REPUBLIC ACT NO.

3591, AS AMENDED
AN ACT ESTABLISHING THE PHILIPPINE DEPOSIT INSURANCE CORPORATION,
DEFINING ITS POWERS AND DUTIES AND FOR OTHER PURPOSES

Creation of Philippine Deposit Insurance Corporation

The Philippine Deposit Insurance Corporation (PDIC) was established on June 22, 1963, by
Republic Act 3591:
Section 1 - There is hereby created a PDIC hereinafter referred to as “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. ( As amended by R.A. 10846, 11 June 2016 )
The Corporation shall be attached to the Bangko Sentral ng Pilipinas for policy and program
coordination. ( As amended by R.A. No. 11840, 20 July 2022 )

State Policy
( As added by R.A. No. 10846, 11 June 2020 )
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.
Towards this end, the Government must extend all means and mechanisms necessary for the
Corporation effectively fulfill its visual task of promoting, and safeguarding the interest of the
depositing public by way of providing insurance coverage on bank deposits and in helping
develop a sound and stable banking system.
In view of the crucial role and the nature of its function and responsibilities the Corporation,
while being a government instrumentality which corporate powers, shall enjoy fiscal and
administrative autonomy.

Role and Function of PDIC

Deposit Insurance
− The PDIC insures deposits up to a maximum of PhP500,000 per depositor per bank.
− The PDIC builds up the Deposit Insurance Fund (DIF) to pay claims on insured deposits.

Co-regulating banks
− The PDIC works with the Bangko Sentral ng Pilipinas (BSP) to examine banks, issue
regulations, and ensure the stability of the banking system.

Liquidating closed banks

− When ordered by the BSP's Monetary Board, the PDIC liquidates closed banks. The PDIC
manages the assets of closed banks and distributes them to creditors.

Promoting financial stability

− The PDIC works to protect the banking system from illegal schemes and promote public
confidence in the economy.

Assisting eligible banks

− The PDIC helps eligible banks to improve their viability and strengthen the banking system.
 Deposit Insurance Coverage
(Renumbered from sec.5 by R.A NO. 10846, 11 JUNE 2016)

Section 6. The deposit liabilities of any bank which in engaged in the business of receiving
deposits as herein defined on the effective date of this Act, or which thereafter may engage in the
business of receiving deposits, shall be insured with the Corporation. The Corporation may
establish separate insurance funds and insurance arrangement or structures or takaful that take
into consideration the peculiar characteristics of Islamic banking. ( As amended by R.A,
NO.6037, 04 AUGUST 1969; R.A, NO. 10846, 11 JUNE 2016; R.A, NO. 11840, 20 JULY 2022)
Whenever a bank is determined by the Bangko Sentral ng Pilipinas to be capital deficient, the
Corporation may conduct an insurance risk evaluation on the bank to enable it to assess the risks
to the DIF. Such evaluation may include the determination of; (i) the fair market value of the
assets and liabilities of a bank; or (ii) the risk classification of a bank. (As added by R.A NO.
10846, 11 JUNE 2016 and amended by R.A NO. 11840, 20 July 2022)

