REPUBLIC ACT NO.
10846 – PDIC g) Members of the board shall designate from among
SECTION 1: CREATION
a) Insure deposits of all banks which are entitled to benefits of
insurance.
b) Promote and safeguard the interest of depositing public by
providing insurance coverage on all insured deposits and help
maintaining a sound and stable banking system.
SECTION 2: State Policy
a) Strengthen the mandatory deposit insurance coverage system
b) To generate, preserve, maintain faith and confidence in
country’s banking system, and protect it from illegal schemes
and machinations.
c) The government must extend all means and mechanism
necessary for the PDIC to fulfill its task
d) While being government instrumentality with corporate
powers, PDIC shall enjoy fiscal and administrative
autonomy.
SECTION 3: Board of Directors: Composition and Authority
a) Secretary of finance – ex officio chairman
b) Governor of BSP – ex officio member
c) President of PDIC – vice chairman
• Appointed by the Pres. of the Philippines with term 6
years
d) 4 members from private sector for term of 6 years unless
sooner removed for cause and subject to 1 reappointment.
• Provided, that those first appointed, the first two
appointees shall serve term of 3 years.
• Provided however, appointive director shall continue to
hold office until successor is appointed. Appointive
director may be nominated by the GCGO-CC for
reappointment by the President of the Phil. Only if one
obtains a performance above average or equivalent or
higher in the preceding year.
e) Appointment to any vacancy shall be only for unexpired term
of predecessor.
Qualifications on members of the Board:
• Good moral character
• Unquestionable integrity and responsibility
• Recognized competence in economics, banking and
finance law, management administration or insurance
• At least 35 years of age
• For duration of their term of office and for a period of 1
year, the appointive members of the board shall be
disqualified from holding any office, position in any
insured bank.
f) Secretary of finance and Governor of BSP may each
designate an alternate.
• Shall be an official with a rank not lower than assistant
secretary or its equivalent with written authority from
SEC and Gov to attend meetings and to vote on behalf
of its principals.
themselves who shall act as Chairman in the event when:
• Chairman of the board is unable to attend Board meeting
• Vacancy in the office of the SEC of finance
• Absence of vice chairman
President of Philippines may remove appointive member of the Board
in the following reasons:
✓ Physically or mentally incapacitated lasted for more than 6
months
✓ Guilty of acts or operations which are fraudulent or illegal
✓ No longer possess the qualifications
✓ Doesn’t meet standards for performance based on the evaluation
by the GCGO-CC
h) Presence of 4 members shall constitute a quorum.
i) Compensations, per diems, allowances, incentives and other
benefits for BM shall determine by GCGO-CC
j) RA No. 6713 “code of conduct and ethical standards for
public officials and employees” any member of BM with
personal interest in any matter in the agenda of the BOD shall
disclose his/her interest to the board and recuse from the
meeting when the matter is taken up.
Board of directors shall have the authority:
 Approve and issue rules and regulations for banks
 Act as policy making body of the Corporation and constitute
board committees to oversee management, operations and
administration of the Corporation
 To establish human resource management system
 To approve a compensation structure, provided, all positions
in the corporation shall be governed by a compensation
package, position classification system and qualification
standards approved by the board.
• Compensation structure shall be comparable to
other financial institutions based on prevailing
market rate and provide yearly merit reviews or
increases based on productivity.
• The corporation shall therefore be exempt from
existing laws, rules and regulations on
compensation package, position classification
and qualification standards.
 To appoint, establish rank, fix remuneration, benefits,
including health care services through HMO and
medical benefits and remove any officer or employee of
the corporation for cause, subject to pertinent civil
service laws.
• Provided BOD may delegate this authority
to president subject to specific guidelines;
• Provided further that in no case shall be
there any diminution of existing salaries,
benefits and other emoluments.
 To approve policy on local and foreign travel and
corresponding expenses, allowances and per diems of
officers employees, agents of the corporation.
 To adopt an annual budget for and authorize such
expenditures by the corporation
  To approve target level of deposit insurance fund
 To review the organizational setup of the corporation
and adopt new or revised structure
 To adopt, sign and revise, an early separation plan for
employees and to provide incentives for all those who
shall separated from the service.
