APEX BANCRIGHTS HOLDINGS, INC., LEAD BANCFUND HOLDINGS, INC.

, ASIA
WIDE REFRESHMENTS CORPORATION, MEDCO ASIA INVESTMENT
CORPORATION, ZEST-O CORPORATION, HARMONY BANCSHARES HOLDINGS,
INC., EXCALIBUR HOLDINGS, INC., AND ALFREDO M. YAO, PETITIONERS, VS.
BANGKO SENTRAL NG PILIPINAS AND PHILIPPINE DEPOSIT INSURANCE
CORPORATION, RESPONDENTS.
G.R. No. 214866, October 02, 2017

Facts

In July 2001, EIB merged with Urban Bank, Inc. (UBI) and Urbancorp Investments, Inc.
(UII) to reconstruct UBI. However, EIB faced financial difficulties and was subsequently
re-acquired by the Philippine Deposit Insurance Corporation (PDIC). The PDIC provided
additional financial assistance in 2005, considering conditions on EIB stockholders
infusing additional capital whenever EIB's adjusted Risk Based Capital Adequacy Ratio
falls below 12.5%. Despite this, EIB failed to comply with the BSP's capital requirements
and Banco de Oro (BDO) initially expressed interest in acquiring EIB. Later in 2012, the
BSP prohibited EIB from doing business in the Philippines and placing it under PDIC's
receivership. PDIC submitted its initial receivership report, which found EIB can be
reconstructed or permitted to continue the operation, provided however, a bidding for its
reconstruction was conducted and conditions were met. Unfortunately, no bids were
submitted, and a public bidding failed. The PDIC informed BSP that EIB could not be
reconstructed, and a Resolution was passed to allow PDIC to direct the proceed with
the liquidation of EIB.

Issue

The Court's main issue is whether the CA correctly ruled that the Monetary Board did
not abuse its discretion in issuing Resolution No. 571, which granted the PDIC to
proceed with the liquidation of EIB.

Court’s Ruling

The petition is DENIED. The court ordered that the petition for certiorari is unfounded.
Under Section 30 of RA 7653, which allows the Monetary Board to designate the
Philippine Deposit Insurance Corporation as receiver of a bank or quasi-bank if it cannot
pay its liabilities or has insufficient assets. The receiver must immediately take charge of
the liquidation and exercise the general powers of a receiver under the Revised Rules
of Court. Also, if the receiver determines that the entity or bank cannot be reconstructed
or permitted to continue its business, the Monetary Board shall notify the board of
directors and direct the receiver to proceed with the liquidation. Thus, the designation of
a conservator or appointment of a receiver is exclusively with the Monetary Board.

In the end, the Monetary Board's decision to liquidate EIB, despite not having a
separate factual determination, is not considered grave abuse of discretion nor
unconstitutional. Therefore, the Monetary Board's actions are declared by law to be final
and executory, and courts cannot set aside or restrain them unless they are deemed
plainly arbitrary and made in bad faith.

PHILIPPINE DEPOSIT INSURANCE CORPORATION (PDIC), Petitioner, vs.

PHILIPPINE COUNTRYSIDE RURAL BANK, INC., RURAL BANK OF CARMEN
(CEBU), INC., BANK OF EAST ASIA (MINGLANILLA, CEBU), INC., and PILIPINO
RURAL BANK (CEBU), INC., Respondents.
G.R. No. 176438, January 24, 2011

Facts.

The Philippine Deposit Insurance Corporation (PDI) Board of Directors approved an

investigation into PCRBI, a bank that grants loans to certain individuals through dacion
of properties. The investigation was based on reports from the BSP on ten banks,
including four respondents in this petition.Then, the PDIC Board established a Special
Investigation Team to conduct the investigation. The investigation was conducted on
PCRBI, PRBI, BEAI, and RBCI, which were considered to be among the "Legacy
Banks''.

