Rules and Regulations Governing the Insurance of Deposit Liabilities of Banks and Banking Institutions in the Philippines with the PDIC

March 12, 1969

RULES AND REGULATIONS GOVERNING THE INSURANCE OF DEPOSIT LIABILITIES OF BANKS AND BANKING INSTITUTIONS IN THE PHILIPPINES WITH THE PDIC

Pursuant to the provisions of R.A. No. 3591 entitled "AN ACT ESTABLISHING THE PHILIPPINE DEPOSIT INSURANCE CORPORATION, DEFINING ITS POWERS AND DUTIES AND FOR OTHER PURPOSES," the following rules and regulations governing the insurance of deposit liabilities of banks and banking institutions in the Philippines with the Philippine Deposit Insurance Corporation, hereinafter referred to as "PDIC", are hereby promulgated:

PART I

Definition of Terms

SECTION 1.01. As used in these Rules and Regulations:

a) Bank and Banking Institution — shall be synonymous and interchangeable and shall include banks, commercial banks, savings banks, mortgage banks, rural banks, development banks, cooperative banks, trust companies, branches and agencies in the Philippines of foreign banks: and all other companies, corporations, partnerships performing banking functions in the Philippines. Inasmuch as under the provisions of R.A. No. 3779, as amended, deposits in savings and loan associations are eligible for deposit insurance, such associations shall be considered "banks" for purposes of these Rules and Regulations.

b) Receiver — includes a receiver, liquidating agent, conservator, commission, person, or other agency charged by law with the duty of winding up the affairs of a bank.

c) Insured Bank — means any bank the deposits of which are insured in accordance with the provisions of R.A. No. 3591.

d) Non-insured Bank — means any bank the deposits of which are not insured.

e) Deposit — means the unpaid balance of money or its equivalent received by a bank in the usual course of business and for which it has given or is obliged to give credit to a commercial, checking, savings, time or thrift account or which is evidenced by its certificate of deposit, and trust funds held by such bank whether retained or deposited in any department of such bank or deposited in another bank, together with such other obligations of a bank as the Board of Directors of PDIC shall find and shall prescribe by regulations to be deposit liabilities of the bank: Provided, That any obligation of a bank which is payable at the office of the bank located outside of the Philippines shall not be a deposit for any of the purposes of R.A. No. 3591 or included as part of the total deposits or of the insured deposit: Provided, further, That any insured bank which is incorporated under the laws of the Philippines which maintains a branch outside the Philippines may elect to include for insurance its deposit obligation payable only at such branch.

f) Insured Deposit — means the net amount due to any depositor for deposits in an insured bank (after deducting offsets) less any part thereof which is in excess of P10,000.00. Such net amount shall be determined according to such regulations as the Board of Directors of PDIC may prescribe and in determining the amount due to any depositor there shall be added together all deposits in the bank maintained in the same capacity and the same right for his benefit or in his own name or in the names of others, except trust funds the insurance of which shall be separate from and additional to that covering other deposits of the owners or beneficiaries of such trust funds.

g) Transfer Deposit — means a deposit in an insured bank made available to a depositor by PDIC as payment of insured deposit of such depositor in a closed bank and assumed by another insured bank.

h) Trust Funds — means funds held by an insured bank in a fiduciary capacity and includes without being limited to funds held as trustee, executor, administrator, guardian or agent.

i) Base Day — shall be the period of time from the closing of the books of the bank on the last business day immediately preceding the assessment base day to the closing of the books of the bank on the base day according to its normal practice, i.e. the usual and regular practice of the bank on business days with no deviation therefrom on base days. Holidays and other non-business days intervening between the preceding business day and the base day are a part of the base day. IcCATD

j) Cash Item — means any instrument providing for the payment of money which the reporting bank in the regular course of business has received and in exchange therefor has given credit to a deposit account or has issued an instrument evidencing or constituting a deposit as defined in item (e) of this Section, or has paid in the regular course of business by giving cash therefor or credit as a payment on a debt due to the bank, or has received as a collection for public utility service, or in a similar transaction: Provided, That the instrument is in the process of collection and is payable on presentation; and Provided, further, That the payor or drawee of the instrument is not the reporting bank or a branch or office thereof. However, an instrument received by a bank in payment of or arising from the sale or other disposition of any of its assets is not a cash item for the purposes of these Rules and Regulations.

