M2 - PDIC Law

PDIC LAW
RA 3591, as amended
THE PDIC
The Philippine Deposit Insurance Corporation (PDIC) is a government

instrumentality created on June 22, 1963 by Republic Act 3591 entitled,
An Act Establishing the Philippine Deposit Insurance Corporation
(PDIC), Defining Its Powers and Duties and for Other Purposes.
PUBLIC POLICY OBJECTIVES
·To promote and safeguard the interests of the depositing public by

way of providing insurance coverage on all insured deposits.
·To strengthen the mandatory deposit insurance coverage system.
·To generate, preserve and maintain faith and confidence in the

country’s banking system.
·To protect it from illegal schemes and machinations.

MANDATE
1.Deposit insurance.
PDIC provides a maximum deposit insurance coverage of P500,000
per depositor per bank. To pay claims on insured deposits, PDIC builds
up the Deposit Insurance Fund (DIF) primarily through assessments
of banks at an annual flat rate of 1/5 of 1% of their total deposit
liabilities.
MANDATE
2.Receivership of Closed Banks.

PDIC proceeds with the liquidation process upon order of the Monetary
Board of the Bangko Sentral ng Pilipinas (BSP). The assets of the
closed bank are managed and eventually disposed of to settle claims
of creditors in accordance with the preference and concurrence of
credits as provided by the Civil Code of the Philippines.
PDIC COMPOSITION
·DOF Secretary – ex officio Chairman
·PDIC President – appointed by President of the Philippines – Vice

Chairman of the Board
·BSP Governor – ex officio Member
·4 members from the private sector – appointed by the President of

the Philippines
MEMBERSHIP
Membership with PDIC is mandatory for all banks licensed by the BSP
to operate in the Philippines:
·Banks incorporated under Philippine laws, such as commercial banks,

savings banks, mortgage banks, stock savings and loan associations,
development banks, cooperative banks and rural banks.
·Domestic branches of foreign banks

SCOPE OF DEPOSIT INSURANCE PROTECTION
Maximum deposit insurance coverage of P500,000 per depositor per

bank.
Coverage:
Not covered:
·Investment products such as bonds and securities, trust accounts and

other similar instruments.
Deposit accounts or transactions that:
·Are unfunded, fictitious or fraudulent
·Constitute and/or emanate from unsafe and unsound banking

practice/s as determined by the PDIC, in consultation with the BSP,
after due notice and hearing and publication of PDIC’s cease and desist
order against such deposit accounts/transactions
Not covered:
·Are determined to be proceeds of an unlawful activity as defined in

the Anti-Money Laundering Act (Republic Act 9160, as amended)
·Bank deposits in foreign banks operating outside the Philippines
·Bank deposits in foreign branch of domestic bank operating outside

the Philippines
The Philippine Deposit Insurance Corporation 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.
UNSAFE AND UNSOUND DEPOSIT-RELATED ACTIVITIES
·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

SINGLE ACCOUNTS
are individually-owned accounts or accounts held under one name,

either as:
·natural person - any individual person. Single proprietors are

considered natural persons.
·juridical entity – refers to a corporation, partnership or cooperative.

JOINT ACCOUNTS
A joint account regardless of whether the conjuction ‘and’, ‘or’ or

‘and/or’ is used shall be insured separately from single accounts.
Illustrative example:
By, ITF, 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.
By, ITF, FAO Accounts
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 P500,000.
Illustrative Example:
JOINT ACCOUNTS
General rule: The insured amount is divided equally among co-owners

of a joint account.
Exception: Unless a different sharing is stipulated in the deposit

documents.
How much is Andy Lim’s insured deposit for all his single and joint
accounts?
Answer: P1,000,000 minus all obligations or loans of the depositor with

the closed bank, if any.
REQUIREMENTS FOR CLAIMS
When to file claims - during the claims settlement operations period as

announced in the Notice to Depositors.
Depositors have 2 years from PDIC takeover to file their deposit

insurance claims.
Persons required to file deposit insurance claims:
·Depositors with valid deposit accounts with balances of more than

