An Act Amending Sections 1, 3, 4, 5, 6, 7, 8, 9, 10, 11, 13, 18, 22, 24, 26, and 28 of Republic Act No. 3591, as Amended, Otherwise Known as the Philippine Deposit Insurance Corporation Charter, and for Other Purposes

Case Overview and Summary

Summary of Republic Act No. 11840 Amending the Philippine Deposit Insurance Corporation Charter

Creation and Mandate of PDIC (Section 1)
- The Philippine Deposit Insurance Corporation (PDIC) is created to insure deposits of banks and promote a sound banking system.
- PDIC is attached to the Bangko Sentral ng Pilipinas for policy coordination.

Board of Directors (Section 3)
- PDIC is governed by a 7-member Board of Directors.
- The Board has authority to issue rules, appoint officers, set travel policies, adopt budgets, set target level for Deposit Insurance Fund (DIF), review organizational structure, adopt early separation plans, and sponsor training programs.

President of PDIC (Section 4)
- The President is the Chief Executive Officer appointed by the President of the Philippines.
- The President's salary is based on the Compensation and Position Classification System developed by the Governance Commission for GOCCs.

Definitions (Section 5)
- Defines key terms such as "insured deposit" with a maximum coverage of P500,000 per depositor.
- The maximum coverage can be adjusted during threats to financial stability.
- Defines terms related to bank liquidation and receivership.

Deposit Insurance Coverage (Section 6)
- Deposits of banks engaged in receiving deposits are insured by PDIC.
- PDIC may establish separate insurance funds and arrangements for Islamic banking.

Assessment of Member Banks (Section 7)
- Assessment rate shall not exceed 1/5 of 1% per annum, with a minimum of P5,000 semi-annually.
- PDIC shall study the need for a risk-based assessment system within 5 years.
- Assessment rate can be adjusted if maximum coverage increases.

Sanctions for Unsafe Banking (Section 8)
- PDIC can terminate insured status of banks that fail to comply with BSP's cease-and-desist orders related to deposit-taking.

Powers of PDIC (Sections 9-11)
- PDIC can examine records, require information, and investigate claims.
- PDIC and BSP can examine deposit records when there is a failure of prompt corrective action due to capital deficiency.

Liquidation of Banks (Section 13)
- PDIC as receiver can adopt conventional liquidation or purchase and assumption of assets/liabilities.
- PDIC can sell assets to a Financial Institutions Strategic Transfer Corporation.

Dividend Declaration (Section 18)
- PDIC shall build up and maintain the DIF at the target level set by the Board.
- PDIC shall declare and remit cash dividends to the National Government based on income excluding assessment income.

Financial Assistance (Section 22)
- PDIC can provide loans, purchase assets, assume liabilities, or make deposits to prevent bank closures or maintain financial stability.
- Financial assistance requires determination of systemic consequences by the Monetary Board.

Issuance of Bonds and Debentures (Section 24)
- PDIC can issue bonds, debentures, and other obligations with approval of the President to provide liquidity for insured deposit settlement or financial assistance.

Exemption from Bulk Sales Law (Section 28)
- Bank liquidation involving purchase of all assets and assumption of all liabilities is exempt from the Bulk Sales Law.