PDIC LAW

Philippine Deposit Insurance Corporation Law

(RA 3591 as amended by RA 7400, RA 9302 [2004], RA 9576

[2009], & RA 10846 [2016])
THE PDIC
The Philippine Deposit Insurance Corporation (PDIC) is a government
instrumentality created on 22 June 1963 by RA 3591 entitled, An Act
Establishing the Philippine Deposit Insurance Corporation (PDIC), Defining
Its Powers and Duties and for Other Purposes.
 PUBLIC POLICY OBJECTIVES
ü To promote and safeguard the interests of the depositing public by way of
providing insurance coverage on all insured deposits.
ü To strengthen the mandatory deposit insurance coverage system
ü To generate, preserve, and maintain faith and confidence in the country’s
banking system
ü To protect it from illegal schemes and machinations.
MANDATE
1. Deposit Insurance
PDIC provides a maximum deposit insurance coverage of Php 500,000 per
depositor per bank. 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.
MANDATE
2. Receivership of Closed Banks
PDIC proceeds with the liquidation process upon order of the Monetary
Board of the Bangko Sentral 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.
 PDIC COMPOSITION
• DOF Secretary – ex officio Chairman
• PDIC President – appointed by President of the Philippines
– Vice Chairman of the Board
• BSP Governor – ex officio Member
• 4 members from the private sector – appointed by President of the
Philippines
MEMBERSHIP
Membership with PDIC is mandatory for all banks licensed by the BSP to
operate in the Philippines:
ü Banks incorporated under Philippine laws, such as commercial banks,
savings banks, mortgage banks, stock savings and loan associations,
development banks, cooperative banks, and rural banks
ü Domestic branches of foreign banks
SCOPE OF DEPOSIT INSURANCE PROTECTION

Maximum deposit insurance coverage of Php 500,000 per depositor per bank.
SCOPE OF DEPOSIT INSURANCE PROTECTION
Coverage:
By deposit type By deposit amount By currency
Savings Single Php
Special Savings Joint Foreign currency
Demand/Checking By, ITF, FAO
Negotiable Order of Withdrawal
Time Deposits
SCOPE OF DEPOSIT INSURANCE PROTECTION
Not covered:
ü Investment products such as bonds and securities, trust accounts and other similar
instruments
ü Deposit accounts or transactions that:
- are unfunded, fictitious or fraudulent;
- constitute and/or emanate from unsafe and unsound banking practice/s as determined
by the PDIC, in consultation with the BSP, after dure 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 (RA 9160, as amended)
SCOPE OF DEPOSIT INSURANCE PROTECTION
Not covered:
ü Bank deposits in foreign banks operating outside the Philippines.
ü Bank deposits in foreign branch of domestic bank operating outside the Philippines.
SCOPE OF DEPOSIT INSURANCE PROTECTION

The 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.
UNSAFE AND UNSOUND DEPOSIT RELATED ACTIVITIES

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

adequate controls required under existing laws, rules and regulations
ü Failure to keep bank records within bank premises
ü Granting high interest rates, when bank has: (i) negative unimpaired capital,
or (ii) liquid assets to deposits ratio less than 10%
ü Non-compliance with PDIC regulations
SINGLE ACCOUNTS
Are individually-owned accounts or accounts held under one name, either as:

• Natural person – any individual person. Single proprietors are considered

natural persons.
• Juridical entity – refers to a corporation, partnership or cooperative.
JOINT ACCOUNTS
A joint account regardless of whether the conjunction “and”, “or” or “and/or”
is used shall be insured separately from single accounts.

Account Name Deposit Mirabel’s share in the

Insured Deposit
Mirabel or Luisa 500,000 250,000
Mirabel and Isabela 1,000,000 250,000
Mirabel and/or Bruno 1,000,000
Total 2,500,000 500,000
EXAMPLE
The bank records of Bank Pink show the following joint accounts and their balances.
Rose and/or Lisa P500,000
Rose and/or Jisoo 500,000
Rose and/or Jennie 500,000

Is each account insured?

