PHILIPPINE DEPOSIT INSURANCE CORPORATION (PDIC) LAW

(RA 3591 as amended by Ra 10846)

A. Description of PDIC
PDIC is a government instrumentality created in 1963 by virtue of R.A. 3591 to insure the deposits of all banks
which are entitled to the benefits of insurance. PDIC is an attached agency of Department of Finance.
Latest amendments to R.A. 3591 are contained in R.A. 10346 signed into law on May 23, 2016. R.A. 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.
The PDIC now has the authority:
 to help depositors have quicker access to their insured deposits should their bank close;
 resolve problem banks while still open;
 hasten the liquidation process for closed banks;
 and mete out stiffer sanctions and penalties against those who engage in unsafe and unsound banking
practices.
Under amendment, depositors would have quicker access to their insured deposits in the event of bank closure
since PDIC now has the authority to pay insured deposits without netting out depositors’ loan obligations with
the closed bank and based on evidence of deposits and not on the closed bank’s records alone.
 With its enhanced resolution authorities, PDIC would also be able to more effectively promote financial
inclusion
HOW? -through early intervention in problem banks or open bank resolution.
 In cases where bank closure becomes inevitable, the new law enhanced the chances of recovery by
creditors of their claims against the assets of the closed bank
HOW? -by preventing the further dissipation of these assets through seamless transition from bank closure to
liquidation
 The new law does away with the 90-day receivership period and allows PDIC to proceed directly to
liquidation.
 The ff. which are under the new law would help enhance recovery rate for creditors of closed bank:
-immediate assignment of encumbered assets to closed bank creditors
-adoption of purchase of assets
-assumption of liabilities as a mode of liquidation,
-and express prohibition on reopening of banks ordered closed by the Monetary Board of the BSP

B. Insurable Deposits under PDIC Law (Covered by PDIC Insurance)

1. By Deposit Type:
a. Savings Deposit
b. Special Savings
c. Demand/Checking Account
d. Negotiable Order of Withdrawal (NOW)
e. Certificate of Time Deposits

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 2. By Deposit Account:
a. Single Accounts – are individually-owned accounts or accounts held under one name, either as
natural person (single proprietorship or individual) or juridical entity (corporation, partnership or
cooperative).
b. Joint Accounts – are accounts held under one more than one name
i. A joint account regardless of whether the conjunction “and”, “or” or “and/or” is used shall
be insured separately from single accounts.
ii. Unless a different sharing is stipulated in the deposit documents, the insured amount up to
the Maximum Deposit Insurance Coverage of Php 500,000 shall be divided equally between
or among co-owners of a joint account.
iii. The total shares of a co-owner in several joint accounts may exceed Php 500,000 but will
only be insured up to the Maximum Deposit Insurance Coverage of Php 500,000.
iv. Joint accounts held in the names of a juridical entity and a natural person shall be
presumed to belong solely to the juridical entity.
c. Account “By”, “In Trust For” (ITF) or “For the Account of” (FAO) another person
i. In a “By” account, Ana by Ben, Ana is the depositor.
ii. In an “In Trust For” (ITF) account, Ana In Trust For Ben, Ben is the depositor.
iii. In a “For the Account of” (FAO) account, Ana For the Account of Ben, Ben is the
depositor.
d. Explanatory Notes
i. 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 Php 500,000.
ii. The depositor’s total shares in his/her joint accounts shall be separately insured up to Php
500,000.
iii. A depositor with single accounts and joint accounts may have insured deposits of up to
Php 1,000,000.

