Banking Laws and Jurisprudence

Banking Laws
and
Jurisprudence
XVIII. Issuance of bonds
a. The board of directors shall determine the

interest rates, maturity and other
requirements of said obligations.
b. PDIC shall provide for appropriate
reserves for the redemption of retirement
of said obligations.
XIX. Report and Audit
a. PDIC shall annually make a report of its

operation to the Congress as soon as
practicable after the 1st day of January in
each year.
b. Its financial transactions shall be audited

by the Commission on Audit in accordance
with the principles and procedures
applicable to commercial corporate
transactions and under such rules and
regulations as may be prescribed by the
Commission on Audit.

c. Except as to matters relating to the functions of
PDIC as receiver which shall be subject to visitorial
audit only, the representatives of the Commission
on Audit shall have access to all books, accounts,
records, reports files and all other papers, things, or
property belonging to or in use by PDIC pertaining to
its financial transactions and necessary to facilitate
the audit, and they shall be afforded full facilities for
verifying transactions with the balances or securities
held by depositories, fiscal agents, and custodians.
XX. Miscellaneous
A. Signs
i. Every insured bank shall display at each
place of business maintained by it a sign or
signs, and shall include a statement in all its
advertisements to the effect that its deposits
are insured by PIDC.
XX. Miscellaneous
ii. The Board of Directors may exempt

from this requirement advertisements which
do not relate to deposits or when it is
impractical to include such statement
therein.
XX. Miscellaneous
B. Merger or Consolidation of Insured Banks

(1) merge or consolidate with any
noninsured bank or institution or convert
into a noninsured bank or institution; or
(2) assume liability to pay any deposits
made in, or similar liabilities of, any
noninsured bank or institution; or
XX. Miscellaneous
(3) transfer assets to any noninsured bank

or institution in consideration of the
assumption of liabilities for any portion of
the deposits made in such insured bank.
XX. Miscellaneous
C. Protection Against Losses

i. PDIC may require an insured bank to
provide protections and idemnity against
burglary, defalcation, losses arising from
discharge of duties by, or particular acts of
defaults of its directors, officers, or
employess, and other similar insurable
losses.
XX. Miscellaneous
ii. The Board of Directors in consultation

with the Central Bank, shall determine the
bonding requirement as it refers to directors,
officers and employers of the insured bank
as well as the form and amount of the bond.
XX. Miscellaneous
iii. Whenever any insured bank refuses to

comply with any such requirement, PDIC
may contract for such protection and add
the cost thereof to the assessment
otherwise payable by such bank.
XX. Miscellaneous
D. Directors, Officers and Employees of

Insured Banks
Except with the written consent od PDIC,
no person shall serve as a director, officer,
or employee of an insured bank who has
been convicted of any criminal offense
involving dishonesty or a breach of trust.
XXI. Criminal Penalties
The penalty of prison mayor or a fine of

not less the Fifty thousand pesos
(P50,000.00) but not more than Two
million pesos (P2,000,000.00), or both, at
the discretion of the court, shall be
imposed upon any director, officer,
employee or agent of a bank:
1. For any willful refusal to submit reports as

required by law, rules and regulation;
2. Any unjustified refusal to permit
examniation and audit of the deposit
records or the affairs of the institution;
3. Any willful making a false statement or
entry in any bank report or document
required by PDIC;
4. Submission of false material information

in connection with or in relation to any
financial assistance extended to the bank;
5. Splitting of deposits or creation of
fictitious loans or deposit accounts.

* Splitting of deposits occur whenever a deposit account
with an outstanding balance of more then the statutory
maximum amount of insured deposit maintained under the
name of natural or juridical persons is broken down and
transferred into two or more accounts in the name/s of
natural or juridical persons or entities who have no
beneficial ownership on transferred deposits in their names
within thirty (30) days immediately preceding or during a
bank-declared bank holiday, or immediately preceding a
closure order issued by the Monetary Board of the Bangko
Sentral ng Pilipinas for the purpose of availing of the
maximum deposit insurance coverage.
6. refusal to allow PDIC to takeover a closed

bank placed under it receivership or
obstructing such action;
7. refusal to turn-over or 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 PDIC;
9. violation of, or causing any person to violate,

the exemption from garnishment, levy, attachment
or execution provided under the PDIC Law and the
New Central Bank Act;
10. any willful failure or refusal to comply with, or
violation of any provision of the PDIC Law, or
commission of any other irregularities and/or
conducting business in an unsafe or unsound
manner as may determined by the Board of
Directors.
XXII. Fines
The Board of Directors is authorized to impose
administrative fines for any act or omission enumerated
in above, and for violation or any order, instruction, rule
or regulation issued by PDIC, against a bank and/or any
of its directors, officers or agents responsible for to be
appropriate, but in no case to exceed three times the
amount of the damages or costs caused by the
transaction for each day that the violation subsits,
taking into consideration, the attendant circumstances,
such as the nature and gravity of the violation or
irregularity and the size of the bank.
XXIII. TRO and Injunction
i.
No court, except the Court of Appeals,

shall issue any temporary restraining
order, preliminary injunction or preliminary
mandatory injunction against PDIC for any
action under the PDIC Law.
ii. The prohibition shall apply in all cases,
disputes or controversies instituted by a
provate party, the insured bank, or any
shareholder of the insured bank.
iii. The Supreme Court may issue a

restraining order or in junction when the
matter is of extreme urgency involving a
constitutional issue, such that unless a
temporary restraining order is issued, grave
injustices and irreparable injury will arise
iv. Any restraining order or injunction issued

in violation of the foregoing is void 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.
XXIV. Reorganization
i.
PDIC may be reorganized by the Board of

Directors by adopting if it so desires, an
entirely new staffing pattern or
organizational structure to suit its
operations.
ii. The reorganization should be completed
within six (6) months jafter the effectivity
of the PDIC Law.
XXIV. Reorganization
iii. The Board of Directors is authorized to

provide separation incentives, and all those
who shall retire or be separated from the
service on account of reorganization 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.
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Banking Laws

XVIII. Issuance of bonds

a. The board of directors shall determine the

XIX. Report and Audit

a. PDIC shall annually make a report of its

XIX. Report and Audit

b. Its financial transactions shall be audited

XIX. Report and Audit

ii. The Board of Directors may exempt

B. Merger or Consolidation of Insured Banks

(3) transfer assets to any noninsured bank

C. Protection Against Losses

ii. The Board of Directors in consultation

iii. Whenever any insured bank refuses to

D. Directors, Officers and Employees of

XXI. Criminal Penalties

The penalty of prison mayor or a fine of

XXI. Criminal Penalties

1. For any willful refusal to submit reports as

XXI. Criminal Penalties

4. Submission of false material information

XXI. Criminal Penalties

XXI. Criminal Penalties

6. refusal to allow PDIC to takeover a closed

XXI. Criminal Penalties

9. violation of, or causing any person to violate,

XXIII. TRO and Injunction

No court, except the Court of Appeals,

XXIII. TRO and Injunction

iii. The Supreme Court may issue a

XXIII. TRO and Injunction

iv. Any restraining order or injunction issued

PDIC may be reorganized by the Board of

iii. The Board of Directors is authorized to

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