PHILIPPINE DEPOSIT INSURANCE CORPORATION (PDIC) 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., [G.R. No. 176438, January 24, 2011]

FACTS: On March 9, 2005, the Board of Directors of the PDIC (PDIC Board) approved the conduct
of an investigation, on the basis of the Reports of Examination of the Bangko Sentral ng Pilipinas
(BSP) on ten (10) banks, four (4) of which are respondents in this petition for review. The said
resolution also created a Special Investigation Team to conduct the said investigation, with the
authority to administer oaths, to examine, take and preserve testimony of any person relating to
the subject of the investigation, and to examine pertinent bank records.

According to PDIC, in the course of its investigation, PCRBI was found to have granted loans to
certain individuals, which were settled by way of dacion of properties. These properties, however,
had already been previously foreclosed and consolidated under the names of PRBI, BEAI and RBCI.

The counsel for PCRBI and BEAI advised them not to submit to PDIC investigation on the ground
that its investigatory power, as amended, cannot be differentiated from the examination powers
accorded to PDIC, under which, prior approval from the Monetary Board is required.

As a reply, PDIC stated that their investigation power, as distinguished from their examination
power, does not need prior approval of the Monetary Board. PDIC then urged PRBI and BEAI not to
impede the conduct of PDICs investigation as the same constitutes a violation of the PDIC Charter
for which PRBI and BEAI may be held criminally and/or administratively liable.

The Banks, sought further clarification from PDIC on its source of authority to conduct the
impending investigations and requested that PDIC refrain from proceeding with the investigations
and also wrote to the Monetary Board requesting a clarification on the parameters of PDICs power
of investigation/examination over the Banks and for an issuance of a directive to PDIC not to
pursue the investigations pending the requested clarification.

PDIC then issued a letter which appeared to be a final demand for The Banks to allow the formers
investigation. PRBI and BEAI replied that letters of clarification had been sent to PDIC and the
Monetary Board. Pending action on such requests, PDIC was requested to refrain from proceeding
with the investigation.

The PDIC General Counsel reiterated its position that prior Monetary Board approval was not a
pre-requisite to PDICs exercise of its investigative power.

The Banks filed a Petition for Declaratory Relief with a Prayer for the Issuance of a TRO and/or
Writ of Preliminary Injunction (RTC Petition) before the Regional Trial Court of Makati.

PDIC filed a motion to dismiss but later, the Banks withdrew their application for a temporary
restraining order (TRO) reasoning that lower courts cannot issue injunctions against PDIC. Thus,
the Banks instituted a petition for injunction with application for TRO and/or Preliminary
Injunction.

Even before the CA-Manila could rule on the application for a TRO and/or writ of preliminary
injunction, the RTC-Makati dismissed the petition on the ground that there already existed a
breach of law that isolated the case from the jurisdiction of the trial court.

The Banks filed a motion for reconsideration but it was denied by the RTC for lack of merit.[30] On
February 10, 2006, the Banks filed a notice of appeal[31] which they later withdrew on February
28, 2006.

In view of the dismissal of the RTC-Makati petition, the CA-Manila dismissed the petition for
injunction for being moot and academic.
Thereafter, on March 14, 2006, the Banks filed their Petition for Injunction with Prayer for
Preliminary Injunction with the CA-Cebu.

The CA-Cebu issued a resolution granting the Banks application for a TRO. This enjoined the PDIC,
from conducting examinations/investigations on the Banks head and branch offices without
securing the requisite approval from the Monetary Board of BSP.

PDIC then filed with the Supreme Court a Petition for Certiorari, Prohibition and Mandamus with
Prayer for Issuance of Temporary Restraining Order and/or Writ of Preliminary Injunction under
Rule 65 which was dismissed.

The CA-Cebu then rendered a decision granting the writ of preliminary injuction filed by The
Banks.

PDIC moved for reconsideration but it was denied. Hence, this petition.

ISSUE: Whether the Court of Appeals-Cebu 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.

