Philippine

Deposit
Insurance
Corporation
R.A. 3591 as amended
Deposit Insurance Law
Devotional
 Intro
There are 2 classifications of Corporations:
1. Private – under the Revised Corporation
Code (B.P. 68 as revised by R.A.
11232)
2. Public – under the Local Government
Code (R.A. 7160)
Government-Owned or -Controlled Corporation (GOCC) refers to any
agency organized as a stock or nonstock corporation, vested with
functions relating to public needs whether governmental or proprietary
in nature, and owned by the Government of the Republic of the
Philippines directly or through its instrumentalities either wholly or,
where applicable as in the case of stock corporations, to the extent of at
least a majority of its outstanding capital stock: Provided, however, That
for purposes of this Act, the term “GOCC”- shall include GICP/GCE and
GFI as defined herein (Sec.3, Chapter 1, R.A.10149)

2 types of GOCCs
1. Non-chartered GOCC - A GOCC organized and operating
under Batas Pambansa Bilang 68 (The Corporation Code of the
.
Philippines).
2. Chartered GOCC refers to a GOCC, including Government
Financial Institutions, created and vested with functions by a
special law.
Drama
Julia Barreto and Gerald Anderson
have been secretly lovers for the past 3
years before they went out in public.
They got married in secret to avoid
drama. With their hard earned money,
they have decided to make deposits in
Paubaya Bank, a bank authorized by
the BSP, on different deposit accounts.
Paubaya Bank was shut down by the
Monetary Board of the BSP. Now, Julia
and Gerald came to you, a CPA and
asked your advice on how much they
can claim from PDIC.

What advice would you give them?

What is PDIC and what are its functions?

● The Philippine Deposit Insurance Corporation (PDIC)

is a government instrumentality created on 22 June
1963 by Republic Act 3591 entitled, An Act
Establishing the Philippine Deposit Insurance
Corporation (PDIC), Defining Its Powers and Duties
and for Other Purposes It is an attached agency of the
Department of Finance.

● The latest amendments to RA 3591 are contained in RA

10846 signed into law on May 23, 2016. RA 10846
empowered PDIC with stronger authorities to protect
the depositing public and promote financial stability.
The new law also includes important provisions to
ensure that the PDIC remains financially and
institutionally strong to fulfill its mandate under its
Charter.
What is PDIC and what are its functions?

● It is mandated to give bank depositors

protection and financial stability by
providing permanent and continuing
deposit insurance
 Public Policy
Objectives

PDIC was established to promote and safeguard

the interests of the depositing public by way of
providing insurance coverage on all insured
deposits. PDIC also aims to strengthen the
mandatory deposit insurance coverage system to
generate, preserve, and maintain faith and
confidence in the country's banking system, and
protect it from illegal schemes and machinations.
3 Mandates of PDIC
1. Deposit Insurance
2. Receivership of Closed Banks
3. Co-regulator of Banks
1. Deposit Insurance
PDIC provides a maximum deposit insurance coverage of
PhP500,000 per depositor per bank. To pay claims on insured
deposits, PDIC builds up the Deposit Insurance Fund (DIF)
primarily through assessments of banks at an annual flat rate of
1/5 of 1% of their total deposit liabilities.
***Insurance - A contract in which one party agrees to indemnify another against a predefined category of risks in
exchange for a premium.

***Risk — Uncertainty arising from the possible occurrence of given events.

 risk-based assessment
system
RIsk-based assessment system pertains to a method for calculating an insured bank’s
assessment on the probability that the DIF will incur a loss with respect to the bank, and the
likely amount of any such loss, based on its risk rating that takes into consideration the
following:
“(1) Quality and concentration of assets;
“(2) Categories and concentration of liabilities, both insured and uninsured, contingent and
noncontingent;
“(3) Capital position;
“(4) Liquidity position;
“(5) Management and governance; and
“(6) Other factors relevant to assessing such probability, as may be determined by the
Corporation: (Sec 5, paragraph.t, R.A. 10846)
2. Receivership *of Closed Banks
PDIC proceeds with the liquidation process upon
order of the Monetary Board of the Bangko Sentral
ng Pilipinas (BSP). The assets of the closed bank
are managed and eventually disposed of to settle
claims of creditors in accordance with the preference
and concurrence of credits as provided by the Civil
Code of the Philippines
*Receivership - the process of appointment by a court of a receiver to take custody of the property, business, rents
and profits of a party to a lawsuit pending a final decision on disbursement or an agreement that a receiver control
the financial receipts of a person who is deeply in debt (insolvent) for the benefit of creditors.
3. Co-regulator of Banks
PDIC regulatory issuance 2011-01 included is unsafe
and unsound banking processes
 PDIC Composition
1. Officers:
 DOF Secretary – ex officio Chairman
 *PDIC President – appointed by the President of the
Philippines
-Vice Chairman of the Board
 BSP Governor –ex officio member
 4 Members from the private sector

*The GCG (Governance commission for GOCCs) provides a short list to the
president, and from that shortlist, the president will appoint the PDIC
President which will also serve as the Vice chairman
 PDIC Composition
1. Members:

Membership with PDIC is mandatory for all banks licensed by

the BSP to operate in the Philippines:

i. Banks incorporated under Philippine laws, such as

commercial banks, savings banks, mortgage banks,
stock savings and loan associations, development banks,
cooperative banks, and rural banks
ii. Domestic branches of foreign banks
As of 31 December 2017, there are
587 banks in the Philippine
banking system. These consist of
43 commercial banks (including
branches of foreign banks), 55
thrift banks (savings banks,
mortgage banks, stock savings and
loan associations, and development
banks), and 489 rural banks
(including cooperative banks).
What types of Scope of the Deposit Insurance
Protection
deposits are PDIC provides a maximum
deposit insurance coverage of
covered? PhP500,000 per depositor per
bank. It covers all types of bank
deposits in banks whether
denominated in local or foreign
currencies. All deposit accounts
of a depositor in a closed bank
maintained in the same right and
capacity shall be added together.
 Types of Deposits
By Deposit Type By Deposit Amount By Currency

