RA 9302 Philippine Deposit Insurance Corporation Act
(another GOCC Government Owned Corporation)
Purpose:
1. To create a government-owned entity, PDIC.
2. To insure the deposit liability of banks in an
account up to 500,000.00 for every single
depositor of each bank irrespective of the
number of accounts therewith (RA 3591 as
amended by RA 9576, April 29, 2009)
3. To promote and safeguard the interest of the
depositing public by way of providing
permanent and continuing insurance coverage
on all insured deposits.
PDIC Functions: Insurance
 Nature- compulsory insurance on all bank
deposits.
 Coverage: Concept of Insured Depositors- the
net amount to any depositor for deposits in an
insured bank, after deducting any offsets, but
should not exceed 500,000.00 (RA 3591 as
amended by RA 9576, April 29, 2009)
 if the depositor has 2 or more accounts with the
same bank, the maximum coverage pertains to
the sum of all such accounts maintained in the
same right and capacity
 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 (with
authorization, transfer deposits to other,
example nag abroad so walay nagagamit sa
account)
 Foreign currency deposits are covered under the
provision of RA 3591 as amended and
insurance payment shall be in same currency in
which the insured deposits are denominated
(Sec 9, RA 6426, Circular No. 1389, 1993)
Note: The PDIC law is not applicable to
offshore banking units (P.D No. 1034)
 Trust funds held by an insured bank in a
fiduciary capacity whether held in trust or
deposited in any other department or in another
bank shall be insured like other forms of
deposits in an amount not to exceed P10,000 for
each trust estate; such insurance shall be
separate from and addition to that covering
other deposits of the owners of such trust funds
or the beneficiaries (Banking Laws and
Jurisprudence, Dizon and Dizon, 2006)
-Managing account for others;
 Where a fiduciary bank deposits trust funds in
other insured banks, the amount shall be
considered as deposit liability of the bank in
which such funds are so deposited
PDIC Functions: Specific Risk Insured Against
 Exclusions (Sec. 3, Regulatory Insurance No.
2011-02)
 PDIC shall not pay deposit insurance for the
following accounts or transactions whether
denominated, documented, recorded or booked
as deposits by the bank:
1. Investment products such as bonds and
securities, trust accounts and other
similar instrument which do not fall under
the definition of a deposits.
The following features may be
considered as grounds for determining
that a product is an investment.
a. No debtor-creditor relationship exists
between the bank and the client
b. Relationship between the bank and the
client is either that of a trustee-trustor or
an agent-principal:
c. Principal amount is not protected:
d. Amount deposited is not withdrawable on
demand; and/or,
e. Other analogous features.
2. Deposits accounts or transactions which are
unfunded, fictitious, and fraudulent.
- A deposit account or transaction shall
be deemed unfunded when no money
or equivalent (of money) is received by
a bank for such account or transaction.
(wala nay sulod na kwarta, not
necessarily walay naga sulod; as long
as wala nay sulod ang bank account)
- A deposit account or transaction shall
be deemed fictitious when it is
simulated, feigned or is not genuine
deposit account or transaction, e.g.
Money or Equivalent (of money) was
made to appear to have been received
by a bank, or the deposit account or the
name of the depositor does not appear
in the records of the bank. (the account
does not really exist)
 - A deposit account or transaction shall
be deemed fraudulent whenever the
bank and/or depositor knowingly
employ means calculated to deceive
3. Deposit accounts or transactions
constituting and/or emanating from, unsafe
and/or unsound banking practices as
determined by the PDIC, in consultation
with BSP after due notice and hearing and
Publication of the DCD issued by the PDIC
against such deposit accounts or
transactions in accordance with Section 4
of this regulatory insurance. (under GBL
2000)
4. Deposits that are determined to be the
proceeds of the Unlawful activity as
defined under Republic Act No. 9160, as
amended in accordance to the following
rules.
- Payment of deposits insurance shall be
deferred on any deposit which the
subject matter of any freeze order civil
forfeiture proceedings, money
laundering case or any other case
involving an Unlawful Activity,
pending before the department of
Justice, Office of the Ombudsman or
the regular court.
- Deposits insurance payments shall only
be made upon a final judgment
effectively holding that the deposits do
