AMENDING REPUBLIC ACT NUMBERED THREE THOUSAND FIVE HUNDRED NINETY-ONE, AS AMENDED, ENTITLED “AN ACT ESTABLISHING THE PHILIPPINE DEPOSIT INSURANCE CORPORATION, DEFINING ITS POWER…

WHEREAS, there were pending before Congress prior to the
promulgation of Proclamation No. 1081, dated September 21, 1972, certain
urgent measures proposing amendments to Republic Act No. 3591, as
amended:

WHEREAS, the deposit insurance scheme has been adopted to
generate more faith and confidence in the banking system and the
Philippine Deposit Insurance Corporation, as an insurer of bank
depositors, is entrusted not only with the vital role of protecting
depositors from loss resulting from bank closures but also in helping
develop a sound and stable banking system; and

WHEREAS, the recommendations contained in the report on the
Philippine financial system which have been accepted, with certain
modifications by the monetary authorities, included among others,
certain proposals geared toward ensuring the effectiveness of the
Corporation in performing its assigned tasks;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the
Philippines, by virtue of the powers in me vested by the Constitution as
Commander-in-Chief of the Armed Forces of the Philippines, and pursuant
to Proclamation No. 1081, dated September 21, 1972, and General Order
No. 1, dated September 22, 1972, as amended, and in order to effect the
desired changes and reforms in the social, economic, and political
structure of our society, do hereby order and decree the amendment of
Republic Act No. 3591, as amended, as follows:

SECTION 1. Section two of Republic Act Numbered Three
thousand five hundred ninety-one, as amended, is hereby amended to read
as follows:

“SEC. 2. The powers and functions of the Corporation shall
be vested in a Board of Directors consisting of three (3) members one
of whom shall be the Governor of the Central Bank of the Philippines and
two of whom shall be citizens of the Republic of the Philippines to be
appointed by the President of the Philippines with the consent of the
Commission on Appointments. One of the appointive members shall be the
Chairman of the Board of Directors of the Corporation who shall be
appointed on a full time basis for a term of six. (6) years at an annual
compensation which shall be fixed by the President of the Philippines.
The other appointive member, who shall be appointed for a term of four
(4) years and the Governor of the Central Bank shall each receive a per
diem of not exceeding fifty pesos (P50.00) for each day of meeting
actually attended by them but in no case shall each of them receive more
than five hundred pesos (P500.00) a month. In the event of vacancy in
the office of the Governor of the Central Bank of the Philippines, and
pending the appointment of his successor or during the absence of the
Governor, the Acting Governor of the Central Bank of the Philippines
shall act as member of the Board of Directors. In the event of a vacancy
in the Office of the Chairman of the Board of Directors and pending the
appointment of his successor, the Governor of the Central Bank of the
Philippines shall act as Chairman. The members of the Board of Directors
shall be ineligible during the time they are in office and for a period
of two years thereafter to hold office, position or employment in any
insured bank, except that this restriction shall not apply to any member
who has served the full term for which he was appointed. No member of
the Board of Directors shall be an officer or director of any insured
bank; and before entering upon his duties as member of the Board of
Directors, he shall certify under oath that he has complied with this
requirement and such certification shall be filed with the Secretary of
the Board of Directors. Any vacancy in the Board created by the death,
resignation, or removal of an appointive member shall be filled by the
appointment of a new member to complete the unexpired period of the term
of the member concerned.

“The Board of Directors shall have the authority:

“1. To prepare and issue rules and regulations as it considers
necessary for the effective discharge of its responsibilities;
“2. To direct the management, operations and administration of the
Corporation;
“3. To appoint, fix the remuneration and remove any officer or employee
of the Corporation for cause: Provided, however, That officers
exercising discretionary powers shall not be subject to the Civil
Service Law; and
“4. To authorize such expenditures by the Corporation as are in the
interest of the effective administration and operation of the
Corporation: Provided, however, That not later than one year
after the appropriation and release of the additional fifteen million
pesos for the permanent insurance fund as provided in Section ten (a-1)
of this Act, the annual operating expenses of the Corporation may amount
to not more than the equivalent of the annual gross income from the
investment of the permanent insurance fund and not more than fifteen per
cent of the first ten million pesos of all other income, such as
assessments and earnings from the investment of funds of the Corporation
other than the permanent insurance fund: Provided, further,
That if all other income exceeds ten million pesos, the prescribed
ceiling for the annual operating expenses may be increased by not more
than ten percent of the excess: Provided, finally, That in the
computation of income, recoveries and accrued income shall be excluded.”

SEC. 2. Section ten (a) of the same Act is hereby
amended by adding another paragraph after Section ten (a) which reads as
follows:

“SEC. 10(a-1). The permanent insurance fund hereinabove
created is hereby increased to twenty million pesos and for this
purpose, the amount of fifteen million pesos is hereby appropriated from
the General Fund.”

SEC. 3. Section twelve, Subsection (c) of the same Act is
hereby amended to read as follows:

“SEC. 12(c). When the Corporation has determined that an
insured bank is in danger of closing, in order to prevent such closing,
the Corporation, in the discretion of its Board of Directors, is
authorized to make loans to, or purchase the assets of, or make deposits
in, such insured bank, upon such terms and conditions as the Board of
Directors may prescribe, when in the opinion of the Board of Directors,
the continued operation of such bank is essential to provide adequate
banking service in the community: Provided, however, That funds
available for this purpose shall be limited only to the permanent
insurance fund referred to in Section ten (a) of this Act, additional
appropriations thereto, and money borrowed from the Central Bank in
accordance with the provisions of Section thirteen of this Act: Provided,
further, That funds of the Corporation accumulated from
assessments paid by insured banks shall not be available for this
purpose nor for the repayment of loans obtained from the Central Bank
for the funding of assistance to insured banks as provided in this
section. Such loans and deposits may be in subordination to the rights
of depositors and other creditors.”

SEC. 4. This Decree shall take effect immediately.

Done in the City of Manila, this 29th day of January, in the
year of Our Lord, nineteen hundred and seventy-three.