all his
rights against the closed bank and its shareholders or the receivership
estate shall revert to him.

SECTION 17 [12].

a. Unused or unallocated money shall be invested to government

securities or guarantees by the Republic of the Philippines.
b. The baking accounts of the PDIC shall be with the BSP, PNB, or any
government baking institutions.
c. The DIF 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 Appropriation 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.
d. Kung tingin ng PDIC na magsasara yung insured bank, pwede nila
tulungan yung bank by loaning them, assuming some liabilities,
purchasing some assets, at kung tingin ng PDIC na necessary yung
bangko for the financial stability of the economy. Pwede din to gawin
for closed insured banks if tingin ng PDIC na it is necessary for the
interests of the community or for the economy, subject to the approval
of Monetary Board.
 The PDIC may also provide financial assistance to any corporations
acquiring control through merger or consolidation to an insured bank in
danger of closing or to a closed bank. In doing this, a report must be
made to the Monetary Board within 60d.
  Before helping, the PDIC must know that actual payoff and liquidation
is more expensive than providing financial assistance. If the Monetary
Board determines that there will be systemic risk of a bank’s closing,
the PDIC may provide financial assistance to such insured bank that is
necessary to prevent its closure and restore it to viable operations.
 Systemic risk – pag di makapagsettle yung isang bangko sa iba pang
bangko, magkakaroon ng chain reaction.
- 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.
 The PDIC can’t use this power to purchase the common and voting
stock of an insured bank but it can enter into agreements that is
necessary to protect its financial interests. The PDIC may help in the
form of equity or quasi-equity if the Board agrees and the MB concurs.
This help shall be sold as soon as it is practicable.

SECTION 18 [13].

 Pwede mangutang si PDIC kay BSP at pwede pautangin ni BSP si PDIC

on terms they stipulated. Such funds are from time to time required for
insurance purposes and financial assistance.
 Loan granted by BSP shall be consistent with monetary policy and the
rate shall be fixed by the MB but shall not be more than the Treasury
Bill Rate.
 If the Board thinks that the funds of the PDIC is not sufficient for
emergency or urgent need for the purposes of this act, they may take
short-term loans in Government banks.

SECTION 19 [14]. Issuance of debt instruments

  Upon approval of the President of the PH, the PDIC may issue debt
instruments (bonds, notes, etc.) as may be necessary for providing
financial assistance or paying insurance claims. The board shall
determine the rate, maturity, and other necessary information for such
debt instruments and a reserve must be kept for its redemption.
 All these debt instruments are tax-exempt in principal and interest, and
fully guaranteed by the Government. The guarantee shall not be 2x the
amount of DIF and must be clearly stated in the face of the debt
instrument.
 The Board shall have the power to prescribe rules and regulations for
the issuance, reissuance, servicing, placement and redemption of the
bonds herein authorized to be issued as well as the registration of such
bonds at the request of the holders thereof.

SECTION 20 [15].

a. A report of operations shall be made to the congress every 1/1.

b. PDIC’s financial transactions must be audited by the Commission on
Audit (COA) in the place where the accounts of the PDIC are normally
kept.
General Rule: Representatives of COA must have access to all the
documents pertaining to the financial transactions of the PDIC and
shall be afforded full facilities for verifying such transactions. Such
documents shall remain in possession and custody of the PDIC.
Exception: As to matters relating to the function of the Corporation as
receiver which shall be subject to visitorial audit only

SECTION 21 [16].

a. General Rule: ALL insured banks shall display in every sign and ads it
has that the deposits are insured by the PDIC.
Exception: The Board may exempt from this requirement ads not
related to deposits or when it is impractical to include such statement.
 - The Board of Directors shall prescribe by regulations the forms of
such signs and the manner of use.
b. No insured bank shall pay any dividend on its capital stock or interest
on its capital notes or debentures or distribute any of its capital assets
if it has yet to pay assessment dues unless it is due to a dispute
between the bank and the PDIC over the amount of the assessment.
This subsection shall not apply if the insured bank deposits a security
to the PDIC to secure payment of such dues upon the determination of
the issue.
c. No insured bank shall do the following without written consent by the
PDIC:
1. merge or consolidate with any bank or institution
2. assume liability to pay any deposits made in, or similar liabilities of,
any bank or institution
3. transfer assets to any bank or institution in consideration of the
assumption of liabilities for any portion of the deposits made in such
insured bank.
d. The PDIC may require insured banks to be protected from insurable
losses (theft, fire, etc.). The Board, in consultation with the BSP, shall
determine the bonding requirement of the insured bank as well as the
form and amount of the bond. If an insured bank refuses to comply
with the requirements for such protection, the PDIC may add such
costs to the assessment payable by the insured bank.
e. Assessment payable is subject to interest computed from when it is
due at legal rate for loans. In case of willful failure or refusal to pay the
assessment and interest, the penalty will be multiplying the interest
payable twice each day the violation continues. The interest may be
collected by the PDIC for its own use. This penalty is not applicable if it
falls under subsection (b).
f. Penalty to a bank personnel of prision mayor (6y and 1d to 12y) OR a
fine of at least 50k and at most 2m OR BOTH if
1. Willful refusal to submit required reports
2. Refusal to permit examination and audit of deposit records or affairs
of the institution
3. Willful making of false statements or bank entry report or falsifying
required PDIC documents.
4. submission of false material information in relation to any financial
assistance of the Corporation extended to the bank.
5. splitting of deposits or creation of fictitious loans or deposits
accounts.
- Splitting of deposits – amount more than 500k by one person is split
between separate accounts (to another natural or juridical person or
to a person who has no interest in such deposit).
- Example: May 2m ako, 500k insured, ilipat ko ung other amounts sa
ibang account para mamaximize ko yung insurance.
- Happens within 120 days before or during a bank-declared bank
holiday, or upon a closure order issued by the Monetary Board for
the purpose of availing of the maximum deposit insurance coverage
6. Refusal to allow the Corporation to take over a closed bank placed
under its receivership or obstructing such action of the Corporation.
7. Refusal to turn over, destroying, or tampering bank records.
8. Fraudulent disposal, transfer or concealment of any asset, property
or liability of the closed bank under the receivership of the
Corporation.
9. Violation of, or causing any person to violate, the exemption from
garnishment, levy, attachment or execution provided under this Act
and the New Central Bank Act.
10. Any willful failure or refusal to comply with, or violation of any
provision of this Act, or commission of any other irregularities,
and/or conducting business in an unsafe or unsound manner as may
be determined by the Board of Directors.
 g. The Board has the authority to impose fines for any acts that is omitted
in the preceding subsection to the responsible bank personnel but such
fine must not be more than 3x the amount of damages or costs caused
by the transaction for each day that the violation subsists, taking into
consideration the attendant circumstances, such as the nature and
gravity of the violation or irregularity and the size of the bank.