C. Items that are not covered by PDIC Deposit Insurance

The following, whether denominated, documented, recorded or booked as deposit by the bank, are excluded
from PDIC deposit insurance (Section 4 (f) of the PDIC Charter):
a. Investment products such as bonds and securities, trust accounts and other similar instruments
b. Deposit accounts or transactions that:
i. Are unfunded, fictitious or fraudulent
ii. Constitute and/or emanate from unsafe and unsound banking practices as determined by the
PDIC, in consultation with the BSP, after due notice and hearing and publication of PDIC’s
cease and desist order against such deposit accounts/transactions
iii. Are determined to be proceeds of an unlawful activity as defined in the AntiMoney Laundering
Act (Republic Act 9160, as amended)
Note: Unsafe and unsound deposit-related activities include, among others: (PDIC Regulatory Issuance No.
2011-01)

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  Deposit-related practice/activity/transaction without the approval or adequate controls required under
existing laws, rules and regulations
 Failure to keep bank records within bank premises
 Granting high interest rates, when bank has:
(i) Negative unimpaired capital, or
(ii) Liquid assets to deposit ratio less than 10%
 Non-compliance with PDIC regulations
B. Maximum Liability (Maximum Deposit Insurance Coverage)
PCMO shall pay deposit insurance on all valid deposit up to the Maximum Deposit Insurance Coverage of
500,000 per deposit of a closed bank. Account maintained in the same right and capacity for a depositor’s
benefit; whether in his own name or in the name of the others, are covered by deposit insurance. However a
depositor with single account and ------ accounts may have ----- deposits of up to Php 1,000,000.
Deposit are considered valid upon the determination of the PDIC, based on bank records, that the deposits were.
Illustrative examples:
1. How much is Fe Santos ensured deposit if she has the following four deposit account in the same bank?
Account Name Deposits(PHP) Insured Deposit of Fe Santos
Fe Santos 100,000 100,000
Ben Santos for the account of 100,000 100,000
Ben Santos
Charlie Santos in Trust for Fe 100,000 100,000
Santos
Fe Santos Store (Sole 700,000 200,000
Proprietorship)
Total 1,000,000 500,000

2. How much is Fe Santos ensured deposit if she has the following three joint accounts in the same bank?
Account Name Diposits(PHP) Insured Deposit of Fe Santos
Fe Santos or Ben Santos 500,000 250,000
Fe Santos and Charlie Santos 1,000,000 250,000
Fe Santos and/or Divina 1,000,000 0*
Santos
Total 2500,000 500,000
*Note: Mrs. Fe Santos should not have any insured deposit share since she already has 500,000 shares in
the two joint accounts she has with Ban and Charlie Santos.

3. How much is Fe Santos ensured deposit for all her single and joint in the same bank?
Account Name Deposits(PHP) Insured Deposit of Fe
Santos
All single accounts of Fe 1,000,000 500,000
Santos in BDO branch 1
All joint accounts of Fe 2,500,000 500,000
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 Santos in BDO branch 2
Total 3,500,000 1,000,000
*Note: for the purposes of computing the insured deposits, all the obligations or loans of the depositor
with the closed bank, as of bank closure, shall be deducted from the depositor’s total deposit with the
said bank. (PDIC Regulatory Issuance No. 2011-04)
E. Requirement for Claims of Insured Deposits

1. When are claims filed?

Claims are filed during the claims settlement operations period, as announced in the Notice to
Depositors Published in National or local newspapers, or posted in the bank premises and conspicuous
places within the locality, and in the PDIC website.
Depositors have 2 years from PDIC takeover of the closed bank to file their deposit insurance claims.
2. Who are required to file deposit insurance claims?
a. Depositors with valid deposit accounts with balances of more than Php100,000.
b. Depositors who have outstanding obligations with the closed bank regardless of the amount of
deposits.
c. Depositors with account balances of less than Php100,000 who have no updated addresses with
the bank records or who have not updated their addresses through the Mailing Address Update
Form(MUAF) issued by PDIC.
d. Depositors who have maintained their account under the name of business entities, regardless of
type of account or account balance.
e. Depositors with accounts not eligible for early payment, regardless of type of account or account
balance per advice of PDIC.