A cash item is deemed to be in the process of collection from the time it is either credited to a deposit account or paid by the reporting bank until the reporting bank has received acceptable payment in the form of cash, credit, draft or officers' check, or notice of dishonor: Provided, That an item shall not be considered as in the process of collection if such item has been outstanding for a period in excess of fifteen (15) days from the time it was sent to the drawee bank for payment.

A cash item is deemed to be payable on presentation when the payor or drawee is required to pay it forthwith upon presentation.

k) Cash Item Held For Clearing — This term (as used in the Certified Statements on PDIC Forms Nos. 201 and 202) represents an item: —

(1) which has been received in the usual course of business on the base day before the closing of the books on that day;

(2) which is held at the time of said closing for clearance or direct presentment on the next business day in conformity with the normal practice of the reporting bank; and

(3) in which the payor or drawee of the instrument is a bank or person, other than the reporting bank.

l) Cash Item Forwarded for Collection — This term (as used in the Certified Statements on PDIC Forms Nos. 201 and 202) represents an item received on the base day and either sent for collection on the same day or held at the close of business on that day to be sent for the collection on the next business day.

m) Uncollected Cash Item In Process Of Collection — This term (as used in the Certified Statements on PDIC Forms Nos. 201 and 202) represents cash item paid or credited on days preceding the base day but remaining uncollected as of the close of business on the base day for a period not in excess of fifteen (15) days. This cash item is eligible for deduction only under the (bb) method.

n) Interbranch Item — This is an item which is drawn against a deposit account maintained in the main office or a branch office of the reporting bank which is received and paid or credited to a deposit account by an office of the reporting bank other than the office which carries the deposit account against which such item is drawn. AETcSa

o) Reciprocal Bank Balances — A reciprocal bank balance exists when the reporting bank has a deposit balance due to another bank, and such reporting bank also has a deposit balance due from the same insured bank disregarding, for this purpose, balances representing deposits of trust funds.

PART II

Application for Deposit Insurance

SECTION 2.01. Who may Apply for Deposit Insurance. — Any existing or proposed bank may apply for insurance of its deposit liabilities with PDIC. A "proposed bank" for purposes of these Rules and Regulations, is one which has already registered is Articles of Incorporation with the Securities and Exchange Commission but has not yet started operations.

SECTION 2.02. Filing of Application and Procurement of Forms. — Existing or proposed banks desiring to insure their deposit liabilities with PDIC should file their applications for deposit insurance with PDIC. Appropriate application forms and instructions for completing the same will be furnished without charge upon request.

SECTION 2.03. Forms and Instructions. — The following application forms for deposit insurance and other forms relating thereto are hereby prescribed, sample copies of which are hereto attached and made integral parts of these Rules and Regulations:

a) Application by Existing Banks

(1) PDIC Form No. 101 — Application for Deposit Insurance by an Existing Bank. — An existing bank shall use this form which most be signed and sworn to by the Bank's President or Vice President and Treasurer or Secretary, and the bank's corporate seal affixed thereto. Two (2) signed copies of the application must be filed with PDIC, and at least one (1) copy kept by the bank in its files. This form must be accompanied by —

— PDIC Form No. 101-A — Statement of Capital and Capital Required

— PDIC Form No. 103 — Information Sheet and Statement of Assets and Liabilities, [For each director and officer (from President down to Department Heads)]

— Certified Copy of Articles of Incorporation and By-Laws

b) Application by Proposed Bank

(1) PDIC Form No. 102 — Application for Deposit Insurance by a Proposed Basic — A proposed bank shall use this form which must be signed and sworn to by the Treasurer or other duly authorized representative of the proposed bank. Two (2) signed copies must be filed with PDIC, and at least one (1) copy kept by the bank in its files. The accomplished form submitted to PDIC must be accompanied by a certified copy of the bank's Articles of Incorporation.

(2) PDIC Form No. 102-A — Certificate of Adoption of Resolution — This form is a certificate attesting to the fact of adoption of a resolution by the Board of Directors of the bank approving the action of the Treasurer or other duly authorized representative of the proposed bank in preparing and presenting the application for deposit insurance on PDIC Form No. 102. This document should be certified and sworn to by the President or Vice President and by the Treasurer or Secretary of the bank.

Final action on the application for deposit insurance of a proposed bank will not be taken unless two (2) properly executed copies of Form No. 102-A (Certificate of Adoption of Resolution) are received by PDIC, accompanied by a copy of the bank's license or authorization to engage in the business of receiving deposits, where such license or authorization is required by law or regulation. HEcIDa

SECTION 2.04. Notice of Disposition of Application for Deposit Insurance. — PDIC shall advise the applicant bank of the action taken on its application for deposit insurance.