P100,000
·Depositors who have outstanding obligations with the closed bank

regardless of amount of deposits.
·Depositors with account balances of less than P100,000 who have no

updated addresses in the bank records or who have not updated their
addresses through the MAUF issued by the PDIC.
Persons required to file deposit insurance claims:
·Depositors who maintain their accounts under the name of business

entities, regardless of type of account and account balance.
·Depositors with accounts not eligible for early payment, regardless of

type of account and account balance, per advice of PDIC.
Persons not required to file deposit insurance claims:
·Valid deposit accounts
·Balance of P100,000 and below
·No obligations with the closed bank
·Complete and updated addresses in the bank records of through the

MAUF issued by the PDIC
Steps in filing:
1.Prepare the following documents:

a. Original evidence of deposits
b. One valid photo-bearing ID with clear signature
c. Original PSA birth certificate if below 18
d. Original copy of notarized SPA for claimants who are not
signatories in the bank records
2.Submit personally or through mail

Who should sign the deposit insurance claim form?
·Depositor – if 18 and above
·Parent – if below 18
·Agent – ‘by’
·Trustee – ITF
·Each depositor – ‘and’, ‘or’ and ‘and/or’

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PDIC LAW

The Philippine Deposit Insurance Corporation (PDIC) is a government

·To promote and safeguard the interests of the depositing public by

·To strengthen the mandatory deposit insurance coverage system.

·To generate, preserve and maintain faith and confidence in the

·To protect it from illegal schemes and machinations.

2.Receivership of Closed Banks.

·DOF Secretary – ex officio Chairman

·PDIC President – appointed by President of the Philippines – Vice

·BSP Governor – ex officio Member

·4 members from the private sector – appointed by the President of

·Banks incorporated under Philippine laws, such as commercial banks,

·Domestic branches of foreign banks

Maximum deposit insurance coverage of P500,000 per depositor per

·Investment products such as bonds and securities, trust accounts and

Deposit accounts or transactions that:

·Are unfunded, fictitious or fraudulent

·Constitute and/or emanate from unsafe and unsound banking

·Are determined to be proceeds of an unlawful activity as defined in

·Bank deposits in foreign banks operating outside the Philippines

·Bank deposits in foreign branch of domestic bank operating outside

The Philippine Deposit Insurance Corporation covers only the risk of a

·Deposit-related practice/activity/transaction without the approval or

·Failure to keep bank records within bank premises

·Non-compliance with PDIC regulations

are individually-owned accounts or accounts held under one name,

·natural person - any individual person. Single proprietors are

·juridical entity – refers to a corporation, partnership or cooperative.

A joint account regardless of whether the conjuction ‘and’, ‘or’ or

·In a ‘By’ account, Ana by Ben, Ana is the depositor.

In the case where a depositor is the sole beneficial owner of a single,

General rule: The insured amount is divided equally among co-owners

Exception: Unless a different sharing is stipulated in the deposit

Answer: P1,000,000 minus all obligations or loans of the depositor with

When to file claims - during the claims settlement operations period as

Depositors have 2 years from PDIC takeover to file their deposit

Persons required to file deposit insurance claims:

·Depositors with valid deposit accounts with balances of more than

·Depositors who have outstanding obligations with the closed bank

·Depositors with account balances of less than P100,000 who have no

Persons required to file deposit insurance claims:

·Depositors who maintain their accounts under the name of business

·Depositors with accounts not eligible for early payment, regardless of

Persons not required to file deposit insurance claims:

·Valid deposit accounts

·Balance of P100,000 and below

·No obligations with the closed bank

·Complete and updated addresses in the bank records of through the

1.Prepare the following documents:

2.Submit personally or through mail

·Depositor – if 18 and above

·Each depositor – ‘and’, ‘or’ and ‘and/or’

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