PHILIPPINE DEPOSIT INSURANCE CORP.

CHARTER AMENDMENTS

Notes compiled by

ATTY. MARIA LULU G. REYES

2 Colle e o! L"# S"i$t Lo%is U$i&e'sity S%mm"'y o! C("$ es Enhancements and refinements to powers of the corporation New safeguards for PDIC personnel New sanctions and penalties

ENHANCEMENTS ) RE*INEMENT TO THE PO+ERS O* THE CORPORATION

T(e ,"sic Policy o! PDIC -The Corporation shall promote and safeguard the interest of the depositing public by way of providing permanent and continuing insurance coverage on all insured deposits. !"ec. #$ second par.%

M"$d"te o! PDIC Insure &an' deposits (eceiver ) li*uidator of closed ban's

As deposit insurer (Sec.4 (g)) +Insured deposit means the amount due to any depositor for deposits in an insured ban' net of any obligation of the depositor to the insured ban' as of the date of closure$ but not to e,ceed P-./$ ///. !"ec.0! g%% 1 2oint account is insured separately from any individually 3 owned deposit account$ regardless +and$ +or or +and ) or is used. 1dditional provisions on 2oint accounts Insured amount of deposit is divided to as many e*ual shares as there are individuals unless stipulated otherwise in the deposit document. 1ll deposits in 2oint accounts of a depositor are added together$ but the sum of his ) her insured deposit in all 2oint accounts should not e,ceed P-./$///

Comp%t"tio$ o! M".. Deposit I$s%'"$ce Co&e' /MDIC0 E."mple 12 3ose4 $o o%tst"$di$ lo"$ /"mo%$ts i$ t(o%s"$d pesos0 Deposit &alanc e #. 5ose Individual -. 5ose 5oint 1ccounts -.# 5ose and ) or Pilar -.- 5ose and Pilar -.6 5ose or 1nita Tot"l
Tot"l I$s%'ed deposit Total 7ninsured Deposit

Dep. "hare

4a, Insuranc e Cover -./ -./ -./ -./

"hare in ma,. Insurance cover 5ose -./ #-. #-. #-. 567 788 -8. Pilar n)a #-. #-. / 678 678 8. 1nita n)a / / #-. 167 167 -.

6// -./ 0// 6// #$-./ 9:7 68.

6// #-. -// #./

5ose9s total share is :-. but his ma,imum insurance cover is only .//. The #-. in e,cess of .// is part of his uninsured deposit S%mm"'y Tot"l Deposit S("'e 88. 6-. #./ ;;;;;; 14678 S("'e i$ I$s%'"$ce Co&e' :-. -./ #-. I$s%'ed Deposito' .// -./ #-. ;;;;; 9:7 U$i$s%'ed Deposit -8. 8. -. ;;;;;; ;:7

3ose Pil"' A$it" Tot"l

Deposito's #it( o%tst"$di$ lo"$s <utstanding loans$ whether matured or unmatured$ are netted out from total outstanding deposits$ not from the insured portion of the deposit. If the depositor is a co=owner of a 2oint account$ his ) her insured deposit is determined by deducting the outstanding loan from his ) her share of the 2oint account. >is ) he.r loan obligation is not deducted from the share of co=owner.

E."mple 62 3ose )< o' Pil"' /#it( o%tst"$di$ lo"$0 Deposit 3 P0//$ /// <utstanding ?oan@ 5ose 3 P./$ /// !unmatured%A Pilar 3 P#./$ /// !matured% Deposit "hare !1% 3ose Pil"' Tot"l 688 688 >88 <)" ?oan !&% 78 178 688 Net !CB1=&% 4a, Insuranc e Cover !D% 167 167 678 Insured Deposit !E% 167 78 1:7 7ninsured Deposit !C% 67 = 67

178 78 688

Deposito's #it( lo"$ sec%'ed by (old ? o%t If a loan is secured by a hold=out on a 2oint Dand ) or account$ the loan balance is netted out from the entire account$ regardless of who among the owners of the 2oint account is the borrower. If a loan is secured by a hold=out on a 2oint +and account$ the loan balance is netted out from the share of the borrower$ unless the other owner !s% consented to the hold=out agreement.

E."mple ;"2 3ose )< o' Pil"'. Deposit of P0//$ ///A 5ose and Pilar signed the hold=out agreement for a loan of P#./$ /// 1cct. &alance !1% 3ose >88 Pil"' Tot"l >88 178 678 178 678 167 678 167 678 167 678 = = <)" ?oan !&% Net !CB1= &% Deposit "hare !D% 167 4a, Cover !E% 167 Insured Deposit !E% 167 7ninsured Deposit !C% =

E."mple ;b2 3ose )< o' Pil"'. Deposit of P0//$ ///A 5ose w) outstanding loan of P#./$ /// secured by hold=out$ only 5ose is signatory to hold out agreement 1cct. &alance Deposit "hare <)" ?oan Net !CB1=&% 4a, Cover Insured Deposit 7ninsured Deposit

5 !1% 3ose >88 Pil"' Tot"l >88 688 688 >88 178 8 678 78 688 678 !&% !E% 167 167 678 !E% 78 167 1:7 !C% = :7 :7

PDIC cannot terminate the insured status of any ban' which continues to operate or received deposits. If any insured ban' fails or refuses to pay any assessment the remedies are@ 1n action for collection before the appropriate court 1dministrative sanctions against responsible ban' officials