SECTION 22.

 Only the CA issue any temporary restraining order, preliminary

injunction or preliminary mandatory injunction against the PDIC for any
action under this Act.
 This prohibition shall apply in all cases, disputes or controversies
instituted by a private party, the insured bank, or any shareholder of
the insured bank.
 The Supreme Court may issue a restraining order or injunction when
the matter is of extreme urgency involving a constitutional issue, such
that unless a temporary restraining order is issued, grave injustice and
irreparable injury will arise. The party applying for the issuance of a
restraining order or injunction shall file a bond in an amount to be fixed
by the Supreme Court, which bond shall accrue in favor of the
Corporation if the court should finally decide that the applicant was not
entitled to the relief sought.
 Any restraining order or injunction in violation of this section is void
and any judge who issued the restraining order is suspended for 60d
w/o pay.

SECTION 23. Reorganization of the PDIC

 The Corporation may be reorganized by the Board of Directors by

adopting, if it so desires, an entirely new staffing pattern or
organizational structure to suit the operations of the Corporation under
this Act.
  No preferential or priority right shall be given to or enjoyed by any
personnel for appointment to any position in the new staffing pattern
nor shall any personnel be considered as having prior or vested rights
with respect to retention in the Corporation or in any other position
which may be created in the new staffing pattern, even if he should be
the incumbent of a similar position prior to reorganization.
 The reorganization shall be completed within six (6) months after the
effectivity of this Act. Personnel who are not retained are deemed
separated from the service.

SECTION 24.

 The Board of Directors is hereby authorized to provide separation

incentives, and all those who shall retire or be separated from the
service on account of reorganization under the preceding section shall
be entitled to such incentives which shall be in addition to all gratuities
and benefits to which they may be entitled under existing laws.

OVERALL MANDATE

 Provide insurance for deposits to give public confidence in depositing

and stability in the economy.
 Insurance premiums are paid by the bank and not by the depositors.

FUNCTIONS

 Insure deposits
 Regulate banks
 Receiver and liquidator of closed banks

OBJECTIVES

 Safeguard the interest of depositing publics by providing insurance

 Strengthen mandatory deposit insurance coverage
  Generate faith and confidence in banking system
 Protect the banks from illegal schemes

MAXIMUM DEPOSIT INSURANCE COVERAGE

 500k per depositor

 May be adjusted subject to the approval of the President of the PH in
case of a condition that threatens the monetary and financial stability
of the banking system that may have systematic consequences

PDIC MEMBER BANKS

 Banks that are allowed by the PDIC to perform banking functions in the
PH:
1. Domestic banks
2. Branches of foreign banks in the PH

MEMBERSHIP

 All banks are members of the PDIC; its mandatory.

COVERAGE

 Only covers the risk of a bank closure by the monetary board (from
BSP). Other causes are not relevant.

EXCESS IN MDIC

 The excess amount from the insured amount may be claimed against
the assets of the bank in their liquidation.

MODE OF PAYMENT FOR INSURED DEPOSITS

 Cash
 Bank transfer (ittransfer sa ibang bangko)

PERIOD OF CLAIMING INSURANCE

 Within 2 years of bank closure

FILING CLAIMS

 Not more than 100k, automatic na by mail so no need to file

Requirement:
1. No obligations with the closed bank
2. Complete mailing address in bank records
3. The account is not maintained under the name of business entities.
 More than 100k: filed during the onsite Claim Settlement Operations
period.

REQUIREMENTS IN FILING CLAIMS

1. Original evidence of deposits

2. Valid ID with clear signature
3. PSA birth certificate if minor and Valid ID of parent
4. Notarized SPA (Special Power of Attorney – allows a person to authorize
another individual to make legal decisions in their behalf) for claimants
that are not signatories in the bank records

WHO SHOULD SIGN THE DEPOSIT INSURANCE CLAIM FORM?

 Depositor – not minor

 Parent – minor
 Agent – by
 Trustee – ITF
 Each depositor in joint accounts

PDIC

h. Established in 1963
i. 6/22/63
j. RA 3591

MANDATE

Deposit Insurance
  500k per depositor per bank
 Deposit Insurance Fund is used for payment. The amount of DIF is built
up from assessments (1/5 of 1% per annum)

Receivership of closed banks

 Liquidator si PDIC ng closed banks. They settle the assets for

liquidation.

Coregulator of banks with BSP

 PDIC sanctions banks who does unsafe and unsound banking practices.

