PDIC (R.

A 3591 or Philippine Deposit Insurance Corporation)

1. What is the purpose of PDIC Law?

- PDIC was created by Republic Act 3591 in 1963 to “promote and safeguard the interests of
the depositing public by way of providing permanent and continuing insurance coverage
on all insured deposits.” PDIC also seeks to strengthen the required deposit insurance to
create, preserve and maintain faith and confidence in the nation’s banking system as well as
defend it from nefarious plots and machinations

2. What are the main functions of PDIC? (DCR)

- Consistent with its public policy objectives, the PDIC has the following mandates:
I. Deposit Insurer: Deposit Insurance. The PDIC provides a maximum deposit
insurance coverage of PHP500,000 per depositor per bank. To pay insured deposits,
the PDIC builds up the Deposit Insurance Fund primarily through assessments of
member-banks at an annual flat rate of 1/5 of 1% of their total deposit liabilities
II. Co-regulator of banks: Examination and Resolution. The PDIC works closely with
the Bangko Sentral ng Pilipinas (BSP) to help maintain stability in the banking
system. PDIC is authorized to issue regulations to implement its Charter, conduct
bank examinations and investigations to assess financial safety and soundness of
banks and their adherence to banking and deposit insurance rules and regulations,
and extend financial assistance to eligible distressed banks.
III. Receivership and Liquidator of closed banks. The PDIC is the statutory receiver and
liquidator of closed banks. Upon order of the Monetary Board of the BSP, PDIC takes
over closed banks; administers their assets, records and affairs; and manages and
preserves these assets for the benefit of the closed banks' creditors. Under RA
10846 or the amended PDIC Charter, a closed bank transitions seamlessly from
closure to liquidation, enabling PDIC to dispose and distribute assets and settle
claims of creditors in accordance with the preference and concurrence of credits as
provided by the Civil Code of the Philippines.
 As Receiver, the PDIC administers the assets, records and affairs of the
closed bank; and preserves the closed bank’s assets for the benefit of the
bank’s creditors. Depositors with deposits in excess of the deposit insurance
coverage or uninsured deposits are considered creditors of the closed bank.
Ran after creditors for collectibles.
 When a closed bank can no longer be rehabilitated, PDIC is directed by the
Monetary Board to proceed with the liquidation of the bank as Liquidator.
Liquidation of a closed bank’s assets involves conversion of real and other
properties acquired (ROPA) and other assets to liquid assets to facilitate
distribution to creditors.

3. What are the public policy objectives of PDIC?

- Two public policy objectives are: depositor protection and financial stability
- To strengthen the mandatory deposit insurance coverage system to generate, preserve,
maintain faith and confidence in the country’s banking system, and protect it from illegal
schemes and machinations.
 - Towards this end, the government must extend all means and mechanisms necessary for
the Philippine Deposit Insurance Corporation to effectively fulfill its vital task of promoting
and safeguarding the interests of the depositing public by way of providing permanent and
continuing insurance coverage on all insured deposits,…machinations and in helping develop
a sound and stable banking system at all times.

4. Define:
a. Deposit

- The unpaid balance of money or its equivalent received by a bank in the usual course of
business and for which it has given or is obliged to give credit to a commercial, checking,
savings, time or thrift account, or is issued in accordance with Bangko Sentral rules and
regulations and other applicable laws together with such other obligations of a bank, which,
consistent with banking usage and practices. the Board of Directors shall determine and
prescribe by regulations to be deposit liabilities of the bank:
- Provided, That any obligation of a bank which is payable at the office of the bank located
outside of the Philippines shall not be a deposit for any of the purposes of this Act or
included as part of the total deposits or of insured deposit:
- Provided, further, That, subject to the approval of the Board of Directors, any insured bank
which is incorporated under the laws of the Philippines which maintains a branch outside
the Philippines may elect to include for insurance its deposit obligations payable only at
such branch.
b. Insured deposit
- 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 date of closure, but not to
exceed P500,000. Such amount shall be determined according to such regulations as the
BOD may prescribe

5. What is the maximum deposit insurance coverage?

- Previously up to 250k per depositor with the bank. R.A No. 9576 signed by the President
on April 29, 2009 doubled the coverage to 500k
- The maximum deposit insurance coverage is Php500,000 per depositor per bank. The
insurance covers all forms of deposits in member-banks whether in local or foreign
currencies.
- A maximum deposit insurance coverage of P500,000 shall be paid by the corporation.
Provided, That, for the first three (3) years from the effectivity of this Act, the first Two
hundred fifty thousand pesos (P250,000.00) of the deposit insurance coverage shall be
for the account of the Corporation, and those in excess of Two hundred fifty thousand
pesos (P250,000.00) but not more than Five hundred thousand pesos (P500,000.00)
shall be for the account of the National Government.
- 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. All deposit
accounts by a depositor in a closed bank maintained in the same right and capacity
shall be added together.
- 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.
 - Deposits are considered valid upon the determination by the PDIC, based on bank
records, that the deposits were made with a corresponding inflow of cash.

6. What are the covered by PDIC deposit insurance?

- PDIC insured valid deposits in domestic offices of its member banks
- The PDIC’s deposit insurance covers all forms of deposits in member-institutions,
whether in local or foreign currencies. But there are bank products that are excluded
from deposit insurance.
- Except for the exclusions stipulated in RA 9576, deposits of all commercial banks, savings
and mortgage banks, rural banks, private development banks, cooperative banks, savings
and loan associations, as well as branches and agencies in the Philippines of foreign banks
and all other corporations authorized to perform banking functions in the Philippines, are
insured with PDIC. As for Philippine banks with branches outside the country, RA 9576
stipulates that subject to the approval of the Board of Directors, any insured bank with
branch outside the Philippines may elect to include for insurance its deposit obligations
payable at such branch.
- Foreign currency deposits are also insured by PDIC pursuant to RA 6426 (“An act instituting a
foreign currency deposit system in the Philippines, and for other purposes”) and Central
Bank (CB) Circular No. 1389. Depositors may receive payment in the same currency in which
the insured deposit is denominated.

Insured Deposits
By Deposit Type By Deposit Account By Currency
 Savings  Single account  Philippine peso
 Special savings  Joint account  Foreign currencies
 Demand/checking  Account “by”, “in trust considered as part of
 Negotiable order of for” (ITF) or “for the BSP’s international
withdrawal (NOW) - account of” (FAO) reserves
check another person
 Certificate of time
deposit

- PDIC covers only the risk of a bank closure (insolvency) 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.

7. Definition of accounts:
a. Single accounts
- Accounts maintained solely by a depositor (natural person, or juridical
entity/organization) In-Trust-For (ITF) and By Accounts are also considered single
accounts. In the case of account name: (1) Maria ITF Jose; or, (2) Jose By Maria, the
owner is Jose for both accounts.

 Natural person – refers to any individual person, single proprietors are considered
natural persons
 Juridical entity – refers to a corporation, partnership or cooperative
b. Joint accounts
- an account held jointly by two or more natural persons, or by two or more  juridical
persons or entities. Joint account regardless of whether the conjunction "and," "or,"
"and/or" is used, shall be insured separately from any single or singly-owned deposit
account.
- 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.
- 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.
- Joint accounts held in the names of a juridical entity and a natural person shall be
presumed to belong solely to the juridical entity.
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,

 Provided, further, That the aggregate of the interests 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 Five hundred thousand pesos (P500,000.00):
 Provided, furthermore, That the provisions of any law to the contrary
notwithstanding, no owner/holder of any negotiable certificate of deposit shall
be recognized as a depositor entitled to the rights provided in this Act unless his
name is registered as owner/holder thereof in the books of the issuing bank: 
 Provided, finally, That, in case of a condition that threatens the monetary and
financial stability of the banking system that may have systemic consequences,
as defined in Section 17 hereof, as determined by the Monetary Board, the
maximum deposit insurance cover may be adjusted in such amount, for such a
period, and/or for such deposit products, as may be determined by a
unanimous vote of the Board of Directors in a meeting called for the purpose
and chaired by the Secretary of Finance, subject to the approval of the
President of the Philippines.”

c. “By”, “ITF” or “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.

To simplify:
 o 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.
o The depositor’s total shares in his/her joint accounts shall be separately insured
up to Php500,000.
o A depositor with single accounts and joint accounts may have insured deposits
of up to Php1,000,000.

8. What are the rules in determining accounts covered?

- For Single accounts:

 In determining the insured deposit of single accounts, 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. Total insured deposit should not exceed the
Maximum Deposit Insurance Coverage of Php500,000. Single accounts are insured
separately from joint accounts up to the Maximum Deposit Insurance Coverage of
Php500,000.

- For Joint accounts:

 If the account is held jointly by two or more natural persons, or by two or more
juridical persons/entities, the maximum insured deposit shall be divided into as
many equal shares as there are natural persons or juridical entities, unless a
different sharing is indicated in the deposit document
 If the account is held by a juridical person/entity jointly with one or more natural
persons, the maximum insured deposit shall be presumed to belong entirely to such
juridical person/entity
 The aggregate of the interests of each co-owner over several joint accounts,
whether owned by the same or different combinations, shall likewise be subject to
the Maximum Deposit Insurance Coverage of Php500,000.

9. What is compensation or set-off in relation to computing insured deposits?

- Under R.A. No. 9576, the PDIC may propose to adjust the MDIC, subject to the approval
of the President of the Philippines, in case of a condition that threatens the monetary
and financial stability of the banking system that may have systemic consequences.
- The insured deposit should be 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
(P500,000).
- In determining the insured amount, the outstanding balance of each account is adjusted
such that interests are updated, withholding taxes are deducted, accounts maintained
by a depositor in the same right and capacity are added together, and whenever
applicable, unpaid loans and other obligations of the depositor are deducted; and in no
case shall insured deposit exceed Php500,000

10. Requirements for claims

a. Who are required to file claims?
 - Depositors:
 With valid deposit accounts with balances of more than P100,000.00;
 With outstanding obligations with the closed bank either as borrower, co-maker, or
as spouse of borrower;
 With incomplete mailing address found in the bank records, or failed to update
them through the MAUF issued by the PDIC;
 With accounts maintained under the name of business entities;
 With accounts not eligible for early payment, regardless of type of account and
account balance per advice of PDIC; and
 Who are deceased whose filing of claim is thru the legal heirs.

b. What are the documents required in support of the claim?

- Original Evidence of Deposits such as savings, passbook, certificate of time deposit, bank
statement, used or unused checks, or ATM card.
- One (1) valid original photo-bearing identification document (ID) with clear signature of
depositor/claimant (e.g. Driver’s license, SSS/GSIS ID, Senior Citizen’s ID, Passport, PRC
ID, OWWA/OFW ID, Seaman’s ID, Alien Certificate of Registration ID, Voter’s ID) or
PhilID. (recommended to bring at least two (2) valid ID’s in case of discrepancies in
signature.)
- For depositors below (18) years old, photocopy of birth certificate from the Philippine
Statistics Authority (PSA) or a duly certified copy issued by the local civil registrar, and
valid ID of the parent
- 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
- Claim Form:
 When filing claim during the onsite CSO period, or during personal filing at the PDIC
PAC, a system generated Claim Form shall be printed by PDIC representative after
interview/processing.
 The Claim Form needs to be accomplished, signed, and notarized. Depositors are
required to check one (1) preferred payment option in the Deposit Insurance
Payment Option (DIPO). Depositors must ensure that the signature on the Claim
Form and DIPO is similar with the signature in the bank records and the valid IDs
submitted.

c. Who should sign the Claim Form?

1. Depositor of the account – for depositor 18 years old and above
2. Parent – of depositor below 18 years old
3. Agent – in the case of “by” account
4. Trustee – in the case of “In Trust for” (ITF) account
5. Each depositor/account holder for account maintained as “or”, “and/or” or “and” – in
the case of joint accounts
6. Authorized representatives – for business entities, deceased depositors and person who
has special power attorney (SPA) from the depositor
 d. When are claims filed?
- Claims are filed during the onsite Claims Settlement Operations (CSO) 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 who failed to file their claims during the onsite CSO may do so through any
of these options:
I. Personal filing at the PDIC Public Assistance Center located at the 3rd Floor, SSS
Bldg., 6782 Ayala Avenue corner V. A. Rufino Street, Makati City, 8:00 AM to
5:00 PM, Monday to Friday, except holidays.
II. Filing through mail by sending a duly accomplished and notarized Claim form

- Depositors have two (2) years from PDIC's takeover of the closed bank to file their
deposit insurance claims. After the two-year period, the depositor's right to claim for
deposit insurance is barred pursuant to Section 21(e) of R.A. 3591, as amended.

