G.R. No.

118917 - December 22, 1997 Consequently, on March 31, 1987, private respondents
Philippine Deposit Insurance Corporation vs. Court filed an action for collection against PDIC, RSB and
of Appeals the Central Bank.

FACTS: On September 14, 1987, the trial court, declared the

On September 22, 1983, plaintiffs-appellees invested Central Bank in default for failing to file an answer.
in money market placements with the Premiere
Financing Corporation (PFC) in the sum of P10,000.00 On May 29, 1989, the trial court rendered its decision
each for which they were issued by the PFC ordering the defendants therein to pay plaintiffs, jointly
corresponding promissory notes and checks. On the and severally, the amount corresponding to the latter’s
same date (September 22, 1983), John Francis certificates of time deposit.
Cotaoco, for and in behalf of plaintiffs-appellees, went
to the PFC to encash the promissory notes and Both PDIC and RSB appealed.
checks, but the PFC referred him to the Regent Saving
Bank (RSB). Instead of paying the promissory notes ISSUE:
and checks, the RSB, upon agreement of Cotaoco, Whether or not PDIC can be held liable for value of the
issued the subject 13 certificates of time deposit with certificates of time deposit held by the petitioners.
Nos. 09648 to 09660, inclusive, each stating, among
others, that the same certifies that the bearer thereof HELD:
has deposited with the RSB the sum of P10,000.00; NO.
that the certificate shall bear 14% interest per annum;
that the certificate is insured up toP15,000.00 with the Whenever an insured bank shall have been closed on
PDIC; and that the maturity date thereof is on account of insolvency, payment of the insured deposits
November 3, 1983 (Exhs. “B”, “B-1” to “B-12”). in such bank shall be made by the Corporation as
soon as possible. The term “deposit” means the
On the aforesaid maturity dated (November 3, 1983), unpaid balance of money or its equivalent received by
Cotaoco went to the RSB to encash the said a bank in the usual course of business and for which it
certificates. Thereat, RSB Executive Vice President has given or is obliged to give credit to a commercial,
Jose M. Damian requested Cotaoco for a deferment or checking, savings, time or thrift account or which is
an extension of a few days to enable the RSB to raise evidence by passbook, check and/or certificate of
the amount to pay for the same (Exh. “D”). Cotaoco deposit printed or issued in accordance with Central
agreed. Despite said extension, the RSB still failed to Bank rules and regulations and other applicable laws,
pay the value of the certificates. Instead, RSB advised together with such other obligations of a bank which,
Cotaoco to file a claim with the PDIC. consistent with banking usage and practices, the
Board of Directors shall determine and prescribe by
Meanwhile, on June 15, 1984, the Monetary Board of regulations to be deposit liabilities of the Bank. These
the Central Bank issued Resolution No. 788 (Exh. ‘2’, pieces of evidence convincingly show that the subject
Records, p. 159) suspending the operations of the CTDs were indeed issued without RSB receiving any
RSB. Eventually, the records of RSB were secured money therefor. No deposit, as defined in Section 3 (f)
and its deposit liabilities were eventually determined. of R.A. No. 3591, therefore came into existence.
On December 7, 1984, the Monetary Board issued Accordingly, petitioner PDIC cannot be held liable for
Resolution No. 1496 (Exh. ‘1’) liquidating the RSB. value of the certificates of time deposit held by private
Subsequently, a masterlist or inventory of the RSB respondents.
assets and liabilities was prepared. However, the
certificates of time deposit of plaintiffs-appellees were
not included in the list on the ground that the
certificates were not funded by the PFC or duly
recorded as liabilities of RSB.

