PDIC Law
“The Corporation shall not pay deposit insurance for the following
AN ACT INCREASING THE MAXIMUM DEPOSIT INSURANCE
COVERAGE, AND IN CONNECTION THEREWITH, TO
STRENGTHEN THE REGULATORY AND ADMINISTRATIVE
AUTHORITY, AND FINANCIAL CAPABILITY OF THE
PHILIPPINE DEPOSIT INSURANCE CORPORATION (PDIC),
AMENDING FOR THIS PURPOSE REPUBLIC ACT NUMBERED
THREE THOUSAND FIVE HUNDRED NINETY-ONE, AS
AMENDED, OTHERWISE KNOWN AS THE PDIC CHARTER, AND
FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the
Philippines in Congress assembled:
SECTION 1. Statement of State Policy and Objectives. – It is hereby
declared to be the policy of the State to strengthen the mandatory deposit
insurance coverage system to generate, preserve, maintain faith and
confidence in the country‟s banking system, and protect it from illegal
schemes and machinations.
Towards this end, the government must extend all means and
mechanisms necessary for the Philippine Deposit Insurance Corporation
to effectively fulfill its vital task of promoting and safeguarding the
interests of the depositing public by way of providing permanent and
continuing insurance coverage on all insured deposits, and in helping
develop a sound and stable banking system at all times.
SEC. 2. Section 4(f) of Republic Act No. 3591, as amended, is hereby
amended by adding an additional paragraph, to read as follows:
“(f) The term „deposit‟ means the unpaid balance of money or its
equivalent received by a bank in the usual course of business and for
which it has given or is obliged to give credit to a commercial,
checking, savings, time or thrift account, or issued in accordance
with Bangko Sentral rules and regulations and other applicable laws,
together with such other obligations of a bank, which, consistent
with banking usage and practices, the Board of Directors shall
determine and prescribe by regulations to be deposit liabilities of the
bank: Provided, That any obligation of a bank which is payable at
the office of the bank located outside of the Philippines shall not be a
deposit for any of the purposes of this Act or included as part of the
total deposits or of insured deposit: Provided, further, That, subject
to the approval of the Board of Directors, any insured bank which is
incorporated under the laws of the Philippines which maintains a
branch outside the Philippines may elect to include for insurance its
deposit obligations payable only at such branch.
different sharing is stipulated in the document of deposit, and (2) If
accounts or transactions, whether denominated, documented,
recorded or booked as deposit by the bank:
“(1) Investment products such as bonds and securities, trust
accounts, and other similar instruments;
“(2) Deposit accounts or transactions which are unfunded, or that are
fictitious or fraudulent;
“(3) Deposit accounts or transactions constituting, and/or emanating
from, unsafe and unsound banking practice/s, as determined by the
Corporation, in consultation with the BSP, after due notice and
hearing, and publication of a cease and desist order issued by the
Corporation against such deposit accounts or transactions; and
“(4) Deposits that are determined to be the proceeds of an unlawful
activity as defined under Republic Act No. 9160, as amended.
“The actions of the Corporation taken under this section shall be
final and executory, and may not be restrained or set aside by the
court, except on appropriate petition for certiorari on the ground that
the action was taken in excess of jurisdiction or with such grave
abuse of discretion as to amount to a lack or excess of jurisdiction.
The petition for certiorari may only be filed within thirty (30) days
from notice of denial of claim for deposit insurance.”
DESCRIBE THE INSURABLE DEPOSITS
SEC. 3. Section 4 (g) of the same Act is hereby amended to read as
follows:
“(g) 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 Five hundred thousand pesos (P500,000.00). Such
net amount shall be determined according to such regulations as the
Board of Directors may prescribe. In determining such amount due
to any depositor, there shall be added together all deposits in the
bank maintained in the same right and capacity for his benefit either
in his own name or in the name of others. A joint account regardless
of whether the conjunction „and,‟ „or,‟ „and/or‟ is used, shall be
insured separately from any individually-owned deposit
account: Provided, That (1) If the account is held jointly by two or
more natural persons, or by two or more juridical persons or entities,
the maximum insured deposit shall be divided into as many equal
shares as there are individuals, juridical persons or entities, unless a
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: Provided, further, That the aggregate of the interests of each
co-owner over several joint accounts, whether owned by the same or
different combinations of individuals, juridical persons or entities,
shall likewise be subject to the maximum insured deposit of Five
hundred thousand pesos (P500,000.00): Provided, furthermore, That
the provisions of any law to the contrary notwithstanding, no
owner/holder of any negotiable certificate of deposit shall be
recognized as a depositor entitled to the rights provided in this Act
unless his name is registered as owner/holder thereof in the books of
the issuing bank: Provided, finally, That, in case of a condition that
threatens the monetary and financial stability of the banking system
that may have systemic consequences, as defined in Section 17
hereof, as determined by the Monetary Board, the maximum deposit
insurance cover may be adjusted in such amount, for such a period,
and/or for such deposit products, as may be determined by a
unanimous vote of the Board of Directors in a meeting called for the
purpose and chaired by the Secretary of Finance, subject to the
approval of the President of the Philippines.”
