REPUBLIC ACT NO.

3591, as amended

AN ACT ESTABLISHING THE PHILIPPINE DEPOSIT INSURANCE

CORPORATION, DEFINING ITS POWERS AND DUTIES
AND FOR OTHER PURPOSES

THE CREATION OF THE PDIC

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.

The Corporation shall, as a basic policy, promote and safeguard the interests of the depositing
public by providing insurance coverage on all insured deposits and helping maintain a sound and stable
banking system.

STATE POLICY
(As amended by RA No. 10846, 11 June 2016)

SECTION 2. – 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.

BOARD OF DIRECTORS: COMPOSITION & AUTHORITY

SECTION 3. (a) The powers and functions of the Corporation shall be vested in and exercised by a
Board of Directors which shall be composed of seven (7) members as follows:

(1) The Secretary of Finance who shall be the ex officio Chairman of the Board without
compensation.

(2) The Governor of the Bangko Sentral ng Pilipinas who shall be ex officio member of the Board
without compensation.

(3) The President of the Corporation, who shall be appointed by the President of the Philippines
from the shortlist prepared by the Governance Commission for Government-Owned or Controlled
Corporations pursuant to RA 10149 to serve on a full time basis for a term of six (6) years. The President
of the Corporation shall also serve as Vice Chairman of the Board.

(4) Four (4) members from the private sector to be appointed by the President of the Philippines
from the shortlist prepared by the Governance Commission for GOCC.

QUALIFICATIONS

No person shall be appointed as member of the Board unless he or she be of good moral
character, of unquestionable integrity and responsibility, of known probity and patriotism, and who is of
recognized competence in economics, banking and finance, law, management administration or insurance,
and shall be at least thirty-five (35) years of age. For the duration of their tenure or term of office and for a
period of one (1) year thereafter, the appointive members of the Board shall be disqualified from holding
any office, position or employment in any insured bank.

MEETINGS/QUORUM/COMPENSATION

The presence of four (4) members shall constitute a quorum. All decisions of the Board of
Directors shall require the concurrence of at least four (4) members.

The compensation, per diems, allowances, incentives, and other benefits for board members shall
be determined by the Governance Commission for GOCC.

THE PRESIDENT OF THE CORPORATION

SECTION 4. The President of the Corporation shall be its Chief Executive Officer and the Vice
Chairman of its Board of Directors and his or her salary shall be fixed by the President of the Philippines
upon the recommendation of the Governance Commission for GOCC, at a sum commensurate to the
importance and responsibility attached to the position. The sum total of the salary, allowances, benefits
and other emoluments of the President of the Corporation shall be higher than the compensation package
of the next highest ranking executive of the Corporation.

DEFINITION OF TERMS

(g) The term deposit means the unpaid balance of money or its equivalent received by a bank in
the usual course of business and for which it has given or is obliged to give credit to a commercial,
checking, savings, time or thrift account, evidenced by a passbook, certificate of deposit, or other evidence
of deposit issued in accordance with Bangko Sentral ng Pilipinas rules and regulations and other applicable
laws, together with such other obligations of a bank x x x

(j) The term insured deposit means the amount due to any bonafide depositor for legitimate
deposits in an insured bank as of the date of closure but not to exceed Five hundred thousand pesos
(P500,000.00)

(l) The term liquidation court refers to the Regional Trial Court (RTC) of general jurisdiction where
the petition for assistance in the liquidation of a closed bank filed and give due course.

PROHIBITIONS ON INSURANCE DEPOSITS

The Corporation shall not pay deposit insurance for the following accounts or transactions:

(1) Investment products such as bonds and securities, trust accounts, and other similar
instruments;

(2) Deposit accounts or transactions which are fictitious or fraudulent as determined by the
Corporation;
 (3) Deposit accounts or transactions constituting, and/or emanating from, unsafe and unsound
banking practice/s, as determined by the Corporation, in consultation with the BSP, after due notice and
hearing, and publication of a directive to cease and desist issued by the Corporation against such deposit
accounts, transactions or practices; and

(4) Deposits that are determined to be the proceeds of an unlawful activity as defined under
Republic Act No. 9160, as amended.

LIQUIDATION OF A CLOSED BANK

SECTION 12. (a) Whenever a bank is ordered closed by the Monetary Board, the Corporation
shall be designated as receiver and it shall proceed with the takeover and liquidation of the closed bank in
accordance with this Act. For this purpose, banks closed by the Monetary Board shall no longer be
rehabilitated.

PERMANENT INSURANCE FUND

SECTION 17. To carry out the purposes of this Act, the permanent insurance fund shall be Three
billion pesos (P3,000,000,000.00).

The Deposit Insurance Fund shall be the capital account of the Corporation and shall principally
consist of the following: (i) the Permanent Insurance Fund; (ii) assessment collections, subject to the
charges enumerated in Section 6 (d); (iii) reserves for insurance and financial assistance losses; and (iv)
retained earnings: Provided, That the reserves for insurance and financial assistance losses and retained
earnings shall be maintained at a reasonable level to ensure capital adequacy: Provided, further, That the
Corporation may, within two (2) years from the passage of this Act, and every five (5) years thereafter,
conduct a study on the need to adjust the amount of the Permanent Insurance Fund, insurance cover,
assessment rate and assessment base, and thereafter make the necessary recommendation to Congress.
For this purpose, the Corporation may hire the services of actuarial consultants to determine, among
others, the affordability of assessment rates, analysis and evaluation of insurance risk, and advisability of
imposing varying assessment rates or insurance cover of different bank categories.

PAYMENT OF INSURED DEPOSITS

SECTION 19. Whenever an insured bank shall have been closed by the Monetary Board pursuant
to Section 30 of RA 7653, or upon expiration or revocation of a bank’s corporate term, payment of the
insured deposits on such closed bank shall be made by the Corporation as soon as possible either (1) by
cash or (2) by making available to each depositor a transferred deposit in another insured bank in an
amount equal to insured deposit of such depositor: Provided, however, That the Corporation, in its
discretion, may require proof of claims to be filed before paying the insured deposits, and that in any case
where the Corporation is not satisfied as to the validity of a claim for an insured deposit, it may require final
determination of a court of competent jurisdiction before paying such claim: Provided, further, That failure to
settle the claim, within six (6) months from the date of filing a claim for insured deposit, where such failure
was due to grave abuse of discretion, gross negligence, bad faith, or malice, shall, upon conviction, subject
the directors, officers or employees of the Corporation responsible for the delay, to imprisonment from six
(6) months to one (1) year: Provided, furthermore, That the period shall not apply if the validity of the claim
requires the resolution of issues of facts and or law by another office, body or agency including the case
mentioned in the first proviso or by the Corporation together with such other office, body or agency.