After reading “What is the Philippine Deposit Insurance Corporation and what are its functions?”, read also “What is the power of the corporation to increase or decrease capital stock or incur, create, increase bonded indebtedness?”
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The Philippine Deposit Insurance Corporation (PDIC) is a government instrumentality created by virtue of Republic Act No. 3591.
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The PDIC aims to protect depositors by providing a deposit insurance coverage for the depositing public and help promote financial stability among depositors.
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The PDIC shall control, manage and administer the affairs of closed banks.
- The PDIC is the statutory receiver and liquidator of closed banks.
The Philippine Deposit Insurance Corporation (PDIC) is a government instrumentality created by virtue of Republic Act No. 3591, or the Act Establishing the Philippine Deposit Insurance Corporation, Defining its Powers and Duties and for Other Purposes. The law seeks to insure the deposits of all banks. The PDIC aims to protect depositors by providing a deposit insurance coverage for the depositing public and help promote financial stability among depositors.
“The PDIC is tasked to strengthen the mandatory deposit insurance coverage system to generate, preserve, maintain faith and confidence in the country’s banking system; and protect it from illegal schemes and machinations.” (Official PDIC website, accessed at https://www.pdic.gov.ph/).
The PDIC shall have the following functions:
- Insurer of deposits;
- Regulator of banks; and
- Rehabilitation receiver of banks.
The law says:
Section 1 of R.A. No. 3591, otherwise known as the Charter of the Philippine Deposit Insurance Corporation, provides that:
“Section 1. There is hereby created a Philippine Deposit Insurance Corporation hereinafter referred to as the “Corporation” which shall insure, as herein provided, the deposits of all banks which are entitled to the benefits of insurance under this Act, and which shall have the powers hereinafter granted.”
Likewise, as a matter of policy, the PDIC is entrusted with the promotion and safeguarding of the interests of the depositing public. In line with this, the PDIC is responsible for providing a permanent and continuing insurance coverage for all insured deposits, as enshrined in Section 1 of R. A. No. 9302, or the Act Amending R. A. No. 3591. It provides that:
“SECTION 1. Section 1 of Republic Act No. 3591, as amended, is hereby amended by adding a new paragraph to read as follows:
“The Corporation shall, as a basic policy, promote and safeguard the interests of the depositing public by way of providing permanent and continuing insurance coverage on all insured deposits.”
Furthermore, Section 1 of R.A. No. 9576, otherwise known as the Act Increasing the Maximum Deposit Insurance Coverage, and in connection therewith, to Strengthen the Regulatory and Administrative Authority, and Financial Capability of the Philippine Deposit Insurance Corporation (PDIC), amending for this purpose R.A. No. 3591, as Amended, otherwise known as the PDIC Charter. It states that:
“SECTION 1. Statement of State Policy and Objectives. – It is hereby declared to be the policy of the State to strengthen the mandatory deposit insurance coverage system to generate, preserve, maintain faith and confidence in the country’s banking system, and protect it from illegal schemes and machinations.
Towards this end, the government must extend all means and mechanisms necessary for the Philippine Deposit Insurance Corporation to effectively fulfill its vital task of promoting and safeguarding the interests of the depositing public by way of providing permanent and continuing insurance coverage on all insured deposits, and in helping develop a sound and stable banking system at all times.”
