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Chapter 10DEPOSIT INSURANCE

I. ROLES of PDICA. Insure the deposits of all banks which are entitled to the benefits of

insurance and which shall have the powers granted by lawB. Promote and safeguard the interests of the depositing public by way of

providing permanent and continuing insurance coverage on all insureddeposits

II. POWERS of PDICA. To adopt a corporate sealB. To have succession until dissolved by an Act of CongressC. To make contractsD. To sue and be sued

i. Suits of civil nature deemed to arise under Phil. Lawsii. No attachment or execution against PDICiii. BOD shall designate an agent upon whom service of process may

be madeE. To appoint officers and employee; define their duties, fix compensation,

require bonds of them, to dismiss for a cause

F. To prescribe by-laws not inconsistent w/ lawG. To exercise by its BOD, or duly authorized officers or agents, all powersspecifically granted by law

H. To conduct examination of banks w/ prior approval of MBi. No examination can be conducted w/in 12 months from last

examination dateii. The examination shall maximize the efficient use of the relevant

reports, information, and findings of the BSPiii. BOD shall prescribe guidelines

I. To act as receiverJ. To prescribe by its BOD such rules and regulations as it may deem

necessary to carry out the provisions of PDIC lawK. To establish its own provident fund (made of contribution made both by it

or its employees)L. To compromise, condone, or release any claim or settled liability to PDIC,

regardless of the amount involved

III. BOARD OF DIRECTORSA. Composition

i. Secretary of Finance (ex-officio chairman)ii. Governor of BSP (ex-officio member w/o compensation)iii. President of PDIC (Vice chairman of board) appointed by Pres of

RP from either Govt or private sector to serve on full-time basis fora term of 6 years

iv. 2 members from private sectors (term 6 yrs w/o reappointment)qualifications: GMC, unquestionable integrity and responsibility;

recognized competence in economics, banking and finance, law,management administration or insurance; @L 35 y.o

B. Disqualification of Appointive Members For duration of their tenure or term of office and for a period 1 year

thereafter DQ from holding any office, position or employment inany ensured bank

C. Quoroum 3 = Q; all decisions shall require concurrence of@L 3 members SOF/Gov. BSP may designate a representative -> position: shall not

be lower than an U.sec or deputy gov, to attend such meetings andto vote on behalf of their respective principals

Pres act as chairman if Chairman of Board unavailable/ vacant

D. Per Diem Fixed by Sec of Finance Pres my fix other emoluments = those received by other

governmental institutions

E. Authority of the board1. To prepare and issue rules and regulations2. To direct the management, operation and administration of PDIC3. Establish a HR management system

a. Compensation structure instituted as integral component ofcorporattions HR

b. All positions shall be governed by compensation, positionclassification system and qualification standards

c. Compensation comparable to other govt financial institutionsand subject to review by Board no more than 1q2yrs

d. Exempt from existing rules and regulations on compensation,position classification and qualification standards

e. Endeavor to make its system conform to Compensation andPosition Classification Act of 1989

4. To appoint, establish rank, fix remuneration, approve training,remove o/e

5. Adopt annual budget; authorize expenditures6. Approve methodology for determining the level and amount ofprovisioning for insurance and financial assistance losses

IV. OFFICERSA. The President

i. Shall be the chief executiveii. Salary is fixed by Pres of RPiii. Sum total salary shall serve as ceiling for fixing that of the othersiv. Powers and Duties

a. To prepare agenda for the meeting of Board; to submit for

consideration of Board policies and measures

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b. To execute and administer the policies and measures approvedby Board

c. To direct and supervise the operations and internaladministration

d. To represent PDIC in all dealings w/ other officese. To authorize, w/ his signature, contracts, notes and securities

issued, annual reports, balance sheets, etc docsf. To represent PDIC in all legal proceedings/actionsg. To delegate his power to represent to other officers

h. To exercise such other powers as may be vested in himB. V-Pres

i. Assist the Pres; salary: fixed by BOD upon recom of PresPDICii. Can succeed the Pres (instances: absence/ temp or permanent

incapacity/ vacancy and pending appointment of new PresPDIC)

C. Bank Examinersi. Have power to examine any insured bankii. Have power to make thorough examination of all the affairs of bank;

power toa. Administer oathb. Examine and take preserve the testimony of any other officers

and agents thereofc. To compel presentation of books, documents or records

necessary in his judgment to ascertain the facts relative to thecondtition of the bank

D. Claim Agentsi. Have power to investigate all claims for insured depsoits and

transferred deposits

E. Investigatorsi. Have power to conduct investigations on frauds, irregularities and

anomalies committed in banks, based on report of examinationconducted by PDIC and BSP or complaints from depositors or other

govt agency

V. DEPOSIT INSURANCE COVERAGE Deposit liabilities of any bank or banking institution shall be insured

with PDIC Factors to be considred

o Financial history and condition of banko Adequacy of its capital structureo Future earning prospectso General character of its mgto Convenience and needs of community to be servedo WON its corpo powers consistent w/ purposes of PDIC

Statutory Liability

o PDIC was created by law and, as such, is governed primarilyby the provisions of the special law creating it. The liability of

PDIC for insured deposits therefore is statutory and suchliability rests upon the existence of deposits with insuredbank, not on the negotiability or non-negotiability of thecertificates evidencing these deposits

A deposit must in Fact be Madeo The fact that the cert state that the certicates are insured by

PDIC does not ipso facto make the latter liable for the sameshould the contingency insured against arise

o The law requires a corresponding deposit be placed in the

insured banko A deposit is constituted only if money or the equivalent of

money is received by a bank Holder in Due Course not Applicable

o Even if depositor were to be regarded as an innocentpurchaser of certificates of deposits as nego instruments, itssituation would be in no wise bettered so far as relate to aclaim against guaranty fund. The fund protects deposits only

Deposit Insurance of Foreign Currency Deposits insured with PDIC;insurance payment shall be in the same currency in which theinsured deposits are denominated

XXIII. TRO AND INJUCTION Only CA shall issue TRO, prelim injuction or prelim mandatory

injunction against PDIC SC may issue if matter is of extreme urgency involving a consti issue Any TRO or injuction issued in violation of the foregoing is void; any

judge who issued: penalty of suspension of @L 60 days w/. pay

XXIV. Reorganization PDIC may be reorganized by the BOD by adopting if it so desires an

entirely new staffing pattern or organizational structure to suit itsoperations

Reorg: to be completed within 6 mos after effectivity of PDIC BOD is authorized to provide separate incentives, and all those who

retire or be separated from the service on account of reorganizationshall be entitled to such incentives