Banking

1. Register of Deeds Manila vs. China Banking Corporation

G.R. No. L-11964 !pril "# 196"
Facts: Alfonso Pangilinan and one Guillermo Chua were charged with qualifed theft,
the money involved amounting to P27,!!!"!! in the Court of First #nstance of
$anila" After admitting his civil lia%ility in favor of his em&loyer, the China 'an(ing
Cor&oration, in relation to the o)ense, he ceded and transferred to the latter, in
satisfaction thereof, a &arcel of land located in the City of $anila, registered in the
name of *'elen +ta" Ana, married to Alfonso Pangilinan," -he .eed of -ransfer
e/ecuted %y Pangilinan was &resented for registration %ut the register of deeds,
after fnding that China 'an(ing Cor&oration, as an alien0owned cor&oration, is
%arred from acquiring lands in the Phili&&ines under +ec" , Art" 1### of the
Constitution, su%mitted the matter to the 2and 3egistration Commission for
resolution which, in turn, denied the registration" 4ence, res&ondent herein fled the
&resent a&&eal to question the resolution of the Commission"
#ssue: 5hether or not res&ondent 6 an alien0owned %an( 6 can acquire ownershi&
of the residential lot %y virtue of the deed of transfer e/ecuted %y Pangilinan to
satisfy his civil lia%ility arising from the crime"
4eld: 7o" Paragra&h 8c9, +ection 2 of 3e&u%lic Act ::7 allows a commercial %an(
to &urchase and hold such real estate as shall %e conveyed to it in satisfaction of
de%ts &reviously contracted in the course of its dealings" 4owever, the *de%ts*
referred to in this &rovision are only those resulting from &revious loans and other
similar transactions made or entered into %y a commercial %an( in the ordinary
course of its %usiness as such" ;%viously, whatever *civil lia%ility* 6 arising from
the criminal o)ense of qualifed theft 6 was admitted in favor of a&&ellant %an( %y
its former em&loyee, Alfonso Pangilinan, was not a de%t resulting from a loan or a
similar transaction had %etween the two &arties in the ordinary course of %an(ing
%usiness" -he resolution was a<rmed"
". Rep$%li& of the 'hilippines vs. (e&$rit) Credit and !&&eptan&e
Corporation
G.R. No. L-"*+#, -an$ar) ", 196.
Facts: Articles of #ncor&oration of defendant cor&oration were registered with the
+ecurities and =/change Commission" 5hen they a&&lied with +=C for the
registration and licensing of their securities under the +ecurities Act, the latter
referred it to the Central 'an( which in turn rendered an o&inion classifying
defendant cor&oration as engaged in %an(ing" +=C then advised the cor&oration to
com&ly with the requirements under the General 'an(ing Act"
Pursuant to a search warrant issued %y $-C $anila, mem%ers of Central 'an(
intelligence division and $anila &olice sei>ed documents and records relative to the
%usiness o&erations of the cor&oration" After e/amination of the same, the
intelligence division of the Central 'an( su%mitted a memorandum to the then
Acting .e&uty Governor of Central 'an( fnding that the cor&oration is engaged in
%an(ing o&erations" #n lieu of the memorandum, the $onetary 'oard issued a
resolution declaring that the cor&oration is &erforming %an(ing o&erations without
frst com&lying with the &rovisions of 3e&u%lic Act 7o" ::7"
7otwithstanding such resolution, the cor&oration, have %een and still are
&erforming the functions and activities which had %een declared to constitute illegal
%an(ing o&erations? the cor&oration had esta%lished 7@ %ranches in &rinci&al cities
and towns throughout the Phili&&ines? that through a systematic and vigorous
cam&aign underta(en %y the cor&oration, the same had managed to induce the
&u%lic to o&en A,@B: savings de&osit accounts with an aggregate de&osit of
PC,BDA,C:B"7@? Accordingly, the +olicitor General commenced this quo warranto
&roceedings for the dissolution of the cor&oration, with a &rayer that, meanwhile, a
writ of &reliminary inEunction %e issued e/ &arte, enEoining the cor&oration and its
%ranches, as well as its o<cers and agents, from &erforming the %an(ing o&erations
com&lained of, and that a receiver %e a&&ointed &endente lite" +u&erintendent of
'an(s of the Central 'an( was then a&&ointed %y the +u&reme Court as receiver
&endente lite of defendant cor&oration"
#ssue: 5hether or not defendant cor&oration was engaged in %an(ing o&erations"
4eld" Fes" An investment com&any which loans out the money of its customers,
collects the interest and charges a commission to %oth lender and %orrower, is a
%an(" #t is conceded that a total of A,@B: savings account de&osits have %een
made %y the &u%lic with the cor&oration and its 7@ %ranches, with an aggregate
de&osit of PC,BDA,C:B"7@, which has %een lent out to such &ersons as the
cor&oration deemed suita%le therefore" #t is clear that these transactions &arta(e of
the nature of %an(ing, as the term is used in +ection 2 of the General 'an(ing Act"
4ence, defendant cor&oration has violated the law %y engaging in %an(ing without
securing the administrative authority required in 3e&u%lic Act 7o" ::7" Accordingly,
the defendant cor&oration was ordered dissolved and a&&ointment of receiver was
made &ermanent"
,. Da/aso 'ere0 vs. Monetar) Board
G.R. No. L-",,*. -$ne ,* 196.
Facts: Petitioner0a&&ellant Pere>, for himself and in a derivative ca&acity on %ehalf
of the 3e&u%lic 'an(, instituted mandamus &roceedings in the Court of First
#nstance of $anila against the $onetary 'oard, the +u&erintendent of 'an(s, the
Central 'an( and the +ecretary of Gustice" 4is o%Eect was to com&el these
res&ondents to &rosecute, among others, Pa%lo 3oman and several other 3e&u%lic
'an( o<cials for violations of the General 'an(ing Act and the Central 'an( Act,
and for falsifcation of &u%lic or commercial documents in connection with certain
alleged anomalous loans amounting to PC,:!:,@!!"!! authori>ed %y 3oman and the
other %an( o<cials"
#ssue: 5hether or not these res&ondents may %e com&elled to &rosecute criminally
the alleged violators of %an(ing laws"
4eld: 7o" Petitioners cannot see( %y mandamus to com&el res&ondents to
&rosecute criminally those alleged violators of the %an(ing laws" Although the
Central 'an( and its res&ondent o<cials may have the duty under the Central 'an(
Act and the General 'an(ing Act to cause the &rosecution of those alleged violators,
yet there is nothing in said laws that im&oses a clear, s&ecifc duty on the former to
do the actual &rosecution of the latter" -he Central 'an( is a government
cor&oration created &rinci&ally to administer the monetary and %an(ing system of
the 3e&u%lic, not a &rosecution agency li(e the fscalHs o<ce" 'eing an artifcial
&erson, -he Central 'an( is limited to its statutory &owers and the nearest &ower to
which &rosecution of violators of %an(ing laws may %e attri%uted is its &ower to sue
and %e sued" 'ut this cor&orate &ower of litigation evidently refers to civil cases
only" Central 'an( and its o<cers have already done what they can %y referring the
matter to the s&ecial &rosecutors of the .e&artment of Gustice for &rosecution and
investigation" $oreover, it is a settled rule that mandamus will not lie to com&el a
&rosecuting o<cer, li(e the +ecretary of Gustice, to &rosecute a case in court"
2astly, violations of %an(ing laws constitute a &u%lic o)ense, the &rosecution
of which is a matter of &u%lic interest and hence, anyone 6 even &rivate individuals
6 can denounce such violations %efore the &rosecuting authorities" +ince Pere>
himself could cause the fling of criminal com&laints against those allegedly
involved in the anomalous loans, if any, then he has a &lain, adequate and s&eedy
remedy in the ordinary course of law, which ma(es mandamus against res&ondents
im&ro&er" 4ence, the order of the lower court dismissing the &etition was a<rmed"
4. (i/e1 2nternational 3Manila4 2n&. vs. Co$rt of !ppeals
G.R. No. ##*1, Mar&h 19 199*
Facts: -he &etitioner is a &rivate cor&oration engaged in the e/&ortation of food
&roducts" #t %uys these &roducts from various local su&&liers and then sells them
a%road" $ost of its e/&orts are &urchased %y the &etitioner on credit"
-he &etitioner was a de&ositor of the res&ondent %an( and maintained a
chec(ing account in its %ranch in Cu%ao, Iue>on City which issued several chec(s
against its de&osit %ut was sur&rised to learn later that they had %een dishonored
for insu<cient funds" As a consequence, several su&&liers sent a letter of demand
to the &etitioner, threatening &rosecution if the dishonored chec( issued to it was
not made good and also withheld delivery of the order made %y the &etitioner" ;ne
su&&lier also cancelled the &etitionerHs credit line and demanded that future
&ayments %e made %y it in cash or certifed chec("
-he &etitioner com&lained to the res&ondent %an(" #nvestigation disclosed
that the sum of PC!!,!!!"!! de&osited %y the &etitioner on $ay 2, CADC, had not
%een credited to it" -he error was rectifed only a month after, and the dishonored
chec(s were &aid after they were re0de&osited" -he &etitioner then fled a com&laint
in the then Court of First #nstance of 3i>al against the %an( for its gross and wanton
negligence"
#ssue: 5hether or not the %an( can %e held lia%le for negligence
4eld: -he de&ositor e/&ects the %an( to treat his account with the utmost fdelity
whether such account consists only of a few hundred &esos or of millions" -he %an(
must record every single transaction accurately, down to the last centavo, and as
&rom&tly as &ossi%le" -his has to %e done if the account is to reJect at any given
time the amount of money the de&ositor can dis&ose of as he sees ft, confdent
that the %an( will deliver it as and to whomever he directs" A %lunder on the &art of
the %an(, such as the dishonour of a chec( without good reason, can cause the
de&ositor not a little em%arrassment if not also fnancial loss and &erha&s even civil
and criminal litigation"
+. 5idelit) (avings and Mortgage Bank vs. Cen0on
G.R. No. L-46"*# !pril + 199*
Facts: -imoteo and ;lim&ia +antiago de&osited with the defendant Fidelity +avings
'an( the amount of P!,!!!"!! under a savings account and another P!,!!!
