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PDIC Law Flashcards

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1
Q

What is the Philippine Deposit Insurance Corporation (PDIC)?

A

A government instrumentality created in 1963 by virtue of Republic Act 3591 to insure the deposits of all banks entitled to insurance benefits.

The PDIC is an attached agency of the Department of Finance.

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2
Q

What is the purpose of RA 3591?

A

To create the PDIC and insure the deposits of all banks entitled to insurance benefits.

RA 3591 was enacted in 1963.

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3
Q

When was the latest amendment to RA 3591 signed into law?

A

May 23, 2016.

This amendment is known as RA 10846.

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4
Q

What enhanced powers were given to PDIC under RA 10846?

A

Stronger authorities to protect the depositing public and promote financial stability.

The law includes provisions to ensure PDIC’s financial and institutional strength.

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5
Q

What authority does PDIC have regarding insured deposits in case of bank closure?

A

To pay insured deposits without netting out depositors’ loan obligations with the closed bank.

Payments are based on evidence of deposits, not solely on the closed bank’s records.

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6
Q

What is the significance of PDIC’s enhanced resolution authorities?

A

Promotes financial inclusion through early intervention in problem banks or open bank resolution.

This allows PDIC to resolve issues while banks are still operational.

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7
Q

How does the new law enhance the chances of recovery for creditors of closed banks?

A

By preventing further dissipation of assets through seamless transition from bank closure to liquidation.

This aims to protect the interests of creditors.

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8
Q

Fill in the blank: The PDIC was created by virtue of _______.

A

Republic Act 3591

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9
Q

What does PDIC stand for?

A

Philippine Deposit Insurance Corporation

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10
Q

What is one of the key responsibilities of the PDIC under the new law?

A

To resolve problem banks while still open.

This helps in maintaining stability in the banking sector.

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11
Q

What does the new banking law eliminate regarding the receivership period?

A

The 90-day receivership period

This allows PDIC to proceed directly to liquidation.

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12
Q

What is one method of liquidation adopted by the PDIC?

A

Purchase of assets and assumption of liabilities

This method enhances recovery rate for creditors of closed banks.

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13
Q

What is the role of the PDIC as a deposit insurer?

A

To promote and safeguard the interests of the depositing public by providing permanent insurance coverage on all insured deposits.

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14
Q

What authority does the PDIC have as a co-regulator of banks?

A

Empowered to examine and investigate banks.

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15
Q

What is the function of the PDIC as a receiver and liquidator of closed banks?

A

To control, manage, and administer the affairs of the bank.

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16
Q

What is the maximum amount for insured deposits under the PDIC?

A

P500,000.

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17
Q

Which types of deposits are covered by the PDIC?

A
  • Savings Deposit
  • Special Savings
  • Demand/Checking Account
  • Negotiable Order of Withdrawal (NOW)
  • Certificate of Time Deposits
  • Foreign currency Deposit
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18
Q

What triggers the adjustment of maximum deposit insurance coverage?

A

A condition threatening the monetary and financial stability of the banking system as determined by the Monetary Board.

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19
Q

What is required for the Monetary Board to approve adjustments to deposit insurance?

A

Unanimous vote of the Board of Directors of the PDIC in a meeting chaired by the DOF Secretary.

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20
Q

What does systemic risk refer to according to the PDIC Charter?

A

The possibility that failure of one bank to settle net transactions will trigger a chain reaction affecting other banks and leading to a general shutdown of normal clearing and settlement activity.

It also includes the likelihood of a sudden collapse of confidence in a significant portion of the banking system with large economic effects.

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21
Q

What is covered under the PDIC Act?

A

The deposit liabilities of any bank or banking institution engaged in receiving deposits on the effective date of the PDIC Act, or thereafter.

This ensures that deposits are insured with the PDIC.

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22
Q

What is ‘splitting of deposits’?

A

Occurs when a deposit account with an outstanding balance over P500,000 is transferred to two or more accounts in names without beneficial ownership in the transferred deposits.