SECTION 2.05. Effective Date of Insurance — The deposit insurance shall take effect on the date of receipt by the bank of the notice of approval: Provided, however, That in the case of a proposed bank which has not started operation on the date of receipt of the notice of approval, the insurance shall take effect on the date such bank actually started operation.

PART III

Assessments

SECTION 3.01. Assessment Rate. — Each insured bank shall pay to PDIC an assessment on its assessment base at the rate of one-eighteenth (1/18) of one per centum per annum. The semi-annual assessment for each insured bank shall be in the amount of the product of one-half (½) the annual assessment rate multiplied by the assessment base.

SECTION 3.02. Assessment Base. — The assessment base shall be the amount of the liability of the bank for deposits according to the definition of the term "deposit" pursuant to Section 3(f) of R.A. 3591 and Sec. 1.01 (e) of these Rules and Regulations without any deduction for indebtedness of depositors but subject to the deductions and exclusions authorized in Sec. 6, sub-section (a), (1) and (2), of said Act and Sections 3.03 and 3.05 of these Rules and Regulations. In case a bank which is incorporated under the laws of the Philippines and which maintains a branch outside the Philippines elects to include for insurance its deposit obligations payable only at such branch, it shall include such deposit obligations as part of the "deposits" subject to assessment.

Deposits maintained in foreign currencies in an insured bank shall form part of the total deposit obligations of said bank. For assessment purposes, such deposits shall be converted to their equivalent amount in pesos on the basis of the legal parity rate obtaining on the applicable base day/s.

SECTION 3.03. Allowable Deductions From Deposit Liabilities. — The following items are allowable deductions from reported total deposit liabilities in computing the assessment base:

a) Reciprocal Bank Balances — For assessment purposes, the reporting bank may deduct from the total deposit liabilities the amount due from another insured bank not in excess of the balance due to such insured bank. For the purpose of computing the reciprocal bank balance deduction, the balance used must be subject to immediate withdrawal. This means that items in the process of collection must be excluded from the computation of both the "due to" and "due from" balances as shown on the books of the reporting bank. For instance, any outstanding unpaid draft credited to the "due from" account may be added back to the book balance to show the actual collected balance due from the other insured bank in computing this deduction.

b) Interbranch Item — This item may be deducted in its actual amount if it is not reflected on the books of the reporting bank on the base day as a charge against deposit liabilities.

c) Cash Items — In computing the assessment base, cash items may be deducted under either of the two alternative methods described in the following section without regard as to whether withdrawal has been made against the credit given to deposit accounts in the normal course of business.

However, no deductions may be made or claimed —

1) for cash items after the reporting bank has received payment or notice of dishonor thereof;

2) for instruments received in payment for cash items previously paid or credited to deposit accounts and forwarded for collection; and

(3) for instruments received in payment of clearings. Furthermore, an instrument providing for the payment of money which is paid or credited to a deposit account and which is received for the purpose of abnormally increasing deposits or reducing assessments with deductions on any assessment base day is not a cash item as defined in this Part as it is not received in the usual or regular course of business.

No two reporting banks may deduct the same cash items under the (aa) method for computing deductible cash items unless one of the banks normally and in the regular course of business is a collecting and check clearing agent of the other.

d) Trust Funds deposited in other insured banks — Trust funds deposited in other insured banks may be deducted from the total deposit liabilities: Provided, That —

(1) The account is maintained in the depository insured bank by the reporting bank as fiduciary and the account is properly noted as such to show that the funds therein are trust funds; cDCaTH

(2) The funds in such account are used exclusively for their trust purposes by the reporting bank; and

(3) Records are kept which clearly show that the trust funds have been deposited and maintained in the manner above-stated.

(e) Non-assessable items included in the total deposit liabilities — Items or accounts which are not assessable but which have been included in the total deposit liabilities may be claimed as deductions provided they are explained fully.

SECTION 3.04. Choice of method in computing deductible cash items — An insured bank may at its option compute its deductible cash items by either of the following methods designated (aa) and (bb):

(aa) Method — Under this method, a bank may deduct twice the amount of the total of the following:

(1) "cash items held for clearing"

(2) "cash items forwarded for collection" both as defined in Sections 1.01(k) and 1.01(l), respectively, of these Rules and Regulations.

