Imagine you have a piggy bank where you keep all your savings.
Now, think of PDIC EARLY INTERVENTION IN PROBLEM BANKS OR OPEN BANK
as a superhero who protects your piggy bank.
1. If your piggy bank breaks (like a bank closing), PDIC makes sure you can
still get your savings quickly.
2. If your piggy bank has a small crack (like a problem with the bank), PDIC
can fix it before it breaks completely.
3. If someone tries to break your piggy bank (like unsafe banking
practices), PDIC can give them a time-out (like penalties).
Also, if you borrowed some money from your piggy bank (like a loan), and your piggy
bank breaks, PDIC will still give you your savings without taking away what you
borrowed.
PDIC’s superpowers also help more people to have their own piggy banks (like
promoting financial inclusion). And if a piggy bank really has to break (like a bank
closure), PDIC makes sure that the people who gave you money (like creditors)
have a better chance to get their money back. They do this by making sure the
money in the piggy bank doesn’t disappear when it breaks (like preventing the
dissipation of assets).
P.1
NEW LAW indeed brings significant changes to the process of handling closed banks.
Here are the key points:
1. Elimination of the 90-day receivership period: The PDIC can now proceed
directly to liquidation without waiting for 90 days. This accelerates the
process and allows for quicker resolution.
2. Immediate assignment of encumbered assets: The assets of the closed
bank are immediately assigned to the creditors. This ensures that the
creditors have a claim on the assets and can recover their dues.
3. Adoption of purchase of assets and assumption of liabilities: This is a
new mode of liquidation where the PDIC can sell the assets of the closed
bank and assume its liabilities. This helps in the efficient disposal of assets
and settlement of liabilities.
4. Prohibition on reopening of closed banks: Banks that have been ordered
closed by the Monetary Board of the BSP cannot be reopened. This prevents
the recurrence of the issues that led to the bank’s closure.
These changes aim to enhance the recovery rate for creditors of closed banks, ensuring
that they can recover their dues in a timely and efficient manner. P.3
An insured deposit is like a safety net for your money in the bank. If the bank
closes (stops operating), you won’t lose all your money. The bank’s insurance
will pay you back the money you had in the bank. But there’s a limit - they will
only pay you back up to five hundred thousand pesos (P500,000.00). This
means if you had more than P500,000 in the bank, you will only get back
P500,000. This insurance applies to any genuine depositor who has made
legitimate deposits in the bank. So, it’s a way to protect your money even if
something goes wrong with the bank. P.5
1. Republic Act No. 9576: This law allows Philippine banks that have
branches in other countries to choose to insure the deposits made at
these foreign branches. However, this decision must be approved by
the bank’s Board of Directors.
2. Foreign Currency Deposits: Deposits made in foreign currencies are
also insured by the Philippine Deposit Insurance Corporation (PDIC)
under Republic Act 6426 and Central Bank Circular No. 1389. This
means that if a bank fails, the PDIC will reimburse the depositors.
3. Payment in Same Currency: If a depositor needs to claim their insured
deposit, they will receive the payment in the same currency as the
original deposit. This means if you deposited US dollars, you’ll get
reimbursed in US dollars.
In simple terms, these laws and regulations are designed to protect the
money you deposit in a bank, even if the bank has branches outside the
Philippines or the deposit is in a foreign currency. (P.8)
RESOLUTION.
Consider a city’s fire department (PDIC). If a building (bank) catches fire, the fire
department doesn’t wait for the building to burn down. They intervene early to
control the fire. “Open Bank Resolution” is like a fire extinguisher used on the
burning building, ensuring the people inside (depositors) can safely exit (access
their money). P.2
THE PHILIPPINE DEPOSIT INSURANCE CORPORATION (PDIC) BOARD,
ESTABLISHED BY LAW, CONSISTS OF:
1. The Secretary of Finance, serving as the ex-officio Chairperson without
compensation.
2. The Governor of the Bangko Sentral ng Pilipinas (BSP), an ex-officio
member without compensation.
3. The President of the Corporation, appointed by the President of the
Philippines from a shortlist by the Governance Commission for
Government-owned or -controlled Corporations under Republic Act
No. 10149. This person serves full-time for six years and also acts as the
Vice Chairman of the Board.
4. Four private sector members, appointed by the President of the
Philippines for six years from a shortlist by the same Governance
Commission under Republic Act No. 10149. P.4
1. PDIC’s Role: The PDIC (Philippine Deposit Insurance
Corporation) is responsible for maintaining a fund called the
Deposit Insurance Fund (DIF). This fund is used to pay insurance
claims and provide financial help to banks.
