University of the Visayas

Philippine Deposit
Insurance Corporation
(PDIC) Law
R.A. 3591, As amended
 BRIEF BACKGROUND
• Government instrumentality created in 1963 by virtue of R.A. 3591
• PDIC is an attached agency of the Department of Finance
• Latest amendments are contained in R.A.10846
 empowered PDIC with stronger authorities to protect the depositing public and
promote financial stability
PDIC now has the authority
 Help depositors to have quicker access to their insured deposits should their bank close
 Resolve problem banks while still open
 Hasten liquidation process for closed banks
 Mete out stiffer sanctions and penalties against those who engage in unsafe and unsound
banking practices
 What is the purpose of the PDIC Law?
• Insure the deposits of all banks which are entitled to the benefits of
insurance

• Promote and safeguard the interests of the depositing public

• Providing insurance coverage on all insured deposits
• Helping maintain a sound and stable banking system
 What are the functions of PDIC?
To act as:
1. deposit insurer
2. co-regulator of banks
3. receiver and liquidator of closed banks
Insurer of Deposit

PDIC as a basic policy, promote and safeguard the interest

of the depositing public by way of providing permanent
and continuing insurance coverage on all insured
Regulator of Banks

• Empowered to examine and investigate banks

Examination of Banks

• Involves an evaluation of the current status of a bank

and determines its compliance with the set standards
regarding solvency, liquidity, asset valuation, operations,
systems, management and compliance with banking
laws, rules and regulations.

• Such process involves an intrusion into a bank’s records.

Investigation of Banks
• Conducted based on specific findings of certain acts or
omissions which are subject of a complaint or a Final
Report Examination made by PDIC.

• Does not involve a general evaluation of the status of a

bank but zeroes in on specific acts and omissions
uncovered via an examination, or which are cited in a
complaint.
Rehabilitation Receiver of Banks

• PDIC as receiver shall control, manage and administer

the affairs of the closed bank.
Meaning of Deposit

• Unpaid balance of money or its equivalent received by a

bank in the usual course of business
• For which it has given or is obliged to give credit to a
commercial, checking, savings, time or thrift account
• Evidenced by passbook, certificate of deposit or other
evidence of deposit
Insured Deposits

• Amount due to any bona fide depositor for legitimate

deposits in an insured bank, net of any obligation of the
depositor to the insured bank as of the date of closure,
but not to exceed P500,000.
Can the maximum deposit insurance
be adjusted?
• Yes, it may be adjusted in such amount, for such a
period, and/or for such deposit products provided the
following are complied with

i. The Monetary Board has determined that there is a

condition that threatens the monetary and financial
stability of the banking system
Can the maximum deposit insurance
be adjusted?
ii. The adjustments is approved by a unanimous vote of
the BoDs of PDIC in a meeting called for the purposed
and chaired by the Sec. of Finance

iii. Adjustments are approved by the President of the Phils.

What are the deposits not covered by
insurance?
Sioux maintains P200,000 in BDO Bank’s Cebu branch
and P250,000 in BDO Bank’s US Branch. In the event of
a closure of BDO Bank, how much is Sioux’s insured
deposit?
What are the deposits not covered by
insurance?
A: P200,000. The P250,000 deposited in BDO bank’s US
Branch is not covered being payable outside of the Phils.
Maximum Liability
Per bank
• the entitlement to deposit insurance is on a per bank
basis