On September 4, 1984, plaintiffs-appellees filed with

the PDIC their respective claims for the amount of the
certificates (Exhs. “C”, “C-1”, to “C-12”). Sabina Yu,
James Ngkaion, Elaine Ngkaion and Jeffrey Ngkaion,
who have similar claims on their certificates of time
deposit with the RSB, likewise filed their claims with
the PDIC. To their dismay, PDIC refused the aforesaid
claims on the ground that the Traders Royal Bank
Check No. 299255 dated September 22, 1983 for the
amount of P125,846.07 (Exh. “B”) issued by PFC for
the aforementioned certificates was returned by the
drawee bank for having been drawn against
insufficient funds; and said check was not replaced by
the PFC, resulting in the cancellation of the certificates
as indebtedness or liabilities of RSB.
G.R. No. 176438 January 24, 2011 The Banks, through counsel, sought further
PHILIPPINE DEPOSIT INSURANCE CORPORATION clarification from PDIC on its source of authority to
(PDIC), Petitioner, vs. PHILIPPINE COUNTRYSIDE conduct the impending investigations and requested
RURAL BANK, INC., RURAL BANK OF CARMEN that PDIC refrain from proceeding with the
(CEBU), INC., BANK OF EAST ASIA investigations. The Banks wrote to the Monetary Board
(MINGLANILLA, CEBU), INC., and PILIPINO RURAL requesting a clarification on the parameters of PDIC’s
BANK (CEBU), INC., Respondents. power of investigation/examination over the Banks and
for an issuance of a directive to PDIC not to pursue the
FACTS: investigations pending the requested clarification.
On May 25, 2005, the PDIC Board adopted another
resolution, Resolution No. 2005-05-056, approving the On June 28, 2005, PRBI and BEAI again received
conduct of an investigation on PCRBI based on a letters from PDIC, which appeared to be final demands
Complaint-Affidavit filed by a corporate depositor, the on them to allow its investigation. The PDIC General
Philippine School of Entrepreneurship and Counsel reiterates its position that prior Monetary
Management. Board approval was not a pre-requisite to PDIC’s
exercise of its investigative power.
On June 3, 2005, in accordance with the two PDIC
Board resolutions, then PDIC President and Chief The Banks then filed a Petition for Declaratory Relief
Executive Officer Ricardo M. Tan issued the Notice of with a Prayer for the Issuance of a TRO and/or Writ of
Investigation to the President or The Highest Ranking Preliminary Injunction (RTC Petition) before the
Officer of PCRBI. Regional Trial Court of Makati. In the RTC Petition, the
Banks prayed for a judgment interpreting Section 9(b-
In the course of its investigation, PCRBI was found to 1) of the PDIC Charter, as amended, to require prior
have granted loans to certain individuals, which were Monetary Board approval before PDIC could exercise
settled by way of dacion of properties. These its investigation/examination power over the Banks.
properties, however, had already been previously
foreclosed and consolidated under the names of PRBI, The Banks withdrew their application for a temporary
BEAI and RBCI. restraining order (TRO). Thus, the Banks instituted a
petition for injunction with application for TRO and/or
On June 15, 2005, PDIC issued similar notices of Preliminary Injunction (CA-Manila petition) before the
investigation to PRBI and BEAI. The notices stated Court of Appeals-Manila.
that the investigation was to be conducted pursuant to
Section 9 (b-1) of the PDIC Charter and upon authority RTC Makati and CA-Manila both dismissed the
of PDIC Board Resolution No. 2005-03-032 petitions filed by the Banks.
authorizing the twelve (12) named representatives of
PDIC to conduct the investigation. The notice of On March 14, 2006, the Banks filed their Petition for
investigation was served on PRBI the next day, June Injunction with Prayer for Preliminary Injunction (CA-
16, 2005. Cebu Petition) with the Court of Appeals-Cebu (CA-
Cebu).
PRBI and BEAI refused entry to their bank premises
and access to their records and documents by the On March 15, 2006, the CA-Cebu issued a resolution
PDIC Investigation Team, upon advice of their granting the Bank’s application for a TRO. This
respective counsels. On June 16 and 17, 2005, Atty. enjoined the PDIC, its representatives or agents or any
Victoria G. Noel sent letters to the PDIC informing it of other persons or agency assisting them or acting for
her legal advice to PCRBI and BEAI not to submit to and in their behalf from conducting
PDIC investigation on the ground that its investigatory examinations/investigations on the Banks’ head and
power pursuant to Section 9(b-1) of R.A. No. 3591, as branch offices without securing the requisite approval
amended, cannot be differentiated from the from the Monetary Board of BSP.
examination powers accorded to PDIC under Section
8, paragraph 8 of the same law, under which, prior On September 18, 2006, after both parties had
approval from the Monetary Board is required. submitted their respective memoranda, the CA-Cebu
rendered a decision granting the writ of preliminary
On June 17, 2005, PDIC General Counsel Romeo M. injuction.
Mendoza sent a reply to Atty. Noel stating that "PDIC’s
investigation power, as distinguished from the PDIC moved for reconsideration but it was denied in a
examination power of the PDIC under Section 8 of the resolution dated January 25, 2007.
same law, does not need prior approval of the
Monetary Board." PDIC then urged PRBI and BEAI Hence, this petition.
"not to impede the conduct of PDIC’s investigation" as
the same "constitutes a violation of the PDIC Charter ISSUES:
for which PRBI and BEAI may be held criminally Whether prior approval of the Monetary Board of the
and/or administratively liable. Bangko Sentral ng Pilipinas is necessary before the
PDIC may conduct an investigation of respondent
banks.
Whether the power of the PDIC to conduct the basis of a fact-finding examination, then clearly
investigation the same as its power of examination. examination and investigation are two different
proceedings. It would obviously defy logic to make the
RULING: result of an "investigation" the basis of the same
The Court is of the view that the Monetary Board proceeding. Thus, RI No. 2005-02 defines an
approval is not required for PDIC to conduct an "investigation" as a "fact-finding examination, study or
investigation on the Banks. inquiry for determining whether the allegations in a
complaint or findings in a final report of examination
Section 9(b-1) of the PDIC Charter provides that the may properly be the subject of an administrative,
PDIC Board shall have the power to: criminal or civil action."

(b-1) The investigators appointed by the Board of Examination involves an evaluation of the current
Directors shall have the power on behalf of the status of a bank and determines its compliance with
Corporation to conduct investigations on frauds, the set standards regarding solvency, liquidity, asset
irregularities and anomalies committed in banks, valuation, operations, systems, management, and
based on reports of examination conducted by the compliance with banking laws, rules and regulations.
Corporation and Bangko Sentral ng Pilipinas or
complaints from depositors or from other government Investigation, on the other hand, is conducted based
agency. Each such investigator shall have the power on specific findings of certain acts or omissions which
to administer oaths, and to examine and take and are subject of a complaint or a Final Report of
preserve the testimony of any person relating to the Examination.
subject of investigation. (As added by R.A. 9302, 12
August 2004) Clearly, investigation does not involve a general
evaluation of the status of a bank. An investigation
As stated above, the charter empowers the PDIC to zeroes in on specific acts and omissions uncovered via
conduct an investigation of a bank and to appoint an examination, or which are cited in a complaint.
examiners who shall have the power to examine any
insured bank. Such investigators are authorized to An examination entails a review of essentially all the
conduct investigations on frauds, irregularities and functions and facets of a bank and its operation. It
anomalies committed in banks, based on an necessitates poring through voluminous documents,
examination conducted by the PDIC and the BSP or and requires a detailed evaluation thereof. Such a
on complaints from depositors or from other process then involves an intrusion into a bank’s
government agencies. records.

