Rare Periodicals

How PDIC strengthens banking system

Media

Part of The Philippines Herald

Title

How PDIC strengthens banking system

Identifier

Protection of Depositors

Language

English

Source

May 31, 1970

Year

1970

Subject

Banking laws

Banking policy

Banking industry -- Philippines

Deposit insurance laws

Central banking industry

Philippine Deposit Insurance Corporation

Rights

Fulltext

Protection of Depositors How PDIC Strengthens Banking System The Philippine Deposit Insurance Corporation is a government entity creat­ ed by law io protect bank depositors and to safe­ guard the nation’s money supply. Under Republic Act No. 3591, PDIC in­ sures individual depositors up to PIO,000 of their ba­ lances in every PDIC in­ sured bank. This is PDIC’s primary objective. However, PDIC’s ultimate goal is that of strengthening the entire banking system. By working towards this goal, PDIC — as an insurance company — would in turn be reducing the risk it in­ sures against. This is why the Deposit Insurance Act also vested PDIC with the govern­ ment functions of super­ vising and examining in­ sured banks. Following WE OFFER FINANCIAL ASSISTANCE TO FACILITATE THE DEVELOPMENT OF INDUSTRY AND COMMERCE FOR THE COUNTRY SERVICES OFFERED : CHECKING ACCOUNT SAVINGS ACCOUNT TIME DEPOSITS INDUSTRIAL LOANS COMMERCIAL LOANS OTHER LOANS COMMERCIAL LETTERS OF CREDIT FOREIGN EXCHANGE TRUST FUNCIIUNS PHILIPPINE BANK OF COMMUNICATIONS HEAD OFFICE: 214-216 Juan Luna, Manila * Tel. 47-96-01 CEBU BRANCH: Cor. Magallanes & Gonzales St., Tel. 2877 are the provisions of the SECTION 1. There is hereby created a Philip­ pine Deposit Insurance Corp oration hereinafter referred to as the “Corpo­ ration “which shall insure, as herein provided, the deposits of all banks which are entitled to the bene­ fits of insurance under this Act, and which shall have the powers herein­ after granted. Board SECTION 2. The pow­ ers and functions of the corporation shall be vest­ ed in a board of directors consisting of three mem­ bers one of whom shall be the Governor of the Cen­ tral Bank of the Philip­ pines and two of whom shall be citizens of the Republic of the Philip­ pines to be appointed by the President of the Phil­ ippines with the consent of the Commission on Ap­ pointments. One of the appointive members shall be the Chairman of the Board of Directors of the Corpora­ tion who shall be appoint ­ ed on a full time basis for a term of six years at an annual c o m p e n s ation which shall be fixed by the President of the Phil­ ippines. The other appointive member, who shall be ap­ pointed for a term of four years and the Governor of the Central Bank shall each receive a per diem of not exceeding P50 for each day of meeting actually attended by them but in no case shall each of them receive more than P500 a month. In the event of a vacan­ cy in the office of the Go­ vernor of the Central Bank of the Philippines, and pending the appointment of his successor or during the absence of the gov­ ernor, the acting governor of the Central Bank of the Philippines shall act ?s member of the Board of Directors. In the event of a vacan­ cy in the office of the chairman of the board of directors and pending the appointment of his succes­ sor, the Governor of the Central Bank shall act as chairman. The members of the board of directors shall be ineligible during the time they are in office and for a period of two years thereafter to hold any office, position or em­ ployment in any insured bank .except that this res­ triction shall not apply to any member who has serv­ ed the full term for which he was appointed. No member of the board of directors shall be an of­ ficer or director of any in­ sured bank; and before entering upon his duties as member of the board he shall certify under oath that he has complied with his requirement and such certification shall be filed with the secretary of the board of directors. Any vacancy in the board created by the death, resignation, or re­ moval of an appointive member shall be filled oy the appointment of a new member to complete the unexpired period of the term of the member con­ cerned. (As amended oy RA No. 6037, approved August 4, 1969). Functions The board of directors shall have the authority. 1. To prepare’ and issue rules and regulations as it considers necessary for the effective discharge cf its- responsibilities; 2. To direct the man­ agement, operations and administration of the cor­ poration; 3. To appoint, fix the remunerations and re­ move any officer or em­ ploye of the corporation for cause, Provided, how­ ever, that officers exercis­ ing discretionary powers shall not be subject to the Civil Service Law (as amended by Republic Act No. 6037, approved Au­ gust 4, 1969); and 4. To authorize such ex­ penditures by the corpo­ ration as are in the inte■ rest of the effective admi­ nistration and operation of the corporation. SECTION 3. As used in this Act— (a) The term “Board of Directors” means the board of directors of the corporation. (b) The term “Bank” and “Banking Institution” shall be synonymous and interchangeable and shad include banks, commer­ cial banks, savings banks, mortgage banks, rural banks, development