RFBT 3 LECTURE NOTES

PDIC LAW
ATTY. MYLA M. MATIC

PDIC LAW
REPUBLIC ACT 3591 AS AMENDED
AN ACT ESTABLISHING THE PHILIPPINE DEPOSIT INSURANCE CORPORATION, DEFINING ITS
POWERS AND DUTIES AND FOR OTHER PURPOSES (PDIC CHARTER) JUNE 22, 1963

Ref Amendments:

REPUBLIC ACT No. 9576  (2009)

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 JUNE 11, 2016

AN ACT ENHANCING THE RESOLUTION AND LIQUIDATION FRAMEWORK FOR BANKS,

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

PHILIPPINE DEPOSIT INSURANCE CORPORATION (PDIC) is a government instrumentality created

in 1963 by virtue of Republic Act 3591 to insure the deposits of all banks. PDIC exists to protect
depositors by providing deposit insurance coverage for the depositing public and help promote
financial stability.

Consistent with its public policy objectives, the PDIC has the following mandates:

I. Deposit Insurance. 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.

II. Examination and Resolution. 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

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and soundness of banks and their adherence to banking and deposit insurance rules and
regulations, and extend financial assistance to eligible distressed banks.

III. Receivership and Liquidation. 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.

I INSURABLE DEPOSITS/INSURED DEPOSIT

 “Insurable deposit” is entire deposits aggregated value of a depositor, including their

calculated interest as per the assessment or bankruptcy declaration day of scheme
member subject, unless in case of exemptions defined as per the Law “On deposit
insurance”. 
 Insured deposit refers to the amount due to any depositor for 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 the Maximum Deposit Insurance Coverage. Effective June 1, 2009, the Maximum
Deposit Insurance Coverage is P500,000.00 per deposits per bank.

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

entity/organization). In-Trust-For (ITF) and By Accounts are also considered single accounts.
In the case of account name: (1) Maria ITF Jose; or, (2) Jose By Maria, the owner is Jose for
both 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.

 Joint account is an account 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.

 If the account is held jointly by two or more natural persons, or by two or more juridical
persons/entities, the maximum insured deposit shall be divided into as many equal shares

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as there are natural persons or juridical entities, unless a different sharing is indicated in
the deposit document.

 If the account is held by a juridical person/entity jointly with one or more natural persons,
the maximum insured deposit shall be presumed to belong entirely to such juridical
person/entity

 The aggregate of the interests of each co-owner over several joint accounts, whether
owned by the same or different combinations, shall likewise be subject to the Maximum
Deposit Insurance Coverage of Php500,000.

ARE ALL BANKS MEMBERS OF PDIC?

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

II TYPES OF DEPOSITS INSURED BY PDIC

PDIC covers only the risk of a bank closure ordered by the Monetary Board.

1. Deposits of all commercial banks, savings and mortgage banks, rural banks,
private development banks, cooperative banks, savings and loan
associations, as well as branches and agencies in the Philippines of foreign
banks and all other corporations authorized to perform banking functions in
the Philippines.

2. As for Philippine banks with branches outside the country that elected to include
for insurance its deposit obligations payable at such branch.

3. Foreign currency deposits are also insured by PDIC pursuant to RA 6426 (“An act
instituting a foreign currency deposit system in the Philippines, and for
other purposes”) and Central Bank (CB) Circular No. 1389. Depositors may
receive payment in the same currency in which the insured deposit is
denominated.

4. Deposits in branches and subsidiaries of foreign banks licensed by the Bangko

Sentral ng Pilipinas (BSP) to perform banking functions in the Philippines.

III EXCLUSIONS FROM DEPOSIT INSURANCE COVERAGE UNDER R.A. No. 9576

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1. Bank losses due to theft, fire, closure by reason of strike or existence of public disorder,
revolution or civil war
2. Investment products such as bonds, securities and trust accounts;
3. Deposit accounts which are unfunded, fictitious or fraudulent;
4. Deposit products constituting or emanating from unsafe and unsound banking practices;
5. Deposits that are determined to be proceeds of an unlawful activity as defined under
the Anti-Money Laundering Law.

Shall the depositor pay any insurance premium to PDIC?

No. Insurance premium is paid by the banks, not by the depositors. The bank is assessed 1/5 of
1% per annum of the assessment base of the bank.

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. However, 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.

IV SCOPE OF DEPOSIT INSURANCE PROTECTION/MAX DEPOSIT INSURANCE COVERAGE

Effective June 1, 2009, the maximum deposit insurance coverage is P500,000 per depositor per
bank. It covers all types of bank deposits in banks whether denominated in local or foreign
currencies. All deposit accounts by a depositor in a closed bank maintained in the same right
and capacity shall be added together.

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.

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V MAXIMUM LIABILITY

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"

Illustrative Cases:

Case 1: Single Account/s

Computation of Insured and Uninsured Amount:

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 P 500,000.00 and the
uninsured amount is P 400,000.00.

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Case 2: Single Account/s and Sole Proprietorship

Computation of Insured and Uninsured Amount:

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 P 500,000.00 and the
uninsured amount is P 400,000.00.

Case 3: Single, "ITF" and "By" Accounts

Computation of Insured and Uninsured Amount:

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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

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Charter Provision:

 A joint account regardless of whether the conjunction "and", "or", "and/or" is used,
shall be insured separately from any individually-owned deposit account/s.

 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 person or entities, unless a
different sharing is stipulated in the document of deposit.

 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.

Illustrative Cases:

Case 4: Single Account and Joint Account/s

Computation of Insured and Uninsured Amount:

Breakdown of Insured and Uninsured Amount:

Explanations:

 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

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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.

