So vs. Philippine Deposit Insurance Corporation

A petition for certiorari assailing the PDIC’s denial of a deposit insurance claim must be filed with the CA, not the RTC, because PDIC is a quasi-judicial agency and Section 4, Rule 65 confines petitions involving acts or omissions of quasi-judicial agencies to the CA unless otherwise provided by law or the rules.

PDIC is the deposit insurer created under RA 3591, as amended, with the duty and authority to determine the validity of and grant or deny deposit insurance claims. Its Charter treats its actions on deposit insurance claims as final and executory, reviewable only by certiorari on the ground of grave abuse of discretion. Peter L. So maintained a Special Incentive Savings Account with Cooperative Rural Bank Bulacan (CRBB), an insured bank.

On April 17, 2013, Peter L. So opened an account with Cooperative Rural Bank Bulacan (CRBB) in the amount of P300,000, for which he was assigned Special Incentive Savings Account (SISA) No. 05-15712-1. In the same year, he learned that CRBB closed its operations and was placed under the Philippine Deposit Insurance Corporation’s (PDIC’s) receivership. This prompted him, together with other depositors, to file an insurance claim with the PDIC on November 8, 2013.

Acting on the claim, the PDIC sent a letter/notice dated November 22, 2013, requiring petitioner to submit additional documents, which petitioner averred he had complied with. Upon investigation, the PDIC found that petitioner’s account originated from and was funded by the proceeds of a terminated SISA (mother account) jointly owned by a certain Reyes family. Based on the determination that petitioner’s account was among the product of the splitting of the mother account, which is prohibited by law, the PDIC denied petitioner’s claim for payment of deposit insurance.

Petitioner filed a Request for Reconsideration, which the PDIC likewise denied on January 6, 2016. Aggrieved, petitioner filed a Petition for Certiorari under Rule 65 before the RTC.

• Nature of PDIC: Petitioner argued that PDIC is not a quasi-judicial agency and does not possess quasi-judicial power under its Charter; it merely performs fact-finding functions based on its regulatory power.
• Jurisdiction and Hierarchy of Courts: Petitioner argued that under Section 4, Rule 65, as amended by A.M. No. 07-7-12-SC, a petition relating to an act or omission of a corporation such as PDIC should be filed with the RTC; Batas Pambansa Blg. 129 provides that the SC, CA, and RTC have original concurrent jurisdiction over petitions for certiorari, prohibition, and mandamus; and under the hierarchy of courts, the RTC has jurisdiction.

• Jurisdiction over PDIC Certiorari: Whether the RTC has jurisdiction over a petition for certiorari filed under Rule 65 assailing the PDIC’s denial of a deposit insurance claim.

• Jurisdiction over PDIC Certiorari: No. The CA, not the RTC, has jurisdiction over a Rule 65 petition assailing the PDIC’s denial of a deposit insurance claim, because PDIC is a quasi-judicial agency and Section 4, Rule 65 confines such petitions to the CA unless otherwise provided by law or the rules.

• Jurisdiction over PDIC Certiorari: The SC started from Section 4(f) of PDIC’s Charter, which makes PDIC’s actions final and executory and allows them to be set aside only through a petition for certiorari on the ground that the action was taken in excess of jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction, filed within 30 days from notice of denial of the deposit insurance claim. The remaining question was which court has jurisdiction. The SC rejected petitioner’s claim that PDIC is not a quasi-judicial agency. PDIC was created under RA 3591 as an insurer of deposits, and it has the duty and authority to determine the validity of and grant or deny deposit insurance claims. Section 16(a) of its Charter provides that PDIC commences determination of insured deposits upon its actual takeover of a closed bank, while Section 1 of PDIC Regulatory Issuance No. 2011-03 provides that PDIC shall pay legitimate deposits and provide a mechanism for reconsideration of a denial. Section 4(f) treats PDIC’s denial as final and executory, reviewable only by certiorari for grave abuse of discretion. These show a legislative intent to create PDIC as a quasi-judicial agency. Citing Lintang Bedol vs. Commission on Elections and Encinas vs. Agustin, the SC explained that quasi-judicial power is the power to adjudicate the rights of persons before the agency, to hear and determine questions of fact, and to decide according to standards laid down by law; an administrative body exercises it when it performs in a judicial manner an act essentially executive or administrative, where the power is incidental to or reasonably necessary for the performance of its entrusted duty. The test is whether the agency is authorized to make a final pronouncement affecting the parties; if it merely evaluates evidence and cannot make such final pronouncement, there is no judicial discretion and judgment. PDIC exercises judicial discretion and judgment when it determines whether a claimant is entitled to a deposit insurance claim after investigating facts and weighing evidence, and the law considers its action final and executory and reviewable only for grave abuse of discretion. On venue, Section 4, Rule 65, as amended by A.M. No. 07-7-12-SC, provides that if the petition involves an act or omission of a quasi-judicial agency, unless otherwise provided by law or the rules, it shall be filed with and cognizable only by the CA. Hence, a petition for certiorari questioning PDIC’s denial of a deposit insurance claim should be filed before the CA, not the RTC. Section 22 of PDIC’s Charter supports this by providing that no court except the CA shall issue a TRO, preliminary injunction, or preliminary mandatory injunction against PDIC for any action under the Act. Finally, Section 5(g) of RA 10846 confirms that PDIC’s actions shall be final and executory and may only be restrained or set aside by the CA upon certiorari for excess of jurisdiction or grave abuse of discretion, within 30 days from notice of denial. The SC therefore found no reversible error in the RTC’s dismissal.