The distinction between the power to investigate and In contrast, although it also involves a detailed
the power to examine is emphasized by the existence evaluation, an investigation centers on specific acts of
of two separate sets of rules governing the procedure omissions and, thus, requires a less invasive
in the conduct of investigation and examination. assessment.
Regulatory Issuance (RI) No. 2005-02 or the PDIC
Rules on Fact-Finding Investigation of Fraud, The practical justification for not requiring the Monetary
Irregularities and Anomalies Committed in Banks Board approval to conduct an investigation of banks is
covers the procedural requirements of the exercise of the administrative hurdles and paperwork it entails,
the PDIC’s power of investigation. On the other hand, and the correspondent time to complete those
RI No. 2009-05 sets forth the guidelines for the additional steps or requirements. As in other types of
conduct of the power of examination. investigation, time is always of essence, and it is
prudent to expedite the proceedings if an accurate
The definitions provided under the two aforementioned conclusion is to be arrived at, as an investigation is
regulatory issuances elucidate on the distinction only as precise as the evidence on which it is based.
between the power of examination and the power of The promptness with which such evidence is gathered
investigation. Section 2 of RI No. 2005-02 states that is always of utmost importance because evidence,
its coverage shall be applicable to "all fact-finding documentary evidence in particular, is remarkably
investigations on fraud, irregularities and/or anomalies fungible. A PDIC investigation is conducted to
committed in banks that are conducted by PDIC based "determine[e] whether the allegations in a complaint or
on: [a] complaints from depositors or other government findings in a final report of examination may properly
agencies; and/or [b] final reports of examinations of be the subject of an administrative, criminal or civil
banks conducted by the Bangko Sentral ng Pilipinas action." In other words, an investigation is based on
and/or PDIC." reports of examination and an examination is
conducted with prior Monetary Board approval.
The same issuance states that the Final Report of Therefore, it would be unnecessary to secure a
Examination is one of the three pre-requisites to the separate approval for the conduct of an investigation.
conduct of an investigation, in addition to the Such would merely prolong the process and provide
authorization of the PDIC Board and a complaint. unscrupulous individuals the opportunity to cover their
Juxtaposing this provision with Section 9(b-1) of the tracks.
PDIC Charter, since an examination is explicitly made
Indeed, while in a literary sense, the two terms may be
used interchangeably, under the PDIC Charter,
examination and investigation refer to two different
processes. To reiterate, an examination of banks
requires the prior consent of the Monetary Board,
whereas an investigation based on an examination
report, does not.
G.R. No. 230020, March 19, 2018 Aggrieved, petitioner filed a Petition for Certiorari
PETER L. SO, Petitioners, -versus – PHILIPPINE before the RTC.
DEPOSIT INSURANCE CORPORATION,
Respondents. However, the RTC upheld the factual findings and
conclusions of the PDIC and also denied petitioner's
In the case of Lintang Bedol v. Commission on motion for reconsideration. It also declared that,
Elections, cited in Carlito C. Encinas v. PO1 Alfredo P. pursuant to its Charter (RA 3591), PDIC is empowered
Agustin, Jr. and PO1 Joel S. Caubang, the Supreme to determine and pass upon the validity of the
Court explained the nature of a quasi-judicial agency, insurance deposits claims, it being the deposit insurer.
viz.: As such, when it rules on such claims, it is exercising a
quasi-judicial function. Thus, it was held that
Quasi-judicial or administrative adjudicatory power on petitioner's remedy to the dismissal of his claim is to
the other hand is the power of the administrative file a petition for certiorari with the Court of Appeals
agency to adjudicate the rights of persons before it. It under Section 4, Rule 65, stating that if the petition
is the power to hear and determine questions of fact to involves the acts or omissions of a quasi-judicial
which the legislative policy is to apply and to decide in agency, unless otherwise provided by law or the rules,
accordance with the standards laid down by the law it shall be filed in and cognizable only by the Court of
itself in enforcing and administering the same law. The Appeals (CA).
administrative body exercises its quasi-judicial power
when it performs in a judicial manner an act which is In addition, the RTC also cited Section 22 of Republic
essentially of an executive or administrative nature, Act (RA) No. 3591, as amended, which essentially
where the power to act in such manner is incidental to states that only the CA shall issue temporary
or reasonably necessary for the performance of the restraining orders, preliminary injunctions or
executive or administrative duty entrusted to it. In preliminary mandatory injunctions against the PDIC for
carrying out their quasi-judicial functions the any action under the said Act. Hence, So filed petition
administrative officers or bodies are required to directly to the Surpreme Court on pure question of law.
investigate facts or ascertain the existence of facts,
hold hearings, weigh evidence, and draw conclusions ISSUE:
from them as basis for their official action and exercise Whether the RTC have jurisdiction over a petition for
of discretion in a judicial nature. certiorari filed under Rule 65, assailing the PDIC's
denial of a deposit insurance claim. (NO)
The actions of the PDIC taken under RA 10846
Section 5(g) shall be final and executory, and may RULING:
only be restrained or set aside by the Court of In the case of Lintang Bedol v. Commission on
Appeals, upon appropriate petition for certiorari on the Elections, cited in Carlito C. Encinas v. PO1 Alfredo P.
ground that the action was taken in excess of Agustin, Jr. and PO1 Joel S. Caubang,the Supreme
jurisdiction or with such grave abuse of discretion as to Court explained the nature of a quasi-judicial agency,
amount to a lack or excess of jurisdiction. The petition viz.:
for certiorari may only be filed within thirty (30) days
from notice of denial of claim for deposit insurance. Quasi-judicial or administrative adjudicatory power on
the other hand is the power of the administrative
FACTS: agency to adjudicate the rights of persons before it. It
Peter L. So opened an account with the Cooperative is the power to hear and determine questions of fact to
Rural Bank Bulacan (CRBB) amounting to P300,000, which the legislative policy is to apply and to decide in
for which he was assigned the Special Incentive accordance with the standards laid down by the law
Savings Account (SISA) No. 05-15712-1. On the same itself in enforcing and administering the same law. The
year, So learned that CRBB closed its operations and administrative body exercises its quasi-judicial power
was placed under Philippine Deposit Insurance when it performs in a judicial manner an act which is
Corporation's (PDIC's) receivership. This prompted essentially of an executive or administrative nature,
petitioner, together with other depositors, to file an where the power to act in such manner is incidental to
insurance claim with the PDIC. or reasonably necessary for the performance of the
executive or administrative duty entrusted to it. In
However, upon investigation, the PDIC found that carrying out their quasi-judicial functions the
petitioner's account originated from and was funded by administrative officers or bodies are required to
the proceeds of a terminated SISA (mother account), investigate facts or ascertain the existence of
jointly owned by a certain Reyes family. Thus, based facts, hold hearings, weigh evidence, and draw
on the determination that petitioner's account was conclusions from them as basis for their official
among the product of the splitting of the said mother action and exercise of discretion in a judicial
account which is prohibited by law. nature.

PDIC then denied petitioner's claim for payment of The Supreme Court has laid down the test for
deposit insurance. Petitioner filed a Request for determining whether an administrative body is
Reconsideration, which was likewise denied by the exercising judicial or merely investigatory functions:
PDIC on January 6, 2016. adjudication signifies the exercise of the power
and authority to adjudicate upon the rights and
obligations of the parties. Hence, if the only purpose
of an investigation is to evaluate the evidence
submitted to an agency based on the facts and
circumstances presented to it, and if the agency is not
authorized to make a final pronouncement affecting
the parties, then there is an absence of judicial
discretion and judgment.

