PDIC v. Phil. Countryside Rural bank, Inc. G.R. No. 176438, Jan.

24, 2011

Facts:

The Philippine Deposit Insurance Corporation (PDIC) adopted resolutions approving investigations on several
banks, including PCRBI, PRBI, BEAI, and RBCI. These banks were part of the "Legacy Banks" collectively owned or
controlled by Legacy Plans Inc. and Celso Gancayco delos Angeles, Jr. The PDIC issued a notice of investigation
to PCRBI, but PRBI and BEAI refused to cooperate. The banks argued that PDIC's investigatory power required
prior approval from the Monetary Board, while PDIC maintained that it did not. The banks filed a petition for
declaratory relief seeking clarification on the requirement of prior approval. The petition was dismissed by the
Regional Trial Court (RTC) in Makati, and the Court of Appeals (CA) in Manila considered the matter moot and
academic. The banks then filed a petition for injunction, which was granted by the CA in Cebu, enjoining PDIC
from conducting examinations/investigations on the banks' offices. PDIC filed a petition for certiorari with the
Supreme Court, but it was dismissed. The CA in Cebu subsequently issued a decision granting the writ of
preliminary injunction, which PDIC's motion for reconsideration was denied.

Issue:

In order for the Philippine Deposit Insurance Corporation (PDIC) to conduct an investigation of respondent
banks, it is required to obtain prior approval from the Monetary Board of the Bangko Sentral ng Pilipinas.

Ruling:

Monetary Board approval is not required for the Philippine Deposit Insurance Corporation (PDIC) to conduct an
investigation on banks. The terms "investigation" and "examination" are distinct, with investigation referring to
a more intensive fact-finding scrutiny and associated with proceedings prior to criminal prosecution. The PDIC's
charter empowers it to conduct investigations on frauds, irregularities, and anomalies in banks based on
examination reports or complaints. There are separate rules governing the procedures for investigations and
examinations. While an examination evaluates a bank's overall status and compliance, an investigation focuses
on specific acts or omissions uncovered during an examination or cited in a complaint. Requiring Monetary
Board approval for investigations would cause unnecessary delays and hinder prompt gathering of evidence.
Since investigations are based on examination reports, separate approval for investigations would prolong the
process and allow individuals to cover up their actions.