not constitute proceeds of an Unlawful
Activity.
- Deposits determined with finality by
the courts to be proceeds of an
Unlawful Activity shall not be paid
deposit insurance.
- For the purposes of this issuance, the
phase “proceeds of an unlawful
activity” shall be understood to include
deposits whose proceeds are related to
an Unlawful Activity as defined under
the Republic Act No. 9160, otherwise
known as the Anti-Money Laundering
Act of 2001, as amended (Sec. 6,
Regulatory Issuance 2011-02).
PDIC Functions: Assessment (Sec. 6)
The PDIC assess and collects insurance
assessments from member-banks to insure members-
banks deposit accounts.
PDIC Functions: Payment of Insured Deposits
Condition Precedent for Entitlement to Payment
- Filing of claim within 24 months from
order of closure.
Manner of Payments (Sec. 14)
- Cash
- Transferred deposit- a deposit in an
insured bank made available to a
depositor by the PDIC as payment of
the insured deposits of such depositor
in a closed bank and assumed by
another insured bank. (Sec 4(h))
Payment of Insured Deposits as Preferred Credit
under Art.2244 of the Civil Code (Sec 15)
- All payments by the corporation of
insured deposits in closed banks
partake of the nature of public funds,
and as such must be considered a
preferred credit similar to taxes due to
the National Government in the order
of the preference under Article 2244 of
the New Civil Code: Provided further,
that this preference shall be likewise
effective upon liquidation proceedings
already commenced and pending as of
the approval of this Act, where no
distribution of assets has been made.
Recognition of Owner (Sec. 16)
- General Rule: PDIC or any insured
bank is not required to recognize as the
owner of any portions of a deposits
appearing on the records of a closed
bank under a name other than that or
the claimant, any person whose name
or interest as such owner is not
disclosed on the record as such closed
bank as part owner of said deposits, if
such recognition would increase
deposits in such closed bank.
- Exception: If such deposits would
NOT increase the aggregate amount of
the insured deposits in such closed
bank.
PDIC Functions: Rule (Sec. 4 [g])
1. PDIC liability is on a per bank basis accounts in
a bank, even though in several branches, are to
be added together, provided that they are
maintained in the same capacity and the same
right for his benefit either in his own name or in
the name of others.
 - Capacities: individual account joint
“and” account, joint “and/or” account.
2. The insurance premiums are to be paid by the
insured bank, not the depositors.
3. In case depositors account is more than the
insurance coverage, the balance may still be
recovered from the PDIC after the final
liquidation of the remaining assets of the closed
bank. (pwede mabalik imong remaining
balance if naa pay mabilin sa insured bank).
4. A joint account regardless whether the
conjunction “and”, “or” “and/or” is used, shall
be insured separately from any individually-
owned deposit account.
a. If the account is held jointly by two or more
natural persons, or by two or more judicial
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.
b. If the account is held by a juridical person
or entity jointly with one or more natural
persons, the maximum insured deposit shall
be presumed to belong entirely to such
juridical person or entity; provided further,
that the aggregate of the individuals,
juridical persons or entities, shall likewise
be subject to the maximum insured deposit
of 500,000.00 (RA 3591 as amended by RA
9576, April 29, 2009)
5. No owner/holder of any negotiable certificate
of deposit shall be recognized as a depositor
entitled to the right provided unless his name is
registered as owner/holder thereof in the books
of the issuing bank.
PDIC Functions: Withholding of Payment (Sec. 6 [d])
General Rule: Payment of insured deposit may be
offset to pay for any liability of the depositor to the
closed bank or its receiver.
Exception: PDIC may withhold payment of such
portion of the insured deposit of any depositor in a
closed bank for the payment of any liability of such
depositor as a stockholder of the closed bank or of any
liability of the depositor to the closed bank or its
receiver WHICH IS NOT OFFSET against a claim due
from such bank, pending the determination and payment
of such liability by such liability depositor or any other
liable therefor.
PDIC Functions:
Effect of Payment by PDIC to the Depositor of His
Insured Deposit:
a. Discharges the PDIC from further liability (Sec.
16)
b. Subrogates the PDIC to all the right of the
depositors against the closed bank to the extent