banks, cooperative banks, trust companies, branches and agencies in the Philinpines of foreign banks and all other companies, corporations, partnerships performing banking func­ tions in the Philippines. (c) The term “receiver” includes a receiver, liqui­ dating agent, conservator, commission, person, or other agency charged by law with the duty of winding up the affairs of a bank. (d) The term “insured_ bank” means any bank the deposits of which are insured in accordance with the provisions of this Act. (e) The term “non-insured bank” means any bank the deposits of which are not insured. Deposit (f) The term “deposit” means the unpaid ba­ lance of money or its equivalent received by a bank in the usual course of business and for which it has given or obliged to give credit to a commer­ cial, checking, savings, time or thrift account or which is evidenced by its certificate of deposit, and trust funds held by such bank whether retained or deposited in any depart­ ment of such bank or de­ posited in another bank, together with such other obligations of a bank as the board of directors shall find and shall pres­ cribe 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 thp total deposits or of the in­ sured ' deposit: Provided, further, That any insured bank which is incorporat­ ed under the laws of the Philippines which main­ tains a branch outside the Philippines may elect to include for insurance its deposit obligation payable only at such branch. (g) The term “insured (Continued on Page 14) 1970 ’Page 12 BANKING' SUPPLEMENT How PDIC Helps Banking System PHILIPPINE VETERANS BANK IN PEACE, AS IN WAR — WE SERVE HEAD OFFICE: PVB Building Bonifacio Drive Port Area, Manila P.O. Box 2330, Manila BANKING SERVICES OFFERED DEPOSIT FACILITIES: Checking Accounts* Savings Deposit* Time Deposit* TRUST SERVICES:* Trusteeship Guardianship Administration Receivership Transfer Agent Safe Deposit Boxes BANK MONEY ORDERS DRIVE-IN AND NIGHT DEPOSITORY SERVICES WITH CORRESPONDENT BANKS IN PRINCIPAL CITIES OF THE WORLD • Insured with Philippine Deposit Insurance Corporation TELEPHONE NOS: 40-00-40 to 49 40-00-51 to 52 CABLE ADDRESS PHILVETBANK LOAN FACILITIES: Agricultural Industrial Commercial FOREIGN TRANSACTIONS: Import & ExportFinancing Foreign Exchange Remittances Collections Travellers Checks (Continued from Page 1?.) deposit” means the net amount due to any depo­ sitor for deposits in an in­ sured bank (after deduct­ ing offsets) less any part thereof which is in excess of PIO,000. Such net amount shall be determin­ ed according to such regu­ lations as the board of di­ rectors may prescribe and in deter mining the amount due to any depo­ sitor there shall be added together all deposits in the bank maintained in the same capacity and the same right for his benefit or his own name or in the name of others. (h) The term "transfer deposit” means a deposit in an insured bank made available to a depositor by the corporation as pay­ ment of insured deposit of such depositor in a closed bank and assumed by an­ other insured bank. Trust Funds (i) The term “trust funds” means funds held by an insured bank in a fiduciary capacity and in­ cludes without being li­ mited to, funds held as trustees, executor, admi­ nistrator, guardian or agent. SECTION 4. The de­ posit liabilities of any bank or banking institution which is engaged in the business of receiving de­ posits as herein defined on the effective date of this Act, or which there­ after may engage in the business of receiving de­ posits shall be insured with the corporation. (As amended by R.A. No. 602.7 approved August 4, 1969). SECTION 5 HAS BEEN REPEALED SECTION 6. (a) The assessment rate shall be determined by the board of directors: Provided, That the assessment rate shall not exceed one twelfth of one per cen­ tum per annum. The se­ miannual assessment for each insured bank shall be the amount of the product of one-half (y2) the assessment rate mul­ tiplied by the assessment base. The assessment base shall be the amount of liability of the bank for deposits, according to the definition of the term "de­ posit” in the pursuant to subsection (f) of Section 3 without any deduction for indebtedness of depo­ sitors: Provided further. That the Bank— (1) may deduct (i) from the deposit balance due to an insured bans the deposit balance due from such insured bank (other than trust funds deposited by it in such bank) which is subject to an immediate withdra­ wal; and (ii) cash items as determined by either Page 14 BANKING SUPPLEMENT Sundoy, Moy 31, 1970 of the following methods at the option of the bank; (aa) by multiplying by 2 the total of the cash items forwarded for col­ lection on the assessment base days (being the days on which the aver­ age deposits are comput­ ed) and cash items held for clearings at the close of business on said days, which are in the process of collection and which the bank has paid in the regular course of business or credited to deposit accounts, or (bb) by de­ ducting the total cash items held for clearing at the close of business on said days, which are in the process of collect­ ion and which the bank has paid in the regular source of business or credited to deposit