2. Building the DIF: The PDIC continuously adds money to the DIF
to ensure it can cover any insurance claims that come up.
3. Bank Contributions: Banks that are members of the PDIC
contribute to the DIF. They do this by paying an annual fee that is
equal to 0.2% (or 1/5 of 1%) of the total amount of money their
customers have deposited with them. These payments are
collected twice a year.
4. Managing the DIF: The money in the DIF is invested wisely, as
outlined in the PDIC Charter, to help it grow.
5. Insurance Coverage: If you have a joint account (an account
owned by two or more people), it’s insured separately from any
accounts owned by just one person. P.6
Here’s a simpler explanation:
1. Joint Account Insurance: A joint account, no matter how it’s
labeled (with “and”, “or”, or “and/or”), is insured separately from
individual accounts.
2. Equal Division of Insurance: Unless stated otherwise in the
deposit documents, the insurance money (up to a maximum of
P500,000) will be split equally among the joint account holders.
3. Insurance Limit: A co-owner’s total share in multiple joint
accounts can be more than P500,000, but the insurance will only
cover up to P500,000.
4. Ownership of Joint Accounts: If a joint account is held by a
company (juridical entity) and an individual, it’s assumed that the
company owns the account. P.7
EXCLUSIONS FROM THE PDIC DEPOSIT INSURANCE:
1. Investment Products: Things like bonds, securities, and trust
accounts are not covered. These are more like investments rather
than regular deposits, so they don’t get the same insurance
protection.
2. Certain Deposit Accounts or Transactions:
o Deposits that don’t have actual funds, or are made-up
or fraudulent, are not insured.
o Deposits that come from unsafe and risky banking
practices are not covered. The PDIC, in consultation
with the BSP, identifies these practices. They give a
warning, hold a hearing, and then issue a stop order
(PDIC’s cease and desist order) against such deposits.
o If a deposit is found to be the proceeds of illegal
activities as defined by the Anti-Money Laundering
Law, it’s also not insured.
3. Foreign Bank Deposits: Deposits in foreign banks operating
outside the Philippines or deposits in a foreign branch of a
Philippine bank operating outside the Philippines are not covered
by PDIC insurance.
DEPOSIT-RELATED PRACTICES THAT ARE CONSIDERED UNSAFE AND
EXPLAIN SOME OF THE JARGON:
1. Unapproved Activities: If a bank carries out any deposit-related
activities without the necessary permissions or without proper
checks and balances (adequate controls), it’s considered unsafe.
This could lead to deposits that aren’t tracked, recorded, or
documented.
2. Record Keeping: Banks are required to keep all their records
(both paper and digital) within their premises. If they fail to do so,
it’s considered an unsafe practice.
3. High-Interest Rates: If a bank offers high-interest rates when it’s
not financially stable, it’s considered unsafe. Here are some terms
explained:
o Negative Unimpaired Capital: This means the bank’s
capital (money the bank has) is less than zero. Capital
is important for a bank to cover losses and support its
operations.
o Liquid Assets-to-Deposits Ratio: This is a measure of
a bank’s liquidity (how quickly assets can be turned into
cash). If this ratio is less than 10%, it means the bank
might struggle to cover immediate cash needs.
o Operating Loss: This means the bank’s expenses are
greater than its revenues.
o A bank is seen as offering high-interest rates if the rate
is more than half of the typical rate for similar banks.
4. Non-Compliance: If a bank doesn’t follow the rules and
regulations set by the Philippine Deposit Insurance Corporation
(PDIC), it’s considered an unsafe practice.
5. Other Practices: Any other activities related to deposits that the
PDIC identifies as unsafe through its rules and regulations are
also considered unsafe.
In simpler terms, these rules are there to ensure that banks operate safely,
protect their depositors, and maintain a stable banking system.
1. WHEN TO FILE CLAIMS:
o The process of filing claims starts during a period
called the “Claims Settlement Operations” (CSO).
This is a specific time when depositors can start filing
their claims.
o The start of the CSO period is announced in a “Notice
to Depositors”. This notice is published in local and
national newspapers, posted at the bank’s premises,
in noticeable places within the local area, and on the
PDIC website.
o “PDIC” stands for Philippine Deposit Insurance
Corporation. It’s an agency that protects depositors by
providing deposit insurance. It takes over when a bank
closes.
o Depositors have (2) two years from the time the PDIC
takes over the closed bank to file their deposit
insurance claims. This means if a bank closes today,
depositors have until the same date two years from
now to file their claims.