Thus, the legislative intent in creating PDIC as a quasi-

judicial agency is clearly manifest. Indeed, PDIC
exercises judicial discretion and judgment in
determining whether a claimant is entitled to a deposit
insurance claim, which determination results from its
investigation of facts and weighing of evidence
presented before it. Noteworthy also was the fact that
the law considers PDIC's action as final and executory
and may be reviewed only on the ground of grave
abuse of discretion.

Finally, in the new amendment in PDIC's Charter

under RA 10846, specifically Section 5(g) thereof,
confirmed such conclusion, viz.:

The actions of the PDIC taken under Section 5(g) shall

be final and executory, and may only be restrained or
set aside by the Court of Appeals, upon appropriate
petition for certiorari on the ground that the action was
taken in excess of jurisdiction or with such grave
abuse of discretion as to amount to a lack or excess of
jurisdiction. The petition for certiorari may only be filed
within thirty (30) days from notice of denial of claim for
deposit insurance.
GR NO.170290 April 11, 2012 favor of Citibank and BA. Aggrieved, PDIC appealed to
Philippine Deposit Insurance Corporation vs. the CA which affirmed the ruling of the RTC in its
Citibank October 27, 2005 Decision. Hence, this petition.

FACTS: ISSUE:
Petitioner Philippine Deposit Insurance Corporation Whether or not a branch of a bank has a separate
(PDIC) is a government instrumentality created by legal Personality.
virtue of Republic Act (R.A.) No. 3591, as amended by
R.A. No. 9302. HELD:
No. A branch has no separate legal personality. This
Respondent Citibank, N.A. (Citibank) is a banking Court is of the opinion that the key to the resolution of
corporation while respondent Bank of America, S.T. & this controversy is the relationship of the Philippine
N.A. (BA) is a national banking association, both of branches of Citibank and BA to their respective head
which are duly organized and existing under the laws offices and their other foreign branches.
of the United States of America and duly licensed to do
business in the Philippines, with offices in Makati City. The Court begins by examining the manner by which a
foreign corporation can establish its presence in the
In 1977, PDIC conducted an examination of the books Philippines. It may choose to incorporate its own
of account of Citibank. It discovered that Citibank, in subsidiary as a domestic corporation, in which case
the course of its banking business, from September such subsidiary would have its own separate and
30, 1974 to June 30, 1977, received from its head independent legal personality to conduct business in
office and other foreign branches a total of the country. In the alternative, it may create a branch
P11,923,163,908.00 in dollars, covered by Certificates in the Philippines, which would not be a legally
of Dollar Time Deposit that were interest-bearing with independent unit, and simply obtain a license to do
corresponding maturity dates. These funds, which business in the Philippines.
were lodged in the books of Citibank under the
account “Their Account-Head Office/Branches-Foreign In the case of Citibank and BA, it is apparent that they
Currency,” were not reported to PDIC as deposit both did not incorporate a separate domestic
liabilities that were subject to assessment for corporation to represent its business interests in the
insurance. As such, in a letter dated March 16, 1978, Philippines. Their Philippine branches are, as the
PDIC assessed Citibank for deficiency in the sum of name implies, merely branches, without a separate
P1,595,081.96. legal personality from their parent company, Citibank
and BA. Thus, being one and the same entity, the
Similarly, sometime in 1979, PDIC examined the funds placed by the respondents in their respective
books of accounts of BA which revealed that from branches in the Philippines should not be treated as
September 30, 1976 to June 30, 1978, BA received deposits made by third parties subject to deposit
from its head office and its other foreign branches a insurance under the PDIC Charter. The purpose of the
total of P629,311,869.10 in dollars, covered by PDIC is to protect the depositing public in the event of
Certificates of Dollar Time Deposit that were interest- a bank closure.
bearing with corresponding maturity dates and lodged
in their books under the account “Due to Head . It has already been sufficiently established by US
Office/Branches.” Because BA also excluded these jurisprudence and Philippine statutes that the head
from its deposit liabilities, PDIC wrote to BA on office shall answer for the liabilities of its branch. Now,
October 9, 1979, seeking the remittance of suppose the Philippine branch of Citibank suddenly
P109,264.83 representing deficiency premium closes for some reason. Citibank N.A. would then be
assessments for dollar deposits. required to answer for the deposit liabilities of Citibank
Philippines. If the Court were to adopt the posture of
Believing that litigation would inevitably arise from this PDIC that the head office and the branch are two
dispute, Citibank and BA each filed a petition for separate entities and that the funds placed by the head
declaratory relief before the Court of First Instance office and its foreign branches with the Philippine
(now the Regional Trial Court) of Rizal on July 19, branch are considered deposits within the meaning of
1979 and December 11, 1979, respectively. In their the PDIC Charter, it would result to the incongruous
petitions, Citibank and BA sought a declaratory situation where Citibank, as the head office, would be
judgment stating that the money placements they placed in the ridiculous position of having to reimburse
received from their head office and other foreign itself, as depositor, for the losses it may incur
branches were not deposits and did not give rise to occasioned by the closure of Citibank Philippines.
insurable deposit liabilities under Sections 3 and 4 of Surely our law makers could not have envisioned such
R.A. No. 3591 (the PDIC Charter) and, as a a preposterous circumstance when they created PDIC.
consequence, the deficiency assessments made by
PDIC were improper and erroneous. The cases were Finally, the Court agrees with the CA ruling that there
then consolidated. is nothing in the definition of a “bank” and a “banking
institution” in Section 3(b) of the PDIC Charter[27]
On June 29, 1998, the Regional Trial Court, Branch which explicitly states that the head office of a foreign
163, Pasig City (RTC) promulgated its Decision in
bank and its other branches are separate and distinct
from their Philippine branches.