WHO COMPOSES THE PDIC? (see Section 2)

SINGLE ACCOUNTS

 Individually owned accounts

 Owned by both natural and juridical persons
 Single proprietors are considered as natural persons

JOINT ACCOUNTS

General Rule: insured amounts is divided equally

Exception: sharing agreement

BY, ITF, FAO ACCOUNTS (EXAMPLES)

 By Jamie for Edwin, Edwin is the depositor. Or Edwin by Jamie, Edwin is

also the depositor. Basically means Jamie is making deposits (by Jamie)
for Edwin.
 Jamie in trust of Edwin, Edwin is the depositor
 Jamie for the account of Edwin, Edwin is the depositor
SECRECY OF BANK DEPOSITS (SEPTEMBER 9 1955)

SECTION 1. Purpose

 The Government encourages the people to deposit in banks and

discourages private hoarding of money.
 The deposits are considered as loans to the bank and are used to assist
the economic development of the country.

SECTION 2. Confidentiality

 All deposits may not be looked into by anyone.

Exceptions:

1. Examination is made in the course of a special or general examination

of the bank under the ground of fraud and irregularity that is allowed
by the Monetary Board.
2. Examination is made by an independent external auditor hired by the
bank for audit purposes that may only be used by the bank itself.
3. Upon written consent of the depositor.
4. In cases of impeachment
5. Upon order of the court in cases of bribery of duty of public officials
6. When the money deposited is the subject of court litigation.

SECTION 3.

 It is illegal for any bank employees to disclose information to people

other than those mentioned in Section 2.
 It is also illegal for auditors to disclose such information to any other
person that is not a bank director, or official or employee authorized by
the bank

SECTION 4.

 Any other laws that are inconsistent with this Act is repealed
(irrelevant).
SECTION 5

 Violation will result to 5 years conviction or 20k fine or both in the

court’s discretion.

TRUTH IN LENDING ACT (RA 3765)

Section 1. Title

Section 2. Declaration of Policy. To protect the public who lack awareness

when it comes to credit from the true cost of credit from the creditor by
making the latter disclose true and full information incident to a credit
transaction.

Section 3. As used in this Act, the term

(1) "Board" means the Monetary Board of the Central Bank of the Philippines.

(2) "Credit" means any loan, mortgage, deed of trust, advance, or discount;
any conditional sales contract; any contract to sell, or sale or contract of sale
of property or services, either for present or future delivery, under which part
or all of the price is payable subsequent to the making of such sale or
contract; any rental-purchase contract; any contract or arrangement for the
hire, bailment, or leasing of property; any option, demand, lien, pledge, or
other claim against, or for the delivery of, property or money; any purchase,
or other acquisition of, or any credit upon the security of, any obligation of
claim arising out of any of the foregoing; and any transaction or series of
transactions having a similar purpose or effect.

(3) "Finance charge" includes interest, fees, service charges, discounts, and
such other charges incident to the extension of credit as the Board may be
regulation prescribe.

(4) "Creditor" means any person engaged in the business of extending credit
(including any person who as a regular business practice make loans or sells
or rents property or services on a time, credit, or installment basis, either as
principal or as agent) who requires as an incident to the extension of credit,
the payment of a finance charge.

(5) "Person" means any individual, corporation, partnership, association, or

other organized group of persons, or the legal successor or representative of
the foregoing, and includes the Philippine Government or any agency
thereof, or any other government, or of any of its political subdivisions, or
any agency of the foregoing.

Section 4. Creditor shall give a statement containing the following

information before consummation of transaction

(1) the cash price or delivered price of the property or service to be acquired.

(2) the amounts, if any, to be credited as down payment and/or trade-in.

(3) the difference between the amounts set forth under clauses (1) and (2).

(4) the charges, individually itemized, which are paid or to be paid by such
person in connection with the transaction, but which are not incident to the
extension of credit.

(5) the total amount to be financed.

(6) the finance charge

(7) interest rate of the unpaid obligation

Section 5. The Board shall prescribe such rules and regulations as may be
necessary or proper in carrying out the provisions of this Act.

Any rule or regulation prescribed hereunder are necessary or proper to:

1. Effectuate the purposes of this Act

2. To prevent circumvention or evasion
3. to facilitate the enforcement of this Act, or any rule or regulation
issued thereunder.
Section 6. (a) Any creditor who fails to disclose to any person any
information in violation of this Act or any regulation issued thereunder shall
be liable to such person in the amount of P100 or in an amount equal to
twice the finance charged required by such creditor in connection with such
transaction, whichever is the greater, except that such liability shall not
exceed P2,000 on any credit transaction. Action to recover such penalty may
be brought by such person within one year from the date of the occurrence
of the violation, in any court of competent jurisdiction. In any action under
this subsection in which any person is entitled to a recovery, the creditor
shall be liable for reasonable attorney's fees and court costs as determined
by the court.

(b) Except as specified in subsection (a) of this section, nothing contained in

this Act shall affect the validity and enforceability of contracts and
transactions.

(c) Any person who willfully violates any provision of this Act or any
regulation issued thereunder shall be fined by not less than P1,000 or more
than P5,000 or imprisonment for not less than 6 months, nor more than one
year or both.

(d) Government or agency is immune from the penalties of this Act.

(e) Final judgement to a creditor who willfully violated this Act shall be
deemed prima facie evidence against him if his other debtors also brought
an action under this Act. The creditor will be estopped from denying or
contesting the misrepresentation he made in a civil case to avoid reproving
facts that are the results of the final judgment.

Section 7. This Act shall become effective upon approval.

ANTI MONEY LAUNDERING ACT (AMLA)

SECTION 1. Short Title. — This Act shall be known as the "Anti-Money
Laundering Act of 2001."