(bb) Method — Under this method, a bank may deduct the actual amount of the total of the following:

(1) "cash items held for clearing;"

(2) "cash items forwarded for collection"; and

(3) "uncollected cash items in process of collection" all as defined in Sections 1.01(k), 1.01(l), and 1.01(m), respectively, of these Rules and Regulations.

The reporting bank may select either of the two alternative methods (aa) or (bb) for claiming deductions for cash items: Provided, That the named method is used for both base days in the semi-annual assessment period. ASDTEa

SECTION 3.05. Exclusions from Deposit Liabilities — For assessment purposes, the following items may be excluded in computing the total deposit liabilities:

a) Deposit accounts held as security for a liability to the bank; Provided, That the amount that may be excluded shall —

(1) not exceed such liability;

(2) not be subject to withdrawal by the obligor; and

(3) be carried in a special non-interest bearing account designated to properly show their purpose.

b) Deposit liabilities of a bank which are payable at an office of the bank located outside the Philippines unless the insured bank which is incorporated under the laws of the Philippines and which maintains a branch outside the Philippines has elected to include for insurance its deposit obligations payable only at such branch in which case such deposit liabilities should be included as part of the total deposit liabilities.

SECTION 3.06. Maintenance of assessment records. — As a condition to the right to make any deduction or exclusion in determining the assessment base, each insured bank shall maintain such records as will readily permit verification of the correctness thereof.

SECTION 3.07. Time of Payment of Assessments. — As provided in the next following section, each insured bank shall pay to PDIC the amount of the semi-annual assessment due to PDIC as shown on its Certified Statement at the time such statement is filed.

SECTION 3.08. Filing of Certified Statements. — The certified statements required to be filed under Section (b) of R.A. No. 3591 shall be in the prescribed forms hereto attached and made integral parts of these Rules and Regulations. Every insured bank shall file a certified statement with PDIC as follows:

a) PDIC Form No. 202 — First Certified Statement. — This form shall be accomplished by the newly insured bank and filed with the PDIC upon the expiration of the first semi-annual period in which it became an insured bank. This form shows, the deposit liabilities less the authorized deductions for only one base Day, either June 30 or December 31, whichever date is applicable. When any of said base days is a non-business day or a holiday, the preceding business day shall be used. It also shows that computation of the assessment base and the amount of the assessment due the PDIC. It must be signed under oath by an authorized officer of the bank and the original copy forwarded to PDIC on or before July 15 or January 15, as the case may be, and a copy or copies retained in the bank's files. Blank forms will be mailed by PDIC to the newly insured banks with appropriate instructions for their preparation.

b) PDIC Form No. 201 — Certified Statement. — This form shall be accomplished by every insured bank and filed with PDIC on or before January 15 and July 15 of each year by every insured bank, except newly insured banks which must submit their First Certified Statement on PDIC Form No. 202. PDIC Form No. 201, shows the deposit liabilities less authorized deductions for the two base days in each semi-annual period. The base day are March 31 and June 30 for six (6)-month period ending June 30; and September 30 and December 31 for the six (6)-month period ending December 31. When any of said base days is a non-business day or a holiday, the preceding business day shall be used. The form shows the computation of the assessment base and the amount of the assessment due the PDIC. It must be signed under oath by an authorized officer of the bank, the original copy forwarded to PDIC, and a copy or copies retained in the bank's files. Blank forms will be mailed by PDIC to the insured banks with appropriate instructions for their preparation. aIcDCH

SECTION 3.09. Resumption of insured status before the insurance of deposits ceases; filing of Certified Statements. — If a bank whose insured status has been terminated under Section 7 (a) or (b) of R.A. 3591 makes application to PDIC before the insurance of its deposits shall have ceased, to be permitted to continue or to resume its status as an insured bank, and, if the Board of Directors of PDIC grants the application, the Bank will be deemed for assessment purposes to continue as an insured bank and must, thereafter, furnish Certified Statements and pay assessments as though its insured status had not been terminated in the first instance.

SECTION 3.10. Submission of Reports of Condition, etc. — Whenever required by the Board of Directors of PDIC, insured banks shall file reports of condition, reports of earnings and dividends, summaries of deposits, and such other reports as may be required, upon the forms and in the manner and pursuant to the instructions prescribed by the Board of Directors from time to time. The form of such reports and instructions for completing the same will be furnished to all such banks by, or may be obtained upon request from PDIC.

