Philippine Deposit Insurance Corporation

What is the Philippine Deposit Insurance Corporation (PDIC)?

The Philippine Deposit Insurance Corporation (PDIC) was established on June 22, 1963 by
Republic Act 3591. Under its Charter, the corporation is mandated to give bank depositors
protection and financial stability by providing permanent and continuing deposit insurance.

What does the PDIC do?

The Philippine Deposit Insurance Corporation has three basic functions. First, they are the
deposit insurer. Second, they act as co-regulator of banks. And third, they are the receiver
and liquidator of closed banks.

What is maximum deposit insurance coverage of PDIC?

Since June 2009, the Maximum Deposit Insurance Coverage or MDIC is P500,000 per
depositor per bank. Simply, this means if a bank closes, then you can get up to P500,000 back
from the PDIC.

If you had P100,000 in a savings account upon the time the bank closed, then you’ll get all of the
P100,000 back from the PDIC. However, if you had P700,000 in the account, then you’ll only
get the MDIC or P500,000 back.

What are covered by the PDIC Deposit Insurance?

PDIC insures valid deposits in domestic offices of its member-banks. Deposits are considered
valid if, upon determination by PDIC, are recorded in the bank’s records, and are evidenced by
inflow of cash.

By Deposit Types:

 Savings
 Special Savings
 Demand / Checking
 Negotiable Order of Withdrawal (NOW)
 Time Deposits

By Deposit Account:

 Single Account
 Joint Account
  Account “By”, “In Trust For” (ITF), and “For the Account of” (FAO)

By Currency:

 Philippine Peso
 Foreign currencies considered as part of BSP’s international reserves

Which banks are members of the PDIC?

All operating banks are members of the PDIC. It is mandatory. So, this includes commercial
banks, savings banks, mortgage banks, development banks, rural banks, and cooperative banks.
In addition, stock savings and loan associations are also included; as well as domestic branches
of foreign banks.

What specific risks to a bank does PDIC cover?

The Philippine Deposit Insurance Corporation covers only the risk of a bank closure ordered by
the Monetary Board. Thus, bank losses due to theft, fire, closure by reason of strike or existence
of public disorder, revolution or civil war, are not covered by PDIC.

Do you need to any insurance premium to the PDIC to be covered?

No. The insurance premium is paid by the banks, not by the depositors.

What is NOT covered by the PDIC Deposit Insurance?

Republic Act No. 9576 stipulates that PDIC will not pay deposit insurance for the following
accounts or transactions:

 Investment products such as bonds, securities and trust accounts.

 Deposit accounts which are unfunded, fictitious or fraudulent.
 Deposit products constituting or emanating from unsafe and unsound banking practices.
 Deposits that are determined to be proceeds of an unlawful activity as defined under the
Anti-Money Laundering Law.

What is my PDIC deposit insurance coverage if I have several types of accounts in a bank?

Your PDIC insurance coverage will not increase and will be up to P500,000 in total. The deposit
insurance coverage is not determined on a per-account basis. The type of account (whether
checking, savings, time or other form of deposit) has no bearing on the amount of insurance
coverage.
Let’s say that you have P1M in a savings account in Bank Alpha, and another P1M in a checking
account also in Bank Alpha. If Bank Alpha closes, you’ll only get a total of P500,000 from
PDIC.

If I have deposits in different banks, what is my PDIC deposit insurance coverage?

It will be up to P500,000 per bank. Deposits in different banking institutions are insured
separately. 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 main office and at one or more branch offices of the same bank,
the deposits are added together when determining deposit insurance coverage, the total of which
shall not exceed P500,000.

How can I claim PDIC deposit insurance if my bank closes?

Depositors will be advised through media and posters at the premises of the closed bank on the
schedule of distribution of claim forms by PDIC, receiving of claim forms by PDIC, and the
prescriptive date of filing claims by the depositors.

The depositor must then file his deposit insurance claim within 24 months from date of bank
takeover. Failing to do so will forfeit their right to get the insured amount from the PDIC.
However, they may still make a claim against the assets of the closed bank.

So, if I have more than P500,000 in a deposit account, the excess is lost if the bank closes?

Not necessarily. The uninsured portion of the deposit can be claimed against the assets of the
closed bank.

The claim may be filed with the Liquidator of the closed bank within sixty (60) days from
publication of notice of closure. However, payment of said claim will depend on the bank’s
available assets and approval of the Liquidation Court.

