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An Act Establishing the Philippine Deposit Insurance Corporation, Defining its

Powers and Duties and for other Purposes

Republic Act 3591

(AS AMENDED BY REPUBLIC ACT NO. 9576 and REPUBLIC ACT NO. 10846)

REPUBLIC ACT NO. 9576

AN ACT INCREASING THE MAXIMUM DEPOSIT INSURANCE COVERAGE, AND IN


CONNECTION THEREWITH, TO STRENGTHEN THE REGULATORY AND
ADMINISTRATIVE AUTHORITY, AND FINANCIAL CAPABILITY OF THE PHILIPPINE
DEPOSIT INSURANCE CORPORATION (PDIC), AMENDING FOR THIS PURPOSE
REPUBLIC ACT NUMBERED THREE THOUSAND FIVE HUNDRED NINETY-ONE, AS
AMENDED, OTHERWISE KNOWN AS THE PDIC CHARTER, AND FOR OTHER PURPOSES

REPUBLIC ACT NO. 10846

AN ACT ENHANCING THE RESOLUTION AND LIQUIDATION FRAMEWORK FOR BANKS,


AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 3591, AS AMENDED, AND OTHER
RELATED LAWS

BASIC POLICY

The Corporation shall, as a basic policy, promote and safeguard the interests of the
depositing public by providing insurance coverage on all insured deposits and
helping maintain a sound and stable banking system.

STATE POLICY

To strengthen the mandatory deposit insurance coverage system to generate,


preserve, maintain faith and confidence in the countrys banking system, and
protect it from illegal schemes and machinations.

Promoting and safeguarding the interests of the depositing public by way of


providing insurance coverage on bank deposits and in helping develop a sound and
stable banking system.

PDICs overall mandate

PDIC exists to provide deposit insurance coverage for the depositing public to help
promote public confidence and stability in the economy.

It ensures prompt payment of insured deposits, exercises complementary


supervision of banks, adopts responsive resolution methods, and applies efficient
management of receivership and liquidation functions.

PDICs functions
1. Deposit Insurer

The PDIC provides a maximum deposit insurance coverage of


PHP500,000 per depositor per bank.

To pay insured deposits, the PDIC builds up the Deposit


Insurance Fund primarily through assessments of member-banks
at an annual flat rate of 1/5 of 1% of their total deposit liabilities.

2. Co-regulator of Banks

The PDIC works closely with the Bangko Sentral ng


Pilipinas (BSP) to help maintain stability in the banking
system.

PDIC is authorized to:

issue regulations to implement its Charter,

conduct bank examinations and


investigations to assess financial safety and
soundness of banks and their adherence to
banking and deposit insurance rules and
regulations, and

extend financial assistance to eligible


distressed banks.

3. Receiver and Liquidator of Closed Bank

The PDIC is the statutory receiver and liquidator of closed banks.

Upon order of the Monetary Board of the BSP, PDIC:

takes over closed banks;

administers their assets, records and affairs;

and manages and preserves these assets for the benefit


of the closed banks creditors.

Under RA 10846 or the amended PDIC Charter, a


closed bank transitions seamlessly from closure to
liquidation, enabling PDIC to dispose and distribute
assets and settle claims of creditors in accordance
with the preference and concurrence of credits as
provided by the Civil Code of the Philippines.
Definition of Terms

Deposits

The term deposit means the unpaid balance of money or its equivalent received by
a bank in the usual course of business and for which it has given or is obliged to
give credit to a

commercial,

checking,

savings,

time or

thrift account, evidenced by a passbook, certificate of deposit, or other evidence of


deposit issued in accordance with Bangko Sentral ng Pilipinas rules and regulations
and other applicable laws, together with such other obligations of a bank, which,
consistent with banking usage and practices,

The Board of Directors shall determine and prescribe by regulations to


be deposit liabilities of the bank

Provided, That any obligation of a bank which is payable at the office of


the bank located outside of the Philippines shall not be a deposit for
any of the purposes of this Act or included as part of the total deposits
or of insured deposit:

Provided, further, That subject to the approval of the Board of Directors, any insured
bank which is incorporated under the laws of the Philippines which maintains a
branch outside the Philippines may elect to include for insurance its deposit
obligations payable only at such branch.

