D.

PHILIPPINE DEPOSIT INSURANCE CORPORATION ACT

l. Basic policy
2. Powers and functions of the Philippine Deposit Insurance
Corporation; prohibitions
3. Concept of insured deposits
4. Liability to depositors
a. Deposit liabilities required to be insured with Philippine Deposit Insurance Corporation
b. Commencement of liability
c. Deposit accounts not entitled to payment
d. Extent of liability
e. Determination of insured deposits
f. Calculation of liability
i. Per depositor, per capacity rule ii. Joint accounts iii. Mode of payment iv. Effect
of payment of insured deposits
v. Payment of insured deposits as preferred credit vi. Failure to settle claim of insured depositor

Il
vii. Failure of depositor to claim insured deposits
(a) Examination of banks and deposit accounts
(b) Prohibition against splitting of deposits
(c) Prohibition against issuances of temporary restraining orders
5. Concept of bank resolution
6. Role of the Philippine Deposit Insurance Corporation in relation to banks in distress
a. Closure and takeover
b. Conservatorship
c. Receivership
d. Liquidation
FUNCTIONS OF PDIC
•  Deposit Insurer
•  Co-regulator of Banks
•  Receiver and Liquidator of Closed Banks
• 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
• What is an insured deposit
• 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.
• R.A. No. 9576 stipulates that PDIC will not pay deposit insurance for the following accounts
or transactions:
• Investment products such as bonds, securities and trust accounts;
• Deposit accounts which are unfunded, fictitious or fraudulent;
• Deposit products constituting or emanating from unsafe and unsound banking practices;
• Deposits that are determined to be proceeds of an unlawful activity as defined under the
Anti-Money Laundering Law.
• Membership of banks to PDIC is mandatory; hence, all operating
banks are members of PDIC
• Types of Deposits Insured
• 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:
• Investment products such as bonds, securities and trust accounts;
• Deposit accounts which are unfunded, fictitious or fraudulent;
• Deposit products constituting or emanating from unsafe and unsound
banking practices;
• Deposits that are determined to be proceeds of an unlawful activity
as defined under the Anti-Money Laundering Law
• What risks are covered?
• 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
• Shall the depositor pay any insurance premium to PDIC?
• No. Insurance premium is paid by the banks, not by the depositors.
The bank is assessed 1/5 of 1% per annum of the assessment base of
the bank.
• How is insurance coverage determined?
• In determining the insured amount, the outstanding balance of each account is adjusted, such
that interests are updated, withholding taxes are deducted, accounts maintained by a depositor
in the same right and capacity are added together; and whenever applicable, unpaid loans and
other obligations of the depositor are deducted; and in no case shall insured deposit exceed
P500,000.
• R.A. No. 9576 stipulates that PDIC will not pay deposit insurance for the following accounts or
transactions:
• Investment products such as bonds, securities and trust accounts;
• Deposit accounts which are unfunded, fictitious or fraudulent;
• Deposit products constituting or emanating from unsafe and unsound banking practices;
• Deposits that are determined to be proceeds of an unlawful activity as defined under the Anti-
Money Laundering Law
• Can PDIC insurance coverage be increased by having several
accounts in the same name in an insured bank?
• No. 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.
• If I have deposits in several different insured banks, will my deposits
be added together for insurance purposes?
• No. 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.