More on insured deposit aside from payment: ON INSURED DEPOSITS
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A bank may be ordered closed by the Bangko Sentral ng Pilipinas
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Upon closure or expiration or revocation of a bank’s corporate term, payment of insured deposits shall be made as soon as possible by the Philippine Deposit Insurance Corporation (PDIC)
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PDIC may require proof of claims to be filed before paying the insured deposits
Many folks think that they aren’t good at earning money, when what they don’t know is how to use it. – Frank A. Clark
In a previous article, it was discussed that the term ”deposit” refers to the unpaid balance of money or its equivalent received by a bank in the usual course of its business. When a bank has been ordered closed, all deposits are insured to a maximum of Five Hundred Thousand Pesos (P500,000.00). This means that a depositor may be paid by the PDIC a maximum of P500,000.00, nothing more. However, it could be less depending on the amount of the corresponding deposit.
In what instance should PDIC pay a claim?
The law says:
PDIC’s liability is dependent on the existence of deposit.
For a better understanding, let us take the case of Philippine Deposit Insurance Corporation vs. Court of Appeals et.al., G.R. No. 118917, December 22, 1997.
In this case, several individuals invested in money market placements with Premiere Financing Corporation (PFC) in the sum of P10,000.00 each for which they were issued by the PFC corresponding promissory notes and checks. John Francis Cotaoco (Cotaoco), for and in behalf of the said individuals, went to PFC to encash the promissory notes and checks, but the PFC referred him to the Regent Savings Bank (RSB). Instead of paying the promissory notes and checks, the RSB, upon agreement of Cotaoco, issued 13 Certificates of Time Deposit (CTD) that the same certifies that the bearer of the corresponding CTD has deposited with the RSB the sum of P10,000. Also, it states that the CTD is insured up to P15,000.00 with the PDIC.
When presented for encashment, RSB failed to pay the value of the CTDs. Instead, RSB advised Cotaoco to file a claim with the PDIC. PDIC refused to pay the claims on the ground that the Traders Royal Bank Check issued by the PFC for the CTDs was returned by the drawee bank for having been drawn against insufficient funds; and said check was not replaced, resulting in the cancellation of the CTDs as indebtedness or liabilities of RSB.
However, PDIC was ordered by the lower court to pay the individuals the amount corresponding to their CTDs.
Is PDIC liable to pay the amount of the subject CTDs?
The Supreme Court says:
No.
The deposit liability of PDIC is determined by law. The mere fact that a CTD recites on its face that a certain sum has been deposited, or that officers of the bank may have stated that the deposit is protected by the guaranty law does not make the guaranty fund liable for payment, if in fact a deposit has not been made. In order that a claim for deposit insurance with the PDIC may prosper, the law requires that a corresponding deposit be placed in an insured bank.
In this case, there is no deposit to speak of. RSB did not receive money or its equivalent when it issued the CTDs. Evidence convincingly show that the subject CTDs were indeed issued without RSB receiving any money. No deposit as defined under the law came into existence. Accordingly, PDIC cannot be held liable for the value of subject CTDs.
In payment of the insured deposits, may the PDIC require proof of claims before payment of the insured deposits?
The law says:
Yes.
The PDIC, in its discretion, may require proof of claims to be filed before paying the insured deposits. If the PDIC is not satisfied as to the validity of a claim for an insured claim, it may require the final determination of a court before paying such claim. Generally, the claim should be settled within six (6) months from the date of its filing. Otherwise, those who are responsible for the delay may be sanctioned for an imprisonment.
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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