Who is Entitled to the Insured Deposit?

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This article was originally published on June 1, 2022 and has been updated to reflect recent legal developments.

The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of a lawyer or you may directly contact and consult Alburo Alburo and Associates Law Offices to address your specific legal concerns, if there is any.

Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.

AT A GLANCE:

An insured deposit is the amount due to any bonafide depositor for legitimate deposits in an insured bank as of the date of closure, but not exceeding the amount determined under applicable regulations as the Board of Directors may prescribe. (Section 5(3)(k) of Republic Act No.3591, as amended)

Payment of insured deposits is made whenever an insured bank is closed, or upon expiration or revocation of its corporate term.

What is a Deposit?

Deposit is 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, or issued in accordance with Bangko Sentral rules and regulations and other applicable laws, together with such other obligations of a bank, which, consistent with banking usage and practices, the Board of Directors shall determine and prescribe by regulations to be deposit liabilities of the bank (Philippine Deposit Insurance Corp. v. Dizon, G.R. No. 219909 (Notice), February 19, 2020)

What is an insured deposit?

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. (Linsangan v. Philippine Deposit Insurance Corp., G.R. No. 228807, February 11, 2019)

Section 5(3)(k) of Republic Act No.3591, as amended, provides:

“(k) 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). Such amount shall be determined according to such regulations as the Board of Directors may prescribe. 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 or her benefit either in his or her own name or in the name of others. A joint account regardless of whether the conjunction ‘and’, ‘or’, ‘and/or’ is used, shall be insured separately from any individually-owned deposit account: Provided, That (1) if the account is held jointly by two or more natural persons, or by two or more juridical persons or entities, the maximum insured deposit shall be divided into as many equal shares as there are individuals, juridical persons or entities, unless a different sharing is stipulated in the document of deposit, and (2) if the account is held by a juridical person or entity jointly with one or more natural persons, the maximum insured deposit shall be presumed to belong entirely to such juridical person or entity: Provided, further, That the aggregate of the interest of each co-owner over several joint accounts, whether owned by the same or different combinations of individuals, juridical persons or entities, shall likewise be subject to the maximum insured deposit: Provided, furthermore, That the provisions of any law to the contrary notwithstanding, no owner/holder of any passbook, certificate of deposit or other evidence of deposit shall be recognized as a depositor entitled to the rights provided in this Act unless the passbook, certificate of deposit or other evidence of deposit is determined by the Corporation to be an authentic document or record of the issuing bank.
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On March 15, 2025, the PDIC Board of Directors increased the amount covered by an insured deposit to One Million Pesos (PhP1,000,000.00) per depositor.

Who is entitled to the Insured Deposit?

As a general rule, the insured deposit is payable to the bona fide or beneficial owner of the deposit.

In determining the depositor entitled to insured deposit payable by the PDIC, the registered owner/holder of a Legitimate Deposit in the books of the issuing bank shall be recognized as the depositor entitled to deposit insurance, except as otherwise provided by this Issuance. (Linsangan v. Philippine Deposit Insurance Corp.)

Deposit Splitting and Transfers

In deposit splitting, there is a presumption that the transferees have no beneficial ownership considering that the source account, which exceeded the maximum deposit insurance coverage, was split into two or more accounts within 120 days immediately preceding bank closure.

On the other hand, in cases wherein the transfer into two or more accounts occurred before the 120-day period, the PDIC does not discount the possibility that there may have been a transfer for valid consideration, but in the absence of transfer documents found in the records of the bank at the time of closure, the presumption arises that the source account remained with the transferor.

Consequently, even if the transfer into different accounts was not made within 120 days immediately preceding bank closure, the grant of deposit insurance to an account found to have originated from another deposit is not automatic because the transferee still has to prove that the transfer was for a valid consideration through documents kept in the custody of the bank.(Linsangan v. Philippine Deposit Insurance Corp.)

Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding legal services, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/ 09175772207/ 09778050020.

Who is Entitled to the Insured Deposit?

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