ac­ counts, plus such uncol­ lected items paid or cre­ dited on preceding days which are in the process of collection; Provided, that the board of direc­ tors may define the terms “cash items”, “process of collection”, and “uncol­ lected items’ and shall fix the maximum period for which any such item may be deducted; and (2) may exclude from its assessment base (i) drafts drawn by it on de­ posit accounts in other banks which are issued in the regular course of bu­ siness; and the amount of advices or authoriza­ tions issued by it for cash letters received, directing that its deposit account in the sending bank be charged with the amount thereof; and (ii) cash funds which are received and held solely for the purpose of securing a lia­ bility to the bank but not in an amount in excess of such liability, and which are not subject to withdrawal by the obli­ gor and are carried in a special non-interest bearing account desig­ nated to properly show their purpose. Conditions Each insured bank, as a condition to the right to make any such deduction or exclusion in determin­ ing its assessment base, shall maintain such re­ cords as will readily per­ mitverification of the cor­ rectness thereof. The se­ miannual assessment base for one semiannual period shall be the average of the assessment base of the bank as of the dose of bu­ siness on March thirty-one and June thirty, -and the s e m iannual assessment base for the other se­ miannual period shall be the average of the as­ sessment base of the bank as of the close of business on September thirty and D e c e mber thirty-one: Provided, That when any of said days is a nonbusi­ ness day or a legal holi­ day, either National or Provincial, the preceding business day shall be used. The certified statements required to be filed with the corporation under sub­ sections (b) and (c) of this section shall be in such form and set forth such supporting informa­ tion as the Board of Direc­ tors shall prescribe. The assessment payments re­ quired from insured banks under subsection (b) and (c) of this section shall be made in such manner and at such time or times as the board of directors shall prescribe, provided the time or times so pres­ cribed shall not be later than sixty days after fil­ ing the certified statement setting forth the amount of assessment. (b) On or before the 15th of July of each year, each ipsured bank shall file with the corporation a certified state ment showing for the six months ending on the pre­ ceding June thirty the amount of the assessment base and the amount of semi annual assessment due to the Corporation for the period ending on the following December thir­ ty-one, determined in ac­ cordance with sub-section (a) of this section, which shall contain or be verified by a written declaration that it is made under the penalties of perjury. (c) Each bank which becomes an insured bank shall not be required to file any certified state­ ment or pay any assess­ ment for the semiannual 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 a s s e ssment base for its first certified statement shall be the as■ sessment base of the bank as of the close of business on the preceding June thirty or December thir­ ty-one, whichever is ap­ plicable, determined in accordance with subsec­ tion (a) of this section. Pro Rata (d) As of December thirty-one, nineteen hun­ dred sixty-four, and as of December thirty-one of each calendar year there­ after the corporation shall transfer 40 per centum of its net assessment income shall be credited pro rata to the insured banks based upon the assessment of each bank becoming due during each calendar year. Each year such credit shall be applied by the corporation toward the payment of the total as­ sessment becoming due for the semiannual assess­ ment period beginning the next ensuing July 1 and any excess credit shall be applied upon the assess­ ment next becoming due. The term “net assess­ ment income” as used therein means the total assessments which become due during the calendar year; (2) additions to re­ serve to provide for insur­ ance losses during the calendar year, except that any adjustments to re­ serve which result in a re­ duction of such reserve shall be added; and (3) the insurance losses sus­ tained in said calendar year plus losses from any preceding years in excess of such reserves. If the above deductions exceed in amount the to­ tal assessments which be­ come due during the ca­ lendar year, the amount of such excess shall be restored by d e d u c tion from total assessments be­ coming due in subsequent 460 Rosorio St., Manila Tel. Nos. 49-97-31 thru 39 METROPOLITAN BRANCHES SAN NICOLAS BRANCH 468 Lavezares St.. Manila Tel Nos. 49-99-45 and 49-99-21 CALOOCAN CITY BRANCH 360-362 Rizal Ave. Ext. Caloocan City Tel Nos. 23-40-44 and 23-09-49 QUEZON CITY BRANCH Sta. Mesa Market Quezon City Tel. Nos. 61-15-89 and 61-20-19 PASAY CITY BRANCH 1851 Taft Ave. Ext. Pasay City Tel. Nos. 50-47-95 and 59-19-75 LA UNION BRANCH Cor. Osmena & Quezon Sts. San Fernando, La Union Tel. Nos. 91 & 93 LAOAG CITY BRANCH Ventura Bldg., Bonifacio St. Laoag City Tel Nos. 245 and 246 SORSOGON BRANCH Magsaysay St., Sorsogon Tel. Nos. 691 and 282 PROVINCIAL