3. Who are depositors not required to file deposit insurance claims?

Depositors with valid deposit accounts with balances of Php 100,000 and below are not required to claims
provided they have no obligations with the closed bank and have complete and updated addresses in bank
records or have updated these through the Mailing Address Update Form (MAUF) issued by the PDIC.
Depositors with deposit balances of Php100,000 and below may update their addresses using the MAUF and
submit to PDIC representatives stationed at the closed bank premises before the start of the onsite claims
settlement operations.
These depositors are entitled to immediate / early payment of deposit insurance claim as part of PDIC’s
initiative to provide convenience to small depositors. Payments to these depositors are sent as postal money
orders to depositors’ mailing addresses.
4. Steps in filing deposit insurance claims

a. Prepare the following documents:

i. Original evidence of deposits such as savings passbook, certificate of time deposit, bank
statement, unused checks, and ATM card.
ii. Original copy of ONE (1) VALID PHOTO-BEARING IDENTIFICATION
DOCUMENTS (ID) with clear signature of depositor/claimant such as Driver’s License, SSS/GSIS ID,

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Senior Citizen’s ID, Passport, PRC ID , OWWA/OFW ID, Seaman’s ID, Alien Certification of Registration ID,
Voter’s ID, IBP. Please ensure that the ID number is clear and legible.
iii. If the depositor is below 18 years old, a photocopy of his/her certificate from the
Philippine Statistics Authority (PSA) or duly certified copy from the local civil registrar and valid IDs of
the parent.
iv. Original copy of a notarized Special Power of Attorney (SPA) for claimants who are not
the signatories in the bank records. In the case of minor depositor, the SPA must be executed by the
parent.

b. Submit to:
i. If filing personally:
- the PDIC representatives at the premises of the closed bank during Claims
Settlement Operations (CSO) or to the PDIC Public Assistance Center at the 3rd
Floor, SSS Bldg., 6782 Ayala Avenue corner V.A. Rufino Street, Makati City after
the onsite CSO.
ii. If filing through mail:
- Send the accomplished and notarized Claim Form and requirements to the
Claims Processing Department of PDIC 4/F SSS Building , 6782 Ayala Avenue
corner V.A. Rufino Street, 1226 Makati City
5. Who should sign the deposit insurance claim form?
a. Depositor of the account- for depositors 18 years old and above.
b. Parent- if the depositor is below 18 years old
c. Agent- in the case of “By” accounts
d. Trustee- in the case of “ In Trust For (ITF)” accounts
e. Each Depositor- in the case of joint accounts such as “Or”, “And/Or” or
“And” accounts
6. Procedures for claiming Insurance Proceeds
a. Period for Payment
i. Whenever an insured bank is closed by Monetary Board
ii. Payment shall be made by PDIC as soon as possible
b. Mode of Payment
i. By cash
ii. By making available to each depositor a transferred deposit in another insured bank
in an amount equal to insured deposit of such depositor
c. Requirement before payment
i. PDIC may require proof of claims before paying the insured deposit
ii. If PDIC is not satisfied as to the validity of a claim for an insured deposit, it may
require final determination of a court of competent jurisdiction before paying such
claim.
d. Period for payment
i. It must be made within 6 months from the date of filing otherwise the officers of PDIC will be

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 liable for failure to pay if due to grave abuse of discretion, gross negligence, bad faith or
malice.
e. Rights of PDIC upon payment of insured deposits
i. PDIC shall be subrogated to all rights of depositor against the closed bank to the extent of
such payment.

BANK SECRECY LAW

AN ACT PROHIBITING DISCLOSURE OF OR INQUIRY INTO DEPOSITS WITH ANY BANKING
INSTITUTION
(REPUBLIC ACT NO. 1405) Absolute Confidentiality of Bank Deposits and Investments in Government
Bonds

All deposits of whatever nature in banks or banking institutions in the Philippines and investments in
government bonds are absolutely confidential in nature.(Sec. 2, Rep. Act No. 1405)

(i) Deposits refer to money or funds placed with a bank that can be withdrawn on the depositor’s order or
demand, such as deposit accounts in the form of savings, current and time deposits.
Deposits are characterized as being in the nature of a simple loan. The placing of deposits in a bank creates a
creditor-debtor relationship between the depositor and the bank. As such, the bank, being the debtor, has the
obligation to pay a certain sum of money to the depositor, being the creditor.

(ii) Investments in Government Bonds refer to investments in bonds issued by the Government of the
Philippines, its political subdivisions and its instrumentalities. Government bonds are debt securities which are
unconditional obligations of the State, and backed by its full taxing power. Government bonds include treasury
bills, treasury notes, retail treasury bonds, dollar linked peso notes, and other risk-free bonds.

