PHILIPPINE DEPOSIT INSURANCE CORPORATION

AN ACT ESTABLISHING THE PHILIPPINE DEPOSIT INSURANCE CORPORATION,

DEFINING ITS POWERS AND DUTIES AND FOR OTHER PURPOSES. (Rep. Act No.
3591)1

THE CREATION OF THE PHILIPPINE DEPOSIT INSURANCE CORPORATION

SECTION 1. There is hereby created a Philippine Deposit Insurance Corporation hereinafter

referred to as the "Corporation" which shall insure, as herein provided, the deposits of all banks
which are entitled to the benefits of insurance under this Act, and which shall have the powers
hereinafter granted.

BOARD OF DIRECTORS: COMPOSITION AND AUTHORITY

SEC. 2. The powers and functions of the Corporation shall be vested in and exercised by a Board
of Directors which shall be composed of five (5) members as follows:
(a) The Secretary of Finance who shall be the ex officio Chairman of the Board without
compensation.
(b) The Governor of the Central Bank, who shall be ex officio member of the Board without
compensation.
(c) The President of the Corporation, who shall be appointed by the President of the
Philippines from either the Government or private sector to serve on a full-time basis for
a term of six (6) years. The President shall also serve as vice chairman of the Board.
(d) Two (2) members from the private sector, to be appointed for a term of six (6) years
without reappointment by the President of the Philippines:
Provided,
That of those first appointed, the first appointee shall serve for a period of two (2) years.

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As amended by RA No. 6037, PD Nos. 120, 653, 1094, EO No. 890, PD Nos. 1897,1985, and RA No. 7400.

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 No person shall be appointed as member of the Board unless he be of good moral
character and of unquestionable integrity and responsibility, and who is of recognized
competence in economics, banking and finance, law, management administration or insurance,
and shall be at least thirty-five (35) years of age. For the duration of their tenure or term in office
and for a period of one year thereafter, the appointive members of the Board shall be disqualified
from holding any office, position or employment in any insured bank.
Whenever the Chairman of the Board is unable to attend a meeting of the Board, or in the
event of a vacancy in the office of the Secretary of Finance, the President of the Corporation
shall act as chairman.
The presence of three (3) members shall constitute a quorum, and all decisions shall
require a vote of a majority of the members present, there being a quorum.
The members of the Board of Directors from the private sector, except the President shall
receive a per diem for every board meeting attended, the amount of which shall be Five hundred
pesos (P500.00) per meeting but not to exceed the sum of Two thousand pesos (P2,000.00) for
every single month.
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, establish the rank, fix the remuneration and remove any officer or employee of
the Corporation for cause, subject to the Civil Service and pertinent compensation laws;
and
4. To authorize such expenditures by the Corporation as are in the interest of the effective
administration and operation of the Corporation. (As amended by RA No. 7400, approved
April 13, 1992.)

PRESIDENT OF THE CORPORATION COMPENSATION, POWERS, AND DUTIES

SEC. 2-A. The President of the Corporation shall be the Chief Executive thereof and his salary
shall be fixed by the President of the Philippines at a sum commensurate to the importance and

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responsibility attached to the position. The sum total of the salary of the President and the
allowances and other emoluments which the Board of Directors may grant him shall be the
ceiling for fixing the salary, allowances and other emoluments of all other personnel in the
Corporation.
The powers and duties of the President of the Corporation are:
(a) To prepare the agenda for the meeting of the Board and to submit for the consideration of
the Board the policies and measures which he believes to be necessary to carry out the
purposes and provisions of this Act;
(b) To execute and administer the policies and measures approved by the Board;
(c) To direct and supervise the operations and internal administration of the Corporation in
accordance with the policies established by the Board. The President may delegate certain
of his administrative responsibilities to other officers of the Corporation, subject to the
rules and regulations of the Board;
(d) To represent the Corporation, upon prior authority of the Board, in all dealings with other
offices, agencies and instrumentalities of the Government and with all other persons or
entities, public or private, whether domestic, foreign or international;
(e) To authorize, with his signature, upon prior authority of the Board, contracts entered into
by the Corporation, notes and securities issued by the Corporation, and the annual
reports, balance sheets, profits and loss statements, correspondence and other documents
of the Corporation. The signature of the President may be in facsimile whenever
appropriate;
(f) To represent the Corporation, either personally or through counsel, in all legal proceedings
or actions;
(g) To delegate, with the prior approval of the Board of Directors, his power to represent the
Corporation, as provided in subsections (d) and (f) of this Section, to other officers of the
Corporation; and
(h) To exercise such other powers as may be vested in him by the Board.

The President shall be assisted by a Vice President and other officials whose appointment
and removal for cause shall be approved and whose salary shall be fixed by the Board of
Directors upon recommendation of the President of the Corporation. During the absence or

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temporary incapacity of the President, or in case of vacancy or permanent incapacity and
pending the appointment of a new President of the Corporation by the President of the
Philippines, the Vice President shall act as President and discharge the duties and responsibilities
thereof. (As amended by RA No. 7400.)

DEFINITION OF TERMS

SEC. 3. As used in this Act –

(a) The term "Board of Directors" means the Board of Directors of the Corporation.
(b) The terms "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. (RA No. 7400)
(c) The term "receiver" includes a receiver, commission, person or other agency charged by
law with the duty to take charge of the assets and liabilities of a bank which has been
forbidden from doing business in the Philippines, as well as the duty to gather, preserve
and administer such assets and liabilities for the benefit of the depositors and creditors of
said bank, and to continue into liquidation whenever authorized under this Act or other
laws, and to dispose of the assets and to wind up the affairs of such bank. (RA No. 7400)
(d) The term "insured bank" means any bank the deposit of which are insured in accordance
with the provisions of this Act.
(e) The term "non-insured bank" means any bank the deposit of which are not insured.
(f) 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 or which is evidenced by
passbook, check and/or certificate of deposit, printed or issued in accordance with Central
Bank 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

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 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. (RA No. 7400)
(g) The term "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 One
hundred thousand pesos (P100,000.00). Such net amount shall be determined according
to such regulations as the Board of Directors may prescribe and in determining such
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 either in his own name
or in the name of others:
Provided,
That, the provisions of any law to the contrary notwithstanding on owner/holder of any
negotiable certificate of deposit shall be recognized as a depositor entitled to the rights
provided in this Act unless his name is registered as owner/holder thereof in the books of
the issuing bank. (RA No. 7400)
(h) 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.
(i) The term "trust funds" means funds held by an insured bank in a fiduciary capacity and
include without being limited to, funds held as trustee, executor, administrator, guardian,
or agent.

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 DEPOSIT INSURANCE COVERAGE

SEC. 4. The deposit liabilities of any bank or banking institution, 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.
(As amended by RA No. 6037)

SEC. 5. (Repealed by Section 4 of Republic Act No. 6037, approved August 4, 1969)

ASSESSMENT OF MEMBER BANKS

SEC. 6. (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
semiannual 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 the
amount of Two hundred fifty pesos (P250.00). The assessment base shall be the amount of the
liability of the bank for deposits, according to the definition of the term "deposit" in and pursuant
to subsection (f) of Section 3 without any deduction for indebtedness of depositors.
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 semiannual 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 non-business day or legal holiday; either national or provincial,
the preceding business day shall be used. The certified statements required to be filed with the
Corporations 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