Are all banks members of the PDIC?

Membership of banks to PDIC is mandatory; hence, all operating banks are


members of PDIC.

What about branches and subsidiaries of foreign bank here in the Philippines?

PDIC Charter provides that the deposits in branches and subsidiaries of foreign
banks licensed by the Bangko Sentral ng Pilipinas (BSP) to perform banking
functions in the Philippines are insured by the PDIC.

Insured Deposits
The term insured deposit means the 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 date of closure, but not to exceed P500,000.00.

A joint account shall be insured separately from any individually-owned deposit


account.

In determining such amount due to any depositor, there shall be added together all
deposits in the bank maintained in the same right and capacity for his or her benefit
either in his or her own name or in the name of others.

Which deposits are insured?

By Deposit Type:

1. Savings

2. Special Savings

3. Demand/ Checking

4. Negotiable Order of Withdrawal (NOW)

5. Certificate of Time Deposits

By Deposit Account:

1. Single Account

2. Joint Account

3. Account By, In Trust For (ITF) or For the Account of (FAO) another
person

By Currency:

1. Philippine peso

2. Foreign currencies considered as part of BSPs international reserves

Exclusions from Insurance Coverage

The Corporation shall not pay deposit insurance for the following accounts or
transactions:

1. Investment products such as bonds and securities, trust


accounts, and other similar instruments;

2. Deposit accounts or transactions which are fictitious or


fraudulent as determined by the Corporation;
3. Deposit accounts or transactions constituting, and/or emanating
from, unsafe and unsound banking practice/s, as determined by
the Corporation, in consultation with the Bangko Sentral ng
Pilipinas, after due notice and hearing, and publication of a
directive to cease and desist issued by the Corporation against
such deposit accounts, transactions or practices; and

4. Deposits that are determined to be the proceeds of an unlawful


activity as defined under Republic Act No. 9160, as amended.

In relation to number 3.
(PDIC Regulatory Issuance No. 2011-01)

Unsafe and unsound deposit-related activities include, among others:

Deposit-related practice/activity/transaction without the approval or adequate


controls required under existing laws, rules and regulations

Failure to keep bank records within bank premises

Granting high interest rates, when bank has:

(i) negative unimpaired capital, or

(ii) liquid assets to deposit ratio less than 10%

Non-compliance with PDIC regulations

R.A. No. 9576 stipulates that PDIC will not pay deposit insurance for the following
accounts or transactions:

1. Investment products such as bonds, securities and trust


accounts;

2. Deposit accounts which are unfunded, fictitious or fraudulent;

3. Deposit products constituting or emanating from unsafe and


unsound banking practices;

4. Deposits that are determined to be proceeds of an unlawful


activity as defined under the Anti-Money Laundering Law.

What are required to be insured?

The deposit liabilities of any bank which is engaged in the business of receiving
deposits as herein defined on the effective date of this Act, or which thereafter may
engage in the business of receiving deposits, shall be insured with the Corporation.
Whenever a bank is determined by the Bangko Sentral ng Pilipinas to be capital
deficient, the Corporation may conduct an insurance risk evaluation on the bank to
enable it to assess the risks to the DIF. Such evaluation may include the
determination of:

I. the fair market value of the assets and liabilities of a bank; or

II. the risk classification of a bank; or

III. possible resolution modes under Section 11 of this Act, subject to


such terms and conditions as the PDIC Board may prescribe.

When does liability arise?

PDIC covers only the risk of a bank closure ordered by the Monetary Board. Thus,
bank losses due to theft, fire, closure by reason of strike or existence of public
disorder, revolution or civil war, are not covered by PDIC.

Extent of Liability

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.