There is no need to complicate the matter when it can

be solved by simple logic bolstered by law and
jurisprudence. Based on the foregoing, it is clear that
the head office of a bank and its branches are
considered as one under the eyes of the law. While
branches are treated as separate business units for
commercial and financial reporting purposes, in the
end, the head office remains responsible and
answerable for the liabilities of its branches which are
under its supervision and control. As such, it is
unreasonable for PDIC to require the respondents,
Citibank and BA, to insure the money placements
made by their home office and other branches.
Deposit insurance is superfluous and entirely
unnecessary when, as in this case, the institution
holding the funds and the one which made the
placements are one and the same legal entity.
G.R. No. 70054, December 11, 1991 the financial condition of Banco Filipino Savings and
BANCO FILIPINO SAVINGS AND MORTGAGE Mortgage Bank as of July 31, 1984, finding the bank
BANK VS. CENTRAL BANK one of insolvency and illiquidity and provides sufficient
justification for forbidding the bank from engaging in
There is no question that under Section 29 of the banking. The Monetary Board ordered the closure of
Central Bank Act, the following are the mandatory Banco Filipino and designated Mrs. Carlota P.
requirements to be complied with before a bank found Valenzuela as Receiver.
to be insolvent is ordered closed and forbidden to do
business in the Philippines: Firstly, an examination Banco Filipino filed a complaint with the RTC to set
shall be conducted by the head of the appropriate aside the action of the Monetary Board placing the
supervising or examining department or his examiners bank under receivership and filed with the SC the
or agents into the condition of the bank; secondly, it petition for certiorari and mandamus. Carlota
shall be disclosed in the examination that the condition Valenzuela, as Receiver and Arnulfo Aurellano and
of the bank is one of insolvency, or that its Ramon Tiaoqui as Deputy Receivers of Banco Filipino
continuance in business would involve probable loss submitted their report on the receivership of the bank
to its depositors or creditors; thirdly, the department to the Monetary Board, finding that the condition of the
head concerned shall inform the Monetary Board in banking institution continues to be one of insolvency,
writing, of the facts; and lastly, the Monetary Board i.e., its realizable assets are insufficient to meet all its
shall find the statements of the department head to be liabilities and that the bank cannot resume business
true. with safety to its depositors, other creditors and the
general public, and recommends the liquidation of the
In the case at bar, We believe that the closure of the bank. Banco Filipino filed a motion before the SC
petitioner bank was arbitrary and committed with grave praying that a restraining order or a writ of preliminary
abuse of discretion. Granting in gratia argumenti that injunction be issued to enjoin respondents from
the closure was based on justified grounds to protect causing the dismantling of Banco Filipino signs in its
the public, the fact that petitioner bank was suffering main office and 89 branches. The SC ordered the
from serious financial problems should not issuance of the temporary restraining order. The SC
automatically lead to its liquidation. Section 29 of the directed the Monetary Board and Central Bank hold
Central Bank provides that a closed bank may be hearings at which the Banco Filipino should be heard.
reorganized or otherwise placed in such a condition
that it may be permitted to resume business with This refers to nine (9) consolidated cases concerning
safety to its depositors, creditors and the general the legality of the closure and receivership of petitioner
public. Banco Filipino Savings and Mortgage Bank (Banco
Filipino for brevity) pursuant to the order of respondent
FACTS Monetary Board. Six (6) of these cases, namely, G.R.
This case involves 9 consolidated cases. The first six Nos. 68878, 77255-68, 78766, 81303, 81304 and
cases involve the common issue of whether or not the 90473 involve the common issue of whether or not the
liquidator appointed by the respondent Central Bank liquidator appointed by the respondent Central Bank
has the authority to prosecute as well as to defend (CB for brevity) has the authority to prosecute as well
suits, and to foreclose mortgages for and in behalf of as to defend suits, and to foreclose mortgages for and
the bank while the issue on the validity of the in behalf of the bank while the issue on the validity of
receivership and liquidation of the latter is pending the receivership and liquidation of the latter is pending
resolution in G.R. No. 7004. On the other hand, the resolution in G.R. No. 7004. Corollary to this issue is
other three (3) cases, namely, G.R. Nos. 70054, which whether the CB can be sued to fulfill financial
is the main case, 78767 and 78894 all seek to annul commitments of a closed bank pursuant to Section 29
and set aside M.B. Resolution No. 75 issued by of the Central Bank Act. On the other hand, the other
respondents Monetary Board and Central Bank on three (3) cases, namely, G.R. Nos. 70054, which is the
January 25, 1985. main case, 78767 and 78894 all seek to annul and set
aside M.B. Resolution No. 75 issued by respondents
G.R. Nos. 70054 Monetary Board and Central Bank on January 25,
Banco Filipino Savings and Mortgage Bank 1985.
commenced operations on July 9, 1964. It has 89
operating branches with more than 3 million ISSUES
depositors. It has an approved emergency advance of 1. Whether or not the liquidator appointed by the
P119.7 million. The Monetary Board placed Banco respondent Central Bank has the authority to
Filipino Savings and Mortgage Bank under prosecute as well as to defend suits, and to foreclose
conservatorship of Basilio Estanislao. He was later mortgages for and in behalf of the bank while the issue
replaced by Gilberto Teodoro as conservator on on the validity of the receivership and liquidation of the
August 10, 1984. Gilberto Teodoro submitted a report latter is pending resolution in G.R. No. 7004
dated January 8, 1985 to respondent The Monetary
Board on the conservatorship of the bank. 2. Whether or not the Central Bank and the Monetary
Subsequently, another report dated January 23, 1985 Board acted arbitrarily and in bad faith in finding and
was submitted to the Monetary Board by Ramon thereafter concluding that petitioner bank is insolvent,
Tiaoqui regarding the major findings of examination on and in ordering its closure on January 25, 1985.
 Bank possesses those powers and functions only as
RULING provided for in Sec. 29 of the Central Bank Act.
1. Yes, the liquidator appointed by the respondent 2. Yes, the Monetary Board acted arbitrarily and in bad
Central Bank has the authority to prosecute as well as faith in finding and thereafter concluding that petitioner
to defend suits, and to foreclose mortgages for and in bank is insolvent, and in ordering its closure on
behalf of the bank while the issue on the validity of the January 25, 1985. There is no question that under
receivership and liquidation of the latter is pending Section 29 of the Central Bank Act, the following are
resolution in G.R. No. 7004. When the issue on the the mandatory requirements to be complied with
validity of the closure and receivership of Banco before a bank found to be insolvent is ordered closed
Filipino bank was raised in G.R. No. 70054, pendency and forbidden to do business in the Philippines: Firstly,
of the case did not diminish the powers and authority an examination shall be conducted by the head of the
of the designated liquidator to effect and carry on the appropriate supervising or examining department or
administration of the bank. In fact when We adopted a his examiners or agents into the condition of the bank;
resolute on August 25, 1985 and issued a restraining secondly, it shall be disclosed in the examination that
order to respondents Monetary Board and Central the condition of the bank is one of insolvency, or that
Bank, We enjoined further acts of liquidation. Such its continuance in business would involve probable
acts of liquidation, as explained in Sec. 29 of the loss to its depositors or creditors; thirdly, the
Central Bank Act are those which constitute the department head concerned shall inform the Monetary
conversion of the assets of the banking institution to Board in writing, of the facts; and lastly, the Monetary
money or the sale, assignment or disposition of the s Board shall find the statements of the department head
to creditors and other parties for the purpose of paying to be true. Anent the first requirement, the Tiaoqui
debts of such institution. We did not prohibit however report, submitted on January 23, 1985, revealed that
acts a as receiving collectibles and receivables or the finding of insolvency of petitioner was based on the
paying off credits claims and other transactions partial list of exceptions and findings on the regular
pertaining to normal operate of a bank. examination of the bank as of July 31, 1984 conducted
by the Supervision and Examination Sector II of the
There is no doubt that the prosecution of suits Central Bank of the Philippines Central Bank. Clearly,
collection and the foreclosure of mortgages against Tiaoqui based his report on an incomplete examination
debtors the bank by the liquidator are among the usual of petitioner bank and outrightly concluded therein that
and ordinary transactions pertaining to the the latter's financial status was one of insolvency or
administration of a bank. They did Our order in the illiquidity. It is evident from the foregoing
same resolution dated August 25, 1985 for the circumstances that the examination contemplated in
designation by the Central Bank of a comptroller Sec. 29 of the CB Act as a mandatory requirement
Banco Filipino alter the powers and functions; of the was not completely and fully complied with. Despite
liquid insofar as the management of the assets of the the existence of the partial list of findings in the
bank is concerned. The mere duty of the comptroller is examination of the bank, there were still highly
to supervise counts and finances undertaken by the significant items to be weighed and determined such
liquidator and to d mine the propriety of the latter's as the matter of valuation reserves, before these can
expenditures incurred behalf of the bank. be considered in the financial condition of the bank.
Notwithstanding this, the liquidator is empowered
under the law to continue the functions of receiver is It would be a drastic move to conclude prematurely
preserving and keeping intact the assets of the bank in that a bank is insolvent if the basis for such conclusion
substitution of its former management, and to prevent is lacking and insufficient, especially if doubt exists as
the dissipation of its assets to the detriment of the to whether such bases or findings faithfully represent
creditors of the bank. These powers and functions of the real financial status of the bank. The actuation of
the liquidator in directing the operations of the bank in the Monetary Board in closing petitioner bank on
place of the former management or former officials of January 25, 1985 barely four days after a conference
the bank include the retaining of counsel of his choice with the latter on the examiners' partial findings on its
in actions and proceedings for purposes of financial position is also violative of what was provided
administration. in the CB Manual of Examination Procedures. Said
manual provides that only after the examination is
Clearly, in G.R. Nos. 68878, 77255-58, 78766 and concluded, should a pre-closing conference led by the
90473, the liquidator by himself or through counsel has examiner-in-charge be held with the
the authority to bring actions for foreclosure of officers/representatives of the institution on the
mortgages executed by debtors in favor of the bank. In findings/exception, and a copy of the summary of the
G.R. No. 81303, the liquidator is likewise authorized to findings/violations should be furnished the institution
resist or defend suits instituted against the bank by examined so that corrective action may be taken by
debtors and creditors of the bank and by other private them as soon as possible (Manual of Examination
persons. Similarly, in G.R. No. 81304, due to the Procedures, General Instruction, p. 14). It is hard to
aforestated reasons, the Central Bank cannot be understand how a period of four days after the
compelled to fulfill financial transactions entered into conference could be a reasonable opportunity for a
by Banco Filipino when the operations of the latter bank to undertake a responsive and corrective action
were suspended by reason of its closure. The Central on the partial list of findings of the examiner-in-charge.
In the instant case, the basic standards of substantial
due process were not observed. Time and again, We
have held in several cases, that the procedure of
administrative tribunals must satisfy the fundamentals
of fair play and that their judgment should express a
well-supported conclusion.

