Law Summary
Definition and Scope of Deposits
- "Deposit" includes unpaid balances credited to various bank accounts (commercial, checking, savings, time, thrift).
- Other bank obligations may be classified as deposits by PDIC regulations.
- Deposits payable outside the Philippines generally excluded unless elected for insurance.
- Deposit insurance excludes:
- Investment products like bonds, securities, trust accounts.
- Unfunded, fictitious, or fraudulent accounts.
- Accounts resulting from unsafe or unsound banking practices after notice and hearing.
- Proceeds of unlawful activities under anti-money laundering laws.
- PDIC decisions under this section are final and may only be challenged by certiorari within 30 days.
Definition and Limits of Insured Deposits
- Insured deposit is net amount due to depositor, capped at PHP 500,000.
- Deposits aggregated for same depositor in same rights and capacities.
- Joint accounts insured separately, with maximum insurance divided equally among co-owners or presumed fully to juridical person if joint with natural persons.
- Aggregate interest across several joint accounts subject to maximum coverage.
- Only registered holders of negotiable certificates of deposit qualify for insurance.
- Coverage limit adjustable in systemic financial threat scenarios by unanimous PDIC Board, with Finance Secretary chair and Presidential approval.
Payment and Funding of Deposit Insurance
- PDIC to pay up to PHP 500,000 coverage with differentiation for first 3 years:
- PHP 250,000 borne by PDIC.
- Excess up to PHP 500,000 borne by National Government.
- Congress to appropriate funds to reimburse PDIC for excess payments.
Examination Authority of PDIC
- PDIC can conduct bank examinations with Monetary Board approval, not within 12 months of last exam.
- Special examinations allowed if bank closure is threatened.
- PDIC and Bangko Sentral may investigate deposit accounts in unsafe or unsound banking practices.
- Examinations must maximize use of existing Bangko Sentral findings to avoid duplication.
Liability and Indemnification of PDIC Personnel
- PDIC directors, officers, employees, agents indemnified and held free from liability unless actions are willfully violating law, in bad faith, malicious, or grossly negligent.
- Indemnification covers all liabilities, claims, damages, costs related to official functions, without prejudice to criminal liabilities.
Tax Exemption and Financial Preservation
- Deposit Insurance Fund preservation is State policy.
- PDIC exempt from tax obligations for 5 years; tax charged to Tax Expenditure Fund.
- Starting 6th year, PDIC exempt from income tax, withholding tax, VAT on assessments, and local taxes.
Issuance of Bonds and Financial Obligations
- PDIC authorized to issue bonds, debentures to provide liquidity and financial assistance with Presidential approval.
- Board determines terms and sets aside reserves for redemption.
- Obligations exempt from taxation and guaranteed by Government, guarantee limited to twice the Deposit Insurance Fund.
- Board empowered to regulate issuance and registration.
Prohibited Acts: Splitting Deposits
- Specifically prohibits splitting or creation of fictitious deposit accounts to evade maximum deposit insurance within 120 days before or during bank insolvency or closure.
Organizational Authority
- PDIC Board empowered to review and revise organizational structure to fulfill mandate.
Joint Congressional Oversight
- Creation of a joint congressional committee to oversee Act implementation.
- Committee composed of key Senate and House committee chairs plus appointed members.
Separability Clause
- Invalidity of any provision does not affect other provisions or applications.
Repealing Clause
- Repeals inconsistent laws, orders, and parts thereof.
Effectivity
- Act takes effect 15 days after publication in Official Gazette or two newspapers of general circulation.