COMPUTE THE MAXIMUM LIABILITY
SEC. 4. The maximum deposit insurance coverage of Five hundred
thousand pesos (P500,000.00) provided in Section 4(g) of Republic Act
3591, as amended herein, shall be paid by the Corporation: Provided,
That, for the first three (3) years from the effectivity of this Act, the first
Two hundred fifty thousand pesos (P250,000.00) of the deposit
insurance coverage shall be for the account of the Corporation, and those
in excess of Two hundred fifty thousand pesos (P250,000.00) but not
more than Five hundred thousand pesos (P500,000.00) shall be for the
account of the National Government. The Congress shall annually
appropriate the necessary funding to reimburse the Corporation for any
payment to insured depositors paid in excess of Two hundred fifty
thousand pesos (P250,000.00).
IDENTIFY THE REQUIREMENTS FOR CLAIMS
SEC. 5. Section 8, paragraph Eighth of the same Act is hereby amended
to read as follows:
“Eighth – To conduct examination of banks with prior approval
of the Monetary Board: Provided, That no examination can be
conducted within twelve (12) months from the last examination
date: Provided, however, That the Corporation may, in
 coordination with the Bangko Sentral, conduct a special
examination as the Board of Directors, by an affirmative vote of
a majority of all of its members, if there is a threatened or
impending closure of a bank: Provided, further, That,
notwithstanding the provisions of Republic Act No. 1405, as
amended, Republic Act No. 6426, as amended, Republic Act No.
8791, and other laws, the Corporation and/or the Bangko Sentral,
may inquire into or examine deposit accounts and all information
related thereto in case there is a finding of unsafe or unsound
banking practice: Provided, finally, That to avoid overlapping of
efforts, the examination shall maximize the efficient use of the
relevant reports, information, and findings of the Bangko Sentral,
which it shall make available to the Corporation.”
SEC. 6. A new Section 9 (h) of the same Act is hereby added to read as
follows:
“(h) Unless the actions of the Corporation or any of its officers
and employees are found to be in willful violation of this Act,
performed in bad faith, with malice and/or gross negligence, the
Corporation, its directors, officers, employees and agents are held
free and harmless to the fullest extent permitted by law from any
liability, and they shall be indemnified for any and all liabilities,
losses, claims, demands, damages, deficiencies, costs and
expenses of whatsoever kind and nature that may arise in
connection with the performance of their functions, without
prejudice to any criminal liability under existing laws.”
SEC. 7. Section 9 (h) of the same Act is accordingly renumbered as
Section 9 (i).
SEC. 8. An additional paragraph to Section 17 of the same Act is hereby
added after subparagraph (b) to read as follows:
“(c) It is hereby declared to be the policy of the State that the
Deposit Insurance Fund of the Corporation shall be preserved
and maintained at all times. Accordingly, all tax obligations of
the Corporation for a period of five (5) years reckoned from the
date of effectivity of this Act shall be chargeable to the Tax
Expenditure Fund (TEF) in the annual General Appropriations
Act pursuant to the provisions of Executive Order No. 93, series
of 1986; Provided, That, on the 6th year and thereafter, the
Corporation shall be exempt from income tax, final withholding
tax, value-added tax on assessments collected from member
banks, and local taxes.”
SEC. 9. Section 17 (c) of the same Act shall be accordingly renumbered
as Section 17 (d).
SEC. 10. Section 19 is hereby amended to read as follows:
“SEC. 19. With the approval of the President of the Philippines,
the Corporation is authorized to issue bonds, debentures, and
other obligations, both local or foreign, as may be necessary for
purposes of providing liquidity for settlement of insured deposits
in closed banks as well as for financial assistance as provided
herein: Provided, That the Board of Directors shall determine the
interest rates, maturity and other requirements of said
obligations: Provided, further, That the Corporation shall provide
for appropriate reserves for the redemption or retirement of said
obligation.
