PHILIPPINE DEPOSIT INSURANCE CORPORATION

I.

OBJECTIVE
To provide permanent and continuing deposit insurance coverage for the
depositing public to help promote public confidence and stability in the economy.
It ensures prompt payment of insured deposits, exercises complementary
supervision of banks, adopts responsive resolution methods, and applies efficient
management of receivership and liquidation functions.

II.

SALIENT FEATURES
PDIC is a government instrumentality created in 1963 by virtue of
Republic Act 3591 to insure the deposits of all banks which are entitled to the
benefits of insurance. The latest amendments to RA 3591 are contained in RA
9576 signed into law on April 29, 2009. RA 9576 increased the maximum deposit
insurance coverage to P500,000.00. The new law also includes important
provisions to ensure that the PDIC remains financially and institutionally strong to
fulfill its mandate under its Charter.
The PDIC now has the authority to determine which deposit products are
covered by insurance. The PDIC is also authorized to conduct independent
special examination of banks and may inquire into or examine deposit accounts
of ailing banks in the event there is a finding of unsafe and unsound banking
practices.
Part of the financial strengthening measures for the PDIC, on the other
hand, include exemption from taxes and the authority to issue sovereign bonds,
debentures and other debt issuances.
The PDIC is an attached agency of the Department of Finance.

III.

EXTENT OF MAXIMUM DEPOSIT INSURANCE COVERAGE

Effective June 1, 2009 (under RA 9302), 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.
History:
1. RA 3591- the net amount due to any depositor for deposits in an insured bank
(after deducting offsets) less any part thereof which is in excess of P10,000.
2. RA 9302- the amount due to any depositor for deposits in an insured bank net
of any obligation of the depositor to the insured bank as of the date of closure,
but not to exceed Two hundred fifty thousand pesos (P250,000.00).

IV.

RECEIVERSHIP AND LIQUIDATION PROCESS

The PDIC as receiver shall control, manage and administer the affairs of
the closed bank. Effective immediately upon takeover as receiver of such
bank, the powers, functions and duties, as well as all allowances,
remunerations and perquisites of the directors, officers, and stockholders of
such bank are suspended, and the relevant provisions of the Articles of
Incorporation and By-laws of the closed bank are likewise deemed
suspended.
The assets of the closed bank under receivership shall be deemed in
custodia legis in the hands of the receiver. From the time the closed bank is
placed under such receivership, its assets shall not be subject to attachment,
garnishment, execution, levy or any other court processes. Therefore, a

judge, officer of the court or any person who shall issue, order, process or
cause the issuance or implementation of the writ of garnishment, levy,
attachment or execution shall be liable under Section 21, RA 9302. (Sec 10,
RA 9302)
V.

PHILIPPINE DEPOSIT INSURANCE

APPEALS (402 SCRA 194)

CORPORATION

VS

COURT

OF

FACTS:
Prior to May 22, 1997, respondents had 71 certificates of time deposits
denominated as "Golden Time Deposits" (GTD) with an aggregate face value of
P1,115,889.96. May 22, 1987, a Friday, the Monetary Board (MB) of the Central
Bank of the Philippines, now Bangko Sentral ng Pilipinas, issued Resolution
5052 prohibiting Manila Banking Corporation to do business in the Philippines,
and placing its assets and affairs under receivership. The Resolution, however,
was not served on MBC until Tuesday the following week, or on May 26, 1987,
when the designated Receiver took over. On May 25, 1987 - the next banking
day following the issuance of the MB Resolution, respondent Jose Abad was at
the MBC at 9:00 a.m. for the purpose of pre-terminating the71 aforementioned
GTDs and re-depositing the fund represented thereby into 28 new GTDs in
denominations of P40,000.00 or less under the names of herein respondents
individually or jointly with each others Of the 28 new GTDs, Jose Abad preterminated 8 and withdrew the value thereof in the total amount of P320,000.00.
Respondents thereafter filed their claims with the PDIC for the payment of the
remaining 20 insured GTDs. February 11, 1988, PDIC paid respondents the
value of 3 claims in the total amount of P120,000.00. PDIC, however, withheld
payment of the 17 remaining claims after Washington Solidum, Deputy Receiver
of MBC-Iloilo, submitted a report to the PDIC that there was massive conversion
and substitution of trust and deposit accounts on May 25, 1987 at MBC-Iloilo.
Because of the report, PDIC entertained serious reservation in recognizing
respondents' GTDs as deposit liabilities of MBC-Iloilo. Thus, PDIC filed a petition
for declaratory relief against respondents with the RTC of Iloilo City, for a judicial
declaration determination of the insurability of respondents' GTD sat MBC-Iloilo.
In their Answer respondents set up a counterclaim against PDIC whereby they
asked for payment of their insured deposits. The Trial Court ordered petitioners
to pay the balance of the deposit insurance to respondents. The Court of Appeals
affirmed the decision of the lower court. Petitioner posits that the trial court erred
in ordering it to pay the balance of the deposit insurance to respondents,
maintaining that the instant petition stemmed from a petition for declaratory relief
which does not essentially entail an executory process, and the only relief that
should have been granted by the trial court is a declaration of the parties' rights
and duties. As such, petitioner continues, no order of payment may arise from the
case as this is beyond the office of declaratory relief proceedings.
ISSUE:
HELD:
VI.