In view of the foregoing premises, We believe that the

closure of the petitioner bank was arbitrary and
committed with grave abuse of discretion. Granting in
gratia argumenti that the closure was based on
justified grounds to protect the public, the fact that
petitioner bank was suffering from serious financial
problems should not automatically lead to its
liquidation. Section 29 of the Central Bank provides
that a closed bank may be reorganized or otherwise
placed in such a condition that it may be permitted to
resume business with safety to its depositors, creditors
and the general public.
G.R. No. 200678, June 4, 2018 and recover accounts and assets of, or defend any
Banco Filipino Savings and Mortgage Bank v. action against, the institution." Considering that the
Bangko Sentral ng Pilipinas receiver has the power to take charge of all the assets
of the closed bank and to institute for or defend any
A closed bank under receivership can only sue or be action against it, only the receiver, in its fiduciary
sued through its receiver, the Philippine Deposit capacity, may sue and be sued on behalf of the closed
Insurance Corporation (PDIC). Hence, the petition filed bank.
by the petitioner bank which has been placed under
receivership is dismissible as it did not join PDIC as a When petitioner was placed under receivership, the
party to the case. powers of its Board of Directors and its officers were
suspended. Thus, its Board of Directors could not have
FACTS: validly authorized its Executive Vice Presidents to file
Petitioner bank has been placed under receivership the suit on its behalf. The Petition, not having been
when it filed a Petition for Certiorari with the Supreme properly verified, is considered an unsigned pleading.
Court. Said Petition was assailed by the respondent A defect in the certification of non-forum shopping is
that contended that the same should be dismissed likewise fatal to petitioner's cause. Considering that the
outright for being led without Philippine Deposit Petition was led by signatories who were not validly
Insurance Corporation's authority. It asserts that authorized to do so, the Petition does not produce any
petitioner was placed under receivership on March 17, legal effect. Being an unauthorized pleading, this Court
2011, and thus, petitioner's Executive Committee never validly acquired jurisdiction over the case. The
would have had no authority to sign for or on behalf of Petition, therefore, must be dismissed.
petitioner absent the authority of its receiver, Philippine
Deposit Insurance Corporation. They also point out
that both the Philippine Deposit Insurance Corporation
Charter and Republic Act No. 7653 categorically state
that the authority to file suits or retain counsels for
closed banks is vested in the receiver. Thus, the
verification and certification of non-forum shopping
signed by petitioner's Executive Committee has no
legal effect.