SECTION 2. Declaration of Policy. — The State protects the

confidentiality of bank accounts and ensures that the PH shall not be used as
a money laundering site for the proceeds of illegal money. The State shall
extend cooperation in transnational investigations and prosecutions off
people involved in money laundering.

SECTION 3. Definitions.

(a) "Covered persons", natural or juridical, refers to:

(1) banks, non-banks, quasi-banks, trust entities, foreign exchange dealers,

pawnshops, money changers, remittance and transfer companies and other
similar entities and all other persons and their subsidiaries and affiliates
supervised or regulated by the Bangko Sentral ng Pilipinas (BSP);

(2) insurance companies, pre-need companies and all other persons

supervised or regulated by the Insurance Commission (IC);

(3) (i) securities dealers, brokers, salesmen, investment houses and other
similar persons managing securities or rendering services as investment
agent, advisor, or consultant

(ii) mutual funds, close-end investment companies, common trust funds, and
other similar persons, and

(iii) other entities administering or otherwise dealing in currency,

commodities or financial derivatives based thereon, valuable objects, cash
substitutes and other similar monetary instruments or property supervised or
regulated by the Securities and Exchange Commission (SEC);

(4) jewelry dealers in precious metals, who, as a business, trade in precious

metals, for transactions in excess of 1M
(5) jewelry dealers in precious stones, who, as a business, trade in precious
stones, for transactions in excess of 1M

(6) company service providers which, as a business, provide any of the

following services to third parties:

(i) acting as a formation agent of juridical persons.

(ii) acting as (or arranging for another person to act as) a director or
corporate secretary of a company, a partner of a partnership, or a similar
position in relation to other juridical persons.

(iii) providing a registered office, business address or accommodation,

correspondence or administrative address for a company, a partnership or
any other legal person or arrangement; and

(iv) acting as (or arranging for another person to act as) a nominee
shareholder for another person; and

(7) persons who provide any of the following services:

(i) managing of client money, securities or other assets.

(ii) management of bank, savings or securities accounts.

(iii) organization of contributions for the creation, operation or management

of companies; and

(iv) creation, operation or management of juridical persons or arrangements,

and buying and selling business entities.

Lawyers and accountants acting as independent legal professionals in

relation to information about their clients or where the information will
compromise the atty-client relationship: Provided, that these accountants
and lawyers are licensed and subject to their own codes of conduct and
professional responsibilities.
(b) 'Covered transaction' is a transaction in cash or other equivalent
monetary instrument in excess of 500k within one (1) banking day

(b-1) 'Suspicious transaction' are transactions with covered institutions,

regardless of the amounts involved, where any of the following
circumstances exist:

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

justification.

2. the client is not properly identified.

3. the amount involved is not commensurate with the business or financial

capacity of the client.

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

5. any circumstance relating to the transaction which is observed to deviate

from the profile of the client and/or the client's past transactions with the
covered institution.

6. the transaction is in any way related to an unlawful activity or offense

under this Act that is about to be, is being or has been committed; or

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

(c) "Monetary instrument" refers to:

(1) coins or currency of legal tender of the Philippines, or of any other

country.

(2) drafts, checks and notes.

(3) securities or negotiable instruments, bonds, commercial papers, deposit

certificates, trust certificates, custodial receipts or deposit substitute
instruments, trading orders, transaction tickets and confirmations of sale or
investments and money market instruments; and

(4) other similar instruments where title thereto passes to another by

endorsement, assignment or delivery.

(d) "Offender" refers to any person who commits a money laundering

offense.

(e) "Person" refers to any natural or juridical person.

(f) "Proceeds" refers to an amount derived or realized from an unlawful

activity.

(g) "Supervising Authority" refers to the appropriate supervisory or

regulatory agency, department or office supervising or regulating the
covered institutions enumerated in Section 3(a).

(h) "Transaction" refers to any act establishing any right or obligation or

giving rise to any contractual or legal relationship between the parties
thereto. It also includes any movement of funds by any means with a
covered institution.

(i) 'Unlawful activity' refers to any act or omission or series or combination

thereof involving or having direct relation to the following:

(1) Kidnap for ransom

(2) RA 9165 - Sections 4-6, 8-16 of Comprehensive Drugs Act of 2002

(3) Section 3 paragraphs B, C, E, G, H and I of Republic Act No. 3019, as

amended, otherwise known as the Anti-Graft and Corrupt Practices Act.

(4) Plunder (RA 7080)

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

(6) Jueteng and Masiao punished as illegal gambling under PD No. 1602.
(7) Piracy on the high seas under the Revised Penal Code, as amended and
Presidential Decree No. 532.

(8) Qualified theft under Article 310 of the Revised Penal Code, as amended.

(9) Swindling under Article 315 and Other Forms of Swindling under Article
316 of the Revised Penal Code, as amended.

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

(11) Violations of RA No. 8792, known as the Electronic Commerce Act of

2000.

(12) Hijacking and other violations under Republic Act No. 6235; destructive
arson and murder, as defined under the Revised Penal Code, as amended.

(13) Terrorism, conspiracy to commit terrorism under SEC 3-4 of RA No. 9372.

(14) Financing of terrorism under Section 4 and offenses punishable under

Sections 5, 6, 7 and 8 of Republic Act No. 10168, otherwise known as the
Terrorism Financing Prevention and Suppression Act of 2012.

(15) Bribery under Articles 210, 211 and 211-A of the Revised Penal Code, as
amended, and Corruption of Public Officers under Article 212 of the Revised
Penal Code, as amended.

(16) Frauds and Illegal Exactions and Transactions under Articles 213, 214,
215 and 216 of the Revised Penal Code, as amended.

