REVIEWER IN REGULATORY FRAMEWORK AND LEGAL ISSUES IN BUSINESS

CHAPTER 5
PHILIPPINE DEPOSIT INSURANCE CORPORATION

WHAT IS THE PHILIPPINE DEPOSIT INSURANCE

WHAT IS PDIC’S MAXIMUM DEPOSIT INSURANCE
CORPORATION (PDIC)?
COVERAGE?
Philippine Deposit Insurance Corporation (PDIC)
Effective June 1, 2009, the maximum deposit
is a government instrumentality created in 1963 by
insurance coverage is ₱500,000 per depositor.
virtue of Republic Act No. 3591 to provide depositor
protection and promote financial stability. » All deposit accounts by a depositor in a closed
bank maintained in the same right and capacity
» It is an attached agency of the Bangko Sentral ng
shall be added together.
Pilipinas( BSP).
Under R.A. No. 9576, the PDIC may propose to adjust
It exists to protect depositors by providing deposit
the Maximum Deposit Insurance Coverage
insurance coverage for the depositing public and help
(MDIC), subject to the approval of the President of
promote financial stability.
the Philippines, in case of a condition that threatens
Its core mandates are deposit insurance and the monetary and financial stability of the banking
liquidation of closed banks. system that may have systemic consequences.

It prides itself as a professional, committed and

responsive public service institution and a champion
WHAT IS AN INSURED DEPOSIT?
in governance.
» Insured Deposit – it means the amount due to
» It is a socially responsible corporation which
any bona fide depositor for legitimate deposits in
advocates to empower every Filipino through
an insured bank net of any obligation of the
financial literacy.
depositor to the insured bank as of date of
closure, but not to exceed ₱500,000.

WHAT IS PDIC’S OVERALL MANDATE? A joint account shall be insured separately from any
individually-owned deposit account.
PDIC exists to provide deposit insurance coverage for
the depositing public to help promote public R.A. No. 9576 stipulates that PDIC will not pay deposit
confidence and stability in the economy. It ensures insurance for the following accounts or transactions:
prompt payment of insured deposits, exercises
1. Investment products such as bonds, securities
complementary supervision of banks, adopts
and trust accounts.
responsive resolution methods, and applies efficient
management of receivership and liquidation 2. Deposit accounts which are unfunded, fictitious
functions. or fraudulent.
3. Deposit products constituting or emanating
from unsafe and unsound banking practices.
WHAT ARE THE FUNCTIONS OF PDIC?
4. Deposits that are determined to be proceeds of
o Deposit Insurer an unlawful activity as defined under the Anti-
o Liquidator of Closed Banks Money Laundering Law.
ARE ALL BANKS MEMBERS OF PDIC? ARE DEPOSITS MAINTAINED IN PHILIPPINE
BANKS WITH BRANCHES OUTSIDE THE
Membership of banks to PDIC is mandatory. Hence, all
PHILIPPINES INSURED BY THE PDIC?
operating banks are members of PDIC.
The PDIC Charter provides that a Philippine bank
may elect to insure with the PDIC its deposits in
WHAT TYPES OF DEPOSITS ARE INSURED BY branches outside the Philippines.
PDIC?
» As of September 8, 2022, no Philippine bank has
Except for the exclusions stipulated in R.A. No. 9576, elected to insure deposits in their foreign
deposits of all commercial banks, savings and branches with PDIC.
mortgage banks, rural banks, private development
To verify if your deposits in a branch of a Philippine
banks, cooperative banks, savings and loan
bank outside the Philippines are covered by deposit
associations, as well as branches and agencies in the
insurance in the host foreign country, please inquire
Philippines of foreign banks and all other corporations
with the account officer of your branch.
authorized to perform banking functions in the
Philippines, are insured with PDIC.

» As for Philippine banks with branches outside the WHAT SPECIFIC RISKS TO A BANK DOES PDIC
country, R.A. No. 9576 stipulates that subject to COVER?
the approval of the Board of Directors, any
PDIC covers only the risk of a bank closure ordered by
insured bank with branch outside the Philippines
the Monetary Board. Thus, bank losses due to theft,
may elect to include for insurance its deposit
fire, closure by reason of strike or existence of public
obligations payable at such branch.
disorder, revolution or civil war, are not covered by
Foreign currency deposits are also insured by PDIC PDIC.
pursuant to R.A. No. 6426, “An act instituting a
foreign currency deposit system in the
Philippines, and for other purposes” and Central SHALL THE DEPOSITOR PAY ANY INSURANCE
Bank (CB) Circular No. 1389. PREMIUM TO PDIC?
» Depositors may receive payment in the same No. Insurance premium is paid by the banks, not by the
currency in which the insured deposit is depositors. The bank is assessed 1/5 of 1% per
denominated. annum of the assessment base of the bank.