Issue:
Whether or not petitioner Banco Filipino, as a closed
bank under receivership, could file this Petition for
Review without joining its statutory receiver, the
Philippine Deposit Insurance Corporation, as a party to
the case.

Ruling:
A closed bank under receivership can only sue or be
sued through its receiver, the Philippine Deposit
Insurance Corporation. Under Republic Act No. 7653,
when the Monetary Board finds a bank insolvent, it
may "summarily and without need for prior hearing
forbid the institution from doing business in the
Philippines and designate the Philippine Deposit
Insurance Corporation as receiver of the banking
institution."

The relationship between the Philippine Deposit

Insurance Corporation and a closed bank is fiduciary in
nature. Section 30 of Republic Act No. 7653 directs the
receiver of a closed bank to "immediately gather and
take charge of all the assets and liabilities of the
institution" and "administer the same for the benefit of
its creditors." The law likewise grants the receiver "the
general powers of a receiver under the Revised Rules
of Court." Under Rule 59, Section 6 of the Rules of
Court, "a receiver shall have the power to bring and
defend, in such capacity, actions in his [or her] own
name." Thus, Republic Act No. 7653 provides that the
receiver shall also "in the name of the institution, and
with the assistance of counsel as [it] may retain,
institute such actions as may be necessary to collect
G.R. No. 230037, March 19, 2018 RTC dismissed due to lack of jurisdiction. This was
SPOUSES KISHORE LADHO CHUGANI AND also affirmed by the CA upon appeal.
PRISHA KISHORE CHUGANI, ET AL., Petitioners,
-vs – PHILIPPINE DEPOSIT INSURANCE ISSUE:
CORPORATION, Respondents. 1. Whether the CA is correct in ruling that the RTC has
no jurisdiction over the Petitions for Certiorari filed by
Section 4(f) of R.A. No. 3591, as amended by R.A. No. the petitioners. (YES)
9576 states that deposit means the unpaid balance of 2. Whether the PDIC committed grave abuse of
money or its equivalent received by a bank in the discretion in denying petitioners claim for deposit
usual course of business and for which it has given or insurance. (NO)
is obliged to give credit to a commercial, checking,
savings, time or thrift account, or issued in accordance RULING:
with Bangko Sentral rules and regulations and other 1.The PDIC was created by Republic Act (R.A.) No.
applicable laws, together with such other obligations of 3591 on June 22, 1963 as an insurer of deposits in all
a bank, which, consistent with banking usage and banks entitled to the benefits of insurance under the
practices. PDIC Charter to promote and safeguard the interests
of the depositing public by way of providing permanent
Section 2(d) of PDIC Regulatory Issuance No. 2011- and continuing insurance coverage of all insured
02 states that for deposit to be considered as deposits.
legitimate, it should be 1) received by a bank as a
deposit in the usual course of business; 2) recorded in In the case of Monetary Board, et. al., v. Philippine
the books of the bank as such; 3) opened in Veterans Bank, the Supreme Court defined a quasi-
accordance with established forms and requirements judicial agency, to wit:
of the BSP and/or the PDIC.
A quasi-judicial agency or body is an organ of
Further, in Phil. Deposit Insurance Corp. v. CA,this government other than a court and other than a
Court held that in order for the claim for deposit legislature, which affects the rights of private parties
insurance with the PDIC may prosper, it is necessary through either adjudication or rule-making. The very
that the corresponding deposit must be placed in the definition of an administrative agency includes its
insured bank. being vested with quasijudicial powers. The ever
increasing variety of powers and functions given to
FACTS: administrative agencies recognizes the need for the
Petitioners, upon the invitation of Raymundo Garan active intervention of administrative agencies in
(Garan), the President of Rural Bank of Mawab matters calling for technical knowledge and speed in
(Davao), Inc., (RBMI), signified their intention to open countless controversies which cannot possibly be
Time Deposits with RBMI. Petitioners then opened handled by regular courts. A "quasi-judicial function" is
Time Deposit Accounts with RBMI through inter- a term which applies to the action, discretion, etc. of
branch deposits to the accounts of RBMI maintained in public administrative officers or bodies, who are
Metrobank and China Bank- Tagum, Davao Branches. required to investigate facts, or ascertain the existence
Thereafter, Certificates of Time Deposits (CTDs) and of facts, hold hearings, and draw conclusions from
Official Receipts were issued to petitioners. them, as a basis for their official action and to exercise
discretion of a judicial nature.
However, sometime in September 2011, petitioners
came to know that the Monetary Board of the Bangko In the instant case, the PDIC has the power to prepare
Sentral ng Pilipinas placed RBMI under receivership and issue rules and regulations to effectively discharge
and thereafter closed the latter. Petitioners, then filed its responsibilities. The power of the PDIC as to
claims for insurance of their time deposits. whether it will deny or grant the claim for deposit
insurance based on its rules and regulations partakes
Respondent Philippine Deposit Insurance Corporation of a quasi-judicial function. Also, the fact that decisions
(PDIC) denied the claims on the following grounds: 1.) of the PDIC as to deposit insurance shall be final and
based on bank records submitted by RBMI, petitioners' executory, such that it can only be set aside by a
deposit accounts are not part of RBMI's outstanding petition for certiorari evinces the intention of the
deposit liabilities; 2.) the time deposits of petitioners Congress to make PDIC as a quasi-judicial agency.
are fraudulent and their CTDs were not duly issued by
RBMI, but were mere replicas of unissued CTD's in the Consistent with Section 4, Rule 65, the CA has the
inventory submitted by RBMI to PDIC; and 3.) the jurisdiction to rule on the alleged grave abuse of
amounts purportedly deposited by the petitioners were discretion of the PDIC. Therefore, the CA is correct
credited to the personal account of Garan, hence, they when it held that the RTC has no jurisdiction over the
could not be construed as valid liabilities of RBMI. Petitions for Certiorari filed by the petitioners
questioning the PDIC's denial of their claim for deposit
Petitioners filed a request for reconsideration however insurance. Nevertheless, any question as to where the
PDIC rejected the same. Hence, petitioners filed a petition for certiorari should be filed to question PDIC's
Petition for Certiorari under Rule 65 of the Rules of decision on claims for deposit insurance has been put
Court with the Regional Trial Court (RTC), to which the to rest by R.A. No. 10846.Section 7 therein provides:
xxxx Considering the above disquisitions, it is sufficiently
"The actions of the Corporation taken under Section established that the PDIC, did not commit any grave
5(g) shall be final and executory, and may only be abuse of discretion in denying petitioners' claim for
restrained or set aside by the Court of Appeals, upon deposit insurance as the same were validly grounded
appropriate petition for certiorari on the ground that the on the facts, law and regulations issued by the PDIC.
action was taken in excess of jurisdiction or with such
grave abuse of discretion as to amount to a lack or
excess of jurisdiction. The petition for certiorari may
only be filed within thirty (30) days from notice of denial
of claim for deposit insurance.