 To promote and sponsor the local or foreign training or
study of personnel in the fields of banking, finance,
management, information technology and law.
SECTION 5: President of the corporation compensation, powers
and duties
a) The president of the corporation shall be its chief executive
officer and the vice chairman of its BOD and his/her salary
shall be fixed by the president of the Philippines upon
recommendation of GCGO-CC.
b) To represent the corporation in all dealings with other
officers, agencies, and instrumentalities of the government
SECTION 6:
c) To represent the corporation either personally or through
counsel in any legal proceeding
d) The president shall be assisted by vice pres. and other
officials whose appointment and removal for cause shall be
approved and whose salary shall be fixed by the BOD upon
recommendation of the pres. of the corporation.
e) During the vacancy or permanent incapacity and pending
appointment of new president of the PDIC, BOD shall
designate officer-in-charge of the corporation.
SECTION 7: Definition of terms
a) Asset – movable/immovable, tangible/intangible
resources/properties over which a bank has an established
interest, subject to approval of BSP
b) Asset distribution plan – plan of distribution of the assets of
a closed bank to its creditors, based on its realizable value
c) Board of directors
d) Bank and banking institution – shall be synonymous and
interchangeable and shall include banks, commercial banks,
savings banks, mortgage banks, etc
e) Closed bank – bank placed under liquidation by MB
f) Creditor – any individual with valid claim against assets of
the closed bank
g) Deposit – unpaid balance of money or its equivalent received
by a bank in the usual course of business evidenced by a
passbook, certificate of deposit, or other evidence
Corporation shall not pay deposit insurance for the ff transactions:
▪ Investment products such as bonds and securities, trust
accounts
▪ Deposit accounts or transactions which are fraudulent
▪ Deposit accounts or transactions constituting from unsafe and
unsound banking practice/s
▪ Deposits that are determined to be the proceeds of unlawful
activity
h) Disputed claim – claim or suit against assets of a closed bank
for specific performance, or breach of contract or damages,
or whatever nature or character, money or otherwise,
liquidated or not, fixed or contingent, matured or current,
denied by the receiver
i) Insured bank – any bank the deposits of which are insured
j) Insured deposit – amount due to any bonafide depositor for
legitimate deposits in an insured bank as of the date of closure
but not to exceed 500,000.
• In determining such amount, there shall be added
together all deposits in the bank maintained in the same
right and capacity for his or her benefit either in his or
her own name or in the name of others.
• Joint account regardless “and”,”or”,”and/or” shall be
insured separately. PROVIDED,
1. If the account is held jointly by two or more natural or
juridical persons, the maximum insured deposis shall be
divided into as many equal shares as there are
individuals, unless a different sharing is stipulated in the
document of deposit
2. If the account is held by a juridical person with one or
more natural persons, the maximum insured deposit
shall be presumed to belong entirely to such juridical
person or entity. Provided further that the aggregate of
the interest if each co-owner of several joint accounts be
subject to maximum insured deposit of 500,000.
Provided furthermore that no owner/holder of any
passbook, certificate of deposit, or any evidence of
deposit shall be recognized as a depositor entitled to
rights unless such is determined to be an authentic.
Provided finally, that in case of condition that threatens
the monetary and financial stability of banking system,
the ,maximum deposit insurance cover may be adjusted
in such amount, for such period, as may be determined
by unanimous vote of BOD subject to approval of the
pres. of the phil.
