PDIC Law prescribe by regulations to be deposit liabilities of the

bank: Provided, That any obligation of a bank which

“DEFINITION OF TERMS”
is payable at the office of the bank located outside of
“SEC. 5. As used in this Act – the Philippines shall not be a deposit for any of the
purposes of this Act or included as part of the total
“(a) The term asset refers to movable, immovable, deposits or of insured deposit: Provided, further,
tangible, or intangible resources or properties over That subject to the approval of the Board of
which a bank has an established or equitable Directors, any insured bank which is incorporated
interest, including the proceeds of the sale of its under the laws of the Philippines which maintains a
bank and branch licenses subject to the approval of branch outside the Philippines may elect to include
the Bangko Sentral ng Pilipinas. for insurance its deposit obligations payable only at
“(b) The term asset distribution plan refers to the such branch.
plan of distribution of the assets of a closed bank to “The Corporation shall not pay deposit insurance
its creditors, based on its estimated realizable value for the following accounts or transactions:
as of a certain cut-off date, prepared in accordance
with the Rules on Concurrence and Preference of “(1) Investment products such as bonds and
Credits under the Civil Code or other laws. securities, trust accounts, and other similar
instruments;
“An asset distribution plan may be partial when it
pertains to the distribution of a portion or some of the “(2) Deposit accounts or transactions which are
assets of the closed bank, or final when it pertains to fictitious or fraudulent as determined by the
the distribution of all the assets of the closed bank. Corporation;

“(c) The term Board of Directors means the Board “(3) Deposit accounts or transactions constituting,
of Directors of the Corporation. and/or emanating from, unsafe and unsound
banking practice/s, as determined by the
“(d) The term bank and banking institution shall Corporation, in consultation with the Bangko Sentral
be synonymous and interchangeable and shall ng Pilipinas, after due notice and hearing, and
include banks, commercial banks, savings banks, publication of a directive to cease and desist issued
mortgage banks, rural banks, development banks, by the Corporation against such deposit accounts,
cooperative banks, stock savings and loan transactions or practices; and
associations and branches and agencies in the
Philippines of foreign banks and all other “(4) Deposits that are determined to be the proceeds
corporations authorized to perform banking of an unlawful activity as defined under Republic Act
functions in the Philippines. No. 9160, as amended.