• If Peony has a deposit with BPI Bank and CBC Bank and
both banks closed, Peony is entitled to P500,000
insurance coverage for each bank.
Maximum Liability
Per Depositor, Per Capacity Rule
• all deposits in the bank maintained in the same right and
capacity for his benefit either in his own name or in the
name of others shall be added together in determining the
insured amount, and regardless of the type of account
Maximum Liability
Accounts “By”, “In Trust For (ITF)” or “For the Account
of (FAO)” another person:
1. “By” account (Claes by Bjork)
Claes is the depositor
2. “ITF” account (Claes ITF Bjork)
Bjork is the depositor
3. “FAO” account (Claes FAO Bjork)
Bjork is the depositor
Individual Accounts
All individual accounts of a depositor, including those
where ownership is vested, shall be insured to a maximum
of P500,000.
Individual Accounts
How much is Steff Go’s insured deposit if she has the
following deposits in the same bank?
Individual Accounts
How much is Steff Go’s insured deposit if she has the
following deposits in the same bank?
Joint Accounts
A joint account regardless of whether the conjunction “and”,
“or”, “and/or” is used shall be insured separately from any
individually owned deposit account, provided that:

1. If the account is held jointly by two or more natural

persons, or by two or more juridical persons or entities, the
maximum insured deposit shall be divided into as many equal
shares as there are individuals, juridical persons or entities,
unless a different sharing is stipulated in the document of
deposit; and
Joint Accounts
2. If the account is held by a juridical person or entity jointly
with one or more natural persons, the maximum insured
deposit shall be presumed to belong entirely to such juridical
person or entity.

Provided, further, that the aggregate of the interest of each co-

owner over several joint accounts, whether owned by the
same or different combinations of individuals, juridical
persons or entities, shall likewise be subject to the maximum
insured deposit of P500,000.
Joint Accounts
The P500,000 entitlement to joint deposits is separate
from the P500,000 applicable to the individually owned
accounts by the depositor, giving him a maximum of
P1,000,000 insurance coverage.

Thus, a depositor who maintains both individual and joint

accounts maybe insured up to a total of P1,000,000:
P500,000 for all his individual accounts, P500,000 for all
his joint accounts.
Joint Accounts
Marcus Ty maintains the following accounts with CBC
Bank:

How much is the total insured and uninsured deposit of

Marcus Ty?
Joint Accounts
How much is the total insured and uninsured deposit of
Marcus Ty?
Joint Accounts
Marcus Ty maintains the following accounts with CBC
Bank:

If Marcus Ty had another joint account with Rolando, the

balance of which is P700,000, how much is the total insured
and uninsured deposit of Marcus Ty?
Joint Accounts
Marcus Ty’s share of the balance will be P350,000 but
there is no more insurance coverage for Marcus since he
already exhausted the P500,000 insurance coverage with
the first two joint accounts.
PROCEDURE FOR THE PDIC
1. PDIC shall commence the determination of insured deposits
due the depositors of a closed bank upon its actual takeover of
the closed bank.
2. PDIC shall give notice to the depositors of the closed bank
of the insured deposits due them by whatever means deemed
appropriate by the Board of Directors.
3. PDIC shall publish the notice once a week for at least 3
consecutive weeks in a newspaper of general circulation in the
community where the closed bank or its branches are located.
CERTIFICATE OF DEPOSIT
The name of the owner/holder of any negotiable certificate
of deposit shall be registered as owner/holder in the books
of the issuing bank.

Otherwise, the depositor will not be recognized as a

depositor entitled to the rights in PDIC Act.
CLAIMS
These are filed during the claims settlement operations
period, as announced in the Notice to Depositors
published in national or local newspapers, or posted in the
bank premises and conspicuous places within the locality
and in the PDIC website.
Those required to file claims:
1. Depositors with valid deposit accounts with balances of
more than P100,000.
2. Depositors who have outstanding obligations with the
closed bank regardless of amount of deposits.
3. Depositors with account balances of less than P100,000
who have no updated addresses in the bank records or who
have not updated their addresses through Mailing Address
Update Form (MAUF) issued by the PDIC.
Those required to file claims:
4. Depositors who maintain their accounts under the name
of business, regardless of the type of account and account
balance.
5. Depositors with accounts not eligible for early payment,
regardless of type of account and account balance per
advice of PDIC.
Those not required to file claims:
Depositors with valid deposit accounts with balances of
P100,000 and below
Provided:
no obligations with the closed bank
have complete and updated addresses in the
bank records or have updated these through MAUF
issued by PDIC
CLAIMS
These depositors are entitled to immediate/early payment
of deposit insurance claim as part of PDIC’s initiative to
provide convenience to small depositors.