The schedule of payment beyond the P500,000.00 maximum insurance shall be based on
priorities set by law.

How long does it take PDIC to settle a claim for insured deposit?

The PDIC aims to pay valid claims as soon as possible. Prior to payout, claims are examined
thoroughly. This is to protect the Deposit Insurance Fund (DIF) which is the source of insurance
payments.

Sometimes, depositors mistakenly assume that the payouts are sourced from their deposits. This
is not the case. The payouts are from PDIC’s own funds.
The claim for insured deposit should be settled within six (6) months from the date of filing
provided all requirements are met but the claim must be filed within twenty-four (24) months
after bank takeover.

The six-month period shall not apply if the documents of the claimant are incomplete or if the
validity of the claim requires the resolution of issues of facts and law by another office, body or
agency, independently or in coordination with PDIC.

FINANCIAL REHABILITATION AND INSOLVENCY ACT OF 2010

Nature of Proceedings – Sec. 3:

1. In Rem: The proceedings under this Act shall be in rem. Jurisdiction
over all persons affected by the proceedings shall be considered as
acquired upon publication of the notice of the commencement of the
proceedings in any newspaper of general circulation in the Philippines
in the manner prescribed by the rules of procedure to be promulgated
by the Supreme Court.
Nature of Proceedings – Sec. 3:
1. In Rem: The proceedings under this Act shall be in rem. Jurisdiction
over all persons affected by the proceedings shall be considered as
acquired upon publication of the notice of the commencement of the
proceedings in any newspaper of general circulation in the Philippines
in the manner prescribed by the rules of procedure to be promulgated
by the Supreme Court.
In Rem: The proceedings under this Act shall be in rem. Jurisdiction
over all persons affected by the proceedings shall be considered as
acquired upon publication of the notice of the commencement of the
proceedings in any newspaper of general circulation in the Philippines
in the manner prescribed by the rules of procedure to be promulgated
by the Supreme Court.
When rehabilitation is not feasible, to facilitate a speedy and orderly
liquidation of these debtor's assets and the settlement of their
obligations.
When rehabilitation is not feasible, to facilitate a speedy and orderly
liquidation of these debtor's assets and the settlement of their
obligations.
Under this law, rehabilitation refers to the restoration of the debtor to a condition of successful
operation and solvency. When rehabilitation is not feasible, it is in the interest of the State to
facilitate a speedy and orderly liquidation of these debtor’s assets and the settlement of their
obligations. 

The definition of a debtor is important to be able to determine if the parties may avail of the
proceedings provided by FRIA. The term debtor covers a sole proprietorship duly registered with
the Department of Trade and Industry (DTI), a partnership duly registered with the Securities
and Exchange Commission (SEC), a corporation duly organized and existing under Philippine
laws, or an individual debtor who has become insolvent.
However, the term debtor does not include banks, insurance companies, pre-need companies,
and national and local government agencies or units.

There are three types of rehabilitation, namely:

1. Court-supervised rehabilitation
2. Pre-negotiated rehabilitation; and
3. Out-of-court/Formal Restructuring

Court-Supervised Rehabilitation

Court-supervised rehabilitation may be initiated through voluntary proceedings or involuntary

proceedings.

A.1.a. Voluntary Proceedings

Voluntary Proceedings may be initiated by an insolvent debtor through filing a petition for
rehabilitation with the court and on the grounds provided under the FRIA.

The filing of the petition for rehabilitation must be approved by the owner in case of a sole
proprietorship, or by a majority of the partners in case of a partnership, or in case of a
corporation, by a majority vote of the board of directors or trustees and authorized by the vote of
the stockholders representing at least two-thirds (2/3) of the outstanding capital stock, or in case
of nonstock corporation, by the vote of at least two-thirds (2/3) of the members, in a
stockholder’s or member’s meeting duly called for the purpose.

A group of debtors may jointly file a petition for rehabilitation when one or more of its members
foresee the impossibility of meeting debts when they respectively fall due, and the financial
distress would likely adversely affect the financial condition and/or operations of the other
members of the group and/or the participation of the other members of the group is essential
under the terms and conditions of the proposed Rehabilitation Plan.