Yes.
How much can Rose recover from the PDIC?
P500,000. The aggregate interest of each co-owner over several joint accounts, whether owned by the same or
different combinations of individuals, juridical persons or entities shall likewise be subject to the maximum
insured deposit of P500,000.
EXAMPLE
The couple Agustin and Julieta Madrigal have the following account balances with
Encanto Bank.
Agustin Madrigal P500,000
Julieta Madrigal 500,000
Agustin Madrigal and/or Julieta Madrigal 500,000

How much are the insured amounts?

All the 3 accounts are insured because the deposits are maintained in different rights and capacities. A joint
account shall be insured separately from any individually-owned deposit account. (Sec. 4(g) PDIC Charter)

How much Agustin Madrigal recover from PDIC?

P750,000. The and/or account shall be divided into as many entities in whose names the account is recorded.
By, ITF, FAO Accounts
• In a “By” account, Ana by Ben, Ana is the depositor.
• In an “In Trust For” (ITF) account, Ana In Trust For Ben, Ben is the
depositor.
• In a “For the Account of ” (FAO) account, Ana For the Account of Ben, Ben
is the depositor.
By, ITF, FAO Accounts
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 Php 5000,000.
Illustrative Example:
Account Name Deposit Insured Deposit
Mirabel 100,000 100,000
Luisa FAO Mirabel 100,000 100,000
Bruno ITF Mirabel 100,000 100,000
Mirabel Optical Clinic 700,000 200,000
Total 1,000,000 500,000
JOINT ACCOUNTS
General rule: the insured amount is divided equally among co-owners of
a joint account.
Exception: Unless a different sharing is stipulated in the deposit
documents
How much is Mirabel’s insured deposit for all his single and joint
accounts? Answer: Php 1,000,000 minus all obligations or loans of the
depositor with the closed bank, if any.
 REQUIREMENTS FOR CLAIMS
When to file claims – during the claims settlement operations period as
announced in the Notice to Depositors.

Depositors have 2 years from PDIC takeover to file their deposit insurance
claims.
 REQUIREMENTS FOR CLAIMS
Persons required to file deposit insurance claims:
vDepositors with valid deposit accounts with balances of more than Php
100,000
vDepositors who have outstanding obligations with the closed bank
regardless of amount of deposits.
vDepositors with account balances of less than Php 100,000 who have not
updated addresses in the bank records or who have not updated their
addresses through the MAUF issued by the PDIC.
 REQUIREMENTS FOR CLAIMS
Persons required to file deposit insurance claims:
üDepositors who maintain their accounts under the name of business
entities, regardless of type of account and account balance.
üDepositors with accounts not eligible for early payment, regardless of
type of account and account balance, per advice of PDIC.
 REQUIREMENTS FOR CLAIMS
Persons not required to file deposit insurance claims:
üValid deposit accounts
üBalance of Php 100,000 and below
üNo obligations with the closed bank
üComplete and updated addresses in the bank records of through the
MAUF issued by the PDIC
REQUIREMENTS FOR CLAIMS
Steps in filing:
1. Prepare the following documents:
a) Original evidence of deposits
b) One valid photo-bearing ID with clear signature
c) Original PSA birth certificate if below 18
d) Original copy of notarized SPA for claimants who are not signatories in
the bank records
2. Submit personally or through mail
REQUIREMENTS FOR CLAIMS
Steps in filing:
1. Prepare the following documents:
a) Original evidence of deposits
b) One valid photo-bearing ID with clear signature
c) Original PSA birth certificate if below 18
d) Original copy of notarized SPA for claimants who are not signatories in
the bank records
2. Submit personally or through mail
REQUIREMENTS FOR CLAIMS
Who should sign the deposit insurance claim form?
• Depositor – if 18 and above
• Parent – if below 18
• Agent – “by”
• Trustee – ITF
• Each depositor – “and”, “or”, “and/or”