PART IV

Payment of Insured Deposits

SECTION 4.01. Payment of Insured Deposits in Closed Banks. — Whenever an insured bank closes on account of insolvency, PDIC shall make payments of insured deposits therein. An insured bank shall be deemed to have been closed on account of insolvency in any case in which it has been closed for the purpose of liquidation without adequate provision being made for payment of its depositors. The Board of Directors of PDIC shall appoint one or more Claim Agents with the power and authority to investigate and examine claims for insured deposits for the purpose of making immediate payment thereof in accordance with the provisions of R.A. No. 3591. Claimants for insured deposits shall submit to such Claim Agents appropriate proof of claims in the form and manner prescribed by law or the Board of Directors of PDIC, deliver any passbook or other record issued by the Bank evidencing the insured deposit, assign their claims for insured deposits to PDIC to the extent required by law, and furnished proper identification. In cases where PDIC is not satisfied as to the validity of a claim for insured deposit, it may require the final determination and adjudication of a court of competent jurisdiction before paying such claim.

SECTION 4.02. Form of payment. — PDIC may make payment of the insured deposits either (1) by cash or its equivalent or (2) by making available to each depositor a transferred deposit in another insured bank in an amount equal to the insured deposit of the depositor. Any such transfer deposit would be in the form of a demand deposit. In making such payments, PDIC shall exercise its statutory authority to withhold payment of such portion of the insured deposit of any depositor as may be required to provide for the payment of any liability of such depositor as a stockholder of the bank, or of any liability of such depositor to the closed bank or its receiver, which is not offset against a claim from the bank, pending the determination and payment of such liability by the depositor or any other person liable therefor.

SECTION 4.03. Claim by Fiduciary Bank for insured deposits of Trust Estates. — The claim for insured deposits on a closed insured bank by a fiduciary bank which, in the exercise of its trust powers, had deposited trust funds therein shall be determined as follows:

a) Allocated funds of a trust estate — If trust funds of a particular trust estate are allocated by the fiduciary and deposited, the deposit with respect to such estate will be the amount of its funds allocated and deposited and remaining to the credit of the claimant as fiduciary in the closed insured bank.

b) Interest of a trust estate in unallocated trust funds — If trust funds belonging to two or more trust estates be mingled and deposited in whole or in parts by the fiduciary bank in one or more insured banks to the credit of such fiduciary bank without allocation of specific amounts from each particular trust estate, the deposit with respect to a trust estate in any closed insured bank shall be computed in accordance with the following formula:

	a
X =	---	x c
	b

Where:

x represents the corresponding deposit of a trust estate in the closed insured bank;

a represents the entire unallocated trust funds to the credit of the fiduciary bank in the closed insured bank;

b represents the entire unallocated trust funds for which the fiduciary bank is accountable, including such portions held by it and/or deposited in all depositories; and

c represents all unallocated trust funds of the trust estate for which the fiduciary bank is accountable.

c) Total insured deposit of a particular trust estate — The total insured deposit of a fiduciary bank with respect to any particular trust estate shall be the sum of the two amounts determined in accordance with paragraphs (a) and (b) above, but shall in no case exceed P10,000.00.

SECTION 4.04. Payment not to exceed P10,000.00 to each depositor. — Each depositor of a closed insured bank shall be entitled to payment covering the not amount due him from such bank for deposits (after deducting offsets) not in excess of P10,000.00. In establishing the amount due any depositor, there shall be added together all deposits maintained in the said closed insured bank in the same capacity and in the same right for his benefit either in his own name or in the name of others, except trust funds the insurance of which shall be separate from and additional to that covering other deposits of the owners or beneficiaries of such trust funds, as provided in subsection (i) of Section 6 of R.A. No. 3591. ITaCEc

SECTION 4.05. Insurance of deposits maintained in currencies other than the Philippine peso. — Deposit obligations in foreign currency of any insured bank are eligible for deposit insurance.

Deposit insurance coverage and payment for insured deposits maintained in foreign currencies in a closed insured bank shall be determined in accordance with the following rules:

a) the deposit in foreign currency shall be converted into its equivalent amount in Philippine pesos at the legal parity rate obtaining on the date the bank was closed on account of insolvency, and the insurance coverage shall extend to such computed amount, but in no case to exceed to P10,000.00 for each depositor and;

b) the liability of PDIC to each depositor shall be payable in Philippine pesos in the amount of insurance coverage as computed above.