As Receiver / Liquidator Of Closed banks PDIC is the statutory receiver of all closed ban's. !"ec. E=ninth$ PDIC CharterA "ec. 6/$ (.1. 8:.6% 4onetary &oard shall give prior notice to PDIC of its appointment as receiver of closed ban'. !"ec. #/ !a%% 1s receiver$ it shall have full control$ management and administration of the affairs of the closed ban'. !"ec.#/ !b%% T(e A%t(o'ity o! PDIC E,amine insured ban's Investigate frauds$ irregularities and anomalies Provide financial assistance to distressed ban's

E."mi$e i$s%'ed b"$@s !"ec.E% E,aminations conducted with prior approval of monetary board No e,amination can be conducted within #- months from last e,amination date

I$&esti "te !'"%ds4 I''e %l"'ities "$d "$om"lies

6 The &oard shall appoint investigators who shall have the power to conduct investigations on frauds$ irregularities and anomalies committed in ban's !"ec. F !b=#%% &asesG (eports of e,amination conducted by PDIC and ) or &"P Complaints from depositors or from other government agency !"ec. F!b=#%% Power of the investigators 1dminister oaths E,amine$ ta'e and preserve the testimony of any person relating to the sub2ect of investigation !"ec. F !b=#%%

*i$"$ci"l Assist"$ce /"ec.#8 !c%0 Co$ditio$2 Hhen the grant of the assistance is less e,pensive than actual payoff and li*uidation of the ban' E.ceptio$2 Hhen the 4& has determined that there are systemic conse*uences of a probable failure or closure of an insured ban'. Definition of systemic ris'@ The possibility that failure of one ban' to settle net transactions with other ban's will trigger a chain reaction leading to a shutdown of ban'ing activity$ ?i'elihood of sudden une,pected collapse of confidence in a significant portion of the ban'ing or financial system with potential real economic effects Li&e b"$@s 4odes@ 4a'e loans Purchase of assets 1ssume liabilities 4a'e deposits Criteria@ Essential to provide ade*uate ban'ing service in the communityA or 4aintain financial stability Closed b"$@s 4odes@ 1ssume liabilities Purchase assets

7 Criteria@ Iital to the interest of the communityA or 1 severe financial climate e,ists which threatens the stability of a number of ban's possessing significant resources. 1pproval@ - reopening and resumption of operations approved by 4&

Recipie$t o! *i$"$ci"l "ssist"$ce2 ban's in danger of closing a corporationG ac*uiring control of a ban' in danger of closing consolidating with or ac*uiring the assets of insured ban' in danger of closing 1ssistance to an insured ban' may ta'e the form of 3 ?oans Purchase of assets 1ssumption of liabilities 4a'ing deposits Hith concurrence of 4onetary &oard$ e*uity or *uasi=e*uity infusion

SA*EGUARD *OR PDIC PERSONNEL

Le "l Assist"$ce PDIC shall underwrite or advance litigation costs and e,penses in connection with any civil$ criminal or administrative action or proceeding involving PDIC personnel. "uch PDIC personnel are made a party to the action or proceeding by reason of or in connection with e,ercise of authority or performance of functions or duties. !"ec F !f%% Personnel separated from service shall continue to be provided with legal protection in connection with any act done or omitted by them in good faith during their tenure)employment. In the event of compromise)settlement$ the personnel to be indemnified are those identified not to have committed any negligence or misconduct. PDIC to advance litigation e,penses upon receipt of an underta'ing by the PDIC personnel to repay the amount advanced should it determined by the &oard that he is not entitled to be indemnified. !"ec.F!g%%

8 1ssistance includes grant or advance of legal fees to enable concerned PDIC personnel to engage a counsel of his choice.!"ec.F!h%%

SANCTION AND PENALTIES

P%$is("ble "cts Hillful refusal to submit reports !"ec. -#!f%#% 7n2ustified refusal to permit e,amination and audit of deposit record or affairs of institution !"ec.-#!f%-% Hillful ma'ing of false statement or entry in ban' report or document re*uired by PDIC !"ec -# !f%6% "ubmission of false material information in relation to financial assistance e,tended to the ban' !"ec -# !f%0% "plitting deposits or creation of fictitious loans or deposit accounts !"ec -#!f%.% (efusal to allow PDIC to ta'e over$ or obstructing the ta'eover of a closed ban' placed under its receivership !"ec -# !f%:% (efusal to turn over or destroying or tampering ban' records !sec-#!f%8% Craudulent disposal$ transfer or concealment of any asset$ property or liability of a closed ban' !"ec-# !f%E% Iiolation of or causing any person to violate the e,emption from garnishment$ levy$ attachment or e,ecution !sec-#!f%% Hillful failure or refusal to comply with or violation of the provisions of (.1. 6.F#$ commission of any other irregularities$ and)or conducting business in an unsafe or unsound manner as may be determined by the &oard !"ec.-#!f%#/% C'imi$"l Pe$"lties Imprisonment of prision mayor or Cine of not less than P./$/// but not more than P- million <r both at the discretion of the court !"ec.-# f%

9 I$A%$ctio$s No court e,cept the Court of 1ppeals shall issue a T(<$ Preliminary in2unction$ or preliminary mandatory in2unction against the PDIC. 1ny in2unction issued in violation of this provision is void J without force and effectA 2udge who issued the same shall be suspended for at least :/ days without pay. !"ec.--% "upreme Court may issue a restraining order or in2unction on matters of e,treme urgency involving a constitutional issue$ such that unless a T(< is issued$ grave in2ustice and irreparable in2ury will arise. Party applying for the T(< or in2unction shall post a bond in an amount to be fi,ed by the "upreme Court