PHILIPPINE DEPOSIT

INSURANCE
CORPORATION ACT
REPUBLIC ACT NO. 3591, AS AMENDED
STATUTES CONSTITUTING THE LAW ON
PHILIPPINE DEPOSIT INSURANCE
1. R.A. No. 3591, or An Act Establishing the Philippine Deposit Insurance Corporation, Defining its Powers and Duties and for other
purposes (22 June 1963)
2. Acts Amending R.A. No. 3591:
a. R.A. No. 6307 (4 August 1969)
b. PD No. 120 (29 January 1973)
c. PD No. 653 (1 February 1975)
d. PD No. 1094 (13 February 1977)
e. PD No. 1451 (11 June 1978)
f. PD No. 1897 (11 January 1984)
g. PD No. 1940 (27 June 1984)
h. PD No. 1985 (4 October 1985)
i. R.A. No. 7400 (13 April 1992)
j. R.A. No. 9302 (27 July 2004)
k. R.A. No. 9576 (29 April 2009)
l. R.A. No. 10846, An Act Enhancing the Resolution and Liquidation Framework for Banks, Amending for the purpose Republic Act No. 3591, As
Amended and other Related Laws (23 May 2016)
PURPOSE OF PDIC

1. Strengthen the mandatory deposit coverage system;

2. Generate, preserve, maintain faith and confidence in the country’s banking system;
3. Protect the Philippine banking system from illegal schemes and machinations; and,
4. Promote and safeguard the interests of the depositing public by way of providing
permanent and continuing insurance coverage on all insured deposits
(PDIC Law, Sec. 2)
COMPOSITION OF BOARD OF DIRECTORS

1. Secretary of Finance, ex-officio Chairman of the Board without compensation

2. Governor of the BSP, ex-officio Member of the Board without compensation
3. President of the PDIC, who shall be appointed by the President of the Philippines to
serve on full-time basis for a term of six (6) years. He shall also be the Vice-Chairman
of the Board; and
4. Four (4) members from the private sector, to be appointed by the President of the
Philippines for a term of six (6) years without reappointment
PDIC Law (Sec. 3(a))
QUALIFICATIONS OF REGULAR MEMBERS

1. Good moral character;

2. Unquestionable integrity and responsibility;
3. Recognized competence in economics, banking and finance, law, management administration
or insurance; and
4. At least 35 years old
PDIC Law (Sec. 3(a), par. 2)
Note: For the duration of their term and for a period of 1 year, the non-ex-officio members of
the Board shall be disqualified from holding any office, position, or employment in any insured
bank. PDIC Law (Sec. 3(a), par. 2)
FUNCTIONS OF THE PDIC

1. Bank examination.
Under the new law, PDIC’s authority to examine its member banks, with prior approval by the
Monetary Board, has been restored.
2. Liquidation of closed banks
3. Deposit insurance
4. Assessment
5. Bank rehabilitation
6. Receivership of closed banks
POWER TO MAKE EMERGENCY LOANS

The PDIC is authorized to make loans to, or purchase assets of, or assume liabilities of, or make deposits in:
1. A bank in danger of closing, upon its acquisition by a qualified investor; or
2. A qualified investor, upon its purchase of all assets and assumption of all liabilities of a bank in danger
of closing; or
3. A surviving or consolidated institution that has merged or consolidated with a bank in danger of
closing.
Such loan shall be upon such terms and conditions as the Board of Directors may prescribe, such
acquisition, purchase of assets, assumption of liabilities, merger or consolidation, is essential to provide
adequate banking service in the community or maintain financial stability in the economy.
PDIC Law, Sec. 22(e)
Note: The BSP may lend funds to the PDIC for insurance purposes and in cases of financial assistance that
the latter is authorized to extend under Sec. 22(e) of R.A. No. 3591, as amended.
SYSTEMIC RISK

There is systemic risk when there is a possibility that the failure of one bank to settle net
transactions with other bank 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
sudden, unexpected collapse of confidence in a significant portion of the banking or
financial system with potentially large economic effects.
PDIC Law, Sec. 22
SCOPE OF DEPOSIT INSURANCE
-NATURE
Compulsory insurance on all bank deposits (PDIC Law, Sec. 6)

