PHILIPPINE DEPOSIT INSURANCE

CORPORATION ACT
By:

PONCE, Enrico and

VALMORES, Gay Valerie

A. Basic Policy
(Sec.1)To promote and safeguard the interests of the depositing public
by way of providing permanent and continuing insurance coverage on
all insured deposits.
B. Main Functions
1. Insurance of Banks (Sec.5)
To insure the deposit liabilities of any bank or banking institution
engaged in the business of receiving deposits or which thereafter
may engage in the business of receiving deposits.
2. Examination of Banks (Sec. 8 and 9)
To conduct examination of banks with prior approval of the
Monetary Board. No examination can be conducted within twelve
months from the last examination date. The Board of Directors shall
appoint examiners who shall have power, on behalf of the PDIC to
examine any insured bank. Such examiner shall have the power to
make a thorough examination of all the affairs of the bank and in
doing so, he shall have the power to administer oaths, to examine
and take and preserve the testimony of any of the officers and
agents thereof, and, to compel the presentation of books,
documents, papers, or records necessary in his judgment to
ascertain the facts relative to the condition of the bank; and shall
make a full and detailed report of the condition of the bank to the
PDIC. The Board of Directors shall appoint claim agents who shall
have the power to investigate and examine all claims for insured
deposits and transferred deposits. Each claim agent shall have the
power to administer oaths and to examine under oath and take and
preserve testimony of any person relating to such claim.
3. Rehabilitation of Banks (Sec.17)
Money of the PDIC not otherwise employed shall be invested in
obligations of the Republic of the Philippines or in obligations
guaranteed as to principal and interest by the Republic of the
Philippines. The banking or checking accounts of the PDIC shall be
kept with the Bangko Sentral ng Pilipinas, with the Philippine
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National Bank, or with any other bank designated as depository or

fiscal agent of the Philippine government.
4. Receivership of Closed Banks (Sec.10)
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 PDIC 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.
5. Liquidation of Closed Banks (Sec.30, R.A.7653)
Whenever, upon report of the head of the supervising or examining
department, the Monetary Board finds that a bank or quasi-bank:
a. Is unable to pay its liabilities as they become due in
the ordinary course of business: Provided, That this
shall not include inability to pay caused by
extraordinary demands induced by financial panic in
the banking community;
b. Has insufficient realizable assets, as determined by
the Bangko Sentral, to meet its liabilities; or
c. Cannot continue in business without involving
probable losses to its depositors or creditors; or
d. Has willfully violated a cease and desist order under
SEC 37 that has become final, involving acts or
transactions which amount to fraud or a dissipation of
the assets of the institution; in which cases, the
Monetary Board may summarily and without need for
prior hearing forbid the institution from doing business
in the Philippines and designate the Philippine
Deposit Insurance PDIC as receiver of the banking
institution.
For a quasi-bank, any person of recognized competence in banking
or finance may be designed as receiver. The receiver shall
immediately gather and take charge of all the assets and liabilities
of the institution, administer the same for the benefit of its creditors,
and exercise the general powers of a receiver under the Revised
Rules of Court but shall not, with the exception of administrative

expenditures, pay or commit any act that will involve the transfer or
disposition of any asset of the institution: Provided, That the
receiver may deposit or place the funds of the institution in nonspeculative investments. The receiver shall determine as soon as
possible, but not later than ninety (90) days from take over, whether
the institution may be rehabilitated or otherwise placed in such a
condition so that it may be permitted to resume business with
safety to its depositors and creditors and the general public:
Provided, That any determination for the resumption of business of
the institution shall be subject to prior approval of the Monetary
Board.
If the receiver determines that the institution cannot be rehabilitated
or permitted to resume business in accordance with the next
preceding paragraph, the Monetary Board shall notify in writing the
board of directors of its findings and direct the receiver to proceed
with the liquidation of the institution. The receiver shall:
1.
File ex parte with the proper regional trial court, and
without requirement of prior notice or any other action, a petition for
assistance in the liquidation of the institution pursuant to a liquidation plan
adopted by the Philippine Deposit Insurance PDIC for general application
to all closed banks. In case of quasi-banks, the Monetary Board shall
adopt the liquidation plan. Upon acquiring jurisdiction, the court shall, upon
motion by the receiver after due notice, adjudicate disputed claims against
the institution, assist the enforcement of individual liabilities of the
stockholders, directors and officers, and decide on other issues as may be
material to implement the liquidation plan adopted. The receiver shall pay
the cost of the proceedings from the assets of the institution.
2.
Convert the assets of the institutions to money, dispose
of the same to creditors and other parties, for the purpose of paying the
debts of such institution in accordance with the rules on concurrence and
preference of credit under the Civil Code of the Philippines and he may, in
the name of the institution, and with the assistance of counsel as he may
retain, institute such actions as may be necessary to collect and recover
accounts and assets of, or defend any action against, the institution. The
assets of an institution under receivership or liquidation shall be deemed
in custodia legis in the hands of the receiver and shall, from the moment
the institution was placed under such receivership or liquidation, be
exempt from any order of garnishment, levy, attachment, or execution.
The actions of the Monetary Board taken under this SEC or under
SEC 29 of this Act shall be final and executory, and may not be
restrained or set aside by the court except on petition for certiorari
on the ground that the action taken was in excess of jurisdiction or