In simpler terms, if your bank closes, you’ll be notified about when and how
you can claim your insured deposits. You have two years from the date the
bank closes to file your claim

2. DEPOSITORS REQUIRED TO FILE INSURANCE CLAIMS 3. DEPOSITORS NOT REQUIRED TO FILE INSURANCE CLAIMS

a. Depositors with Large Balances: If you have more than P100,000 in
your account, you need to file an insurance claim to get your money back.
b. Depositors with Outstanding Obligations: If you owe the bank money
(for example, if you have a loan), you need to file a claim, no matter how
much money you have in your account.
c. Depositors with Outdated Addresses: If you have less than P100,000
in your account but the bank doesn’t have your current address, you need
to file a claim. You also need to update your address using the Mailing
Address Update Form (MAUF) provided by the PDIC.
d. Business Accounts: If your account is under a business name, you
need to file a claim, regardless of the type of account or how much money
is in it.
e. Accounts Not Eligible for Early Payment: If your account isn’t eligible
for early payment (as advised by the PDIC), you need to file a claim, no
matter what type of account it is or how much money is in it.
a. Small Depositors: If you have P100,000 or less in your account, you don’t
need to file an insurance claim, as long as:
✓ you don’t owe the bank any money and
✓ the bank has your current address.
If the bank doesn’t have your current address, you can update it using the
Mailing Address Update Form (MAUF) provided by the PDIC. You can
submit this form to PDIC representatives at the bank before the Claims
Settlement Operations (CSO) begin.
Note: The PDIC has a special process for small depositors. If you qualify, you
can get your money back quickly without having to file a claim. The money
will be sent to you as a postal money order, which you can cash at the post
office.
In simpler terms, if your bank closes and you have a small balance, don’t owe
the bank money, and have an updated address, you don’t need to file a claim.
You’ll get your money back quickly through the mail.

5. Who Should Sign the Deposit Insurance Claim Form?

a. Depositor: If you’re 18 years old or above and the account is in your name.
b. Parent: If the depositor is under 18 years old.
c. Agent: In the case of a “By” account, an agent should sign. A “By” account
means that someone (the agent) is managing the account on behalf of the
depositor.
d. Trustee: For an “In Trust For” (ITF) account, a trustee should sign. An ITF
account is one where a person (the trustee) holds and manages the account
for the benefit of another person.
e. Each Depositor: In the case of joint accounts (accounts owned by more
than one person), each depositor should sign. This applies to “or,” “and,” or
“and/or” accounts. These terms define how the account holders can use the
account. For example:
• An “or” account allows any account holder to independently
make transactions.
• An “and” account requires all account holders to agree on
transactions.
• An “and/or” account combines the features of both “or” and “and”
accounts, providing flexibility in how account holders can make
transaction.

4. STEPS TO FILE DEPOSIT INSURANCE CLAIMS
a. Gather Your Documents:
i. Proof of Deposits (ORIGINAL): This includes your savings passbook, time
deposit certificate, bank statement, unused checks, and ATM card.
ii. Valid ID (ORIG): Bring a valid ID that has your photo and signature.
Examples include a (Driver’s license or Passport, SSS/GSIS ID, Senior
Citizen’s ID, PRC ID, OWWA/OFW ID, Seaman’s ID, Alien Certification of
Registration ID, Voter’s ID, IBP). Make sure the ID number is clear and
legible.
iii. For Depositors Under 18: If the depositor is under 18, you’ll need a copy
of their birth certificate (from the Philippine Statistics Authority (PSA) or
duly certified copy from the local civil registrar) and the parent’s valid IDs.
iv. Special Power of Attorney (SPA) (orig copy): If the person filing the claim
isn’t the one whose name is on the bank records, they’ll need a notarized
SPA. If the depositor is a minor, the SPA must be signed by the parent.
b. Submit Your Claim:
i. In Person: You can file the claim in person with PDIC representatives at the
closed bank during the Claims Settlement Operations (CSO) or at the PDIC
Public Assistance Center in Makati City after the onsite CSO. (3rd floor, SSS
Building, 6782 Ayala Avenue corner V.A. Rufino Street, Makati City)
ii. By Mail: You can also mail the completed and notarized Claim Form and
the required documents to the Claims Processing Department of PDIC in
Makati City. (same add. 4th floor)
Jargon Explained:
• PDIC: Philippine Deposit Insurance Corporation, a government
agency that insures deposits in banks.
• CSO: Claims Settlement Operations, a period when PDIC
representatives are available at the closed bank to assist with
claims.