under a certifcate of time de&osit" 4ence, the aggregate amount of the s&ouseKs
de&osit is PC!!,!!!" 4owever, the $onetary 'oard su%sequently issued a resolution
declaring Fidelity +avings $ortgage 'an( insolvent and for%idden the %an( from
doing %usiness in the Phili&&ines" +ince Fe%ruary CA, CABA, the +u&erintendent of
'an(s has %een ta(ing charge of the assets of &etitioner %an(" Phili&&ine .e&osit
#nsurance Cor&oration 8P.#C9 was only a%le to &ay the s&ouses the amount of
PC!,!!!, leaving a de&osit %alance of PA!,!!!" -hrough another resolution of the
$onetary 'oard, the liquidation of the %an( was ordered and is still &ending u& to
the &resent" After demand for the &ayment of the de&osit %alance, the s&ouses fled
an action for sum of money with damages against &etitioner %an(" -he lower court
ruled in favor of s&ouses and ordered the %an( to &ay interest on un&aid de&osits
even after its closure &lus moral and e/em&lary damages with attorneyKs fees and
costs"
#ssues: 5hether or not an insolvent %an( may %e adEudged to &ay interest on
un&aid de&osits even after its closure %y the Central 'an( %y reason of insolvency
without violating the &rovisions of the Civil Code on &reference of credits? and
5hether or not an insolvent %an( may %e adEudged to &ay moral and
e/em&lary damages, attorneyHs fees and costs when the insolvency is caused
%ecause of the anomalous real estate transactions without violating the &rovisions
of the Civil Code on &reference of credits"
4eld: 7o" Petitioner cannot %e held lia%le for interest on %an( de&osits which
accrued from the time it was &rohi%ited %y the Central 'an( to continue with its
%an(ing o&erations" #t is settled Euris&rudence that a %an(ing institution which has
%een declared insolvent and su%sequently ordered closed %y the Central 'an( of the
Phili&&ines cannot %e held lia%le to &ay interest on %an( de&osits which accrued
during the &eriod when the %an( is actually closed and non0o&erational"
5hat ena%les a %an( to &ay sti&ulated interest on money de&osited with it is
that thru the other as&ects of its o&eration it is a%le to generate funds to cover the
&ayment of such interest" Lnless a %an( can lend money, engage in international
transactions, acquire foreclosed mortgaged &ro&erties or their &roceeds and
generally engage in other %an(ing and fnancing activities from which it can derive
income, it is inconceiva%le how it can carry on as a de&ository o%ligated to &ay
sti&ulated interest"
Awards of moral and e/em&lary damages and attorneyHs fees are li(ewise
erroneous" #n the a%sence of fraud, %ad faith, malice or wanton attitude, &etitioner
%an( may, therefore, not %e held res&onsi%le for damages which may %e reasona%ly
attri%uted to the non0&erformance of the o%ligation" 5herefore, the decision
a&&ealed from was modifed" 'an( is only lia%le to &ay the de&osit %alance of
PA!,!!! with accrued interest until the date it was &rohi%ited from doing %usiness
%y the Central 'an( with no other damages and costs"
6. (ia vs. Co$rt of !ppeals
G.R. No. 1*"9.* Ma) 1, 199*
Facts: Plainti) 2u>on +ia rented a safety de&osit %o/ of the defendant %an( at its
'inondo 'ranch wherein he &laced his collection of stam&s" -he said safety de&osit
%o/ leased %y the &lainti) was at the %ottom or at the lowest level of the safety
de&osit %o/es of the defendant %an("
.uring the Joods that too( &lace in CAD and CADB, Joodwater entered into
the defendant %an(Hs &remises, see&ed into the safety de&osit %o/ leased %y the
&lainti) and caused, according damage to his stam&s collection" -he defendant
%an( reEected the &lainti)Hs claim for com&ensation for his damaged stam&s
collection, so, the &lainti) instituted an action for damages against the defendant
%an("
-he defendant %an( contended that its contract with the &lainti) over safety
de&osit %o/ was one of lease and not of de&osit and, therefore, governed %y the
lease agreement which should %e the a&&lica%le law? the destruction of the
&lainti)Hs stam&s collection was due to a calamity %eyond o%ligation on its &art to
notify the &lainti) a%out the Joodwaters that inundated its &remises at 'inondo
%ranch which allegedly see&ed into the safety de&osit %o/ leased to the &lainti)"
-he trial court rendered in favor of &lainti) +ia and ordered +'-C to &ay damages"
#n an a&&eal, the Court of A&&eals a%solved +'-C from any lia%ility" 4ence this
&etition"
#ssue: 5hether or not +'-C is lia%le for negligence
4eld: Fes" +ome &rovisions of the lease agreement which are meant to e/em&t
+'-C from any lia%ility for damage, loss or destruction of the contents of the safety
de&osit %o/ which may arise from its own agentsK fraud, negligence or delay must
%e stric(en down for %eing contrary to law and &u%lic &olicy"
As correctly held %y the trial court, +'-C was guilty of negligence" +'-CHs
negligence aggravated the inEury or damage to the stam& collection" +'-C was
aware of the Joods of CAD and CADB? it also (new that the Joodwaters inundated
the room where the safe de&osit %o/ was located" #n view thereof, it should have
lost no time in notifying the &etitioner in order that the %o/ could have %een o&ened
to retrieve the stam&s, thus saving the same from further deterioration and loss" #n
this res&ect, it failed to e/ercise the reasona%le care and &rudence e/&ected of a
good father of a family, there%y %ecoming a &arty to the aggravation of the inEury or
loss" Accordingly, the aforementioned fourth characteristic of a fortuitous event is
a%sent" Article CC7! of the Civil Code, which reads M-hose who in the &erformance
of their o%ligation are guilty of fraud, negligence, or delay, and those who in any
manner contravene the tenor thereof, are lia%le for damages, is a&&lica%le" 4ence,
the &etition was granted"
.. Banas vs. !sia 'a&i6& 5inan&e Corporation
G.R. No. 1"#.*, 7&to%er 1# "***
Facts: -eodoro 'aNas e/ecuted a Promissory 7ote in favor of C" G" .i>on
Construction where%y for value received he &romised to &ay to the order of C" G"
.i>on Construction the sum of P:A!,!!!"!! in installments of *P:2,!!"!! every
2th day of the month starting from +e&tem%er 2, CAD! u& to August 2, CADC"*
2ater, C" G" .i>on Construction endorsed with recourse the Promissory 7ote
to A+#A PAC#F#C, and to secure &ayment thereof, C" G" .i>on Construction, through
its cor&orate o<cers, Cenen .i>on, President, and Guliette '" .i>on, Oice President
and -reasurer, e/ecuted a .eed of Chattel $ortgage covering three heavy
equi&ment units of Cater&illar 'ulldo>er Crawler -ractors $oreover, Cenen .i>on
e/ecuted a Continuing Lnderta(ing wherein he %ound himself to &ay the o%ligation
Eointly and severally with C" G" .i>on Construction"
#n com&liance thereof, C" G" .i>on Construction made three installment
&ayments to A+#A PAC#F#C for a total of PC:!,!!!"!!" -hereafter, however, C" G"
.i>on Construction defaulted in the &ayment of the remaining installments,
&rom&ting A+#A PAC#F#C to send a +tatement of Account to Cenen .i>on for the
un&aid %alance of P2B7,7:7"! inclusive of interests and charges, and PBB,A!A":D
re&resenting attorneyHs fees" As the demand was unheeded, A+#A PAC#F#C fled a
com&laint for a sum of money with &rayer for a writ of re&levin against -eodoro
'aNas, C" G" .i>on Construction and Cenen .i>on"
-he trial court issued a writ of re&levin against defendant C" G" .i>on
Construction for the surrender of the %ulldo>er crawler tractors" ;f the three
%ulldo>er crawler tractors, only two were actually turned over %y defendants which
units were su%sequently foreclosed %y A+#A PAC#F#C to satisfy the o%ligation" -he
two %ulldo>ers were sold %oth to A+#A PAC#F#C as the highest %idder"
Petitioners insist that A+#A PAC#F#C was organi>ed as an investment house
which could not engage in the lending of funds o%tained from the &u%lic through
recei&t of de&osits" -he dis&uted Promissory 7ote, .eed of Chattel $ortgage and
Continuing Lnderta(ing were not intended to %e valid and %inding on the &arties as
they were merely devices to conceal their real intention which was to enter into a
contract of loan in violation of %an(ing laws" -he 3egional -rial Court ruled in favor
of A+#A PAC#F#C holding the defendants Eointly and severally lia%le for the un&aid
%alance of the o%ligation under the Promissory 7ote" -he Court of A&&eals a<rmed
the decision of the trial court
#ssues: 5hether the dis&uted transaction %etween &etitioners and A+#A
PAC#F#C violated %an(ing laws, hence, null and void
4eld: 7o" An investment com&any refers to any issuer which is or holds itself out as
%eing engaged or &ro&oses to engage &rimarily in the %usiness of investing,
reinvesting or trading in securities" As defned in 3evised +ecurities Act, securities
*shall include commercial &a&ers evidencing inde%tedness of any &erson, fnancial
or non0fnancial entity, irres&ective of maturity, issued, endorsed, sold, transferred
or in any manner conveyed to another with or without recourse, such as &romissory
notes* Clearly, the transaction %etween &etitioners and res&ondent was one
involving not a loan %ut &urchase of receiva%les at a discount, well within the
&urview of *investing, reinvesting or trading in securities* which an investment
com&any, li(e A+#A PAC#F#C, is authori>ed to &erform and does not constitute a
violation of the General 'an(ing Act"
5hat is &rohi%ited %y law is for investment com&anies to lend funds o%tained
from the &u%lic through recei&ts of de&osit, which is a function of %an(ing
institutions" 'ut here, the funds su&&osedly *lent* to &etitioners have not %een
shown to have %een o%tained from the &u%lic %y way of de&osits, hence, the
ina&&lica%ility of %an(ing laws" 5herefore, the assailed decision of the Court of
A&&eals was a<rmed"
#. Re)es vs. Co$rt of !ppeals
G.R. No. 11#49" !$g$st 1+ "**1
Facts: #n view of the 2!