Prohibition against unauthorized disclosure under other laws:

The General Banking Law prohibits bank directors, officers, employees or agents from disclosing to any
unauthorized person, without order of a competent court, any information relative to funds or properties
belonging to private individuals, corporations, or any other entity in the custody of the bank. (Sec. 55[b], Rep.
Act No. 8791) The Thrift Banks Act and the Rural Banks Act likewise prohibit any bank officer, employee
or agent from disclosing any information on such funds or properties. (Sec. 21[a][2], Rep. Act No. 7906 & Sec.
26[a][2], Rep. Act No. 7353)

Prohibited Acts and Persons Liable

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The following are liable under this law:
(i) Any person or government official who, or any government bureau or office that, examines,
inquires or looks into a bank deposit or government bond investment in any of the instances not
allowed in Section 2;
(ii) Any official or employee of a banking institution who makes a disclosure concerning bank
deposits to another in any instance not allowed by law (Sec. 3, Rep. Act No. 1405); and
(iii) (iii) Any person who commits a violation of any of the provisions of the law (Sec. 5, Rep. Act No.
1405).

Any bank official, director, employee or agent who discloses information relative to funds or properties in the
custody of the bank may also be held liable under the applicable provisions of the General Banking Law, Thrift
Banks Act and Rural Banks Act.

Instances when Confidentiality of Bank Deposits is Not Absolute

Bank deposits and investments in government bonds may be examined, inquired or looked into under limited
exceptions in Republic Act No. 1405 and in other laws.

(i) Exceptions under the Law on Secrecy of Bank Deposits Section 2 of Republic Act No. 1405 provides that
bank deposits and government bond investments may be examined, inquired and looked into in the following
instances:
(a) Upon written permission or consent in writing by the depositor.
(b) In cases of impeachment of the President, Vice President, members of the Supreme Court, members
of the Constitutional Commission
(c) Upon order of a competent court in cases of bribery or dereliction of duty of public officials.
(d) In cases where the money deposited or invested is the subject matter of the litigation. The
money deposited should be the very thing in dispute. (Mellon Bank, N.A.v. Magsino, 190 S.C.R.A. 633
[1990])

(ii) Exceptions under Other Laws

(a) The Ombudsman has the power to issue subpoena and subpoena duces tecum, take testimony in
any investigation or inquiry, as well as examine and access bank accounts and records. The power
of the Ombudsman to subpoena deposit information of a government official may be exercised when the
following conditions concur:
(1) there must be a case pending before a court of competent jurisdiction;
(2) the account must be clearly identified;
(3) the inspection must be limited to thensubject matter of the pending case; and
(4) the bank personnel and the account holder must be notified to be present during the
inspection. (Marquez v. Desierto, 359 S.C.R.A. 772 [2001])

(b) Bank deposits of a public official, his spouse and unmarried children may be taken into
consideration in the enforcement of Section 8 of The Anti-Graft and Corrupt Practices Act (Rep.
Act No. 3019).

(c) Directors, officers, stockholders and related interests who contract a loan or any form of
financial accommodation with their bank or related bank are required to execute a written waiver
of secrecy of deposits pursuant to The New Central Bank Act. (Sec. 26, Rep. Act No. 7653)

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 (d) The Commissioner of Internal Revenue is authorized to inquire into bank deposit accounts in
relation to:
(1) an application for compromise of tax liability or a determination of a decedent’s gross
estate under The National Internal Revenue Code (Rep. Act No. 8424, as amended by Rep. Act
No. 10021); and
(2) a request for tax information of specific taxpayers made by a foreign tax authority
pursuant to a tax treaty under The Exchange of Information on Tax Matters Act of 2009 (Rep.
Act No. 8424, as amended by Rep. Act No. 10021).