SECTION 4.06. Subrogation of Corporation to all rights of Depositor upon payment of insured deposits. — Upon payment of the insured deposit as outlined above, PDIC shall be subrogated to all rights of the depositor against a closed insured bank to the extent of such payment. Such subrogation shall include the right on the part of PDIC to receive the same dividends from the proceeds of the assets of such closed bank as would have been payable to the depositor on a claim for insured deposit, but such deposit shall retain his claim for any uninsured portion of his unpaid deposit.

PART V

Termination of Insured Status of Insured Banks

SECTION 5.01. Voluntary termination of insured status of insured banks. — Any insured bank may, upon not less than ninety (90) days' written notice to PDIC, and to the Development Bank of the Philippines if it owns or holds as pledges any preferred stock, capital notes, or debentures of such bank, terminate its status as an insured bank in accordance with the following procedures:

a.) Adoption of resolution and notice to PDIC. — The insured bank shall adopt a resolution stating that its insured status shall terminate on the date specified in the resolution which shall not be earlier than ninety (90) days from the date of the receipt by PDIC of a certified copy of the resolution. The resolution shall likewise state that the president or other authorized officer of the bank is directed to immediately forward a certified copy of the resolution to PDIC, receipt of which shall constitute the prescribed notice of voluntary termination of the bank's insured status. The PDIC, upon receipt of a copy of said resolution, shall promptly advise the bank of the date of such receipt and confirm the date of the termination of the insured status of the said bank.

b) Notice to depositors — The insured bank shall give notice to its depositors of the termination of its insured status not later than five (5) days after receipt of the confirmation by PDIC of the date of such termination and prior to the termination date. Such notice shall be (1) mailed to each depositor at his last address of record as shown upon the books of the bank, (2) published in not less than two (2) consecutive issues of a local newspaper of general circulation, and (3) shall state that the status of the bank as an insured bank will terminate on the date specified in the notice and that the insured deposits in said bank on the date of termination will continue to be so insured within the limitations prescribed under Sec. 7(a) of R.A. No. 3591. Any additional information or advice which the bank may deem advisable may be included in the notice.

Should the bank concerned propose to pay its depositors by means of a transferred deposit in another insured bank, the notice shall state, additionally, that the deposits may be transferred upon the depositor's direction and upon his acknowledgment in writing of the payment of his deposits by such transfer; or that, in case of a liquidating bank, such transfer may be made upon his failure to claim his deposits within three (3) months from the date of last publication of notice in the newspaper.

c) Documentary proofs of mailing and publication of notice to be furnished PDIC — The bank shall furnish PDIC the following documents: (1) an affidavit of mailing to be executed by the official of the bank under whose direction the mailing was effected, which affidavit shall state the date of the mailing, the fact that it was mailed to each depositor at his last known address of record appearing in the books of the bank, and that a copy of the notice as mailed is attached; and (2) an affidavit of the publication of the notice to depositors, together with proof of such publication.

d) Additional requirements with respect to liquidating banks — In addition to the foregoing, a liquidating bank shall accomplish the following:

1) Submission of additional legal documents — The insured bank shall submit to PDIC certified copies of such additional documents or instruments as are required by law to place the bank in liquidation.

2) Notice to PDIC of payment of deposit liabilities — When the deposit liabilities of the liquidating bank shall have been paid in full, the bank shall furnish PDIC an affidavit executed by two of its ranking officers stating the fact that the deposit liabilities of the bank have been paid in full and giving the date of the final payment. It shall be understood that the issuance of a draft or officers' check will not discharge the bank of its liability until the same is finally paid.

3) Disposition of unclaimed deposits — When the liquidating bank has unclaimed deposits (i.e. deposits not claimed within three (3) months from the date of publication of notice as required in sub-section (b) above), it shall further state in the affidavit required in the preceding paragraph the amount of such unclaimed deposits and the disposition made of the funds to be held to meet such claims. The transfer of such funds or compensating assets to an insured bank in an amount sufficient to pay the unclaimed and unpaid deposits in consideration of such insured bank assuming payment thereof will be considered as payment of such unclaimed deposits. In this connection, the liquidating bank shall furnish PDIC: a) an affidavit and proof of publication, and b) a certified copy of the contract of assumption.