• Quasi-judicial agency — An administrative body exercises quasi-judicial power when it adjudicates the rights of persons before it, hears and determines questions of fact, weighs evidence, and decides according to standards laid down by law, making a final pronouncement affecting the parties. The SC applied this to PDIC because it determines deposit insurance claims, investigates facts, weighs evidence, and its denial is final and executory unless set aside by certiorari for grave abuse of discretion.
• Jurisdiction over certiorari against a quasi-judicial agency — Under Section 4, Rule 65, as amended, a petition for certiorari involving an act or omission of a quasi-judicial agency is filed with and cognizable only by the CA, unless otherwise provided by law or the rules. The SC applied this to hold that the RTC had no jurisdiction over So’s Rule 65 petition against PDIC’s denial of his deposit insurance claim.
• Finality of PDIC actions on deposit insurance claims — PDIC’s actions on deposit insurance claims are final and executory and may be set aside only by the CA through a petition for certiorari on the ground of excess of jurisdiction or grave abuse of discretion amounting to lack or excess of jurisdiction, filed within 30 days from notice of denial. The SC used this to confirm that the CA, not the RTC, is the proper court.

• "The actions of the Corporation taken under this section shall be final and executory, and may not be restrained or set aside by the court, except on 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." — This provision establishes that PDIC’s denial of a deposit insurance claim is final and executory and reviewable only by certiorari for excess of jurisdiction or grave abuse of discretion.
• "If the petition involves an act or an omission of a quasi-judicial agency, unless otherwise provided by law or these rules, the petition shall be filed with and be cognizable only by the Court of Appeals." — This is the decisive Rule 65 provision on venue and jurisdiction that the SC applied in holding that the CA, not the RTC, has jurisdiction over the petition.
• "Thus, the legislative intent in creating PDIC as a quasi-judicial agency is clearly manifest." — The SC reached this conclusion after applying the quasi-judicial agency test to PDIC’s power to determine and deny deposit insurance claims.
• "The actions of the Corporation 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." — This provision of RA 10846 confirmed the SC’s reading that review of PDIC’s denial of a deposit insurance claim belongs to the CA.

• Lintang Bedol vs. Commission on Elections, 621 Phil. 498, 511 (2009) — Cited in Encinas and relied on by the SC for the definition and test of a quasi-judicial agency.
• Carlito C. Encinas vs. PO1 Alfredo P. Agustin, Jr. and PO1 Joel S. Caubang, 709 Phil. 236, 256-257 (2013) — Cited for the explanation of quasi-judicial power and the test used to classify PDIC as a quasi-judicial agency.
• Philippine Deposit Insurance Corporation vs. Phil. Countryside Rural Bank, Inc. et al., 655 Phil. 313, 337 (2011) — Cited for the creation and role of PDIC under RA 3591 as insurer of deposits.

• Section 4(f), Republic Act No. 3591 (PDIC Charter), as amended — Makes PDIC’s actions final and executory and allows them to be set aside only through a petition for certiorari for excess of jurisdiction or grave abuse of discretion amounting to lack or excess of jurisdiction, filed within 30 days from notice of denial of the deposit insurance claim. The SC used this to frame the available remedy.
• Section 16(a), Republic Act No. 3591, as amended — Provides that PDIC commences the determination of insured deposits due depositors of a closed bank upon its actual takeover of the closed bank. The SC cited this to show PDIC’s duty and authority over deposit insurance claims.
• Section 1, PDIC Regulatory Issuance No. 2011-03 — Provides that PDIC shall pay legitimate deposits held by bona fide depositors and provide a mechanism for depositors to seek reconsideration of a denial of a deposit insurance claim. The SC cited this as part of the basis for PDIC’s quasi-judicial function.
• Section 4, Rule 65, Rules of Court, as amended by A.M. No. 07-7-12-SC — Provides that a petition involving an act or omission of a quasi-judicial agency shall be filed with and cognizable only by the CA, unless otherwise provided by law or the rules. The SC applied this to hold that the RTC lacked jurisdiction.
• Section 22, Republic Act No. 3591, as amended — Provides that no court, except the CA, shall issue a temporary restraining order, preliminary injunction, or preliminary mandatory injunction against PDIC for any action under the Act. The SC cited this as support for CA jurisdiction.
• Section 5(g), Republic Act No. 10846 — Provides that PDIC’s actions shall be final and executory and may only be restrained or set aside by the CA upon certiorari for excess of jurisdiction or grave abuse of discretion, within 30 days from notice of denial of a deposit insurance claim. The SC cited this as confirming its conclusion.