• SPA: Special Power of Attorney, a legal document that gives
someone else the authority to act on your behalf.
REPUBLIC ACT 1405 - BANK SECRECY LAW IN THE PHILIPPINES:
A. Purpose (Section 1): The law aims to:
1. Encourage Deposits: It motivates people to deposit their money
in banks instead of hoarding it privately.
2. Economic Development: It allows banks to use these deposits
for authorized loans, contributing to the country’s economic
development.
B. Coverage: The law applies to all deposits and investments in bonds
issued by the Government of the Philippines, its subdivisions, and its
instrumentalities. These are considered confidential and cannot be
examined. This includes:
1. Deposits: Money or funds placed with a bank that can be
withdrawn on demand. This includes savings, current, and time
deposits. (characterized as being in the nature of a simple
loan.)
2. Investment in Government Bonds: Investments in bonds issued
by the government, its subdivisions, and its instrumentalities.
These are debt securities backed by the full taxing power of the
State. (includes treasury bills, treasury notes, and other risk-
free bonds.)
General Banking Law
- prohibits bank directors, officers, employees, or agents from
disclosing to any unauthorized person,
- without the order of a competent court,
- any information relative to funds or properties belonging to private
individuals, corporations, or any other entity in the custody of the
bank
C. Prohibited Acts (Section 3): The law prohibits:
1. Examination of Deposits: No person or government official can
examine, inquire into, or look into such deposits.
2. Disclosure of Information: No bank official or employee can
disclose any information concerning said deposits to any
unauthorized person.
Note: The law does not prohibit the attachment or garnishment of bank
accounts. If the accounts are garnished, it is not considered a violation of the
Bank Secrecy Law as long as the amount of deposit is not disclosed.
6. PROCEDURES FOR CLAIMING INSURANCE PROCEEDS FROM THE
(PDIC)
a. Period of Payment (Section 32): If an insured bank is closed, the PDIC
must make a payment as soon as possible, ideally within (6) six months from
the date of filing.
- If the PDIC officers fail to make the payment within this period due to grave
abuse of discretion, gross negligence, bad faith or malice, they can be
held accountable.
- However, if the claimant’s documents are incomplete or if the claim’s
validity requires resolution of issues by another office, body, or agency, the
six-month period may not apply.
b. Mode of Payment (Section 32): The PDIC can pay the claimant in two
ways:
i. By Cash: The PDIC can pay the claimant in cash.
ii. Transferred Deposit: The PDIC can transfer an amount equal to the
insured deposit to another insured bank.
c. Requirement Before Payment: The PDIC may require certain conditions
to be met before making a payment.
i. Proof of Claims: The PDIC may require proof of claims before paying the
insured deposit.
ii. Validity of a Claim: If PDIC is not satisfied with the validity of a claim
for an insured deposit, it may require a final determination from a court of
competent jurisdiction before paying the claim.
Note: Upon payment of insured deposits, PDIC shall be legally subrogated
to all the rights of the depositor against the closed bank to the extent of
such payment (Section 33). This means that once the PDIC has paid the
depositor, it assumes the depositor’s rights against the closed bank. This is
done to the extent of the payment made by the PDIC. This process is known
as legal subrogation.
Exceptions under RA 1405 (Section 2):
1. Written Consent: If the depositor or investor gives written
permission, their bank details can be disclosed.
2. Impeachment Cases: In cases of impeachment, bank details
can be disclosed.
3. Bribery or Dereliction of Duty: If a public official is accused of
bribery or neglect of duty, a court order can allow access to their
bank details.
4. Litigation: If the money deposited or invested is directly involved
in a legal case, a court order can allow access to the bank details.
This means that the investigation into the bank deposit must be
based on the fact that the money in the account is directly related
to the legal action.
Other Exceptions:
1. Unexplained Wealth: If a court suspects unexplained wealth
under the Anti-Graft and Corrupt Practices Act (RA 3019), it can
order access to bank details.
2. Internal Revenue Inquiry: The Commissioner of Internal
Revenue can inquire into bank deposits for:
a. Determining a deceased person’s total estate.
b. Applying for a compromise on tax liability.
3. Anti-Money Laundering Act of 2001 (RA 9160): Bank accounts
can be examined if:
a. There’s probable cause that the deposits are related to an
unlawful activity or money laundering.
b. There’s probable cause that the deposits are related to
certain crimes such as kidnapping for ransom, violation of the
Dangerous Drugs Act, hijacking, destructive arson, murder,
and violations of RA 6235 (acts harmful to civil aviation).
c. The Bangko Sentral is conducting its periodic or special
examination regarding compliance with Anti-Money Laundering
Law.
d. The Court of Appeals orders an examination by law
enforcement officers in terrorism cases under the Human
Security Act of 2007.