As a regulator of banks, the PDIC is authorized to examine and investigate banks. In the case of PDIC v. Philippine Countryside Rural Bank, Inc. (G.R. No. 176438, 24 January 2011), the Supreme Court has held that:
“Under its charter, the PDIC is empowered to conduct examination of banks with prior approval of the Monetary Board:
Eighth – To conduct examination of banks with prior approval of the Monetary Board: Provided, That no examination can be conducted within twelve (12) months from the last examination date: Provided, however, That the Corporation may, in coordination with the Bangko Sentral, conduct a special examination as the Board of Directors, by an affirmative vote of a majority of all of its members, if there is a threatened or impending closure of a bank; Provided, further, That, notwithstanding the provisions of Republic Act No. 1405, as amended, Republic Act No. 6426, as amended, Republic Act No. 8791, and other laws, the Corporation and/or the Bangko Sentral, may inquire into or examine deposit accounts and all information related thereto in case there is a finding of unsafe or unsound banking practice; Provided, That to avoid overlapping of efforts, the examination shall maximize the efficient use of the relevant reports, information, and findings of the Bangko Sentral, which it shall make available to the Corporation; (As amended by RA. 9302, 12 August 2004, RA. 9576, l June 2009)
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Section 9(b-l) of the PDIC Charter further provides that the PDIC Board shall have the power to:
POWERS AND RESPONSIBILITIES AND PROHIBITIONS
SECTION 9.
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(b) The Board of Directors shall appoint examiners who shall have power, on behalf of the Corporation to examine any insured bank. Each such examiner shall have the power to make a thorough examination of all the affairs of the bank and in doing so, he shall have the power to administer oaths, to examine and take and preserve the testimony of any of the officers and agents thereof, and, to compel the presentation of books, documents, papers, or records necessary in his judgment to ascertain the facts relative to the condition of the bank; and shall make a full and detailed report of the condition of the bank to the Corporation. The Board of Directors in like manner shall appoint claim agents who shall have the power to investigate and examine all claims for insured deposits and transferred deposits. Each claim agent shall have the power to administer oaths and to examine under oath and take and preserve testimony of any person relating to such claim. (As amended by E.O. 890, 08 April 1983; RA. 7400,13 April 1992)
As for the function of the PDIC as the rehabilitation receivers of banks, the PDIC shall control, manage and administer the affairs of closed banks.
“The PDIC is the statutory receiver and liquidator of closed banks. PDIC takes over banks ordered closed by the Monetary Board; administers closed banks’ assets, records and affairs; and preserves and disposes these assets for the benefit of the creditors and uninsured depositors.
When the Monetary Board orders the liquidation of a bank that has been placed under receivership, its assets are managed, liquidated, and distributed to creditors and uninsured depositors according to the preference and concurrence of credits as provided for by the Civil Code of the Philippines.” (Receivership and Liquidation Webpage, Official PDIC Website, accessed at https://www.pdic.gov.ph/receivershipandliquidation).
Jurisprudence says:
In the above-mentioned case of PDIC v. Philippine Countryside Rural Bank, Inc. (G.R. No. 176438, 24 January 2011), the Supreme Court ruled that primary purpose of the PDIC is to act as deposit insurer, as a co-regulator of banks, and as receiver and liquidator of closed banks. To wit:
“The PDIC was created by R.A. No. 3591 on June 22, 1963 as an insurer of deposits in all banks entitled to the benefits of insurance under the PDIC Charter to promote and safeguard the interests of the depositing public by way of providing permanent and continuing insurance coverage of all insured deposits. It is a government instrumentality that operates under the Department of Finance. Its primary purpose is to act as deposit insurer, as a co-regulator of banks, and as receiver and liquidator of closed banks.”
In the case of Linsangan v. PDIC (G.R. No. 228807, 11 February 2019), the Supreme Court emphasized the function of the PDIC as an insurer of deposits in all banks entitled to the benefits of insurance under the law. As such:
“The PDIC was created by Republic Act (R.A.) No. 3591 8 on June 22, 1963 as an insurer of deposits in all banks entitled to the benefits of insurance under the PDIC Charter to promote and safeguard the interests of the depositing public by way of providing permanent and continuing insurance coverage of all insured deposits.
Based on its charter, the PDIC has the duty to grant or deny claims for deposit insurance. “The term ‘insured deposit’ means the amount due to any bona fide depositor for legitimate deposits in an insured bank net of any obligation of the depositor to the insured bank as of the date of closure, but not to exceed Five Hundred Thousand Pesos (₱500,000.00). In determining such amount due to any depositor, there shall be added together all deposits in the bank maintained in the same right and capacity for his benefit either in his own name or in the names of others.”
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