Sanctions Against Unsafe and Unsound Banking

(Renumbered from sec. 7 by R.A. No. 10846, June 2016; amended by R.A No. 11840, 20 July
2022)
Section 8. Whenever upon examination by the Corporation in to the condition of any insured
bank, it shall be disclosed that an insured bank or its directors or agents have committed, are
committing or about to commit unsafe or unsound banking, or have violated, are violating or
about to violate any provision of any law or regulation to which the insured bank is subject. The
Board of Directors shall submit the report of the examination to the Monetary Board. (As
amended by R.A. NO. 1840, 20 JULY 2022)
The Corporation may terminate the insured of any bank that fails or refuse to comply, within (30)
days from notice, with any cease-and-desist order issued by the Bangko Sentral ng Pilipinas,
pertaining to a deposit-related unsafe and/ or sounding banking. (As added by R.A. NO. 10846,
11 JUNE 2016; amended and renumbered by R.A. NO. 11840, 20 JULY 2022)
Such termination shall be final and executory, and shall be effective upon publication of the
notice of termination in a newspaper of general circulation. ( As added by R.RA. NO. 10846, 11
JUNE 2016
The deposit of each depositors in the bank on the effective date of the termination of insurance
coverage, less all subsequent withdrawals, shall continue to be insured up to the maximum
deposit insurance coverage for a period of one hundred eighty (180) days. Addition to, or
renewal of exixting deposits and new deposits in such bank after the effective date of termination
of insured status of the bank shall not be insured by the Corporation. ( As added by R.A. NO.
10846, 11 JUNE 2016)
The bank shall not advertise or represent that additions to, or renewal of, exixting deposits and
new deposits made after the effective date of termination are covered by deposits insurance. ( As
added by R.A. NO. 10846, 11 JUNE 2016)

Authority to Examine Deposits Records

(As amended by R.A. No. 11840, 20 July 2022)
Section 11. When there is a failure of prompt corrective action as declared by the Monetary
Board due to capital deficiency, the Corporation and the Bangko Sentral ng Pilipinas may
examine, inquire or look into the deposits record of bank: Provided, That such authority may not
be exercised when the failure of prompt corrective action due to grounds other than capital
deficiency.
For this purpose, banks, their officers and employees are hereby mandated to disclosure and
report to the Corporation and the Bangko Sentral ng Pilipinas or their duty authorized officers
and employees, the required deposit account information. (As amended by R.R. NO. 11840, 20
JULY 2022)
The Corporation and the Bangko Sentral ng Pilipinas, their duly authorized officers or employees
are prohibited from disclosing information obtained under this Section to any person,
government officials, bureau or office.
Any act done pursuant to this Section shall not b deemed as a violation of Republic Act No. 1405,
as amended, Republic Act No. 6426, as amended, Republic Act No. 8791, and the other similar
laws protecting or safeguarding the secrecy or confidentiality of bank deposits.
Any unauthorized disclosure of the information under this Section shall be subject to the same
penalty under the laws protecting the secrecy of confidentiality of bank deposits. (As amended
by R.A. NO. 11840, 20 JULY 2022)
The provision of this Section notwithstanding, the Monetary Board may take other actions under
existing laws that it may deem necessary. (As amended by R.A. NO. 11840, 20 JULY 2022)

Assessment of Member Banks

(Renumbered from Sec. 6 by R.A. No. 10846, 11 June 2016)

