Compiled by Precy C.

de Jesus, CPA, LLB

PHILIPPINE DEPOSIT INSURANCE LAW (JUNE 22, 1963) 1 R.A.10846/R.A. 3591

Membership with PDIC is mandatory for all banks licensed by the BSP to operate in the Philippines which
include banks incorporated under Philippines laws, such as commercial banks, savings banks, mortgage
banks, stock savings and loan associations, development banks, cooperative banks, and rural banks; and
domestic branches of foreign banks.

Function of PDIC is to protect the small investors/depositors and to build a strong banking confidence.
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. PDIC is an attached agency of the Department of Finance.

PDIC 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.

Mandates of the Philippine Deposit Insurance Corporation

PDIC provides a maximum deposit insurance

coverage of Php500,000 per depositor per bank.
DEPOSIT INSURANCE To pay claims on insured deposits, PDIC builds up
the Deposit Insurance Fund (DIF) primarily through
assessments of banks at an annual flat rate of 1/5
of 1% of their total deposit liabilities.
PDIC proceeds with the liquidation process upon
order of the Monetary Board of the Bangko Sentral
RECEIVERSHIP OF CLOSED BANKS ng Pilipinas (BSP). The assets of the closed bank are
managed and eventually disposed of to settle
claims of creditors in accordance with the
preference and concurrence of credits as provided
by the Civil Code of the Philippines.

Scope of the Deposit Insurance Protection

PDIC provides for a maximum deposit insurance coverage of Php500,000 per depositor per bank. It covers
all types of bank deposits in banks whether denominated in local or foreign currencies. All deposit
accounts of a depositor in a closed bank maintained in the same right and capacity shall be added
together. Again, 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.2 A joint account shall be insured separately from any individually-owned deposit account.

✓ Account of sole proprietor, being wholly owned by the owner shall be added to all the accounts
since these are maintained in the same right and capacity.
✓ A joint account regardless of whether the conjunction “and”, “or” and “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.
✓ 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
✓ 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.

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pdic.gov.ph
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PDIC Regulatory Issuance No. 2011-04

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 Compiled by Precy C. de Jesus, CPA, LLB

“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 of Php500,000 (June 1, 2009).

Deposits are considered valid upon the determination by the PDIC, based on the bank records, that the
deposits were made with a corresponding inflow of cash. 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.

Insured Deposits, include -

By Deposit Type: Savings, Special Savings, Demand/Checking, Negotiable order of withdrawal (NOW),
Certificate of Time Deposits

By Deposit Account: Single Account, Joint Account, Account “By”, “In Trust For” (ITF), “For the Account of”
(FAO) another person
▪ In a “By” Account, e.g. Ana By Ben, Ana is the depositor
▪ In an “In Trust For” (ITF) Account, e.g. Ana in trust for Ben, Ben is the depositor
▪ In an “For the Account of” (FAO) Account, e.g. Ana for the account of Ben, Ben is the depositor

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 depositor’s 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.

By Currency: Philippines peso and foreign currencies considered as part of BSP’s international reserves
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.

Are deposits maintained in branches and subsidiaries of foreign banks operating

in the Philippines insured by PDIC?

YES. The PDIC Charter provides that the deposits in branches and subsidiaries of foreign banks licensed by
BSP to perform banking functions in the Philippines are insured by the PDIC. Foreign currency deposits are
also insured by PDIC pursuant to R.A. 6426 and CB Circular 1389. Depositors may receive payment in the
same currency in which the insured deposit is denominated.

What are not covered by PDIC deposit insurance?

The following whether denominated, documented, recorded or booked as deposit by the bank, are excluded
from the PDIC deposit insurance:3
(a) Investment products such as bonds and securities, trust accounts and other similar instruments;
(b) Deposit accounts or transactions that:
- Are unfunded, fictitious or fraudulent
- Constitute and/or emanate from unsafe and unsound banking practices 4 as determined by the
PDIC, in consultation with BSP, after due notice and hearing and publication of PDIC’s cease
and desist order against such deposit accounts/transactions
- Are determined to be proceeds of an unlawful activity as defined in the Anti-Money Laundering
Act (Republic Act 9160, as amended)

3
Sec. 4 (f) PDIC Charter; Republic Act 9576
4
PDIC Regulatory Issuance No. 2011-01 include (a) deposit-related practice without the approval or adequate
controls required under existing laws, rules and regulations;
(b) Failure to keep bank records within bank premises; (c) granting high interest rates, when bank has: (i) negative
unimpaired capital; or (ii) liquid assets to deposit ratio less than 10%; and (d) Non-compliance with PDIC regulations.