Savings Single Php

Special Savings Joint Foreign Currency

Demand/Checking By, ITF, FAO

Negotiable Order of withdrawal

Time Deposits
Note:
The only risk covered is
Bank closure ordered by
BSP thru its Monetary
Board
 1. Investment products such as bonds and securities,
What are NOT trust accounts and other similar instruments

2. Deposit accounts or transactions that:

covered by -- Are unfunded, fictitious or fraudulent
-- Constitute and/or emanate from unsafe and unsound

PDIC deposit
banking practice/s as determined by the PDIC, in
consultation with the BSP, after due notice and hearing
and publication of PDIC’s cease & desist order against

insurance? such deposit accounts/transactions

-- Are determined to be proceeds of an unlawful activity
as defined in the Anti- Money Laundering Act (Republic
Act 9160, as amended)
 PDIC issuance #2011-01
Unsafe and unsound deposit related activities
The following may be considered unsafe and/or unsound deposit-related practices:

○ deposit-related practice, activity, or transaction without the requisite approvals or without

adequate controls, as mandated by existing laws, rules, and regulations,.

○ Failure to keep bank records (printed and/or electronic) within the bank premises

○ Granting high interest rates when the bank has: (i) negative unimpaired capital and (ii) either a
liquid assets-to-deposits ratio of less than 10% or an operating loss.

○ Non-compliance with PDIC Regulatory Issuances.

○ Other deposit-related practices,

Single Accounts

● Single Accounts are individually-owned

accounts or accounts held under one name,
either as natural person or juridical entity.
• Natural Person refers to any individual person.
Single proprietors are considered natural persons.
• Juridical entity refers to a corporation, partnership
or cooperative.
  A joint account regardless of whether the
Joint Accounts conjunction “and”, “or” or “and/or” is used shall
be insured separately from single accounts.

● are accounts held under more  Unless a different sharing is stipulated in the
than one name deposit documents, the insured amountup to
the Maximum Deposit Insurance Coverage of
Php500,000 shall be divided equally between
or among co-owners of a joint account.

 The total shares of a co-owner in several joint

accounts may exceed Php500,000 but will only
be insured up to the Maximum Deposit
Insurance Coverage of Php500,000.

 Joint accounts held in the names of a juridical

entity and a natural person shall be presumed
to belong solely to the juridical entity
Assuming all deposits are
in one bank

Account name Deposit Julia’s share in the

insured deposit
Julia Barreto or Bea Alonzo 500,000 250,000

Julia Barreto and Gerald 1,000,000 250,000

Anderson
Julia Barreto and/or 1,000,000
Joshua Garcia
Total 2,500,000 500,000
By, ITF, FAO Accounts
● In a “By” account, “Ana by Ben”, Ana is the depositor.

● In an “In Trust For” (ITF) account, “Ana In Trust For Ben”, Ben is
the depositor.

● In a “For the Account of” (FAO) account, “Ana For the Account of
Ben” , Ben is the depositor.
● To simplify:
In the case where a depositor is the sole beneficial owner of a single, “For the Account
of”, “By”, and “In Trust For” accounts, the consolidated balances of these accounts shall
be insured up to Php500,000.

The depositor’s total shares in his/her joint accounts shall be separately insured up to
Php500,000.

A depositor with single accounts and joint accounts may have insured deposits of up to
Php1,000,000.
EXERCISES
1. How much is Julia Barreto’s insured deposit if she has the following four deposit
accounts in the same bank?

Account Name Deposit Insured Deposit of Julia B.

Julia Barreto 100,000 100
Gerald Anderson FAO Julia 150,000 150
Barreto

Dominic Roque ITF Julia 150,000 150

Barreto

Julia Barreto’s Tilapia store 600,000 100

TOTAL 1000,000 500
2. How much is Bea Alonzo’s insured deposit if she has the following three joint accounts
in the same bank?

Account name Deposit Bea Alonzo’s share in the

insured Deposit

Bea Alonzo or Julia Barreto 500,000 250

Bea Alonzo and Dominic Roque 500,000 250

Bea Alonzo and Gerald 500,000 0

Anderson

TOTAL 1500,000 500

3. How much is Gerald Anderson’s share in the insured deposit in the following deposits
in the same bank?

Account name Deposit Gerald Anderson’s share in the

insured Deposit

Gerald Anderson 100,000 100

Bea Alonzo by Gerald Anderson 100,000 0

Gerald Anderson ITF Dominic Roque 200.000 0

Julia Barreto FAO Gerald Anderson 700,000 400

Gerald Anderson Salon 200,000 0

TOTAL 500
4. How much is Julia Barreto’s insured deposit for all her single and joint accounts in the
same bank?

Accounts Deposit Julia Barreto’s share in the

Insured Deposit

Alll single accounts of Julia 1000,000 500

Barreto in Q1

All Joint Accounts of Julia 2,500,000 500

Barreto in Q2

TOTAL 3,500,000 1000

Requirement for Claims
When to file claims – during the claims settlement operations period as
announced in the Notice to Depositors

Depositors have 2 years from PDIC takeover to file their deposit

insurance claims
WHO ARE REQUIRED TO FILE DEPOSIT INSURANCE CLAIMS?

*MAUF – Mailing Adress Update Form

If you want to have something
you’ve never had, you have to do
something you’ve never done.
-unknown
Thank you for
listening!
God bless