Philippine Deposit Insurance Corporation

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AN ACT ENHANCING THE RESOLUTION AND LIQUIDATION FRAMEWORK FOR BANKS, AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 3591, AS AMENDED, AND OTHER RELATED LAWS

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REPUBLIC ACT No. 10846

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BOARD OF DIRECTORS: COMPOSITION AND AUTHORITY Composed of seven (7) members as follows:

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The Secretary of Finance

The Governor of the Bangko Sentral ng Pilipinas

The President of the Corporation- to serve for (6) years. shall also serve as Vice Chairman of the Board;

Four (4) members from the private sector. The appointive directors shall serve for a term of six (6) years unless sooner removed for cause and shall be subject to only one (1) reappointment: Provided, That of those first appointed, the first two (2) appointees shall serve for a period of three (3) years

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- 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.

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Asset

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- 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.

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Asset distribution plan

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- means the Board of Directors of the Corporation.

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Board of Directors

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- 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.

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Bank and banking

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- refers to a bank placed under liquidation by the Monetary Board.

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Closed bank

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- refers to any individual or entity with a valid claim against the assets of the closed bank.

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Creditor

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- 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.

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Deposit

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- 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

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Disputed claim

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- means any bank the deposits of which are insured in accordance with the provisions of this Act.

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Insured bank

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- 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.

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Insured deposit

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- refers to the proceedings under Sections 12 to 16 of this Act.

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Liquidation

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- 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.

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Liquidation court

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- refers to the payment of insured deposits.

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Payout

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- refers to the petition filed by the receiver with the RTC in accordance with Section 16 of this Act.

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Petition for assistance in the liquidation of a closed bank

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- 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.

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Purchase of assets and assumption of liabilities

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- refers to the Corporation or any of its duly authorized agents acting as receiver of a closed bank.

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Receiver

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- 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.

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Records

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- refer to assets, in cash or in kind, to be turned over to the closed bank’s stockholders of record, in proportion to their interest in the closed bank as of date of closure, after payment in full of liquidation costs, fees and expenses, and the valid claims and surplus dividends to all the creditors.

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Residual assets

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- 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.

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Resolution

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- pertains to a method for calculating an insured bank’s assessment on the probability that the DIF will incur a loss with respect to the bank, and the likely amount of any such loss, based on its risk rating that takes into consideration the following: 1) Quality and concentration of assets; 2) Categories and concentration of liabilities, both insured and uninsured, contingent and noncontingent; 3) Capital position; 4) Liquidity position; 5) Management and governance; and 6) Other factors relevant to assessing such probability, as may be determined by the Corporation:

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Risk-based assessment system

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- 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.

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Statement of affairs

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- refer 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.

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Surplus dividends

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- 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.

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Takeover

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- 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.

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Transfer deposit

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- 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.

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Trust funds

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- refers to the claim recognized by the receiver or allowed by the liquidation court.

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Valid claim

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- refers to the period provided in Section 16 of this Act.”

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Winding up period