(17) Corruption under Articles 217, 222 of the Revised Penal Code

(18) Forgeries and Counterfeiting under Articles 163, 166, l67, 168, 169 and
176 of the Revised Penal Code, as amended;

(19) Human trafficking - Sections 4 to 6 of Republic Act No. 9208, otherwise

known as the Anti-Trafficking in Persons Act of 2003;
(20) Violations of Sections 78 to 79 of Chapter IV, of Presidential Decree No.
705, otherwise known as the Revised Forestry Code of the Philippines, as
amended;

(21) Violations of Sections 86 to 106 of Chapter VI, of Republic Act No. 8550,
otherwise known as the Philippine Fisheries Code of 1998;

(22) Violations of Sections 101 to 107, and 110 of Republic Act No. 7942,
otherwise known as the Philippine Mining Act of 1995;

(23) Violations of Section 27(c), (e), (f), (g) and (i), of Republic Act No. 9147,
otherwise known as the Wildlife Resources Conservation and Protection Act;

(24) Violation of Section 7(b) of Republic Act No. 9072, otherwise known as
the National Caves and Cave Resources Management Protection Act;

(25) Carnapping

(26) Violations of Sections 1, 3 and 5 of Presidential Decree No. 1866, as

amended, otherwise known as the decree Codifying the Laws on
Illegal/Unlawful Possession, Manufacture, Dealing in, Acquisition or
Disposition of Firearms, Ammunition or Explosives.

(27) Fencing – buying illegal goods to resell

(28) Violation of Section 6 (Illegal recruitment) Republic Act No. 8042,

otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995,
as amended by Republic Act No. 10022.

(29) Violation of Republic Act No. 8293, otherwise known as the Intellectual
Property Code of the Philippines.

(30) Violation RA No. 9995, known as the Anti-Photo and Video Voyeurism Act
of 2009.

(31) Violation of Section 4 of Republic Act No. 9775, otherwise known as the
Anti-Child Pornography Act of 2009.
(32) Violations of Sections 5, 7, 8, 9, 10(c), (d) and (e), 11, 12 and 14 of
Republic Act No. 7610, otherwise known as the Special Protection of Children
Against Abuse, Exploitation and Discrimination;

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

(34)Felonies or offenses of a similar nature that are punishable under the

penal laws of other countries.

(as amended by RA No 9194, 10365)

(j) 'Precious metals' shall mean gold, silver, platinum, palladium, rhodium,
ruthenium, iridium and osmium. These include alloys of precious metals,
solders and plating chemicals such as rhodium and palladium plating
solutions and potassium gold cyanide and potassium silver cyanide and
silver cyanide in salt solution.

(k) 'Precious stones' shall mean diamond, ruby, emerald, sapphire, opal,
amethyst, beryl, topaz, and garnet that are used in jewelry making, including
those formerly classified as semi-precious stones.

(as amended by RA No 10365)

SECTION 4. Money Laundering Offense. — Money laundering is

committed by any person who, knowing that any monetary instrument or
property represents, involves, or relates to the proceeds of any unlawful
activity:

(a) transacts said monetary instrument or property.

(b) converts, transfers, disposes of, moves, acquires, possesses or uses said
monetary instrument or property.

(c) conceals or disguises the true nature, source, location, disposition,

movement or ownership of or rights with respect to said monetary
instrument or property.
(d) attempts or conspires to commit money laundering offenses referred to in
paragraphs (a), (b) or (c).

(e) aids, abets, assists in or counsels the commission of the money

laundering offenses referred to in paragraphs (a), (b) or (c) above; and

(f) performs or fails to perform any act as a result of which he facilitates the
offense of money laundering referred to in paragraphs (a), (b) or (c) above.

Money laundering is also committed by any covered person (with knowledge)

who fails to report the AML Council a covered or suspicious transaction.

SECTION 5. Jurisdiction of Money Laundering Cases. — The RTC shall

have jurisdiction to try all cases on money laundering. Those committed by
public officers and private persons who are in conspiracy with such public
officers shall be under the jurisdiction of the Sandiganbayan.

SECTION 6. Prosecution of Money Laundering. —

(a) Any person may be charged with and convicted of both the offense of
money laundering and the unlawful activity as herein defined.

(b) The prosecution of any offense or violation under this Act shall proceed
independently of any proceeding relating to the unlawful activity.

SECTION 7. Creation of Anti-Money Laundering Council (AMLC).

— The Anti-Money Laundering Council is hereby created and shall be
composed of the Governor of the BSP as Chairman, the Commissioner of the
Insurance Commission and the Chairman of the SEC, as members. The AMLC
shall act unanimously in the discharge of its functions as defined hereunder:

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

covered institutions.

(2) to issue orders to know the real owner and location of the proceeds of the
unlawful activity.
(3) to institute civil forfeiture proceedings and all other remedial proceedings
through the Office of the Solicitor General.

(4) to cause the filing of complaints with the DOJ or the Ombudsman for the
prosecution of money laundering offenses.

(5) to investigate suspicious transactions and covered transactions deemed

suspicious after an investigation by AMLC, money laundering activities, and
other violations of this Act.

(6) to apply before the CA, ex parte, for the freezing of any monetary
instrument or property alleged to be laundered, proceeds from, or
instrumentalities used in or intended for use in any unlawful activity as
defined in Section 3(i)

(7) to implement measures necessary to counteract money laundering.

(8) receive and take action any request from foreign states in assistance of
their own AML operations.

(9) to develop educational programs on the effects of money laundering, the

methods and techniques used, the viable means of prevention and the
effective ways of prosecuting and punishing offenders.