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such manner and at such time or times as the Board of Directors shall prescribe, provided the
time or times so prescribed shall not be later than sixty (60) days after filing the certified
statement setting forth the amount of assessment. (RA No. 7400)
(b) On or before the 31st of July of each year, each insured bank shall file with the
Corporation a certified statement showing for the six months ending on the preceding
June thirty the amount of the assessment base and the amount of the semi-annual
assessment due to the Corporation for the period ending on the following December
thirty-one, determined in accordance with subsection (a) of this section, which shall
contain or be verified by a written declaration that it is made under the penalties of
perjury. Each insured bank shall pay to the Corporation the amount of the semi-annual
assessment it is required to certify. On or before the 31st day of January of each year,
each insured bank shall file with the Corporation a similar certified statement for the six
months ending on the preceding December thirty-one and shall pay to the Corporation the
amount of the semi-annual assessment for the period ending in the following June thirty
which it is required to certify. (As amended by PD No. 1940)
(c) Each bank which becomes an insured bank shall not be required to file any certified
statement or pay any assessment for the semi-annual period in which it becomes an
insured bank. On the expiration of such period, each such bank shall comply with the
provisions of subsection (b) of this section except that the semiannual assessment base
for its first certified statement shall be the assessment base of the bank as of the close of
business on the preceding June thirty or December thirty-one, whichever is applicable,
determined in accordance with subsection (a) of this section. If such bank has assumed
the liabilities for deposits of another bank or banks, it shall include such liabilities in its
assessment base. The first certified statement shall show as the amount of the first semi-
annual assessment due to the Corporation, an amount equal to the product of one-half of
the annual assessment rate multiplied by such assessment base.
(d) As of December thirty-one nineteen hundred and sixty-four, and as of December thirty-
one of each calendar year thereafter, the Corporation shall transfer 40 per centum of its
net assessment income to its capital account and the balance of the net assessment income
shall be credited pro rata to the insured banks based upon the assessment of each bank
becoming due during said calendar year. Each year such credit shall be applied by the

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 Corporation toward the payment of the total assessment becoming due for the semi-
annual assessment period beginning the next ensuing July 1 and any excess credit shall be
applied upon the assessment next becoming due. The term "net assessment income" as
used therein means the total assessments which become due during the calendar year less
(1) the operating costs and expenses of the Corporation for the calendar year; (2)
additions to reserve to provide for insurance losses during the calendar year, except that
any adjustments to reserve which result in reduction of such reserve shall be added; and
(3) the insurance losses sustained in said calendar year plus losses from deductions
exceed in amount the total assessments which become due during the calendar year, the
amount of such excess shall be restored by deduction from total assessments becoming
due in subsequent years.
(e) The Corporation (1) may refund to an insured bank any payment of assessment in excess
of the amount due to the Corporation or (2) may credit such excess toward the payment
of the assessment next becoming due from such bank and upon succeeding assessments
until the credit is exhausted.
(f) Any insured bank which fails to file any certified statement required to be filed by it in
connection with determining the amount of any assessment payable by the bank to the
Corporation may be compelled to file such statement by mandatory injunction or other
appropriate remedy in a suit brought for such purpose by the Corporation against the
bank and any officer or officers thereof in any court of the Philippines of competent
jurisdiction in which such bank is located.
(g) The Corporation, in a suit brought in any court of competent jurisdiction, shall be entitled
to recover from any insured bank the amount of any unpaid assessment lawfully payable
by such insured bank to the Corporation, whether or not such bank shall have filed any
such statement and whether or not suit shall have been brought to compel the bank to file
any such statement. No action or proceeding shall be brought for recovery of any
assessment due to the Corporation or for the recovering of any amount paid to the
Corporation in excess of the amount due to it, unless such action or proceeding shall have
been brought within five years after the right accrued for which the claim is made, except
where the insured bank has made or filed with the Corporation a false or fraudulent
certified statement with the intent to evade, in whole or in part, the payment of

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 assessment, in which case the claim shall not have been deemed to have accrued until the
discovery by the Corporation that the certified statement is false or fraudulent.
(h) Should any insured bank fail or refuse to pay any assessment required to be paid by such
bank under any provision of this Act, and should the bank not correct such failure or
refusal within thirty (30) days after written notice has been given by the Corporation to
an officer of the bank citing this subsection, and stating that the bank has failed or refused
to pay as required by law the insured status of such bank shall be terminated by the Board
of Directors:
Provided,
That, after the lapse of thirty (30) days from the date when the written notice has been
sent by registered mail, whether or not such notice has been actually received by the
bank, the Corporation shall terminate the insured status of the bank. The bank shall give
written notice of such termination to each of the depositors at his last address of record on
the books of the bank and the Corporation shall publish the notice of the termination of
insured status of the bank. After the termination of the insured status, the insured deposits
of each depositor in the bank on the date of such termination, less all subsequent
withdrawals from any deposits of such depositor, shall continue to be insured for a period
of ninety (90) days. No additions to any such deposits and no new deposits in such bank
after the date of such termination shall be insured by the Corporation, and the bank shall
not advertise or hold itself out as having insured deposits unless the same connection
shall also state with equal prominence that such additions to deposits and new deposits
made after such date are not so insured. In the event that such bank shall be closed on
account of insolvency within the period of ninety (90) days, the Corporation shall have
the same powers and rights with respect to such bank as in the case of an insured bank.
(RA No. 7400)
(i) (Deleted by Sec. 3, PD No. 1940.)

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 SANCTIONS AGAINST UNSAFE AND UNSOUND BANKING PRACTICES

SEC. 7.
(a) Whenever upon examination by the Corporation into the condition of any insured bank, it
shall be disclosed that an insured bank or its directors or agents have committed, are
committing or about to commit unsafe or unsound practices in conducting the business of
the bank, or have violated, are violating or about to violate any provisions of any law or
regulation to which the insured bank is subject, the Board of Directors shall submit the
report of the examination to the monetary board to secure corrective action thereon. If no
such corrective action is taken by the Monetary Board within sixty (60) days from the
submission of the report; the Board of Directors shall, motu proprio, institute corrective
action which it deems necessary. The Board of Directors may issue a cease and desist
order and require the bank or its directors of agents concerned to correct the practices or
violations within sixty (60) days. However, if the practice or violation is likely to cause
insolvency or substantial dissipation of assets or earnings of the bank, or is likely to
seriously weaken the condition of the bank or otherwise seriously prejudice the interests
of its depositors and the Corporation, the period to take corrective action shall not be
more than fifteen (15) days. The order may also include the imposition of fines provided
in Section 16 (f) hereof. The Board of Directors shall duly inform the Monetary Board of
the Central Bank of the Philippines of action it has taken with respect to such practices or
violations. If the bank violates the cease and desist order or fails to correct the practices
or violations as required within the period prescribed herein, the Corporation shall
terminate the insured status of the bank the consequences of the termination of insured
status of the bank on the Corporation, the bank and the depositors and their deposits shall
be governed by Section 6 (h) hereof.
(b) The actions and proceedings provided in the preceding subsection may be undertaken by
the Corporation if, in its opinion, an insured bank or its directors or agents have violated,
are violating or about to violate any provision of this Act or any order, rule or instruction
issued by the Corporation or any written condition imposed by the Corporation in
connection with any transaction with or grant by the Corporation. (RA No. 7400)

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 SANCTIONS AGAINST UNSAFE AND UNSOUND BANKING PRACTICES

To implement the foregoing Sec. 7(a) (b), the Corporation has established procedures for
the guidance of all member insured-banks or its directors or agents, which was approved by the
Board of Directors, in its Resolution No. 94-11-118 dated Nov. 25, 1994.

Definition of Terms

1. "The Corporation" shall refer to the Philippine Deposit Insurance Corporation (PDIC).
2. "Cease and Desist Order (CDO)" shall refer to the Order issued by PDIC, thru its Board of
Directors, to a member insured bank, or its directors or agents to correct (a) the unsafe or
unsound practices in conducting the business of the bank, (b) violations of any law or
regulation to which the insured bank is subject, or (c) violations of the provision of RA
No. 3591, as amended or any order, rule or instruction issued by the Corporation or any
written condition imposed by the Corporation in connection with any transaction with or
grant by the Corporation.
The object of the CDO is to protect depositors and PDIC against existing or
potential risk exposure arising from said practices or violations.
3. "Unsafe or Unsound Practices" shall refer to any action or lack of action which is contrary
to generally accepted standards of prudent operation, the possible consequences of which,
if continued, would result in abnormal risk of loss or damage to a bank, depositors and its
shareholders or even the depletion of the Insurance Fund administered by PDIC.
4. “Responsible Bank Directors/Officers/Employees” shall refer to any bank
officer/employee who shall be held accountable or answerable for any conduct or
obligation in connection with bank transactions.