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 Compiled by Precy C. de Jesus, CPA, LLB

Question 1: (Single Account/s)

Lito Manaloto has the following bank accounts in Nalugi Bank:
Savings Deposit maintained in the Head Office - Php200,000
Time Deposit in the Head Office - Php500,000
Demand Deposit in Manila Branch - Php100,000
Checking Deposit in Rizal Branch - Php100,000
Time Deposit in Manila Branch - Php200,000

How much is the insured deposit?

a. Php400,000 c. Php1,100,000
b. Php500,000 d. Php200,000

Question 2: (Single Account/s and Sole Proprietorship)

Lito Manaloto has the following bank accounts in Nalugi Bank:
Savings Deposit maintained in the Head Office - Php100,000
Time Deposit in the Head Office - Php400,000
Demand Deposit in Manila Branch - Php300,000
Savings Deposit Manaloto Bakeshop
(Sole Proprietorship) by Lito Manaloto - Php100,000

How much is the insured deposit?

a. Php400,000 c. Php500,000
b. Php1,100,000 d. Php200,000

Question 3: (Single Account/s, In Trust For and BY Accounts/ For the Account of)
The following bank accounts are provided by your client in Poor Bank -
Account Name Per Bank Records Type of Deposit Balance
Pedro Cruz Demand Deposit Php200,000
Pedro Cruz ITF Manolito Cruz Savings Deposit Php400,000
Pedro Cruz By Maria Cruz Time Deposit Php500,000
Pedro Cruz By Maria Cruz or Manolito Cruz Time Deposit Php500,000

How much is the insured deposit of Pedro Cruz?

a. Php400,000 c. Php500,000
b. Php1,100,000 d. Php200,000

How much is the insured deposit of Manolito Cruz?

a. Php400,000 c. Php500,000
b. Php1,100,000 d. Php200,000

How much is the insured deposit of Maria Cruz?

a. Php400,000 c. Php500,000
b. Php1,100,000 d. None

Question 4: (Joint Accounts)

The following bank accounts are provided by your client in Kiwawa Bank -
Account Name Per Bank Records Type of Deposit Balance
Karlo Gomez Savings Deposit Php600,000
Karlo Gomez and Sheila Gomez Time Deposit Php500,000
Karlo Gomez or Manny Gomez Demand Deposit Php800,000

How much is the total insured deposit of Karlo Gomez for single and joint accounts?
a. Php1,200,000 c. Php1,000,000
b. Php1,100,000 d. Php600,000

How much is the insured deposit of Sheila Gomez?

a. Php300,000 c. Php500,000
b. Php1,100,000 d. Php250,000

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 Compiled by Precy C. de Jesus, CPA, LLB

How much is the insured deposit of Manny Gomez?

a. Php300,000 c. Php500,000
b. Php1,100,000 d. Php250,000

Question 5: (Joint Accounts)

The following bank accounts are provided by your client in Kiwawa Bank -
Account Name Per Bank Records Type of Deposit Balance
Karlo Gomez Savings Deposit Php500,000
Karlo Gomez or Sheila Gomez Savings Deposit Php600,000
Karlo Gomez and Manny Gomez Time Deposit Php500,000
Karlo Gomez or Sheila Gomez or
Manny Gomez Time Deposit Php450,000

How much is the total insured deposit of Karlo Gomez for single and joint accounts?
a. Php1,200,000 c. Php1,000,000
b. Php1,100,000 d. Php600,000

How much is the insured deposit of Sheila Gomez?

a. Php300,000 c. Php500,000
b. Php1,100,000 d. Php400,000

How much is the insured deposit of Manny Gomez?

a. Php300,000 c. Php500,000
b. Php1,100,000 d. Php400,000

Question 6: (Joint Accounts with Juridical Persons)

The following bank accounts are provided by your client in Kiwawa Bank -
Account Name Per Bank Records Type of Deposit Balance
Karlo Gomez or Sheila Gomez Savings Deposit Php500,000
Aviance Corp. Time Deposit Php500,000
Karlo Gomez and Xavier Corp. Demand Deposit Php500,000

How much is the insured deposit of Karlo Gomez?

a. Php500,000 c. Php750,000
b. Php250,000 d. Php600,000
How much is the insured deposit of Sheila Gomez?
a. Php500,000 c. Php750,000
b. Php250,000 d. Php600,000

