The

Banking
Laws
L AW S 1 0 4 3
The PDIC
Act of
1963
PHILIPPINES DEPOSIT
INSURANCE
C O R P O R AT I O N
Assignments for Monday
Reading Assignment on PDIC Act:
Republic Act No. 3591 (lawphil.net) – The Old PDIC Act
Republic Act No. 10846 (lawphil.net) – The PDIC Act with Amendments
(You may read the latter only)
Case Digest (One Page only): G.R. No. 170290, April 11, 2012 (PDIC
vs. Citibank)
 Created in 1953, by virtue of RA 3591, to
insure deposits of all banks which are entitled
PDIC Act to the benefits thereto.

Philippine Latest Amendment to RA 3591 – RA 10846,

May 23, 2016.
Deposit
Salient Provisions:
Insurance - Quicker access to insured deposits
Corporation - Creditor recovery options
- Enhanced early intervention
- Removal of 90-day receivership
Functions PDIC Functions as:

of PDIC 1. Deposit Insurer – This is the primary

mandate of the PDIC, to promote and
Insure safeguard the interests of the depositing public
by providing PERMANENT and
Co-Regulate CONTINUING insurance coverage on all
insurable deposits.
Receive and Liquidate
2. Co-regulator of Banks – Examination and
investigative powers
3. Receiver and Liquidator of Closed Banks
 Any amount DUE to any bona fide depositor for
LEGITIMATE DEPOSITS in any insured bank,
NET of any encumbrances or obligations the
Insurable depositor has to the INSURED BANK.
Deposits PDIC Coverage Limit: 500,000
The PDIC Covers:
1. Savings Deposits (including Special Savings)
2. Demand/Checking Accounts
3. Negotiable Order of Withdrawal (NOW)
4. Certificate of Time Deposits
Summary: NET Deposit
5. Foreign Currency Deposits (FCDUs)
in an insured bank,
MAXIMUM of 500,000
 The Monetary Board may seek to adjust the amount
Can the of coverage, as necessary, for a certain period and/or
500,000 limit deposit products, subject to the following:
be adjusted in 1. A condition that threatens the monetary and
financial stability of the entire banking system (i.e.
the future? systemic risk)
2. Approval by a UNANIMOUS vote of the PDIC
Board of Directors, where the secretary of the
Department of Finance chairs.
3. Approval of the President of the Philippines

Short Answer: YES!