Procedures

1. When the PDIC's examination of a bank discloses that the bank or its directors or agents
(a) have committed, are committing about to commit unsafe or unsound practices in

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 conducting the business of the bask, (b) have violated, are violating or about to violate
any provisions of any law or regulation to which the bank is subject, or (c) if in the
opinion of PDIC, the bank or its directors or agents have violated, are violating or about
to violate any provision of the PDIC Charter or any order, rule or instruction issued by
the PDIC or any written condition imposed by PDIC in connection with say transaction
with or grant by PDIC, the bank or its directors or agents shall be given a reasonable
period not exceeding 60 days within which to submit an action plan acceptable to PDIC
to correct the practices. PDIC shall monitor the bank's compliance to its Action Plan in
close coordination with Bangko Sentral ng Pilipinas (BSP).
2. When the bank fails to submit such action plan within the prescribed period, the
examination findings shall be referred to the PDIC Board of Directors for appropriate
action.
3. The PDIC Board shall in turn submit the report of the examination to the Monetary Board
to secure corrective action and the Monetary Board shall undertake any and all necessary
corrective action within sixty (60) days from submission of the report.
4. If no such corrective action is taken by the Monetary Board within sixty (60) days from the
submission of the report or despite the MB's directive, no corrective action is taken by the
bank or its directors or agents, the PDIC Board shall, motu proprio, institute corrective
action which it deems necessary. The PDIC Board of Directors may issue a cease and
desist order and require the bank or its directors or agents concerned to correct practices
or violations within sixty (60) days.
PDIC shall enlist BSP's comments on a proposed CDO within 48 hours before it
is sent. Copy of the CDO transmitted to the bank shall be simultaneously furnished BSP.
5. The CDO will require the insured bank or its directors or agents to cease and desist from
undertaking specific banking activities until defined affirmative actions are taken by the
insured bank or its directors or agents concerned to correct practices or violations. Such
affirmative actions must be undertaken within sixty (60) days from receipt of such CDO
by a responsible bank director, officer or employee. However, in the discretion of the
PDIC Board of Directors, the practice or violation is likely to cause insolvency or
substantial dissipation of assets or earnings of the bank, or is likely to seriously weaken
the condition of the bank or otherwise seriously prejudice the interests of its depositors

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 and the Corporation, the sixty (60) days period to take corrective action may be shortened
to not less than fifteen (15) days. In this case, the bank will also be ordered to cease and
desist from accepting deposits until the required affirmative actions are undertaken by the
bank or by its stockholders.
6. The CDO shall clearly specify the following.
a. Unsafe or unsound practice or condition being sought to be corrected;
b. The person or persons or the banking units or offices to which the CDO is being
directed;
c. The currencies and amounts involved, when applicable;
d. The time periods within which the specific actions or corrections should be taken; and
e. Verifiable, relevant action or actions being required.
7. A re-examination of the bank shall be undertaken by the PDIC after the end of the
corrective period to verify the bank's compliance with the requirements of the CDO. Prior
to the conduct of the re-examination, PDIC shall consult with BSP for the latest
information/developments on the bank. If the PDIC Board determines, based on the
examination report, and the consultations with BSP that there has been full compliance
with the CDO, the Board may order the lifting of the CDO.
8. PDIC may allow an amendment of the CDO in the event PDIC determines that the insured
bank has substantially complied with the terms and conditions of the CDO. The Bank
may be deemed to have substantially complied with the CDO if all of the following
conditions exist:
a. Policy, management, and procedural changes have been adopted and implemented,
which have clearly arrested or reversed the bank's unsafe or unsound condition, and
on the basis of which, the bank's condition and operations can be reasonably
anticipated to improve, and key statutory prudential ratios are expected to be met in
the current accounting period:
b. In case of bank insolvency, sufficient capital has been infused, to meet the BSP's
minimum capitalization requirements; and
c. The bank has complied with all the reportorial requirements of the CDO.
9. If some unsafe or unsound practices and conditions cannot reasonably be fully corrected
within the prescribed period of the CDO, PDIC may also accept a Deed of Undertaking

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 (DOU) from the bank's Board of Directors as substantial compliance if conditions 8b and
8c are met. The (DOU) must specify the remaining corrective actions which the bank will
undertake within a time frame acceptable in PDIC.
10. Sanctions and Penalties for Noncompliance with the CDO.
a. Fines –
(1) For any willful violations or failure to correct the practices or violations, as required
within the prescribed period of the CDO, PDIC shall avail of the following
remedies allowed under RA 3951, as amended.
(1.1) PDIC shall fine the directors, officers or employees responsible an amount from
P500.00 to P1,000.00 a day for each type of violation, the imposition of which shall
be final and executory until reversed, modified or lifted by the PDIC Board of
Directors; and
(1.2) PDIC shall file the appropriate action in Court against the directors, officers or
employees responsible for the violations.
(2) Any of the following shall constitute willful violation of the CDO.
(2.1) Despite the CDO by PDIC, and after PDIC has given two (2) written warnings,
the bank continues to solicit and accept deposits notwithstanding its insolvent
position, prejudicing the interest of the depositors and the Deposit Insurance Fund;
(2.2) After two written warnings from PDIC on the unsafe or unsound practices sought
to be corrected, the bank continues to violate any provision of banking law or
regulation which causes substantial dissipation of the bank's assets and earnings,
seriously weakens the bank's condition and prejudices the interest of the depositors
and the Corporation; and
(2.3) Refusal or failure to comply with the reportorial requirements of the CDO or the
submission of false or patently misleading information despite three warnings from
PDIC in accordance with the Regulatory Issuance No. 93-1 dated November 9,
1993.

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 b. Termination of Insured Status –
(1) Willful violation of the CDO may also be a ground for the termination of the
insured status of banks. This termination, however, may be resorted to only after the
above-cited less drastic measures shall have been availed of by PDIC regarding the
implementation of CDO.
(2) Any request for reinstatement of a bank's insured status may be considered only
after the bank has compiled with all the requirements of the CDO and other
preconditions as may be imposed by the PDIC Board.
Please be guided accordingly.

(Sgd.) Ernest Leung

President

POWERS AS A CORPORATE BODY

SEC. 8. The Corporation as a corporate body shall have the powers:

First- To adopt and use a corporate seal;
Second - To have succession until dissolved by acs Act of Congress;
Third - To make contracts;
Fourth - To sue and be sued, complain and defend, in any court of law in the Philippines.
All suits of a civil nature to which the Corporation shall be a part shall be deemed to
arise under the laws of the Philippines. No attachment or execution shall be issued
against the Corporation or its property before final judgment in any suit, action or
proceeding in any court. The Board of Directors shall designate an agent upon
whom service of process may be made in any province or city or jurisdiction in
which the insured bank is located;
Fifth - To appoint by its Board of Directors such officers and employees as are not
otherwise provided for in this Act, to define their duties, fix their compensation,
require bonds of them and fix penalty thereof and to dismiss such officers and
employees for cause;