How much is the insured deposit of Aviance Corp.?

a. Php300,000 c. Php500,000
b. Php1,100,000 d. Php400,000
How much is the insured deposit of Xavier Corp.?
c. Php500,000 c. Php750,000
d. Php250,000 d. Php600,000

Question 7: Statement 1. Deposit insurance coverage is not determined on a per account basis. The
type of account on whether checking, savings, time or other form of deposit) has no bearing on the
amount of insurance coverage.
Statement 2. The claim for insured deposit should be settled within six (6) months from the date of
filing provided all the requirements are met but the claim must be filed within twenty-four (24) months
after bank takeover. 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.
a. Both Statements 1 and 2 are true.
b. Statement 1 is true and Statement 2 is false.
c. Statement 1 is false and Statement 2 is true.
d. Both Statements 1 and 2 are false.

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 Compiled by Precy C. de Jesus, CPA, LLB

Who are required to file deposit insurance claims?

Depositors –
1. With valid deposit accounts with balances of more than Php100,000;
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
Mailing Address Update Form issued by PDIC;
4. With accounts maintained under the name of business entities;
5. With accounts not eligible for early payment, regardless of the type of account and account
balance per advice of PDIC; and
6. Who are deceased whose filing of claim is through the legal heirs

What is the prescriptive period for the filing of claims?

Claims should be filed within the two-year (24 months) prescriptive period after PDIC’s takeover of the
closed bank. If the depositor fails to file his claim, all of his rights 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.

If the deposit account in a closed bank is more than Php500,000, 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 the 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 Php500,000 maximum insurance shall be
based on priorities set by law.

What are the instances when a bank/quasi-bank may be placed under

receivership?
Receivership is the summary closure of a bank by the BSP without prior notice and hearing after a finding
that the continuance in business would involve probable loss to its depositors and creditors. 5 A bank may
be placed under receivership in the following instances, to wit:
a. If the bank is unable to pay its liabilities as they become due in the ordinary course of business;
Provided that, this shall not include the inability to pay caused by extraordinary demands induced
by financial panic in the banking community;
b. Has insufficient realizable assets, as determined by the Bangko Sentral to meet its liabilities;
c. Cannot continue in business without involving probable losses to its depositors or creditors;
d. Has willfully violated a cease and desist order that has become final, involving acts or transactions
which amount to fraud or a dissipation of the assets of the institution, in which cases, the Monetary
Board may summarily and without need for prior hearing forbid the institution from doing business
in the Philippines and designate the PDIC as receiver of the banking institution;
e. In case it notifies the Bangko Sentral or publicly announces a bank holiday, or in any manner
suspends the payment of its deposit liabilities continuously for more than 30 days (this pertains to
the insolvency of bank).6

When bank is placed under receivership, its officers, including its acting president, are no longer authorized
to transact business in connection with bank’s assets and property. 7 The appointment of a receiver does not
dissolve the bank as a corporation nor does it interfere with the exercise of corporate rights. Banks under
liquidation retain their corporate personality. The bank can sue and be sued but any case should be initiated
and prosecuted through the liquidator.

When a bank is declared insolvent and placed under receivership, the BSP through the Monetary Board,
determines whether to proceed with the liquidation or reorganization of the financially distressed bank. 8

5
Central Bank vs. Court of Appeals, 220 SCRA 536.
6
Sec. 30 Republic Act 8791.
7
Abacus Real Estate Development Center vs. Manila Bank, G.R. No. 162270, April 6, 2005.
8
Sps. Larrobis, Jr. vs. Phil. Veterans Bank, G.R. No. 135706, October 1, 2004.

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The assets of the bank shall be deemed in custodia legis in the hands of the receiver and shall from the
moment the bank was placed under receivership or liquidation be exempt from any order of garnishment,
levy, attachment or execution.9 The BSP forbids the bank from doing business. As such the bank cannot
foreclose any mortgage.10 However, the pendency of the case did not diminish the authority of the
designated liquidator to administer and continue the bank’s transactions. 11

What are the requirements before a bank can be declared insolvent, order it
closed and forbid it from doing further business in the Philippines?

