PDIC V CITIBANK ET. ET.AL. AL. Topic: Foreign Currency Deposit PHILIPPINE DEPOSIT INSURANCE CORPORATION vs. CITIBANK, N.A. and BANK OF AERICA, S.T. ! N.A., ".R. No. #$%&'%, Ap(i) ##, &%#& Pon*n+* : Associate Associate Justice Jose Catral Mendoza Cas* Di*s+ - : Mervic Al A. Tuble Fac+s: Citibank, N.A. (Citibank) and ank o! A"erica, A"erica, #.T. $ N.A. (BA) are duly organized corporations and e%isting under t&e la's o! t&e (nited #tates o! A"erica and duly licensed to do business in t&e )&ilippines, 'it& o!!ices o!!ices in Makati City. )etitioner )&ilippine Deposit *nsurance Corporation (PDIC) conducted (PDIC) conducted an e%a"ination o! t&e books o! account o! Citibank Citibank and A in +--and +- respectively. *t discovered t&at Citibank in t&e course o! its banking business, received !ro" its &ead o!!ice and ot&er !oreign branc&es a total o! )++,/,+0/,12.11 in dollars d ollars !ro" #epte"ber /1, +-3 to June /1, +-- covered by b y Certi!icates o! Dollar Ti"e Ti"e Deposit t&at 'ere interest4bearing 'it& corresponding "aturity d ates. And A a total o! )0, )0, /++,20.+1 in dollars, covered by Certi!icates o! Dollar Ti"e Deposit t&at 'ere interest4bearing 'it& corresponding "aturity dates and lodged in t&eir books under t&e account Due to 5ead 6!!ice7ranc&es. For !ailure to report t&e said a"ounts as deposit liabilities t&at 'ere sub8ect to assess"ent !or insurance, )D*C soug&t t&e re"ittance o! de!iciency pre"iu" assess"ents !or dollar deposits.
Citibank and A eac& !iled a petition !or declaratory relie! be!ore t&e Court o ! First *nstance stating t&at t&e "oney place"ents t&ey rec eived !ro" t&eir &ead o!!ice and ot&er !oreign branc&es 'ere not deposits and did not give rise to insurable deposit liabilities liabilities under #ections / and 3 o! 9.A. No. /+ (the PDIC Charter) and, Charter) and, as a conse;uence, t&e de!iciency assess"ents "ade by )D*C 'ere i"proper and erroneous. 9TC ruled in !avor o! Citibank and A '&ic& reasoned t&at t&ere 'as no depositor4depository relations&ip bet'een t&e respondents and t&eir &ead o!!ice or ot&er branc&es. Also, t&e place "ents 'ere deposits "ade outside t&e )&ilippines '&ic& are e%cluded under #ection /.1
)D*C appealed to t&e CA '&ic& a!!ir"ed t&e ruling o! t&e 9TC. Iss/*s : +.= >&et&er or not t&e dollar deposits are "oney place"ents, t&us, t&ey are not sub8ect to t&e provisions o! 9epublic Act No. 030 ot&er'ise kno'n as t&e Foreign Currency Deposit Act o! t&e )&ilippines. .= >&et&er or not t&e )&ilippine branc& o! a !oreign corporation &as a separate legal personality !ro" its !oreign &ead o!!ice !or t&e purpose o! )D*C. R/)in: T&e court ruled t&at t&e !unds in ;uestion are not deposits 'it&in t&e de!inition o! t&e )D*C C&arter and are, t&us, e%cluded !ro" assess"ent. )ursuant to #ection /
T&e Court in resolving t&e controversy in t&e relations&ip o! t&e )&ilippine branc&es o! Citibank and A to t&eir respective &ead o!!ices and t&eir ot&er !oreign branc&es e%a"ined t&e "anner by '&ic& a !oreign corporation can establis& its presence in t&e )&ilippines. *t "ay c&oose to incorporate its o'n subsidiary as a do"estic corporation, in '&ic& case suc& subsidiary 'ould &ave its o'n separate and independent legal personality to conduct business in t&e country. *n t&e alternative, it "ay create a branc& in t&e )&ilippines, '&ic& 'ould not be a legally independent unit, and si"ply obtain a license to do business in t&e )&ilippines. *t is apparent t&at t&e respondent banks did not incorporate as a separate do"estic corporation to represent its business interests in t&e )&ilippines. T&us, being one and t&e sa"e entity, t&e !unds placed by t&e respondents in t&eir respective branc&es in t&e )&ilippines s&ould not be treated as deposits "ade by t&ird parties sub8ect to deposit insurance under t&e )D*C C&arter.
