Maximum Deposit Insurance for Each Depositor Php500,000
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TO :All Banks and Depositors
SUBJECT :Rules on Net Out of Obligations to Determine Insured Deposit

Pursuant to its authority under Section 8(10th) of Republic Act No. 3591, as amended (PDIC Charter), and to further implement Section 4 (g) thereof on the determination of Insured Deposit, the PDIC Board of Directors by virtue of Resolution No. 2011-10-224 dated 25 October 2011, approved the promulgation of the following regulatory issuance that prescribes the Rules on Net-out of Obligations to Determine Insured Deposit.

Section 1. Objective

This Regulatory Issuance defines, enumerates and identifies the obligations as of bank closure to be netted out from a deposit, for purposes of computing the deposit insurance due a depositor under Section 4(g) of the PDIC Charter in relation to PDIC Regulatory Issuances 2009-031 and 2011-022.

Section 2. Definition of Terms

Bank Closure refers to the date the bank ceased to operate pursuant to the order of closure by the Monetary Board of the Bangko Sentral ng Pilipinas.

Insured Deposit means the amount due to any bona fide depositor for legitimate deposits in an insured bank net of any obligation of said depositor to the insured bank as of the date of closure, which shall not exceed five hundred thousand pesos (Php500,000.00).

Loan obligation as used herein shall include, but is not limited to, the sum of loan principal, interest, penalties, advances, charges and expenses due or owing to the closed bank. The loan referred to herein of the depositor-debtor of the closed bank may be current or past due, secured or unsecured.

Section 3. Net out

For purposes of computing insured deposit, all obligations of the depositor with the closed bank, as of bank closure, shall be net out from the depositorís total deposits with said bank. The net out is solely for the purpose of determining the net deposit covered by deposit insurance and does not constitute as payment for any of the obligations of the depositor under Section 4 hereof.

After netting out, the balance of the deposit, if any, shall be subject to deposit insurance coverage, which in no case shall exceed five hundred thousand pesos (Php500,000.00).

The deposit insurance due a depositor shall be subject further to Regulatory Issuance No. 2009-03 (Rules on Determination of Beneficial Ownership of Legitimate Deposits) and other existing applicable laws, rules and regulations on the payment of insured deposits.

Section 4. Obligations for Net Out

The following shall be netted out from the depositorís total deposits with the closed bank:

  1. Loan obligations with the closed bank as principal debtor or as co-maker;

  2. Loan obligations with the closed bank where the depositor acts as surety and the obligation has become past due or demandable against the surety by virtue of the principal debtorís default prior to or at the time of the bankís closure;

  3. Loan obligations of the depositorís spouse with the closed bank where the loan obligation is contracted by the said spouse as the designated administrator-spouse of the Absolute Community of Property or Conjugal Partnership of Gains, or with the consent of other spouse;

  4. Money accountability of the depositor who is a director, officer, stockholder or employee of the closed bank;

  5. Other sums due or owing to the closed bank from the depositor.

Section 5. Effect of Net Out

  1. Any amount netted out from the deposit and/or such amount in excess of the maximum deposit insurance coverage (MDIC) shall be considered as uninsured deposit which shall be a claim against the assets of the closed bank.

  2. The uninsured deposit maybe applied as payment to or deducted from the obligations referred to in Section 4 hereof.

Section 6. Inquiries

Any question in connection with netting out may be addressed to:

The Department Manager
Claims Processing Department
Philippine Deposit Insurance Corporation
SSS Building, 6782 Ayala Avenue corner V.A. Rufino Street
Makati City 1226

Section 7. Bankís Duty to Inform Depositors

All banks shall:

  1. Within forty-five (45) days from date of effectivity of this Regulatory Issuance, inform all its depositors of these rules by permanently and continuously posting of this Regulatory Issuance in conspicuous places within bank premises;

  2. Within thirty (30) days from compliance under Section 7 (a) hereof, submit a report of such compliance signed and certified by the Bankís Compliance Officer or its equivalent.

Thereafter, all member banks shall submit the required certification of compliance through its respective Compliance Officer on an annual basis (i.e. every January 31 of each year).

Non-compliance with, or violation of this Section, shall subject the bank and its responsible directors, officers, or employees to the imposition of administrative fines in accordance with Section 21 (f) of the PDIC Charter, as implemented by Regulatory Issuance No. 2005-03 (PDIC Administrative Offenses, Fines and Procedure).

Section 8. Separability Clause

Sections of this Regulatory Issuance shall be deemed severable, and should any section, subsection, paragraph, sentence, or phrase hereof be declared by a court of competent jurisdiction to be invalid, unenforceable, or unconstitutional, such decision shall not affect the validity of the Issuance as a whole, or any part thereof, other than the part so declared to be invalid, unenforceable, or unconstitutional.

Section 9. Repealing Clause

All issuances, rules and/or regulations of the PDIC which are inconsistent with this Regulatory Issuance are hereby repealed or amended accordingly.

Section 10. Effectivity

This Regulatory Issuance shall take effect fifteen (15) days after publication in the Official Gazette or in any newspaper of general circulation.


1 Determination of Beneficial Ownership of Legitimate Deposits
2 Rules and Regulations Governing Deposit Accounts or Transactions Excluded from the Coverage of Deposit Insurance

Philippine Star - November 15, 2011


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