Policy and governing entitlement principle
- PDIC is tasked with promoting and safeguarding the interests of depositing public by providing permanent and continuing insurance coverage on all insured deposits.
- PDIC is also tasked with helping develop a sound and stable banking system at all times.
- Only legitimate deposits of bona fide depositors are entitled to deposit insurance unless excluded under Section 4(f) of the PDIC Charter and this regulatory issuance.
- PDIC deposit insurance does not apply to categories expressly excluded under Section 3.
Key defined terms and concepts
- Bona Fide Depositor means a natural or juridical person, or entity, who/which is the owner of a deposit, as determined by PDIC under PDIC Regulatory Issuance No. 2009-003 (Determination of Beneficial Ownership of Legitimate Deposits), and whose deposit is recorded in the books of the bank.
- Deposit means the unpaid balance of money or its equivalent received by a bank in the usual course of business, for which the bank has given or is obliged to give credit to a commercial, checking, savings, time or thrift account, or created/issued under Bangko Sentral rules, together with such other bank obligations that the PDIC Board may prescribe as deposit liabilities.
- Deposit excludes deposit obligations payable at the office of the bank located outside of the Philippines; however, an insured bank incorporated under Philippine laws with a branch outside the Philippines may elect to include for insurance deposit obligations payable only at such branch, subject to PDIC Board approval.
- Money includes: (1) coins and currency declared by the Philippine government as acceptable and officially recognized for debts; (2) Philippine notes and coins issued in accordance with R.A. No. 7653; and (3) other currencies authorized for acceptance by banks with foreign currency deposit units.
- Equivalent (of money) includes cleared personal checks, manager’s/cashier’s checks, and money orders.
- Received by a Bank means the inflow/receipt by a bank of money or its equivalent as consideration for a deposit, recorded in the bank’s books.
- Usual Course of Business means solicitation, acceptance, receipt, and/or recording of deposits in accordance with law, including deposit-taking practice rules issued or amended by PDIC, BSP, and/or the Anti-Money Laundering Council (AMLC).
- Directive to Cease and Desist (DCD) means a PDIC directive prohibiting, among others, a bank and/or its directors, officers, employees, or agents from offering, marketing, promoting, or continuing to offer/market/promote deposit products/accounts/transactions that constitute and/or emanate from Unsafe and/or Unsound Banking Practice, while representing to the public that such products/accounts/transactions are insured by PDIC.
- Legitimate Deposit means money or its equivalent received as a deposit in the usual course of business and recorded as such, opened under established BSP and/or PDIC requirements.
- Publication means one-time printing in a newspaper of general circulation.
- Unlawful Activity means any act or omission, or series/combination thereof, involving or directly related to the enumerations under Section 3(i) of Republic Act No. 9160 (Anti-Money Laundering Act of 2001), as amended.
- Unsafe and/or Unsound Banking Practice means: (1) conducting business unsafe/unsound pursuant to PDIC Board Resolution No. 2010-02-003, adopting guidelines/principles in BSP Circular No. 341, series of 2002, as amended by BSP Circular No. 640, series of 2009; or (2) other acts/omissions PDIC Board determines by regulation or resolution.
What deposit insurance excludes
- PDIC does not pay deposit insurance for excluded accounts/transactions regardless of denomination, documentation, recording, or booking as deposits by the bank.
- PDIC excludes investment products, including bonds and securities, trust accounts, and other similar instruments that do not fall under the definition of a Deposit.
- A product is considered investment based on features such as: (1) no debtor-creditor relationship between bank and client; (2) trustee-trustor or agent-principal relationship; (3) principal amount not protected; (4) amount not withdrawable on demand; and/or (5) other analogous features.
- PDIC excludes unfunded or fictitious or fraudulent deposit accounts/transactions.
- A deposit account/transaction is unfunded when no Money or Equivalent is received by the bank for that account/transaction.
- A deposit account/transaction is fictitious when it is simulated/feigned/not a genuine deposit account/transaction, including where money/equivalent is made to appear received by the bank or the named depositor does not appear in the bank’s records.
- A deposit account/transaction is fraudulent whenever the bank and/or depositor knowingly uses means calculated to deceive, including concealment and breach of legal/equitable duty, trust, or confidence, resulting in damage or taking undue and unconscientious advantage (including where the named depositor denies ownership).
- PDIC excludes deposit accounts/transactions constituting and/or emanating from Unsafe and/or Unsound Banking Practice/s as determined by PDIC, in consultation with BSP, after due notice and hearing, with Publication of the DCD under Section 4.
- PDIC excludes deposits determined to be proceeds of an Unlawful Activity under Republic Act No. 9160, as amended, subject to Section 6.
Unsafe/unsound findings and DCD issuance
- PDIC’s determination of unsafe/unsound deposit accounts/transactions and issuance of a DCD follow rules under Section 4.
- A DCD may issue after PDIC determines, in consultation with BSP, that the deposit accounts/transactions constitute and/or emanate from Unsafe and/or Unsound Banking Practice/s.
- A DCD may be issued based on bank examination findings, after giving the bank opportunity to comment under PDIC Regulatory Issuance No. 2009-05 (Rules and Regulations on Examination of Banks).
- A DCD may also be issued based on resolution of a report or complaint under PDIC Regulatory Issuance No. 2005-03, if PDIC determines in consultation with BSP that the deposit product(s) constitute and/or emanate from unsafe/unsound practice(s).