If the deposit account in a closed bank is more than P500,000.00, what happens to
the excess of the maximum amount of insured deposit?

The claim for the uninsured portion of the deposit is a claim against the assets of
the closed bank.

The claim may be filed with the Liquidator of the closed bank within sixty (60) days
from publication of notice of closure.

However, payment of said claim will depend on the banks available assets and
approval of the Liquidation Court.

The schedule of payment beyond the P500,000.00 maximum insurance shall be


based on priorities set by law.

Adjustments

Under R.A. No. 9576, the PDIC may propose to adjust the MDIC, subject to the
approval of the President of the Philippines, in case of a condition that threatens the
monetary and financial stability of the banking system that may have systemic
consequences

If I have deposits in several different insured banks, will my deposits be added


together for insurance purposes?
No. Deposits in different banking institutions are insured separately.

What if there are several deposits in different branches of the same bank, will it be
insured separately?

If a bank has one or more branches, the main office and all branch offices are
considered as one bank.

Thus, if you have deposits at the main office and at one or more branch offices of
the same bank, the deposits are added together when determining deposit
insurance coverage, the total of which shall not exceed P500,000

CALCULATION OF LIABILITY

Per depositor, Per capacity rule

Charter Provision: Sec. 4 (g):

x x x In determining such amount due to any depositor, there shall be added


together 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. x x x

PDIC shall pay deposit insurance on all valid deposits up to the Maximum Deposit
Insurance Coverage of Php500,000, per depositor, of a closed bank.

SINGLE ACCOUNTS

These are accounts maintained solely by a depositor (natural person or juridical


entity/org).

What are considered single accounts?

1. In-Trust-For (ITF) account,

Maria ITF Jose, Jose is the owner of the account

2. By Accounts

Jose By Maria, the owner is Jose of the account

3. For the Account of (FAO) account,

Maria For the Account of Jose, Jose is the owner of the


account.

Some Concepts on Single Accounts

In determining the insured deposit of single accounts, 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.
Total insured deposit should not exceed the Maximum Deposit Insurance Coverage
of Php500,000.

Single accounts are insured separately from joint accounts up to the Maximum
Deposit Insurance Coverage of Php500,000.

To simplify:

In the case where a depositor is the sole beneficial owner of a single, For the
Account of, By, and In Trust For accounts, the consolidated balances of these
accounts shall be insured up to Php500,000.

The depositors total shares in his/her joint accounts shall be separately insured up
to Php500,000.

A depositor with single accounts and joint accounts may have insured deposits of up
to Php1,000,000.

Case 1: Single Account/s

Explanations:

All the four deposit accounts (i.e., Account Nos. 1 to 4) are owned by the same
person, Juan Dela Cruz, and maintained in the same Bank (Head Office and all its
Branches), thus, the balance of the accounts will be added together, as they are
maintained in the same right and capacity, regardless of account type and banking
unit/branch. Total amount of insured deposit cannot exceed P 500,000.00, the
Maximum Deposit Insurance Coverage (MDIC).

Of the total balance of P 900,000.00, the amount insured is P500,000.00 and the
uninsured amount is P400,000.00.

Case 2: Single Account/s and Sole Proprietorship

Explanations:

The first three deposit accounts (i.e., Account Nos. 1 to 3) are owned by the same
person, Juan Dela Cruz, hence, the balance of the accounts will be added together.

A sole proprietor is wholly owned by the owner, hence, the Dela Cruz Flower Shop
(Account No. 4) owned by Juan Dela Cruz will be added to his first three accounts as
all of them (Account Nos. 1 to 4) are maintained in the same right and capacity. The
total amount insured cannot exceed P500,000.00.

Of the total balance of P 900,000.00, the amount insured is P500,000.00 and the
uninsured amount is P 400,000.00.
Case 3: Single, ITF and By Accounts

Explanations:

Juan Dela Cruz is the principal owner of three accounts (i.e., Account Nos. 1, 3 & 4).
As these are maintained in the same right and capacity, these accounts will be
consolidated.