“All notes, debentures, bonds, or such obligations issued by the
Corporation shall be exempt from taxation both as to principal
and interest, and shall be fully guaranteed by the Government of
the Republic of the Philippines. Such guarantee, which in no case
shall exceed two times the Deposit Insurance Fund as of date of
the debt issuance, shall be expressed on the face thereof.
“The Board of Directors shall have the power to prescribe rules
and regulations for the issuance, reissuance, servicing, placement
and redemption of the bonds herein authorized to be issued as
well as the registration of such bonds at the request of the holders
thereof.”
SEC. 11. Section 21, paragraph (f)(5) is hereby amended to read as
follows:
“5) splitting of deposits or creation of fictitious loans or deposit
accounts.
“Splitting of deposits occurs whenever 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 is broken down and transferred into two (2) or
more accounts in the name/s of natural or juridical persons or
entities who have no beneficial ownership on transferred deposits
in their names within one hundred twenty (120) days
immediately preceding or during a bank-declared bank holiday,
or immediately preceding a closure order issued by the Monetary
Board of the Bangko Sentral ng Pilipinas for the purpose of
availing of the maximum deposit insurance coverage;”
SEC. 12. An additional paragraph shall be inserted under Section 2, to
read as follows:
“SEC. 2. xxx The Board of Directors shall have the authority:
“x x x
“7. To review the organizational set-up of the Corporation and
adopt a new or revised organizational structure as it may deem
necessary for the Corporation to undertake its mandate and
functions.”
SEC. 13. Joint Congressional Oversight Committee. - There is hereby
created a joint congressional oversight committee to oversee the
implementation of this Act. The committee shall be composed of the
chairpersons of the Senate Committee on Banks, Financial Institutions
and Currencies and the Committee on Finance and five (5) senators to be
appointed by the President of the Senate, and the chairpersons of the
House Committee on Banks and Financial Intermediaries and the
Committee on Appropriations and five (5) members to be appointed by
the Speaker of the House of Representatives.
SEC. 14. Separability Clause. - If any provision or section of this Act or
the application thereof to any person or circumstances is held invalid, the
other provisions or sections of this Act, in the application of such
provision or section to other persons or circumstances, shall not be
affected thereby.
SEC. 15. Repealing Clause. - All acts or parts of acts and executive
orders, administrative orders, or parts thereof, which are inconsistent
with the provisions of this Act, are hereby repealed.
REPUBLIC ACT No. 1405 (Secrecy of Bank Deposits)
AN ACT PROHIBITING DISCLOSURE OF OR INQUIRY INTO,
DEPOSITS WITH ANY BANKING INSTITUTION AND
PROVIDING PENALTY THEREFOR.
Section 1. It is hereby declared to be the policy of the Government to
give encouragement to the people to deposit their money in banking
institutions and to discourage private hoarding so that the same may be
properly utilized by banks in authorized loans to assist in the economic
development of the country.
Section 2. 1 All deposits of whatever nature with banks or banking
institutions in the Philippines including investments in bonds issued by
the Government of the Philippines, its political subdivisions and its
instrumentalities, are hereby considered as of an absolutely confidential
nature and may not be examined, inquired or looked into by any person,
government official, bureau or office, except upon written permission of
the depositor, or in cases of impeachment, or upon order of a competent
court in cases of bribery or dereliction of duty of public officials, or in
cases where the money deposited or invested is the subject matter of the
litigation.
Section 3. It shall be unlawful for any official or employee of a banking
institution to disclose to any person other than those mentioned in
Section two hereof any information concerning said deposits.
Section 4. All Acts or parts of Acts, Special Charters, Executive Orders,
Rules and Regulations which are inconsistent with the provisions of this
Act are hereby repealed.
Section 5. Any violation of this law will subject offender upon
conviction, to an imprisonment of not more than five years or a fine of
not more than twenty thousand pesos or both, in the discretion of the
court.
(AMMENDMENT to RA No. 1405)
EXEMPTING GOVERNMENT OFFICIALS AND EMPOYEES
FROM THE PROHIBITION AGAINST DISCLOSURE OF OR
INQUIRY INTO DEPOSITS WITH ANY BANKING INSTITUTION
AND FOR OTHER PURPOSES
SECTION 2. All deposits of whatever nature with banks or banking
institutions in the Philippines including investments in bonds issued by
the Government of the Philippines, its political subdivisions and its
instrumentalities, are hereby considered as of an absolutely confidential
nature and may not be examined, inquired or looked into by any person,
government official, bureau or office, except upon written permission of
the depositor, or in cases of impeachment, or upon order of a competent
court in cases of bribery or dereliction of duty of public officials, or in
cases where the money deposited or invested is the subject matter of the
litigation; or when the depositor is an elective or appointive official of
the republic of the Philippines including but not limited to the
president, vice president, members of congress, members of the
judiciary, the ombudsman and his deputies, the chairmen and
members of the constitutional commission, members of the cabinet
including the undersecretaries, assistant secretaries and bureau
directors of the different departments, the commissioners, deputy
commissioners, examiners and/or appraisers in the bureau of
customs and the bureau of internal revenue and the officers and
members of the Armed Forces of the Philippines (AFP) and the
Philippine National Police (PNP).