DETERMINATION OF THE AMOUNT DUE TO DEPOSITOR

The amount due (insured deposit) 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 shall not 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 benefits 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 different sharing is stipulated in the document of deposit, and
(2) If the account is held by a juridical person or entity jointly with one or more
natural persons, the maximum insured deposits shall be presumed to belong
entirely to such juridical person or entity: Provided, further, That the aggregate of
the interest 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, the provisions of any law to the
contrary notwithstanding, no owner/holder of any negotiable certificate of deposit
shall be recognized as a depositor 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 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. (Section 4(g) of RA 3591 as amended by RA 9302 and RA 9576 )
VII.

MODE OF PAYMENT AND PERIOD FOR SETTLEMENT OF CLAIMS

Whenever an insured bank shall have been closed by the Monetary
Board, payment of the insured deposits on such closed bank shall be made by
the PDIC as soon as possible either:
(1) by cash, or
(2) by making available to each depositor a transferred deposit in another
insured bank in an amount equal to insured deposit of such depositor.
The claim for insured deposit should be settled within six (6) months from
the date of filing provided all requirements are met but the claim must be filed
within twenty-four (24) months after bank takeover. The six-month period shall
not apply if the documents of the claimant are incomplete or if the validity of the
claim requires the resolution of issues of facts and law by another office, body or
agency, independently or in coordination with PDIC. (Section 14, RA 9302).

VIII.

POWER OF PDIC TO EXAMINE BANKS

PDIC has the power 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 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. (Section 8 par Eighth of RA 3591 as amended by RA 9372 and
RA 9576)
IX.

PHILIPPINE DEPOSIT INSURANCE CORPORATION

COUNTRYSIDE RURAL BANK, INC. (G.R 176438)

VS

PHILIPPINE

FACTS:
ISSUE:
HELD:
X.

SPLITTING OF DEPOSITS
Splitting of deposits occurs whenever a deposit account with an
outstanding balance of more that 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. (Section 21 paragraph
(f)(5) of RA 3591 as amended by RA 9372 and RA 9576)

XI.

PHILIPPINE DEPOSIT INSURANCE

APPEALS, G.R 126911 (2003)

CORPORATION

VS

COURT

OF

FACTS:
Prior to May 22, 1997, respondents had 71 certificates of time deposits
denominated as "Golden Time Deposits" (GTD) with an aggregate face value of
P1,115,889.96. May 22, 1987, a Friday, the Monetary Board (MB) of the Central
Bank of the Philippines, now Bangko Sentral ng Pilipinas, issued Resolution
5052 prohibiting Manila Banking Corporation to do business in the Philippines,
and placing its assets and affairs under receivership. The Resolution, however,
was not served on MBC until Tuesday the following week, or on May 26, 1987,
when the designated Receiver took over. On May 25, 1987 - the next banking
day following the issuance of the MB Resolution, respondent Jose Abad was at
the MBC at 9:00 a.m. for the purpose of pre-terminating the71 aforementioned
GTDs and re-depositing the fund represented thereby into 28 new GTDs in
denominations of P40,000.00 or less under the names of herein respondents
individually or jointly with each others Of the 28 new GTDs, Jose Abad preterminated 8 and withdrew the value thereof in the total amount of P320,000.00.
Respondents thereafter filed their claims with the PDIC for the payment of the
remaining 20 insured GTDs. February 11, 1988, PDIC paid respondents the
value of 3 claims in the total amount of P120,000.00. PDIC, however, withheld
payment of the 17 remaining claims after Washington Solidum, Deputy Receiver
of MBC-Iloilo, submitted a report to the PDIC that there was massive conversion

and substitution of trust and deposit accounts on May 25, 1987 at MBC-Iloilo.
Because of the report, PDIC entertained serious reservation in recognizing
respondents' GTDs as deposit liabilities of MBC-Iloilo. Thus, PDIC filed a petition
for declaratory relief against respondents with the RTC of Iloilo City, for a judicial
declaration determination of the insurability of respondents' GTD sat MBC-Iloilo.
In their Answer respondents set up a counterclaim against PDIC whereby they
asked for payment of their insured deposits. The Trial Court ordered petitioners
to pay the balance of the deposit insurance to respondents. The Court of Appeals
affirmed the decision of the lower court. Petitioner posits that the trial court erred
in ordering it to pay the balance of the deposit insurance to respondents,
maintaining that the instant petition stemmed from a petition for declaratory relief
which does not essentially entail an executory process, and the only relief that
should have been granted by the trial court is a declaration of the parties' rights
and duties. As such, petitioner continues, no order of payment may arise from the
case as this is beyond the office of declaratory relief proceedings.
ISSUE:
HELD: