Article 177Supplement v1, p. 177

COMMERCIAL LAWS SUPPLEMENT

the issuing bank: Provided, finally, That in case of a

condition that threatens the monetary and financial

stability of the banking system that may have systemic

consequences,

as

defined

in

Section

22

hereof,

as

determined

by

the

Monetary

Board,

the

maximum

deposit insurance cover may be adjusted in such amount,

for such a period, and/or for such deposit products, as

may be determined by a unanimous vote of the Board of

Directors in a meeting called for the purpose and chaired

by the Secretary of Finance, subject to the approval of the

President of the Philippines.

(k) The term liquidation refers to the proceedings under

Sections 12 to 16 of this Act.

(l) The term liquidation court refers to the Regional Trial

Court (RTC) of general jurisdiction where the petition for

assistance in the liquidation of a closed bank is filed and

given due course.

(m) The term payout refers to the payment of insured

deposits.

(n) The term petition for assistance in the liquidation of a

closed bank refers to the petition filed by the receiver

with the RTC in accordance with Section 16 of this Act.

(o) The term purchase of assets and assumption of

liabilities refers to a transaction where an insured bank

purchases any or all assets and assumes any or all

liabilities of another bank under resolution or liquidation,

as provided in this Act.

(p) The term receiver refers to the Corporation or any of its

duly authorized agents acting as receiver of a closed

bank.

(q) The term records include all documents, titles, papers

and electronic data of the closed bank, including those

pertaining to deposit accounts of and with the closed

bank, its assets, transactions and corporate affairs.

(r) The term residual assets refer to assets, in cash or in

kind, to be turned over to the closed bank’s stockholders

of record, in proportion to their interest in the closed bank

as of date of closure, after payment in full of liquidation

costs, fees and expenses, and the valid claims and surplus

dividends to all the creditors.

(s) The term resolution refers to the actions undertaken

by the Corporation under Section 11 of this Act to:

(1) Protect depositors, creditors and the DIF;

(2) Safeguard the continuity of essential banking services

or maintain financial stability; and

(3) Prevent deterioration or dissipation of bank assets.

(t) The term risk-based assessment system pertains to a

method for calculating an insured bank’s assessment on

the probability that the DIF will incur a loss with respect

to the bank, and the likely amount of any such loss, based

on

its

risk

rating

that takes into consideration the

following:

(1) Quality and concentration of assets;

(2)

Categories

and

concentration

of

liabilities,

both

insured and uninsured, contingent and noncontingent;

(3) Capital position;

(4) Liquidity position;

(5) Management and governance; and

(6) Other factors relevant to assessing such probability, as

may be determined by the Corporation:

(u) The term statement of affairs refers to a report of

financial condition of the closed bank at a given date,

showing the: (1) estimated realizable value of assets; (2)

classification of credits; and (3) estimated liabilities to be

settled.

(v) The term surplus dividends refers to the remaining

assets of the closed bank after satisfaction in full of all the

liquidation costs, fees and expenses, and valid claims. The

surplus dividends shall be computed at the legal rate of

interest from the date of takeover to cut-off date of the

distribution plan, and shall be paid, in cash or in kind, to

creditors of the closed bank in accordance with the Rules

on Concurrence and Preference of Credits under the Civil

Code or other laws.

(w) The term takeover refers to the act of physically taking

possession and control of the premises, assets and affairs

of a closed bank for the purpose of liquidating the bank.

(x) The term transfer deposit means, a deposit in an

insured bank made available to a depositor by the

Corporation

as

payment of insured deposit of such

depositor in a closed bank and assumed by another

insured bank.

(y) The term 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.

(z) The term valid claim refers to the claim recognized by

the receiver or allowed by the liquidation court.

(aa) The term winding up period refers to the period

provided in Section 16 of this Act.

DEPOSIT INSURANCE COVERAGE

SECTION 6. The deposit liabilities of any bank which is

engaged in the business of receiving deposits as herein

defined on the effective date of this Act, or which

thereafter

may engage in the business of receiving

deposits, shall be insured with the Corporation.

Whenever a bank is determined by the Bangko Sentral

ng Pilipinas to be capital deficient, the Corporation may

conduct an insurance risk evaluation on the bank to

enable it to assess the risks to the DIF. Such evaluation

may include the determination of: (i) the fair market value

of the assets and liabilities of a bank; or (ii) the risk

classification of a bank; or (iii) possible resolution modes

under Section 11 of this Act, subject to such terms and

conditions as the PDIC Board may prescribe.

ASSESSMENT OF MEMBER BANKS

SECTION 7. (a) The assessment rate shall be determined

by the Board of Directors: Provided, That the assessment

rate shall not exceed one-fifth (1/5) of one per centum (1%)

per annum. The semi-annual assessment for each insured

bank shall be in the amount of the product of one-half

(1/2) the assessment rate multiplied by the assessment

base but in no case shall it be less than Five thousand

pesos (P5,000.00). The assessment base shall be the

amount of the liability of the bank for deposits as defined

under subsection (g) of Section 5 without any deduction

for indebtedness of depositors.

In addition, the Board of Directors may establish a

risk-based assessment system and impose a risk-based

assessment rate which shall not exceed two-fifth (2/5) of

one per centum (1%) per annum multiplied by the

assessment base.

The semi-annual assessment base for one semi-annual

period shall be the average of the assessment base of the

bank as of the close of business on March thirty-one and

June thirty and the semi-annual assessment base for the

other semi-annual period shall be the average of the

assessment base of the bank as of the close of business

on September thirty and December thirty-one: Provided,

That when any of said days is a nonbusiness day or legal

holiday,

either

national

or

provincial,

the

preceding

business day shall be used. The certified statements

required

to

be

filed

with

the

Corporation

under

subsections (b) and (c) of this section shall be in such

form and set forth such supporting information as the

Board

of

Directors

shall

prescribe.

The

assessment

payments

required

from

the

insured

banks

under

subsections (b) and (c) of this section shall be made in

such manner and at such time or times as the Board of

Directors shall prescribe.

(b) On or before the 31st of July of each year, each insured

bank shall file with the Corporation a certified statement

© Compiled by RGL

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