BRANCHES BACOLOD CITY BRANCH Araneta St., Bacolod City Tel. Nos. 2-26-68; 2-62-66 CEBU and 2-61-66 ILOILO CITY BRANCH Iznart cor. de Leon St. IJoilc City Tel. Nos. 45-41 and 45-51 LEGASPI CITY BRANCH Rizal cor. Mabini Sts. Legaspi City Tel. Nos. 431 and 428 CITY BRANCH 417-421 Manalili St. Cebu City 'Tel. Nos. 97-84-1 and 97-03-1 MEMBER: Philippine Deposit Insurance Corporation years. (e) The corporation (1) may refund to an insured bank any payment of as­ sessment in excess of the amount due to the corpo­ ration or (2) may credit such excess toward the payment of the assess­ ments until the credit is exhausted. Injunction (f) Any insured bank which fails to file any cer­ tified statement required to be filed by it in connec­ tion with determining the amount of any assessment payable by the bank to the corporation may be com­ pelled to file such state­ ment by mandatory in­ junction or other appro­ priate 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 locat­ ed. (g) The corporation, in a suit brought in any court of competent jurisdiction, shall be entitled to re­ cover from any insured bank the amount of any unpaid assessment law fully payable by such in­ sured bank to the corpo­ ration, whether or not such bank shall have filed any such certified statement and whether or not suit shall have been brought to compel the bank to file any such statement. Failure (h) Showed any insur­ ed bank fail or refuse to Sunday, May 31, 1970 BANKING SUPPLEMENT Page 15 pay any assessment re­ quired to be paid by such bank under any provision of this Act, and should the bank not correct such failure or refusal within thirty days after written notice has been given by the corporation to an of­ ficer of the bank, citing this subsection, and sta­ ting 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. (i) Trust funds held by an insured bank in a fi­ duciary capacity whether held in trust or deposited in any other department or in another bank shall be insured like other forms of deposits, in an amount not to exceed PIO,000 for each trust estate, and when deposit­ ed by the fiduciary bank in another insured bank such trust funds shall be similarly insured to the fiduciary bank according to the trust estates re­ presented. Notice SECTION 7. (a) Any insured bank may, upon not less than ninety days’ written notice to the cor­ poration, and to the De­ velopment Bank of the Philippines if it owns or holds as pledges any pre­ ferred stock, capital notes, or debentures of such bank, terminate its status as an insured bank. Whenever the board of directors shall find that an insured bank or its di­ rectors or trustees have continued unsafe or un­ sound practices in con­ ducting the business of the bank or which have know­ ingly or negligently per­ mitted any of its officers PRUDENTIAL BANK Plaza Goiti, Manila Tel. Nos. 40-51-81 to 40-51-94 Cable Address: “PRUBANK” WE NOW HAVE 29 BANKING OFFICES THROUGHOUT THE PHILIPPINES TO SERVE YOU __ Metropolitan Branches Malate, Manila Espafia, Manila Legarda, Manila Divisoria, Manila Cavite City Cubao, Quezon City Grace Park, Caloocan City DEPOSITORY OF THE PHILIPPINES AND UNITED STATES GOVERNMENTS WORLDWIDE CORRESPONDENT RELATIONS or agents to violate any provisions of any law or regulation to which the insured bank is subject, the board of directors shall first give to the Central Bank of the Philippines a statement with respect to such practices or viola­ tions for the purpose of securing the correction thereof and shall give a copy thereof to the bank. Unless such correction shall be made within one hundred twenty days or such shorter period of time the Central Bank of the Philippines shall require, the Board of Di­ rectors, if it shall deter­ mine to proceed further, shall give to the bank not less than thirty days’ writ­ ten notice of intention to determine the status of the bank as an insured bank, and shall fix a time and place for a hearing before the board of direc­ tor or before a person de­ signated by it to conduct such hearing, at which evidence may be produced, and upon such evidence the board of directors shall make written findings which shall be conclusive. Unless the bank shall ap­ pear at the hearing by a duly authorized represen­ tative, it shall be deemed to have consented to the termination of its status as an insured bank. Violation If the board of directors shall find that any unsafe or unsound practice or violation specified in such notice has been establish­ ed and has not been cor­ rected within the time above prescribed in which to make such correction, the board of directors may order that the insured status of the bank be ter­ Makati, Rizal Pasig, Rizal Concepcion, Malabon, Rizal San Bartolome, Malabon, Rizal * Navotas Extension Office Laoag City Olongapo City Subic Bay, U.S. Naval Base, Subic Bay Angeles City * Main Branch * Extension Office Clark Air Base, Clark Field Cabanatuan City Dagupan City minated on a date subse­ quent to such finding and to the expiration of the time specified in such no­ tice of intention. The corporation may publish notice of such ter­ mination and the bank shall give notice of such termination to each of the depositors at his last add­ ress of record