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Sixth – To prescribe, by its Board of Directors, bylaws not inconsistent with law,
regulating the manner in which its general business may be conducted, and the
privileges granted to it by law may be exercised and enjoyed;
Seventh - To exercise, by its Board of Directors, or duly authorized officers or agents, all
powers specifically granted by the provisions of this Act, and such incidental
powers as shall be necessary to carry on the powers so granted;
Eighth – To conduct independent examinations of and to require information and reports
from banks, as provided in this Act, whenever deemed necessary by the Board of
Directors:
Provided,
That to the extent practicable, said examinations shall maximize the efficient use of
available relevant reports, information and findings, specifically from the Central
Bank. The Board of Directors shall prescribe such regulations as may be necessary
to ensure the special nature and reasonable exercise of this power. (RA No. 7400)
Ninth – To act as receiver; and
Tenth – To prescribe by its Board of Directors such rules and regulations as it may deem
necessary to carry out the provisions of this Act. (As amended by RA No. 6037)
Eleventh - The Corporation may establish its own provident fund which shall consist of
contributions made both by the Corporation and by its officers and employees to a
common fund for the payment of benefits to such officers or employees or their
heirs. The Board of Directors shall prepare and issue rules and regulations as it may
deem necessary to make effective the establishment and operation of the fund. (As
added by Sec. 4, PD No.1940)
Twelfth - To compromise, condone or release, in whole or in part, any of claim or settled
liability to the Corporation, regardless of the amount involved, under such terms
and conditions as may be imposed by the Board of Directors to protect the interest
of Corporation. (Added by RA No. 7400)

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 POWERS AND RESPONSIBILITIES AND PROHIBITIONS

SEC. 9.
(a) The Board of Directors shall administer the affairs of the Corporation fairly and
impartially and without discrimination. The Corporation shall be entitled to the free use
of Philippine mails in the same manner as the other offices of the national government.
(b) The Board of Directors shall appoint examiners who shall have power, on behalf of the
Corporation to examine any insured bank. Each such examiner shall have the power to
make a thorough examination of all the affairs of the bank and in doing so, he shall have
the power to administer oaths, to examine and take and preserve the testimony of any of
the officers and agents thereof, and, to compel the presentation of books, documents,
papers or records necessary in his judgment to ascertain the facts relative to the condition
of the bank; and shall make a full and detailed report of the condition of the bank to the
Corporation. The Board of Directors in like manner shall appoint claim agents who shall
have the power to investigate and examine all claims for insured deposits and transferred
deposits. Each claim agent shall have the power to administer oaths and to examine under
oath and take and preserve testimony of any person relating to such claim. (RA No. 7400)
(c) Each insured bank shall make the Corporation reports of condition in such form and at
such times as the Board of Directors may require such reports to be published in such
manner, not inconsistent with any applicable law, as it may direct. Every such bank which
fails to make or publish any such report within such time, not less than five days, as the
Board of Directors may require, shall be subject to a penalty of not more than P100 for
each day of such failure recoverable by the Corporation for its use.
(d) The Corporation shall have access to reports of examination made by, and reports of
condition made to the Central Bank of the Philippines or its appropriate supervising
departments, and the Central Bank of the Philippines shall also have access to reports of
examination made by, and reports of condition made to the Corporation:
Provided,
That the provisions of any law to the contrary notwithstanding, the Corporation shall
likewise have access to reports, findings and any other information derived from any

17
 special or general examination or inquiry conducted by the Central Bank in respect to
bank fraud or serious irregularity in an insured bank:
Provided,
That, the Corporation shall use such reports and findings under similar terms and
conditions prescribed by applicable laws on the Central Bank. (RA No. 7400)
(e) Personnel of the Corporation are hereby prohibited from:
(1) being an officer, director, consultant, employee or stockholder, directly or indirectly,
of any bank or banking institution except as otherwise provided in this Act;
(2) receiving any gift or thing of value from any officer, director or employee thereof;
(3) revealing in any manner, except under order of court or authorized herein in such
condition or business of any such institution. The prohibition shall not be held to
apply to the giving of information to the Board of Directors or to any person
authorized by either of them in writing to receive such information.

Notwithstanding the provisions of this Section and Section 2, members of the Board of
Directors and other personnel of the Corporation may become directors and officers of any bank
and banking institution and of any entity related to such institution in connection with financial
assistance extended by the Corporation to such institution and when in the opinion of the Board
it is appropriate to make such a designation to protect the interest of the Corporation.
Borrowing from any bank or banking institution by examiners and other personnel of the
examination departments of the corporation shall be prohibited only with respect to the particular
institution in which they are assigned, or are conducting an examination. Personnel of other
departments, offices or units of the Corporation shall likewise be prohibited from borrowing
from any bank or banking institution during the period of time that a transaction of such
institution with the corporation is being evaluated, processed or acted upon by such personnel:
Provided, however,
That the Board may, at its discretion, indicate the position levels or functional groups to which
the prohibition is applicable.
Borrowing by all full-time personnel of the corporation from any bank or banking
institution shall be secured and disclosed to the Board, and shall be subject to such further rules
and regulations as the Board may prescribe. (RA No. 7400)

18
SEC. 9-A. The provisions of other laws, general or special, to the contrary notwithstanding,
whenever it shall be appropriate for the Monetary Board of the Central Bank of the Philippines to
appoint a receiver of any banking institution pursuant too existing laws, the Monetary Board
shall give prior notice to and appoint the Corporation as receiver.
In addition to the powers of a receiver pursuant to existing laws, the Corporation is
empowered to bring suits to enforce liabilities to or recoveries of the bank. Further, the
Corporation may, upon its own responsibility, in the discretion of its Board of Directors and upon
justifiable reasons, appoint and hire persons or entities of recognized competence in banking or
finance as its deputies and assistants.
The Corporation, its directors, officers and employees shall not be subject to any action,
claim or demand for or in connection with any act done or omitted to be done by them in good
faith in the exercise of their functions or in connection with the exercise of the powers under this
Section and Sections 9-B, 9-C, and 12(c) of this Act. (Added by RA No. 7400)

SEC. 9-B. Before any distribution of the assets of the closed bank in accordance with the
preferences established by law, the Corporation shall periodically charge against said assets such
reasonable receivership expenses and subject to approval by the proper court, such reasonable
liquidation expenses, it has incurred as part of the cost of receivership liquidation proceedings
and collect payment therefor from available assets. (id.)

SEC. 9-C. Cases not provided in Section 9-A above including the filing of cases to modify, set
aside or restrain any action of the Corporation therein shall be governed by Section 29 of RA
265,2 as amended. (id.)

2
Now Sec. 36, Rep. Act No. 7653.

19
 PERMANENT INSURANCE FUND

SEC. 10.
(a) A permanent insurance fund in the amount of P5,000,000 to be appropriated from the
General Fund, is hereby created to be used by the Corporation to carry out the purposes
of this Act.
(a-1) The permanent insurance fund hereinabove created is hereby increased to Three billion
pesos (P3,000,000,000.00) and for this purpose, such sum as may be necessary is hereby
appropriated from the General Fund:
Provided,
That the maximum amount of the insured deposit of any depositor is hereby increased to
One hundred thousand pesos (P100,000.00). (RA No. 7400)

PAYMENT OF INSURED DEPOSIT

(b) Fox purposes of this Act an insured bank shall be deemed to have been closed on account
of insolvency when ordered closed by the Monetary Board of the Central Bank of the
Philippines pursuant to Section 29 of RA 265, 3 as amended. (As amended by PD No.
1940.)
(c) Whenever an insured bank shall have been closed on account of insolvency payment of
the insured deposits in such bank shall be made by the Corporation as soon as possible
either (1) by cash or (2) making available to each depositor a transferred deposit in
another insured bank in an amount equal to the insured deposit of such depositor:
Provided, however,
That the Corporation, in its discretion may require proof of claims to be filed before
paying the insured deposits, and that in any case where the Corporation is not satisfied as
to the viability of a claim for an insured deposit, it may require the final determination of
a court of competent jurisdiction before paying such claim:
Provided, further,

3
Now, Sec. 36, Rep. Act No. 7653.

20
 That failure to settle the claim within six (6) months from the date of filing of the claim
for insured deposit shall, upon conviction, subject the directors, officers or employees of
the corporation responsible for the delay, to imprisonment from six (6) months to one (1)
year:
Provided, however,
That the period shall not apply if the validity of the claim requires the resolution of issues
of facts and or, law by another office, body or agency including the case mentioned in the
first proviso or by the Corporation together with such other office, body or agency. (RA
No. 7400)
(d) The Corporation, upon payment of any depositor as provided for in subsection (c) of this
Section, shall be subrogated to all rights of the depositor against the closed bank to the
extent of such payment. Such subrogation shall include the right on the part of the
Corporation to receive the same dividends and payments from the proceeds of the assets
of such closed bank and recoveries on account of stockholders' liability as would have
been payable to the depositor on a claim for the insured deposits but, such depositor shall
retain his claim for any uninsured portion of his deposit. All payments by the corporation
of insured deposits in closed banks partake of the nature of public funds, and as such,
must be considered a preferred credit similar to taxes due to the National Government in
the order of preference under Article 2244 of the New Civil Code:
Provided, further,
That this preference shall be likewise effective upon liquidation proceedings already
commenced and pending as of the approval of this Act, where no distribution of assets
has been made. (RA No. 7400)

SEC. 11.
(a) Payment of an insured deposit to any person by the Corporation shall discharge the
Corporation, and payment of a transferred deposit to any person by the new bank or by an
insured bank in which a transferred deposit has been made available shall discharge the
Corporation and such new bank or other insured bank, to the same extent that payment to
such person by the closed bank would have discharged it from liability for the insured
deposit.

