PDIC ACT (RA 3591, AS AMENDED)

PHILIPPINE DEPOSIT INSURANCE CORPORATION (PDIC):

Primary Functions: to act as

1. Deposit Insurer – the PDIC shall promote and safeguard the interests of the depositing public by way of providing permanent and continuing insurance
coverage on all insured deposits.
2. Co-regulator of banks – as a bank regulator, the PDIC is empowered to examine and investigate banks.
3. Receiver and liquidator of closed banks – the PDIC as receiver shall control, manage and administer the affairs of the bank.

INSURED DEPOSITS: Amount due to any bona fide depositor for legitimate 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 P500,000.

Adjustment of maximum deposit insurance: the amount of coverage may be adjusted in such amount, for such a period, and/or for such deposit products,
provided:
1. The Monetary Board has determined that there is a condition that threatens the monetary and financial stability of the banking system that may have
systematic consequences as defined under RA No. 3591;
2. Approval by a unanimous vote of the Board of Directors of the PDIC in a meeting called for the purpose and chaired by the DOF Secretary;
3. Approval of the President of the Philippines.

Under Section 22 of the PDIC Charter, a systemic risk refers to the possibility of failure of one bank to settle net transactions with other banks will trigger
a chain reaction, depriving other banks of funds leading to a general shutdown of normal clearing and settlement activity. It also means the likelihood of
a sudden, unexpected collapse of confidence in a significant portion of the banking or financial system with potentially large real economic effects.

Coverage: The deposit liabilities of any bank or banking institution, which is engaged in the business of receiving deposits as herein defined on the effective
date of the PDIC Act, or which thereafter may engage in the business of receiving deposits, shall be insured with the PDIC.

Deposit accounts not entitled to payment:

1. Investment products such as bonds and securities, trust accounts and other similar instruments
2. Deposit accounts or transactions which are unfunded and that are fictitious or fraudulent
3. Deposit accounts or transactions constituting and/or emanating from, unsafe and unsound banking practice/s, as determined by PDIC, in consultation
with BSP, after due notice and hearing, and publication of a cease and desist order issued by PDIC against such deposit accounts or transactions
4. Deposits that are determined to be the proceeds of an unlawful activity as defined under RA 9160 or the Anti-Money Laundering Act, as amended 5.
Deposits payable in a place outside the Philippines (like those in foreign branches)
6. Money placements by the head office of a foreign bank in its branch in the Philippines because there is only one entity.
7. Deposit products that resulted from splitting of deposit.

Splitting of Deposit – occurs whenever a deposit account with an outstanding balance more than P500,000 under the name of persons is broken down
and transferred to two or more accounts in the name of persons or entities who have no beneficial ownership in the transferred deposits in their
names within 120 days immediately preceding or during a bank-declared bank holiday or immediately preceding a closure order issued by the Monetary
Board for the purpose of availing the maximum deposit insurance coverage. This is considered a criminal act punishable by imprisonment of not less
than 6 years but not more than 12 years or a fine not less than P50,000 but not more than P10,000,000, or both, at the discretion of the court.

Determination of the amount due

Per Depositor, Per Capacity Rule: 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 in determining the insured amount.

Accounts “By”, “In Trust For (ITF)” or “For the Account of (FAO)” another person:
1. In a “By” account (Juan by Pedro) – Juan is the depositor.
2. In an “ITF” account (Juan ITF Pedro) – Pedro is the depositor.
3. In a “FAO” account (Juan FAO Pedro) – Pedro is the depositor.

Joint accounts: A joint account regardless of whether the conjunction “and”, “or”, “and/or” is used shall be insured separately from any individually-
owned deposit account, provided that:
1. 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 persons or entities, unless a different sharing is stipulated in the document of
deposit, and
2. 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;

Provided, further, that the aggregate of the 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 P500,000.00.

Certificate of Deposit: No owner/holder of any negotiable certificate of deposit shall be recognized as a depositor entitled to the rights in PDIC Act unless
his name is registered as owner/holder thereof in the books of the issuing bank.

Procedure for the PDIC:

1. PDIC shall commence the determination of insured deposits due the depositors of a closed bank upon its actual takeover of the closed bank.
2. PDIC shall give notice to the depositors of the closed bank of the insured deposits due them by whatever means deemed appropriate by the Board of
Directors.
3. PDIC shall publish the notice once a week for at least 3 consecutive weeks in a newspaper of general circulation or, when appropriate, in a newspaper
circulated in the community or communities where the closed bank or its branches are located.

Mode of payment: made as soon as possible either:

1. By cash
2. By making available to each depositor a transferred deposit in another insured bank in an amount equal to insured deposit of such depositor

Proof of claim: The PDIC, in its discretion, may require proof of claims to be filed before paying the insured deposits, and that in any case where the PDIC
is not satisfied as to the validity of a claim, it may require final determination of a court of competent jurisdiction before paying such claim.

Withholding of payment: The PDIC may withhold payment of such portion of the insured deposit for the payment of any liability of such depositor as a
stockholder of the closed bank, or of any liability of such depositor to the closed bank or its receiver, which is not offset against a claim due from such
bank, pending determination and payment of such liability by such depositor or any other liable therefor.

Effect of payment: PDIC shall be subrogated to all rights of the depositor against the closed bank to the extent of such payment. Such subrogation shall
include the right on the part of PDIC to receive the same dividends and payments from the proceeds of the assets of such closed bank and recoveries on
account of stockholders’ liability as would have been payable to the depositor on a claim for the insured deposits, but such depositor shall retain his claim
for any uninsured portion of his deposit.

Under Section 21 of the PDIC Charter, payment of an insured deposit to any person by PDIC shall discharge the PDIC, and payment of transferred deposit
to any person by the new bank or by an insured bank in which a transferred deposit has been made available shall discharge PDIC and such new bank or
other insured bank, to the same extent that payment to such person by the closed bank would have discharged it from liability for the insured deposit.

Preference: All payments by PDIC of insured deposits in closed banks partake of the nature of public funds, and as such, must be considered a preferred
credit similar to taxes due to the National Government in the order of preference under Article 2244(9) of NCC, provided further, that this preference shall
be likewise effective upon liquidation proceedings already commenced and pending as of the approval of PDIC Act, where no distribution of assets has
been made.

Failure to settle claim of insured depositor: Failure to settle the claim within 6 months from the date of filing of claim for insured deposit, where such failure
was due to grave abuse of discretion, gross negligence, bad faith or malice, shall upon conviction, subject the directors, officers or employees of PDIC
responsible for the delay, to imprisonment from 6 months to one year, provided, that the period shall not apply if the validity of the claim requires the
resolution of issues of facts and/or law by another office, body or agency.

Failure of depositor to claim insured deposits: Unless otherwise waived by the PDIC, if the depositor in the closed bank shall fail to claim his insured
deposits with PDIC within 2 years from actual takeover of the closed bank by the receiver, or does not enforce his claim filed with PDIC within 2 years
after the 2-year period to file a claim, all rights of the depositor against the PDIC with respect to the insured deposit shall be barred, however, all rights of
the depositor against the closed bank and its shareholders or the receivership estate to which PDIC may have become subrogated, shall thereupon revert
to the depositor. Thereafter, PDIC shall be discharged from any liability on the insured deposit.