SECTION 5.02. Involuntary termination of insured status of insured banks. — Whenever the Board of Directors of PDIC shall find that the insured bank or its directors or trustees have continued unsafe or unsound practices in conducting the business of the bank or which have knowingly or negligently permitted any of its officers or agents to violate any provision of any law or regulation to which the insured bank is subject, the said Board shall give the Central Bank of the Philippines a statement with respect to such practices or violations for the purpose of securing correction thereof and shall furnish a copy thereof to the insured bank concerned. AHCaED

The insured status of such an insured bank shall be terminated by PDIC in accordance with the following procedures:

a) Notice and hearing to determine the status of the insured bank — If the unsafe or unsound practices and/or violations by an insured bank shall not have been corrected within one hundred twenty (120) days or such shorter period of time as the Central Bank of the Philippines shall require, the Board of Directors of PDIC shall give the insured bank not less than thirty (30) days written notice of intention to terminate the insured status of said bank, and shall fix a time and place for hearing before the Board or before a person designated by it to conduct such hearing in accordance with such procedure as the Board may determine at which hearing evidence may be produced and upon which the Board shall make written findings which shall be conclusive. Unless the bank shall appear at the hearing by a duly authorized representative, it shall be deemed to have consented To the termination of its insured status.

b) Publication of notice of termination of insured status — If it has been established during the hearing that the bank has not corrected the unsafe or unsound practice and/or violations specified in the notice of intention to terminate its insured status, the Board of Directors of PDIC may order that the insured status of the bank be terminated on a date subsequent to such finding and to the expiration of the time specified in such notice of intention to terminate. PDIC shall cause to be published notice of such termination in at least two (2) consecutive issues of a local newspaper of general circulation, and the bank shall give notice of such termination to each of the depositors at his last address, of record on the books of the bank in such manner and at such a time as the Board of Directors of PDIC may find necessary and may order for the protection of the depositors.

SECTION 5.03. Continuation of insurance of deposits in insured banks after termination of insured status. — The insured deposits (less all subsequent withdrawals) of each depositor in a bank whose insured status has been terminated whether voluntarily by the bank concerned (under Sec. 5.01 above) or by action of the Board of Directors of PDIC (under Sec. 5.02 above) shall, from the date of such termination, continue to be insured for a period of two (2) years. The bank shall continue to file certified statements with and pay assessments to PDIC as in the case of an insured bank during the said two-year period. Additions to existing insured deposits and new deposits in such bank made after the date of such termination shall no longer be covered by deposit insurance and the bank shall not advertise or hold itself out as having insured deposits unless in the same connection it shall also state with equal prominence that such additions to deposits and new deposits made after such termination date are no longer insured. The bank whose insured status has been terminated under the provisions of Sec. 7(a) of R.A. No. 3591 (Sec. 5.01 and Sec. 5.02 of these Rules and Regulations) shall, during the two (2) years from the date of such termination, in all other respects be subject to the duties and obligations of an insured bank; and, in the event such bank shall be closed on account of insolvency, within such period of two years, PDIC shall have the same powers and rights with respect to such bank as in the case of an insured bank.

SECTION 5.04. Termination of insured status of an insured bank not engaged in the business of receiving deposits. — Whenever the Board of Directors of PDIC shall have evidence indicating that an insured bank is not engaged in the business of receiving deposits, it will give notice in writing to the bank of such fact and will direct the bank to show cause why its insured status should not be terminated under the provisions of Sec. 7(b) of R.A. No. 3591.

PDIC shall take the following steps:

a) Notice requiring production of evidence — The Board of Directors of PDIC shall give the bank a period of at least thirty (30) days from receipt of notice to submit documents or written evidence supporting the fact that it is actually engaged in the business of receiving deposits.

b) Hearing — The Board of Directors may, in its discretion and upon request of the bank, authorize a hearing before it or before any person designated by it for the purpose of receiving and evaluating the evidence presented by the bank.

c) Notice of Termination — If after evaluation of the evidence presented in behalf of the bank, the Board of Directors of PDIC determines that the bank is not engaged in the business of receiving deposits, it shall notify the bank that its insured status and the insurance of its deposits will terminate at the expiration of the first full semi-annual assessment period following such notice. The bank shall then file its final Certified Statement and pay the corresponding assessment for such period.

d) Publication of Notice of Termination. — Within thirty (30) days prior to the date of the termination of the insured status of the bank, the said bank shall publish a notice of termination in at least two (2) consecutive issues of a local newspaper of general circulation and shall furnish PDIC with proof of such publication.

The notice shall state that the status of the bank as an insured bank will terminate on the date indicated therein and its deposits shall thereupon cease to be insured. Any pertinent information or advice that the bank may deem desirable may be included in the notice.

