6. 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., respondents.

FACTS:
The Board of Directors of the PDIC adopted a resolution approving the conduct of an investigation, in
accordance with Section 9(b-1) of RA No. 3591, An Act Establishing The Philippine Deposit Insurance Corporation,
Defining Its Powers And Duties And For Other Purposes, on the basis of the Reports of Examination of the Bangko
Sentral ng Pilipinas (BSP) on 10 banks, 4 of which are respondents. The PDIC Board adopted another
resolution approving the conduct of an investigation on PCRBI based on a Complaint-Affidavit filed by a
corporate depositor, the Philippine School of Entrepreneurship and Management (PSEMI) through its president,
Jacinto L. Jamero.

In accordance with the two PDIC Board resolutions, then PDIC President and Chief Executive Officer Ricardo M.
Tan issued the Notice of Investigation and the PDIC Investigation Team personally served it on PCRB.

According to PDIC, 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 respondents. Similar notices were issued to them.

The investigation was sought because the Banks were found to be among the ten (10) banks collectively known
as "Legacy Banks." The Reports of General and Special Examinations of the BSP, disclosed, among others, that
the Legacy Banks were commonly owned and/or controlled by Legacy Plans Inc. (now Legacy Consolidated
Plans, Inc.), and Celso Gancayco delos Angles, Jr. and his family.

The RBCI provided the PDIC Investigation Team with certified copies of the loan documents they had requested,
until its president received an order directing him not to allow the investigation. Subsequently, PRBI and BEAI
refused entry to their bank premises and access to their records and documents by the PDIC Investigation Team,
upon advice of their respective counsels.

Atty. Victoria G. Noel sent letters to the PDIC informing it of her legal advice to PCRBI and BEAI not to submit to
PDIC investigation on the ground that its investigatory power requires prior approval from the Monetary Board.

PDIC General Counsel Romeo M. Mendoza sent a reply to Atty. Noel stating that "PDIC’s investigation power, as
distinguished from the examination power of the PDIC which does not need prior approval.
The Banks filed a petition to require prior Monetary Board approval before PDIC could exercise its
investigation/examination power over the Banks. PDIC filed a motion to dismiss alleging that the RTC had no
jurisdiction over the said petition since a breach had already been committed by the Banks when they received
the notices of investigation, and because PDIC need not secure prior Monetary Board approval since
"examination" and "investigation" are two different terms

ISSUE: W/N the Monetary Board approval is not required for PDIC to conduct an investigation on the Banks.

RULING: YES
The PDIC was created by R.A. No. 3591 as an insurer of deposits in all banks entitled to the benefits of
insurance under the PDIC Charter to promote and safeguard the interests of the depositing public by way of
providing permanent and continuing insurance coverage of all insured deposits. It is a government
instrumentality that operates under the Department of Finance. Its primary purpose is to act as deposit insurer,
as a co-regulator of banks, and as receiver and liquidator of closed banks.

The process of examination covers a wider scope than that of investigation. Examination involves an
evaluation of the current status of a bank and determines its compliance with the set standards regarding
solvency, liquidity, asset valuation, operations, systems, management, and compliance with banking laws, rules
and regulation. Investigation, on the other hand, is conducted based on specific findings of certain acts or
omissions which are subject of a complaint or a Final Report of Examination. Clearly, investigation does not
involve a general evaluation of the status of a bank. An investigation zeroes in on specific acts and omissions
uncovered via an examination, or which are cited in a complaint. An examination entails a review of essentially
all the functions and facets of a bank and its operation. It necessitates poring through voluminous documents,
and requires a detailed evaluation thereof. Such a process then involves an intrusion into a bank’s records.

Although it also involves a detailed evaluation, an investigation centers on specific acts of omissions and,
thus, requires a less invasive assessment.

To reiterate, an examination of banks requires the prior consent of the Monetary Board, whereas an
investigation based on an examination report, does not.