- A DCD enjoins the bank from offering/continuing to offer to the public the subject deposit accounts/transactions (and other substantially similar accounts/transactions) and from representing that such accounts/transactions are insured by PDIC.
- A DCD advises the bank and the public of withdrawal of deposit insurance coverage over the covered deposit account/transaction types effective upon Publication of the DCD, until lifted or dissolved by PDIC.
Reconsideration and DCD effect on coverage
- The bank or a depositor whose deposits are excluded may file a request for reconsideration within ten (10) days from receipt of the PDIC Board resolution.
- The request for reconsideration must be based on newly-discovered evidence that materially affects the questioned resolution.
- The request must be addressed to the PDIC Board of Directors c/o the Office of the Corporate Secretary.
- The request for reconsideration must be verified, accompanied by affidavit/s and other document/s supporting the ground for reconsideration.
- A bank’s reconsideration request must be filed by a person authorized by the bank’s Board of Directors in a resolution specifically for that purpose.
- The PDIC Board resolution becomes final after lapse of the ten (10) day period without a timely reconsideration filing, or if the reconsideration request is filed out of time.
- A DCD is effective upon Publication until dissolved/discharged by PDIC, and remains effective notwithstanding any request for reconsideration.
- PDIC must notify the bank in writing of the PDIC Board resolution and furnish a copy of the DCD.
- The bank must, through its President or Compliance Officer, inform depositors via registered mail that accounts covered by the DCD are excluded from PDIC deposit insurance; failure to comply does not affect the DCD’s effectivity and enforceability.
- The President and members of the bank’s Board of Directors are liable criminally and/or civilly under existing PDIC regulations for failure to inform depositors as required.
- Upon Publication of the DCD, deposit insurance does not cover:
- Deposits/accounts/transactions opened on or after Publication that are substantially similar in characteristics/features/nature to those covered by the DCD, as determined by PDIC; and
- Existing and outstanding deposit accounts/transactions prior to Publication that are covered but were subsequently renewed, rolled over, converted or transformed to the accounts covered by the DCD, or otherwise remain unsafe/unsound in contemplation of the DCD.
Dissolution of DCD and restoration of coverage
- A DCD may be dissolved or lifted upon application by the affected bank.
- PDIC may lift a DCD when the bank:
- Has actually ceased offering the subject deposit accounts/transactions substantially similar to those covered by the DCD to the public and has fully complied with corrective measures prescribed in the DCD, verified by PDIC through a compliance audit; and
- Undertakes to cease further offering to the public the subject accounts/transactions substantially similar to those covered by the DCD.
- Depositors and the public must be informed of the dissolution or lifting through Publication.
- Upon Publication of the dissolution or lifting, deposit insurance coverage for the subject deposit accounts/transactions is restored.
Deposits as unlawful proceeds: deferral and final payment
- Deposit insurance payment is deferred for deposits determined to be proceeds of an Unlawful Activity if the deposit is subject matter of a freeze order, civil forfeiture proceedings, money laundering case, or any other case involving an Unlawful Activity pending before the Department of Justice, Office of the Ombudsman, or the regular court.
- Deposit insurance payments are made only upon a final judgment effectively holding that the deposits do not constitute proceeds of an Unlawful Activity.
- Deposits finally determined by courts to be proceeds of an Unlawful Activity are not paid deposit insurance.
- For this issuance, “proceeds of an unlawful activity” includes deposits whose proceeds are related to an Unlawful Activity under Republic Act No. 9160, as amended.
Assessments on excluded deposits
- Prior to Publication of a DCD, banks continue paying assessments on all covered deposit accounts or transactions.
- Banks must remove from the computation of the assessment base all deposit accounts/transactions excluded from deposit insurance coverage under the DCD upon the DCD’s effectivity.
Remedies, finality, and reconsideration
- If a deposit insurance claim is denied, the depositor may file within sixty (60) days from receipt of the denial a verified request for reconsideration based on newly discovered evidence not submitted to PDIC when the claim was filed.
- The request must be addressed to the Claims Group of the PDIC and must include affidavit/s and other document/s supporting payment.
- PDIC actions under this regulatory issuance are final and executory and may not be restrained or set aside by court.
- Judicial review is limited to appropriate petition for certiorari under Rule 65 of the Rules of Court on the ground that the action was taken in excess of jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction.
- A Rule 65 petition may be filed only within thirty (30) days from notice of denial of a request for reconsideration.
Criminal and administrative penalties
- Any responsible director, officer, employee, or agent of a bank who fails or refuses to comply with, or violates, any provision of this regulatory issuance regarding deposit accounts/transactions excluded from deposit insurance is subject to a penalty of:
- prision mayor; or
- a fine of not less than PHP 50,000 but not more than PHP 2,000,000; or
- both,
- at the discretion of the court, under Section 21(f) of the PDIC Charter.
- PDIC Board of Directors may impose administrative fines against the bank and its responsible directors, officers, employees, or agents under Section 21(g) of the PDIC Charter and its implementing regulatory issuances.
Repeals, separability, and operational effect
- All PDIC rules and/or regulations inconsistent with this issuance are repealed or amended accordingly.
- The issuance contains a separability clause: invalidity of any part does not affect the validity of the whole, except for the portion declared invalid, unenforceable, or unconstitutional.