“(e) The term closed bank refers to a bank placed “The actions of the Corporation taken under Section
under liquidation by the Monetary Board. 5(g) shall be final and executory, and may only be
restrained or set aside by the Court of Appeals, upon
“(f) The term creditor refers to any individual or appropriate petition for certiorari on the ground that
entity with a valid claim against the assets of the the action was taken in excess of jurisdiction or with
closed bank. such grave abuse of discretion as to amount to a lack
“(g) The term deposit means the unpaid balance of or excess of jurisdiction. The petition for certiorari
money or its equivalent received by a bank in the may only be filed within thirty (30) days from notice
usual course of business and for which it has given of denial of claim for deposit insurance.
or is obliged to give credit to a commercial, checking, “(h) The term disputed claim refers to a claim or suit
savings, time or thrift account, evidenced by a against the assets of a closed bank, or for specific
passbook, certificate of deposit, or other evidence of performance, or breach of contract, or damages, of
deposit issued in accordance with Bangko Sentral whatever nature or character, whether for money or
ng Pilipinas rules and regulations and other otherwise, liquidated or unliquidated, fixed or
applicable laws, together with such other obligations contingent, matured or current, denied by the
of a bank, which, consistent with banking usage and receiver.
practices, the Board of Directors shall determine and
“(i) The term insured bank means any bank the chaired by the Secretary of Finance, subject to the
deposits of which are insured in accordance with the approval of the President of the Philippines.
provisions of this Act.
“(k) The term liquidation refers to the proceedings
“(j) The term insured deposit means the amount under Sections 12 to 16 of this Act.
due to any bonafide depositor for legitimate deposits
“(1) The term liquidation court refers to the
in an insured bank as of the date of closure but not
Regional Trial Court (RTC) of general jurisdiction
to exceed Five hundred thousand pesos
where the petition for assistance in the liquidation of
(P500,000.00). Such amount shall be determined
a closed bank is filed and given due course.
according to such regulations as the Board of
Directors may prescribe. In determining such “(m) The term payout refers to the payment of
amount due to any depositor, there shall be added insured deposits.
together all deposits in the bank maintained in the
same right and capacity for his or her benefit either “(n) The term petition for assistance in the
in his or her own name or in the name of others. A liquidation of a closed bank refers to the petition
joint account regardless of whether the conjunction filed by the receiver with the RTC in accordance with
‘and’, ‘or’, ‘and/or’ is used, shall be insured Section 16 of this Act.
separately from any individually-owned deposit “(o) The term purchase of assets and assumption
account: Provided, That (1) if the account is held of liabilities refers to a transaction where an insured
jointly by two or more natural persons, or by two or bank purchases any or all assets and assumes any
more juridical persons or entities, the maximum or all liabilities of another bank under resolution or
insured deposit shall be divided into as many equal liquidation, as provided in this Act.
shares as there are individuals, juridical persons or
entities, unless a different sharing is stipulated in the “(p) The term receiver refers to the Corporation or
document of deposit, and (2) if the account is held any of its duly authorized agents acting as receiver
by a juridical person or entity jointly with one or more of a closed bank.
natural persons, the maximum insured deposit shall
“(q) The term records include all documents, titles,
be presumed to belong entirely to such juridical
papers and electronic data of the closed bank,
person or entity: Provided, further, That the
including those pertaining to deposit accounts of and
aggregate of the interest of each co-owner over
with the closed bank, its assets, transactions and
several joint accounts, whether owned by the same
corporate affairs.
or different combinations of individuals, juridical
persons or entities, shall likewise be subject to the “(r) The term residual assets refer to assets, in cash
maximum insured deposit of Five hundred thousand or in kind, to be turned over to the closed bank’s
pesos (P500,000.00): Provided, furthermore, That stockholders of record, in proportion to their interest
the provisions of any law to the contrary in the closed bank as of date of closure, after
notwithstanding, no owner/holder of any passbook, payment in full of liquidation costs, fees and
certificate of deposit, or other evidence of deposit expenses, and the valid claims and surplus
shall be recognized as a depositor entitled to the dividends to all the creditors.
rights provided in this Act unless the passbook,
certificate of deposit, or other evidence of deposit is “(s) The term resolution refers to the actions
determined by the Corporation to be an authentic undertaken by the Corporation under Section 11 of
document or record of the issuing bank: Provided, this Act to:
finally, That in case of a condition that threatens the “(1) Protect depositors, creditors and the DIF;
monetary and financial stability of the banking
system that may have systemic consequences, as “(2) Safeguard the continuity of essential banking
defined in Section 22 hereof, as determined by the services or maintain financial stability; and
Monetary Board, the maximum deposit insurance
“(3) Prevent deterioration or dissipation of bank
cover may be adjusted in such amount, for such a
assets.
period, and/or for such deposit products, as may be
determined by a unanimous vote of the Board of “(t) The term risk-based assessment system
Directors in a meeting called for the purpose and 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 “(aa) The term winding up period refers to the
likely amount of any such loss, based on its risk period provided in Section 16 of this Act.”
rating that takes into consideration the following:
“(1) Quality and concentration of assets;
“(2) Categories and concentration of liabilities, both
insured and uninsured, contingent and
noncontingent;
“(3) Capital position;
“(4) Liquidity position;
“(5) Management and governance; and
“(6) Other factors relevant to assessing such
probability, as may be determined by the
Corporation:
“(u) The term statement of affairs refers to a report
of financial condition of the closed bank at a given
date, showing the: (1) estimated realizable value of
assets; (2) classification of credits; and (3) estimated
liabilities to be settled.
“(v) The term surplus dividends refers to the
remaining assets of the closed bank after
satisfaction in full of all the liquidation costs, fees and
expenses, and valid claims. The surplus dividends
shall be computed at the legal rate of interest from
the date of takeover to cut-off date of the distribution
plan, and shall be paid, in cash or in kind, to creditors
of the closed bank in accordance with the Rules on
Concurrence and Preference of Credits under the
Civil Code or other laws.
“(w) The term takeover refers to the act of physically
taking possession and control of the premises,
assets and affairs of a closed bank for the purpose
of liquidating the bank.
“(x) The term transfer deposit means, a deposit in
an insured bank made available to a depositor by the
Corporation as payment of insured deposit of such
depositor in a closed bank and assumed by another
insured bank.
“(y) The term trust funds means funds held by an
insured bank in a fiduciary capacity and includes
without being limited to, funds held as trustee,
executor, administrator, guardian or agent.
“(z) The term valid claim refers to the claim
recognized by the receiver or allowed by the
liquidation court.