ACTREG3

Module III
PDIC Law

I. Philippine Deposit Insurance Corporation Law (RA 3591 as

amended by RA 10846)
A. Description of Philippine Deposit Insurance Corporation

PDIC is a government instrumentality created in 1963 by virtue of Republic

Act 3591 to insure the deposits of all banks which are entitled to the
benefits of insurance. The PDIC is an attached agency of the Department
of Finance.

The latest amendments to RA 3591 are contained in RA 10846 signed into

law on May 23, 2016. RA 10846 empowered PDIC with stronger authorities
to protect the depositing public and promote financial stability. The new
law also includes important provisions to ensure that the PDIC remains
financially and institutionally strong to fulfill its mandate under its Charter.

The PDIC now 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.

Under amendment, depositors would have quicker access to their insured

deposits in the event of bank closure since PDIC now has the authority to
pay insured deposits without netting out depositors’ loan obligations with
the closed bank, and based on evidence of deposits and not on the closed
bank’s records alone.

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With its enhanced resolution authorities, PDIC would also be able to more
effectively promote financial inclusion through early intervention in problem
banks or open bank resolution. In cases where bank closure becomes
inevitable, the new law enhanced the chances of recovery by creditors of
their claims against the assets of the closed bank by preventing the further
dissipation of these assets through seamless transition from bank closure
to liquidation. The new law does away with the 90-day receivership period
and allows PDIC to proceed directly to liquidation. The immediate
assignment of encumbered assets to closed bank creditors, adoption of
purchase of assets and assumption of liabilities as a mode of liquidation,
and express prohibition on reopening of banks ordered closed by the
Monetary Board of the Bangko Sentral ng Pilipinas would help enhance
recovery rate for creditors of closed banks.

B. Insurable Deposits under PDIC Law (Covered by PDIC

Insurance)
1. By Deposit Type:
a. Savings Deposit
b. Special Savings
c. Demand/Checking Account
d. Negotiable Order of Withdrawal (NOW)
e. Certificate of Time Deposits
f. Foreign currency Deposit
2. By Deposit Account:
a. Single Accounts - are individually-owned accounts or accounts
held under one name, either as natural person (single
proprietorship or individual) or juridical entity (corporation,
partnership or cooperative).
b. Joint Accounts - are accounts held under more than one name.
i. A joint account regardless of whether the conjunction
“and”, “or” or “and/or” is used shall be insured separately
from single accounts.
ii. 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.

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 iii. 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.
iv. Joint accounts held in the names of a juridical entity and
a natural person shall be presumed to belong solely to
the juridical entity.

c. Account “By”, “In Trust For” (ITF) or “For the Account of”
(FAO) another person
i. In a “By” account, Ana by Ben, Ana is the depositor.
ii. In an “In Trust For” (ITF) account, Ana In Trust For Ben,
Ben is the depositor.
iii. In a “For the Account of” (FAO) account, Ana For the
Account of Ben, Ben is the depositor.

d. Explanatory Notes
i. 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.
ii. The depositor’s total shares in his/her joint accounts shall
be separately insured up to Php500,000.
iii. A depositor with single accounts and joint accounts may
have insured deposits of up to Php1,000,000.

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C. Items that 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):
a. Investment products such as bonds and securities, trust accounts
and other similar instruments
b. Telegraphic note
c. Deposit accounts or transactions that:
i. Are unfunded, fictitious or fraudulent
ii. Constitute and/or emanate from unsafe and unsound banking
practices 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
iii. Are determined to be proceeds of an unlawful activity as
defined in the AntiMoney Laundering Act (Republic Act 9160, as
amended)
d. Bank Deposits in Foreign Banks operating outside the Philippine
territory or Bank Deposits in Foreign branch of domestic bank
operating outside the Philippine territory
Note: Unsafe and unsound deposit-related activities include, among others:
(PDIC Regulatory Issuance No. 2011-01)
 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

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D. Maximum Liability (Maximum Deposit Insurance Coverage)

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. 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. However, A depositor with single accounts and joint
accounts may have insured deposits of up to Php1,000,000.
Illustrative examples:

1. How much is Fe Santos’s insured deposit if she has the following four
deposit accounts in the same bank?
ACCOUNT NAME Deposit (in PHP) Insured Deposit of Fe
Santos
Fe Santos 100,000 100,000
Ben Santos For the 100,000 100,000
Account of Fe Santos
Charlie Santos In Trust 100,000 100,000
For Fe Santos
Fe Santos’ Store (Sole 700,000 200,000
Proprietorship)
Total 1,000,000 500,000

2. How much is Fe Santos’s insured deposit if she has the following three
joint accounts in the same bank?
ACCOUNT NAME Deposit (in PHP) Insured Deposit of Fe
Santos
Fe Santos or Ben 500,000 250,000
Santos
Fe Santos and Charlie 1,000,000 250,000
Santos
Fe Santos and/or 1,000,000 0*
Divina Santos
Total 2,500,000 500,000

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*Note: Mrs. Fe Santos does not have any insured deposit share since she
already has P500,000 in total shares in the two joint accounts she has with
Ben and Charlie Santos.