R.A. 6426, the Foreign Currency Deposit Act of the Philippines.
In order to attract greater foreign investments and currency deposits in
the country, all such deposits are considered of an absolutely
confidential nature and, except upon written permission of the depositor,
in no instance shall such deposits be examined, inquired or looked into
by any person, government official, bureau or office whether judicial,
administrative or legislative or any other entity whether public or
private.
All foreign currency deposits are absolutely confidential. In the case of
RA 1405, the Supreme Court held that bank accounts could be
garnished, not covering bank deposit. Foreign Currency, therefore, are
exempt from attachment, garnishment, or any other order or process of
any count, legislative body, government agency. Exception if the
depositor has given a written authorization (same exception applicable to
the RA 1405).
NOTE: UNDER RA 1405 as distinguished with RA 6426--A writ of
garnishment on bank deposit of a defendant is not an inquiry into his
deposit as contemplated by RA 1405. It merely requires the bank cashier
to inform the court whether said debtor has a deposit in said bank only
for the purpose of garnishment to be issued by it. So that the bank will
hold the same intact and not allow any withdrawal until further orders.
REPUBLIC ACT No. 3765
AN ACT TO REQUIRE THE DISCLOSURE OF FINANCE
CHARGES IN CONNECTION WITH
EXTENSIONS OF CREDIT.
Section 1. This Act shall be known as the "Truth in Lending Act."
*Describe the purpose*
Section 2. Declaration of Policy. It is hereby declared to be the policy of
the State to protect its citizens from a lack of awareness of the true cost
of credit to the user by assuring a full disclosure of such cost with a view
of preventing the uninformed use of credit to the detriment of the
national economy.
Section 3. As used in this Act, the term
(1) "Board" means the Monetary Board of the Central Bank of the
Philippines.
(2) "Credit" means any loan, mortgage, deed of trust, advance, or
discount; any conditional sales contract; any contract to sell, or sale
or contract of sale of property or services, either for present or
future delivery, under which part or all of the price is payable
subsequent to the making of such sale or contract; any rental-
purchase contract; any contract or arrangement for the hire,
bailment, or leasing of property; any option, demand, lien, pledge,
or other claim against, or for the delivery of, property or money;
any purchase, or other acquisition of, or any credit upon the security
of, any obligation of claim arising out of any of the foregoing; and
any transaction or series of transactions having a similar purpose or
effect.
(3) "Finance charge" includes interest, fees, service charges, discounts,
and such other charges incident to the extension of credit as the
Board may be regulation prescribe.
(4) "Creditor" means any person engaged in the business of extending
credit (including any person who as a regular business practice
make loans or sells or rents property or services on a time, credit, or
installment basis, either as principal or as agent) who requires as an
incident to the extension of credit, the payment of a finance charge.
(5) "Person" means any individual, corporation, partnership,
association, or other organized group of persons, or the legal
successor or representative of the foregoing, and includes the
Philippine Government or any agency thereof, or any other
government, or of any of its political subdivisions, or any agency of
the foregoing.
*Illustrate the obligation of creditors to persons to whom credit is
extended*
Section 4. Any creditor shall furnish to each person to whom credit is
extended, prior to the consummation of the transaction, a clear statement
in writing setting forth, to the extent applicable and in accordance with
rules and regulations prescribed by the Board, the following information:
(1) the cash price or delivered price of the property or service to be
acquired;
(2) the amounts, if any, to be credited as down payment and/or trade-in;
(3) the difference between the amounts set forth under clauses (1) and
(2);
(4) the charges, individually itemized, which are paid or to be paid by
such person in connection with the transaction but which are not
incident to the extension of credit;
(5) the total amount to be financed;
(6) the finance charge expressed in terms of pesos and centavos; and
(7) the percentage that the finance bears to the total amount to be
financed expressed as a simple annual rate on the outstanding
unpaid balance of the obligation.