(e) The Anti-Money Laundering Council may be authorized to examine and inquire into bank deposits
or investments with banks or nonbank financial institutions –
(1) with court order, when there is probable cause that the deposits or investments are related
to an unlawful activity or a money laundering offense (Secs. 3[i] and 4 of Rep. Act No. 9160);
and
(2) without need of court order, when probable cause exists that a particular deposit or
investment with any banking institution is related to certain predicate crimes, such as
kidnapping
for ransom, violation of the Comprehensive Dangerous Drugs Act, hijacking and other violations
under Republic Act No. 623510, destructive arson and murder (Sec. 11 of Republic Act No.
916011).

(f) The Bangko Sentral is authorized to –

(1) inquire into or examine bank deposits or investments in the course of a periodic or special
examination to ensure compliance with The Anti- Money Laundering Law, in accordance
with the rule of examination of the Bangko Sentral (Sec. 11, Rep. Act No. 9160, as amended);
and
(2) conduct annual testing which is limited to the determination of the existence and true
identity of the owners of numbered accounts (Sec. 9, Rep. Act No. 9160, as amended12).

(g) The Philippine Deposit Insurance Commission and the Bangko Sentral may inquire into bank
deposits when there is a finding of unsafe or unsound banking practices. (Sec. 8, Rep. Act No. 3591,
as amended)

(h) The Court of Appeals, designated as a special court, may issue an order authorizing law
enforcement officers to examine and gather information on the deposits, placements, trust accounts,
assets and records in a bank or financial institution in connection with anti-terrorism case. (Rep.Act
No. 937213)
(i) The Commission on Audit is authorized to examine and audit government deposits pertaining to
the revenue and receipts of, and expenditures or uses of funds and properties, owned or held in trust by,
or pertaining to, the Government or any of its subdivisions, agencies or instrumentalities, including
government-owned and controlled corporations with original charters. (See Art. IX-D, 1987 Constitution
and Pres. Dec. No. 1445)

(j) The Presidential Commission on Good Government, in the conduct of its investigations to
recover ill gotten wealth accumulated by former President Ferdinand E. Marcos, his immediate
family, relatives, subordinates and close associates, may issue subpoenas requiring the attendance and
testimony of witnesses and/or the production of books, papers, contracts, records, statement of accounts
and other documents. (Sec. 3 [e], Exec. Order No. 1 [1986])

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 (iv) Jurisprudence Interpreting Exceptions

(a) Plunder is analogous to bribery. The exception in the law that is applicable in bribery also applies to
plunder. The overt or criminal acts as described in Section 1(d) of Republic Act No. 7080 would
make the similarity between plunder and bribery even more pronounced since bribery is essentially
included among these criminal acts. (Ejercito v. Sandiganbayan, 509 S.C.R.A. 190 [2006])
(b) Cases of unexplained wealth are similar to cases of bribery or dereliction of duty and no reason is
seen why these two classes of cases cannot be excepted from the rule making bank deposits
confidential. (Phil. National Bank v. Gancayco, 122 Phil. 503 [1965])

Authorized Disclosures
Disclosures by authorized and responsible bank officials are allowed in the following instances:

(i) reporting of unclaimed balances to the Treasurer of the Philippines (Secs. 1 & 2, Act No. 3936);
(ii) turn-over to the Commissioner of Internal Revenue of the amount in bank accounts as may be
sufficient to satisfy the writ of garnishment issued to collect delinquent taxes (Secs. 205 & 208,
Rep. Act No. 8424); and
(iii) submission of report, and turn-over to, the court officer or executing sheriff of garnished
amounts pursuant to a writ of garnishment in satisfaction of a judgment (Sec. 9[c], Rule 39, Rules
of Court; See China Banking Corporation v. Ortega, 49 SCRA 355 [1973]).
(iv) disclosure by a bank officer or employee upon order of the court in connection with a deposit
in a closed bank that was used in the perpetration of anomalies. (Soriano v. Manuzon, C.A. G.R.-S.P
No. 8763415)

Penalties for Violation of Republic Act No. 1405 will subject the offender, upon conviction, to the following
penalties:
(i) imprisonment of not more than five years;
(ii) fine of not more than P20,000.00; or
(iii) both imprisonment and fine.