Section 7. (a) The assessment rate shall be determined by the Board of Directors: Provided, That
the assessment rate shall not exceed one-fifth (1/5) of one per centum (1%) per annum. The
semi-annual assessment for each insured bank shall be in the amount of the product of one-half
(1/2) the assessment rate multiplied by the assessment base but in no case shall it be less than
Five Thousand Pesos (P5,000.00). The assessment base shall be the amount of the liability of the
bank for deposits as defined under subsection (g) of Section 5 without any deduction for
indebtedness of depositors. (As amended by R.A. No. 9302, 12 August 2004, R.A. No. 10846, 11
June 2016)
In addition, the Board of Directors shall conduct a study on the need to establish a risk-based
assessment system within five (5) years from passage of this Act the results of which shall be
reported to the Joint Congressional Oversight Committee to ensure compliance with the intent of
the law. For which purpose, the Board of Directors shall consider the viability of a mechanism
that adjusts the assessment rate depending on the creditworthiness or risk profile of the bank,
consistent with the national development goals and impose a commensurate risk-based adjusted
assessment rate per annum per bank. The risk-based assessment rate and assessment base shall be
determined to ensure the adequacy and sustainability of the DIF while at the same time
rationalizing the financial burden on banks and stability of the financial system. The assessment
of each insured bank shall be determined by multiplying the risk-based assessment rate with the
assessment base. (As added by R.A. No. 10846, 11 June 2016; amended by R.A. No. 11840, 20
July 2022)
In case there will be an increase in the maximum deposit insurance coverage, the PDIC Board
shall have the authority to adjust the assessment rate for banks taking into consideration the
current economic conditions, and the adequacy and sustainability of the DIF. (As added by R.A.
No. 11840, 20 July 2022)
The Corporation and the Board of Directors shall ensure and endeavor to maintain transparency
under all possible conditions in the way of conducting all the foregoing activities under Section 7
(a). (As added by R.A. No. 11840, 20 July 2022)
The semi-annual assessment base for one semi-annual period shall be the average of the
assessment base of the bank as of the close of business on March thirty-one and June thirty and
the semi-annual assessment base for the other semi-annual period shall be the average of the
assessment base of the bank as of the close of business on September thirty and December thirty-
one: Provided, That when any of said days is a non-business day or legal holiday, either national
or provincial, the preceding business day shall be used. The certified statements required to be
filed with the Corporation under subsections (b) and (c) of this Section shall be in such form and
set forth such supporting information as the Board of Directors shall prescribe. The assessment
payments required from the insured banks under subsections (b) and (c) of this Section shall be
made in such manner and at such time or times as the Board of Directors shall prescribe. (As
amended by R.A. No. 7400, 13 April 1992; R.A No. 10846, 11 June 2016)
(b) On or before the 31st of July of each year, each insured bank shall file with the Corporation a
certified statement showing for the six months ending on the preceding June thirty the amount of
the assessment base and the amount of the semi-annual assessment due to the Corporation for the
period ending on the following December thirty-one, determined in accordance with subsection
(a) of this Section, which shall contain or be verified by a written declaration that it is made
under the penalties of perjury. Each insured bank shall pay to the Corporation the amount of the
semi-annual assessment it is required to certify. On or before the 31st day of January of each year,
each insured bank shall file with the Corporation a similar certified statement for the six months
ending on the preceding December thirty-one and shall pay to the Corporation the amount of the
semi-annual assessment for the period ending on the following June thirty which it is required to
certify. (As amended by P.D. No. 1940, 27 June 1984)