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 accounts stating the maximum
amount of insurance.
SCOPE OF DEPOSIT INSURANCE
-SPECIFIC RISK INSURED AGAINST
The risk insured against by deposit insurance is bank closure (PDIC Law, Sec. 19)
SCOPE OF DEPOSIT INSURANCE
-ASSESSMENT OF PREMIUM
The PDIC assesses and collects insurance premiums from member-banks to insure
member-banks’ deposit accounts (PDIC Law, Sec. 7)
SCOPE OF DEPOSIT INSURANCE
-EXTENT OF INSURED DEPOSITS
The unpaid balance of money or its equivalent received by a bank in the usual course of
business, for which it is obliged to give credit to a commercial, checking, savings, time or
thrift account, or issued in accordance with BSP rules and regulations and other applicable
laws, together with such other obligations of a bank (PDIC Law, Sec. 5(g))
SCOPE OF DEPOSIT INSURANCE
-EXCLUSIONS FROM TERM “DEPOSIT”
PDIC shall not pay deposit insurance for the following accounts or transactions whether denominated,
documented, recorded or booked as deposits by the bank:
1. Investment products such as bonds and securities trust accounts, and other similar instruments which
do not fall under the definition of a deposit;
2. Deposit accounts or transactions which are unfunded, or are fictitious or fraudulent;
3. Deposit accounts or transactions constituting, and/or emanating from, unsafe and/or unsound banking
practices after due proceedings
4. Deposits that are determined to be the proceeds of an unlawful activity as defined under RA 9160
5. Obligations of a bank which is payable at the office of the bank, located outside of the Philippines
Note: Subject to the approval of the board of the PDIC, any insured bank which maintains a branch outside
the Philippines may elect to include for insurance its deposit obligations payable only as such branch.
AMOUNT OF INSURANCE COVERAGE

GENERAL RULE:
• The compulsory insurance shall cover the net amount of a deposit account in an insured
bank, after deducting any offsets, not exceeding P500,000.00 (PDIC Law, Sec. 5(j))
MULTIPLE ACCOUNTS
• If a depositor has 2 or more accounts with the same bank, the maximum coverage
pertains to the sum of all such accounts maintained in the same right and capacity, even if
placed in different branches (PDIC Law, Sec. 5(j))
AMOUNT OF INSURANCE COVERAGE

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 (PDIC Law, Sec. 4(g))
• Where an account is jointly owned, 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 (PDIC Law, Sec. 4(g))
NOTE: 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 (PDIC Law, Sec. 4(g))
AMOUNT OF INSURANCE COVERAGE

FOREIGN CURRENCY DEPOSIT ACCOUNTS

• Foreign currency deposits are covered under the provisions of the PDIC Act and
insurance payment shall be in the same currency in which the insured deposits are
denominated
NOTE: The PDIC Law is not applicable of Offshore Banking Units (PD No. 1034, Sec. 8)
SPLITTING OF DEPOSITS OR CREATION OF
FICTITIOUS LOAN OR DEPOSIT
REQUISITES:
• There is a deposit account with an outstanding balance of more than the statutory maximum
amount of insured deposit maintained under the name of natural or juridical persons;
• Such deposit account is broken down and transferred to 2 or more accounts
• The transferee accounts are in the name/s of persons or entities who have no beneficial
ownership on the transferred deposits placed in their names;
• The transfer is made: (a) within 120 days immediately preceding a bank-declared bank holiday;
(b) during a bank-declared bank holiday; (c) immediately preceding a closure order issued by
the Monetary Board of the BSP
• The transfers were for the purpose of availing of the maximum deposit insurance coverage
PDIC Law, Sec. 26(f)(1)(e)
PENALTY FOR SPLITTING DEPOSITS

The penalty of imprisonment of not less than six (6) years but not more than twelve (12)
years or a fine of not less than Fifty Thousand Pesos (P50,000.00) but not more than Ten
Million Pesos (P10,000,000.00) or both, at the discretion of the court, shall be imposed
upon any director, officer, employee, or agent of a bank who shall allow a depositor to
create fictitious or fraudulent loans or deposit accounts
NOTE:
The depositor or borrower himself can also be punished for “conspiring or willfully
participating in ant of the offenses enumerated in Par. 1 of this section.
PDIC Law, Sec. 26(f)(1)(e)
SETTLEMENT OF CLAIMS
POWER TO DENY CLAIMS

PDIC, as a quasi-judicial agency, exercises judicial discretion and judgment in determining

whether a claimant is entitled to a deposit insurance claim, which determination results
from its investigation of facts and weighing of evidence presented before it. (Peter L. So vs.
PDIC, G.R. No. 230020, March 19, 2018)
PERIOD TO CLAIM INSURED DEPOSIT