k) Liquidation court – RTC of general jurisdiction where the
petition for assistance in liquidation of a closed bank is filed
and given due course
l) Payout – payment of insured deposits
m) Petition for assistance in the liquidation of a closed bank –
petition filed by the receiver with RTC
n) Purchase of asset and assumption of liabilities – transaction
where an insured bank purchases any/all assets and assumes
any/all liabilities of another bank
o) Receiver – corporation or any of its duly authorized agents
p) Records – includes all documents, titles, paper and electronic
data
q) Residual assets – assets, in cash or in kind, to be turned over
to closed bank’s stockholders in proportion to their interest
r) Resolution – refers to
 Protect depositors, creditors and DIF
 Safeguard the continuity of essential banking
services
 Prevent deterioration of bank assets
s) Risk-based assessment system – method for calculating an
insured bank’s assessment on the probability that the DIF will
 incur a loss with respect to bank and likely amount of any
such loss, takes into consideration the following;
 Quality and concentration of assets
 Categories and concentration of liabilities
 Capital position
 Liquidity position
 Management and governance
 Other factors relevant in assessing such probability
t) Statement of affairs – report of financial condition of the
closed bank at a given date, showing
• Estimated realizable value of assets
• Classification of credits
• Estimated liabilities to be settled
u) Surplus dividends – remaining assets of the closed bank after
satisfaction in full of all the liquidation costs, fees and
expenses, and valid claims.
v) Transfer deposits – deposit in an insured bank made available
to a depositor by the corporation as payment of insured
deposit of such depositor in closed bank and assumed by
another insured bank
w) Trust funds – funds held by an insured bank in a fiduciary
capacity and includes without being limited to, funds held as
trustee, executor, administrator, guardian or agent
x) Valid claim – claim recognized by the receiver or allowed by
the liquidation court
SECTION 8: Deposit insurance coverage
a) Deposit liabilities of any bank which engaged in the business
of receiving deposits or which may engage in the business of
receiving deposits shall be insured with the corporation
b) Whenever a bank is determined by BSP to be capital
deficient, the PDIC may conduct an insurance risk evaluation
on the bank to enable it to assess the risks to the DIF. Such
evaluation may include the determination of:
✓ Fair market value of assets and liabilities of bank
✓ Risk classification of a bank
✓ Possible resolution modes
SECTION 10: Assessment of member banks
a)Assessment rate shall be determined by the BOD not exceed
1/5 of 1% per annum.
b) Semi-annual assessment for each insured bank shall be in the
amount if the product of ½ the assessment rate x assessment
base but in no case shall it be less than 5,000.
c) Assessment base shall be the amount of the liability of the
bank for deposits without any deduction for indebtedness of
depositors.
d) BOD may establish a risk-based assessment system and
impose a risk-based assessment rate which shall not exceed
2/5 of 1% per annum x assessment base.
e) Semi-annual assessment base:
• March 30 and June 30
• September 30 and December 30
Provided, when any of said days is a non business
day or holiday, preceding business day shall be
used.
SECTION 11
All assessment collections and income from operations after expenses
and charges shall be added to DIF:
• Operating costs and expenses of the corporation for the
calendar year
• Additions to reserve to provide for insurance and financial
assistance losses, net of recoverable amounts from applicable
assets and collaterals
• Net insurance and financial assistance losses sustained in said
calendar year
The corporation may file a case for collection before the appropriate
court on the bank officials responsible for the nonpayment of
assessment fees in the event of:
• Insured bank fail or refuse to pay
• The bank not correct such failure or refusal within 30 days
after written notice
SECTION 12: The Corporation shall have the authority to collect a
special assessment from any member bank and prescribe the terms and
conditions to maintain the target level of DIF set by the BOD.
SECTION 13: Sanctions against unsafe and unsound banking
practices
• Upon examination by the PDIC into the condition of any insured
bank, it shall be:
✓ Disclosed that an insured bank or its director or agents
have committed, or about to commit unsafe or unsound
practices or have violated or about to violate any law
BOD shall submit the report submit report of the examination of
MB to secure corrective action.
If no corrective action is taken by the MB within 45 days from the
submission of the report, BOD shall motuproprio institute
corrective action which it deems necessary.
✓ BOD May issue cease and desist order
✓ Require the bank or its directors or agents concerned to
correct practices or violations within 45 days.
✓ If the practice or violation is likely to cause insolvency
or weaken the condition of the bank, the period to take
shall not more than 15 days.
✓ May also impose fines
• Actions and proceedings may be undertaken by the corporation if
in its opinion, an insured bank or its directors or agents have
violated, are violating or about to violate any provision issued by
the PDIC
• Corporation may terminate the insured status of any bank that
fails or refuses to comply within 30 days from notice with any
cease and desist order by PDIC or with any corrective action
impose by the MB.