(10) to enlist the assistance of any branch, department, bureau, office,

agency or instrumentality of the government, including GOCC, in undertaking
any and all AML operations, which may include the use of its personnel,
facilities and resources for the more resolute prevention, detection and
investigation of money laundering offenses and prosecution of offenders; and

(11) to impose administrative sanctions for the violation of laws, rules,

regulations and orders and resolutions issued pursuant thereto.

(12) to require the Land Registration Authority and all its Registries of Deeds
to submit to the AMLC, reports on all real estate transactions involving an
amount in excess 500k within 15 days from the date of registration of the
transaction, in a form to prescribed by the AMLC. The AMLC may also require
the LRA and all its RD to submit copies of relevant documents of all real
estate transactions.

SECTION 8. Creation of a Secretariat. — The AMLC is hereby authorized

to establish a secretariat to be headed by an Executive Director who shall be
appointed by the Council for a term of five (5) years.

Requirements:

1. Member of the Bar of the Philippines

2. 35 years old
3. Of good moral character
4. Unquestionable integrity and known probity

All members of the Secretariat must have served for at least five (5) years
either in the Insurance Commission, the SEC or the (BSP) and shall hold full-
time permanent positions within the BSP.

SECTION 9. Prevention of Money Laundering; Customer

Identification Requirements and Record Keeping. — (a) Customer
Identification. — Covered institutions shall establish and record the true
identity of its clients based on official documents. They shall maintain a
system of verifying the true identity of their clients and, in case of corporate
clients, require a system of verifying their legal existence and organizational
structure, as well as the authority and identification of all persons purporting
to act on their behalf.

The provisions of existing laws to the contrary, anonymous accounts,

accounts under fictitious names, and all other similar accounts are
prohibited. Peso and foreign currency non-checking numbered accounts shall
be allowed. The BSP may conduct annual testing solely limited to the
determination of the existence and true identity of the owners of such
accounts.
(b) Record Keeping. — All records of all transactions of covered institutions
shall be maintained and safely stored for five (5) years from the dates of
transactions. With respect to closed accounts, the records on customer
identification, account files and business correspondence, shall be preserved
and safely stored for at least five (5) years from the dates when they were
closed.

(c) Reporting of Covered and Suspicious Transactions. — Covered persons

shall report to the AMLC all covered transactions and suspicious transactions
within five (5) working days from occurrence thereof, unless the AMLC
prescribes a different period not exceeding fifteen (15) working days.

Lawyers and accountants acting as independent legal professionals are not

required to report covered and suspicious transactions if the relevant
information was obtained in circumstances where they are subject to
professional secrecy or legal professional privilege.

Should a transaction be determined to be both a covered transaction and a

suspicious transaction, the covered institution shall be required to report the
same as a suspicious transaction.

When reporting covered or suspicious transactions to the AMLC, covered

institutions and their officers and employees shall not be deemed to have
violated Republic Act No. 1405, 6426, 8791 and other similar laws, but are
prohibited from communicating to any person, the fact that a covered or
suspicious transaction report was made, the contents thereof, or any other
information in relation thereto. In case of violation thereof, the concerned
officer and employee of the covered institution shall be criminally liable.
However, no administrative, criminal or civil proceedings, shall lie against
any person for having made a covered or suspicious transaction report in the
regular performance of his duties in good faith, whether or not such reporting
results in any criminal prosecution under this Act or any other law.
SECTION 10. Freezing of Monetary Instrument or Property. —Upon a
verified petition by the AMLC and after determination that probable cause
exists as defined in Section 3(i), the CA may issue a freeze order which shall
be effective immediately, and which shall not exceed 6mo depending upon
the circumstances of the case. No case withing 6mo means that the order is
lifted. This new rule shall not apply to pending cases. The court should act
within 24h within the filing of the petition. If the application is filed a day
before a non-working day, the computation of the twenty-four (24)-hour
period shall exclude the non-working days.

A motion may be filed to lift the order, and the court must resolve this before
the expiration of such order.

No court shall issue a temporary restraining order or a writ of injunction

against any freeze order, except the Supreme Court.

SECTION 11. Authority to Inquire into Bank Deposits.

— Notwithstanding the provisions of Republic Act No. 1405, 6426, 8791; and
other laws, the AMLC may examine any particular deposit or investment with
any banking institution or non-bank financial institution upon order of any
competent court based on an ex parte application in cases of violations of
this Act, when it has been established that there is probable cause that the
deposits or investments, including related accounts involved, are related to
an unlawful activity or a money laundering offense under Section 4; except
that no court order shall be required in cases involving activities in Section
3(i)(1), (2), and (12) hereof, and felonies or offenses of a nature similar to
those mentioned in Section 3(i)(1), (2), and (12), which are Punishable under
the penal laws of other countries, and terrorism and conspiracy to commit
terrorism as defined and penalized under Republic Act No. 9372.

The Court of Appeals shall act on the application to inquire into or examine
any depositor or investment with any banking institution or non-bank
financial institution within twenty-four (24) hours from filing of the
application.

To ensure compliance with this Act, the BSP may, in the course of a periodic
or special examination, check the compliance of a Covered institution with
the requirements of the AMLA and its implementing rules and regulations.

For purposes of this section, 'related accounts' shall refer to accounts, the
funds and sources of which originated from and/or are materially linked to
the monetary instrument(s) or property(ies) subject of the freeze order(s).

A court order ex parte must first be obtained before the AMLC can inquire
into these related Accounts: Provided, That the procedure for the ex parte
application of the ex parte court order for the principal account shall be the
same with that of the related accounts.

The authority to inquire into or examine the main account and the related
accounts shall comply with the requirements of Article III, Sections 2 and 3 of
the 1987 Constitution, which are hereby incorporated by reference.

