I.

SUBJECT MATTER/TOPIC: PHILIPPINE DEPOSIT INSURANCE CORPORATION(PDIC) LAW (RA 3591, as

amended)

II. LESSON MODULE:

1. INSURABLE DEPOSIT

2. MAXIMUM LIABILITY

3. REQUIREMENTS OF CLAIMS

III. LESSON OBJECTIVES/LEARNING OUTCOMES:

At the end of the module, the students are expected to:

1. Know what is PDIC, its functions and mandate.

2. know what deposits are insurable and the maximum amount covered.

3. know how a depositor of a closed insured bank file his insurance claim.

IV. LESSON PROPER - TEACHING LEARNING ACTIVITY

A. PDIC, ITS MANDATE AND FUNCTIONS

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 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.

The PDIC is an attached agency of the Department of Finance.

PDIC exists to provide deposit insurance coverage for the depositing public to help promote public
confidence and stability in the economy. It ensures prompt payment of insured deposits, exercises
complementary supervision of banks, adopts responsive resolution methods, and applies efficient
management of receivership and liquidation functions.

Functions:

1. Deposit Insurer

2. Co-regulator of Banks

3. Receiver and Liquidator of Closed Banks

Membership of banks to PDIC is mandatory. Hence, all operating banks are members of PDIC.
PDIC 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.

B. INSURABLE DEPOSITS

Except for the exclusions stipulated in RA 9576, deposits of all commercial banks, savings and mortgage
banks, rural banks, private development banks, cooperative banks, savings and loan associations, as well
as branches and agencies in the Philippines of foreign banks and all other corporations authorized to
perform banking functions in the Philippines, are insured with PDIC.

As for Philippine banks with branches outside the country, RA 9576 stipulates that subject to the approval
of the Board of Directors, any insured bank with branch outside the Philippines may elect to include for
insurance its deposit obligations payable at such branch.

Foreign currency deposits are also insured by PDIC pursuant to RA 6426 (“An act instituting a foreign
currency deposit system in the Philippines, and for other purposes”) and Central Bank (CB) Circular No.
1389. Depositors may receive payment in the same currency in which the insured deposit is denominated.

Exclusions from deposit insurance coverage as stipulated in R.A. No. 9576:

1.Investment products such as bonds, securities and trust accounts;

2.Deposit accounts which are unfunded, fictitious or fraudulent;

3.Deposit products constituting or emanating from unsafe and unsound banking practices;

4.Deposits that are determined to be proceeds of an unlawful activity as defined under the Anti-
Money Laundering Law.

C. MAXIMUM LIABILITY

Effective June 1, 2009, the maximum deposit insurance coverage is P500,000 per depositor. All deposit
accounts by a depositor in a closed bank maintained in the same right and capacity shall be added
together.

Under R.A. No. 9576, the PDIC may propose to adjust the MDIC, subject to the approval of the President
of the Philippines, in case of a condition that threatens the monetary and financial stability of the banking
system that may have systemic consequences.

The term ‘insured deposit’ means the amount due to any bona fide depositor for legitimate deposits in
an insured bank net of any obligation of the depositor to the insured bank as of date of closure, but not
to exceed P500,000.00.

A joint account shall be insured separately from any individually-owned deposit account.

The PDIC Charter provides that the deposits in branches and subsidiaries of foreign banks licensed by the
Bangko Sentral ng Pilipinas (BSP) to perform banking functions in the Philippines are insured by the PDIC.
The PDIC Charter also provides that a Philippine bank may elect to insure with the PDIC its deposits in
branches outside the Philippines. As of 31 December 2012, no Philippine bank has elected to insure
deposits in their foreign branches with PDIC.

If the deposit account in a closed bank is more than P500,000.00, then the claim for the uninsured portion
of the deposit is a claim against the assets of the closed bank.

The claim may be filed with the Liquidator of the closed bank within sixty (60) days from publication of
notice of closure. However, payment of said claim will depend on the bank’s available assets and approval
of the Liquidation Court.

D. REQUIREMENTS OF CLAIMS

PDIC insurance coverage will not be increased by having several accounts in the same name in an insured
bank. Deposit insurance coverage is not determined on a per-account basis. The type of account (whether
checking, savings, time or other form of deposit) has no bearing on the amount of insurance coverage.

Deposits in several different insured banks will not be added together for insurance purposes. Deposits in
different banking institutions are insured separately. However, if a bank has one or more branches, the
main office and all branch offices are considered as one bank. Thus, if you have deposits at the main office
and at one or more branch offices of the same bank, the deposits are added together when determining
deposit insurance coverage, the total of which shall not exceed P500,000.

Depositors maybe required to file their claims for insured deposit with PDIC. Depositors will be notified
through the national and/or local media and posters at the premises of the closed insured bank and other
public places within the locality on the schedule of distribution of claim forms by PDIC, receiving of claim
forms by PDIC, and the prescriptive date of filing claims by the depositors. The notice will also be published
for 3 weeks in a newspaper of general circulation.

The depositor of the closed insured bank has 2 years (24 months) from date of bank takeover to file his
deposit insurance claim.

When the depositor of a closed bank fails to file his claim within the 24-month period, then all rights of
the depositor with respect to the insured deposit shall no longer be honored. But he may still make a
claim against the assets of the closed bank.

PDIC aims to pay valid claims as soon as possible. Prior to payout, claims are examined thoroughly. This is
to protect the Deposit Insurance Fund (DIF) which is the source of insurance payments. Sometimes,
depositors mistakenly assume that the payouts are sourced from their deposits. This is not the case. The
payouts are from PDIC’s own funds.

The claim for insured deposit should be settled within six (6) months from the date of filing provided all
requirements are met but the claim must be filed within twenty-four (24) months after bank takeover.
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.
Sources:

http://www.pdic.gov.ph/faqs

Disclaimer:

The information provided in RFBT 3 in this module/lesson is for educational purposes only. All information
found herein is provided in good faith and we make no representation or warranty, express or implied, as
regards to the accuracy, adequacy, validity, reliability, availability, or completeness of thereof.

I do not assume ownership of any of the information provided herein.