21
 (b) Except as otherwise prescribed by the Board of Directors, neither the Corporation nor
such other insured bank shall be required to recognize as the owner of any portion of a
deposit appearing on the records of the closed bank under a name other than that of the
claimant, any person whose name or interest as such owner is not disclosed on the
records of such closed bank as part owner of said deposit, if such recognition would
increase the aggregate amount of the insured deposits in such closed bank.
(c) The Corporation may withhold payment of such portion of the insured deposit of any
depositor in a closed bank as may be required to provide for the payment of any liability
of such depositor as a stockholder of the closed bank, or of any liability of such depositor
to the closed bank or its receiver, which is not offset against a claim due from such bank,
pending the determination and payment of such liability by such depositor or any other
person liable therefor.
(d) If, after the Corporation shall have given at least three (3) months notice to the depositor
by mailing a copy thereof to his last known address appearing on the records of the
closed bank, the depositor in the closed bank shall fail to file a claim for his insured
deposit from the Corporation within eighteen (18) months after the Monetary Board of
the Central Bank of the Philippines shall have ordered the closure of said bank pursuant
to Section 29 of RA 265,4 as amended, all rights of the depositor against the Corporation
with respect to the insured deposit shall be barred, and all rights of the depositor against
the closed bank and its shareholders or the receivership estate to which the Corporation
may have become subrogated, shall thereupon revert to the depositor;
Provided,
That the claimant shall enforce his duty-filed claim against the Corporation within one
(1) year after the eighteen-month period heretofore mentioned. Thereafter, the
Corporation shall be discharged from any liability on the insured deposit without
prejudice to the rights of the claimant against the closed bank and its shareholders or the
receivership estate:
Provided, further,
That when practicable, the Board of Directors may adopt other adequate means of notice
to the depositor. (RA No. 7400)

4
Now Sec. 36, Rep. Act No. 7653.

22
 CORPORATE FUNDS

SEC. 12.
(a) Money of the Corporation not otherwise employed shall be invested in obligations of the
Republic of the Philippines or in obligations guaranteed as to principal and interest by the
Republic of the Philippines.
(b) The banking or checking accounts of the Corporation shall be kept with the Central Bank
of the Philippines, with the Philippine National Bank, or with any other bank designated
as depository or fiscal agent of the Philippine Government.

FINANCIAL ASSISTANCE

(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 assume liabilities 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 or maintain
financial stability in the economy.

The authority of the Corporation under the foregoing paragraph to extend financial
assistance to, assume liabilities of, purchase the assets of an insured bank may also be exercised
in the case of a closed insured bank if the Corporation finds that the resumption of operations of
such bank is vital to the interests of the community, or a severe financial climate exists which
threatens the stability of a number of banks possessing significant resources:
Provided,
That the re-opening and resumption of operations of the closed bank shall be subject to
the prior approval of the Monetary Board.
The Corporation may provide any Corporation acquiring control of, merging or
consolidating with or acquiring the assets of an insured bank in danger of closing in order to

23
prevent such closing or of a closed insured bank in order to restore to normal operations, with
such financial assistance as it could provide an insured bank under this subsection:
Provided,
That, within sixty (60) days from date of assistance the Corporation shall submit a report thereof
to the Monetary Board.
In all cases, however, the Corporation, prior to the exercise of this power, shall determine
that actual payoff and liquidation thereof will be more expensive than the exercise of this power.
Finally, the Corporation may not use its authority under this subsection to purchase the voting or
common stock of an insured bank but it can enter into and enforce agreements that it determines
to be necessary to protect its financial interests. (RA No. 7400)

AUTHORITY TO BORROW

SEC. 13. The Corporation is authorized to borrow from the Central Bank of the Philippines and
the Central Bank is authorized to lend the Corporation on such terms as may be agreed upon by
the Corporation and the Central Bank, such funds as in the judgment of the Board of Directors of
the Corporation are from time to time required for insurance purposes including those provided
for in Section 12(c) of this Act:
Provided,
That may such loan as may be granted to the Central Bank shall be consistent with monetary
policy: and
Provided, further,
That the rate of interest thereon shall be fixed by the Monetary Board but shall not exceed the
treasury bill rate.
When in the judgment of the Board of Directors the funds of the Corporation are not
sufficient to provide for an emergency or urgent need to attain the purposes of this Act, the
Corporation is likewise authorized to borrow money, obtain loans or arrange credit lines or other
credit accommodations from any bank designated as depository or fiscal agent of the Philippine
Government:
Provided,
That such loan shall be of short term duration. (RA No. 7400)

24
 ISSUANCE OF BONDS, DEBENTURES AND OTHER OBLIGATIONS

SEC. 14. With the approval of the president of the Philippines, to issue bonds, debentures, and
other obligations whenever its capital or funds are not sufficient to meet its obligations to
depositors whose deposits are insured:
Provided,
That the board of directors shall determine the interest rates, maturity and other requirements of
said obligations:
Provided, further,
That the corporation shall provide for appropriate reserves for the redemption or retirement of
said obligations.
All notes, debentures, bonds or such obligations issued by the Corporation shall be
exempt from taxation. (As amended by RA No. 6037)

REPORTS

SEC. 15.
(a) The Corporation shall annually make a report of its operations to the Congress as soon as
practicable after the first day of January in each year.
(b) The financial transactions of the Corporation shall be audited by the General Auditing
Office in accordance with the principles and procedures applicable to commercial
corporate transactions and under such rules and regulations as may be prescribed by the
Auditor General. The audit shall be conducted at the place or places where accounts of
the Corporation are normally kept. The representatives of the General Auditing Office
shall have access to all books, accounts, records, reports, files, and all other papers,
things, or property belonging to or in use by the Corporation 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. All such books, accounts, records, reports, files, papers, and
property of the Corporation shall remain in possession and custody of the Corporation.

25
 (c) A report of the Audit for each fiscal year ending on June 30 shall be made by the Auditor
General to the Congress not later than January 15 following the close of such fiscal year.
On or before December 15 following such fiscal year the Auditor General shall furnish
the Corporation a short form report showing the financial position of the Corporation at
the close of fiscal year. The report to the Congress shall set forth the scope of the audit
and shall include a statement of assets and liabilities and surplus or deficit; a statement of
surplus or deficit analysis; a statement of income and expenses; a statement or sources
and application of funds and such comments and information as may be deemed
necessary to inform Congress of the financial operations and condition of the
Corporation, together with such recommendations with respect thereto as the Auditor
General may deem advisable. The report shall also show specifically any program,
expenditure, or other financial transactions or undertaking observed in the course of the
audit, which in the opinion of the Auditor General, has been carried on or made without
authority of law. A copy of each report shall be furnished to the President of the
Philippines, to the Governor of the Central Bank of the Philippines, and to the
Corporation at the time submitted to the Congress.