SECTION 12. Forfeiture Provisions. —

(a) Civil Forfeiture. — Upon determination by the AMLC that probable cause
exists that any monetary instrument or property is in any way related to an
unlawful activity or a money laundering offense under Section 4 hereof, the
AMLC shall file with the appropriate court through the Office of the Solicitor
General, a verified petition for forfeiture, and the Rules of Court on Civil
Forfeiture shall apply.

The forfeiture shall include those other monetary instrument or property

having an equivalent value to that that is found to be related in any way to
an unlawful activity or a money laundering offense, when with due diligence,
the former cannot be located, or it has been substantially altered, destroyed,
diminished in value or otherwise rendered worthless by any act or omission,
or it has been concealed, removed, converted, or otherwise transferred, or it
is located outside the Philippines or has been placed or brought outside the
jurisdiction of the court, or it has been commingled with other monetary
instrument or property belonging to either the offender himself or a third
person or entity, thereby rendering the same difficult to identify or be
segregated for purposes of forfeiture.

(b) Claim on Forfeited Assets. — The offender may claim, by verified petition,
that some of the assets legitimately belongs to him and for it to be
separately excluded from the monetary instrument or property
corresponding thereto. The petition must be filed within 15 days. Default
means the order is final and executory. This provision shall apply in both civil
and criminal forfeiture.

(c) Payment in Lieu of Forfeiture. — Where the said order cannot be enforced
because any particular monetary instrument or property cannot, with due
diligence, be located, the court may, instead of enforcing the order of
forfeiture, accordingly, order the convicted offender to pay an amount equal
to the value of said monetary instrument or property. This provision shall
apply in both civil and criminal forfeiture.

SECTION 13. Mutual Assistance among States. —

(a) Request for Assistance from a Foreign State. — Where a foreign State
makes a request for assistance in the investigation or prosecution of a
money laundering offense, the AMLC may execute or refuse to execute the
same and inform the foreign State of any valid reason for not executing the
request or for delaying the execution thereof. The principles of mutuality and
reciprocity shall, for this purpose, be at all times recognized.

(b) Acting on requests by foreign states by the AMLC:

(1) tracking down, freezing, restraining and seizing assets alleged to be

proceeds of any unlawful activity

(2) giving information needed by the foreign State and

(3) applying for an order of forfeiture of any monetary instrument or property
in the court: Provided, No court shall issue an order unless the requesting
state gives:

1. An authenticated copy of the order of a court ordering the forfeiture of a

person convicted of money laundering offense in their state.’

2. Certification or affidavit of an officer saying that the conviction is

conclusive, and no other appeals lies in the court.

(c) Requesting assistance from foreign states:

(1) tracking down, freezing, restraining and seizing assets alleged to be

proceeds of any unlawful activity.

(2) obtaining information that it needs relating to any covered transaction,

money laundering offense or any other matter directly or indirectly related
thereto

(3) to the extent allowed by the law of the foreign State, applying with the
proper court therein for an order to enter any premises belonging to or in the
possession or control of, the offender in said request, and/or search any or all
such persons named therein and/or remove any document, material or
object named in said request: Provided, That the documents accompanying
the request in support of the application have been duly authenticated in
accordance with the applicable law or regulation of the foreign State

(4) applying for an order of forfeiture of any monetary instrument or property

in the proper court in the foreign State: Provided, That the request is
accompanied by an authenticated copy of the order of the RTC ordering the
forfeiture of said of a convicted offender and an affidavit of the clerk of court
stating that the conviction and the order of forfeiture are final and that no
further appeal lies.

(d) Limitations on Request for Mutual Assistance. — The AMLC may refuse to
comply with any request for assistance if the action is contrary to the
Constitution or affects the national interest of the PH unless there is a treaty
between the PH and the requesting State relating to the provision of
assistance in relation to money laundering offenses.

(e) Requirements for Requests for Mutual Assistance from Foreign States

(1) confirm that an investigation or prosecution is being conducted or that

the offender has been convicted of any money laundering offense

(2) state the grounds on which any person is being investigated or

prosecuted for money laundering or the details of his conviction

(3) give sufficient particulars as to the identity of said person

(4) give particulars sufficient to identify any covered institution believed to

have any information, document, material or object which may be of
assistance to the investigation or prosecution

(5) ask from the covered institution concerned any information, document,
material or object which may be of assistance to the investigation or
prosecution.

(6) specify the manner in which and to whom said information, document,
material or object obtained pursuant to said request, is to be produced

(7) give all the particulars necessary for the issuance by the court in the
requested State of the writs, orders or processes needed by the requesting
State.

(8) contain such other information as may assist in the execution of the
request.

(f) Authentication of Documents. — a document is authenticated if the same

is signed or certified by a judge, magistrate or equivalent officer in or of, the
requesting State, and authenticated by the oath or affirmation of a witness
or sealed with an official or public seal of a minister, secretary of State, or
officer in or of, the government of the requesting State, or of the person
administering the government or a department of the requesting territory,
protectorate or colony. The certificate of authentication may also be made by
a secretary of the embassy or legation, consul general, consul, vice consul,
consular agent or any officer in the foreign service of the Philippines
stationed in the foreign State in which the record is kept, and authenticated
by the seal of his office.

(g) Extradition. — The Philippines shall negotiate for the inclusion of money
laundering offenses as herein defined among extraditable offenses in all
future treaties.

SECTION 14. Penal Provisions. — (a) Penalties for the Crime of Money
Laundering. 7-14 years and a fine at least 3M but not more than twice the
value of the monetary instrument or property involved in the offense, shall
be imposed upon a person convicted under Section 4(a), (b), (c) and (d) of
this Act.