th
Asian 3acing Conference then scheduled to %e held in
+ydney, Australia, the Phili&&ine 3acing Clu%, #nc" 8P3C#9 sent four delegates to the
said conference" P3C#, through its o<cers, a&&lied to the res&ondent %an( for a
foreign e/change demand draft in Australian dollars"
Godofredo, clu%Ks chief cashier, went to res&ondent %an( to a&&ly for a
demand draft in the amount ALPC,BC!"!! &aya%le to the order of the 2!
th
Asian
3acing Conference +ecretariat of +ydney, Australia" 4e was attended to %y
res&ondent %an(Hs assistant cashier, $r" Fasis, who at frst denied the a&&lication for
the reason that res&ondent %an( did not have an Australian dollar account in any
%an( in +ydney" Godofredo as(ed if there could %e a way for res&ondent %an( to
accommodate P3C#Hs urgent need to remit Australian dollars to +ydney" Fasis of
res&ondent %an( then informed Godofredo of a rounda%out way of e)ecting the
requested remittance to +ydney thus: the res&ondent %an( would draw a demand
draft against 5est&ac 'an( in +ydney, Australia 85est&ac0+ydney9 and have the
latter reim%urse itself from the L"+" dollar account of the res&ondent in 5est&ac
'an( in 7ew For(, L"+"A" 85est&ac07ew For(9" -his arrangement has %een
customarily resorted to since the CAB!Hs and the &rocedure has &roven to %e
&ro%lem0free" P3C# and the &etitioner Gregorio 4" 3eyes, acting through Godofredo,
agreed to this arrangement or a&&roach in order to e)ect the urgent transfer of
Australian dollars &aya%le to the +ecretariat of the 2!
th
Asian 3acing Conference"
Pursuant thereto, res&ondent %an( a&&roved the said a&&lication of P3C# and issued
foreign e/change demand draft in the sum a&&lied for &aya%le to the order of the
2!
th
Asian 3acing Conference +ecretariat of +ydney, Australia, and addressed to
5est&ac0+ydney as the drawee %an("
4owever, u&on due &resentment of the foreign e/change demand draft, the
same was dishonored, with the notice of dishonor stating that there is M7o account
held with 5est&ac"* $eanwhile, 5es&ac07ew For( sent a ca%le to res&ondent %an(
informing the latter that its dollar account in the sum of ALP C,BC!"!! was de%ited"
#n res&onse to P3C#Hs com&laint a%out the dishonor of the said foreign e/change
demand draft, res&ondent %an( informed 5est&ac0+ydney of the issuance of the
said demand draft, drawn against the 5es&ac0+ydney and informing the latter to %e
reim%ursed from the res&ondent %an(Hs dollar account in 5est&ac07ew For(" -he
res&ondent %an( on the same day li(ewise informed 5es&ac07ew For( requesting
the latter to honor the reim%ursement claim of 5es&ac0+ydney" L&on its second
&resentment for &ayment, the demand draft was again dishonored %y 5est&ac0
+ydney for the same reason, that is, that the res&ondent %an( has no de&osit dollar
account with the drawee 5es&ac0+ydney"
Petitioners Gregorio 3eyes and Consuelo Puyat03eyes arrived in +ydney on a
se&arate date and %oth were humiliated and em%arrassed in the &resence of
international audience after %eing denied registration of the conference secretariat
since the foreign e/change draft was dishonored" Petitioners were only a%le to
attend the conference after &romising to &ay in cash instead which they fulflled
Petitioners fled in the 3egional -rial Court a com&laint for damages against
the res&ondent %an(" -he trial court rendered Eudgment in favor of the res&ondent
%an(" -he a&&ellate court a<rmed the decision of the trial court"
#ssue: 5hether or not res&ondent %an( is lia%le for damages due to the dishonor of
the foreign e/change demand drafts"
4eld: 7o" -he facts as found %y the courts a quo show that res&ondent %an( did not
cause an erroneous transmittal of its +5#F- ca%le message to 5est&ac0+ydney" #t
was the erroneous decoding of the ca%le message on the &art of 5est&ac0+ydney
that caused the dishonor of the su%Eect foreign e/change demand draft"
-he evidence also shows that the res&ondent %an( e/ercised that degree of
diligence e/&ected of an ordinary &rudent &erson under the circumstances
o%taining? the res&ondent %an( advised 5est&ac07ew For( to honor the
reim%ursement claim of 5est&ac0+ydney and to de%it the dollar account

of
res&ondent %an( with the former" As soon as the demand draft was dishonored, the
res&ondent %an(, thin(ing that the &ro%lem was with the reim%ursement and
without any idea that it was due to miscommunication, re0confrmed the authority of
5est&ac07ew For( to de%it its dollar account for the &ur&ose of reim%ursing
5est&ac0+ydney" 3es&ondent %an( also sent two more ca%le messages to 5est&ac0
7ew For( inquiring why the demand draft was not honored"
-he degree of diligence required of %an(s, is more than that of a good father
of a family where the fduciary nature of their relationshi& with their de&ositors is
concerned" #n other words %an(s are duty %ound to treat the de&osit accounts of
their de&ositors with the highest degree of care" 'ut the said ruling a&&lies only to
cases where %an(s act under their fduciary ca&acity, that is, as de&ositary of the
de&osits of their de&ositors" 'ut the same higher degree of diligence is not e/&ected
to %e e/erted %y %an(s in commercial transactions that do not involve their fduciary
relationshi& with their de&ositors" -he case at %ar does not involve the handling of
&etitionersH de&osit, if any, with the res&ondent %an(" #nstead, the relationshi&
involved was that of a %uyer and seller" 5herefore, the decision of the Court of
A&&eals was a<rmed"
9. Consolidated Bank and 8r$st Corporation vs. Co$rt of !ppeals
G.R. No. 1,#+69 (epte/%er 11 "**,
Facts: +olid%an( is a domestic %an(ing cor&oration while &rivate res&ondent 2"C"
.ia> and Com&any, CPAKs 8M2"C" .ia>,9, is a &rofessional &artnershi& engaged in the
&ractice of accounting and which o&ened a savings account with +olid%an(" .ia>
through its cashier, $ercedes $acaraya , flled u& a savings cash de&osit sli& and a
savings chec(s de&osit sli&" $acaraya instructed the messenger of 2"C" .ia>,
#smael Cala&re, to de&osit the money with +olid%an( and give him the +olid%an(
&ass%oo("
Cala&re went to +olid%an( and &resented to -eller 7o" B the two de&osit sli&s
and the &ass%oo(" -he teller ac(nowledged recei&t of the de&osit %y returning to
Cala&re the du&licate co&ies of the two de&osit sli&s" +ince the transaction too(
time and Cala&re had to ma(e another de&osit for 2"C" .ia> with Allied 'an(, he left
the &ass%oo( with +olid%an(" 5hen Cala&re returned to +olid%an( to retrieve the
&ass%oo(, -eller 7o" B informed him that some%ody got the &ass%oo(" Cala&re went
%ac( to 2"C" .ia> and re&orted the incident to $acaraya"
-he following day,, 2"C" .ia> through its Chief =/ecutive ;<cer, 2uis C" .ia>,
called u& +olid%an( to sto& any transaction using the same &ass%oo( until 2"C" .ia>
could o&en a new account followed %y a formal written request later that day" #t was
also on the same day that 2"C" .ia> learned of the unauthori>ed withdrawal the day
%efore of P:!!,!!! from its savings account" -he withdrawal sli& %ore the
signatures of the authori>ed signatories of 2"C" .ia>, namely .ia> and 3ustico 2"
$urillo" -he signatories, however, denied signing the withdrawal sli&" A certain 7oel
-amayo received the P:!!,!!!"