with such grave abuse of discretion as to amount to lack or excess

of jurisdiction. The petition for certiorari may only be filed by the
stockholders of record representing the majority of the capital stock
within ten (10) days from receipt by the board of directors of the
institution of the order directing receivership, liquidation or
conservatorship.
C. Insured Deposits
(Sec.4g) Theamountduetoany bonafide depositorforlegitimate

depositsinaninsuredbanknetofanyobligationofthedepositortothe
insuredbankasofdateofclosure,butnottoexceedP500,000.00.
D. Liability to Depositors
1. DepositLiabilitiesRequiredtobeInsured(Sec.5)

Thedepositliabilitiesofanybankorbankinginstitution,whichis
engaged in the business of receiving deposits or which thereafter may
engage in the business of receiving deposits, shall be insured with the
PDIC.
2. CommencementofLiability(Sec.14)

Whenever an insured bank shall have been closed by the Monetary

Board,paymentoftheinsureddepositsonsuchclosedbankshallbemade
by the PDIC as soon as possible either (1) by cash or (2) by making
availabletoeachdepositoratransferreddepositinanotherinsuredbankin
anamountequaltoinsureddepositofsuchdepositor.The PDIC,inits
discretion,mayrequireproofofclaimstobefiledbeforepayingtheinsured
deposits,andthatinanycasewherethePDICisnotsatisfiedastothe
viability of a claim for an insured deposit, it may require final
determination of a court of competent jurisdiction before paying such
claim.Failuretosettletheclaim,withinsix(6)monthsfromthedateof
filingofclaimforinsureddeposit,wheresuchfailurewasduetograve
abuse of discretion, gross negligence, bad faith, or malice, shall, upon
conviction, subject the directors, officers or employees of the PDIC
responsibleforthedelay,toimprisonmentfromsix(6)monthstoone(1)
year.Theperiodshallnotapplyifthevalidityoftheclaimrequiresthe
resolutionofissuesoffactsandorlawbyanotheroffice,bodyoragency
includingthecasementionedinthefirstprovisoorbythePDICtogether

withsuchotheroffice,bodyoragency.
3. DepositAccountsNotEntitledtoPayment(Sec.4(f))

Anyobligationofabank,whichis,payableattheofficeofthebank
locatedoutsideofthePhilippinesshallnotbeadepositorincludedaspart
ofthetotaldepositsorofinsureddeposit.Subjecttotheapprovalofthe
BoardofDirectors,anyinsuredbankwhichisincorporatedunderthelaws
ofthePhilippineswhichmaintainsabranchoutsidethePhilippinesmay
electtoincludeforinsuranceitsdepositobligationspayableonlyatsuch
branch.
4. LiabilityforContentsofSafetyBoxNotliabletheBankhasnowayof

knowingwhatadepositorplacesinhissecuritydepositbox.
5. DeterminationofInsuredDeposits(Sec.16)

ThePDICshallcommencethedeterminationofinsureddepositsduethe
depositorsofaclosedbankuponitsactualtakeoveroftheclosedbank.
6. CalculationofLiability(Sec.4(g))