2. Grave abuse of discretion is the capricious and

whimsical exercise of the judgment of a court, tribunal
or quasi-judicial agency that is equivalent to lack of
jurisdiction. It must be so grave such that the power
was exercised in an arbitrary or despotic manner by
reason of passion or personal hostility.

In this case, it cannot be said that PDIC committed

grave abuse of discretion in denying petitioners claim
for deposit insurance.

Section 4(f) of R.A. No. 3591, as amended by R.A. No.

9576 states that 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, 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.

Section 2(d) of PDIC Regulatory Issuance No. 2011-02

states that for deposit to be considered as legitimate, it
should be 1) received by a bank as a deposit in the
usual course of business; 2) recorded in the books of
the bank as such; 3) opened in accordance with
established forms and requirements of the BSP and/or
the PDIC.

Further, in Phil. Deposit Insurance Corp. v. CA,this

Court held that in order for the claim for deposit
insurance with the PDIC may prosper, it is necessary
that the corresponding deposit must be placed in the
insured bank.

Here, upon investigation by the PDIC, it was

discovered that 1) the money allegedly placed by the
petitioners in RBMI was in fact credited to the personal
account of Garan, hence, they could not be construed
as valid liabilities of RBMI to petitioners; 2) based on
bank records and the certified list of the bank's
outstanding deposit liabilities, the alleged deposits of
petitioners are not part of RBMI's outstanding liabilities;
and 3) the CTDs are not validly issued by RBMI, but
were mere replicas of the unissued and unused CTDs
still included in the inventory of RBMI. Further, the act
of petitioners in opening Time Deposits and thereafter
depositing several amounts of money through inter-
branch deposits with Metrobank and China Bank for
the account of RBMI can hardly be considered as in
the ordinary course of business.
G.R. No. 234401, December 05, 2019 Aggrieved, petitioner then filed with the CA a special
CONNIE L. SERVO, PETITIONER VS. PHILIPPINE civil action for certiorari; however, the Court of Appeals
DEPOSIT INSURANCE CORPORATION, dismissed the petition for lack of jurisdiction.
RESPONDENT.
Hence, this petition.
Facts
Petitioner filed a claim for deposit insurance with Issue:
respondent Philippine Deposit Insurance Corporation Whether or not the Court of Appeals erred in
(PDIC). She essentially alleged that she lent Teresita dismissing the petition for certiorari on ground of lack
Guiterrez Five Hundred Thousand Pesos of jurisdiction?
(P500,000.00) for the repair of the latter’s bus units.
Petitioner met with Guiterrez at the Rural Bank of San Held:
Jose Del Monte to receive the latter’s loan payment. The Court ruled in affirmative. However, the Court
For this purpose, petitioner opened a time deposit dismissed the case because of disregard of the
account with the bank under Special Savings Deposit doctrine of hierarchy of courts.
(SSD) Account No. 001 03-00904-1. Per her
agreement with Gutierrez, the latter's name was used The Court of Appeals here erred when it dismissed
as the account holder since she was a preferred bank petitioner's special civil action for certiorari on ground
client. that since the case involves a pure question of law, the
same falls within this Court's exclusive jurisdiction.
A few years later, however, the bank was closed down.
Consequently, petitioner filed with PDIC her claim for For one, Section 9 of BP 129 vests concurrent
deposit insurance, together with certain documents. jurisdiction in the regional trial courts, the Court of
Appeals, and the Supreme Court over special civil
She claimed to have verbally informed Eliza Dela actions and auxiliary writs and processes. The law
Peña, one of the bank tellers that the Five Hundred does not distinguish whether the issues involved are
Thousand Pesos (P500, 00.00) deposited in SSD pure factual or legal issues or mixed issues of fact and
Account was held in trust for her by Gutierrez. She law for the purpose of determining which of the courts
also categorically stated that she was the exclusive should take cognizance of the case.
owner of SSD Account.
The filing of the instant special civil action directly in
PDIC, through its Claims Deposit Department, denied this Court is in disregard of the doctrine of hierarchy of
petitioner's claim for deposit insurance, citing as courts. Although the Court has concurrent jurisdiction
ground the absence of any bank records/ documents with the Court of Appeals in issuing the writ of
indicating that petitioner, not Gutierrez, owned the certiorari, direct resort is allowed only when there are
account. special, [extraordinary] or compelling reasons that
justify the same.
Petitioner filed a Request for Reconsideration (RFR).
PDIC denied petitioner's RFR, this time citing as There being no special, important or compelling
ground petitioner's alleged failure to submit reason, the petitioner thereby violated the observance
documents showing that the "break-up and transfer of the hierarchy of courts, warranting the dismissal of
of Legitimate Deposit to the transferee is for a Valid the petition for certiorari
Consideration." PDIC emphasized that petitioner was
not even a relative within the second degree of
consanguinity or affinity of Gutierrez.

Petitioner consequently filed the action below, imputing

grave abuse of discretion on PDIC for denying her
claim for deposit insurance.

PDIC riposted that the Regional Trial Court (RTC) has

no jurisdiction over the subject matter of the petition as
the same fell exclusively within its quasi-judicial
jurisdiction.

The trial court sustained PDIC's argument and

dismissed the case on ground of lack of jurisdiction.
The trial court recognized that since PDIC is a quasi-
judicial agency which performed the assailed quasi-
judicial action, the case should have been brought up
to the Court of Appeals.