2"C" .ia> demanded from +olid%an( the return of its money %ut to no avail"
4ence, 2"C" .ia> fled a Com&laint for 3ecovery of a +um of $oney against
+olid%an( with the 3egional -rial Court" After trial, the trial court rendered a decision
a%solving +olid%an( and dismissing the com&laint" Court of A&&eals reversed the
decision of the trial court"
#ssue: 5hether or not +olid%an( must %e held lia%le for the fraudulent withdrawal on
&rivate res&ondentKs account"
4eld: -he &etition is &artly meritorious" +olid%an( is lia%le for %reach of contract
due to negligence, or cul&a contractual"
-he contract %etween the %an( and its de&ositor is governed %y the
&rovisions of the Civil Code on sim&le loan" -here is a de%tor0creditor relationshi&
%etween the %an( and its de&ositor" -he %an( is the de%tor and the de&ositor is the
creditor" -he law im&oses on %an(s high standards in view of the fduciary nature of
%an(ing" 3A D7AC declares that the +tate recogni>es the Mfduciary nature of
%an(ing that requires high standards of integrity and &erformance", -his new
&rovision in the general %an(ing law, introduced in 2!!!, is a statutory a<rmation
of +u&reme Court decisions holding that Mthe %an( is under o%ligation to treat the
accounts of its de&ositors with meticulous care, always having in mind the fduciary
nature of their relationshi&",
4owever, the fduciary nature of a %an(0de&ositor relationshi& does not
convert the contract %etween the %an( and its de&ositors from a sim&le loan to a
trust agreement, whether e/&ress or im&lied" Failure %y the %an( to &ay the
de&ositor is failure to &ay a sim&le loan, and not a %reach of trust"
+olid%an(Ks tellers must e/ercise a high degree of diligence in insuring that
they return the &ass%oo( only to the de&ositor or his authori>ed re&resentative" -he
tellers (now, or should (now, that the rules on savings account &rovide that any
&erson in &ossession of the &ass%oo( is &resum&tively its owner" #f the tellers give
the &ass%oo( to the wrong &erson, they would %e clothing that &erson &resum&tive
ownershi& of the &ass%oo(, facilitating unauthori>ed withdrawals %y that &erson"
For failing to return the &ass%oo( to Cala&re, the authori>ed re&resentative of 2"C"
.ia>, +olid%an( and -eller 7o" B &resum&tively failed to o%serve such high degree of
diligence in safeguarding the &ass%oo(, and in insuring its return to the &arty
authori>ed to receive the same"
4owever, 2"C" .ia> was guilty of contri%utory negligence in allowing a
withdrawal sli& signed %y its authori>ed signatories to fall into the hands of an
im&ostor" -hus, the lia%ility of +olid%an( should %e reduced" 4ence, the lia%ility of
+olid%an( for actual damages was reduced to only B!Q, the remaining @!Q was
%orne %y &rivate res&ondent"
1*. Ban&o de 7ro vs. -!'RL Develop/ent Corporation
G.R. No. 1.99*1 !pril 14 "**#
Facts: 'anco de ;ro e/tended fnancial facilities to res&ondent GAP32 amounting to
P2:!,!!!,!!! with co0res&ondents 3a&id Forming Cor&oration 83FC9 and Gose
Arollado acting as sureties" GAP32 defaulted in the &ayment of four trust recei&ts"
Petitioner %an( su%sequently found out that GAP32 altered and falsifed its fnancial
statements to &roEect itself as a via%le investment" 'ecause the demand for
&ayment was unheeded, &etitioner %an( sued GAP32 and the sureties for &ayment of
the %alance due on the trust recei&ts in 3-C $a(ati" 3es&ondents then hastily fled a
&etition for reha%ilitation and stay order in Calam%a of 3-C which were granted" As
a result, the com&laint was dismissed with res&ect to GAP32 and 3FC" Arollado
remained as defendant" 3es&ondents fled a &etition for certiorari %efore the CA,
contending that the trial court did not acquire Eurisdiction over them as the
summons were served on a mere administrative assistant" CA granted the &etition
and dismissed &etitionerKs motion for reconsideration" 4ence this &etition"
#ssues: 5hether or not Eurisdiction over the defendants was acquired and
whether or not they are lia%le to &ay their o%ligations
4eld: Petition granted" 5hen res&ondents moved for the sus&ension of &roceedings
of the civil case %efore the $a(ati 3-C, on the %asis of the stay order of the Calam%a
3-C, they waived whatever defect there was in the service of summons and were
deemed to have su%mitted themselves voluntarily to the Eurisdiction of the $a(ati
3-C"
Considering the amount of &etitionerHs e/&osure in GAP32, Eustice and fairness
dictate that the $a(ati 3-C hear whether or not res&ondents indeed committed
fraud in securing the credit accomodation" #n this event, &etitioner can use the
fnding of fraud to move for the dismissal of the reha%ilitation case in the Calam%a
3-C"
$oreover, under +ec" @! of the General 'an(ing 2aw, should such statements
8fnancial9 &rove to %e false or incorrect in any material detail, the %an( may
terminate any loan or credit accommodation granted on the %asis of said
statements and shall have the right to demand immediate re&ayment or liquidation
of the o%ligation"
$eanwhile, trial court should &roceed with the case against three defendants"
11. 'hilippines National Bank vs. 9rlando 8. Rodrig$e0 et al.
G.R. No. 1.*,"+ (epte/%er "6 "**#
Facts: 3es&ondents0s&ouses maintained a savings and demandRchec(ing accounts
with &etitioners Phili&&ines 7ational 'an( 8P7'9" -hey were engaged in the informal
lending %usiness and had a discounting arrangement with the Philna%an(
=m&loyees +avings and 2oan Association 8P=$+2A9, an association of P7'
em&loyees, which li(ewise maintained current and savings accounts with &etitioner
%an(" P=$+2A regularly granted loans to its mem%ers" +&ouses 3odrigue> would
rediscount the &ostdated chec(s issued to mem%ers whenever the association was
short of funds" As was customary, the s&ouses would re&lace the &ostdated chec(s
with their own chec(s issued in the name of the mem%ers"
#t was P=$+2AKs &olicy not to a&&rove a&&lications for loans of mem%ers with
outstanding de%ts" -o su%vert this &olicy, some P=$+2A o<cers devised a scheme
to o%tain additional loans des&ite their outstanding loan accounts" -hey too( out
loans in the names of un(nowing mem%ers, without the (nowledge or consent of
the latter" -he P=$+2A chec(s issued for these loans were then given to the s&ouses
for rediscounting" -he o<cers carried this out %y forging the indorsement of the
named &ayees in the chec(s" #n return, the s&ouses issued their &ersonal chec(s
83odrigue> chec(s9 in the name of the mem%ers and delivered the chec(s to an
o<cer of P=$+2A" -he P=$+2A chec(s, on the other hand, were de&osited %y the
s&ouses to their account" $eanwhile, the 3odrigue> chec(s were de&osited directly
%y P=$+2A to its savings account without any indorsement from the named &ayees"
-his usual irregular &rocedure is made &ossi%le through the facilitation of =dmundo
Palermo, Gr", treasurer of P=$+2A and %an( teller in the P7' 'ranch"
-he s&ouses issued BA chec(s, in the total amount of P2,:@,D!@"!!, &aya%le
to @7 mem%ers of P=$+2A" After fnding out such fraudulent act, P7' closed the
current account of P=$+2A" As a result, the P=$+2A chec(s de&osited %y the
s&ouses were returned or dishonored for the reason *Account Closed"* -he
corres&onding 3odrigue> chec(s, however, were de&osited as usual to the P=$+2A
savings account" -he amounts were duly de%ited from the 3odrigue> account" -hus,
%ecause the P=$+2A chec(s given as &ayment were returned, s&ouses 3odrigue>
incurred losses from the rediscounting transactions"
+&ouses 3odrigue> sued P=$+2A and P7'" -hey contended that %ecause P7'
credited the chec(s to the P=$+2A account even without indorsements, P7'
violated its contractual o%ligation to them as de&ositors" P7' &aid the wrong
&ayees, hence, it should %ear the loss" -rial court ruled in favor of s&ouses and
ordered P7' to &ay" CA a<rmed the decision" 4ence this &etition
#ssue: 5hether or not P7' can %e made lia%le to &ay the amount of chec(s which
were de&osited to the P=$+2A savings account"
4eld: Fes" -he 3odrigue> chec(s are &aya%le to order since the %an( failed to &rove
that the named &ayees therein are fctitious" 4ence, the fctitious0&ayee rule which
will ma(e the instrument &aya%le to %earer does not a&&ly" P7' acce&ted the BA
chec(s for de&osit to the P=$+2A account even without any indorsement from the
named &ayees" #t %ears stressing that order instruments can only %e negotiated
with a valid indorsement"
A %an( that regularly &rocesses chec(s that are neither &aya%le to the
customer nor duly indorsed %y the &ayee is a&&arently grossly negligent in its
o&erations" -his Court has recogni>ed the unique &u%lic interest &ossessed %y the
%an(ing industry and the need for the &eo&le to have full trust and confdence in
their %an(s" For this reason, %an(s are minded to treat their customerKs accounts
with utmost care, confdence, and honesty" #n a chec(ing transaction, the drawee
%an( has the duty to verify the genuineness of the signature of the drawer and to
&ay the chec( strictly in accordance with the drawerKs instructions, i"e", to the
