GUIDELINES ON TERMINATION AND REINSTATEMENT OF` INSURED STATUS OF BANKS

1.         PDIC
shall terminate the insured status of a bank upon its continued failure
or refusal to pay the assessment, due semi-annually, computed by
multiplying the assessment rate as determined by the PDIC Board of
Directors and the bank’s liability for deposits, in accordance with
Section 6(a) of R.A. 3591, as amended.

2.         First
demand letters shall be sent to banks through registered mail, thirty
(30) days after the 31 January and 31 July prescribed deadlines for
filing of certified statements and remitting the corresponding
assessments.  Interest charges at the legal, rate
of 12% per annum, reckoned from due date/s shall be imposed upon these
banks, in accordance with Section 16(e) of R.A. 3591, as amended.

3.         Failure
to comply within thirty (30) days after receipt of the first demand
letter shall constitute willful failure or refusal by the bank to file
the required certified statement and pay the corresponding assessment
and interest charges.  Thereafter, PDIC shall send the second demand letter through registered mail.  Penalty
charges at twice the rate of interest charges or 24% per annum shall be
added thereon, reckoned 30 days from receipt of the first demand
letter, pursuant to Section 16(e) of R.A. 3591, as amended.

4.         Termination proceedings of the bank’s insured status shall start thirty (30) days after receipt by the bank of PDIC’s second demand letter.

5.         The
third and final demand letter shall be sent to the bank through
registered mail. Should the bank still fail to remit the assessment
payment, including interest and penalty charges within thirty (30) days
from the date of mailing of the third and final demand letter, PDIC
shall terminate the bank’s insured status which shall be effective after
the lapse of said thirty (30) days, whether or not said demand letter
has been actually received by the bank.

6.         The
order of termination shall be sent to the bank, by such mode of service
as may be expeditious and efficient, upon the expiration of the 30-day
period from date of mailing of the third and final demand letter.  The order of termination shall be final and executory until set aside, modified or suspended by the PDIC Board Directors.

7.         The
Corporation shall publish the order of termination of the insured
status in a newspaper of general and/or local circulation for three (3)
consecutive days.  The cost of said publication shall be chargeable to the bank.  Immediately
upon receipt of the order of termination from the Corporation, the bank
shall give written notice of such termination to each of the depositors
at his last address recorded in the books of the bank.  Willful
failure by the bank to do so shall subject its directors and/or officer
to an administrative fine not exceeding One Thousand Pesos (P1,000.00)
per day under the provisions of Section 16 (f) and/or render them
criminally liable for violation thereof, which is punishable by a fine
of not more than Twenty Thousand Pesos (P20,000.00) and by imprisonment
of not more than five years under the provisions of Section 16 (g) of
R.A. 3591, as amended.

8.         Failure of the bank for whatever reason to give written notice to the depositors shall not in any way affect the validity and effectivity of the order of termination of insured status against the depositors of the bank.

9.         The
insured deposits of each depositor in the bank as of the effective date
of termination, less all subsequent withdrawals/debit adjustment from
any deposits of such depositor, shall continue to be insured for a
period of ninety (90) days from the date of such termination.  No additions to any such deposits and no new deposits in such bank after the date of such termination shall be insured by PDIC.

10.       The
bank whose insured status has been terminated shall not advertise or
hold itself out as having insured deposits unless, in the same
connection, the bank shall state with equal prominence that such
additions to the insured deposits and new deposits made after such
termination are not so insured.  Any
director/officer of such bank who violates or causes the violation of
the foregoing shall be criminally liable therefore, with a penalty of a
fine not exceeding twenty thousand pesos (P20,000.00) or imprisonment of
not more than one year or both, a provided for under Section 16 (a) of
R.A. 3591, as amended.

11.       A
bank whose insured status has been terminated may request for the
reinstatement of its insured status by means of a written application
filed with the Corporation.  The PDIC Board of
Directors may approve such application based on a recommendation that:
(a) the cause or causes for termination of insured status has/have been
corrected, and (b) that the bank may continue to operate with insurance
cover with safety to its depositors, creditors and the general public,
thereby, not exposing the Deposit Insurance Fund to undue risk.

Adopted: 26 March 2002

(SGD.) ROSALINDA U. CASIGURAN
Officer-in-Charge