DEPOSIT

INSURANCE
PHILIPPINE DEPOSIT INSURANCE
CORPORATION
R.A. 3591
I. Role of PDIC
a) Insure the deposits of all banks (only those
entitled)
b) Promote and safe guard the interest of the
depositing public
II. POWERS OF PDIC AS A CORPORATE
BODY
1) To adopt and use a corporate seal
2) To have succession until dissolved by an Act
of Congress
3) To make contracts
4) To sue and be sued, complain and defend, in
any court in the Philippines
5) To appoint by its Board of Directors such
officer and employees not otherwise
provided for by law

6. To prescribe, by its BoD, by-laws not inconsistent
with law
7. To exercise all powers specifically granted by law
and those incidental and necessary thereto
8. To conduct examination of banks with prior
approval of the Monetary Board
9. To act as receiver
10. To prescribe such rules and regulation to carry out
the provision of the PDIC law
11. To establish its own provident fund
12. To compromise condone or release any claim or
settled liability to PDIC

III. Board of Directors
A. Composition
a) Secretary of Finance (Ex-officio Chairman)
b) Governor of BSP (Ex-officio member)
c) President of PDIC (Vice-Chairman)
d) 2 members from the private sector
Qualification of the 2 appointive members:
1. good moral char.
2. unquestionable integrity and responsibility
3. recognized competence in economics, banking,
law, management administration or insurance
4. at least 35 yrs. of age
B. Disqualification from holding any office,
position or employment in any insured banks

C. Quorum
1) The presence of 3 members shall consists a
quorum. All decisions of the BoD shall require
the concurrence of at least 3 members.
2) The Sec. of Finance and the Gov. of BSP may
designate their respective representative.
(must not be lower than Undersecretary or
Deputy Gov.)
3) In the absence of the Chairman or there is
vacancy in the office of the Sec. of Finance,
the President shall act as chairman.
D. Per Diem
The Sec. of Finance shall fix the rate of per
diem for every Board Meeting attended by the
members from the private sector.

The President may fix emoluments of the
members comparable to other BoD of
Government financila institution
E. Authority of the Board
1. Prepare and issue rules and regulation as it
considers necessary for the effective discharge of
its responsibilities;
2. Direct the management, operation and
administration of PDIC;
3. Establish human resource management system
which shall govern the selection, hiring,
appointment, transfer, promotion or dismissal of
all personnel;
4. To appoint, establish the rank, fix renumeration,
approve local and foreign training and remove
any officer or employee for cause subject to
pertinent civil service laws
5. Adopt annual budget for, and authorize
such expenditure as are in the interes of the
effective administration and operation of
PDIC;
6. Approve the methodology for determining
the level and amount of provisioning for
insurance and financila assistance losses,
which shall establish reasonable levels of
deposit insurance reserves.
IV. OFFICERS
A. The President
1) The chief executive
2) Salary shall be fixed by the President of the Phil.
3) Sum total of the salary and other emoluments shall
be the ceiling for fixing the salary, allowances and
other emoluments of other personnel.
Powers and Duties:
a) To prepare the agenda for the meeting of the BOD
and to submit policies and measure w/c he believes
necessary to carry out the purpose of the PDIC law;
b) To execute and administer the policies and measures
approved by the Board;
c. To direct and supervise the operations and
internal administration in accordance with
the policies and measures;
d. Represent the PDIC in dealings with other
agencies;
e. To authorize contract, notes and securities
issued and the annual reports and financial
statements;
f. To represent the PDIC either personally or
through counsel, in legal proceedings;
g. To delegate his powers to represent to other
officers; and
h. To exercise such other powers as may be
vested in him by the Board.

B. The Vice-President
-Salary shall be fixed by the Board upon
recommendation by the President
- During absence or temporary incapacity
of the President, or in case vacancy or
permanent incapacity, pending
appointment of a new President; the Vice-
President shall act as President.

C. Bank Examiners
- appointed by the BOD
- have power to throrough examination of all
the affairs of the bank and shall have the
power to:
1. Administer oaths
2. Examine and take and preserve the testimony of any
of the officer and agents thereof, and
3. Compel presentation of book, documents, papers or
records necessary to his judgment to ascertain the
facts relative to the condition of the bank

D. Claims Agents
-appointed by the BoD and have the power to
investigate and examine all claims for insured
deposits and transferred deposits.
- have the power to administer oaths and examine
under oath and take and preserve testimony of any
person relating to such claim.
E. Investigators
- appointed by the BoD and have the power to conduct
investigations on fraud, irregularities and anomalies
committed in banks, based on reports of examination
conducted by the PDIC and BSP or complaints from
depositors and other governmental agencies
-also have the power to administer oaths and preserve
testimony
V. DEPOSIT INSURANCE COVERAGE
A. DEPOSIT LIABILITIES