SANCTIONS AND PENALTIES

SEC. 16.
(a) Every insured bank shall display at each place of business maintained by it a sign or
signs, and shall include a statement to the effect that its deposits are insured to the
Corporation in all its advertisements:
Provided,
That 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. The
Board of Directors shall prescribe by regulations the forms of such signs and the manner
of use. For each day an insured bank continues to violate any provisions of this
subsection or any lawful provisions of said regulations, it shall be subject to a penalty of

26
 not more than One thousand pesos (P1,000.00) which the Corporation may recover for its
use:
Provided, however,
That the penalty of imprisonment for not more than one (1) year or a fine of not
exceeding Twenty thousand pesos (P20,000.00) or both, in the discretion of the court
shall be imposed upon the directors and officers of any bank not insured under the
provisions of this Act which shall in any manner, advertise or hold itself out as having
insured status for the purpose of making it appear that its deposits are insured with the
Corporation. (RA No. 7400)
(b) No insured bank shall pay any dividends on its capital stock or interest on its capital notes
or debentures (if such interest is required to be paid only out of net profits) or distribute
any of its capital assets while it remains in default in the payment of any assessment due
to the Corporation; and any director or officer or any insured bank who participates in the
declaration or payment of any such dividend or interest or in any such distribution shall
upon conviction, be fined not more than P1,000 or imprisoned not more than one year, or
both: Provided, That such default is due to a dispute between the insured bank and the
Corporation over the amount of such assessment, this subsection shall not apply if such
bank shall deposit security satisfactory to the Corporation for payment upon final
determination of the issue.
(c) Without prior written consent by the Corporation, no insured bank shall (1) merge or
consolidate with any bank or institution or (2) assume liability to pay any deposits made
in, or similar liabilities of, any bank or institution or (3) transfer assets to any bank or
institution in consideration of the assumption of liabilities for any portion of the deposits
in such insured bank.
(d) The Corporation may require an insured bank to provide protection and indemnity against
burglary, defalcation, losses arising from discharge of duties by, or particular acts of
defaults of its directors, officers, or employees, and other similar insurable losses. The
Board of Directors in consultation with the Central Bank, shall determine the bonding
requirement as it refers to directors, officers and employees of the insured bank as well as
the form and amount of the bond. Whenever any insured bank refuses to comply with any

27
 such requirement the Corporation may contract for such protection and add the cost
thereof to the assessment otherwise payable by such bank. (RA No. 7400)
(e) Any assessment payable by an insured bank under this Act shall be subject to payment of
interest computed from the date such assessment became due and payable and at the legal
rate for loans as prescribed by law or appropriate authority and in case of willful failure
or refusal to pay such assessment and interest thereon, there shall be added a penalty
equivalent to twice the amount of interest payable as computed herein for each day such
violations continue, which the interest and penalty the Corporation may recover for its
use:
Provided,
That the penalty shall not be applicable under the circumstances stated in the provisions
of subsection (b) of this Section. (RA No. 7400)
(f) The Board of Directors is hereby authorized at its discretion to impose upon insured
bank, their directors, and/or officers, for any willful delay in the submission of reports as
required by law, rules and regulations; any refusal to permit examination in the affairs of
the institution; any willful making of a false statement to the Corporation; any willful
failure or refusal to comply with, or violation of any provision of this Act, or any order,
instruction or regulations issued by the Corporation or any commission of irregularities,
and/or conducting business in an unsafe or unsound manner as may be determined by the
Board of Directors, a fine not exceeding One thousand pesos (P1,000.00) a day for each
type of violation, the imposition of which shall be final and executory until reversed,
modified or lifted by the Board of Directors. (RA No. 7400)
(g) Whenever an insured bank willfully violates this Act or any order, instruction, rule or
regulation issued by the Corporation, the officer or officers responsible for such violation
shall be punished by a fine of not more than twenty thousand pesos (P20,000) and by
imprisonment of not more than five years. (Id.)

28
 PROHIBITIONS FROM BANK DIRECTORSHIPS

SEC. 17. Except with the written consent of the Corporation, no person shall serve as a director,
officer, or employee of an insured bank who has been convicted, or who is hereafter convicted,
of any criminal offense involving dishonesty or a breach or trust, for each willful violation of this
prohibition, the bank involved shall be subject to a penalty of not more than P100 for each day
this prohibition is violated, which the Corporation may recover for its use.

SEPARABILITY CLAUSE

SEC. 18. If any provision or section of this Act or the application thereof to any person or
circumstance is held invalid, the other provisions or sections of this Act, in the application of
such provision or section to other persons or circumstances, shall not be affected thereby.

REPEALING CLAUSE

SEC. 19. All Acts or parts of Acts and executive orders, administrative orders, or parts thereof
which are inconsistent with the provisions of this Act are hereby repealed.

SEC. 20. This Act shall take effect upon approval. The Philippine Deposit Insurance Corporation
shall commence business upon organization of the Board of Directors and certification by the
Treasurer of the Philippines that the Permanent Insurance Fund has been appropriated.

Approved, June 22, 1963.

29
 FDIC AMENDED RULES AND REGULATIONS

To the provisions of RA 3591, as amended, entitled "AN ACT ESTABLISHING THE

PHILIPPINE DEPOSIT INSURANCE CORPORATION, DEFINING ITS POWERS AND
DUTIES AND FOR OTHER PURPOSES," the following rules and regulations, as amended,
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. Definitions 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, 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. (As amended by Regulatory Issuance No.
92- 3, dated Sept. 14, 1992.)
b. Receiver – includes a receiver, commission, person, or other agency charged by law
with the duty to take charge of the assets and liabilities of a bank which has been
forbidden from doing business in the Philippines, as well as the duty to gather, preserve,
and administer such assets and liabilities for the benefit of the depositors and creditors of
said bank, and to continue into liquidation whenever authorized under RA 3591, as
amended, or other laws, and to dispose of the assets and to wind up the affairs of such
bank. (Id.)
c. Insured Bank means any bank the deposits of which are insured in accordance with
the provisions of RA 3591, as amended.
d. Non-insured Bank means any bank the deposits of which are not insured.
e. Deposit means the unpaid balance of money of 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

30
 commercial, checking, savings, time, or thrift account or which is evidenced by
passbook, check, and/or certificate of deposit, printed or issued in accordance with
Central Bank 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 of PDIC shall find and shall prescribe by regulations the 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 RA 3591, as amended, or
included as part of the total deposits or of the 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 of the
Philippines may elect to include for insurance its deposit obligation payable only at such
branch. (As amended by PD No. 1940 June 27, 1984.)
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 one
hundred thousand pesos (P100,000.00) such net amount shall be determined according to
such regulations as the Board of Directors may prescribe and in such 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 either in his own name or in the name of
others:
Provided,
That the provisions of any law to the contrary notwithstanding, no owner/holder of any
negotiable certificate of deposit shall be recognized as a depositor entitled to the rights
provided in RA 3591, as amended, unless his name is registered as owner/holder thereof
in the books of the issuing bank. (As amended by Regulatory Issuance No. 92-3, dated
Sept. 14, 1992.)
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.

31
 h. Trust Funds means funds held by an insured bank in a fiduciary capacity and
includes without being limited to funds held as trustees, 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 according to the normal
practice, i.e. the usual and regular practice of the bank on business days with no deviation
therefrom on base days. Holidays or other non-business days intervening between the
preceding business day and the base day are a part of the base day. If the base day falls on
a day when the bank is open for less than the normal number of banking hours, such as
being open only until noon on Saturdays, that day shall nevertheless be used as a base
day provided the bank is open for the transaction of all its business on such shorter
business day.
j, k, l, m, n, and o are repealed by Regulatory Issuance No. 92-3, dated Sept. 14, 1992.
p. Semi-annual Period means a period beginning on January One of any calendar year and
ending on June Thirty of the same year or a period beginning on July One of any calendar
year and ending on December Thirty-One of the same year.

