by Allan Yves Briones
The Commission on Audit (COA) and the Philippine Deposit Insurance Corporation (PDIC) butt heads on the proper computation for remittances owed by the latter to the national government.
According to the commission’s annual audit report, the dividends declared by PDIC in 2018 was deficient by P2.01 billion because it subtracted the sums of interest on borrowed funds, other business income and foreign exchange gains from the actual income base of P10.47 billion.
This practice, according to state auditors, is contrary to Section 18 of Republic Act No. 3591 which states that the dividend rate shall be at least 50% of the income from the agency’s other sources.

However, as shown in the report, PDIC only declared the value of P6.45 billion which according to the prevailing rate means that remittances owed will amount to only P3.22 billion.
Management asserted, however, that the items excluded and deducted from the dividend base “are warranted under the relevant accounting treatment or reporting standards.” They explained that the interest expenses relate to the interest costs incurred on the borrowed funds, not covered under the existing computation scheme.
The state auditing agency added that the national government, represented by the Department of Finance, similarly argued that the exclusions and deduction from the income base are not allowed under the PDIC Charter. In fact, both parties agreed to refer to the Department of Justice for opinion and resolution the interpretation of the Dividends Law and the PDIC Charter.
Pending resolution of by the justice department, the commission affirmed their recommendation to declare additional dividends owed by PDIC in the amount of P2.01 billion, and that the same be remitted to the national government.
The PDIC was created to insure bank deposits, safeguarding the interests of the depositing public.