of such payment (Sec. 15)
Statutory Liability
-liability of PDIC rests upon the existence of
deposits with the insured bank, not on the negotiability
or non-negotiability of certificates evidencing these
deposits. The fact that a bank instrument provides that
the certificate is insured by the PDIC does not ipso facto
make the latter liable for the same; the deposit liability
of the PDIC is determined by the provisions of RA 3519
(PDIC vs. CA, GR No. 118917. December 22, 1997).
PDIC Functions:
A. Authority to Terminate
1. Continued engagement in unsafe and unsound
banking practices
2. Should any insured bank fail or refuse to pay
any assessment required to be paid, and should
the bank not correct such failure or refusal
within 30 days after written notice has been
given to an officer of the bank and stating that
the bank has failed or refused to pay as required
by the PDIC, may at its discretion, file a case
for collection before the appropriate court
without prejudice to the imposition of
administrative sanctions on the bank officials
responsible for the nonpayment (Sec 6 [h]).
B. Bank Examination (Sec. 7)
- Under the new law, PDIC’s authority to
examine its member banks, with prior
approval by the Monetary Board has
been restored.
C. Bank Rehabilitation (Sec 17)
- 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 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 such 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.
D. Receivership of Closed Banks
- Once a bank is ordered closed by the
Monetary board (MB) of the Bangko
Sentral ng Pilipinas, 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 preserves its assets for the benefit
of creditors (Sec 10 [a,b])
E. Liquidation of Closed Banks
- 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.
- There are substantial differences in the
procedure for involuntary dissolution
and liquidation of a corporation under
the Corporation Code, and that of a
banking corporation under the New
Central Bank Act, so that the
requirements in one cannot simply be
imposed in the other. PDIC as
liquidator of insolvent bank, does not
need to secure a tax clearance before
court’s approval of the projects of
distribution of the bank’s assets.
PDIC Functions: Prohibition against splitting of
deposits
- Splitting of deposits occurs whenever a
deposit account with an outstanding
balance of more than 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 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; (As added
by RA 9302, 12 August 2004; as
amended by RA 9576. 29 April 2009)
- The penalty of prison mayor or a fine
of not less than 50,000 pesos but not
more than 2million or both at the
discretion of the court shall be imposed
upon any director, officer, employee or
agent of a bank.
PDIC Functions: Prohibition against issuance of TRO’s,
etc.
- No court except the Court of Appeals,
shall issue any temporary restraining
order, preliminary injunction or
preliminary mandatory injunction
against the Corporation for any action
under this Act. (As added by RA 9302,
12 August 2004). This prohibition shall
apply in all cases, disputes or
controversies instituted by a private
party, the insured banks or any
shareholders of the insured bank (As
added by RA 9302, 12 August 2004).
- The Supreme Court may issue a
restraining order or injunction when the
matter is of extreme urgency involving
a constitutional issue, such that unless
a temporary straining order is issued,
grave injustice and irreparable injury
will arise. The party applying for the
issuance of a restraining order or
injunction shall file a bond in an
amount to be fixed by the Supreme
Court, which bond shall accrue in favor
of the Corporation if the court should
finally decide that the applicant was not
entitled to the relief sought. (As added
by RA 9302, 12 August 2004).
- Any restraining order or injunction
issues in violation of this Section is
void and of no force and effect and any
judge who has issued the same shall
suffer the penalty of suspension of
atleast 60 days without pay. (As added
by RA 9302, 12 August 2004).
Specific Functions of the PDIC

The PDIC serve the following functions:

a. Deposit Insurer
b. Co-regulator of banks
c. Receiver and liquidator of closed banks

Types of Deposits insured by the PDIC

Deposits in the following banks are insured by the

PDIC:

1. Commercial banks
2. Savings and mortgage banks
3. Private development banks
4. Cooperative banks
5. Savings and loan associations
6. Branches and agencies in the Philippines of
foreign banks
7. Other corporations authorized to perform
banking function in the Philippines. (apil ang
universal banks)