11. What 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):
 Investment products such as bonds and securities, trust accounts and other similar
instruments
 Deposit accounts or transactions that:
o Are unfunded, fictitious or fraudulent
o Constitute and/or emanate from unsafe and unsound banking practice/s3 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
o Are determined to be proceeds of an unlawful activity as defined in the
AntiMoney Laundering Act (Republic Act 9160, as amended)

Note: Unsafe and unsound deposit-related activities include, among others:

 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

Note:

 A joint account is separately insured up to maximum deposit insurance coverage of Php500,000

from an individually-owned deposit account.
  The share of a depositor in the insured deposit of each joint account shall be added and in no case
shall the insured deposit exceed Php500,000.
 Depositors of closed banks have up to two years from the actual takeover by the PDIC of the
closed bank to file their claims.
 Deposits in excess of Php500,000 are claims against the assets of the closed bank and are no
longer an obligation of the PDIC, as Deposit Insurer.

Other Questions:

1. What is the relationship between the depositor and the bank?

- The bank acts as the debtor and the depositor is the creditor. The depositor lends the
bank money and the bank agrees to pay the depositor on demand
2. Are all banks members of PDIC?
- Membership of banks to PDIC is mandatory; hence, all operating banks are members of
PDIC.
3. Are deposits maintained in branches and subsidiaries of foreign banks operating in the Philippines
insured by the PDIC?
- Yes, the PDIC Charter provides that the deposits in branches and subsidiaries of foreign
banks licensed by the Bangko Sentral ng Pilipinas (BSP) to perform banking functions in the
Philippines are insured by the PDIC.
4. Are deposits maintained in Philippine banks with branches outside the Philippines insured by the
PDIC?
- The PDIC Charter provides that a Philippine bank may elect to insure with the PDIC its
deposits in branches outside the Philippines. As of 20 April 2021, no Philippine bank has
elected to insure deposits in their foreign branches with PDIC.
5. What specific risks to a bank does PDIC cover?
- 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.
6. Shall the depositor pay any insurance premium to PDIC?
- No. 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.
7. How is insurance coverage determined?
- In determining the insured amount, the outstanding balance of each account is adjusted, such
that interests are updated, withholding taxes are deducted, accounts maintained by a depositor
in the same right and capacity are added together; and whenever applicable, unpaid loans and
other obligations of the depositor are deducted; and in no case shall insured deposit exceed
P500,000.
8. Can PDIC insurance coverage be increased by having several accounts in the same name in an insured
bank?
- No. Deposit insurance coverage is not determined on a per-account basis. The type of account
(whether checking, savings, time or other form of deposit) has no bearing on the amount of
insurance coverage.
9. If I have deposits in several different insured banks, will my deposits be added together for insurance
purposes?
- No. 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.
 Thus, if you have deposits at the main office and at one or more branch offices of the same
bank, the deposits are added together when determining deposit insurance coverage, the total
of which shall not exceed P500,000.
10. Is there a need for a depositor to file his claim for insured deposit with PDIC?
- Yes. Depositors will be advised through the national and/or local media and posters at the
premises of the closed insured bank and other public places within the locality on the
schedule of distribution of claim forms by PDIC, receiving of claim forms by PDIC, and the
prescriptive date of filing claims by the depositors.
11. When should the depositor of a closed insured bank file his claim with PDIC?

- The depositor of the closed insured bank has 24 months from date of bank takeover to file his
deposit insurance claim.

12. What happens when the depositor of a closed bank fails to file his claim within the 24-month period?
- All rights of the depositor 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.

13. How long does it take PDIC to settle a claim for insured deposit?
- PDIC aims to pay valid claims as soon as possible. Prior to payout, claims are examined
thoroughly. This is to protect the Deposit Insurance Fund (DIF) which is the source of
insurance payments. Sometimes, depositors mistakenly assume that the payouts are sourced
from their deposits. This is not the case. The payouts are from PDIC’s own funds.
- The claim for insured deposit should be settled within six (6) months from the date of filing
provided all 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.
14. What processes are involved before PDIC starts servicing claims?
- Deposit records are subjected to an examination prior to the start of servicing/settlement of
claims. Claims are evaluated and processed according to PDIC's standard procedures.
15. How long does the pre-settlement examination take?
- The length of time needed for the pre-settlement examination of deposit liabilities of a closed
insured bank largely depends on the completeness and accuracy of records turned over by the
Bank to PDIC and the number of deposit accounts to be examined.
16. If the deposit account in a closed bank is more than P500,000.00, 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
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
P500,000.00 maximum insurance shall be based on priorities set by law.