The single account (Account No. 1) is under his name alone and the other two are
By accounts (Account Nos. 3 and 4) which are owned by him as the PRINCIPAL
DEPOSITOR or BENEFICIAL OWNER while Maria Dela Cruz and Pedro Dela Cruz
ACTED AS HIS AGENTS only. Thus, the total insured amount payable to Juan Dela
Cruz is P 500,000.00 and the uninsured amount is P700,000.00.

Antonio Dela Cruz on the other hand has only one account (Account No. 2), an ITF
account in which Antonio is the PRINCIPAL OR BENEFICIAL OWNER and Juan acted as
AGENT. Thus, Antonio Dela Cruz is entitled to a separate deposit insurance of P
400,000.00 for his savings deposit.

Joint Accounts are accounts held under more than one name.

These accounts held jointly by two or more natural persons, or by two or


more juridical persons or entities. Joint account regardless of whether the
conjunction and, or, and/or is used, shall be insured separately from
any single or singly-owned deposit account.

Case 4: Single Account and Joint Account/s

Computation of Insured and Uninsured Amount:

Breakdown of Insured and Uninsured Amount:

1. Juan Dela Cruz has three accounts, one is under his name alone (Account No.
1) and the other two are jointly maintained by him and Maria or Pedro Dela
Cruz (Account Nos. 2 & 3).

For the Savings Deposit individually-owned by Juan Dela Cruz (Account


No. 1), he is entitled to a separate deposit insurance of P 500,000.00.
The uninsured deposit is P100,000.00

2. For the two accounts (Account Nos. 2 & 3) which are jointly maintained by him
and Maria or Pedro Dela Cruz, each joint account is considered equally shared
among co-depositors unless otherwise indicated in the deposit document. The
insurance coverage of P500,000.00 will apply to the sum of shares of each co-
depositor in the insured portion of each joint deposit account.
3. For Account No. 2, the maximum deposit insurance is P500,000.00 which shall be
divided equally between Juan and Maria. The share of Juan Dela Cruz is
P250,000.00. There is no uninsured amount.

4. For Account No. 3, the maximum deposit insurance is P500,000.00 which shall be
divided equally between Juan and Pedro. The share of Juan Dela Cruz is
P250,000.00. The uninsured amount is P300,000.00, thus, his share in the uninsured
amount is P150,000.00.

Case 5: Accounts Jointly Owned by Individuals or Natural Persons

Computation of Insured and Uninsured Amount:

Breakdown of Insured and Uninsured Amount:

For Savings Deposit jointly owned by Juan and Maria Dela Cruz (Account No. 2), the
share of Juan and Maria in the MDIC is P250,00.00 each while their share in the
uninsured portion is P50,000.00 each.

3. Shares of each co-owner in each of the joint accounts are added together and
insured up to P500,000.00 MDIC.

4. Juan Dela Cruz has three accounts jointly maintained with Maria and/or Pedro
Dela Cruz. All his shares in each of these accounts are added together. Hence, of
the P 650,000.00 total shares of Juan, P 500,000.00 is covered by deposit
insurance.

5. Maria Dela Cruz and Pedro Dela Cruz are also entitled to deposit insurance for
their respective shares in the accounts.

Case 6: Accounts Jointly Owned by Individuals/ Natural Persons and Juridical Persons
or Entities

Computation of Insured and Uninsured Amount:

2. XYZ Corporation is entitled to P500,000.00 deposit insurance for its Time Deposit
(Account No. 2).

3. The Demand Deposit (Account No. 3) maintained in the name of Juan Dela Cruz
and ABC Corporation, is presumed to belong entirely to ABC Corporation. Hence,
ABC Corporation is entitled to the P 500,000.00 deposit insurance.

Procedure for claiming insurance proceeds


Who are not required to file claims?

Depositors with valid deposit accounts with balances of Php100,000 and below
are not required to file claims but shall have:

No obligations with the closed bank

Complete and updated addresses in the bank records or have


updated these through the Mailing Address Update Form (MAUF)
issued by the PDIC.

