Section 7Sec./Art. 7

Section 4 of the same Act is accordingly renumbered as Section 5, and is hereby amended to read as follows:

DEFINITION OF TERMS

SEC. 5. As used in this Act

(a) The term asset refers to movable, immovable, tangible, or intangible resources or properties over which a bank has an established or equitable interest, including the proceeds of the sale of its bank and branch licenses subject to the approval of the Bangko Sentral ng Pilipinas.

(b) The term asset distribution plan refers to the plan of distribution of the assets of a closed bank to its creditors, based on its estimated realizable value as of a certain cut-off date, prepared in accordance with the Rules on Concurrence and Preference of Credits under the Civil Code or other laws.

An asset distribution plan may be partial when it pertains to the distribution of a portion or some of the assets of the closed bank, or final when it pertains to the distribution of all the assets of the closed bank.

(c) The term Board of Directors means the Board of Directors of the Corporation.

(d) The term 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, stock savings and loan associations and branches and agencies in the Philippines of foreign banks and all other corporations authorized to perform banking functions in the Philippines.

(e) The term closed bank refers to a bank placed under liquidation by the Monetary Board.

(f) The term creditor refers to any individual or entity with a valid claim against the assets of the closed bank.

(g) The term 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, evidenced by a passbook, certificate of deposit, or other evidence of deposit issued in accordance with Bangko Sentral ng Pilipinas rules and regulations and other applicable laws, together with such other obligations of a bank, which, consistent with banking usage and practices, the Board of Directors shall determine and 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 this Act or included as part of the total deposits or of insured deposit: Provided, further, That subject to the approval of the Board of Directors, 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 obligations payable only at such branch.

The Corporation shall not pay deposit insurance for the following accounts or transactions:

(1) Investment products such as bonds and securities, trust accounts, and other similar instruments;

(2) Deposit accounts or transactions which are fictitious or fraudulent as determined by the Corporation;

(3) Deposit accounts or transactions constituting, and/or emanating from, unsafe and unsound banking practice/s, as determined by the Corporation, in consultation with the Bangko Sentral ng Pilipinas, after due notice and hearing, and publication of a directive to cease and desist issued by the Corporation against such deposit accounts, transactions or practices; and

(4) Deposits that are determined to be the proceeds of an unlawful activity as defined under Republic Act No. 9160, as amended.

The actions of the Corporation taken under Section 5(g) shall be final and executory, and may only be restrained or set aside by the Court of Appeals, upon appropriate petition for certiorari on the ground that the action was taken in excess of jurisdiction or with such grave abuse of discretion as to amount to a lack or excess of jurisdiction. The petition for certiorari may only be filed within thirty (30) days from notice of denial of claim for deposit insurance.

(h) The term disputed claim refers to a claim or suit against the assets of a closed bank, or for specific performance, or breach of contract, or damages, of whatever nature or character, whether for money or otherwise, liquidated or unliquidated, fixed or contingent, matured or current, denied by the receiver.

(i) The term insured bank means any bank the deposits of which are insured in accordance with the provisions of this Act.

(j) The term insured deposit means the amount due to any bonafide depositor for legitimate deposits in an insured bank as of the date of closure but not to exceed Five hundred thousand pesos (P500,000.00). Such amount shall be determined according to such regulations as the Board of Directors may prescribe. In determining such amount due to any depositor, there shall be added together all deposits in the bank maintained in the same right and capacity for his or her benefit either in his or her own name or in the name of others.

A joint account regardless of whether the conjunction and, or, and/or is used, shall be insured separately from any individually-owned deposit account: Provided, That (1) if the account is held jointly by two or more natural persons, or by two or more juridical persons or entities, the maximum insured deposit shall be divided into as many equal shares as there are individuals, juridical persons or entities, unless a different sharing is stipulated in the document of deposit, and (2) if the account is held by a juridical person or entity jointly with one or more natural persons, the maximum insured deposit shall be presumed to belong entirely to such juridical person or entity: Provided, further, That the aggregate of the interest of each co-owner over several joint accounts, whether owned by the same or different combinations of individuals, juridical persons or entities, shall likewise be subject to the maximum insured deposit of Five hundred thousand pesos (P500,000.00): Provided, furthermore, That the provisions of any law to the contrary notwithstanding, no owner/holder of any passbook, certificate of deposit, or other evidence of deposit shall be recognized as a depositor entitled to the rights provided in this Act unless the passbook, certificate of deposit, or other evidence of deposit is determined by the Corporation to be an authentic document or record of 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.

(1) 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 banks 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 banks 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.