Before the Monetary Board can declare a bank insolvent, ordered it closed and forbid it from doing further
business in the Philippines, the following basic requirements must be complied with by the Central Bank, to
wit –

a) There must be an examination by the head of the Department Supervision or his examiners or
agents into the condition of the bank;
b) The examination discloses that the condition of the bank is one of insolvency or that its continuance
in business would involve probable loss to creditors or depositors;
c) The head of said department shall inform in writing the Monetary Board of such facts;
d) Upon finding said information or statements to be true, the Monetary Board shall appoint a
receiver to take charge of the assets and liabilities of the bank; and,
e) Within sixty (60) days the Monetary Board shall determine and confirm if the bank is insolvent and
if public interest requires, ordering the liquidation of the bank.

A complete examination is not necessary before closure order and receivership is made. 12

Miranda was a depositor of Prime Savings Bank (PSB). On June 3, 1999, she
withdrew substantial amounts from her account, but instead of cash shed opted
to be issued a crossed cashier’s check. She was thus issued Cashier’s Check no.
0518 in the sum of P2,500,000.00 and Cashier’s Check no. 0514 in the amount
of P3,002,000.00. She deposited the two checks into her account in another bank
on the same day, however, Bangko Sentral ng Pilipinas (BSP) suspended the
clearing privileges of Prime Savings Bank. The two checks of Miranda were
returned to her unpaid. Subsequently, the BSP placed PSB under the receivership
of the Philippine Deposit Insurance Corporation (PDIC). Miranda, thus, filed a
civil action for sum of money in the RTC to recover the funds from her unpaid
checks against PSB, PDIC and the BSP.
a. Do the cashier’s checks operate as an assignment of funds in the hands
of Miranda?
NO. The two cashier’s checks issued by PSB do not constitute an assignment of funds in the
hands of Miranda as there were no funds to speak of in the first place. The bank was financially
insolvent for some time even before the issuance of the checks.

b. Is the claim lodged by Miranda a disputed claim under Section 30 of

Republic 7653, and therefore, under the jurisdiction of the liquidation
court?
YES. The claim lodged by Miranda qualifies as a disputed claim subject to the jurisdiction of
the liquidation court. Regular courts do not have jurisdiction over actions filed by claimants
against an insolvent bank, unless there is a clear showing that the action taken by the BSP,
through the Monetary Board in the closure of financial institutions was in excess of jurisdiction,
or with grave abuse of discretion. The power and authority of the Monetary Board to close
banks and liquidate them thereafter when public interest so requires is an exercise of the police
power of the State that is subject to judicial inquiry. “Disputed claims” refer to all claims,
whether they be against the assets of the insolvent bank, for specific performance, breach of
contract, damages, or whatever.
In Central Bank of the Philippines v. Dela Cruz, it was held that the actions of the Monetary
Board in proceedings on insolvency are explicitly declared by law to be “final and executory”.

9
Phil. Veterans Bank vs. NLRC, G.R. No. 13039, October 26, 1999.
10
Provident Savings Bank vs. CA, 222 SCRA 125.
11
Banco Pilipino Savings and Mortgage Bank vs. Ybanez, 445 SCRA 482.
12
Rural Bank of San Miguel vs. Monetary Board, 516 SCRA 154, 2007.

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They may not be set aside, or restrained, or enjoined by the courts, except upon “convincing
proof that the action is plainly arbitrary and made in bad faith”.

c. Are PSB, PDIC and BSP solidarily liable to Miranda?

NO. Only PSB is liable to pay for the amount of the two cashier’s checks. Solidary liability cannot
attach to the BSP, in its capacity as government regulator of banks, and the PDIC as statutory receiver
under R.A. 7653, because they are the principal government agencies mandated by law to determine
the financial viability of banks and quasi-banks, and facilitate receivership and liquidation of closed
financial institutions, upon a factual determination of the latter’s insolvency. 13

Rural Bank of San Miguel, Inc. (RBSM) was a domestic corporation engaged in
banking. X claims to be the majority stockholder of its outstanding shares of
stock. On January 21, 2000, the Monetary Board and BSP issued Resolution No.
105 prohibiting RBSM from doing business in the Philippines, placing it under
receivership and designating PDIC as receiver. Thereafter, PDIC implemented the
closure order and took over the management of RBSM’s assets and affairs. RBSM
contend that MB and BSP committed grave abuse of discretion in issuing
Resolution No. 105 as there was no complete examination that had been
conducted before it was issued. Is current and complete examination of a bank
before it can be closed and placed under receivership required?

