Philippine Deposit Insurance Corporation

Republic Act No. 3591, as amended

Philippine Deposit Insurance Corporation for closed banks, as well as for

(Corporation) financial assistance, which shall
be exempt from taxation both as
●​ shall insure the deposits of all banks to principal and interest, and
which are entitled to the benefits of fully guaranteed by the Republic
insurance under this Act, and which (but not to exceed twice the
shall have the powers hereinafter Deposit Insurance Fund).
granted.
●​ shall promote and safeguard the interest ●​ Prohibit PDIC officers and personnel
of the depositing public by providing from being officers, consultants,
insurance coverage on all insured employee or stockholders, directly or
deposits and helping maintain a sound indirectly, of any bank, nor to receive
and stable banking system. gifts from banks or divulge information
●​ shall be attached to the BSP for policy relating to the business conditions of
and program coordination. banks. However, PDIC officers and
personnel are allowed to become
State Policy director or officer when it is part of the
terms of financing assistance extended
It is hereby declared to be the policy of the State by PDIC.
to strengthen the mandatory deposit insurance
coverage system to generate, preserve, ●​ Underwrite and advance costs of
maintain faith and confidence in the country’s litigation in connection with any cause
banking system, and protect it from illegal brought by it, in all actions flied by PDIC
schemes and machinations. (Sec. 2, par. 1, as receiver, payment of court fees shall
PDIC Law) be deferred until action is terminated
with finality, and such fees shall
PDIC is primarily a deposit insurer, its purpose is constitute as first lien on any judgment
to protect the depositing public in the event of a in favor of closed bank, or in case of
bank closure. But PDIC also has been unfavorable judgment, to be considered
empowered under its charter to act as as administrative expenses.
co-regulator of banks with BSP, and to be
receiver/liquidator of closed banks. (PDIC vs. ●​ Courts (except Court of Appeals) are
Citibank, 669 SCRA 1911) prohibited from issuing Temporary
Restraining Order or injunction against
PDIC Roles and Powers PDIC, for any action under the PDIC
Law. The Supreme Court may issue a
●​ Borrow and Issue Bonds - PDIC is restraining order or injunction when the
authorized to: matter is of extreme urgency involving a
constitutional issue.
a.​ Borrow from BSP, which has
been so authorized to lend; ●​ Regardless of existing laws on the
matter, PDIC Board has the power to
b.​ Obtain loans or arrange credit compromise, condone or release, in
lines or other credit whole or in part, any claim or settled
accommodations from any bank liability, regardless of the amount
designated as depository of involved, as well as to write-off
Philippine Government; receivables and assets which are no
longer recoverable.
c.​ With Presidential approval:
Issue bonds, debentures and ●​ Exemption from Dividends Law. PDIC
other obligation, both local and shall remit dividends to the Government
foreign, to provide liquidity for only if the target Deposit Insurance
settlement of insured deposits

JCVL, CPA
 Fund level for the applicable year has a.​ If an account is held jointly by
been reached. two or more natural persons, or
by two or more juridical entities,
●​ Tax Exemption. PDIC is exempted from maximum insured deposit shall
income tax local taxes, final withholding be divided into as many equal
tax, and VAT on assessments collected shares as there are individuals,
from member banks. juridical entities, unless a
different sharing is stipulated in
COMPULSORY INSURANCE COVERAGE OF the document of the deposit;
BANK DEPOSITS
b.​ If an account is held by a
It is obligatory for banks to insure their deposits juridical entity with one or more
with, and pay premiums thereon, to the PDIC, natural persons, maximum
with the Deposit Insurance Fund (DIF) as insured deposit is presumed to
permanent insurance fund. belong entirely to such juridical
entity;
Insured Deposit
c.​ Aggregate of interests of each
Amount due to bona fide depositor for legitimate co-owner over several joint
deposits in insured bank, net of depositor's accounts, whether owned by the
obligation to insured bank as of closure date, same or different combinations
including foreign currency deposit unit accounts, of individuals, juridical entities,
not to exceed P1,000,000, but which may be shall likewise be subjected to
adjusted upward or downward: the maximum insured deposit of
P1,000,000;
●​ In case of a condition that threatens
monetary and financial stability of the d.​ No owner/holder of any
banking system that may have systemic negotiable certificate of deposit
consequences; shall be recognized as a
depositor entitled unless his
●​ Adjustment shall be in such amount, for name is registered as
such a period, and/or for such deposit owner/holder in the bank's book.
products, as may be determined by:
Ineligible Deposit Accounts
a.​ A unanimous vote of PDIC
Board of Directors, chaired by ●​ Investment products such as bonds and
the Department of Finance securities, trust accounts, and other
Secretary; similar instruments.