Payments are sent to the depositor’s mailing address as

postal money orders.
Who should sign the insurance claim?
• Depositor – For depositors who are 18 years and above
• Parent – If the depositor is below 18 years old
• Agent – For “By” accounts
• Trustee – For “In Trust For” ITF accounts
• Each Depositor – For joint accounts
PERIODS
• Period to file claim – 2 years from actual takeover of the
closed bank
• Period to enforce claim – 2 years after the 2 year period
to file a claim
• PDIC may require proof of claims to be filed before
paying the insured deposits
• In any case where PDIC is not satisfied as to the validity
of a claim
It may require final determination of a court of
competent jurisdiction before paying.
 Effects of non-filing or non-enforcement of claim
within the prescribed period
• All rights of the depositor against the PDIC with respect
to the insured deposit shall be barred
• All rights of the depositor against the closed bank and its
shareholders or the receivership estate to which PDIC
may have become subrogated, shall thereupon revert to
the depositor.
• PDIC shall be discharged from any liability on the
insured deposit.
Modes of payment
1. By cash
2. By making available to each depositor a transferred
deposit in another insured bank in an amount equal to
insured deposit of such depositor
Withholding of payment
•PDIC may withhold payment of such portion of the
insured deposit for the payment of any liability of such
depositor
As a stockholder of the closed bank, or
Any liability of such depositor to the closed bank or its
receiver which is not offset against a claim due from such
bank
Effect of payment
PDIC shall be subrogated to all rights of the depositor
against the closed bank to the extent of such payment
Period for the PDIC to settle claim
• 6 months from the date of filing of the claim
• Failure to settle the claim within the said period due to
grave abuse of discretion, gross negligence, bad faith or
malice
Upon conviction, will be subjected to imprisonment
from 6 months to 1 year
EXC: period shall not apply if the validity of the
claim requires the resolution of issues of facts and/or law
by another office, body or agency
END
1. Maria is a depositor of XXX Bank. She has three (3) deposit
accounts all under her name. One, in checking account, one in saving
account and another one in time deposit account. Each account has a
balance of Php250,000. XXX Bank became insolvent. PDIC was
assigned as receiver of the Bank. Maria therefore is unable to withdraw
from all of the accounts. She then filed her claims with the PDIC.
Which statement is most accurate?

a. Maria can claim a total of Php500,000 for all the three (3) accounts.
b. Maria can only claim from one (1) account of Php250,000.
c. Maria can claim a total of Php750,000 from all the three (3)
accounts.
d. Maria cannot claim anything from any of the deposit accounts.
2. The following are the functions of the PDIC, except

a. To investigate banks
b. To safeguard deposits
c. To audit bank financial statements
d. To liquidate closed banks
3. Rose had the following accounts with ZZZ Bank:
I. Savings account #001 under her name, P100,000.
II. Savings account #002 under her name, P80,000.
III. Savings account #003 named after Rose for the account of May,
P65,000.
IV. Savings account #004 under both Rose and May as co-depositors,
P44,000.
How much is the insured deposit of Rose?
a. P202,000
b. P224,000
c. P267,000
d. P289,000
4. A depositor is not required to file claims with the PDIC if
his accounts have a balance:

a. of less than P100,000

b. not exceeding P100,00
c. of less than P50,000
d. not exceeding P50,000
5. S1: Foreign currency deposits are considered as insured
deposits under the PDIC Law.
S2: Deposits payable outside the Philippines are considered as
insured deposits under the PDIC Law.

a. Only S1 is true.
b. Only S2 is true.
c. Both statements are true.
d. Both statements are not true.