(c) Each bank which becomes an insured bank shall not be required to file any certified statement
or pay any assessment for the semi-annual period in which it becomes an insured bank. On the
expiration of such period, each such bank shall comply with the provisions of subsection (b) of
this Section except that the semi-annual assessment base for its first certified statement shall be
the assessment base of the bank as of the close of business on the preceding June thirty or
December thirty-one, whichever is applicable, determined in accordance with subsection (a) of
this Section. If such bank has assumed the liabilities for deposits of another bank or banks, it
shall include such liabilities in its assessment base. The first certified statement shall show as the
amount of the first semi-annual assessment due to the Corporation, an amount equal to the
product of one- half of the annual assessment rate multiplied by such assessment base.
(d) All assessment collections and income from operations after expenses and charges shall be
added to the DIF under Section 17 hereof. Such expenses and charges are: (1) the operating costs
and expenses of the Corporation for the calendar year; (2) additions to reserve to provide for
insurance and financial assistance losses, net of recoverable amounts from applicable assets and
collaterals, during the calendar year; and (3) the net insurance and financial assistance losses
sustained in said calendar year. (As amended by R.A. No. 9302, 12 August 2004; R.A. No.
10846, 11 June 2016)
(e) The Corporation (1) may refund to an insured bank any payment of assessment in excess of
the amount due to the Corporation or (2) may credit such excess toward the payment of the
assessment next becoming due from such bank and upon succeeding assessments until the credit
is exhausted.
(f) Any insured bank which fails to file any certified statement required to be filed by it in
connection with determining the amount of any assessment payable by the bank to the
Corporation may be compelled to file such statement by mandatory injunction or other
appropriate remedy in a suit brought for such purpose by the Corporation against the bank and
any officer or officers thereof in any court of the Philippines of competent jurisdiction in which
such bank is located.
(g) The Corporation, in a suit brought in any court of competent jurisdiction, shall be entitled to
recover from any insured bank the amount of any unpaid assessment lawfully payable by such
insured bank to the Corporation, whether or not such bank shall have filed any such certified
statement and whether or not suit shall have been brought to compel the bank to file any such
statement. No action or proceeding shall be brought for recovery of any assessment due to the
Corporation or for the recovering of any amount paid to the Corporation in excess of the amount
due to it, unless such action or proceeding shall have been brought within five years after the
right accrued for which the claim is made, except where the insured bank has made or filed with
the Corporation a false or fraudulent certified statement with the intent to evade, in whole or in
part, the payment of assessment, in which case the claim shall not have been deemed to have
accrued until the discovery by the Corporation, that the certified statement is false or fraudulent.
(h) Should any insured bank fail or refuse to pay any assessment required to be paid by such
bank under any provision of this Act, and should the bank not correct such failure or refusal
within thirty (30) days after written notice has been given by the Corporation to an officer of the
bank citing this subsection, and stating that the bank has failed or refused to pay as required by
the law, the Corporation may, at its discretion, file a case for collection before the appropriate
court without prejudice to the imposition of administrative sanctions allowed under the
provisions of this law on the bank officials responsible for the nonpayment of assessment fees.
(As amended by R.A. No. 9302, 12 August 2004; R.A. No. 10846, 11 June 2016)
(i) The Corporation shall have the authority to collect a special assessment from any member
bank and prescribe the terms and conditions thereof to maintain the target level of the DIF set by
the Board of Directors in accordance with this Act. (As added by R.A. No. 10846, 11 June 2016)