on the books at the bank, in such a manner and at such a time as the board of direc­ tors may find to be neces­ sary and may order for the protection of the deposit­ ors. No additions to any such deposits and no new depo­ sits in such bank made af­ ter the date of such termi­ nation shall be insured by the corporation, and the bank shall not advertise or hold itself out as having insured deposits unless in the same connection it shall also state with equal prominence that such ad­ ditions to deposits and new deposits made after such date are not so in­ sured. Such bank shall, in all other respects, be sub­ ject to the duties and obli­ gations of an insured bank for the period of two years from the date of such ter­ mination, and in the event that such rank shall be closed on account of in­ solvency within such pe­ riod of two years, the cor­ poration shall ’ have the same powers and rights with respect to such bank as in case of an insured bank. Termination (b) Not withstanding any other provision of law, whenever the board of directors shall deter­ mine that an insured banking institution is not Provincial Branches San Pablo City Naga City Tacloban City Cebu City Mactan Air Base, Lapulapu City Bacolod City Davao City * Main Branch ♦ Extension Office . engaged in the business of receiving deposits, the corporation shall notify the banking institution that its insured status will terminate at the ex­ piration of the first full semi annual assessment period following such no­ tice. (c) Whenever the lia­ bilities of an in sured bank for deposits shall have been assumed by another insured bank or banks, the insured sta­ tus of the bank whose lia­ bilities are so assumed shall terminate on the date of receipt by the cor­ poration of satisfactory evidence of such assump­ tion with like effect as if its insured status had been terminated on said date by the board of di­ rectors after proceedings under sub-section (a) of this section: Provided That if the bank whose liabilities are so assumed gives to its depositors no­ tice of such assumption within 30 days after such assumption takes effect, by publication or by any reasonable means, in ac­ cordance with regulations to be prescribed by the board of directors, the in­ surance of its deposits shall terminate at the end of six months from the date such assumption takes effect. Such bank shall be subject to the du­ ties and obligations of an insured bank for the pe­ riod its deposits are in­ sured: Provided, further, That if the deposits are assumed by a newly in­ sured bank, the bank whose deposits are as­ sumed shall not be re­ quired to pay any assess­ ment upon the deposits which have been so as­ sumed after the semian­ nual period in which the assumption takes effect. Powers SECTION 8. The corpo­ ration as a corporate ;x>dy shall have the power— First. — To adopt and use a corporate seal. Second. — To have suc­ cession until dissolved by an Act of Congress. Third. — To make con­ tracts. 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 execu­ tion shall be issued ag­ ainst the corporation or its property before final judgment in any suit, ac­ tion, or proceeding in any court. The board shall de­ signate an agent upon whom service of process may be made in any pro­ vince or city or jurisdic­ tion in which any insured bank is located. Fifth. — To appoint by its board of directors such officers and employes as are not otherwise provi­ ded for in this Act, to de­ fine their duties, fix their compensation, require bonds of them and fix pe­ nalty thereof and to dis­ miss such officers and employes for cause. Sixth. — To prescribe, by its board of directors, by-laws not inconsistent with law, regulating the manner in which its ge­ neral business may be conducted, and the privi­ leges granted to it by law may be exercised and en­ joyed. Seventh. — To exercise by its directors, or duly authorized o f f i cers or agents, all powers speci­ fically granted by the provisions of this Act, and such incidental powers as shall be necessary to car­ ry on the powers granted. Eight. — To make exa­ minations of and to re­ quire information and re­ ports from banks, as pro­ vided in this Act: Provi­ ded, that any examina­ tion shall be made simul­ taneously with the exa­ mination by the depart­ ment of the Central Bank conducting examinations of banks: (As amended by R.A. No. 6037, approved Aug. 4, 1969) Ninth. — To act as re­ ceiver. Tenth. — To prescribe by its board of directors such rules and regula­ tions as it may deem ne­ cessary to carry out the provision of this Act. Use of Mails SECTION 9. (a) The board shall administer the affair of the corpora­ tion fairly and impartial­ ly and without discrimi­ nation. 