These depositors are entitled to immediate or early payment of deposit insurance


claim as part of PDICs initiative to provide convenience to small depositors.

Payments to these depositors are sent as postal money orders to the depositors
mailing addresses.

Who are required to file deposit insurance claims?

1. Depositors with valid deposit accounts with balances of more than


Php100,000.

2. Depositors who have outstanding obligations with the closed bank regardless
of amount of deposits.

3. Depositors with account balances of less than Php100,000 who have no


updated addresses in the bank records or who have not updated their
addresses through the Mailing Address Update Form (MAUF) issued by the
PDIC.

4. Depositors who maintain their accounts under the name of business entities,
regardless of 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.

When are claims filed?

Claims 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.

Depositors have two (2) years from PDICs takeover of the closed bank to file their
deposit insurance claims.

Steps in Filing the insurance claim

1. Prepare the following documents:


Original evidence of deposits such as savings passbook,
certificate of time deposit, bank statement, unused checks, and
ATM card.

Original copy of ONE (1) VALID PHOTO-BEARING


IDENTIFICATION DOCUMENTS (ID) with clear signature of
depositor/claimant such as Drivers License, SSS/ GSIS ID, Senior
Citizens ID, Passport, PRC ID, OWWA/ OFW ID, Seamans ID,
Alien Certification of Registration ID, Voters ID, IBP. Please
ensure that the ID number is clear and legible

If the depositor is below 18 years old, a photocopy of his/her


birth certificate from the Philippine Statistics Authority (PSA) or
duly certified copy from the local civil registrar and valid IDs of
the parent

Original copy of a notarized Special Power of Attorney (SPA) for


claimants who are not the signatories in the bank records. In the
case of minor depositor, the SPA must be executed by the parent

2. The claim form shall be signed by:

i. DEPOSITOR of the account - for depositors 18 years old and


above

ii. PARENT - if the depositor is below 18 years old

iii. AGENT - in the case of By accounts

iv. TRUSTEE - in the case of In Trust For (ITF) accounts

v. EACH DEPOSITOR - in the case of joint accounts such as Or,


And/Or or And accounts

3. Submit to

If filing personally:

The PDIC representatives at the premises of the closed bank during


Claims Settlement Operations (CSO) or to the PDIC Public Assistance
Center at the 3rd Floor, SSS Bldg., 6782 Ayala Avenue corner V.A.
Rufino Street, Makati City after the onsite CSO.

If filing through mail

Send the accomplished and notarized Claim Form and requirements to:
The Claims Processing Department
Philippine Deposit Insurance Corporation
4/F SSS Building, 6782 Ayala Avenue corner
V.A. Rufino Street, 1226 Makati City

Mode of payment

Payment of the insured deposits on such closed bank shall be made by the PDIC as
soon as possible either:

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 [Sec. 19, Amended PDIC
Charter]

Note: Transfer Deposit means a deposit in an insured bank made available to a


depositor by the PDIC as payment of insured deposit of such depositor in a closed
bank and assumed by another insured bank [Sec. 4(x), Amended PDIC Charter].

Effect of Payment

1. The PDIC shall be discharged from liability to the depositor;

2. The PDIC, upon payment of any depositor as provided for in Section 14 shall
be subrogated to all rights of the depositor against the closed bank to the
extent of such payment ;

3. Payments by the PDIC of insured deposits in closed banks partake of the


nature of public funds, and as such, must be considered a preferred credit
similar to taxes due to the National Government in the order of preference
under Article 2244 of the New Civil Code

If the claims of the PDIC against the bank are considered preferred credits, what is
the nature of the excess uninsured claim of the depositor against the bank?

Example

Maria deposited P600,000.00 in a bank. The bank closed and was turned over to the
PDIC.

How much can Maria claim against the PDIC?

How much can Maria claim against the bank?

Can PDIC claim against the bank? If so, how much?

Who gets paid first, PDIC or Maria?