In addition, the Banks filed a petition for a judgment interpreting Section 9 of the PDIC
Charter, as amended, to require prior Monetary Board approval before PDIC could
exercise its investigation/examination power over the Banks. Later, the Court dismissed
a petition for certiorari, recognizing allegations of grave abuse of discretion and failure
to comply with the Civil Procedure and argued that the terms examination and
investigation are synonymous words, and there is no clear distinction between those
two. The decision is that PDIC must obtain approval before proceeding with
investigations on banks and PDIC's request for reconsideration was denied, leading to
this petition.

Issue
The main issue is whether the Court of Appeals erred In finding that prior approval of
the Monetary Board of the Bangko Sentral ng Pilipinas is necessary before the PDIC
may conduct an investigation of respondent banks.
 Court’s Ruling

The petition is GRANTED. In the case of PDIC and the banks, where the PDIC in order
for it to exercise its power of investigation, the law requires that: (a) the investigation is
based on a complaint of a depositor or any other government agency, or on the report of
examination of [the] Bangko Sentral ng Pilipinas (BSP) and/or PDIC; and, (b) the
complaint alleges, or the BSP and/or PDIC Report of Examination contains adverse
findings of, fraud, irregularities or anomalies committed by the Bank and/or its directors,
officers, employees or agents; and, (c) the investigation is upon the authority of the
PDIC Board of Directors.
As concluded by the Court, the PDIC does not require Monetary Board approval for
bank investigations due to administrative hurdles and paperwork. Therefore, obtaining
separate approval for an investigation would prolong the process and allow
unscrupulous individuals to cover their tracks. The two processes are different from
each other under the PDIC Charter, with an examination of banks requiring Monetary
Board consent, and an investigation based on examination reports. Therefore, it is not
necessary to secure separate approval for an investigation.

PHILIPPINE DEPOSIT INSURANCE CORPORATION, Petitioner, vs. CITIBANK, N.A.

and BANK OF AMERICA, S.T. & N.A., Respondents.

G.R. No. 170290, April 11, 2012

Facts

The Philippine Deposit Insurance Corporation (PDIC) and Citibank, a Bank of America,
were involved in a dispute over deficiency premium assessments for dollar deposits. In
1977, PDIC discovered that Citibank received a total of ₱11,923,163,908.00 in dollars
from its head office and other foreign branches, but these funds were not reported as
deposit credit. As a result, PDIC assessed Citibank for deficiency in the amount of
₱1,595,081.96.6. Furthermore, the Citibank and BA claims that the money placements
were not deposits and did not give rise to insurable deposit liabilities. The Regional Trial
Court ruled in favor of Citibank and BA, stating that the money placements were not
assessable for insurance purposes under the PDIC Charter, as they were deposits
made outside the Philippines and were not included as third-party deposits that must be
insured.
The Philippine Deposit Insurance Corporation appealed to the Central Bank of the
Philippines (CA) which affirmed the decision of RTC. It was found that money
placements were received as part of the bank's internal dealings by Citibank and BA as
agents of their respective head offices which led to the conclusion that no bank deposit
could have arisen from transactions between the Philippine branch and the head office.

Issues

A. The appellate court erred in ruling that the subject dollar deposits are money
placements which are not subject to the provisions of Foreign Currency Deposit
Act of the Philippines.

B. Whether or not the money placements subject matter of these petitions are
assessable for insurance purposes under the PDIC Act.

Court’s Ruling

The petition is DENIED. It is evident that Citibank and BA did not form a separate
domestic corporation to represent their business interests in the Philippines. The funds
that the respondents deposited in each of their branches in the Philippines should not
be regarded as deposits made by third parties covered by deposit insurance under the
PDIC Charter since they belong to one and the same business. Furthermore, it is
supported by Philippine banking laws that a foreign bank's headquarters and its
branches are considered as a one legal company and a foreign bank's headquarters
must ensure that all of its Philippine branch's liabilities are paid on time. Thus, the
PDIC's requirement that the respondents, Citibank and BA, guarantee the money
placements made by their main office and other branches is unreasonable. In
conclusion, when the organization holding the money and the one making the
placements are one and the same legal entity, deposit insurance is redundant and
completely unnecessary.