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 shall ap­ point examiners who shall have power, on behalf of the corporation to exam­ ine any insured bank or any bank making appli­ cation to become an in­ sured bank, whenever in the judgment of the board of directors an examina­ tion of the bank is neces­ sary. (c) Each insured bank shall make to the corpo­ ration reports of condi­ tion in such form and at such times as the board of directors may require such reports to be publish­ ed in such manner, not inconsistent with any ap­ plicable law, as it may di­ rect. Every such bank which fails to make or publish any such report within such time, not less than five days, as the board may require, shall be subject to a penalty of not more than PlOO for each day of such failure recoverable by the corpo­ ration for its use. Access (d) The corporation shall have access to re­ ports of examination made Page 16 NANKING SUPPLEMENT Sunday, May 31, 1970 by, and reports of condi­ tion made to the Superin­ tendent of Banks or the Governor of the Central Bank, and the Superin­ tendent of Banks or the Governor of the Central Bank of the Philippines shall also have access to reports of e x a mination made on behalf of, and re­ ports of condition made to the corporation. (e) The members of the board and the officers and employes of the corpora­ tion are prohibited from revealing any informa­ tion relating to the condi­ tion or business of any insured bank and any member of the Board, of­ ficer or employe of the corporation violating this provision shall be held lia­ ble for any loss or injury suffered by the corpora­ tion. -SECTION 10. (a) A per­ manent insurance fund in the amount of 1*5,000,000 to be appropriated from the General Fund is here­ by created to be used by the corporation to carry out the purposes of this Act: Provided, That the maximum amount of the insured deposit of any depositor shall be P10,000. (b) Foi the purposes of this Act an insured bank shall be deemed to have been closed on account of insolvency in any case in which it has been closed for the purposes of liqui­ dation without adequate provision being made for payment of its depositors. Insolvency (c) Whenever an in­ sured 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) by ma­ king available to each de­ positor a transferred de­ posit in another insured bank in. an amount equal to the insured deposit of such depositor: Provided, That the corporation, i±i its discretion, may re­ quire proof of claims to be filed before paying the insured deposits, and that in any case where the corporation is not satis­ fied as to the validity of a claim for an insured de­ posit, it may require the final determination of a court of competent juris­ diction before paying such claim. (d) The corporation, upon the payment of any depositor as provided for in subsection (c) of this section shall be subrogat­ ed to all rights of the de­ positor against the closed bank to the extent of such payment. Such sub­ rogation shall include the jight on the part of the corporation to receive the same dividends from the proceeds of the assets of such closed bank and re­ coveries on account of stockholders* liability as would have been payable Sunday, May 31; 1970 to the depositor on a claim for the insured de­ posit, but such depositor shall retain his claim for any uninsured portion of his deposit. Payment SECTION 11. (a) Pay­ ment of an insured depo­ sit to any person by the corporation shall dis­ charge the corporation, any payment of a trans­ ferred deposit to any per­ son by the new bank or by an insured bank in which a transferred depo­ sit has been made avail­ able 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 in­ sured deposit. (b) Except as otherwise prescribed by the board, 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 per­ son whose name or inte­ rest 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 de­ posits ir. such closed bank. (c) The corporation may withhold payment of such portion of the insured de­ posit of any depositor in a closed bank as may be re­ quired to provide for the payment of any liability of such depositor as a stockholder of the closed bank, oi 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 deter­ mination and payment of such liability by such de­ positor or any other perso'n liable therefor. 3 Months Notice (d) If, after the corpo­ ration shall have given at least three months notice to the depositor by mail­ ing a copy thereof, to his last known address ap­ pearing on the records of the closed bank, any de­ positor in the closed bank shall fail to claim his in­ sured deposit from the corporation within eigh­ teen months after the Monetary Board of the Central Bank of the Phi­ lippines or the proper court shall have ordered ’ the conversion of the as­ sets of such closed bank into money, all rights of the depositor against the corporation with respect to the Insured deposit shall be bared, and all rights oi 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. SECTION 12 (a) Money of the corporation not otherwise employed shall be invested in obligations of the Republic of the Philippines or in obliga­ tions guaranteed as to principal and interest by the Republic of the Philip­ pines. (As amended by R. A. No. 6037, approved Aug. 4, 1969) (b) The banking or accounts of the corpora­ tion shall be kept with the Central Bank of the Philippines, with the Phi­ lippine National Bank, or with any other designa­ ted as depository or fiscal agent of the Government CB Loan SECTION 13. The cor­ poration is authorized to borrow from the Central Bank of the Philippines and the Central Bank is authorized and directed to loan the