ARE DEPOSITS MAINTAINED IN BRANCHES AND HOW IS INSURANCE COVERAGE DETERMINED?

SUBSIDIARIES OF FOREIGN BANKS OPERATING IN
THE PHILIPPINES INSURED BY THE PDIC? In determining the insured amount, the outstanding
balance of each account is adjusted, such that interests
Yes, the PDIC Charter provides that the deposits in are updated, withholding taxes are deducted, accounts
branches and subsidiaries of foreign banks licensed by maintained by a depositor in the same right and
the Bangko Sentral ng Pilipinas (BSP) to perform capacity are added together; and whenever
banking functions in the Philippines are insured by the applicable, unpaid loans and other obligations of the
PDIC. depositor are deducted; and in no case shall insured
deposit exceed ₱500,000.
CAN PDIC INSURANCE COVERAGE BE INCREASED IF THE DEPOSIT ACCOUNT IN A CLOSED BANK IS
BY HAVING SEVERAL ACCOUNTS IN THE SAME MORE THAN ₱500,000.00, WHAT HAPPENS TO
NAME IN AN INSURED BANK? THE EXCESS OF THE MAXIMUM AMOUNT OF
INSURED DEPOSIT?
No. Deposit insurance coverage is not determined on
a per-account basis. The type of account (whether The claim for the uninsured portion of the deposit is a
checking, savings, time or other form of deposit) has claim against the assets of the closed bank.
no bearing on the amount of insurance coverage.
The claim may be filed with the Liquidator of the
closed bank within sixty (60) days from publication
of notice of closure.
IF I HAVE DEPOSITS IN SEVERAL DIFFERENT
INSURED BANKS, WILL MY DEPOSITS BE ADDED » However, payment of said claim will depend on
TOGETHER FOR INSURANCE PURPOSES? the bank’s available assets and approval of the
Liquidation Court. The schedule of payment
No. Deposits in different banking institutions are
beyond the ₱500,000 maximum insurance shall
insured separately.
be based on priorities set by law.
» 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 CHARTER PROVISION: SECTION 4 (G)
main office and at one or more branch offices of
“--- In determining such amount due to any depositor,
the same bank, the deposits are added together
there shall be added together all deposits in the bank
when determining deposit insurance coverage,
maintained in the same right and capacity for his
the total of which shall not exceed ₱500,000.
benefit either in his own name or in the name of
others. ---"

IS THERE A NEED FOR A DEPOSITOR TO FILE HIS

CLAIM FOR INSURED DEPOSIT WITH PDIC?
SINGLE ACCOUNTS
Yes. Depositors will be advised through the national
» Single Accounts – these are individually-owned
and/or local media and posters at the premises of the
accounts or accounts held under one name, either
closed insured bank and other public places within the
as natural person or juridical entity.
locality on the schedule of distribution of claim forms
by PDIC, receiving of claim forms by PDIC, and the » Natural Person – it refers to any individual
prescriptive date of filing claims by the depositors. person.
» Single proprietors are considered natural
persons.
WHEN SHOULD THE DEPOSITOR OF A CLOSED
o Juridical Entity – it refers to a corporation,
INSURED BANK FILE HIS CLAIM WITH PDIC?
partnership or cooperative.
The depositor of the closed insured bank has 24
months from date of bank takeover to file his deposit
insurance claim. BY, IN TRUST FOR (ITF), OR
FOR THE ACCOUNT (FAO) ACCOUNTS

o In a “BY” account, Ana by Ben. Ana is the

depositor.
o In an “In Trust For” (ITF) account, Ana in trust
for Ben. Ben is the depositor.
o In a “FOR THE ACCOUNT OF” (FAO) account, 2. A sole proprietor is wholly owned by the owner,
Ana for the account of Ben. Ben is the depositor. hence, the Dela Cruz Flower Shop owned by
Juan Dela Cruz will be added to his first three
accounts as all of them are maintained in the
same right and capacity.
ILLUSTRATIVE CASES:
» The total amount insured cannot exceed
CASE 1: SINGLE ACCOUNT/S ₱500,000.
3. Of the total balance of ₱900,000, the amount
Computation of Insured and Uninsured Amount: insured is ₱500,000 and the uninsured amount
is ₱400,000.