named &ayee in the chec(" #t should charge to the drawerKs accounts only the
&aya%les authori>ed %y the latter" ;therwise, the drawee will %e violating the
instructions of the drawer and it shall %e lia%le for the amount charged to the
drawerKs account"
1". Bank of !/eri&a N8 and (! vs. !sso&iated Citi0ens Bank
G.R. No. 141**1 Ma) "1 "**9
Facts: 'A0Finance Cor&oration granted $iller ;)set Press, #nc" a credit line facility
through which the latter could assign or discount its trade receiva%les with the
former" -he re&resentatives of $iller 8Ly Siat Chung, Ching Ly +eng, and Ly Chung
Guan +eng9 e/ecuted a Continuing +uretyshi& Agreement with 'A0Finance where%y
they Eointly and severally guaranteed the full and &rom&t &ayment of any and all
inde%tedness which $iller may incur with 'A0Finance"
$iller discounted and assigned several trade receiva%les to 'A0Finance %y
e/ecuting .eeds of Assignment in favor of the latter" #n consideration thereof, 'A0
Finance issued four chec(s &aya%le to the order of $iller with the notation *For
PayeeKs Account ;nly"* -hese chec(s were drawn against 'an( of America" -he four
chec(s were de&osited %y Ching Ly +eng in Associated Citi>ens 'an( with his Eoint
account with Ly Chung +eng" Associated 'an( stam&ed the chec(s and guaranteed
all &rior endorsements andRor lac( of endorsements and sent them through clearing"
2ater, 'an( of America as drawee %an( honored the chec(s and &aid the &roceeds
to Associated 'an( as the collecting %an(" 5hen $iller failed to deliver to 'A0
Finance the &roceeds of the assigned trade receiva%les, 'A0Finance fled a collection
suit against $iller and im&leaded the three re&resentative of the latter"
$iller, Ly Siat Chung, and Ly Chung Guan +eng fled a Eoint answer with
cross0claim against Ching Ly +eng, wherein they denied that 8C9 they received the
amount covered %y the four 'an( of America chec(s, and 829 they authori>ed their
co0defendant Ching Ly +eng to transact %usiness with 'A0Finance on %ehalf of
$iller" Ly Siat Chung and Ly Chung Guan +eng also denied having signed the
Continuing +uretyshi& Agreement with 'A0Finance" 'A0Finance fled an Amended
Com&laint im&leading 'an( of America as additional defendant for allegedly
allowing encashment and collection of the chec(s %y &erson or &ersons other than
the &ayee named thereon" Ching Ly +eng did not fle his Answer to the com&laint"
'an( of America fled a third &arty com&laint against Associated 'an(" #n its
answer to the third &arty com&laint, Associated 'an( admitted having received the
four chec(s for de&osit in the Eoint account of Ching Ly +eng and Ly Chung Guan
+eng, %ut alleged that Ching Ly +eng, %eing one of the cor&orate o<cers of $iller,
was duly authori>ed to act for and on %ehalf of $iller" 3-C rendered Eudgment
ordering 'an( of America to &ay 'A0Finance the value of the four chec(s" CA
a<rmed the trial courtKs ruling with modifcation that Associated 'an( should
reim%urse 'an( of America" 4ence this &etition"
#ssues: 5hether or not 'an( of America is lia%le to &ay 'A0Finance and
whether or not Associated 'an( should reim%urse 'an( of America the amount of
the four chec(s"
4eld: Fes" -he %an( on which a chec( is drawn, (nown as the drawee %an(, is under
strict lia%ility, %ased on the contract %etween the %an( and its customer 8drawer9, to
&ay the chec( only to the &ayee or the &ayeeKs order" -he drawerKs instructions are
reJected on the face and %y the terms of the chec(" 5hen the drawee %an( &ays a
&erson other than the &ayee named on the chec(, it does not com&ly with the terms
of the chec( and violates its duty to charge the drawerKs account only for &ro&erly
&aya%le items"
;n the &art of Associated 'an(, the law im&oses a duty of diligence on the
collecting %an( to scrutini>e chec(s de&osited with it for the &ur&ose of determining
their genuineness and regularity" -he collecting %an( %eing &rimarily engaged in
%an(ing holds itself out to the &u%lic as the e/&ert and the law holds it to a high
standard of conduct" #n &resenting the chec(s for clearing and for &ayment, the
defendant Tcollecting %an(U made an e/&ress guarantee on the validity of *all &rior
endorsements"* -hus, stam&ed at the %ac( of the chec(s are the defendantKs clear
warranty" As the warranty has &roven to %e false and inaccurate, Associated 'an( is
lia%le for any damage arising out of the falsity of its re&resentation"
Clos$re of Banks
1. Ra/os vs. Central Bank of the 'hilippines
G.R. No. L-"9,+" 7&to%er 4 19.1
Facts: Petitioners are the maEority and controlling stoc(holders of ;verseas 'an( of
$anila 8;'$9, a commercial %an(ing cor&oration" -he ;'$ had %een sus&ended %y
res&ondent from clearing with the C' and from lending o&erations for various
violations of the %an(ing laws and im&lementing regulations" Petitioners charged
that the ;'$ %ecame fnancially distressed %ecause of this sus&ension and the
de&rivation %y the C' of all the usual credit facilities and accommodations accorded
to the other %an(s"
'ecause the fnancial situation of the ;'$ had caused mounting concern in the C',
&etitioner 3amos and the ;'$ management met with res&ondent C' on the
necessity and urgency of reha%ilitating the ;'$ through the e/tension of necessary
fnancial assistance" #n lieu thereof, the $onetary 'oard issued a resolution
demanding the stoc(holders to mortgage their &ro&erties or assign the same to the
C' and to e/ecute a voting trust agreement where%y they will &ass the
management to Phili&&ine 7ational 'an( in order Mto stave of liquidation,"
4ence, the &etitioners e/ecuted the voting trust agreement &re&ared %y C'
with &etitioners as cestuis que trust

and res&ondent C'Hs +u&erintendent of 'an(s
as the -rustee" Petitioners li(ewise conveyed %y way of mortgage to the C' all their
&rivate &ro&erties and holdings to secure the o%ligations of the ;'$ to the C'"
Accordingly, new directors and o<cers were elected and installed and they too(
over the management and control of the ;verseas %an("
4owever, after D months, the Central 'an( did not ma(e any &ositive action
to reorgani>e and resume ;'$Ks normal o&erations" #nstead, C' issued a resolution
e/cluding ;'$ from clearing with it and authori>ing the nominee %oard of directors
to sus&end o&erations" 5orse, C' $onetary 'oard issued a resolution ordering the
liquidation the %an(" 4ence this &etition for certiorari, &rohi%ition and mandamus
with &rayer for the issuance of a writ of &reliminary inEunction to restrain res&ondent
Central 'an( of the Phili&&ines from enforcing and im&lementing the $onetary
'oard 3esolutions"
#ssue: 5hether or not the C' had agreed to reha%ilitate, normali>e and sta%ili>e
;'$ and whether or not the C' resolutions were ado&ted in a%use of discretion"
4eld: Fes" Petition granted" C' did agree and commit itself to the continued
o&eration of, and reha%ilitation of, the ;'$" C' made e/&ress re&resentations to
&etitioners herein that it would su&&ort the ;'$, and avoid its liquidation if the
&etitioners would e/ecute 8a9 the voting trust agreement turning over the
management of ;'$ to the C' or its nominees, and 8%9 mortgage or assign their
&ro&erties to the Central 'an( to cover the overdraft %alance of ;'$" -he
&etitioners having com&lied with these conditions and &arted with value to the
&roft of the C' 8which thus acquired additional security for its own advances9, the
C' may not now renege on its re&resentations and liquidate the ;'$, to the
detriment of its stoc(holders, de&ositors and other creditors, under the rule of
&romissory esto&&els"
-he conduct of the C' reveals a calculated attem&t to evade reha%ilitating
;'$ des&ite its &romises" 4ence, res&ondent Central 'an( of the Phili&&ines is
directed to com&ly with it o%ligations under the voting trust agreement, and to
desist from ta(ing action in violation thereof"
". Central Bank vs. Co$rt of !ppeals
1*6 (CR! 14, 19#1
Facts: Plainti)s #sidro Fernande> and Gesus Gayme are the maEority and controlling
stoc(holders of Provident 'an(" 5hen Provident +avings 'an( e/&erienced %an(run,
it was forced to %orrow funds from other %an(s and the Central 'an(" .es&ite the
%orrowing, the funds remained insu<cient to satisfy the withdrawals" 4ence, the
&lainti)s a&&ealed to Central 'an( for further assistance" 4owever, C' re&lied to
them stating that they have to relinquish and turnover the management and control
of the %an( to #glesia ni Sristo 8#7S9 in order for it to assist the distressed &rovident"
'ecause &lainti)s were left with no other choice, they agreed to the &ro&osal and
e/ecuted a memorandum of agreement with =agle 'roadcasting Cor&oration 8='C9,
a com&any identifed with #7S"
4owever, ='C did not com&ly with its o%ligation to organi>e the %an("
#nstead, it made several irregularities in managing the %an(" -hese acts were made
des&ite the &resence of C' e/aminers" +u%sequently, C' $onetary 'oard issued a
resolution declaring the closure of Provident +avings 'an( and ordering its
liquidation" 4ence, Fernande> and Gayme fled with the Court of First #nstance a