SECTION 5.05. Termination of insured status of an insured bank for failure and/or refusal to pay assessment. — Should any insured bank fail or refuse to pay any assessment required to be paid by such bank under any provision of R.A. No. 3591 and should the bank not correct such failure or refusal within thirty (30) days after written notice has been given by PDIC to an officer of the bank, citing Sec. 6(h) of said Act, and stating that the bank has failed or refuses to pay as required by law, the insured status of such bank shall thereupon be terminated by the Board of Directors of PDIC.

a) Publication of notice to depositors of insured bank — Upon the termination of the insured status of the bank, PDIC shall cause the publication in two (2) consecutive issues of a local newspaper of general circulation of notice to the depositors of the delinquent insured bank to the effect that the insurance of their deposits will terminate upon the expiration of the first full semi-annual period following the date of the last publication of notice to depositors. The cost of such publication shall be chargeable to the bank.

b) Remedies of PDIC against insured bank. — PDIC shall be entitled to recover from any insured bank the amount of any unpaid assessment lawfully payable by such insured bank to PDIC in a suit brought in any court of competent jurisdiction. Any insured bank which fails or refuses to pay the required assessment may be compelled to pay such assessment by mandatory injunction or other appropriate remedy in a suit brought for such purpose by PDIC against the bank and any of its officer or officers thereof in any court of the Philippines of competent jurisdiction in which the bank is located. These remedies provided for in sub-sections (f) and (g) of Sec. 6 of R.A. No. 3591 shall be in addition to any other legal remedies available to PDIC against the insured bank. TCaEIc

PART VI

Advertisement of Membership

SECTION 6.01. Mandatory requirements with regard to the official sign and display.

(a) Insured banks to display official sign. — Each insured bank shall continuously display an official sign as hereinafter prescribed at each teller's window or counter where insured deposits are usually and normally received in its principal place of business and in all its branches. The official sign shall be displayed by an insured bank immediately upon receipt thereof from PDIC.

(b) Official sign — The official sign shall be seven inches by three inches (7" x 3") in size and shall be of the following design:

 (PDIC Seal) (PDIC Seal)

DEPOSITS INSURED

By

PHILIPPINE DEPOSIT INSURANCE CORPORATION

Manila, Philippines

Maximum Deposit Insurance for Each Depositor P10,000.00

PDIC shall provide at cost official signs of uniform material which any insured bank may display. No insured bank shall display official signs other than those provided by PDIC.

SECTION 6.02. Mandatory requirements with regard to the official advertising statement and/or emblem and manner of use. —

(a) Insured banks to include official advertising statements and/or emblem in all its advertisements. — Each insured bank shall not later than thirty (30) days after the first day of operation as an insured bank, include the official advertising statement and/or emblem as hereinafter prescribed, in all of its advertisements. An insured bank may be exempted from this requirement only upon prior written approval of the PDIC. In cases where advertising copy not including the official advertising statement and/or emblem is on hand on the date the requirement of this section becomes operative, the insured bank may cause the official advertising statement and/or emblem to be included by use of rubber stamp or otherwise. When an insured bank has billboard advertisements outstanding which are required to include the official advertising statement and/or emblem, it shall cause the official advertising statement and/or emblem to be included therein as soon as it is consistent with its contractual obligations.

(b) Official advertising statement — The official advertising statement shall be in substance as follows: "Member of the Philippine Deposit Insurance Corporation (Maximum Deposit Insurance for Each Depositor — P10,000.00)."

(c) The Emblem — The emblem shall be of the following design:

(d) Official advertising statement and/or emblem in a dialect or language other than English — The official advertising statement and/or emblem may be translated in any other dialect: Provided, That the translation has had the prior approval of the PDIC.

PART VII

Penal Provisions

SECTION 7.01. Penal Provisions. — Violations of any of the provisions of R.A. No. 3591 and/or these rules and regulations shall subject the offender to the penalties imposed under Sections 9(c), 16(a), (b), (e) and 17 of R.A. No. 3591 insofar as the same may be applicable, without prejudice to the right of PDIC to avail itself of other remedies under other existing laws: Provided, That in the case of Sections 9(c), 16(a) and (e), and 17, the Board of Directors of the PDIC shall determine the amount of penalty which shall in no case exceed P100.00.

For the Board of Directors:

(SGD.) LUIS TIRSO RIVILLAActing ChairmanPhilippine Deposit Insurance Corporation