1. Individual account is insured separately from joint accounts; BUT
2. In case of joint accounts the amount of the deposit shall be divided equally between the depositors UNLESS otherwise is stipulated.
Example: 50K; A and B, A or B, A and/or B = 250 K each unless otherwise stipulated in the agreement 3. The maximum coverage likewise shall be divided
between the depositors.
So 500 K divide also between A and B.
Given these rules how much can a depositor recover from PDIC?
• 500 K for his individual account
• 500 K for all his joint accounts What if he has so many joint accounts?
A and/or B A and/or Father A and/or Mother A and/or Brother A and/or Sister
Are all these accounts insured separately from one another? This is the significant amendment in RA 9302, which was carried over in the new amendatory law. “The aggregate share of the depositor in all the joint accounts should be added, and aggregate share of all the joint accounts is insured only up to 500 K.” So the maximum amount you can recover from PDIC is P1M – 500K for you individual account and 500K for you share in all your joint accounts.
Example: A has the following accounts with ABC Bank: 1M in his own name (A)
1M A and/or B 1M A and/or C 1M A and/or B
For any amount in excess of the insured deposit you cannot recover from PDIC.
It can be recovered from the Bank but based on concurrence of preference of credit. So you stand in equal footing with other creditors of the distressed bank. And usually deposit is not a preferred credit EXCEPT the case of Miranda vs CA.
Miranda vs CA.
The depositor withdrew 5 M and converted to a manager’s check. When it was converted to a manager’s check the bank officials already knew that the bank was insolvent, it got the money and issued the managers check. In transit the bank closed because of insolvency. Under these circumstances the SC said that the deposit is considered a preferred credit. Generally it is not a preferred credit, generally the 500 K cannot be recovered not from PDIC but from the bank depending on the available assets and how many creditors are there – are they preferred or not. Your chances of recovering the entire amount nil, but the chances or you recovering a portion of the 500K depend on how preferred you are viz a viz the other creditors of the distressed bank.
Within what period can you file with PDIC?
Within 24 mos. from closure. After that PDIC will not be liable but you can still recover from the distressed bank based on the rules concurrence an on preferences of credit.
A and/or B – the amount shall be divided between them: A owns 500K, B owns 500K (no problem)
A and/or C – A owns 500K, C owns 500K (no problem) A and/or D - A owns 500K, C owns 500K (no problem) Total account of A is 1.5 M
How much can be recovered?
Only 500K. Under the old law these accounts are insured separately, that is why prior RA 9302 the law was easy to circumvent.
The 1M cannot be recovered from PDIC but from the distressed bank subject to the rules on concurrence and preference of credit.
A has accounts with X branch, Y branch and Z branch of the same bank, are they insured separately?
No because they are maintained in the same bank but different branches. So it should be per bank not per branch in computation.
What if A has accounts with ABC Bank and XYZ Bank, both banks collapsed how much can he recover?
This is not something the law does not contemplate. But it makes sense that the depositor can demand 500 K for his deposit with ABC Bank and 500 K for his deposit with XYZ Bank.
What about account maintained with a corporation? Example: A and/or ABC Corp. Who can recover the insurance?
It is the corporation unless otherwise stipulated. So don’t you ever maintain an account with a corporation because the presumption it is owned by the corporation unless otherwise stipulated in the contract of deposit.
What about A in trust for B; or Father in trust for son, who can recover the insurance coverage?
The account is owned by the Father, he can withdraw it anytime but he earmarked for the credit of his son.
The law says that for insurance purposes it is the beneficiary (in whose favour the account is opened), the son, that can claim the insurance coverage not
the one opening the account,
Does PDIC have the power to examine bank deposits?
Under RA 9302 it was not clear it was simply state that PDIC with consent of BSP may examine the books documents and records. It does not say whether this cover deposits.
The amendments made it clear that PDIC has the power to examine deposits of distressed banks. Does BSP have the power to examined Bank Deposits?
Only for the purpose of insuring compliance with the Anti-Money Laundering Law.
PDIC, no qualification, can examine bank deposits of a distressed bank.
Does PDIC have the power to reduce interest on deposit? PDIC law now empowers the PDIC to reduce the interest rate on any deposit made within 6 mos. prior to closure. So if you are induced by the “offer” of the bank of its high interest rate, think twice because all of these banks have closed in the past and PDIC , any way, has the power to reduce the interest rate to a reasonable level. So what is the point of putting you money in that bank because of the high interest rate if it closes?
*Every time a bank offers a very interest rate, it is an indication of poor financial health.
For tax purposes if an account is held in a “and/or capacity” can one of the depositor later on withdraw the entire amount without paying taxes?
If it A and/or B, 50% owned by A therefore 50% may be withdrawn without paying taxes.
What if it is “A and B”?
Same. 50% shall be without tax.
So if you want to save on taxes make it A or B. So that if B dies you can withdraw the entire deposit.
The basis for this should be made in complete trust between A and B because if it turns out to be someone take advantage of the situation the prudence that prompted you to open account in that capacity may be defeated by other important consideration. Just like what happened to the case of City Bank v CA.
City Bank vs CA.
Father and/or daughter. The daughter withdrew the entire deposit and transferred everything to her account.
Famous moviestar before he was officially declared dead, there was observance of 3 days before he was declared clinical death (organs are no longer working) and physical/legal death (no more part of your body is functioning). During the 3 day period they changed the account from “A and B” to “A or B,” using the thumbmark of the movie actor. Then authenticated by the notary public swearing before his own god that thumbmark was affixed with his free consent or volition. Once the records have been cleansed they declared the movie actor dead. So the wife was able to withdraw all the deposit without being subjected to payment of taxes.