PerDepositor,PerCapacity
In determining such amount due to any depositor, there shall be
addedtogetheralldepositsinthebankmaintainedinthesamerightand
capacityforhisbenefiteitherinhisownnameorinthenameofothers.
JointAccountsAjointaccountregardlessofwhethertheconjunction
"and," "or," "and/or" is used, shall be insured separately from any
individuallyowneddepositaccount.Iftheaccountisheldjointlybytwoor
morenaturalpersons,orbytwoormorejuridicalpersonsorentities,the
maximuminsureddepositshallbedividedintoasmanyequalsharesas
thereareindividuals,juridicalpersonsorentities,unlessadifferentsharing
isstipulatedinthedocumentofdeposit.AjuridicalpersonorentityholdsIf
theaccountjointlywithoneormorenaturalpersons,themaximuminsured
depositshallbepresumedtobelongentirelytosuchjuridicalpersonor
entity.Theaggregateoftheinterestsofeachcoowneroverseveraljoint
accounts, whether owned by the same or different combinations of
individuals,juridicalpersonsorentities,shalllikewisebesubjecttothe
maximum insured deposit of P250,000.00. Mode of Payments (Sec.14)
Paymentshallbemadebycashortransferreddeposit.TransferredDeposit.
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Depositinanotherinsuredbankinanamountequaltoinsureddepositof
suchdepositor.
E. FailuretoSettleClaimofanInsuredDepositor

(Sec.14)ThePDIC,initsdiscretion,mayrequireproofofclaimsto
befiledbeforepayingtheinsureddeposits,andthatinanycasewherethe
PDICisnotsatisfiedastotheviabilityofaclaimforaninsureddeposit,it
mayrequirefinaldeterminationofacourtofcompetentjurisdictionbefore
payingsuchclaim.
Failuretosettletheclaim,withinsix(6)monthsfromthedateof
filingofclaimforinsureddeposit,wheresuchfailurewasduetograve
abuse of discretion, gross negligence, bad faith, or malice, shall, upon
conviction, subject the directors, officers or employees of the PDIC
responsibleforthedelay,toimprisonmentfromsix(6)monthstoone(1)
year.
F. Failure of Depositor to Claim Insured Deposit

(Sec.16(e))Ifthedepositorintheclosedbankshallfailtoclaimhis
insured deposits with the Corporation within two (2) years from actual
takeoveroftheclosedbankbythereceiver,ordoesnotenforcehisclaim
filedwiththecorporationwithintwo(2)yearsafterthetwoyearperiodto
fileaclaimasmentionedhereinabove,allrightsofthedepositoragainstthe
Corporationwithrespecttotheinsureddepositshallbebarred;however,all
rightsofthedepositoragainsttheclosedbankanditsshareholdersorthe
receivershipestatetowhichtheCorporationmayhavebecomesubrogated,
shallthereuponreverttothedepositor.Thereafter,theCorporationshallbe
dischargedfromanyliabilityontheinsureddeposit.
G. Prohibitions
1.

ProhibitionagainsttheSplittingofDeposits(Sec.21(f)(5))
Splitting of deposits occurs whenever a deposit account with an
outstandingbalanceofmorethanthestatutorymaximumamountof
insureddepositmaintainedunderthenameofnaturalorjuridical
personsisbrokendownandtransferredintotwoormoreaccountsin
thename/sofnaturalorjuridicalpersonsorentitieswhohaveno
beneficialownershipontransferreddepositsintheirnameswithin

thirty(30)daysimmediatelyprecedingorduringabankdeclared
bankholiday,orimmediatelyprecedingaclosureorderissuedbythe
MonetaryBoardoftheBangkoSentralngPilipinasforthepurpose
ofavailingofthemaximumdepositinsurancecoverage.
2. ProhibitionagainstIssuanceofTROs(Sec.22)Nocourt,exceptthe
Court of Appeals, shall issue any temporary restraining order,
preliminaryinjunctionorpreliminarymandatoryinjunctionagainst
thePDICforanyactionunderthePDICAct.Thisprohibitionshall
applyinallcases;disputesorcontroversiesinstitutedbyaprivate
party,theinsuredbank,oranyshareholderoftheinsuredbank.The
SupremeCourtmayissuearestrainingorderorinjunctionwhenthe
matterisofextremeurgencyinvolvingaconstitutionalissue,such
thatunlessatemporaryrestrainingorderisissued,graveinjustice
andirreparableinjurywillarise.Thepartyapplyingfortheissuance
ofarestrainingorderorinjunctionshallfileabondinanamountto
befixedbytheSupremeCourt,whichbondshallaccrueinfavorof
theCorporationifthecourtshouldfinallydecidethattheapplicant
was not entitled to the relief sought. Any restraining order or
injunctionissuedinviolationofthisisvoidandofnoforceand
effectandanyjudgewhohasissuedthesameshallsufferthepenalty
ofsuspensionofatleastsixty(60)dayswithoutpay.

SPECIAL COMMERCIAL LAWS

Saturdays 2:00pm-4:00pm
Submitted to: Atty. Rosalie DC Cada
Submitted on: October
2,
2015
(softcopy)
October
3,
2015