Banking Laws

I. Philippine Deposit Insurance Corporation Law (RA 3591 as amended by RA 10846)

A. Description of 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 which are entitled to the benefits of insurance. The PDIC is an attached agency of
the Department of Finance.

The latest amendments to RA 3591 are contained in RA 10846 signed into law on May 23, 2016. RA
10846 empowered PDIC with stronger authorities to protect the depositing public and promote financial
stability. The new law also includes important provisions to ensure that the PDIC remains financially and
institutionally strong to fulfill its mandate under its Charter.

The PDIC now has the authority to help depositors have quicker access to their insured deposits should
their bank close; resolve problem banks while still open; hasten the liquidation process for closed banks;
and mete out stiffer sanctions and penalties against those who engage in unsafe and unsound banking
practices.

Under amendment, depositors would have quicker access to their insured deposits in the event of bank
closure since PDIC now has the authority to pay insured deposits without netting out depositors’ loan
obligations with the closed bank, and based on evidence of deposits and not on the closed bank’s records
alone.

With its enhanced resolution authorities, PDIC would also be able to more effectively promote financial
inclusion through early intervention in problem banks or open bank resolution. In cases where bank
closure becomes inevitable, the new law enhanced the chances of recovery by creditors of their claims
against the assets of the closed bank by preventing the further dissipation of these assets through
seamless transition from bank closure to liquidation. The new law does away with the 90-day
receivership period and allows PDIC to proceed directly to liquidation. The immediate assignment of
encumbered assets to closed bank creditors, adoption of purchase of assets and assumption of liabilities
as a mode of liquidation, and express prohibition on reopening of banks ordered closed by the Monetary
Board of the Bangko Sentral ng Pilipinas would help enhance recovery rate for creditors of closed banks.

B. Insurable Deposits under PDIC Law (Covered by PDIC Insurance)

1. By Deposit Type:
a. Savings Deposit
b. Special Savings
c. Demand/Checking Account
d. Negotiable Order of Withdrawal (NOW)
e. Certificate of Time Deposits
f. Foreign currency Deposit
2. By Deposit Account:
a. Single Accounts - are individually-owned accounts or accounts held under one name,
either as natural person (single proprietorship or individual) or juridical entity
(corporation, partnership or cooperative).
b. Joint Accounts - are accounts held under more than one name.
i. A joint account regardless of whether the conjunction “and”, “or” or “and/or” is
used shall be insured separately from single accounts.
 ii. Unless a different sharing is stipulated in the deposit documents, the insured
amount up to the Maximum Deposit Insurance Coverage of Php500,000 shall be
divided equally between or among co-owners of a joint account.
iii. The total shares of a co-owner in several joint accounts may exceed Php500,000
but will only be insured up to the Maximum Deposit Insurance Coverage of
Php500,000.
iv. Joint accounts held in the names of a juridical entity and a natural person shall
be presumed to belong solely to the juridical entity.

c. Account “By”, “In Trust For” (ITF) or “For the Account of” (FAO) another person
i. In a “By” account, Ana by Ben, Ana is the depositor.
ii. In an “In Trust For” (ITF) account, Ana In Trust For Ben, Ben is the depositor.
iii. In a “For the Account of” (FAO) account, Ana For the Account of Ben, Ben is the
depositor.

d. Explanatory Notes
i. 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.
ii. The depositor’s total shares in his/her joint accounts shall be separately insured
up to Php500,000.
iii. A depositor with single accounts and joint accounts may have insured deposits of
up to Php1,000,000.

C. Items that are not covered by PDIC Deposit Insurance

The following, whether denominated, documented, recorded or booked as deposit by the bank, are
excluded from PDIC deposit insurance (Section 4 (f) of the PDIC Charter):
a. Investment products such as bonds and securities, trust accounts and other similar instruments
b. Telegraphic note
c. Deposit accounts or transactions that:
i. Are unfunded, fictitious or fraudulent
ii. Constitute and/or emanate from unsafe and unsound banking practices as determined by
the PDIC, in consultation with the BSP, after due notice and hearing and publication of
PDIC’s cease & desist order against such deposit accounts/transactions
iii. Are determined to be proceeds of an unlawful activity as defined in the AntiMoney
Laundering Act (Republic Act 9160, as amended)
d. Bank Deposits in Foreign Banks operating outside the Philippine territory or Bank Deposits in
Foreign branch of domestic bank operating outside the Philippine territory
Note: Unsafe and unsound deposit-related activities include, among others: (PDIC Regulatory Issuance
No. 2011-01)
⮚ 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

D. Maximum Liability (Maximum Deposit Insurance Coverage)

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 . Accounts maintained in the same right and capacity for a
depositor’s benefit, whether in his own name or in the name of others, are covered by deposit insurance.
However, A depositor with single accounts and joint accounts may have insured deposits of up to
Php1,000,000.