&etition for certiorari, &rohi%ition, and mandamus against Central 'an( to annul the
resolution and restrain C' from &roceeding with the liquidation which the court
granted" Court of A&&eals a<rmed lower courtKs decision" 4ence this a&&eal"
#ssue: 5hether or not the closure of the %an( may %e su%Eect to Eudicial inquiry and
whether or not the resolution was issued ar%itrarily and in %ad faith"
4eld: Fes" .ecision a<rmed" 5hile the closure and liquidation of a %an( may %e
considered an e/ercise of &olice &ower, the validity of such e/ercise of &olice &ower
is su%Eect to Eudicial inquiry and could %e set aside if it is either ca&ricious,
discriminatory, whimsical, ar%itrary, unEust, or a denial of due &rocess and equal
&rotection clauses of the Constitution"
-he ar%itrariness and %ad faith of Central 'an( is evident from the fact that it
&ressured Fernande> and Gayme into relinquishing the management and control of
Provident +avings 'an( to #glesia 7i Sristo which did not have any intention of
restoring the %an( into its former sound fnancial condition %ut whose interest was
merely to recover its de&osits from the %an( and thereafter allowing #7S to
mismanage the %an( until the %an(Ks fnancial deterioration and su%sequent
closure" Central 'an( acted whimsically and withdrew its commitment to su&&ort
the %an( to the detriment of the latter"
,. (al$d vs. Central Bank
G.R. No. L-1.6"* !$g$st 19 19#6
Facts: -he $onetary 'oard ado&ted 2 resolutions for%idding the $untinlu&a 'an( to
do %usiness, designating a statutory receiver, and ordering the liquidation of the
same %an( after confrmation that it is insolvent" $untinlu&a %an( o&&osed the
liquidation and alleged that the action of the $onetary 'oard was &remature and
void since there was no &rior e)ort to reorgani>e the management of the %an( and
restore its via%ility and that it was made ar%itrarily and in %ad faith" -he 3egional
-rial Court, treating the o&&osition of the %an( as a motion to dismiss, ruled in favor
of it and declared the action of the $onetary 'oard ar%itrary after fnding that the
%an( had more assets than lia%ilities" -he #ntermediate A&&ellate Court reversed the
decision and gave due course to the &etition for liquidation" 4ence this &etition
#ssue: 5hether or not the action of the $onetary 'oard is within the Eurisdiction of
the 3egional -rial Court and may rule on its validity %ased on ar%itrariness and %ad
faith"
4eld: Fes" 3esolutions of the $onetary 'oard for%idding %an(ing institutions to do
%usiness? or a&&ointing a receiver to ta(e charge of the %an(Hs assets and lia%ilities?
or determining whether the %an(ing institutions may %e reha%ilitated, or should %e
liquidated and a&&ointing a liquidator towards this end are %y law fnal and
e/ecutory" 'ut they can %e set aside %y the court on one s&ecifc ground, and that
is, if there is convincing &roof that the action is &lainly ar%itrary and made in %ad
faith" -he Central 'an( concedes this &ower in the court, %ut insists that that setting
aside cannot %e done in the same &roceeding for assistance in liquidation, %ut in a
se&arate action instituted s&ecifcally for the &ur&ose" 4owever, there is no
&rovision of law which e/&ressly or even %y im&lication im&oses the requirement for
a se&arate &roceeding e/clusively occu&ied with adEudicating this issue" 4ence,
such action may %e asserted as an a<rmative defense of a counterclaim in the
&roceeding for assistance in liquidation that the Central 'an( has fled in the
3egional -rial Court" -he case is remanded %ac( to the 3-C for further &roceeding"
4. Lipana vs. Develop/ent Bank of the Philippines
G.R. No. .,##4 (eptember 24, 1987
Facts: Petitioners o&ened and maintained %oth time and savings de&osits with the
res&ondent .evelo&ment 'an( of 3i>al" 5hen some of the time de&osit certifcates
matured, &etitioners were not a%le to cash them %ut instead were issued a
managerHs chec( which was dishonored u&on &resentment" .emands for the
&ayment of %oth time and savings de&osits have failed" 4ence, &etitioners fled with
the 3-C a collection suit with &rayer for issuance of a writ of &reliminary attachment
which was granted %y the court" -he 3-C rendered Eudgment in favor of &etitioners"
$eanwhile, the $onetary 'oard &laced the res&ondent %an( under receivershi&"
+u%sequently, the motion for e/ecution &ending a&&eal fled %y &etitioners was
granted %y the court %ut was also stayed %y the trial Eudge" -he motion fled %y
&etitioners to lift the stay order having %een denied, this &etition was fled"
#ssue: 5hether or not res&ondent Eudge could legally stay e/ecution of Eudgment
that has already %ecome fnal and e/ecutor
4eld: Fes" Petition dismissed" After the $onetary 'oard has declared that a %an( is
insolvent and has ordered it to cease o&erations, the 'oard %ecomes the trustee of
its assets for the equal %eneft of all the creditors, including de&ositors" -he assets
of the insolvent %an(ing institution are held in trust for the equal %eneft of all
creditors, and after its insolvency, one cannot o%tain an advantage or a &reference
over another %y an attachment, e/ecution or otherwise" -o e/ecute the Eudgment
would unduly de&lete the assets of res&ondent %an( to the o%vious &reEudice of
other de&ositors and creditors,
+. 7verseas Bank of Manila vs. Co$rt of !ppeals
G.R. No. L-4+#66 !pril 19 19#9
Facts: #n relation to a contract of sale %etween 7A5A+A, as vendor and a certain
'onifacio 3egalado, as vendee, the amount corres&onding to the frst &ayment %y
3egalado was &laced on a time de&osit with the ;verseas 'an( %y the 7A5A+A
-reasurer for a &eriod of B months" A second &ayment having %een made %y
3egalado, another time de&osit was made %y the 7A5A+A -reasurer with the
;verseas 'an(, this time in the amount res&resenting the %alance of the &urchase
&rice due from 3egalado" -he &eriod of this second de&osit was f/ed C year"
+u%sequently, 7A5A+AHs Acting General $anager wrote to the ;verseas 'an(
advising that 8C9 as regards the frst time de&osit which had already matured,
7A5A+A wished to withdraw it immediately, and 829 with res&ect to the second time
de&osit of, it intended to withdraw it B! days thereafter as authori>ed %y the
&artiesH agreement set forth in the certifcate of the de&osit" .es&ite several letter
request, nothing was heard from the ;verseas 'an(" #t did however &ay to 7A5A+A
interest on its time de&osits"
After maturity of the second time de&osit and ;verseas 'an( not res&onding
to the letter request of 7A5A+A for the remittance of the time de&osits, 7A5A+A
then wrote to the Central 'an( Governor a%out the matter" A&&arently, even the
Central 'an( was ignored %y ;verseas 'an(" ;ne last letter was written %y 7A5A+A
to the ;verseas 'an(, reiterating its demand for the return of its money" Again the
letter went unheeded"
7A5A+A thus %rought suit to recover its de&osits and damages" CF# $anila
rendered Eudgment in favor of 7A5A+A and ordered the %an( to &ay" CA a<rmed
the trial courtKs ruling" 4ence this &etition"
#ssue: 5hether or not ;verseas 'an( is lia%le to &ay"
4eld: Fes" Gudgment a<rmed" -he %an(Ks contention that the &unitive actions ta(en
%y the Central 'an( &revented the %an( from conducting its %usiness is devoid of
merit" -here is a%solutely no evidence of these facts in the record" $oreover, the
sus&ension of o&erations in CABD could not &ossi%ly e/cuse non0com&liance with the
o%ligations in question which matured in CABB" Again, the claim that the Central
'an(, %y sus&ending the ;verseas 'an(Hs %an(ing o&erations, had made it
im&ossi%le for the ;verseas 'an( to &ay its de%ts, whatever validity might %e
accorded thereto, or the further claim that it had fallen into a distressed fnancial
situation, cannot in any sense e/cuse it from its o%ligation to the 7A5A+A, which
had nothing whatever to do with the Central 'an(Hs actuations or the events leading
to the %an(Hs distressed state"
6. Ban&o 5ilipino (avings and Mortgage Bank vs. Central Bank
G.R. No. .**+4 De&e/%er 11 1911
Facts: Petitioners -o& $anagement Programs Cor&oration and Pilar .evelo&ment
Cor&oration are cor&orations engaged in the %usiness of develo&ing residential
su%divisions"-o& $anagement and Pilar .evelo&ment o%tained several loans from
'anco Fili&ino all secured %y real estate mortgage in their various &ro&erties in
Cavite"
-he $onetary 'oard issued a resolution fnding 'anco Fili&ino insolvent and
&lacing it under receivershi&" +u%sequently, the $onetary 'oard issued another
resolution &lacing the %an( under liquidation and designated a liquidator" 'y virtue
of her authority as liquidator, Oalen>uela a&&ointed the law frm of +yci&, +ala>ar, et
al" to re&resent 'anco Fili&ino in all litigations"
'anco Fili&ino fled the &etition for certiorari questioning the validity of the
resolutions issued %y the $onetary 'oard authori>ing the receivershi& and
liquidation of 'anco Fili&ino"A tem&orary restraining order was issued enEoining the
res&ondents from e/ecuting further acts of liquidation of the %an(" 4owever, acts