Rehabilitation Plan shall refer to a plan by which the financial well-being and viability of an
insolvent debtor can be restored using various means including, but not limited to, debt
forgiveness, debt rescheduling, reorganization or quasi-reorganization, dacion en pago, debt-
equity conversion and sale of the business (or parts of it) as a going concern, or setting-up of new
business entity, or other similar arrangements as may be approved by the court or creditors.

A.1.b. Involuntary Proceedings

Any creditor or group of creditors with a claim of, or the aggregate of whose claims is, at least
One Million Pesos (Php1,000,000.00) or at least twenty-five percent (25%) of the subscribed
capital stock or partners’ contributions, whichever is higher, may initiate involuntary
proceedings against the debtor by filing a petition for rehabilitation with the court if:
(a) there is no genuine issue of fact on law on the claim/s of the petitioner/s, and that the due and
demandable payments thereon have not been made for at least sixty (60) days or that the debtor
has failed generally to meet its liabilities as they fall due; or

(b) a creditor, other than the petitioner/s, has initiated foreclosure proceedings against the debtor
that will prevent the debtor from paying its debts as they become due or will render it insolvent.

Who is a rehabilitation receiver and what are his or her qualifications?

A rehabilitation receiver shall refer to the person or persons, natural or juridical, appointed as

such by the court and which shall be entrusted with such powers and duties.

The rehabilitation receiver shall have the following minimum qualifications:

 A citizen of the Philippines or a resident of the Philippines in the six (6) months
immediately preceding his nomination;
 Of good moral character and with acknowledged integrity, impartiality and
independence;
 Has the requisite knowledge of insolvency and other relevant commercial laws, rules and
procedures, as well as the relevant training and/or experience that may be necessary to
enable him to properly discharge the duties and obligations of a rehabilitation receiver;
and
 Has no conflict of interest: Provided, That such conflict of interest may be waived,
expressly or impliedly, by a party who may be prejudiced thereby.

Nature of proceedings- in rem.

If the court finds the petition for rehabilitation (see Initiation of Proceedings) to be sufficient in
form and substance, it shall, within 5 working days from the filing of the petition, issue
a Commencement Order. 

The Commencement Order shall include a Stay or Suspension Order which shall:

 (1) suspend all actions or proceedings, in court or otherwise, for the enforcement of
claims against the debtor;

 (2) suspend all actions to enforce any judgment, attachment or other provisional remedies
against the debtor;

 (3) prohibit the debtor from selling, encumbering, transferring or disposing in any manner
any of its properties except in the ordinary course of business; and

 (4) prohibit the debtor from making any payment of its liabilities outstanding as of the
commencement date except as may be provided herein.
EXCEPTIONS TO THE STAY OR SUSPENSION ORDER
The Stay or Suspension Order shall not apply:
A. To cases already pending appeal in the Supreme Court as of commencement date. Any final
and executory judgment arising from such appeal shall be referred to the court for appropriate
action;
B. Subject to the discretion of the court, to cases pending or filed at a specialized court or quasi-
judicial agency which, upon determination by the court, is capable of resolving the claim more
quickly, fairly and efficiently than the court. Any final and executory judgment of such court or
agency shall be referred to the court and shall be treated as a non-disputed claim;
C. To the enforcement of claims against sureties and other persons solidarily liable with
the debtor, and third party or accommodation mortgagors as well as issuers of letters of credit,
unless the property subject of the third party or accommodation mortgage is necessary for the
rehabilitation of the debtor as determined by the court upon recommendation by
the rehabilitation receiver;
D. To any form of action of customers or clients of a securities market participant to recover or
otherwise claim moneys and securities entrusted to the latter in the ordinary course of the latter’s
business as well as any action of such securities market participant or the appropriate regulatory
agency or self-regulatory organization to pay or settle such claims or liabilities;
E. To the actions of a licensed broker or dealer to sell pledged securities of a debtor pursuant to a
securities pledge or margin agreement for the settlement of securities transactions in accordance
with the provisions of the Securities Regulation Code and its implementing rules and regulations;
F. The clearing and settlement of financial transactions through the facilities of a clearing agency
or similar entities duly authorized, registered and/or recognized by the appropriate regulatory
agency like the Bangko Sentral ng Pilipinas (BSP) and the SEC as well as any form of actions of
such agencies or entities to reimburse themselves for any transactions settled for the debtor; and
G. Any criminal action against the individual debtor or owner, partner, director or officer of a
debtor shall not be affected by any proceeding commenced under R.A. 10142.