b.​ Approved by the President. ●​ Unfunded, fictitious or fraudulent deposit

accounts or transactions.
Net Amount Due to Each Depositor
●​ Those that constitute or are emanating
Determined as follows: from unsafe and unsound banking
practices, as determined by the PDIC,
●​ Add together all deposits in the bank after due notice and hearing, and
maintained in the same right and publication of a cease and desist order
capacity for his benefit, either in his own issued against such accounts.
name or in the names of others.
●​ Those proceeding from unlawful activity
●​ A joint account regardless of whether as defined by Anti-Money Laundering
the conjunction "and", "or", "and/or" is Law.
used, shall be insured separately from
any individually-owned deposit account, ●​ Products of splitting of deposits. Splitting
Provided: of deposits occurs when a deposit with
an outstanding balance of more than

JCVL, CPA
 P1,000,000 maintained under the name threatened or impending
of natural or juridical entity is broken closure.
down and transferred into two or more c.​ Notwithstanding Secrecy of
accounts in the different names within Bank Deposit Act, PDIC and/or
120 days immediately preceding or BSP may inquire into or
during a bank-declared holiday, or examine deposit accounts and
immediately preceding a closure order. all information related in case
there is finding of unsafe or
Subrogation Right unsound banking practice.

PDIC shall be subrogated to all the rights of the ●​ Investigate banks for frauds
depositor against a closed bank to the extent of
payment made by PDIC. -​ PDIC appointed investigators,
without need of prior Monetary
If such depositor fails to file a claim for his Board approval, have the power
insured deposit within 2 years after MB shall to conduct investigation on
have ordered the bank's closure, all rights of frauds, irregularities and
depositor against PDIC shall be barred. anomalies committed in banks,
based on reports of examination
Requirements in filing claims conducted by PDIC and BSP,
complaints from depositors or
●​ Original evidence of deposits such as from other governmental
savings, passbook, certificate of time agencies.
deposit, bank statement, unused
checks, and ATM card. ●​ Corrective actions against unsafe and
unsound banking practices
●​ Original copy of one valid photo-bearing
identification documents with clear a.​ Risk Evaluation - Whenever
signature of depositor/claimant. BSP determines a bank to be
capital deficient, PDIC shall
●​ If the depositor is below 18 years old, a conduct an insurance risk
photocopy of his/her birth certificate evaluation to assess the risk to
from the Philippine Statistics Authority of the Deposit Insurance Fund,
duly certified copy from the local civil which shall include termination
registrar and valid IDs of the parent/s. of: (i) fair market value of assets
and liabilities; (ii) its risk
●​ Original copy of a notarized Special classification; (ii) possible
Power of Attorney for claims who are resolution mode to be taken.
not the signatories in the bank records.
In the case of a minor depositor, the b.​ Resolution of a Bank - Refers
SPA must be executed by the parent. actions taken by PDIC to:

PDIC AS CO-REGULATOR OVER BANKING 1.​ Protect depositors,

INDUSTRY creditors and the
Deposit Insurance
●​ Examine banks with prior approval of Fund;
the Monetary Board
2.​ Safeguard the continuity
a.​ No examination can be of essential banking
conducted within 12 months services or maintain
from the last examination. financial stability;

b.​ By affirmative vote of the 3.​ Prevent deterioration/

majority PDIC Board, and in dissipation of bank
coordination with BSP, conduct assets.
a special examination of a bank

JCVL, CPA
 Banks may be placed
under resolution upon c.​ Surviving or consolidated
(i) failure of prompt institution that combined with a
corrective action as distressed bank
declared by the
Monetary Board; or (ii) But only when in PDIC Board's opinion, such
request by a bank to be acquisition, purchase of assets, assumption of
placed under liabilities, merger or consolidation, is essential to
Resolution. provide adequate banking services in the
community or maintain the financial stability in
When a bank is placed under resolution, its the economy.
stockholders, directors, officers or employees
shall have among others the obligations to: BANKS PLACED UNDER RECEIVERSHIP

4.​ Ensure bank The Monetary Board may, summarily and

compliance with POIC without need of prior hearing, forbid the
prescribed resolution institution from doing business, and designate
terms and conditions; the Philippine Deposit Insurance Corporation as
receiver of the banking institution.
5.​ Engage independent
appraiser/auditor to
determine bank's
valuation;

6.​ Ensure prudent

management and
administration of bank's
assets, liabilities, and
records; and

7.​ Cooperate with PDIC in

the conduct or exercise
of any or all of its
authorities and honor in
good faith its
commitment or
undertaking on the
bank's resolution.

●​ Extend loans and other assistance to

banks

In order to prevent an insured distressed

bank from closing, PDIC is authorized to
(i) make loans to, (ii) purchase assets,
(iii) assume liabilities of, or (iv) make
deposits in a:

a.​ Bank in danger of closing, upon

acquisition by qualified
investors;

b.​ Qualified investor, upon its

purchase of all assets and
assumption of all liabilities in a
bank in danger of closing; or

JCVL, CPA