Insured portion to be paid by the PDIC to Maria: P500,000.00

This portion is to be claimed by the PDIC against the bank, in the


nature of a preferred credit.

Uninsured portion: P100,000.00

This portion is to be claimed by the depositor against the assets of the


bank as an ordinary credit or claim.

Failure to settle claim of insured depositor

General Rule: Failure to settle the claim within six months from the date of filing of
claim for insured deposit shall, upon conviction, subject the directors, officers or
employees of the PDIC responsible for the delay to imprisonment from six months to
one year.

Requisite: The failure was due to the grave abuse of discretion, gross negligence,
bad faith, or malice of the directors, officers or employees.

Exception: The validity of the claim requires the resolution of issues of facts and or
law by another office, body or agency including the case mentioned in the first
proviso or by PDIC together with such other office, body or agency.

Failure of depositor to claim insured deposits

General rule: All rights of the depositor against the PDIC with respect to the
insured deposit shall be barred:

1. If he fails to claim the insured deposits within two years from actual
takeover of the closed bank by the receiver; or

2. If he does not enforce his claim filed with the corporation within two
years after the two-year period to file a claim.

Exception: Waiver by PDIC.

But all rights of the depositor against the closed bank and its shareholders or the
receivership estate to which the PDIC may have become subrogated, shall
thereupon revert to the depositor.

Bank examination

The PDIC may examine an insured bank with prior approval of the MB if, in its
opinion, such bank or its directors or agents have violated, are violating or about to
violate any provision of the PDIC Act or any order, rule or instruction issued by the
PDIC or any written condition imposed by the PDIC in connection with any
transaction with or grant by it.
Deposit splitting

It occurs whenever a deposit account/s with an outstanding balance of more than


the statutory maximum amount of insured deposit maintained under the name of a
natural or juridical person/s is/are broken down and transferred into two or more
accounts in the name/s of natural or juridical person/s or entity/entities who have no
Beneficial Ownership on transferred deposits in their names within one hundred
twenty (120) days immediately preceding or during a bank-declared bank holiday,
or immediately preceding a closure order issued by the Monetary Board of
the Bangko Sentral ng Pilipinas for the purpose of availing of the maximum deposit
insurance coverage.

This means that the transferee does not really own the deposit account, even if it is
in his name and is only acting as a dummy.

Elements:

1. Existence of source account/s in a bank with a balance or aggregate balance


of more than the MDIC;

2. There is a break up and transfer of said account/s into two or more existing or
new accounts in the name of another person/s or entity/entities;

3. The transferee/s have no Beneficial Ownership over the transferred funds;


and

4. Transfer occurred within 120 days immediately preceding or during a bank-


declared bank holiday, or immediately preceding bank closure.

Penalty

1. Imprisonment of not less than six (6) years but not more than twelve (12)
year

2. Or a fine of not less than fifty thousand pesos (p50,000) but not more than
ten million pesos (p10,000,000),

3. Or both, at the discretion of the court, shall be imposed upon.

Prohibition Against Issuance


of TROs, etc.

General rule: TROs, preliminary injunction or preliminary mandatory injunction


against the PDIC are prohibited.[Sec. 27 R.A. 3591, as amended]

It applies in all cases, disputes or controversies instituted by a private party, insured


bank, or any shareholder of the insured bank.

Exceptions:
1. If TRO is issued by the Court of Appeals.

2. The Supreme Court may issue TRO when the matter is of extreme urgency
involving a constitutional issue, such that unless TRO is issued, grave
injustice and irreparable will arise. Bond must be filed and if the case finally
decided that the applicant is not entitled to the relief sought, the bond shall
accrue in favor of the PDIC

Any restraining order or injunction in violation of Sec. 27 is VOID and of no


force and effect and any judge who has issued the same shall suffer the penalty of
suspension of at least sixty (60) days without pay.

CASES

PDIC V. CA, 283 SCRA 462

PDIC V. CA, 402 SCRA 194