E. Penalty
• If someone violates this law, they could face up to (5) five years in
prison, a fine of up to twenty thousand pesos (P20,000), or both.
The exact punishment is decided by the court. (NOT MORE THAN)
F. Examination of Foreign Currency Deposits
• General Rule: Foreign currency deposits are confidential. They
can’t be examined or inquired into by anyone, including
government officials, bureaus, offices, or any private or public
entity.
• Exceptions:
1. If the depositor gives written permission, their foreign
currency deposits can be examined.
2. The Anti-Money Laundering Council (AMLC) can
examine a deposit or investment with any banking
institution or non-bank financial institution if a
competent court orders it. This is only in cases where
there’s probable cause that the deposits or
investments are related to a money laundering offense.
3. Foreign currency deposits are exempt from
attachment, garnishment, or any other order or
process of any court, legislative body, government
agency, or any administrative body. For example, if a
person owes money and a court orders their assets to
be seized to pay the debt, their foreign currency
deposits cannot be seized.
Penalties for Violation
• If someone willfully violates this Act or any regulation made by the
Monetary Board under this Act, they could face:
a. Imprisonment of at least one year but not more than five
years.
b. A fine of at least five thousand pesos (P5,000) but not more
than twenty-five thousand pesos (P25,000).
c. Both a fine and imprisonment, as decided by the court.
Jargon Explained
• Garnishment: A legal process that allows a creditor to remove
funds from your bank account to satisfy a debt.
• Attachment: A legal process by which a court of law, at the request
of a creditor, designates specific property owned by the debtor to
be transferred to the creditor.
• Probable Cause: A requirement in criminal law that must be met
for police to make an arrest, conduct a search, or receive a
warrant. Courts usually find probable cause when there is a
reasonable basis for believing a crime has been committed.
• Willful Violation: A violation in which the offender knowingly or
voluntarily disregards the law.
4. Ombudsman Subpoena: A subpoena is a formal document that
orders someone to appear in court. In this context, the
Ombudsman can issue a subpoena for an investigation it is
conducting, provided there’s already a:
- case pending in court,
- the account is clearly identified,
- the inspection is limited to the subject matter of the pending case,
and
- the bank personnel and the depositor are notified to be present
during the inspection.
UNCLAIMED BALANCES LAW (PRESIDENTIAL DECREE NO. 679):
Unclaimed Balances: These are funds that have been left untouched in
banks, building and loan associations, and trust corporations. They can be
in the form of money, bullion (large bars of gold or silver), securities (financial
assets), or other forms of debt. These balances belong to people who are
either known to be dead or haven’t made any transactions for 10 years or
more.
Dormant Deposits: If a deposit hasn’t been touched for 10 years, it
becomes dormant. The government can then claim these dormant
deposits, a process known as escheatment.
Covered Institutions: The institutions that must comply with this law
include all banks, trust corporations, mutual building and loan associations,
and all banking institutions covered under Act No. 3936, as amended by PD
679.
Reporting of Unclaimed Balances: These institutions must send a sworn
statement to the Treasurer of the Philippines. (of their respective managing
officers, of all credits and deposits held by them in favor of persons
known to be dead, or who have not made further deposits or withdrawals
during the preceding 10 years or more,) (arranged in alphabetical order
according to the names of creditors and depositors)
This statement should include:
1. The names and last known addresses of the people who own the
unclaimed balances.
2. The amount and date of the unclaimed balance, and whether
it’s in the form of money or a security. If it’s a security, they must
specify what kind.
3. The date when the owner of the unclaimed balance either died
or made their last transaction.
4. Any interest due on the unclaimed balance and the amount of
that interest.
Penalty for Non-compliance: If an institution (president, cashier or
managing officer of the bank, building and loan association, or trust
corporation) (neglects or refuses) fails to send this sworn statement, it
must pay the government a fine of 500 pesos for each month or part of a
month that the failure continues.
Jargon Explained:
• Bullion: Large bars of gold or silver.
• Security: A tradable financial asset, like a bond or a share of
stock.
• Escheatment: The legal process where unclaimed or abandoned
assets are transferred to the state.
• Sworn Statement: A document that affirms the truth of the facts
in it, confirmed by the oath or affirmation of the person making it.
It’s legally binding, meaning the person could face penalties if they
lie on it.