corporation on such terms as may be fixed by the corporation and the CB, such funds as in the judgment of the board of directors of the corporation are from time to time required for insu­ rance purposes including those provided for in Sec­ tion 12(c) not exceeding in "he aggregate of one hundred million pesos outstanding at any one time: Provided. That the rate of interest to be charged in connection Tel. Nos. — 40-70-11 to 40-70-37 DIVISORIA BRANCH 632 M. de Santos Manila Tel. Nos. 48-55-97 & 48-58-08 QUIAPO BRANCH 132 Echague St., Manila Tel. No. 47-98-00 ARRANQUE BRANCH 733 T. Alonzo St., Manila Tel. No. 47-45-36 MAKATI BRANCH 215 Buendla Ave., Makati, Rizal Tel. Nos. 88-00-45 & 88-58-67 TONDO BRANCH 753 Claro M. Recto Ave., Tondo, Manila Tel. No. 21-81-83 DAVAO BRANCH 883 Claro M. Recto Davao City Tel. Nos. 7.-85-91 — 7-73-51 PASAY BRANCH 212 Llbertad St., Pasay City Tel. Nos. 80-58-89 & 80-81-90 PACO BRANCH 1635 Dart St., Paco, Manila Tel. No. 50-55-24 SOLER BRANCH 1087 Soler St., Manila Tel. No. 21-72-73 ERMITA BRANCH 1137 A. Mablnl St., Manila Tel. No. 59-58-79 . MAGDALENA BRANCH 970 Magdalena St., Manila Tel. No. 40-70-11 Local 222 CEBU CITY BRANCH Cor. F. Gonzales & Magallanes Sts. Cebu City Tel. No. 47-94 COMPLETE BANKING FACILITIES The Bank that Is at your Service Always in all ways MEMBER: Philippine Deposit Insurance Corporation with any loan made pur­ suant tn this section shall not be less than the cur­ rent average rate on out­ standing marketable and non-marketable obliga­ tions of the Republic of the Philippines as of the last day of the month pre­ ceding the making of such loan. Any such Ioan shall be use^ by the corporation solely in carrying out its functions with respect to such insurance. (As amended by R.A. No. 6037, approved Aug. 4, 1969), SECTION 14. With the approval of the President of the Philippines, to issue b<nds, debentures, and other obligations whenever its capital or funds are not sufficient to meet its obligation to depositors whose deposits are insured; Provided, that the board of directors shall determine the inte­ rest rates, maturity and other requirements of said obligations; Provided, further, that the corpora­ tion shall provide for ap­ propriate reserves for the redemption or retirement of saia obligations. All notes, debentures, bonds, or such obligations issued by the corporation shall be exempt from taxation. (As amended by R.A. No. 6037, approved Aug. 14, 1969) SECTION 15. (a) The corporation shall annual­ FOREIGN BRANCH HONG KONG BRANCH 4 Duddell St. Hong Kong Tel. H 24-30-31 DOMESTIC BRANCHES ly make a report of fts operations to Congress as soon as practicable after the 1st day of January each year. Audit (b) The financial tran­ sactions of the corpora­ tion shall be audited by the General Auditing Of­ fice in accordance with the principles and proce­ dures applicable to com­ mercial corporate transac­ tions and under such rules and regulations as may be prescribed by the auditor general. (c) A report of the au­ dit. for each fiscal year ending on June 30 shall be .iade by the auditor general to Congress not later than 15 following the close of such fis­ cal year. On or before Dec. 15 following such fiscal year, the auditor ge­ neral shall furnish the corporation a short form report showing the finan­ cial position of the corpo­ ration at the close of fis­ cal year. Display SECTION 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 in­ sured by the corporation' in all of its advertisement: Provided, That the board of directors may exempt from this requirement adBANKING SUPPLEMENT J Wg e 17 vertlsements which do not relate to deposits or when it is impractical to include such statement therein. 1. The directors and of­ ficers of any bank, corpo­ ration, partnership or any other company perform­ ing banking functions in the Philippines not in­ sured under the provi­ sions of this Act, which shall in any manner, ad­ vertise or hold itself out as having insured status for the purpose of making it appear that its depo­ sits are insured with the corporation. 2. The directors and of­ ficers of a bank whose in­ sured status had already been terminated, if such Your peso can grow with DBP PROGRESS BONDS they earn 7% yearly interest tax-free! DBP PROGRESS BONDS EARN 796 INTEREST YEAR­ LY - TAX FREE! You pay heavy taxes yearly on everything you earn. Not eo with DBP Progress Bonds. Just hand in the correspond­ ing Interest coupon attached to your bond certificate and you get your 7% interest - tax-free - twice a year. Now figure It out for yourself. De­ pending on your Income bracket, the 7% Interest be­ ing offered could mean any­ where from 8% to 10% worth (or more) of assured earnings yearly - all absolutely tax freel MORE PROFITABLE! DBP PROGRESS BONDS OFFER A RARE OPPORTU­ NITY FOR CAPITAL GROWTH THROUGH A MOST UNIQUE EXCHANGE PROGRAM! Anytime within the term of the bond, a holder may exchange his DBP Progress Bonds for preferred ehares convertible (at pre-set conversion prices) Into common shares of select­ ed Industrial firms In a portfolio made available for lust this purpose by DBP. As these shares grow In value, so will the value of your investment! MORE GROWTH! DBP PROGRESS