and other transactions &ertaining to normal o&erations of a %an( are not enEoined"
+u%sequently, -o& $anagement and Pilar .evelo&ment failed to &ay their
loans on the due date" 4ence, the law frm of +yci&, +ala>ar, et al" acting as counsel
for 'anco Fili&ino under authority of the liquidator, a&&lied for e/tra0Eudicial
foreclosure of the mortgage over -o& $anagement and Pilar .evelo&mentKs
&ro&erties" -hus, the =/0;<cio +heri) of the 3egional -rial Court of Cavite issued a
notice of e/tra0Eudicial foreclosure sale of the &ro&erties" -o& $anagement and Pilar
.evelo&ment fled 2 se&arate &etitions for inEunction and &rohi%ition with the
res&ondent a&&ellate court see(ing to enEoin the 3egional -rial Court of Cavite, the
e/0o<cio sheri) of said court and +yci&, +ala>ar, et al" from &roceeding with
foreclosure sale which were su%sequently dismissed %y the court" 4ence this
&etition
#ssue: 5hether or not the liquidator has the authority to &rosecute as well as to
defend suits and to foreclose mortgages for and %ehalf of the %an( while the issue
on the validity of the receivershi& and liquidation is still &ending resolution
4eld: Fes" +ection 2A of the 3e&u%lic Act 7o" 2B, as amended (nown as the
Central 'an( Act, &rovides that when a %an( is for%idden to do %usiness in the
Phili&&ines and &laced under receivershi&, the &erson designated as receiver shall
immediately ta(e charge of the %an(Hs assets and lia%ilities, as e/&editiously as
&ossi%le, collect and gather all the assets and administer the same for the %eneft of
its creditors, and re&resent the %an( &ersonally or through counsel as he may retain
in all actions or &roceedings for or against the institution, e/ercising all the &owers
necessary for these &ur&oses including, %ut not limited to, %ringing and foreclosing
mortgages in the name of the %an(" Pendency of the case did not diminish the
&owers and authority of the designated liquidator to e)ectuate and carry on the
administration of the %an("
4owever, the assailed order of the $onetary 'oard liquidating the %an( was
annulled and set aside" Central 'an( and the $onetary 'oard were ordered to
reorgani>e &etitioner %an( and allow the latter to resume %usiness under their
com&trollershi&"
.. Central Bank of the 'hilippines vs. Co$rt of !ppeals
G.R. No. ##,+, Ma) # 199"
Facts: Central 'an( discovered that certain questiona%le loans e/tended %y
ProducerKs 'an( of the Phili&&ines 8P'P9, totalling a&&ro/imately P:!! million 8the
&aid0in ca&ital of P'P amounting only to P C@!"@@ million9, were fctitious as they
were e/tended, without collateral, to certain interests related to P'P owners
themselves"
+u%sequently and during the same year, several %lind items a%out a family0
owned %an( in 'inondo which granted fctitious loans to its stoc(holders a&&eared
in maEor news&a&ers which triggered a %an(0run in P'P and resulted in continuous
over0drawings on the %an(Hs demand de&osit account with the Central 'an(?
reaching to P C@:"A million" 4ence, on the %asis of the re&ort su%mitted %y the
+u&ervision and =/amination +ector, the $onetary 'oard 8$'9, &laced P'P under
conservatorshi&"
P'P su%mitted a reha%ilitation &lan to the C' which &ro&osed the transfer to
P'P of : %uildings owned %y Producers Pro&erties, #nc" 8PP#9, its &rinci&al stoc(holder
and the su%sequent mortgage of said &ro&erties to the C' as collateral for the
%an(Hs overdraft o%ligation %ut which was not a&&roved due to disagreements
%etween the &arties"
+ince no other reha%ilitation &rogram was su%mitted %y P'P for almost :
years its overdrafts with the C' continued to accumulate and swelled to a
staggering PC"!2: %illion" Consequently, the C' $onetary 'oard decided to a&&rove
in &rinci&le what it considered a via%le reha%ilitation &rogram for P'P" -here %eing
no res&onse from %oth P'P and PP# on the &ro&osed reha%ilitation &lan, the $'
issued a resolution instructing Central 'an( management to advise the %an( that
the conservatorshi& may %e lifted if P'P com&lies with certain conditions"
5ithout res&onding to the communications of the C', P'P fled a com&laint
with the 3egional -rial Court of $a(ati against the C', the $' and C' Governor
alleging that the resolutions issued were ar%itraty and made in %ad faith"
3es&ondent Gudge issued a tem&orary restraining order and su%sequently a writ of
&reliminary inEunction" C' fled a motion to dismiss %ut was denied and ruled that
the $' resolutions were ar%itrarily issued" C' fled a &etition for certiorari %efore the
Court of A&&eals see(ing to annul the orders of the trial court %ut CA a<rmed the
said orders" 4ence this &etition"
#ssue: 5hether or not the trial court erred in not dismissing the case for lac( of
cause of action and declaring the $' resolutions as ar%itrary"
4eld: Fes" Assailed decisions are annulled and set aside" -he following requisites
must %e &resent %efore the order of conservatorshi& may %e set aside %y a court:
8C9 -he a&&ro&riate &leading must %e fled %y the stoc(holders of record
re&resenting the maEority of the ca&ital stoc( of the %an( in the &ro&er court? 829
+aid &leading must %e fled within ten 8C!9 days from recei&t of notice %y said
maEority stoc(holders of the order &lacing the %an( under conservatorshi&? and 8:9
-here must %e convincing &roof, after hearing, that the action is &lainly ar%itrary
and made in %ad faith" #n the instant case, the original com&laint was fled more
than : years after P'P was &laced under conservator, long after the e/&iration of
the C!0day &eriod deferred to a%ove" #t is also %eyond question that the com&laint
and the amended com&laint were not initiated %y the stoc(holders of record
re&resenting the maEority of the ca&ital stoc("
#. 5irst 'hilippine National Bank vs. Co$rt of !ppeals
9. 7ng vs. Co$rt of !ppeals
G.R. No. 11"#,* 5e%r$ar) 1 1996
Facts: Gerry ;ng fled with the 3egional -rial Court of Iue>on City a &etition for the
surrender of 2 -C-s against 3ural 'an( of ;longa&o, #nc" 83';9, re&resented %y its
liquidator Guillermo G" 3eyes, Gr" and de&uty liquidator A%el Allanigue" According to
the &etition, said 2 &arcels of land were duly mortgaged %y 3'; in favor of
&etitioner to guarantee the &ayment of ;mni%us Finance, #nc", which is li(ewise now
undergoing liquidation &roceedings of its money mar(et o%ligations to &etitioner"
;mni%us Finance, #nc", not having seasona%ly settled its o%ligations to &etitioner,
the latter &roceeded to e)ect the e/traEudicial foreclosure of said mortgages and
the city sheri) of -agaytay City issued a certifcate of sale in favor of &etitioner
which were duly registered"
3es&ondents failed to seasona%ly redeem said &arcels of land, for which
reason, &etitioner has e/ecuted an a<davit of consolidation of ownershi& which has
not %een su%mitted to the 3egistry of .eeds of -agaytay City, in view of the fact
that &ossession of the aforesaid titles or ownerHs du&licate certifcates of title
remains with the 3';" -o date, &etitioner has not %een a%le to e)ect the registration
of said &arcels of land in his name in view of the &ersistent refusal of res&ondentsto
surrender 3';Hs co&ies of its ownerHs certifcates of title for the &arcels of land
covered %y the two -C-s"
3es&ondent 3'; fled a motion to dismiss on the ground of res judicata and
that it was undergoing liquidation and it is the liquidation court which has e/clusive
Eurisdiction to ta(e cogni>ance of &etitionerHs claim" -rial court denied the motion to
dismiss %ecause it found that the causes of action in the &revious and &resent cases
were di)erent although it was silent on the Eurisdictional issue" 3'; fled a motion
for reconsideration %ut was similarly reEected" -he Court of A&&eals, through a
certiorari fled %y 3';, annulled the challenged orders of the trial court which
sustained the Eurisdiction of the trial court and denied reconsideration thereof"
$oreover, the trial Eudge was ordered to dismiss the civil case without &reEudice to
the right of &etitioner to fle his claim in the liquidation &roceedings &ending %efore
the 3egional -rial Court of ;longa&o City"
#ssue: 5hether or not the civil case against 3'; may &roceed inde&endently from
the liquidation &roceedings"
4eld: 7o"Petition denied" All claims against the insolvent %an( should %e fled in the
liquidation &roceeding" -he Eudicial liquidation is intended to &revent multi&licity of
actions against the insolvent %an(" #t is a &ragmatic arrangement designed to
esta%lish due &rocess and orderliness in the liquidation of the %an(, to o%viate the
&roliferation of litigations and to avoid inEustice and ar%itrariness" #t is not necessary
that a claim %e initially dis&uted in a court or agency %efore it is fled with the
liquidation court"
1*. Manalo vs. Co$rt of !ppeals
G.R. No. 141"9. 7&to%er # "**1
Facts: +" Oillanueva =nter&rises, re&resented %y its &resident, -herese Oillanueva
Oargas, o%tained a loan of three million &esos and one million &esos from the
res&ondent PA#C +avings and $ortgage 'an( and the Phili&&ine American
#nvestments Cor&oration 8PA#C9, res&ectively" -o secure &ayment of %oth de%ts,