Liquidation of a Closed Bank

(As added by R.A. No. 10846, 11 June 2016)

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.

Authorities of a Receiver and Effects of Placement of a Bank Under Liquidation

(As added by R.A. No. 10846, 11 June 2016)

Section. 13. (a) The receiver is authorized to adopt and implement, without need of consent of
the stockholders, board of directors, creditors or depositors of the closed bank, any or a
combination of the following modes of liquidation:
1. Conventional liquidation; and
2. Purchase of assets and/or assumption of liabilities.

(b) In addition to the powers of a receiver provided under existing laws, the Corporation, as
receiver of a closed bank, is empowered to:
1. Represent and act for and on behalf of the closed bank;
2. Gather and take charge of all the assets, records and affairs of the closed bank, and
administer the same for the benefit of its creditors;
3. Convert the assets of the closed bank to cash or other forms of liquid assets, as far as
practicable: Provided, That the Corporation is authorized to sell assets of closed banks,
which are held by the Corporation as receiver, to a Financial Institutions Strategic Transfer
Corporation (FISTC), in accordance with the provisions of Republic Act No. 11523 or the
"Financial Institutions Strategic Transfer (FIST) Act". For this purpose, the Board of
Directors shall be the appropriate regulatory authority and shall promulgate the necessary
implementing rules and regulations. (As amended by R.A. No. 11840, 20 July 2022)
4. Bring suits to enforce liabilities of the directors, officers, employees, agents of the closed
bank and other entities related or connected to the closed bank or to collect, recover, and
preserve all assets, including assets over which the bank has equitable interest;
5. Appoint or hire persons or entities of recognized competence in banking, finance, asset
management or remedial management, as its deputies, assistants or agents, to perform such
powers and functions of the Corporation as receiver of the closed bank, or assist in the
performance thereof;
6. Appoint or hire persons or entities of recognized competence in forensic and fraud
investigations;
7. Pay accrued utilities, rentals and salaries of personnel of the closed bank for a period not
exceeding three (3) months, from available funds of the closed bank;
8. Collect loans and other claims of the closed bank and for this purpose, modify, compromise
or restructure the terms and conditions of such loans or claims as may be deemed
advantageous to the interests of the creditors of the closed bank;
9. Hire or retain private counsel as may be necessary;
10. Borrow or obtain a loan, or mortgage, pledge or encumber any asset of the closed bank,
when necessary to preserve or prevent dissipation of the assets, or to redeem foreclosed
assets of the closed bank, or to minimize losses to its depositors and creditors;
11. If the stipulated interest rate on deposits is unusually high compared with prevailing
applicable interest rates, the Corporation as receiver, may exercise such powers which may
include a reduction of the interest rate to a reasonable rate: Provided, That any modifications
or reductions shall apply only to earned and unpaid interest;
12. Utilize available funds of the bank, including funds generated by the receiver from the
conversion of assets to pay for reasonable costs and expenses incurred for the preservation
of the assets, and liquidation of, the closed bank, without need for approval of the liquidation
court; For banks with insufficient funds, the Corporation is authorized to advance the
foregoing costs and expenses, and collect payment, as and when funds become available.
13. Charge reasonable fees for the liquidation of the bank from the assets of the bank: Provided,
That payment of these fees, including any unpaid advances under the immediately preceding
paragraph, shall be subject to approval by the liquidation court;
14. Distribute the available assets of the closed bank, in cash or in kind, to its creditors in
accordance with the Rules on Concurrence and Preference of Credits under the Civil Code
or other laws;
15. Dispose records of the closed bank that are no longer needed in the liquidation in accordance
with guidelines set by the PDIC Board of Directors, notwithstanding the laws on archival
period and disposal of records; and
16. Exercise such other powers as are inherent and necessary for the effective discharge of the
duties of the Corporation as receiver. The Board of Directors shall adopt such policies and
guidelines as may be necessary for the performance of the above powers by personnel,
deputies, assistants and agents of the Corporation.

(c) After the payment of all liabilities and claims against the closed bank, the Corporation shall
pay surplus, if any, dividends at the legal rate of interest from date of takeover to date of
distribution to creditors and claimants of the closed bank in accordance with the Rules on
Concurrence and Preference of Credits under the Civil Code or other laws before distribution to
the shareholders of the closed bank.

(d) The officers, employees, deputies, assistants and agents of the receiver shall have no liability
and shall not be subject to any action, claim or demand in connection with any act done or
omitted to be done by them in good faith in connection with the exercise of their powers and
functions under this Act and other applicable laws, or other actions duly approved by the court.