The depositor is barred from claiming the insured deposit if he/she fails to:
1. File the claim within 2 years from actual takeover of the closed bank by the PDIC; or
2. Enforce within 2 years after the expiry of the 2-year period above, any unpaid claim
filed within the 2-year period
PDIC Law, Sec. 21(e)
PROOF OF CLAIMS

• PDIC may require proof of claims to be filed before paying the insured deposits
• In any case, where it is not satisfied as to the viability of a claim for an insured deposit, it
may require final determination of a court of competent jurisdiction before paying such
claim
PDIC Law, Sec. 19
RECOGNITION OF OWNER

The name of the owner/s disclosed on a passbook, certificate of deposit, or other evidence
of deposit determined by the PDIC to be an authentic document or record of the closed
bank shall be conclusive evidence of ownership of such account.
The PDIC or the insured bank cannot be required to recognize a claimant whose name or
interest is not disclosed by such authentic document or record as owner of a part or
whole of the deposit account, if such recognition would increase the aggregate amount of
the insured deposits in such closed bank
PDIC Law, Sec. 21(c)
RECOGNITION OF OWNER

No owner/holder of any negotiable certificate of deposit shall be recognized as a depositor

entitled to the rights provided unless his name is registered as owner/holder thereof in the
books of the issuing bank
EXCEPTIONS:
1. When otherwise prescribed by the PDIC Board of Directors; or
2. When the undisclosed claim or interest will not increase the aggregate amount of the
insured deposits in such closed bank
PDIC Law, Sec. 5(g)
REMEDY FROM DENIAL OF CLAIM

The PDIC’s action to deny a deposit insurance claim is final and executory and may be
reviewed only on the ground of grave abuse of discretion thru a petition for certiorari
before the Court of Appeals (Peter L. So vs. PDIC, G.R. No. 230020, March 19, 2018)
MANNER OF PAYMENT

1. Cash; or
2. Transferred deposit – A deposit in an insured bank made available to a depositor by
the PDIC as payment of the insured deposit of such depositor in a closed bank and
assumed by another insured bank
EFFECT OF PAYMENT BY PDIC TO THE DEPOSITOR
OF THE INSURED DEPOSIT
1. Discharges the PDIC from further liability
2. Subrogates the PDIC to all the rights of the depositor against the closed bank to the
extent of such payment
CLAIM OF PDIC AGAINST CLOSED BANK DEEMED
PREFERRED CREDIT UNDER ART. 2244 OF THE NCC
Upon payment of the deposit insurance claims, the PDIC is subrogated to the rights of the
insured depositor against the closed banks. The claims of the PDIC against the closed bank
partake of the nature of public funds, and as such, must be considered a preferred credit in
favor of the PDIC under Art. 2244 of the New Civil Code
PDIC Law, Sec. 20
STATUTORY LIABILITY

The liability of the PDIC rests upon the existence of deposits with the insured bank, not on the
negotiability of certificates evidencing these deposits. The fact that a bank instrument provides
that the certificate is insured by the PDIC does not ipso facto make the latter liable for the
same; the deposit liability of the PDIC is determined by the provisions of R.A. No. 3519.
Even if the bank has knowledge that it shall be under receivership, it does not ipso facto mean
that the depositors also has knowledge of such. Thus, they can still engage in business
transactions in course of business as long as they acted in good faith and did not know such
closure.Therefore, such deposits made in the period shall be covered by deposit insurance.
PDIC vs. CA, G.R. No. 118917, December 22, 1997
RECOVERY OF DEPOSIT NOT COVERED BY
INSURANCE
In case the depositor’s account is more than the insurance coverage, the balance may still
be recovered from the PDIC after the final liquidation of the remaining assets of the closed
bank.
PDIC Law, Sec. 20
PROHIBITIONS AGAINST ISSUANCE OF TROS

No court, except the Court of Appeals, shall issue any temporary restraining order, preliminary
injunction or preliminary mandatory injunction against the Corporation for any action under
this Act. This prohibition shall apply in all cases, disputes or controversies instituted by a private
party, the insured bank, or any shareholder of the insured bank.
PDIC Law, Sec. 22
The Supreme Court may issue a restraining order or injunction when the matter is of extreme
urgency involving a constitutional issue, such that unless a temporary restraining order is issued,
grave injustice and irreparable injury will arise. The party applying for the issuance of a
restraining order or injunction shall file a bond in an amount to be fixed by the Supreme Court,
which bond shall accrue in favor of the Corporation if the court should finally decide that the
applicant was not entitled to the relief sought.
PDIC Law, Sec. 27