RULING:

PDIC stresses that its power of examination is different from its power of investigation, in such
that the former requires prior approval of the Monetary Board while the latter requires merely the
approval of the PDIC Board.

The Banks, on the other hand, are of the opinion that a holistic reading of the PDIC charter shows
that petitioners power of examination is synonymous with its power of investigation.

After an evaluation of the respective positions of the parties, the Court is of the view that the
Monetary Board approval is not required for PDIC to conduct an investigation on the Banks.

Although investigation and examination are two separate and distinct procedures under the
charter of the PDIC and the BSP, the words seem to be used loosely and interchangeably.

Under its charter, the PDIC is empowered to conduct examination of banks with prior approval of
the Monetary Board.

The petition for injunction is GRANTED. The respondent PDIC is restrained from further conducting
investigations or examination on petitioners-banks without the requisite approval from the
Monetary Board.

THE PRESIDENT OF PHILIPPINE DEPOSIT INSURANCE CORPORATION AS LIQUIDATOR OF PACIFIC

BANKING CORPORATION, petitioner, vs. HON. WILFREDO D. REYES, Pairing Judge, RTC Manila,
Branch 31; ANG ENG JOO; ANG KEONG LAN; and E.J. ANG INTERNATIONAL, LTD., represented by
FORNIER & FORNIER LAW, respondents. [G.R. No. 154973. June 21, 2005]

FACTS: On 5 July 1985, pursuant to Resolution No. 699 of the Monetary Board of the Central Bank
of the Philippines, the PaBC was placed under receivership on the ground of insolvency.
Subsequently, it was placed under liquidation, and a liquidator was designated.

The Central Bank of the Philippines, through the Office of the Solicitor General, filed with the
Regional Trial Court (RTC) of Manila, Branch 31, a petition for assistance in the liquidation of PaBC.

Vitaliano N. Naagas, President of the PDIC, was appointed by the Central Bank as Liquidator.

Private respondents Ang Eng Joo, Ang Keong Lan, and E.J. Ang International Ltd. (hereafter
Singaporeans, filed their claim before the liquidating court. Citing Republic Act No. 5186,
otherwise known as the Investment Incentives Act, they claimed to be preferred creditors and
prayed for the return of their equity investment in the amount of US$2,531,632.18 with interest
until the closure of the PaBC.

The liquidation court, through Presiding Judge Regino Veridiano II, issued an order asking the
Liquidator of PaBC to pay claimants through their Attorney-in-Fact Gonzalo C. Sy, their total
investment of US$2,531,632.18 as preferred creditors.

Petitioners motion for reconsideration was denied.

ISSUE: May an investment in a corporation, whose existence has been terminated, be entitled to
an interest in the concept of actual and compensatory damages from the time such investment
was made until the closure of the corporation?

RULING:

The amount remitted to PaBC by the Singaporeans is considered an investment.

An investment is an expenditure to acquire property or other assets in order to produce revenue.

It is the placing of capital or laying out of money in a way intended to secure income or profit from
its employment. To invest is to purchase securities of a more or less permanent nature, or to place
money or property in business ventures or real estate, or otherwise lay it out, so that it may
produce a revenue or income.

Thus, unlike a deposit of money or a loan that earns interest, the investment of the Singaporeans
cannot be assured of a dividend or an interest on the amount invested. For, interests or dividends
are granted only after profits or gains are generated.

The Supreme Court concurs with the Court of Appeals in holding that the amount of
US$2,531,632.18 remitted by the Singaporeans to PaBC was not a loan or forbearance of money in
favor of PaBC.

Thus, the Court of Appeals award of 6% interest on the Singaporeans equity investment as actual
or compensatory damages from the date of its remittance until the closure of PaBC has no leg to
stand on and must, therefore, be deleted.

The case is remanded to the trial court to recompute the payments vis--vis the total amount due
the Singaporeans.

The decision of the Court of Appeals is AFFIRMED insofar as the respondent Singaporeans are
entitled to the payment of 12% interest per annum in the form of actual or compensatory
damages.