Oargas e/ecuted in favor of the res&ondent and PA#C a Eoint frst mortgage

over two
&arcels of land registered under her name" ;ne of the lots is the su%Eect of the
&resent case" +" Oillanueva =nter&rises failed to settle its loan o%ligation"
Accordingly, res&ondent instituted e/traEudicial foreclosure &roceedings over the
mortgaged lots and acquired the same as the highest %idder" After the la&se of one
year, title was consolidated in res&ondentHs name for failure of Oargas to redeem"
+u%sequently, Central 'an( of the Phili&&ines fled a &etition for assistance in
the liquidation of the res&ondent PA#C with the 3egional -rial Court" After a few
years, res&ondent &etitioned the 3egional -rial Court of Pasay City for the issuance
of a writ of &ossession for the su%Eect &ro&erty" 4owever, during the &endency of
civil case for the issuance of a writ of &ossession, Oargas e/ecuted a deed of
a%solute sale selling, transferring, and conveying ownershi& of the dis&uted lot in
favor of a certain Armando Angsico" 7otwithstanding this sale, Oargas, still
re&resenting herself to %e the lawful owner of the &ro&erty, leased the same to
&etitioner .omingo 3" $analo" 2ater, Armando Angsico, as %uyer of the &ro&erty,
assigned his rights therein to &etitioner"
-he court su%sequently issued the writ of &ossession %ut Oillanueva
=nter&rises and Oargas moved for its quashal" Petitioner, on the strength of the
lease contract and deed of assignment made in his favor, su%mitted a &ermission to
fle an e/0&arte motion to intervene" 'oth motions were denied %y the court" Court
of A&&eals u&held the order of the lower court" 4ence this &etition"
#ssue: 5hether or not the Eurisdiction for the issuance of the writ of &ossession fled
%y the res&ondent %an( is vested solely on the liquidation court"
4eld: 7o" Petition dismissed" Although the law &rovides that all claims against the
insolvent %an( should %e fled in the liquidation &roceeding, such legal &rovision
only fnds o&eration in cases where there are claims against an insolvent %an(" #n
fne, the e/clusive Eurisdiction of the liquidation court &ertains only to the
adEudication of claims against the %an(" #t does not cover the reverse situation
where it is the %an( which fles a claim against another &erson or legal entity"
$oreover, a %an( which had %een ordered closed %y the monetary %oard
retains its Euridical &ersonality which can sue and %e sued through its liquidator" -he
only limitation %eing that the &rosecution or defense of the action must %e done
through the liquidator" ;therwise, no suit for or against an insolvent entity would
&ros&er" #n such situation, %an(s in liquidation would lose what Eustly %elongs to
them through a mere technicality"
11. R$ral Bank of (ta. Catalina vs. Land Bank of the 'hilippines
G.R. No. 14#*19 -$l) "6 "**4
Facts: 3es&ondent 2and 'an( of the Phili&&ines fled a com&laint against the
&etitioner, +ta" Catalina 3ural 'an(, #nc", in the 3egional -rial Court for the collection
of sum of money" For its failure to fle its answer to the com&laint, the trial court
declared the &etitioner %an( in default" .es&ite its recei&t of the co&y of the said
order, the &etitioner %an( failed to fle a motion to set aside the order of default"
3es&ondent %an( &resented 2 witnesses" -he frst witness, $r" $ervin +ison,
the chief loans and creditor of the 2and 'an( of the Phili&&ines, testifed that he
(nows of the rediscounting line agreements entered into %y and %etween the
&lainti) and the defendant" +aid agreements were identifed %y him in court for P
:,!!,!!!"!!" #n case of defendantHs default, the availments shall %e su%Eect to :Q
&enalty &er month from due date of note as agreed u&on" .uring the e)ectivity of
the frst and second rediscounting line agreement, defendant made several
se&arate availments, each is su%Eect to a certain interest &er annum and with a
term of CD! days" -he second witness, $s" =lenita del Castillo, corro%orated the
testimony of $r" +ison" -he grand total of all the availments &lus corres&onding
&enalties amounted more than P million"
#n the meantime, the $onetary 'oard a&&roved the &lacement of the
&etitioner %an(Hs assets under receivershi&" -he Phili&&ine .e&osit #nsurance
Cor&oration 8P.#C9 was designated as receiver 8conservator9 of the &etitioner, and
the latter was &rohi%ited from doing %usiness in the Phili&&ines" Lnaware of the
action of the C', the trial court rendered Eudgment %y default against the &etitioner
%an( ordering the %an( to &ay its o%ligation to res&ondent 2'P &lus interests and
damages"
-he &etitioner, through the P.#C, a&&ealed the decision to the Court of
A&&eals" -he &etitioner %an( claim that since it was &laced under receivershi& and
&rohi%ited from doing %usiness in the Phili&&ines it should no longer %e held lia%le
for interests and &enalties on its account to the res&ondent %an(" 4owever, CA
rendered Eudgment a<rming the decision of the 3-C"
#ssue: 5hether or not an insolvent %an( &laced under receivershi& and &rohi%ited
from doing %usiness in the Phili&&ines may %e held lia%le to &ay interests and
&enalties after %eing declared in default"
4eld" Fes" Petition dismissed" Petitioner was served with a co&y of summons and
the com&laint, %ut failed to fle its answer thereto" #t also failed to fle a verifed
motion to set aside the order of default des&ite its recei&t of a co&y thereof" 5e
note that the trial court rendered Eudgment only on A&ril 7, CAAD or more than a
year after the issuance of the default order? yet, the &etitioner failed to fle any
verifed motion to set aside the said order %efore the rendition of the Eudgment of
default" -he P.#C was designated %y the Central 'an( of the Phili&&ines as receiver
8conservator9 as early as Ganuary C@, CAAD, and in the course of its management of
the &etitioner %an(Hs a)airs, it should have (nown of the &endency of the case
against the latter in the trial court" $oreover, the &etitioner, through the P.#C,
received a co&y of the decision of the trial court %ut did not %other fling a motion
for &artial reconsideration a&&ending thereto the orders of the $onetary 'oard or a
motion to set aside the order of default" #nstead, the &etitioner a&&ealed the
decision, and even failed to assign as an error the default order of the trial court"
-he &etitioner is, thus, %arred from relying on the orders of the $onetary 'oard of
the Central 'an( of the Phili&&ines &lacing its assets and a)airs under receivershi&
and ordering its liquidation"
1". Miranda vs. Co$rt of !ppeals
G.R. No. 169,,4 (epte/%er # "**6
Facts: Petitioner 2eticia G" $iranda was a de&ositor of Prime +avings 'an(" +he
withdrew su%stantial amounts from her account, %ut instead of cash she o&ted to %e
issued a crossed cashierHs chec( in the sum of P2,!!,!!! and cashierHs chec( in
the amount of P:,!!2,!!!" Petitioner de&osited the two chec(s into her account in
another %an( on the same day, however, 'ang(o +entral ng Pili&inas 8'+P9
sus&ended the clearing &rivileges of Prime +avings 'an( e)ective 2:!! &"m" of Gune
:, CAAA" -he two chec(s of &etitioner were returned to her un&aid"
;n Gune @, CAAA, Prime +avings 'an( declared a %an( holiday" ;n Ganuary 7,
2!!!, the '+P &laced Prime +avings 'an( under the receivershi& of the Phili&&ine
.e&osit #nsurance Cor&oration 8P.#C9"
Petitioner fled a civil action for sum of money in the 3egional -rial Court to
recover the funds from her un&aid chec(s against Prime +avings 'an(, P.#C and the
'+P" -he court rendered Eudgment against defendants and ordered them to &ay the
&lainti)" ;n a&&eal, the Court of A&&eals reversed the trial court and ruled in favor
of the P.#C and '+P, dismissing the case against them, without &reEudice to the
right of &etitioner to fle her claim %efore the court designated to adEudicate on
claims against Prime +avings 'an(" PetitionerHs motion for reconsideration was
denied" 4ence, this &etition"
#ssue: 5hether or not the res&ondents are solidarily lia%le to &ay the &etitioner"
4eld: 7o" ;nly Prime +avings 'an( that is lia%le to &ay for the amount of the two
cashierHs chec(s" +olidary lia%ility cannot attach to the '+P, in its ca&acity as
government regulator of %an(s, and the P.#C as statutory receiver under 3"A" 7o"
7B:, %ecause they are the &rinci&al government agencies mandated %y law to
determine the fnancial via%ility of %an(s and quasi0%an(s, and facilitate
receivershi& and liquidation of closed fnancial institutions, u&on a factual
determination of the latterHs insolvency" 4owever, in a situation involving the
element of fraud, where a cashierHs chec( is &urchased from a %an( at a time when
it is insolvent, as its o<cers (now or are %ound to (now %y the e/ercise of
reasona%le diligence, it has %een held that the &urchase is entitled to a &reference
in the assets of the %an( on its liquidation %efore the chec( is &aid" 4ence, the CA
decision is a<rmed with modifcation that the claim of &etitioner $iranda is entitled
to &reference in the assets of P+' in its liquidation"