Illustrative examples:

1. How much is Fe Santos’s insured deposit if she has the following four deposit accounts in the same
bank?
ACCOUNT NAME Deposit (in PHP) Insured Deposit of Fe Santos
Fe Santos 100,000 100,000
Ben Santos For the Account of 100,000 100,000
Fe Santos
Charlie Santos In Trust For Fe 100,000 100,000
Santos
Fe Santos’ Store (Sole 700,000 200,000
Proprietorship)
Total 1,000,000 500,000

2. How much is Fe Santos’s insured deposit if she has the following three joint accounts in the same
bank?
ACCOUNT NAME Deposit (in PHP) Insured Deposit of Fe Santos
Fe Santos or Ben Santos 500,000 250,000
Fe Santos and Charlie Santos 1,000,000 250,000
Fe Santos and/or Divina Santos 1,000,000 0*
Total 2,500,000 500,000
*Note: Mrs. Fe Santos does not have any insured deposit share since she already has P500,000 in total
shares in the two joint accounts she has with Ben and Charlie Santos.

3. How much is Fe Santos’s insured deposit for all her single and joint accounts in the same bank?
ACCOUNT NAME Deposit (in PHP) Insured Deposit of Fe Santos
All single accounts of Fe Santos 1,000,000 500,000
in BDO Branch 1
All joint accounts of Fe Santos in 2,500,000 500,000
BDO Branch 2
Total 3,500,000 1,000,000

Note: For purposes of computing the insured deposits, all obligations or loans of the depositor with the
closed bank, as of bank closure, shall be deducted from the depositor’s total deposits with the said bank.
(PDIC Regulatory Issuance No. 2011-04).

Note: In case of joint account involving a juridical/artificial person and a natural person, the maximum
insured deposit of P500,000 to such joint account shall be given to juridical/artificial person only.

E. Requirements for Claims of Insured Deposits

1. 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 PDIC’s takeover of the closed bank to file their deposit insurance
claims.

2. Who are required to file deposit insurance claims?

a. Depositors with valid deposit accounts with balances of more than Php100,000. 
b. Depositors who have outstanding obligations with the closed bank regardless of amount
of deposits.
c. 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. 
d. Depositors who maintain their accounts under the name of business entities, regardless
of type of account and account balance. 
e. Depositors with accounts not eligible for early payment, regardless of type of account
and account balance per advice of PDIC. 

3. Who are depositors not required to file deposit insurance claims?

Depositors with valid deposit accounts with balances of Php100,000 and below are not required
to file claims provided they have no obligations with the closed bank and have complete and
updated addresses in the bank records or have updated these through the Mailing Address
Update Form (MAUF) issued by the PDIC. Depositors with deposit balances of Php100,000 and
below may update their addresses using the MAUF and submit to PDIC representatives stationed
at the closed bank premises before the start of the onsite claims settlement operations

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

4. Steps in filing deposit insurance claims

a. Prepare the following documents:
i. Original evidence of deposits such as savings passbook, certificate of time
deposit, bank statement, unused checks, and ATM card. 
ii. Original copy of ONE (1) VALID PHOTO-BEARING IDENTIFICATION
DOCUMENTS (ID) with clear signature of depositor/claimant such as Driver’s
License, SSS/ GSIS ID, Senior Citizen’s ID, Passport, PRC ID, OWWA/ OFW ID,
Seaman’s ID, Alien Certification of Registration ID, Voter’s ID, IBP. Please ensure
that the ID number is clear and legible. 
iii. 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. 
iv. 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. 
b. Submit to:
 i. If filing personally:
1. 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. 
ii. If filing through Mail
1. Send the accomplished and notarized Claim Form and requirements to
The Claims Processing Department of PDIC 4/F SSS Building, 6782 Ayala
Avenue corner V.A. Rufino St. 1226 Makati City

5. Who should sign the deposit insurance claim form?

a. Depositor of the account – for depositors 18 years old and above
b. Parent – if the depositor is below 18 years old
c. Agent – in the case of “By” accounts
d. Trustee – in the case of “In Trust for (ITF” accounts
e. Each Depositor – in the case of joint accounts such as “Or”, “And/Or” or “And”
accounts 

6. Procedures for Claiming Insurance Proceeds

a. Mode of payment

i. By Cash
ii. By making available to each depositor a transferred deposit in another insured
bank in an amount equal to insured deposit of such depositor

b. Requirement before payment

i. PDIC may require proof of claims before paying the insured deposit
ii. If PDIC is not satisfied as to the validity of a claim for an insured deposit, it may
require final determination of a court of competent jurisdiction before paying
such claim

c. Period for payment

i. It must be made within 6 months from the date of filing otherwise the officers of
PDIC will be liable for failure to pay if due to grave abuse of discretion, gross
negligence, bad faith or malice. The six-month period shall not apply if the
documents of the claimant are incomplete or if the validity of the claim requires
the resolution of issues of facts and law by another office, body or agency,
independently or in coordination with PDIC.

d. Rights of PDIC upon payment of insured deposits

i. PDIC shall be legally subrogated to all rights of depositor against the closed bank
to the extent of such payment.