PART II. Coverage of Deposit Insurance

SEC. 2.01. Coverage of Deposit Insurance. – The deposit liabilities of any bank or banking
institution which is engaged in the business of receiving deposits as herein defined, or which
hereafter may engage in the business of receiving deposits shall be insured with the PDIC. (As
amended by Regulatory Issuance No. 92-3, dated Sept. 14, 1992.)
Deposits in savings and loan associations are eligible for insurance with PDIC in
accordance with the provisions of Section 4(b) of RA No. 3779, as amended, in relation to the
pertinent provisions of the PDIC Charter.

SEC. 2.02. Effective Date of Deposit Insurance. – The date of effectivity of deposit insurance
coverage shall be determined as follows:

32
 a. For banks which were already engaged in the business of receiving deposits on August 4,
1969, the date of effectivity of their deposit insurance shall be on such date.
b. For banks which are authorized to accept deposits subsequent to August 4, 1969, the date
of effectivity of their deposit insurance shall be the date they were granted authority to
accept deposits.

PART III. Assessments

SEC. 3.01. Assessment Rate. – Each insured bank shall pay to PDIC assessments for Insurance
coverage of the bank's deposits at the rate fixed by the Board of Directors but which shall not
exceed one-fifth (1/5) of one per centum per annum on its assessment base. The semi-annual
assessment for each insured bank shall be the amount of the product of one-half (1/2) the annual
assessment rate multiplied by the assessment base but in no case shall it be less than the amount
of two hundred fifty (P250.00) pesos. (As amended by MC dated Feb. 23, 1977, PD No. 1940,
June 27, 1984 and further amended by Regulatory Issuance No. 92- 3, dated Sept. 14, 1992. )

SEC. 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 RA
No. 3591, as amended, and Section 1.01 (e) of these Rules and Regulations without any
deduction for indebtedness of depositors.
The semi-annual assessment base for the semi-annual assessment ending June 30 shall be
the average of the assessment base of the bank as of the close of business on September 30 and
December 31 and the semi-annual assessment base for the semi-annual assessment ending
December 31 shall be the average of the assessment base as of the close of business on March
31, and June 30.
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.

33
 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 interbank rate obtaining on the applicable
base day/s. (As amended by Regulatory Issuance No. 92- 3, dated Sept. 14, 1992.)

SECS. 3.03 and 3.04, are repealed by Regulatory Issuance No. 92-3, dated Sept. 14, 1992.

SEC. 3.05. Exclusions from Deposit Liabilities. – For assessment purposes, the following items
may be excluded in computing the total liabilities:
a. Those deleted under PDIC Board Resolution No. 65, Minutes No. 3, dated June 6, 1985.
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.

SEC. 3.06. Maintenance of Assessment Records. – Each insured bank shall maintain such
records as will readily permit verification of the correctness of the assessment base. (As amended
by Regulatory Issuance No. 92-3, Sept. 14, 1992.)

SEC. 3.07. Time and Manner of Payment of Assessments. - Each insured bank shall pay to the
PDIC the amount of the semiannual assessment required under Sec. 3.01 of these rules and
regulations at the time of filing its certified statement. The assessment shall be paid in such
manner as the Board of Directors shall prescribe. (Id.)

SEC. 3.08. Filing of Certified Statements. - The Certified Statements required to be filed by the
insured banks in accordance with Sec. 6(b) of RA No 3591, as amended, shall be filed with PDIC
upon the forms, and in the manner prescribed by the Board of Directors of PDIC. The certified
statement form shall be reproduced by the banks themselves and filed with PDIC as follows:

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 a. PDIC Form No. 202 - First Certified Statement - This form shall be accomplished by
the newly opened, reopened, or rehabilitated bank and filed with PDIC upon the
expiration of the first semi-annual period in which it becomes an insured bank. This form
shows the deposit liabilities for only one base day, either June 30 or December 31,
whichever date is applicable. When any of said base days is a holiday or a non-business
day, the preceding business day shall be used. The form also 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, two copies, one of which is the original
copy, forwarded to PDIC on or before July 31 or January 31, as the case may be, and a
copy or copies retained in the bank's files.
b. PDIC Form No. 201 - Regular Certified Statement - This form shall be accomplished
and filed with PDIC on or before January 31 and July 31 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 for the two base
days in each semi-annual period. The base days are March 31 and June 30 for the 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 the assessment due the PDIC. It must be signed under
oath by an authorized officer of the bank, the original and a copy forwarded to PDIC, and
a copy or copies retained in the bank's files. (As amended by EO No. 890, April 8, 1983,
and further amended by Regulatory Issuance No. 92-3, Sept. 14, 1992.)

SEC. 3.09. Submission of Reports of Condition, etc. - When 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.

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 PART IV. Payment of Insured Deposits

SEC. 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 when ordered closed by the
Monetary Board of the Central Bank of the Philippines pursuant to Sec. 29 of RA No. 265, 5 as
amended. 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 RA No. 3591, as
amended. Claimants for insured deposits shall, to such Claim Agents, appropriate proof of claims
in the form and manner prescribed by or the Board of Directors of FDIC, deliver any passbook or
other records issued by the bank evidencing the insured deposit, assign their claims for insured
deposits to PDIC to the extent required by law, and furnish proper identification. Disputed claims
which cannot be adjusted in the field are to be referred to the Head Office for determination. In
cases where PDIC is not satisfied as to the validity of claims for insured deposit, it may require
the final determination and adjudication of. a court of competent jurisdiction before paying such
claims. (As amended by PD No. 1940, June 27, 1984.)

SEC. 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 deposits a transfer deposit in another
insured bank in an amount equal to the insured deposit of the depositor.
The insurance of such transfer deposit shall be separate from that of other deposits of the
depositor in the transferee bank, and shall be maintained therein until the right of claim it has
prescribed according to law or until it is claimed or consolidated with the other deposits of such
depositor with the consent of the latter.
In making such payments, PDIC shall exercise its statutory authority provided for in Sec.
11(c) of RA No. 3591, as amended.

SEC. 4.03. Was repealed under PD No. 1940.

5
Now Sec. 36. Rep. Act No. 7653.

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SEC. 4.04. Payment Not to Exceed P100,000.00 to Each Depositor. - Each depositor of a closed
insured bank shall be entitled to payment covering the net amount due him from such bank for
deposits (after deducting offsets) not in excess of P100,000.00. In establishing the amount due to
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 or in the name of
others. (As amended by Regulatory Issuance No. 92- 3, Sept. 14, 1992.)

SEC. 4.05. Insurance of Deposits Maintained in Currencies Other than the Philippine Peso. -
Deposit obligations in foreign currency of any insured bank are likewise insured.
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 interbank rate obtaining on the date the bank was closed on or
insolvency, and the insurance coverage shall extend to such computed amount, but in no
case to exceed P40,000.00 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. (As amended by PD No. 1897, June 11, 1984.)

SEC. 4.06. Subrogation of PDIC to all Rights of Depositors Upon Payment of Insured
Deposits. - Upon payment of the insured deposits, 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 and payments from the
proceeds of the assets of such closed bank and recoveries on account of stockholders' liability as
would have been payable to the depositor on a claim for insured deposit, but such depositor shall
retain his claim for any uninsured portion of his deposit:
Provided,
That all payments by PDIC of insured deposits in closed banks partake of the nature of public
funds, and as such, must be considered a preferred credit similar to taxes due to the National
Government in the order of preference under Article 2244 of the New Civil Code;
Provided, further,

37
That this preference shall be likewise effective upon liquidation proceedings already commenced
and pending as of the approval of RA No. 7400, where no distribution of assets has been made.
(As amended by PD No. 1940, June 27, 1984, and further amended by Regulatory Issuance No.
92- 3, Sept. 14, 1992.)

