When a bank declares bankruptcy

When a bank declares bankruptcy "I have several bank accounts in a rural bank. With the recent turn of events in the said bank because of the coronavirus pandemic, it declared bankruptcy. However, in one of our dialogues with the bank officials, they assured us that our money is covered by insurance under the Philippine Deposit Insurance Commission (PDIC). Can you enlighten me on the matter?Marcus Dear Marcus,Under Republic Act (RA) 10846, there is a mandatory insurance coverage for deposits of money in all banks. Section 5(g) of RA 10846 states that: “The term deposit means 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, evidenced by a passbook, certificate of deposit, or other evidence of deposit issued in accordance with Bangko Sentral ng Pilipinas 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. xxx”With regard to the amount of insurance coverage, Section 7 of the afore-mentioned law provides that a bonafide depositor shall be entitled to receive the amount of not exceeding P500,000, to wit: “Section 7. Section 4 of the same Act is accordingly renumbered as Section 5, and is hereby amended to read as follows:“Section 5. As used in this Act — “(j) 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). xxx. 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. xxx”This means the PDIC insures only the first P500,000 due to a depositor. Such maximum amount is shared by all of the depositor’s single deposit accounts in the bank. Thus, PDIC is only obliged to pay a depositor up to P500,000, regardless of whether the depositor has one, two or more single accounts.Applying the foregoing to your case, bank closure by reason of bankruptcy triggered the obligation of the PDIC to pay your insured deposits up to a maximum P500,000 for your single account/s. The PDIC is obliged to settle this with you immediately, and payment of the insured deposit will either be in the form of cash or money transfer to another bank.We hope that we were able to answer your queries. This advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated. Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net" - https://www.affordablecebu.com/