NO. Sec. 30 R.A. 7653 provides:

Proceedings in Receivership and Liquidation – Whenever, upon report of the head of the supervising or
examining department, the Monetary Board finds that a bank or quasi-bank:
a. Is unable to pay its liabilities as they become due in the ordinary course of business: Provided,
that this shall not include inability to pay caused by extraordinary demands induced by financial
panic in the banking community;
b. Has insufficient realizable assets, as determined by the BSP to meet its liabilities; or,
c. Cannot continue in business without involving probable losses to its depositors or creditors; or
d. Has willfully violated a cease and desist order under Sec. 37 that has become final, involving
acts or transactions which amount to fraud or dissipation of the assets of the institution; in
which cases, the Monetary Board may summarily and without need for prior hearing forbid the
institution from doing business in the Philippines and designate the PDIC as receiver of the
banking institution.
In R.A. 7653, only a “report of the head of the supervising or examining department” is necessary. The
word “report” has a definite and unambiguous meaning which is clearly different from “examination”.
From the words used in Sec. 30, it is clear that R.A. 7653 no longer requires that an examination be
made before the MB can issue a closure order. 14

Explain the “Close Now, Hear Later” Doctrine.

The “close now, hear later” doctrine has already been justified as a measure for the protection of the
public interest. Swift action is called for on the part of the BSP when it finds that a bank is in dire straits.
Unless adequate and determined efforts are taken by the government against distressed and
mismanaged banks, public faith in banking system is certain to deteriorate to the prejudice of the
national economy itself, not to mention the losses suffered by the bank depositors, creditors and
stockholders, who all deserve the protection of the government. 15

Accordingly, the Monetary Board can immediately implement its resolution prohibiting a banking
institution to do business in the Philippines and, thereafter, appoint the PDIC as receiver. The procedure
for the involuntary closure of a bank is summary and expeditious in nature. Such action of the Monetary
Board shall be final and executory, but may be later subjected to a judicial scrutiny via a petition for
certiorari to be filed by the stockholders of record of the bank representing a majority of the capital
stock. Obviously, this procedure is designed to protect the interest of all concerned that is, the
depositors, creditors and stockholders, the bank itself and the general public. The protection afforded
public interest warrants the exercise of a summary closure. 16

13
Miranda v. Philippine Deposit Insurance Corporation, G.R. No. 169334, September 8, 2006.
14
Rural Bank of San Miguel, Inc., et. al. v. Monetary Board, et. al., G.R. No. 150886, February 16, 2007.
15
Bangko Sentral ng Pilipinas Monetary Board, et.al. v. Valenzuela, et.al, G.R. No. 184778, October 2, 2009.
16
Vivas, et.al. v. The Monetary Board of the Bangko Sentral ng Pilipinas, et.al. G.R. No. 191424, August 7, 2013.

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What are the requisites before a court can set aside the order of the Monetary
Board placing a bank or quasi-bank under Conservatorship, Receivership or
Liquidation?
A petition for certiorari filed within ten (10) days from receipt of decision by the stockholders of record
representing majority of the capital stock of the bank or quasi-bank.17

Can the liquidation court take cognizance of a case wherein the main cause of
action is not a simple money claim against a bank ordered closed, placed under
receivership of the PDIC, and undergoing a liquidation proceedings, but
Annulment of Deed of Mortgage and Damages?
YES. Action involving annulment of deed of mortgage and damages falls within the purview of a
disputed claim in contemplation of Sec. 30 of R.A. 7653. The jurisdiction should be lodged with the
liquidation court. This being a claim against a bank under receivership can properly be consolidated
with the liquidation proceedings before the liquidation court.18

Is prior approval of the Monetary Board of the Bangko Sentral ng Pilipinas

necessary before the PDIC may conduct an investigation of banks?
NO. The confusion can be attributed to the fact that although “investigation” and “examination” are
two separate and distinct procedures under the charter of the PDIC and the BSP, the words seem to be
used loosely and interchangeably. It does not help that indeed these terms are very closely related in
generic sense. However, while “examination” connotes a mere generic perusal or inspection,
“investigation” refers to a more intensive scrutiny for a more specific fact-finding purpose. The latter
term is also usually associated with proceedings conducted prior to criminal prosecution.

The PDIC was created by R.A. 3591 on June 22, 1963 as an insurer of deposits in all banks entitled to
the benefits of insurance under the PDIC Charter to promote and safeguard the interests of the
depositing public by way of providing permanent and continuing insurance coverage of all insured
deposits. Under its charter, the PDIC is empowered to conduct examination of banks without prior
approval of the Monetary Board. The charter empowers the PDIC to conduct an investigation of a bank
and to appoint examiners who shall have the power to examine any insured bank. Such investigators
are authorized to conduct investigations on frauds, irregularities and anomalies committed in banks,
based on an examination conducted by the PDIC and the BSP or on complaints from depositors or from
other government agencies.