 Such termination shall be final and executory and
effective upon publication of the notice of termination in
a news paper of general circulation
 Deposits of each depositor in the bank on the effective
date of the termination of insurance coverage, less all
subsequent withdrawals, shall continue to be insured up
to the maximum deposit insurance coverage for a period
of 180 days. Additions to or renewal of existing deposits
shall not be insured by the PDIC.
SECTION 15
To compromise, condone or release, in whole or in part, any claim or
settled liability to the corporation, regardless of the amount involved,
under terms and conditions as may be imposed by BOD to protect the
interest of corporation and to write off the corporation’s receivables
and assets which are no loner recoverable or realizable.
SECTION 16
1. To determine qualified interested acquirers or investors for
any of the modes of resolution or liquidation of banks
2. To determine the appropriate resolution method and
implement the same
3. To determine the appropriate mode of liquidation of a closed
bank and implement the same
SECTION 18
B - 1. Investigators appointed by BOD shall have:
✓ Power on behalf of the corporation to conduct investigations
on frauds, irregularities and anomalies committed in banks
✓ Power to administer oaths
✓ Examine and take and preserve the testimony of any person
relating subject to investigation
SECTION 19
• Each insured bank shall make to the corporation reports of
condition in such form and at such times as the BOD may
require such reports to published in such manner.
• Every such bank which fails to make or publish any report
within such time, as BOD may require shall be penalize of
not more than 10,000 for each day of such failure recoverable
by the corporation for its use
SECTION 20
• Each insured bank shall keep and maintain a true and accurate
record of its daily deposit transactions consistent with
standards set by BSP duly certified by the president of the
bank and compliance officer
• Refusal or willful failure to issue required certification shall
constitute a violation and subject to sanctions
SECTION 21
• The corporation shall underwrite or advance all legal costs
and expenses, including fees and other expenses of external
counsel, or provide legal assistance to, directors, officers
employees or agents of the corporation in connection with
any civil, criminal, administrative or any other action in
connection with the exercise of authority or performance of
functions and duties
• Provided such legal protection shall not apply to action or
proceeding initiated by the PDIC
• Provided further directors, officers, employees who shall
resign, retire, transfer to another agency or separated from the
service, shall continue to be provided with legal protection in
connection with any act done by them in good faith during
the term of their employment
• In the event of settlement/compromise, indemnification shall
be provided only in connection with such matters covered by
the settlement as to which the corporation is advised that the
persons to be indemnified did not commit any negligence or
misconduct
SECTION 22
• Members of the board of directors and personnel of the
corporation may become directors and officers of any bank
and banking institution and of any entity related to such
institution in connection with financial assistance extended
by the corporation
• When in the opinion of the board it is appropriate to make
such designation to protect the interest of the corporation
SECTION 23 Bank resolution
• The corporation may commence the resolution of a bank upon:
a) Failure of prompt corrective action as declared by the MB
b) Request by a bank to be placed under resolution
• BSP shall inform the PDIC of the initiation of prompt corrective
action on any bank and be authorized to share with the PDIC all
information in relation to the prompt corrective action.
• When there is a failure to prompt corrective action as declared by
the MB due to capital deficiency, the PDIC, duly authorized
officers or employees, may examine, inquire or look into deposit
records of a bank:
 Provided, such authority is exercised only due to capital
deficiency, otherwise, they are mandated to disclosed
and report to PDIC deposit account information of said
bank
 PDIC, authorized officers or employees are prohibited
from disclosing information obtained to any person,
government official, bureau or office. Provided, any
unauthorized disclosure of the information shall be
subject to penalty
• The stockholders, directors, officers or employees of the bank
shall have the following obligations:
 Ensure bank compliance with terms and conditions
prescribed by the corporation
 Cause the engagement, with the consent of the
corporation, of an independent appraiser or auditor for
the purpose of determining the valuation of the bank
 Ensure prudent management and administration of
bank’s assets, liabilities and records
 Cooperate with the PDIC in conduct or exercise of any
or all of its authorities and honor in good faith its
commitment with the PDIC on the resolution of the bank