This can happen within 120 days before a bank holiday or closure order for maximum deposit insurance coverage.

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23
Q

What are the consequences of splitting deposits?

A

It is considered a criminal act punishable by imprisonment of not less than 6 years and not more than 12 years or a fine of not less than P50,000 and not more than P10,000,000, or both.

The penalty is at the discretion of the court.

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24
Q

Are deposit products by the head office of a foreign bank in its branch in the Philippines entitled to payment?

A

No, because there is only one entity.

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25
True or False: A deposit account can be split to avail maximum deposit insurance coverage.
True
26
What are deposits that are determined to be the proceeds of an unlawful activity as defined under RA 9160?
Deposits that are proceeds of unlawful activity as defined under RA 9160 ## Footnote These are considered under the Anti-Money Laundering Act as amended.
27
What type of deposits are payable in a place outside the Philippines?
Deposits payable in a place outside the Philippines ## Footnote This includes deposits in foreign branches.
28
What are unfunded deposit accounts or transactions?
Deposit accounts or transactions which are unfunded and that are fictitious or fraudulent ## Footnote These do not represent legitimate or actual funds.
29
What constitutes unsafe and unsound banking practices?
Deposit accounts or transactions constituting and/or emanating from unsafe and unsound banking practices ## Footnote Determined by PDIC in consultation with BSP, after due notice and hearing.
30
What are examples of investment products mentioned?
Investment products such as: * Bonds * Securities * Trust accounts * Other similar instruments ## Footnote These are financial instruments that may not be covered by standard deposit insurance.
31
What is the entitlement to deposit insurance based on?
Per bank basis ## Footnote Each bank's deposits are insured separately.
32
What does the Per Depositor, Per Capacity Rule state?
All deposits in the bank maintained in the same right and capacity shall be added together ## Footnote This applies regardless of the type of account.
33
What is a joint account?
A joint account is an account held by two or more natural persons or juridical persons/entities, insured separately from individually owned deposit accounts.
34
How is the maximum insured deposit divided in a joint account held by multiple individuals?
The maximum insured deposit shall be divided into as many equal shares as there are individuals or entities, unless otherwise stipulated.
35
What happens to the maximum insured deposit if a joint account is held by a juridical person and natural persons?
The maximum insured deposit shall be presumed to belong entirely to the juridical person or entity.
36
What is the maximum insured deposit amount for joint accounts?
The maximum insured deposit amount for joint accounts is P500,000.
37
How does the insurance coverage for joint accounts compare to individually owned accounts?
The P500,000 entitlement for joint deposits is separate from the P500,000 for individually owned accounts, allowing a maximum of P1,000,000 insurance coverage.
38
What is the first step in the PDIC procedure for closed banks?
PDIC shall commence the determination of insured deposits due the depositors of a closed bank upon its actual takeover of the closed bank ## Footnote This procedure ensures that depositors are promptly informed and compensated for their insured deposits.
39
What is the role of PDIC in notifying depositors of a closed bank?
PDIC shall give notice to the depositors of the closed bank of the insured deposits due them by whatever means deemed appropriate by the Board of Directors. ## Footnote The notice can include various forms of communication as decided by the Board.
40
How often must PDIC publish notices about closed banks?
PDIC must publish the notice once a week for at least 3 consecutive weeks in a newspaper of general circulation or in a community newspaper where the closed bank is located. ## Footnote This ensures that the information reaches the affected depositors effectively.
41
Who is recognized as a depositor entitled to rights under the PDIC Act for a Certificate of Deposit?
No owner/holder of any negotiable certificate of deposit shall be recognized unless his name is registered as owner/holder in the books of the issuing bank. ## Footnote Registration is crucial for entitlement to PDIC rights.
42
When are claims filed during the claims settlement operations?
Claims are filed during the claims settlement operations period as announced in the Notice to Depositors published in newspapers or posted in the bank premises and in the PDIC website. ## Footnote This process ensures transparency and accessibility for depositors.