I. Deposit liabilities of any banks or banking
institution w/c is engaged in the business of
receiving deposits shall be insured w/ PDIC.
II. Factors to be considered by the BoD:
a) The financial history and condition of bank;
b) The adequacy of its capital strucutre;
c) Its future earning prospect;
d) The general character of management
e) Convenience and the nee of the community to be
served by the bank and whether its corporate power
is consistent with PDIC purpuse
III. The term deposit means the unpaid
balance of money or its equivalent received
by a bank in the usual course of buiness and
for which it has given or its obliged to give a
credit to a respective kind of account.
IV. Any obligation of a bank which is payable at
the office of the bank located outside of the
Phil. shall not be a deposit for any of the
purposes of the PDIC law; or included as
total of insured deposits.
B. Statutory liability of PDIC
PDIC was created by law (RA 3591), thus will be
primarily be governed by the provision of said
law, therefore liability of the PDIC is statutory;
Such liability rest upon the existence of deposits
and not on the negotiability or no-negotiability
of the certificates evidencing the deposits.
Case:
PDIC vs. CA (GR No. 118317) citing Fourth Nat. Bank of Wichita vs. Wilson:
Thus, the plaintiffs in Fourth Nat. Bank of Wichita v. Wilson

argued that:
x x x the court should hold the certificates to be guaranteed because
they are negotiable instruments, and were acquired by the present
holders in due course; otherwise it is said certificates of deposit will be
deprived of the quality of commercial paper. Certificates of deposit
have been regarded as the highest form of collateral. They are of wide
currency in the banking and business worlds, and are particularly useful
to persons of small means, because they bear interest, and may be
readily cashed; therefore to deprive them of the benefit of the guaranty
fund would be a calamity. x x x

The Supreme Court of Kansas, however, found the
plaintiffs contention to be without merit, ruling thus:
x x x The argument confuses negotiability of
commercial paper with statutory guaranty of
deposits. The guaranty is something extrinsic to all
forms of evidence of bank obligation; and negotiability
of instruments has no dependence on existence or
nonexistence of the guaranty.
x x x Whatever the status of the plaintiffs may be as
holders in due course under the Negotiable
Instruments Law, they cannot be assignees of a deposit
which was not made, and cannot be entitled to the
benefit of a guaranty which did not come into
existence. x x x

C. A Deposit must in Fact be Made
i. The fact that the certificate states that the
certificates are insured by PDIC does not ipso
facto makes the latter liable for the same
should the contingency insured against arise.
A deposit should actually be made with the
bank. The banks have nothing to do with the
guaranty fund.
ii. In order that a claim with the PDIC may
prosper, the law requires that a
corresponding deposit be placed in an
insured bank (RA 3591, Sec. 1 and Sec. 10(C))


III. A deposit may be constituted only if money
or the equivalent of money is received by a
bank (RA 3591 Sec.3(f))
D. Holder in Due Course not Applicable

Even if depositor be regarded as an innocent
purchaser of certificates of deposits as
negotiable instrument, still does not relate ot
a claim against the guaranty fund.
The fund protect deposits only.

PDIC vs. CA (GR No. 118317) citing American
State Bank vs. Foster

E. Liability Under the Negotiable
Instrument vs. The Guaranty Fund
Liability of the maker of a negotiable
instrument should be distinguished from the
liability of guaranty fund.
The circumstances under each kind of liability
is entirely apart from both law governing
each, respectively.
Liability of the maker of negotiable instrument
is governed by the Negotiable Instrument Law
while liability of the guaranty fund is purely
statutory
F. Deposit Insurance of Foreign
Currency Deposits

Foreign currency deposits are insured with
PDIC.
Insurance payment shall be in the same
currency in which the insured deposits are
denominated. (Sec. 9 of RA 6426Foreign
Currency Deposit Act)
G. Duty to Indicate Insurance on
Deposits
All banks shall indicate the coverage
of the PDIC in each passbook,
certificate of time deposit and/or
cover of checkbook for demand
deposit/NOW account stating among
other thins the maximum amount of
insurance
VI. ASSESSMENT
A. Assessment Rate
Shall be determined by the Board of Directors
Note:
1. The assessment rate shall not exceed 1/5 of 1%
per annum.
Semi-annual assessment = of the assessment
rate *assessment base; but in no case shall the
amount be less than P250.00.
- The assessment base shall be the amount of the
liability of the bank deposits w/out any
deduction for indebtedness of depositor

2. The semi-annual assessment base for one
semi-annual period shall be the average of
the assessment base of the banks as of the
close of business on March 31 and June 30 or
for other semi-annual period of Sept. 30 and
Dec. 31