3. How much is Fe Santos’s insured deposit for all her single and joint
accounts in the same bank?
ACCOUNT NAME Deposit (in PHP) Insured Deposit of Fe
Santos
All single accounts of 1,000,000 500,000
Fe Santos in BDO
Branch 1
All joint accounts of Fe 2,500,000 500,000
Santos in BDO Branch
2
Total 3,500,000 1,000,000

Note: 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. (PDIC
Regulatory Issuance No. 2011-04).

Note: In case of joint account involving a juridical/artificial person and a

natural person, the maximum insured deposit of P500,000 to such joint
account shall be given to juridical/artificial person only.

E. Requirements for Claims of Insured Deposits

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 1. When are claims filed?

Claims are filed during the claims settlement operations 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 have two (2) years from PDIC’s takeover of the closed bank
to file their deposit insurance claims.

2. Who are required to file deposit insurance claims?

a. Depositors with valid deposit accounts with balances of more

than Php100,000. 
b. Depositors who have outstanding obligations with the closed
bank regardless of amount of deposits.
c. Depositors with account balances of less than Php100,000 who
have no updated addresses in the bank records or who have
not updated their addresses through the Mailing Address
Update Form (MAUF) issued by the PDIC. 
d. Depositors who maintain their accounts under the name of
business entities, regardless of type of account and account
balance. 
e. Depositors with accounts not eligible for early payment,
regardless of type of account and account balance per advice of
PDIC. 

3. Who are depositors not required to file deposit insurance

claims?
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 Depositors with valid deposit accounts with balances of Php100,000
and below are not required to file claims provided they have no
obligations with the closed bank and have complete and updated
addresses in the bank records or have updated these through the
Mailing Address Update Form (MAUF) issued by the PDIC. Depositors
with deposit balances of Php100,000 and below may update their
addresses using the MAUF and submit to PDIC representatives
stationed at the closed bank premises before the start of the onsite
claims settlement operations

These depositors are entitled to immediate/early payment of deposit

insurance claim as part of PDIC’s initiative to provide convenience to
small depositors. Payments to these depositors are sent as postal
money orders to the depositors’ mailing addresses.

4. Steps in filing deposit insurance claims

a. Prepare the following documents:
i. Original evidence of deposits such as savings passbook,
certificate of time deposit, bank statement, unused
checks, and ATM card. 
ii. Original copy of ONE (1) VALID PHOTO-BEARING
IDENTIFICATION DOCUMENTS (ID) with clear
signature of depositor/claimant such as Driver’s License,
SSS/ GSIS ID, Senior Citizen’s ID, Passport, PRC ID,
OWWA/ OFW ID, Seaman’s ID, Alien Certification of
Registration ID, Voter’s ID, IBP. Please ensure that the ID
number is clear and legible. 
iii. If the depositor is below 18 years old, a photocopy of
his/her birth certificate from the Philippine Statistics
Authority (PSA) or duly certified copy from the local civil
registrar and valid IDs of the parent. 
iv. 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. 
b. Submit to:

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 i. If filing personally:
1. The PDIC representatives at the premises of the
closed bank during Claims Settlement Operations
(CSO) or to the PDIC Public Assistance Center at
the 3rd Floor, SSS Bldg., 6782 Ayala Avenue corner
V.A. Rufino Street, Makati City after the onsite
CSO. 
ii. If filing through Mail
1. Send the accomplished and notarized Claim Form
and requirements to The Claims Processing
Department of PDIC 4/F SSS Building, 6782 Ayala
Avenue corner V.A. Rufino St. 1226 Makati City

5. Who should sign the deposit insurance claim form?

a. Depositor of the account – for depositors 18 years old and
above
b. Parent – if the depositor is below 18 years old
c. Agent – in the case of “By” accounts
d. Trustee – in the case of “In Trust for (ITF” accounts
e. Each Depositor – in the case of joint accounts such as “Or”,
“And/Or” or “And” accounts 

6. Procedures for Claiming Insurance Proceeds

a. Mode of payment

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 i. By Cash
ii. By making available to each depositor a transferred
deposit in another insured bank in an amount equal to
insured deposit of such depositor

b. Requirement before payment

i. PDIC may require proof of claims before paying the

insured deposit
ii. If PDIC is not satisfied as to the validity of a claim for an
insured deposit, it may require final determination of a
court of competent jurisdiction before paying such claim

c. Period for payment

i. It must be made within 6 months from the date of filing

otherwise the officers of PDIC will be liable for failure to
pay if due to grave abuse of discretion, gross negligence,
bad faith or malice. 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.

d. Rights of PDIC upon payment of insured deposits

i. PDIC shall be legally subrogated to all rights of depositor

against the closed bank to the extent of such payment.

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