CASE 3: SINGLE, “ITF” AND “BY” ACCOUNTS

Computation of Insured and Uninsured Amount:

Explanations:

1. All the four deposit accounts are owned by the

same person, Juan Dela Cruz, and maintained in
the same bank. Thus, the balance of the accounts
will be added together, as they are maintained in
the same right and capacity, regardless of account
type and banking unit/branch.
EXPLANATIONS:
» Total amount of insured deposit cannot
exceed ₱500,000 the (MDIC). 1. Juan Dela Cruz is the principal owner of three
accounts. As these are maintained in the same
2. Of the total balance of ₱900,000, the amount right and capacity, these accounts will be
insured is ₱500,000 and the uninsured amount consolidated.
is ₱400,000.
» The single account is under his name alone and
the other two are “By” accounts which are
owned by him as the principal depositor or
CASE 2: SINGLE ACCOUNT/S AND
beneficial owner while Maria Dela Cruz and
SOLE PROPRIETORSHIP
Pedro Dela Cruz acted as his agents only. Thus,
Computation of Insured and Uninsured Amount: the total insured amount payable to Juan Dela
Cruz is ₱500,000 and the uninsured amount is
₱700,000.
2. Antonio Dela Cruz on the other hand, has only
one account, an “ITF” account in which Antonio
is the principal or beneficial owner and Juan
acted as agent. Thus, Antonio Dela Cruz is
entitled to a separate deposit insurance of
₱400.000 for his savings deposit.
Explanations:
1. The first three deposit accounts are owned by the
same person, Juan Dela Cruz, hence, the balance
of the accounts will be added together.
JOINT ACCOUNTS Cruz, each joint account is considered equally
shared among co-depositors unless otherwise
o A joint account regardless of whether the
indicated in the deposit document. The insurance
conjunction “AND”, “OR” or “AND/OR” is used
coverage of ₱500,000 will apply to the sum of
shall be insured separately from single accounts.
shares of each co-depositor in the insured
» Unless a different sharing is stipulated in the portion of each joint deposit account.
deposit documents, the insured amount up to
3. For Account No. 2, the maximum deposit
the maximum deposit insurance coverage of insurance is ₱500,000 which shall be divided
₱500,000 shall be divided equally between or equally between Juan and Maria. The share of
among co-owners of a joint account. Juan Dela Cruz is ₱250,000. There is no
» The total shares of a co-owner in several joint uninsured amount.
accounts may exceed ₱500,000 but will only be
4. For Account No. 3, the maximum deposit
insured up to the maximum deposit insurance
insurance is ₱500,000 which shall be divided
coverage of ₱500,000.
equally between Juan and Pedro. The share of
o Joint accounts held in the names of a juridical Juan Dela Cruz is ₱250,000. The uninsured
entity and a natural person shall be presumed to amount is ₱300,000, thus, his share in the
belong solely to the juridical entity. uninsured amount is ₱150,000.

ILLUSTRATIVE CASES: CASE 5: ACCOUNTS JOINTLY OWNED BY

INDIVIDUALS OR NATURAL PERSONS
CASE 4: SINGLE ACCOUNT AND JOINT ACCOUNT/S
Computation of Insured and Uninsured Amount:
Computation of Insured and Uninsured Amount:

Breakdown of Insured and Uninsured Amount: Breakdown of Insured and Uninsured Amount:

EXPLANATIONS: EXPLANATIONS:

1. Juan Dela Cruz has three accounts, one is under 1. The individually-owned deposit or single deposit
his name alone and the other two are jointly of Juan Dela Cruz is entitled to a separate deposit
maintained by him and Maria or Pedro Dela insurance of ₱500,000.
Cruz . For the savings deposit individually-owned 2. For savings deposit jointly owned by Juan and
by Juan Dela Cruz, he is entitled to a separate Maria Dela Cruz, the share of Juan and Maria in
deposit insurance of ₱500,000. The uninsured the MDIC is ₱250,00 each while their share in the
deposit is ₱100,000. uninsured portion is ₱50,000 each.
2. For the two accounts which are jointly
maintained by him and Maria or Pedro Dela
3. Shares of each co-owner in each of the joint
accounts are added together and insured up to
₱500,000 MDIC.
4. Juan Dela Cruz has three accounts jointly
maintained with Maria and/or Pedro Dela
Cruz. All his shares in each of these accounts are
added together. Hence, of the ₱650,000 total
shares of Juan, ₱500,000 is covered by deposit
insurance.
5. Maria Dela Cruz and Pedro Dela Cruz are also
entitled to deposit insurance for their respective
shares in the accounts.

CASE 6: ACCOUNTS JOINTLY OWNED BY

INDIVIDUALS/NATURAL PERSONS AND
JURIDICAL PERSONS OR ENTITIES

Computation of Insured and Uninsured Amount:

EXPLANATIONS:

1. The deposit insurance for savings deposit is to be

shared equally between Juan and Maria Dela
Cruz. Hence, each of them is entitled to ₱250,000
deposit insurance.
2. XYZ Corporation is entitled to ₱500,000 deposit
insurance for its time deposit.
3. The demand deposit maintained in the name of
Juan Dela Cruz and ABC Corporation, is
presumed to belong entirely to ABC
Corporation. Hence, ABC Corporation is
entitled to the ₱500,000 deposit insurance.