March 27, 2017

The Philippine Deposit Insurance Corporation (PDIC) filed on March 22, 2017 a motion with the Court of Appeals (19th Division in Cebu City) to lift and dissolve the Court’s temporary restraining order (TRO) and/or status quo ante order (SQAO). The Court of Appeals, in its Resolution dated March 13, 2017, ordered PDIC to stop payments of deposit insurance to the depositors of the closed Rural Bank of Barotac Viejo (Iloilo), Inc., and its liquidation. PDIC (Receiver of the closed RB of Barotac Viejo) had earlier vowed to exhaust all legal remedies available to pursue its commitment to protect the interests of the bank’s depositors and creditors, and resume public service at the soonest possible time.

The orders were issued by the Court of Appeals because of the case filed by the owners of the bank which questioned the bank’s closure. The orders are effective for 60 days unless sooner lifted.

On February 23, 2017, the Monetary Board ordered the closure of RB of Barotac Viejo and directed the PDIC to proceed with the takeover and liquidation of the bank.

Recognizing the need to inform depositors of the temporary suspension of its deposit insurance payout and liquidation operations in the closed RB of Barotac Viejo, PDIC conducted a Depositors-Borrowers Forum each for the bank’s Head Office on March 22, 2017 and for its Concepcion Branch on March 23, 2017.

During the Forum, PDIC explained that the TRO and/or SQAO covered the acceptance, processing and payment of deposit insurance claims. Also included in the suspension are the acceptance, processing and payment of claims against the closed bank’s assets and disposal of assets. PDIC may continue to receive payments on voluntary basis from borrowers via various payment options. But for fully paid accounts, PDIC is prevented from issuing a release of the mortgage until the TRO and/or SQAO is lifted.

PDIC had paid a total of PHP107.09 million in deposit insurance as of March 16, 2017 to the bank’s depositors, including payments via postal money orders amounting to PHP30.5 million coursed through the Philippine Postal Corporation for depositors with balances of PHP100,000 and below. This represented 75.9% of the total deposit liabilities of the bank amounting to PHP141.1 million. PDIC also clarified misconceptions that the payments for deposit insurance were being drawn from the closed bank’s funds. It emphasized that under the law, payments for deposit insurance claims are sourced from PDIC’s Deposit Insurance Fund, the funding source for all deposit insurance payments. Following standard takeover procedures, PDIC has started to gather, control, and inventory the records, assets and liabilities including remaining funds of RB of Barotac Viejo when it took over the bank, but had to stop following the TRO and/or SQAO. The items inventoried were properly accounted for by the designated PDIC Team and held intact for safekeeping and in trust for the bank by the PDIC as Receiver.

Depositors, creditors and borrowers of RB of Barotac Viejo are advised to await further developments on the case through announcements made at PDIC’s official website, www.pdic.gov.ph and facebook account, and through local media networks. They may communicate with PDIC by calling the PDIC Public Assistance Hotlines at (02) 841-4630 to (02) 841-4631, or send their e-mail to pad@pdic.gov.ph. Concerned clients of the bank who are outside Metro Manila may also call PDIC at its Toll Free Hotline at 1-800-1-888-PDIC (7342). Inquiries may also be sent via private message to the official PDIC Facebook account at www.facebook.com/OfficialPDIC.

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The Philippine Deposit Insurance Corporation (PDIC) was established on June 22, 1963 by Republic Act 3591 to provide depositor protection and help maintain stability in the financial system by providing deposit insurance. Effective June 1, 2009, the maximum deposit insurance coverage is P500,000 per depositor. All deposit accounts by a depositor in a closed bank maintained in the same right and capacity shall be added together. A joint account shall be insured separately from any individually-owned deposit account.

PDIC news/press releases and other information are available at the website, www.pdic.gov.ph.