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NU 3 Phil Deposit Insurance Law
NU 3 Phil Deposit Insurance Law
PROFESSOR JV ABUEL
LPT MBA CPA JD
Purpose of the Law
Provides for the creation of PDIC, acting with the basic policy
to promote and safeguard the interest of the depositing public
by way of providing permanent and continuing insurance
coverage of all insured deposits. (Section1 PDIC law)
1. Insurance
2. Examination
3. Bank Rehabilitation
4. Receivership of Closed banks
5. Liquidation of Closed banks
Insurance Function
Compulsory insurance on all bank deposits. The net amount to any depositor for
deposits in an insured bank, after deducting any offsets, but should not exceed
P500,000. (RA 3591 as amended by RA 9576, April 29, 2009)
If the depositor has two (2) or more accounts with the same bank, the maximum
coverage pertains to the sum of all such accounts ,maintained in the right and
capacity.(Section 4(g))
In the 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. (Section 4(g))
Foreign currency deposits are covered under the provisions of RA 3591, as amended
and insurance payment shall be in the same currency in which the insured deposits are
denominated. (Section 9, RA 6426, Circular No.1389, 1993)
The PDIC law is not applicable to Offshore Banking Units. (PD 1034).
Bank Examination Function
PDIC authority to examine its member banks, with prior approval by the Monetary
Board, has been restored.
The PDIC, in the discretion of its Board of Directors, may grant financial assistance to
distressed banks if it is proven to be a less costly alternative than closure or determine
that the actual payoff and liquidation thereof will be more expensive than the
exercise of that power, when in the opinion of the Board of Directors, the continued
operation of such bank is essential to provide adequate banking service in the
community or maintain financial stability in the economy.
Receivership of Closed Bank
Once a bank is ordered closed by the Monetary Board of th BSP, the PDIC is
designated as statutory receiver. The PDIC upon receipt of the MB resolution ordering
the closure of a bank, immediately physically takes over the closed bank.
Receivership is the stage within which the PDIC manages the affairs of the closed
bank and preserve its assets for the benefits of creditors. (Section 10 (a,b))
After it is determined that the closed bank cannot be rehabilitated, the PDIC shall
recommend the liquidation of the assets of the closed bank. Liquidation refers to the
recovery and conversion of assets into cash for distribution to all creditors in
accordance with the order of creditor preference pursuant to law.
Composition of Board of Directors
In order for a claim for deposit insurance with PDIC to prosper, Law
requires that corresponding deposit be placed in insured bank; deposit as
defined under Section 3(f) of Law may be constituted only if money or
equivalent of money is received by bank. When evidence shows that
certificates of time deposit were issued in consideration of checks
received by the issuing bank, which checks bounced, issuing bank
received no money therefor, no deposit therefore came into existence,
and PDIC cannot be held liable for value thereof.
PDIC vs Commission on Audit , 546 SCRA 473 (2/22/2008)
GR No.171548
Section 29 of PDIC law applies only in cases where there are claims against an
insolvent bank, and that the exclusive jurisdiction of the liquidation court
pertains only to the adjudication of claims against the bank and does not cover
the reverse situation where it is the bank which files a claim against another
person or legal entity.
Requirement under Section 29 that all claims against bank be pursued in the
liquidation proceedings filed by the Central Bank is intended to prevent
multiplicity of actions against the insolvent bank and designed to establish due
process and orderliness in the liquidation of the bank, to obviate the
proliferation of litigations and to avoid injustice and arbitrariness. Legislature
contemplated that for convenience, only one court, if possible, should pass
upon claims against insolvent bank and that liquidation court should assist
Superintendents of Banks and regulate his operations.
Thank You