The penalty of imprisonment from 4-7 years and a fine of not less than 1.5M
but not more than 3M shall be imposed upon a person convicted under
Section 4(e) and (f) of this Act.

The penalty of imprisonment from 6mo to 4 years or a fine of not less than
100k but not more than 500k, or both, shall be imposed on a person
convicted under the last paragraph of Section 4 of this Act.

(b) Penalties for Failure to Keep Records. The penalty of imprisonment from
6mo to 1y or a fine of not less than 100k but not more than 500k, or both,
shall be imposed on a person convicted under Section 9(b) of this Act.

(c) Malicious Reporting. Any person who, with malice, or in bad faith, reports
or files a completely unwarranted or false information relative to money
laundering transaction against any person shall be subject to a penalty of
6mo to 4y and a fine of not less 100k but not more 500k, at the discretion of
the court: Provided, That the offender is not entitled to avail the benefits of
the Probation Law.

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

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

(d) Breach of Confidentiality. The punishment of imprisonment ranging from

3-8 years and a fine of not less 500k but not more than 1M shall be imposed
on a person convicted for a violation under Section 9(c). In the case of a
breach of confidentiality that is published or reported by media, the
responsible reporter, writer, president, publisher, manager and editor-in-chief
shall be liable under this Act.

(e) The penalty of imprisonment ranging from 4-7 years and a fine
corresponding to not more than 200% of the value of the monetary
instrument or property laundered shall be imposed upon the covered person,
its directors, officers or personnel who knowingly participated in the
commission of the crime of money laundering.

(f) Imposition of Administrative Sanctions. The imposition of the

administrative sanctions shall be without prejudice to the filing of criminal
charges against the persons responsible for the violation.
After due notice and hearing, the AMLC shall, at its discretion, impose
sanctions, including monetary penalties, warning or reprimand, upon any
covered person, its directors, officers, employees or any other person for the
violation of this Act, its implementing rules and regulations, or for failure or
refusal to comply with AMLC orders, resolutions and other issuances. Such
monetary penalties shall be in amounts as may be determined by the AMLC
to be appropriate, which shall not be more than 500k per violation.

The AMLC may promulgate rules on fines and penalties taking into
consideration the attendant circumstances, such as the nature and gravity of
the violation or irregularity.

(g) The provision of this law shall not be construed or implemented in a

manner that will discriminate against certain customer types, such as
politically-exposed persons, as well as their relatives, or against a certain
religion, race or ethnic origin, or such other attributes or profiles when used
as the only basis to deny these persons access to the services provided by
the covered persons. Whenever a bank, or quasi-bank, financial institution or
whenever any person or entity commits said discriminatory act, the person
or persons responsible for such violation shall be subject to sanctions as may
be deemed appropriate by their respective regulators.

SECTION 16. Prohibitions Against Political Harassment. — This Act

shall not be used for political persecution or harassment or as an instrument
to hamper competition in trade and commerce.

No case for money laundering may be filed against and no assets shall be
frozen, attached or forfeited to the prejudice of a candidate for an electoral
office during an election period.

SECTION 17. Restitution. — Restitution for any aggrieved party shall be

governed by the provisions of the New Civil Code.
SECTION 18. Implementing Rules and Regulations. — Within thirty (30)
days from the effectivity of this Act, the BSP, the Insurance Commission and
the SEC shall promulgate the rules and regulations to implement effectively
the provisions of this Act. Said rules and regulations shall be submitted to the
Congressional Oversight Committee for approval.

Covered institutions shall formulate their respective money laundering

prevention programs in accordance with this Act including, but not limited to,
information dissemination on money laundering activities and its prevention,
detection and reporting, and the training of responsible officers and
personnel of covered institutions.

SECTION 19. Congressional Oversight Committee. — There is hereby

created a Congressional Oversight Committee composed of seven (7)
members from the Senate and seven (7) members from the House of
Representatives. The members from the Senate shall be appointed by the
Senate President based on the proportional representation of the parties or
coalitions therein with at least two (2) Senators representing the minority.
The members from the House of Representatives shall be appointed by the
Speaker also based on proportional representation of the parties or coalitions
therein with at least two (2) members representing the minority.

The Oversight Committee shall have the power to promulgate its own rules,
to oversee the implementation of this Act, and to review or revise the
implementing rules issued by the AMLC within 30 days from the
promulgation of the said rules.

SECTION 20. Non-intervention in the Bureau of Internal Revenue

(BIR) Operations. — Nothing contained in this Act nor in related
antecedent laws or existing agreements shall be construed to allow the AMLC
to participate in any manner in the operations of the BIR.

SECTION 21. The authority to inquire into or examine the main account and
the related accounts shall comply with the requirements of Article III,
Sections 2 and 3 of the 1987 Constitution, which are hereby incorporated by
reference. Likewise, the constitutional injunction against ex post facto laws
and bills of attainder shall be respected in the implementation of this Act.

SECTION 22. Appropriations Clause. — The AMLC shall be provided with

an initial appropriation of 25M to be drawn from the national government.
Appropriations for the succeeding years shall be included in the General
Appropriations Act.

SECTION 23. Separability Clause. — If any provision or section of this Act

or the application thereof to any person or circumstance is held to be 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.

SECTION 24. Repealing Clause. — All laws, decrees, executive orders,

rules and regulations or parts thereof, including the relevant provisions
of Republic Act No. 1405, as amended; Republic Act No. 6426, as
amended; Republic Act No. 8791, as amended and other similar laws, as are
inconsistent with this Act, are hereby repealed, amended or modified
accordingly.

SECTION 25. Effectivity. — This Act shall take effect fifteen (15) days after
its complete publication in the Official Gazette or in at least two (2) national
newspapers of general circulation. (as amended by RA No 9194)