43
Who is required to file claims with PDIC?
Those required to file claims include: * Depositors with valid deposit accounts with balances of more than Php100,000 * Depositors with outstanding obligations with the closed bank * Depositors with account balances of less than Php100,000 without updated addresses * Depositors maintaining accounts under business entities * Depositors with accounts not eligible for early payment. ## Footnote Each group has specific criteria that necessitate filing a claim.
44
Who is NOT required to file claims with PDIC?
Depositors with valid deposit accounts with balances of Php100,000 and below are not required to file claims if they have no obligations with the closed bank and have complete and updated addresses. ## Footnote This policy simplifies the process for a significant number of depositors.
45
What is the purpose of the Mailing Address Update Form (MAUF) issued by PDIC?
The MAUF allows depositors to update their addresses to ensure they receive notices and can file claims if necessary. ## Footnote Keeping address records updated is essential for effective communication.
46
What is the purpose of the PDIC's initiative for small depositors?
To provide convenience and immediate/early payment of deposit insurance claims to small depositors
47
How are payments to depositors sent?
As postal money orders to the depositors' mailing addresses
48
Who should sign the insurance claim if the depositor is 18 years old and above?
Depositor of the account
49
Who signs the insurance claim if the depositor is below 18 years old?
Parent
50
In the case of 'By' accounts, who is authorized to sign the insurance claim?
Agent
51
Who signs the insurance claim for 'In Trust for (ITF)' accounts?
Trustee
52
In joint accounts such as 'Or', 'And/Or', or 'And' accounts, who must sign the insurance claim?
Each Depositor
53
What is the period for depositors to file a claim after a bank closure?
2 years from the actual takeover of the closed bank
54
What is the period to enforce a claim after the filing period?
2 years after the 2-year period to file a claim
55
What may the PDIC require before paying insured deposits?
Proof of claims to be filed
56
What happens if a depositor does not file or enforce their claim within the required periods?
All rights against PDIC and the closed bank shall be barred
57
What are the effects of non-filing of claims?
1. Rights against PDIC are barred 2. Rights against the closed bank revert to the depositor 3. PDIC is discharged from liability
58
What are the modes of payment for insured deposits?
1. By cash 2. By transferring deposits to another insured bank
59
True or False: The PDIC can require a final determination of a court before paying a claim.
True
60
What may the PDIC withhold payment for?
Any liability of the depositor as a stockholder of the closed bank, or any liability to the closed bank or its receiver not offset against a claim due from such bank ## Footnote This withholding is pending determination and payment of such liability by the depositor or any other liable party.
61
What happens to the rights of the depositor when PDIC makes a payment?
PDIC shall be subrogated to all rights of the depositor against the closed bank to the extent of such payment ## Footnote This includes the right to receive dividends and payments from the proceeds of the assets of the closed bank.
62
What does a depositor retain after PDIC payment?
His claim for any uninsured portion of his deposit ## Footnote This means that the depositor still has rights to recover funds that are not insured.
63
What discharges the PDIC when it pays an insured deposit?
Payment of an insured deposit to any person by PDIC ## Footnote This also applies to payments by new banks or insured banks for transferred deposits.
64
What is the nature of payments by PDIC of insured deposits in closed banks?
They partake of the nature of public funds and must be considered a preferred credit similar to taxes due to the National Government ## Footnote This is outlined under Article 2244(9) of NCC.
65
What is the period for the PDIC to settle a claim?
6 months from the date of filing of the claim ## Footnote This is the standard timeframe for claim resolution.
66
What are the consequences for PDIC directors, officers, or employees for failure to settle claims within 6 months?
Imprisonment from 6 months to one year upon conviction for grave abuse of discretion, gross negligence, bad faith or malice ## Footnote This emphasizes accountability within the PDIC for timely claim resolution.
67
What is the exception to the period applicable in banking laws?
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. ## Footnote This means that if a claim's validity is contingent upon further examination by a different entity, the usual time constraints do not apply.
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