(e) The placement of a bank under liquidation shall have the following effects:
1. On the corporate franchise or existence Upon placement by the Monetary Board of a bank
under liquidation, it shall continue as a body corporate until the termination of the winding-
up period under Section 16 of this Act. Such continuation as a body corporate shall only be
for the purpose of liquidating, settling and closing its affairs and for the disposal,
conveyance or distribution of its assets pursuant to this Act. The receiver shall represent the
closed bank in all cases by or against the closed bank and prosecute and defend suits by or
against it. In no case shall the bank be reopened and permitted to resume banking business
after being placed under liquidation.
2. On the powers and functions of its directors, officers and stockholders The powers, voting
rights, functions and duties, as well as the allowances, remuneration and perquisites of the
directors, officers, and stockholders of such bank are terminated upon its closure.
Accordingly, the directors, officers, and stockholders shall be barred from interfering in any
way with the assets, records, and affairs of the bank. The receiver shall exercise all
authorities as may be required to facilitate the liquidation of the closed bank for the benefit
of all its creditors.
3. On the assets Upon service of notice of closure as provided in Section 14 of this Act, all the
assets of the closed bank shall be deemed in custodia legis in the hands of the receiver, and
as such, these assets may not be subject to attachment, garnishment, execution, levy or any
other court processes. A judge, officer of the court or any person who shall issue, order,
 process or cause the issuance or implementation of the garnishment order, levy, attachment
or execution, shall be liable under Section 27 of this Act: Provided, however, That collaterals
securing the loans and advances granted by the Bangko Sentral ng Pilipinas shall not be
included in the assets of the closed bank for distribution to other creditors: Provided, further,
That the proceeds in excess of the amount secured shall be returned by the Bangko Sentral
ng Pilipinas to the receiver. Any preliminary attachment or garnishment on any of the assets
of the closed bank existing at the time of closure shall not give any preference to the
attaching or garnishing party. Upon motion of the receiver, the preliminary attachment or
garnishment shall be lifted and/or discharged.
4. On labor relations Notwithstanding the provisions of the Labor Code, the employer-
employee relationship between the closed bank and its employees shall be deemed
terminated upon service of the notice of closure of the bank in accordance with this Act.
Payment of separation pay or benefits provided for by law shall be made from available
assets of the bank in accordance with the Rules on Concurrence and Preference of Credits
under the Civil Code or other laws.
5. Contractual obligations The receiver may cancel, terminate, rescind or repudiate any
contract of the closed bank that is not necessary for the orderly liquidation of the bank, or is
grossly disadvantageous to the closed bank, or for any ground provided by law.
6. On interest payments The liability of a bank to pay interest on deposits and all other
obligations as of closure shall cease upon its closure by the Monetary Board without
prejudice to the first paragraph of Section 85 of Republic Act No. 7653 (the New Central
Bank Act): Provided, That the receiver shall have the authority, without need for approval of
the liquidation court, to assign, as payment to secured creditors, the bank assets serving as
collaterals to their respective loans up to the extent of the outstanding obligations, including
interest as of date of closure of the bank, as validated by the receiver. The valuation of the
asset shall be based on the prevailing market value of the collaterals as appraised by an
independent appraiser on an "as is where is" basis.
7. Liability for penalties and surcharges for late payment and nonpayment of taxes From the
time of closure, the closed bank shall not be liable for the payment of penalties and
surcharges arising from the late payment or nonpayment of real property tax, capital gains
tax, transfer tax and similar charges.
8. Bank charges and fees on services The receiver may impose, on behalf of the closed bank,
charges and fees for services rendered after bank closure, such as, but not limited to, the
execution of pertinent deeds and certifications.
9. Actions pending for or against the closed bank Except for actions pending before the
Supreme Court, actions pending for or against the closed bank in any court or quasi- judicial
body shall, upon motion of the receiver, be suspended for a period not exceeding one
hundred eighty (180) days and referred to mandatory mediation. Upon termination of the
mediation, the case shall be referred back to the court or quasi-judicial body for further
proceedings.
10. Final decisions against the closed bank The execution and enforcement of a final decision of
a court other than the liquidation court against the assets of a closed bank shall be stayed.
The prevailing party shall file the final decision as a claim with the liquidation court and
settled in accordance with the Rules on Concurrence and Preference of Credits under the
Civil Code or other laws.
11. Docket and other court fees Payment of docket and other court fees relating to all cases or
actions filed by the receiver with any judicial or quasi-judicial bodies shall be deferred until
the action is terminated with finality. Any such fees shall constitute as a first lien on any
judgment in favor of the closed bank or in case of unfavorable judgment, such fees shall be
paid as liquidation costs and expenses during the distribution of the assets of the closed bank.
12. All assets, records, and documents in the possession of the closed bank at the time of its
closure are presumed held by the bank in the concept of an owner.
13. The exercise of authority, functions, and duties by the receiver under this Act shall be
presumed to have been performed in the regular course of business.
14. Assets and documents of the closed bank shall retain their private nature even if
administered by the receiver. Matters relating to the exercise by the receiver of the functions
under this Act shall be subject to visitorial audit only by the Commission on Audit.
Reference:
Republic of the Philippines. (1963). An act establishing the Philippine Deposit Insurance
Corporation, defining its powers and duties and for other purposes (Republic Act No. 3591).
Retrieved from https://www.pdic.gov.ph › PDIC Charter 2022