BONDS ARE LIQUID - THEY MAY BE CASHED ANYTIME, ANYWHERE! Other forms of Investment may tie up your capital indefi­ nitely. Not so with DBP Pro­ gress Bonds. Although the bonds (registered or bearer) of P100, PT.OOO, andP10,000 have a term of 10 years, they may be cashed any time (at the holder's option and for a small service charge) at DBP or any of its many service agencies. In case you should need money in a hurry, therefore, DBP Progress Bonds are easy to convert into cash I MORE LIQUID! DBP PROGRESS BONDS ARE FULLY GUARANTEED ABSOLUTELY NO RISK INVOLVED! DBP Progress Bonds are fully backed by the entire resources of the Development Bank of the Philippines. They also carry • the unconditional guarantee of the Government of the Philip­ pines! SAFER! UNIQUE COLLATERAL VALUE! DBP Progress Bonds can be used as collateral with no fur­ ther need for evaluations or QUICKER LOANS! 4__ h DtVILOFMINT BANK OF THE PHILIPPINES rw'rttPfcvito. Mu-* bank shall continue to advertise in any manner or hold itself out as hav­ ing insured deposits, un­ less in the same connec­ tion, it shall also state with the same prominence that additional and/or new deposits made after the effective date of ter­ mination of its insured status are no longer in­ sured. Fraudulent Use 3. Any person, who knowing the purpose for which the official sign, advertising state­ ment and/or emblem, as duly Diescribed by the board of directors of the corporation is to be used, reproduces or supplies such sign, advertising statement and/or emblem or a colorable imitation thereof, for the use of a bank not insured under the provisions of this Act, to enable such bank to fraudulently use the same in connection with the advertising of its services. (b) No insured bank shall pay any dividends on its capital stock or inteiest on its capital notes or debentures (if such in­ terest is required to be paid only out of net pro­ fits) or distribute any of its capital assets while it remains in default in the payment of any assess­ ment due to the corpora­ tion; ana any director or officer of any insured bank who paiticipates in the declaration or payment of any such dividend or interest or in any such distribution shall, upon conviction, be fined not more than Pl,000 or im­ prisoned not more than one year, or both: Provi­ ded, That if such default is due to a dispute be­ tween the insured bank and the corporation over the amount of such as­ sessment, this subsection shall not apply, if such bank shall deposit securi­ ty to the corporation for payment upon final deter­ mination of the issue. (c) Without prior writ­ ten consent by the corpo­ ration; no insured bank shall (1) merge or conso­ lidate with any non­ insured bank or institu­ tion or convert into a non-insured bank or insti­ tution or (2) assume lia­ bility to pay any deposits made in, or similar liabi­ lities of, any non-insured bank or institution or (3) transfer assets to any non-insured bank or ins­ titution in consideration ' of the assumption of lia­ bilities for any portion of the deposits made in such insured bank. Indemnity (d) The corporation may require any insured bank to provide protec­ tion and indemnity against burglary, defalca­ tion, and other similar in­ surable losses. Whenever any insured bank refuses to comply with any such requirement the corpora­ tion may contract for such protection and in­ demnity and add the cost thereof to the assessment otherwise payable by such bank. (e) Any insured bank which willfully fails or re­ fuses to file any certified statement or pay any as­ sessment required under this act shall be subject to a penalty of not more than P100 for each day that such violations con­ tinue, which penalty the corporation may recover for its use: Provided, That this subsection shall not be applicable under the circumstances stated in the provisions of subsec­ tion (b) of this section. SECTION 17. Except with the written consent of the corporation, no person shall serve as a di­ rector, or employe of an insured bank who has been convicted, or who is hereafter convicted, of any criminal offense in­ volving dishonesty or a breach of trust. For each willful violation of this prohibition, the bank in­ volved shall be subject to a penalty of not more than P100 for each day this prohibition is violat­ ed, which the corporation may recover for its use. SECTION 18. If any provision or section of this Act or the application thereof to any person or circumstance is held inva­ lid, the other provisions or sections of this Act, in the application of such provisions or section to other persons or circum­ stances, shall not be af­ fected thereby. SECTION 19. All acts or parts of Acts and execu­ tive orders, administrative orders, or parts thereof which are inconsistent with the provisions of this Act are hereby repealed. SECTION 20. This Act shall take effect upon ap­ proval. The Philippine De­ posit Insurance Corpora­ tion shall commence busi­ ness upon organization of the board of directors and certification by the Trea­ surer of the Philippines that the Permanent Insu­ rance Fund has been ap­ propriated. Page 18 BANKING SUPPLEMENT Sunday, May 31, 1970

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