PART V. Issuance of Cease and Desist Order

SEC. 5.01. Whenever upon examination by the examination departments into the condition of
any insured bank, it shall be disclosed that an insured bank or its directors or agents have
committed, are committing or about to commit unsafe or unsound practices in conducting the
business of the bank; or have violated, are violating or about to violate any provisions of any law
or regulation to which the insured bank is subject; or have violated, or are violating or about to
violate the provisions of RA No. 3591, as amended, or any order, rule instruction issued by the
Corporation, or any written condition imposed by the Corporation in connection with any
transaction with or grant by the Corporation, the Board of Directors shall give notice to the
insured bank of such finding so that appropriate actions may be taken by said bank. The notice
shall state the actions or undertakings to be done by the bank within a period of not less than
fifteen (15) days.
If no appropriate action has been taken by the bank after the notice mentioned in the
preceding paragraph within the period stated in the notice, a report of the examination shall be
submitted to the Monetary Board to secure corrective action thereon, if no such corrective action
is taken by the Monetary Board within sixty (60) days from the submission of the report, the
Board of Directors shall, motu proprio institute corrective action which it deems necessary.
The Board of Directors may issue a cease and desist order and require the bank or its
directors or agents concerned to correct the practices of violations within sixty (60) days.
However, if the practice or violation is likely to cause insolvency or substantial dissipation of
assets or earnings of the bank, or is likely to seriously prejudice the interests of the depositors
and the corporation, the period to take corrective action shall not be more than fifteen (15) days.

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 The cease and desist order may include the imposition of fines provided in Section 16(f)
of RA No. 3591, as amended.
The Board of Directors shall duly inform the Monetary Board of the Central Bank of the
Philippines of the action taken by PDIC. (As amended by Regulatory Issuance No. 92- 3, Sept.
14, 1992.)

PART V-A. Termination of Insured Status of Banks6

SEC. 5.01(A). Termination of Insured Status Due to Violation of Cease and Desist Order or
Failure to Correct Practices or Violations. - Should the insured bank violate the cease and desist
order or fail to correct the practices or violations as required within the period prescribed in the
order, the Board of Directors shall terminate the insured status of the bank. The order of
termination shall be final and executory until set aside, modified, or suspended by the Board of
Directors.

SEC. 5.02(A). Termination of Insured Status Due to Failure or Refusal to Pay Assessment. -
Should the insured bank fail or refuse to pay assessment required to be paid by such bank under
any provision of RA No. 3591, as amended, and should the bank not correct such failure or
refusal within thirty (30) days after written notice has been given by the Corporation to an officer
of the bank, citing Section 6(h) of said law, and stating that the bank has failed or refused to pay
as required, the Board of Directors shall terminate the insured status of such bank:
Provided,
That, after the lapse of thirty (30) days from the date when the written notice has been sent by
registered mail, whether or not such notice has been actually received by the bank, the
Corporation shall terminate the insured status of the bank. The order of termination shall be final
and executory until set aside, modified, or suspended by the Board of Directors.

SEC. 5.03(A). Notice of the Bank and the Depositors of the Termination of Insured Status. -
The Corporation shall give notice to the bank of the order of termination of its insured status by
such mode of service as may be expeditious and efficient. Immediately upon receipt of such

6
As inserted by Regulatory Issuance No. 92-3, issued Sept. 14, 1992.

39
order, the bank shall give written notice of such termination of each of the depositors at his last
address of record on the books of the bank. The PDIC, shall cause the publication of the notice of
termination in three (3) consecutive days in a newspaper of general and/or local circulation. The
cost of such publication shall be chargeable to the bank.
Failure of the bank for whatever reason to give written notice to the depositors as
provided above shall not affect the validity and effectivity of the order of termination of insured
status against the depositors of the bank provided that the required publication has been complied
with.

SEC. 5.04(A). Extension of Deposit Insurance After Termination of Insured Status of the
Bank. - After the termination of the insured status of a bank, the insured deposits of each
depositor in the bank on the date of such termination less all subsequent withdrawals from any
deposits of such depositor, shall continue to be insured for a period of ninety (90) days from date
of first publication of the order of termination mentioned in the preceding paragraph. No
additions to any such deposits and no new deposits in such bank after date of first publication by
PDIC of the order of termination of insured status, shall be insured by PDIC. The bank shall not
advertise or hold itself out as having insured deposits unless in the same connection, the bank
shall state with equal prominence that such additions to the insured deposits and new deposits
after such termination are not insured. In the event that such bank shall be closed on account of
insolvency within the period of ninety (90) days mentioned, the Corporation shall have the same
powers and rights with respect to such bank as in the case of an insured bank.

SEC. 5.05(A). Resumption of Insured Status. - The bank whose insured status has been
terminated may request for the resumption of its insured status by means of written application
filed with the Corporation, and the Board of Directors may, upon finding that the cause or causes
for termination of insured status has/have been corrected or remedied, approve such application.

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 PART VI. Advertisement of Membership

SEC. 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.
(b) Official sign - The official sign shall be eight inches by four inches (8" x 4") in size and
shall be of the following design:

PDIC official sign -

Deposits Insured
By
Philippine Deposit Insurance
Corporation Maximum Deposit Insurance
for Each Depositor P100,000.00

PDIC shall provide at cost official signs of uniform material which an insured bank may
display. No insured bank shall display official signs other than those provided by PDIC. An
insured bank may either procure the standard signs from the PDIC or may use any other sign of
the same size, wording, and appearance which shall have been approved in writing by PDIC as
conforming to the requirements of this section. Such approval will be given only in individual
cases where the standard sign does not harmonize with the bank's counters and fixtures or where
it cannot be adequately displayed because of the type of construction of the bank's counters and
fixtures. The Board of Directors of PDIC may grant a temporary exemption from its provisions
to a particular bank upon its written application setting forth the facts.

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SEC. 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 statement and/or emblem in all their
advertisements - Each insured bank shall, not later than thirty (30) days after the first day
of its operations 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 the 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 the use of
rubber stamp or similar reasonable substitute, 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 it contractual obligations.
(b) Official advertising statement - The official advertising shall be in substance as follows:
"Member of the Philippine Deposit Insurance Corporation Maximum Deposit Insurance
For Each Depositor P100,000.00." Further, the following rules shall be observed in the
use of advertising statement/emblems:
1. Whenever the official advertising statement appears in any printed advertisement
of any insured bank, the prints should not be smaller than the smallest letter of the
advertisement but in any case no less than 10 pts. type (in) bodoni bold or its
equivalent.
2. In case of television and/or film strip advertisements, the official advertising
statement or PDIC emblem must be shown for at least three (3) seconds, and at
the same instance, mention of deposits being insured with PDIC must be made.
3. In case of radio advertisements of any insured bank, a particular mention of the
official advertising statement must be made.
(c) Emblem - The emblem shall be of the following design: (graphic omitted)
(d) Short title - The following title is hereby, approved for use of insured banks on sign or
plates attached to the outside of the bank premises: "Member of PDIC."

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 (e) Use of emblem or short title - Any insured bank may use the emblem in any of its
advertisements and on any of its bank's supplies. The short title cannot be substituted for
the official advertising statement in the types of advertisements required to include the
latter. Any insured bank, may, in addition to the requirements of these Rules and
Regulations and of RA No. 3591, as amended, amplify the official advertising statement.
For example, as an addition to the official advertising statement, any insured bank may, at
its option, use the following in any of its advertisements: "Deposits in this bank are
insured with maximum insurance of P100,000.00 for each depositor."
(f) 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 written approval of the
PDIC.

PART VII. Penal Provisions

SEC. 7.01. Legal Remedies/Penal Provisions. - The Corporation may avail of the legal remedies
and/or impose the penalties provided for under Section 6(f), (g) and (h); Sections 9(c); 16(a), (b),
(c), (f) and (g); and Section 17 of RA No. 3591, as amended, without prejudice to the right of
PDIC to avail itself of other remedies under other existing laws. (As amended by Regulatory
Issuance No. 92- 3, Sept. 14, 1992.)

Adopted: 12 March 1969.

(Sgd.) VITALIANO N. NANAGAS II
President

Note: This Rules and Regulations was reissued April 1, 1992, per Board Resolution No.
92-04023, and further amended by Regulatory Issuance No. 92-3, dated Sept.14, 1992.

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