 Section 22 of the PDIC Charter outlines “systemic
risk” as follows:
1. Failure of one bank that may trigger a chain
Systemic Risk: reaction among other banks, leading to a general
What is it? shutdown on the normal clearing and settlement
activity.
2. Likelihood of SUDDEN and UNEXPECTED
COLLAPSE of confidence in a significant
portion of the banking and/or financial system.
 Deposit liabilities of banks, legitimately engaged in
Coverage the business of receiving deposits, as of the
enactment of the law, and all future banks, shall be
INSURED by the PDIC.
 1. Deposits that existed as a result of SPLITTING.
Who are NOT Splitting happens when:
entitled to a. A deposit account with more than 500,000
PDIC outstanding balance is broken down and
transferred to two or more accounts in the
Payments? name of persons or entities who have no
beneficial ownership in the transferred
deposits in their names.
b. Splitting happened within 120 days
BEFORE, or DURING, a bank-declared
bank holiday, or immediately preceding a
closure order.
c. For the purpose of availing MAXIMUM
DEPOSIT INSURANCE COVERAGE.
Splitting is a CRIMINAL OFFENSE.
 2. Deposit products or money placements by the head
Who are NOT office of a foreign bank in its branch in the Philippines
entitled to because there is only one entity (PDIC v. Citibank)
PDIC 3. Deposits that are determined to be the proceeds of an
Payments? unlawful activity, as defined by RA 9160 (AMLA)
4. Deposits payable in a place OUTSIDE of the
Philippines (Foreign Branch Deposits)
5. Unfunded deposits that are fictitious and fraudulent.
6. Deposits emanating from unsound and unsafe
banking practices.
7. Investment Products (Such as Bonds , trusts, others)
 Rule 1: The deposit insurance is on a “per bank
basis” i.e. if Maria has a deposit with ABC Bank and
XYZ Bank, and both banks closed, both deposits
Determining shall be given a maximum insurance of 500,000
EACH.
Amount Due
Rule 2: For deposits in a same bank, “per depositor,
per capacity” rule shall apply, in that all deposits in
the same bank in the same right and capacity of the
depositor either on his own benefit or in the name of
others shall be ADDED TOGETHER.
Rule 3: Individual accounts, in the same bank, as
well as accounts under one’s ownership, shall be
insured at a maximum of 500,000.
 Rules for trust accounts:
1. “By” Accounts (Deposit of A by B) – A is the
depositor
Determining
2. “In Trust For” or “ITF” accounts (Deposit of A
Amount Due ITF B) – B is the depositor
3. “For the Account of” or “FAO” accounts (Deposit
of A FAO B) – B is the depositor
Example: Determine the insurable
deposit of Mr. Jones:
Account Name Amount of Deposit Insured
Mr. Jones 100,000 (?)
Ms. Jones FAO Mr. Jones 100,000 (?)
Ms. Jones ITF Mr. Jones 100,000 (?)
Mr. Jones’ Store (Sole 700,000 (?)
Proprietor)
TOTAL 1,000,000 (?)
Example: Determine the insurable
deposit of Mr. Jones:
Account Name Amount of Deposit Insured
Mr. Jones 100,000 100,000
Ms. Jones FAO Mr. Jones 100,000 100,000
Ms. Jones ITF Mr. Jones 100,000 100,000
Mr. Jones’ Store (Sole 700,000 200,000
Proprietor)
TOTAL 1,000,000 500,000
 Rules for JOINT Accounts:
A JOINT ACCOUNT is evidenced by the use of
“and,” “or,” “and/or.”
Determining
Any individually owned deposit in a joint account
Amount Due shall be INSURED separately, subject to the 500k
limit.
For INDIVIDUAL holders (natural persons) – shall be
divided into as many equal shares as there are joint
depositors, and is subject INDIVIDUALLY to the
500k limit.
For CORPORATE holders (juridical persons) – only
the 500k limit is allowed, despite many individual
joint depositors.
Such that… (assume equal share)
Account Joint Deposit Split Amount Insured (EACH)
Name
A& B 500,000 250,000 250,000
250,000 250,000
A or B 1,000,000 500,000 500,000
500,000 500,000
A and/or B 1,500,000 750,000 500,000
750,000 500,000
 For INDIVIDUALS who holds both a JOINT and an
INDIVIDUAL account, their share in the joint
account and their individual shares shall be covered
Determining SEPARATELY.
Amount Due Ergo, MAX COVERAGE: 1,000,000
Such that…
If Cruella holds a joint account with the Baroness,
and Cruella also has an individual account at the
same bank, Cruella’s share on the joint account, and
her individual account, shall be separately insured.
Example: Determine the insurable
deposit of (a) Miranda and (b) Andrea
Account Name Type of Deposit Balance
Miranda Priestly Savings 600,000
Miranda Priestly ITF Andrea Sachs FCDU 400,000
Miranda Priestly AND Emily Demand 400,000
Charlton
Miranda Priestly OR Andrea Sachs Time 700,000
TOTAL
Example: Determine the insurable
deposit of (a) Miranda and (b) Andrea
Account Name Deposit Split on Deposit Insured Deposits
Balance
Miranda Priestly 600,000 600,000 Miranda: 500,000
MP ITF AS 400,000 400,000 Andrea: 400,000
MP AND EC 400,000 200,000 Miranda: 200,000
200,000 Emily: 200,000
MP OR AS 700,000 350,000 Miranda: 300,000
350,000 Andrea: 350,000
MIRANDA: 1,000,000
ANDREA: 750,000
 Determination of Insured Deposits – actual takeover
of closed bank.
Notice shall be made to the depositors via:
Procedures for
1. Personal notice – any means deemed
the PDIC appropriate, and
2. Public notice – via a newspaper of general
circulation, where the closed bank is located,
once a week for at least three consecutive weeks.
COD Holders – not acknowledged by the PDIC
unless the COD holder is registered as holder thereof
in the books of the bank.
 Claims must be filed during the CLAIMS
SETTLEMENT PERIOD, as announced.
Who shall claim?
1. Depositors of valid accounts of more than 100,000
Claims
2. Depositors with outstanding bank obligations
3. Depositors who failed to update address via
MAUF (Mailing Address Update Form)
4. Depositors who maintain accounts under the name
of a business entity (sole props, owners)
5. Deposits not eligible for early payment, as
Who should claim? determined by PDIC.
 Signing the claim:
GENERAL RULE: The DEPOSITOR
Except if depositor or deposit is a…
Nature of the Deposit(or) Who shall sign?
Claims MINOR Parent
For “by” accounts The Agent
For “in trust for” or ITF Trustee
Joint Accounts Each joint depositors

Period of FILING claim: 2 years from actual

takeover of the bank
Period of ENFORCING claim: 2 years after filing
How to claim? claim
 Note: PDIC may require PROOF of CLAIM. PDIC
can also require COURT DETERMINATION.
Effects of failure to file and/or enforce claim:
1. Barred from rights against PDIC.
Claims
2. Revocation of depositor rights against the closed
bank.
3. PDIC is discharged from liability.
In short, WALANG MAPAPALA SI DEPOSITOR.
MODE OF PAYMENT – Cash, or via direct deposit
in a new bank, under the depositor’s name.
How to claim?
 Topic 1: PDIC reserves the right to withhold
payment.
Topic 2: Effect of PDIC’s payment of insured
Miscellaneous deposit to the depositor
Topics Topic 3: Preference against other credits
Topic 4: The 6-month settlement requirement for
PDIC; failure to do so.

Others na ituuu
 Ask anything through:
acontillo@usl.edu.ph

Any abcontillo@up.edu.ph

Questions? tontoncpa@gmail.com
0956 732 1237

LAWS 1043