The distinction between the power to investigate and the power to examine is emphasized by the
existence of two separate sets of rules governing the procedure in the conduct of investigation and
examination. Regulatory Issuance (RI) No. 2005-02 or the PDIC Rules on Fact-Finding Investigation of
Fraud, Irregularities and Anomalies Committed in Banks covers the procedural requirements of the
exercise of the PDIC’s power of investigation. On the other hand, RI No. 2009-05 sets forth the
guidelines for the conduct of the power of examination.

The definitions provided under the two aforementioned regulatory issuances elucidate the distinction
between the power of examination and the power of investigation.

Sec. 2 of RI No. 2005-02 states that its coverage shall be applicable to “all fact-finding investigations on
fraud, irregularities and/or anomalies committed in banks that are conducted by the PDIC based on: [a]
complaints from depositors or other government agencies; and/or [b] final reports of examination of
banks conducted by the Bangko Sentral ng Pilipinas and/or PDIC.”

The same issuance states that the Final Report of Examination is one of the three pre-requisites to the
conduct of an investigation, in addition to the authorization of the PDIC Board and a complaint.
Juxtaposing this provision with Sec. 9(b-1) of the PDIC Charter, since an examination is explicitly made
the basis of a fact-finding examination, then clearly examination and investigation are two different
proceedings. In 2009, to clarify the procedural matters, PDIC released RI No. 2009-0519 or the Rules and
Regulations on Examination of Banks.

17
Central Bank vs. Court of Appeals, 220 SCRA 539.
18
In Re: Petition for Assistance in the Liquidation of the Rural Bank of BOKOD (Benguet), Inc. v. Bureau of Internal Revenue,
G.R. No. 158261, December 18, 2006; see Lucia Barrameda Vda. De Ballesteros v. Rural Bank of Canaman, Inc., G.R. No. 176260,
November 24, 2010.
19
Sec. 2 Types of Examination

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 Compiled by Precy C. de Jesus, CPA, LLB

Sec. 3 of RI No. 2009-05 provides for the general scope of the PDIC examination:

a. Determination of the bank’s solvency and liquidation position;

b. Evaluation of asset quality as well as determination of sufficiency of valuation reserves on loans
and other risk assets;
c. Review of all aspects of bank operations;
d. Assessment of risk management system, including the evaluation of the effectiveness of the
bank management’s oversight functions, policies, procedures, internal control and audit;
e. Appraisal of overall management of the bank;
f. Review of compliance with applicable banking laws, and rules and regulations, including PDIC
issuances;
g. Follow-through of specific exceptions/violations noted during a previous examination; and,
h. Any other activity relevant to the above.

Rule 2, Sec. 1 of PDIC RI No. 2005-02 or the PDIC Rules on Fact-Finding Investigation of Fraud,
Irregularities and Anomalies Committed in Banks provides for the scope of fact-finding investigations
as follows: “Fact-finding investigations shall be limited to the particular acts or omissions subject of a
complaint or a Final Report of Examination.”

An examination entails a review of essentially all the functions and facets of a bank and its operation. It
necessitates poring through voluminous documents, and requires a detailed evaluation thereof. Such a
process then involves an intrusion into a bank’s records. In contrast, although it also involves a detailed
evaluation, an investigation centers on specific acts of omissions and, thus, requires a less invasive
assessment.

Indeed, while in literary sense, the two terms may be used interchangeably, under the PDIC Charter,
examination and investigation refer to two different processes. To reiterate, an examination of banks
requires the prior consent of the Monetary Board, whereas an investigation based on an
examination report, does not.20

(a) Regular Examination – An examination conducted independently or jointly with the BSP. It requires the prior
approval of the PDIC Board of Directors and the Monetary Board (MB). It may be conducted only after an interval
of at least twelve (12) months from the closing date of the last Regular Examination.
(b) Special Examination – An examination conducted at any time in coordination with the BSP, by an affirmative vote of
a majority of all the members of the PDIC Board of Directors, without need of prior MB approval if there is a
threatened or impending bank closure as determined by the PDIC Board of Directors.
20
Philippine Deposit Insurance Corporation v. Philippine Countryside Rural Bank, Inc., et.al., G.R. No. 176438, January 24, 2011.