FOREIGN CURRENCY DEPOSIT ACT OF THE PHILIPPINES (REPUBLIC ACT NO. 6426)

Absolute Confidentiality of Foreign Currency Deposits

All foreign currency deposits are absolutely confidential and cannot be examined, inquired, or looked into by
any person, government official, bureau or office, whether judicial or administrative or legislative, or any other
private or public entity. Foreign currency deposits are also exempt from attachment, garnishment, or any
other order or process of any court, legislative body, government agency or any administrative body
whatsoever. (Sec. 8, Rep. Act No. 6426)

Foreign currency deposits refer to:

a. funds in foreign currencies
b. which are accepted and held by authorized banks
c. in the regular course of business
d. with the obligation to return an equivalent amount to the owner thereof, with or without interest.

Prohibited Acts and Persons Liable

The following are liable under this law:

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 (i) Any person or government official who, or any government bureau or office that, examines, inquires
or looks into a foreign currency deposit without the written permission of the depositor (Sec. 8,
Rep. Act No. 6426);

(ii) Any official or employee of a banking institution who makes a disclosure concerning foreign
currency deposits to another, in any instance not allowed by law (See Sec. 10, Rep. Act No. 6426);

(iii) Anyone who shall attach, garnish, or subject the foreign currency deposit to any other order or
process of any court, legislative body, government agency or any other administrative body (Sec. 8, Rep.
Act No. 6426); and

(iv) Any person who commits a willful violation of any of the provisions of Republic Act No. 6426
or regulation issued by the Monetary Board pursuant to the said law (Sec. 10, Rep. Act No. 6426).

Instances when Confidentiality of Foreign Currency Deposits is Not Absolute

Foreign currency deposits may be examined, inquired or looked into under the limited exceptions in Republic
Act No. 6426 and in other laws.

(i) Exception under The Foreign Currency Deposit Act

Foreign currency deposits may be examined, inquired or looked into when there is written permission of the
depositor.

(ii) Exceptions under Other Laws

(a) DOSRI who contract a loan or any form of financial accommodation with their bank or related bank
are required to execute a written waiver of secrecy of deposits pursuant to The New Central Bank Act.
(Sec. 26, Rep. Act No. 7653)

(b) The Commissioner of Internal Revenue is authorized to inquire into bank deposit accounts in
relation to (see exception under the Bank Secrecy Law above)

(c) The Anti-Money Laundering Council may be authorized to examine and inquire into bank deposits
or investments with banking or non-bank financial (see exception under the Bank Secrecy Law above)

(d) The Bangko Sentral (see exception under the Bank Secrecy Law above)

(e) The Philippine Deposit Insurance Commission and the Bangko Sentral may inquire into bank
deposits when there is a finding of unsafe or unsound banking practices.

(f) The Commission on Audit (see exception under the Bank Secrecy Law above)

(g) The Presidential Commission on Good Government (see exception under the Bank Secrecy Law
above)

(iii) Exceptions under Jurisprudence on Grounds of Equity

(a) Account of a Non-resident Alien
The garnishment of a foreign currency deposit account of a non-resident alien found guilty of raping a minor
was allowed on the basis of equity. (Salvacion v. Central Bank of the Philippines, 278 S.C.R.A. 27 [1997])
(b) Account of a Co-payee of a Check

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A co-payee of a check who filed a suit for recovery of sum of money was considered, in a pro hac vice ruling by
the Supreme Court, as a depositor in view of the distinctive circumstances of the case. (China
Banking Corporation v. Court of Appeals, 511 S.C.R.A. 110 [2006])

Penalties
Violation of Republic Act No. 6426 shall subject the offender, upon conviction, to the following penalties:
(i) imprisonment of not less than one (1) year but not more than five (5) years; or
(ii) fine of not less than Five Thousand Pesos (P5,000.00) but not more than Twenty Five Thousand Pesos
(P25,000.00); or
(iii) both imprisonment and fine.

The following sanctions may also be imposed against a bank or any bank director and officer for violation
of the provisions of Republic Act No. 6426 and Bangko Sentral regulation issued pursuant to said law:
(i) revocation of the authority of the bank to accept new foreign currency deposits; and
(ii) administrative sanctions provided under Section 37 of the New Central Bank Act (Rep. Act No.
7653), as may be applicable.

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