 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.

 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.

 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:

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Breakdown of Insured and Uninsured Amount:

Explanations:

 The individually-owned deposit or single deposit of Juan Dela Cruz (Account No. 1) is
entitled to a separate deposit insurance of P500,000.00.

 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.

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

 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.

 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

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Entities

Computation of Insured and Uninsured Amount:

Explanations:

 The deposit insurance for Savings Deposit (Account No. 1) is to be shared equally
between Juan and Maria Dela Cruz. Hence, each of them is entitled to P 250,000.00
deposit insurance.

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

 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.

VI FILING OF CLAIMS

 DEPOSITORS NOT REQUIRED TO FILE DEPOSIT INSURANCE CLAIMS

Depositors with valid deposit accounts with balances of P100,000.00 and below are not required to
file claims, provided they:
(1) have no obligations with the closed bank, or have not acted as co-makers of these obligations,
or are not spouses of the borrowers;
(2) have complete mailing address found in the bank records or have updated their addresses
through the Mailing Address Update Form (MAUF) of PDIC before the start of the onsite claims
settlement operation; and
(3) have not maintained the account under the name of business entities
Postal Money Orders are sent to these depositors at their respective mailing addresses found in the
bank records or indicated in the MAUF.

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 WHEN ARE CLAIMS FILED?

Claims are filed during the onsite Claims Settlement Operations (CSO) 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 who failed to file their claims during the onsite CSO may do so through any of these
options:

1. Personal filing at the PDIC Public Assistance Center located at the 3rd Floor, SSS Bldg.,
6782 Ayala Avenue corner V. A. Rufino Street, Makati City, 8:00 AM to 5:00 PM,
Monday to Friday, except holidays.

2. Filing through mail by sending a duly accomplished and notarized Claim Form and
requirements to:

  The Public Assistance Department

Philippine Deposit Insurance Corporation
3/Floor SSS Building, 6782 Ayala Avenue corner
V.A. Rufino Street, 1226 Makati City

Depositors have two (2) years from PDIC's takeover of the closed bank to file their
deposit insurance claims. After the two-year period, the depositor's right to claim for
deposit insurance is barred pursuant to Section 21(e) of R.A. 3591, as amended.

 WHO ARE REQUIRED TO FILE DEPOSIT INSURANCE CLAIMS?

Depositors:

1. With valid deposit accounts with balances of more than P100,000.00;

2. With outstanding obligations with the closed bank either as borrower, co-maker, or as
spouse of borrower;

3. With incomplete mailing address found in the bank records, or failed to update them
through the MAUF issued by the PDIC;

4. With accounts maintained under the name of business entities;

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5. With accounts not eligible for early payment, regardless of type of account and
account balance per advice of PDIC; and

6. Who are deceased whose filing of claim is thru the legal heirs.

 WHAT ARE THE REQUIREMENTS IN FILING CLAIMS?

1. ORIGINAL EVIDENCE OF DEPOSITS such as savings passbook, certificate of time

deposit, bank statement, used or unused checks, or ATM card.

2. ONE (1) VALID ORIGINAL PHOTO-BEARING IDENTIFICATION DOCUMENT (ID) with clear
signature of depositor/claimant (e.g. Driver's License, SSS/GSIS ID, Senior Citizen's ID,
Passport, PRC ID, OWWA/OFW ID, Seaman's ID, Alien Certificate of Registration ID,
Voter's ID). (IT IS RECOMMENDED TO BRING AT LEAST TWO (2) VALID IDs IN CASE OF
DISCREPANCIES IN SIGNATURE).

3. For depositors below eighteen (18) years old, photocopy of birth certificate from the
Philippine Statistics Authority (PSA) or a duly certified copy issued by the local civil
registrar, and valid ID of the parent.

4. 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.

5. Claim Form:

When filing claim during the onsite CSO period, or during personal filing at the PDIC
PAC, a system generated Claim Form shall be printed by PDIC representative after
interview/processing.

When filing through mail, please download the PDIC Claim Form. The claim form
needs to be accomplished, signed, and notarized. Depositors must ensure that the
signature on the Claim Form is similar with the signature in the bank records and the
valid IDs submitted.

 WHO SHOULD SIGN THE CLAIM FORM?

1. DEPOSITOR of the account

  �  for depositor 18 years old and above

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2. PARENT

  �  of depositor below 18 years old

3. AGENT

  �  in the case of "by" account

4. TRUSTEE

  �  in the case of "In Trust for (ITF)" account

5. EACH DEPOSITOR/ACCOUNT HOLDER for account maintained as "Or", "And/Or" or

"And"

  �  in the case of joint accounts

6. AUTHORIZED REPRESENTATIVE/s

  �  for business entities, deceased depositors and person who has Special Power of
Attorney (SPA) from the depositor.

What processes are involved before PDIC starts servicing claims?

Deposit records are subjected to an examination prior to the start of servicing/settlement of

claims. Claims are evaluated and processed according to PDIC's standard procedures.

How long does the pre-settlement examination take?

The length of time needed for the pre-settlement examination of deposit liabilities of a closed
insured bank largely depends on the completeness and accuracy of records turned over by the
Bank to PDIC and the number of deposit accounts to be examined.

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.

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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 bank’s
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.

What happens when the depositor of a closed bank fails to file his claim within the 24-month
period?

All rights of the depositor with respect to the insured deposit shall no longer be honored. But
he may still make a claim against the assets of the closed bank.

E N D OF L E C T U R E

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