Section 5. The Board shall prescribe such rules and regulations as may
be necessary or proper in carrying out the provisions of this Act. Any
rule or regulation prescribed hereunder may contain such classifications
and differentiations as in the judgment of the Board are necessary or
proper to effectuate the purposes of this Act or to prevent circumvention
or evasion, or to facilitate the enforcement of this Act, or any rule or
regulation issued thereunder.
*Describe the consequence of non-compliance with obligation*
Section 6. (a) Any creditor who in connection with any credit
transaction fails to disclose to any person any information in violation of
this Act or any regulation issued thereunder shall be liable to such
person in the amount of P100 or in an amount equal to twice the finance
charged required by such creditor in connection with such transaction,
whichever is the greater, except that such liability shall not exceed
P2,000 on any credit transaction. Action to recover such penalty may be
brought by such person within one year from the date of the occurrence
of the violation, in any court of competent jurisdiction. In any action
under this subsection in which any person is entitled to a recovery, the
creditor shall be liable for reasonable attorney's fees and court costs as
determined by the court.
(b) Except as specified in subsection (a) of this section, nothing
contained in this Act or any regulation contained in this Act or any
regulation thereunder shall affect the validity or enforceability of any
contract or transactions.
(c) Any person who willfully violates any provision of this Act or any
regulation issued thereunder shall be fined by not less than P1,00 or
more than P5,000 or imprisonment for not less than 6 months, nor more
than one year or both.
(d) No punishment or penalty provided by this Act shall apply to the
Philippine Government or any agency or any political subdivision
thereof.(e) A final judgment hereafter rendered in any criminal
proceeding under this Act to the effect that a defendant has willfully
violated this Act shall be prima facie evidence against such defendant in
an action or proceeding brought by any other party against such
defendant under this Act as to all matters respecting which said
judgment would be an estoppel as between the parties thereto.
Section 7. This Act shall become effective upon approval.
Approved: June 22, 1963
Compare covered and excluded transactions***
The Truth in Lending Act (TILA) protects you against inaccurate and
unfair credit billing and credit card practices. It requires lenders to
provide you with loan cost information so that you can comparison shop
for certain types of loans.
For loans covered under TILA, you have a right of rescission, which
allows you three days to reconsider your decision and back out of the
loan process without losing any money. This right helps protect you
against high-pressure sales tactics used by unscrupulous lenders.
TILA does not tell banks how much interest they may charge or whether
they must grant a consumer loan.
There are certain exceptions to the applicability of the Act. The
following transactions are exempt from Regulation Z:
 Credit given primarily for a business, commercial, or
agricultural purpose;
 Credit extended to any entity other than a natural person
(including credit to government agencies or instrumentalities);
 Credit in excess of $25,000 not secured by real property or
personal property used or expected to be used as the
consumer‟s principal dwelling;
 Public utility credit;
 Credit extended by a broker-dealer registered with the
Securities and Exchange Commission (SEC) or the Commodity
Futures Trading Commission (CFTC), involving securities or
commodities accounts;
 Home fuel budget plans; and
 Certain student loan programs.
However, when a credit card is involved, credit generally exempted
(e.g., business purpose credit) is subject to the requirements that govern
the issuance of credit cards and liability for their unauthorized use.
Credit cards must not be issued on an unsolicited basis and, if a credit
card is lost or stolen, the cardholder must not be held liable for more
than $50 for the unauthorized use of the card.
306 “TRUTH IN LENDING ACT” DISCLOSURE
REQUIREMENT
Banks are required to strictly adhere to the provisions of R.A. No.
3765, otherwise known as the “Truth in Lending Act”, and shall make
the true and effective cost of borrowing an integral part of every loan
contract.
The following regulations shall apply to all banks engaged in the
following types of credit transactions:
a. Any loan, mortgage, deed of trust, advance and discount;
b. Any conditional sales contract, any contract to sell, or sale or
contract of sale of property or services, either for present or future
delivery, under which part or all of the price is payable subsequent
to the making of such sale or contract;
c. Any rental-purchase contract;
d. Any contract or arrangement for the hire, bailment, or leasing of
property;
e. Any option, demand, lien, pledge, or other claim against, or for
delivery of, property or money;
f. Any purchase, or other acquisition of, or any credit upon security of
any obligation or claim arising out of any of the foregoing; and
g. Any transaction or series of transactions having a similar purpose or
effect.
The following categories of credit transactions are outside the scope of
these regulations:
(1) Credit transactions which do not involve the payment of any finance
charge by the debtor; and
(2) Credit transactions in which the debtor is the one specifying a
definite and fixed set of credit terms such as bank deposits,
insurance contracts, sale of bonds, etc.